Although at will employees can be terminated for any reason or no reason at all, courts will recognize the employee’s right to sue for wrongful termination where the termination violates a fundamental public policy.
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Wrongful Termination UpdateEmployee Protected From Termination
After Making False Overtime Claim
By Christopher W. Olmsted
An employee claims that he worked overtime, but an investigation reveals that his claim is false. The employee claims he made a mistake, but the company concludes otherwise. He should be terminated, right? Not so fast. California law might offer protection to such an employee. In a case titled Barbosa v. Impco Technologies, a California appellate court found that complaining about missing overtime can be a protected activity, and that firing the complainer may be a wrongful termination.
Employee Caught Making False Overtime Claim
Manuel Barbosa worked as a lead carburetor assembler for Impco Technologies. Two of the employees in his unit told him they thought they had worked overtime hours, but not been paid. Mr. Barbosa thought because these employees were missing overtime, he was too. He went to the payroll administrator and his supervisor, claiming that the time clock was not working and he and five employees were underpaid. The supervisor believed Barbosa and approved the time. The company issued paychecks with the added overtime.
But the payroll administrator became suspicious. The company had recently installed a new time clock system and it had been working correctly with no complaints. So the payroll administrator spoke to the human resources manager, who ran the report from the scans at the security entrance gate and compared that report with the time card report. The gate report showed Mr. Barbosa and the others could not have worked the overtime that Mr. Barbosa claimed.
Then one of the employees in Mr. Barbosa’s work unit reported to HR that she was sure she had not worked overtime, and she was not owed the extra pay. She also stated that the other workers, who had worked the same hours, had not worked overtime either.
Management confronted Mr. Barbosa, asking if he was sure he worked the overtime hours. He insisted that he had. Then he was shown the security gate reports. At that point, he relented and claimed he must be confused.
Within a few days, the company terminated Mr. Barbosa for time card falsification.
Employee’s Lawsuit Alleges Protected Activity
Mr. Barbosa sued, alleging that he was wrongfully terminated in retaliation for reporting what he believed to be a wage discrepancy. He alleged that although it turned out that he was mistaken, he still had the right to report his reasonable belief of a violation. He claimed that his complaint was protected activity, and that the company terminated him for exercising his rights.
The trial court evaluated the evidence at trial and dismissed Mr. Barbosa’s lawsuit after the company moved for a non-suit. The court ruled that Mr. Barbosa had not engaged in protected activity and that the company had the right to terminate this at will employee even if he made a good faith mistake.
Appellate Court Reverses
Although at will employees can be terminated for any reason or no reason at all, courts will recognize the employee’s right to sue for wrongful termination where the termination violates a fundamental public policy.
Over time, courts have recognized a number of different public policies that employers may not violate. “The courts have been sensitive to the need to protect the individual employee from discriminatory exclusion from the opportunity of employment whether it be by the all-powerful union or employer,” observed the court. “This development at common law shows that the employer is not so absolute a sovereign of the job that there are not limits to his prerogative.”
Applying this philosophy, the court explained that overtime laws relate to fundamental issues of social welfare worthy of protection. “The duty to pay overtime wages is a well-established fundamental public policy affecting the broad public interest.” Overtime laws contribute to our general social welfare, and “one purpose of requiring payment of overtime wages is to spread employment throughout the work force by putting financial pressure on the employer.” “Thus,” concluded the court, “overtime wages are another example of a public policy fostering society’s interest in a stable job market.”
If an employer discharges an employee for exercising his right to overtime wages, the employee will have a viable cause of action for wrongful termination. But what if the employee is not actually entitled to overtime wages? An employer might logically conclude that if there is no right to overtime wages, the employer is free to terminate the employee. But that logic is wrong, according to the appellate court.
The court ruled that a “good faith but mistaken belief” is protected from retaliation. When an employee exercises his statutory right to overtime wages out of a reasonable good faith belief he is entitled to it, he is protected from termination for raising the issue, notwithstanding the later discovery that he is wrong. Employees need this margin of error, according to the court. “Any other conclusion would open the door to employee intimidation and chill the exercise of statutory rights,” wrote the court.
Here, Mr. Barbosa presented evidence that he had a reasonable good faith belief he was entitled to overtime. Under the previous time clock system, mistakes in timekeeping had been made; the new system had been in place less than a month. Mr. Barbosa claimed that his co-workers convinced him the overtime was unpaid, and he in turn convinced his manager. He testified he was confused when confronted with the impossibility of his claim. The appellate court concluded that under the circumstances, there was some evidence of a good faith, though mistaken belief. The jury should have been permitted to consider whether Mr. Barbosa acted in good faith, or whether he made the claim knowing it to be false. Thus, the appellate court ordered the case back to trial.
Practical Tips:
Investigate Complaints. If an employee raises concerns about overtime or other wage and hour issues, it is appropriate to investigate the matter, interview witnesses, gather documents and other evidence, and reach a prompt conclusion, taking corrective measures where underpayment is confirmed.
Protect Good Faith Complainers. Where the complaint is unfounded, take care when considering discipline of the employee. Consider whether the employee may have made the complaint with a good faith belief of a problem. If this is the case, the employee may be protected from retaliation, and discipline would not be appropriate.
Respond to Clear Fraud. Where an employee engages in intentional misconduct--records time not worked, punches in an absent friend, or engages in other fraudulent acts-- discipline or termination is still the appropriate response.
Related Articles:
Holiday Pay Rules
Travel Time Rules
More Legal Update articles.
Download the entire February 2010 Legal Update in PDF format.
This article is intended as a brief overview of the law and are not intended to substitute as legal advice. Any questions or concerns regarding any statute or case law should be addressed to a licensed attorney. Copyright © 2010 by Barker Olmsted & Barnier, APLC. San Diego, California. All rights reserved.
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