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Who needs to know about this case: Labor lawyers

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Synopsis: In 1994, David Schacter enrolled in a voluntary incentive-compensation plan offered by Citigroup, in which he would receive five percent of his total compensation in 1995 in the form of restricted stock. In July 1995, he received 44 shares of stock, which vest in 1997. In 1996, he received 38 shares of stock, which vest in 1998. Under the plan, Schachter agreed that if he resigned before the stock vested, he would forfeit the stock and the cash compensation to be paid as restricted stock. In 1996, he resigned.


In 1998, he filed a class action against Citigroup, alleging that it failed to pay him earned wages in violation of the Labor Code. Ultimately, the trial court granted Citigroup summary judgment and the appeals court affirmed. The Supreme Court granted review, and affirmed.

Labor Code section 202 states that an employer must pay an employee his earned wages after he quits his employment. Schachter claimed that the percentage of compensation he chose to receive as shares of stock was an earned wage that remained unpaid when he resigned and that he should have been paid cash upon resignation. The Supreme Court disagreed, noting that employers and employees are free to alter the terms of employment.

Schachter agreed to be paid in the form of restricted stock instead of cash and agreed that the stock would be earned only if it had vested.

Accordingly, his failure to remain employed through the vesting period meant that he did not actually earn the stock or the funds used to buy it.


Who needs to know about this case: Employment lawyers

Why it’s important: Holds that in employment-discrimination case, if employer presents evidence of legitimate non-discriminatory motives, it is entitled to a jury instruction on mixed-motive affirmative defense.


Synopsis: Harris, a bus driver employed by the City' of Santa Monica, was fired after she disclosed that she was pregnant. She then sued the City for pregnancy discrimination. At trial, the City sought jury instructions on its mixed-motive affirmative defense. The trial court refused and instructed the jury that the City was liable for discrimination if Harris’ pregnancy was a motivating factor for the discharge even if other matters may have con-tributed. The jury returned a verdict for Harris.


Reversed. Under the mixed-motive defense, an employer is not liable for actions that were motivated by both discriminatory and non-discriminatory reasons if it can establish that the legitimate reason, on its own, would have induced it to make the same decision. The mixed- motive defense is available to an employer accused of employment discrimination under both federal and state law. The trial court’s instructions were erroneous because the jury could not have found that Harris’s pregnancy factored into the City's decision to terminate her without also finding that the City was liable for discrimination. Because the court’s failure to instruct the jury on the mixed- motive affirmative defense deprived the City of a legitimate defense, the judgment was reversed and the case was remanded for retrial.

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