CA Supreme Court: LA County Union Entitled to Home Addresses and Phone Numbers of Non-Union Employees

The California Supreme Court in a unanimous opinion addressed employees' privacy rights in the public sector union context. The decision has implications for non-union, private sector employers as well, so read on.

The Service Employees International Union, Local 721, represents Los Angeles County's employees.  However, employees within the union's collective bargaining unit may choose not to join the SEIU as a member. Here's how it works per the CA Supreme Court.

Each of the County‟s bargaining units has a memorandum of understanding (MOU), with SEIU. Most of these MOUs have an agency shop provision that gives County employees four options: (1) join SEIU and pay dues; (2) decline to join and pay a fair share fee; (3) decline to join, object to the fair share fee, and instead pay an agency shop fee; or (4) decline to join, claim a religious exemption, and pay the agency shop fee to a nonreligious, nonlabor charitable fund. A recognized bargaining agent acts on behalf of
all employees in a bargaining unit, whether the employees are union members or not.

Every year, the union sends out a packet of information.  Those who do not respond are deemed "fair share" fee payers.  The vast majority of non-members are "fair share" fee payers.  The "fair share" fee covers activities related to collective bargaining, but does not include contributions for the union's non-bargaining related activities, such as political activity.

The County historically did not disclose non-members' addresses and phone numbers. Instead, the union would send the packets to a third party, the LA County Employee Relations Commission, for distribution to the non-members.

In 2006, the union sought to amend the collective bargaining agreements to require the County to turn over the addresses and phone numbers of non-members. After the County refused, the union filed an administrative charge with the County ERC. The ERC held the County's refusal was an unfair labor practice.  The County filed a writ proceeding in Superior Court, which held that the non-members' privacy interests would have to yield to the union's need to discharge its duties as bargaining representatives of the non-members.

The Court of Appeal also held the union was entitled to the information, but for different reasons than the superior court.  The appellate court decided that the non-members had a right to notice and the opportunity to opt-out of disclosure, similar to the rights courts have fashioned in the context of class action litigation.

The California Supreme Court accepted the County's request for review.  First, the Court noted that the National Labor Relations Act does not apply to the County's union relationship.  The County's relationship is governed by state law, the MMBA.  LA County's ERCOM (rather than the NLRB in the private sector or the PERB that covers state workers and counties other than LA) enforces the MMBA.  I know, lots of acronyms.  Bottom line, though, is that PERB interpretations of the MMBA and the NLRB's decisions under the NLRA are persuasive authority.

The Court analyzed the PERB and NLRA decisions as well as the statute and other authorities. The Court concluded that the union is entitled to the names and addresses of the employees it represents, even when the employees do not sign up as "members" of the union and pay only the agency fee.

The Court then considered whether California's right to privacy outweighed the union's right to the information. The Court first decided that applicants and employees had a reasonable expectation that employers would keep personal contact information private.  The Court noted:

A job applicant who provides personal information to a prospective employer can reasonably expect that the employer will not divulge the information outside the entity except in very limited circumstances. For example, various laws require employers to disclose information to governmental agencies, such as the Internal Revenue Service and Social Security Administration, and disclosure may also be necessary for banks or insurance companies to provide employee benefits. (See Belaire-West Landscape, Inc. v. Superior Court (2007) 149 Cal.App.4th 554, 561 (Belaire-West).) But beyond these required disclosures, it is reasonable for employees to expect that their home contact information will remain private "in light of employers‟ usual confidentiality customs and practices."

This conclusion is important to private sector, non-union employers, because it means that employees should be notified and should consent to disclosure to third parties, such as customers or vendors.  These notices and consents usually occur when employees sign up for benefits and the like.  Employee handbooks can contain a policy notifying employees that sometimes names and addresses will be disclosed to customers, vendors, etc. if that is a concern.

The Court next decided that disclosure of names and addresses amounted to a serious intrusion, another essential element of an invasion of privacy claim.

So, the County having established a reasonable expectation of privacy and a serious intrusion, the union had to show its legitimate interest in the information outweighed the employees' privacy interest.  The Court agreed that the union's interest was sufficiently important to justify the intrusion. 

The Court noted that employees and the County could put into place procedural safeguards themselves that would limit or preclude disclosure of non-members' information such as via collective bargaining: 
 

Employers like the County remain free to bargain for a notice and opt-out procedure in negotiating collective bargaining agreements with employee unions. Public employers can also draft employment contracts that will notify employees their home contact information is subject to disclosure to the union and permit employees to request nondisclosure. Finally, nothing in the relevant statutes or case law appears to prohibit agencies such as PERB or ERCOM from developing notice and opt-out procedures that would allow employees to preserve the confidentiality of their home addresses and telephone numbers

The decision is LA County v. Los Angeles County Employee Relations Commission and the opinion is here.

DGV






 

California Supremes Expanding Employment Law Docket

The California Supreme Court is taking up several cases for review that will have significant effects on California employment law.  Once the Supreme Court grants review, the lower court opinion is not precedent and cannot be cited in briefs or relied upon unless the Court says otherwise.

Here are two recent "grants," courtesy of the California bar's employment law section email blast (and thank you, Phyllis Cheng as always):

In this case, the court of appeal expanded appellate review of arbitration decisions beyond what was previously the law.  One of the reasons parties turn to arbitration is finality - no appeals unless there are very specific circumstances.  This case carved a huge loophole.  This case also rejected the employer's argument that it had an "honest belief" that an employee was faking the need for medical leave, justifying discharge.

Richey v. Autonation, Inc. (2012) 149 Cal.Rptr.3d 280 (SC S207536/B234711review granted 2/13/13) CFRA/honest belief defense Petition for review after the Court of Appeal reversed the judgment in a civil action. This case presents the following issues: (1) Is an employer’s honest belief that an employee was violating company policy or abusing medical leave a complete defense to the employee’s claim that the employer violated the Moore-Brown-Roberti Family Rights Act (Gov. Code, §§ 12945.1, 12945.2)? (2) Was the decision below to vacate the arbitration award in the employer’s favor consistent with the limited judicial review of arbitration awards? Review granted/brief due.

This one is a "grant and hold" that likely will depend on the outcome of the pending Iskanian decision, which addresses overlapping issues.  The Court is going to decide whether class action waivers are lawful in California after the U.S. Supreme Court's decision in ATT Mobility v. Concepcion.

Franco v. Arakelian Enterprises, Inc. (2012) 149 Cal.Rptr.3d 530 (SC S207760/B232583 review granted 2/13/13) Class Action Waiver Petition for review after the Court of Appeal affirmed an order denying a petition to compel arbitration in a civil action. The court ordered briefing deferred pending decision in Iskanian v. CLS Transportation Los Angeles, LLC, S204032 (#12-97), which includes the following issue: Did AT&T Mobility LLC v. Concepcion (2011) 563 U.S. __ [131 S.Ct. 1740, 179 L.Ed.2d 742] impliedly overrule Gentry v. Superior Court (2007) 42 Cal.4th 443 with respect to contractual class action waivers in the context of non-waivable labor law rights?  Review granted/briefing deferred. The High Court of course has a number of other significant employment law cases pending. f you want to review all of the cases the California Supreme Court has on its docket (employment law and otherwise), the Court keeps a list here.

California Supremes Rule on "Mixed Motive"

Here is a long awaited and unanimous (6-0 with Baxter recused) ruling from the California Supreme Court:

We hold that under the FEHA, when a jury finds that unlawful discrimination was a substantial factor motivating a termination of employment, and when the employer proves it would have made the same decision absent such discrimination, a court may not award damages, backpay, or an order of reinstatement. But the employer does not escape liability. In light of the FEHA’s express purpose of not only redressing but also preventing and deterring unlawful discrimination in the workplace, the plaintiff in this circumstance could still be awarded, where appropriate, declaratory relief or injunctive relief to stop discriminatory practices. In addition, the plaintiff may be eligible for reasonable attorney’s fees and costs.

Long awaited?  Yes, we published about the court of appeal's pro-employer decision in November 2009, here.  And this case is very important to clarify the burdens of proof in discrimination cases.  So, "long anticipated" too.

The Supreme Court did not go as far as the lower court.  In Harris, the plaintiff was a bus driver for LA County.  She had a series of accidents and unexcused absences, resulting in her termination. She claimed it was due to her pregnancy, in violation of the Fair Employment and Housing Act.  She pointed to some negative comments by a supervisor as evidence.

After trial, a jury awarded Harris a bunch of money.  LA County tried to get the court to instruct the jury that Harris could not prevail if the County proved it would have fired Harris regardless of her pregnancy.  Harris prevailed upon the trial court to instruct only that discriminatory bias must be but one motivating reason for the discharge.  So, she won.

The court of appeal reversed, holding that the County should have been provided the jury instruction.  

The California Supreme Court reasoned that the FEHA prohibits acts that occur "because of" illegal discrimination. That phrase is construed a variety of ways.  The Court sought to effectuate the legislature's intent to prohibit discriminatory practices.  After reviewing cases and engaging in statutory interpretation, the Court came up with the principle above.  An employer who proves it fired the plaintiff even though there was evidence of a discriminatory motive is entitled to prevail on the claim for damages.  But the plaintiff will still win declaratory relief  (like an injunction), attorneys' fees, and costs. 

Here is some additional helpful language for employers:

We are mindful, however, that section 12940(a) does not purport to outlaw discriminatory thoughts, beliefs, or stray remarks that are unconnected to employment decisionmaking. Racist, sexist, or other biased comments in the workplace may give rise to a claim for unlawful harassment under a separate provision of the FEHA. (§ 12940, subd. (j); see Lyle v. Warner Bros. Television Productions (2006) 38 Cal.4th 264, 277–278.) But such comments alone do not support a claim under section 12940(a), nor do bigoted thoughts or beliefs by themselves. Were it otherwise, the causation requirement in section 12940(a) would be eviscerated. Section 12940(a) does not prohibit discrimination “in the air.” It prohibits discrimination that causes an employer “to refuse to hire or employ the person or to refuse to select the person for a training program leading to employment, or to bar or to discharge the person from employment or from a training program leading to employment, or to discriminate against the person in compensation or in terms, conditions, or privileges of employment.” (§ 12940(a).)

No emotional distress damages because:

When an employee is fired, and when discrimination has been shown to be a substantial factor but not a “but for” cause, we believe it is a fair supposition that the primary reason for the discharged employee’s emotional distress is the discharge itself. Such distress is not compensable under the FEHA — indeed, compensation for such distress would be a windfall to the employee — if the employer proves it would have fired the employee anyway for lawful reasons.  But such comments alone do not support a claim under section 12940(a), nor do bigoted thoughts or beliefs by themselves. Were it otherwise, the causation requirement in section 12940(a) would be eviscerated. Section 12940(a) does not prohibit discrimination “in the air.” It prohibits discrimination that causes an employer “to refuse to hire or employ the person or to refuse to select the person for a training program leading to employment, or to bar or to discharge the person from employment or from a training program leading to employment, or to discriminate against the person in compensation or in terms, conditions, or privileges of employment.” (§ 12940(a).)

Although attorneys' fees may be available when the plaintiff wins a mixed-motive case, the plaintiffs' bar should not assume it will be the entire cost of litigating a case to conclusion:

An award of attorney’s fees is discretionary under section 12965, subdivision (b). An award may take into account the scale of the plaintiff’s success, and it must not encourage “unnecessary litigation of claims that serve no public purpose either because they have no broad public impact or because they are factually or legally weak.” (Weeks v. Baker & McKenzie (1998) 63 Cal.App.4th 1128, 1173.) Like Congress in enacting Title VII, our Legislature did not “ ‘ enact[] legislation whose benefit inures primarily to lawyers in the form of a substantial fee recovery, even if relief to the plaintiff is otherwise trivial and the lawsuit promotes few public goals.’ ” (Stevens v. Gravette Medical Center Hospital (W.D.Ark. 1998) 998 F.Supp. 1011, 1018.) The touchstone is “reasonable[ness].” (§ 12965, subd. (b).) In sum, we hold that a plaintiff subject to an adverse employment decision in which discrimination was a substantial motivating factor may be eligible for reasonable attorney’s fees and costs expended for the purpose of redressing, preventing, or deterring that discrimination.

Strong mixed motive cases will be thwarted by well timed and realistic offers of compromise under Civil Procedure Code Section 998.

So, a mixed bag on mixed motive.  But a welcome ruling in all for employers, in my opinion.  There is a lot to like in this opinion, even though mixed motive is not a complete defense.   The case is Harris v. City of Santa Monica and the opinion is here. 

California Supreme Court Allows Labor Picketing at Shopping Center

But, the Court also held that the Ralphs Grocery parking lot at the Sacramento area center is NOT a public forum, where speech cannot be prevented.  We posted about the Court of Appeal's decision here, by the way.

The Supreme Court decided that two provisions of California law can protect labor picketing against trespass claims, even though the picketing occurred on private property - a parking lot and entrance to a Ralphs store.   The picketing would be allowed even if non-labor picketing would constitute a trespass.   The way the law allows this is by limiting the grounds under which courts will issue injunctions against picketing to narrow circumstances.  For good measure, the law makes it harder to prove those circumstances than other types of cases.

That sounds a lot like a First Amendment violation to me, because the government is picking and choosing what kind of speech is worthy of protection and what is not.  And that is what Justice Chin essentially said in dissent.  But, the Supreme Court majority disagrees with yours truly on that point, and the Court tends to hold more sway than Greggy's blog, no matter how wrong it is. I kid. :)

OK, here comes a long explanation if you can hang in there - 


So, here's what happened as told by the Supreme Court-

When the College Square Foods Co store opened in July 2007, agents of defendant United Food and Commercial Workers Union Local 8 (the Union) began picketing the store, encouraging people not to shop there because the store‘s employees were not represented by a union and did not have a collective bargaining agreement. The Union‘s agents, in numbers varying between four and eight, walked back and forth on the entrance walkway carrying picket signs, speaking to customers, and handing out flyers. These activities generally occurred five days a week (Wednesday through Sunday) for eight hours a day. The Union‘s agents did not impede customer access to the store.

[ I bolded this because if the union did block access to the store, even the union-friendly law under review would permit an injunction]... Anyway, more from the Court's opinion -

In January 2008, Ralphs notified the Union in writing of its regulations for speech at its Foods Co stores, including the one in College Square. Those store regulations prohibit speech activities within 20 feet of the store‘s entrance and prohibit all such activities during specified hours and for a week before certain designated holidays. The store regulations also prohibit physical contact with any person, the distribution of literature, and the display of any sign larger than two feet by three feet. The Union‘s agents did not adhere to Ralphs‘s speech regulations. In particular, they handed out flyers and stood within five feet of the store‘s entrance. Ralphs asked the Sacramento Police Department to remove the Union‘s agents from the College Square Foods Co store, but the police declined to do so without a court order.

OK, so why did the police refuse to get rid of the trespassers on Ralph's private property?   Because they're in a union, too.   They said would only enforce a court order prohibiting the conduct, unless they saw some sort of crime occurring, which was not happening.  So, off Ralphs went to Court for an injunction, where it met the Moscone Act. 

In essence, the Moscone Act (actually two different laws) says that courts cannot enjoin peaceful picketing, gathering, etc. It also imposes a tough evidentiary burden on employers seeking to obtain an injunction, including a requirement of live witness testimony.

The Court of Appeal decided that Ralphs parking area and store entrance were not public forums, so California's broad constitutional right to free speech in public areas would not apply.  Then  the Court of Appeal said that the Moscone Act unconstitutionally permitted some kinds of speech on private property (labor protests), but did not protect others (e.g., anti-abortion protests).  The lower Court reasoned that when the government chooses one type of content for protection, that violates the First Amendment.

On review, the Supreme Court first held that every outdoor shopping plaza is not a public forum, where the First Amendment protects all kinds of speech:

to be a public forum under our state Constitution‘s liberty-of-speech provision, an area within a
shopping center must be designed and furnished in a way that induces shoppers to congregate for purposes of entertainment, relaxation, or conversation, and not merely to walk to or from a parking area, or to walk from one store to another, or to view a store‘s merchandise and advertising displays.

Applying this standard, the Court then decided that the College Station shopping plaza was not a protected public shopping mall where the First Amendment would apply.

So, now, Ralphs has private property and it wants to eject or limit conduct on its property via an injunction against a trespasser.  The Supreme Court had to decide if the Moscone Act's limits on injunctions violated Ralph's constitutional rights.

The Supreme Court decided the Court of Appeal was wrong, and that the Moscone Act can favor union picketing on private property without violating the Constitution.  Here is the Court's explanation of the law itself:

certain activities undertaken during a labor dispute are legal and cannot be enjoined. (Id., §527.3, subd. (b).) Those activities are:

“(1) Giving publicity to, and obtaining or communicating information regarding the existence of, or the facts involved in, any labor dispute, whether by advertising, speaking, patrolling any public street or any place where any person or persons may lawfully be, or by any other method not involving fraud, violence or breach of the peace.

“(2) Peaceful picketing or patrolling involving any labor dispute, whether engaged in singly or in numbers.

“(3) Assembling peaceably to do any of the acts specified in paragraphs (1) and (2) or to promote lawful interests.” (Code Civ. Proc., § 527.3, subd. (b).)

Expressly excluded from the Moscone Act’s protection, however, is “conduct that is unlawful including breach of the peace, disorderly conduct, the unlawful blocking of access or egress to premises where a labor dispute exists, or other similar unlawful activity.” (Code Civ. Proc., § 527.3, subd. (e).)

In addition, the law imposes burdens on courts and businesses seeking injunctions for violations:

Section 1138.1 prohibits a court from issuing an injunction during a labor dispute unless, based upon witness testimony that is given in open court and is subject to cross-examination, the court finds each of these facts:

“(1) That unlawful acts have been threatened and will be committed unless restrained or have been committed and will be continued unless restrained, but no injunction or temporary restraining order shall be issued on account of any threat or unlawful act excepting against the person or persons, association, or organization making the threat or committing the unlawful act or actually authoriz[ing] those acts. “(2) That substantial and irreparable injury to complainant’s property will follow.

“(3) That as to each item of relief granted greater injury will be inflicted upon complainant by the denial of relief than will be inflicted upon defendants by the granting of relief.

“(4) That complainant has no adequate remedy at law.

“(5) That the public officers charged with the duty to protect complainant’s property are unable or unwilling to furnish adequate protection.” (§ 1138.1, subd. (a).)

OK, I've bolded what makes the Moscone Act tough on those who seek injunctions even against violent union conduct that is unprotected.  First, in most cases, a court will issue a temporary injunction  on papers.  For labor injunctions, there must be live testimony. Second, the injunction can be issued only against individuals that violate the Act specifically, not against a whole union, absent proof that the whole union is actually authorizing the conduct. Tough to get the names of the folks breaking stuff outside your store, right?
Oh, and you have to put on evidenced that the police cannot or will not help. Easy breezy!  These requirements just do not apply to temporary injunctions in other contexts.

So, the Supreme Court did not see a problem with this. First, the Court surveyed a long line of cases recognizing the rights of unions to conduct peaceful picketing on private walkways outside of businesses.  The Court then did its best to overcome federal decisions holding that laws could not restrict one kind of speech, but not another.  The Supreme Court's rationale was that the Moscone Act does not restrict speech, it merely insulates union speech from legal action.

The Supreme Court apparently does not agree that the general rules permitting injunctions restrict speech on private property.  That is, if you come to my business to picket about some non-labor related issue, I can obtain an injunction more easily because I don't have to follow the Moscone Act. As such, the California Code of Civil Procedure contains a content bias.

Anyway, there are a number of concurring and dissenting opinions, too. The Chief Justice tried to write a concurrence softening the blow of the majority ruling, but Justice Liu essentially called "bull" on the CJ's opinion, arguing that the CJ's interpretation of the majority's opinion was not supported.  As I said earlier, Justice Chin wrote a dissent that I thought was correct, but what do I know?

This may not be the end of this discussion. The Court appears to have opined on federal law, which means that the U.S. Supreme Court likely has jurisdiction to consider whether the First Amendment trumps California law.  We will see what happens next.

I know, long post, but complex issue.  Bottom line - business owners have little power to exclude union picketing, absent (1) fairly egregious conduct (2) money to conduct a mini-trial in court to obtain an injunction and/or (3) business-friendly local politicians / police.  I emphasize that this decision applies to any business located on private property, such as an office park complex.  It's not limited to grocery stores or malls.  The Moscone Act protects picketing from trespass injunctions all over the place.

The opinion is Ralphs Grocery Co. v. UFCW, Local 8 and the opinion is here.

California Supreme Court De-Publishes Administrative Exemption Case

I posted about the Court of Appeal's opinion in Harris v. Superior Court here.  That decision, on remand from the California Supreme Court, would have severely limited the administrative exemption.  Fortunately, the California Supreme Court has now de-published the decision (here), so it is no longer good law.  The bad news is that the Supreme Court's guidance on the administrative exemption is rather vague and remains open to lower courts' interpretations.

California Supreme Court to Decide If Insubordination is Misconduct

Remember when the Court of Appeal decided that "refusing to sign" a document was insubordination, disqualifying a terminated employee from unemployment insurance benefits?  See this post.  That was awesome.

Anyway, the California Supreme Court granted review of the decision, so it's off the books for now.

Stay tuned!

Greg

California Supreme Court: Workers' Compensation Preemption of Loss of Consortium Claim

The Workers' Compensation Act preempts most civil lawsuits by injured workers. There are certain exceptions allowing civil lawsuits, such as for emotional distress due to sexual harassment. There are statutory exceptions, too, such as when a co-worker intentionally injures the employee.  One less-known provision, called the "power press" exception permits civil actions in addition to workers' compensation claims. As explained by the Supreme Court:

[Labor Code] Section 4558 authorizes an injured worker to bring a civil action for tort damages against his or her employer where the injuries were “proximately caused by the employer’s knowing removal of, or knowing failure to install, a point of operation guard on a power press,” where the “manufacturer [had] designed, installed, required or otherwise provided by specification for the attachment of the guards and conveyed knowledge of the same to the employer.” (§ 4558, subds. (b) & (c).)

 If an injured worker can sue in court in addition to filing a workers' compensation claim for injuries falling within the "power press" exception, can his spouse sue for loss of consortium, or is that claim barred by the Workers' Compensation Act exclusivity provisions?

The Supreme Court said:

notwithstanding the availability of a civil cause of action for workers who suffer power press injuries, claims arising from the industrial accident that caused those injuries fundamentally remain compensable under the workers’ compensation system. Consequently, under settled principles of workers’ compensation law, the exclusivity rule bars a dependent spouse’s claim for loss of consortium.  

This means that the loss of consortium claim is not actionable, even if the power press exception applies. 

The case is Lifiell Mfg. Co. v. Superior Court and the opinion is here.

California Supreme Court: Certain Cities Don't Have to Pay Prevailing Wage

Many employers who do business with the government have heard of the "prevailing wage."  If you haven't, here's what it is, as explained by the California Supreme Court:

contractors on "public works" projects [have] to pay "the general prevailing rate of per diem wages for work of a similar character in the locality in which the work is performed." . . . The term "public works" was defined as work done for public agencies and work paid for with public funds. ... Simply put, "[p]revailing wage laws are based on the . . . premise that government contractors should not be allowed to circumvent locally prevailing labor market conditions by importing cheap labor from other areas."

Basically, the law requires public employers to pay "prevailing" wages.  But "prevailing" usually means "pretty darn high" if you have ever seen them. They are calculated by the Bureau of Labor Statistics and state counterparts (such as the Department of Industrial Relations).

Anyway, so California's constitution authorizes "charter cities," which have broad authority to govern themselves.  State laws preempt charter cities' rules in certain circumstances.

Vista, CA, is a charter city.  Vista was implementing some public works projects, constructing buildings and such.  The project did not call for paying the "prevailing" wage and some unions sued.

Cutting to the chase, here is the 5-2 holding:

Here, we reaffirm our view — first expressed 80 years ago (see City of Pasadena v. Charleville (1932) 215 Cal. 384, 389 (Charleville)) — that the wage levels of contract workers constructing locally funded public works are a municipal affair (that is, exempt from state regulation), and that these wage levels are not a statewide concern (that is, subject to state legislative control).

How fast will someone try to pass an initiative to overturn this one?

The case is State Building and Const. Trades Council, etc. v. City of Vista and the opinion is here.

California Supreme Court: Out of State Employers Bound by California Overtime Law...

...when employees work in California for at least a day or a week at a time.

Sullivan v. Oracle is a wage hour class action we addressed here.  If you don't remember, you're forgiven. This was back in 2008.  I had more and darker hair; Lehman Brothers was a functioning company.  You could buy a Pontiac. Remember?

Anyway, so Sullivan and his class were employees who periodically worked in California.  They wanted California wage law to apply during any full day in which they worked in California. The federal court of appeals asked the California Supreme Court to answer "certified questions."

First, does the California Labor Code apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs in the circumstances of this case, such that overtime pay is required for work in excess of eight hours per day or in excess of forty hours per week?

Here, the Court said "yes." When employees visit California from other states, California overtime laws apply:

To exclude nonresidents from the overtime laws’ protection would tend to defeat their purpose by encouraging employers to import unprotected workers from other states.  Nothing in the language or history of the relevant statutes suggests the Legislature ever contemplated such a result.

The Court ensured its holding was limited to overtime, not necessarily to other wage-hour laws:

the case before us presents no issue concerning the applicability of any provision of California wage law other than the provisions governing overtime compensa­tion.  While we conclude the applicable conflict-of-laws analysis does require us to apply California’s overtime law to full days and weeks of work performed here by nonresidents (see post, at p. 12), one cannot necessarily assume the same result would obtain for any other aspect of wage law.  California, as mentioned, has expressed a strong interest in governing overtime compensation for work performed in California.  In contrast, California’s interest in the content of an out-of-state business’s pay stubs, or the treatment of its employees’ vacation time, for example, may or may not be sufficient to justify choosing California law over the conflicting law of the employer’s home state.  No such question is before us.

The court then turned to the second question:

Second, does [Business and Professions Code section] 17200 apply to the overtime work described in question one?  Third, does [section] 17200 apply to overtime work performed outside California for a California-based employer by out-of-state plaintiffs in the circumstances of this case if the employer failed to comply with the overtime provisions of the FLSA?”

The Supreme Court noted it already has held that the UCL applies to overtime claims. Therefore, the Court answered "the second certified question as follows:  Business and Professions Code section 17200 does apply to the overtime work described in question one. "

As for the third question, the Supreme Court decided that out of state plaintiffs could not sue a California-based employer for overtime violations occurring outside of California.  Thus, merely because an employer is headquartered in CA, that does not make the employer subject to suit under the UCL for alleged wrongs entirely occurring somewhere else.

The case is Sullivan v. Oracle Corp. and the opinion is here.

California Supreme Court Holds No Arbitration in Lieu of Labor Commissioner Hearing

The California Supreme Court decided that an employer cannot require an employee to go to arbitration instead of a "Berman" hearing before the Labor Commissioner.  Rather, the employee must be permitted to go to the labor commissioner and then the arbitration agreement can be used for the "appeal" de novo.
This 4-3 decision involves lengthy discussions of preemption and unconscionability. 

The majority, led by retiring Justice Moreno, finds that the waiver of the labor commissioner hearing deprives the employee of so many benefits that the arbitration agreement violates public policy.  The U.S. Supreme Court may take a look at this one under the Federal Arbitration Act.  Until then, though, employees get to see the Labor Commissioner, even if they have arbitration agreements.

The case is Sonic-Calabasas A, Inc. v. Moreno and the opinion is here.

California Supreme Court Bings Google

I think Reid v. Google (opinion here) will be more memorable for its discussion of objections in summary judgment proceedings than for its discussion of the stray remarks doctrine.

I will post my upcoming article here next Monday, which will explain the above gibberish. (Or I'll cheerfully refund your money, and that's a promise!)

California Supreme Court Holds No Private Right of Action Re: Tip Pooling

Labor Code Section 351 provides that tips belong to the servers who generate them. Tip pooling - employer-mandated sharing of tips among service staff, has been held lawful under that section. But certain tip pooling arrangements, particularly those in which management shares tips, have been held illegal.

In Lu v. Hawaiian Gardens Casino, Inc., a card dealer sued over a tip pooling arrangement, claiming that the employer's policy violated section 351. The lower courts held that Section 351 does not authorize private lawsuits. The Supreme Court stepped in to resolve a split in the courts of appeal. Applying general principles regarding when the Legislature intends to create private causes of action, the Court held there was none authorized under Section 351.
Of course, the plaintiffs can pursue their unfair competition claims, etc. The main disadvantage I can see off the cuff is the absence of a claim for attorney's fees under the Labor Code.

This case does not address whether tip pooling itself is lawful. So, employers should continue to draft tip pooling arrangements in accordance with lower court decisions on the subject, such as Leighton v. Old Heidelberg, Ltd. (1990) 219 Cal.App.3d 1062, 1067; Etheridge v. Reins Internat. California, Inc. (2009) 172 Cal.App.4th 908, 921-922; Budrow v. Dave & Buster’s of California, Inc. (2009) 171 Cal.App.4th 875, 878-884; and Jameson v. Five Feet Restaurant, Inc. (2003) 107 Cal.App.4th 138, 143.

The case is Lu v. Hawaiian Gardens Casino, Inc. and the opinion is here.

U.S. Supreme Court Declines to Take Up San Francisco Healthcare Law

Back in 2008, the Ninth Circuit Court of Appeals held that San Francisco's Healthcare Security Ordinance was not preempted by ERISA. We posted on that here. Fast-forward (chuckle) to yesterday, when the U.S. Supreme Court refused the Golden Gate Restaurant Association's petition for review. So, looks like those pesky surcharges disclosed at the bottom of menus throughout San Francisco are here to stay.

DGV

California Supreme Court Defines "Employer" in Wage Hour Cases

In 2005, the California Supreme Court held in Reynolds v. Bement (2005) 36 Cal.4th 1075, that individual agents / managers cannot be held liable as "employers" under California wage-hour law. In Martinez v. Combs, opinion here, the court similarly held that investors / business partners could not be held liable as "employers" either.

To get there, the Court engaged in a rigorous, painstaking (euphemisms for tedious) analysis of the history of California wage-hour laws, all the way back to the Magna Carta, or so it seemed.

But the Court did something that had not been done before. It came up with a framework for deciding just what entity can be held liable for unpaid wages.

This case arises because Munoz, the employer that hired, supervised, and (previously) paid its farm workers, went bankrupt. So, the case has relevance during these troubled times. Munoz operated a strawberry harvesting operation. Because of lower strawberry prices and financial reverses, Munoz could not pay its workers and then declared bankruptcy.

Unable to recover from Munoz, the employees sued: "two of the produce merchants through whom Munoz sold strawberries: Apio, Inc. (Apio), and Combs Distribution Co., together with its principals, Corky and Larry Combs, and its field representative Juan Ruiz (collectively Combs). Plaintiffs’ separate action against a third merchant, Frozsun, Inc. (Frozsun), has been stayed pending the outcome of this action."

The Labor Code does not specify who is liable for unpaid wages under Lab. Code Section 1194:

Notwithstanding any agreement to work for a lesser wage, any employee receiving
less than the legal minimum wage or the legal overtime compensation applicable to the employee is entitled to recover in a civil action the unpaid balance of the full amount of this minimum wage or overtime compensation, including interest thereon, reasonable attorney’s fees, and costs of suit.

The Court first decided that liability under Section 1194 is limited to an "employer" under the Industrial Welfare Commission's Wage Orders. The Wage Orders do define "employer." As the Court related:

Employ’ means to engage, suffer, or permit to work,” and “ ‘[e]mployer’ means any person as defined in Section 18 of the Labor Code, who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person.”

So, who is an employer? The Court said that under the IWC's definition, one can become an employer in one of three ways:

To employ, then, under the IWC’s definition, has three alternative definitions. It means: (a) to exercise control over the wages, hours or working conditions, or (b) to suffer or permit to work, or (c) to engage, thereby creating a common law employment relationship.

Suffer or permit - The Court clarified that to "suffer or permit" someone to work results in a finding of employer only when the person permitting the work has the power to stop it. The vendors / defendants could not stop or prevent the work. Munoz had all the power to hire or fire his own workers.

Regarding the "control over the wages hours and working conditions," the Court rejected the claim that the vendors' financial relationships with Munoz resulted in de facto control over the plaintiffs' working conditions.

Finally, "to engage" means that the employer hires the employees to work, which is the straightforward way of establishing an employment relationship. There was no such evidence in this case.

So, this test will be used to define who is liable under California law as an "employer," with the exception of the employer's agents / employees. The employer's own agents and employees are not liable under Reynolds v. Bement, cited above. If the IWC changes the definition of "employer," then this case may be superseded. But the Legislator has all but abolished the IWC. So, the Legislature will have to define the employment relationship or reconstitute the IWC to change the effect of this case.

The opinion in Martinez v. Combs is here.

No Attorney's Fees for Minimal Recovery in FEHA Case

The California Supreme Court held that trial courts may deny attorney's fees to prevailing plaintiffs in discrimination cases brought under the Fair Employment and Housing Act, if the plaintiff recovers less than the $25,000 jurisdictional minimum for superior court. The plaintiff recovered about $11,000 and tried to recover over $800,000 in attorney's fees. Code of Civil Procedure Section 1033 authorizes trial courts to deny recovery of costs and fees when the jurisdictional minimum is unmet. The Supreme Court held that Section 1033 applies in FEHA cases. The court also held that the trial court properly considered that the plaintiff grossly inflated his request for attorney's fees. The case is Chavez v. Los Angeles and the opinion is here.

California Supreme Court Takes on Harassment v. Discrimination

Roby sued McKesson for disability-based harassment and discrimination. The jury awarded over $3million in actual and $15million in punitive damages, including an award of damages for harassment against an individual defendant. The verdict, though, was a mess and was reduced because of overlapping, duplicative damages awards. In addition, there was an issue of whether the individual could be sued for harassment because much of the alleged conduct was in connection with personnel decisions.

One of the issues the Supreme Court addressed is whether a manager / supervisor's conduct during "personnel actions" is evidence not only of the discriminatory motive, but also harassment. The court explained the difference as follows: "discrimination refers to bias in the exercise of official actions on behalf of the employer, and harassment refers to bias that is expressed or communicated through interpersonal relations in the workplace. " * * *
"[H]arassment is generally concerned with the message conveyed to an employee, and therefore with the social environment of the workplace, whereas discrimination is concerned with explicit changes in the terms or conditions of employment"

Applying this standard, the court upheld Roby's harassment claim:

Roby's discrimination claim sought compensation for official employment actions that were motivated by improper bias. These discriminatory actions included not only the termination itself but also official employment actions that preceded the termination, such as the progressive disciplinary warnings and the decision to assign Roby to answer the office telephones during office parties. Roby's harassment claim, by contrast, sought compensation for hostile social interactions in the workplace that affected the workplace environment because of the offensive message they conveyed to Roby. These harassing actions included Schoener's demeaning comments to Roby about her body odor n10 and arm sores, Schoener's refusal to respond [*40] to Roby's greetings, Schoener's demeaning facial expressions and gestures toward Roby, and Schoener's disparate treatment of Roby in handing out small gifts. None of these events can fairly be characterized as an official employment action. None involved Schoener's exercising the authority that McKesson had delegated to her so as to cause McKesson, in its corporate capacity, to take some action with respect to Roby. Rather, these were events that were unrelated to Schoener's managerial role,
engaged in for her own purposes.

Does this clear things up? There was a bright line between personnel actions and harassing conduct before this case, supported by 15 years of authority. Does this mean that personnel actions now are evidence of harassment when the manager carrying them out is unpleasant? We will see how lower courts treat evidence of harassment after this decision.

Separately - the Court also analyzed punitive damages in employment law cases. After detailed analysis, the Court decided that a one-to-one ratio between actual and punitive damages was the constitutional limit. The Court based its conclusion on its conclusion that as a corporation, McKesson's conduct was not particularly "reprehensible." The Court also based its decision on the high damages award, warranting a lower ratio because of the actual damages' deterrence of similar conduct.

The Court also explained what a "managing agent" is for punitive damages purposes, clarifying prior rulings:

In this case, the Court of Appeal concluded that the jury could reasonably have found supervisor Schoener to be a "managing agent" of employer McKesson. On that basis, the court concluded that the jury's award of punitive damages could be justified based on Schoener's actions alone, regardless of whether more senior managers at McKesson were informed of Schoener's actions. We disagree.

At the time of Roby's termination, McKesson had over 20,000 employees; Schoener
worked at a local distribution center supervising four of them. When we spoke in White about persons having "discretionary authority over . . . corporate policy"
(White, supra, 21 Cal.4th at p. 577), we were referring to formal policies that affect a substantial portion of the company and that are the type likely to come to the attention of corporate leadership. It is this sort of broad authority that justifies punishing an entire company for an otherwise isolated act of oppression, {Slip Opn. Page 32} fraud, or malice. The record here does not support the conclusion that Schoener exercised that sort of broad authority or that she was a "managing agent" for purposes of awarding punitive damages under Civil Code section 3294, subdivision (b). Therefore, in assessing the reprehensibility of employer McKesson's conduct, we must look to what McKesson's more senior managers knew and did.

The case is Roby v. McKesson Corp. and the opinion is here.

California Supreme Court to Review Section 203 Waiting Time Penalties

The statute of limitations for a penalty is usually one year under California law. But, Labor Code Section 203 says that the statute of limitations for "waiting time penalties" is the same as the limitations period for the underlying wage claim. So, if the underlying wage claim is three years (such as unpaid overtime), then the statute of limitations for late payment of those wages at termination is also three years.

But, what happens if the underlying wages are paid already and an employee just wants to recover penalties in a civil lawsuit? There IS no underlying claim for wages in that case. So, the court of appeal reasoned in Pineda v. Bank of Am., that the one-year statute of limitations should apply in cases where there is no accompanying claim for unpaid wages.

The court in Pineda also clarified that the unfair competition law's four year statute does not apply to waiting time penalties, since the UCL ordinarily only applies to "restitution" of the plaintiff's property, and waiting time penalties are not the employee's property.

The California Supreme Court just accepted review of Pineda on both issues discussed above. The docket is here. We posted about the court of appeal's opinion here.

Ninth Circuit Asks CA Supremes for Guidance on Wage and Hour

The Ninth Circuit has before it three cases involving pharmaceutical sales representatives. These folks visit with doctors and give them information on medications. The Ninth Circuit wants to know if these employees count as "outside salespersons" under California law. So, they asked the California Supreme Court for an opinion:

1. The Industrial Welfare Commission’s Wage Orders 1-2001 and 4-2001 define “outside salesperson” to mean “any person, 18 years of age or over, who customarily and regularly works more than half the working time away from the employer’s place of business selling tangible or intangible items or obtaining orders or contracts for products, services or use of facilities.” 8 Cal. Code Regs., tit. 8, §§ 11010, subd. 2(J); 11040, subd. 2(M). Does a pharmaceutical sales representative (PSR) qualify as an “outside salesperson” under this definition, if the PSR spends more than half the working time away from the employer’s place of business and personally interacts with doctors and hospitals on behalf of drug companies for the purpose of increasing individual doctors’ prescriptions of specific drugs?

If the sales representatives don't qualify as outside salespersons, because they don't take orders or actually sell the medications, the court wants to know if they qualify as "administrative" employees:

2. In the alternative, Wage Order 4-2001 defines a person employed in an
administrative capacity as a person whose duties and responsibilities involve (among other things) “[t]he performance of office or non-manual work directly related to management policies or general business operations of his/her employer or his employer’s customers” and “[w]ho customarily and regularly exercises discretion and independent judgment.” Cal. Code Regs., tit. 8 § 11040, subd. 1(A)(2)(a)(I), 1(A)(2)(b). Is a PSR, as described above, involved in duties and responsibilities that meet these requirements

The Ninth Circuit seeks guidance on the administrative test because California case law is sparse on what it means to "exercise discretion and independent judgment" for the administrative exemption, and whether the PSRs are involved in "office or non-manual work directly related ot management policies or general business operations" of Bayer's customers. The court appears to believe that California law on outside salespersons differs from the federal test under the FLSA such that reliance on FLSA cases would be of "limited" assistance.

The Supreme Court does not have to answer the questions. If the Court chooses not to, then the case will return to the Ninth Circuit for a prediction on how the Supreme Court would rule. Otherwise, this case could provide needed guidance in this area of wage and hour law.

The case is D'Este v. Bayer Corporation and the opinion/request for answers is here.