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No “Honest Belief” Defense to Claims under California Family Rights Act

Published by on December 11, 2012

In Richey v. Autonation, Inc. et al., a California Court of Appeal has recently held that an employer’s good-faith, honest belief that an employee on medical leave was abusing the leave was not a defense to the employee’s claim for violation of the California Family Rights Act (“CFRA”), California’s counterpart to the federal Family Medical […]

In Richey v. Autonation, Inc. et al., a California Court of Appeal has recently held that an employer’s good-faith, honest belief that an employee on medical leave was abusing the leave was not a defense to the employee’s claim for violation of the California Family Rights Act (“CFRA”), California’s counterpart to the federal Family Medical Leave Act.  More after the break.

In Richey, the employee was employed by defendant as a sales manager.  The employee went on a medical leave of absence under the CFRA due to a back injury.  While on leave, the employer learned the employee was working at a restaurant that the employee owned.  Defendant had two other employees go to the employee’s restaurant.  These employees observed the employee sweeping, bending, taking orders, and cashiering.  The defendant terminated the employee’s employment relying on its policy barring other employment and stating “You are not allowed to accept employment with another company while you are on approved leave.”

The employee filed suit claiming, among other causes of action, that defendant had interfered with his CFRA rights.  The employee argued that he did not believe that defendant’s policy regarding other employment applied to him because he owned the restaurant.  The matter was arbitrated and the arbitrator ruled in favor of the employer.  Relying on non-California case law, the arbitrator focused on the “honest belief” defense in which an employer who honestly believes that it is discharging an employee for misusing leave is not liable even if the employer is mistaken about the actual misuse.  The arbitration concluded that defendant had terminated the employee based on its honest belief that he was abusing his medical leave.

The Court of Appeal reversed the arbitrator’s decision rejecting that the honest belief defense is applicable to claims under CFRA.  CFRA allows an employer to terminate an employee and deny reinstatement from a CFRA-protected leave when the employment otherwise would have ended.  CFRA, however, states that in such situations, the employer bears the burden of establishing the employee would not otherwise have been employed at the time of restatement.  The Court of Appeal concluded that the application of the honest belief defense to CFRA claims would require the employee (and not the employer) to bear the burden of proving that he or she was not abusing their leave.  Accordingly, like the Court of Appeal, the U.S. Court of Appeals for the Ninth Circuit had previously rejected the honest belief defense as applicable to CFRA claims.  The Court of Appeal further held that an employer may not terminate an employee on CFRA leave based solely on the fact that the employee is working part time in another comparable job.

To read the full Court of Appeal decision, click here.

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