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When “Disorderly Conduct” Is Misconstrued as Domestic Violence: Allstate Ordered to Pay Fired Insurance Broker for Defamation

Employment6

In California, state law prohibits your employer from firing you solely because you were arrested on suspicion of a crime. Under Section 432.7 of the state Labor Code, an employer may not consider “any record of arrest or detention that did not result in conviction,” when making employment decisions. This prohibition also extends to “any record regarding a referral to, and participation in, any pretrial or post-trial diversion program, or concerning a conviction that has been judicially dismissed or ordered sealed pursuant to law.” But an employer may use proof of a conviction–including a voluntary guilty plea–as grounds for terminating employment.

Employer Allowed to Consider Guilty Plea, Even Though Charges Were Later Dismissed

Even if your employer fires you following a conviction, however, that does not give the employer license to lie about, or misstate the nature of, your criminal record. A recent published decision from the California Fourth District Court of Appeals, Tilkey v. Allstate Insurance Company, provides an apt example. In this case, a jury determined an employee was wrongfully terminated following his decision to plead guilty to a “disorderly conduct” charge in Arizona. The jury further ruled that the employer defamed the employee in explaining the reasons for his termination to federal regulators. While the appeals court reversed the wrongful termination part of the verdict, it allowed the jury’s defamation ruling to stand.

Here is some background on the case. The plaintiff worked as a life insurance broker for Allstate. In August 2014, the plaintiff was staying with his girlfriend and her grandson in Arizona. One night, the plaintiff got into a verbal argument with his girlfriend. She locked him out of the house. He started banging on the door. The girlfriend called the police. She told officers that he did want to let the plaintiff in “because she was afraid he would wake up her grandson.”

Police noticed there was some damage to the door, ostensibly as a result of the plaintiff’s banging. The officers subsequently charged the plaintiff with criminal damage and disorderly conduct. The girlfriend later sent an email to Allstate informing it of the arrest.

In January 2015, the plaintiff agreed to plead guilty to the disorderly conduct charge and enter a diversion program. After completing the program, the Arizona court formally dismissed the charges in July 2015. But in May 2015, Allstate decided to fire the plaintiff for “engaging in threatening behavior and/or acts of physical harm or violence to any person, regardless of whether he/she is employed by Allstate.”

The Fourth District explained that Allstate’s actions did not violate California law. The company was allowed to treat the plaintiff’s guilty plea as a “conviction.” Furthermore, Allstate was also allowed to consider the plaintiff’s participation in the diversion program. While Section 432.7 does not permit employers to look at in-state diversion programs, the Fourth District said there was no such prohibition against considering “out-of-state domestic violence programs,” since California abolished diversion for domestic violence charges roughly a decade ago.

“Not Substantially True” Statements to Regulators Qualify as Defamation

Although Allstate was within its rights to fire the plaintiff, the actions it took post-firing still landed it in trouble. Because the plaintiff worked as a licensed broker, Allstate had to file a form with federal securities regulators explaining its decision to fire him. On this form, Allstate falsely stated the plaintiff had threatened “physical harm or violence.” But the Arizona charges only alleged “disruptive behavior” by the plaintiff. There were never any allegations that the plaintiff threatened physical harm or violence against his girlfriend or anyone else.

By making statements that were “not substantially true” to regulators about a non-securities-related matter, the Fourth District said the jury was entitled to find Allstate committed defamation. And given the “reprehensibility” of Allstate’s actions, the Court further upheld the jury’s decision to award punitive damages on this issue.

Get Advice from a California Employment Law Attorney

As a California resident, the law protects you against employers improperly using information from your criminal record to deny you a job, or to fire you from your current position. If you have additional questions about how the law works in this area, contact a qualified California employment attorney today.

https://www.employmentrightscalifornia.com/california-governor-orders-large-food-sector-employers-to-offer-additional-paid-sick-leave-during-covid-19-pandemic/

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* Cathleen Scott is licensed to practice in Florida only.

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