Written by attorney Douglas M Larsen

Terminating Employees For Fraud in California -- Dutra v. Mercy Medical

Ms.Dutrawas upset with her employer, Mercy Medical Center, when she was confronted about her gossiping (for which she had been disciplined in the past), check fraud and time card fraud. She, with her union representative, attended a meeting with her supervisors. These three issues were discussed, and given, as grounds for the termination of her employment.

Ms.Dutradid not back down, and sued Mercy Medical Center for defamation, and wrongful termination in violation of Labor Code section 132a. This code section prohibits an employer from discriminating against an employee because the employee has been injured on the job or has filed a workers' compensation claim. Three months prior to the termination, before the acts of fraud were discovered, Ms.Dutrafell on the job and injured herself.

Defamation Occurring During The Termination Meeting

The claim of defamation was based on the meeting among the supervisors, union steward and Ms.Dutra. It is interesting to me that a defamation claim could have been brought in the first place. The supervisors were Mercy Medical representatives. Therefore, they were not "third-parties". Thus, a defamation action should not be permitted when the communications were made by and in the presence of the company's management representatives. Moreover, the union steward was present at Ms.Dutra'srequest. He was her representative. She had the right to have a union representative present. Mercy Medical could not prevent the steward's presence. Therefore, it seems to me that a defamation lawsuit should not be permitted to go forward because Ms.Dutrabrought her representative.

Mercy Medical still prevailed on the claim, but did so because of a privilege under Civil Code 47(c). A privilege means that even if the communication was made to a third-party, it was privileged and cannot be the basis for a defamation lawsuit.

Civil Code section 47(c) permits one interested person (Mercy Medical) to make a statement to another person of interest (steward) without incurring liability for defamation, provided the statement was made without malice. In this case, the Court of Appeal concluded that the only reasonable interpretation of the statements made during the employment termination were made without malice (presumably to inform Ms.Dutraof the charges against her).

It might appear obvious to an HR professional that statements made to an employee and her representative at a termination meeting should not form the basis of a defamation claim. However, few things are obvious in the law, or the California HR world. Now employers can rely on this case for the position that such statements are privileged.

Labor Code Section 132a Claims Must Be Brought Before The WCAB

Ms. Dutraalso claimed that the termination occurred because she was injured three months earlier. Section 132a allows an employee to assert this claim before the Workers' Compensation Appeals Board ("WCAB"). However, Ms. Dutramade the argument that section 132a claim could be asserted as a civil action for wrongful termination. She based this argument on the case, City of Moorpark v. Superior Court (1998) 18 Cal.4th 1143, which said that the WCAB was not the exclusive remedy for claims brought by an injured worker against his/her employer. Moorpark specifically said that an employee injured on the job could assert a 132a claim before theWCAB and also a cause of action for wrongful termination for disability discrimination in a civil court.

Moorpark has been used incorrectly in my opinion by many plaintiffs' attorneys. I had such a case. The court permitted the plaintiff to assert a 132a claim in civil court, in spite of my urging that the claim must be brought before the WCAB. I argued that the WCAB has exclusive jurisdiction of 132a claims -- something that was supported by years of case law. However, the court, relying on Moorpark, concluded that a 132a claim could be brought as a civil claim.

Ms.Dutrawas not lucky on this claim. The Court of Appeal correctly held that section 132a cannot be the basis of a claim for wrongful termination in violation of public policy. Section 132a provides a procedure for adjudication. It also provided a very specific remedy. If a litigant could make a 132a claim in civil court, it would eviscerate both the procedure and remedy provided by section 132a.

Why Is It So Difficult To Get Rid Of A Problem Employee?

It shouldn't be this difficult to terminate the employment of a worker who engages in check fraud, time card fraud and gossip. It seems to me that firing a person for fraud is a "no-brainer." I am disappointed the courts allowed the claim to persist so far.

This case is instructive on several levels. First, maintain at-will employment. I have already posted a blog on how to maintain at-will employment. This will at least eliminate claims of breach of contract.

Second, explain the reasons of termination to the employee alone. I understand that an employee may have the right under a collective bargaining agreement to bring in a union representative. Work with it. But if this does not exist in your workplace, inform the employee without others present. Those who should be present on the employer's side are the HR Director and the supervisor.

Third, be prepared with good evidence of wrongdoing. If you claim check fraud, then have evidence showing check fraud. If you claim time card fraud, obtain the evidence of time card fraud. Be prepared to litigate the matter. Defamation is actionable only if the statements made are untrue. Truth is the ultimate defense.

Fourth, be prepared to fight. A good offense is often the best defense. Make sure employees understand that you devote the resources necessary to protect your company. If you do this on one case, your other employees know what they can expect if they file a lawsuit.

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