In Nakai v. Friendship House Association of American Indians, Inc., the California Court of Appeal determined whether, under the Fair Employment and Housing Act (FEHA), marital issues that spill into the workplace implicate marital status protections and an employer’s duty to investigate.

The Facts

For over 20 years, plaintiff Orlando Nakai (Nakai) worked as a counselor at the Friendship House Association of American Indians, Inc. (Friendship House). Friendship House is a drug and alcohol rehabilitation program for Native Americans. While employed at Friendship House, Nakai married the chief executive officer’s (CEO) daughter.  During Nakai and his wife’s employment at Friendship House, Nakai and his wife experienced marital difficulties that created turmoil in the workplace. In May of 2016, Nakai’s wife revealed to her mother, the CEO of the Friendship House that Nakai “had a gun, was angry with the employees at the Friendship House, was dangerous, and had relapsed on drugs.” Nakai’s wife further told her mother that she had obtained a restraining order against her husband. The next morning, the CEO of the Friendship House, Nakai’s mother-in-law, placed him on administrative leave and then, without investigating her daughter’s allegations, terminated Nakai’s employment. Nakai filed an action for wrongful termination, claiming discrimination on the basis of his marital status and failure to conduct a reasonable investigation prior to discharge. Both claims asserted a violation of the FEHA. The trial court granted summary judgment in favor of the Friendship House, determining Nakai had failed to establish a prima facie case of marital status discrimination and had failed to demonstrate that his employer had an obligation to investigate.

The Court of Appeal’s Analysis

Nakai alleged that he was discharged from the Friendship House “solely because of his status as the spouse of the complaining employee.” Although the FEHA prohibits marital status discrimination, the California Court of Appeal affirmed the trial court’s decision that Nakai could not establish a prima facie case for marital status discrimination. According to the Court, marital status discrimination laws are supposed to “prevent discrimination against classes of people.” For example, employers cannot refuse to hire single people because they are single. On the other hand, the FEHA discrimination laws are not set out to protect people based on their “status of being married to a particular person.”  Since Nakai claimed he was terminated because of his marriage to the CEO’s daughter, not on the basis of being married itself, the Court determined that there was “not a marital discrimination problem.” The Court found that the Friendship House had valid, nondiscriminatory reasons for terminating Nakai; his wife reported that he owned a gun, was allegedly angry at their employees, and was using drugs. The Court determined that because Friendship House had concerns of violence, it had legitimate reasons for firing Nakai.

Next, the Court reviewed Friendship House’s failure to investigate the claims made by Nakai’s wife before firing him. The Court of Appeal explained that Nakai was an at-will employee; therefore, the Friendship House owed him no duty to investigate the wife’s charges before firing him. The Court further explained that absent a contractual or statutory provision to the contrary, employers considering the issue of an employee accused of misconduct “may act peremptorily, arbitrarily, or inconsistently, without providing specific protections such as prior warning, fair procedures, objective evaluation, or preferential reassignment.”  Nakai did not produce a contract or even argue the presence of an implied agreement that required “good cause” for termination. Consequently, the Court of Appeal rejected Nakai’s argument that he had a contractual right to have his employer investigate his wife’s complaints.

The Court of Appeal concluded by considering whether, under the FEHA, employers are under an obligation to investigate the legitimacy of complaints made against alleged perpetrators of crimes. Although the FEHA requires an investigation when a third party accuses an employee of sexual harassment, this was not the charge here. Further, the duty to investigate runs in favor of the victim, not the perpetrator of harassment. Thus, the court determined that the FEHA does not impose a duty to investigate in regards to alleged threats of workplace violence.

Practical Tips for Employers

●This case highlights the conflicts of interest and related issues that can arise when spouses work for the same company, which is not entirely uncommon.

●This case provides guidance to employers on the meaning of marital status discrimination under the FEHA. Additionally, its ruling provides some perspective regarding an employers’ express statutory and contractual duty to investigate misconduct complaints. Unless mandated by contract or statute, there is no express legal duty to investigate.

●However, prudent employers will still consider investigating complaints before disciplining or terminating employees, as this will, among other things, ensure a reasoned decision, prevent future lawsuits, and prevent additional hostility among employees.

●Employers should work closely with expert legal counsel when determining whether to conduct a workplace investigation before disciplining or terminating an employee. If you have questions about workplace investigations or your duty to investigate, please contact the attorneys at Palmer Kazanjian Wohl Hodson LLP.