By Michelle Lee Flores
If an employee proves that an illegal reason (such as age discrimination) was a substantial motivation in his employer’s decision to terminate him, does the company have any defense to a wrongful termination claim?
A recent case confirms that a California employer may avoid liability if it can prove that it would have made the same termination decision, regardless of the wrongful motivation.
Jury Decides District Manager Was Misclassified
William A. Davis began working as an insurance agent for Farmers Insurance in 1977. In 1983, he entered into a district manager’s appointment agreement. The agreement was written as an Independent Contractor agreement but required Davis to, among other things, recruit agents acceptable to Farmers, represent Farmers in his district, “represent no other” insurance companies, and conform to all of Farmers’ regulations, operating principles, and standards.
Davis brought a lawsuit against Farmers in which he claimed that he was wrongly classified as an independent contractor instead of an employee. He also claimed that he had been wrongfully discharged because of his age (57) and that Farmers had failed to pay him his wages.
At trial, the Jury found that Davis was an employee and Farmers had misclassified him as an independent contractor. However, the trial court didn’t allow the jury to decide if he was owed wages. Instead, the trial court agreed with Farmers that Davis didn’t provide evidence that the company failed to pay him wages due, and certain wage deductions, including a balloon deduction from his final pay ($293,000 for repayment of loans from Farmers), were not improper or unauthorized.
Jury Instruction on Age Discrimination Claim
Davis also brought a common-law claim for wrongful termination based on his age. While his lawsuit was pending, the California Supreme Court held in Harris v. City of Santa Monica that when an employee supports a Fair Employment and Housing Act (FEHA) discrimination claim by establishing that an illegitimate criterion was a substantial factor in the adverse employment decision at issue, the employer may avoid liability for damages by establishing that it would have made the same decision even without the wrongful motivation.
At Davis’ trial, the court gave Jury Instructions amended to reflect the holding in Harris. The jury then found that Davis’ age was a substantial motivating factor in his discharge but concluded that Farmers would have made the same termination decision for legitimate reasons—poor performance. Accordingly, the jury awarded him no damages.
On appeal, Davis claimed the trial court erred by (1) issuing improper jury instructions and (2) not letting the jury decide if Farmers owed him wages. Specifically, he claimed the jury should have been instructed that he could recover damages for his age discrimination claim if age was a motivating factor in Farmers’ decision to fire him, even if the company proved that his poor job performance alone would have led to his termination.
Read more details of the case and the bottom line for employers.