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Employer-Friendly Ruling in Age Discrimination Case Is Overturned by California Legislature

  • October 3, 2002

The California Supreme Court ruled earlier this summer that the state Fair Employment and Housing Act prohibits age discrimination in hiring, discharge, suspension, and demotion. However, in an unanimous decision, the court ruled the plaintiff did not have a valid age discrimination claim under FEHA based on the employer's refusal to allow the employee to participate in its educational reimbursement program because of his age. The court found that unlike other protected characteristics, the FEHA prohibitions against age discrimination did not extend to employee benefits. Esberg v. Union Oil Company of California (June 26, 2002) 02 C.D.O.S. 5609.

In response, the California legislature quickly passed, and on September 17 Governor Davis signed, a bill expanding FEHA's protections to encompass providing of employee benefits, thereby abrogating the Esberg decision.

California Assembly Bill 1599: Age Discrimination Lawsuits: New Basis

Purpose: To extend protection against age discrimination in employment to selection for training programs and to compensation or other terms, conditions or privileges of employment.

Effective Date: January 1, 2003. However, the bill states its provisions are intended to clarify existing law and reject the Supreme Court's interpretation in Esberg. Accordingly, the bill's provisions may be applied retroactively.

Consequences: Makes it an unlawful employment practice, subject to certain exceptions, for an employer on the basis of a person's age to refuse to hire or employ the person, to refuse to select the person for a training program leading to employment, to bar or discharge the person from employment or from a training program leading to employment, or to discriminate against the person in compensation or in the terms, conditions, or privileges of employment.

Employers must re-examine their policies to ensure there are no age-based differences. In Esberg, the employer refused to reimburse the school tuition of an employee over the age of 40, despite the employer's tuition assistance program offered to its employees, which the Court held was lawful. The legislature now has prohibited such a practice.

Not Prohibited: Promotions within existing staff, hiring or promotion on the basis of experience and training, or hiring under specified established recruiting programs; inquiries about the age of an applicant or specifying age limitations where compelled or provided by law.

Overrules Esberg: Rejects the interpretation given to the law by the California Supreme Court in Esberg v. Union Oil Company of California (holding age discrimination claim under FEHA could not be based on "terms, conditions, or privileges of employment").

©2002 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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