Esberg v. Union Oil Co.

Opinion

In this case, a 53-year-old employee, with the employer’s approval, pursued an undergraduate degree at company expense. Three years later, he sought employer-paid postgraduate education. When the company denied funding, plaintiff brought suit claiming unlawful age discrimination.

This case does not involve any cause of action related to wrongful termination. Instead, plaintiff raises two novel issues related to age discrimination in the furnishing of employee benefits. First, he contends that the

In 1995, plaintiff filed a complaint with the Department of Fair Employment and Housing (DFEH) based on UNOCAL’s refusal to fund an advanced degree for plaintiff because of his age. The DFEH chose not to prosecute plaintiffs case, but it gave him a “right to sue” letter that authorized him to file a private action in court. After plaintiff received the right-to-sue letter, he brought this action against UNOCAL. Plaintiffs complaint alleged, among other things, breach of contract, age discrimination in violation of the FEHA, and denial of benefits in violation of fundamental public policy.

After trial of the merits of plaintiffs complaint, the jury returned a special verdict finding that UNOCAL had wrongftilly denied plaintiff educational assistance benefits for the MBA program because of his age. The jury also found that UNOCAL breached an agreement it had with plaintiff that it would not discriminate because of age. The jury awarded plaintiff $35,000 in noneconomic damages and $51,000 in economic damages.

UNOCAL moved for judgment notwithstanding the verdict, contending that denial of an employment benefit such as educational assistance violated neither the FEHA nor the fundamental public policy against age discrimination in employment. The trial court agreed and set aside the jury’s $35,000 award of noneconomic damages. Because plaintiff had prevailed on his contract claim, the trial court entered judgment awarding plaintiff $51,000 in economic damages.

Plaintiff appealed, alleging that UNOCAL’s refusal to reimburse him for the costs of obtaining a master’s degree violated the FEHA prohibition against age discrimination in employment, and that public policy supported a common law tort claim for denial of employment benefits based on age. The Court of Appeal rejected these contentions and affirmed the trial court’s judgment. We granted plaintiffs petition for review.

A. Overview of the FEHA’s Antidiscrimination Provisions

The Legislature enacted the FEHA to establish a comprehensive scheme to eliminate certain discriminatory practices in employment and housing. An

Section 12920 outlines the FEHA’s general policy against employment discrimination: “It is hereby declared as the public policy of this state that it is necessary to protect and safeguard the right and opportunity of all persons to seek, obtain, and hold employment without discrimination or abridgment on account of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, age, or sexual orientation.”

Section 12935, subdivision (a) authorizes the Fair Employment and Housing Commission (FEHC) to “adopt . . . suitable rules, regulations, and standards ... to interpret, implement, and apply all provisions of [the FEHA].”

The FEHA has two separate provisions—sections 12940 and 12941— prohibiting various forms of workplace discrimination and identifying the classes that are protected against these forms of discrimination. Section 12940 prohibits an employer from discriminating, among other things, in the “terms, conditions, or privileges of employment” because of an employee’s “race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, or sexual orientation.” Notably, section 12940 does not prohibit employment discrimination on the basis of age.

Section 12941, the specific FEHA provision addressing age discrimination in employment, makes it “an unlawful employment practice for an employer to refuse to hire or employ, or to discharge, dismiss, reduce, suspend, or demote, any individual over the age of 40 on the ground of age, except in cases where the law compels or provides for such action.” (Italics added.) Notably, section 12941 does not prohibit discrimination in the terms, conditions, or privileges of employment.

B. Plaintiffs Contentions

Plaintiff contends that by denying his application for educational assistance for an MBA degree his employer violated sections 12940 and following of the FEHA prohibiting employment discrimination. As we have observed, however, neither section 12940 nor section 12941 prohibits discrimination in the terms, conditions, or privileges of employment on the basis of age. Section 12940 prohibits discrimination in the terms, conditions,

Under well-established rules of statutory construction, we must ascertain the intent of the drafters so as to effectuate the purpose of the law. (Preston v. State Bd. of Equalization (2001) 25 Cal.4th 197 , 213 [ 105 Cal.Rptr.2d 407 , 19 P.3d 1148 ].) Because the statutory language is generally the most reliable indicator of legislative intent, we first examine the words themselves, giving them their usual and ordinary meaning and construing them in context. (People v. Lawrence (2000) 24 Cal.4th 219 , 230 [ 99 Cal.Rptr.2d 570 , 6 P.3d 228 ].) When statutory language is clear and unambiguous, “ ‘there is no need for construction and courts should not indulge in it.’ ” (People v. Benson (1998) 18 Cal.4th 24 , 30 [ 74 Cal.Rptr.2d 294 , 954 P.2d 557 ], quoting People v. Overstreet (1986) 42 Cal.3d 891 , 895 [ 231 Cal.Rptr. 213 , 726 P.2d 1288 ].)

Of the various FEHA provisions, only sections 12941 and 12941.1 address age discrimination in the workplace. Section 12941, subdivision (a), provides in pertinent part: “It is an unlawful employment practice for an employer to refuse to hire or employ, or to discharge, dismiss, reduce, suspend, or demote, any individual over the age of 40 on the ground of age, except in cases where the law compels or provides for such action.” (Italics added.) In section 12941.1, the Legislature stated: “[T]he use of salary as the basis for differentiating between employees when terminating employment may be found to constitute age discrimination if use of that criterion adversely impacts older workers as a group, and ... the disparate impact theory of proof may be used in claims of age discrimination.” (Italics added.) Neither section 12941 nor section 12941.1 prohibits age discrimination in the terms, conditions, or privileges of employment.

The FEHA provision that does prohibit discrimination in the terms of employment, section 12940, notably fails to include age as a protected category. As pertinent here, it prohibits an employer from discriminating against an employee “in terms, conditions, or privileges of employment” because of an employee’s “race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, or sexual orientation.” Although section 12940 expressly prohibits discrimination in the terms and conditions of employment on the basis of race, religion, sex, and other expressly mentioned criteria, we cannot construe it, contrary to its plain meaning, as encompassing a statutory prohibition against discrimination in the terms and conditions of employment on the basis of age.

Notwithstanding the clear language of sections 12940 and 12941, plaintiff would have us consider subdivision (a) of section 7295.2 of title 2 of the California Code of Regulations (regulation 7295.2(a)), which states: “Discrimination on the basis of age may be established by showing that a job applicant’s or employee’s age over forty was considered in the denial of an employment benefit.” (Italics added.) If this regulation were valid, defendant employer would likely have to pay for plaintiff’s postgraduate education. Indeed, plaintiffs central argument is that this administrative regulation is both valid and reasonably necessary to effectuate the purposes of the FEHA. But a review of the law governing administrative regulations reveals that regulation 7295.2(a) is invalid insofar as it purports to prohibit age discrimination in employment benefits.

California administrative agencies routinely adopt quasi-legislative regulations under express statutory authority. “For such regulations to be valid in this state, they must be consistent ‘with the terms or intent of the authorizing statute.’” (Green v. Ralee Engineering Co. (1998) 19 Cal.4th 66 , 82 [ 78 Cal.Rptr.2d 16 , 960 P.2d 1046 ], quoting California Assn, of Psychology Providers v. Rank (1990) 51 Cal.3d 1 ,11 [ 270 Cal.Rptr. 796 , 793 P.2d 2 ].) A regulation that is inconsistent with the statute it seeks to implement is invalid. (Mooney v. Pickett (1971) 4 Cal.3d 669 , 679 [ 94 Cal.Rptr. 279 , 483 P.2d 1231 ].) Although regulation 7295.2(a) apparently would allow plaintiff

Plaintiff insists that subdivision (a) of section 12935, which authorizes the FEHC to “adopt . . . suitable rules, regulations, and standards ... to interpret, implement, and apply all provisions of [the FEHA],” compels the conclusion that regulation 7295.2(a) is valid. We reject this argument, however, because regulation 7295.2(a), insofar as it purports to prohibit age discrimination in employment benefits, is inconsistent with the FEHA, and a regulation that is inconsistent with the authorizing statute does not implement its provisions.

Plaintiff further suggests that regulation 7295.2(a) is necessary to implement section 12920, in which the Legislature has declared that “as the public policy of this state . . . it is necessary to protect and safeguard the right and opportunity of all persons to seek, obtain, and hold employment without discrimination or abridgment on account of. . . age . . . .” Section 12920 is a general provision that simply outlines the public policy behind the FEHA statutory scheme as a whole. As we have previously noted, when a statute’s language is clear, courts need not consider the public policy or statutory scheme encompassing the statute. (Torres v. Parkhouse Tire Service, Inc., supra, 26 Cal.4th at p. 1003.)

Plaintiffs argument that regulation 7295.2(a) is reasonably necessary to effectuate the FEHA is unpersuasive. As discussed earlier, neither section 12940 nor section 12941 prohibits age discrimination in the terms, conditions, or privileges of employment. Education benefits fall within this category. We do not review the wisdom of the Legislature’s decision not to include employees over the age of 40 as a protected class in section 12940, or the wisdom of its decision not to include allocation of employee benefits among the employer decisions to which the age discrimination prohibition of section 12941 applies. Our role in construing a statute is simply to ascertain and to declare what is in terms or in substance contained in the statute, not to insert what has been omitted. (See Code Civ. Proc., § 1858.)

C. Plaintiff’s Common Law Tort Claim

Plaintiff alleges that an employer’s denial of educational assistance to an employee over the age of 40 because of the employee’s age violates a

In Tameny, the plaintiff alleged that his employer had fired him for refusing to participate in an illegal price-fixing scheme. We held that “an employer’s obligation to refrain from discharging an employee who refuses to commit a criminal act . . . reflects a duty imposed by law upon all employers in order to implement the fundamental public policies embodied in the state’s penal statutes.” (Tameny, supra, 27 Cal.3d at p. 176, italics added.) We concluded that such a violation of public policy would support a common law cause of action in tort. (Ibid.)

In Rojo, we held that the two plaintiffs had suffered tortious constructive discharge because their employer’s sexual harassment forced them to leave their employment. (Rojo, supra, 52 Cal.3d at pp. 70-71.) Our holding in Rojo was grounded in the determination that our state Constitution (Cal. Const., art. I, § 8) declared a fundamental public policy against sex discrimination in employment (Rojo, supra, at pp. 89-90), and that this fundamental public policy “ 4inure[d] to the benefit of the public at large’ ” and was firmly established at the time of the plaintiffs’ discharge (id. at pp. 90-91).

Some two years after Rojo, supra, 52 Cal.3d 65 , this court refined the scope of the common law tortious discharge claim in Gantt v. Sentry Insurance (1992) 1 Cal.4th 1083 [ 4 Cal.Rptr.2d 874 , 824 P.2d 680 ] (Gantt). There, the plaintiff was constructively discharged for resisting an employer’s pressure to lie during the investigation of a coworker’s sexual harassment claim. This court held that there was direct statutory support for the jury’s express finding that the employer violated a fundamental public policy when it constructively discharged the plaintiff employee, in view of section 12975, which specifically prohibited any obstruction of an investigation by the DFEH. Distinguishing between matters genuinely involving public policy and those that concern merely ordinary disputes between employer and employee, we observed that “[a] public policy exception carefully tethered to fundamental policies that are delineated in constitutional or statutory provisions strikes the proper balance among the interests of employers, employees and the public.” (Gantt, supra, at p. 1095.)

As we later explained in Stevenson v. Superior Court (1997) 16 Cal.4th 880 , 889 [ 66 Cal.Rptr.2d 888 , 941 P.2d 1157 ] (Stevenson), 44[i]n the context

In Stevenson, an employee who had been discharged at the age of 60 after 30 years of employment alleged that her former employer wrongfully terminated her employment in violation of the public policy against age discrimination. (Ste venson, supra, 16 Cal.4th at pp. 885-886.) We recognized that the FEHA establishes a general public policy against age discrimination in employment, but we acknowledged the limitations of allowing common law tort claims based on public policy articulated in a statute. We said: “[Wjhen a plaintiff relies upon a statutory prohibition to support a common law cause of action for wrongful termination in violation of public policy, the common law claim is subject to statutory limitations affecting the nature and scope of the statutory prohibition, but the common law claim is not subject to statutory procedural limitations affecting only the availability and scope of nonexclusive statutory remedies.” {Stevenson, supra, at p. 904, italics added.) Applying that reasoning here, a common law tort claim based on the public policy against age discrimination articulated in the FEHA is subject to the FEHA’s limitations on the nature and scope of the statutory prohibition against age discrimination. (Stevenson, supra, at p. 904; see also Jennings v. Marralle (1994) 8 Cal.4th 121 , 130 [ 32 Cal.Rptr.2d 275 , 876 P.2d 1074 ] [public policy against employment discrimination does not apply to employers who are statutorily exempt under the FEHA because they do not regularly employ five or more persons].) If, as we have concluded, the FEHA does not prohibit employers from denying educational benefits on the basis of age, then plaintiff may not ground a common law claim for denial of the same benefits in the FEHA’s prohibition against age discrimination.

In Stevenson, we noted that a historical survey of tortious discharge decisions established four requirements that a policy must meet in order to support a claim: “First, the policy must be supported by either constitutional or statutory provisions. Second, the policy must be ‘public’ in the sense that it ‘inures to the benefit of the public’ rather than serving merely the interests of the individual. Third, the policy must have been articulated at the time of the discharge. Fourth, the policy must be ‘fundamental’ and ‘substantial.’ ” (Stevenson, supra, 16 Cal.4th at pp. 889-890.)

With respect to the first requirement, no constitutional or statutory provision supports a claim for a wrongful denial of educational benefits to workers over the age of 40. As we noted earlier, the plain language of sections 12940 and 12941 reveals that the FEHA does not prohibit an

Failure to meet the first requirement of Stevenson, supra, 16 Cal.4th 880 , is fatal to plaintiffs common law tort claim. Therefore, we need not discuss the other three requirements, and we reject plaintiffs common law tort claim.

Conclusion

The California Legislature has established the public policy of this state for employment discrimination generally and for age discrimination in employment in particular. In no uncertain terms, the Legislature has prohibited employers from discriminating in the terms and conditions of employment on the basis of a variety of factors, but the employee’s age notably is not one of those factors. In equally clear language, the Legislature has prohibited employers from discriminating on the basis of age when they make decisions about hiring, discharging, suspension, and demoting. Under no reasonable construction, however, does the statutory language of the FEHA extend the age discrimination prohibition beyond these matters to encompass all employment decisions relating to the terms and conditions of employment, such as the fiimishing of educational assistance. Because the FEHA embodies this state’s general public policy against age discrimination in employment, defendant employer’s action in denying plaintiff employee educational assistance for postgraduate studies neither violated the FEHA nor gave rise to a common law tort cause of action for violation of public policy. Accordingly, plaintiff has no cause of action for which he may recover noneconomic damages, and the trial court’s judgment awarding plaintiff $51,000 in damages for economic loss caused by his employer’s breach of contract represents the extent of his authorized recovery.

The judgment of the Court of Appeal is affirmed.

George, C. J., Baxter, J., Werdegar, J., Chin, J., Brown, J., and Moreno, J., concurred.