U.S. Supreme Court Issues Two Retaliation Decisions

The U.S. Supreme Court is wrapping up its Term. Yesterday, the Court issued two significant decisions regarding retaliation.

In CBOCS West, Inc. v. Humphries, the Court ruled 7-2, that employees may sue for retaliation under 42 U.S.C. section 1981. Section 1981 is a post-Civil War anti-race-discrimination statute that does not require employees to pursue administrative remedies through the Equal Employment Opportunity Commission. However, it substantially overlaps with Title VII of the Civil Rights Act. California employees have the Fair Employment and Housing Act. The main benefit of section 1981 is its longer statute of limitations and the lack of an exhaustion requirement. Justices Thomas and Scalia dissented, noting that section 1981 is an anti-discrimination statute that protects people from conduct based on "who they are" rather than "what they do" (engage in protected activity). The opinion is here.

In Gomez-Perez v. Potter, the court, this time 6-3, held that the section of the Age Discrimination in Employment Act's protecting federal government workers authorizes retaliation claims against the federal government. The opinion is here. Chief Justice Roberts and Justices Scalia and Thomas dissented.

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

Update - Cal. Supreme Court Review Granted

We posted on Schachter v. Citigroup here. The California Supreme Court has decided to review the decision, which upheld Citigroup's stock option plan's forfeiture provisions under California wage and hour law. The court of appeal also said that payment in stock options did not violate Labor Code section 212. Stay tuned for the Supreme Court's view, probably in 2009 or 2010.

Meet GINA

President Bush signed the "Genetic Information Nondiscrimination Act," or "GINA." Title I of the new law prohibits the use of genetic testing or genetic testing results to affect health insurance premiums. "Genetic testing" includes one's own test and the tests of family members.

Title II of the law addresses employment discrimination. Basically, the law follows Title VII of the Civil Rights Act of 1964, and bars employers' reliance on genetic information in making employment decisions. The law specifically says there are no disparate impact claims allowed, so intentional discrimination must be proved. It's also illegal to request genetic information, although there are exceptions for inadvertent requests (such as family history) and when information is disclosed as part of an FMLA procedure.

I'm not sure whether any employers were discriminating based on genetic information, or where they were getting it. Apparently, Congress saw a need to step in, though. So, you genetic testers and discriminators - knock it off. Actually, the law takes effect in 18 months. By that time, remember to update your handbooks, applications, training programs, and EEO statements. Also, I'm sure there will be a new poster(!)

Here's the text of the new law.

H/T to Ross Runkel for the link and for lots of other information.

Court of Appeal Examines "Same Actor" Inference

Nita White-Ivy was a senior HR manager. She was Marietta Harvey's boss at a company called Pyramid. Then, White-Ivy became VP of Global HR for Sybase. She hired Harvey to be a director of HR at Sybase. Both women are Filipina. At Sybase, White-Ivy promoted Harvey several times, up to where she was the second-highest ranking employee in the department. Later, White-Ivy was considering demoting Harvey because she was unhappy with Harvey's performance and wanted to reduce her responsibilities. Harvey spoke with other executives about this proposed demotion. White-Ivy did not go forward with the demotion. However, she called Harvey on the carpet for "back-stabbling" and eliminated her position. Also, in response to some other executives' feedback, White-Ivy had commented that there were too many Asian females in the HR department, and she was interested in hiring more males, and more white males.

Harvey sued Sybase for race /national origin and sex discrimination. Thus, she accused White-Ivy, another female Filipina, of firing Harvey because of discrimination. That's the same White-Ivy who supervised Harvey at two companies, hired her at Sybase, and gave her several promotions. Harvey also claimed she was fired for discussing her salary in violation of the Labor Code.

A jury obviously found that there was no way White-Ivy was motivated by sex or national origin discrimination when she decided to fire Harvey, right? Wrong. The jury awarded her $1.8 million, including $500,000 in punitive damages.

The Court of Appeal rejected Sybase's argument that the same actor evidence - evidence that White-Ivy had treated Harvey well on so many occasions over a long period of time - was dispositive. The Court found "substantial evidence" on which the jury could have found discrimination - that White-Ivy was motivated to replace Asian females with males and non-Asians. Under well-settled principles, if a jury's verdict is based on substantial evidence, the jury is is privileged to reject contrary evidence, even if compelling. So, the Court affirmed the jury's verdict, acknowledging the evidence of non-discrimination was strong.

There are a number of lessons to be learned from this case, including about "diversity" efforts. Announcing a desire to hire members of one protected group or another to improve the mix of races and sexes in a department may be used as evidence of discrimination by members of other groups. Even a manager with a history of favoring members of one group may be found to have discriminatory motivations. Finally, the "same actor" inference remains part of employment law, particularly in the context of motions for summary judgment. However, it is unclear how this case, decided after a verdict, will affect courts' analysis.

The case is Harvey v. Sybase and the opinion is here.

Proposed SB 1583 Imposes Liability for Bad Independent Contractor Advice

Non-attorney HR consultants - heads up!

SB 1583, now pending in the legislature, would impose penalties on third parties who merely advise employers that a given worker can be classified as an independent contractor. The penalty applies only if the worker is later found to have been mis-classified. The penalty is $200 per day per contractor. Licensed attorneys are exempt from this bill (whew).

The proposed bill text is here. Be careful out there!

DGV

Newspaper Delivery Drivers Are Employees for Workers' Comp. Purposes

State Compensation Insurance Fund assessed Antelope Valley Press workers' compensation premiums for newspaper delivery workers. AVP classified these persons as independent contractors, not employees, and challenged SCIF's decision in court. The Court of Appeal affirmed the trial court's conclusion that the delivery workers were properly considered employees.

The Court of Appeal found “the evidence does not show that in making deliveries. . . the carriers are engaged in a distinct occupation or business of their own” and “delivering papers requires no particular skill.” Moreover, the same company had employees, whom they admitted were employees, performing the same duties as the purported contractors. In addition, applying the seminal case of S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, found that nearly all the factors therein pointed to employee status. In particular, AVP controlled numerous aspects of how the deliverypersons handled their duties.

Three recent court of appeal opinions have found employee status with respect to delivery persons. The previous ones were JKH Enterprises v. Dept. of Industrial Relations and Estrada v. Federal Express. The current case is Antelope Valley Press v. Poizner and the opinion is here.

Thanks to Matt Norfleet of our San Francisco office for pointing out the decision.