By: Keith R. Dobyns and Ankush Dhupar
In Vance v. Ball State University et al., the Supreme Court of the United States held that an employee who harasses others may subject an employer to vicarious liability under Title VII “only if he or she is empowered by the employer to take tangible employment actions against the victim.” “Tangible employment actions” are actions that effect a “significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits.”
In Vance, an African-American employee at Ball State University (BSU) alleged she was the victim of racial harassment and retaliation at her workplace. The plaintiff claimed that a fellow BSU employee was the initiator of such discriminatory acts. In her complaint, the plaintiff alleged that the employee was her supervisor and therefore BSU was vicariously liable for the creation of a racially hostile work environment.
BSU moved to dismiss the case claiming that it could not be held vicariously liable for the employee’s harassment. BSU insisted the alleged harassing employee was not the plaintiff’s supervisor as she could not hire, fire, promote, transfer, or discipline the plaintiff. The plaintiff argued that her fellow employee was a “supervisor” because she had the authority to control the plaintiff’s daily activities and evaluate her performance.
The Supreme Court sided with BSU in holding that for purposes of Title VII, to be a “supervisor,” an employee must have the power to take a tangible employment action against the victim. That is, she must be able to “effect a ‘significant change’ in employment status,” such as hiring, firing, demoting, promoting, transferring, or disciplining.
In California, employees alleging employment discrimination or harassment are likely to sue under the Fair Employment and Housing Act (“FEHA”) rather than the federal counterpart, Title VII. The FEHA usually offers employees greater protection, relief, and procedural advantages than Title VII.
Unlike Title VII, the FEHA defines “supervisor” as any person having the authority to hire, transfer, discharge other employees, or the responsibility to direct them. Thus, a person having the responsibility to direct an employee's day-to-day duties (i.e., a team leader) is a “supervisor” under the FEHA even if lacking authority to hire, fire, promote, or transfer the employee. This definition is broader than the definition under Title VII, and the Vance decision may have little impact on cases brought under California state law.
Practical Tip: Under the FEHA, an employer is strictly liable for workplace harassment by a supervisor. Additionally, an employer may be held liable for a non-supervisor’s harassing conduct if the employer knew or should have known of such conduct. Thus, employers should continually monitor co-worker interactions - especially between supervisors and subordinates - to ensure a non-hostile working environment for their employees.
The full text of the decision can be found here.
By: Patrick J. Kirby and Jesse K. Cox
Recently, Senate Bill 1186 (“SB 1186”), a bi-partisan measure aimed at protecting California small-businesses from predatory lawsuits filed under the Americans with Disabilities Act (“ADA”), was signed into law by the Governor. While only 12 percent of the country’s disabled population resides in California, upwards of 40 percent of ADA lawsuits nationwide have been filed within the state in recent years. The goal of SB 1186 is to help business owners become compliant with the mandates of the ADA by mitigating the frequency and severity of these lawsuits that often times shut down small businesses, with little to no benefit to those whom the ADA is designed to protect.
Specifically, SB 1186 prohibits attorneys from sending demand letters threatening to sue for ADA violations and demanding that the business owner pay to settle the prospective claim. Under the new law, parties are required to provide a written advisory to business owners 30 days before filing suit for construction-related violations. The bill also prevents parties from “combining” claims for a single violation through repeated visits to the same business premises, and incentivizes business owner compliance with the ADA by capping damages for unintentional violations remedied within 30 or 60 days of a complaint. However, this damages cap does not apply to “intentional” or “knowing” violations. Further, under the new law, cities and counties are required to inform business licensees of their responsibility to satisfy accessibility laws under the ADA. Portions of the bill are set to take effect immediately.
Practical Tips: With the enactment of SB 1186, California has taken the first steps to curb abusive ADA litigation that has plagued small business for years. Under this measure, small business owners will face less of the “pay now or pay later” pressure previously asserted by those trying to take advantage of the financial incentives included in the ADA. While hopefully reigning in many of the problems with ADA suits, the new law in no way excuses or exempts compliance, and the responsibility to align their operations with the ADA still rests on business owners. Businesses should consider SB 1186 a shield and not a sword, potentially protecting them from costly litigation as they work to adhere to all requirements of the ADA.
To learn more about this new law, read the press release issued by SB 1186 co-sponsor, State Senator Dutton: http://cssrc.us/web/31/news.aspx?id=12637
By: Patrick J. Kirby and Jesse K. Cox
In Sparks v. Vista Del Mar Child and Family Services, the California Court of Appeal prohibited the enforcement of an arbitration clause contained within an employee handbook. Specifically, in Sparks, the plaintiff was hired as a temporary employee before being hired permanently as the defendant’s controller in 2007. The plaintiff claimed he was fired for pre-textual reasons in 2010 after he complained of employee practices he believed violated federal and state law. He later sued for wrongful termination, and the defendant sought a petition compelling arbitration per an arbitration clause included in its employee handbook.
In support of its petition, the defendant asserted that the plaintiff signed a form entitled “Acknowledgement of Receipt of Employee Handbook,” demonstrating that he received and reviewed the handbook, and agreed to its terms—including the arbitration clause at issue. The clause itself was located on pages 35 and 36 of the handbook, and typed in the same font style and size as the rest of the handbook.
The court ruled there was no agreement to arbitrate. The court reasoned that acknowledgement of receipt of the handbook, by itself, was not enough to create an enforceable arbitration agreement. Specifically, the Court noted that according to both federal and state law, “the threshold question presented by a petition to compel arbitration is whether there is an agreement to arbitrate.” The party seeking to compel arbitration bears the burden of proving a valid agreement. If it carries its burden, the opposing party must then prove its defense by a preponderance of the evidence.
In this case, the defendant’s arbitration clause was tucked within its employee handbook, indistinguishable from the handbook’s other provisions. It was not highlighted or boxed off, nor was there any place for employees to specifically acknowledge the provision in writing. Moreover, on the “Acknowledgment” form that the plaintiff did sign, there was no specific reference to the arbitration clause. The Court stressed that to support a conclusion that an employee has given up his right to litigate an employment-related claim, there should be, “[a]t a minimum . . . a specific reference to the duty to arbitrate . . . in the acknowledgement of receipt form signed by the employee. . . .”
Additionally, the Court concluded that the defendant’s arbitration clause was both procedurally and substantively unconscionable. In particular, the Court found no evidence the clause was subject to negotiation; thus, it amounted to an adhesion contract and was procedurally unconscionable. Secondly, the clause was held substantively unconscionable because it forced the plaintiff to give up administrative and judicial rights under federal and state statutes without making express provisions for discovery rights or other procedures. Specifically, the arbitration clause referenced the American Arbitration Association rules, but these rules were not given to the plaintiff.
Lastly, the Court took issue with the defendant’s handbook on several other fronts. In particular, the handbook was merely “distributed” to the defendant’s employees, suggesting it was more informational than contractual. It also contained a sentence reading, “The Handbook is not intended to create a contract of employment. . . .” Importantly, the Court reasoned that because the defendant reserved for itself the power to unilaterally change the content of the handbook, any agreement it purported to make was illusory.
Practical Tips: The opinion in this case was not necessarily a wholesale assault on arbitration clauses. In fact, the court highlighted both United States Supreme Court and California Supreme Court authority recognizing the policy favoring arbitration agreements. That being said, such a general policy does not trump the requirement that these types of agreements be entered into voluntarily. Employers who choose to include arbitration clauses in their governing policies can help satisfy this requirement by ensuring employees are specifically aware of the arbitration provision, understand its terms, and understand what rights they are forfeiting by agreeing to arbitrate any dispute. While the court did not require that employees sign an arbitration agreement separate from a form acknowledging receipt of any handbook containing the arbitration clause, such a practice could help insulate employees from civil litigation in cases such as Sparks. If an employer chooses to not use a separate form, it may consider setting the arbitration clause apart from other text in the handbook, using bold font to highlight the clause’s presence, or include a signature line within close proximity to the arbitration provision to ensure that employees memorialize their recognition of the agreement to arbitrate.
The full text of the decision can be found here: http://www.courts.ca.gov/opinions/documents/B234988.PDF