February 23, 2004
Section 96(k) of the California Labor Code is of interest to employers who attempt to regulate the lawful off-site conduct of their employees during non-working hours. The law became effective on January 1, 2000, and was amended in 2002 to also apply to applicants (Section 98.6). Employers have voiced concern that if courts apply this statutory provision literally, employers could be prevented from regulating employees' off-site lawful conduct even when the conduct runs afoul to the employer's legitimate business interests. A recent appellate opinion from the Fourth District, Barbee v. Household Automotive Finance Corp. , 113 Cal.App.4th 525 (2003) alleviates some of that concern.
Section 96(k) of the Labor Code provides that the California Labor Commissioner may assert on behalf of employees:
Claims for loss of wages as the result of demotion, suspension, or discharge from employment for lawful conduct occurring during nonworking hours away from the employer's premises.
The California Professional Fire Fighters Association supported this legislation in response to claims from members that they were being retaliated against for engaging in political activities. In enacting Section 96(k), the Legislature found that "allowing any employer to deprive an employee of any constitutionally guaranteed civil liberties, regardless of the rationale offered, is not in the public interest." The Legislature further found that "absent the protection afforded to employees by the Labor Commissioner, an individual employee is ill-equipped and unduly disadvantaged in an effort to assert civil rights guaranteed by Article I of the California Constitution."
Although it appears that the goal of the Legislature was to protect civil rights, the actual text of the amendment is much broader. If interpreted literally, it could be argued that subsection (k) protects all "lawful conduct" in which employees engage while off-site during non-working hours. Thus, such activities as moonlighting, even when contrary to the employer's business interests, may be protected. Indeed, in a conference in 2003, a Deputy Labor Commissioner stated that he would find a violation of Section 96(k) if an employee was fired for moonlighting during hours when the employee was not otherwise required to be at work for the employer.
The text is also unclear as to what is meant by the phrases "nonworking hours" and "away from the employer's premises." Many employees now work from home or have portable offices; and many employees (especially exempt employees) also have flexible schedules.
Interpreting Section 96(k)
In October 2000, the California Office of the Attorney General published an opinion letter interpreting Section 96(k). A State Senator questioned if subsection (k) abrogated existing law that permitted the discipline of police officers for lawful conduct occurring away from the employer's premises during nonworking hours when the conduct conflicted with the duties of those police officers. The Attorney General opined that Section 96(k) did not abrogate existing law, but rather provided employees with a "supplemental procedure" to assert rights that were already protected elsewhere in the law. Relying on legislative history, the Attorney General explained that "[n]o statements may be found . . . to suggest that the amendment was intended to . . . affect substantive rights of employees at all."
In an opinion filed on November 20, 2003, the California Court of Appeal for the Fourth District agreed with the opinion of the Attorney General. In Barbee, the Court held that there was no violation of Labor Code section 96(k) when an employer fired a supervisor for dating a subordinate.
The facts in Barbee were reasonably clear and simple. The employer learned that Barbee, the head of its sales force, was dating one of his subordinates. Barbee's boss told him that dating a subordinate created a potential conflict of interest, and either the relationship should end or one of them should resign. When Barbee failed to resign and failed to end the relationship, his employment was terminated.
Barbee sued claiming the termination was an invasion of privacy and a violation of Section 96(k). The trial court granted summary judgment in favor of the employer. Barbee appealed. With respect to the privacy claim, the Court of Appeal found that summary judgment was appropriate because Barbee could not establish that he had a reasonable expectation of privacy in the existence of or pursuit of the relationship with his subordinate. With respect to the claim under Labor Code section 96(k), the Court also affirmed summary judgment, stating:
We conclude that Labor Code section 96, subdivision (k) does not set forth an independent public policy that provides employees with any substantive rights, but, rather, merely establishes a procedure by which the Labor Commissioner may assert, on behalf of employees, recognized constitutional rights. Therefore, in order to prevail on his wrongful termination claim, Barbee must establish that his employment was terminated because he asserted civil rights guaranteed by article I of the California Constitution. We conclude that Barbee cannot make this showing and therefore he cannot establish the first necessary element of his wrongful termination claim.
We note, however, that Barbee did not consider the impact of Cal. Labor Code Section 98.6, which states in part that "no person shall discharge any employee .. because the employee … engaged in any conduct delineated in this chapter, including the conduct described in subdivision (k) of Section 96 …."
Conclusion
The Barbee opinion is significant as it is the first appellate opinion to analyze Labor Code section 96(k) and it comes out squarely in favor of employers. Nonetheless, it remains to be seen whether the Labor Commissioner and other appellate courts follow Barbee's lead. Accordingly, an employer considering terminating, demoting, or suspending an employee for lawful off-site conduct during nonworking hours should still carefully consider the potential impact of Labor Code Section 96(k).
For more information on Section 96(k) of the California Labor Code, or other labor and employment law matters, please contact:
Robert A. Dolinko
(415) 369-7180
radolinko@thelenreid.com
Prior legal decisions related to Section 96(k) of the California Labor Code were previously discussed in: Thelen Report No. 63.
© 2004 By Thelen LLP . This article has been published as an information service to clients and friends. Please recognize that the information is general in nature and must not be relied upon as legal advice. The authors, listed above, or your Thelen attorney contact, would be happy to discuss the information in this article in greater detail and its application to your specific situation. We welcome your comments and suggestions.
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