In a case of first impression, the Court of Appeals of California, Second District held that individual supervisors cannot be held liable under Section 394 of the California's Military and Veterans Code (Section 394) for engaging in allegedly discriminatory acts against an employee for his membership or service in the armed forces. On November 10, 2011, the California appellate court issued a decision in Haligowski v. Superior Court of Los Angeles County, holding that, as with discrimination cases under the California Fair Employment and Housing Act (FEHA), plaintiffs may only hold their employers, and not individual supervisors performing normal management duties, liable for alleged discrimination under Section 394.

Lieutenant Mario Pantuso was called to active duty with the Navy while working at Safway Services, LLC. He served a six-month deployment in Iraq and sought to return to work. His immediate supervisor and the regional manager informed Pantuso that his employment was terminated. Pantuso sued Safway, his immediate supervisor and the regional manager for discrimination and retaliation under Section 394, and sought damages from Safway for wrongful retaliation and termination in violation of public policy.

Under Section 394, no person, employer, or officer or agent of any corporation, company or firm may discriminate against or discharge an employee for his service or membership in the armed forces (Cal. Mil. & Vet. Code § 394 (a) and (d) (2011)).

Plaintiff claimed that the defendants discriminated against him because of his membership in the Navy by:

Pantuso's immediate supervisor and the regional manager demurred to the complaint, claiming that supervisors cannot be held individually liable under Section 394. After the trial court overruled the demurrer, the individual defendants petitioned for a writ of mandate to direct the trial court to vacate its order and enter a new order sustaining the demurrer without leave to amend.

The California appellate court granted the individual defendants' petition and ordered the trial court to vacate its order, overruling the demurrer and holding that Section 394 does not permit personal liability against individual supervisors whose allegedly discriminatory acts arise out of the performance of their normal management duties.

According to the court, the plain language of Section 394 does not specifically permit individual liability. Section 394 prohibits discrimination by any "person" or "agent," and prohibits an "employer or officer or agent . . . or other person" from discharging an employee because of his membership or service in the military. However, the statute does not define "person" or "agent," and the court could not determine the legislature's intent by looking at the legislative history.

The court in Haligowski found persuasive an unpublished federal district court case (Kirbyson v. Tesoro Refining and Marketing Co., No. 09-3990 (N.D. Cal. Mar. 2, 2010)), which held that, similar to claims under the California Fair Employment and Housing Act (FEHA), Section 394 did not permit individual liability for alleged discrimination. California cases have held that the FEHA does not permit individual supervisors to be held personally liable for discrimination and retaliation (see Jones v. Lodge at Torrey Pines Partnership, 42 Cal. 4th 1158 (2008); Reno v. Baird, 18 Cal.4th 640 (1998) and Janken v. GM Hughes Electronics, 46 Cal. App. 4th 55 (1996)).

The court also found that Section 394 was not preempted by the federal Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), which does allow individual supervisors to be held personally liable for discrimination in violation of the statute (see 20 C.F.R. § 1002.5 (d)(1)(i) 2011)).

The Haligowski decision establishes new precedent under Section 394, foreclosing individual supervisor liability for employment discrimination against members of the military. California employers should ensure that its supervisors understand that it is unlawful to discriminate on the basis of an employee's military service or membership. Under state law, only employers may be held liable for discriminatory acts by its supervisors that are found to be in violation of Section 394. California plaintiffs may hold individual supervisors liable for employment discrimination based on their military membership under the federal Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).

For information on California military leave and a sample military employment leave policy under California law, see State Q&A, Leave Policy Language: California: Question 5.