A troika of California Supreme Court rulings over the past year may signify the end of an era in which the state was at the forefront of employee protections. The rulings demonstrate a strong employer bent, strengthening their ability to dismiss employees and limiting exposure to liability in discrimination cases.

Sanford Jacoby, associate director of UCLA's Institute for Industrial Relations, pointed out that California had established itself as a leader in worker protection, largely because of its Supreme Court decisions.

"Now," he maintained, "the court seems to be backing away and making us more like other states in the sense that employees are less powerful, relative to employers, when it comes to asserting their rights."

In each of the three rulings there was good news for businesses and bad news for individual workers seeking recourse under the California Fair Employment and Housing Act.

The upshot of these decisions could be more arbitration cases with smaller awards to employees and less exposure to punitive damages for employers on the discrimination front. In the workplace, it may mean a further fraying of the employer/employee relationship.

The most recent ruling, Guz v. Bechtel, handed down Oct. 5, strengthens the ability of employers to fend off claims of "implied contract," a doctrine sometimes used by dismissed employees that asserts length of service and pay raises are proof of an employer's legal commitment to keep them on board.

"That's important," said Jeffrey Berman, an employer attorney with Sidley & Austin, "because what the courts had been doing was putting a bunch of facts in a bag, shaking them up and assuming there was enough in there to assume implied contract."

California is an "at-will" employer state. The doctrine gives employers wide discretion in deciding who they want to work for them. Once the concept of implied contract is established, an employer is required to demonstrate that there is a "cause" for dismissal. If such a cause is established, successfully suing that employer becomes more difficult for the employee.

Possible boost for unions

Jacoby suggested that one reaction to the recent decision might be that employees will become more receptive to joining a labor union, which can provide greater protection under collective bargaining agreements. Jacoby noted, however, that most people who bring such suits are well-paid managers who are not covered under the National Labor Relations Act but can afford attorneys.

"The decision points out, more glaringly after all the downsizing in recent years, how little loyalty and protection employers extend to their professional employees and (those employees) will respond in kind," Jacoby predicted.

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