EXECUTIVE SUMMARY
IMPORTANT EMPLOYMENT CASES OF THE YEAR
The past year in employment law can be characterized as the year
that the California Supreme Court definitively rejected the lead of the Ninth
Circuit Court of Appeals, and instead relied upon its own judgments about
both federal and state law. As a result, the federal courts are no longer
presumptively the better place to be for employers.
One of the most important developments of the past year was the
affirmation by the California Supreme Court that employment discrimination
claims under state law (e.g. the Fair Employment and Housing Act) may be
the subject of mandatory arbitration agreements, and a specification of the
requirements for such an agreement to be enforceable. In general, the
arbitration procedure must provide the employee with the full remedies
available under the statute; it must not cost the employee more than s/he
would be required to spend in a court case; it must provide for adequate
discovery; and, to allow judicial review, it must require the same findings
from the arbitrator as would be required from a judge acting as finder of
fact. Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal. 4th
83, 99 Cal.Rptr.2d 745 (Aug. 24, 2000).
However, although a California Court of Appeal had previously ruled
that an at-will employer may terminate employees who refuse to sign an
arbitration agreement, in the same case (i.e. the identical factual setting
and the same employee) a federal district court enjoined an employer from
requiring employees to arbitrate their Title VII claims. EEOC v. Luce,
Forward, Hamilton & Scripps, 122 F.Supp.2d 1080 (C. D. Cal. 2000).
Both the United States Supreme Court and the California Supreme
Court considered the effect of evidence in an employment discrimination
case that an employer’s “legitimate business explanation” of a challenged
decision was untrue. The United States Supreme Court held that evidence
of pretext, combined with the plaintiff’s prima facie case, may be sufficient
to support a finding of discrimination on a prohibited basis. It indicated,
however, that the determination of whether an untruthful explanation is
sufficient to defeat summary judgment (or directed verdict) depends on
many factors, including the quality of the evidence of untruthfulness and the
evidence of a nondiscriminatory reason for the employer’s decision.
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Reeves v. Sanderson, 530 U.S. 133, 120 S.Ct. 2097 (2000). While citing
Reeves, the California Supreme Court concentrated more on the need for
quality evidence than it did on the finding that evidence of untruthfulness or
pretext may be sufficient, along with the prima facie case, to defeat
summary judgment. In fact, the California Supreme Court held that that an
inference of intentional discrimination could not be drawn solely from
evidence that an employer lied about its reasons. Guz v. Bechtel National,
Inc., 24 Cal. 4th 317, 100 Cal.Rptr.2d 352 (2000).
In discrimination cases, the major developments of the past year
have been in the areas of disability discrimination, retaliation, and
remedies. With respect to the former, the courts - - particularly the state
courts - - have been active in evaluating what kinds of conditions merit
protection and the extent of employers’accommodation obligation. Even
without the recent amendments to the Fair Employment and Housing Act
clarifying that a limitation need not be substantial or affect activities other
than working to be protected, the courts have been expansive in their
interpretation of protected disabilities. Further, the Ninth Circuit has held
that under federal law, unlike California law, danger to the plaintiff is not a
defense to a failure to hire or assign. Echazabal v. Chevron USA, Inc., 226
F. 3d 1063 (9th Cir. 2000).
But the courts have been even more expansive in their interpretation
of the employer’s obligation to affirmatively explore - - over and over again
- - possible accommodations to a known disability. Particularly noteworthy
are indications that poor performance reviews can constitute notice to the
employer that a prior accommodation is not sufficient, requiring a search for
other possible accommodations. See, e.g., Humphrey v. Memorial
Hospitals Association, __F. 3d __, 2001 WL 118432 (9th Cir. Feb. 13,
2001); Spitzer v. The Good Guys, Inc., 80 Cal. App. 4th 1376, 96 Cal. Rptr.
2d 236 (1st Dist. 2000). Seniority systems not incorporated into a collective
bargaining agreement may not be a defense to a failure to accommodate
an employee by reassignment to another job. Barnett v. U.S. Air, Inc., 228
F. 3d 1105 (9th Cir. 2000).
With respect to retaliation cases, the most interesting developments
are the expanding definition of “adverse treatment” and especially the trend
toward making employers liable for the shunning or other hostile acts of coworkers toward a complaining plaintiff, see, e.g., Fielder v. United Airlines,
218 F. 3d 973 (9th Cir. 2000); Thomas v. Department of Corrections, 77
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Cal. App. 4th 507, 91 Cal. Rptr. 2d 770 (4th Dist. 2000), and the growing
difficulty, at least in federal courts, in obtaining summary judgment on
retaliation claims. See, e.g., Ray v. Henderson, 217 F. 3d 1234 (9th Cir.
2000); Fielder v. United Airlines, supra.
As to remedies, the United States Supreme Court recently agreed to
decide whether “front pay” is included in the $300,000 cap in 42 U.S.C.
§1981(a) (which applies to Title VII, the ADA, and other discrimination
statutes) for damages other than back pay. Pollard v. E.I DuPont de
Nemours Co., 213 F. 3d 933 (6th Cir. 2000), cert. granted, ___U.S.___,
121 S. Ct. 756, 2001 WL 12416 (Jan. 8, 2001).
The California Supreme Court decided (in a non-discrimination case)
that in-house attorneys are entitled to attorneys’fees where available by
statute or contract. And a California Court of Appeal decided that an
employer must indemnify a supervisor for the expenses of defending
himself in a sexual harassment case, where the alleged harassment
consisted of sexual banter.
The California courts continued to develop wrongful termination law.
The California Supreme Court held that with appropriate notice, an at-will
employer could change its policies and procedures, and continued
employment constitutes acceptance of such a change. Asmus v. Pacific
Bell, 23 Cal. 4th 1, 96 Cal.Rptr.2d 179 (2000). However, the policies that
an employer does have may create implied contractual requirements. On
the other hand, longevity, raises and promotions are not, without other
evidence, a contractual guarantee of future employment security. Guz v.
Bechtel National, Inc., supra.
One Court of Appeal held that terminating an employee for his failure
to sign an agreement containing a non-compete clause was a violation of
public policy. D’Sa v. Playhut, Inc., 85 Cal.App. 4th 927, 102 Cal.Rptr. 2d
495 (2d Dist. 2000). As mentioned before, a federal district court believes
that terminating employees who refuse to agree to arbitration of Title VII
rights violates public policy. EEOC v. Luce, Forward Hamilton & Scripps,
supra.
Employers should watch the developments following the National
Labor Relations Board’s ruling in Epilepsy Foundation of Northeast Ohio,
331 N.L.R.B. No. 92, 164 LRRM (BNA) 1233 (July 10, 2000) holding that
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non-union employees may insist that co-workers be present at any
employee interview that the employee reasonably believes may lead to the
imposition of discipline. While long the rule in the union setting, many
commentators believe that the NLRB has overstepped its bounds by
extending the rule to non-union companies.
Last but not least, the California Supreme Court has sanctioned the
ability of individual plaintiffs - - even those unaffected by a practice - - to
seek under unfair competition laws restitution to affected persons of monies
which have been unlawfully withheld, most often in an alleged violation of
wage laws. However, fluid recovery funds, disgorgement of profits and
similar remedies require that a class action be certified. Cortez v. Purolator
Air Filtration Products Co., 23 Cal. 4th 163, 96 Cal.Rptr. 2d 518 (2000).
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