Worker Fired After Seeking Unemployment Compensation Awarded $1.3M

Terminating California workers for filing for jobless benefits violates public policy

By Joanne Deschenaux January 15, 2018
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The California Court of Appeal upheld a jury verdict in favor of an employee who was fired after she applied for unemployment compensation. The employee initially worked full time, but, after she became pregnant, her employer cut her hours significantly, and she applied for jobless benefits. The jury concluded that the firing violated public policy—entitling the worker to $325,000 in compensatory damages—and that the employer acted with "malice, oppression or fraud," entitling the employee to $1 million in punitive damages.

Dennis Baca, a real estate developer, owns numerous income-producing rental properties, including Airport Self Storage in Livermore. On Nov. 22, 2010, the plaintiff began working 40 hours a week for Baca—three days a week at the storage facility and two days a week at Baca's business office.

In May or June 2011, the plaintiff learned she was pregnant. According to documents filed with the court, she told Baca, who allegedly became angry but told her that he would not fire her because he did not want her to collect unemployment. She was, however, "welcome to quit," Baca said. Subsequently, Baca told the plaintiff to work only three hours a day. Following a few months of reduced hours, the plaintiff filed a claim for unemployment benefits. After Baca learned about the claim, he fired the plaintiff. She filed a complaint against Baca, alleging wrongful termination in violation of public policy, and she sought compensatory and punitive damages. The jury determined that the plaintiff's unemployment claim was a substantial motivating reason for Baca's decision to discharge her and awarded her $1.3 million in damages. Baca appealed, and the appellate court affirmed the jury's award.  

[SHRM members-only how-to guide: How to Manage Pregnancy-Related Leave in California]

The appellate court found sufficient evidence to support the jury's finding that the plaintiff was fired because she filed a claim for unemployment benefits. The court then noted that it is established law in California that such a discharge constitutes wrongful termination in violation of public policy. It further concluded that the compensatory damages award was not excessive and that the award of punitive damages was justified.

Punitive Damages

Under California law, punitive damages may be awarded where there is clear and convincing evidence that the defendant acted with "oppression, fraud or malice."

A defendant acts with malice if he or she intends to harm the plaintiff or acts with "a willful and conscious disregard of the rights or safety of others," the court noted. Here, the court said, the evidence supporting a finding of liability provided a sufficient basis for the jury to find malice. The jury could properly conclude that Baca fired the plaintiff to punish her for filing an unemployment benefits claim and that the conduct was willful and in conscious disregard of the plaintiff's rights.   

O'Brien v. Baca, Calif. Ct. App., No. A145949A (Dec. 4, 2017).

Professional Pointer: In California, a claim for discharge in violation of public policy does not have to be based on a specific statute. The underlying principle is that no one should be fired for exercising a legal right or protesting or refusing to participate in illegal or unethical behavior. Here, the employee had the legal right to file for unemployment benefits and could not be punished for doing so.

Joanne Deschenaux, J.D., is a freelance writer based in Annapolis, Md.

 

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