United States Supreme Court
ENCINO MOTORCARS, LLC v. NAVARRO
SERVICE ADVISORS MEET WITH CUSTOMERS TO DISCUSS VEHICLE REPAIRS BUT DO NOT GENERALLY PERFORM WORK ON VEHICLES
The Fair Labor Standards Act (FLSA) requires employers to pay overtime compensation to employees covered by the Act. The FLSA exempts salesmen and mechanics who are primarily engaged selling or servicing automobiles at a covered dealership from overtime requirements. Defendant Encino Motorcars employed “service advisors” who met with customers to discuss vehicular problems and potential repairs, recorded service orders, followed up with customers, and explained the work done on vehicles to customers. Plaintiff Navarro and other employees sued Encino Motorcars for backpay for overtime violations under the FLSA.
THE DEPARTMENT OF LABOR’S 2011 RULE REQUIRED OVERTIME PAY FOR SERVICE ADVISORS
The District Court dismissed the case. The Ninth Circuit reversed based on the Department of Labor’s 2011 rule regarding service advisors. The Supreme Court granted certiorari, held that the Department of Labor’s 2011 rule is procedurally defective and may not be relied upon, and remanded the issue of exemption for the Ninth Circuit to address. The Ninth Circuit held that service advisors are not exempt from overtime rules, and the Supreme Court granted certiorari again.
THE SUPREME COURT CREATES AN EXEMPTION FOR SERVICE ADVISORS
Due to factual stipulations by the parties, the only question for the Supreme Court was whether service advisors are salesmen primarily engaged in servicing automobiles under the FLSA. Service advisors are salesman because they sell customers services for their vehicles. Service advisors are primarily engaged in servicing automobiles because that term can mean “the action of providing a service” rather than merely repairing vehicles. Service advisors are integral to the servicing process and need not physically repair vehicles to be engaged in service. The Court also rejected the Ninth Circuit’s assertion that exemptions to the FLSA should be construed narrowly.
Justice Ginsburg’s dissent correctly notes that the Supreme Court has now created an exemption for service advisors where the FLSA only exempted salesmen, partsmen, and mechanics.
United States Supreme Court. Decided April 2, 2018. Opinion by Justice Thomas. Dissent by Justice Ginsberg. 138 S.Ct. 1134.
California Supreme Court
DYNAMEX OPERATIONS WEST v. SUPERIOR COURT
Under Dynamex, workers are employees unless the company shows, as its burden, that it exercised no control over the workers either as a matter of contract or as a matter of fact.
This decision insures that California workers will receive the rights the Legislature intended for them, regardless of any subterfuge to mislabel them as independent contractors.
A CLASS OF DELIVERY DRIVERS ALLEGED THAT THEY WERE MISCLASSIFIED AS INDEPENDENT CONTRACTORS
Two delivery drivers alleged that they, and a class of similarly situated plaintiffs, had been misclassified as independent contractors. After its denial of class certification was reversed by the Court of Appeal, the trial court granted class certification, relying on the definition of “employee” described in the IWC Wage orders.
“SUFFER OR PERMITTED TO WORK” IS THE CORRECT STANDARD FOR EMPLOYEES WHEN CONSIDERING ACTIONS PURSUED UNDER THE WAGE ORDER
Our Supreme Court described first the importance of insuring that workers are properly classified. Employers who misclassify employees as independent contractors avoid paying social security, workers compensation insurance, and payroll tax. The workers lack the protections of California law normally accorded to employees. These employers have an unfair advantage against their competitors who abide by the law and provide the various benefits required of them to their employees.
For these reasons, the Supreme Court determined it necessary to clarify that the definition of “employee” is broad when applied to the wage orders.
THE EMPLOYER MUST ESTABLISH 3 ELEMENTS TO SHOW THAT A WORKER IS AN INDEPENDENT CONTRACTOR
To vindicate these important state interests, the Court re-iterated a long-standing rule: the burden is on the employer, claiming a worker to be an independent contractor, to establish that it is so. The worker has no initial burden, and the initial presumption is in favor of the worker’s proper classification as an employee. Any worker who is “suffered or permitted to work,” as described by the wage orders, will be deemed an employee.
Therefore, to show that a worker is an independent contractor under the wage orders, an employer must meet the “ABC” standard by affirmatively establishing all of the following: (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 of performance for 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. Only if the hiring entity affirmatively establishes all of these factors will the worker be deemed an independent contractor for whom the wage orders do not apply.
The Supreme Court stated that the “suffered or permitted to work” standard is “exceptionally broad,” and most workers will be found to be employees under it. This, the Court said, is justified by “the fact that individual workers generally possess less bargaining power than a hiring business and that workers’ fundamental need to earn income for their families’ survival may lead them to accept work for substandard wages or working conditions.” Affording them the protection of the wage orders fulfills the “basic objective of wage and hour legislation and wage orders” to “ensure that such workers are provided at least the minimal wages and working conditions that are necessary to enable them to obtain a subsistence standard of living and to protect the workers’ health and welfare.”
CONCLUSION
California workers are presumed to be employees for the purpose of the wage orders, and companies have a high, affirmative burden to meet all of the ABC standards in order to prove otherwise. The Court here advanced the interests of California workers, as well as law-abiding California companies.
CELA INVOLVEMENT: CELA submitted an amicus brief and argued before the Supreme Court through Monique Olivier of Duckworth Peters Lebowitz Olivier. Counsel in the lower courts, as well as before the Supreme Court, included A. Mark Pope of Pope, Berger & Williams, as well as Kevin F. Ruf of Glancy Binkow & Goldberg, and Boudreau Williams and Jon Williams.
CELA wishes to thank its many colleagues who helped to bring about this well-reasoned and powerful decision: California Rural Legal Assistance Foundation, National Employment Law Project, Los Angeles Alliance for a New Economy, La Raza Centrol Legal, Legal Aid Society – Employment Law Center, Asian Americans Advancing Justice – LA and ALC, The Impact Fund, Alexander Community Law Center, UCLA Center for Labor Research, Women’s Employment Rights Clinic and Worksafe. Thanks to all for your hard work and a job well done.
California Supreme Court, filed April 30, 2018; Opinion by Cantil-Sakauye, C.J.
California Courts of Appeal
ABED V. WESTERN DENTAL SERVICES, INC.
Here, the pregnant plaintiff was neither employee nor applicant. She did not apply for employment because the employer allegedly told her, falsely, that there were no open positions. The court determined that the FEHA nonetheless protected this plaintiff even though she never applied.
DEFENDANT HAD TWO REASONS FOR POSTING JOB ADVERTISEMENTS
Defendant Western Dental sometimes hired student externs from schools with dental assistant programs. When Western Dental advertised, it sometimes had an available position, and sometimes was merely collecting applications to have at the ready in case a position opened. Western Dental called the latter circumstance an “evergreen” advertisement. At least one witness testified that externs were usually hired after their unpaid internship.
DEFENDANTS ALLEGEDLY TOLD PLAINTIFF THAT THE NAPA OFFICE WAS NOT HIRING
Plaintiff Abed worked as an unpaid extern for Western Dental. During that time, she alleged that her supervisors discovered that she was pregnant. She further alleged that she heard them discussing her pregnancy, and at least one supervisor stated that she would not be hired if she were pregnant.
Soon after that, Abed alleged that she was told that there were no openings in the Napa office, the only office she could work because of the location of her OB/GYN.
THE FEHA PROTECTED PLAINTIFF, EVEN THOUGH SHE NEVER APPLIED FOR A POSITION
The FEHA prohibits pregnancy discrimination against both employees and applicants for employment. Here, Western Dental moved for and obtained summary judgment at the trial court level because Plaintiff Abed had never applied for employment.
The appellate court reversed. Looking to precedent from the United States Supreme Court in Teamsters v. United States, 341 US 324 (1977), the Abed court found that the FEHA , like Title VII, provides protection against discriminatory acts that “deter job applications.” Interpreting the FEHA broadly to effect its remedial purpose, the court held that “[e]mployers who lie about the existence of open positions are not immune from liability under the FEHA simply because they are effective in keeping protected persons from applying.”
CONCLUSION
The FEHA is an important civil rights statute with a broad remedial purpose. It will be read in such a way to further that purpose, including protection of individuals who might have applied for a position, but were discouraged from doing so in a discriminatory fashion.
Ca. Ct. App., 1st Dist.., Div. One. Filed 3/24/18. Opinion by Justice Humes. 23 Cal.App.5th 726
CASTILLO v. GLENAIR, INC.
PLAINTIFFS BROUGHT CLASS CLAIMS AGAINST BOTH THEIR STAFFING AGENCY AND THEIR ON-SITE EMPLOYER
Similar to many wage and hour class actions (like the Serrano case in the previous Bulletin), Plaintiffs brought wage and hour claims against both the temporary staffing service agency (GCA Services) and its client company (Glenair, Inc.). It was demonstrated for the purpose of summary judgment that, given the level of involvement with the employees, GCA Services and Glenair were joint employers of the plaintiffs.
THE NAMED PLAINTIFFS SETTLED THEIR CASE AGAINST THE STAFFING AGENCY
During the pendency of this case, a separate class action (“Gomez”) was brought against GCA Services by different named plaintiffs. The Castillo named plaintiffs were class members in that case. A court-approved settlement was reached, and the Castillo named plaintiffs did not opt out.
The case before this Court involved the same wage and hour claims that had been resolved with GCA Services in the Gomez case.
Importantly, the Gomez release included not just GCA Services, but also its “agents.” This is a standard term in releases.
RES JUDICATA BARRED THE SUIT AGAINST GLENAIR
Before even reaching the issue of agency, the court determined that res judicata barred the Castillo claims because GCA and Glenair were in privity.
Using a broad definition of privity, the court described it as dealing not with the relationships between the parties, but rather the relationship of the party claiming privity to the subject matter of the litigation. That party must have been sufficiently close to the case to have its interests represented sufficiently by the other party, which must have been its “virtual representative,” according to the court.
Here, the two requirements of res judicata were deemed met. There was a final decision on the merits of the claim under Gomez, which, it was undisputed, were the same claims brought here. Privity existed because both Glenair and GCA had substantially similar obligations to insure payment of the class members.
The court emphasized that privity existed only for the purpose of these claims, and was making no ruling on other claims not at issue. If, for example, discrimination had occurred by an employee of one company, the other may not be in privity for that issue.
AGENCY PRINCIPLES ALSO BARRED THE SUIT AGAINST GLENAIR
Agency is somewhat different than privity. An agent is one that acts with the authority of its principal. The principal must have the right, even if not exercised, to control the actions of the agent for the agency relationship to exist.
Here, Glenair handled the time cards for GCA. This was sufficient for a finding of agency, and the release in the Gomez matter of “agents” therefore released Glenair.
CONCLUSION
Plaintiffs’ counsel need to be alert to these issues in settlement agreements with multiple defendants. Privity and agency may make a small settlement attached with a less-important defendant applicable to other defendants.
Ca. Ct. App., 2nd Dist., Div. Two. Filed 4/16/18. Opinion by Justice Lui
DIAZ v. GRILL CONCEPTS SERVICES, INC.
DEFENDANTS WERE REQUIRED TO PAY A LIVING WAGE
In this class action case, Defendants operated a restaurant near LAX airport. Because of its location, in exchange for certain services, Defendants were required to pay a living wage that was higher than those paid by other businesses.
THE LIVING WAGE STATUTE WAS AMENDED
In 2010, the ordinance requiring the living wage was amended. Instead of being tied to the Consumer Price Index, it was then tied to the increase in retirement benefits for the City Retirement System. The effect was that the wages were increased, as were the annual upward adjustments.
DEFENDANT SUSPECTED IT WAS UNDERPAYING ITS EMPLOYEES
Despite the amendment, Defendants continued to pay its employees the old living wage as described before the amendment took place. Defendants’ human resources personnel suspected that they were underpaying their employees, having seen a newspaper article stating that the living wage was higher than what Defendants were paying.
THE FAILURE TO PAY WAS WILLFULL
The plaintiffs pursued a class action, both for the underpayments and for penalties under Ca. Lab. Code §203. Section 203 applies penalties for failure to pay an employee in full when wages that are due if that employee is discharged or quits. Such a failure to pay must be “willful” under that statute.
The Diaz court determined that a defendant could be “willfull” even if it was unaware of the law delineating the wage and timeliness requirements. Citing the maxim that “[i]gnorance of the law is no excuse,” the court found that defendant’s suspicion that they were underpaying their employees, coupled with their failure to make reasonable efforts to clarify their understanding of the ordinance, constituted willfulness sufficient to impose penalties under §203.
Moreover, trial courts have no discretion to waive the penalties on equitable grounds. The statute has mandatory language, and making the penalty optional would defeat its purpose of promoting prompt payment of wages to California workers.
CONCLUSION
Employers have an affirmative obligation to keep themselves informed of California labor law. Negligent failure to do so can result in strong penalties, intended to encourage prompt payment of wages.
CELA INVOLVEMENT: CELA members Randy Renick, Cornelia Dai and Springsong Cooper of Hadsell, Stormer & Renick litigated this case and won the appeal.
Ca.Ct.App., filed May 24, 2018, 2nd District, Division Two; Opinion by Justice Hoffstadt, 23 Cal.App.5th 859
FIERRO v. LANDRY’S RESTAURANT INC.
PLAINTIFF FIERRO FILED A CLASS ACTION DAYS AFTER THE DISMISSAL OF AN ACTION ON BEHALF OF THE SAME CLASS
Plaintiff Jorge Fierro sued Defendant Landry’s Restaurant Inc. for wage and hour violations on behalf of himself and a class of similarly situated employees. A similar case was filed by a plaintiff named Martinez in 2007. The Martinez case dragged out for years. In 2014, the Court of Appeal reversed the denial of class certification. In 2016, the trial court dismissed all claims in Martinez and awarded costs to the named defendants. The plaintiffs appeal in Martinez is pending, and the record is unclear as to what happened to the class allegations. Within days of the Martinez dismissal, Fierro filed this action, identifying a class that went back thirteen years to 2003, the same as the Martinez Fierro argued that the Martinez action tolled the statute of limitations. The trial court sustained Landry’s demurrer to the class claims based on failure to bring the case to trial within five years pursuant to CCP sections 583.310 and 583.360.
THERE IS NO JUDGMENT ON THE MERITS FOR PURPOSES OF RES JUDICATA OR COLLATERAL ESTOPPEL WHERE AN APPEAL IS PENDING OR WHERE A MATTER WAS DISMISSED FOR LACK OF PROSECUTION
Because there was no evidence in the record that Martinez was dismissed under CCP section 583.360 for failure to prosecute, Fierro’s case could not be dismissed on that basis. Regardless, dismissal of a prior action for lack of prosecution is not judgment on the merits and does not bar a subsequent case. In addition, a judgment that is on appeal is not final for purposes of res judicata or collateral estoppel. Since the Martinez appeal is still pending, the judgment in that case cannot bar Fierro’s claims.
TOLLING SHOULD BE LIBERALLY APPLIED
Tolling applies to the dismissed class claims during the pendency of an appeal from an order sustaining a demurrer to the class claims without leave to amend. Tolling also applies upon the filing of an amended complaint presenting new class representatives where the court found the previous class representatives inadequate. Therefore, the Martinez matter tolled Fierro’s claims, except during the time period between the dismissal of Martinez and the filing of Fierro’s lawsuit five days later.
CELA INVOLVEMENT: Congratulations to CELA members Matthew Righetti and John Glugoski.
Ca. Ct. App., Fourth District, Division 1. Filed April 26, 2018, certified for publication May 14, 2018. Opinion by Justice Irion. 232 Cal.5th 325.
HERNANDEZ v. RANCHO SANTIAGO COMMUNITY COLLEGE DISTRICT
DEFENDANT APPROVED PLAINTIFF’S MEDICAL LEAVE, THEN TERMINATED HER DURING THE LEAVE
Plaintiff Marisa Hernandez had worked for Defendant Rancho Santiago Community College District on an off for several years and had performed well. The District hired her as an administrative assistant in 2013, with a one-year probationary period. During the probationary period, Ms. Hernandez’s doctor recommended surgery on a finger that she had previously broken. The finger had healed improperly and was causing Ms. Hernandez considerable pain, and her doctor recommended replacing her damaged knuckle with a cadaver’s knuckle. The District approved Ms. Hernandez’s request for 3-4 months of leave for surgery and recovery. During this approved medical leave, the District terminated Ms. Hernandez. When Ms. Hernandez called the District for an explanation, a Human Resources representative told her that she should have known better than to take a leave while she was on probation. After a bench trial, the trial court found that the District had failed to accommodate and failed to engage in the interactive process with Ms. Hernandez.
THE EDUCATION CODE’S ONE-YEAR PROBATIONARY PERIOD MAY EXCLUDE TIME SPENT ON LEAVE SUCH THAT THE EMPLOYEE WORKS A FULL TWELVE MONTHS
The District argued on appeal that it had to terminate Ms. Hernandez because she would have automatically become a permanent employee upon the one-year anniversary of her employment without a proper evaluation pursuant to the Education Code. The Court of Appeal disagreed, finding “a finite leave is not a reasonable accommodation when the leave leads directly to termination.” Education Code section 88013(a) did not require the District to either terminate Ms. Hernandez or make her a permanent employee upon her hiring anniversary. Though the Education Code states that probation may not exceed one year, the District could have deducted the period of leave from Ms. Hernandez’s probation and evaluated her after she had worked a full year. Further, there was no interactive process where “instead of sitting down with the employee and working out an effective accommodation, the district clammed and locked the door.”
CELA INVOLVEMENT: Congratulations to CELA member Robert S. Scuderi.
Ca. Ct. App., Fourth District, Division 3. Filed May 3, 2018. Opinion by Justice Moore. 22 Cal.App.5th 1187.
HUFF v. SECURITAS SECURITY SERVICES
In this case, the court decided that a PAGA plaintiff-employee who was affected by a single Labor Code violation could sue on behalf of employees affected by any and all Labor Code violations perpetrated by the same employer. This is true whether that PAGA plaintiff-employee was affected by those other violations or not.
HUFF ALLEGED VARIOUS LABOR CODE VIOLATIONS
Plaintiff Huff was a security guard for Defendant Securitas. Having worked there for a year or so, Huff alleged that Securitas violated various Labor Code provisions. They included provisions regarding timely payment of wages, both during employment and upon termination.
THE TRIAL COURT GRANTED HUFF A NEW TRIAL
At first, the trial court ruled that Huff was not a temporary employee, and therefore could not pursue a PAGA claim on the Labor Code violations protecting such employees. On motion for new trial, the court reversed itself. Looking at the statute’s language, the trial court determined that Huff, who alleged he was affected by at least one Labor Code violation, could pursue PAGA penalties for all Labor Code violations on behalf of all affected employees, whether he himself had been affected by the other violations or not.
PAGA DEPUTIZES PRIVATE CITIZENS TO ENFORCE THE LABOR CODE
The Court of Appeal noted that, when enacting PAGA, the Legislature found that the Labor Code was not being enforced effectively. Despite the repeatedly acknowledged importance of the Code to California workers, overburdened governmental agencies lacked the capacity for enforcement.
PAGA was the Legislature’s solution, “creat[ing] a type of qui tam action,” and “deputiz[ed] citizens as private attorneys general to enforce the Labor Code.”
THE CASE BEGAN AND ENDED WITH THE STATUTE’S LANGUAGE
In making its determination in this case, the court looked first to the statutory language. PAGA provides in section 2699, subdivision (a) that “any provision of this code that provides for a civil penalty to be assessed and collected by the Labor and Workforce Development Agency or any of its departments, divisions, commissions, boards, agencies, or employees, for a violation of this code, may, as an alternative, be recovered through a civil action brought by an aggrieved employee on behalf of himself or herself and other current or former employees pursuant to the procedures specified in Section 2699.3.” The statute then specifically defines “aggrieved employee” in section 2699, subdivision (c): “ ‘aggrieved employee’ means any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.” Finding this language unambiguous, the court held that an “aggrieved employee” – one subjected a violation of the Labor Code – may pursue PAGA penalties for “one or more of the alleged violations,” even those not suffered by the aggrieved employee.
Deciding the language to be unambiguous, the court declared that examination of the legislative history was unnecessary, but nonetheless did not alter its conclusion.
CONCLUSION
This is an important case, allowing pursuit of all Labor Code violations by an employee suffering a single such violation. The court’s decision will enhance enforcement of the Labor Code, exactly as the Legislature envisioned when it enacted PAGA.
CELA INVOLVEMENT: Congratulations to Douglas Benedon for his successful writ work.
Ca. Ct. App., 6th Dist., Division 7. Filed 5/23/18. Opinion by Justice Grover. 23 Cal.App.5th 745.
MALDONADO v. EPSILON PLASTICS, INC.
THE LABOR CODE AND WAGE ORDERS HAVE STRICT REQUIREMENTS FOR ADOPTION OF ALTERNATIVE WORKWEEK SCHEDULES
Plaintiffs prevailed in a wage and hour class action bench trial against Defendant Epsilon Plastics and were awarded damages, penalties, and attorney fees. Epsilon scheduled its employees for twelve-hour shifts but paid overtime for only two hours per shift pursuant to an Alternative Workweek Schedule (AWS). An employer may use an AWS only if the AWS is approved by secret ballot by at least two-thirds of the affected employees under Labor Code section 511. More specific requirements are set forth in the wage orders, and wage order 1-2001 for the manufacturing industry applies here. The wage order permits an AWS with up to ten hours per day of work at the regular rate of pay with up to two additional hours at overtime rates. The wage order also sets forth detailed requirements for the adoption of the AWS.
AN EMPLOYER DOES NOT MEET ITS BURDEN WHERE IT CANNOT SHOW WHEN AND HOW AN ALTERNATIVE WORKWEEK SCHEDULE WAS IMPLEMENTED
Exemption from overtime laws is an affirmative defense, and therefore the employer bears the burden of proving exemption. An absence of evidence regarding when and how the AWS was initially adopted means Epsilon did not meet its burden and Plaintiffs are owed additional overtime wages. Plaintiffs have the burden of proving damages, including the number of hours worked without proper compensation. Labor Code section 203 waiting time penalties are awarded unless the failure to pay was made in good faith. Existence of an unclear legal duty or a bona fide legal dispute do not necessarily indicate good faith. There was no objectively reasonable basis for Epsilon’s defense where it could not show when or how the AWS was adopted.
INACCURATE WAGE STATEMENTS ALONE DO NOT JUSTIFY LABOR CODE 226 PENALTIES
Inaccurate wage statements alone do not justify penalties under Labor Code 226, as there must be an actual injury caused by the inaccuracy. The absence of the accurate wages earned on a wage statement generally causes no injury where the hours worked and pay rates are correct on the wage statement. The purpose of the wage statement is to adequately inform the employee of the compensation received. Any error in the total wages earned is remedied by other wage and hour laws. The wage statements accurately reflected the hours worked and rates Epsilon paid, so the wage statements themselves caused no damage since they accurately reflected the hours worked and compensation paid.
POST-TRIAL FILING DEADLINES DO NOT RUN FROM A COURT MAILING UNLESS IT IS A “NOTICE OF ENTRY”
Plaintiffs’ attorney fee motion was not untimely. Though the court clerk served an order indicating the judgment was signed along with the judgment itself and a certificate of mailing, the clerk did not serve a document titled “Notice of Entry.” The deadline to file the fee motion therefore did not run from the date of the clerk’s mailing.
Ca. Ct. App., Second District, Division 8. Filed April 18, 2018, publication ordered May 8, 2018. Opinion by Justice Rubin. 22 Cal.App.5th
RISKE v. SUPERIOR COURT OF LOS ANGELES COUNTY
THE LABOR CODE AND WAGE ORDERS HAVE STRICT REQUIREMENTS FOR ADOPTION OF ALTERNATIVE WORKWEEK SCHEDULES
Plaintiffs prevailed in a wage and hour class action bench trial against Defendant Epsilon Plastics and were awarded damages, penalties, and attorney fees. Epsilon scheduled its employees for twelve-hour shifts but paid overtime for only two hours per shift pursuant to an Alternative Workweek Schedule (AWS). An employer may use an AWS only if the AWS is approved by secret ballot by at least two-thirds of the affected employees under Labor Code section 511. More specific requirements are set forth in the wage orders, and wage order 1-2001 for the manufacturing industry applies here. The wage order permits an AWS with up to ten hours per day of work at the regular rate of pay with up to two additional hours at overtime rates. The wage order also sets forth detailed requirements for the adoption of the AWS.
AN EMPLOYER DOES NOT MEET ITS BURDEN WHERE IT CANNOT SHOW WHEN AND HOW AN ALTERNATIVE WORKWEEK SCHEDULE WAS IMPLEMENTED
Exemption from overtime laws is an affirmative defense, and therefore the employer bears the burden of proving exemption. An absence of evidence regarding when and how the AWS was initially adopted means Epsilon did not meet its burden and Plaintiffs are owed additional overtime wages. Plaintiffs have the burden of proving damages, including the number of hours worked without proper compensation. Labor Code section 203 waiting time penalties are awarded unless the failure to pay was made in good faith. Existence of an unclear legal duty or a bona fide legal dispute do not necessarily indicate good faith. There was no objectively reasonable basis for Epsilon’s defense where it could not show when or how the AWS was adopted.
INACCURATE WAGE STATEMENTS ALONE DO NOT JUSTIFY LABOR CODE 226 PENALTIES
Inaccurate wage statements alone do not justify penalties under Labor Code 226, as there must be an actual injury caused by the inaccuracy. The absence of the accurate wages earned on a wage statement generally causes no injury where the hours worked and pay rates are correct on the wage statement. The purpose of the wage statement is to adequately inform the employee of the compensation received. Any error in the total wages earned is remedied by other wage and hour laws. The wage statements accurately reflected the hours worked and rates Epsilon paid, so the wage statements themselves caused no damage since they accurately reflected the hours worked and compensation paid.
POST-TRIAL FILING DEADLINES DO NOT RUN FROM A COURT MAILING UNLESS IT IS A “NOTICE OF ENTRY”
Plaintiffs’ attorney fee motion was not untimely. Though the court clerk served an order indicating the judgment was signed along with the judgment itself and a certificate of mailing, the clerk did not serve a document titled “Notice of Entry.” The deadline to file the fee motion therefore did not run from the date of the clerk’s mailing.
Ca. Ct. App., Second District, Division 8. Filed April 18, 2018, publication ordered May 8, 2018. Opinion by Justice Rubin. 22 Cal.App.5th
TASWELL v. THE REGENTS OF THE UNIVERSITY OF CALIFORNIA
PLAINTIFF TASWELL REPORTED SAFETY VIOLATIONS AND LOST HIS JOB IN THE FALLOUT
Plaintiff Carl Taswell was a licensed doctor certified in nuclear medicine. University of California, Irvine offered Dr. Taswell a contractual job in its brain imaging center. Shortly after Dr. Taswell began work, another doctor warned him of safety and compliance problems in the brain imaging center. Dr. Taswell reported these issues to the UC whistleblower hotline and subsequently met with university officials and spoke at a radiation safety committee meeting. Dr. Taswell then reported the safety violations to the California Department of Public Health and the federal FDA and Department of Health and Human Services. Dr. Taswell and others with radiation-safety responsibilities entered a lab near the brain imaging center and took pictures of safety violations. UCI placed Dr. Taswell on leave for entering the lab without authorization, and UCI stated that his contract would not be renewed.
TASWELL EXHAUSTED ADMINISTRATIVE REMEDIES BUT DID NOT FILE A WRIT OF MANDAMUS
Taswell filed an internal complaint for whistleblower retaliation and initiated a grievance procedure. Step III of the grievance process is a formal grievance appeal hearing where the employee is represented by counsel and may present his case by oral and documentary evidence. Rebuttal evidence and cross examination are permitted, the hearing is transcribed or recording, and the hearing officer later provides a written statement of findings and recommendations. The hearing officer concluded that UCI did not retaliate against Dr. Taswell. UCI approved the hearing officer’s decision, and Dr. Taswell did not seek a writ of mandamus. Dr. Taswell sued, and the trial court granted summary judgment based on res judicata/collateral estoppel and failure to exhaust judicial remedies.
AN EMPLOYEE NEED NOT FILE A WRIT OF MANDAMUS TO FILE A LAWSUIT UNDER THE WHISTLEBLOWER PROTECTION ACT
The California Legislature did not intend for an administrative finding on retaliation to be given a preclusive effect in a later judicial proceeding. The purpose of the Whistleblower Protection Act is to encourage disclosure of improper governmental activities. The 2010 amendment to Government Code section 8547.10 to allow an employee to file a lawsuit if the university does not satisfactorily address the employee’s complaint within eighteen months. This phrase means when “the complaint was not addressed to the complainant employee’s satisfaction” and does not refer to any other standard of satisfaction. The judicial remedy is entirely separate from the administrative procedure. Therefore, Dr. Taswell was not required to file a writ of mandamus, and neither res judicata nor collateral estoppel apply. The contrary Miklosy decision does not apply because Miklosy was decided before the statute was amended in 2010.
AN EMPLOYEE NEED NOT FILE A WRIT OF MANDAMUS TO FILE A LAWSUIT UNDER HEALTH AND SAFETY CODE SECTION 1278.5, LABOR CODE SECTION 1102.5, OR GOVERNMENT CODE SECTION 12653
Taswell’s claim for retaliation in violation of Health and Safety Code section 1278.5 is also not barred by failure to exhaust or res judicata. The Legislature specifically authorized civil action for damages in the Health and Safety Code. To require administrative exhaustion would therefore be contrary to the legislative intent. Similarly, Dr. Taswell’s retaliation claims under Labor Code section 1102.5 and Government Code section 12653 are not barred. Labor Code section 1105 creates a private right of action for damages for violation of section 1102.5, and section 1102.5 explicitly applies to the University of California. Government Code section 12653 likewise authorizes civil action. Though an employee must still exhaust administrative remedies before filing a lawsuit alleging violation of section 1102.5 and section 12653, the employee need not seek a writ of mandamus before filing a civil suit.
Note: Government Code section 8547.10(c) allows for punitive damages and attorney fees.
CELA INVOLVEMENT: Congratulations to Lawrence Bohm, Brandon Ortiz, and CELA members Zane Hilton and Bradley Mancuso.
Ca. Ct. App., Fourth District, Division 3. Filed May 14, 2018. Opinion by Justice Fybel. 23 Cal.App.5th 343.
Ninth Circuit
PALM v. LOS ANGELES DEPARTMENT OF WATER AND POWER
PLAINTIFF PALM WAS FORCED TO RESIGN AFTER REPORTING ILLEGAL ACTIVITY
Plaintiff Richard Palm was in the midst of a six-month probationary period at Defendant Los Angeles Department of Water and Power when he began reporting various legal violations to his supervisor. The DWP gave Palm the option of forced resignation or termination, and he choice forced resignation. Palm sought to bring a Fourteenth Amendment claim, but the District Court denied leave to amend because Palm lacked a property interest in his probationary position. The Los Angeles Charter, the Los Angeles Civil Service Rules, and the applicable case law, taken together, indicated that City of Los Angeles employees have no property interest in probationary positions. Without a property interest, a plaintiff cannot bring a Fourteenth Amendment claim.
Ninth Circuit. Filed May 10, 2018. Opinion by Judge Callahan. 889 F.3d 1081.
RIZO v. YOVINO, FRESNO COUNTY SUPERINTENDENT OF SCHOOLS
FRESNO COUNTY PAID PLAINTIFF RIZO LESS THAN HER MALE COUNTERPARTS BECAUSE OF HER SALARY HISTORY
Plaintiff Aileen Rizo was hired as a math consultant by Defendant Fresno County and assigned a salary based on the County’s stepped salary level system. Rizo later learned that her male colleagues were hired at higher salary steps. Rizo sued for Equal Pay Act, Title VII, and FEHA violations. The County moved for summary judgment, arguing that the pay disparity was based on Rizo’s salary history. The County admitted that it paid Rizo less than comparable male employees for doing the same work. It argued that this pay disparity was lawful because it was based on salary history rather than sex. A “differential based on any factor other than sex” is permissible under the Equal Pay Act.
PRIOR SALARY IS NOT A PERMISSIBLE “FACTOR OTHER THAN SEX” UNDER THE EQUAL PAY ACT
The Equal Pay Act should be construed broadly and applied to fulfill the purpose of the Act, which is to end historical wage discrimination against women. The catchall “factor other than sex” is limited to job-related factors and does not include salary history. Salary history is not a legitimate measure of work experience, ability, or job performance. Employers may not rely on prior salary to set initial wages. Because use of prior salary perpetuates gender-based pay disparity, employers may not use prior salary in combination with other permissible factors to set initial wages.
The Ninth Circuit expressly overruled its contrary 1982 Opinion in Kouba v. Allstate Insurance Co. (9th Cir. 1982) 691 F.2d 873.
Ninth Circuit (en banc). Filed April 9, 2018. Opinion by Judge Reinhardt. 887 F.3d 453.
SALI v. CORONA REGIONAL MEDICAL CENTER
THE TRIAL COURT DENIED PLAINTIFFS’ MOTION FOR CERTIFICATION OF SEVEN CLASSES OF REGISTERED NURSES
Plaintiffs Marlyn Sali and Deborah Spriggs sought certification of seven classes of Registered Nurses unlawfully underpaid by Defendants Corona Regional Medical Center and UHS of Delaware, Inc. Plaintiffs filed suit on behalf of all RNs employed by Defendants in California and asserted minimum wage, overtime, and meal and rest break violations. The district court denied certification for three reasons: (1) the plaintiffs failed to submit admissible evidence of their injuries and therefore failed the satisfy the FRCP 23(a) typicality requirement, (2) Plaintiff Spriggs and her counsel failed to demonstrate they would adequately represent the proposed classes because Spriggs was not a member of some of the classes, and (3) several proposed classes failed to satisfy the FRCP Rule 23(b)(3) predominance requirement.
CLASS CERTIFICATION IS NOT AN “EVIDENTIARY SHOOTING MATCH,” AND THE PLAINTIFFS’ EVIDENCE NEED NOT BE ADMISSIBLE
In seeking class certification, a plaintiff must demonstrate four requirements pursuant to FRCP 23(a): numerosity, commonality, typicality, and adequacy of representation. A plaintiff must also show that common questions of law or fact predominate over questions affecting only individuals, pursuant to FRCP 23(b). The district court found a lack of typicality because the plaintiffs had not submitted evidence of their injuries. However, the court struck the key declaration that described the plaintiffs’ injuries. This was error. At the class certification stage, a court may not decline to consider evidence on the basis that the evidence may not be admissible at trial later. Class certification should not be a mini-trial, particularly because plaintiff may be able to obtain necessary evidence only after class certification is granted and class discovery is permitted. The district court abused its discretion by requiring admissible evidence for class certification. The court also erred in failing to consider plaintiffs’ own declarations submitted with their reply papers.
THE DISTRICT COURT MADE MULTIPLE ERRORS OF LAW IN DENYING CLASS CERTIFICATION
Because Plaintiff Spriggs was not a full-time employee, she is not an adequate class representative for the classes of full-time employees. Because Plaintiff Sali is an adequate class representative, inadequacy is not a proper basis for denial of class certification. The court further erred in finding class counsel inadequate using unclear legal standards and despite counsel’s extensive work on the case and experience with class actions. Finally, the court erred in finding that two of the classes failed the Rule 23(b)(3) predominance requirement. The court made an error of law in finding that activities such as chatting with co-workers or getting coffee are non-compensable time. Since compensable time is “the time during which an employee is subject to the control of an employer,” the court based its analysis on legal error. The court made another error of law in finding that the damages for inaccurate wage statements were too individualized. Because Corona listed the wrong name on its wage statements, and Labor Code 226 violations are a per se injury, there is no issue of individualized damages for this claim. Even if the damages did vary, this would not be sufficient reason to deny class certification.
CELA INVOLVEMENT: Congratulations to CELA member Jerusalem Beligan.
Ninth Circuit. Filed May 2, 2018. Opinion by Judge Mendoza. 889 F.3d 623
SNAPP v. UNITED TRANSPORTATION UNION
PLAINTIFF WAS TOTALLY DISABLED AND UNABLE TO SAFELY PERFORM HIS JOB
Plaintiff Danny Snapp worked for Defendant Burlington Northern Santa Fe Railway Company (“BNSF”) for almost thirty years and was a member of Defendant United Transportation Union for some of that time. Snapp suffered from sleep apnea, which caused fatigue and low energy. In 1999, Snapp’s doctor reported to BNSF that Snapp could not work in a safe manner. BSNF gave Snapp a fitness for duty exam and determined that he was totally disabled. Snapp went on disability leave. In 2005, Snapp had a dispute with the disability benefits carrier, and his benefits ended. In 2008, BNSF informed Snapp that, since his disability benefits had ended, he had 60 days to secure a position with BNSF or he would be fired. Snapp attempted to enlist BNSF’s help in reinstating his disability benefits but did not attempt to find a job at BNSF, except one request to usurp another employee’s job and then immediately take a medical leave. Snapp did not qualify for the position, his 60 days expired, and BNSF terminated him. Snapp sued, and a jury found for BNSF.
UNDER THE ADA, IT IS THE EMPLOYER’S BURDEN TO SHOW THE UNAVAILABILITY OF A REASONABLE ACCOMMODATION AT MSJ, AND THE EMPLOYEE’S BURDEN TO SHOW THE AVAILABILITY OF A REASONABLE ACCOMMODATION AT TRIAL
Under the Americans with Disabilities Act (in contrast to the FEHA), an employer that fails to engage in the interactive process faces liability only if a reasonable accommodation would have been possible. However, if an employer does not engage in the interactive process, the burden at summary judgment shifts to the employer to prove the unavailability of a reasonable accommodation. This shifted burden does not carry over to trial, where the plaintiff must demonstrate that some accommodation was possible.
A CORPORATE DESIGNEE’S EVIDENTIARY ADMISSION IS NOT NECESSARILY BINDING, AND THE JURY MAY CONSIDER OTHER EVIDENCE
During discovery, BNSF’s Rule 30(b)(6) corporate representative gave testimony indicating that Snapp had requested a reasonable accommodation and that BNSF had failed to engage in the interactive process. Snapp argued that BNSF was bound by this testimony such that the jury should not have been allowed to consider evidence to the contrary. The Ninth Circuit disagreed, holding that the jury was entitled to consider and weigh all evidence regarding reasonable accommodation and the interactive process, including numerous written communications, and to draw its own conclusion.
Ninth Circuit. Filed May 11, 2018. Opinion by Judge Melloy. 889 F.3d 1088.