Monday, October 29, 2012

To fire, or not to fire? A $17 million question.

One of the most frequent questions I get from clients is a variation on the following:

I want to terminate an employee, but he/she has been sick/is pregnant/made a worker's compensation claim/just turned 55/is the only minority in the business.  How can I do this without getting sued?

For disgruntled employees, the threat of a retaliation or discrimination claim against a former employer has long been a way of guaranteeing a severance payment.  Smart employers do not fire employees who may threaten litigation without first considering the risks and taking steps to protect themselves from legal action.  

The case of  Marlo v. United Parcel Service made the news when a unanimous federal jury awarded a former UPS supervisor, Michael Marlo, $2,201,425 in economic and non-economic damages, and an extraordinary $15,897,053 in punitive damages.  Evidence at trial showed that UPS may have had a mixed motive for firing Marlo.  The jury found that UPS had retailiated against Marlo for bringing an wage and hour claim, reporting safety violations and encouraging other supervisors to file lawsuits against the company; UPS argued that it had legitimate reasons for firing Marlo that were unrelated to these factors.

Quoting Grant-Burton v. Covenant Care, Inc. (2002) 99 Cal.App.4th 1361, the Marlo court explained the mixed motive test clearly:

In some cases, the evidence will establish that the employer had “mixed motives” for its employment decision. In a mixed motive case, both legitimate and illegitimate factors contribute to the employment decision. Once the employee establishes that an illegitimate factor played a motivating or substantial role in an employment decision, the burden falls to the employer to prove by a preponderance of the evidence that it would have made the same decision even if it had not taken the illegitimate factor into account.

Jury instructions are often a good, "plain English" way of understanding the law.  In this case, the jury were given the following instruction:
Plaintiff Michael Marlo claims that UPS retaliated against him in violation of the California Labor Code by terminating his employment. Mr. Marlo has the burden of proving each of the following elements by a preponderance of the evidence:

1. That Mr. Marlo engaged in protected activity;

2. UPS subjected Mr. Marlo to an adverse employment action by terminating his employment; and

3. UPS terminated Mr. Marlo's employment because he engaged in protected activity-that is, that the protected activity was a motivating or substantial factor in UPS's decision to terminate his employment.

If you find that Mr. Marlo has failed to prove any of these elements, your verdict must be for UPS.

If you find that Mr. Marlo has proved all three of these elements, then UPS must prove by a preponderance of the evidence that it would have made the same decision to terminate Mr. Marlo even if his protected activity had not been a motivating or substantial factor in the decision. If UPS does not meet this burden, then your verdict must be for Mr. Marlo.

Simply put, in a mixed-motive case, the employee must prove that his termination from employment was improper.  If he or she does so, the employer can defend against the claim by showing that the other factors for termination were strong enough that he or she would have been fired anyway.

My advice to any employer looking to terminate an employee is to spend ten or twenty minutes talking to an attorney first, especially if, like Mr. Marlo, that employee has filed safety complaints and wage and hour claims.  

Every case is different, of course, and nothing herein on any of these entries is intended as legal advice or to create an attorney-client relationship between reader and writer.  This material is offered as a service to clients and the community but should not replace legal advice from a licensed attorney.

Tuesday, October 23, 2012

More limits on arbitration provisions

I've written about the problems employers face enforcing arbitration agreements before, and here is a new spin on the issue.  In Elijahjuan v. Superior Court (2012) --- Cal.Rptr.3d ----, the Second District Court of Appeal, Division 8 (Los Angeles) ruled that a lawsuit brought by a group of employees challenging their status as independent contractors  fell outside the scope of an arbitration agreement that specified that the individuals were independent contractors.  

Why? According to the Court of Appeal, because the lawsuit did not concern the application or interpretation of the Agreement, but instead sought to enforce rights arising under the Labor Code, it was "outside" the agreement. The Labor Code would not apply to independent contractors and did not cover any of the rights and responsibilities set forth in the agreement.