March 7, 2013

California Supreme Court Will Decide The Scope Of The “Honest Belief” Defense Under The CFRA

The California Supreme Court has agreed to review a lower court’s decision which prohibited the so-called “honest belief” defense used by California employers in response to claims under the California Family Rights Act (CFRA).  The high court’s review is notable because California courts have permitted employers to assert the “honest belief” defense in discrimination cases under the Fair Employment and Housing Act (FEHA).

In Richey v. AutoNation, Inc., the California Court of Appeals rejected an employer’s defense that it terminated an employee on CFRA leave based on an “honest belief” that he had lied about a back injury. In particular, while the plaintiff was on an approved leave, the employer dispatched another employee to conduct surveillance, and in the process the plaintiff was observed working in a restaurant and doing all sorts of physical activities may have gone beyond the restrictions imposed by his doctor.  The employer did not, however, do any further investigation of the incident or make any effort to speak to the employee or his doctor before firing him.

The issues in the litigation of the matter was whether the employer’s “honest belief” that the employee had exceeded his doctor’s restrictions was enough to satisfy its burden of proof under the CFRA.  Although the CFRA allows an employer to assert a defense that reinstatement was denied because the employee lied about the need for leave, the Court of Appeal found that an “honest belief” as to that reason was not sufficient.

This has proven to be a tricky issue for the courts.  Under the FEHA, an employer’s burden is merely to offer a “legitimate business reason” for terminating an employee and the employee must offer proof of “pretext,” namely that the employer’s offered reason is a cover up for unlawful discrimination.  In applying that so-called burden shifting analysis, the Court of Appeals has adopted the honest belief test, finding that “it is the employer’s honest belief in the stated reasons for firing an employee and not the objective truth or falsity of the underlying facts that is at issue in a discrimination case.”  On the other hand, federal courts have been split as to whether the federal Family and Medical Leave Act (on which the CFRA is premised) allows for such a defense – the Seventh Circuit allows such a defense, but the Ninth Circuit does not.

The statute itself offers little guidance; notably, the honest belief defense is not mentioned anywhere in the statute.  But, by the same token, it is not codified anywhere in the FEHA and the courts have been allowing employers to assert the defense for many years.

Ultimately, the decision may turn on the unique nature of the rights afforded by the CFRA and the FMLA.  In particular, the CFRA affirmatively requires employers to provide qualified employees with up to 12 weeks of leave and makes it so that an employer, not an employee, bears the burden of justifying the decision to terminate an employee who is on an otherwise approved leave.  By contrast, cases dating back nearly 40 years make it clear that under discrimination statutes, an employee always bears the burden of proving that he was the victim of unlawful discrimination.

This is a scenario which we see all the time: one employee observes another employee on leave for a supposedly debilitating condition playing softball, repairing his car, doing housework or something else which appears to exceed what his doctor has allowed.  Don’t end your investigation there – conduct a full investigation and especially make an effort to talk to the employee so you can confirm if the employee really was exceeding his doctor’s limitations, whether those limitations have changed and if based on those changed circumstances, he is ready to return to work.  The more fully developed your investigatory record, the more likely a court will be to uphold it – regardless of what the ultimate decision in Richey (which we may not see for at least a year).