Wilson Gets Bill to Ban Age Bias in Firings

The state Senate, intervening in a controversial issue involving longtime employees, gave final legislative approval Monday to a bill making it illegal for companies to improve their bottom line by replacing older workers with younger, lower-paid ones.

Gov. Pete Wilson, who has 12 days to act, has not yet decided whether to sign or veto the bill, which would allow the dismissal of older, higher-paid workers only in cases in which a firm can prove it acted out of economic necessity.

The California Chamber of Commerce immediately called on Wilson to use his veto powers while the California Congress of Seniors urged the governor to sign the legislation.

Wilson’s deputy press secretary, Ron Low, said: “We’re going to withhold comment until he has time to sit down with his staff and review it.”

The bill by Sen. Quentin Kopp (I-San Francisco) would invalidate a 1997 state Court of Appeal decision, which held that the dismissal of older workers is not illegal age discrimination if the motivation is economic.

Allan Zaremberg, president of the state Chamber of Commerce and a close ally of Wilson, said he believes the bill would eliminate “an employer’s ability to use economic factors in managing their work force, even if the extra costs mean shutting your doors.”

“This bill goes well beyond age discrimination,” he added. “It says you cannot use economic factors in making management decisions if the employee is over the age of 40.”

Bill Powers, lobbyist for the state Congress of Seniors, said he has “high hopes” that Wilson will sign the bill, despite opposition from employers.

Unless Wilson signs it, Powers said, “serious consequences bode for all the older workers, meaning all those over 40. If they cannot be protected, they are going to have a hell of a time in the future.”

The 1997 appellate court ruling sent shock waves through the California workplace, especially among workers 40 and older who feared that employers would use it to streamline their businesses by cutting employee costs.

Over Republican objections, the Democratic-dominated state Senate passed the bill (SB 1098) Monday on a 25-9 vote, four more than needed. Last month, the Assembly approved the measure by a narrow 42-27 vote, one more than the majority required.

Citing what may be a fading tradition of mutual loyalty between workers and their bosses, Kopp said it is unacceptable to “fire an employee with years of loyalty, who is over 40, simply to hire someone who is younger at a lower salary.”

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Kopp also disputed Zaremberg’s charge that an employer would be prevented from offering an economic defense when older workers are dismissed. Kopp noted that his bill would allow employers to legally defend such dismissals on grounds that they were necessary to keep a company afloat.

For at least 20 years, California has outlawed discrimination in employment based on age. It applies chiefly to workers 40 and over.

Senate defenders of the appellate court decision, which upheld an Orange County Superior Court ruling in the case of a dismissed defense company accountant, said employers should be able to shop for the cheapest labor just as consumers seek the lowest prices for goods and services.

“Consumers discriminate every day on the basis of price,” said Sen. Ray Haynes (R-Riverside). He asserted that the court merely ruled that if an employer hires an employee who is cheaper, it “is not discrimination based on age.”

Sen. Patrick Johnston (D-Stockton), a legislative expert on industrial relations issues, countered that everybody claims to oppose age discrimination, but that the court made it “far too easy” for an employer to dismiss an older, higher-paid worker in favor of a new, less costly employee.

He warned against handing employers a “fig leaf” that would enable them to say that “price is the issue [when] really behind it is age discrimination in its most harmful form.”

The Kopp bill was supported by a variety of senior citizen and public employee organizations, including the California Teachers Assn. and the California Labor Federation, AFL-CIO.

It was opposed by major employer associations, including the state Chamber of Commerce, California Manufacturers Assn., California Health Care Assn. and the Assn. for California Tort Reform.

Economists and experts in aging said the impact of the court’s decision has been blunted so far by the strong economy, which has reduced the layoffs of workers regardless of age.

“You don’t really know what happens with this issue until the economy contracts,” said Fernando Torres-Gil, director of a policy research center on aging at UCLA and a former assistant secretary for aging at the U.S. Department of Health and Human Services.

At the same time, Torres-Gil said, the court decision has focused more attention on the pressures, including age discrimination, that middle age workers face in the job market.

Mark Rudy, a San Francisco attorney who represents workers in labor disputes, said he has noticed an increasing tendency to dismiss older employees.

For employers it is “easier to cut five people earning $100,000 a year than it is to cut 10 people making $50,000,” Rudy said.

The Kopp bill was the first employment age discrimination bill to reach Wilson. Two other similar bills, introduced by Sen. John Vasconcellos (D-Santa Clara) and Assemblywoman Martha M. Escutia (D-Bell), are pending.

They would reopen the courthouse doors to discrimination lawsuits that supporters say were closed by last year’s appellate court ruling.

The Escutia bill (AB 1643) would allow a suit to be heard on whether an older worker had been targeted for dismissal or whether the worker was included with other employees who got layoff notices at the same time.

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The Vasconcellos proposal (SB 2192) would allow suits only by individually selected employees who say they were discriminated against on the basis of age.

Last year’s ruling by the 4th District Court of Appeal involved the case of Michael Marks, an accountant at Loral Corp.’s offices in Newport Beach, who lost his job in a downsizing in 1992.

Marks, then 49, sued, charging that he was a victim of age discrimination. He said he was denied an opportunity to transfer within Loral while other workers under 40 were reassigned. Another worker over 40 was refused a transfer and laid off.

In its ruling, the appellate court said that 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.”

The state Supreme Court refused to hear an appeal, although the majority appeared uneasy with the appellate court’s decision. But the high court also refused to decertify the opinion, which would have blocked it from being used as a precedent in other cases.

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Times staff writer Stuart Silverstein contributed to this story.