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Discussions Regarding Bonuses Are Not Permissible Basis for Terminating Employment

By Jamerson C. Allen
  • January 6, 2003

Do your employees speak with each other about their pay? Would your company like to enforce a policy that prohibits such conversations? WARNING!

The California Court of Appeal recently considered whether terminating an employee for discussing an employer's bonus program violated a fundamental public policy. The employee participated in a group discussion by marketing representatives assigned to separate long-term care facilities. The employee complained her director did not believe in bonuses and she had not received one. The director fired the employee less than a week later for participating in the discussion. Later, the employer advanced other reasons for the discharge.

When the employee subsequently sued the employer, she claimed the termination was in violation of public policy and was wrongful. In considering the merits of the claim, the court applied a four-prong test: (1) whether the policy is supported by either constitutional or statutory provisions; (2) whether the policy is 'public' in the sense that it inures to the public benefit; (3) whether the policy was clearly articulated at the time of the termination; and (4) whether the policy was 'fundamental and substantial.'

The court found this test was met and allowed the suit to proceed. The California Labor Code, section 232, precludes employers from disciplining employees for disclosing their wages. The court relied upon this section, as well as Labor Code section 923, which provides general rights and obligations of labor and management in the state, including the right of freedom of association. According to the court, that section also creates uniform 'fair labor practices.' With respect to the third and fourth prongs, the court determined the employee met her burden by showing Labor Code sections 232 and 923 were in effect long before her termination, and other courts had found the right to engage in 'concerted activity,' such as discussing compensation issues, to be 'fundamental and substantial,' even for non-union members. Grant-Burton v. Covenant Care, Inc., 99 Cal.App.4th 1361 (2002).

Editor's Note: The Grant-Burton decision is another illustration of a court's application of the National Labor Relations Act to non-union employees. No employer, unionized or not, should restrict employees from engaging in 'concerted activity,' including discussions regarding working conditions, compensation, and the like. In light of this opinion, employers should review their handbooks and personnel policies to ensure their current practices do not violate California law or the NLRA, even if their employees are not unionized. Employers with questions regarding the scope of the NLRA should consult experienced labor counsel to ensure compliance with this complex and easily misunderstood area of the law.

©2003 Jackson Lewis P.C. This material is provided for informational purposes only. It is not intended to constitute legal advice nor does it create a client-lawyer relationship between Jackson Lewis and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material. This material may be considered attorney advertising in some jurisdictions. Prior results do not guarantee a similar outcome.

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