Can Employers Legally Terminate at Will?

Dale Fiola has been practicing law for over 40 years in the Southern California area, specializing in employment, labour and administrative law for the last 30 years. With extensive years of practice, Dale shares insights into employment law in the US; he shares light into what employees may deem as controversial, but what benefits employers, as well as how writing musicals enhanced his ability as a refined legal expert.

Why did you choose law? What attracted you to this industry?

I took Latin in high school and thought that a spiritual, religious calling may be best suited for me.  I never received the call, so I decided to apply the Latin to the Law, focusing on a legal career. I never looked back.  I had an extensive background in debate and forensic speaking as a teenager and competed at speech tournaments throughout my academic life.  Later, in my legal career, that experience paid off and allowed me to feel more comfortable in presenting and arguing cases before a judge and jury.

 An employer is vicariously liable for a hostile work environment created by a supervisor.

How has the sector changed over the years? What has been a big change which has deeply impacted the legal sector for the better?

Administrative and labour law have operated on an even keel with predictable changes in their makeup to fulfill due process and fair trial proceedings afforded government and union-represented employees.  One of the frustrating areas in labour law litigation is suing labour unions and employers conjointly in a hybrid action in federal court under claims of breach of duty of fair dealing and breach of the collective bargaining agreement, respectively.  The Courts almost automatically grant summary judgments when an employee must show that the “union’s conduct was discriminatory or in bad faith.” (Stevens v. Moore Business Forms, Inc. (1992 WL 570916). In other words, the unions are not culpable for their ordinary acts of negligence.  To succeed with an action against a union, one has to prove the union acted with gross negligence tantamount to bad faith, discriminatory or arbitrary conduct.  That is difficult to prove from a judicial perspective. As for the rest of us, ordinary negligence is all that is necessary to hold us liable.

As for employment law, it has been on a virtual roller coaster ride since Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654.  For the last thirty years, case decisional law interwoven with legislative changes have slowly defined what is a “terminable at will” employment from one that is not. The employment that is not is one protected by public policy, statutes prohibiting discrimination or retaliation in the workplace, or constitutionally protected freedoms of expression.  With the legal terrain being spelled out with some clarity for employment law, employers have been free to develop compliance systems, engage human resources departments and provide investigatory procedures to establish due diligence to promptly investigate and rectify outstanding claims of discrimination and retaliation.

The upholding of the arbitration agreements places employees in a very vulnerable position relative to recovery and the employers know it.

One area that is developing came as a result of the US Supreme Court’s decisions in two cases in 1998.  An employer is vicariously liable for a hostile work environment created by a supervisor. Faragher v. City of Boca Raton 118 S. Ct. 2275.  The Court followed the rationale of Restatement § 219(1), which provides, “a master is subject to liability for the torts of his servants committed while acting in the scope of their employment.”   Then, in Burlington Industries, Inc. v. Ellerth, 524 U.S. 742, 765, the Supreme Court provided an affirmative defence that the employer could assert as to liability and damages if it could meet two prongs: (1) “that the employer exercised reasonable care to prevent and correct promptly any sexually harassing behaviour”; and (2) “that the plaintiff unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.”

As a result of these two decisions, human resources departments have worked actively to, at least, create the appearance of a prompt investigation and corrective action into any claim of discrimination or retaliation.  The investigation by the human resources departments or their proxies must meet certain standard human resources practices.  The investigation should be conducted by a well-trained human resources representative who has no connection with the accused employee.  The investigation must carefully follow company’s written policies, and witnesses must be interviewed, including the claimant and accused, with relevant, open-ended, non-leading questions being asked.  See Silva v. Lucky Stores, Inc. (1998) 65 Cal.App.4th 256.

Another area of note that has been changing in the last six to seven years is employer-compelled arbitrations.  When an employee hires on as a condition of employment, he is required to sign a host of documents.  Now, it is standard fare for an employer to present a new hire with an arbitration agreement that locks an employee into agreeing that his employment is “at-will,” can be terminated for any or no reason given and with or without notice, that he/she waives his/her right to a civil action, jury trial, and collective, representative or class action, and he/she agrees to take all disputes to arbitration.  In almost all instances, the employee is at the mercy of his/her employer and his/her desire to be gainfully employed and will sign without reading.  The implications of that act will force any dispute regarding that employment into an arbitral forum rather than a court of law.

On 21 May 2018, the United States Supreme Court upheld those arbitration agreements between employer and employee finding that the Federal Arbitration Act (FAA) requires the courts to enforce agreements to arbitrate, including the terms of arbitration the parties select.  As a result of that ruling, most arbitration agreements will be enforced and employees compelled to take them through individual arbitrations eliminating any possibility of a civil jury trial, or class or collective action.  However, as to violations of California’s Private Attorneys General Act (PAGA) (California Labor Code § 2698 et seq.) to recover civil penalties on behalf of the state against an employer for Labour Code violations, those claims are not covered within the arbitration agreements and therefore do not conflict with FAA.  Iskanian v. CLS Transportation Los Angeles, LLC (9th Cir. 2014) 59 Cal.4th 348.  Iskanian ruled that predispute employment waivers were unenforceable against the state [“a PAGA claim lies outside the FAA’s coverage because it is not a dispute between an employer and an employee arising out of their contractual relationship.” (Id. 386).]  A recent Ninth Circuit court decision upheld the unenforceability of PAGA waivers based upon the Iskanian decision.  Sakkab v. Luxottica Retail North America, Inc. (9th Cir. 2015) 803 F.3d. 425.

The upholding of the arbitration agreements places employees in a very vulnerable position relative to recovery and the employers know it.

The employer holds all the discovery cards

The Possibility of Arbitral Incentives.

First, there is no civil court judge not being paid by the parties, only by the state, who generally remains impartial throughout the proceedings. In an arbitral setting, the arbitrator could get “continuing business” from the employer or its attorneys as a perk for favorable decisions.  In one arbitration I was handling, after one favorable decision for the employer, the employer’s attorneys engaged that arbitrator for two more arbitrations while the original arbitration was still pending! One can only speculate what the attorneys’ motives were.

 

Employer’s Apprehension with Jury Trials.

One of the most formidable weapons against the employer is the jury trial.  It places the inner workings of the employer and how it treats its employees out there for public display.  Its results in bad public relations.  It is a lose-lose situation for the employer.  Then, there is no telling how the jury will react.  Will it make a large verdict against the employer with a huge non-economic award or lofty punitive damages?  The uncertainty is frightful for any employer but very real.  Placing the lawsuit in arbitration adds a privacy component to the dispute.  Generally, arbitrators are retired judges or current attorneys who have a sober view on what is a fair decision; whereas, a jury may send an emotionally-charged “financial” message to the employer.

 

Limited Discovery and Law and Motion.

Another advantage of the arbitral forum is cost.  There are fewer motions and discovery matters that vent themselves in arbitration.  Many arbitration services limit the number of depositions to be taken and excise the formalism of interrogatories, requests for production of documents and requests for admission from the proceedings.  It results in a faster approach for the employer to handle the matter and reduces the expense of attorneys’ fees in defence which could correspond to a potential award of attorney’s fees in favour of the employee should he/she ultimately prevail.

There is another appeal to the employer – the employee is hindered in his/her efforts to get discovery.  Without the formal procedures in place and limited discovery, which the courts have indicated are appropriate for arbitrations, the employee is left scurrying trying to get enough evidence to prevail on his/her claims.  Thus, the employer holds all the discovery cards:  the employees that are available and currently on payroll to testify against the recalcitrant employee and all the personnel records.  It only needs to ask for what documents the employee has and take his/her deposition, and it is on its way to trial.

Although I have not seen unethical legal practices in the courts, I have detected from my own observations that political party preferences influence the judicial reasoning, which can have an impact on the success or failure of an employment case.

No Class, Collective and Representative Actions.

With no class or collective action possible, the employer’s prerogative is to “silence” each arbitration as it goes through the mill.  It does this by using confidentiality agreements and stipulations for protective orders that eventuate into protective orders.  Once the arbitration is completed, the records produced by the employer must be “returned” or destroyed” and not accumulated for dissemination on other cases.  This imposed “gag order” protects the employer from plaintiff attorneys sharing case information.  The gag order does not impair the employer’s ability to accumulate information from one arbitration to the next so that it can “fine tune” and strengthen its defences against the next upcoming case.

 

Regarding unethical legal practice, what do you think needs to be done in America to fight against possible corrupted, untruthful practice in the courts?

Although I have not seen unethical legal practices in the courts, I have detected from my own observations that political party preferences influence the judicial reasoning, which can have an impact on the success or failure of an employment case.  For example, I had three to four cases in federal courts in the early 1990’s, which were being presided over by Republican-appointed judges, where summary judgment was granted in favour of the employer (two of those cases were later overturned by the Ninth Circuit). Later, when I tried a federal jury trial before a Democrat-appointed judge, there was a successful jury verdict for my client/employee.  It may have been coincidence, but I think not.

 Harassment is a byproduct of social interaction, whether at home, work or elsewhere…One isolated remark which engenders offensive feelings in an employee is not enough to violate the discrimination statutes. 

What are your first initial steps when talking on a new case on discrimination in the workplace?

It is most important that you listen to all the facts.  An employee will state their version of the facts in a very positive light.  You don’t have the employer’s take on that version, so you have to take off the rose-colored glasses and be “real”.  In examining discrimination or retaliation, the wrongful events must be continuing in nature, not just one isolated circumstance (unless egregious), and occurring in the recent past to assure the timeliness of the claims under the local forum’s statutes of limitations.  In California and under federal law, administrative charges of discrimination must be filed within a short period of time, no longer than one year, in most instances, from the last act of discrimination.

 

Out of all the cases you see regarding employment law, which is the most common ‘type’ of case, and why?

Wrongful termination is the most common type of employment case that moves through the courts. However, close on its heels, is a discrimination or retaliation case.  Many times, the subcomponent to wrongful termination has a variant of discrimination or retaliation to it.

 

Harassment in the workplace: why does it still exist and what can be done to fight it?

Harassment is a byproduct of social interaction, whether at home, work or elsewhere.  When two people get together, words can get in the way and be misinterpreted; harassment can spawn from there.  Harassment in the workplace requires more than just generalized harassment.  It must be “sufficiently severe or pervasive to alter the conditions of the victim’s employment and create an abusive working environment.” Meritor Savings Bank v. Vinson (1986) 106 S.Ct. 2399.  One isolated remark which engenders offensive feelings in an employee is not enough to violate the discrimination statutes. Faragher v. City of Boca Raton, (1998) 118 S.Ct. 2275, 2283.  A hostile working environment will be proven only when the incidents of harassment occur in concert or with a regularity that can reasonably be termed pervasive. Lopez v. S. B. Thomas, Inc. (2nd Cir. 1987) 831 F.2d 1184, 1189.

 

When is freedom of speech an issue in the workplace? What should workers be aware of in regard to political stance in the workplace?

This is an area that has been under construction for several years. In a landmark case decided by the US Supreme Court, Garcetti v. Ceballos (2006) 126 S.Ct. 1951, the court determined that a county employee is protected from discipline based on speech that is not part of the employee’s official duties.  In Ceballos, the county employee was a deputy district attorney, who communicated with fellow deputies in a written memorandum regarding serious misrepresentations contained in a warrant.  After the memorandum’s surfacing, Ceballos claimed he was subjected to a series of retaliatory actions.  Ceballos never expressed those views publicly, but only inside his office.  The Court found that his speech was not protected because it was written as a part of his official duties as a calendar deputy.  Whatever the employer’s response was “reflects the exercise of employer control over what the employer itself has commissioned or created.” Garcetti, p. 1960.

The more the speech is a matter of public concern, expressed publicly, and not within the official duties of that employee, First Amendment protections come into play and protect that speech or expression.

 

What do you think makes a good lawyer?

Integrity, honesty, objectivity to the facts of a case, and hard work.

 

Do you have any ‘out of the box’ tips on how lawyers can retain their expertise over years of working in the industry?

Starting in 2005 through May 2015, I represented 4,000+ employees of Countrywide Homes Loans, Inc. in state and later in federal court.  A week or so before trial in October 2013, the case tentatively settled with the Bank of America, conditioned upon the approval of the district court.  The case was slated for a one-month long trial and, with its settlement, I had a big hole in my calendar for that time slot.  I decided to fill the void by writing a musical, the first of its kind for me, called “Attention Whore,” based upon similar, but not identical, facts of a federal case I had prosecuted to jury trial in 2003.  I wrote the script and the music in 56 days, copyrighting it thereafter.  I never promoted the musical for production purposes, but I got such exhilaration out of the exercise that I decided to write a second musical.  The second musical was called “Dittz, which was scripted with music in 2015.  My daughter was a Hollywood actress and I decided I would help her find work by possibly writing a screenplay for her to act in.  That screenplay was called “Suggestibles,” about a Christ-like prototype that attends Stanford University.  Again, I never promoted the screenplay.

Having written so much legalese over the years, it was fun to write loosely in script format at the ripe old age of 62 years.  I now have written 9 more screenplays in the past 5 years and two more musicals called “Heaven -27” and “WitchStruck.”  I am currently working on two more musicals called “The Time Tinker” and “Vulgaria,” the last of which is a specially prepared musical for a Las Vegas showroom.

The persistency in generating a livelihood as lawyer can dull the senses over time.  A brief respite can trigger a renewed sense of vigor in the legal trenches, which I have experienced first-hand.

Despite these digressions into entertainment, I have an active caseload of class actions and individual arbitrations that has and will continue to occupy a good amount of my time.

I believe I was inspired to pursue entertainment from a legal standpoint when I law clerked for Kenneth Kahn, a Los Angeles Attorney, who represented Andrew Daulton Lee in an espionage case that was later made into a movie entitled, “The Falcon and the Snowman,” with Sean Penn playing Lee.  The case generated a lot of attention and public reaction.

As my years practicing law progressed as an attorney from 1977 to the Countrywide settlement, I did not have the time or ability to devote to free-lance script writing.  When my children final went off to college and moved out, and with the Bank of America settlement proceeds, I determined to take a little time off to explore these literary pursuits.

I’m certainly no professional musician or composer, but I think someone gave me a dollar one time when I played the piano by happenstance at a local restaurant.  That won’t qualify me as a professional on any level.

Writing “Attention Whore” opened my eyes for the first time that, even as a professional lawyer, I don’t lose my ability to create on a different level. Labeled as an attorney does not deprive me of the manner and means to step out of that role once and a while and experience something that drives passion.  I think of Francis Scott Key, a Maryland lawyer, who stepped out of the role of advocate to write a poem about his observations over the battle at Fort McHenry in 1814.  Those words became immortalized as the lyrics for the National Anthem.

I know that my foray into a new area of entertainment may stimulate the neurotransmitters in my head to hopefully delay the onset of aging, but that temporary migration into this new territory has made me more astutely aware of law and the representation of clients. The persistency in generating a livelihood as lawyer can dull the senses over time.  A brief respite can trigger a renewed sense of vigor in the legal trenches, which I have experienced first-hand.

 

The Law Offices of Dale M Fiola
200 North Harbor Boulevard • Suite 217 • Anaheim, CA 92805
Phone: 714.635.7888 or 714.635.7887
www.dalefiola.com

 

The Law Offices of Dale M. Fiola have been handling employment and labor actions since the early 1980s. As the years have passed, the Law Offices of Dale M. Fiola have focused primarily upon representing employees in all types of litigation, such as race, sex, age and ethnIcity discrimination, retaliation, wrongful termination and discipline, and racial and sexual harassment against public and private sector employers.

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