Employer Could Fire Employee For Working Elsewhere While on Legally-Protected Medical Leave of Absence
In Richey v. AutoNation, Inc., 182 Cal. Rptr. 3d 644 (Cal. S. Ct. 2015), the plaintiff, Avery Richey, took a medical leave of absence under the California Family Rights Act (“CFRA”) and federal Family and Medical Leave Act after injuring his back while off-duty. About a month before he injured his back, he began plans to open his own restaurant. He had a meeting with his supervisors to discuss his attendance, performance, and concerns he was “distracted.” His employer, Power Toyota (which is part of the AutoNation consortium of automobile dealerships), had a written policy preventing employees from working while on a CFRA leave of absence. After a fellow employee saw Richey “sweeping, bending over, and hanging a sign using a hammer” at his restaurant while on medical leave, Power Toyota fired him.
Richey sued his employer for racial discrimination, harassment, retaliation for taking CFRA leave, and failure to reinstate him following CFRA leave. Because Richey had signed an arbitration agreement, his lawsuit was decided by an arbitrator. After the hearing, the arbitrator ruled for the employer, reasoning that an employer can legally terminate an employee “if it has an ‘honest’ belief that he is abusing his medical leave and/or not telling the company the truth about his outside employment.”
Richey filed a motion with the trial court to vacate the arbitrator’s award, arguing that the arbitrator committed reversible legal error by crediting the employer’s “honest belief” defense. The trial court denied Richey’s motion. The Court of Appeal, however, reversed, agreeing with Richey that the arbitrator had wrongly denied Richey’s right to reinstatement under the CFRA. On appeal to the California Supreme Court, the Court of Appeal’s decision was reversed. The court concluded that any error the arbitrator may have made in recognizing an “honest belief” defense to a CFRA claim was irrelevant because the arbitrator also found that the employer fired Richey for violating a policy prohibiting an employee from working while on medical leave.