FEBRUARY 2002

I.
LEGISLATIVE/REGULATORY UPDATE

Discovery of Confidential Settlements

SB 11 (Escutia) would give the public access to: 1) private business documents exchanged between parties during litigation, and 2) out-of-court confidential settlement agreements, which otherwise would not be filed with the court. As a result, sensitive business information may be available to the public, including business competitors, the media, and other attorneys. SB 11 is pending in the Senate.

Workers' Compensation Benefits Are Likely to Increase

Determining that California's benefits for injured employees are inadequate, the Legislature voted to increase those weekly payments by more than $300 over four years.

AB 749 (Calderon) has been sent to Governor Gray Davis, who has indicated he will sign the measure after vetoing three previous benefit increases in past years.

The legislation would pump an extra $2.5 billion into the statewide compensation system, raising maximum benefits for injured workers from the current $490 a week to $602 next year and $840 in 2006. After 2006, automatic increases would follow the state's average wage increases. The bill would double death benefits to a maximum of $320,000. The increases would begin January 1, 2003, for job-related injuries suffered on or after that date.

Gender/Ethnicity Reports

AB 1309 (Goldberg) would impose barriers to employers who wish to provide goods and services to local and/or state governments with new mandatory paperwork burdens. The bill would also require employers to supply detailed information about employee pay ranges, job classifications, and recruiting information to state and local government agencies, which would then be open to public inspection. Moreover, the bill would require employers with 100 or more employees to file prescribed reports showing the composition of their employees by gender and ethnicity. The bill would make failure to file a report in good faith an unlawful business practice. AB 1309 fell short of the votes needed to pass the Senate Judiciary Committee but was granted reconsideration.

Health Care Coverage

SB 599 (Chesbro) would increase health care costs by mandating coverage for substance-related disorders in the same manner as other health care services are provided. This bill is currently in the Assembly inactive file.

II.
JUDICIAL UPDATE

EEOC Can Override ADR

In EEOC v. Waffle House the United States Supreme Court voted 6-3 that the Equal Employment Opportunity Commission can pursue victim-specific remedies under federal anti-discrimination statutes even if an employee has agreed to arbitrate discrimination claims.

"The EEOC is in command of the process" and the "master of its own case" once it files suit on behalf of an aggrieved employee, wrote Justice John Paul Stevens for the majority. "It is the public agency's province—not that of the court—to determine whether public resources should be committed to the recovery of victim-specific relief."

The case arose after the Columbia, S.C., Waffle House discharged grill operator Eric Baker in 1994 when he suffered a seizure at work. When applying for the job, Baker had agreed that "any dispute or claim" concerning employment would be settled by arbitration.

Baker later filed a charge with the EEOC, alleging his termination violated the Americans With Disabilities Act. Waffle House argued that the Federal Arbitration Act required arbitration and requested that the case be dismissed. In 1999, the Fourth Circuit Court of Appeals sided with Waffle House, holding that the EEOC may sue only for injunctive relief—not remedies specific to the individual plaintiff—when an employee signs an arbitration agreement.

In dissent, Justice Clarence Thomas said the decision "places those employers utilizing arbitration agreements at a serious disadvantage. Their employees will be allowed two bites at the apple—one in arbitration and one in litigation conducted by the EEOC—and will be able to benefit from the more favorable of the two rulings."

Last year, in a 5-4 ruling, the high court upheld arbitration agreements in general, which continued the supreme court's trend of pro-arbitration decisions. Circuit City Stores v. Adams (2001) 532 U.S. 105. Waffle House addresses the EEOC, not private employees or individuals. Employers should still consider implementing arbitration agreements. An agreement which complies with California law will still prevent the majority of cases from proceeding to court.

Key Title VII Case Argued Before United States Supreme Court

In a case with major implications for all job bias suits, the United States Supreme Court was urged to take a hard line against attempts by employees to recover for violations by employers that would be time-barred under Title VII of the Civil Rights Act of 1964.

On January 9, 2002 the justices heard arguments in National Railroad Passenger Corp. (Amtrak) v. Morgan, regarding the application of the continuing violation doctrine to employment discrimination claims.

Amtrak argued to the Court that employers are entitled to rely on Title VII's statute of limitations. Acts that fall outside the statute's period for filing job bias charges are, Amtrak argued, "merely unfortunate events in history with no present consequences."

Title VII prohibits job discrimination on the basis of race, color, religion, sex, or national origin. To preserve a claim under Title VII, a claimant must file a charge of discrimination with the Equal Employment Opportunity Commission within 180 days after the alleged unlawful incident occurred, or within 300 days after the incident if a charge was first presented to a state or local equal opportunity agency.

Morgan was hired by Amtrak in 1990 to work at its Oakland Maintenance Yard. He claimed that almost immediately after he was hired, he was subjected to a campaign of racial harassment by several of his supervisors. He filed internal complaints and filed a charge with the EEOC in 1995.

A federal district court held that he had forfeited claims for violations that fell outside the 300-day filing period because he had failed to report them promptly to the EEOC. The Ninth Circuit Court of Appeals held that under the continuing violation doctrine, courts could consider conduct that ordinarily would be time-barred "as long as the untimely incidents represent an ongoing unlawful employment practice."

The central inquiry, the Ninth Circuit opined, is whether "the evidence indicates that the alleged acts of discrimination occurring prior to the limitations period are sufficiently related to those occurring within the limitations period" to show a serial violation.

There is a split among the federal circuits on how to apply the doctrine. The Seventh Circuit Court of Appeals, for example, appears to permit it when a reasonable person in the plaintiff's position would not have recognized that the conduct falling outside the limitations period was unlawful.

A decision is expected by July, 2002.

Supervisors Can Be Held Personally Liable for Retaliation

The Ninth Circuit Court of Appeals recently held that a supervisor can be held individually liable for acts of retaliation under the California Fair Employment and Housing Act. As a result, all supervisors should be made aware that any acts of retaliation might result in liability affecting their own personal assets.

In Winarto v. Toshiba America Electronics, the court held that the retaliation provision of FEHA unambiguously applies to "any person," thus imparting personal liability. The court distinguished FEHA's retaliation provision from FEHA's discrimination provision. The discrimination provision prohibits only "an employer" from discriminating and has been held to not extend liability to individual supervisors.

To protect against the potential retaliation liability, employers should inform all managers and supervisors that they may be held personally liable for their acts of retaliation. Moreover, managers and supervisors should be trained on how to avoid retaliation in the workplace. Retaliation may be subtle and may include ostracism of the complaining employee. Finally, an employee should be assured that he or she acted properly in bringing forth complaints and that all employees will be treated fairly.

If you would like to discuss these or any other employment law matters, please do not hesitate to contact any member of Klinedinst's Employment Law Department.