Fenwick Employment Brief - December 15, 2010

by Fenwick & West LLP
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In this issue: Promise of Reduced Sales Quota May Create Enforceable Contract Once Conditions Satisfied; FEHA Obligation to “Correct” Co-Worker Harassment Remedial, Not Anticipatory; Cal. Supreme Court: 3-Year Statute of Limitations on Waiting Time Penalty Claims; U.S. Supreme Court to Review Wal-Mart Class Certification; Employee Lacked Reasonable Belief That Re-Hire Efforts Would Be “Futile”; eBay Arbitration Agreement Enforced After Severing Unconscionable Costs Provision; Ninth Circuit Again Approves Cost-Neutral Pay Shift for Alternative Work Arrangement; EEOC - Record-Breaking Year for Private Sector Discrimination Complaints; EEOC – Record-Breaking Year for Private Sector Discrimination Complaints; and more...

Excerpt from "Promise of Reduced..."

According to a recent California appellate opinion, a compensation plan provision promising a future reduced sales quota upon achievement of certain age and tenure requirements may result in a binding contract the employer could not alter after the requirements had been met. In McCaskey v. California State Automobile Association and consolidated cases, plaintiffs Charles Luke, Francis McCaskey and John Mellen (“Plaintiffs”), all former sales personnel with Defendant California State Automobile Association (“CSAA”), sued CSAA claiming their terminations breached CSAA’s contractual obligations to them and constituted wrongful age discrimination and retaliation.

Plaintiffs began working for CSAA in the 1960’s and 1970’s. By 1973, CSAA’s standard compensation plan provided that sales quotas would be reduced by 15% for sales agents who were 55 years old with 15 years of service and by a further 25% for those who were 60 years old with 20 years of service (“Reduced Quota Provision”).

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