New York
Washington D.C.
Boston
Institute For Corporate Counsel
Los Angeles
RECENT DEVELOPMENTS
IN EMPLOYMENT LAW
San Francisco
Dallas
Cynthia E. Gitt
Miami
Newark
Stamford
Baltimore
1
2000
IN 2000, THE CALIFORNIA SUPREME
COURT CHOSE ITS OWN PATH
EMPLOYERS WITH REMOVAL
OPTIONS HAVE A DIFFICULT
CHOICE
2
ARMENDARIZ v. FOUNDATION
HEALTH SERVICES
• UNDER STATE LAW, MANDATORY
AGREEMENTS THAT ENCOMPASS
STATUTORY DISCRIMINATION
CLAIMS WILL BE ENFORCED IF
SPECIFIC STANDARDS ARE MET
3
THE CALIFORNIA SUPREME COURT
SPECIFICALLY ANALYZED AND
REJECTED, AT LEAST AS TO STATE
CLAIMS, THE CONTRARY
CONCLUSION OF THE NINTH
CIRCUIT IN DUFFIELD
4
IN ORDER TO BE ENFORCABLE
(CONSCIONABLE) AS TO
STATUTORY/DISCRIMNATION
CLAIMS, THE ARBITRATION
AGREEMENT MUST DO ALL OF THE
FOLLOWING:
5
AGREEMENT MUST PROVIDE FOR:
 NEUTRAL ARBITRATORS
 MORE THAN MINIMAL DISCOVERY
 WRITTEN AWARD, SUFFICIENT FOR JUDICIAL
REVIEW
 ALL RELIEF AVAILABLE IN A COURT ACTION
 THE EMPLOYEE NOT TO PAY UNREASONABLE
COSTS OR ANY ARBITRATORS’ FEES OR EXPENSES
6
REQUIREMENTS NOT
ADDRESSED IN
ARBITRATION
AGREEMENT MAY BE
IMPLIED INTO THE
AGREEMENT
7
IF AGREEMENT CONTAINS UNCONSCIONABLE
TERMS, THE COURT MUST DECIDE WHETHER TO
EXCISE THE OFFENSIVE PROVISIONS OR
INVALIDATE THE CONTRACT
•Is the central purpose of the
agreement tainted with illegality?
•Can the offensive provision be
stricken, or is reformation required
to eliminate unconscionability?
8
FOUNDATION HEALTH PLAN’S ARBITRATION
AGREEMENT WAS FOUND UNENFORCABLE:
• It unconscionably limited remedies to back pay
• It unconscionably lacked mutuality because it
implied that the employer but not the employee
could go to court to enforce claims related to
trade secrets or non-competition agreements
9
AFTER ARMENDARIZ, MOST
COURTS TRY TO ENFORCE
AGREEMENTS THAT DO NOT
LIMIT REMEDIES OR REQUIRE
EMPLOYEES TO PAY
SUBSTANTIAL COSTS
10
EXAMPLES OF
UNCONSCIONABLE
PROVISIONS:
• Limitation of Back Pay to Six Months (Pinedo
v. Premium Tobacco)
• Requirement that employee pay all initial costs
of arbitration (Pinedo)
• Requirement that even prevailing plaintiff pay
employer’s costs if go to administrative agency
instead of arbitration (Shubin v. William Lyon
11
Homes)
COURTS OF APPEAL HAVE
APPROVED JAMS AND AAA
EMPLOYMENT DISPUTE
RULES AS PROVIDING
NEUTRALITY AND FAIR
DISCOVERY
12
U.S. DISTRICT COURT ENJOINS
REQUIREMENT OF ARBITRATION
AGREEMENT FOUND
CONSCIONABLE BY STATE COURT OF
APPEAL. DUFFIELD STILL LAW OF
NINTH CIRCUIT (EEOC v. Luce,
Forward, Hamilton & Scripps)
13
UNITED STATES SUPREME COURT WILL HEAR
NINTH CIRCUIT CASE, WHICH FOUND
EMPLOYMENT ARBITRATION AGREEMENTS
NOT SUBJECT TO THE FAA
• Circuit City Stores v. St. Clair Adams
14
ARBITRATION vs. REMOVAL
TO FEDERAL COURT:
• Who will be hearing the case?
• No jury
• Conventional wisdom that arbitration
awards less likely to be unreasonable
• Conventional wisdom that arbitration
more expeditious
• Cost to employer of arbitration
• Question as to nature of judicial review
15
SECOND DISTRICT COURT OF APPEAL RULED
THAT ACCEPTANCE OF ARBITRATION
AGREEMENT IS IMPLIED BY CONTINUED
EMPLOYMENT Craig v. Brown & Root)
16
CALIFORNIA SUPREME
COURT PERMITS EMPLOYERS,
TO CHANGE, WITH
ADEQUATE NOTICE,
“UNILATERALLY ADOPTED”
EMPLOYMENT POLICIES OF
INDEFINITE DURATION
Asmus v. Pacific Bell
17
SIX MONTHS ADEQUATE
NOTICE TO RESCIND
EMPLOYMENT SECURITY
POLICY FOR MANAGERS
18
CAN EMPLOYERS GET
SUMMARY JUDGMENT
IN DISCRIMINATION
CASES?
19
• Evidence that an employer’s explanation
may be pretextual, combined with
employee’s prima facie case, may defeat
summary judgment even without
independent evidence that actual motive
was discriminatory
Reeves v. Sanderson Plumbing
20
Reaffirms analysis of St.
Mary’s Honor Society v. Hicks
that pretext may itself support
inference of discrimination
21
Reeves
ONCE AGAIN,
BAD FACTS MAKE BAD LAW
22
Reeves
SUPREME COURT MINIMIZES
SIGNIFICANCE OF AGE OF DECISIONMAKERS AND OTHER MANAGERS,
AND FOCUSES ON “AGEIST
REMARKS” OF EMPLOYEE’S
SUPERVISOR
23
SUPREME COURT ASSURES THAT
THIS DECISION DOES NOT
NULLIFY JUDGMENT AS MATTER
OF LAW IN EMPLOYMENT CASES
(But at least one justice says
it will be the rare case)
24
[Summary] Judgment Available
“If the record conclusively revealed
some other, nondiscriminatory reason
for the employer’s decision, or if the
plaintiff created only a weak issue of
fact as to whether the employer’s
reason was untrue and there was
abundant and uncontroverted
independent evidence that no
discrimination has occurred.”
25
FACTORS FOR EVALUATING
JUDGMENT AS A MATTER OF LAW:
• Strengths of plaintiff’s prima facie case
• Probative value of proof that employer’s
explanation false
• Any other proper evidence that supports
an employer’s case
26
CALIFORNIA SUPREME COURT
CHOSE THE CAVEAT RATHER THAN
THE HOLDING OF REEVES IN ITS
OWN DISCUSSION OF SUMMARY
JUDGMENT CASES
Guz v. Bechtel National, Inc.
27
•GUZ HAD EVIDENCE THAT HIS
“LAY-OFF” FOR COST REASONS
WAS PRETEXTUAL AND
COMPANY DID NOT FOLLOW ITS
OWN POLICIES
COMPANY’S “LEGITIMATE
BUSINESS EXPLANATION” FOR
CHOOSING YOUNGER WORKERS
WAS “SUBJECTIVE”
28
Guz
CALIFORNIA COURT HELD THAT
INFERENCE OF INTENTIONAL
DISCRIMINATION CANNOT BE
DRAWN SOLELY FROM EVIDENCE
THAT EMPLOYER LIED ABOUT ITS
REASONS: EVIDENCE OF
DISCRIMINATION REQUIRED
29
Guz
IN ANALYZING THE AGE
DISCRIMINATION CLAIM,
CALIFORNIA SUPREME
COURT FOCUSED ON
NUMBERS AND AGES OF
REMAINING PEOPLE
30
Guz
COURT FOUND THAT
PLAINTIFF’S STATISTICS
“MANIFESTLY LACKS
SUFFICIENT PROBATIVE FORCE”
IN LIGHT OF BECHTEL’S
“STRONG AND UNREBUTTED
SHOWING THAT IT TOOK ITS
ACTIONS FOR NONDISCRIMINATORY REASONS”
31
RE STATISTICAL EVIDENCE:
• Employee pool affected by lay-offs "TOO
MINISCULE" TO DEMONSTRATE A
STATISTICALLY RELIABLE PATTERN OF
DISCRIMINATION
• Employees with DIFFERENT JOB SKILLS
COULD NOT BE INCLUDED IN SAME
STATISTICAL POOL
• Since retained employees had different skills than
plaintiff, could not make statistical conclusion
32
GUZ
• BECAUSE EMPLOYER DID VIOLATE
ITS OWN LAY-OFF POLICY,
PLAINTIFF WAS PERMITTED TO
PROCEED ON BREACH OF
CONTRACT WRONGFUL
TERMINATION CLAIM
33
Guz
HOWEVER, COURT STATED THAT
ABSENT OTHER EVIDENCE,
LONGEVITY, RAISES AND
PROMOTIONS ARE THEIR OWN
REWARDS: NOT A CONTRACTUAL
GUARANTEE OF FUTURE
EMPLOYMENT SECURITY
34
DISABILITY
DISCRIMINATION NOW A
MAJOR FOCUS IN
EMPLOYMENT CLAIMS,
AND CALIFORNIA LAW
NOW TOUGHER THAN ADA
35
EXAMPLES OF PROTECTED
DISABILITIES :
Post-traumatic stress disorder (bank
robbery at work)
Jensen v. Wells Fargo
Compulsive Obsessive Disorder
(obsessive rituals re bathing and
grooming)
Humphrey v. Memorial Hospitals
36
ACCOMMODATION
REQUIREMENTS NOW
SUBSTANTIAL AND
ONGOING
37
EMPLOYEE HAS OBLIGATION TO
REQUEST ACCOMMODATION, THUS
INITIATING THE INTERACTIVE
PROCESS, BUT EMPLOYER THAT
KNOWS OF NEED FOR
ACCOMMODATION HAS OBLIGATION
TO OFFER IT
Downey v. Crowley Marine Services
Spitzer v. The Good Guys
(quoting EEOC Guidelines)
38
Lower Performance Evaluations
Continued Medical Leaves
Observation That Previous
Accommodations Do Not Resolve Problem
May Require Employer To Inquire About
Need for (Further) Accommodation
39
ACCOMMODATION REQUIRES
MORE THAN TREATING
DISABLED EMPLOYEE LIKE
ANY OTHER JOB APPLICANT
OR JOB BIDDER-AFFIRMATIVE
ACTION REQUIRED
Spitzer v. Good Guys
40
ABSENT UNDUE HARDSHIP,
JOB RESTRUCTURING
REQUIRED AS AN INITIAL
ACCOMMODATION
Change in Hours
Part-time position
Working from home
41
WHERE JOB RESTRUCTURING
OR OTHER ACCOMMODATION
NOT EFFECTIVE, JOB
REASSIGNMENT REQUIRED
ABSENT UNDUE HARDSHIP
42
REASSIGNMENT NOT REQUIRED WHERE:
• No Position Exists
• No Vacancy in an Existing Position for Which the
Disabled Employee Qualifies
• Reassignment Would Involve Promotion of
Disabled Employee
• Reassignment Would Violate Rights of Another
Employee under Collective Bargaining Agreement
Spitzer v. Good Guys, Citing Federal Cases
43
BUT ABSENT COLLECTIVE
BARGAINING AGREEMENT OR
OTHER “UNDUE HARDSHIP”,
REASSIGNMENT TO APPROPRIATE
VACANT POSITION REQUIRED
EVEN IF EMPLOYER MUST
DEVIATE FROM ITS POLICIES
44
Federal Law
Barnett v. U.S. Air
• Plaintiff protected from policy allowing
senior employees to bump
Willis v. Pacific Maritime Assn.
• Seniority system embodied in collective
bargaining agreement should not be
interfered with
45
• ACCORDING TO NINTH CIRCUIT,
DANGER TO ANOTHER EMPLOYEE
DOES NOT CONSTITUTE UNDUE
HARDSHIP UNDER ADA WITH
RESPECT TO ASSIGNMENTS
Echazabal v. Chevron USA
• CONFLICT WITH CALIFORNIA
LAW?
46
SEXUAL HARASSMENT
DISCHARGE OF OFFENDER NOT
REQUIRED IF LESSER REMEDY IS
EFFECTIVE
Star v. West
47
SEX DISCRIMINATION
• EEOC finds exclusion of prescription
contraceptives discrimination on basis of
sex and pregnancy, where plan covered
other drugs designed to prevent
development of medical conditions
48
RETALIATION
• NINTH CIRCUIT HOLDS FAILURE TO
PREVENT CO-WORKERS’ “SHUNNING”
OF COMPLAINING EMPLOYEE CAN
CREATE EMPLOYER LIABILITY FOR
HARASSMENT
Fielder v. United Airlines
• CALIFORNIA COURTS SAY EMPLOYER
NOT RESPONSIBLE
Thomas v. Department of Corrections
49
STATUTE OF LIMITATIONS
• NINTH CIRCUIT HOLDS THAT ANY
ACT WITHIN LIMITATIONS PERIOD
CAN “REVIVE” PRIOR ACTS UNDER
CONTINUING VIOLATION THEORY
Fielder v. United Airlines
Morgan v. National Railroad
O’Loghlin v. County of Orange
50
COVENANTS NOT TO
COMPETE
• DISCHARGE OF EMPLOYEE WHO
REFUSES TO SIGN UNLAWFUL NONCOMPETE COVENANT (NOT
NECESSARY TO PROTECT TRADE
SECRETS) VIOLATES PUBLIC
POLICY
D’Sa v. Playhut
51
WITNESSES AT EMPLOYEE
INTERVIEWS
• NLRB RULED, IN A NON-UNION
SETTING, THAT EMPLOYEE HAS
RIGHT TO A CO-WORKER WITNESS
IN AN INVESTIGATORY INTERVIEW
THAT EMPLOYEE REASONABLY
BELIEVES COULD LEAD TO
DISCIPLINE
Epilepsy Foundation
52
WAGE CLAIMS
• WAGE CLAIMS (e.g. Improper classification or
overtime issues) MAY BE ASSERTED UNDER
UNFAIR COMPETION LAW—BUSINESS &
PROFESSIONS CODE § 17200
– Restitution may be sought even by nonaffected claimant (i.e. no “standing”) without
class action certification
– Claims for disgorgement of profits or “fluid
recovery” require class action certification
53
CYNTHIA E. GITT
54