JUNE 2001

I.
LEGISLATIVE UPDATE

Salary Basis Test Withdrawn

The California Labor Commissioner backed away from last month's pronouncement that California employers must pay salaried exempt workers a full month's pay when a company closes temporarily. In a letter dated June 22, 2001, State Labor Commissioner Arthur S. Lujan asserted he was "withdrawing" the DLSE's previous statement because the "California law and regulation appears in flux." The Labor Commissioner added that the division plans to clarify criteria "for determining the correct interpretation of ‘salary' in this context."

Thus, it appears that for the time being, California employers may rely upon the weekly basis rules for deductions that were in place prior to May 30, 2001. The Department of Industrial Relations and the Industrial Welfare Commission are scheduled to meet on June 29, 2001 to discuss, among other topics, this issue.

II.
JUDICIAL UPDATE

Title VII Front Pay Award is not Subject to Statutory Damages Cap

This month, the United States Supreme Court opened the door to larger federal verdicts against employers who are found liable of job discrimination, ruling that companies may be forced to pay a worker's future salary in addition to the other damages previously available. The Civil Rights Act of 1991 provides a bias victim the right to win as much as $300,000 in damages. Such workers were generally able to collect back pay and be reinstated to their previous job. The same held true for those who were denied promotions because of discrimination. In recent years, however, many discrimination victims have asserted that they do not wish to be reinstated to their former jobs, but instead want to be paid until they find a new, similar job. This is known as "front" pay.

In a case decided by the U.S. Supreme Court, Sharon Pollard claimed that she had been sexually harassed by male co-workers at a DuPont plant in Memphis, Tennessee. Her supervisors knew of the harassment and did nothing to stop it. Due to the harassment, Pollard took a medical leave in 1995; in 1996, after she decided not to return to her job, the company terminated her employment. She then sued DuPont. A jury ruled for her and awarded her the maximum $300,000 in damages. Pollard said she did not want to return to the plant, so her lawyers asked for front pay to compensate her until she found a new and comparable job. During the trial, one expert witness testified that she might need as much as $800,000 in future compensation. DuPont's lawyers argued that the $300,000 damages limit included front pay. The trial judge and the U.S. Court of Appeals agreed with the company. The Supreme Court overturned the ruling, stating that Congress had not limited front pay damages. Justice Clarence Thomas wrote that Congress "sought to expand the available remedies" for discrimination victims, not to contract them. The ruling does not guarantee that bias victim will receive much money. Typically, the award is not a large amount. It usually covers a few weeks or a few months until the employee finds a comparable job.

The impact of this case on California employers is minimal, since California's Fair Employment & Housing Act does not set a cap on damages.

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.