Employment Law | The beginning of a new year is an important time for business owners and employers. With each new year comes new laws and changes to existing employment-related requirements that can affect whether or not your business is in compliance with California state law. Carefully prepared by attorneys Jerry W. Pearson and Jefferson X. Eberhardt, this two-part 2016 Employment Law Update addresses new and amended labor laws that could dramatically impact your business in the new year.
Part One addressed legislative updates including to changes to piece-rate compensation, prohibitions to gender-based pay differentials and modifications to wage garnishment restrictions. This second part of the update will outline the cases that dramatically changed California’s legal landscape in 2015.
Click here to read part one of the 2016 Employment Law Legislative Update.
DISCRIMNATION
EEOC v. McLane Co., (2015) WL 6457965 (9th Cir. 2015)
Damiana Ochoa filed a charge with the EEOC alleging sex discrimination (based on pregnancy) in violation of Title VII, when, after s••he tried to return to her job following maternity leave, her employer (McLane Co.) informed her that she could not come back to the position she had held for eight years as a cigarette selector unless she passed a physical strength test. Ochoa took the test three times but failed to pass and, as a result, her employment was terminated. McLane disclosed that it administers the test to all new applicants and to employees returning from a leave longer that lasts longer than 30 days. Although McLane voluntarily provided general information about the test and the individuals who had been required to take it (gender, job class, reason for taking the test and the score received), it refused to disclose “pedigree information” for each test taker (name, social security number, last known address, telephone number and the reasons why particular employees were terminated after taking the test). In this EEOC subpoena enforcement action, the district court refused to compel production of the pedigree information, but the United States Court of Appeals for the Ninth Circuit reversed that order in this opinion. The Ninth Circuit also vacated the district court’s order denying enforcement of the subpoena’s request for reasons for termination of employees who took the test and ordered consideration by the district court of whether requiring production of such information would in fact be unduly burdensome. See also CVS Pharmacy, Inc. v. Superior Court, 2015 WL 6119412 (Cal. Ct. App. 2015) (trial court abused its discretion by ordering employer to disclose names and contact information of current and former employees to plaintiff who lacked standing to lead class challenging automatic termination policy for employees who failed to work any hours for 45 consecutive days).
Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores (2015) 575 U.S.
The Court decided that Plaintiff, Samantha Elauf, was not required to make a specific request for a religious accommodation to wear a hijab when applying for a position at children’s clothing store, owned by the company. Defendant declined to hire Plaintiff, arguing that her scarf clashed with the company’s dress code, and that they should not have been made to guess that she wore a head scarf for religious reasons.
Young v. UPS (2015) 575 U.S.
The Supreme Court held that the United States Court of Appeals for the Fourth Circuit, Richmond, VA applied the wrong standard when they dismissed the Plaintiff’s suit for Pregnancy Discrimination. Plaintiff sued her employer citing the Pregnancy Discrimination Act which requires employers to treat women affected by pregnancy the same as “other persons not so affected but similar in their ability to work.” In reversing the Court of Appeals, the Supreme Court held that Plaintiff deserved another shot at proving that Defendant treated her differently from a “large percentage of non-pregnant workers” who may have been offered accommodations.
DFEH v. Am. Pac. Corp 2014 WL2178570 (Cal. Super.) (Trial Order)
A California court ruled that a female-to-male transgender employee could sue in order to enforce the right to use a men’s locker room and restroom facility while awaiting completion of sex reassignment surgery. The court rejected an argument contending that use of the facilities would create emotional discomfort for other employees and noted that this form of “discomfort” was no different than that which was historically claimed with regard to racial minorities.
Nealy v. City of Santa Monica, 2015 WL 632228 (Cal.Ct.App. 2015)
Tony Nealy worked as a solid waste equipment operator for the City of Santa Monica before injuring his knee in July 2003 while moving a large bin full of food waste. Nealy was temporarily totally disabled due to the injury until 2005 when he was released to do “light duty” work after which time he was reassigned to a groundskeeper position. A year later, Nealy again injured himself on the job (this time a lower back injury) and never returned to work again. Over the next several years, Nealy and the City had several “accommodations meetings,” which did not result in an offer of a job for which Nealy could perform the essential functions with an accommodation. Finally, in 2010, Nealy submitted an application for a job as a city planning staff assistant, but the City determined that Nealy did not meet the necessary qualifications for the position. The City then sent Nealy a letter stating it was unable to provide him with reasonable accommodation into an alternative position because he was not minimally qualified for the only position available at the time that was not a promotion.
Nealy exhausted his administrative remedies and filed a lawsuit against the City, alleging disability discrimination, failure to reasonably accommodate a disability, failure to engage in the interactive process and retaliation. The trial court granted summary judgment in favor of the City, and the Court of Appeal affirmed. The Court first affirmed summary judgment based on the statute of limitations and the inapplicability of the “continuing violation doctrine.” The Court also affirmed summary judgment based on evidence that Nealy could not perform some of the essential functions of the solid waste equipment operator, with or without reasonable accommodation, and that the City was not required to eliminate essential functions of the job (e.g., heavy lifting and kneeling) as part of a reasonable accommodation. The City also was not required to “provide an indefinite leave of absence to await possible future vacancies” in jobs Nealy might be able to perform. The Court also affirmed summary adjudication of the claims for failure to engage in the interactive process (the City met with and informed Nealy about its vacant positions) and retaliation (Nealy’s exercise of his right to request reasonable accommodation was not protected activity within the meaning of the statute). Compare Nigro v. Sears, Roebuck & Co., 2015 WL 774633 (9th Cir. 2015) (summary judgment in favor of employer in disability discrimination case reversed, based principally upon employee’s own “self-serving” testimony).
HARASSMENT
Hirst v. City of Oceanside (2015) 236 Cal.App.4th 774
This case demonstrates that a sexual harassment claim can be actionable by a subcontractor. In Hirst, the Plaintiff was an employee of a contractor working pursuant to a contract that her employer had with the Defendant. The Plaintiff’s suit alleged that she was a victim of harassment by a police officer while working for the employer. In light of the fact that the Plaintiff was not actually a party to the contract, the issue was whether the Plaintiff had standing to sue the Defendant. The general rule states that, a “person providing services pursuant to a contract” has standing to sue for sexual harassment. Ultimately, the Court of Appeal determined that a victim of harassment that does not directly have a contract with the harasser, but whose employer has a contract with the harasser is encompassed within the rule.
Dickson v. Burke Williams, Inc. (2015) 234 Cal.App.4th 1307
Despite finding at trial, that Plaintiff did not experience sexual harassment by customers that was severe and pervasive enough to create liability, a jury found the employer liable for $285,000 in damages for a failure to prevent sexual harassment, in a separate claim. Ultimately, the Court of Appeals reversed in favor of the employer, holding that there cannot be liability for failing to prevent sexual harassment if no harassment occurred.
WAGE AND HOUR
Alberts v. Aurora Behavioral Health Care, 2015 WL 6121981 (Cal. Ct. App)
Valerie Alberts and others, formerly employed as members of the nursing staff at two acute care psychiatric hospitals owned and operated by Aurora, claimed that Aurora’s uniform practices and de facto policies routinely denied nursing staff employees their meal and rest periods and overtime payments. Plaintiffs sought class certification on behalf of approximately 1,053 putative class members. The trial court denied class certification on the ground that plaintiffs’ motion relied too heavily “on anecdotal evidence to prove the existence of a systematic violation of overtime and break laws.” The Court of Appeal reversed, holding that there is substantial evidence of understaffing that resulted in a denial of breaks to the class. The Court further held that reversal was required with respect to the overtime and off-the- clock compensation claims. As for the meal and rest break claims, the Court determined it was unclear from the record whether common issues predominated over individual ones.
Mendiola v. CPS Security Solutions (2015) Los Angeles County Super. Ct. No. BC388956
The California Supreme Court rendered a decision requiring that on-call time must be paid for, even if workers are allowed to engage in personal activities (i.e. read, watch TV). The Supreme Court found that restrictions on employees which included an on-premises living requirement; prohibition against alcohol, pets, or children; a 30- minute required response time were enough for the court to deem that time compensable.
In re Acknowledgment Cases, 239 Cal.App. 4th 1498 (2015)
The City of Los Angeles requires all newly hired police officers to attend and graduate from the Los Angeles Police Academy. After the city realized that many officers who graduated from the academy were leaving within a few years to join other law enforcement agencies, the city enacted Los Angeles Administrative Code § 4.1700, which requires that any police officer hired by the LAPD to reimburse the city a prorated portion of the cost of training at the academy if he or she voluntarily leaves the LAPD to work for another law enforcement agency after serving fewer than 60 months with the LAPD. In this coordinated action involving 43 former LAPD officers, the Court of Appeal held that Section 4.1700 violates Labor Code §§ 2802 and 2804 (which require an employer to indemnify employees for all necessary expenditures or losses incurred in direct consequence of the discharge of their duties).
Balestrieri v. Menlo Park Fire Prot. Dist., 800 F.3d 1094 (9th Cir. 2015)
Firefighters and emergency medical personnel sued the Menlo Park Fire Protection District, claiming that two of the district’s policies violate the Fair Labor Standards Act (“FLSA”). In their first claim, the employees claimed they were entitled to overtime for taking their gear to temporary duty stations. In the second, they claimed the district’s system of paying them cash in lieu of unused leave time violates the FLSA. The district court granted summary judgment in favor of the district, and the United States Court of Appeals for the Ninth Circuit affirmed, holding that under the authority of Integrity Staffing Solutions, Inc. v. Busk, 135 S. Ct. 513 (2014), loading up “turnout gear” to report to a shift at a visiting station is not “integral and indispensable” to their firefighting activity. The Court affirmed dismissal of the challenge to the annual sick leave buyback on the ground that it is not an attendance bonus and should not be counted in the regular rate.
Alcantar v. Hobart Serv., 800 F.3d 1047 (9th Cir. 2015)
Joséluis Alcantar filed this action against his employer to represent a putative class of service technicians for the time spent commuting in the employer’s service vehicles from their homes to their jobsites and then back again. Alcantar also alleged failure to provide the technicians with meal and rest breaks. The district court denied class certification and granted partial summary judgment to Hobart. The United States Court of Appeals for the Ninth Circuit reversed in part, holding that the district court improperly reached the merits of Alcantar’s claims in denying class certification rather than focusing on whether the questions presented in connection with the commute-time claims were common to the class. However, the Court affirmed denial of certification of the meal-and-rest break class claims, holding that the putative class failed under Fed. R. Civ. P. 23(b)(3) because questions as to why the service technicians missed their meal and rest breaks varied.
The Court reversed the partial summary judgment that had been entered in favor of Hobart on the commute-time claims on the ground that Alcantar had raised a genuine dispute of material fact as to whether the technicians are as a practical matter required to commute in the employer’s vehicles. Finally, the Court affirmed dismissal of the Private Attorneys General Act
(“PAGA”) claims on the ground that Alcantar’s written notice of his PAGA claim did not contain sufficient facts to comply with the statute’s notice requirement. See also Sakkab v. Luxottica Retail N. Am., Inc., 2015 WL 5667912 (9th Cir. 2015) (Ninth Circuit follows Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal. 4th 348 (2014), barring waiver of PAGA claims); Miranda v. Anderson Enter., Inc., 2015 WL 6081934 (Cal. Ct. App. 2015) (same).
Integrity Staffing Solutions v. Busk (2014) 574 U. S.
The Supreme Court reversed a 9th Circuit ruling, finding that post-shift anti-theft screenings were non-compensable under the FLSA. In reaching that decision, the Supreme Court held that time spent waiting for such check-out was not integral and indispensable to the principal activities that the employees were employed to perform. Given those activities status as post- luminary activities, they were exempted from compensation under the federal Portal-to-Portal Act.
WRONGFUL TERMINATION/ RETALIATION
Sheridan v. Touchstone Television Production, LLC., 2015 WL 6153287 (Cal. Ct. App. 2015)
Nicollette Sheridan sued Touchstone after her contract on Desperate Housewives was not renewed, alleging that her termination was in retaliation for her complaint about a battery allegedly committed by show creator Marc Cherry. The trial court sustained Touchstone’s demurrer to the complaint on the ground that Sheridan had failed to exhaust her administrative remedies by first filing a claim with the Labor Commissioner. The Court of Appeal reversed, holding that the trial court’s reliance upon a now depublished opinion and a statutory framework that has since been amended (Labor Code §§ 98.7(g) and 244 – now expressly stating that administrative remedies need not be exhausted) was misplaced. Accordingly, the reversal was dismissed and the trial court was ordered to vacate its order sustaining Touchstone’s demurrer and to enter a new order overruling the demurrer to the complaint.
Prue v. Brady Company, Cal: Court of Appeal, 4th Appellate Dist., 1st Div. 2015
The California Court of Appeal found that employees that suffered workplace injuries and were subsequently terminated were not restricted to filing suit under Labor Code Section 132a. Employees in that situation could also make a valid claim for wrongful termination in violation of public policy.
Cardenas v. M. Fananian, D.D.S., Inc., 240 Cal. App. 4th 1167 (2015)
Plaintiff was terminated after she filed a police report about a coworker who she suspected may have stolen a wedding ring at the office. Subsequently, Plaintiff brought suit against her employer for wrongful termination, citing Labor Code §1102.5, and was awarded $118,000.
EMPLOYEE MISCLASSIFICATION
Sharif v. Mehusa, Inc., 2015 WL 5969679 (Cal. Ct. App. 2015)
The Court of Appeals affirmed a District Court decision which allowed both the Plaintiff- employee and Defendant-employer to receive reimbursement of attorney’s fees where there were two fee-shifting statutes in separate causes of action. Plaintiff sued Defendant-employer for unpaid overtime, unpaid wages, and a violation of California’ Equal Pay Act. The court found in favor of Plaintiff on her Equal Pay Act claim, but ruled in favor of Defendant on the overtime and wage claims. Subsequently, both parties sought reimbursement of its attorney’s fees. Plaintiff sought fees under Labor Code §1197.5(g), while Defendant sought reimbursement based on §218.5. The Court of Appeals affirmed an offset of fees for a total of $3709.
Noe v. Superior Court (2015) 237 Cal.App.4th 316
The California Court of Appeals has expanded which Defendants can be held liable for employee misclassification. In addition to an employer who actually willfully misclassifies a worker, an employer that is aware that the co-employer misclassified workers and fails to remedy the misclassification can also be liable. However, the action must be brought by the state, not by individual private parties.
O’Connor v. Uber Technologies (2014) 58 F.Supp.3d 989
Subsequent to surviving Summary Judgment, it is still possible for Uber drivers to be characterized as employees. Uber drivers filed suit claiming that they have been misclassified as independent contractors, when in fact they were employees. In an attempt to satisfy the “right to control” test that is traditionally used in an independent contractor analysis, Uber argued that drivers set their own hours and work schedules, provided their own vehicles, and were subject to little supervision. In response, Uber drivers cited the fact that an arbitration agreement was in place, the drivers’ whereabouts were monitored, and customer reviews impacted their future assignments. Based on those facts, the district court found that the Plaintiffs made a prima facie argument that they were employees.
Although a final decision has not been made regarding whether Uber drivers are employees, the application of the facts to the “right to control” test indicates that California courts do not look exclusively to control over schedule and assignments, but also to workplace rules and regulations.
PRIVACY, TECHNOLOGY, AND SOCIAL MEDIA ISSUES
Three D, LLC. v. National Labor Relations Board, Case No. 14-3284
The NLRB decided, and the United States Court of Appeals for the Second Circuit eventually upheld the decision that employees’ Facebook posts are “protected concerted activity,” even if the Facebook posts pertained to work-related matters. Plaintiff-employees were terminated after making a Facebook post commenting upon mistakes made by their Defendant-employer on their tax paperwork, which caused the employees to owe more income tax. In reaching that decision, the NLRB held that the comments were protected because they involved current employees, and were “part of an ongoing sequence of discussions that began in the workplace about [the employer’s calculation of employees’ tax withholding.”
Despite ruling in favor of the Plaintiff, the NLRB made a distinction between the content posted in that matter and speech that is sufficiently disloyal or defamatory. NLRB found that the posts in this case did not lose the protection because the comments “did not even mention [the employer’s] products or services, much less disparage them.” Even the employee’s characterization of her employer as an “asshole” was protected because it “cannot reasonably be read as a statement of fact; rather, Sanzone [employee] was merely voicing a negative personal opinion of [her employer].”
Shore Point Distribution Co. (NLRB), Case No. 22-CA- 151053
The NLRB recommended dismissal of an unfair labor practice claim, the effect of which would enable employers to place a tracking device on employee company vehicles, regardless of whether the employer gave prior bargained for the change with a union. In deciding that the employer could place a GPS on the employee company car, the NLRB Division of Advice concluded that the change was not material, substantial or significant. Prior to installing the GPS, the employer used, with the union’s knowledge, a private investigator to follow employees suspected of stealing time. Thus, the information that the GPS would obtain, is the same that the private investigator would observe.
Pier Sixty, LLC. (NLRB)
A NLRB panel found that an employee’s profanity laced tirade posted on Facebook against his employer was protected speech. Despite the severity of the speech which statements denouncing the supervisor as a “nasty mother f,” a “loser,” and “F his mother and his entire F— ing family,” the NLRB determined that these statements asserted mistreatment of employees and sought redress through unionizing.
HEALTH &SAFETY/ WHISTLEBLOWER PROTECTIONS
Wadler v. Bio-Rad Laboratories, Inc., Case No. 15-cv-02356-JCS (United States District Court 2015)
On October 23, 2015, the U.S. District Court for the Northern District of California largely denied a motion to dismiss a whistleblower retaliation claim brought by a company’s former general counsel, ruling that: (i) the Sarbanes-Oxley Act (“SOX”) and Dodd-Frank anti-retaliation provisions provide for individual liability against board members; and (ii) the Dodd-Frank anti- retaliation provision protects internal whistleblowers (i.e., a whistleblower who did not complain to the SEC).
POLICY ISSUES
Latino Express Inc. (NLRB)
The NLRB reminds employers that handbook rules that are overly broad are unlawful. Defendant- employer’s handbook provision which prohibited employees from engaging in activities that harm the operations or reputation of the company was found to be overbroad. The company was found liable for the policy, regardless of the fact that they previously made a “silent withdrawal” of the policy in 2014.
Valley Health System, LLC, v. Morris (NLRB)
An NLRB judge ruled that a hospital policy which required that employees only speak English while on duty, while conducting business with the hospital or each other, and when patients or customers were present was overbroad, and violated the NLRA’s protection for concerted activities.
Sunpower Corp. v. SunEdison, Inc., 2015 WL 5316333 (N.D. Cal.)
Three former employees of SunPower were sued for allegedly breaching SunPower’s computer use policies by accessing files while they were still employed by SunPower that they allegedly later provided to their new employer (SunEdison). SunPower alleged that defendants violated the federal Computer Fraud and Abuse Act (the “CFAA”) by breaching its computer policies when they connected USB drives to SunPower’s network and copied and stored SunPower’s files onto these devices. The district court granted defendants’ motion to dismiss the CFAA claim, holding that the CFAA is “an anti-hacking statute, not a misappropriation statute.”
Guerrero v. California Dept. of Corrections (2014) WL 1867067
An employer may run afoul of Title VII if they inquire into an applicant’s use of a fake social security number (“SSN”), without conducting an investigation as to the information’s relevancy, recency, or severity. In Guerrero, the Plaintiff was an applicant that acknowledged using a fake SSN from 1995 until 2007. Additionally, Plaintiff also obtained a taxpayer ID number and paid taxes for 10 years prior to obtaining a legitimate SSN. Despite using the fake SSN for more than a decade, the court found that because the background check resulted in disqualification of a number of Latino applicants, the policy had a disparate impact on a protected group and ruled in favor of the plaintiff.
It is important to note that every employment law situation is unique and this Employment Law Update is not a replacement for legal counsel. If you have questions on how legislative changes can impact your business, contact the Employment Law Department at Young Wooldridge, LLP.
Photo Credit: Jeff’s Canon via Flickr
