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August
2000 Employees
Now Have a Right Not to Live in Modesto On January 1, 2000, a quiet revolution occurred in the field of employee rights in California, with the enactment of new amendments to Labor Code Section 96. It is now unlawful, and the basis for a claim for damages for loss of wages against the employer, for an employer to demote, suspend or terminate an employee for lawful conduct outside work hours, and off the employer's premises. In other words, what employees do in their own time is very largely not the employer's business. This article explores the ramifications of this new law, which is likely to overturn a range of practices that have been prevalent in the workplace and to provide new protection for employee lifestyle choices and political expression. These changes touch upon such diverse issues as employee moonlighting, rules against dating between employees, expression of political views, criticism of the employer in a public forum, policies about not hiring smokers, and even residency requirements (hence the title of this article). The new law was enacted as an expansion of the jurisdiction of the California Labor Commissioner. The Labor Commissioner is a statutorily created position within the California Department of Industrial Relations, Division of Labor Standards Enforcement. The Labor Commissioner has a longstanding administrative hearing process for adjudication of employee claims. An employee can file a claim with the Labor Commissioner about a number of employment matters, e.g. unpaid wages, in lieu of suing the employer. Normally, if the case is not resolved at an initial settlement conference, there is an adjudicatory hearing conducted by a Deputy Labor Commissioner. Pursuant to Labor Code Section 98.2, either side has ten days to appeal the Deputy's decision in the Superior Court, limited or unlimited jurisdiction, depending on the amount involved, with further time added as allowed under Code of Civil Procedure Section 1013. If no appeal is taken, the Labor Commissioner decision becomes a final judgment. If an appeal is timely taken, the matter will be heard de novo in court. The specific expansion of jurisdiction was the addition of a new type of claim that the Labor Commissioner is allowed to handle, set forth in the new subdivision of (k) of Labor Code Section 96. This section provides:
Note that there is no stated prohibition regarding refusing to hire an individual because of lawful conduct. The statute only addresses demotion, suspension or discharge of people who have already been hired.
The reference in this finding to Article I of the California Constitution, concerns a broad array of rights. Section 1, of Article 1, states: All people are by nature free and independent and have inalienable rights. Among these are enjoying and defending life and liberty, acquiring, possessing, and protecting property, and pursuing and obtaining safety, happiness, and privacy. Although this new law is framed as an expansion of the Labor Commissioner's jurisdiction to prosecute claims for lost wages, the statute will also have consequences for private employment litigation by expanding wrongful discharge - breach of public policy claims, sometimes known as Tameny cases after Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167. Lawyers representing claimants will argue that the Legislature has expressed an important public policy in this statute, and that a termination on account of an employee's off work lawful conduct is a violation of public policy giving rise to a Tameny claim. The following examples illustrate the potential impact of the new law in several important areas. Freedom of Expression May Moderate, an employee of an advocacy organization, The Nuts-R-Us Action Committee, writes a letter to a newspaper, stating that she is speaking for herself only, criticizing a recent position the organization has taken on a matter of public concern. On the job, however, May does everything that is expected of her, including implementing the very policy she has criticized. Her employer cannot suspend, demote or terminate May for this letter. A related issue is whether the outcome is the same for public employees. A public employee, absent this legislation, is protected by the First Amendment in speaking critically of his employer or his superiors when 1) the employee's speech is a matter of public concern; 2) the employee's speech does not interrupt the work place; and 3) the employee's statement is substantially correct. Rankin v. McPherson (1987) 483 U.S. 378, 383. See also Kirchmann v. Lake Elsinore Unified School District (1997) 57 Cal. App. 4th 595. Will the amendment to Section 96 mean that public employees will have a broader right to criticize than under prior law, and be free from penalty, even if their off the clock expression of views does not satisfy all three elements of the First Amendment test? We expect the answer is yes, as there is nothing in the statute that distinguishes public from private sector employment. Indeed, the Legislation was prompted by firefighters' unions concerned with providing a better way to protect their members' rights of advocacy. Moonlighting Paul Drake is employed as an investigator by attorney Perry Mason. With housing costs rising, Paul notifies Perry that he has taken a second job evenings and weekends for Perry's nemesis, Hamilton Berger, with the understanding that he will not be working on cases with Perry on the other side. Perry cannot fire Paul for this lawful conduct of taking a second job. Note, however, that moonlighting for a competitor may involve unlawful conduct in certain specific situations, if for example, the employee violates the Uniform Trade Secrets Act, Civil Code Section 3426 et seq. This could occur if, for example, the employee uses confidential information from one job for the other, which under certain circumstances includes customer lists or other customer information. Dating Policeman Dan Ville is found to be dating a known criminal, Sandy Ramon. The police department can no longer bring charges against Dan that he has engaged in "conduct unbecoming an officer." The same result should occur if Dan and Sandy are co-employees dating in violation of a rule against dating between employees, which the employer has established to head off sexual harassment claims. The new law can add an interesting twist on cases previously seen in this field. One of the famous earlier wrongful termination cases was Rulon-Miller v. International Business Machines (1984) 162 Cal. App. 3d 241. In that case, the employee claimed that she was fired for a dating an employee of the company's competitor. She stated a claim for breach of the covenant of good faith and fair dealing. A breach of covenant claim permits damages for lost compensation and benefits only. By making a public policy wrongful termination claim referring to the public policy of Labor Code Section 96(k), the same employee could now assert a tort claim, involving general damages and punitive damages as well as lost compensation. Non-smoking Policies The Goody Two Shoe Company announces that it is a non-smoking company, and decides not to hire anyone who smokes tobacco, either on or off premises. (The Americans with Disabilities Act implications of this type of policy deserve a separate article.) Nick O'Tean, an ex-smoker, resumes his smoking habit after being hired, but only smokes off premises. The employer can't terminate Nick for resuming his habit. Legal Off Duty Conduct That Negatively Impacts The Employer's Business Wanda B. Rich, a nurse, appears on a television special, during the course of which she marries a complete stranger who is supposed to be a millionaire. Their marriage ends quickly and horribly, and Wanda is humiliated for her conduct in front of a national audience even larger than the one that viewed her getting married. She is employed by an agency that places nurses in hospitals. Several customers refuse to accept Wanda, stating she is too controversial, and others are placed instead. The company can't fire her for having been involved in the television fiasco, nor can it fire her based on "customer preference," which would be tantamount to doing the same thing. Residency Requirements Monty Diablo, a long time resident of the East Bay, takes a job with Widgets of Modesto. The company requires him to live within ten miles of the office in Modesto, and pays his moving expenses. About a year later, Monty decides he would rather move back to the East Bay, and put up with the long commute. The position does not involve responding to emergencies off-hours. The company threatens to fire him if he gives up his place in Modesto. Under the new law, Monty has a right not to live in Modesto and still keep his job. This example involved the private sector. In the public sector, the employer is allowed to impose requirements that employees reside within a reasonable and specific distance of their place of employment or other designated location. The restrictions are permitted by Article XI, Section 10 of the California Constitution. These public employee residence requirements are not effected by the new law. Conclusion The recent amendment to Labor Code Section 96 promises to protect employees' lifestyles and freedom of political expression by compensating employees for lost wages if they are terminated, suspended or demoted for lawful conduct on their own time away from the employer's premises. It remains to be seen whether the statute will be interpreted as broadly as it is worded, and whether contractual provisions waiving the rights under this statute will be enforceable. While we await court interpretations and possible further legislative action, employers and employees will both have to reevaluate whether longstanding rules concerning off the job conduct are still viable. |
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