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Your Legal Corner - Client Alert Blog

Terminating An Employee For Making A False Overtime Claim May Constitute Wrongful Termination

Written By: Melissa C. Marsh, Esq., California Attorney, January 2010 Add to Favorites
On November 30, 2009, the California Appellate Court in Barbosa v. Impo Technologies, Inc. ruled that a good faith complaint or inquiry about missing overtime can be a protected activity, and that firing an employee for making a good faith claim (even when a subsequent investigation shows he was wrong), constitutes wrongful termination. In Barbosa, Manuel Barbosa sued his former employer IMPCO for wrongful employment termination after IMPCO fired him for allegedly falsifying his time card.

Facts.

Manuel Barbosa supervised 8 workers at Impco Technologies. After receiving complaints of missing overtime hours from some of the employees he supervised, Barbosa thought he too was owed missing overtime. Barbosa informed the payroll administrator and his supervisor about the missing overtime and that maybe the newly installed time clock was malfunctioning and his supervisor who approved the overtime. The payroll administrator later conducted an investigation by examining the time cards and surveillance tapes and determined that no overtime had actually been due. Barbosa was then terminated for allegedly falsifying time records.

Court's Ruiling.

In Barbosa, the Appellate Court held that although at will employees can be terminated for any reason, or no reason at all, an employee cannot be fired for an illegal reason (e.g., where the termination violates a fundamental public policy such as discrimination). Applying this philosophy, the court explained that "the duty to pay overtime wages is a well-established fundamental public policy affecting the broad public interest." The Appellate Court concluded that when an employer terminates an employee for exercising his right to overtime wages, the employee will have a viable cause of action for wrongful termination. But what if the employee was not entitled to overtime wages? The Appellate Court ruled that when an employee makes a claim for overtime out of a “good faith but mistaken belief” the employee is protected from retaliation and termination even if the employer later discovers the employee was wrong. According to the Appellate Court, "Any other conclusion would open the door to employee intimidation and chill the exercise of statutory rights."

Conclusion.

Employees should be aware that claims for unpaid wages, and complaints for alleged violations of the law, should be made not only in "good faith," but also under a "reasonable belief."

Employers must be aware that an employee may bring a successful wrongful termination claim if the employer terminates an employee after the employer makes a false claim made in good faith, reports "reasonably based suspicion" of illegal activity even if none is later discovered, or claims a violation of the Labor Code even if none was in fact made. As long as the employee makes a complaint or claim for statutory rights in good faith, the employee cannot be fired in retaliation for making a claim in good faith based on a reasonable belief.

If presented with a complaint, or claim, California employers should investigate the matter thoroughly (gather documents and talk to witnesses) and where appropriate take corrective measures. If the complaint turns out to be unfounded, employers should not retaliate against the employee with disciplinary action or termination unless the employer's investigation proves the employee was purposely lying. If there is the slightest possibility that the employee presented his claim, or demand, in good-faith the employer would be wise to let it go. However, if the employee was intentionally trying to perpetrate a fraud (records time not worked, punches in an absent co-worker, or engages in other fraudulent acts) discipline including termination may be an appropriate response.


Tags: termination, wrongful, wrongful termination
Posted In: Employment Law News 


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Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.