~The Law Offices Of Sheldon Rosenfield, Employer's Corner Update, Issue # 11

Employer's Corner, Issue No. 11
A management Law Update from the Offices of Sheldon Rosenfield
A Professional Corporation

Representing employers in wrongful termination, harassment and other employee-management disputes.
Representing employers in wrongful termination, harassment and other employee-management

Advising employers and representing them in wrongful termination, sexual harassment, and employee discrimination matters.

Rulings Have Effect On Company Policies, Same Sex Harassment Cases, and Protection to AIDS Carriers

The U.S. Supreme Court in several blockbuster decisions rendered recently has redefined the law of employer liability in sexual harassment and discrimination cases.

The Ellerth and Faragher cases were brought for sexual harassment. The high court ruled that employers are liable for their supervisors’ sexual harassment even if the complaining employee did not suffer any tangible loss (such as termination, demotion, days off, loss of promotability or other benefits).

At the same time, the cases also permit employers to defend themselves in cases where there was no tangible loss of benefits by showing that the employee failed to use the company’s internal complaint procedure to attempt to redress the claimed sexual harassment.

Under the new standard, an employer can obtain summary judgment (prevent a trial) if it can prove that (1) it exercised reasonable care to prevent and correct sexual harassment and (2) that the plaintiff failed to use preventive or corrective opportunities the employer provided.

As a result of these cases, it is more important than ever for employers to adopt effective grievance and investigation procedures. This will insure that federal claims can be dismissed in cases where the employee did not exhaust the employer’s effective grievance procedure to redress her or his complaints.

And, in cases where a current or former employee claims loss of some tangible employment benefit, an effective policy of this type will provide positive evidence to demonstrate to the finder of fact that the employer did what it reasonably could to prevent sexual harassment by supervisors.

Redress procedures will assist in reducing damages in most cases, because there will be less reason for the fact-finder to be outraged against employers who are doing their best with difficult circumstances. Absence of such procedures could open the door to greater damage awards.

These decisions are important because up until now, some federal courts, including those in California, had ruled that even though an employee’s failure to file an internal grievance could affect her or his credibility, the employee’s failure to do so would not preclude a lawsuit.

The EMPLOYER’S CORNER is published to bring CALIFORNIA employers up
to date on the latest laws, court rulings, and jury awards. It is designed to assist employers to recognize situations where an employment lawsuit might arise and how to confront and handle employee problems with an understanding of the legal options
and consequences for failing to follow the law.

‘HORSEPLAY’ BY EMPLOYEES CAN RESULT IN LAWSUITS
AGAINST COMPANY FOR SEXUAL HARASSMENT

In another recent case that surprised some employers, the U.S. Supreme Court has unanimously ruled that a male

oil-drilling platform worker who claimed he was subjected to severe hazing by fellow male employees and supervisors can sue both the harassers as well as the employer, for sexual

harassment under Title VII of the Civil Rights Act. (Oncale vs. Sundowner Offshore Service)

The Court ruled that the harassment need not have been motivated "because of sex." Rather, the court reasoned that any harassing conduct which creates a hostile environment in the workplace can violate federal law if it results in discrimination "because of sex."

As things now stand, harassment claims can be brought by parties of the same sex if the complaining party can show that the discriminatory conduct was because of sex. It will, in each case, remain up to the trier of fact to determine when the line has been crossed.

The Court also ruled that a woman infected with the HIV (AIDS) virus is fully protected by the Americans with Disability Act, even though she has no symptoms of the disease.

The ruling covers discrimination not only against those who are truly disabled but also against those who have conditions that could prove disabling. EC

How Can Employers Protect Themselves?
Prepare a strong policy against sexual harassment.
Communicate the policy to Employees.
Provide employees with an effective complaint procedure.

CALIFORNIA SUPREME COURT HOLDS THAT COMPANIES, BUT NOT SUPERVISORS,
CAN BE LIABLE FOR ILLEGAL DISCRIMINATION

On July 16, the California Supreme Court unanimously ruled that employers, but not individual managers, may be required to pay damages to compensate workers for unlawful job discrimination.

The court’s decision, however, will not prevent lawsuits against supervisors or managers for sexual harassment, other illegal acts, or for retaliating against an employee who complains about job discrimination.

This ruling, Reno vs. County of Solano, follows precedent in the federal courts, and means that individual supervisors and managers can no longer be sued for age, race or gender bias.

An appeals court has ruled that an employer which might have knowingly employed illegal aliens cannot escape a sexual harassment lawsuit because the plaintiff woman was not entitled to work in the United States in the first place.

Implement programs to prevent harassment, including seminars for managers and supervisors.
Instruct managers how to investigate internal complaints.
Discipline employees who violate company policy.

[Each issue of In the Employer’s Corner includes recent jury verdicts returned in California courts. They are in pull-out form for easy keeping and future reference.]

An 18 year old woman sued Wal- Mart based on claims that her supervisor and store managers sexually harassed and discriminated against her. She testified that her supervisor told "dirty" jokes, tried to get her to have sex so he could watch, and touched her in spite of her protests.

The woman said she complained to the store manager, and was transferred to another store. She claims she later learned the manager himself had a crush on her, and that the manager himself made embarrassing remarks about her, grabbed her, and attempted to give her a neck rub during work hours.

The plaintiff testified she went to the manager of a nearby store, who stated he needed more evidence. She then went to the district manager and left a voicemail message. Instead of receiving a return call, she was terminated. She had a history of positive performance appraisals.

The employer denied that her claims were true. A jury, however, awarded her $175,000, of which $25,000 was in punitive damages. "(Fernandez vs. Wal-Mart Stores, Fresno, 5-29-98)"

A man in his late 40’s who was employed in a managerial position with a company, contended he was terminated in violation of public policy for refusing to participate in illegal money transfers to avoid taxes. He further claimed that after his termination, his former employers spoke to several other companies in the industry and made defamatory comments about his character and job performance, damaging his reputation and interfering with his ability to find suitable employment elsewhere.

Defendants contended that the man was not terminated and that his claim that the company fired him for complaining about the money transfers was invalid because the transactions were made after the company’s corporate lawyer recommended them.

While the company admitted making the statements about the plaintiff, they contended that every statement was true, and witnesses hearing the statements confirmed that the information had not changed their opinion of plaintiff nor cost him any business opportunity or employment.

Plaintiff demanded $800,000 before trial, and the company offered to settle for $50,000. The jury found in favor of the employer, and awarded plaintiff nothing. (Rogers vs. Hi-Tech Welding Services, Inc., San Diego, 4-1-98)

From 1985 to 1995, plaintiff, now 54, was employed as a senior team leader and manufacturing manager over the assembly line for the Apache helicopter until he was laid off due to a reduction in force.

Plaintiff claimed his selection for layoff was due to his age. The company contended his layoff was necessary to address performance problems on the assembly line and that his layoff was based on a legitimate, nondiscriminatory ranking of employees done by the plaintiff’s supervisor.

Plaintiff asked the jury to award him $350,000. The jury found for the employer. (St. John vs. Teledyne Ryan Aeronautical, San Diego, 5-1-98)

On December 30, 1995, the 60-year old head golf pro at Rancho Bernardo was terminated. He claimed he was replaced by his assistant, who was substantially younger, and that the club’s board made statements to him which showed it was discriminating on the basis of age.

The club, on the other hand, denied making any statements which showed an intent to discriminate, and instead, presented evidence that the pro was dismissed due to his lack of initiative, organizational and leadership skills, and because he was rude to some club members.

Plaintiff demanded $140,000 before trial, which he reduced to $90,000 during trial. Defendant offered $15,000, which it increased to $60,000 the weekend before trial, and withdrew their offer after only one day of trial. The jury found for the employer. (Carmody vs. Rancho Bernardo Golf Club, San Diego, 5-19-98)

A man in his 40’s who had a physical disability which had resulted from a spinal injury and who walked with a pronounced limp was hired by BART to be a part-time train operator.

Train operators are expected to perform yard work consisting of making and breaking up trains in the yard. This requires an operator to cross the electrified third rail on which the trains run. These are about 2 feet off the ground and are partially enclosed in a fiberglass cover. While plaintiff was able to straddle the rails when he was on training status, he admitted he became stuck at least twice straddling the rails and needed assistance to get out. He was then taken off the trains, and after no reasonable accommodation could be made, the man was reassigned to be a transportation clerk.

In the suit, the plaintiff claimed that he was discriminated against and that BART should have allowed him to continue to practice crossing the third rail.

BART contended that there was no discrimination and that it reasonably accommodated plaintiff by reassigning him to another position for which he was qualified.

The jury, after seven days of trial, found for the defendant. (Reese vs. S.F. Bay Area Rapid Transit District, Oakland, 3-10-98)

Shakey’s Owners Sued for Breach of Contract and Counter-Sued For Return of Salary Paid

In 1995, the plaintiff, a citizen of Singapore in his late 40’s, was a vice president of Inno-Pacific Holdings, the Singapore parent corporation of Shakey’s, Inc., but worked out of its San Francisco offices. He had a separate written employment contract with each company.

The written employment contract stated that the man would be employed by the holding company as long as he was employed with Shakey’s, Inc., and provided that he could be terminated for any reason without notice. Upon termination, the contract provided that plaintiff would be entitled to a "golden parachute" severance of 24 months’ salary.

Plaintiff continued working even after expiration of the contract, but was ultimately terminated because the company was facing difficult financial times.

While plaintiff agreed that the company had the right to terminate him at any time, he insisted he had the right to receive the severance pay. The company, however, contended it had no such obligation, and that the former employee should reimburse it for the payments it made to him after expiration of the contract.

The jury deliberated for less than one hour following a seven-day trial, and awarded plaintiff $200,000. The company was awarded nothing on its cross-complaint. (Kay-Yew Koh vs. Inno-Pacific Holdings, Ltd., Superior Court, San Mateo, 3-10-98)

Jury Sustains Firing of Bank Manager for Mishandling of Check Kiting at His Branch

A 16-year employee of a bank in Sonoma County had spent the last five years of his tenure as branch manager. During his last year of employment, the bank was critical of his performance. The final incident was his reaction to, and unsatisfactory handling of a check kiting operation.

Plaintiff asked the jury to award him $431,000. Pretrial, plaintiff demanded settlement for $200,000, but the bank only offered $50,000. The jury, after deliberating two hours, found for the bank and awarded plaintiff nothing. (O’Connor vs. Exchange Bank, Sonoma, 3-25-98)

A manager for Radio Shack’s most profitable store in the company’s 33-store district in the Central Valley sued the company for wrongful termination and defamation. While on medical leave, an inventory was conducted of the plaintiff’s store, and the district manager supposedly discovered a large inventory loss at the store. The plaintiff was accused of theft and inventory fraud and terminated.

Later, Radio Shack attempted to reverse plaintiff’s termination but placed him in an entry-level position in an undesirable store. Plaintiff’s complaints about his unfair treatment were ignored.

Plaintiff claimed he was defamed and wrongfully discharged. After nine days of trial, the jury found that the plaintiff was defamed, and that Tandy Corporation acted with malice and oppression. This would have entitled plaintiff to punitive damages had the case not settled before the jury could award damages in a two-phase trial. The lawsuit was settled for a confidential amount. Note: plaintiff’s pretrial demand was for $1.1 million, and the company had offered $150,000. (Mazin Al-Ali vs. Tandy Corporation dba Radio Shack, Fresno, 3-4-98)

Hospital Worker Loses Retaliation Lawsuit After Testifying for Another Employee in a Sexual Harassment Suit

A hospital benefits coordinator who claimed she was terminated in retaliation for testifying in favor of a co-employee in a sexual harassment claim sued the hospital and hospital officials.

The hospital claimed it took action against the employee, including termination, for abusing her payroll position by paying herself flood pay when she was not entitled to it, because she was unable to get along with co-workers, and because she denigrated the hospital to other employees and made threatening comments to others that she could "fix" the hospital if she wanted to. The hospital also claimed they terminated the woman after they learned she had improperly contacted and made material misrepresentations to a doctor who was treating a co-worker for worker’s compensation benefits in order to extend the co-worker’s time off and other benefits.

The jury found for the employer after twelve days of trial. (Forncrook vs. Vencour Hospital of Sacramento, Sacramento, 5-8-98)

Employer Not Liable for Terminating Employee in Good Faith With
Reasonable Basis after Thorough Investigation

Three female employees accused their supervisor of sexual harassment.
The employer conducted an investigation. It interviewed 21 people including three suggested by the supervisor under investigation.

During the investigation, the supervisor was personally interviewed by the president and the EEO chief of the company, but he did not offer an explanation for the complaints. (At trial the supervisor said he felt "ambushed" and was "frightened"). At the conclusion of the investigation, the employer felt that it was probable that the supervisor did commit the harassment , and the company discharged him.

In a subsequent civil trial brought by the three women against the supervisor, a jury found for the supervisor. The jury concluded that the women were improperly motivated against him and that he had not committed any acts of sexual harassment.

The fired supervisor then sued the employer for wrongful termination. A jury returned a verdict for $1.8 million against the company.

On appeal, the California Supreme Court reversed the verdict and ordered the case retried. The Court held an employer is not liable for wrongful termination if at the time it makes the decision to terminate, the employer was acting in good faith and following an investigation that was appropriate under the circumstances and had reasonable grounds for believing supervisor had sexually harassed other employees.

Even where there is strong evidence of misconduct, the employer improves its ability to prove that its investigation was "appropriate under the circumstances" and that its belief the employee engaged in wrongdoing was reasonable by following some basic guidelines:

When setting up a meeting with an employee to discuss complaints and evidence, avoid creating an atmosphere of intimidation.

Allow the employee an opportunity to correct or contradict and to provide documentation in response to the charges made against him.

Court Affirms State’s Overtime Rule for 40 Hour Week Rather than 8 Hour Day

The California Supreme Court has let stand an intermediate appellate court ruling against a union petition which sought to overturn a wage order involving overtime rules. The order eliminated the rule which had required overtime pay for work in excess of 8 hours per day and substituted the federal rule which requires overtime for work in excess of 40 hours per week. (California Labor Federation vs. Industrial Welfare Comm’n.)

Job Restructuring May Be Required to Provide HIV Sufferer
with ‘Reasonable Accommodation’

In Bell vs. Wells Fargo Bank, a banking examiner carrying the HIV virus who was denied his request to continue to telecommute to work one day per week is entitled to go forward with a lawsuit for handicap discrimination. "Reasonable accommodation" can include "job restructuring, " according to a recent court decision.

The Court of Appeal has ruled that an employee who claims sex discrimination due to a "hostile work environment" cannot complain of isolated or trivial matters. There must be a pattern of harassment of a routine or generalized nature.

A male correctional officer had claimed his female supervisor had rules which required subordinates to keep their office doors open, their desks in clear view , their feet off their desks, and their office lights on. The Court, in throwing out the lawsuit, noted the rules applied equally to male and female employees, and thus, concluded there was no discrimination.

UCLA Dental School Ordered to Re-instate Student Suffering from
Manic-Depressive (Bipolar) Disorder

A federal court in Los Angeles ordered the UCLA Dental School to reinstate a 35-year old plaintiff who was in his final year of dental school and who suffered from manic depression. The court adopted the plaintiff’s argument that the school failed to provide him with reasonable accommodation, as required by the Americans with Disabilities Act (ADA). (Bryan Amiri vs. Regents)

Every Employer with Five or More Employees Should Have an
Employee Handbook or Manual

An employer manual or handbook is an essential tool for those businesses whose work force consists of 5 or more employees.

Our office works with management in designing and preparing an employer manual that is customized to your business.

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