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Labor & Employment Update: April 1999

Is a job seeker with no disability protected from improper interview questions under the Americans with Disabilities Act?

A federal appeals court recently held that the Americans with Disabilities Act's ("ADA") hiring rules, which prohibit employers from asking whether a job applicant has a disability or questions concerning the nature or severity of an applicant's disability, apply to disabled and nondisabled applicants alike. Griffin v. Steeltek, Inc., 160 F.3d 591 (10th Cir. 1998).

Plaintiff Randy Griffin applied for a job operating a machine that grinds steel. The company's application form included the following two questions:

  1. "Have you received Worker's Compensation or Disability Income payments? If yes, describe."
  2. "Have you physical defects which preclude you from performing certain jobs? If yes, describe."

Griffin answered the first question, indicating that he had suffered third degree burns to his hand and foot, had had elbow surgery and suffered shoulder pain. However, he left the answer space blank in response to the second question.

When Steeltek declined to hire Griffin, he sued under the ADA, arguing that the company had failed to hire him because he did not answer both questions and that the questions were impermissible under the statute. The company countered that Griffin had not been hired because he lacked the two years of steel grinding experience that the job required, and, in any event, Griffin could not state a claim under the ADA because he was neither disabled nor did the company perceive him as disabled.

Relying on ADA's legislative history, the Tenth Circuit Court of Appeals observed that Congress intended to curtail all questioning that would serve to identify and exclude individuals with disabilities from consideration for employment. This goal is best served by allowing all job applicants who are subjected to illegal questioning and who are, in fact, injured by such questioning, to enforce their rights under the ADA. To hold otherwise, the court concluded, ". . . we would in effect be making individuals with disabilities identify themselves as disabled to prevent potential employers from inquiring whether they have a disability. Such a course makes little sense."

The Griffin decision runs counter to another federal appeals court's holding in Armstrong v. Turner Indus., Inc., 141 F.3d 554 (5th Cir. 1998) in which the court held that a single, isolated violation of the ADA's hiring rules against a nondisabled applicant-without proof that the hiring decision was itself discriminatory-cannot give rise to a claim under the ADA. Although the United States Supreme Court may, ultimately, have to reconcile the two conflicting decisions, employers are advised to restrict their pre-job offer inquiries to nonmedical qualifications and skills, such as education and work history.

The Equal Employment Opportunity Commission, which enforces the ADA, further advises employers that they may ask applicants "to describe or demonstrate how they would perform job tasks," but not, for example, specific questions about disabilities, legal drug use or workers' compensation history. Only after an employer has made a job offer may the employer make further medical or disability-related inquiries, provided the employer subjects all new employees in the same job category to the same exam or inquiry.

U.S. Supreme Court to decide when to award punitive damages for intentional job discrimination

The United States Supreme Court heard oral arguments on March 1, in what may be the most significant employment-related case of the term, Kolstad v. American Dental Assn, No. 98-208. Kolstad will give the nine justices the opportunity to decide under what circumstances punitive damages in cases of intentional job bias may be awarded under federal law. The Civil Rights Act of 1991, which amended Title VII to provide for punitive damages and jury trials in such cases, allows punitive damages when the defendant acted with "reckless indifference" toward an employee's rights. The Court must decide what exactly this phrase means.

Plaintiff Carole Kolstad, a female attorney for a professional trade association, successfully argued before a jury that she had suffered intentional gender discrimination when she was passed over for a promotion, which was offered to a man with half as many years of experience with the association as Kolstad. Her supervisor had also refused to meet with her when she sought the position and had repeatedly used the word "bitch" to describe other prominent professional women in her presence. However, neither the trial judge nor the appeals court granted Kolstad's claim for punitive damages. The appeals court held that punitive damages, awarded to punish a wrongdoer, should only be awarded for "egregious conduct" or "truly outrageous acts of discrimination," not "garden-variety" bias claims.

The Supreme Court must now decide what Congress intended in extending punitive damages to intentional job bias claims. Kolstad argues that the appellate court's standard is too high, and, instead, punitive damages should be awarded when the defendant knew or should have realized that its conduct was probably unlawful. During oral argument, the defendant association countered that if Kolstad's standard is adopted, virtually every intentional job bias case would be eligible for punitive damages because all a plaintiff would need to show is that the employer's actions were intentional. That is, without the additional element of egregious conduct, every biased promotion, layoff and termination decision could give rise to liability for punitive damages. The case's outcome will have a significant impact on the remedies employees seek in job bias cases, since more than 24,000 such claims were filed last year alone.

In contrast, California law allows punitive damages for "malice," "oppression" or "fraud." Cal. Civ. Code Sec. 3294. Under California law, "malice" is defined as conduct which is intended to cause injury or despicable conduct with a willful and conscious disregard of the rights or safety of others. The key difference between state and federal law with respect to punitive damages for employment discrimination claims is that under federal law, punitive damages are capped depending on the size of the employer. No such comparable cap exists under California law.

Arbitration agreements under continued attack

Both state and federal courts have recently challenged employers' use of binding arbitration agreements. In addition, legislation has recently been introduced in Congress to prohibit such mandatory arbitration under numerous federal antidiscrimination laws.

In February, a California court of appeal held that an employer's attempt to compel arbitration in a wrongful discharge, sexual harassment and national origin discrimination suit could not succeed because the agreement compelling arbitration was unconscionable. Gonzalez v. Hughes Aircraft Employees Federal Credit Union, 99 C.D.O.S. 1409. In Gonzalez, a customer service representative had signed the company's standard form arbitration agreement requiring her to submit employment disputes to arbitration. The agreement required employees to submit to an internal grievance board and give written notice to the company of any claim to be arbitrated within twenty working days of the board's decision. Claims not within the twenty-day period would be deemed "late claims," which were "void, waived and not arbitrable." In contrast, the company but not the employee could "seek and obtain relief from a court" at any time. Finally, the arbitration agreement limited the discovery rights of the employee to the deposition "of one individual and any expert witness designated by the other party." The court rejected the entire agreement both because it was one-sided and because the employee, who was required to sign the agreement as a term of employment, had little bargaining power to alter any of the agreement's terms.

In addition, on March 9, the California Supreme Court agreed to review a recent court of appeal decision to sever an unenforceable remedies provision from an employee's arbitration agreement but let arbitration otherwise proceed. Armendariz v. Found. Health Psychcare Serv., Inc., 68 Cal.App.4th 374 (review granted) (1999). In Armendariz, two employees sued their former employer claiming they were harassed and terminated because of their sexual orientation. They had both signed the employer's standard arbitration agreement. The appeals court held that although the agreement contained a one-sided remedies provision that limited an employee's recovery "to a sum equal to the wages [the employee] would have earned from the date of any discharge until the date of the arbitration award," California has a longstanding policy favoring arbitration. Therefore, unlike the Gonzalez court, the Armendariz court allowed the balance of the arbitration agreement to survive. The California Supreme Court must now decide whether such agreements can be salvaged once a court determines they contain unenforceable provisions.

In Craft v. Campbell Soup Co., 161 F.3d 1199 (9th Cir. 1998), plaintiff Anthony Craft sued his employer for racial discrimination and harassment under federal law, as well as assault and emotional distress under state law. The collective bargaining agreement between Campbell Soup and Food Process Workers Local 228 included a mandatory grievance and arbitration procedure. While the grievance was pending, Craft filed his complaint with the federal district court in Sacramento. Campbell Soup moved for the case's dismissal, arguing that Craft was bound to proceed to arbitration, rather than directly to the courthouse door. However, a federal appeals court ruled that the Federal Arbitration Act, a seventy-three-year-old law that compels employees to honor binding arbitration clauses in collective bargaining agreements, does not apply to employment contracts or collective bargaining agreements like the Food Process Workers' because Congress intended to regulate contracts between merchants buying and selling goods and "never intended to apply [the statute] to labor contracts of any sort." Therefore, Craft could not be forced to arbitrate his federal claims.

He could, however, be compelled to arbitrate his state law claims, according to the reasoning of another recent federal court decision, Duffield v. Robertson Stephens, 144 F.3d 1182 (9th Cir. 1998) in which the court held that federal employment -related claims could not be forced into arbitration. The Craft holding, in particular, runs counter to decisions of eight other federal circuits, and some California courts have already shown a willingness to disregard the decision in favor of other circuit holdings. Thus, an arbitration clause may be unenforceable as to a claim filed in federal court while a similar claim filed in a California state court may be subject to arbitration.

Finally, members of Congress have recently introduced legislation in both the House of Representatives and the Senate to bar pre-dispute agreements requiring mandatory arbitration of employment claims. Both S 121 and H.R. 872 would amend certain federal civil rights statutes to prevent the mandatory arbitration of claims that arise from unlawful employment discrimination based on race, color, religion, sex, national origin, age or disability. Taken together, these bills would prohibit mandatory arbitration under numerous federal laws, including the Age Discrimination in Employment Act of 1967, the Rehabilitation Act of 1973, the Americans with Disabilities Act, the Fair Labor Standards Act of 1938 and the Family and Medical Leave Act of 1993. Although legislation to amend California's Fair Employment and Housing Act to bar pre-dispute agreements requiring mandatory arbitration of employment claims was introduced in the California Assembly last year, to date, it has not been re-introduced.

California daily overtime resurrected - change in law likely

In 1998, California revised its wage and hour laws to eliminate daily overtime. California overtime requirements, therefore, now conform with their federal counterparts under the Fair Labor Standards Act. Specifically, most private-sector, non-union California employers are no longer required to pay daily overtime to nonexempt employees who work more than eight hours in any work day. The new law also eliminated double-time pay for nonexempt employees who work more than twelve hours in any work day, as well as the seventh day premium pay requirement.

Two bills have now been introduced in California's State Assembly to overturn the recent change. The Eight-Hour-Day Preservation Workplace Flexibility Act of 1999, AB 367 and S 1000, would return to the pre-1998 standard for overtime payment, requiring California employers to pay overtime at one and a half times the regular rate of pay for hours worked over 8 hours in a defined workday and double regular pay for hours worked over 12 hours in a regularly scheduled workday. The bill would make exceptions for:

  1. employees working an alternative workweek schedule,
  2. employees covered by a collective bargaining agreement that provides for wages, hours of work, working conditions and overtime compensation,
  3. specified administrative, professional and other classes of employees designated by the Industrial Welfare Commission and
  4. the first four hours of makeup work ("compensatory time") performed during the same workweek to make up for specified time taken off.

In addition, the bill would make employers liable for prescribed civil penalties for failure to pay overtime wages.

Governor Gray Davis has announced that he supports these measures to return to the pre-1998 standard, and both bills are expected to be acted on soon within both houses of the State Assembly. If California returns to its prior overtime requirements, employers that have changed their overtime pay policies to eliminate daily overtime will need to reinstate them.

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