Developments inCalifornia Law

Thomas T. Liu, Esq.Lawrence J. Rosenfeld, Esq.October 30, 2012

2

Supreme Court – Employers Must ProvideMeal and Rest Breaks

• We waited years and finally got a decision

• Now I’m going to make you wait a little longer asStacie will discuss the case and its aftermath ingreater detail in a special session devoted justto Brinker

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Unpaid Wages Recoverable UnderPrivate Attorney General Act (PAGA)

• Thurman v. Bayshore Transit Management, Inc.

(Cal. App. Ct.)

• Court for the first time says PAGA applies to Sec.

558 unpaid wages

• Section 558 of Cal. Labor Code provides for civil

penalty as well as recovery for unpaid wages

• Because PAGA does not require plaintiff to certify

a class, expect to see more PAGA claims for

unpaid wages

4

Supreme Court Opens Door toExpanding Administrative Exception

• Harris v. Superior Court (Liberty Mutual Ins. Co.)

• Distinguished case from earlier ruling in Bell.

• Bell held employees exempt only if they setcompany policy. Administrative employees whocarried out policies were not exempt.

• Harris limited Bell to the facts in that case.

• Inquiry must be broader – court providedexamples of exempt employee who only carriedout company operations.

5

No Overtime Wages Due toPharmaceutical Sales Reps (PSRs)

• Christopher v. Smithkline Beecham Corp (U.S.Supreme Ct.)

• Under the Fair Labor Standards Act, “outsidesales representatives” are exempt from minimumwage and overtime requirements.

• PSR’s did not sell prescription drugs, merelytried to convince doctors to prescribe their drugs.

• Usually worked 40 hours a week visiting doctors,and another 10-20 attending events andperforming other work.

• They did not receive overtime payment

6

PSR’s Exempt employees under FairLabor Standards Act (FLSA)

• Supreme Court not persuaded by LaborDepartment narrowing definition of “outsidesales rep” for case – would impose unpaidovertime wages on PSRs, who for years weretreated as exempt by employees and LaborDepartment alike

• Court finds “capacity” of a salesmen lends itselfto a broad definition of the terms.

• Work of PSRs, much like salesman, does notlend itself to 40 hour week

7

When in California …

• Sullivan v. Oracle Corp. (9th Cir.)

• California Labor Code applies to Out-ofState workers performing services inCalifornia for a California-basedemployer

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Franchisor and Employee not in EmploymentRelationship

• Kimberly Aleksick v. 7-Eleven, Inc. (Cal. App.Ct.)

• Employee suing because decimalization cost herrepeating numbers.

• Claims under Labor Code require employmentrelationship

• Employee cannot sue 7-Elevenunder LaborCode, because employment relationship waswith the franchisee, not 7-Eleven

• Did not matter that Aleksick was suing becauseof a wage system 7-Eleven forced on itsfranchisees

9

Attorneys’ Fees Unavailable in Mealand Rest Break Claim

• Kirby v. Immoos Fire Protection, Inc. (AppealCourt)

• Section 1194 of Labor Code (providing forattorneys’ fees) only applies to overtime andunpaid wages, not meal or rest break claim

• Because providing one hour of pay is just thepenalty for failure to provide meal and rest breaks,court finds it is not “nonpayment of wages” under218.5 of Labor Code.

• Attorneys’ fees not available to either side

10

Record-Setting Award of $168 Million inHarassment, Retaliation Suit

• Employee – cardiac surgeon’s assistant --filed 18 harassment complaints, and was firedafter final complaint

• Jury finds she was subjected to a hostile workenvironment, retaliation, intentionalinterference, and meal period violations

• Alleges she was slapped on backside,grabbed, propositioned, etc. in front ofsupervisor who she says laughed

• Verdict includes $125 million in punitivedamages

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Age Discrimination Suits – CourtCompare to Employees Over40

• Earl v. Nielsen Media Research, Inc. (9th

Cir.)

• 59-year old 12-year veteran employeedismissed after repeated mistakes

• Court finds Earl can compare hertreatment to employee significantlyyounger then her (42 years’ old), even ifcomparison employee is over 40.

12

$2 Million Verdict Reversed

• Joaquin v. City of Los Angeles, (Cal.App. Ct.)

• Cop fired in retaliation for false sexualcomplaint

• Superior Court ordered hisreinstatement

• Appellate Court reversed, affirmingemployers can discipline and fire formaking false charges

13

Accommodations for Unqualified Employees?

• Johnson v. Board of Trustees of BoundaryCounty School Dist. (9th Cir.)

• Johnson fired because depressionprevented her from maintaining hercredentials.

• Ninth Circuit finds she had enough time toget them, not a qualified employee underADA

14

“Partner” Protected by Fair Employmentand Housing Act (FEHA)

• Fitzimons v. California Emergency PhysiciansMedical Group (Cal. App. Ct.)

• Wrong to read “person” entirely out of statute,even though no personal liability

• Partners may be protected from retaliation whenreporting harassment, discrimination, etc., ofemployees, but they are not protected fromdiscrimination

15

How many accommodations?

• Regional sales manager diagnosed withcancer twice given time off for surgeries but noresponse to request that his travel obligationsbe eased during treatment

• Fired during recession due to lack of traveland contact with customers despite fact hisregion led all others in sales growth

• FEHC found employer failed to engage ininteractive process and had given otheremployees with cancer six month leaves notoffered to manager

• FEHC awarded $846,300 including $50,000for pain and suffering

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Random Sampling Dooms Class Action

• Duran v. U.S. Bank Nat’l Ass’n (Cal. App. Ct.)

• Misclassification suit

• Trial judge suggests “random” sampling in ClassAction, draws 20 names from hat to represent260 class members

• 4 selections opt out, judge will not allowdefendant to introduce evidence aboutunselected class members

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More Random Sampling

• Court find defendant’s Due Process Rights Violated

Barring evidence that would have demonstrated certain

class members properly classified

No “trial by formula”

• Court also disproves of random sampling

No evidence to show 20 plaintiffs constituted “random”

sample of 260

All randomness lost when 4 representatives dropped

from suit

Without statistical reassurances, trial court plan fatally

flawed

18

California Law May Govern,Even Over Choice of Law Provision

• Ruiz v. Affinity Logistics (9th Cir.)

• California law may govern if other state’s lawwould be contrary to important policy ofCalifornia, or if California has a greater interestin the dispute

• Because GA law assumes independentcontractor, and CA law assumes employmentrelationship, California law applies

• Only connection to Georgia was state ofincorporation

19

Violating Employer’s Computer AuthorizationPolicy Not a Federal Crime

• United States v. Nosal (9th Cir.)

• Conviction of former employee who stolecomputer data from company under ComputerFraud Abuse Act overturned

• Court recognizes broad implications if convictionupheld – federal crime for exceedingauthorization on computer

• Computer policies still encouraged, but no crime

20

NLRB Posters on Hold – For Now

• NLRB issued requirement that post noticesdescribing their employees’ rights under theNational Labor Relations Act

• South Carolina court declared NLRB does nothave the power to do so

• NLRB puts requirement on hold until furthernotice

21

California’s New Legislation

• SB 459: Willful Misclassification ofEmployees as Independent Contractors

• Common Issue

• High enforcement priority

22

More California Laws

• Employee Use of Social Media (AB 1844)

Prohibits requiring employees and applicants to

supply usernames and passwords or accessing in

presence of management

Permits requesting access as part of investigation

into misconduct if the request is reasonable

Does not apply to employer-issued electronic

devices

• Religious Dress and Grooming (AB 1964)

Religious dress and grooming standards subject to

FEHA protection

Segregating away from public generally not

reasonable accomodation

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Still One More Law

• Written Commission Agreements (AB 1396)Commissions must be in written contract

Remains valid even after expiration until replaced

24

FEDERAL DEVELOPMENTS FORCALIFORNIA EMPLOYERS TO WATCH

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Attendance is Mandatory

• Samper v. Providence St. Vincent Med. Ctr. (9th

Cir.)

• Neo-natal intensive care unit nurse requestedextra absences to accommodate her disability

• Provides no request for set number of days

• ADA Requires:

(1) Employee is disabled within the meaning of theADA;

(2) Employee is a qualified individual able toperform the essential functions of the job with orwithout reasonable accommodation; and

(3) Employee suffered an adverse employmentaction because of her disability.

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NICU Nurse – No reasonableaccommodation

• Nurses express concern – the job requiresconsistent attendance

• Court finds the only accommodation that wouldsatisfy nurse is open-ended absence policy;hospital not required to provide

• Employee essentially asking to be exemptedfrom the qualification element under ADA – notallowed

27

Third-Party Retaliation Actionable Under FMLA

Lopez v. Four Dee, Inc. (E.D.N.Y. 2012)

• Two sisters, Olga Lopez and Elizabeth Chavez,both employed by same jewelry distributor.

• Lopez took FMLA leave for birth of a child.

• Company fired both sisters after Lopez tookleave.

• Chavez alleged that her termination was inretaliation for Lopez’ exercise of FMLA rights.

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Third-Party Retaliation Actionable Under FMLA

“It shall be unlawful for any employer to discharge or in

any other manner discriminate against any individual for

opposing any practice made unlawful by this

subchapter.”

See 29 U.S.C. § 2615(a)(2).

“It might be concluded that the defendants intended to

punish Lopez by firing her sister… Both the text of the

FMLA’s enforcement provision and the logic of

Thompson [v. N. Am. Stainless,131 S.Ct. 863 (2011)]

strongly suggest that Chavez is entitled to bring an

action alleging third-party retaliation on her own behalf.”

• Employer’s summary judgment motion denied.

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Title VII Does Not Protect Managers Involved inInternal Investigation From Retaliation

Brush v. Sears Holdings Corp. (11th Cir. 2012)

• Plaintiff, a loss prevention manager, received asexual harassment complaint from an assistant storemanager, Mrs. Doe.

• Plaintiff is told to investigate on company’s behalf.

• After some prodding, Mrs. Doe reveals to Plaintiffthat she was raped repeatedly by store manager.

• Company fired manager, does not report rapes ofMrs. Doe to police over Plaintiff’s repeatedobjections.

• Plaintiff is fired for allegedly violating Sears’ policyrelating to investigating sexual harassment claims(e.g., met with Mrs. Doe alone, did not use openquestions).

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Title VII Does Not Protect Managers Involved inInternal Investigation From Retaliation

• Plaintiff alleged she was terminated in retaliationfor her opposition to the nature and performanceof the sexual harassment investigation. EEOCissued cause finding.

• Court granted summary judgment to employerbecause Plaintiff did not engage in protectedactivity.

• Eleventh Circuit affirmed.

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Title VII Does Not Protect Managers Involved inInternal Investigation From Retaliation

“Internal investigations alone do not constitute

discriminatory practices … Nor do federal

courts mandate the procedures that are

required under such circumstances … Brush’s

disagreement with the way in which Sears

conducted its internal investigation into Mrs.

Doe’s allegations does not constitute protected

activity … Since there is no evidence of

Brush’s opposition to any unlawful practice

here, it follows that Brush can support no claim

under Title VII.”

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Title VII Does Not Protect Managers Involvedin Internal Investigation From Retaliation

• Eleventh Circuit adopted the “manager rule,”which prohibits certain individuals fromrecovering under Title VII:

“In essence, the manager rule holds that amanagement employee that, in the course of hernormal job performance, disagrees with or opposesthe actions of an employer does not engage inprotected activity. Instead, to qualify as protectedactivity an employee must cross the line from beingan employee performing her job to an employeelodging a personal complaint.”

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