Failing to Fight Unemployment Claims Today May Lead to Being the Target of a Costly Lawsuit Tomorrow
I. Failing to Fight Unemployment Claims Today May Lead to Being the Target of a Costly Lawsuit Tomorrow
As employers across California seek to reduce their overhead due to a challenging economy, many employees who are fired for serious misconduct, or who resign without good cause, can still seek to recover their lost wages by filing claims for unemployment benefits that they are not entitled to receive under the law.
Under California law, employees who are fired from their jobs for “serious misconduct” and/or who “resigned without good cause” are not eligible to receive unemployment benefits. However, that has not stopped a growing number of desperate former employees and their attorneys/representatives from applying for, and in many cases receiving, payouts from the state that they do not deserve and that are charged against an employer’s reserve account. Sometimes, employees who are terminated for serious misconduct or who quit without cause, receive unemployment benefits because they lie about the reason they were fired or left your employment. On other occasions, bureaucratic errors or an employer’s reluctance to tell the EDD the real reason why the employee was terminated result in employees receiving undeserved benefits intended to assist former employees who were not fired for serious misconduct and who did not voluntarily quit their jobs without good cause.
Once a former employee receives their weekly payments from the EDD, sometimes the employee starts to believe that he or she is really a victim of some sort of misfeasance by their employer. Instead of continuing their efforts to find new employment and bolstered by the myth that if they were not improperly fired, they would not be unemployed, these employees often seek to hit the legal lottery by filing lawsuits against their former employers. Any employer who had been through a lawsuit recognizes their disruptive and costly effects on business operations. Consequently, by failing to stop ineligible employees from receiving weekly benefit payments, employers run the risk of being targeted by a costly civil lawsuit.
II. Now Fiancées of Employees Who Filed Claims for Discrimination Can Sue You for Retaliation – Retaliation by Association
In Thompson v. North American Stainless LP, Thompson’s fiancée, Regalado, filed a complaint of sex discrimination against North American Stainless with the federal Equal Employment Opportunity Commission (“EEOC”). Within 3 weeks of receiving a notice from the EEOC of the complaint, the company fired Thompson. Thompson filed a complaint against American Stainless for retaliation. The lower federal court threw out Thompson’s complaint of retaliation because there was no direct connection between the protected activity of Regalado filing the complaint with the EEOC and Thompson’s firing. The federal Court of Appeals en banc sustained the lower court’s decision and the case was appealed to the U.S. Supreme Court.
The EEOC urged the Supreme Court to broadly interpret Title VII to extend statutory protection to any third party “so closely related to or associated with the person” exercising his or her statutory rights that it would discourage that person from pursuing those rights.
Justice Anton Scalia, a conservative justice, writing for the Court stated: “Thompson is not an accidental victim of the retaliation, collateral damage so to speak, of the employer’s unlawful intended means of harming Regalado (Thompson’s fiancée). Hurting him was the unlawful act by which the employer punished her. In these circumstances, we think Thompson was well within the zone of interest sought to be protected by Title VII. He is a person aggrieved with standing to sue the employer.
Justice Scalia refused to provide a bright-line test, a hard and fast rule for courts and employers to follow when applying the Thompson case. Instead Scalia stated: “We expect that firing a close family member will almost always meet the standard and inflicting a milder reprisal on a mere acquaintance will almost always never do so.”
In interpreting California’s anti-discrimination laws, California courts often refer to federal court decisions, especially decisions of the U.S Supreme Court. Therefore, the Thompson case holding that employers can be held liable for retaliation against third parties who are closely associated with the employee who filed the original complaint of discrimination, will surely find its way into retaliation claims filed under FEHA.
The Thompson case should not change the fundamental way in which you make sound discipline and termination decisions.
Seven Tips for Preventing Retaliation Claims
1. Take all claims of harassment and discrimination seriously by immediately investigating and if warranted, remedying the complaints.
2. Be able to recognize when your action may give rise to a claim of retaliation.
3. If your actions are justified and for legitimate non-discriminatory reasons, do not be prevented from taking action against an employee because of fear that the employee will claim retaliation.
4. Train you managers and supervisors to prevent acts of harassment, discrimination, and retaliation.
5. Train rank and file employees on how to avoid harassment and discrimination of their fellow employees.
6. If employees engage in protected activities, e.g. filing a complaint of discrimination or harassment or engaging in whistle blowing, make certain that any actions you take against them are for legitimate, nondiscriminatory reasons, unrelated to their protected activities.
7. Have your employment lawyer coach you through difficult disciplinary and termination decisions that could result in a claim of retaliation.
III. California Supreme Court Reaffirms a City’s Right to Lay off Employees Without First Bargaining With the Union About the Decision
For many years, public sector employers in California rarely laid off employees. Many public sector employers did not even have workable lay off rules in their labor contracts and personnel policies. Now, with the burgeoning budget crisis at both the state and local government level, cities, counties and special districts will have to consider laying off employees to be able to balance their budgets.
In 1974, the California Supreme Court issues a decision in Fire Fighters v. City of Vallejo that was widely interpreted for years as giving local government agencies the right to lay off employees without having to negotiate first with their unions about the decision to layoff.
Facing a financial crisis, the City of Richmond decided to lay off 18 of its fire fighter employees. The firefighters union tried to negotiate with the city to avert the layoffs, but the city refused to bargain over the layoff decision. The Union filed an unfair practice complaint with the Public Employment Relations Board (“PERB”) the state agency charged with enforcing state labor laws affecting local government employees and PERB would not issue a complaint because it concluded that the city’s refusal to bargain had not violated state law.
In an important decision reinforcing its 1974 ruling, the Court held that the city did not have a legal obligation to bargain about the decision to lay off employees, but only had a legal obligation to bargain about the affects of the layoff decision, including the number and identity of the employees to be laid off and the timing of the layoffs.
It is the City’s sole right to determine whether to lay off employees to reduce labor costs in response to a budget shortfall.
Some Suggestions for City Planning Layoffs
1. Give the employees affected by the layoffs and their union representatives sufficient and timely notice of the City’ decision to layoff.
2. Make certain your layoffs are in strict compliance with the City’s policies regarding reduction in force.
3. Make certain that each permanent employee is sent a Skelly letter detailing the reason that they were selected for layoff because a layoff is considered a termination and an impairment of the employee’s constitutionally vested right in their job. The employee should have an opportunity to respond to the reason why they have been selected for layoff.
4. Be prepared to support the City’s position as to the numbers and classifications of employees to be laid off and the specific persons to be laid off.
5. Make certain that the City Council is fully supportive of the decision to lay off employees before implementing this decision. You don’t want to be half way through the layoff process when the City Council changes its mind about using layoffs to lower labor costs to balance the budget.
6. Make certain that the layoffs do not disparately affect employees who are in a protected status, such as employees 40 years of age and older.
7. Have your employment lawyer coach you through the difficult process of laying off employees to avoid costly litigation that could deprive the City of the financial benefits of the layoff.
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