Employer Is Held Not
Liable for Termination of
Supervisor Based On a Relationship with a Subordinate
A
recent decision of the California Court of Appeal held that the termination
of a supervisor based on his relationship with a subordinate did not
violate the supervisor's right to privacy. The court further held that the
termination did not violate the public policy against discharging employees
for lawful conduct during non-working hours as codified in Labor Code
section 96(k). Barbee v. Household Automotive Finance Corporation,
No. D040421, 2003 Cal.App.Lexis 1719 (2003).
Supervisor Had Ongoing Relationship With
Subordinate
The
case involved Robert Barbee, a national sales manager for Household
Automotive Finance Corporation (HAFC) responsible for leading the entire
sales force.
In
October of 2000, Barbee began dating Melanie Tomita, a member of HAFC's sales force. The chief executive office, John Vella heard of the relationship through rumors and
informed Barbee that intercompany dating
"was a bad idea." Moreover, HAFC had a conflict of interest policy
stating that relationships between employees create a potential conflict of
interest and that supervisor/subordinate relationships must be brought to
management's attention to determine appropriate action.
In
March of 2001, Barbee was questioned by the CEO and the human resources
director about his relationship with Tomita. Barbee was informed that the
relationship created a potential conflict of interest and that he would
have to end the relationship, or either Barbee or Tomita could resign.
Barbee
told them that both he and Tomita wanted to stay with the company. Barbee
acknowledged that the company probably assumed he was thus agreeing to end
his relationship. Not long after, Barbee attended some basketball games
with Tomita - a fact he admitted to the company.
HFAC
then terminated Barbee's employment, and Barbee filed suit.
Is There A Legally Protected Privacy Interest In Pursuing A Sexual
Relationship?
Barbee
claimed that the termination of his employment based on his relationship
with a subordinate violated his right to privacy under Article I, Section 1
of the California Constitution. The court disagreed.
In
order to establish a violation of the right to privacy, an individual must
show that (1) he/she had a legally protected privacy interest; (2) a
reasonable expectation of privacy in the circumstances; and (3) conduct by
defendant constituting a serious invasion of privacy. Hill v. National
Collegiate Athletic Assn. (1994) 7 Cal.4th 1.
As
for the first prong, Barbee contended that he had a legally protected
privacy interest to pursue an intimate or sexual relationship. No California cases
have directly decided that issue.
The
court of appeal looked to a recent United States Supreme Court decision, Lawrence
v. Texas (2003) __ U.S.
__, 123 S.Ct. 2472. In Lawrence, the Court held that a statute
prohibiting sodomy between persons of the same sex violated the due process
clause of the U.S. Constitution. In reaching its holding, the Court noted
that individual decisions between married or unmarried persons concerning
the intimacies of their physical relationship are a form of
"liberty" protected by the Due Process Clause.
The
Barbee court noted that state constitutional privacy protections are
distinct from and often greater than those provided in the federal
constitution. The court of appeal stated that, in light of Lawrence, Barbee may have a legally
protected privacy interest in pursuing an intimate or sexual relationship
guaranteed by the California Constitution.
However,
the court of appeal refused to resolve this issue because it determined
that Barbee could not meet the second prong of his invasion of privacy
claim.
No Reasonable Expectation of Privacy
The
Court held that Barbee did not have a reasonable expectation of privacy in
his relationship with a subordinate. The court's holding was based on a
number of factors.
First,
numerous courts have recognized that employers have a legitimate interest
in avoiding conflicts of interest within the workplace. Employers have a
legitimate interest in avoiding conflicts between work-related and other
obligations and in reducing favoritism or the appearance of favoritism.
Moreover, courts have recognized that supervisor/subordinate relationships
present issues of potential sexual harassment.
Second,
the court noted that HAFC had an express policy requiring that any
supervisor who wanted to maintain an intimate relationship with a
subordinate must bring the matter to the attention of management to allow
management to take appropriate action to avoid the potential conflict of
interest.
Finally,
Barbee was expressly told that there was a potential conflict of interest
in his relationship with Barbee and given options to avoid the conflict.
Barbee thus had advance notice that HAFC believed his conduct presented a
potential conflict. This advance notice further diminished any expectation
of privacy.
The
court of appeals upheld summary judgment of the right to privacy claim.
Termination Did Not Violate Public Policy
Barbee argued that his termination violated the public policy
embodied in Labor Code section 96 (k) and sued for wrongful termination in
violation of public policy.
Section
96(k) provides that the Labor Commissioner can take assignment of
"claims for loss of wages" as a result of adverse action taken
against an employee for any "lawful conduct occurring during
nonworking hours away from the employer's premises."
The
court of appeal held that Section 96(k) does not set forth an independent
public policy that provides employees with substantive rights, but merely
establishes a procedure by which the Labor Commissioner may assert claims
on behalf of employees. The court held that the plain language of the
statute does not itself describe any public policy, but merely outlines the
types of claims over which the Labor Commissioner may exercise
jurisdiction. The uncodified portion of the
statute states that the public policy behind section 96(k) was to provide
an individual employee with a mechanism to assert civil rights guaranteed
by Article I of the California Constitution.
Furthermore,
upon reviewing legislative intent and attorney general opinions, the court
noted that the primary function of Section 96 is to supply additional
enforcement mechanisms for rights established elsewhere and that no
substantive rights were created. Subdivision (k) does not on its face
preclude an employer from taking any action, but allows the Labor
Commissioner to take assignment of preexisting claims.
Thus,
Barbee had to establish that a violation of a substantive right protected
by article I of the California Constitution occurred. Since his only
constitutional claim, the privacy argument, failed for the reasons stated
above, Barbee's public policy claim also failed.
What Employers Should Watch For
While
not deciding this issue, the court does state in dicta that there may be a
legally protected privacy interest in pursuing an intimate or sexual
relationship. Thus, future cases may turn on whether the employee had a
reasonable expectation of privacy in his/her relationship with a
subordinate or co-worker.
Moreover,
the court specifically did not address Labor Code Section 96(a) because the
parties did not raise it. Section 96(a) was amended in 2001 and provides in
relevant part:
"(a) No
person shall discharge an employee or in any manner discriminate against
any employee or applicant for employment because the employee or applicant
engaged in any conduct delineated in this chapter, including the conduct
described in subdivision (k) of Section 96...."
It
may be argued that Section 96(a) declares public policy and provides a
substantive right.
Since
employers are strictly liable for supervisor/subordinate sexual harassment,
employers want to make clear that such conduct is prohibited and that even
consensual relationships may lead to potential conflicts. Moreover,
employers may be liable for harassment of their employees by non-employees
under recently enacted legislation (AB 76). Thus, employer should:
- Implement a clear
conflict of interest policy stating that personal or romantic
involvement with a subordinate employee or a competitor, client,
supplier, or vendor of the company may create an actual or potential
conflict of interest. The policy should further state that such
relationships can lead to claims of sexual harassment and morale
problems. Employers should clearly tie the policy to business related
concerns.
- Establish a policy
that employees involved in these potential conflicts of interest must
provide notice to management for a determination of whether an actual
or potential conflict exists.
- Establish a policy
that the company may in its sole discretion take whatever corrective
action it deems appropriate if an actual or potential conflict is
determined, up to and including termination of employment.
- Inform employees
that failure to disclose supervisor/subordinate relationships or other
relationships creating a potential conflict of interest is grounds for
disciplinary action.
- Communicate
conflict of interest policies to all employees. Place the policy in
the employee handbook and obtain a signed acknowledgment from the
employee that he/she has received, read and understood the handbook.
- Train managers on
sexual harassment law and their potential individual liability.
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