The United States Supreme Court and the California Supreme Court recently have taken actions which may impact employers' defense of age discrimination lawsuits. In a decision dated April 1, 1996, the United States Supreme Court unanimously ruled that an employee suing for age discrimination need not prove that he or she was replaced by someone under forty (40) years old in order to support a claim under the federal Age Discrimination in Employment Act ("ADEA"). As a result of the O'Connor v. Consolidated Coin Caterers Corp. 134 L.Ed.2d 433, 116 S.Ct 1307 (1996) decision, employers may find it more difficult to defend themselves against age discrimination claims.
On May 15, 1996, the California Supreme Court agreed to review the Court of Appeal's decision in Stevenson v. Superior Court 42 Cal.App.4th 1243 (1996), in order to clarify whether age discrimination in employment violates the fundamental public policy of California and thereby constitutes a common law cause of action for wrongful discharge. The Court of Appeal below ruled that common law claims for age discrimination were barred by California law.
The Federal ADEA Decision
In O'Connor, a 56 year old employee was fired and replaced by a 40 year old worker. The former employee, James O'Connor, then filed suit in federal court alleging that his termination violated the Age Discrimination in Employment Act of 1967 ("ADEA"). The trial court granted summary judgment in favor of the employer, holding that Mr. O'Connor failed to make out a prima facie case of age discrimination, because he failed to show that he was replaced by someone outside of the age group protected by the ADEA. The Court of Appeals for the Fourth Circuit affirmed the judgment. The United States Supreme Court unanimously reversed the judgment, thereby permitting Mr. O'Connor to proceed with his discrimination claims against his former employer.
As explained by the Supreme Court, the ADEA bans discrimination against employees because of their age, but limits the class of individuals protected by the Act to those who are 40 years of age or older. Although the ADEA limits its protection to those who are 40 or older, it prohibits discrimination against those protected employees on the basis of age, not class membership. Accordingly, the fact that one person aged 40 or over lost out to another person aged 40 or over is irrelevant for purposes of proving a violation of the ADEA, so long as it is proven that the person lost out because of his or her age. In reversing the dismissal of Mr. O'Connor's age discrimination claim, the Court reasoned that the fact that a replacement is substantially younger than the plaintiff is a far more reliable indicator of age discrimination than is the fact that the plaintiff was replaced by someone outside of the protected class. As a result of this ruling, an employer can no longer avoid liability under the ADEA simply by showing that it replaced one "older" worker with another "older" worker.
The State Age Discrimination Decision
In Stevenson, an employee who had been terminated at the age of 60 following 30 years of employment filed suit against her former employer. Among other claims, Ms. Stevenson alleged a cause of action for wrongful termination in violation of the public policy against age discrimination. Age discrimination is prohibited in California by the Fair Employment and Housing Act ("FEHA") Government Code section 12900, et. seq. Nevertheless, plaintiff was precluded from asserting a claim under FEHA because she failed to exhaust the administrative procedures required by the statute. In the absence of a viable statutory claim, plaintiff was precluded from recovering for the alleged age discrimination unless she could establish a common law claim for wrongful termination in violation of public policy.
The California Supreme Court has ruled that in order to establish the existence of a fundamental public policy in the context of a wrongful discharge action, the asserted public policy must have a basis in either constitutional or statutory provisions. While the California Constitution expresses a fundamental public policy against race and sex discrimination, the Supreme Court recently determined that there is "no law of this state other than the FEHA which proscribes discrimination on the basis of age." Jennings v. Marralle 8 Cal.4th 121 (1994). As a result of the Supreme Court's pronouncements in Jennings, the Court of Appeal found itself compelled to dismiss Ms. Stevenson's claim on the ground that there was no fundamental public policy against age discrimination which could serve as the basis of a common law claim for wrongful termination. In reluctantly doing so, the lower court specifically urged the Supreme Court to re-examine what it considered to be a "troubling area of the law." All seven California Supreme Court justices agreed to review the Stevenson case. The Court's ultimate decision will clarify whether an employee can file a civil lawsuit for age discrimination without first resorting to the California Department of Fair Employment and Housing or the federal Equal Employment Opportunity Commission for redress.