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Wages Earned From an “Inferior” Job May Not Be Used to Mitigate Damages in Awarding Lost Wages in a Wrongful Termination Case

Employee, Alfredo Villacorta, sued his employer, Cemex, for wrongful termination.  Villacorta remained unemployed for about eight months, at which point he found a job that paid him more than he was making with Cemex.   At trial, many months after Villacorta found the higher paying job, in closing argument Villacorta’s attorney only asked the jury for $44,000 in past lost wages for the eight month unemployment period instead of asking for lost wages for the entire period from the date of termination until trial.  Nevertheless, the jury rendered a verdict in favor of Villacorta and awarded him damages for past lost wages in the amount of $198,000.  Before rendering the verdict, the court instructed the jury that Villacorta’s damages, if any, had to be reduced by the amount he earned from other employment.  The court further instructed, however, that no such offset was required if the new position was inferior to Villacorta’s position with Cemex.

In short, the evidence presented at trial was that the new, higher paying job that Villacorta obtained was located two to three hours away from the home where his family resided.  As a result, Villacorta was only able to see his family on weekends and he had to pay for a second residence.  Based on this evidence, the jury found that Villacorta’s new job was “inferior” to his job with Cemex and, thus, awarded Villacorta wages for the full period without any mitigation.

Cemex appealed the decision and argued that the $198,000 award for lost wages was not supported by substantial evidence.  In Villacorta v. Cemex Cement, Inc., 221 Cal. App. 4th 1425 (2013), the court of appeal disagreed, finding “[o]ur Supreme Court discussed mitigating wrongful termination damages in Parker v. Twentieth Century-Fox Film Corp., 3 Cal. 3d 176, 181-182 474 P.2d 689 (1970):

‘The general rule is that the measure of recovery by a wrongfully discharged employee is the amount of salary agreed upon for the period of service, less the amount which the employer affirmatively proves the employee has earned or with reasonable effort might have earned from other employment.’”

However, in order for the employee’s earnings to be applied in mitigation, “the employer must show that the other employment was comparable, or substantially similar, to that of which the employee has been deprived ….” Id. Thus, if the new job is different or inferior, then the wages from that job may not be used to mitigate damages. Wages “actually earned from an inferior job may not be used to mitigate damages because if they were used then it would result ‘in senselessly penalizing an employee who, either because of an honest desire to work or a lack of financial resources, is willing to take whatever employment he can find.’”  Villacorta, 221 Cal. App. 4th at 1432.  “The location of the new job is one of the factors to consider in determining whether the new job is inferior.”  Id.

Based on the evidence presented at trial, the court of appeal found that “a jury could reasonably conclude” the new job was inferior to the job at Cemex “because of the burden placed on Villacorta by the location of the job.”