Allstate terminated Michael Tilkey, a 30-year employee who sold life insurance, after Tilkey’s arrest in Arizona following a domestic dispute with his girlfriend; he was arrested for “criminal damage deface, possession or use of drug paraphernalia and disorderly conduct, disruptive behavior.” Domestic violence charges were attached to the criminal damage and disorderly conduct charges. Following an investigation, Allstate terminated Tilkey’s employment for “engaging in threatening behavior and/or acts of physical harm or violence to any person, regardless of whether he/she is employed by Allstate.” Tilkey sued Allstate for wrongful termination, violation of Cal. Lab. Code § 432.7 (which prohibits an employer from considering as a factor in employment decisions “any record of arrest… that did not result in a conviction”) and compelled, self-published defamation.
The jury awarded Tilkey $2.7 million in compensatory and $16 million in punitive damages. The Court of Appeal reversed in part, holding that Allstate had not violated Section 432.7 because Tilkey had appeared before a court in Arizona and entered a guilty plea, which constituted a “conviction” within the meaning of the statute. The Court affirmed the jury’s verdict on the defamation claim, holding that Tilkey was compelled to “self-publish” a statement about himself that was not substantially true after Allstate provided a written explanation for the termination on a Form U-5 to FINRA. Finally, the Court reduced the punitive damages award to $2.55 million (1.5 times the $1.7 million compensatory damages award for defamation). See also Garcia-Brower v. Premier Auto. Imports of Cal., LLC, 55 Cal. App. 5th 961 (2020) (employer may have violated Section 432.7 for terminating employee who did not disclose a dismissed conviction for misdemeanor grand theft).