Employers are holding their breaths once again as they await the California Supreme Court’s decision in Reid v. Google Inc., expected in late August 2010. The already difficult legal landscape for California employers may become tougher to negotiate should the Supreme Court justices reject the "stray remarks doctrine," which has effectively prevented plaintiff employees from bringing tenuous cases of discrimination before a jury.
The "stray remarks doctrine" has been adopted by many federal circuit courts, including the 9th U.S. Circuit Court of Appeals. It allows a court to disregard discriminatory or harassing remarks that are either isolated or unrelated to the complained of adverse employment action (i.e., discipline, demotion or termination) for purposes of determining whether there is a triable issue of material fact that would warrant trying the matter on the merits.
In Reid, Google Inc. hired the plaintiff, Brian Reid, as Director of Operations and Director of Engineering. At the time of his hiring, Reid was 52 years of age. Google employed Reid for almost two years and during that time he received only one performance evaluation. The comments in Reid’s evaluation were primarily positive, and described Reid, among other things, as having "an extraordinary broad range of knowledge concerning Operations, Engineering in general and an aptitude and orientation towards operational and IT issues." The one noted area of improvement in Reid’s performance evaluation dealt with Reid’s ability to adapt to the Google environment: "Adapting to the Google culture is the primary task for the first year here… Right or wrong, Google is simply different: Younger contributors, inexperienced first line managers, and the super fast pace are just a few examples of the environment."
Reid claimed he was ultimately terminated for the stated reason that he was not a "cultural fit" (notably, Google asserted during litigation that it decided to terminate Reid for substandard performance and because it had elected to eliminate the position to which Reid had been transferred prior to his discharge). Thereafter, Reid sued Google for unfair business practices under the Unfair Competition Law (UCL) based on discriminatory hiring practices, disparate treatment based on his age under the California Fair Employment and Housing Act (FEHA), wrongful termination, failure to prevent discrimination, and emotional distress.
Reid claimed that while employed at Google, he had been subjected to ageist remarks made by his coworkers and members of management. For example, Reid claimed that coworkers referred to him as an "old man," an "old fuddy-duddy," and joked that his office placard should be an "LP" instead of a "CD." Additionally, certain members of management told him his ideas were "obsolete," and "too old to matter," that he was "sluggish," "fuzzy," and "lethargic." Further, Reid argued that before his termination, he was demoted to a non-viable position (a veritable "way station") while younger employees assumed his previous duties.
Google maintained that the complained of comments were stray remarks that did not raise a triable issue of fact as to whether Google’s stated reasons for terminating Reid were pretexual. As such, Google asserted, they were insufficient to support denial of summary judgment. On Google’s motion, the trial court struck Reid’s UCL claims and granted Google summary judgment on the remaining claims. One of the primary issues on appeal was whether the "stray remarks doctrine" relied on by Google could prevent Reid from bringing his case to trial.
In its Oct. 4, 2007 decision, the Court of Appeal declined to apply the stray remarks doctrine and reversed the trial court’s grant of Google’s summary judgment motion, stating: "We cannot view such a rule as anything other than the assumption by the court of a factfinding role." The Court of Appeal expressly criticized the Horn v. Cushman & Wakefield Western Inc. decision supporting the stray remarks doctrine. In Horn, the court held that an isolated and ambiguous comment "was at most a ‘stray’ ageist remark and is entitled to virtually no weight in considering whether the firing was pretexual or whether the decisionmaker harbored discriminatory animus." The Court of Appeal emphasized that the above-cited language in Horn "is all the more remarkable because the opinion elsewhere acknowledges that on summary judgment, "weighing of the evidence" is "prohibited."
On Jan. 30, 2008, the California Supreme Court agreed to review the Reid decision and oral argument in this matter was heard on May 26, 2010. The Court is expected to render its decision in late August of this year. Should the Court decide to invalidate the stray remarks doctrine, this will remove one of the few devices available to California employers that could protect them from the threat of a full-blown trial where the evidence against them is tenuous at best.
Regardless of how the Court comes down on this issue, the Reid decision provides some valuable lessons to employers:
Periodic Performance Evaluations: Employers should conduct performance evaluations on a regular basis (at least annually) and carefully document performance-related issues. Failing to do so will work against the employer should it later decide to discipline or terminate the employee on this basis. In Reid, the employee received only one evaluation over a 20-month period and Google never documented Reid’s performance problems. This served to buttress Reid’s argument that one of Google’s proffered reasons for terminating him (poor performance) was pretextual.
Contents of Performance Evaluations and Written Reprimands: Employers must be careful about what they place in an employee’s performance evaluation and in written reprimands to employees. Despite the best of intentions, words can easily be misconstrued. Terms such as "culture," and those relating to age or any other protected status should be avoided. When in doubt, consult with experienced counsel.
Rely on Objective Criteria When Disciplining or Terminating an Employee: Employers must think carefully before disciplining or terminating an employee, especially when they are members of a protected class. If it cannot justify the decision based on objective criteria (performance or a reduction in force), the employer faces substantial legal exposure.
Have an Effective Harassment and Discrimination Policy in Place: Employers should have in place a written policy prohibiting harassment and discrimination. An effective policy will set forth clear reporting procedures for employees to follow if they believe they are being subjected to harassment or discrimination in the workplace. An employee who fails to seek redress as set forth in the policy will have a more difficult time showing that the employer actually knew of the discrimination and/or harassment and should have taken steps to prevent it.
Severance Pay in Exchange for General Release: Depending on the circumstances, employers should consider offering employees severance pay in exchange for their release of all employment-related claims. An effectively prepared severance agreement and general release can help employers informally resolve employment-related disputes before litigation ensues. Employers should consult with experienced employment law counsel in preparing such an agreement.
Arbitration Agreements: Employers should consider having employees sign arbitration agreements as a condition of employment. Like a successful summary judgment motion, it prevents employees from bringing their case before a jury. Juries can often be unpredictable and, in many cases, sympathetic to employees since most members of a jury are employees themselves. Although arbitrating a dispute still requires an employer to defend a case before a trier of fact (an arbitrator), it is usually considerably less expensive than a trial and removes the uncertainly of a potential runaway jury.
Adriana Cara is a senior associate at Brown Law Group in San Diego. Her practice focuses on labor and employment law. Her clients include public employers, non-profit corporations, and those in private sector industries.