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Bankers have employment rights, too!

June 9, 2011

Some have said banks hand out titles like neighbors hand out candy on Halloween.  Maybe there’s a reason for this.  According to national banks, their officers have fewer rights than other California employees when it comes to employment claims.  Why?  Because of a Civil War era federal law that states the board of a national bank “shall have power” to “dismiss such officers or any of them at pleasure, and appoint others to fill their places.”  (12 U.S.C. § 24, Fifth, italics added.)

National banks routinely assert the National Bank Act of 1864 as a defense against state law employment claims brought by “officers” of the banks.  The banks contend that employment laws prohibiting discrimination are trumped by their federal right to dismiss officers “at pleasure.”

As a recent opinion from the California court of appeal makes clear, the banks are at most half right.  In Quinn v. US Bank, a senior vice president claimed he was harassed and ultimately fired from his job because of a medical condition – diabetes.  He asserted state law claims for discrimination, harassment, failure to accommodate, and wrongful termination.  The bank asked the court to throw out the case, citing its rights under the National Bank Act.  The lower court granted the bank’s motion and dismissed Quinn’s case.

The court of appeal disagreed.  It held that the National Bank Act was “impliedly repealed” by subsequent federal anti-discrimination laws – principally federal Title VII and the federal Americans with Disabilities Act.  Since congress has said no employer can fire an employee for being disabled, or a woman, or Hispanic, congress must have also meant to limit a bank’s power to fire an officer on the same grounds, despite the broad language in the earlier National Bank Act.

The court also said that similar state laws that were consistent with – but not necessarily identical to – the federal anti-discrimination laws were not preempted.  As the court said:

State antidiscrimination laws are preempted only to the extent that they exceed the requirements of the ADA. . . .  As the United States Supreme Court noted, given the importance of state fair employment laws to the federal enforcement scheme, “preemption of [California law] would impair [the ADA] to the extent that [California] provides a means of enforcing [the ADA’s] commands.”

This is fairly convoluted reasoning.  The National Bank Act doesn’t allow actions that violate federal anti-discrimination laws, and also doesn’t allow actions that violate state law if the state anti-discrimination law is “consistent with” the federal anti-discrimination laws.  What does it mean for state law to “exceed [federal] requirements”?  A longer statute of limitations under state laws (the real issue involved in Quinn) doesn’t “exceed” the federal laws – even though it effectively reinstated a remedy Quinn had blown under federal law by not filing soon enough.  But the Quinn court referred to other, as yet unspecified aspects of state law that would “subject[] national banks to ‘diverse and duplicative superintendence’ or imposes “limitations and restrictions as various and as numerous as the States,” and thus would be held preempted.

Quinn’s case was reinstated and sent back for trial on the state law discrimination claims.  So in this instance Quinn’s title didn’t come with the cost of fewer rights.  But you can be sure that national banks will continue to assert the National Bank Act as a defense against employment law claims, at least until the California Supreme Court, or perhaps even the U.S. Supreme Court, address the apparent conflict between the 150-year-old banking law and modern, universally accepted workplace laws.

Bank officers of the world, rejoice!  You have all, er, most of, the rights of other California employees.  But don’t be surprised if your employer thinks differently if push comes to shove.

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