Ottone Leach Olsen & Ray LLP

California Labor Code §96(k) authorizes the Labor Commissioner to act on an employee’s claims for loss of wages because of demotion, suspension or discharge for lawful conduct occurring during non-working hours away from the employer’s premises. Labor Code §98.6 provides a remedy of reinstatement and reimbursement of lost wages for any employee who is discharged or “in any manner discriminated against” because of activity protected by §96, including subsection (k).

This suggests that an employer has no right to impose disciplinary action for off-duty conduct of any kind. This is not so. However, discipline imposed because of lawful, off-duty conduct must be based on a business-related reason and must be imposed in a non-discriminatory manner.

Labor Code §96(k) may affect employers who attempt to regulate or control the off-duty, lawful conduct of their employees. Even if an employer’s decision is based upon a legitimate business interest, the employer may be faced with Labor Commissioner claims if that decision was reached because of the employee’s off-duty behavior.

In order to minimize that risk, the following factors should be considered before taking action against an employee because of lawful, off-duty activities:

• Did the conduct occur on company property?
• Did the employee use company equipment or property for a reason other than a business-related one?
• Did the conduct create a conflict of interest with business purposes?
• Did the activity impact morale or productivity in a negative manner?
• Was the company’s reputation threatened or harmed?
• Is this the employee’s first offense or has he or she been disciplined for engaging in unacceptable off-duty conduct on previous occasions?

Obviously, the more factors that apply, the higher the employer’s chance of successfully defending the decision to discipline or discharge the employee for off-duty conduct.

The Labor Code sections referred to above do not, of course, protect employees from discipline imposed because of unlawful off-duty conduct. Once again, the discipline should be business-related and handled in an even-handed, non-discriminatory manner. For instance, if an employee is arrested, business is affected because the employee is unable to report for work. The employer may discharge that employee for violation of the attendance policy. In order to be consistent and non-discriminatory, the same discipline must be imposed on other employees who are guilty of the same or similar offense.

Following a non-discriminatory course of action will go a long way toward an employer’s defense in the event a disciplined employee files a charge of discrimination or wrongful termination.