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California Employment Law Blog

Thou Shalt Not Bully – Employers Must Educate Supervisors about “Abusive Conduct”

Posted in Employee Discipline, Employer Liability for Worker's Actions, Employment Policies, Harassment, New and Proposed Laws and Legislation, News, Sexual Harassment, Workplace Violence

California businesses that have 50 or more employees are already required to train supervisors on legally prohibited sexual harassment. Following California Governor Jerry Brown’s recent signing of A.B. 2053, that training must now also include education on preventing “abusive conduct” in the workplace, even if the conduct is not based on a protected characteristic nor constitutes legally prohibited discrimination or harassment.

As amended by A.B. 2053, Section 12950.1 of the Government Code defines abusive conduct as malicious conduct “that a reasonable person would find hostile, offensive, and unrelated to an employer’s legitimate business interests.” Although A.B. 2053 provides that a single act is not abusive “unless especially severe and egregious,” its list of conduct that may be abusive is expansive:

  • infliction of verbal abuse, such as the use of derogatory remarks
  • insults
  • epithets
  • verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating
  • gratuitous sabotage or undermining of a person’s work performance

Supervisory employees must receive at least two hours of this enhanced anti-harassment training in an interactive format every two years.

Unpaid Interns Are Now Protected Against Discrimination and Harassment

Posted in Disability, Discrimination, Employment Policies, FEHA, Harassment, New and Proposed Laws and Legislation, News, Reasonable Accommodation, Religion, Retaliation, Uncategorized, Wage and Hour

On September 9, 2014, California Governor Jerry Brown signed A.B. 1443, which extends the state’s anti-harassment and anti-discrimination protections to unpaid interns.

Employers are now prohibited from discrimination based on protected characteristics in the “selection, termination, training or other terms” of unpaid interns. A.B. 1443 also prohibits harassment of unpaid interns based on protected characteristics, and it makes employers liable for sexual harassment of unpaid interns by non-employees if an employer knew or should have known of the conduct but failed to promptly take appropriate corrective action.

In addition, employers may not take adverse actions against unpaid interns based on their religious beliefs and must provide reasonable accommodations for religious observance unless doing so would pose an undue hardship.

Update: California Employees Entitled to Paid Sick Leave Starting July 2015

Posted in Disability, Employee Benefits, Employment Policies, New and Proposed Laws and Legislation, News

On September 10th, California became the second state in the country to require businesses to provide employees with paid sick leave, following Governor Jerry Brown’s signing of A.B. 1522, which goes into effect on July 1, 2015, and will be known as the Healthy Workplaces, Healthy Families Act of 2014.


Click here to read our detailed post about A.B. 1522.

September 2014 Employment Law Notes

Posted in Employment Law Notes

We invite you to review our newly-posted September 2014 California Employment Law Notes, a comprehensive review of the latest and most significant developments in California employment law. The highlights include:

California Employees May Soon Be Entitled to Paid Sick Leave

Posted in Client Alerts, Employee Benefits, Employment Policies, Leaves of Absence, Payroll, Wage and Hour

California Governor Jerry Brown has until September 30th to sign or veto A.B. 1522, a recently passed bill that would require businesses employing at least one person in California to provide employees with paid sick leave and to comply with new recordkeeping and informational requirements. If signed by the governor, the bill will become effective on July 1, 2015.

Most employees would accrue one hour of paid sick leave for every 30 hours worked.

Employees may use accrued sick leave for the treatment of their own or a family member’s existing health conditions, as well as for preventive care. In addition, employees may use sick leave to recover from crimes such as sexual assault and domestic violence. Employers must compensate time off at the employee’s regular rate of pay.

Employers would have limited compliance flexibility and exemptions.

For example, employers may set minimum sick leave use increments, albeit not greater than two hours. Yearly use may be limited to 24 hours (or three days) total. Although unused leave will carry over to the following year, accrual may be capped at 48 hours (or 6 days) total. Employees are not entitled to receive pay for unused leave upon separation; but those who are re-hired within one year must have their previously accrued leave balances reinstated.

Employers whose paid leave policies already comply with the bill’s requirements do not need to provide additional sick leave. Similarly, employers need not give sick leave to certain employees, such as those who provide in-home supportive services or are unionized under collective bargaining agreements that meet enumerated requirements.

Employers would face new recordkeeping and informational requirements.

At the time of hiring, employees must receive notice about their right to accrue and use sick leave free from retaliation. Employees would again receive notice of their rights under the bill through posters that the Labor Commissioner will create to be conspicuously displayed at the workplace. In addition, employees must receive written notice of accrued sick leave amounts on either their itemized wage statements or on separate documents provided with their wages on payday.

Employers must keep records of hours worked, as well as of accrued and used sick leave, for at least three years.

Beware the bill’s sharp enforcement teeth.

Not only does the bill prohibit retaliation, but also imposes a rebuttable presumption against employers who take adverse action against employees within 30 days of their exercise of their right to take sick leave. The Labor Commissioner, tasked with enforcing the bill, may levy fines against employers who violate the bill. Both the Labor Commissioner and the Attorney General are also empowered to bring civil suits on behalf of aggrieved employees.

July 2014 California Employment Law Notes

Posted in Employment Law Notes

We invite you to review our newly-posted July 2014 California Employment Law Notes, a comprehensive review of the latest and most significant developments in California employment law. The highlights include:

California Supreme Court Limits Recovery for Employees Who Misrepresent Their Immigration Status

Posted in E-Verify, Federal Jurisdiction, FEHA, Immigration, Wrongful Termination

On June 26, 2014, the California Supreme Court handed down Salas v. Sierra Chemical, a case at the intersection of employment and immigration law. Salas, a former employee of Sierra Chemical, filed suit alleging disability discrimination and wrongful termination. Prior to trial, Salas notified the court that he would assert a Fifth Amendment privilege to any questions regarding his immigration status. This apparently alerted Sierra Chemical, which investigated and discovered that Salas had wrongfully used someone else’s Social Security Number when applying for the job. Sierra then moved for summary judgment. The trial court initially denied the motion only to be reversed by a writ issued by the Court of Appeal. On remand, the trial court granted the motion for summary judgment, and the Court of Appeal affirmed.

The Supreme Court was called upon to determine whether plaintiff’s claims under the California Fair Employment and Housing Act (“FEHA”) were barred by the doctrines of after-acquired evidence and unclean hands, and whether California Senate Bill No. 1818, which states that “[f]or purposes of enforcing state labor, employment, civil rights, and employee housing laws, a person’s immigration status is irrelevant to the issue of liability,” statutorily preempted those common law defenses. The Supreme Court also asked the parties to submit briefing on whether federal immigration law, which forbids the knowing employment of any unauthorized worker, preempted state law on this issue.

The Court first held that federal immigration law preempted Senate Bill 1818 only in part. Citing the U.S. Supreme Court’s recent decision in Arizona v. U.S., 132 S. Ct. 2492 (2012), the Court held that federal law did not “preempt the field” – that is, supersede any and all state laws relating to immigrants. Instead, federal law only preempts state laws that conflict with a federal law or create an obstacle to achieving its objectives. Federal statutes expressly forbid an employer from employing anyone whom it knows is unauthorized to work in this country; doing so would subject an employer to civil and criminal sanctions. Thus, federal law preempts an award of lost wages that would have accrued after the employer discovered that the employee was unauthorized. However, since federal law does not forbid an employer from unknowingly employing an authorized worker, any preexisting lost wage claim remains valid.

The Supreme Court reversed the Court of Appeal’s holding that the affirmative defenses of unclean hands and after-acquired evidence served as complete defenses to Salas’s claims. Instead, the Court held that these are partial defenses whose application depends on the particular equities of each case. As a general rule, the Court held that “when the employer shows that information acquired after the employee’s claim has been made would have led to a lawful discharge or other employment action, remedies such as reinstatement, promotion, and pay for periods after the employer learned of such information would be inequitable and pointless,” thus precluding a plaintiff from claiming such relief.

However, in line with the U.S. Supreme Court’s decision in McKennon v. Nashville Banner Publishing Co., 513 U.S. 352 (1995), the California Supreme Court held that “to allow . . . after-acquired evidence to be a complete defense would eviscerate the public polices embodied in the FEHA by allowing an employer to engage in invidious employment discrimination with total impunity.” Consequently, the employee could seek compensation “for loss of employment from the date of wrongful discharge or refusal to hire to the date on which the employer acquired information of the employee’s wrongdoing or ineligibility for employment.” The Court did not address the effect that after-acquired evidence or unclean hands could have on a plaintiff’s claim to compensatory or punitive damages, although it has generally been held that a plaintiff may seek such damages in connection with his or her claim of employment discrimination.

The Court found that there was a disputed issue of fact whether Sierra Chemical knew of the incorrect Social Security Number before Salas’s termination. If it did, the employer’s decision to “look the other way” would adversely affect its right to assert the after-acquired evidence and unclean hands defenses. The Court thus remanded for further findings of fact on this issue.

As this opinion addresses the “hot topic” of illegal immigration, in a field traditionally reserved solely to federal authority, it will be interesting to see whether Sierra Chemical seeks review by the U.S. Supreme Court. Assuming that this result stands, the primary takeaway for employers is, as ever, to remain vigilant about the employment status of their employees and to take the appropriate action upon receiving information showing that the employee lacks authorization to work in this country. In addition, when faced with litigation, a defendant should take the initiative to investigate potential affirmative defenses at an early stage of litigation and assert them as quickly as possible.

California Supreme Court Leaves Unanswered Questions in Independent Contractor Case

Posted in Class Actions, Independent Contractors

On Monday, June 30, 2014, the California Supreme Court handed down its decision in Ayala v. Antelope Valley Newspapers, a lawsuit brought on behalf of a group of newspaper delivery carriers who alleged that they had been misclassified as independent contractors instead of employees.  The trial court had initially denied certification, finding that common issues did not predominate and that a classwide trial would be unmanageable in view of the differences in the way in which each carrier performed his or her work and the type of supervision that the company exercised over each.  The Court of Appeal reversed in part, finding that some of the claims were suitable for class treatment while others (such as overtime and meal and rest break claims) were not.  (Our discussion of the 2012 Court of Appeal decision may be found here.)

The California Supreme Court affirmed and held that the independent contractor analysis could be resolved on a classwide basis.  This holding depends largely on a quirk of the common law independent contractor-employee test:  the crucial question is not whether the company actually exercises control over the worker’s daily tasks; the question is whether the company has authority to do so.  In this case, the scope of the company’s authority to control the workers was set forth in the parties’ contracts, which were all essentially identical.  Therefore, the interpretation of that contract created a common issue that could answered on a classwide basis.  The Supreme Court held that in at least some cases, the parties’ actual conduct could be relevant to the analysis to show that different workers had “variable rights.”  However, the Court did not set forth a clear test for when this conduct should be considered.

Ayala is notable for what it does not decide.  Going forward there remains an open question as to what factors California courts should apply in wage and hour cases involving independent contractors – the traditional common law test, the factors set forth in the Wage Orders, the factors used by federal courts interpreting the FLSA, or some conglomeration of all three?  This may be an issue that the Court will revisit in another case.  The Court also declined to set forth any broad principles of law related to class certification, as its discussion on this issue is mostly limited to a short recitation of its own prior precedent.  As a result, Ayala, far from a landmark opinion, is a study in judicial restraint – a narrowly decided case, closely tied to its specific facts, without the wide-reaching ramifications of other recent cases such as Duran and Iskanian.

Employers Should Now Run—Not Walk—Toward Adopting Arbitration Agreements in California

Posted in Arbitration Agreements, Class Actions, NLRA, PAGA

Yesterday, the California Supreme Court issued its long-awaited decision in Iskanian v. CLS Transp. Los Angeles, LLC, upholding class action waivers in employment arbitration agreements. This means that the U.S. Supreme Court’s 2011 opinion in AT&T Mobility LLC v. Concepcion is to be given full force and effect in the employment setting in California. That said, however, Iskanian distinguishes the right of an employee to bring a representative action under California’s Private Attorneys General Act of 2004 (“PAGA”), and holds that such claims may not be barred in an arbitration agreement.

Iskanian is a favorable decision for employers. First, Iskanian reaffirms that class actions are a procedural device that exist to make the resolution of certain claims more efficient, not a substantive right to which litigants are invariably entitled. Iskanian also rejects the NLRB’s conclusion in D.R. Horton (discussed in detail here­) that class action waivers violate employees’ rights under Section 7 of the National Labor Relations Act to engage in “concerted activities for the purpose of collective bargaining or other mutual aid or protection.”

Additionally, Iskanian confirms that an employer does not waive its right to enforce an arbitration agreement when the law suggests that moving to compel arbitration would be futile. In Iskanian, for example, the employer withdrew its petition to compel arbitration when the California Supreme Court issued its opinion in Gentry v. Superior Court (which made clear that further petition would be futile), and renewed its petition after the U.S. Supreme Court decided Concepcion, which implicitly overruled Gentry. In this context, Iskanian holds that a delay in moving to compel arbitration is permitted so long as it is not unreasonable.

In sum, Iskanian clears the way for employers to enter into enforceable arbitration agreements that also contain class action waivers. Further, employers should know that arbitration agreements also operate as “wolfsbane” in warding off some of the most active members of the Plaintiffs’ bar who simply refuse to take a case to arbitration—they would much prefer to pluck at the heart strings of a sympathetic jury. And, while representative PAGA actions may survive and are likely to multiply in the wake of Iskanian, these actions are subject to a significantly shorter statute of limitations period (one year) as compared to the four year statute of limitations employers typically see in other non-PAGA actions. This means that any putative “representative group” will consist of significantly fewer employees (and possibly less exposure).

California Courts May No Longer Be Able to Certify a Ham Sandwich

Posted in Class Actions, Exempt Employees, FLSA, Meal Periods and Rest Breaks, PAGA, Wage and Hour
Commentators have quipped that class certification is so easy in California that with little effort a group of plaintiffs could certify even a ham sandwich.  In fact, as we have discussed here, we have seen a proliferation of recent appellate decisions hinging class certification on the mere existence of an employer’s uniform policy – no matter how facially lawful that policy may be or how diverse its application is to the putative class at issue.The law may be changing.  On May 29, 2014, the California Supreme Court issued its long-awaited decision in Duran v. U.S. Bank Nat’l Ass’n, which sets forth the degree of rigorous analysis in which trial courts must engage before certifying a class action.  Importantly, Duranconfirms that plaintiffs need more than the mere existence of a uniform policy to support their effort to certify a class.Duran involves a group of loan officers for U.S. Bank who allege they were misclassified as overtime-exempt pursuant to the outside sales exception, which applies to employees who spend more than 50% of their workday engaged in sales activities outside their home office.  Plaintiffs argued that the common issue for certification purposes was the fact that U.S. Bank had a common policy that classified its loan officers as exempt and used a common job description.  Rejecting this argument, the Supreme Court confirmed that plaintiffs need more: “In wage and hour cases where a party seeks class certification based on allegations that the employer consistently imposed a uniform policy or de facto practice on class members, the party must still demonstrate that the illegal effects of this conduct can be proven efficiently and manageably within a class setting.”

Accordingly, Duran instructs trial courts to examine how any purportedly unlawful policy is applied to the putative class when deciding to certify the class and how any individualized issues surrounding this application will be managed at trial.  The Court said, “[t]rial courts must pay careful attention to manageability when deciding whether to certify a class action” and explained that “[i]f the court makes a reasoned, informed decision about manageability at the certification stage, the litigants can plan accordingly…”

In this way, Duran seems to adopt the reasoning of the U.S. Supreme Court’s 2011 decision in Wal-Mart Stores v. Dukes, thereby making Dukes’ application to California state law class actions apparent.  First, Duran relies on Dukes in affirming that a defendant has a due process right to litigate its defenses and that the individualized issues surrounding these defenses must be considered at the class certification stage.  Second, in stating that class certification must hinge on “some glue that binds class members together” Duran seems to echo the U.S. Supreme Court’s admonition in Dukes that plaintiffs need some “glue holding the alleged reasons for [the unlawful conduct] together” in order to support class certification.  Both Duran and Dukes similarly instruct that class certification is proper only where an examination of all of the class members’ claims for relief will produce a common answer to the critical liability question.

Additionally, Duran confirms that plaintiffs may propose using statistical or survey data to prove class wide liability at trial.  However, the Court clearly stated that plaintiffs cannot use statistical evidence as “an evidentiary substitute for demonstrating commonality.”  For example, in Duran, even though the trial court found certain allegations were common to the class (i.e. whether U.S. Bank uniformly classified the loan officers as exempt employees and allegedly failed to train or monitor their compliance with the exemption), these questions did not produce common answers as to how the 260 class members actually spent their time.  Moreover, the statistical model used by the trial court failed to ameliorate the problem.

The trial court permitted plaintiffs to submit a “random” sample of 20 employees chosen by the court and did not permit U.S. Bank to introduce any favorable evidence from employees who were not part of the sample.  Based on the evidence from this 20-employee sample and statistical extrapolations that were applied to the rest of the class, judgment was rendered against U.S. Bank for the misclassification of all 260 employees – even though some of those employees signed declarations demonstrating that they were properly classified as exempt.  Duran, therefore, emphasizes that when using statistical evidence, the defendant must be permitted to address questions supporting its defenses even if those questions must be answered on an individualized basis.  And, if these individualized questions become so numerous that the trial would be unmanageable, the class should not be certified.