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Institute For Corporate Counsel

RECENT DEVELOPMENTS IN EMPLOYMENT LAW

Cynthia E. Gitt

Institute For Corporate Counsel

RECENT DEVELOPMENTS IN EMPLOYMENT LAW

Cynthia E. Gitt

New York

Washington D.C.

Boston

Los Angeles

San Francisco

Dallas

Miami

Newark

Stamford

Baltimore

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20002000IN 2000, THE CALIFORNIA SUPREME COURT CHOSE ITS OWN PATH

EMPLOYERS WITH REMOVAL OPTIONS HAVE A DIFFICULT CHOICE

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ARMENDARIZ v. FOUNDATION HEALTH SERVICES

ARMENDARIZ v. FOUNDATION HEALTH SERVICES

• UNDER STATE LAW, MANDATORY AGREEMENTS THAT ENCOMPASS STATUTORY DISCRIMINATION CLAIMS WILL BE ENFORCED IF SPECIFIC STANDARDS ARE MET

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THE CALIFORNIA SUPREME COURT SPECIFICALLY ANALYZED AND REJECTED, AT LEAST AS TO STATE CLAIMS, THE CONTRARY CONCLUSION OF THE NINTH CIRCUIT IN DUFFIELD

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IN ORDER TO BE ENFORCABLE (CONSCIONABLE) AS TO STATUTORY/DISCRIMNATION CLAIMS, THE ARBITRATION AGREEMENT MUST DO ALL OF THE FOLLOWING:

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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

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REQUIREMENTS NOT ADDRESSED IN ARBITRATION

AGREEMENT MAY BE IMPLIED INTO THE

AGREEMENT

REQUIREMENTS NOT ADDRESSED IN ARBITRATION

AGREEMENT MAY BE IMPLIED INTO THE

AGREEMENT

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IF AGREEMENT CONTAINS UNCONSCIONABLE TERMS, THE COURT MUST DECIDE WHETHER TO

EXCISE THE OFFENSIVE PROVISIONS OR INVALIDATE THE CONTRACT

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?

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FOUNDATION HEALTH PLAN’S ARBITRATION AGREEMENT WAS FOUND

UNENFORCABLE:

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

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AFTER ARMENDARIZ, MOST COURTS TRY TO ENFORCE

AGREEMENTS THAT DO NOT LIMIT REMEDIES OR REQUIRE

EMPLOYEES TO PAY SUBSTANTIAL COSTS

AFTER ARMENDARIZ, MOST COURTS TRY TO ENFORCE

AGREEMENTS THAT DO NOT LIMIT REMEDIES OR REQUIRE

EMPLOYEES TO PAY SUBSTANTIAL COSTS

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EXAMPLES OF UNCONSCIONABLE

PROVISIONS:

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 Homes)

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COURTS OF APPEAL HAVE APPROVED JAMS AND AAA

EMPLOYMENT DISPUTE RULES AS PROVIDING

NEUTRALITY AND FAIR DISCOVERY

COURTS OF APPEAL HAVE APPROVED JAMS AND AAA

EMPLOYMENT DISPUTE RULES AS PROVIDING

NEUTRALITY AND FAIR DISCOVERY

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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)

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)

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UNITED STATES SUPREME COURT WILL HEAR NINTH CIRCUIT CASE, WHICH FOUND EMPLOYMENT ARBITRATION AGREEMENTS NOT SUBJECT TO THE FAA

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

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ARBITRATION vs. REMOVAL TO FEDERAL COURT:

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

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SECOND DISTRICT COURT OF APPEAL RULED THAT ACCEPTANCE OF ARBITRATION AGREEMENT IS IMPLIED BY CONTINUED EMPLOYMENT Craig v. Brown & Root)

SECOND DISTRICT COURT OF APPEAL RULED THAT ACCEPTANCE OF ARBITRATION AGREEMENT IS IMPLIED BY CONTINUED EMPLOYMENT Craig v. Brown & Root)

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CALIFORNIA SUPREME COURT PERMITS

EMPLOYERS, TO CHANGE, WITH ADEQUATE NOTICE,

“UNILATERALLY ADOPTED” EMPLOYMENT POLICIES OF

INDEFINITE DURATION Asmus v. Pacific Bell

CALIFORNIA SUPREME COURT PERMITS

EMPLOYERS, TO CHANGE, WITH ADEQUATE NOTICE,

“UNILATERALLY ADOPTED” EMPLOYMENT POLICIES OF

INDEFINITE DURATION Asmus v. Pacific Bell

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SIX MONTHS ADEQUATE NOTICE TO RESCIND

EMPLOYMENT SECURITY POLICY FOR MANAGERS

SIX MONTHS ADEQUATE NOTICE TO RESCIND

EMPLOYMENT SECURITY POLICY FOR MANAGERS

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CAN EMPLOYERS GET SUMMARY JUDGMENT

IN DISCRIMINATION CASES?

CAN EMPLOYERS GET SUMMARY JUDGMENT

IN DISCRIMINATION CASES?

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• 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

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Reaffirms analysis of St. Mary’s Honor Society v. Hicks that pretext may itself support

inference of discrimination

Reaffirms analysis of St. Mary’s Honor Society v. Hicks that pretext may itself support

inference of discrimination

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ReevesReeves

ONCE AGAIN,

BAD FACTS MAKE BAD LAW

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SUPREME COURT MINIMIZES SIGNIFICANCE OF AGE OF DECISION-

MAKERS AND OTHER MANAGERS, AND FOCUSES ON “AGEIST

REMARKS” OF EMPLOYEE’S SUPERVISOR

SUPREME COURT MINIMIZES SIGNIFICANCE OF AGE OF DECISION-

MAKERS AND OTHER MANAGERS, AND FOCUSES ON “AGEIST

REMARKS” OF EMPLOYEE’S SUPERVISOR

ReevesReeves

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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)

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)

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[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.”

[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.”

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FACTORS FOR EVALUATING JUDGMENT AS A MATTER OF LAW:

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

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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.

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•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”

•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”

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CALIFORNIA COURT HELD THAT INFERENCE OF INTENTIONAL DISCRIMINATION CANNOT BE DRAWN SOLELY FROM EVIDENCE THAT EMPLOYER LIED ABOUT ITS REASONS: EVIDENCE OF DISCRIMINATION REQUIRED

CALIFORNIA COURT HELD THAT INFERENCE OF INTENTIONAL DISCRIMINATION CANNOT BE DRAWN SOLELY FROM EVIDENCE THAT EMPLOYER LIED ABOUT ITS REASONS: EVIDENCE OF DISCRIMINATION REQUIRED

GuzGuz

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IN ANALYZING THE AGE DISCRIMINATION CLAIM,

CALIFORNIA SUPREME COURT FOCUSED ON

NUMBERS AND AGES OF REMAINING PEOPLE

IN ANALYZING THE AGE DISCRIMINATION CLAIM,

CALIFORNIA SUPREME COURT FOCUSED ON

NUMBERS AND AGES OF REMAINING PEOPLE

GuzGuz

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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 NON-DISCRIMINATORY REASONS”

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 NON-DISCRIMINATORY REASONS”

GuzGuz

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RE STATISTICAL EVIDENCE: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

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GUZGUZ

• BECAUSE EMPLOYER DID VIOLATE ITS OWN LAY-OFF POLICY, PLAINTIFF WAS PERMITTED TO PROCEED ON BREACH OF CONTRACT WRONGFUL TERMINATION CLAIM

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HOWEVER, COURT STATED THAT ABSENT OTHER EVIDENCE, LONGEVITY, RAISES AND PROMOTIONS ARE THEIR OWN REWARDS: NOT A CONTRACTUAL GUARANTEE OF FUTURE EMPLOYMENT SECURITY

GuzGuz

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DISABILITY DISCRIMINATION NOW A

MAJOR FOCUS IN EMPLOYMENT CLAIMS, AND CALIFORNIA LAW

NOW TOUGHER THAN ADA

DISABILITY DISCRIMINATION NOW A

MAJOR FOCUS IN EMPLOYMENT CLAIMS, AND CALIFORNIA LAW

NOW TOUGHER THAN ADA

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EXAMPLES OF PROTECTED DISABILITIES :

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

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ACCOMMODATION REQUIREMENTS NOW

SUBSTANTIAL AND ONGOING

ACCOMMODATION REQUIREMENTS NOW

SUBSTANTIAL AND ONGOING

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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)

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Lower Performance Evaluations

Continued Medical Leaves

Observation That Previous Accommodations Do Not Resolve Problem

May Require Employer To Inquire About Need for (Further) Accommodation

Lower Performance Evaluations

Continued Medical Leaves

Observation That Previous Accommodations Do Not Resolve Problem

May Require Employer To Inquire About Need for (Further) Accommodation

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ACCOMMODATION REQUIRES MORE THAN TREATING

DISABLED EMPLOYEE LIKE ANY OTHER JOB APPLICANT

OR JOB BIDDER-AFFIRMATIVE ACTION REQUIRED

Spitzer v. Good Guys

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ABSENT UNDUE HARDSHIP, JOB RESTRUCTURING

REQUIRED AS AN INITIAL ACCOMMODATION

Change in HoursPart-time positionWorking from home

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WHERE JOB RESTRUCTURING OR OTHER ACCOMMODATION

NOT EFFECTIVE, JOB REASSIGNMENT REQUIRED ABSENT UNDUE HARDSHIP

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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

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BUT ABSENT COLLECTIVE BARGAINING AGREEMENT OR OTHER “UNDUE HARDSHIP”, REASSIGNMENT TO APPROPRIATE VACANT POSITION REQUIRED EVEN IF EMPLOYER MUST DEVIATE FROM ITS POLICIES

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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

Federal LawFederal Law

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• 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?

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SEXUAL HARASSMENTSEXUAL HARASSMENT

DISCHARGE OF OFFENDER NOT REQUIRED IF LESSER REMEDY IS EFFECTIVE

Star v. West

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SEX DISCRIMINATIONSEX 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

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RETALIATIONRETALIATION

• 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

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STATUTE OF LIMITATIONSSTATUTE 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

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COVENANTS NOT TO COMPETE

COVENANTS NOT TO COMPETE

• DISCHARGE OF EMPLOYEE WHO REFUSES TO SIGN UNLAWFUL NON-COMPETE COVENANT (NOT NECESSARY TO PROTECT TRADE SECRETS) VIOLATES PUBLIC POLICY

D’Sa v. Playhut

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WITNESSES AT EMPLOYEE INTERVIEWS

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

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WAGE CLAIMS 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 non-

affected claimant (i.e. no “standing”) without class action certification

– Claims for disgorgement of profits or “fluid recovery” require class action certification

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CYNTHIA E. GITT