WRONGFUL TERMINATION (Barbosa v. IMPCO Technologies)

In Barbosa v. IMPCO Technologies, Inc., the California Court of Appeal held that it is unlawful for an employer to terminate an employee because the employee made a reasonable, good faith claim for unpaid overtime wages where the claim is ultimately determined to be unfounded. In issuing its opinion, the Court emphasized California public policy, which encourages employees to assert claims with respect to matters of compensation without fear of retaliation, even if the employee is later proven incorrect. The Court explained that, because the payment of overtime wages is a matter of “public health and general welfare,” the discharge of an employee for exercising his or her right to claim overtime wages is a violation of public policy supporting a tort claim against the employer, so long as the employee acts in good faith. See Barbosa v. IMPCO Technologies, Inc., 179 Cal. App. 4th 1116 (2009).

Manuel Barbosa was employed as a “cell leader” supervising eight other employees whose job it was to assemble carburetors. Barbosa and his subordinates were all paid on an hourly basis. In June 2007, two of Barbosa’s subordinates told him they had not been paid for two hours overtime. Barbosa believed he also had not been paid for two hours overtime.

Barbosa told the payroll administrator about the error, and offered his opinion that the time clock was wrong. The payroll administrator requested that Barbosa obtain the approval of his supervisor for the payment of the overtime. The supervisor approved the overtime pay because he trusted Barbosa.

The payroll administrator and human resources manager compared the scan records from the company security gate against the hours for which the employees had been paid, and concluded that the employees could not have worked the overtime that had been claimed. One employee corroborated their suspicions.

A few days later, Barbosa was called to a meeting. When asked whether he was sure his group worked the overtime, Barbosa replied “yes.” After the meeting, the operations manager showed Barbosa the records from the security gate scans. Barbosa then said he was sorry, and that the people who came to him regarding the overtime discrepancy had confused him. Barbosa twice offered to pay the money back, but was terminated on June 19, 2007 for “cheating the company.” The other employees in Barbosa’s group were retained, but the overtime pay was taken back from them.

Barbosa filed suit in superior court alleging a claim for wrongful termination in violation of public policy. The common law recognizes an employee’s right to bring a tort action against his or her employer for a termination of employment that violates public policy. The public policies supporting such a claim may be reflected in statutes or court decisions. As the Court explained, “Determining whether a claim involves a matter of public policy as opposed to an ordinary dispute between the employer and employee depends on whether the matter affects society at large, whether the policy is sufficiently clear, and whether it is fundamental, substantial, and well established at the time of termination.”

In the Barbosa case, the public policy at issue was the law requiring payment of overtime wages to hourly employees, as reflected in Labor Code section 1199. Because the overtime laws apply to society at large, are sufficiently clear about what is required and who benefits, and are well established, Barbosa’s lawsuit arguably satisfied the legal requirements for a claim for wrongful termination in violation of public policy.

The trial court was not so sure. After hearing the evidence, IMPCO moved to dismiss Barbosa’s lawsuit claiming that public policy did not protect an employee’s right to bring non-meritorious claims for unpaid wages. As the trial court remarked, “It still comes down to a question of law. Good faith belief turns out to be wrong; termination thereafter of an at-will employee. We know the employer promptly paid the claim, thereafter, did an investigation, found out [Barbosa] was wrong. I don’t see that there’s a public policy that requires the employer to then make a determination whether this was good faith, not good faith, and require[s] the employer to then continue to employ this employee, who from [its] perspective made an unjustified claim for monies.” On this basis, the trial court dismissed Barbosa’s claim without allowing a jury to decide whether he should prevail against IMPCO.

Barbosa appealed. The Court of Appeal reversed the trial court’s decision, concluding that Barbosa’s claim was factually similar to other cases in which employees were protected from retaliation for making good faith, but mistaken, claims. The Barbosa Court opined that an employee should be permitted to exercise his statutory right to claim overtime wages, even if the employee is later determined to be incorrect. The Court noted, “Any other conclusion would open the door to employee intimidation and chill the exercise of statutory rights.” The Court of Appeal sent the case back to the trial court for further proceedings and evaluation by a jury.

The Barbosa decision means that employees are permitted to question their employers with regard to compensation-related issues, in court or otherwise, without fear of retaliation. It is irrelevant whether the employee’s claim has merit. It only matters that the employee believes, in good faith, that the claim is legitimate.