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Yesterday a California Court of Appeal issued its decision in Sanchez v. Swissport, Inc., addressing whether an employee fired after exhausting her 16 weeks of pregnancy disability leave could assert valid claims against the employer for pregnancy discrimination and failure to accommodate a disability.  The court said yes. 

In Sanchez, the plaintiff employee only worked for Swissport for about a year and one-half when she learned she was pregnant and that she had a high-risk pregnancy requiring bed rest.  She informed her employer that she needed a leave of absence from February through at least her due date in October.  Her employer provided her with the full 16 weeks of pregnancy disability leave required under California's pregnancy disability leave law.  The employer also allowed her to use an additional three weeks of accrued vacation, bringing the employee's total leave to 19 weeks.  The employee was unable to return to work at the end of that 19 weeks, as it was only July and she was not due to give birth until October.  Swissport terminated her employment.  Can you guess what happened next? 

You guessed it.  The employee sued.  Swissport promptly moved to dismiss the case, arguing that because it provided the maximum leave (16 weeks) required for pregnancy disability in California, the employee's claims for pregnancy discrimination, gender discrimation, and failure to accommodate a disability were invalid as a matter of law.  The trial court agreed and threw out the case.  Not so fast, though...the employee successfully appealed.

In yesterday's decision, the California Court of Appeal held that the trial court should not have thrown out the case at the motion to dismiss stage.  The court held that an employer's providing of the 16 weeks of leave for pregnancy disability does not automatically shield the employer from claims for failure to accommodate a disability or for gender/pregnancy discrimination under FEHA.  The court reasoned that an extended leave of absence (beyond 16 weeks of pregnancy disability leave) may be a "reasonable accommodation" for a disability required under FEHA, and that Swissport may have been required to provide the additional leave time absent a showing of undue hardship.  The case was, therefore, remanded to the trial court level so that the employee's FEHA claims could be litigated.

The Sanchez v. Swissport case (available here) is a good reminder for employers that simply complying with maximum leave entitlements provided under laws such as California's pregnancy disability leave law and/or FMLA/CFRA does not necessarily satisfy an employer's obligation to a disabled employee.  Employers who terminate disabled employees simply because they have exhausted statutory leave entitlements are likely to face claims for failure to accommodate and disability discrimination.  Employers should always engage in an interactive process with the employee at or near the expiration of the leave to assess how much additional leave time (or other accommodations) the employee needs and determine whether additional leave can be provided as a reasonable accommodation and without undue hardship to the employer.

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Today the California Supreme Court issued its decision in Harris v. Santa Monica, addressing the “mixed motive” defense to discrimination claims under FEHA.  This case addresses whether a discrimination plaintiff suing under California law must prove that a discriminatory motive was (1) the "but for" cause for the adverse employment decision, (2) a lesser standard, that the discriminatory motive was a motivating factor behind the decision, even if not the dispositive factor, or (3) something in between.  The California Supreme Court went with  "something in between."  In short, the Court held that in mixed motive cases, if an employee proves that an employment action was substantially motivated by discrimination (but also motivated in part by legitimate, non-discriminatory reasons), the burden shifts to the employer to prove that it would have made the same decision for legitimate, non-discriminatory reasons.  If the employer succeeds in proving this, then the employer wins, right?  Not so fast.  The Court today held that if the employer proves that it would have made the same decision for legitimate reasons, the employee may not recover back pay, reinstatement, or emotional distress damages.  However, the Court held that the employee may still be entitled to declaratory relief (a court declaration that the employer engaged in unlawful discrimination), injunctive relief (a court order requiring the employer to refrain from similar acts of discrimination in the future) and—the real kicker—attorneys’ fees.

In the Harris case, the plaintiff-employee was a bus driver for the City of Santa Monica.  Harris had a less than stellar performance record, to put it nicely.  Shortly into her initial 40-day training period, she had an accident determined to be her fault and which caused minor damage to the bus.  She then had a second at-fault accident within her first three months and while still a probationary employee.  In addition to these accidents, within the first few months of her employment (also while she was still a probationary employee) she reported late to her shift twice and failed to give the dispatcher at least one hour’s notice as required by policy.  Applicable policies clearly indicated that these circumstances warranted termination of employment.  Indeed, following these incidents, the transit services manager and the assistant director concluded that Harris did not meet the standards for continued employment.  However, prior to any termination decision actually being made and communicated to Harris, Harris had a chance encounter with her immediate supervisor (not the transit manager or assistant director), who noticed Harris’ uniform shirt sloppily hanging loose and he told her to tuck it in.  At that time, Harris informed the supervisor that she was pregnant.  Harris claims her supervisor looked displeased at the news.  He asked her to get a doctor’s note clearing her to continue to work, which she did.  A few days later, Harris’ supervisor was called to a meeting at which time he was given a list of probationary employees who were not meeting the performance standards for continued employment.  Harris was on the list.  Her employment was then terminated.

Harris sued for pregnancy discrimination, and the claim managed to survive summary judgment and get to trial.  At trial, the City requested that the jury be instructed on the “mixed motive” defense and, more specifically, that even if the jury concluded that pregnancy discrimination was a motivating factor in the termination decision (along with legitimate reasons), the City would not be liable if it proved that it would have terminated Harris for the legitimate business reasons even without pregnancy discrimination as a motivating factor.  The trial court refused to give this instruction to the jury.  The trial court instead instructed the jury that the City was liable if Harris proved simply that pregnancy discrimination was “a motivating factor” in the termination decision.   The jury thereafter concluded that discrimination was a motivating factor and awarded Harris about $150,000 for emotional distress and $25,000 for wage loss.  In addition, because a prevailing employee is entitled to recover attorneys’ fees incurred to successfully litigate a discrimination claim, the court awarded Harris some $400,000 in attorneys’ fees.

The City appealed, and the court of appeal reversed the judgment, holding that the trial court should have given the jury instruction requested by the City.  Harris then petitioned for review to the California Supreme Court, which granted review. 

Today the Supreme Court issued its decision, agreeing with the court of appeal in part.  The Court held that an employer is entitled to assert the mixed motive defense but that successful proof of the defense does not absolve the employer of all liability.  The Court reasoned that if an employee proves that discrimination was a substantial factor behind an adverse employment action, it would be contrary to public policy and the purpose of FEHA to allow the employer to escape all liability.  However, the Court held that where an employer proves that it would have made the same decision for legitimate business reasons irrespective of any partly discriminatory motive, the employee may not recover damages or reinstatement.  In such instances, though, the trial court could still award declaratory and/or injunctive relief against the employer and also award attorneys’ fees to the employee as the prevailing party. 

Given that the attorneys’ fees often exceed the damages awarded to a prevailing plaintiff in a discrimination case (such as was the case here), this still provides significant exposure to employers litigating this type of claim, even if successful in their defense.  To be clear, however, an employer will not be liable for declaratory relief, injunctive relief, or attorneys’ fees in a FEHA case unless the employee proves that discrimination was a “substantial” motivating factor behind the adverse employment action.  There is no bright line rule for what type of evidence will suffice, but the evidence of discriminatory motive must be substantial, not slight (e.g. a stray or isolated discriminatory remark likely would not be considered “substantial” evidence).  The full Harris decision is here.

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Yesterday a California court affirmed a summary judgment win for the employer on an employee's claims of gender discrimination, retaliation, and defamation.  The case, McGrory v. Applied Signal Technology, Inc., contains a lot of favorable language for employers litigating these types of claims in California courts, particularly in the context of seeking summary judgment on the claims.

McGrory was a male department manager who issued performance discipline to a subordinate female employee who was gay.  The female employee refused to accept the discipline and instead lodged a complaint with HR that the discipline was motivated by McGrory's discriminatory bias against lesbians.  The complaint prompted the company to retain an outside investigator to conduct an investigation.  The investigator later issued a report finding that McGrory did not discriminate against the female employee and that the female employee did have performance issues that needed to be addressed.  However, the investigation revealed that McGrory had engaged in inappropriate conduct in the workplace, including regularly making inappropriate sexual and racial/ethnic remarks in violation of the employer's policies.  The investigator also concluded that McGrory (and one other male employee who was interviewed during the investigation) was not truthful in responding to all of her questions during the interview and was not fully cooperative in the interview process.  Based on the investigation report, the employer terminated McGrory's employment.

McGrory sued for wrongful termination in violation of public policy, arguing that his termination was because he was male and that it was also against public policy for an employee to be terminated based on his participation in an investigation.  Finally, the employee alleged that he was defamed as a result of HR telling one or more employees that he was terminated for not cooperating with the investigation (McGrory disputed he was uncooperative and claimed this conclusion was false).

The trial court granted the employer's motion for summary judgment, finding that McGrory's claims had no legal merit.  McGrory appealed, but the appellate court agreed with the trial court's decision.

First, the court held that there was no evidence to support McGrory's claim that his termination was somehow motivated by the fact that he was a man.  There was no direct evidence of any gender bias on the part of the decisionmakers, and the fact that McGrory0 disagreed with the conclusions of the investigation report was not sufficient to establish a discriminatory motive.  The court reiterated the principle that discrimination cannot be proven simply by establishing that the employer's actions were unwise, unsound, or even incorrect.  The actions must be more than wrong; there must also be evidence that the actions were motivated by discriminatory intent.  McGrory had no such evidence.

Second, the court rejected McGrory's claim that his participation in the investigation was "protected activity" and that he should not have been terminated based on that particpation.  The court rationally explained that while it is true that California's anti-discrimination law, FEHA, protects participation in investigatory interviews, it does not protect dishonesty during an investigation or failure to fully cooperate in an investigation.  McGrory's termination was based in part on the employer's belief that McGrory was not truthful during the investigation and refused to provide certain information requested by the investigator.  This is not protected activity.

Finally, the court rejected McGrory's defamation claim.  In this regard, McGrory claimed that after he was terminated, HR told a co-worker that McGrory was terminated for not cooperating with the investigation.  McGrory claimed this was a false statement (because he cooperated) and that it defamed him.  The employer argued that it could not be liable for defamation because its statements were protected by the "common interest privilege."  The common interest privilege protects statements made in the employment context by one interested party to another, as long as those statements are not made "maliciously."  Malice generally means that the allegedly defamatory statement must have been motivated by hatred or ill will or with no reasonable grounds for believing the statement to be true. McGrory argued that there was no reasonable ground for the employer to believe that he failed to cooperate with the investigation.  The court held that this argument was not supported by the evidence and that the investigator (and hence, the employer who relied on the investigator's report) had grounds for believing McGrory was less than cooperative. The court explained that it did not really matter whether this conclusion was correct or fair. Thus, McGrory's defamation claim could not succeed.

The full text of this decision is available here.

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We recently posted about California's adoption of new pregnancy disability regulations, which took effect December 30, 2012.  On December 18, California further adopted general disability regulations governing accommodation requirements for non-pregnancy related disabilities.  The disability regulations took effect December 30, 2012 and are available here.  The new regulations are 23 pages in length and contain definitions of mental and physical disabilities, explain essential versus non-essential job functions, and provide detail on employer and employee responsibilities in engaging in the interactive process and providing reasonable accommodation.  The new regulations incorporate the broad disability definitions and standards set forth under the recent amendments to the federal ADA, making the analysis of whether an employee is disabled much more similar under California and federal law than it used to be.  In simplest terms, it is rather easy to qualify as "disabled" under California (and federal) law.  Thus, in disability discrimination cases, the pivotal liability analysis will focus on the employer's response to the disability, not whether the employee qualifies as disabled.  In short, almost any condition (save and except very minor conditions, such as a common cold or scrape) qualifies as a disability as long as it limits a major life activity in some way.  The California regulations make clear, like the recent amendments to the ADA, that mitigating measures (such as glasses or contact lenses) may not be considered when determining whether a condition limits a major life activity.  Additionally, where the major life activity of working is considered, a condition can be determined to limit an employee's ability to work even if the condition only limits the employee's performance of one particular job (as opposed to an entire class of jobs). 

While the new regulations are too lengthy to summarize in their entirety in this post, there are some interesting points worth noting.  First, the regulations contain a lot of discussion about considerations of transferring a disabled employee to a vacant alternative position as a reasonable accommodation.  This concept is not new in and of itself.  However, what is new is that the regulations expressly state that employers are required to give preference to disabled employees when filling a vacant position.  The only exception is that the employer is not required to ignore a bona fide seniority system.

The regulations also discuss the circumstances under which employers may require medical documentation to support a request for reasonable accommodation.  Interesting in this regard is that the regulations imply that an employer is not entitled to request medical documentation in every circumstance.  The regulations instead say that the employer may request medical documentation "when the need for reasonable accommodation is not obvious."  Furthermore, in situations where the employer seeks medical documentation, the employer must communicate its requests (whether initial or supplemental) through the employee (not directly to a medical provider).  California (unlike federal law) continues to disallow employers from seeking diagnosis information or any medical information not necessary to determine the need for reasonable accommodation.  Finally, where the employee needs reasonable accommodation for over a year, the employer may request further medical certification on a yearly basis.  The regulations do not allow requests for recertification at earlier or more frequent intervals. 

All California employers (in particular, their Human Resources or other personnel responsible for managing leave requests or accommodation requests) should review the new disability regulations to ensure that their practices comply with the standards set forth therein. 

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California's Governor has signed into law AB 1964, which modifies California's Fair Employment and Housing Act's provisions relating to employment discrimination based on one's religious beliefs.  FEHA has always prohibited discrimination against applicants and employees based on their religious beliefs, and has also required reasonable accommodation of employees' religious beliefs and observances, so this much is not new.  The new law makes clear that "religious beliefs" include religious dress practices and religious grooming practices, meaning that employers cannot discriminate against applicants or employees bases on these practices and must also reasonably accommodate such practices in the workplace.  According to the new law, “religious dress practice” shall be construed broadly to include the wearing or carrying of religious clothing, head or face coverings, jewelry, artifacts, and any other item that is part of the observance by an individual of his or her religious creed.  “Religious grooming practice” shall be construed broadly to include all forms of head, facial, and body hair that are part of the observance by an individual of his or her religious creed.  The new law further explains, in pertinent part, that it is an unlawful employment practice:

(l)  (1)  For an employer or other entity covered by this part to refuse to hire or employ a person or to refuse to select a person for a training program leading to employment or to bar or to discharge a person from employment or from a training program leading to employment, or to discriminate against a person in compensation or in terms, conditions, or privileges of employment because of a conflict between the person’s religious belief or observance and any employment requirement, unless the employer or other entity covered by this part demonstrates that it has explored any available reasonable alternative means of accommodating the religious belief or observance, including the possibilities of excusing the person from those duties that conflict with his or her religious belief or observance or permitting those duties to be performed at  another time or by another person, but is unable to reasonably accommodate the religious belief or observance without undue hardship, as defined in subdivision (t) of Section 12926, on the conduct of the business of the employer or other entity covered  by this part.  Religious belief or observance, as used in this section, includes, but is not limited to, observance of a Sabbath or other religious holy day or days, reasonable time necessary for travel prior and subsequent to a religious observance, and religious dress practice and religious grooming practice as described in subdivision (p) of Section 12926.  (2)  An accommodation of an individual’s religious dress practice or religious grooming practice is not reasonable if the accommodation requires segregation of the individual from other employees or the public.

While AB 1964's changes to FEHA arguably are intended simply to clarify existing law, the express modification of FEHA and highlighting of religious discrimination issues may lead to increased focus and scrutiny in this area and, thus, a greater likelihood of religious discrimination suits against employers.  The full text of AB 1964 is here.

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Exemplifying the principle that “bad facts made bad law,” a California court held this week that Domino’s Pizza may be liable for alleged sexual harassment by one of its franchisee’s employees.  The plaintiff in the case was a 16 year old employee who worked for a Domino’s franchise.  The plaintiff alleged that she was sexually assaulted and harassed by a restaurant manager employed by the franchise.  The plaintiff sued both the franchisee and Domino’s Pizza, as the franchisor.  The franchisee filed for bankruptcy, which left Domino’s as the only practical payor of any significant settlement or judgment in the case.  Domino’s moved for summary judgment, arguing that it could not be held liable for conduct by a franchise employee.  Domino’s presented evidence of its franchise agreement, which provided that franchisees were independent contractors and responsible for employment decisions and the like at their own franchise.  The trial court granted Domino’s motion, holding that Domino’s was not liable, as a matter of law, for conduct by a franchise employee because Domino’s was not the employer.  The plaintiff appealed.

The appellate court disagreed with the trial court and reversed the judgment in favor of Domino’s.  The appellate court held that the franchise agreement was not dispositive of the issue of whether Domino’s truly had an independent contractor relationship with its franchise.  The plaintiff had presented evidence suggesting that Domino’s exercised significant control over the local operations of the franchise, suggesting that the franchise may have been an agent of Domino’s as opposed to an independent contractor.  The plaintiff also presented evidence that a Domino’s area leader made recommendations for terminating certain franchise employees, including the supervisor accused of assault and harassment in this particular case.  Based on evidence suggesting a high level of control by Domino’s over franchise operations, the court held that there was a triable issue of fact as to whether Domino’s could be held liable for the conduct of the franchise employee.  As a result, the court held that the plaintiff’s claims could proceed against Domino’s. 

The case is Patterson v. Domino’s and the decision is here.

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In Ross v. Ragingwire, the California Supreme Court held that an employer may lawully terminate an employe (or refuse to hire an applicant) who tests positive for marijuana, even if the marijuana use if for lawful medical purposes under California law.  This week the Ninth Circuit held that the ADA similarly does not protect medical marijuana use.  In James v. City of Costa Mesa, the Ninth Circuit held that the ADA does not protect individuals who claim discrimination against them because of medical marijuana use.  The court reasoned that the ADA excludes from coverage disabilities based on illegal drug use, and that "illegality" is tied to federal, not state, law.  Because marijuana is illegal under federal law, medical marijuana use is not covered under the ADA, even if states such as California have legalized the medical use of marijuana.  Employers should note that while it is not unlawful to discriminate against an applicant or employee on the basis of their marijuana use (even if for medical reasons), it is still unlawful to discriminate against an applicant or employee for an underlying disability (for which the individual may be using the medical marijuana).  As such, employers should use caution in handling these situations to minimize risk and ensure they can demonstrate that any adverse employment decisions were based on knowledge of illegal marijuana use and not on knowledge of an underlying disability.  The James v. City of Costa Mesa opinion is here. 

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This week, the Equal Employment Opportunity Commission (EEOC) issued a ruling giving transgender individuals protections against discrimination in the workplace, concluding that "intentional discrimination against a transgender individual because that person is transgender is, by definition, discrimination 'based on...sex' and such discrimination...violates Title VII."  For California employers, discrimination against transgender employees and job applicants has been prohibited since 2004, when the Legislature passed the Gender Nondiscrimination Bill of 2003 and in so doing amended the Fair Employment and Housing Act to specifically include transgender people.  But California is in the minority of states, as only fifteen other states prohibit employment discrimination based on gender identity.  No federal court has held that Title VII's anti-discrimination provisions apply to transgender people, but the practical effect of the EEOC's ruling is transgender people are now protected by federal law and have legal recourse if they are denied a job or fired because they are transgender.

The ruling came as a result of a discrimination complaint filed by a transgender woman who was denied a job as a ballistics technician at the Walnut Creek, California laboratory of the federal Bureau of Alcohol, Tobacco, Firearms, and Explosives.  The applicant was a veteran and former police detective, and initially applied for the position as a male and was told that she was virtually guaranteed the job.  After she disclosed her gender transition in the middle of the hiring process, the applicant was told that funding for the position had been cut, and subsequently learned that someone else had been hired for the job.

Even though the complaint was brought against a federal agency, the EEOC's ruling applies to both public and private employers alike.  California employers should have already taken measures to ensure against discrimination, including discrimination against those who are transgender.  But given yesterday's decision, companies in all fifty states - including California employers with operations in other states - should take steps to prevent such discrimination.  For example, employers should make sure that "gender identity" is part of the existing company nondiscrimination and anti-harassment workplace policies, and strive to create a non-discriminatory environment in the workplace so as to avoid costly litigation.

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This week the Ninth Circuit held that where attendance is an essential function of the job (isn't it always?), an employer's enforcement of its attendance points policy as to a disabled employee does not constitute a failure to reasonably accommodate under the ADA.  In this particular case, the employee was a neonatal intensive care nurse who had an abominable attendance record due to a multitude of stated reasons, ranging from fibromyalgia to personal life issues.  Even though she worked part-time and only a couple of shifts per week, she was continually absent.  She also took a variety of leaves of absence, all accommodated by her employer.  The employer had an attendance policy that allowed up to five unplanned absences in a rolling 12 month period.  This employee regularly exceeded the limit and had a history of performance discipline for her unexcused absences.  The employer quite reasonably tried to work with the employee to save her, allowed several exceptions from the policy for her, and gave her numerous chances to improve her attendance and escape termination.  The employee nonetheless did not improve her attendance and admittedly continued to exceed the allowed unplanned absences under the attendance policy (she was even absent for a planned meeting to discuss her attendance).  She requested that her employer except her from the attendance policy and essentially allow her uncapped unplanned absences, apparently as a "reasonable accommodation" for some sort of disability.  The employer did not agree.  She was ultimately terminated (duh).  Not to be deterred, she filed a lawsuit claiming the employer violated her ADA rights by not excepting her from the attendance policy as a reasonable accommodation under the ADA.   

In the lawsuit, the employer did not dispute that the employee was disabled.  The dispute focused instead on whether the employer had a duty to except the employee from the attendance policy as a reasonable accommodation.  The trial court said no and granted the employer summary judgment.  The employee appealed to the Ninth Circuit, which agreed with the trial court.  The Ninth Circuit held that the employer had adequately established that regular attendance is an essential function of the position of a neonatal ICU nurse and that an employer is not required by the ADA to relieve a disabled employee from essential functions as an accommodation.  The case is Samper v. Providence St. Vincent and the decision is here. 

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State and federal lawmakers are growing increasingly concerned about how our economy is making it difficult for long term unemployed workers to get back into the workforce.  As a result, there is a movement to make being unemployed a new protected class.  With a larger than normal percentage of voters being unemployed, you can bet this will be popular with some politicians up for re-election in November. 

California is one of a number of states where legislation has been introduced to protect unemployed workers and prohibit an employer from using a person's unemployed status at the time of applying for a job as a negative criteria in the hiring process.  The California bill is AB 1450 and was introduced in January.  In addition to the California bill, Congress has introduced HR 2501 in the House and S 1471, two bills that would provide similar protections on a nationwide basis. 

Currently, most protected status suits deal with harassment and termination of the employment relationship.  Hiring discrimination cases are relatively rare.  However, if any of these bills pass, employers covered by them should expect a wave of new litigation by unemployed applicants applied for positions but were not hired.  Employers will certainly have to alter their hiring practices and train those making the hiring decisions and doing the screenings, in order to ensure that they can defend against such suits. 

These bills will be something to keep an eye on in the coming months.  We will continue to keep you posted on this blog.