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Lawsuit Prevention for Employers

Arbitration Policies Can Serve as a “Miracle” Cure-All

A recent Ninth Circuit Court of Appeals decision illustrates how vulnerable employers are to claims of disability discrimination, and also how arbitration policies can serve as protective “armor.” That case involved a locomotive engineer for BNSF Railway Co.  By the terms of his employment, the engineer, Alamillo, was required to come to work only when he was summoned, usually by telephone.

After he missed calls ten times in 2012, Alamillo opted to receive additional training instead of discipline.  After missing four more calls, he was suspended for 10 days, and later 20 days.  After his final missed call, Alamillo began to suspect that he was suffering from medical problems.  He mentioned to the general manager that he intended to undergo testing for a possible sleep disorder.

After completing a sleep study, Alamillo was diagnosed with obstructive sleep apnea, and was prescribed a CPAP machine.  Although the employer was provided with this diagnosis after the fact, Alamillo was ultimately terminated for the past absences.

He filed suit for wrongful termination, alleging violation of the disability discrimination provisions of the Fair Employment and Housing Act (“FEHA”).  Alamillo claimed that BNSF failed to accommodate his disability (sleep apnea) and failed to engage in the legally-required interactive process with him for the purpose of identifying a reasonable accommodation.  The District Court granted summary judgment to the employer, on the basis that it could not have violated the FEHA because Alamillo’s attendance violations occurred before he was diagnosed with a disability, and therefore before any accommodation was requested.

The Ninth Circuit Court of Appeal affirmed.

One would think that winning two arduous rounds of this knock-down-drag-out legal dispute would have provided the employer with ample cause for celebration.  WRONG.  The employer was rewarded for its efforts with:

  1. The satisfaction of knowing that it never did anything wrong in the first place; and
  1. A legal defense bill that was presumably well into seven figures for the privilege of doing so.

Adding insult to injury, the employer stands virtually no chance of recovering its costs.

By the same token, had the employee won even one dollar, the employer would have been forced to pay the “prevailing party’s” attorneys’ fees, up to the entirety thereof, thanks to California’s infamous “one-way fee-shifting” statute.

Speaking of Arbitration

In the interest of promoting solutions, in place of empty carping, this patently inequitable result has a cure, which can be found in plain sight: a mandatory workplace arbitration policy.  It is estimated that such policies, if properly implemented, can reduce defense costs in labor disputes by as much as 90 percent.  At the same time, such policies vastly enhance the employer’s prospects of winning at trial by replacing employee-friendly juries with impartial arbitrators.

Ironically, these two features, taken together, have the demonstrated effect of discouraging plaintiff’s lawyers from taking cases against the proactive employers utilizing them.

For these reasons, developing and maintaining a properly-drafted arbitration policy may offer the most potent protection available to California employers.

Is this an overstatement? No less an authority than Albert Einstein once counseled, “condemnation without investigation is the height of ignorance.”



Jay G. Putnam is a Petaluma labor lawyer who has specialized in representing California employers for over three decades. His practice is devoted to preventing lawsuits against his clients, without sacrificing workplace authority or management prerogatives. 

While no one can guarantee a future free of lawsuits, Putnam has compiled a remarkable record of success: Not one employer-client has been sued in 36 years with his system of precautions in place. 

For those clients who have arrived with pending lawsuits, Putnam has established an excellent track record of success as well. 

You are invited to visit Mr. Putnam’s website, where you will find in-depth discussion of the most common mistakes made by California employers, and how to avoid them.

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