Denial of Benefit to Older Worker Not Illegal

Tuesday, June 25, 2002

Page 1

Denial of Benefit to Older Worker Not Illegal—S.C.

From Staff and Wire Service Reports

An employer that pays school tuition for employees does not violate the Fair Employment and Housing Act or fundamental public policy by limiting that benefit to younger workers, the state Supreme Court ruled yesterday.

“After a thorough review of the relevant statutory provisions, we conclude, as did both the trial court and the Court of Appeal, that the FEHA’s prohibition against age discrimination in employment extends to hiring, discharging, suspension, and demotion, but not to the furnishing of employee benefits such as educational assistance,” Justice Joyce L. Kennard wrote for a unanimous court.

“Because the FEHA is the source of the fundamental public policy against age discrimination in employment, that public policy is subject to the substantive limits set by the FEHA,” Kennard said. “Although as individuals we may applaud plaintiff’s efforts at self-improvement through education, as judges we find nothing in either statutory or common law that obliges employers to ignore an employee’s age in deciding whether to fund such efforts.”

The court turned down Dan Esberg’s claim that Union Oil illegally discriminated against him in 1994 by denying his request that the company pay the costs of his obtaining a master’s in business administration from the University of Redlands. Unocal had earlier paid the costs of his undergraduate education at Redlands, but told him he was “too old to invest in” when he told the company he wanted to go on to graduate school, he said in his complaint.

An Orange Superior Court jury found that the denial of educational benefits violated Esberg’s rights under FEHA and fundamental public policy, and also that Unocal had breached a contract promising Esberg—who was 42 when he joined the company—that he would not be discriminated against on the basis of age.

He was awarded $51,000 in economic damages, plus $35,000 in noneconomic losses. The economic damages were unaffected on appeal, but Orange Superior Court Judge Raymond J. Ikola granted judgment NOV as to the $35,000 award.

The trial judge was correct, Kennard said, because the age discrimination portion of FEHA is quite specific in providing that it is illegal “to refuse to hire or employ, or to discharge, dismiss, reduce, suspend, or demote” a person over 40 on the basis of age.

A broader anti-discrimination provision of FEHA, Kennard explained, applies to the furnishing of benefits but omits age as a protected category. The statutory language is unambiguous, the justice declared, and a conflicting regulation of the Fair and Employment and Housing Commission lacks statutory authority and is invalid.

Because neither FEHA nor any other constitutional or statutory provision supports Esberg’s claim, the justice went on to say, there was no violation of fundamental public policy.

California lawmakers, meanwhile, are considering legislation that would add age to the list of protected categories with regard to benefits. AB1599 by Assemblywoman Gloria Negrete McLeod, D-Chino, cleared the lower chamber Jan. 28 and is before a Senate committee.

Legal experts said if lawmakers don’t pass the bill, a similar version of which former Gov. Pete Wilson had vetoed, the court’s ruling could clear the way for wanton age discrimination in the workplace. Nearly 45 percent of California’s workplace is 40 or older.

“It’s sad. There are more ways to discriminate against age than by not paying for tuition,” Dale M. Fiola, an Anaheim employment attorney who represented Esberg, said.

Among them, he said, employers could reduce sick and vacation pay for their senior workers.

Unocal attorney David Ozeran of La Follette, Johnson, De Haas, Fesler, Silberberg & Ames urged the court during oral arguments to side with the company. He said a contrary ruling for the aged would be “too broad and sweeping.”

The case is Esberg v. Union Oil Company v. California, 02 S.O.S. 3133.