Meal and rest breaks

June and July 2020 employment law decisions

Receipt of government funds conditioned on compliance with the law does not make a private employer a state actor for purposes of constitutional claims.

July 20, 2020, Ninth Circuit Court of Appeals, John M. Heineke v. Santa Clara University: Mr. Heineke sued Santa Clara University for violations of the Fourteenth Amendment due process and equal protection rights after it terminated him for sexually harassing a former student. The Ninth Circuit affirmed the trial court’s dismissal of the constitutional claims on grounds the university is not a state actor: the university’s receipt of government funds conditioned on compliance with generally applicable laws was insufficient to transform a private university into a state actor.

Business is subject to liability for wage and hour violations despite lending its signatory status in a work contract to a third party.

July 14, 2020, Second District Court of Appeal, Alyosha Mattei v. Corporate Management Solutions, Inc.: Mr. Mattei and three co-workers sued Corporate Management Solutions, Inc. (CMS) for wage and hour violations while working on a television commercial. The trial court dismissed the case on grounds CMS was not the employer of the four plaintiffs. The appellate court reversed. It pointed to the fact that CMS was a signatory to a Commercial Production Agreement that governed the television commercial, the language of which did not show that CMS’s lending of its signatory status to a third party relieved CMS of its liability for wage and hour violations. In addition, CMS’s contract with the third party provided that CMS was obligated to ensure timely payment of wages.

Individual sentenced to perform work duties without pay in lieu of incarceration cannot sue the county for employment discrimination.

July 10, 2020, Fifth District Court of Appeal, Ronald Talley v. County of Fresno: Mr. Talley served a criminal sentence by participation in an Adult Offender Work Program. After getting injured while working in this program, Mr. Talley sued Fresno County for, among other things, disability-related claims under California’s Fair Employment and Housing Act (FEHA). The trial court dismissed the case (summary judgment) after finding that Mr. Talley could not be an employee under the FEHA. The court of appeal reviewed federal and state court precedent and concluded that compensation is a threshold test for determining whether an employment relationship exists. It concluded that the benefit Mr. Talley received for participating in the program, staying out of jail, did not constitute compensation to him an employee because it was not financially significant or quantifiable.

Catholic school teachers cannot sue for employment discrimination.

July 8, 2020, U.S. Supreme Court, Our Lady of Guadalupe School v. Morrissey-Berru: Two elementary school teachers at Catholic schools brought discrimination claims against their employer. The Supreme Court concluded that the claims were barred by the “ministerial exception” to federal laws governing the employment relationship between a religious institution and certain employees. The court pointed to the teachers’ performance of vital religious duties including educating students in the Catholic faith and participating in religious activities with students. Justices Sotomayor and Ginsburg dissented on grounds that the teachers taught primarily secular subjects, lacked substantial religious titles and training, and were not required to be Catholic.

Supervisors looking at a clock during meal or rest breaks not sufficient to show a violation of break laws.

June 30, 2020, First District Court of Appeal, Joana David v. Queen of the Valley Medical Center: Ms. David filed an action against her employer contending she was denied meal and rest periods. The appellate court affirmed the trial court’s dismissal of those claims (summary judgment). Ms. David’s evidence that her supervisors looked at the clock while she was on breaks did not create a dispute of fact: there is a lack of precedent that this constitutes coercion or pressure to undermine a formal policy of providing breaks; and Ms. David testified in deposition that she did not recall missing a meal period, a supervisor interrupting a meal period with work-related questions, or being told to end meal or rest breaks early.

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April and May 2020 employment law decisions

No attorney’s fees available for meal and rest break cases.

May 21, 2020, Second District Court of Appeal, Raquel Betancourt v. OS Restaurant Services, LLC: The trial court awarded Ms. Betancourt over $280,000 in attorney fees for meal and rest break violations. The court of appeal reviewed the attorney’s fees statute for actions based on nonpayment of wages and prior decisions that meal and rest break violations are not actions for nonpayment of wages. The appellate court rejected Ms. Betancourt’s contention that the case was based on a failure to pay earned wages because the claims asserted were the meal and rest violations and wage statement and waiting time penalties.

Time to present a claim under the Government Claims Act is not subject to equitable tolling or continuing violation doctrine.

May 12, 2020, Fourth District Court of Appeal, James Willis v. City of Carlsbad: The trial court struck certain actions taken by the City of Carlsbad from Mr. Willis’s complaint on grounds they were outside of the six-month period prior to Mr. Willis presenting a claim under the Government Claims Act. Mr. Willis contended that the actions should have remained in his case. The court of appeal rejected Mr. Willis’s “equitable tolling” argument because the time to file a Government Claims Act is not a statute of limitations subject to equitable tolling. The appellate court also determined that the continuing violation doctrine did not apply because Mr. Willis was on notice more than six months before he presented his Government Claims Act claim that any further efforts to end the alleged unlawful conduct would be futile in light of the City of Carlsbad’s denials of transfer and promotion.

Wrongful termination claim arising from termination for refusing an extortion attempt based on fraud.

May 6, 2020, First District Court of Appeal, John Galeotti v. International Union of Operating Engineers Local No. 3: The trial court dismissed Mr. Galeotti’s wrongful termination claim (demurrer). The court of appeal reversed after deciding that Mr. Galeotti’s allegations that his employer fired him for not succumbing to an extortion attempt (threat of termination if he did not make a $1,000 contribution to a political campaign) sufficiently describes an alleged violation of public policy (extortion laws). The appellate court also determined that Mr. Galeotti’s allegations that his employer terminated him after mispresenting that the contribution would be used for an election campaign (when it was used for personal use) implicates the public policy against defrauding a person of money.

Punitive damages award affirmed but reduced.

April 29, 2020, Fourth District Court of Appeal, Stephen Colucci v. T-Mobile USA, Inc.: A jury awarded Mr. Colucci $5 million in damages in this workplace retaliation case, including $4 million for punitive damages. The court of appeal determined that there was evidence supporting the jury’s finding that a managing agent of T-Mobile—meaning someone who exercised substantial discretionary authority over decisions that determine corporate policy—engaged in oppression or malice. The appellate court pointed to a district manager responsible for managing nine retail stores and 100 employees who had independent authority to hire or fire employees and over daily store operations. The Fourth District determined that the jury could reasonably infer from the evidence that the district manager became angered by Mr. Colucci’s complaints and decided to concoct a reason for termination knowing that Mr. Colucci was in a weak physical and mental state. Finally, the court of appeal determined that T-Mobile’s conduct warranted imposition of punitive damages but the reprehensibility of conduct was in the low to moderate range of wrongdoing. Therefore, it decided that a punitive damages award equal to 1.5 times that of the compensatory damages aware of $1,020,042 was appropriate.

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October 2019 employment law decisions

Temporary employee can hold the contracting company liable.

October 17, 2019, Fourth District Court of Appeal, Elvia Jimenez v. U.S. Continental Marketing, Inc.: Ms. Jimenez brought claims under the Fair Employment and Housing Act (FEHA) against her contracting employer (U.S. Continental Marketing), a company that negotiated with her direct employer, a temporary-staffing agency (Ameritemps). At trial, the jury decided that U.S. Continental Marketing was not Ms. Jimenez’s employer. The Fourth District reversed the jury verdict. Under the FEHA, whether a company is an employer is determined by the totality of the circumstances, including the extent of direction and control possessed and/or exercised by the company over the employee. Undisputed evidence showed that U.S. Continental Marketing exercised considerable direction and control over Ms. Jimenez’s terms, conditions, and privileges of employment and terminated her employment with them.

Remedy for meal and rest break violations is determined by the hourly wage only.

October 9, 2019, Second District Court of Appeal, Jessica Ferra v. Loews Hollwood Hotel, LLC: In this class action for denial of meal and rest breaks, the employees contended that their “premium wage” remedy of one hour of pay for each missed break should be calculated based on their regular rate of pay including nondiscretionary bonus. The Second District disagreed, concluding that the premium wage is determined by the regular rate of compensation, which is the base hourly wage only.

New independent contractor test applies to California Labor Code claims based on wage order violations.

October 8, 2019, Second District Court of Appeal, Francisco Gonzales v. San Gabriel Transit, Inc.: This class action asserted that San Gabriel Transit misclassified drivers as independent contractors, and as a result violated various California wage and hour laws. While this case was pending, the California Supreme Court made its decision (Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903) establishing the “ABC test” for independent contractors for purposes of claims based on California’s wage orders. The court of appeal concluded that the “ABC test” applies retroactively to pending cases; applies to California Labor Code claims that seek to enforce the protections afforded by wage orders; and claims alleging misclassification not directly premised on wage order protections are subject to the “Borello test” (S.G. Borello and Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341).

Gas station employees cannot pursue claims against Shell Oil.

October 8, 2019, First District Court of Appeal, Billy Henderson v. Equilon Enterprises, LLC: Mr. Henderson filed claims for failure to pay overtime and failure to pay for missed break periods against Equilon Enterprises doing business as Shell Oil Products US. The court of appeal agreed with the trial court that Shell was not a joint employer under the “control,” “suffer or permit,” or “engage” tests. The gas station where Mr. Henderson worked and that had a franchise agreement with Shell unilaterally set Mr. Henderson’s wages and was responsibile for payroll and compliance with labor laws. The station’s agreement with Shell provided that the station had the exclusive right to hire and fire and maintain control over its employees’ daily work activities. Finally, Shell never exercised an option to remove an employee from the station.

McDonald’s employees cannot pursue claims against McDonald’s Corporation.

October 1, 2019, Ninth Circuit Court of Appeals, Guadalupe Salazar v. McDonald’s Corp.: Ms. Salazar and other employees brought a class action for denial of overtime premiums, meal and rest breaks, and other benefits, alleging that McDonald’s was their joint employer with the company who contracted with McDonald’s as a franchise. The Ninth Circuit agreed with the trial court that McDonald’s was not a joint employer under the “control,” “suffer or permit,” or “engage” tests. McDonald’s did not have control over the employees’ wages, hours, or working conditions; rather it only controlled its franchisees with respect to quality control. McDonald’s did not suffer or permit the employees to work because McDonald’s did not have the power to hire and fire the employees. Finally, McDonald’s did not engage the employees to work (California common law) because McDonald’s did not have the right to control the manner and means of work performed at its franchises.

Verdict in favor of employee with retaliation claims is reversed.

October 1, 2019, Second District Court of Appeal, Patrick Nejadian v. County of Los Angeles: A jury found that Los Angeles retaliated against Mr. Nejadian for resisting unlawful orders (Labor Code section 1102.5) and reporting conduct that he reasonably believed constituted unlawful discrimination or harassment in the workplace (Government Code section 12940). On appeal, Los Angeles argued that there was insufficient evidence for these findings. The court of appeal agreed. For the unlawful orders claim, the trial court failed to determine whether the orders resisted by Mr. Nejadian would result in a violation of a statute, rule, or regulation. Furthermore, Mr. Nejadian failed to present sufficient evidence to establish that any acts he was asked to perform would result in a violation of a statute, rule, or regulation. As for the other claim, the court gave a jury instruction that allowed the jury to find in Mr. Nejadian even if he did not report any discrimination or retaliation (refusal to participate in activities that would violate statutes, rules, or regulations). Moreover, Mr. Nejadian failed to present evidence from which a reasonable jury could conclude that Los Angeles was motivated by any reporting of discrimination when it took adverse employment actions against him.

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August and September 2019 employment law decisions

Retaliation claim can be proved with evidence concerning a comparator who need only be similarly situated to the plaintiff employee in all relevant respects.

September 26, 2019, First District Court of Appeal, Rashmi Gupta v. Trustees of the California State University: The court of appeal affirmed a jury verdict finding San Francisco State University retaliated against Dr. Gupta in denying her tenure and terminating her employment. The trial court did not err by allowing Dr. Gupta to present evidence of a comparator professor because the other professor was similarly situated in all relevant respects and Dr. Gupta did not have to show that she was clearly superior to him.

Premium wages required for on-duty meal periods unless there is written agreement to such meal periods.

September 26, 2019, Second District Court of Appeal, Gustavo Naranjo v. Spectrum Security Services, Inc.: The court of appeal determined that at-will, on-call, hourly, nonexempt employees who are paid for on-duty meal periods are also entitled to premium wages (one hour of wages for each off-duty meal period not provided) if the employer does not have a written agreement that includes an on-duty meal period revocation clause.

Employees entitled to penalties and attorney’s fees in whistleblower retaliation case.

September 25, 2019, Second District Court of Appeal, Todd Hawkins v. City of Los Angeles: A jury found in favor of Mr. Hawkins and his co-plaintiff Hyung Kim who claimed retaliation for whistleblowing. The court of appeal affirmed the jury verdict and the trial court’s award of a Private Attorney General Act (PAGA) penalty because the plaintiffs’ pre-lawsuit notice referred to their employer’s conduct directed toward them and other employees that also impacted the public. The court of appeal also affirmed the trial court’s award of attorney’s fees under PAGA, and under a law concerning enforcement of an important right affecting the public interest (Code of Civil Procedure section 1021.5) because the case concerned claims that the plaintiffs were retaliated against for reporting pressure on hearing examiners to change decisions concerning parking citations.

Common law failure to hire claim is not available.

September 24, 2019, Third District Court of Appeal, Wilfert Williams v. Sacramento River Cats Baseball Club, LLC: The court of appeal determined that Mr. Williams’s failure to hire claim is not cognizable under a common law doctrine (Tameny claim) because the doctrine requires the prior existence of an employment relationship that gives rise to an employer’s duty to not violate fundamental public policy with respect to its employees.

Employee’s whistleblower case survives anti-SLAPP motion.

August 29, 2019, Second District Court of Appeal, James Jeffra v. California State Lottery: The court of appeal disagreed with the trial court’s denial of an anti-SLAPP motion on grounds Mr. Jeffra’s whistleblower case arises from non-protected retaliation. The Second District applied a recent California Supreme Court decision that whether a case arises from protected activity depends on the elements of the claim that need to be proven. In this retaliation case, Mr. Jeffra had to prove he was subjected to an adverse employment action, which he claimed was an investigation of alleged wrongdoing (followed by administrative leave and forced retirement). Nevertheless, the court of appeal affirmed the denial of the motion because Mr. Jeffra presented sufficient evidence to establish a probability of prevailing on the merits.

Whether morbid obesity is a disability under federal law in the absence of an underlying physiological condition is an open question.

August 20, 2019, Ninth Circuit Court of Appeals, Jose Valtierra v. Medtronic Inc.: After acknowledging that four other circuits have concluded that morbid obesity is not a disability unless caused by an underlying physiological condition, the Ninth Circuit did not take a stand on that issue. Instead it affirmed the trial court’s dismissal of Mr. Valtierra’s federal disability discrimination case on grounds he did not have evidence to suggest a causal connection between his obesity and his termination.

The causation standard for federal disability discrimination claims is “but for.”

August 20, 2019, Ninth Circuit Court of Appeals, Michael J. Murray, M.D. v. Mayo Clinic: In light of two recent U.S. Supreme Court decisions, the Ninth Circuit affirmed the trial court’s jury instruction for Mr. Murray’s federal disability discrimination claim that used a but for causation standard as opposed to a motivating factor standard.

Unfair Competition Law claims seeking private injunctive relief are subject to arbitration agreements.

August 14, 2019, Fourth District Court of Appeal, Daniel Clifford v. Quest Software Inc.: Mr. Clifford brought various wage and hour claims against his employer. Quest Software moved to compel arbitration. The trial court ordered the case to arbitration except Mr. Clifford’s Unfair Competition Law (UCL) claim. The court of appeal reversed after finding that a California Supreme Court decision did not bar arbitration of a UCL claim for private (as opposed to public) injunctive relief.

The change in law for awards of attorney’s fees and costs to employers in Fair Employment and Housing Act cases applies retroactively.

August 1, 2019, Fourth District Court of Appeal, Arthur Scott v. City of San Diego: Mr. Scott rejected a $7,000 settlement offer under Code of Civil Procedure section 998. After the case went to trial and a jury found in favor of San Diego, the trial court awarded the city $51,946.96 in costs even though it found that the plaintiff’s case was not frivolous. While the appeal was pending, the California Legislature amended the governing costs statute to provide that a prevailing defendant may not recover attorney’s fees and costs, notwithstanding a section 998 offer, against a plaintiff with non-frivolous claims. The court of appeal decided that this amendment clarified existing law, meaning that the change in law applies retroactively. On this basis, it reversed the trial court’s award of costs.

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July 2019 employment law decisions

On-duty meal periods subject to the 30-minute minimum requirement.

July 31, 2019, First District Court of Appeal, L’Chaim House, Inc. v. Division of Labor Standards Enforcement: Residential care home is required to provide meal periods of at least 30 minutes even when they are “on-duty” periods, i.e., the nature of the work prevents the employees from being relieved of all duty and the employer and employees agree in writing to an on-the-job paid meal period.

Anti-SLAPP motions available in discrimination or retaliation cases but not in this particular case.

July 22, 2019, Supreme Court of California, Stanley Wilson v. Cable News Network, Inc.: The anti-SLAPP statute (special motion to strike claims that arise from the defendant’s constitutionally protected activity) may be used to screen claims alleging discriminatory or retaliatory employment actions because the defendant’s adverse action is a necessary element of such claims. Mr. Wilson’s claim that his employer defamed him by privately discussing the alleged reasons for his termination with potential employers and others is not subject to the anti-SLAPP statute because the communications were not made in connection with any issue of public significance.

Employees have sufficient evidence for discrimination and harassment claims.

July 17, 2019, Third District Court of Appeal, Nancy Ortiz v. Dameron Hospital Association and Shirley Galvan v. Dameron Hospital Association: The facts were disputed whether Dameron constructively terminated Ms. Ortiz and Ms. Galvan because there was evidence that their supervisor intentionally created working conditions that would cause a reasonable person to feel compelled to resign. The facts were also disputed whether the supervisor acted with national origin discrimination motive based on evidence that the supervisor focused her criticisms on subordinates’ accents and English language skills. The facts were further disputed whether Ms. Ortiz and Ms. Galvan were subjected to unlawful harassment given the evidence of the supervisor’s criticisms of accents and English-speaking skills and references to subordinates’ ages, including calling them “too old”; and in Ms. Ortiz’s case, the additional evidence of being transferred to a unit where she had little or no experience and provided with no training, being falsely accused of sleeping on the job, and being told she would likely be fired.

Jury verdict in favor of employee in race discrimination and retaliation case affirmed.

July 17, 2019, Third District Court of Appeal, Wendell Brown v. City of Sacramento: Mr. Brown could recover for a suspension that occurred more than one year before he filed a complaint with the Department of Fair Employment and Housing (DFEH) because the suspension did not become final until a union grievance challenging it was dismissed within the one-year statute of limitations period. Mr. Brown could also recover for a transfer that had been announced but not scheduled to take effect until after he filed his DFEH complaint. Although the DFEH complaint did not refer to the specific transfer, it included general language about being forced to transfer and the DFEH investigation would have likely uncovered the specific transfer at issue.

Employer not required to reimburse its employees for purchasing slip-resistance shoes.

July 8, 2019, Third District Court of Appeal, Krista Townley v. BJ’s Restaurants, Inc.: BJ’s Restaurants has a safety policy that requires its employees to wear slip-resistance shoes, although no specific brand, style, or design is required and the policy does not prohibit the employees from wearing their shoes outside of work. The California law requiring employers to reimburse their employees for expenses incurred in the discharge of their work duties (Labor Code section 2802) does not apply because the shoes are non-uniform work clothing and generally usable in the restaurant occupation.

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