California Employment Law Update

McDonald’s Corp Was Not The Joint Employer Of Its Franchisees’ Employees

Salazar v. McDonald’s Corp., 939 F.3d 1051 (9th Cir. 2019)

McDonald’s Corporation (“McDonald’s”) was named as a defendant in a putative class action filed by the employees of the Haynes Family Limited Partnership, which operated eight McDonald’s franchises in the Bay Area. The putative class members alleged they were denied overtime premiums, meal and rest breaks and other violations of the California Labor Code; they further alleged that McDonald’s and its franchises were their joint employers for purposes of wage and hour liability. The district court granted summary judgment in favor of McDonald’s, and the Ninth Circuit affirmed, holding that any control McDonald’s asserted over its franchisees’ workers was geared toward quality control and not over the “day-to-day aspects” of the work at the franchises. Similarly, the Court held that McDonald’s did not “suffer or permit” the franchisees’ employees to work for it nor were those workers employed by McDonald’s under a common law theory of employment. See also Henderson v. Equilon Enter., LLC, 2019 WL 4942458 (Cal. Ct. App. 2019) (same).

Employer May Have FEHA Liability If It Exercised Direction/Control Over Temp Worker

Jimenez v. U.S. Continental Mktg., Inc., 2019 WL 5257938 (Cal. Ct. App. 2019)

Elvia Velasco Jimenez asserted claims under the FEHA against her “contracting employer,” a manufacturing company named U.S. Continental Marketing Inc. (“USCM”) for which she performed services, and a “temporary-staffing agency” named Ameritemps. At trial, the jury agreed with USCM that it was not Jimenez’s employer, and the trial court entered judgment in its favor. The Court of Appeal reversed the judgment in part, holding that Jimenez was entitled to a new trial on her discrimination and wrongful termination claims at which the jury should be instructed that USCM was Jimenez’s employer. The Court held that “where a FEHA claimant presents substantial evidence of an employment relationship that is rebutted only by direction and control evidence outside the bounds of the contractual context (such as in a temporary-staffing situation where hiring, payment, benefits and time-tracking are handled by a temporary-staffing agency), the claimant has demonstrated an employment relationship for FEHA purposes.”

Employee Failed To Present Sufficient Evidence At Trial To Support Retaliation Claim

Nejadian v. County of Los Angeles, 40 Cal. App. 5th 703 (2019)

Patrick Nejadian sued his former employer, the County of Los Angeles, for age discrimination and retaliation and was awarded $300,000 on the retaliation claims (arising under the FEHA and the Labor Code); the jury found no liability on the age discrimination claim. The Court of Appeal reversed the judgment on the ground that Nejadian had failed to present sufficient evidence to support his claims. The Court held that under Cal. Lab. Code § 1102.5(c), an employee is required to show that the activity in question actually would result in a violation or noncompliance with a statute, rule, or regulation, which is “a quintessentially legal question” for the trial court. Once it is determined by the court that the activity would result in a violation or noncompliance with a statute, rule, or regulation, the jury must then determine whether the plaintiff refused to participate in that activity and, if so, whether that refusal was a contributing factor in the defendant’s decision to impose an adverse employment action on the plaintiff. (The Court of Appeal acknowledged that the “Directions for Use” of CACI No. 4603 should include an explanation about this procedure.) In reviewing the evidence presented, the Court determined that “Nejadian mostly referred to the activities in generalities” and failed to present sufficient evidence to show that the activities in question would result in a violation of any specific state, federal, or local statute, rule, or regulation. Similarly, the alleged retaliation under the FEHA did not constitute protected activity because the conversation in which he told a coworker that he felt discriminated against based upon his age “was part of an informal discussion between coworkers, and [the coworker] did not report Nejadian’s statement to management.”

Discriminatory Failure-To-Hire Claim Must Be Brought Under The FEHA

Williams v. Sacramento River Cats Baseball Club, LLC, 40 Cal. App. 5th 280 (2019)

Wilfert Williams sued the Sacramento River Cats Baseball Club under a common law tort action for allegedly failing to hire him as an assistant visitor clubhouse manager because of his race. The trial court sustained the employer’s demurrer to the complaint on the ground that California law does not recognize a common law cause of action for failure to hire in violation of public policy. The Court of Appeal affirmed dismissal of the claim on the ground that only an employee (as distinguished from an applicant) may bring a common law claim for discrimination against an employer. The Court noted, however, “plaintiff is not without recourse” because Williams could have sued under the California Fair Employment and Housing Act (“FEHA”). Cf. Rojas v. Federal Aviation Admin., 2019 WL 5382055 (9th Cir. 2019) (rejected air traffic control applicant is entitled to some information regarding application process under the Freedom of Information Act).

College Professor Was Retaliated Against For Complaining About Hostile Environment

Gupta v. Trustees of the Cal. State Univ., 40 Cal. App. 5th 510 (2019)

Rashmi Gupta was denied a promotion to associate professor and lifetime tenure at San Francisco State University and was terminated after she and several other women of color in the University’s School of Social Work complained about alleged “abuse of power and authority, excessive micromanagement, bullying, and the creation of a hostile environment.” Gupta sued the University for discrimination and retaliation, and the jury awarded her $378,421 on the retaliation claim but found no liability on the discrimination claim. The trial court awarded Gupta an additional $587,161 in attorney’s fees and costs, but denied her request for immediate reinstatement based upon there being no available position for her at the University. The Court of Appeal affirmed the judgment, holding that Gupta was not required to show she was “clearly superior” to a “comparator professor” who was granted tenure (but who had not complained). See also Godecke ex rel. United States v. Kinetic Concepts, 937 F.3d 1201 (9th Cir. 2019) (billing company employee sufficiently alleged a fraudulent scheme to submit false claims to Medicare in violation of the federal False Claims Act).

Court Upholds Whistleblower Verdicts In Favor Of Fired Parking Ticket Hearing Examiners

Hawkins v. City of Los Angeles, 40 Cal. App. 5th 384 (2019)

Todd Hawkins and Hyung Kim were terminated from their jobs as hearing examiners at the Los Angeles Department of Transportation. Hawkins and Kim alleged they had been fired for whistleblowing on the City’s practice of pressuring parking ticket hearing examiners to change decisions from “not liable” to “liable,” meaning that drivers who had challenged their tickets were not getting refunds to which hearing examiners had found they were entitled. The jury respectively awarded Hawkins $238,531 and Kim $188,631 in damages, and the trial court assessed a $20,000 penalty under the Private Attorneys General Act (“PAGA”) and awarded plaintiffs $1,054,286.88 in attorney’s fees. The Court of Appeal affirmed the judgment, holding that the City’s proffered reasons for firing plaintiffs were pretextual because, among other things, the employees were not terminated for the alleged performance deficiencies until after they had complained. Further, there was “overwhelming evidence” that supervisors had instructed hearing officers to change decisions: “Liable. Liable. Liable. Everything had to be liable.”

Two Important Stragglers Among California’s New Labor Laws

Last week, we blogged about the avalanche of new labor laws that California employers will face in 2020.  Here are two late additions to the list  — just in time for Halloween!:

AB 61 (Ting, D-San Francisco) grants employers and coworkers the right to petition a court to issue a gun violence restraining order, which prevents an individual who presents a threat to him/herself or others from “having in [his or her] custody or control, owning, purchasing, possessing, or receiving a firearm or ammunition.” To be a qualifying coworker under this bill, the coworker must have had “substantial and regular” interactions with the subject of the petition for at least one year, and the employer must give permission to the coworker to obtain the restraining order.

AB 749 (Stone, D-Scotts Valley) prohibits the use of what has become nearly ubiquitous no re-hire provisions in settlement agreements of employment disputes unless the employer has a legitimate nondiscriminatory or nonretaliatory reason for terminating or refusing to rehire the person or that person has committed sexual harassment or assault (based upon a good-faith determination by the employer). The prohibition only applies to “aggrieved persons,” which is defined as a person who has filed a claim against the person’s employer in court, before an administrative agency, in an alternative dispute resolution forum, or through the employer’s internal complaint process. Thus, employers may still include no re-hire provisions in severance or settlement agreements that are negotiated in response to demand letters or unfiled claims (as defined).