Weekly Law Resume - December 6, 2012: Employer May Not Deny Reinstatement of An Employee on CFRA Leave Based On “Honest Belief” That Employee Violated Company Leave Policy”

by Low, Ball & Lynch

[author: Karen L. Moore]

Avery Richey v. AutoNation, Inc. et al.
Court of Appeal, Second District (November 13, 2012)

This case discusses an employer’s burden of proof to set forth a legitimate reason for denying reinstatement to an employee on leave under the California Family Rights Act (“CFRA”).

Plaintiff Avery Richey was hired as a sales associate at Power Toyota of Cerritos (“Power Toyota”) in 2004 and was subsequently promoted to sales manager. Upon employment, he signed an arbitration agreement covering claims against Power Toyota, its parent companies, employees and agents. In 2007 he made the decision to start his own restaurant while continuing to work full-time at Power Toyota. The restaurant opened in 2008. Richey’s managers met with him, expressing concern that the restaurant was distracting him from his job duties.

In March 2008, Richey suffered a back injury while moving furniture at home. His physician certified that he was unable to perform his duties at Power Toyota. He filed a claim for leave under the CFRA. The leave was granted and provided for a return to work date of May 28, 2008. Richey’s supervisor sent a letter advising him of the company’s policy barring other employment, including self-employment, while on a leave of absence. Richey did not respond to the letter because he believed that the policy did not apply to him as a restaurant owner.

During Richey’s leave, one of his supervisors parked near the restaurant and observed Richey sweeping, bending over and using a hammer to hang a sign. Several coworkers also observed Richey taking orders and acting as cashier. On May 1, 2008, before his return to work, Power Toyota terminated Richey for engaging in outside employment while on leave. Richey sued, alleging multiple claims including a violation of the CFRA. Power Toyota moved to compel the arbitration agreement which required the arbitrator to base his decision on controlling law.

The arbitrator issued a written order denying Richey’s CFRA claim. In rendering his decision in favor of Power Toyota, the arbitrator conceded that Power Toyota’s investigation of Richey’s restaurant activities was “superficial” and its policy barring secondary employment while on leave was poorly written. It was also unclear whether Richey’s activities at his restaurant were beyond his doctor’s restrictions. Despite many factual issues, the arbitrator decided Richey’s CFRA claim based on a single issue of law and fact. He relied on the “honest belief defense” adopted by a minority of federal circuits (but rejected by the Ninth Circuit). As stated in Smith v. Chrysler Corp. (6th Cir. 1998) 155 F.3d 799, 806, the “honest belief defense” provides that “so long as the employer honestly believed in the proffered reason given for its employment action, the employee cannot establish pretext even if the employer’s reason is ultimately found to be mistaken, foolish, trivial, or baseless.”

Richey moved the trial court to vacate the award, arguing that the arbitrator committed an error of law by improperly allowing Power Toyota the honest belief defense, resulting in waiver of Richey’s CFRA rights. The trial court disagreed, ruling that there was no evidence that Richey could not perform his job duties and Power Toyota’s suspicion of fraud, even if untrue, was enough to justify Richey’s discharge.

The Court of Appeals reversed the trial court judgment and directed it to grant Richey’s petition to vacate the arbitration award and allow a new arbitration. The Court of Appeals examined federal court rulings regarding the federal Family & Medical Leave Act (“FMLA”) upon which CFRA is based and determined that the arbitrator committed legal error in applying the honest belief defense. The Court of Appeal reasoned that both CFRA and FMLA guarantee reinstatement to an employee following certified leave, and the burden of proof is on the employer to set forth particularized facts showing a legitimate reason to deny reinstatement.

California courts are in accord with federal law. Under CFRA an employer has the burden of proving by a preponderance of the evidence that a legitimate reason renders an employee ineligible for reinstatement. In Faust v. California Portland Cement Co. (2007) 150 Cal.App.4th 864, 878-879, the court held that “[a]n interference claim under the FMLA (and thus CFRA) does not involve the burden-shifting analysis articulated by the United States Supreme Court in McDonnell Douglas….A violation of the FMLA ‘simply requires the employer deny the employee’s entitlement to FMLA leave.” Citing to Avila v. Continental Airlines, Inc. (2008) 165 Cal.Appp.4th 1237, 1259, the Court of Appeals noted that allowing an employer to rely on a good faith but erroneous belief about the legitimacy of its actions toward an employee would be inconsistent with the antidiscrimination provision of CFRA.

In this case, the arbitrator improperly imposed the burden of proof on Richey - as opposed to his employer - by basing his decision on Power Toyota’s “honest belief” that Richey violated company policy barring outside employment during his leave. Power Toyota could not rely on a poorly-worded and inconsistently applied company policy to terminate Mr. Richey while on leave. The arbitrator’s failure to apply the correct burden of proof effectively denied Richey a hearing on the merits of his CFRA claims. Necessary findings of fact and conclusion of law sufficient to ensure that the decision complied with the statutory requirements of CFRA include: whether Richey was given adequate notice of Power Toyota’s policies regarding CFRA leave; whether the policy barring secondary employment during leave differed from the policies governing secondary employment for employees not on leave; whether the secondary employment policy violated CFRA; whether Richey’s restaurant activities exceed limitations imposed by his physicians in violation of his leave; and whether Power Toyota carried its burden of proof on these factual issues.


This case illustrates the burden of proof employers must meet to support any decision to deny reinstatement to employees who take leave under CFRA. An employer’s mere “honest belief” that an employee violated the terms of their leave in the absence of factual support will not shield an employer from CFRA liability.

For a copy of the complete decision see:


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Low, Ball & Lynch | Attorney Advertising

Written by:

Low, Ball & Lynch

Low, Ball & Lynch on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.