California Employment Law : Employment Lawyer & Attorney : Fox Rothschild Law Firm : San Francisco, Oakland, Los Angeles, San Diego

Next time someone tells you that "No good deed goes unpunished," tell them to stop being so cynical.  That's only true about 99.97% of the time.

For example, an employer offered severance benefits to a terminating employee in exchange for a release of claims. The employee turns down the offer and sues.  Can he then use the proposed release agreement as evidence that the employer believed the termination was improper?

Earlier this week, a state court of appeal panel in the Sixth Appellate District (based in San Jose) answered: "No."  A rule of evidence (both state and federal) says that an offer to settle can't be used as evidence of liability.  The employee argued that the rule only applied to pre-existing disputes, but the court disagreed.

Good thing.  Any holding that gave employers disincentive to offer severance benefits would be bad for employers and employees alike.  The case is Mangano v. Verity (pdf). 

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Like many management-side employment lawyers, I field a lot of questions from clients wondering what to do with employees on leaves of absence.  Questions like:

The Family Medical Leave Act and California Family Rights Act both require employers to grant employees 12 weeks of unpaid leave.  So if the employee can't come back after 12 weeks, I can replace them, right? 

Wrong.  At least the part about being able to replace them.  In addition to FMLA and CFRA, there are requirements under the Americans With Disabilities Act and California Fair Employment and Housing Act that you provide reasonable accommodations.  Under the FEHA (specifically, Cal. Gov't Code sec. 12926(n)(2)), it is unlawful “for an employer…to fail to make reasonable accommodation for the known physical or mental disability of an…employee.”  Since an unpaid leave of absence is a form of reasonable accommodation, you have to provide it unless you can show that doing so is an undue hardship.

So I have to provide unpaid leave.  I've done that.  The employee asked for a month off and we said "OK."  Than he asked for a month extension, then another month, then another month and we granted all those requests.  Now he wants another two months.  Now we can replace him, right?

Not necessarily.  You still have to show an undue hardship.  And keep in mind, undue hardship doesn't mean expense to the employer.  These laws expect the employer to shoulder the costs and burdens of accommodating disabled employees.  If this is someone whose job can be covered by a temp or by restructuring existing employees, you won't have much luck showing that a further unpaid leave is so onerous that you can terminate.

But I thought I only had to provide a reasonable accommodation if it enabled the employee to perform the essential functions of the job.  If this person can't work at all for another two months, I don't have to provide an accommodation, right?

Wrong.  The decision that a leave of absence could be a form of accommodation kind of swallowed up the "essential functions" requirement.  The manager asks, "What type of accommodation would enable you to perform the essential functions of this job?" and the employee responds, "Letting me stay home for a few months should do the trick."  But there are limits.  The leave must be finite and it must be likely that the employee, at the end of the leave, could perform his or her duties.

What does that mean?

It means, first, that you don't have to grant an indefinite leave of absence.  Since most employees don't ask for indefinite leaves of absence, that doesn't help much.  They ask for finite leaves and, often after that, for a series of extensions.  Second, you don't have to grant leave to an employee who isn't likely to be able to perform the essential functions after the leave is over.  That doesn't help much either because, in most cases, you won't know what the employee's condition will be at the end.

Am I really supposed to run a business according to these rules?

Yes.

Don't you think this mock question and answer format is -- I don't know - hokey?

Yes.  I'll stop now.

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How can you not be impressed with jury instructions?  They take decades worth of law and distill it down to simple statements that jurors can understand.  Or at least that's the idea. 

But first you have to persuade the court to give the correct instructions.  Last week, the appellate court decided Harris v. City of Santa Monica (pdf), which involved a claim of instructional error.  The employer, a municipal bus company accused of firing a driver because she was pregnant, wanted BAJI No. 12.26, a mixed motive instruction that includes the statement:

If you find that the employer's action, which is the subject of the plaintiff's claim, was actually motivated by both discriminatory and non-discriminatory reasons, the employer is not liable if it can establish by a preponderance of the evidence that its legitimate reason, standing alone, would have induced it to make the same decision.

Fifty-four words, seven or so clauses, all in one sentence -- what could be clearer? 

But the court declined to give that instruction.  As any California trial lawyer knows, the CACI instructions (pdf) were intended to replace BAJI.  And this trial court decided to rely instead on CACI 2500, which generally explains disparate treatment discrimination, including the requirement  "[t]hat plaintiff's [protected category (here pregnancy)] was a motivating reason for the discharge."

While the two instructions overlapped, "the overlap was incomplete . . . because the instructions as given did not provide the city with a complete defense if the jury found the city would have terminated Harris anyway for performance reasons even if she had not been pregnant."  So even if there was no CACI instruction on mixed motives, the appellate court ruled that the the employer was entitled to an instruction informing the jury that the employer could not be liable if it would have fired plaintiff regardless of whether she was pregnant.  As a result, a $178,000 verdict for plaintiff and an award of $400,000 in attorneys' fees were set aside and a new trial ordered. 

Pay attention to those instructions!

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The EEOC has issued an advisory to employers regarding how to deal with the Swine Flu or H1N1 virus.  We are working on an analysis of what specific issues California employers must be aware of.  Remember, there are significant differences between the Americans with Disabilities Act ("ADA") and the Fair Employment and Housing Act ("FEHA").

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Many employers rely on arbitration agreements with their employees to control litigation costs.  But the right to require arbitration is under attack from various directions.  Here's a recent one.

On October 20, 2009, a California appellate court issued an opinion that left the door wide open for challenging binding arbitration awards.  In Burlage v. Superior Court, the dispute involved purchase of a home.  After the close of escrow, the buyers learned that part of what they were told was their property actually belonged to a neighbor.  They sued the seller, claiming he fraudulently failed to disclose the encroachments.  The arbitrator ruled that damages must be determined as of the close of escrow and excluded evidence of subsequent actions that lessened (practically eliminated) plaintiff's damages.  The trial court vacated the award and the buyers took a writ.

In a 2-1 decision, the appellate court affirmed the decision to vacate the award.  It based its decision on California Code of Civil Procedure section 1286.2 which allows a court to vacate an arbitration award where a party's rights "were substantially prejudiced . . . by a refusal of the aribtrator[] to hear evidence material to the controversy . . . ."  Because the arbitrator did not admit evidence of damages from a period of time he concluded was irrelevant, the court concluded that the award could be vacated.

The dissent characterized the arbitrator's decision as one as to when damages should be determined and explained that the law does not permit courts to overturn arbitration awards just because they would reach a different conclusion on a legal issue.  It noted that many legal rulings would necessarily result in determinations as to what evidence was or was not material to the controversy. 

The majority opinion also raised the question whether arbitrators, to avoid having their decisions vacated, might be more inclined to admit evidence.  It concluded, however, that that was an overly cynical view and that the decision would not impact evidentiary rulings.  It remains to be seen whether a little healthy cynicism might be justified here.

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Most employers and managers understand what sexual harassment is.  In California, they've gone through the mandatory training (pdf).  So they know about hostile work enviroment and quid pro quo harassment.  ("Quid pro quo" being loosely translated as "No I won't sleep with you to save my job.  You disgust me.  Now go away so I can call my lawyer.")

But California's requirements for a sexual harassment investigation still seem to be a source of confusion.  The October 9, 2009 appellate court decision in Nazir v. United Airlines (pdf) highlights this issue.  (Faithful readers will note that Alex and I have both blogged about different aspects of this case already.  But there's a lot in there and you should thank us for giving you the highlights so you don't have to read through the 54-page opinion yourself.) 

In Nazir, the court criticized United for:

• Failing to follow its own policies -- The policies are there for a reason.  Use them.  Any irregularities allow plaintiffs and their attorneys to raise doubts as to whether this was a good faith investigation or a cover-up.
• Delays in responding to complaints -- Delays make it too easy for a plaintiff to argue that the employer doesn't consider protecting employees from harassment to be a priority.
• Failing to interview witnesses identified by the accused -- To get any use out of an investigation, it needs to be thorough.

Other important rules for investigating harassment include:

• Picking a qualified investigator -- You want someone who's far enough from the situation to be impartial and who has experience investigating these types of issues.  It also needs to be someone who understands how to question witnesses.  (Now the cynics out there may be thinking that I'm just saying that so people hire us to do their investigations.  To that I respond: 1)  If people follow these steps, there will be less harassment litigation, and therefore less work for me and my ilk; and 2) It's not as if the goal of this blog is to repel clients.)   
• Documenting every step -- The most critical documentation will be written statements from key witnesses.  It minimizes the opportunity people have to change their stories.  And save every scrap of documentation.  If you dispose of anything expect to be questioned about what you were trying to hide. 
• Evaluate the evidence objectively -- The person complaining doesn't have to prove his or her case beyond a reasonable doubt.  Even if it's the proverbial "he said/she said," you need to decide who is more credible.
• Take appropriate remedial action -- If you conclude there was harassment, take actions reasonably calculated to stop it. 
• Keep the complaining party informed -- Let them know the status of the investigation, the conclusions, and the steps being taken.  Then when it's all over, follow up with the complaining party periodically to make sure that there have been no further issues.
• Don't add a retaliation claim to your problems -- Do nothing to the complaining party that could be viewed as punitive.  This includes transfers, reductions in hours, or anything else that penalizes or isolates them.

A prompt, thorough investigation can go along way to preventing a harassment claim.  A shoddy investigation can have the opposite effect.  As I've said before, harassment litigation is less about what the alleged harasser did than about how the company responded to the situation.  

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Caveat emptor is the rule of thumb in any marketplace. But nowhere is this bit of wisdom more true than on Craigslist. You can get pretty much anything through Craig. And that's the problem. One issue we have noticed is the rise of internship offerings. These jobs promise lots of intangibles:

"You are serious about pursuing a career in PR – that’s why you seek an internship. If you give us your all, we’ll guarantee you one of the most exciting experiences of your college years. We’ll also give you support to speed your post-college success in a number of ways, ranging from experience and skills development through introductions, references and referrals."

But the Division of Labor Standards Enforcement (DLSE) says not so much. It has developed the following internship guidelines. And they require that in order to be exempt from the wage and hour requirements of the IWC Orders, the intern’s training must be an essential part of an established course of an accredited school or of an institution approved by a public agency to provide training for licensure or to qualify for a skilled vocation or profession. Also, the program may primarily benefit the employer, a regular employee may not be displaced by the trainee, and the training must be supervised b y the school or a disinterested agency. Otherwise, any time spent interning (even time spent giving less than one's all) will be considered “hours worked” notwithstanding any ancillary excitement, experience, or introductions that may be provided. 

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Alex already wrote about some procedural issues in this case.  But there's a lot here to blog about.  Here's my list of some of the lessons from this October 9, 2009 California Appellate Court decision(pdf):

Lesson No. 1:  Appellate courts can be hostile to summary judgment motions in employment litigation.  The court here went so far to say that summary judgment is rarely appropriate in employment cases.  It expressed concern that the procedure was being abused in employment litigation, "especially by deep pocket defendants to overwhelm less well-funded litigants." How's that for a generalization?  I don't know the circumstances that compelled these attorneys to file 1056 pages of  moving papers and 1150 pages of reply papers.  But that's not standard operating procedure for all defense counsel.  Plenty of us realize that the way to win these motions is to simplify the issues, not complicate them.

          Sub-Lesson No. 1(a):  If the court uses the adjective "deep pocket" in a case where you're the defendant, count on those pockets getting lighter before the day is done.

Lesson No. 2:  If in the second paragraph of the opinion, the court says that your motion is "the poster child for such criticism" and "may well be the most oppressive motion ever presented to a superior court," you're probably not going to like what they say in the other 52 pages. 

Lesson No. 3:  To win an employment case for the defense you need to succeed at multiple levels.  The employer here got a favorable ruling from the DFEH and then won on summary judgment.  Things were probably looking pretty bright until the appellate court issued this scathing decision.

Lesson No. 4:  It's another bad sign for the employer defendant when the court, in describing the company's response to the harassment, puts "investigation" in quotes.  Employment law cases are less about what happened to the plaintiff than how the company responded to the situation.  Some of the missteps the court railed against here were United failing to follow its own policies, delaying in addressing the issues, and not interviewing witnesses thought to have relevant information.  I don't think many employers understand the detailed requirements California courts impose on investigations of complaints of harassment and similar misconduct.  Maybe that will be the topic of a future blog entry.

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Employment Law360 reported yesterday on Fullbright & Jaworski's 2009 Litigation Trends Survey.  One of the survey's conclusions was that: "For the sixth consecutive year, labor and employment disputes topped the list of legal worries for U.S. corporate counsel . . . ."  

With juries becoming increasingly hostile to corporate defendants, Congress eager to pass more employee-friendly legislation, and more potential plaintiffs unemployed than at any point in recent memory, don't expect that to change any time soon.  We can only hope that those in-house attorneys take some slight comfort knowing that their outside counsel are lying awake at night, too. 

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