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California court: No individual liability for discrimination against service members

November 15, 2011

A little-known statute in California, Military and Veterans Code section 394, prohibits employers from discriminating against members of the armed forces in employment settings. That’s not news to California employers (or at least it shouldn’t be). What is news, however, is that for the first time a California court has held that only employers are liable for that kind of discrimination. As is the case in other types of discrimination, individual supervisors doing the discriminating face no personal liability. (Which isn’t to say that supervisors should rush out and do it, of course.)

The case is Haligowski v. Superior Court. Lieutenant Mario Pantuso was employed by Safway Services when he was called to active duty with the Navy. When he returned from his six-month tour of duty, he asked Safway for his job back. The employer’s response, communicated by Pantuso’s supervisor Mike Haligowski and regional manager Greg Chomenko, seemed to imply that Lt. Pantuso should go pound some of the sand he saw while serving in Iraq. Pantuso sued Safway, Haligowski, and Chomenko for discrimination and retaliation under section 394. The individuals argued the case should be dismissed as against them because section 394 proivded no basis for individual — as opposed to employer — liability

Here’s what section 394 says:

No person shall discriminate against any officer, warrant officer or enlisted member of the military or naval forces of the state or of the United States because of that membership. No member of the military forces shall be prejudiced or injured by any person, employer, or officer or agent of any corporation, company, or firm with respect to that member’s employment, position or status or be denied or disqualified for employment by virtue of membership or service in the military forces of this state or of the United States. . . .

No employer or officer or agent of any corporation, company, or firm, or other person, shall discharge any person from employment because of the performance of any ordered military duty or training or by reason of being an officer, warrant officer, or enlisted member of the military or naval forces of this state. . . .

The trial court judge, a literalist, held that “based on the plain language of California Military and Veterans’ Code [section] 394, the individual defendants are subject to liability” because “person means person.”

The slightly more nuanced court of appeal disagreed.

[W]e perceive two possible constructions of the use of the words “person” and “agent” in section 394. The first, as Pantuso argues and as the trial court ruled, is that the Legislature intended to hold individual supervisors personally liable for discrimination under this statute. The second possible construction is that, as is generally accepted in other employment discrimination contexts such as the FEHA, that the use of the word “agent” and “other person” was “ ‘intended only to ensure that employers will be held liable if their supervisory employees take actions later found discriminatory, and that employers cannot avoid liability by arguing that a supervisor failed to follow instructions or deviated from the employer’s policy.’” (Reno v. Baird (1998) 18 Cal.4th 640, 647 (Reno), quoting Janken v. GM Hughes Electronics (1996) 46 Cal.App.4th 55, 66 (Janken).)

The court went on to hold that “person” does not mean “individually liable person” within the meaning of section 394. Strongly supporting the court’s holding were the California Supreme Court’s pair of decisions interpreting similar statutory language from FEHA, and holding individual supervisors were not liable for discrimination or retaliation. (The cases are Reno v. Baird and Jones v. Torrey Pines Partnership.) In addition, the court noted that, because discrimination claims often arise from “necessary personnel management duties,”

holding a supervisor individually liable for personnel management decisions which are facially common and unremarkable, but which may in hindsight be considered discriminatory would place a supervisory employee in a direct conflict of interest with his or her employer every time that supervisory employee was faced with a personnel decision. The [supervisor] would be placed in the position of choosing between loyalty to the employer’s lawful interests at severe risk to his or her own interests and family, versus abandoning the employer’s lawful interests and protecting his or her own personal interests. We believe that if the Legislature intended to place all supervisory employees in California in such a conflict of interest, the Legislature would have done so by language much clearer than that used here.

Supervisors and HR personnel can breathe a small sigh of relief with this decision — but even so, as the Haligowski court noted, supervisors may be personally liable for discrimination against military personnel under federal law. Employers, however, remain “the plaintiff employee’s target” (as the Haligowski court put it) for discrimination and retaliation. Employers should be aware of section 394, and USERRA and other protections for military personnel, and the potential liability for stiffing returning service members.

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