In re BCI Coca-Cola Bottling Company of Los Angeles, Inc. v. Murakami. ( 2019 )

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Electronically Filed
Supreme Court
SCWC-XX-XXXXXXX
10-JUN-2019
09:28 AM
IN THE SUPREME COURT OF THE STATE OF HAWAII
---o0o---
IN THE MATTER OF BCI COCA-COLA BOTTLING
COMPANY OF LOS ANGELES, INC.,
Respondent/Respondent/Appellant/Appellee/Cross-Appellee,
vs.
SCOTT MURAKAMI, in his official capacity as the Director,
Department of Labor and Industrial Relations, STATE OF HAWAII;
DEPARTMENT OF LABOR AND INDUSTRIAL RELATIONS, STATE OF HAWAII,
Respondents/Appellees/Appellees/Cross-Appellants,
and
TAMMY L. JOSUE,
Petitioner/Complainant/Appellee/Appellant/Cross-Appellee.
SCWC-XX-XXXXXXX
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-XX-XXXXXXX; CIV. NO. 13-1-1817-06)
JUNE 10, 2019
RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.
OPINION OF THE COURT BY POLLACK, J.
Hawai‘i law protects workers who suffer injuries
arising out of and in the course of their employment from being
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discharged, suspended, or discriminated against on the sole
basis of their work injuries. In this case, an employer hired a
permanent replacement for an employee who was taking a leave of
absence due to such an injury. The employer thus declined to
reinstate the employee to her pre-injury position upon her
return, instead offering her only positions that were downgrades
from her previous work or that she was unqualified to perform.
The employer contends that this was not discrimination based
solely on the employee’s work injury because it was motivated by
the company’s business needs.
We now hold that, in order for business necessity to
constitute a valid defense to a claim of work injury
discrimination, an employer must demonstrate that the employee’s
absence caused a business impairment that could not be
reasonably alleviated by means that would not result in
discrimination. Because no such showing was made in this case,
we affirm the decision of the Director of the Hawai‘i Department
of Labor and Industrial Relations that the work injury
discrimination in this case contravened our law. We accordingly
vacate the Circuit Court of the First Circuit’s judgment and the
Intermediate Court of Appeals’ Judgment on Appeal and remand the
case to the Hawai‘i Department of Labor and Industrial Relations
for any further proceedings as may be appropriate.
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I. FACTS AND PROCEDURAL HISTORY
A. Agency Proceedings
1. Hearing Officer
On September 15, 2010, Tammy L. Josue filed a
complaint with the Wage Standards Division of the Hawaii
Department of Labor and Industrial Relations (Department)
alleging that BCI Coca-Cola Bottling Company (Coca-Cola)
discriminated against her on the basis of her work injury in
violation of Hawai‘i Revised Statutes (HRS) § 378-32(2) (1993).1
Coca-Cola responded on October 7, 2010, denying the allegations
and arguing that Josue’s claim was untimely.
1
HRS § 378-32(2) (1993), which has since been recodified as HRS §
378-32(a)(2), provided in relevant part as follows:
It shall be unlawful for any employer to suspend,
discharge, or discriminate against any of the employer’s
employees:
. . .
(2) Solely because the employee has suffered a work
injury which arose out of and in the course of the
employee’s employment with the employer and which is
compensable under chapter 386 unless the employee is
no longer capable of performing the employee’s work
as a result of the work injury and the employer has
no other available work which the employee is capable
of performing. Any employee who is discharged
because of the work injury shall be given first
preference of reemployment by the employer in any
position which the employee is capable of performing
and which becomes available after the discharge and
during the period thereafter until the employee
secures new employment.
In the interest of clarity, this opinion will refer to the statute as HRS §
378-32(2), which is the codification applicable to the alleged discrimination
in this case.
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An administrative hearing on the complaint commenced
on February 7, 2011. Josue testified that she began working at
Coca-Cola in 2000 as a full-service driver and later received a
promotion to full-service supervisor. On May 29, 2009, Josue
stated, she suffered an injury during the course of her
employment. Josue explained that she was unable to work as a
result of this injury and was placed on a leave of absence in
accordance with Coca-Cola’s disability leave policy. Josue
testified that she attempted to resume her employment on
September 1, 2010, the day after her doctor authorized her to
return to work with no restrictions, but she was informed that
Coca-Cola had hired an employee to permanently fill her
position. Coca-Cola thereafter offered Josue several other
positions with the company, but Josue testified that these
offers were rejected because she either could not meet the
physical requirements of the positions due to a prior shoulder
injury, the positions required experience or certifications that
she did not possess, or the positions were downgrades from her
pre-injury employment.
Coca-Cola called two witnesses: a human resources
manager and Josue’s supervisor. The human resources manager
testified that, during Josue’s absence, she received a request
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from Josue’s supervisor that the position be filled.2 The
manager stated that, after Josue’s position had been vacant for
ten months, Coca-Cola hired a permanent replacement in April
2010.3 The vacancy had been creating a hardship, the manager
explained, because two other supervisors were covering Josue’s
job duties in addition to performing their own. Josue’s
supervisor added that the two individuals providing coverage
were required to adjust their schedules by arriving to work two
hours prior to the time that they typically arrived.
When asked by the hearing officer about the internal
process behind hiring a permanent replacement to fill Josue’s
position, the manager refused to answer because she said that
the process was “confidential” and “privileged.” The manager
stated, however, that the company did not have any information
regarding whether Josue was capable or incapable of returning to
work when it hired Josue’s replacement. The manager testified
that Coca-Cola’s disability leave policy, which allowed an
employee to take a twelve-month leave of absence after a work
injury, does not state that the injured employee’s job will
remain open for those 12 months, but rather merely provides that
the employee’s benefits end after twelve months.
2
Josue’s supervisor testified that he did not submit a request to
fill Josue’s position.
3
The replacement was a former employee who held Josue’s position
immediately prior to Josue.
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In her post-hearing brief, Josue argued that Coca-Cola
violated HRS § 378-32(2) by failing to return her to the
position she had previously held when she was capable of
returning to work after suffering a workplace injury. This
amounted to unlawful discrimination based solely on an injury
that arose from her employment, she contended, and any argument
that the company filled the position for business reasons was
pretextual. In response, Coca-Cola asserted that its failure to
reinstate Josue to her former position had nothing to do with
her work injury, but rather was the result of the company
filling the position more than four months prior to when Josue
was medically released to return to work. Additionally, Coca-
Cola argued, nothing in the language or legislative history of
HRS § 378-32(2) required it to keep Josue’s position vacant
indefinitely or return her to her same position after she was
medically cleared to work.
On August 1, 2011, the hearing officer issued a
Recommended Decision stating that Coca-Cola’s failure to return
Josue to her position was contrary to the purpose of HRS § 378-
32(2). The hearing officer determined that the statute did not
require Coca-Cola to keep Josue’s position open indefinitely,
but it did make it unlawful “for an employer to discriminate
against an employee in conditions or terms of employment when
the employee has been released to return to work full duty, no
restrictions to the position occupied at the time of the work
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injury.” Because Coca-Cola knew or should have known that Josue
would one day be able to return to work without restrictions,
the hearing officer concluded, the company should have filled
her position with a temporary replacement that was subject to
her right to return. Thus, the hearing officer determined that
Coca-Cola discriminated against Josue solely because of a
compensable work injury in violation of HRS § 378-32(2) and
recommended that Josue be returned to the position that she held
before suffering her injury.
2. Director
Coca-Cola appealed the Recommended Decision to the
Director of the Hawai‘i Department of Labor and Industrial
Relations (the Director). Coca-Cola again argued that the plain
language of HRS § 378-32(2) did not prevent it from hiring a
replacement nor did it require the company to return Josue to
her pre-work related injury position. Specifically, Coca-Cola
argued that the “[s]olely because” language in the statute meant
that the work injury must be the only reason for the employment
action, and here the reason for not reinstating Josue was that a
replacement was hired due to the business hardship inherent in
requiring other employees to perform the duties of the position
while Josue was absent. (Citing Fergerstrom v. Datapoint Corp.,
680 F. Supp. 1456, 1459 (D. Haw. 1988).) Thus, Coca-Cola
concluded, the Recommended Decision was clearly erroneous
because the company’s failure to return Josue to her prior
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position was motivated by legitimate, business concerns.
The Director, in his Decision and Order, noted that
when the legislature added the term “discriminate” to HRS § 378-
32(2) in 1981, it made unlawful the practice of reassigning an
employee to a position with other duties at a lower rate of pay
after the injured employee returned to work. (Citing S. Stand.
Comm. Rep. No. 782, in 1981 Senate Journal, at 1249.) Here, the
Director stated, Josue was not returned to her pre-injury
position, but instead was offered other positions that were
either downgrades or positions for which Josue did not meet the
requirements. The Director agreed with the hearing officer that
although Coca-Cola should not be required to hold Josue’s
position open indefinitely, it could have satisfied its business
concerns by filling the position with a temporary employee. By
instead hiring a permanent employee to fill Josue’s position,
the Director determined, Coca-Cola became unable to return Josue
to her pre-injury position “solely because she suffered a work
injury in violation of section 378-32.” The Director’s Decision
and Order thus adopted the hearing officer’s Recommended
Decision that Coca-Cola discriminated against Josue solely
because of her work injury when it failed to return her to the
position that she held at the time of her injury.
B. Circuit Court Proceedings
Coca-Cola appealed the Director’s Decision and Order
to the Circuit Court of the First Circuit (circuit court) and
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argued that it was improper for the Director to rely on
legislative history because the language of the statute was
unambiguous.4 But even if reliance on the legislative history
was proper, Coca-Cola asserted, it did not support the
conclusion that refusing to terminate a replacement employee to
open the injured employee’s position is discrimination. In
response, Josue contended that the purpose of the statute is to
protect employees from retaliatory discharge, and therefore the
Director’s decision comported with the text and purpose of the
statute. (Citing Purchert v. Agsalud, 67 Haw. 25, 35, 677 P.2d
449, 457 (1984).) The Department also responded to Coca-Cola,
arguing that the Director did not err in concluding that Coca-
Cola discriminated against Josue because the company’s hiring of
a permanent replacement was not an independent, non-
discriminatory, and lawful reason for its refusal to return
Josue to her pre-injury position.
The circuit court determined that there was no dispute
that Josue was discriminated against. The court found, however,
that the discrimination “was not because of a work-related
injury, but it was because the position had been filled.” In
addition, the court stated that “to only look at the
[legislative history] without looking at any references as to
4
The Honorable Rhonda A. Nishimura presided.
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what constitutes discrimination is . . . untenable.” The court
therefore concluded that Coca-Cola did not violate HRS § 378-
32(2). Accordingly, the court reversed the Director’s decision.
C. ICA Proceedings
Josue and the Department each appealed the circuit
court decision to the Intermediate Court of Appeals (ICA).
Josue argued that Coca-Cola’s interpretation of the “[s]olely
because” clause was incorrect because it could have satisfied
its operational concerns by filling the position with a
replacement that was subject to Josue’s right to return.
Similarly, the Department argued that although Coca-Cola cited
operational hardship as the reason for filling Josue’s position,
it produced no evidence as to why it could not temporarily,
rather than permanently, have filled Josue’s position. Coca-
Cola responded that it did not discriminate “[s]olely because”
of Josue’s work injury because it filled Josue’s position due to
“operation concerns” and therefore the circuit court did not
err. (Quoting Fergerstrom, 680 F. Supp. at 1458.)
In a memorandum opinion, the ICA affirmed the circuit
court’s decision that Coca-Cola’s actions did not violate HRS §
378-32(2).5 Although the court determined that Coca-Cola
5
The ICA’s memorandum opinion may be found at BCI Coca-Cola
Bottling Company of Los Angeles v. Hoshijo, No.CAAP-0001135, 2018 WL 4659561
(Haw. App. Sept. 28, 2018).
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discriminated against Josue, the ICA stated that the term
“[s]olely” was unambiguous and that a violation of HRS § 378-
32(2) clearly requires that the work injury be the sole cause of
the adverse employment action to run afoul of the statute. The
ICA held that the Director’s conclusion that Coca-Cola
discriminated against Josue “[s]olely because” of her work
injury was clearly erroneous because Josue’s absence was
creating a hardship for the company by requiring two other
supervisors to work extra hours to perform Josue’s job duties.
The ICA thus concluded that “business necessity was also a
reason for [Coca-Cola’s] actions and there was no indication
that the justification was pretextual.”
II. STANDARD OF REVIEW
We review findings of facts and mixed questions of law
and fact under the “clearly erroneous” standard and we review
conclusions of law de novo “to determine if the agency’s
decision was in violation of constitutional or statutory
provisions, in excess of statutory authority or jurisdiction of
agency, or affected by other error of law.” In re Water Use
Permit Applications, 94 Hawaii 97, 119, 9 P.3d 409, 431 (2000)
(quoting Curtis v. Bd. of Appeals, 90 Hawaii 384, 392-93, 978
P.2d 822, 830-31 (1999)); Price v. Zoning Bd. of City & Cty. of
Honolulu, 77 Hawaii 168, 172, 883 P.2d 629, 633 (1994). A
finding of fact is clearly erroneous when “(1) the record lacks
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substantial evidence to support the finding or determination, or
(2) despite substantial evidence to support the finding or
determination, the appellate court is left with the definite and
firm conviction that a mistake has been made.” In re Water Use
Permit Applications, 94 Hawaii at 119, 9 P.3d at 431.
III. DISCUSSION
A. Coca-Cola Discriminated Against Josue
Under HRS § 378-32(2), it is unlawful for an employer
“to suspend, discharge, or discriminate against any of the
employer’s employees . . . [s]olely because the employee has
suffered a work injury which arose out of and in the course of
the employee’s employment with the employer.” Unlike the terms
“suspend” and “discharge,” which denote specific employment-
related actions, it is unclear on the face of the statute what
type of employer action constitutes discrimination in this
context.6 The term “discrimination” is not included in the
applicable definitions provided in HRS § 378-31 (1993), and the
Department has not issued any regulations providing guidance on
how to interpret the term.7 Because the term “discriminate” is
6
According to Black’s Law Dictionary, “discrimination” generally
means “a failure to treat all persons equally when no reasonable distinction
can be found between those favored and those not favored.” Black’s Law
Dictionary 566 (10th ed. 2014).
7
Chapter 378 addresses discriminatory employment practices
generally and provides enumerated examples of other forms of discrimination.
For example, HRS § 378-2 (1993 & Supp. 1995) provides that various employment
decisions amount to unlawful discriminatory acts when made on the basis of
(continued . . .)
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not defined and because the statute is not clear as to what form
of employer action amounts to discrimination on the basis of a
work injury, an ambiguity exists regarding the meaning of the
term. When such ambiguity exists, “the meaning of the ambiguous
word[] may be sought by . . . resort[ing] to extrinsic aides in
determining legislative intent” such as the legislative history
of the statute. Gillan v. Gov’t Emps. Ins. Co., 119 Hawaii 109,
124-25, 194 P.3d 1071, 1086-87 (2008) (quoting State v.
Toyomura, 80 Hawaii 8, 19, 904 P.2d 893, 904 (1995)).
Prior to 1981, HRS § 378-32(2) did not contain the
term “discriminate,” but instead provided that “[i]t shall be
unlawful for any employer to suspend or discharge any of his
employees . . . [s]olely because the employee suffered a work
injury.”8 1970 Haw. Sess. Laws Act 64, § 2 at 121. In 1981, the
(. . . continued)
race, sex, religion, or other protected characteristic, including “to refuse
to hire or employ or to bar or discharge from employment”; “to fail or refuse
to refer to employment”; and “to exclude or otherwise deny equal jobs or
benefits to a qualified individual.” HRS §§ 378-2(1)(A), 378-2(1)(B), 378-
2(6). The chapter does not contain a similar detailed enumeration of
employment actions that constitute discrimination on the basis of work
injury.
8
This provision was originally codified in the worker’s
compensation statute, but in 1970 the legislature moved the provision into
the title of the HRS relating to the Department of Labor and Industrial
Relations. H. Stand. Comm. Rep. No. 253-70, in 1970 House Journal, at 859.
The statute was moved because the legislature recognized that it was
“inappropriately part of the Workmen’s Compensation Law” which was “neither
concerned with nor staffed to carry on an enforcement program, while the
[Department of Labor and Industrial Relations] is structured so as to
implement the policy and purpose of the law.” Id.
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legislature amended the statute by adding discrimination to
types of conduct that are prohibited when undertaken solely
because of an employee’s injury. See 1981 Haw. Sess. Laws Act
10, § 1 at 29. The purpose of this amendment was explained in
both a House and Senate Standing Committee report as follows:
The purpose of this bill is to specify discrimination as an
unlawful employment practice and to specifically allow the
Department of Labor and Industrial Relations to order
reinstatement to the prior position of an employee
discharged in violation of section 378-32, Hawaii Revised
Statutes.
Current law prohibits suspension or discharge of an
employee who has suffered from a work injury or has filed
for bankruptcy or because the employer was summoned as a
garnishee. However, an employee can be downgraded,
reassigned to other duties at a lower rate of pay, or
otherwise be discriminated against in conditions or terms
of employment under the above circumstances without
violating the law. This bill provides further protection
to the employee in such cases by making such discrimination
unlawful.
S. Stand. Comm. Rep. No. 782, in 1981 Senate Journal, at 1249
(emphasis added); accord H. Stand. Comm. Rep. No. 580, in 1981
House Journal, at 1179. These committee reports demonstrate
that the addition of discrimination as an unlawful act sought to
address a loophole in the statute that allowed an employer to
“downgrade” or “reassign[]” an employee “to other duties at a
lower rate of pay” after the employee “has suffered from a work
injury.” Thus, the legislative history indicates that the
intent of the statute is to protect employees that have suffered
work injuries from adverse employment action by preserving the
employee’s position until the employee is able to return to work
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or by placing the employee in a comparable position upon the
employee’s return.
It is undisputed that Josue suffered a work injury and
was placed on a leave of absence pursuant to Coca-Cola’s
disability leave policy. It is also uncontroverted that Coca-
Cola did not reinstate Josue to a position equivalent to or
better than her pre-injury position upon her return to work
after the injury, but instead the company offered her only
positions that she either could not perform or that amounted to
downgrades from her prior employment. Such a decision is the
precise kind of adverse employment action that prompted the
legislature to specifically add the term “discriminate” to HRS §
378-32(2) to prohibit.9 See S. Stand. Comm. Rep. No. 782, in
9
The briefing before the ICA and the ICA’s Memorandum Opinion
addressed the issue of whether Josue’s complaint was timely, which turned on
when the alleged discrimination occurred. Although the issue of timeliness
is not directly raised before us, we must nonetheless decide what action
actually constituted discrimination under HRS § 378-32(2) to resolve this
case. The discrimination necessarily occurred on the day that Josue
returned--and not when the company hired a permanent replacement--because
that is when the employment action adversely affected Josue. Indeed, had
Coca-Cola discharged the employee that was hired to replace Josue or offered
Josue a position that was at least equivalent to her pre-injury position when
she returned to work, no discrimination would have occurred.
Further, HRS § 378-32(2) contained a limited exception that
allows an employer to “suspend, discharge, or discriminate against” an
employee “[s]olely because the employee has suffered a work injury” if “the
employee is no longer capable of performing the employee’s work as a result
of the work injury and the employer has no other available work which the
employee is capable of performing.” If the discriminatory behavior
prohibited by HRS § 378-32(2) was found to occur when an employer makes an
adverse employment decision rather than when the decision adversely affects
the employee, it would incentivize employers to make adverse employment
decisions as quickly as possible after a work injury occurs. Under such a
formulation, the employer would be able to bypass the protections afforded by
the statute if the still-healing injury rendered the employee incapable of
(continued . . .)
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1981 Senate Journal, at 1249; H. Stand. Comm. Rep. No. 580, in
1981 House Journal, at 1179. Thus, Coca-Cola’s actions in this
case constituted discrimination under HRS § 378-32(2), and this
case instead turns on whether the discrimination was undertaken
“[s]olely” on the basis of Josue’s work injury.10
(. . . continued)
performing the employee’s preinjury duties or those of an equivalent or
better position at the time the adverse employment decision was made,
regardless of whether the employee would eventually regain a full capacity
for work. Thus, the employment action must be evaluated from the point at
which the employee is denied reinstatement to an equivalent or better
position upon returning to work in order to effectuate HRS § 378-32(2)’s
purpose of protecting employees who are injured during the course of their
work. In the present case, it is undisputed that Josue’s doctor medically
cleared her to work without restriction prior to the alleged discrimination.
10
During oral argument, Coca-Cola contended that it did not
discriminate against Josue under HRS § 378-32(2) because it was properly
following the “reasonable accommodation” procedures mandated by the Americans
with Disabilities Act (ADA). Oral Argument, BCI Coca-Cola Bottling Company
of Los Angeles v. Murakami (SCWC-XX-XXXXXXX) at 01:00:45-01:01:07,
http://oaoa.hawaii.gov/jud/oa/19/SCOA_041019_SCWC-14-1135.mp3. This argument
was raised before the Director and the circuit court but was not raised
before the hearing officer, ICA, or before this court prior to oral argument.
Even if this argument were properly before us, it is inapt here. Coca-Cola’s
requirements under federal law are wholly separate from its requirements
under HRS § 378-32(2), and Coca-Cola’s compliance with the ADA does not
abdicate its legal duty to comply with HRS § 378-32(2). Nor does the ADA
preempt HRS § 378-32(2) because the two statutes do not conflict. See
Cipollone v. Liggett Grp., Inc., 505 U.S. 504, 516 (1992). Under the
regulations implementing the ADA, it is unlawful for an employer “not to make
reasonable accommodation to the known physical or mental limitations of an
otherwise qualified . . . employee with a disability,” and such an
accommodation includes “[j]ob restructuring” and “reassignment to a vacant
position.” 29 C.F.R. §§ 1630.9(a), 1630.2(o)(2)(ii). An employer can
fulfill its federal requirements while fulfilling its requirements under HRS
§ 378-32(2) because, as explained, the Hawaii statute does not prohibit an
employer from reassigning an employee to a position that is not a downgrade.
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B. In the Absence of True Business Necessity, Discrimination for
Business Reasons is Discrimination “Solely Because” of a Work
Injury
Determining that Coca-Cola discriminated against Josue
does not end the inquiry of whether the company violated HRS §
378-32(2) because the statute only prohibits discrimination when
it is done “[s]olely because the employee has suffered a work
injury.” That is, an employer does not violate the statute if
it discriminates against an employee for a legitimate reason
other than the employee’s work injury. However, HRS § 378-
32(2), like other statutes prohibiting discrimination,
“proscribes not only overt discrimination but also practices
that are fair in form, but discriminatory in operation.” Adams
v. CDM Media USA, Inc., 135 Hawaii 1, 26 n.29, 346 P.3d 70, 95
n.29 (2015) (quoting Griggs v. Duke Power Co., 401 U.S. 424, 431
(1971)) (analogizing discrimination under HRS § 378-2, which
prohibits discrimination on the basis of race, sex, and other
protected characteristics, to discrimination under Title VII of
the Civil Rights Act of 1965)).
In Adams, we explained that if an employer’s
discriminatory action “cannot be shown to be related to” a
legitimate reason such as “job performance, the practice is
prohibited.” Id. (emphasis omitted). Accordingly, “[a]
‘legitimate’ reason must be one that is justifiable in view of
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the purpose of the [statute.]”11 Id. at 15, 346 P.3d at 84
(quoting Hill v. Miss. State Emp’t Serv., 918 F.2d 1233, 1243–44
(5th Cir. 1990) (Rubin, J., dissenting) (second alteration in
original)).
HRS § 378-32(2) was enacted specifically to protect a
vulnerable subset of employees--those who suffer work injuries--
by ensuring that they are restored to their position or placed
in a commensurate position when they return from a work-related
injury.12 S. Stand. Comm. Rep. No. 782, in 1981 Senate Journal,
at 1249; H. Stand. Comm. Rep. No. 580, in 1981 House Journal, at
1179. Indeed, this court has explained that “the legislative
intent of HRS § 378-32(2) is to protect [employees],” Puchert v.
Agsalud, 67 Haw. 25, 36, 677 P.2d 449, 457 (1984), from
discharge, suspension, and discrimination in relation to the
employee’s compensable work injury. Takaki v. Allied Machinery
Corp., 87 Hawaii 57, 64, 951 P.2d 507, 514 (App. 1998); see also
Hummel v. Kamehameha Schs./Bernice Pauahi Bishop Estate, 749 F.
11
“Legitimate” is defined by Black’s Law Dictionary as “lawful” or
“genuine.” Black’s Law Dictionary 1040 (10th ed. 2014).
12
In its current form, HRS § 378-32 also protects employees from
being suspended, discharged, discriminated against, and demoted in several
other circumstances. The statute provides that an employee will not be
penalized as a direct consequence of filing a petition against an employer
for wages, testifying or being subpoenaed to testify in a discrimination
proceeding, testing positive for the presence of drugs or alcohol in a
“substance abuse on-site screening test,” or using available sick leave. HRS
§ 378-32(a)(1)-(4), (b) (2015).
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Supp. 1023, 1027 (D. Haw. 1990) (“The purpose of HRS § 378-32(2)
is to protect [employees.]”).
In light of this purpose, for an employer to
demonstrate a “legitimate reason” for a discriminatory
employment action that was allegedly based on the needs of the
business, an employer must first adduce evidence that, at the
time the position was filled, the vacancy at issue impaired the
employer’s business operations. Adams, 135 Hawaii at 26 n.29,
346 P.3d at 95 n.29 (explaining that when evaluating whether a
discriminatory employment action is related to a legitimate
reason, “[t]he touchstone is business necessity.”); see also
Frank’s Shoe Store v. W. Va. Human Rights Comm’n, 365 S.E.2d
251, 258 n.3 (W. Va. 1986) (rejecting an employer’s contention
that its action of downgrading an employee because she became
pregnant was “necessary for efficient operations of the
business” because there was no “impair[ment of] business
operations”). This burden falls on the employer because, as a
practical matter, only the employer would possess all the
information necessary to demonstrate a business impairment. See
Frank v. Am. Freight Sys., Inc., 398 N.W.2d 797, 802 (Iowa 1987)
(“[T]he burden of showing a business necessity for the
discrimination is upon the [] employer.”).
Additionally, to demonstrate a legitimate reason for
the adverse employment action, the employer must produce
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evidence that the proffered justification for the action was the
only reasonable means by which to remedy the employer’s business
impairment.13 See Smith v. City of Jackson, 544 U.S. 228, 243
(2005) (noting that the “business necessity” test requires a
showing that “there are [no] other ways for the employer to
achieve its goals that do not result in” discrimination). When
reasonable alternative methods of relieving the business
impairment exist that do not involve taking adverse employment
action against the injured employee, HRS § 378-32(2) obliges an
employer to use one of these means rather than discriminating.
Otherwise, an employee would be subject to a demotion or other
adverse employment action despite the employee’s value to the
business--as shown by the business impairment caused by the
employee’s absence--solely because the employee had the
misfortune of becoming injured as a result of the job. Such an
outcome would provide no real protection to employees and would
contravene the purpose of the statute. Accordingly, an employer
must prove that there were no feasible alternatives to the
discriminatory employment action.14
13
As with demonstrating a business impairment, the employer is best
situated to produce the business information necessary to justify its
decision, and the burden of demonstrating a lack of reasonable alternatives
must thus fall upon the employer. Placing the burden on the employee would
not only be burdensome, but it would also likely involve extensive discovery
that could lead to protracted and contentious litigation.
14
Federal courts utilize similar principles under federal
employment discrimination law. See Ricci v. DeStefano, 557 U.S. 557, 578
(continued . . .)
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Identifying a business impairment and determining
whether it could have been alleviated through the use of a
feasible alternative is a fact-bound inquiry that will vary
based on the circumstances of the case. For example, a
necessary consideration will often be the employer’s knowledge
of the anticipated length of the injured employee’s absence.
When an employer who is suffering a business impairment from an
employee’s absence knows that the employee will return from
injury-related leave in a matter of weeks or months, then
filling the position with a temporary employee or having another
employee cover the absent employee’s duties may be a suitable
alternative to filling it with a permanent employee. On the
other hand, if an employer learns that the employee will be
absent indefinitely or for an extended duration, then preserving
the injured employee’s right to return to the employee’s
(. . . continued)
(2009) (explaining that the business necessity defense under the Civil Rights
Act of 1964 may be defeated by a showing of “a legitimate alternative that
would have resulted in less discrimination”); Wards Cove Packing Co., Inc. v.
Atonio, 490 U.S. 642, 658 (1989), superseded by statute, Civil Rights Act of
1991, Pub. L. No. 102-166, 105 Stat. 1074, as recognized in Raytheon Co. v.
Hernandez, 540 U.S. 44 (2003) (holding that proof of a legitimate business
justification requires “first, a consideration of the justifications an
employer offers for his use of [its] practices; and second, the availability
of alternative practices to achieve the same business ends, with less
[discriminatory] impact”); Clady v. L.A. Cty., 770 F.2d 1421, 1428 (9th Cir.
1985) (“[T]he [employment decision] does not constitute a business necessity
[when] an alternative selection device exists which would have comparable
business utility and less adverse impact.”); Blake v. City of L.A., 595 F.2d
1367, 1383 (9th Cir. 1979) (holding that “[e]ven if an employer meets his
burden of demonstrating business necessity, Title VII plaintiffs may prevail
if” there are “alternative selection devices [] available that would serve
the employer’s legitimate interests without discriminatory effects”).
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position or another position that is not a downgrade may not be
feasible given the difficulties of covering the absent
employee’s duties for a prolonged or indefinite period. Thus,
the employer’s knowledge of the anticipated length of an
employee’s absence is often critical in the employer’s
evaluation of reasonable alternatives. Specific alternatives,
depending on the circumstances, may include filling the vacant
position with a temporary employee, having another employee or
employees cover the duties of the position, or holding open an
equivalent or better position that does not create a business
impairment. If any of these or another nondiscriminatory
alternative is feasible, then the employer is required to
utilize it rather than discriminating against the injured
employee.15
In sum, an employer’s alleged discriminatory
employment action must be related to a legitimate reason for the
adverse action, which the employer has the burden to prove. An
employer may demonstrate that its discriminatory employment
action did not violate HRS § 378-32(2) by presenting evidence to
show that the vacancy caused operational impairment to the
business that justified filling the position at the time that it
15
In enacting HRS § 378-32(2), the legislature recognized that
small businesses may be more significantly affected by the absence of an
injured employee. The legislature addressed this situation by providing that
the subsection “shall not apply to an employer in whose employment there are
less than three employees at the time of the work injury.” HRS § 378-32(2).
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was filled and that there was no feasible alternative to the
adverse employment action that would have rectified the
impairment.
C. The Director’s Decision Was Not Clearly Erroneous
As stated, we review findings of facts of an agency
under the “clearly erroneous” standard. In re Water Use Permit
Applications, 94 Hawaii 97, 119, 9 P.3d 409, 431 (2000). Thus,
we will uphold the Director’s findings of fact in the case
unless “the record lacks substantial evidence to support the
finding or determination” or we are otherwise “left with the
definite and firm conviction that a mistake has been made.” Id.
Here, the Director found that, after Josue suffered a
work-related injury and while she was on an approved leave of
absence, Coca-Cola filled her position without knowing whether
Josue would be able to return to work. And when Josue did
return to work without any restrictions, the company refused to
reinstate her to her pre-injury position or an equivalent or
better job that she could actually perform. Based on these
facts, the Director concluded that Coca-Cola discriminated
against Josue. Additionally, the Director concluded that Coca-
Cola could have satisfied its business concerns and the
requirements of HRS § 378-32(2) by filling the position with a
temporary replacement that was subject to Josue’s right to
return to her position.
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To demonstrate that it did not discriminate “[s]olely
because” of Josue’s work injury, Coca-Cola first needed to
present evidence that Josue’s vacancy caused a business
impairment. A human resource manager for Coca-Cola testified
that Josue’s absence was creating a hardship for her department
because other supervisors were being required to come to work
two hours early to perform Josue’s work duties in addition to
their own. Yet there is no clear evidence in the record that
the other supervisors did not wish to perform this work for
additional compensation, that providing additional pay to the
other supervisors posed a financial burden to the business, or
that the arrangement was otherwise impairing Coca-Cola’s
business operations. The evidence is thus unclear as to whether
business operations were being adversely affected by Josue’s
absence.
In any event, it is ultimately unnecessary for this
court to decide whether Coca-Cola successfully established that
Josue’s absence was causing a business impairment in light of
the Director’s finding that feasible alternatives existed to
Coca-Cola’s hiring of a permanent replacement.16 As explained,
16
The ICA cited Fergerstrom v. Datapoint Corp., 680 F. Supp. 1456
(D. Haw. 1988), in support of its holding that Coca-Cola’s decision was not
“[s]olely because” of Josue’s work injury. In Fergerstrom, an employee
suffered a work injury and went on a leave of absence from work. Id. at
1457. Nine months later, while the employee was still on leave, the employer
notified the employee that he had been “administratively terminated” because
of the company’s policy of terminating any employee who had been on a leave
(continued . . .)
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to prove that it had a legitimate reason for its discrimination,
Coca-Cola was required to demonstrate not only that Josue’s
absence resulted in a business impairment, but also that there
were no feasible alternatives to remedy the impairment that
would not preclude Josue’s return to her position or its
equivalent. Accordingly, Coca-Cola was required to prove that
there were no feasible alternatives to hiring a permanent
replacement that resulted in the denial of Josue’s
reinstatement. When the hearing officer asked what the
company’s process was to fill Josue’s position, the manager
responded that information about the decision-making process was
privileged and confidential. Coca-Cola did not present any
evidence as to why a temporary replacement or other alternative
would not have sufficiently addressed Coca-Cola’s business
concerns.
(. . . continued)
of absence for more than ninety days. Id. The district court held that the
termination did not violate HRS § 378-32(2) because the employee was
terminated “by operation of the Administrative Discharge Policy, not solely
because of his injury.” Id. at 1458.
We disagree with the analysis applied by the Fergerstrom court.
As explained, a discriminatory employment action must be related to a
legitimate reason, which in this context is a business impairment. Adams,
135 Hawaii at 26 n.29, 346 P.3d at 95 n.29 (quoting Griggs, 401 U.S. at 431).
An employer’s blanket administrative termination policy, whether of a
duration of one day, ninety days, or a year, does not, on its own,
demonstrate a business impairment. Instead, an employer must provide
evidence, on a case-by-case basis, that the employee’s absence caused a
business impairment and that there were no feasible alternatives to the
adverse employment action.
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Indeed, the lack of evidence of the company’s
consideration of feasible alternatives is underscored by the
fact that the company did not contact Josue until after it had
filled her position with a permanent replacement. Coca-Cola had
no indication of whether Josue would be able to work without
restrictions and, if so, the anticipated time frame when this
would occur. Under the circumstances, Coca-Cola could not have
evaluated the feasibility of alternatives without this
information.
Coca-Cola had the burden to prove that there was no
feasible alternative to hiring a permanent replacement for
Josue. However, the record lacks any evidence that a temporary
employee would not have been able to fulfill Josue’s duties
during her leave of absence due to her work-related injury--nor
even that Coca-Cola considered the possibility. The Director
concluded that in light of the evidentiary record, a temporary
employee could have addressed Coca-Cola’s business concerns, and
the company was thus not justified in discriminating against
Josue in the manner it did. There was substantial evidence in
the record to support the conclusion that Coca-Cola failed to
meet its burden to prove that there were no feasible
alternatives to refusing to reinstate Josue to a position at
least equivalent to the one she left because of her work
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injury.17 Thus, the Director’s findings were not clearly
erroneous, and its conclusions of law were correct. The
Director’s decision should have been affirmed, and it was error
for the ICA to hold otherwise.
IV. CONCLUSION
Based on the foregoing, we vacate the ICA’s Judgment
on Appeal, vacate the circuit court’s judgment, affirm the
Director’s Decision and Order, and remand the case to the
Director for any appropriate proceedings consistent with this
opinion.
Ronald Fujiwara /s/ Mark E. Recktenwald
for petitioner
/s/ Paula A. Nakayama
Adam S. Rosenberg
for respondents Scott Murakami, /s/ Sabrina S. McKenna
Director of Department of Labor
and Industrial Relations, and /s/ Richard W. Pollack
Department of Labor and
Industrial Relations /s/ Michael D. Wilson
Anna Elento-Sneed
for respondent BCI Coca-Cola
Bottling Company
Robert H. Thomas
Loren A. Seehase
17
During oral argument, the Department argued, for the first time,
that Coca-Cola was required to keep Josue’s position vacant until a medical
determination about her ability to return to work was made under the worker’s
compensation statute. Oral Argument, BCI Coca-Cola Bottling Company of Los
Angeles v. Murakami (SCWC-XX-XXXXXXX) at 00:23:00-00:23:20,
http://oaoa.hawaii.gov/jud/oa/19/SCOA_041019_SCWC-14-1135.mp3. Even if the
argument was properly raised, however, it lacks merit because, as explained,
an employer may fill the position with a permanent employee if the vacancy
caused a business impairment and there were no feasible alternatives to
utilizing a permanent replacement.
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for amicus curiae
National Federation of
Independent Business Small
Business legal Center
28