RECENT CALIFORNIA SUPREME COURT OPINIONS

Employment Law

Carter

On June 7, 2006, the California Supreme Court declared retroactive an amendment to the Fair Employment and Housing act which established that an employer is potentially liable for the sexual harassment of its employees by non-employees, such as clients and customers, when the employer does not take immediate and appropriate corrective action to end the harassment. Carter v. California Department of Veteran’s Affairs (2006) 38 Cal.4th 914. The Carter court came to this conclusion after ruling that the California Legislature’s 2003 amendment to Government Code §12940(j)(1) merely clarified existing law and thus could be applied retroactively without violating employers’ due process rights. 

The Carter court stated: "We conclude that the 2003 amendment to section 12940, subdivision (j)(1), clarified existing law by providing explicit standards to govern employer liability for sexual harassment of employees that noneemployees commit." Carter, 38 Cal.4th 914, 931. Thus, the court found that employers must protect their employees from sexual harassment perpetrated by clients that occurred any time from 2003 forward. Justice Chin wrote the majority opinion, with Chief Justice George, and Justices Kennard, Baxter, Werdergar, Moreno, and Corrigan concurring.

Dore

On August 3, 2006, the California Supreme Court held that a provision in an employment agreement defining at-will employment as “employment that may be ended ‘at any time without cause’” did not introduce a loophole creating an implied agreement that an employee could only be terminated for cause.  Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 392.  The  Court held that when a document exists that contains “no ambiguity, patent or latent, in its termination provision,” then “no triable issues of fact exist with respect to . . . causes of action for breach of contract and breach of the covenant of good faith and fair dealing.”  Dore, 39 Cal.4th 384, 393.  In Dore, the plaintiff received a letter from his employers shortly after beginning work which stated that his employer had “the right to terminate [his] employment at any time just as [plaintiff had] the right to terminate [his] employment…at any time.”  Dore, 39 Cal.4th 384, 388. Plaintiff Dore was asked to sign and return the letter signifying his acceptance of these employment terms.  Dore signed the letter.  The Court found that in this circumstance, the language was unambiguous. 

The Court did not specify, however, whether it was significant that Dore had signed the letter, or whether an employee handbook with an “at-will” provision would constitute an unambiguous employment contract.  Instead, the Court narrowly held that where a document between an employee and employer unambiguously establishes “at-will” employment, then other  extenuating circumstances implying long-term employment do not prevail.

The holding is consistent with the Court’s ruling in Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317.  In Guz, the Court held that a “clear and unambiguous at-will provision in a written employment contract, signed by the employee, cannot be overcome by evidence of a prior or contemporaneous implied-an-fact contract requiring good cause to terminate.” Dore, 24 Cal 4th, 384, 389 (citing Guz v. Bechtel, 24 Cal.4th 317, 340.)  The Court’s Opinion was issued by Justice Werdegar with Chief Justice George, Justice Kennard, Justice Chin and Justice Moreno concurring.  Justices Baxter, Corrigan, and Moreno wrote separate concurring opinions.