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California Employers Cannot Deny Family Medical Leave Based on Honest Belief That an Employee Worked Another Job During Leave

Can an employer terminate an employee on medical leave, when the employer has reason to believe that the employee is secretly working at another job?

A new California app November 14, 2012, Richey v. AutoNation, Inc., provides an answer.  In Richey, the Plaintiff, Avery Richey, was a Sales Manager at Power Toyota of Cerritos. Richey suffered a back injury while moving furniture at home.  His physician certified that he was unable to perform his duties, and Richey went out on approved California Family Rights Act (CFRA) leave.  While Richey was on leave, one of his supervisors sent him a letter, advising him of the company’s policy barring other employment, including self-employment, while on a leave of absence.  Richey did not respond because he believed that the policy, as stated in the employee handbook – “you are not allowed to accept employment with another company while you are on approved CFRA leave” – did not apply to him because he was the owner of a restaurant.  The employer received information suggesting that Richey had been working at his restaurant while on leave.  Richey’s supervisor directed another employee to drive by the restaurant.  The employee observed Richey sweeping, bending over, and using a hammer to hang a sign.  Another supervisor visited the restaurant for about twenty minutes and believed he saw Richey working.  Several other co-workers observed Richey taking orders and acting as a cashier.  Based on this information, Richey was terminated four weeks before his leave expired.

Richey sued alleging violation of CFRA rights, and the case went to arbitration.  The arbitrator concluded that Power Toyota could terminate Richey if it had an honest belief that he was abusing medical leave.  Richey acknowledged that he had taken orders, handled payments, and answered the telephone, but claimed that he had only engaged in limited light duty tasks, as authorized by his doctor.  The Court of Appeal vacated the arbitrator’s decision, holding that the honest belief defense – the idea was that an employer should not be held liable for discrimination if the employer honestly, even though mistakenly, believed in a nondiscriminatory reason – has not been extended by the majority of courts to the family medical leave context.  The Court found that under the federal Family Medical Leave Act (FMLA), the deprivation of the right to reinstatement is a violation, regardless of the employer’s intent, and an employer’s good faith does not protect it from liability.  The Court then cited various California decisions applying FMLA principles to CFRA claims.

Employment decisions seemingly based on common sense – an employee on legitimate medical leave would ordinarily not be working somewhere else – can nevertheless result in liability for employers.  Based on the strict language of the CFRA, employers cannot rely on their honest belief that an employee working two jobs is abusing the leave process.  Richey reminds employers that employment leave laws are complex, and that leave issues must be considered carefully, particularly before any termination decision is made.

This article is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.