This principle used to be clear – paid administrative leave was outside the scope of adverse employment action. This was based on court holdings that an employee suffers no substantial or material change in terms and conditions of employment while on paid administrative leave. For years, courts held that an employee who is put on paid administrative leave cannot prove he or she suffered an adverse employment action to give rise to a viable discrimination or retaliation claim. However, what once was clear, is no more.
First, in 2013, the Ninth Circuit put into question the principle that paid administrative leave does not constitute a type of adverse employment action. In Dahlia v. Rodriguez (9th Cir. 2013) 735 F.3d 1060, the Ninth Circuit held paid administrative leave could constitute an adverse employment action when considering the totality of the circumstances. Second, on November 15, 2017, the Fourth District Court of Appeal issued a decision in Whitehall v. County of San Bernardino (2017) 17 Cal.App.5th 352, holding that the imposition of an administrative leave may constitute an adverse employment action. Since 2017, there has been at least one published California case and one published federal court case that have found that placement on paid administrative leave may constitute an adverse employment action depending on the specific facts presented. [1]
The decisions in Whitehall and Dahlia have forced California employers to rethink when paid administrative leave may qualify as an adverse employment action and to consider the risk involved with placing an employee on paid administrative leave.
The Purpose of Paid Administrative Leave
The purpose of paid administrative leave is to temporarily remove an employee from the workplace to address a particular situation. For example, if an employee engages in or threatens violence in the workplace, an employer can and should remove the employee from the workplace pending an investigation into the alleged misconduct. Paid administrative leave has also been used by employers when, on balance, they feel it is better that the subject of an investigation is not in the workplace while the investigation is pending. Use of paid administrative leave has not been limited to investigations of discrimination, harassment or retaliation. It has had widespread use for many different types of alleged misconduct.
During paid administrative leave, the employee is typically relieved of all duties and responsibilities of his/her position. The employee remains employed by the agency and continues to receive full pay and benefits. During the leave, an agency may prohibit the employee from entering agency-owned property or facilities and can order the employee to surrender all agency-provided property (office keys, IDs, credit cards, computers, etc.). The agency can also require the employee to remain available during regular business hours to answer any and all work-related inquiries.
The Definition of an Adverse Employment Action
The California Supreme Court has coined “adverse employment action” as a “term of art.” It is generally used as a shorthand description of the kind of adverse treatment imposed upon an employee to support a cause of action under a discrimination or retaliation statute.
Employees in California may bring claims of discrimination and retaliation pursuant to the Fair Employment and Housing Act (“FEHA”). Under the FEHA, an adverse employment action must be reasonably likely to impair an employee’s job performance or prospects for advances. [2] It does not include minor or trivial actions that do no more than anger or upset an employee. While an adverse employment action may include more than just “ultimate” employment acts, such as failure to hire, termination, demotion, or failure to promote, it nevertheless requires “a substantial adverse change in the terms and conditions” of employment. [3] The reason why an employee must provide a substantial adverse job effect is to guard the employer from judicial micromanagement of business practices and frivolous lawsuits over insignificant slights. This brings up the question, is paid administrative leave a substantial and adverse change in employment?
The Split in Federal Circuit Court Authority
There is a split in federal circuit authority about whether paid administrative leave constitutes adverse or punitive action. Some circuits have a split in authority even amongst district courts within the circuit. This is because the determination of whether paid administrative constitutes an adverse employment action involves the courts to closely scrutinize the exact facts in the case. There is no one-size-fits all answer and courts sometimes have to draw lines that are not always clear in deciding whether there has been a substantial or material change in the terms and conditions of employment. The Ninth Circuit, which is the circuit whose decisions govern employers in California, has found paid administrative leave can be an adverse employment action in the Dahlia case. A court in the First Circuit has found that whether paid administrative leave is a materially adverse action is “an objective test and ‘should be judged from the perspective of a reasonable person in the plaintiff’s position, considering all the circumstances.’” [4] There are cases from the Second, Third, Fifth, Sixth, Seventh, Eighth, and Tenth Circuits that have held that placing an employee on paid administrative leave, without more, is not an adverse employment action. [5] There have also been other cases from the Fifth and Sixth Circuits that have found that paid administrative leave cannot be flatly ruled out as an adverse employment action. [6]
Deviation in the Ninth Circuit
Dahlia v. Rodriguez was the first Ninth Circuit case to decide whether placement on administrative leave constitutes an adverse employment action. In Dahlia, Burbank Police Detective John Dahlia was assigned to assist a robbery investigation. A day after the robbery, Dahlia allegedly observed Lieutenant Omar Rodriguez grab a suspect and threaten him with a gun. Later that evening, Dahlia claimed he heard yelling and the sound of someone being slapped in a room where a Sergeant was interviewing another suspect. Dahlia met with a Lieutenant to disclose the abuse he witnessed and was allegedly told to “stop his sniveling.” The Burbank Police Department’s Internal Affairs Unit initiated an investigation into the physical abuse related to the robbery. Following Dahlia’s interview with internal affairs, the City placed Dahlia on paid administrative leave pending the determination of discipline. Dahlia filed a lawsuit against the City alleging that he was placed on paid administrative leave in retaliation for exercising his free speech rights in disclosing alleged abusive interrogation tactics by other officers.
To succeed on a claim of retaliation, one element the plaintiff must prove is he or she suffered an adverse employment action. The lower court found that placement on paid administrative leave did not constitute an adverse employment action for purposes of First Amendment retaliation. The Ninth Circuit disagreed. The Ninth Circuit concluded that, under some circumstances, placement on administrative leave can constitute an adverse employment action. The Ninth Circuit reasoned that to constitute an adverse employment action, the retaliation need not be severe or of a certain kind. For First Amendment retaliation cases, the key inquiry was whether the action was “reasonably likely to deter employees from engaging in the protected activity.”
The Ninth Circuit was persuaded by Dahlia’s assertion that paid administrative leave, when considered in the context of his employment, prevented him from taking the sergeant’s exam, required him to forfeit on-call and holiday pay, and prevented him from furthering his investigative experience. The Ninth Circuit held that if Dahlia could prove these effects, he could prove he suffered an adverse employment action because these effects and the general stigma from being put on administrative leave likely deter employees from engaging in protected activity. Ultimately, Dahlia does not hold that paid administrative leave must always constitute an adverse employment action, rather it provides a short and under-developed conclusion that paid administrative leave, by itself, may constitute an adverse employment action in some situations.
Dahlia’s analysis focused on paid administrative leave in retaliation cases. The California Court of Appeal, in Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, has also determined that a paid administrative leave may constitute an adverse employment action in a discrimination case. In Horsford, a police officer was placed on paid administrative leave because of a claim that he was mentally unstable. After he was cleared to return to work by two psychologists, he was still not allowed to return to his position as an officer. In assessing whether the officer suffered an adverse employment action to prove a discrimination charge, the Court of Appeal noted the jury was entitled to collectively consider the alleged discriminatory acts. In other words, the employer’s acts could be viewed under the totality of the circumstances. The Court of Appeal found that an officer who is removed from a highly desirable position and placed on paid administrative leave for months suffered an adverse employment action because a jury could find that the leave was unjustified and may have resulted from racial animus.
California’s Fourth District Court’s Interpretation in Whitehall
In Whitehall v. County of San Bernardino, the Fourth District Court of Appeal addressed whether paid administrative leave could constitute an adverse employment action. The Court described the facts as follows: Mary Anna Whitehall was a social worker for San Bernardino County Children and Family Services (“CFS”). After CFS assigned another social worker, Eric B., to investigate the death of a nine-month-old baby who died under suspicious circumstances, the baby’s four older siblings were placed in protective custody. CFS assigned Whitehall to investigate for the jurisdiction/disposition hearing, an assignment referred to as a “J/D writer.” In her investigation, Whitehall collected evidence that validated Eric’s concerns for the safety of the four older children. Whitehall collected the police report, photographs of the family home from the time of the baby’s death showing filthy, unsanitary conditions, and reports from the medical examinations of the four older siblings showing ligature marks on their wrists and ankles and burn marks.
The deputy director of CFS allegedly instructed Whitehall to withhold certain photographs and to provide altered ones. Whitehall learned CFS never provided a complete police report to the court, so she gave the assigned deputy county counsel a computer disk containing all photographs obtained from police. Subsequently, CFS removed Whitehall from the case and instructed her not to discuss the case with the new J/D writer, contrary to normal practice. In addition, CFS fired Eric for allegedly exaggerating the condition of the house and reporting the smell of methamphetamine despite the fact that the social worker who assisted him during the initial response corroborated his version of events.
Concerned about her potential liability for withholding evidence and providing altered photographs to the court and counsel, Whitehall met with an attorney to discuss her situation. The attorney drafted a declaration for Whitehall and Whitehall, Eric, and the social worker who had assisted Eric during the initial response filed a motion informing the juvenile court that CFS had perpetrated a fraud upon the court.
Six days after filing the motion, CFS placed Whitehall on administrative leave while it conducted an internal investigation into Whitehall’s potential violation of County rules and policies barring disclosure of confidential information to unauthorized persons. After Whitehall was on administrative leave for approximately two months, which included two hearings, the County decided to terminate Whitehall for violating the confidentiality policy. However, after learning of the County’s intentions to terminate her, Whitehall resigned. Whitehall filed a complaint against the County and CFS based on whistleblower liability and retaliation.
Essentially, Whitehall turns on the whistleblower statute, Labor Code section 1102.5, which prohibits an employer from retaliating against an employee for disclosing information that may evidence improper government activity, if the purpose of the disclosure was to remedy the improper situation. The Court found that the County’s placement of Whitehall on administrative leave with the intention of firing her was in retaliation for Whitehall’s disclosure to the juvenile court the County’s attempt to manipulate evidence. Thus, the Court found that Whitehall’s paid administrative leave constituted an adverse employment action.
As in Dahlia, the court’s decision in Whitehall does not assert that paid administrative leave always constitutes an adverse employment action. Rather, the Whitehall decision merely establishes that paid administrative leave may constitute an adverse employment action in certain circumstances. Furthermore, the court in Whitehall reiterated that adverse employment claims remain inherently fact-specific. Quoting Yanowitz v. L’Oreal USA (2005), the court reaffirmed that:
“The impact of an employer’s action in a particular case must be evaluated in context. Accordingly, although an adverse employment action must materially affect the terms, conditions, or privileges of employment to be actionable, the determination of whether a particular action or course of conduct rises to the level of actionable conduct should take into the account the unique circumstances of the affected employee as well as the workplace context of the claims.” (26 Cal.4th 1028, 1051.)
The Effect of Dahlia & Whitehall
In the past, if an employee was placed on paid administrative leave but suffered no additional punitive action, he or she could not bring a successful claim of discrimination or retaliation because none of the employer’s actions materially or substantially affected the terms or conditions of employment.
This assumption changed post-Dahlia. Even though an employee receives full pay and benefits during paid administrative leave, when looking at the totality of the circumstances, a court may find the secondary effects that come as a natural result of being away from the workplace deter an employee from engaging in protected activity and constitute adverse employment action. Furthermore, after Whitehall, a court may find that an employee placed on paid administrative leave shortly after “whistle-blowing” or engaging in other protected activity experienced an adverse employment action.
Based on Whitehall, Dahlia and Horsford, the court may consider the loss of promotional opportunities, the loss of specialty pay, the loss of opportunities to gain work experience, whether the employer had a legitimate managerial reason to place the employee on paid administrative leave, the stigma of being placed on administrative leave, and the employee’s participation in protected activity.
However, these cases continue to leave open questions. When does paid administrative leave cross over to an adverse employment action? What if the employer places the employee on paid administrative leave but allows the employee to take a promotional examination when the opportunity arises? What if the employer agrees to set a practice where employees on paid administrative leave will receive holiday pay while on leave? What if the employer calls the time off a “paid suspension” instead of paid administrative leave?
If paid administrative leave can be an adverse employment action, then employees placed on paid administrative leave who file a discrimination or retaliation lawsuit against an employer have added leverage in proving their case or negotiating a settlement. This creates tricky situations for employers who must now assess the risk in placing an employee on paid administrative leave.
Example 1: A Police Department suspects that a police officer violated a direct order from a sergeant to stay out of the downtown area during his shift and not get involved with a particular group of suspected gang members. The Department wants to conduct an internal affairs investigation and place him on paid administrative leave during the investigation. Should the Department place the police officer on paid administrative leave?
Most likely yes. It is fairly standard for an employee to be placed on paid administrative leave during an investigation. If the Department regularly places officers on paid administrative leave during pending investigations, particularly investigations into insubordination, then the Department can do so in this case. In this example, there appears to be no evidence that the officer engaged in protected activity. However, if the officer has engaged in protected activity, then the Department must consider whether placing the officer on paid administrative leave would likely deter employees from engaging in that protected activity.
Example 2: An IT Analyst submits a letter of resignation to the County on Monday stating that he is resigning effective Friday. On that same Monday, the IT Analyst provides a statement to an investigator regarding an investigation involving another employee. The County suspects that the IT Analyst is sharing information with the other employee in a manner that harms the integrity of the investigation. The County does not want the IT Analyst in the workplace for the remainder of the week as the investigation is taking place. Should the County place the IT Analyst on paid administrative leave until the effective date of his resignation?
Probably not. The biggest risk the County has to consider is that the employee likely engaged in protected activity by making statements to the investigator. If the County places the IT Analyst on paid administrative leave, it might be construed as an adverse employment action in retaliation following his protected activity. The risk increases if the County has no history of ever placing an employee who has resigned on paid administrative leave. An alternative to paid administrative leave is for the County to offer the IT Analyst the option of taking time off with pay leading up to his last day on Friday. If the IT Analyst chooses to voluntarily take this offer, the IT Analyst will remain away from the workplace and cannot allege that the County took adverse employment action against him.
Example 3: A water district employee has expressed genuine concerns to her supervisor about the efficacy of the district’s current lead testing protocols on a few occasions. Each time, the supervisor told the employee that she was handling the issue. In fact, the district was adequately and properly addressing the issue and working on updating the lead testing protocols. Concerned that her supervisor was not adequately addressing the issue, the employee brings her concern and documentation of a recent lead test report to the Department of Drinking Water. Individuals at the district learn of the employee’s revelation of district information to the Department and conduct an investigation. Should the district place this employee on paid administrative leave while conducting the investigation?
Most likely no. Should the employee file a complaint under the whistleblower statute, the court may conclude that paid administrative leave constitutes retaliation, and thus an adverse employment action. Instead, the agency should first conduct an investigation into the allegation and impose discipline based on the results of the investigation.
Due Process Disciplinary Rights
Another question that remains: if paid administrative leave can be an adverse employment action, then must employers provide pre-disciplinary and post-disciplinary due process rights to an employee prior to placing them on paid administrative leave? In Skelly v. State Personnel Board (1975) 15 Cal.3d 194, the California Supreme Court held that a permanent public employee’s property rights (i.e., their vested right to continued employment) cannot be taken away by an employer without first being affording certain procedural safeguards. Where “significant punitive action” is imposed, an employee is entitled to notice of the proposed disciplinary action, a statement of the reasons for the proposed disciplinary action, a copy of the charges and materials on which the proposed discipline is based, and the right to respond, either orally or in writing, to the authority initially proposing the action. Generally, discharges, suspensions, demotions, and disciplinary reductions in pay are considered “significant” punitive action. Warnings and reprimands are not considered “significant” punitive actions. If paid administrative leave may constitute an adverse employment action, then it is not clear whether paid administrative leave could also constitute a significant punitive action depending on the circumstances.
For police officers, the lingering question is whether paid administrative leave can be considered punitive action? The Public Safety Officers Procedural Bill of Rights Act (“POBR”) provides police officers with the right to administratively appeal punitive actions. The POBR defines “punitive action” as any action that may lead to dismissal, demotion, suspension, reduction in salary, written reprimand, or transfer for purposes of punishment. There is currently no case law holding that paid administrative leave constitutes punitive action for purposes of entitling an officer to the right to appeal a paid administrative leave decision.
Factors to Consider When Making a Paid Administrative Leave Decision
In light of Whitehall, Dahlia and Horsford, agencies in California should remain aware that the relationship between paid administrative leave and an adverse employment action is not so clear anymore. Below is a checklist of the factors agencies should consider when making a decision to place an employee on paid administrative and conducting a risk assessment into such decision. Courts will determine whether paid administrative leave constitutes an adverse employment action by looking at the totality of the circumstances. These factors balance the various factors a court may consider.
To help keep paid administrative leave out of the realm of an adverse employment action, the employee must continue to receive full pay and benefits. This means the employee must continue to receive any and all health, dental, vision, and life insurance. The employee must continue to accrue vacation, sick leave, and personal time off just as he/she would be entitled to accrue if he/she was not on leave. Under Dahlia, receipt of full pay may mean that in addition to the employee’s regular wages, the employee should continue to receive some types of specialty pay. The employer should provide employees on paid administrative leave with the same specialty pay it provides employees on other types of paid leave, such as vacation and paid sick leave. This could include educational pay, shooting pay, longevity pay, special assignment pay, and/or acting pay. Other types of specialty pay may require the employee to actually perform the work necessary to receive the pay, such as on-call pay and standby pay.
If the employee has engaged in protected activity, then placing an employee on paid administrative leave immediately following such protected activity may appear retaliatory. Protected activity includes but is not limited to free speech, whistleblowing, opposition to harassment, discrimination, and retaliation, concerted activity, participation in a discrimination proceeding, and requesting a reasonable accommodation based on religion or disability. If the decision has no connection to the employee’s protected activity, the employer must nevertheless be prepared to defend its decision to place an employee on paid administrative leave so close in temporal proximity to the protected activity. The employer can offer evidence that the action was taken for a legitimate, nondiscriminatory reason, but the better option may be to consider alternatives before placing the employee on paid administrative leave in the first place.
The Ninth Circuit in Dahlia held that the proper inquiry in determining whether paid administrative leave constitutes an adverse employment action is: whether the action is reasonably likely to deter employees from engaging in protected activity? If employee activity is reasonably likely to be chilled due to the fear of being placed on paid administrative leave, then it may constitute an adverse employment action.
In addition to the paid administrative leave itself, if any secondary effects that come as a natural result of the employee being away from the workplace are likely to deter employees from engaging in protected activity, then the leave may constitute an adverse employment action. Examples of secondary effects include loss of specialty pay, loss of opportunities for promotion, and loss of opportunities to gain experience.
Employers should consider past practices. If the employer regularly places suspect employees on paid administrative leave pending harassment, discrimination, and retaliation investigations, then it has a strong reason to continue that practice. By establishing that it has placed similarly situated employees on paid administrative leave in the past, the employer can demonstrate that it has not singled out a particular employee. Such past practice will also help the employer prove it had a legitimate, nondiscriminatory reason to place the employee on paid administrative leave.
If paid administrative leave will prevent an employee from applying for a promotion or taking a test for advancement, then he/she may claim that the leave constitutes an adverse employment action. Since employees are frequently told to remain available during working hours during paid administrative leave, employers may want to consider allowing an employee on leave the chance to apply for promotional opportunities to the same extent the employee could have applied if his/she was not on leave.
The Ninth Circuit held that if Dahlia could prove the general stigma from being put on administrative leave deterred employees from engaging in protected activity, he could prove the leave constituted an adverse employment action. Whenever an employee is placed on paid administrative leave, his/her coworkers are bound to notice his/her absence but that alone likely does not create stigma. However, if an employee can prove that employees refrain from engaging in protected activity because they fear being placed on paid administrative leave will alienate them, cause harm to their relationships with coworkers, or create some other stigmatizing effect, then a court may find the leave to be an adverse employment action.
On a case by case basis, the employer should consider whether there are any alternatives to placing an employee on paid administrative leave. Thinking back to the purpose of paid administrative leave, can the employer address the situation without removing the employee from the workplace? Can the employer request that the employee take voluntary paid leave? Can the employer place the employee in a different work location on a temporary basis pending the conclusion of an investigation? Can the employer require the employee to telework? These alternatives may achieve the employer’s goal without raising adverse employment action questions.
If you have any questions about this issue, please contact our Los Angeles, San Francisco, Fresno, Sacramento, or San Diego office.
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[1] Taswell v. Regents of University of California (2018) 23 Cal.App.5th 343, 365 (placement on paid leave pending investigation and, that same day, informed contract would not be renewed constitute adverse employment actions); United States ex rel. Herman v. Coloplast Corp. (D. Mass. 2018) 295 F. Supp. 3d 37, 43 (a jury could find that paid administrative leave with full benefits, salary, and commission was materially adverse where plaintiff could not grow herself professionally and lost the opportunity to earn commissions above the 100% quota).
[2] Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1054-1055.
[3] Akers v. County of San Diego (2002) 95 Cal.App.4th 1441, 1455.
[4] See United States ex rel. Herman v. Coloplast Corp. (D. Mass. 2018) 295 F. Supp. 3d 37, 43.
[5] See Joseph v. Leavitt (2d Cir. 2006) 465 F.3d 87; Jones v. Southeastern Pennsylvania Transportation Authority (3rd Cir. 2015) 796 F.3d 323; Breaux v. City of Garland (5th Cir. 2000) 205 F.3d 150; Stewart v. Miss. Transp. Comm’n (5th Cir. 2009) 586 F.3d 321, 332; Peltier v. United States (6th Cir. 2004) 388 F.3d 984; Nicols v. Southern Illinois University-Edwardsville (7th Cir. 2007) 510 F.3d 772; Singletary v. Missouri Dep’t of Corr. (8th Cir. 2005) 423 F.3d 886; Benavides v. City of Oklahoma City (10th Cir. 2013) 508 Fed.Appx. 720; Lincoln v. Maketa (10th Cir. 2018) 880 F.3d 533, 542.
[6] McCoy v. City of Shreveport (5th Cir. 2007) 492 F.3d 551, 561 (it is a close question whether paid administrative leave constituted an adverse employment action); Michael v. Caterpillar Fin. Servs. (6th Cir. 2007) 496 F.3d 584, 596 (placement on paid administrative leave for four days, coupled with placement on a 90–day performance plan, was an adverse employment action).