California Employment Law Update

Stick to the Schedule: Los Angeles Imposes Significant New Requirements on Retail Employers

On November 22, 2022, the Los Angeles City Council unanimously passed the Fair Work Week Ordinance (“FWWO”).  Set to take effect in April 2023, the new law imposes significant requirements on retail employers in the City of Los Angeles with respect to both scheduling and hiring.  It follows in the footsteps of similar predictive scheduling laws already on the books in other major cities, including San Francisco, Seattle, New York City, Chicago and Philadelphia.  

Although the FWWO is bad news for retailers, its scope is relatively narrow.  To be covered, an employer must (1) be identified as a retail business by the North American Industry Classification System and fall within retail trade categories 44 through 45, and (2) have 300 or more employees globally (including employees placed through a temporary service or staffing agency, employees of the employer’s subsidiary, and some franchise employees).  Any employee who qualifies for minimum wage and performs at least two hours of work in a workweek in the City is covered by the FWWO.

Some of the FWWO’s more notable provisions include the following:

  • Two Week Notice Requirement for Work Schedules. Under the FWWO, employers will be required to notify their employees of their work schedule at least 14 calendar days before the start of the work period, either by posting the schedule in a conspicuous and accessible place in the workplace or by providing the schedule electronically to employees.  Any subsequent changes to an employee’s work schedule must be made in writing (either by posting or electronic transmission to the employee(s)), and employees can decline any hour, shift, or work location changes not included in their original work schedule.  On the other hand, if an employee agrees to a schedule change, they must do so in writing.
  • Predictability Pay. Under the FWWO, an employee is entitled to predictability pay for each change to a scheduled date, time, or location of the employee’s schedule with less than 14 days’ advance notice. Where an employee agrees to a change to their schedule after its posting, and the change results in either no loss of time or additional work time exceeding 15 minutes, the employer must pay the employee one additional hour of pay at the employee’s regular rate for each change.  If an employer reduces the employee’s work time from what was listed in their schedule by 15 minutes or more, the employer must pay the employee one-half their regular rate of pay for the time the employee does not work (e., ½ the employee’s regular rate for the period that the employee would have worked before the schedule change).  Predictability pay is not required where: (1) the employee requests the schedule change, (2) the employee voluntarily accepts a schedule change made by the employer due to absence of another employee, (3) the employee accepts additional work hours that were offered by the employer, (4) the employee’s work hours are reduced because the employee violated the law or the employer’s lawful policies or procedures, (5) the employer’s operations are affected by law or force majeure, or (6) the extra hours the employee worked require the payment of overtime wages.
  • Existing Employees’ Right of First Refusal for Additional Work. In addition to predictable scheduling provisions, the FWWO also limits employers’ ability to hire additional workers to meet unanticipated demand.  Specifically, where additional work hours become available, employers must offer the additional hours to current employees before hiring any additional employees (or going through a staffing agency or temporary service) to do the work if (1) one or more current employees are qualified to do the job, and (2) the employer would not be required to pay overtime pay to the current employee that takes on the additional work.
  • Rest Between Shifts. Employers will need an employee’s written consent to schedule the employee for a shift that begins less than ten hours from the end of the employee’s last shift.  In addition, if an employee is scheduled for a shift that begins less than ten hours after the end of their last shift, they must be paid a time and a half premium.
  • Good Faith Estimates of Work Schedules. The FWWO requires covered employers provide a written “good faith estimate” of an employee’s work schedule upon hire, and within ten days of an existing employee’s request.  Although the good faith estimate is not legally binding, if the employee’s actual work hours substantially deviate from the estimate, the employer must have a documented legitimate business reason that was unknown at the time the good faith estimate was provided.

In addition to the above, the FWWO also imposes notice and recordkeeping requirements, and prohibits employers from retaliating against any employees for exercising rights under the new law.  Employers in the retail industry should examine their scheduling practices carefully and consult with counsel before the FWWO takes effect on April 1, 2023.



Arbitrator Should Decide Whether NY or CA Law Applies

A California court has ruled that an arbitrator (not a judge) should decide on the applicability of California Labor Code Section 925 to a dispute between a law firm partner and his former law firm. Zhang v. Superior Court, 2022 WL 16832570 (Cal. Ct. App. 2022).  This ruling potentially undermines the protections of Labor Code Section 925, which permits an employee to void a contractual provision that requires the employee to adjudicate a claim outside of California that arose in the state.

Jinshu (“John”) Zhang was an equity partner at Dentons U.S. LLP.  After Dentons terminated Zhang’s service over a dispute about his compensation related to a multi-million dollar contingency fee, the parties brought dueling actions in New York and California.  Dentons initiated an arbitration in New York pursuant to the arbitration clause in the partnership agreement, while Zhang brought a wrongful termination action in Los Angeles Superior Court.

The partnership agreement contained a broad arbitration clause that covered “all disputes related to the validity, breach, interpretation, or enforcement of [the partnership agreement]” and designated the place of arbitration as “either Chicago, Illinois or New York, New York.”  The arbitration clause also contained a delegation clause which delegated all questions of arbitrability to the arbitrator.

Dentons filed a motion to compel arbitration in New York and a motion to stay the action in the Los Angeles Superior Court under California Code of Civil Procedure Section 1281.4, which permits a court to stay an action where an application was made to a court “of competent jurisdiction” to order arbitration.  The Superior Court granted but later vacated an injunction staying the New York arbitration.  The Superior Court also stayed the California action, finding that it lacked jurisdiction because the parties delegated questions of arbitrability to the arbitrator.  Zhang sought a writ of mandate, which was denied. The California Supreme Court granted review and transferred the case back to the Court of Appeal, which in this latest opinion denied the petition and determined that the parties had delegated questions of arbitrability to the arbitrator.

Zhang argued that the New York court was not a court of competent jurisdiction that could compel arbitration because Labor Code Section 925 prohibits an employer from requiring a California “employee” to adjudicate a claim that arose in California.  The Court of Appeal rejected Zhang’s analysis, finding that the argument ignored the threshold issue:  whether the equity partner was an “employee” who could invoke Labor Code Section 925 in the first instance.

The Court held that Zhang’s status as an employee was an issue of arbitrability.  Thus, the parties’ clear and unmistakable delegation clause, which provided that issues of arbitrability would be decided by the arbitrator, mandated that the arbitrator, not the court, must determine whether Zhang was an employee such that he could invoke Labor Code Section 925.

Beyond the threshold question of the employee status of a law firm’s equity partner, this ruling may provide some practical guidance to practitioners in drafting future arbitration agreements with out-of-state forum and choice of law provisions.  An exception to Labor Code Section 925 permits employees who are represented by legal counsel to select another state’s law to govern the parties’ agreement.  Thus, in cases where an employee is represented by counsel and is covered by an arbitration agreement which has a delegation clause and an out-of-state choice of law provision, application of Labor Code Section 925 and choice of law may ultimately be determined by an arbitrator outside of California.

November 2022 California Employment Law Notes

We invite you to review our newly-posted November 2022 California Employment Law Notes, a comprehensive review of the latest and most significant developments in California employment law. The highlights include:

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Former Employee Was Not Injured By Alleged Violation Of FCRA

Limon v. Circle K Stores Inc., 2022 WL 14391789 (Cal. Ct. App. 2022)

Plaintiff Ernesto Limon was employed by Circle K (which operates gas stations and convenience stores in California) for just one month before filing this putative class action lawsuit against his former employer, alleging violation of the Fair Credit Reporting Act (FCRA).  Limon alleged that Circle K’s standard form in which it seeks a job applicant’s consent to conduct a background check violated FCRA’s “standalone disclosure” requirement because it contained “extraneous provisions” and, further, that he was “confused regarding the nature of his rights under the FCRA.”  After suing Circle K in federal court (and losing), Limon initiated this action in state court.  The trial court also dismissed Limon’s action based on Limon’s inability to establish he had suffered a concrete injury as a result of Circle K’s actions.  The Court of Appeal affirmed on the ground that Limon had not suffered a sufficient concrete or particularized injury to have standing to sue Circle K.

Target Of Workplace Violence TRO Was Entitled To Cross Examine Witnesses

CSV Hospitality Mgmt. LLC v. Lucas, 84 Cal. App. 5th 117 (2022)

CSV Hospitality Management LLC obtained a restraining order under the Workplace Violence Safety Act against Jermorio Lucas who was living at the Aranda Residence, a residential hotel that provides supportive housing to formerly homeless individuals.  In support of its petition against Lucas, CSV submitted affidavits from four of its employees establishing that Lucas had been “very aggressive and confrontational” towards other tenants and Aranda Residence employees.  Among other things, Lucas verbally abused employees while they were working, stalked them, took photos and videos of them without their consent, and even forcefully pushed one of the employees into a window.  The trial court granted a temporary restraining order against Lucas and set the matter for an evidentiary hearing.  The trial judge denied Lucas’s counsel’s request to cross examine CSV’s witnesses and ordered Lucas to refrain from harassing, threatening, following or contacting CSV’s employees and Lucas was forbidden from possessing a firearm.  The Court of Appeal reversed the workplace violence restraining order due to the denial of Lucas’s due process right to cross examine one of CSV’s witnesses.

Employer Waived Right To Arbitration By Failing To Timely Pay Arbitration Fees

Espinoza v. Superior Court, 83 Cal. App. 5th 761 (2022)

Rosa M. Quincoza Espinoza sued her former employer, Centinela Skilled Nursing & Wellness Centre West, LLC, for discrimination and retaliation.  The employer filed a motion to stay the litigation and compel arbitration, invoking the terms of an arbitration agreement that Espinoza had signed.  After the employer’s motion to compel arbitration was granted, Espinoza’s counsel emailed the arbitration provider and initiated an arbitration.  On May 24, 2021, the arbitration provider sent the parties an initial invoice for an administrative fee and telephonic arbitration management conference with a due date of May 31, 2021.  On July 1, 2021, the arbitration provider confirmed to plaintiff’s counsel that it had yet to receive payment of the invoice from the employer.  Plaintiff then filed a motion in the trial court pursuant to Cal. Code Civ. Proc. §§ 1281.97 and 1281.98, contending that the employer had materially breached the arbitration agreement and waived its right to compel arbitration by failing to pay the invoice within 30 days of the due date.  Although the trial court denied the motion on the ground that defendant was in “substantial compliance” with the arbitration provision and plaintiff did not suffer “material prejudice,” the Court of Appeal held that Section 1281.97 does not contain exceptions for substantial non-compliance, inadvertent non-payment, or absence of prejudice and this interpretation of the statute is not preempted by the Federal Arbitration Act.  Accordingly, the  Court issued a peremptory writ of mandate directing the trial court to: vacate its order denying plaintiff’s motion; order the lifting of the stay of litigation in court; and determine whether plaintiff’s motion for sanctions should be granted pursuant to Cal. Code Civ. Proc. § 1281.99. See also Davis v. Shiekh Shoes, LLC, 2022 WL 16546189 (Cal. Ct. App. 2022) (employer waived right to arbitration by failing to file motion to compel arbitration for 18 months and by actively participating in the lawsuit).

Hirer Of Independent Contractor Is Not Liable For Injury To Contractor’s Employee

Miller v. Roseville Lodge No. 1293, 83 Cal. App. 5th 825 (2022)

Roseville Lodge No. 1293, Loyal Order of Moose, Inc., hired Charlie Gelatini to move an ATM on its premises.  Ricky Lee Miller, Jr., who worked for Gelatini and was the person who performed the work, was injured on the job when he fell from a scaffold.  Miller sued the Lodge and its bartender for his injuries.  Relying upon the well-established Privette doctrine, the Lodge and Dickinson argued that they were not liable for Miller’s injuries since he was Gelatini’s employee and not theirs.  The trial court granted defendants’ summary judgment motion, and the Court of Appeal affirmed, ruling that the Privette doctrine holds that a hirer generally delegates to an independent contractor all responsibility for workplace safety and is not liable for injuries sustained by the contractor or its workers while on the job.  The Court rejected Miller’s arguments that the retained control or concealed hazardous conditions exceptions to the Privette doctrine applied.  Compare Ramirez v. PK 1 Plaza 580 SC, LP, 2022 WL 16846274 (Cal. Ct. App. 2022) (Privette doctrine does not apply where landowner did not hire independent contractor).

Offer To Settle Expired When The Court Granted Summary Judgment Motion

Trujillo v. City of Los Angeles, 2022 WL 15119812 (Cal. Ct. App. 2022)

In a negligence case, the City of Los Angeles made a settlement offer to the plaintiff pursuant to Cal. Code Civ. Proc. § 998 a few days before the hearing on defendant’s motion for summary judgment.  Just four minutes after the court granted defendant’s summary judgment motion, plaintiff’s counsel emailed a purported acceptance of the settlement offer to the City.  The trial court entered judgment for the defendant, implicitly ruling that plaintiff’s acceptance was inoperative.  The Court of Appeal affirmed, holding that “[b]ecause a dispute is resolved and the outcome of the litigation becomes certain and known once a trial court issues its oral ruling granting summary judgment, that is the point in time at which both the text and purpose of section 998 dictate that the pending section 998 offer is no longer operative.”

School District Employee May Have Been Discriminated Against On The Basis Of A Disability

Price v. Victor Valley Union High Sch. Dist., 2022 WL 16845113 (Cal. Ct. App. 2022)

La Vonya Price worked as a part-time substitute special education aide at the Victor Valley Unified School District before applying for a full-time position.  Although she received an offer for a full-time position, it was contingent upon her passing a physical exam, which she failed.  Price sued for disability discrimination and related claims.  The trial court granted the District’s motion for summary judgment, but the Court of Appeal reversed in part.  The appellate court rejected the District’s argument that Price was not qualified to perform the job because she failed the physical examination and was unable to perform the essential functions of the job, such as running after students.  The Court disagreed that running after students was an essential function of a full-time instructional assistant’s job especially given that Price worked in the same position in a part-time capacity before being offered a full-time position.  Price also established that she could have been placed in a setting where special needs students do not require any physical assistance or supervision.  Further, the Court determined that the comment (repeated four times) from the District’s Director of Classified Personnel that Price was “a liability” created a triable issue of material fact as to whether the District’s stated reasons for rescinding the job offer were pretextual.  The Court also held that the District was under no obligation to engage in the interactive process with Price because her disability, resulting limitations, and necessary reasonable accommodations were not open and obvious (she denied having a disability or any limitations), which meant that she had the initial burden to initiate the interactive process and request a reasonable accommodation.  Finally, the Court held that the retaliation claim was properly dismissed because the decision to terminate her employment was made before she allegedly engaged in any protected activity.

Whistleblower Claim Should Not Have Been Dismissed In Part

Killgore v. SpecPro Prof’l Servs., LLC, 51 F.4th 973 (9th Cir. 2022)

While consulting for an environmental project for the United States Army Reserve Command, Aaron Killgore believed he was being required to prepare an environmental assessment in a manner that violated federal law. Killgore was fired shortly after he reported the suspected illegality to his supervisor and the Army Reserve’s project leader Chief Laura Caballero, who Killgore alleged gave the unlawful directives. The district court granted SpecPro’s partial motion for summary judgment, but the Ninth Circuit reversed, holding that Killgore’s disclosure to his supervisor was actionable even though the supervisor to whom Killgore made the disclosure did not have “authority to investigate, discover, or correct the violation” within the meaning of Cal. Lab. Code § 1102.5(b). The Court also held that Killgore’s disclosure to Caballero was an actionable disclosure to a “government agency” within the meaning of the statute even though the disclosure was part of Killgore’s normal duties and Caballero may have been a “wrongdoer” who was the subject of the disclosure. However, the Ninth Circuit affirmed dismissal of Killgore’s retaliation claim, finding that Killgore failed to present evidence that he refused to participate in illegal activity within the meaning of Section 1102.5(c).


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