State High Court Deals Blow to Older Workers

A divided California Supreme Court decided Wednesday to let stand a lower court ruling that allowed companies to lay off older workers and keep younger employees to save money.

The court’s action means that trial courts throughout the state will be bound by the July ruling in favor of employers. A Court of Appeal in the case ruled that firing predominantly older workers is not age discrimination if the motivation is economic.

“It is pretty devastating for anyone age 40 or older for this to remain law,” said William Quackenbush, a labor and appellate lawyer. “. . . Employers are now going to be free to arrange their restructuring and business decisions around this case.”

Sarah Rios, a human resources consultant for the Employers Group, an organization of 5,000 state businesses, said employers will now have more flexibility when they make layoffs.

In the past, she said, employers have been afraid to lay off the most highly compensated employees because they usually are 40 or older and could claim age discrimination.

“It will have a positive impact on California employers,” she said. “Employers are really scared of terminating employees nowadays because they can be sued in so many directions.”

The Supreme Court does not explain its decisions to grant or deny review of cases. But it appears the majority of the justices was uncomfortable with the lower court’s decision in the age case.

Chief Justice Ronald George and Justices Marvin Baxter and Ming W. Chin fell one vote short in a move to decertify the ruling, which would have prevented it from being cited as precedent in other cases. Justices often will deny review and instead decertify a ruling when they disagree with the result but believe the case is not a good vehicle for deciding an issue.

Justices Stanley Mosk and Joyce Kennard voted for a full-blown review of the case. Lawyers familiar with it were puzzled that Mosk and Kennard failed to vote to decertify, and thereby dilute a ruling that troubled them enough to want a review.

Justices Kathryn Mickle Werdegar and Janice Rogers Brown apparently supported the ruling, although their votes were not made public.

“The most difficult thing to understand is why a case should remain on the books when only two of the seven justices really indicated their full approval of the decision,” Quackenbush said.

Although all trial courts will have to follow the decision, appeals courts still can issue conflicting rulings, prompting the California Supreme Court to revisit the law at a later date.

The court’s action stemmed from a lawsuit brought by Michael Marks, a former aerospace accountant who lost his job in 1992 when Loral Corp., his employer, eliminated most jobs at the Newport Beach corporate office where he worked. Marks was 49 at the time.

Marks said he was discriminated against on the basis of age because he was denied the opportunity to transfer within the corporation while other workers under age 40 received reassignments. Only one other worker, also older than 40, was denied reassignment and laid off.

Loral officials said Marks was laid off in a cost-cutting move because he made more money and had more benefits than younger workers. Company officials could not be reached Wednesday.

James J. Guziak, Marks’ lawyer, called the Supreme Court’s refusal to intervene in the case “extremely disheartening.”

Marks volunteered to take a pay cut but lost his job after he filed an age discrimination claim against the company for refusing to transfer him with younger workers, Guziak said. If Marks had been one year older when he was fired, he would have been entitled to a retirement package worth nearly $200,000 when he reached the age of 55, Guziak said.

He said Marks, who is divorced, was out of work for several years before landing another job. He was forced to sleep on a friend’s couch for a while and could not make support payments to his children, who were teenagers when he was laid off, Guziak said.

Susan Kemp, a lawyer and labor consultant for the California Chamber of Commerce, said business still will be cautious about terminating older workers. She said their lawyers probably will advise them that layoffs should not predominantly affect one group, whether in age, race or sex.

“You still have to ask, ‘Am I disparately impacting a class?’--because someone is going to raise the issue,” she said.

“What they have permitted is for an employer to point to high salary as the explanation for a decision on whom to terminate, . . .” said labor lawyer Quackenbush.

During Marks’ civil trial against Loral, the Orange County judge approved a jury instruction that said: “An employer is entitled to choose employees with lower salaries, even though this may result in choosing younger employees. If the choice is based on salary, there is no age discrimination.”

The Court of Appeal in Santa Ana upheld the instruction. In a ruling written by Justice David G. Sills, the court said that age discrimination laws were never intended to impede a company from controlling its costs.

“Employers may indeed prefer workers with lower salaries to workers with higher ones, even if the preference falls disproportionately on older, generally higher paid workers,” Sills wrote. “Decision-making by costs--reliance on relative prices if you will--goes to the very core of a market economy.”