California Court of Appeal: Applying New Post-Harris v. L.A. Standard in FEHA Discrimination Cases

Alamo worked for a small company called PMIC as a collections clerk. She took pregnancy leave.  PMIC hired a pregnant temp to replace her during the leave.  The temp, named Moran, intended to stop working once Alamo returned.

Stop me if you've heard this before. While Alamo was on leave, her manager discovered performance problems with Alamo's work, including problems that cost the Company money.  And - again stop me - the manager had noticed performance problems before the leave, but had not disciplined Alamo previously.

So, Alamo is getting ready to come back to work. She comes into the office one day to have lunch with a co-worker.  She runs into Moran and gets into a heated argument about Moran's alleged treatment of Alamo's co-worker (with whom she had just had lunch).  Moran tells Alamo she's about to be fired.  Sure enough, when Alamo returned, she was fired for poor performance and insubordination.

Alamo sued for pregnancy discrimination. After trial, a jury awarded her $10,000.00 in compensatory damages, and 0 for punitive damages.  The court awarded about $50K in attorney's fees.

PMIC appealed.  It argued that the court should have instructed the jury that the plaintiff has to prove discrimination was a "substantial motivating reason" for the termination, rather than just "a motivating reason."  PMIC also argued that it was entitled to put on evidence of a "mixed motive" defense,
following Harris v. City of Santa Monica (2013) 56 Cal.4th 203 (discussed here).

The Court of Appeal ageed that PMIC was entitled to an instruction that says discrimination must be a "substantial" motivating reason. The form civil jury instructions ("CACI") have been amended to incorporate Harris.  Practitioners should ensure they have the most current version of the instructions.

But PMIC was not so lucky on the mixed motive defense. PMIC offered a defective mixed motive instruction that was not a proper statement of the law. And the Court also found that "mixed motive" is an affirmative defense that must be pleaded in the defendant's answer.  Therefore, employers seeking to limit damages with the mixed motive defense must plead it or amend their answers.

Frankly, I don't know why the employer lost, or why it wanted a "mixed motive" defense.  There was scant evidence of discrimination described in the court of appeal's opinion.   Alamo argued that this was not a mixed motive case at all, and I think I agree with her.  We shall see if the employer can assert the mixed motive defense without admitting there is evidence of a discriminatory and non-discriminatory motive for taking action.

This case is Alamo v. Practice Management Information Corp. and the opinion is here.

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California Supremes Expanding Employment Law Docket

The California Supreme Court is taking up several cases for review that will have significant effects on California employment law.  Once the Supreme Court grants review, the lower court opinion is not precedent and cannot be cited in briefs or relied upon unless the Court says otherwise.

Here are two recent "grants," courtesy of the California bar's employment law section email blast (and thank you, Phyllis Cheng as always):

In this case, the court of appeal expanded appellate review of arbitration decisions beyond what was previously the law.  One of the reasons parties turn to arbitration is finality - no appeals unless there are very specific circumstances.  This case carved a huge loophole.  This case also rejected the employer's argument that it had an "honest belief" that an employee was faking the need for medical leave, justifying discharge.

Richey v. Autonation, Inc. (2012) 149 Cal.Rptr.3d 280 (SC S207536/B234711review granted 2/13/13) CFRA/honest belief defense Petition for review after the Court of Appeal reversed the judgment in a civil action. This case presents the following issues: (1) Is an employer’s honest belief that an employee was violating company policy or abusing medical leave a complete defense to the employee’s claim that the employer violated the Moore-Brown-Roberti Family Rights Act (Gov. Code, §§ 12945.1, 12945.2)? (2) Was the decision below to vacate the arbitration award in the employer’s favor consistent with the limited judicial review of arbitration awards? Review granted/brief due.

This one is a "grant and hold" that likely will depend on the outcome of the pending Iskanian decision, which addresses overlapping issues.  The Court is going to decide whether class action waivers are lawful in California after the U.S. Supreme Court's decision in ATT Mobility v. Concepcion.

Franco v. Arakelian Enterprises, Inc. (2012) 149 Cal.Rptr.3d 530 (SC S207760/B232583 review granted 2/13/13) Class Action Waiver Petition for review after the Court of Appeal affirmed an order denying a petition to compel arbitration in a civil action. The court ordered briefing deferred pending decision in Iskanian v. CLS Transportation Los Angeles, LLC, S204032 (#12-97), which includes the following issue: Did AT&T Mobility LLC v. Concepcion (2011) 563 U.S. __ [131 S.Ct. 1740, 179 L.Ed.2d 742] impliedly overrule Gentry v. Superior Court (2007) 42 Cal.4th 443 with respect to contractual class action waivers in the context of non-waivable labor law rights?  Review granted/briefing deferred. The High Court of course has a number of other significant employment law cases pending. f you want to review all of the cases the California Supreme Court has on its docket (employment law and otherwise), the Court keeps a list here.

Ninth Circuit Holds Retail Store Manager Unable to Work Is Not Qualified Individual

The Ninth Circuit held that a retail store manager who was unable to perform her essential job functions  was not a qualified individual, despite her request for a part time schedule and a five month leave.

Montblanc properly asserts that Lawler cannot competently perform her job duties as manager. Here, the essential duties of a boutique manager are undisputed. Lawler testified that a manager is responsible for hiring, training, and supervising sales staff; overseeing and developing customer relations; administrating stocking and inventory; cleaning; creating store displays; and preparing
sales reports. She further stated that the duties of a manager can only be performed in the store.

But but but... she was "on disability" and leave is a type of accommodation.  What happened?

The key is that Lawler did not establish that she ever would be able to perform her essential job duties again.

Lawler, however, offers no factual support showing she can perform any job duty of a boutique manager, regardless of the accommodation. Rather, she admitted that her disability makes it impossible for her to fulfill the duties of her position and that she has been unemployed since October 2009, has not applied for any positions, has made no effort to secure employment, and has exhausted her disability benefits.
Lawler contends that Montblanc “cannot argue that it met its burden of showing that Plaintiff was not able to do the job with or without reasonable accommodation” because it denied her requests for reduced hours and a five-month leave of absence. This argument ignores the holding in Green that “the plaintiff employee bears the burden of proving he or she was able to do the job, with or without reasonable accommodation.”

The court also rejected a harassment claim and a retaliation claim.  But the headline is the rejection of the disability discrimination case.

The opinion in Lawler v. Montblanc is here.

US Department of Labor Stats on Leaves

The DOL's Bureau of Labor Statistics just released data from a survey regarding leaves of absence.

You can read the full press release about the survey here.


Here's the summary.


In 2011, 90 percent of wage and salary workers had access to paid or unpaid leave at their main jobs, the
U.S. Bureau of Labor Statistics reported today. Twenty-one percent of wage and salary workers took
paid or unpaid leave during an average week. Workers who took leave during an average week took an average of 15.6 hours of leave. Fifty-six percent of wage and salary workers were able to adjust their work schedules or location instead of taking leave or because they did not have access to leave in 2011. Seven percent of workers made such an adjustment in an average week.

End of summary. Begin my annoyed rant.

Let's read it again: 1/5 of workers take leave in an average week.  20% of people cannot report to work in a given week. Yes, there are some people who need leave.  But the system is abused.

End rant.

California Legislature Clarifies Paid Bone Marrow Leave

Governor Brown just signed SB 272, which clarifies last year's paid bone marrow /organ donation leave law.  That law requires employers to grant up to five days' paid leave for bone marrow donation and up to 30 days' paid leave for organ donation.

Key changes: The new bill clarifies a few thing: the time off for bone marrow / organ donation leave is measured in "business days" rather than calendar days.  The employer may require the employee to use up to five days of PTO for bone marrow leave and up to two weeks of PTO for organ donation leave. The 12 month period for measuring entitlement is "rolling" based on the date of the leave request.

The new bill is here.

California Fair Employment and Housing Commission to Issue Pregnancy Discrimination Regulations

So, the California FEHC, which enforces the Fair Employment and Housing Act (FEHA) is fixing to revise its pregnancy disability leave regulations. The webpage devoted to these efforts, including a link to the first draft of the regulations is here. If history is a guide, there will be a number of hearings and revisions before final regulations are promulgated. We will have a detailed article on these proposed regulations in the coming weeks. However, one highlight I noticed right away is that the new regulations will explain in more detail how pregnancy disability dovetails with other disabilities regarding "reasonable accommodation obligations" (over and above the separate pregnancy disability leave requirement).

Can't Currently Count on Kin Care Case

How's that for alliteration? OK, it's Friday. So sue me. Maybe I can represent me. Anyway, the Supreme Court took up McCarther v. Pacific Telesis Group here. The issues on review:

Petition for review after the Court of Appeal reversed the judgment in a civil action. This case presents the following issues: (1) Does Labor Code section 233, which mandates that employees be allowed to use a portion of "accrued and available sick leave" to care for sick family members, apply to employer plans in which employees do not periodically accrue a certain number of paid sick days but are paid for qualifying absences due to illness? (2) Does Labor Code section 234, which prohibits employers from disciplining employees for using sick leave to care for sick family members, prohibit an employer from disciplining an employee who takes such "kin care" leave if the employer would have the right to discipline the employee for taking time off for the employee's own illness or injury?

We posted on this opinion here. We wrote an article here. Much toner and pixels spilled for naught. Now we must wait for the Supreme Court to decide this important wage and hour / leave issue here. If you want us to do an amicus brief while we're waiting, email me.

Court of Appeal: Inadequate Notice of Disability But Sufficient Notice for CFRA Leave

The Court of Appeal decided that Continental Airlines management had insufficient notice that its employee, Henry Avila, had a covered "disability" under the Fair Employment and Housing Act. The employer knew the employee had missed work because he was "sick," was hospitalized for three days, and that he presented a couple of slips from Kaiser putting him off work for short durations. The court, though, found it was undisputed that the employer did not know that the reasons for the absences amounted to a "disability" under FEHA. The plaintiff's failure to accommodate claim failed for the same reason.

However, the court held that Continental was on sufficient notice that the employee needed CFRA leave. Avila's merely calling in sick was not sufficient notice:

That plaintiff called in sick was, by itself, insufficient to put Continental on notice that he needed CFRA leave for a serious health condition. (See Gibbs v. American Airlines, Inc. (1999) 74 Cal.App.4th 1, 9 [“an employee who calls in sick to work for several days while taking antibiotics for an apparent flu has not provided her employer with ‘notice sufficient to make the employer aware that the employee needs CFRA qualifying leave’”]; see also Stevens v. Department of Corrections (2003) 107 Cal.App.4th 285, 292 [“in the context of leave for an employee’s own serious health condition, the mere notice that an employee seeks to use sick time is insufficient to place the employer on notice that the employee seeks CFRA-qualifying leave”] [dictum].)

Yet, the court held (2-1) that the employee's claim that he gave the Kaiser doctor's notes to an unidentified manager was sufficient to create a triable issue of fact that he sufficiently requested a CFRA leave. The employee's testimony was sufficient to require a trial as to whether the company had adequate notice that the employee was hospitalized for 3 days, sufficient to
constitute a "serious health condition" requiring leave. The dissenting justice believe that the employee did not make a sufficient request for leave.

The opinion in Avila v. Continental Airlines is here.

Ninth Circuit on Damages Available under FMLA

Farrell worked for Tri-County Metropolitan Transportation District of Oregon. The district denied some FMLA requests that Farrell made because of his own conditions. A jury awarded him $1,110 in lost wages for the work time Farrell lost because of the emotional distress he suffered when the district denied his FMLA claim. Although emotional distress damages are not available under the FMLA, lost work time is. So, the Ninth Circuit decided, a jury was entitled to award Farrell lost wages due to emotional distress.

The case is Farrell v. Tri-County Metropolitan Transportation District of Oregon and the opinion is here.

Courts' First Kin Care Ruling

California law provides for "Kin Care," which essentially authorizes employees to use half of paid sick leave to care for covered family members' illnesses. Labor Code section 233, the statute that created Kin Care, prohibits employers from discharging, disciplining, or taking other action against employees for taking Kin Care. Section 234 invalidates absence control policies that count Kin Care against attendance. But Section 233 also says that employers can impose the same conditions on Kin Care that it applies to its sick leave policies applicable to employees' own illnesses.

The Court of Appeal decided in McCarther v. Pacific Telesis that employers may count Kin Care leave against attendance to the same extent as sick leave for an employee's own illness. The Court relied on the language in section 233 that permits employers to treat Kin Care the same as sick leave. The Court said that section 234 prohibits employers only from placing additional burdens on the use of Kin Care. This was a key ruling, since Pacific Telesis permits unlimited sick leave, but counts sick leave against employees' attendance. If section 234 prohibited the attendance policy, employees there essentially could take unlimited sick leave, call it Kin Care, and never come back to work.

Stay tuned for a full length article in the Daily Journal next week. In the meantime, here's the opinion.

DGV

CA Supreme Court Rules on California Family Rights Act Issues

So, Lonicki was an employee claiming major depression and work-related stress stopped coming to work and requested medical leave. In the employer’s view, the employee did not have a serious health condition and was capable of performing her duties. The employer ordered the employee to return to work, and fired her when she did not. The twist: While taking FMLA/CFRA leave, she worked for another employer. While her other job was not identical, there was a substantial overlap.
The Supreme Court considered two issues: First, could the employer just fire Lonicki without seeking additional medical certifications as provided by the CFRA statute? The court concluded (6-1) that employers need not do so. Justice Moreno, though, said that the employer must follow that procedure before denying leave based on an employer's belief that the employee is not eligible for leave.
The second issue is the one that got the headlines: If an employee seeks FMLA/CFRA leave for her own health condition, and she works another job, does she really have a serious health condition? Here, the Supreme Court split 4-3 that she MIGHT. The court decided that working another position is evidence that the employee's condition might not qualify for FMLA or CFRA. But the Court refused to hold that working in a comparable job was "conclusive" evidence no serious health condition justified leave. So, off to trial with Lonicki and her employer.

The case is Lonicki v. Sutter Health Central and the opinion is here.

Instant Leave of Absence Notes (dot.com)?

Here's something you know: employees sometimes take time off when they are not sick, or at jury duty, etc.

Here's something you may not know: There's a new website that actually sells pre-printed, official looking forms authorizing leaves of absence. Sort of like a fake note a kid gives to his or her school. The concept is not new, but the availability of excuse forms on the internet may be. The url is "my excused absence dot com" I'm not linking to it.

What will happen when an employee is caught using a fake note? What if a real doctor signs a fake note? Will a business sue the website for unfair business practices? Oh, the mind boggles.

Anyway, if you did not have enough to worry about, be on the look out for doctors' notes and jury duty excuses that may not be genuine.

DGV

U.S. Department of Labor FMLA Analysis

The U.S. DOL sought comments on its FMLA regulations last fall and winter. They have come out with a thorough report. It's so thorough, the executive summary alone is 12 pages. Originally, they were seeking these comments in contemplation of possible revisions. But the report does not mention what if any revisions are under consideration. For now, you may wish to read the report to confirm what you already know: intermittent leave and medical certification are the most difficult parts of FMLA to administer. Most employers are fine with bona fide leave for birth and adoption and for truly serious health conditions. See? It took me only two lines to give you this blinding glimpse of the obvious.

California Court: Employer Failed to Follow CFRA Requirements

The California Family Rights Act in most respects mirrors the federal FMLA. These laws have been around for some time now. But their provisions, and the interplay between them and workers' compensation and disability discrimination laws, continue to vex employers. The California Court of Appeal's decision in Faust v. California Portland Cement is a cautionary tale for employers trying to untangle this complex web of laws and regulations.

Faust worked for California Portland Cement as a "lube specialist" at a quarry. He experienced some severe stress and work and filed a worker's compensation claim. He sent in an initial note note in support of a request for leave based on depression. His psych benefits ended. He then sought an extension supported by a note from his chiropractor.

The employer questioned the adequacy of the certificate and attempted to call Faust. His wife told the HR manager that Faust was too stressed to speak with the HR manager, and she could speak with Mrs. Faust, Faust's workers' compensation lawyer, or his chiropractor. The company did not accept these options and terminated Faust's employment after seven weeks of leave. Significantly, the company also did not designate the leave as CFRA/FMLA, or notify Faust of his rights under those laws.

Faust sued for disability discrimination and harassment under the Fair Employment and Housing Act, as well as denial of CFRA leave, interference with the right to take CFRA leave, retaliation, and unfair business practices in violation of California Bus. and Prof. Code section 17200. The trial court granted summary judgment in favor of the company, holding that Faust had engaged in "insubordination" by taking unauthorized leave. The trial court's main point was that Faust did not cooperate with the company's efforts to clarify the bases for his leave.

The Court of Appeal reversed on the CFRA claims. Here are the important issues decided:

1. Interference with CFRA merely requires proof that the employee was entitled to leave and the employer denied the leave. There is no "pretext" or "shifting burdens" analysis normally applicable to discrimination claims.

2. The company's failure to demonstrate it had (1) posted the required notices regarding FMLA/ CFRA leave, and (2) notified Faust of his right to CFRA leave precluded summary judgment against Faust. The CFRA regulations expressly state the employer's failure to give notice precludes the employer from denying leave because the employee failed to give adequate notice.

3. The court would not hold that, as a matter of law, the company was privileged to insist on speaking with Faust directly, rather than his wife, doctor or workers' compensation attorney. This is significant, as employees frequently refer management to "representatives," and employers frequently (and correctly) insist on communication with their own employee. The court said that whether Faust adequately communicated is for the trier of fact (likely a jury made up of 12 employees who may not want to talk with HR.)

4. The chiropractor's note, while perhaps not adequate to constitute a medical certification, was more than sufficient to put the employer on notice that it should look further into whether the leave qualified under CFRA. The court then said that the company's efforts were insufficient because it did not seek out Faust's designated representatives, and that the company failed to give Faust notice of leave anyway.

5. The retaliation claim survived because the company's legitimate business reason was undermined by the fact that the company would not communicate with any of Faust's representatives, "particularly" his workers' compensation attorney. The court said that this failure was sufficient to permit a trial on whether the discharge was in retaliation for Faust's taking a protected leave.

6. The wrongful termination in violation of public policy claim survived because the CFRA claim survived. But the court noted in a footnote that Faust's reporting co-worker misconduct would not support that wrongful termination claim. That footnote will come in handy for employers in other contexts.

7. The court finally allowed the FEHA disability discrimination claim to proceed. With little analysis, the court relied on Faust's discrediting the company's legitimate business reason for discharging him, as discussed above.

It is always much easier to analyze these issues in hindsight. The company did try to assess Faust's entitlement to leave, and Faust did not fully cooperate. But, as this decision makes clear, the law places most of the burden on the employer to ferret out whether employees are entitled to protected leave. So, the decision might have come out better for the employer if it had (1) taken into account Faust's initial claim of a mental disability when refusing to deal with the "representatives" and (2) provided notice of CFRA leave at the outset of Faust's leave.

DGV

Ninth Circuit Protects Employee's Violent Outbursts

An employee claiming "bi-polar" disorder was privileged to storm out of the boss' office, throw papers at the boss, and kick and toss objects around her cubicle, according to the Ninth Circuit Court of Appeals.

Gambini received a warning for her attitude. She claims she had bi-polar disorder. During the meeting over the warning, she became upset, left the meeting, and then started kicking her cubicle and throwing objects. Employees complained they were in fear of her next outburst. The Company hospitalized her and provided FMLA paperwork. They later terminated her employment.

Gambini sued and lost the case at trial. In Gambini v. Total Renal Care, deciding the case under Washington law (but tracking its own ADA jurisprudence), the Court of Appeals said that the jury should have been instructed that "if it found that her conduct at issue was caused by or was part of her disability, then it could find that one of the substantial reasons she was fired was her bi-polar condition."

That means the jury has to consider whether the conduct at issue is associated with a mental disability that cannot be seen or really measured. Is the conduct a result of an impairment, or just the result of a bad day, or someone emboldened by ADA protection maybe?

Consider a state like California where nearly every condition is a disability. Any conduct an employee can attribute to a disability is protected? What if the employee's symptoms include breaking things or setting them on fire? What if the employee "because" of a disability does not control bodily functions? How about touching other employees? Cursing? Taking unannounced days off?

Yes, these examples are subject to an "undue hardship" analysis, but the employer has the burden of proving undue hardship, and it's a tough burden. Direct threat? Even tougher! What if the employer fired twenty people without disabilities for throwing objects at a supervisor? The person with a disability gets a pass? I understand there are folks with real disabilities who need a boost. But I don't think the ADA was intended to be stretched in this fashion. Additionally, the opportunity for abuse is pretty high with a decision like this.

Tiny bright spot for the employer - the Ninth Circuit said that the FMLA claim was properly dismissed because the employer showed it would have fired Gambini regardless of her having taken leave.


DGV

California Employers Cannot Require Employees to Use Vacation During FMLA Leave

FMLA leave is generally unpaid. The FMLA generally provides employers with the right to require employees to use vacation and sick leave (or other paid leave) during FMLA-covered leave. But there are some rather badly written DOL regulations that restrict the employer's right to when leave is "unpaid." And when an employee receives benefits such as under a temporary disability leave benefit plan the leave is not "unpaid" and the employer cannot require the employee to use vacation or sick pay. The Seventh Circuit Court of Appeals recently applied that regulation in Repa v. Roadway Express, Inc. The effect of the decision is that California employers cannot require employees to use vacation, sick or other paid leave when the employee is receiving state disability, PFL, or workers' compensation benefits. If you need more information on this, we will have an article posted on our website about it next week.

DGV

Another San Francisco Paid Sick Leave Update

The San Francisco Office of Labor Standards Enforcement (OLSE) has come up with some FAQs regarding the San Francisco paid sick leave ordinance. The FAQs give some insight as to the city's enforcement position. The answers to some of the questions will confirm that the ordinance is nearly impossible for large employers with operations within and without San Francisco to comply with. The law goes into effect this Monday, February 5, 2007. Good luck!

DGV

San Francisco Paid Sick Leave Update

We previously posted about the new paid sick leave ordinance and poster here. There are subtle differences in the language between the ordinance and poster, intended to "clarify" the ordinance. For example, employers may be surprised to know that San Francisco's Office of Labor Standards Enforcement takes the position that paid sick leave must accrue when any employee performs work in San Francisco, even if only temporarily. Once the employee works 30 hours in San Francisco, no matter the time it takes to do so, the employee accrues an hour of paid sick leave. On the other hand, the employee is entitled to take paid sick leave only when scheduled to work in San Francisco.

So, for example, assume an employee based in Oakland comes into San Francisco for a two hour meeting. The employer must track that time so that the employee earns sick leave after 28 more hours performing work in San Francisco. Other examples - a delivery driver spends 3 hours out of 8 delivering in San Francisco per day, or a salesperson whose territory includes San Francisco and others. In each case, the employer is responsible for toting up the hours worked in SF and crediting one hour's sick pay for each 30 hours of work within the City and County of San Francisco.

Obviously, employees who do not regularly work in SF will not accrue much sick time, and probably won't have much opportunity to take it. But this will be a recordkeeping nightmare. The ordinance is effective on 2/5. Get ready!

Update on San Francisco Sick Leave - Poster

Here is the poster for San Francisco's Paid Sick Leave ordinance. The new law takes effect February 5, 2007. All employers with employees working in the City and County of San Francisco must comply. (Us ,too).

Resources - We posted previously on this in November. Also, here is our article we published in the Sacramento Daily Recorder. And here is the ordinance itself.

DGV

Federal DOL Seeks Comments on FMLA Regulations

A regulatory agency usually seeks public comment about draft regulations before they are finalized. However, the U.S. Department of Labor has decided to handle things in reverse. The agency seeks public comment regarding the current FMLA regulations. That's right, you can weigh in on the rather broad "serious health condition" definition, the "ease" of administering "intermittent leave," the medical certification, and other topics covered by the current regulations you have come to love over the past dozen years. Here is a webpage the DOL has created for providing comments. Presumably, the DOL will review the comments to decide whether and to what extent revisions to the regulations are appropriate. (Dare to dream).

DGV