January 2001 Vol. 7 No. 1 ISSN 1087-6219
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In This Issue

• California Supreme Court explains principles of implied in fact employment terms
• Summary judgment for employer on failure to accommodate claim reversed
• Court of Appeal upholds employment dispute arbitration clause under Armendariz standards
• School district not required to provide special services to home schooled child
• CBEST is a valid screening test for public school teachers
• UPDATES

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California Supreme Court explains principles of implied in fact employment terms

The California Supreme Court has explained the requirements for proving an implied in fact contract to overcome the statutory presumption of at will employment. It also ruled that the implied covenant of good faith and fair dealing cannot be used to create such a contract by itself.

John Guz worked for Bechtel for over twenty years, receiving steady raises, promotions and good performance reviews. Bechtel had written personnel policies, which established a form of progressive discipline, and set out procedures for implementing a reduction in force. Another policy stated that Bechtel employees “have no … agreements guaranteeing continuous service and may be terminated at [Bechtel's] option.” Bechtel terminated Guz's employment after it eliminated his work unit and transferred its tasks to another office.

The Supreme Court ruled that Guz's twenty years of service with accompanying raises and promotions was not sufficient by itself to create an implied in fact contract requiring good cause to terminate his employment. There has to be evidence that the employer and the employee actually intended to alter the at will employment presumption set out in Labor Code section 2922.

Bechtel's employment policies could provide the necessary evidence to overcome the presumption, despite the terminate at Bechtel's option clause. However, those policies did not require good cause. Although there were no constraints on Bechtel's prerogative to determine when to institute a reduction in force, the Court did remand to the Court of Appeal to determine whether Guz had a viable claim that Bechtel had not adhered to its reduction in force procedures.

Guz asserted a separate claim for breach of the implied covenant of good faith and fair dealing. The implied covenant cannot supply a good cause requirement, where the evidence does not establish an implied in fact agreement requiring good cause.

Guz v. Bechtel Nat'l, Inc., 24 Cal. 4th 317 (2000).

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Summary judgment for employer on failure to accommodate claim reversed

The Second District Court of Appeal in Los Angeles has ruled that disputed factual issues precluded summary judgment dismissing a failure to accommodate claim by a bank branch manager suffering from post-traumatic stress disorder. The undisputed facts did not establish that the bank had taken all possible steps to accommodate the manager's disability.

Leanne Jensen was the victim of an armed robbery at the Wells Fargo branch where she worked as the branch manager. After the robbery, Jensen developed post-traumatic stress disorder, and was unable to return to her job as a branch manager.

Jensen applied for a number of alternative jobs, but was not selected. Wells Fargo said that it did not select her because she was not qualified, because others had priority, or because others had superior qualifications. The bank did offer her a temporary position that she turned down. The evidence could support the inference that Wells Fargo placed the burden on Jensen to identify suitable available positions.

To defeat a failure to accommodate claim on a summary judgment motion, the employer must establish by undisputed facts (1) that a reasonable accommodation was offered and refused, (2) that there was no vacant position for which the disabled employee was qualified, or (3) that it did everything possible to find a reasonable accommodation but was unable to do so because the disabled employee did not engaged in discussions in good faith.

Wells Fargo was not entitled to summary judgment. The offer of a temporary job was not a reasonable accommodation. Therefore, Jensen's rejection of it did not relieve Wells Fargo of its duty to provide an accommodation. Jensen declared that Wells Fargo did not offer any other positions.

Wells Fargo's evidence did not definitively establish that there were no other positions at the bank for which Jensen was qualified. It could not place the burden on Jensen to identify suitable position. Employees do not have at their disposal the extensive information concerning positive alternative positions that employers have. The fact that other employees had superior qualifications or some form of priority was not a sufficient ground for refusing Jensen a position. The disabled employee is entitled to preferential consideration.

The evidence about Jensen's level of cooperation was in conflict. According to the bank, Jensen kept adding restrictions, and refused to talk to managers who were attempting to find jobs for her. Jensen denied those assertions. Although it was possible that Jensen was not acting in good faith, that issue could not be determined on a motion for summary judgment.

Jensen v. Wells Fargo Bank, 85 Cal. App. 4th 245 (2000).

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Court of Appeal upholds employment dispute arbitration clause under Armendariz standards

The Second District Court of Appeal in Los Angeles has upheld the validity of an arbitration clause to a wrongful termination claim. It applied the principles of the California Supreme Court's recent decision in Armendariz v. Foundation Psychcare Services, Inc., 24 Cal. 4th 83 (2000).

Brown & Root sent its employees a memorandum announcing the adoption of a dispute resolution program that included binding arbitration of all employment claims. Employees would pay no more than $50 for arbitration, and the company would pay up to $2500 toward the employee's attorney fees. There were no restrictions on the remedies available in arbitration.

Christine Craig sued Brown & Root for wrongful termination, sexual harassment and gender discrimination. The trial court granted Brown & Root's petition to compel arbitration. The Court of Appeal affirmed.

The distribution of the memorandum adopting the dispute resolution program made binding arbitration one of the terms of Craig's employment. Her continued employment following distribution of the memorandum constituted implied acceptance of the new procedure. Asmus v. Pacific Bell, 23 Cal. 4th 1 (2000) (discussed in the July 2000 issue of Appellate Decisions Noted).

Under Armendariz, mandatory employment arbitration agreements are enforceable so long as they permit employees to vindicate their statutory rights. Brown & Root's program meets the Armendariz standards. The cost to the employee is less than the filing fee for a superior court lawsuit. Adequate discovery is available. Employees can recover all remedies that would be available in court. The arbitrator must issue a written decision, which is subject to judicial review.

Craig v. Brown & Root, Inc., 84 Cal. App. 4th 416 (2000).

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School district not required to provide special services to home schooled child

The Ninth Circuit has ruled that the Individuals with Disabilities Education Act (IDEA) does not require school districts to provide special services to children schooled at home in Nevada. Denial of those services does not offend the due process or equal protection clauses.

Christopher Hooks received his education at home from his parents, under an exemption from Nevada's compulsory attendance law. The local school district refused his parents' request for speech therapy services, pursuant to a policy that denied such benefits to home-schooled children. The parents sued the school district in Nevada federal court.

The IDEA requires school districts to provide special services to students in public schools, students placed in private schools by public agencies and students placed unilaterally in private schools by their parents. Christopher's parents argued that they had placed him unilaterally in a private school. The Ninth Circuit rejected their argument. Since the IDEA does not define private school, courts look to the state definition. In Nevada, the term “private schools” does not include a home in which instruction is provided to a child exempted from compulsory attendance. Therefore, Christopher had no claim under the IDEA.

The Hooks also argued that the school district's policy of denying special services to home-schooled children violated due process and equal protection standards. Although parents have a due process right to direct their children's education, the school district did not interfere with that right. The Hooks were free to teach Christopher at home. The district merely conditioned the provision of certain benefits on enrollment in school.

Since the school district's policy did not implicate a fundamental right or a suspect classification, it only needed rational basis to survive equal protection analysis. Limiting special services to those enrolled in qualified private schools reasonably advanced Nevada's interest in maximizing the utility of scarce funds for education.

Hooks v. Clark County School Dist., 228 F.3d 1036 (9th Cir. 2000).

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CBEST is a valid screening test for public school teachers

The Ninth Circuit has upheld the California Basic Education Skills Test (CBEST) in an action on behalf of a class of minority educators. Although the test had a discriminatory impact, it was properly validated.

California's Education Code requires all credentialed public school teachers to demonstrate proficiency in basic reading, writing and mathematics. The CBEST is the test that the State developed to test for such proficiency. The class established that the test had a statistically significant disparate impact on minority educators.

Although the State is not the direct employer of public school teachers, it is nonetheless subject to Title VII with respect to their employment. The State is heavily involved in the details of public education, and has the ability to interfere with class members' employment opportunities with local school districts.

The State correctly implemented the three-step approach to establishing job-relatedness. It identified the basic skills as the subject of the testing. It presented studies based on educators' perceptions to show that those skills were an important element of teachers' work behavior, and it presented another study that matched the test results to the skills.

Association of Mexican-American Educators v. State of California, 231 F.3d 572 (9th Cir. 2000).

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UPDATES

Subsequent treatment of decisions reported on in earlier issues:

Armendariz v. Foundation Psychcare Services, Inc. (September 2000 issue), now reported at 24 Cal. 4th 83 (2000).

Brooks v. City of San Mateo (July 2000 issue), opinion superseded on denial of rehearing, 229 F.3d 917 (9th Cir. 2000).

Carrisales v. Department of Corrections (January 2000 issue), abrogated by AB 1856, codified at Cal. Gov't Code section 12940(h)(3).

Echazabal v. Chevron USA, Inc. (June 2000 issue), superseded by new opinion, 226 F.3d 1063 (9th Cir. 2000).

Frank v. United Airlines, Inc. (July 2000 issue), petition for certiorari filed (Dec. 8, 2000).

Jensen v. Lane County (September 2000 issue), now reported at 222 F.3d 570.

Robinson v. Solano County (August 2000 issue), rehearing en banc denied (Oct. 23, 2000).

Sony Computer Entertainment, Inc. v. Connectix Corp. (March 2000 issue), cert. denied, 121 S.Ct. 172 (2000).

Three Boys Music Corp. v. Bolton (June 2000 issue), petition for certiorari filed (Oct. 27, 2000).

Wasson v. Sonoma County Junior College (March 2000 issue), cert. denied, 121 S.Ct. 305 (2000).

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