MARCH 2001

I.
LEGISLATIVE UPDATE

Ergonomics Rule Repealed

This month, President Bush signed a bill repealing the Federal Ergonomics Regulation issued last year. The regulation, aimed at reducing workplace injuries such as carpal tunnel syndrome and lower back pain, was approved by the Clinton administration and took effect in January 2001. While President Bush’s signature ends compliance with the new federal regulation for the time being, California employers still must continue to comply with the ergonomics regulation that has been in effect in California since 1997.

II.
JUDICIAL UPDATE

Exclusion of Employee Over The Age Of 40 From Employer’s Educational Assistance Program Does Not Constitute Age Discrimination

In Esberg v. Union Oil Company of California, a California court of appeals determined that excluding a worker over the age of forty from the company’s educational assistance program did not constitute age discrimination. Dan Esberg ("the Employee") was hired by UNOCAL ("the Employer") as a telecommunications specialist. The Employee enrolled at the University of the Redlands and pursued his bachelor’s degree pursuant to the Employer’s educational assistance program.

In May 1994, before the Employee completed his bachelor’s degree program, he and another employee discussed their mutual desire to obtain a master’s degree. The Employee broached the subject with a supervisor who commented, "you are too old for the company to invest in." Nonetheless, the Employee obtained the necessary documents from Redlands to enter the MBA program and sent a letter to three managers, all of whom had authority to approve educational financial assistance. The Employee explained that he would soon complete his bachelor’s program and wanted financial aid to pursue an advanced degree. In August, a supervisor told the Employee his request had not been approved, giving no reason for the decision. Three younger employees received financial aid for a master’s program.

The bulk of the decision discussed whether state law prohibits an employer from discriminating as to the conditions, terms, benefits, and privileges of employment on the basis of age. Statutory causes of action for unlawful discrimination in employment are governed primarily by Government Code section 12940 and Government Code section 12941. These two statutes were enacted together in 1980. Section 12940(a) states that, in the absence of certain exceptions, it is unlawful "for an employer, because of the race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, or sexual orientation of any person, to refuse to hire or employ the person or to refuse to select the person for a training program leading to employment, or to bar or to discharge the person from employment or from a training program leading to employment, or to discriminate against the person in compensation or in terms, conditions, or privileges of employment."

The court noted that age is conspicuously absent from class-category list of section 12940. Rather, it is in a category by itself under section 12941. In pertinent part, section 12941(a) provides, "it is an unlawful employment practice for an employer to refuse to hire or employ or to discharge, dismiss, reduce, suspend, or demote, any individual over the age of 40 on the ground of age, except in cases where the law compels or provides for such action." Unlike its companion statute for all other discrimination categories, section 12941 does not make it unlawful for an employer to "refuse to select the person for a training program leading to employment, or to bar or to discharge the person . . . from a training program leading to employment, or to discriminate against the person in compensation or in terms, conditions, or privileges of employment."

In light of the statutory interpretation, the court found that the Employer’s denial of financial assistance to the Employee to pursue his master’s degree did not violate the statutory prohibition against age discrimination. Specifically, the court opined that unlike section 12940, section 12941 does not prohibit discrimination in selecting a person for, or discharging him or her from, a training program leading to employment, nor does it prohibit discrimination in the terms, conditions, or privileges of employment. Importantly, the court did not agree with the Employee’s argument that it should insert the terms "conditions, benefits, and privileges" of employment in section 12941. The court reasoned that perhaps the legislature found it inadvisable to compel an employer who wishes to provide special training programs or free college and postgraduate education to its twenty or thirty year old workers to also extend those privileges to employees in their forties, fifties, sixties, and beyond. The court further noted that obvious economic factors -- the cost of training and education program versus their long-term investment return to the employer -- may well have been considered when the lawmakers chose to put age in a class by itself. Quite simply the court concluded that the Employer did not violate the statutory prohibition against employment age discrimination by refusing to pay for the Employee’s master’s degree. We will have to wait and see if the legislature chooses to fill the gap between the statutes.

Arbitration Agreement Held Unenforceable Because It Did Not Meet The Requirements Of Armendariz

In McCoy v. Superior Court, a California court of appeals found that the law firm Marshack, Shulman & Hodges’ ("the Employer") arbitration agreement was unconscionable under the factors promulgated in Armendariz v. Foundation Health Psychcare, Inc. David McCoy ("the Employee") had been employed by the Employer as a file clerk for approximately three and a half years when he was summarily terminated. The Employee believed his termination was related to his impending two week leave of absence for annual military training and filed a wrongful termination action. The Employer moved to compel arbitration, citing an arbitration agreement signed by the employee. The trial court granted the motion and the Employee appealed, seeking to return to superior court.

The court found that the arbitration agreement did not meet their requirements under Armendariz. Specifically, the court was most offended by the requirement that the Employee pay half of the arbitrator’s fee. This agreement required the arbitrator be a retired superior court judge, whose fees run up to $400.00 per hour.

The McCoy case is a reminder for employers to ensure that mandatory arbitration agreements meet the five minimum requirements of Armendariz: (1) neutral arbitrators, (2) more than minimal discovery, (3) a written award, (4) all relief otherwise available in court, and (5) no requirement for an employee to pay unreasonable costs.

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.