The California Supreme Court did not decide whether an employer's "honest belief" that an employee is misusing family or medical leave is a defense to a claim against an employer for violating the California Family Rights Act. Instead, the Court decided whether a court had the power to vacate an arbitrator's decision because the arbitrator's ruling adopted the "honest belief" defense. BUT, if you get through the arbitration portion of this post, you'll see that the high Court announced an important rule regarding CFRA leave.
First, arbitrators' decisions generally are NOT reviewable for legal error, because arbitration is supposed to be quick and less expensive than litigation. But a few years ago, the California Supreme Court carved out an exception for statutory claims based on "unwaivable" rights (such as the Fair Employment and Housing Act, or the California Family Rights Act). The Court held in Pearson Dental Supply v. Superior Court (my post is here.) that an appellate court may vacate an arbitration award when the arbitrator's legal error denies the plaintiff a hearing.
In the present case, Richey v. Autonation, the Supreme Court held that the court of appeal did NOT have the power to vacate an arbitrator's decision that Automation lawfully fired Richey, based on its honest belief that Richey was abusing CFRA leave. Regardless of whether the honest belief defense is valid in California, the arbitrator's decision is unreviewable for that kind of claimed legal error.
The error addressed in Pearson Dental therefore kept the parties from receiving a review on the merits. Its narrow rule was sufficient to resolve the case. (Ibid.) Plaintiff here has not advocated for a greater scope of judicial review in cases involving unwaivable statutory rights, and thus, there is no reason to go beyond the framework Pearson Dental established.But that's only half the story.
The Court also ruled that even if the arbitrator relied on the "honest belief" defense erroneously, Richey would have lost anyway. That is because, the Court found, Automation justifiably fired Richey while he was on CFRA leave, because Richey violated Automation's policy prohibiting work during CFRA leave:
Even if the arbitrator erred, and even if such an error could
serve as a basis for vacating an arbitration award, plaintiff has not shown that the
error was prejudicial.
Here, the arbitrator found plaintiff was fired because he violated Power Toyota‘s employment policy against outside work while on approved CFRA medical leave, not because he was on approved leave. 3 The evidence to support that finding, as reflected in the arbitrator‘s factual findings, was overwhelming. Power Toyota explicitly warned plaintiff that its policy prohibited any outside employment, including self-employment, while on leave. Plaintiff knowingly ignored the warnings. Power Toyota invited plaintiff to communicate regarding his outside employment, and he deliberately avoided any such communication. ***
[P]laintiff blatantly ignored his superiors‘ clear instructions not to work at the restaurant while on CFRA leave. To ignore this fact and to hold that Power Toyota could not have fired plaintiff under any circumstances for violating company policy while on leave would ignore the rule that plaintiff had ―no greater right to reinstatement or to other benefits and conditions of employment than if [he] had been continuously employed‖ during the statutory leave period. (29 C.F.R. § 825.216(a).)
The arbitrator found plaintiff‘s firing was based on a clear violation of company policy — a legally sound basis for upholding the arbitrator‘s award — and would likely have made that finding regardless of the evidence or findings as to the employer‘s honest belief plaintiff was misrepresenting his medical condition.
