California Appeals Court Clarifies 2001 Amendment To Labor Code Section 98.6, Which Prohibits Employers From Discharging Or Discriminating Against Employees For "Lawful Conduct Occurring During Nonworking Hours Away From The Employer's Premises."

In a case which no doubt will be viewed largely as a victory for employers and management lawyers, a California appeals court has clarified a 2001 amendment to section 98.6 of the California Labor Code.  The case, Grinzi v. San Diego Hospice Corporation, issued in June of 2004.  The amendment in question, which must be read in conjunction with section 96(k) of the Labor Code, essentially prohibits employers from discharging an employee or discriminating against an employee or applicant for employment because the employee or applicant engaged in "lawful conduct occurring during nonworking hours away from the employer's premises," or because the employee or applicant has exercised, on behalf of himself, herself or others, "any rights afforded him or her."  Section 96(k) authorizes the California Labor Commissioner to pursue claims on behalf of employees who allege that their rights were violated under section 98.6.

When the section 98.6 amendment was first passed, management lawyers and their employer clients expressed concern that it could gut the "at-will" presumption that generally applies to employment relationships in this state.  That presumption, which is codified in Section 2922 of the Labor Code, provides in substance that an employment relationship having no specified term may be terminated at anytime, for any reason, by either party to the relationship.  Fortunately, the Grinzi court's decision makes clear that the at-will presumption is still alive in California.  Looking to a prior decision which issued from the same court in November of 2003 [Barbee v. Household Automotive Finance Corporation (2003) 113 Cal.App.4th 525, 6 Cal.Rptr.3d 406], the Grinzi case reaffirms two rulings: 1) section 96(k) does not confer any substantive right on the employee but merely establishes a procedure by which the Labor Commissioner may assert jurisdiction over claims that are legally recognized elsewhere under the Labor Code, and 2) the references in section 96(k) and section 98.6 to "lawful conduct occurring during nonworking hours away from the employer's premises" are limited by the requirement that such conduct also involve the assertion of "recognized constitutional rights."

Although the plaintiff in the Grinzi case maintained that her discharge violated her constitutional right to freedom of expression (she alleged her termination was because of her membership in a private investment group), the court held that such first amendment rights were only protected from intrusion or interference by the government, not private employers; hence, because the plaintiff's employer was not a government employer, she could not maintain her lawsuit based on either section of the Labor Code.

Persons wishing further information or who have questions or comments about either this case or any of the cases that have appeared on this website can contact any of the attorneys at Epstein, Turner & Song.