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A supervisor at a software company had a two-year contract that included a clause that permitted termination upon 'employee's failure or refusal to faithfully, diligently, or completely perform his duties hereunder to the satisfaction of the company or to carry out any lawful instruction of the company.' After the employee was fired he sued for breach of contract, maintaining that the company's dissatisfaction was objectively unreasonable. The employer produced evidence supporting its position that customers were finding fault with the plaintiff's performance and attitude, and that he was properly terminated. The trial court dismissed the complaint, finding no triable issue and refusing to substitute its judgment for the employer's. The state appellate division reversed. Relying on case law holding that an employer 'must have a reasonable basis for his dissatisfaction,' the appeals court found that firing decisions must meet objective standards that a worker's performance was unsatisfactory

The state Supreme Court reversed. The court stated that 'application of another's notion of satisfactory performance would undermine recognized and accepted notions of business judgment and individualized competitive strategy, as well as principles of freedom of contract.' The court further opined that 'the employer, not some hypothetical reasonable person, is best suited to determine if the employee's performance is satisfactory.'

The Second Circuit has held that denying insurance coverage for infertility treatments that can only be performed on women does not violate the Pregnancy Discrimination Act (PDA). Saks v. Franklin Covey Co., 00-9598 (Jan. 15, 2003).

The plaintiff's lawsuit claimed that the refusal of her employer's health benefits plan to cover infertility treatments amounted to a violation of her civil rights under Title VII of the Civil Rights Act of 1964 and the PDA, 42 U.S.C. '2000e, which extended Title VII's bar against discrimination 'because of sex' to include pregnancy and 'related medical conditions.' The health plan allowed benefits for a number of infertility products and procedures, but specifically excluded artificial insemination and other surgical impregnation procedures, such as in-vitro fertilization. The district court found that the exclusions of surgical impregnation procedures affected males and females equally and that the PDA was not violated because the plan provides equal coverage for men and women.

The Second Circuit affirmed. The court noted that the proper inquiry in a sex discrimination challenge to a health benefits plan under Title VII 'is whether sex-specific conditions exist, and if so, whether exclusion of benefits for those conditions results in a plan that provides inferior coverage to one sex.' Reproductive capacity, however, is just as common to men as women, and the court did not interpret 'the PDA as introducing a completely new classification of prohibited discrimination based solely on reproductive capacity. Rather, the PDA requires that pregnancy, and related conditions, be properly recognized as sex-based characteristics of women.' Remarking that the Supreme Court has held that discrimination based on fertility alone does not violate Title VII as modified by the PDA, the court also observed that infertility afflicts men and women with equal frequency. To include 'infertility within the PDA's protection as a 'related medical condition' would result in the anomaly of defining a class that simultaneously includes equal numbers of both sexes and yet is somehow vulnerable to discrimination.' The court concluded that 'because such a result is incompatible with the PDA's purpose of clarifying the definition of 'because of sex' and the Supreme Court's interpretation of the PDA ' we hold that infertility standing alone does not fall within the meaning of the phrase 'related medical conditions' under the PDA.'The New Jersey Supreme Court has ruled that absent an employment agreement to the contrary, employers may use subjective standards to determine whether workers failed to fulfill contractual obligations to perform to the company's satisfaction. Silvestri v. Optus Software, Inc., A-95, (Jan 23, 2003).

A supervisor at a software company had a two-year contract that included a clause that permitted termination upon 'employee's failure or refusal to faithfully, diligently, or completely perform his duties hereunder to the satisfaction of the company or to carry out any lawful instruction of the company.' After the employee was fired he sued for breach of contract, maintaining that the company's dissatisfaction was objectively unreasonable. The employer produced evidence supporting its position that customers were finding fault with the plaintiff's performance and attitude, and that he was properly terminated. The trial court dismissed the complaint, finding no triable issue and refusing to substitute its judgment for the employer's. The state appellate division reversed. Relying on case law holding that an employer 'must have a reasonable basis for his dissatisfaction,' the appeals court found that firing decisions must meet objective standards that a worker's performance was unsatisfactory

The state Supreme Court reversed. The court stated that 'application of another's notion of satisfactory performance would undermine recognized and accepted notions of business judgment and individualized competitive strategy, as well as principles of freedom of contract.' The court further opined that 'the employer, not some hypothetical reasonable person, is best suited to determine if the employee's performance is satisfactory.'