April and May 2018 employment law decisions

Employees may pursue representative claims as long as they are personally affected by at least one of the alleged violations.

May 23, 2018, Sixth District Court of Appeal, Forrest Huff v. Securitas Security Services USA, Inc.: Mr. Huff filed representative claims against his former employer under the Private Attorneys General Act of 2004 (PAGA) alleging violations concerning the pay practices of Securitas. The trial court concluded that Mr. Huff could pursue all of the claims even if he could not prove that he was personally affected by one of the violations. PAGA claims allow private parties to sue for civil penalties that previously were only recoverable by a state agency (Labor Commissioner). When employees bring representative actions under PAGA, they do as a proxy or agent of the agency, not other employees. On appeal, Securitas contended that Mr. Huff could only pursue PAGA claims for violations that personally affected him. The appellate court reviewed the law, which states that an “aggrieved employee” who may file a PAGA claim is “any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.” (Labor Code section 2699(c).) The Sixth District concluded that this means a PAGA claim may be brought by a person employed by the alleged violator and affected by at least one of the violations alleged in the case.

Representative claims for pay statement violations do not require proof of injury or a knowing and intentional violation.

May 22, 2018, Third District Court of Appeal, Terri Raines v. Coastal Pacific Food Distributors, Inc.: Ms. Rains sued her former employer alleging, among other claims, a representative claim under PAGA concerning pay statement violations. The trial court dismissed the case (summary judgment) after deciding that Ms. Rains had not suffered an injury as required for an individual claim because the missing hourly overtime rate could be determined from the pay statement by simple math. On appeal, the Third District reviewed the pay statement law, which requires a number of items in pay statements including all applicable hourly rates in effect during the pay period. The parties agreed that Ms. Raines’s statements did not show the overtime hourly rate. The appellate court noted that there are three different remedies for a pay statement violation: actual damages or statutory ($50 per pay period) penalties, injunctive relief, and civil penalties ($250 per pay period for an initial violation under PAGA). The Third District determined that a civil penalty was available not just when no pay statement is provided but also when the pay statement violates the law in some way. Previous decisions by federal courts had come to opposing conclusions as to whether a party with a PAGA claim concerning pay statement violations must prove injury. In addition, the First District Court of Appeal had recently decided, in Lopez v. Friant & Associates, LLC (2017) 15 Cal.App.5th 773, that there was no injury or knowing and intentional requirement for a PAGA claim. The Fourth District agreed with the First District.

UC whistleblowers may file suit after adverse administrative decisions.

May 14, 2018, Fourth District Court of Appeal, Carl Taswell v. The Regents of the University of California: Dr. Taswell sued the Regents alleging he was retaliated against for whistleblowing activities regarding patient safety during his employment by UC Irvine. The trial court dismissed the case (summary judgment) after deciding that Dr. Taswell’s claims were barred by a University decision denying his grievance challenging his termination and his failure to overturn that decision (by writ of mandamus) before filing suit. The Fourth District reviewed the general principle that an administrative decision that is of sufficient judicial character is binding and precludes a subsequently filed lawsuit unless it is reversed by writ. It also reviewed two prior California Supreme Court decisions that established the rule that civil servants and California State University employees could file whistleblower retaliation claims in court after receiving adverse administrative decisions concerning the same claims. The appellate court then turned to the section of the whistleblower retaliation law that applies to UC employees (Government Code section 8547.10), which has the same language that applies to CSU employees (authorizing a civil suit if the employer has not satisfactorily addressed the administrative complaint). The Fourth District concluded that the same interpretation applies to UC employees: a court action is permitted if the employer does not address the complaint to the employee’s satisfaction, e.g., finding against him. The court of appeal also reviewed Dr. Taswell’s claims under separate whistleblower laws (Labor Code section 1102.5 and Government Code section 12653). It determined that although Dr. Taswell was required to “exhaust administrative remedies” (by filing the grievance) the language of the laws clearly reflected a legislative intent to permit a court action. As a result, Dr. Taswell could pursue his claims under those laws as well without overturning the adverse grievance decision.

No failure to engage in interactive process claim under federal law.

May 11, 2018, Ninth Circuit Court of Appeals, Danny Snap v. Burlington Northern Santa Fe Railway Company: Mr. Snapp sued his former employer alleging a failure to accommodate under the federal Americans with Disabilities Act. The jury found in favor of Burlington. Mr. Snapp appealed. One issue was whether the trial court improperly rejected a proposed jury instruction that would have imposed liability on Burlington for failing to engage in the interactive process regardless of the availability of a reasonable accommodation. The Ninth Circuit reviewed its prior decision, Barnett v. U.S. Air, Inc. (9th Cir. 2000) 228 F.3d 1105, in which it decided that if an employer receives notice of an employee’s need for an accommodation and fails to engage in the interactive process (employer and employee come to understand the employee’s abilities and limitations, the employer’s needs for various positions, and a possible middle ground for accommodating the employee), the employer is liable if a reasonable accommodation would have been possible. The appellate court explained this means there is no separate claim for failing to engage in the interactive process (unlike under California law); rather, the claim is for discrimination in denying an available and reasonable accommodation. Previous decisions established that at the summary judgment stage the employer has the burden to prove the unavailability of a reasonable accommodation. The Ninth Circuit rejected Mr. Snapp’s contention that the summary judgment standard applied at trial.

No due process claim for probationary employee.

May 10, 2018, Ninth Circuit Court of Appeals, Richard A. Palm v. Los Angeles Department of Water and Power: Mr. Palm filed suit alleging his employer terminated his employment in a probationary position without due process of law in violation of the Fourteenth Amendment. The trial court dismissed his case (motion to dismiss) without leave to amend on grounds Mr. Palm could not state a due process claim because he lacked a property interest in his position. On appeal, the Ninth Circuit recited the standard that Mr. Palm had to demonstrate a constitutionally protected property interest in his position to pursue a due process claim. The appellate court reviewed the Los Angeles Charter and Civil Service Rules. During probation Los Angeles could terminate Mr. Palm based on a subjective finding that he had demonstrated unsatisfactory performance. In a previous decision, the Ninth Circuit concluded that an employer’s ability to determine on a purely subjective basis whether a probationary employee had performed satisfactorily undercuts any expectation of continued employment. Also, during probation Mr. Palm had no right of appeal of a termination to a Board of Civil Service Commissioners. The Ninth Circuit decided that probationary positions held by city employees are not vested with a protected property interest.

Failure to accommodate and engage in interactive process where the employer terminated the probationary employee while on leave on grounds the employee’s performance had not been reviewed.

May 3, 2018, Fourth District Court of Appeal, Marisa Hernandez v. Rancho Santiago Community College District: Ms. Hernandez sued the District under California law for failure to make reasonable accommodation for her medical condition and failure to engage in an interactive process. Ms. Hernandez was hired in 2013 with a one-year probationary period and performance reviews due at three, seven, and 11 months; after 12 months she would become a permanent employee. Her performance was not evaluated after three or seven months. Eight months into the probationary period, Ms. Hernandez went on temporary disability leave to have surgery for an injured suffered during a previous employment with the District. She was scheduled to return to work around the 12-month anniversary of her hiring date. The District terminated her while she was on leave because her performance had not been reviewed. The case went to trial where the court found in Ms. Hernandez’s favor and awarded her $723,746 in damages. On appeal, the District asserted that it had to terminate Ms. Hernandez’s employment during her probationary period because if it had not she would have become a permanent employee without having had her performance evaluated. The Fourth District agreed that the District accommodated Ms. Hernandez by giving her time off for the surgery but it was not reasonable when it included the consequence that she would lose if her job if she took leave. The appellate court rejected the District’s use of the one-year probationary period as justification for the termination. The District could have deducted the leave time from Ms. Hernandez’s probationary period so that she received a full 12-month period of time in which the District could have evaluated her performance. The Fourth District also affirmed the trial court’s finding of a violation of the good faith interactive process requirement because Ms. Hernandez was told she could not be fired for taking leave but was fired when she took the leave.

Broad employee standard established for wage order violations.

April 30, 2018, Supreme Court of California, Dynamex Operations West, Inc. v. Charles Lee: Two delivery drivers sued Dynamex on their own behalf and on behalf of a class of similarly situated drivers alleging misclassification as independent contractors rather than employees, which led to a violation of a California wage order (which imposes obligations relating to the minimum wages, maximum hours, and basic working conditions such as minimally required meal and rest breaks). The issue was which standard applies, under California law, in determining whether workers should be classified as employees or as independent contractors for purposes of California wage orders: the multifactor standard set forth in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, or the “to suffer or permit to work” standard described in Martinez v. Combs (2010) 49 Cal.4th 35. The California Supreme Court concluded that the latter was the standard and that the suffer or permit to work definition must be interpreted broadly to treat as employees all workers who would ordinarily be viewed as working in the hiring business. In determining whether a worker is properly considered the type of independent contractor to whom the wage order does not apply, it is appropriate to look to the “ABC” test. Under this test, a worker is properly considered an independent contractor to whom a wage order does not apply only if the hiring entity establishes: (A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact; (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Time to file federal discrimination claims starts when the administrative agency actually provides the right-to-sue notice.

April 27, 2018, Ninth Circuit Court of Appeals, Taylor Scott v. Gino Morena Enterprises, LLC: Ms. Scott sued her former employer alleging sexual harassment and retaliation. The trial court dismissed the case (summary judgment) after deciding that Ms. Scott’s claims were time-barred. Ms. Scott had to file a charge with a state or federal agency (or both) before filing suit. Ms. Scott filed a charge with California Department of Fair Employment and Housing (DFEH) on November 13, 2013, received a right to sue from the DFEH on November 25, 2013, and filed suit on November 20, 2014 under California law. The DFEH “dual-filed” the charge with the federal Equal Employment Opportunity Commission (EEOC) on November 13, 2013 and the EEOC did not issue its right-to-sue notice until June 3, 2015. On June 17, 2015, the trial court allowed Ms. Scott to amend her complaint to assert federal claims. The issue was whether the 90-day period to file a case begins when Ms. Scott received the right-to-sue notice from the EEOC or 180 days after the charge was filed with the EEOC regardless of when the EEOC issued the notice. The appellate court determined that while the law governing the issue contemplates that the EEOC gives notice sometime after 180 days after the charge is filed, the 90-day period begins when the EEOC actually gives the notice.

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