Musick, Peeler & Garrett LLP
By Alyce A. Rubinfeld, Esq., Partner
January 2007
Lyle v. Warner Bros., 38 Cal 4 th 264 (2006).
Labor Practice
Group
Members
______________
Anthony J. Bejarano
Robert J. Bekken
G. Michael Brown
Philip Ewen
Michael R. Goldstein
Jennifer M. Ilenstine
David M. Lester
Kirsten C. Love
Michael W. Monk
Gary F. Overstreet
Alyce A. Rubinfeld
Stuart W. Rudnick
Robert M. Stone
William J. Tebbe
Stuart D. Tochner
Elaine M. Vukadinovich
Keith A. Watts
Steven D. Weinstein
______________
The issue presented to the California Supreme Court was whether the use of sexually coarse and
vulgar language in the workplace can constitute harassment based on sex within the meaning of
the FEHA to create a hostile work environment, and if so, whether the imposition of liability under
the FEHA for such speech would infringe on defendants’ federal and state constitutional rights of
free speech.
In Lyle, the California Supreme Court cited with approval the United States Supreme Court’s 1998
decision in Oncale v. Sundowner Offshore Services, Inc. In Oncale, the United States Supreme
Court held that the anti-harassment law was never intended to be used to mandate a “civility
code” for the workplace or to outlaw all forms of sexual comments and vulgar language in the
workplace. Rather, the Oncale Court held that actionable sexual harassment must be harassment
because of the “victim’s sex.” In addition, the conduct must be “severe or pervasive” enough to
adversely affect the “victim’s” work environment.
In applying the Oncale standard, the California Supreme Court held that the work atmosphere on
the sitcom Friends show did not create a sexually hostile work environment. A former writers’
assistant, Lyle, who worked on the Friends sitcom who heard the writers using vulgar and sexually
explicit language which was about the show’s actors, and observed them imitating sexual
gestures, as well as discussing their personal sexual experiences and preferences, did so for the
purpose of developing scripts for the Friends sitcom. As such, the sexually explicit conduct and
verbiage was not directed toward Lyle. Nor was it aimed at her. Stated differently, the
“nondirected” conduct was not actionable sexual harassment because of the alleged victim’s sex.
In fact, both male and female writers engaged in sexual discussions.
Impact:
Employers whose work involves a creative process involving the occasional use of
sexual remarks and vulgar language must ensure that the comments or conduct are not directed
at a particular employee or group of employees who belong to a specific gender group. California
now recognizes a narrowly drawn exception to the existence of a sexually hostile work
environment for employers whose legitimate business involves a creative process. This “creative
necessity” defense to a sexual harassment claim will not have widespread application to other
industries. Employers should advise potential employees during the hiring process if they will be
exposed to sexual discussions as part of the creative process.
Wasti v. Superior Court, 140 Cal.App.4th 667 (2006).
The California Court of Appeal overturned a lower court’s dismissal of a pregnancy discrimination
cause of action in a civil complaint despite the employer’s argument that she had failed to exhaust
her administrative remedies. The employee had filed an administrative complaint for pregnancy
discrimination with the Department of Fair Employment and Housing and asked for an immediate
Right-To-Sue. The employee subsequently retained counsel and filed a civil lawsuit for pregnancy
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© Copyright 2007 by
Musick, Peeler & Garrett LLP
ALL RIGHTS RESERVED
2007 Employment Law Bulletin for California Employers is published by Musick, Peeler & Garrett LLP to inform its
clients and contacts. The information presented is general in nature and is not intended to replace professional
legal advice. Questions regarding specific matters or circumstances should be discussed with legal counsel.
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discrimination within the one-year statute. The employer argued in its Demurrer to the civil complaint that employee had failed
to serve her administrative complaint on her employer within the 60-day requirement under Gov’t Code § 12962 and thus had
not exhausted her administrative remedies under FEHA. Gov’t Code § 12962 was amended in 2003 to ease the DFEH’s burden
regarding written notification by limiting the DFEH’s responsibility to serve DFEH complaints for unrepresented plaintiffs. The
amendments required employees who were represented by private counsel to serve a copy of the administrative complaint
(which had been filed for investigation) upon the employer within a 60-day period.
The Court of Appeal ruled the trial court misapplied the statute, holding the employee had no jurisdictional requirement to serve
the DFEH complaint on her former employer because the DFEH did not open an investigation (only issued a Right-To-Sue notice)
and she was not represented by counsel at the administrative level.
Impact: This decision is being interpreted as a victory for employee rights. Employers should refrain from arguing that an
employee failed to exhaust administrative remedies when the employee seeks an immediate Right to Sue from the DFEH without
retaining legal counsel and thereafter files a timely civil complaint, even if the employee does not serve the Right-to-Sue on the
employer. Plaintiffs’ attorneys must serve the DFEH administrative charge on the employer within 60 days of the filing of a
request for an administrative investigation.
Singleton v. United States Gypsum Company, 140 Cal.App.4th 1547 (2006).
The California Court of Appeal held a male maintenance mechanic employed by USG had presented sufficient evidence of
harassment based on sex to proceed to a jury trial. Singleton filed an action alleging sex discrimination and harassment in
violation of the Fair Employment & Housing Act. He contended that two of his co-workers said things that challenged his
manliness, such as pointing out that he was wearing tight jeans, and accusing him of giving his male supervisor oral sex or
engaging in other homosexual activity. The trial court held that there was no triable issue of fact that the hostility or abuse was
related to Singleton’s gender or sexual orientation.
The appellate court reversed the trial court’s judgment. The court focused on whether the harassment was “because of sex.” As
the California Supreme Court recently explained in the Friends case, the disparate treatment of an employee on the basis of
sex—not mere discussion of sex or use of vulgar language in the work place—is germane to making a sexual harassment claim.
The appellate court concluded that Singleton’s harassment was “because of sex” since it attacked his identity as a heterosexual
male.
Impact: This case makes employers in California vulnerable to liability for sexual identity harassment.
Smith v. Superior Court, 39 Cal.4th 77 (2006).
The Court of Appeal held that an employer effectuates a “discharge” within the meaning of California Labor Code Section 201
when it fires an employee or when it releases an employee upon completion of a job assignment. Here, Smith was hired for
one-day to be a hair model for L’Oreal but did not receive her paycheck until two months’ had lapsed.
Employers are required to pay all wages due to the employee who is released from a project for which the employee was
specifically hired or be liable for waiting-time penalties under Labor Code Section 203. To avoid penalties, the final wage
payment must be transmitted to the employee on the last day worked.
Impact: Employers must pay all wages due to temporary, project or freelance employees on the last day worked. The “check
is in the mail” response does not comply with California’s legal requirements for timely wage payment and will likely result in the
assessment of waiting time penalties against the Employer.
Dore v. Arnold Worldwide, Inc., 39 Cal.4 th 384 (2006).
An employment contract providing that management supervisor’s employment was at-will and could be terminated “at any time”
was deemed unambiguous and meant employment could be terminated at any time with or without cause despite the contract
not expressly speaking to whether termination for cause was required. Notably, the employment contract was silent as to
whether or not cause was required to terminate a management supervisor. The California Supreme Court rejected the
management supervisor’s contentions that the contract language was ambiguous. It further rejected his contention that oral
representations, conduct and documents led him reasonably to understand there existed between he and his employer an
implied-in-fact contract that provided he would not be discharged from his employment except for cause.
Impact: Employers should be sure to include at-will language that not only addresses the timing if termination can be invoked
at any time, but also that termination can occur without cause. This will avoid costly litigation of ambiguous at-will termination
provisions. The California Supreme Court has reaffirmed the doctrine of at-will employment which favors employers.
th
Gober v. Ralphs Grocery Co., 137 Cal.App.4
204 (2006).
Six Ralphs grocery store employees sued for sexual harassment after the store director allegedly engaged in inappropriate
touching, used profanity, made inappropriate comments about some of the employees’ sex lives and threw various objects at
some of them. The jury awarded each of the employees between $50,000 and $200,000 in compensatory damages and
between $150,000 and $1.3 million in punitive damages. On retrial, the jury returned a more favorable verdict, awarding each
of the employees $5 million in punitive damages. Ralphs Grocery filed an appeal claiming the ratio for punitive damages used
was excessive. The Court of Appeal agreed holding that a maximum ratio of 6 to 1 (punitive to compensatory damages) is
sufficient to punish Ralphs and to deter others from similar conduct in the future.
Impact: This case is viewed as favorable decision for California employers demonstrating the Courts’ willingness to reduce
outrageous punitive damages awards by runaway juries. There has been a trend commencing in 2004 for California courts to
apply reasonable limits on punitive damages awards after the United States Supreme Court decision in State Farm v. Campbell
which used a ratio of nor more than a single digit multiplier (9) to limit a compensatory damage award.
Williams v. Genentech, 49 Cal.Rptr.3d 210 (2006) (Review by the Supreme
Court of California granted).
Plaintiff, who claims her employer discriminated against her on the basis of a disability by filling her position while she was on
medical leave, failing to re-hire her for a vacant position, and terminating her employment could not establish a prima face case
of disability discrimination to withstand a Motion for Summary Judgment filed by the Employer. The Court of Appeal held that
Plaintiff could not establish that she was “qualified” to return to work at that time. It further held that she had not raised a
triable issue of fact where the reason stated for not re-hiring Plaintiff was her lack of qualifications and Plaintiff failed to establish
that Employer’s assertion that she was not qualified was pretextual. The Court held that the Employer was not required to
assign the Plaintiff to work with a new supervisor when she had claimed that working with her former supervisor with whom she
had a personality conflict was contributing to her disability. Additionally, the Court found that the Employer was not required to
keep Plaintiff’s position open as a disability accommodation after she exhausted all disability leave provided for by company
policy and by law.
Impact: The Williams case recognizes that a reasonable accommodation need not be the precise accommodation that the
employee requested, and that, while a reasonable accommodation might include an extended leave of absence, an employer is
not necessarily required to hold open a position indefinitely while an employee is on a medical leave. Because of the interplay
between workers’ compensation issues, the California Fair Employment and Housing Act and the California or Federal Family
Medical Leave Act, it is imperative that Employers analyze the potential impact of each of these laws when dealing with a
disabled employee.
Taylor v. Los Angeles Department of Water & Power, 2006 WL 3350725
(November 20, 2006).
Eric Taylor, an associate electrical engineer employed by the Los Angles Department of Water & Power filed a lawsuit against his
employer alleging he was retaliated against for opposing race discrimination claimed by a subordinate, Mr. Donald Coleman.
Taylor was identified as a witness to Coleman’s internal claims of race discrimination and wrongful termination and supported
Coleman by being a witness, appearing at his termination hearing, providing information to the EEO office, participating in
several investigative interviews and testifying in Coleman’s support at the hearing. Taylor, on his own behalf, subsequently
alleged that he was retaliated by his supervisor by being subjected to more than 20 acts of retaliation, including stripping him of
most of his duties and denying him training and a promotion.
The Court of Appeal found that Taylor had sufficiently alleged that he engaged in protected activity and that he had been
subjected to adverse employment action. The Court analyzed the retaliation cause of action using two standards. First it used
the “materiality standard” which provides that a retaliation claim lies only for an employment action that materially affects the
terms and conditions of employment. Next, it used the “deterrence test” which provides that a retaliation claim lies for any
adverse treatment that is based on a retaliatory motive and is reasonably likely to deter the charging party or others from
engaging in protected activity.
Impact: This decision was a case of first impression for the Court of Appeal on the issue of the standard to be applied to a
retaliation claim following the United States Supreme Court decision earlier this year in Burlington Northern & Santa Fe Ry. Co.,
v. White, 126 S.Ct. 2405 (2006). In Burlington, the Supreme Court adopted the deterrence test in a Title VII lawsuit, finding
that a job reassignment of an employee after complaining about sexual harassment was sufficient to deter protected activity for
purposes of stating a retaliation claim. In 2005, the California Supreme Court had applied the more stringent materiality
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standard announced in Yanowitz v. L’Oreal USA, Inc., 36 Cal.4th 1028 (2005) to analyze a retaliation claim filed under the
California Fair Employment & Housing Act. In so doing, it is apparent that California courts will at a minimum be apply ing the less
stringent deterrence standard which is disadvantageous to employers who alter the terms and conditions of employment for
employees, even with no resulting economic impact, who have engaged in protected activity. Importantly, the Court in Tayl or also
held that California supervisors may be found personally liable for retaliation and that a separate cause of action exists for the
failure to prevent retaliation under FEHA.
Church v. Jamison, 143 Cal.App.4th 1568 (2006).
The California Court of Appeal held that employees can sue for all accrued but unused vacation pay when their employment is
terminated, even if it was earned outside of the applicable statute of limitations period. Prior law stated that employees can sue
only for accrued but unused vacation that was within the applicable statute of limitations, up to a maximum of four years.
Mr. Church had earned 10 days of paid vacation which he never used. Church filed a lawsuit against his former employer less than
a year after his employment was terminated, but more than three years after he earned the last of the unpaid vacation benefits.
He argued that a two-year statute of limitations applicable to oral contracts should apply. The Court agreed, holding that the time
for filing Church’s complaint was timely. However, the Court refused to use the two-year statute of limitations to reach back to
limit the amount of accrued but unused vacation that was recoverable. Thus, the employer’s liability for vacation pay was
unlimited.
Impact: Employers should exercise care to prevent employees from accruing large amounts of unused vacation and to pay
whatever is owed promptly upon termination. Employers may consider implementing a lawful vacation cap policy which can avoid
the accrual of huge amounts of vacation that would be payable upon an employee’s termination. Employees should be given
adequate time to use vacation after vesting. The Division of Labor Standards Enforcement will deem policies that provide vacation
must be used in the same year in which it is earned.
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