Friday, January 2, 2015

Ambiguity in Employment Contracts

Where an employment contract is ambiguous, it will be construed most strongly against the party preparing it or employing the words concerning which doubt arises. This rule applies to contracts prepared by the employer, or by the employer's representative such as his or her attorney.

RKO Radio Pictures v. Sheridan, 195 F.2d 167: Where employer drafted employment contract, employer was responsible for any ambiguity created by its use of language, and such ambiguous language was construed strictly against employer.

Goddard v. South Bay Union High School District (1978) 79 Cal.App.3d 98, the court stated: An employment contract between a school district and an employee is in essence a contract of adhesion and therefore will be construed against the school district.” Applying this principle, the court construed an ambiguous board regulation against the board. An adhesion contract is a contract in which the party with superior bargaining power permits the other party to adhere to the contract or reject it, but does not permit an opportunity to bargain over its terms. (Neal v. State Farm Ins. Co. (1961) 188 Cal.App.2d 690, 694, 10 Cal.Rptr. 781.)

One who is hired under such a contract has no opportunity to bargain for a change in the language of the document; hence, any ambiguous provision should be resolved against the draftsman and in favor of the other party. (Frates v. Burnett, 9 Cal.App.3d 64, 70; 87 Cal.Rptr. 731; Hamilton v. Stockton Unified Sch. Dist. (1966) 245 Cal.App.2d 944, 952, 54 Cal.Rptr. 463.) The rule of resolving ambiguities against the drafter “does not serve as a mere tie breaker; it rests upon fundamental considerations of policy.” (Steven v. Fidelity & Casualty Co. (1962) 58 Cal.2d 862, 871, 27 Cal.Rptr. 172, 178, 377 P.2d 284, 290.)

While the clear weight of the case law favors the employee, whether or not an employment contract is actually ambiguous is often a more difficult matter to appraise.

Harris and Mixed Motives in Discrimination Cases

The Supreme Court of California determined in Harris v. City of Santa Monica (2013) 56 Cal.4th 203, the proper remedy permitted for a plaintiff in a discrimination employment case under the Fair Employment Housing Act (FEHA) where, although discrimination was a substantial factor in her termination, the employer proves that a same decision result would have been reached for non-discriminatory reasons. Here, Harris was hired as a bus driver trainee in October 2004 for the City of Santa Monica; she had a couple “preventable accidents”, resulting in two accidents, one during her probationary period, and one after. For her evaluation, she was designated as “needing further development.” She also had a “reliability problem” due to being tardy on two occasions, and a failure to notify supervisors in a timely manner. Then in 2005 she informed a superior that she was in fact pregnant. The supervisor showed concern and asked her to seek clearance from her doctor to remain working. The morning Harris gave him the doctor’s note, her superior attended a supervisors' meeting and received a list of probationary drivers who were not meeting standards for continued employment. Harris was on the list. Her last day on the job was May 18, 2005. After alleging that sexual discrimination, which includes pregnancy, was a factor in her termination, the defense denied and made the affirmative defense that it had legitimate, nondiscriminatory reasons to fire her as an at-will, probationary employee. But the court denied the defendant’s jury instructions: “If you find that the employer's action ... was actually motivated by both discriminatory and non-discriminatory reasons, the employer is not liable if it can establish by a preponderance of the evidence that its legitimate reason, standing alone, would have induced it to make the same decision.” The trial court refused to provide such instruction, using instead the “motivating factor” test; which is determined by asking the jury to find for the plaintiff if proven by a preponderance of the evidence whether Harris’ pregnancy was a motivating factor in the her termination from employment. On appeal, the court reversed, finding that the jury instruction should have been permitted, and failure to amounted to prejudicial error. The Supreme Court agreed in part, but determined what remedial measures a plaintiff could still be awarded even in the mixed-motive analysis is determined in favor of an employer. A same-decision showing, in effect, is not a complete defense to liability if the plaintiff has proven that discrimination was still a substantial motive affecting her termination. Id. at 407. Thus the issue centered on remedies: “If a plaintiff has shown that discrimination was a substantial factor motivating a termination decision, but the employer has shown that it would have made the same decision in any event, what relief is available to the plaintiff?” Id. at 233. The court held, when a plaintiff has shown by a preponderance of the evidence that discrimination was a substantial factor motivating his or her termination, the employer is entitled to demonstrate that legitimate, nondiscriminatory reasons would have led it to make the same decision at the time. If the employer proves by a preponderance of the evidence that it would have made the same decision for lawful reasons, then the plaintiff cannot be awarded damages, backpay, or an order of reinstatement. However, where appropriate, the plaintiff may be entitled to declaratory or injunctive relief. The plaintiff also may be eligible for an award of reasonable attorney's fees and costs. As for the jury instructions, a jury in a mixed-motive case alleging unlawful termination should be instructed that it must find the employer's action was substantially motivated by discrimination before the burden shifts to the employer to make a same-decision showing, and that a same-decision showing precludes an award of reinstatement, backpay, or damages.

Thursday, June 9, 2011

Martinez v. Combs and the Expanded Definition of “Employer”

The California Supreme Court has recently expanded the definition of “employer” and what it means to “employ” for the purposes of Labor Code wage and hour violations. In the case of Martinez v. Combs, plaintiffs were seasonal agricultural workers who were seeking to recover unpaid minimum wages. They were employed by Munoz & Sons (“Munoz”) which operated large strawberry farms along the California Central Coast. Munoz had distribution agreements with two produce merchants, Apio, Inc. (“Apio”) and Combs Distribution Co. (“Combs”).When poor market conditions caused a severe drop in strawberry prices, Munoz was unable to pay plaintiffs, which led to litigation. Initially a defendant in the suit, Munoz declared bankruptcy. The case, thereafter, focused on whether, Apio and Combs can be held liable as employers under the Labor Code.

As part of regular business operations, Apio and Combs routinely sent representatives out into the fields to ensure that the workers were picking and packing the strawberries properly, inspect the quality, speak with the foremen, etc. They, however, did not have any supervisory authority, nor did they have any hiring or termination powers. Despite this very limited level of interaction, plaintiffs argued that Apio and Combs should be liable for unpaid minimum wages as employers.

To decide the issue of what it means to be an “employer” and to “employ”, the Court first went through a painstakingly detailed discussion of the history of the Industrial Welfare Commission (“IWC”) and its Wage Orders. Established in the early 20th century, IWC sought to curtail the exploitation of children and women in the workplace. As such, it was authorized by the legislature to define the terms as necessary in order to achieve its goals. IWC used a very broad definition in order to prevent those utilizing child and/or woman labor from avoiding liability by not being “employers” in the technical sense.

The IWC’s definition and one adopted by the Court in this case is: To “employ” means to (a) to exercise control over the wages, hours or working conditions, or (b) to suffer or permit to work, or (c) to engage, thereby creating a common law employment relationship. The “to suffer or permit to work” language in the definition is very broad and can create liability even where a typical employer/employee relationship is not present. According to the Court, the historical meaning of the phrase is just as applicable today: “A proprietor who knows that persons are working in his or her business without having been formally hired, or while being paid less than the minimum wage, clearly suffers or permits that work by failing to prevent it, while having the power to do so.”

In this case, however, the Court found that Apio and Combs were not liable as employers as they did not suffer or permit plaintiffs to work. The representatives that they sent out into the fields were not viewed as supervisors and they did not exercise any control over plaintiffs. They were there simply to make sure that the product they were paying for was satisfactory. The Court found that Apio, Combs and Munoz had a typical “chain of distribution” relationship and imposing employer liability on Apio and Combs would potentially expose others along the chain (i.e. supermarkets, other buyers of produce) to liability. In other words, merely doing business with a company which violates the Labor Code is not enough for employer liability even under the broadest of definitions.

While Apio and Combs avoided liability in this case, the Court’s adoption of IWC’s broad definition of what it means to “employ” means that companies utilizing the services of independent contractors, temporary staffing agencies, etc. should take extra precautions if they wish to avoid lawsuits for Labor Code violations. For instance, if a company contracts with a temporary staffing agency to provide workers and the agency fails to pay the workers minimum wage, the company may be liable under this broad definition. Thus, contracts should be drafted with clear and unambiguous language as to which party has the ability to control, hire, pay, terminate, etc. Even then, turning a blind eye toward obvious Labor Code violations during business operations may very well prove a costly mistake.

Written by: Vadim Yeremenko

Thursday, October 7, 2010

How Hostile Does It Have to Be?

Racist comments or ethnic slurs at work can amount to a “hostile work environment” depending on the number of incidents and the working relationship between the speaker and receiver of the discriminatory comments.

In a 2003 California case, Dee v. Vintage Petroleum, Glenda Dee brought an employment discrimination action against her employer under FEHA, the Fair Employment Housing Act. She claimed that her supervisor, Paul Strickland, asked her to lie about company business and secretly take documents from another supervisor’s desk. Additionally, she claimed he insulted her, used profanity, and made a negative comment about her race, saying, “it’s your Filipino understanding versus mine” when she told him it made her uncomfortable that he asked her to lie to other supervisors. (Dee v. Vintage Petroleum, Inc. (2003) 106 Cal.App.4th 30). Because of Strickland’s actions and comments, Dee left work. She said that the hostile work environment created a disability for her under FEHA (post traumatic stress disorder), and that she would return to work if Vintage Petroleum promised to limit her contact with Strickland. They denied her this request and fired her instead. The Court stated that based on these facts, Dee could take this case to trial and let a jury decide whether the situation amounted to a “hostile work environment,” thereby reversing a lower court’s ruling of summary judgment for the defendant, Vintage Petroleum. As for her claim under FEHA, however, the Court decided that she did not have a valid disability claim.

Although “there is neither a threshold or a ‘magic number’ of harassing incidents that gives rise to liability nor a number of incidents below which a P fails as a matter of law to state a claim,” courts often find that a single offensive act is not enough to create a hostile work environment. (Rodgers v. Western-Southern Life Ins. Co. (7th Cir. 1993) 12 F.3d 688, 674). Some jurisdictions will consider a single racial slur to create a hostile work environment, however, so long as it was by a supervisor. In 1998, the New Jersey Supreme Court opined that where a supervisor makes a single racial slur, that exacerbates the severity of the remark. (Taylor v. Metzger (1998) A.2d 685, 694). In this case, the fact that Dee was harassed by her supervisor was a vital factor in the Court’s decision. Supervisors have an ability to intimidate and control employees in a way that equal-level coworkers do not. Strickland not only degraded and insulted Dee on several occasions, he also said he would “drag her down” if she told on him, making his power over her very apparent. Strickland’s racial slur followed Dee’s complaint that he told her to lie. A reasonable inference is that Strickland wished to intimidate her so that she would not complain to higher management about his conduct.

Monday, June 9, 2008

Harassing Behavior

The following is a list of some sexual harassing behaviors defined by California statutory law:

1. Sexual favors -- unwanted sexual advances or propositions
2. Verbal conduct -- epithets, slurs or derogatory comments, including comments about a person's body, appearance, or sexual activity
3. Physical conduct -- assault, impeding or blocking movement, or any physical interference with normal work or movement
4. Visual harassment -- leering looks, offensive gestures, or derogatory posters, cartoons, or drawings

*Also includes harassment based on gender, pregnancy, childbirth, or related medical conditions

Thursday, April 10, 2008

Indirect Sexual Harassment

An employee may have a claim for sexual harassment even when sexually harassing conduct permeates the work environment of the employee, even if such conduct is not directed at the employee if: (1) it occurs in the employee's presence; or, (2) is directed at the employee but does not occur in his/her presence. (See e.g., Beyda v. City of Los Angeles (1998) 65 Cal.App.4th 511, 518; Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 611; Kortan v. State of California (Central Dist. Cal 1998) 5 F.Supp.2d 843, 850.)

Thursday, March 6, 2008

Some Recent Changes in Misc California Law.

1. Employers with 25 of more employees must give "qualified employees" as many as 10days off (unpaid) when their spouse is on leave from military deployment. Effective October 9, 2007.

2. The California minimum wage increased from $7.50 to $8. Effective January 1, 2008.

3. California drivers cannot use cell phones while driving a motor vehicle unless the driver is using a hands-free device. Effective July 1, 2008.