Insurance Agencies And The Employment Civil Rights Laws Of California And The Ninth Circuit, Part 2

Disability Discrimination
The Americans with Disabilities Act (ADA) forbids employers of 15 or more employees from discriminating in employment because of disability.(1) Under California law the threshold is five employees.(2)

Disability discrimination laws differ from most other employment civil rights statutes in two respects:

1. They do not impose an absolute prohibition, since there clearly are some jobs that cannot be done by some disabled persons.
2. However, they require covered employers to make reasonable efforts to accommodate a disability of an otherwise qualified worker so long as it does not result in undue hardship to the employer.

The ADA frequently raises questions as to what is a 'disability.' Alcohol and drug use are potential problem areas. The statute itself gives employers wide latitude to discharge for alcohol or drug use on the job, even if such conditions could be considered in some circumstances to be disabilities that call for accommodation.

In Collings v. Longview Fibre Co.,(3) the Court held that employees had been dismissed for drug-related misconduct, not for drug addiction (which could be considered a disability). An employer does not violate the ADA by having rules prohibiting the illegal use of drugs at the workplace and discharging employees who violate those rules. A distinction might be drawn between past use of drugs, which might be a disability if it is being treated, and present use or lying about their use, which normally would permit a discharge.

Does the ADA apply only to conditions arising from a physiological condition rather than a 'voluntary' condition the worker supposedly can control? In a case pertaining to both federal and California statutes involving a 300-pound woman contending weight discrimination, the California Supreme Court said a physiological condition was required.(4) California law now covers mental disability,(5) which may or may not affect the underlying distinction as to what is a 'voluntary' act. One might foresee future plaintiffs contending that they had no control over their weight because of a mental disability.

The ADA also raises questions on what is a reasonable accommodation for a disability. One decision involved an employee diagnosed with epilepsy whom the company placed on paid leave. The company had attempted to find him another post not involving face-to-face selling and offered him his old job back (which he declined in order to go on disability). The court found the company had made reasonable efforts to accommodate the employee's disability, even though it did not initially grant him the accommodation he wanted.(6)

The Equal Employment Opportunity Commission (EEOC) gives the following examples of what is meant by reasonable accommodation:

• Making existing facilities readily accessible and usable by the disabled employee.
• Job restructuring.
• Modifying work schedules.
• Reassignment to a vacant position.
• Acquiring or modifying devices or equipment.
• Adjusting or modifying examinations, training materials, or policies.
• Providing qualified readers or interpreters.

The EEOC states that an employer is not required to lower quality or quantity standards to make an accommodation or to provide personal-use items, such as glasses or hearing aids.

Horror stories circulate of the cost of complying with the ADA, even though these relate more often with retrofitting buildings, not accommodating employees. In addition, the ADA (and other civil rights laws as well) are occasionally used by some as a means to accomplish other objectives. There is one anecdote concerning a strip tease club which was shut down by local authorities because it failed to provide a wheelchair ramp to the stage for strippers in wheelchairs.

The ADA overrides state Workers Compensation laws.(7) The ADA's predominance exposes employers to damages in excess of those allowed by Workers Compensation, if the employer wrongfully fails to accommodate an injured worker. However, the ADA can in turn be overridden by other federal statutes, such as the Railway Labor act which established physical job requirements.(8)

Sexual Harassment
Sexual harassment in employment is a hot legal topic.(9) It is an area fraught with danger for an employer, which can be held responsible for the acts of an employee. The employer is strictly liable for sexual harassment by a supervisor in California.(10) On the one hand, the employer needs to give the accused a fair hearing. On the other hand, the employer must investigate such claims immediately, and if true, must take effective action to stop the harassment (dismissing the harasser if necessary), or risk substantial actual and punitive damages. Steiner v. Showboat Operating Co.(11) involved a floor manager of a Las Vegas casino who subjected a female employee to ongoing sexually offensive language. He did this to men also. He was transferred and ultimately fired. She quit, and sued for sexual harassment, retaliation, constructive discharge, and wrongful infliction of emotional distress. The lower court dismissed all her charges. The Ninth Circuit held she could maintain a suit for sexual harassment, since her treatment differed from that suffered from men, and also that she could maintain the tort suit for emotional distress. In determining what constitutes sexual harassment, bear in mind that the federal Ninth Circuit defines sexual harassment from the victim's viewpoint, which for females means 'conduct which a reasonable woman would consider sufficiently severe or pervasive to alter the conditions of employment and create an abusive working environment.'(12) This standard of a 'reasonable woman,' not a 'reasonable person,' may mandate the manners of an earlier and more civil period in our history.

Sexual Orientation
Discrimination in employment for sexual orientation is actionable under California law,(13) although presently it is generally actionable under federal law.(14) It can also give rise to a California tort claim for wrongful discharge in violation of a public policy statute.(15)

Retaliation for Complaints
Finally, an employer who retaliates against an employee for raising a civil rights complaint is violating the civil rights statutes. The employer may also be sued in California for the tort of bad faith, which can give rise to punitive damages. This tort was cut back several years ago in California, but it still can arise when an employer violates a legislative public policy.(16) Violation of Calif. Labor Code 970, prohibiting false representations to encourage an employee to move, was held to give rise to the tort of bad faith.(17)

Tactics for Avoiding Claims
What can agency owners do to avoid such discrimination claims? Initially, they might look at their agency to see if a statistical case could be made that there is a disproportion in the hiring or promoting of their minority or female employees. If a disproportion exists, they should consider the reasons. There may be obvious explanations, such as the fact that the agency draws on the locality for its employees, and the employees may mirror the community. However, the analysis could uncover potential problems.

The managers should be sensitive to any conduct that might be construed as harassment of their female or other protected employees. It's wise to be sensitive to harassment of any or all of their employees for business if not for legal reasons.

Desirability of an Express Company Policy
Although it may seem like overkill, particularly in smaller agencies, there is much to be said for having an expressly written company policy, communicated to the employees, to the effect that the agency does not discriminate in employment because of race, religion, national origin, age, sex, or sexual orientation; that it will accommodate disabilities as required by law, and that it will not tolerate sexual or other harassment of its employees. Such a clause should be put in the agency manual, and possibly in employment contracts as well.

A suggested policy,(18) designed for sexual harassment, but which could be applied to all forms of discrimination, is as follows:

• A well-written policy directed against sexual harassment, which defines what it is and states that it will not be tolerated.
• A complaint procedure designed to encourage victims to come forward.
• Effective means of communicating the policy to all employees.
• Training and education programs for supervisors and/or employees.
• Prompt and thorough investigations of every complaint.
• Prompt corrective action and appropriate sanctions where violations occur.
• Regular management audit and review of the program.

Any claim of discrimination or sexual harassment should be investigated and dealt with promptly, and not swept under the rug. The employer is frequently put on the horns of a dilemma, since he must deal fairly with the accused, and still give the victim redress for valid claims while punishing the wrongdoer. If a transfer of one party is part of management's solution, be careful of transferring the accuser since this could be construed as punishment of the victim.

Situations in which older, minority, female, or other protected employees are passed for promotions they wanted and applied for, or are demoted or discharged, carry with them the possibility of a claim. Particularly in cases of demotion or dismissal, the reasons should be documented, preferably after getting legal help. As a general proposition, it is frequently recommended that an employee who is not performing satisfactorily first be given a warning, before any demotion or dismissal, and that each step be documented.

Desirability of an Employment Contract
There is much to be said for having employment contracts with the agency employees, particularly producers. They can clarify the status of a producer as an employee or independent contractor, spell out who owns the expirations, provide for confidentiality of trade secrets to lay the groundwork for statutory trade-secret protection and spell out whether employment is to be at will or whether an employee may be discharged only for good cause. They may also provide, if desired, for mediation or arbitration as an alternative to litigation.

Alternative Dispute Resolution
There is presently a great deal of discussion about the desirability of alternative dispute resolution, and under what terms it should be used. There is authority that mediation and arbitration clauses may cover civil rights complaints, particularly if the contract is expressly drafted to include civil rights complaints. However, the EEOC has resisted the use of mediation or arbitration as an alternative to its statutory procedures.

If an alternative dispute resolution clause is used, decide how it should be drafted. The source of the mediator or arbitrator is important. Some provision for discovery is probably a good idea, though a time limit to accomplish it may be appropriate. I think it is a good idea for the agreement to clearly state to the employee, in bold or capital letters, that under the agreement the parties are giving up certain rights, such as the right to a jury trial.

Conclusion
The civil rights laws need not impose any additional expense on an agency, but they do carry a risk of litigation. Knowledge of the law, execution of proper employment contracts and company policies to ensure that the law is followed, and an understanding of which give the employer protection, will reduce the risk of litigation. A sprinkling of the golden rule and maintenance of good personal relations with employees are just as important. Experience with errors and omissions in many professions shows that where a good relationship exists, even persons with legitimate complaints may forego the litigation option.

Footnotes

1. 42 USC 1102.1.
2. Govt. Code 12926.
3. (9th Cor. 1995) 63 F.3d 828.
4. Cassista v. Community Foods, Inc. (1993) 5 Cal.4th 1050, 22 Cal.Rptr.2d 287.
5. Govt. Code 12926.
6. Sharpe v. American Tel. & Tel. Co. (9th Cir. 1995) 66 F.3d 1045.
7. Jimeno v. Mobil Oil Corp. (9th Cir. 1995) 66 F.3d 1514.
8. Croston v. Burlington Northern Railroad Co. (9th Cir. 1993) 999 F.2d. 381.
9. Sexual harassment can be attacked under federal law if it leads to dismissal, Heyne v. Caruso (9th Cir. 1995) 69 F.3d. 1475. It can also be attacked under California state law. Catchpole v. Brannon (1995) 36 Cal.App.4th 237, 42 Cal.Rptr. 440.
10. Kelly-Zurian v. Wohl Shoe Co., Inc. (1994) 22 Cal.App.4th 397, 27 Cal.Rptr.2d 457.
11. (9th Cir. 1994) 25 F.3d 1459.
12. Ellison v. Brady (9th Cir. 1991) 924 F.2d 872.
13.  Govt. Code 12926, Labor Code 1102.1.
14. But see Meinhold v. Dept. of Defense (9th.Cir. 1994) 34 F.3d 1469.
15. Leibert v. Transworld Sys. Inc. (1995) 32 Cal.App.4th 1693, 39 Cal.Rptr.2d 65.
16. Gantt v. Sentry Insurance (1993) 1 Cal.4th 1083, 4 Cal.Rptr. 874; Rojo v.
    Klinger (1990) 52 Cal.3d 65, 276 Cal.Rptr. 130.
17. Fitch v. Brenda Raceway Corp. (1994) 22 Cal.App.4th 547, 27 Cal.Rptr.2d 531, Lazar v. Superior Court (1996) 12 Cal.4th 631, Cal.Rptr.2d.
18. Barbara Lindemann et al, Sexual Harassment.