July and August 2017 employment law decisions

Anti-SLAPP motion and retaliation

July 26, 2017, Fourth District Court of Appeal, Aram Bonni v. St. Joseph Health System: Mr. Bonni sued St. Joseph Health System for whistle-blower retaliation. St. Joseph filed a special motion to strike the complaint (“anti-SLAPP motion”), which the trial court granted. The court of appeal reversed. The Fourth District reviewed the recent Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057 decision, which counseled that in ruling on an anti-SLAPP motion, courts should consider the elements of the challenged claim and what actions by the defendant supply those elements and consequently form the basis for liability. The Fourth District determined that Mr. Bonni’s claim, based on Labor Code 1278.5, arises from St. Joseph’s retaliatory purpose or motive, and not from how that purpose is carried out, even if by speech or petitioning activity. It then observed that Mr. Bonni’s complaint did not allege any specific written or oral statement or writing which allegedly formed the basis of his retaliation claim. Instead, he alleged that an abusive peer review process was initiated by the hospitals because he made complaints about unsafe conditions at the hospitals. Consequently, his claim was not based merely on St. Joseph’s peer review process, or on statements made during those proceedings, but on the retaliatory purpose or motive by which it was undertaken.

Vacation pay at time of separation

July 28, 2017, Fourth District Court of Appeal, Nathan Minnick v. Automotive Creations, Inc.: Mr. Minnick sued Automotive Creations, Inc. on behalf of himself and other employees alleging that their employer’s policy violated California law because it required employees who worked for less than one year to forfeit vested vacation pay. The appellate court noted that the California Supreme Court interpreted Labor Code section 227.3 to mean that once vested, vacation pay may not be forfeited. The Fourth District agreed with a Second District decision (Owen v. Macy’s, Inc. (2009) 175 Cal.App.4th 462), which provides that the employer may establish a waiting period before the employee becomes eligible to earn vacation, and if the employer’s policy is clearly stated, the waiting period policy is enforceable. The Fourth District affirmed the dismissal of the case.

Hostile work environment

July 31, 2017, Ninth Circuit Court of Appeals, Cynthia Fuller v. Idaho Department of Corrections: Ms. Fuller sued the Idaho Department of Corrections for its response to a co-worker raping her on three occasions outside of the workplace. The Ninth Circuit reversed the trial court’s dismissal of her case. The appellate court determined that a reasonable jury could conclude that the IDOC effectively condoned the rapes by requiring Ms. Fuller to return to a workplace run by supervisors who showed public support for her rapist, eagerly anticipated his return, and continued to pay him while denying her paid leave. As a result, IDOC created a hostile work environment by making it more difficult for Ms. Fuller to do her job, to take pride in her work, and to desire to stay in her position.

Civil penalty versus unpaid wages

August 2, 2017, Fifth District Court of Appeal, Richard Esparza v. KS Industries, L.P.: KS Industries, L.P. sought to compel arbitration of Mr. Esparza’s claims, on behalf of himself and other employees, for civil penalties and wages arising from minimum wage and overtime violations, meal and rest break violations, timely payment of wages, failure to provide pay statements, and failure to reimburse business expenses. Mr. Esparza relied on Labor Code sections 558 and 1197.1 to contend that recovery of the unpaid wages was a form of civil penalty, which could not be forced into arbitration. The Fifth Circuit disagreed, pointing out that section 558 provides that the employee recovers 100 percent of the underpaid wages, whereas a civil penalty action (Labor Code Private Attorney’s General Act) requires 75 percent of the recovery to go to the State of California.

One day’s rest in seven

August 3, 2017, Ninth Circuit Court of Appeals, Christopher Mendoza v. Nordstrom, Inc.: Mr. Mendoza on behalf of himself and other Nordstrom employees sued Nordstrom under the California law that requires one day’s rest from work in seven. (Labor Code sections 551 and 552.) An exception applies when the employee works less than six hours. The trial court ruled in favor of Nordstrom on grounds that although Mr. Mendoza worked seven consecutive days over two work weeks on three separate occasions, he worked less than six hours on some, but not all, of those days. The Ninth Circuit affirmed the decision, but for different reasons. The California Supreme Court had decided that the seven-day period is only for each workweek and the exception only applies when the employee works less than six hours on all seven days. It was undisputed that Mr. Mendoza did not work seven consecutive days within any one work week.

Retaliation and disability discrimination

August 8, 2017, Fourth District Court of Appeal, Melony Light v. California Department of Parks and Recreation: Ms. Light sued the California Department of Parks and Recreation for retaliation and disability discrimination. The trial court dismissed the retaliation claim on grounds there was no adverse employment action. The Fourth District reversed on grounds there was evidence that would support a finding of an adverse action: Ms. Light was moved to a different office, was subjected to verbal and physical attack during a confrontation, was told she would no longer work at the Department when her out-of-class assignment was over, had a training offer for a position rescinded, was later rejected for promotion to that position, and had her scheduled hours reduced to zero. The appellate court also determined there was direct evidence of retaliatory intent based on a supervisor’s statements that if Ms. Light did not follow orders she would be moved to a different workplace and her work at the District would end. As for the disability claim, the Fourth District affirmed the dismissal because there was no evidence the Department knew of Ms. Light’s disabilities before it took adverse action, only vague references to workplace stress.

Costs of suit

August 15, 2017, Fourth District Court of Appeal, Aleksei Sviridov v. City of San Diego: Mr. Sviridov sued the City of San Diego over his terminations. After three appeals, San Diego was awarded over $90,000 in costs. Mr. Sviridov challenged the award based on the rule that an employer may not recover its costs of suit in a Fair Employment and Housing Act or Public Safety Officers Procedural Bill of Rights Act case unless the court determines it to be frivolous. The court of appeal disagreed because San Diego had made three settlement offers under Code of Civil Procedure section 998, which Mr. Sviridov rejected. The Fourth District reasoned that a blanket application of the FEHA or POBRA costs rule where there is a section 998 offer would erode the public policy of encouraging settlement in such cases.

Age discrimination

August 16, 2017, Ninth Circuit Court of Appeals, Charles Merrick v. Hilton Worldwide, Inc.: Mr. Merrick sued Hilton Worldwide, Inc. for age discrimination. The Ninth Circuit Court of Appeals concluded that Mr. Merrick had a “prima facie” case of discrimination because he was sixty years old when he was permanently laid off, his termination was not based on his performance, and his duties were outsourced or assumed by other employees. The appellate court also determined that Hilton had non-discriminatory explanations for the layoff. Mr. Merrick did not dispute the explanations, but claimed he could prove discrimination because Hilton did not offer to transfer him, mischaracterized his responsibilities and performance, and failed to comply with its layoff policy. The Ninth Circuit found that a position Mr. Merrick pointed to was not available and Hilton provided a list of open positions, the record did not support the mischaracterization claim, and the deviation from the layoff guidelines did not constitute specific and substantial evidence of a discriminatory motive.

Hours worked question

August 16, 2017, Ninth Circuit Court of Appeals, Amanda Frlekin v. Apple, Inc.: The Ninth Circuit certified the following question to California Supreme Court: Is time spent on the employer’s premises waiting for, and undergoing, required exit searches of packages or bags voluntarily brought to work purely for personal convenience by employees compensable as “hours worked” within the meaning of California Industrial Welfare Commission Wage Order No. 7?

Anti-SLAPP motion and discrimination

August 16, 2017, Second District Court of Appeal, Dioka Okorie v. Los Angeles Unified School District: Mr. Okorie sued the Los Angeles Unified School District alleging, among other things, discrimination, harassment, and retaliation. In response, the District filed a special motion to strike the complaint (“anti-SLAPP motion”), which the trial court granted. The court of appeal affirmed. The Second District determined that Mr. Okorie’s case was distinguishable from the recent Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057 decision, which decided that a discrimination claim may be struck only if the speech or petitioning activity itself is the wrong complained of, and not just evidence of liability. The wrong in Park was the university’s decision to deny the plaintiff tenure, but Mr. Okorie complained of a wide array of adverse employment actions, with the bulk of them being statements or communicative conduct made by District personnel. Furthermore, Mr. Okorie did not allege that the primary source of the alleged discrimination was his reassignment from his classroom to his home or his subsequent reassignment from his home to ESC, the so-called teacher’s jail. Instead, the gravamen of Mr. Okorie’s theory is discrimination via humiliation, which is meaningless outside the context of the protected speech to which anti-SLAPP protection applies.

Disability discrimination

August 25, 2017, Ninth Circuit Court of Appeals, Antonio Alamillo v. BNSF Railway Company: Mr. Alamillo sued BNSF Railway Company for disability discrimination and failure to provide a reasonable accommodation. The Ninth Circuit decided that Mr. Alamillo could not establish a “prima facie” case of discrimination because BNSF did not know that Mr. Alamillo was disabled when the decision to initiate disciplinary proceedings was made, and Mr. Alamillo conceded that BNSF disregarded his disability when it decided to terminate him. The appellate court also concluded that there was no reasonable accommodation claim because BNSF provided Mr. Alamillo with a “constant work schedule” and precluding BNSF from terminating Mr. Alamillo for prior misconduct is not a reasonable accommodation.

Posted by deanroyerlaw in Employment

June and July 2017 employment law decisions

Employee during pendency of work visa approval

June 13, 2017, California Court of Appeal, First Appellate District, Ming-Hsiang Kao v. Joy Holiday et al.: Mr. Kao was entitled to overtime pay, penalties for Joy Holiday’s failure to provide wage statements, and a waiting time penalty for the company’s failure to pay all wages due at termination. Mr. Kao was an employee, not a “guest” pending approval of a work visa, because Joy Holiday paid Mr. Kao substantial salary and Mr. Kao performed tasks beneficial to the company. Mr. Kao was also a non-exempt employee (i.e., entitled to overtime pay) because while he was an office manager he was paid less than the equivalent of two times the minimum wage for 40 hours per week and then was demoted to non-manager status.

Age discrimination covers political subdivisions with fewer than 20 employees

June 19, 2017, Ninth Circuit Court of Appeals, John Guido and Dennis Rankin v. Mount Lemmon Fire District: the federal Age Discrimination in Employment Act applies to a political subdivision of a state that employs fewer than 20 employees. The ADEA defines three distinct categories of covered employers: (1) a “person” that employs 20 or more employees, where “person” does not include a political subdivision; (2) an agent of a “person;” and (3) States and political subdivisions of States. The Sixth, Seventh, Eighth, and Tenth Circuits previously decided otherwise.

Anti-gay statements outside of the termination decision enough to get case to trial

June 21, 2017, California Court of Appeal, Second Appellate District, Joseph Husman v. Toyota Motor Credit Corporation: Mr. Husman had sufficient evidence that a substantial motivating factor for his termination was stereotyping related to his sexual orientation. There was a perception he was “too gay” as shown by statements made outside the termination decision: second-line supervisor observed at various times that Mr. Husman had made “a very clear statement” about his sexual orientation and should cut his hair, as well as ridiculing him for wearing a scarf as an accessory when it was not cold outside.

Individuals liable for retaliation under Fair Labor Standards Act

June 22, 2017, Ninth Circuit Court of Appeals, Jose Arnulfo Arias v. Anthony Raimondo: the Fair Labor Standards Act retaliation provision applies to any person, including an individual who is not an employer. In this case, after Mr. Arias filed a case against his employer for overtime and meal and rest break violation, the employer’s attorney enlisted the services of U.S. Immigration and Customs Enforcement (“ICE”) to take Mr. Arias into custody at a scheduled deposition and then to remove him from the United States; and attempted to block Mr. Arias’s California Rural Legal Assistance attorney from representing him. The attorney could be liable because the FLSA makes it unlawful for any “person,” which includes a legal representative, to terminate or discriminate against an employee who files a FLSA complaint; and defines “employer” to include “persons” who act in the interest of the employer in relation to an employee.

Attorney’s fees for unpaid wage claims must be requested at the initiation of the case

June 29, 2017, California Court of Appeal, Second Appellate District, Michael Shames v. Utility Consumers’ Action Network: employee could not recover attorney’s fees after prevailing at trial on an unpaid wages claim because he did not request the fees at the initiation of the case. California Labor Code 218.5 provides for attorney’s fees to the prevailing party if she “requests attorney’s fees and costs upon the initiation of the action.” Such a request was not included in either Mr. Shames’s initial complaint (first court filing) or an amended complaint.

Mortgage underwriters are non-exempt employees entitled to overtime

July 5, 2017, Ninth Circuit Court of Appeals, Gina McKeen-Chaplin v. Provident Savings Bank, FSB: Mortgage underwriters are entitled to overtime pay. The administrative employee exemption under federal law did not apply because the underwriters’ primary job duty did not relate to their employer bank’s management or general business operations. The Ninth Circuit followed the Sixth Circuit’s analysis (the underwriters do not decide if the bank should take on risk, but instead assess whether, given the guidelines provided to them from above, the particular loan at issue falls within the range of risk the Bank has determined it is willing to take), and rejected the Second Circuit (which decided that underwriters perform administrative work because they assist in the running and servicing of the bank’s business by making decisions about when the Bank should take on certain kinds of credit risk).

Right to obtain other employees’ contact information in representative action

July 13, 2017, California Supreme Court, Michael Williams v. The Superior Court of Los Angeles County: Employee with a representative case (Labor Code Private Attorneys General Act) was entitled to contact information of other employees that he sought to have represented in the case. The standard established for class actions—contact information is discoverable without any showing of good cause—applies to PAGA cases.

Posted by deanroyerlaw in Employment

Rest periods commissioned employees

Rest period pay for commissioned employees?

The Second District Court of Appeal recently decided two questions regarding rest periods and commissioned employees. In Vaquero v. Stoneledge Furniture, LLC (Feb. 28, 2017, No. B269657) ___Cal.App.4th___ [2017 Cal. App. LEXIS 165], the issues were (1) whether employees paid on commission are entitled to separate compensation for rest periods, and (2) whether employers who keep track of hours worked, including rest periods, violate the law by paying employees a guaranteed minimum hourly rate as an advance on commissions earned in later pay periods.

In this case, Mr. Vaquero worked as a Sales Associate for Stoneledge Furniture, a retail furniture company. He served as a lead plaintiff in a class action lawsuit against Stoneledge alleging violations of California’s rest period law.

Stoneledge paid Sales Associates on a commission basis. According to its commission agreement, if a Sales Associate did not earn the equivalent of at least $12.01 per hour in commissions, Stoneledge paid the associate a “draw” against future commissions. The agreement did not provide for compensation for rest periods. Stoneledge allowed its Sales Associates to take rest periods, and claimed that it paid them for rest periods at the same rate as other compensated time.

The trial court found that Stoneledge’s payment system accounted for all hours worked and guaranteed that Sales Associates would be paid more than $12 an hour for those hours. It dismissed the case after concluding that there was no possibility that the employees’ rest period time would not be captured in the total amount paid each pay period.

On appeal, the appellate court began with a review of the rest period law. Employers must permit 10-minute periods during which its non-exempt employees, who work at least 3.5 hour shifts, are not required to work. Employers must pay their employees for the rest periods.

The court of appeal then addressed the first question: whether California law required Stoneledge to separately compensate its Sales Associates for rest periods. A Wage Order requires employers to count “rest period time” as “hours worked for which there shall be no deduction from wages.” A previous decision concerning employees paid by the job or unit (piece-work) established a rule of separate compensation for rest periods where the employer uses an “activity based compensation system” that does not directly compensate for rest periods. The employer could not comply with the law by purportedly negotiating a higher piece rate. The Second District concluded that the Wage Order applies equally to commissioned employees, employees paid by piece rate, or any other compensation system that does not provide compensation for rest breaks and other nonproductive time.

Next, the appellate court considered the second question: whether Stoneledge’s commission plan complied with California law by “counting as hours worked” the time Sales Associates spent taking rest breaks. Although Stoneledge kept track of hours worked and rest periods and treated both identically, the formula it used for determining commissions did not include any component that directly compensated Sales Associates for rest periods. When Stoneledge paid an employee only a commission, the commission agreement did not compensate for rest periods. And for Sales Associates who did not earn the minimum rate in commissions, the compensation was hourly pay along with a “draw” (advance) against future commissions. In that case, there was no compensation for rest periods because Stoneledge took it back in later pay periods.

The Second District reversed the trial court’s dismissal of the case.

Posted by deanroyerlaw in Employment

First Amendment and media statements

First Amendment protection for statements to media?

Last month, the Ninth Circuit Court of Appeals decided whether the First Amendment protected an attorney when she spoke to a reporter about a case she worked on. If protected, a jury verdict that Maricopa County’s termination of her was retaliatory would be affirmed.

In this case, Brandon v. Maricopa County (9th Cir. Feb. 23, 2017, No. 14-16910) 2017 U.S. App. LEXIS 3259, Ms. Brandon was working as an attorney representing the county when she spoke with an Arizona Republic reporter about a lawsuit alleging the sheriff’s department acted with brutality towards protesters. In an article resulting from the interview, the newspaper suggested that the county made an overly generous settlement offer to prevent embarrassing certain county officials who might have been required to answer questions in depositions. The article quoted Ms. Brandon as saying: “I don’t know why they did what they did, and I’m sure they have their reasons.” Later, Ms. Brandon was terminated ostensibly because of an altercation she had with another staff member. Ms. Brandon sued the county for, among other claims, retaliation in violation of her First Amendment right to free speech.

After the jury found in Ms. Brandon’s favor, the county appealed. The Ninth Circuit began with a review of First Amendment employment retaliation law. Speech made by public employees in their official capacity (i.e., as part of their job duties) is not protected; speech made in their private capacity as a citizen is. The Ninth Circuit has developed three principles to help determine whether the speech is made as a public employee or a private citizen. First, if the employee speaks outside of the chain of command, it is unlikely that she is speaking as part of her job duties. Second, if the substance of the speech is a routine report as part of normal department procedure about a particular incident, the speech is typically within the employee’s job duties. But if an employee raises concerns about corruption or systematic abuse, it is unlikely to be within the employee’s job duties. Third, if the employee speaks in contradiction to a supervisor’s orders, the speech often falls outside of the employee’s job duties.

The Ninth Circuit applied these principles to the case by first noting that Ms. Brandon had a broad fiduciary duty to her client, the county. Also, the rules of professional conduct recognize attorneys’ statements to media outlets to be part of their duties representing their clients. The court of appeals concluded that while Ms. Brandon spoke outside the chain of command, she was speaking as an attorney representing the county. It determined that Ms. Brandon did not raise any allegation of corruption or other serious misconduct, only a disagreement with the settlement authorized by the county. Finally, the Ninth Circuit found that Ms. Brandon’s communication with the newspaper did not violate any county policy.

Based on this analysis, the appellate court decided that Ms. Brandon’s speech was part of her official duties she owed to the county as its attorney. Consequently, the First Amendment did not protect her.

Posted by deanroyerlaw in Employment

Hugging as unlawful harassment

Can hugging be unlawful harassment?

The Ninth Circuit Court of Appeals recently addressed the question of whether frequent unwanted hugging and one unwanted kiss in the workplace can constitute unlawful sexual harassment. In Zetwick v. Cnty. of Yolo (9th Cir. Feb. 23, 2017, No. 14-17341) 2017 U.S. App. LEXIS 3260, Ms. Zetwick alleged that her supervisor hugged her over one hundred times over a 13-year period, and kissed her partially on the lips on one occasion.

The trial court dismissed the case before trial after concluding that hugs and kisses on the cheek can never be unlawful harassment. On appeal, the Ninth Circuit found that the trial court failed to rely on any precedent that supported its conclusion. To the contrary, some of the precedent stood for the proposition that hugs and kisses, when unwelcome and pervasive, can constitute unlawful harassment. The appellate court also found that the trial court committed a second legal error by incorrectly stating that the standard for harassment is severe and pervasive conduct (as opposed to severe or pervasive). While the trial court correctly stated the standard elsewhere in its opinion, the Ninth Circuit found the incorrect reference to be significant because it occurred where the trial court found that Ms. Zetwick had not met the standard.

The appellate court turned next to whether there was sufficient evidence for a reasonable conclusion that unlawful harassment occurred. The Ninth Circuit reviewed federal harassment law, which requires a sexually offensive environment that both a reasonable person would find hostile or abusive, and one that the victim perceived to be so. It concluded that the evidence could satisfy this standard based on Ms. Zetwick’s testimony that her supervisor hugged her more than one hundred times during the period 1999 to 2012, and that he hugged female employees exclusively.

The Ninth Circuit faulted the trial court for viewing the evidence in a mathematically precise manner (seven to eight hugs per year on average, each lasting a few seconds) rather than considering the cumulative effect of the conduct. The court of appeals also determined that the trial court erred by failing to consider precedent that the conduct has greater impact when carried out by a supervisor, overlooking Ms. Zetwick’s testimony about the emotional impact of her supervisor’s behavior, and disregarding her testimony about her supervisor’s conduct toward other female employees.

Ultimately, the Ninth Circuit reversed the trial court’s dismissal of the case.

Posted by deanroyerlaw in Employment