Ruling Makes It Easier to Fire Good Workers

The California Supreme Court made it easier Thursday for companies to fire workers--reducing the possibility that a laid-off employee can win either an age discrimination suit or a case claiming that good performance over many years guaranteed job security.

The court’s decision backed away from a 1988 ruling that workers could not be laid off if they had been given reason to believe that their jobs would be safe so long as their performance remained solid.

Thursday’s decision also held that older workers who are fired during staff reductions may not claim age discrimination simply because some younger employees were retained.

The 6-1 decision will affect all private, nonunion workplaces in the state.

“There are no good signals for employees here,” said employment lawyer Steve Kaplan, who is on the executive board of the Los Angeles County Bar Assn.’s labor law section. “The court seems to be going out of its way, both in discrimination and employee contract rights, to cut back on the rights of employees.

“What the Supreme Court is saying is that an employee is living in a fantasy world if he thinks the employer has to treat him fairly,” Kaplan said.

Steven Drapkin, who represented the state’s largest association of employers in the case, called the ruling a major victory for employers and one of the court’s most important employment decisions in a decade.

The decision “slammed the door” on what employers viewed as unwarranted suits by laid-off workers, Drapkin said. In the process, the justices “partially overturned” an earlier decision that had been seen by employment lawyers as a landmark case, he said.

“This case says that trial judges have a duty to screen out non-meritorious cases,” Drapkin said.

Many employment lawyers had expected the court to use the current case as a way to extend its 1988 ruling and provide more protections for workers; instead, the decision is expected to make it more difficult to prove implied guarantees of job security.

The earlier ruling did not mean that every “vague” combination of factors, “shaken together in a bag, necessarily allows a finding that the employee had a right to be discharged only for good cause,” Justice Marvin Baxter wrote for the court.

Instead, the court ruled, employers may lay off longtime employees who have performed well so long as the worker cannot show that he or she had a “specific understanding” of job security.

Although length of employment and performance may still be considered, the test will be whether an employer’s words, conduct or written policies produced that sort of specific assurances, the court said. Heavy emphasis will be placed on written policies.

William Quackenbush, who represented the employee in the case before the high court, stressed that workers who can be fired at will still have rights. Each case must be reviewed on its specific facts, the court said.

The court also noted that employers cannot fire workers as a pretext to cheat them out of contract benefits to which they are clearly entitled.

That comment, included in a footnote in the court’s opinion, will help employees who have been fired just before stock options vest or in similar circumstances, Quackenbush said.

The portion of the opinion that dealt with age discrimination will make it more difficult for fired employees to get their cases before a jury in a California court.

Justice Joyce Kennard dissented in that part of the decision.

To get a jury trial with an age discrimination claim, a fired worker in California must now show evidence that the employer acted for discriminatory reasons. By contrast, federal courts require only that workers show evidence that the employer’s reason for the firing was not credible.

Employment lawyers said Thursday they will now advise clients with discrimination cases to take their claims to federal, rather than state court.

The case decided Thursday, Guz vs. Bechtel, was brought by John Guz, who was abruptly fired in 1993 after working for Bechtel National Inc. for 22 years. He had earned major promotions, merit raises and generally favorable job reviews.

The San Francisco-based engineering and construction company said the layoff occurred during a necessary reduction of the work force. Guz, who was 49 at the time, filed a lawsuit, charging he was illegally fired, in part because of his age.

A trial judge in San Francisco threw out the suit, but a Court of Appeal reinstated it.

The California Supreme Court said Bechtel “had the absolute right to eliminate Guz’s work unit and transfer the unit’s responsibilities to another company entity.”

However, the court said Guz can return to the Court of Appeal to argue that written policies that required Bechtel supervisors to rank employees before layoffs were not followed in his case.

“We are pleased that the court recognized that Bechtel was within its rights to consolidate two work units and reduce our work force,” said Jeff Berger, a spokesman for Bechtel.

Guz could not be reached for comment.

Knowledgeable lawyers said there was virtually no chance that the U.S. Supreme Court would agree to review the ruling because it involved an interpretation of state law.

“The impact is that some companies are going to think they can get away with a lot of stuff that before they were afraid to try,” said Joseph Posner, who heads the Los Angeles chapter of the National Employment Lawyers Assn.

“If the only thing you’ve got is a long time on the job and at least adequate performance,” Posner added, “it does look like this court is giving companies more leeway to fire people.”

Larry J. Shapiro, who publishes the California Employer Advisor, a newsletter for employers, said companies should now review their written personnel policies to ensure they do not provide employees with guarantees that might conflict with their ability to fire at will.