Ninth Circuit: Public Sector Independent Contractor Has No Property Interest and No Section 1983 Claim

42 U.S.C. Section 1983 allows public sector workers to challenge certain government employer action against public sector workers. The law permits state employees to challenge deprivations of due process or equal protection that amount to violations of the constitution.  But to use Section 1983, the employee must demonstrate a property right or liberty interest that the government employer deprived.  Many civil service workers are employed under conditions that virtually guarantee them a job that cannot end without sufficient cause.  Section 1983 lawsuits involving employment actions often are predicated on that sort of employment relationship.

The 9th Circuit Court of Appeals in Blantz v. California Dept. of Corr. and Rehab. considered Blantz's claim that the 14th Amendment protected her engagement as an independent contractor.  Here are the facts as stated by the court:

In July 2006, Blantz entered into a written agreement with Newport Oncology and Healthcare, Inc. (NOAH) to work as a nurse practitioner for the CDCR. The CDCR contracts with NOAH to identify available healthcare professionals and refer them to the CDCR to work in medical facilities owned by the CDCR throughout California. Blantz agreed with NOAH to provide medical services to the CDCR as an independent contractor. Pursuant to the agreement, Blantz’s wages would be paid by NOAH, not by the CDCR.

The CDCR ended the engagement without explanation.  Blantz then tried to obtain a new job with CDCR, but her references did not pan out.  So, she sued CDCR and officials under Section 1983, claiming that her independent contractor arrangement could not be ended without due process (e.g., a hearing and notice of the reasons etc.).

Blantz claimed that CDCR conferred a property right to her independent contractor arrangement by documents that CDCR gave her at orientation. But CDCR's contract with NOAH said CDCR could request her removal essentially at will.

The district court dismissed her case, and the Ninth Circuit affirmed.  The court would not decide whether an independent contractor - rather than an employee - could every have a 14th amendment interest in due process related to her engagement.  The court explained why Blantz's claim failed:

We hold that a state agency does not create constitutionally protected property interests for its independent contractors simply by instituting performance review procedures. Even assuming independent contractors can ever have constitutionally protected property interests in their positions, something more is required: either an affirmative grant of tenure or a guarantee from the government that termination can occur only for cause. Absent such assurances, there is no cognizable basis for an independent contractor to assert an entitlement to her continued position that is constitutionally protected. Because Blantz’s orientation documents did not contain such assurances, we affirm the district court’s dismissal of Blantz’s federal deprivation of property claim.

The court then rejected Blantz's claim that a poor reference deprived her of "liberty" when she was unable to obtain a new position with CDCR. 

the defendants here are not alleged to have precluded Blantz from all government employment, only employment with the CDCR. Blantz allegedly has been barred from employment with one division of the state government; but she is free to seek other nursing positions with the state. Thus, she has not alleged an unconstitutional deprivation of liberty.  See Llamas, 238 F.3d at 1128 (holding that the government had not deprived plaintiff of liberty when plaintiff was barred from future employment with one community college district, but was  free to pursue employment elsewhere).

This case is Blantz v. California Dept. of Corr. and Rehab. and the opinion is here.

 

Court of Appeal: Volunteer Reserve Cop Has No Discrimination Claim

L.A. has a corps of volunteer, reservist police in addition to the regular police force.  They grant these volunteers workers' compensation benefits and a $50 per shift expense reimbursement, but no salary. 

Frank Estrada was a volunteer for some 17 years.  The police force ended his engagement after he was investigated for some misconduct related to his regular job.  

He sued for disability discrimination under the Fair Employment and Housing Act.  The court had to decide whether Estrada was an "employee."   (Only applicants/employees can sue under FEHA for disability discrimination).

Agreeing with the trial court, the Court of Appeal said that Estrada was not an employee.  The city did not "appoint" him to an employee position.  That the city chose to extend workers' compensation benefits to its volunteers was a policy decision, the court said.  Here is the punchline:

Estrada was a volunteer who served without remuneration. He was appointed to a volunteer position, rather than to a position in the classified civil service. Accordingly, Estrada was not an employee of the City. (Board Civil Service Rules,§ 1.17.) Therefore, Estrada is incapable of maintaining a cause of action against the City for disability discrimination pursuant to the FEHA.

So, employers may be able to argue that it is possible to cover volunteers with workers' compensation insurance and yet maintain non-employee, volunteer status. But, this case was decided in great part based on Los Angeles' status as a charter city.  So, a private sector employer could come out with a different result. Be careful.

This case is Estrada v. City of Los Angeles and the opinion is here.

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






 

Supreme Court Clarifies California Public Sector Unions' Notice Requirements

Like many states, California permits unions to represent public sector employees. But employees may "opt out" of paying dues toward these unions' political activities.To permit the "opt out," the unions must issue what are known as "Hudson" notices at least annually, which advise employees of how much of their dues are spent on collective bargaining and how much on political and other non-representative activity.  The employees can opt-out of paying the fee not that are not allocated to collective bargaining -related activities. Unions are permitted to rely on the prior year's ratio to set the current year's dues.

This system exists because of the First Amendment.  The public sector employer would not be able to force employees to join an organization that  requires financing of viewpoints with which the employee does not agree.

So far so good?  Well,what if the union issues a Hudson notice, and then a few weeks after the "opt out" period, issues a special fees increase after issuing its Hudson notice?  Can it unilaterally do this without a new notice?  That was the issue the Supreme Court confronted in Knox v. SEIU, Local 1000.

The Supreme Court said, "no":

To respect the limits of the First Amendment, the union should have sent out a new notice allowing nonmembers to opt in to the special fee rather than requiring them to opt out. Our cases have tolerated a substantial impingement on First Amendment rights by allowing unions to impose an opt-out requirement at all. Even if this burden can be justified during the collection of regular dues on an annual basis, there is no way to justify the additional burden of imposing yet another opt-out requirement to collect special fees whenever the union desires.

Why?

Public sector unions have the right under the First Amendment to express their views on political and social issues without government interference. . . .But employees who choose not to join a union have the same rights. The First Amendment creates a forum in which all may seek, without hindrance or aid from the State, to move public opinion and achieve their political goals. “First Amendment values [would be] at serious risk if the government [could] compel a particular citizen, or a discrete group of citizens, to pay special subsidies for speech on the side that [the government] favors.” ...  Therefore, when a public-sector union imposes a special assessment or dues increase, the union must provide a fresh Hudson notice and may not exact any funds from nonmembers without their affirmative consent.

5 justices joined the majority opinion.  2 justices concurred in the judgment, agreeing the union needs to secure consent from the non-members.  2 justices dissented, and would hold that the union gets to set its non-member contribution rate based on the prior year's expenses, even if the union imposes a special assessment immediately thereafter.

The case is Knox v. SEIU, Local 1000 and the opinion is here.

U.S. Supreme Court on Federal Employees' Access to Court

WARNING - Most of you will not care about this. The Supreme Court held today that a federal government employee covered by the Civil Service Reform Act must bring employment claims before the Merit Systems Protection Board, rather than district court.

The MSPB is the exclusive forum, even if the employee is raising a constitutional law claim, and even if the employee is ineligible for federal employment. 

In this case, Elgin did not register for the draft and was fired because people who do not register are ineligible for federal employment.  He tried to bring a claim at the MSPB, but an ALJ held that MSPB had no jurisdiction over his claims. So, he sued in district court, which denied his claim on the merits.  He then appealed to the First Circuit Court of Appeals, which decided that both the district court and the First Circuit lacked jurisdiction.

The Supreme Court agreed, holding that the MSPB can decide constitutional law issues, and that MSPB rulings are subject to review by the Federal Circuit Court of Appeals and by the Supreme Court.

The case is Elgin v. Dept. of Treasury and the opinion is here. 

Court of Appeal: Breach of Contract Against Employer for Breach of Settlement Confidentiality

Sanchez was a county labor relations manager for San Bernadino County. She became romantically involved with a union official, Erwin. Their respective employers negotiated labor relations memoranda of understanding. At some point, their relationship became known and unacceptable to the county's brass. The County thought a romance between labor negotiators on opposite sides of the table might constitute a conflict of interest. So sensitive! For her part, Sanchez denied the conflict of interest, but admitted the appearance of impropriety. So, the county gave Sanchez the chance to resign with a separation agreement.

The separation agreement contained a strict confidentiality requirement. But immediately after Sanchez resigned, the newspapers picked up on the story and quoted county officials. She sued the county and individual defendants for a variety of claims, including breach of contract. The county successfully "SLAPPED" most of the causes of action. The trial court eventually granted summary judgment on the rest of them. The court dismissed the breach of contract claim because the confidentiality agreement was contrary to the county's legal duty to disclose such facts to the public.

On appeal, the court of appeal reinstated the contract claim. The county's primary argument was that it was bound to disclose Sanchez's affair. After analyzing the various legal theories (including the Public Records Act and the First Amendment), the court said there was a triable issue of fact on the contract claim because the county did not have to disclose the affair to the papers. Had the settlement agreement been disclosed under the Public Records Act, the court might have come down the other way.

The court rejected the county's argument that Sanchez waived the confidentiality agreement by speaking with her parents and showing the agreement to Erwin. The court found it significant that Sanchez did so only after learning of the county's breach.

Regarding the issue of damages, she presented significant evidence it was harder to find a job after the disclosure of the affair to the newspapers. Therefore, the court rejected the county's contention that there were no damages available for the breach of confidentiality.

Typically, employers do not advertise their settlements with employees. So, this case may be an anomaly, particularly in the private sector. But to the extent employers needed motivation to maintain confidentiality, the prospect of a breach of contract claim should provide it. Employers should ensure they honor confidentiality provisions in separation agreements.

The case is Sanchez v. County of San Bernardino and the opinion is here.

California Supreme Court: Public Employee May Be Disciplined for Refusing to Cooperate in Investigation

The California Supreme Court held that a deputy public defender was properly discharged when he refused to answer questions during an internal investigation. He argued that he could not be compelled to answer because he invoked his Fifth Amendment right to refuse to answer questions on the grounds they might incriminate him.

But the investigator, a supervisor attorney at the public defender's office, had informed him that his cooperation in the investigation would not be used against him in criminal proceedings. Was his refusal to testify protected conduct? The court unanimously said "no":

a public employee may be compelled, by threat of job discipline, to answer questions about the employee’s job performance, so long as the employee is not required, on pain of dismissal, to waive the constitutional protection against criminal use of those answers. Here, plaintiff was not ordered to choose between his constitutional rights and his job. On the contrary, he was truthfully told that, in fact, no criminal use could be made of any answers he gave under compulsion by the employer. In the context of a noncriminal public employment investigation, the employer was not further required to seek, obtain, and confer a formal guarantee of immunity before requiring its employee to answer questions related to that investigation.

The case is Spielbauer v. County of Santa Clara and the opinion is here.