On November 9, 2007, the California Court of Appeals, in Ortega v. Contra Costa Community College Dist., Case No. A113341, held that an employer may not require its employees to submit claims under the state's Fair Employment and Housing Act (FEHA) to a contractual administrative process (for example, grievance procedures under a collective bargaining agreement), except under relatively narrow circumstances. Employers relying an existing CBAs or employment agreements for such a process should review their agreements in light of Ortega.
After being demoted by his employer, the Contra Costa Community College District, Jose Ortega filed a statement of grievance with the District for violations of the collective bargaining agreement (CBA) entered into between Ortega's union and the District. Ortega's grievance was denied for failure to follow proper procedure and for being untimely. In addition to filing his statement of grievance with the District, Ortega timely filed a complaint with the California Department of Fair Employment and Housing (DFEH) and received a right to sue notice. Ortega subsequently filed a complaint against the District in Contra Costa Superior Court, alleging causes of action for (1) race discrimination, (2) intentional infliction of emotional distress, and (3) negligent supervision. Ortega, Slip Opn. at 2.
The following year Ortega filed a second statement of grievance with the District because his employment contract was not renewed. This statement of grievance was also denied, and the administrative process did not proceed. He then filed another complaint with DFEH regarding his termination, received a second right to sue notice, and again filed suit. Ortega, Slip Opn. at 2-3.
The District moved to dismiss Ortega's first complaint and demurred to the second on the ground that Ortega failed to exhaust his administrative remedies required by the CBA. The trial court granted the motion to dismiss and sustained the demur without leave to amend. Ortega, Slip Opn. at 2-3.
The Court of Appeal reversed, holding that Ortega was not required to exhaust all administrative remedies under the CBA prior to filing a claim under FEHA because the CBA requirements were contractual, rather than statutory.
The Court held that an employer may prevent its employees from asserting claims under FEHA (and related doctrines) only pursuant to an agreement meeting two conditions:
First, the agreement or CBA requiring that the employee's FEHA (and related) claims to be determined by an administrative body or arbitration panel must be "clear and unmistakable." Ortega, Slip Opn. at 6 (quoting Camargo v. California Portland Cement Co. [2001] 86 Cal.App.4th 995, 1018.) "Second, the procedure of the arbitration must allow for the full litigation and fair adjudication of the FEHA claim." Ortega, Slip Opn. at 6 (quoting Camargo, 86 Cal.App.4th at 1018). If these conditions are not met, an employee may assert his or her FEHA and related non-FEHA claims in a judicial forum before, during or even after pursuing claims surrounding the same allegations before an administrative body. Ortega, Slip Opn. at 6 (citing Marcario v. County of Orange [2007] 155 Cal.App.4th 397, 404-405).
The Court explained that Ortega was not required to exhaust his remedies before an administrative body pursuant to a CBA because "the union may well have good faith representational interests that different from the employee's individual interests, and these distinct interests may lead the union to block the fact-finding proceeding or conduct it in a way that is inimical to the employee's interests." Ortega, Slip Opn. at 5. Indeed, the CBA in Ortega's case did not even provide employees with the right to obtain a fact-finding hearing.
The Court also held that Ortega's non-FEHA causes of action were exempt from the exhaustion doctrine because the disposition of these claims in another forum could have a preclusive effect on his FEHA claims.
The practical upshot of Ortega is that only where, as a practical matter, the employee (or the employee's bargaining agent) has entered into an enforceable agreement to arbitrate FEHA (and related) claims, will the courts bar such claims in deference to private administrative procedures. Where a CBA requires employees to initiate some form of summary grievance procedure, for example, the employee is free to file a DFEH charge and/or suit at any time within the applicable limitations periods, notwithstanding the grievance requirement.
Click here for a copy of the Ortega decision.
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