Employee Benefits
Jun. 26, 2002
FEHA Allows Age Bias in Job Benefits, Court Rules
SAN FRANCISCO - The state Supreme Court Monday upheld the right of employers to consider age when deciding which benefits to grant their workers, but the ruling may soon be invalidated by pending legislation that expressly rejects the court's reasoning.
Interpreting the state's Fair Employment and Housing Act in the case of a 53-year-old man whose employer refused to reimburse him for education expenses while doing so for younger workers, a unanimous court found that the law's prohibition on age discrimination applies only to employment status, not to job benefits.
The plaintiff, Dan Esberg, had worked for Union Oil Co. for 14 years when a supervisor told him the company would not pay for Esberg to pursue an MBA because Esberg was "too old to invest in."
Esberg sued and won $51,000 on a breach-of-contract claim and $35,000 for pain and suffering. But the Orange County trial judge and 4th District Court of Appeal both concluded he was not entitled to the latter damages under FEHA because the law does not specifically proscribe weighing age in benefit questions.
Writing for the high court, Justice Joyce L. Kennard applauded Esberg's self-improvement efforts. But she led the court in affirming the lower court rulings, saying that "under no reasonable construction ... does the statutory language of the FEHA extend the age discrimination prohibition beyond these matters to encompass all employment decisions relating to the terms and conditions of employment, such as the furnishing of educational assistance." Esberg v. Union Oil Co., 2002 DJDAR 7073.
Age is one of a dozen categories - including gender, race, religion, sexual orientation, mental disability and marital status - in which employers are forbidden from discriminating when it comes to hiring, firing and demotions. But a separate statute that applies to on-the-job "terms and conditions" lists all the categories except age.
A bill that has cleared the state Assembly and is now pending in the Senate would render Union Oil Co.'s actions illegal.
Written in response to the Esberg case, AB1599 would add age to the list of factors that employers may not consider when deciding questions of benefits. The bill goes so far as to state that its intent is to "construe and clarify the meaning and effect of existing law and to reject the interpretation given to the law in Esberg v. Union Oil Company of California."
Tony Hartman, legislative analyst for Assemblywoman Gloria Negrete McLeod, D-Chino, the bill's sponsor, said Monday that it was McLeod's intent to make the law retroactive.
"It's not an idea that was born with her, but it was written strictly to rebut the reasoning used by the courts," he said.
The language is a reference to the appellate court opinion, but the Supreme Court adopted the same reasoning.
According to Esberg's lawyer, Dale Fiola of Anaheim, the only wrinkle in Kennard's opinion was her clarification that Esberg did not have a common law tort claim because the analogous Fair Employment & Housing Department regulation that Esberg claimed Union Oil violated is not supported by statutory provisions.
"The ruling is very similar to the 4th District," Fiola said. "It sends up a red flag that an employer can discriminate and not have a price to pay."
Union Oil's lead counsel, David Ozeran, of La Follette Johnson De Haas Fesler Silberberg & Ames, could not be reached for comment.
Sam McAdam, an employment law specialist with Seyfarth Shaw in Sacramento, said Monday the Legislature is "thumbing its nose at the Supreme Court."
"It's the Supreme Court's job to say what legislation means after it's been written," said McAdam, who represents employers. "AB1599 as written will probably cause a lot of confusion. I think it's too late for Esberg, but people with potential claims in the pipeline might be protected."
McAdam and Hartman both said Monday that the bill is expected to pass the Senate, but there's been no signal from Gov. Gray Davis whether he will sign it into law.
McAdam suggested responsible legislators should excise the language that makes the law retroactive.
"If they don't," he said, "they've just picked a fight with the Supreme Court."
Esberg, who still will collect $51,000 on his breach-of-contract claim, now works for a Southern California telecommunications company.
Matthew King
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