Cases and Comments on Contracts

Part 8: More Torts Attendant to Breach of Contract: Employment Discrimination

by Robert V. West, MD JD FAAEM

Absent a provision specifying the term or length of an employment relationship, neither party to the contract has any legally enforceable claims for breach of the contract. Without a term contract, most state and federal courts adhere to the "employment at will" doctrine as the rule in analyzing employment disputes. The underlying premise here is that when there is no term of employment specified and it is left to the discretion of either party (employer or employee), then either party may terminate the arrangement at will. That means an employer can terminate an employee for a good reason, a bad reason, or for no reason at all. The only legal restriction is that if there is a reason that can be detected for the termination, it cannot be an illegal reason.

Title VII of the 1964 Civil Rights Act prohibits employment discrimination based on race, color, religion, gender, and national origin. (42 U.S.C. Section 2000e et seq.) Similarly, the Equal Pay Act of 1963 prohibits sex-based wage discrimination; that is, persons of the opposite sex in the same job are to be paid the same amount. Both of these laws are administered and enforced by the Equal Employment Opportunity Commission (EEOC). Private litigants can pursue their own cause of action after reporting and allowing the EEOC a procedural period of time for an investigation. Damages for both of these violations under these laws include lost wages, attorney's fees, punitive damages, and job reinstatement. Retaliatory termination for failure to participate in an "illegal scheme" or a retaliatory discharge for reporting any discriminatory activity under either of these laws is considered wrongful termination and is actionable under these same acts. Similar protections exist under most state laws as well.

This brings us to an illustrative case that recently came out of the California courts, which was filed on behalf of a former director of AAEM, Drew Fenton, MD FAAEM, and his co-plaintiff Klaus Wagener, MD FAAEM. This case underscores the application of these federal rights to our practice in the emergency department, as either an independent contractor or an employee.

Drs. Fenton and Wagener are not members of any ethnic or racial minority. Nevertheless, the group of ED physicians at Centinela Hospital where they worked was composed of predominantly non-Caucasian doctors and it was alleged by Drs. Fenton and Wagener that the hospital terminated their ED employment because the hospital desired to change the racial composition of "the group." While the case was originally dismissed on a summary judgment by the trial court, the California Court of Appeals has recently reversed the lower court decision and followed the decisions in some other California cases. See Fisher v. San Pedro Peninsula Hospital, 215 Cal. App. 3d 590, 606 (1989), Gomez v. Alexian Bros. Hospital of San Jose, 698 F. 2d 1019, 1021 (1983).

In Gomez, the plaintiff submitted a proposal which included five Hispanic physicians. The hospital told the plaintiff the proposal was unacceptable because "there were too many brown faces" in the group and the hospital feared "turning the hospital into a Mexican institution." The Ninth Circuit held that Title VII encompasses situations where unlawful discrimination interferes with an individual's employment opportunity, irrespective of whether a formal employment relationship exists. Therefore, applying this reasoning to Drs. Fenton and Wagener's case, while the hospital did not employ Drs. Fenton and Wagener, the alleged attempts at changing the racial composition of the group by terminating all of them was actionable on this basis. Additionally, when it interfered with their employment opportunities with the group by taking over the ED-exclusive contract, the hospital again violated Title VII.

Good luck at trial, Drew and Klaus!