Institute For Corporate Counsel RECENT DEVELOPMENTS IN EMPLOYMENT LAW Cynthia E. Gitt

1. New York Washington D.C. Boston LosAngeles SanFrancisco Dallas Miami Newark Stamford Baltimore Institute For Corporate CounselRECENT DEVELOPMENTS IN EMPLOYMENT LAWCynthia E. Gitt

2. 2000 IN 2000, THE CALIFORNIA SUPREME COURT CHOSE ITS OWN PATH EMPLOYERS WITH REMOVAL OPTIONS HAVE A DIFFICULT CHOICE

3. ARMENDARIZ v. FOUNDATION HEALTH SERVICES • UNDER STATE LAW, MANDATORY AGREEMENTS THAT ENCOMPASS STATUTORY DISCRIMINATION CLAIMS WILL BE ENFORCED IF SPECIFIC STANDARDS ARE MET

4. THE CALIFORNIA SUPREME COURT SPECIFICALLY ANALYZED AND REJECTED, AT LEAST AS TO STATE CLAIMS, THE CONTRARY CONCLUSION OF THE NINTH CIRCUIT IN DUFFIELD

5. IN ORDER TO BE ENFORCABLE (CONSCIONABLE) AS TO STATUTORY/DISCRIMNATION CLAIMS, THE ARBITRATION AGREEMENT MUST DO ALL OF THE FOLLOWING:

6. AGREEMENT MUST PROVIDE FOR: • NEUTRAL ARBITRATORS • MORE THAN MINIMAL DISCOVERY • WRITTEN AWARD, SUFFICIENT FOR JUDICIAL REVIEW • ALL RELIEF AVAILABLE IN A COURT ACTION • THE EMPLOYEE NOT TO PAY UNREASONABLE COSTS OR ANY ARBITRATORS’ FEES OR EXPENSES

7. REQUIREMENTS NOT ADDRESSED IN ARBITRATION AGREEMENT MAY BE IMPLIED INTO THE AGREEMENT

8. IF AGREEMENT CONTAINS UNCONSCIONABLE TERMS, THE COURT MUST DECIDE WHETHER TO EXCISE THE OFFENSIVE PROVISIONS OR INVALIDATE THE CONTRACT Is the central purpose of the agreement tainted with illegality? Can the offensive provision be stricken, or is reformation required to eliminate unconscionability?

9. FOUNDATION HEALTH PLAN’S ARBITRATION AGREEMENT WAS FOUND UNENFORCABLE: • It unconscionably limited remedies to back pay • It unconscionably lacked mutuality because it implied that the employer but not the employee could go to court to enforce claims related to trade secrets or non-competition agreements

10. AFTER ARMENDARIZ, MOST COURTS TRY TO ENFORCE AGREEMENTS THAT DO NOT LIMIT REMEDIES OR REQUIRE EMPLOYEES TO PAY SUBSTANTIAL COSTS

11. EXAMPLES OF UNCONSCIONABLE PROVISIONS: • Limitation of Back Pay to Six Months (Pinedo v. Premium Tobacco) • Requirement that employee pay all initial costs of arbitration (Pinedo) • Requirement that even prevailing plaintiff pay employer’s costs if go to administrative agency instead of arbitration (Shubin v. William Lyon Homes)

12. COURTS OF APPEAL HAVE APPROVED JAMS AND AAA EMPLOYMENT DISPUTE RULES AS PROVIDING NEUTRALITY AND FAIR DISCOVERY

13. U.S. DISTRICT COURT ENJOINS REQUIREMENT OF ARBITRATION AGREEMENT FOUND CONSCIONABLE BY STATE COURT OF APPEAL. DUFFIELD STILL LAW OF NINTH CIRCUIT (EEOC v. Luce, Forward, Hamilton & Scripps)

14. UNITED STATES SUPREME COURT WILL HEAR NINTH CIRCUIT CASE, WHICH FOUND EMPLOYMENT ARBITRATION AGREEMENTS NOT SUBJECT TO THE FAA • Circuit City Stores v. St. Clair Adams

15. ARBITRATION vs. REMOVAL TO FEDERAL COURT: • Who will be hearing the case? • No jury • Conventional wisdom that arbitration awards less likely to be unreasonable • Conventional wisdom that arbitration more expeditious • Cost to employer of arbitration • Question as to nature of judicial review

16. SECOND DISTRICT COURT OF APPEAL RULED THAT ACCEPTANCE OF ARBITRATION AGREEMENT IS IMPLIED BY CONTINUED EMPLOYMENT Craig v. Brown & Root)

17. CALIFORNIA SUPREME COURT PERMITS EMPLOYERS, TO CHANGE, WITH ADEQUATE NOTICE, “UNILATERALLY ADOPTED” EMPLOYMENT POLICIES OF INDEFINITE DURATION Asmus v. Pacific Bell

18. SIX MONTHS ADEQUATE NOTICE TO RESCIND EMPLOYMENT SECURITY POLICY FOR MANAGERS

19. CAN EMPLOYERS GET SUMMARY JUDGMENTIN DISCRIMINATION CASES?

20. Evidence that an employer’s explanation may be pretextual, combined with employee’s prima facie case, may defeat summary judgment even without independent evidence that actual motive was discriminatory Reeves v. Sanderson Plumbing

21. Reaffirms analysis of St. Mary’s Honor Society v. Hicks that pretext may itself support inference of discrimination

22. Reeves ONCE AGAIN, BAD FACTS MAKE BAD LAW

23. Reeves SUPREME COURT MINIMIZES SIGNIFICANCE OF AGE OF DECISION-MAKERS AND OTHER MANAGERS, AND FOCUSES ON “AGEIST REMARKS” OF EMPLOYEE’S SUPERVISOR

24. SUPREME COURT ASSURES THAT THIS DECISION DOES NOT NULLIFY JUDGMENT AS MATTER OF LAW IN EMPLOYMENT CASES (But at least one justice says it will be the rare case)

25. [Summary] Judgment Available “If the record conclusively revealed some other, nondiscriminatory reason for the employer’s decision, or if the plaintiff created only a weak issue of fact as to whether the employer’s reason was untrue and there was abundant and uncontroverted independent evidence that no discrimination has occurred.”

26. FACTORS FOR EVALUATING JUDGMENT AS A MATTER OF LAW: • Strengths of plaintiff’s prima facie case • Probative value of proof that employer’s explanation false • Any other proper evidence that supports an employer’s case

27. CALIFORNIA SUPREME COURT CHOSE THE CAVEAT RATHER THAN THE HOLDING OF REEVES IN ITS OWN DISCUSSION OF SUMMARY JUDGMENT CASES Guz v. Bechtel National, Inc.

28. GUZ HAD EVIDENCE THAT HIS “LAY-OFF” FOR COSTREASONS WAS PRETEXTUAL AND COMPANY DID NOT FOLLOW ITS OWN POLICIESCOMPANY’S “LEGITIMATE BUSINESS EXPLANATION” FOR CHOOSING YOUNGER WORKERS WAS “SUBJECTIVE”

29. Guz CALIFORNIA COURT HELD THAT INFERENCE OF INTENTIONAL DISCRIMINATION CANNOT BE DRAWN SOLELY FROM EVIDENCE THAT EMPLOYER LIED ABOUT ITS REASONS: EVIDENCE OF DISCRIMINATION REQUIRED

30. Guz IN ANALYZING THE AGE DISCRIMINATION CLAIM, CALIFORNIA SUPREME COURT FOCUSED ON NUMBERS AND AGES OF REMAINING PEOPLE

31. Guz COURT FOUND THAT PLAINTIFF’S STATISTICS “MANIFESTLY LACKS SUFFICIENT PROBATIVE FORCE” IN LIGHT OF BECHTEL’S “STRONG AND UNREBUTTED SHOWING THAT IT TOOK ITS ACTIONS FOR NON-DISCRIMINATORY REASONS”

32. RE STATISTICAL EVIDENCE: • Employee pool affected by lay-offs "TOO MINISCULE" TO DEMONSTRATE A STATISTICALLY RELIABLE PATTERN OF DISCRIMINATION • Employees with DIFFERENT JOB SKILLS COULD NOT BE INCLUDED IN SAME STATISTICAL POOL • Since retained employees had different skills than plaintiff, could not make statistical conclusion

33. GUZ • BECAUSE EMPLOYER DID VIOLATE ITS OWN LAY-OFF POLICY, PLAINTIFF WAS PERMITTED TO PROCEED ON BREACH OF CONTRACT WRONGFUL TERMINATION CLAIM

34. Guz HOWEVER, COURT STATED THAT ABSENT OTHER EVIDENCE, LONGEVITY, RAISES AND PROMOTIONS ARE THEIR OWN REWARDS: NOT A CONTRACTUAL GUARANTEE OF FUTURE EMPLOYMENT SECURITY

35. DISABILITY DISCRIMINATION NOW A MAJOR FOCUS IN EMPLOYMENT CLAIMS, AND CALIFORNIA LAW NOW TOUGHER THAN ADA

36. EXAMPLES OF PROTECTED DISABILITIES : • Post-traumatic stress disorder (bank robbery at work) Jensen v. Wells Fargo • Compulsive Obsessive Disorder (obsessive rituals re bathing and grooming) Humphrey v. Memorial Hospitals

37. ACCOMMODATION REQUIREMENTS NOW SUBSTANTIAL AND ONGOING

38. EMPLOYEE HAS OBLIGATION TO REQUEST ACCOMMODATION, THUS INITIATING THE INTERACTIVE PROCESS, BUT EMPLOYER THAT KNOWS OF NEED FOR ACCOMMODATION HAS OBLIGATION TO OFFER IT Downey v. Crowley Marine Services Spitzer v. The Good Guys (quoting EEOC Guidelines)

39. Lower Performance EvaluationsContinued Medical LeavesObservation That Previous Accommodations Do Not Resolve ProblemMay Require Employer To Inquire About Need for (Further) Accommodation

40. ACCOMMODATION REQUIRES MORE THAN TREATING DISABLED EMPLOYEE LIKE ANY OTHER JOB APPLICANT OR JOB BIDDER-AFFIRMATIVE ACTION REQUIRED Spitzer v. Good Guys

41. ABSENT UNDUE HARDSHIP, JOB RESTRUCTURING REQUIRED AS AN INITIAL ACCOMMODATION Change in Hours Part-time position Working from home

42. WHERE JOB RESTRUCTURING OR OTHER ACCOMMODATION NOT EFFECTIVE, JOB REASSIGNMENT REQUIRED ABSENT UNDUE HARDSHIP

43. REASSIGNMENT NOT REQUIRED WHERE: No Position Exists No Vacancy in an Existing Position for Which the Disabled Employee Qualifies Reassignment Would Involve Promotion of Disabled Employee Reassignment Would Violate Rights of Another Employee under Collective Bargaining Agreement Spitzer v. Good Guys, Citing Federal Cases

44. BUT ABSENT COLLECTIVE BARGAINING AGREEMENT OR OTHER “UNDUE HARDSHIP”, REASSIGNMENT TO APPROPRIATE VACANT POSITION REQUIRED EVEN IF EMPLOYER MUST DEVIATE FROM ITS POLICIES

45. Federal Law Barnett v. U.S. Air • Plaintiff protected from policy allowing senior employees to bump Willis v. Pacific Maritime Assn. • Seniority system embodied in collective bargaining agreement should not be interfered with

46. ACCORDING TO NINTH CIRCUIT, DANGER TO ANOTHER EMPLOYEE DOES NOT CONSTITUTE UNDUE HARDSHIP UNDER ADA WITH RESPECT TO ASSIGNMENTS Echazabal v. Chevron USA • CONFLICT WITH CALIFORNIA LAW?

47. SEXUAL HARASSMENT DISCHARGE OF OFFENDER NOT REQUIRED IF LESSER REMEDY IS EFFECTIVE Star v. West

48. SEX DISCRIMINATION • EEOC finds exclusion of prescription contraceptives discrimination on basis of sex and pregnancy, where plan covered other drugs designed to prevent development of medical conditions

49. RETALIATION • NINTH CIRCUIT HOLDS FAILURE TO PREVENT CO-WORKERS’ “SHUNNING” OF COMPLAINING EMPLOYEE CAN CREATE EMPLOYER LIABILITY FOR HARASSMENT Fielder v. United Airlines • CALIFORNIA COURTS SAY EMPLOYER NOT RESPONSIBLE Thomas v. Department of Corrections

50. STATUTE OF LIMITATIONS • NINTH CIRCUIT HOLDS THAT ANY ACT WITHIN LIMITATIONS PERIOD CAN “REVIVE” PRIOR ACTS UNDER CONTINUING VIOLATION THEORY Fielder v. United Airlines Morgan v. National Railroad O’Loghlin v. County of Orange