Crisis Averted: California Employers Are Not Liable for “Take-Home” COVID Cases.

Last week, the California Supreme Court unanimously ruled that employers are not liable to nonemployees who contract COVID-19 from employee household members that bring the virus home from their workplace, because “[a]n employer does not owe a duty of care under California law to prevent the spread of COVID-19 to employees’ household members.” Kuciemba v. Victory Woodworks, Inc., No. S274191 (Cal. July 6, 2023), slip op. at 49.

We previously covered the Kuciemba action here, but as a reminder, the Ninth Circuit certified two questions to the California Supreme Court: (1) If an employee contracts COVID-19 at the workplace and brings the virus home to a spouse, does the California Workers’ Compensation Act (Lab. Code, § 3200 et seq.) (the “WCA”) bar the spouse’s negligence claim against the employer, and (2) Does an employer owe a duty of care under California law to prevent the spread of COVID-19 to employees’ household members?

The court answered the first question in the plaintiff’s favor, concluding “take home” COVID-19 claims do not fall under the Workers’ Compensation regime and therefore are not barred by the exclusivity provisions of the WCA. However, as a practical matter, the court’s ruling on the second question—that employers owe no such duty of care—bars negligence claims for COVID-19 infection by members of an employee’s household.

Public policy concerns drove the court’s analysis. As it explained:

Imposing on employers a tort duty to each employee’s household members to prevent the spread of this highly transmissible virus would throw open the courthouse doors to a deluge of lawsuits that would be both hard to prove and difficult to cull early in the proceedings. Although it is foreseeable that employees infected at work will carry the virus home and infect their loved ones, the dramatic expansion of liability plaintiffs’ suit envisions has the potential to destroy businesses and curtail, if not outright end, the provision of essential public services. These are the type of ‘policy considerations [that] dictate a cause of action should not be sanctioned no matter how foreseeable the risk.’ Slip op. at 46 (quoting Elden v. Sheldon, 46 Cal. 3d 267, 274 (1988)).

Although the California Supreme Court is a notoriously difficult venue for employers (as we have frequently observed), in Kuciemba, the court took a pragmatic approach to avoiding a catastrophe for employers and the judicial system alike. Employers of all kinds can breathe a sigh of relief.

Tags: California Supreme Court, workers' compensation

If We’ve Said It Once, We’ve Said It 1,000 Times… Pay Those Arbitration Fees Early And Often!

By Tony Oncidi and Dixie Morrison on July 10, 2023 Posted in Arbitration Agreements, Breach of Contract, California Labor & Employment Law

Many California employers and their counsel remain blissfully ignorant of the latest “gotcha” law in California, which can easily derail an otherwise perfectly planned arbitration. Back in 2019, the California legislature, an implacable foe of arbitration agreements, set a booby trap for unsuspecting employers by requiring the timely payment of arbitration fees and costs on pain of “waiving” the right to arbitrate. (The same gotcha applies to consumer arbitrations.)

Specifically, Section 1281.98(a)(1) of the Code of Civil Procedure provides that in an employment or consumer arbitration, if the drafting party (i.e., the defendant) does not pay the invoiced costs and fees to the arbitration provider within 30 days of the due date, that party “is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel the employee or consumer to proceed with that arbitration.” It bears noting that the employee/consumer relying upon this statute to torpedo the arbitration need not plead or prove any form of harm or damage resulting from this so-called “material breach” of the arbitration agreement.

In Cvejic v. Skyview Capital, LLC, yet another appellate court applied this unforgiving statute in an employment case and found that by failing to pay the required fees within 30 days of the due date, the employer was in “material breach of the arbitration agreement” even though the arbitration panel actually set a later payment deadline after being notified of Skyview’s failure to pay. The court held that the new deadline did not retroactively “cure” Skyview’s material breach and subsequent triggering of Section 1281.98.

This is just the most recent court to so hold, following a similar 2022 decision by a state appellate court on which we previously reported.

While this latest legislative attack on arbitration may someday get struck down by a federal court that is less hostile to arbitration (see, e.g., Chamber of Commerce v. Bonta, the recent opinion from the Ninth Circuit striking down Section 432.6 of the Labor Code), until that happens, employers and their counsel should be vigilant in making timely payment of the arbitration fees and costs as soon as they get the bill!

EEOC Releases New Employer Guidance On Pregnant Workers Fairness Act

By Tony Oncidi and Ryan McGill on June 27, 2023 Posted in ADA, Biden Administration Coverage, New and Proposed Laws and Legislation, Pregnancy Leave

As we covered here, the Pregnant Workers Fairness Act (PWFA) is effective today! As a reminder, the PWFA extends the requirements of the ADA to employees with known limitations related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions. The EEOC stated that they will begin accepting charges of discrimination for incidents occurring on or after June 27, 2023.

Employers should review the EEOC’s newly published guidance. The EEOC has also prepared an infographic for employers, an informational poster, and tips directed at employees. Supervisor training is recommended by the EEOC to ensure they are ready when they receive accommodation requests.

Don’t Expect to Discharge That PAGA Debt in Bankruptcy

By Jonathan Slowik on June 22, 2023 Posted in Bankruptcy, California Labor & Employment Law, California Labor Code, PAGA, Wage and Hour

As we have written here on multiple occasions, the Private Attorneys General Act (PAGA) disadvantages employers in several ways. Despite permitting recovery similar to what might be obtained in a class action, class certification rules do not apply and it is an open question whether courts can even limit an unmanageable claim before trial. Plaintiffs may pursue a PAGA claim even after settling their individual claims for the same underlying conduct. “PAGA-only” actions are nearly impossible to remove to federal court. And a recent case illustrates another disadvantage: PAGA penalties may largely survive bankruptcy.

Under PAGA, 75% of any penalties awarded are paid to the Labor and Workforce Development Agency (LWDA) for “enforcement of labor laws” and “education of employers and employees about their rights and responsibilities” under the Labor Code. Cal. Lab. Code § 2699(i). In In re Patacsil, 2023 WL 3964908 (E.D. Cal. Bankr. June 9, 2023), the court held that these amounts, payable to the LWDA, fall within a statutory exception that makes certain penalties “payable to and for the benefit of a governmental unit” nondischargeable in bankruptcy. 11 U.S.C. § 523(a)(7). Under this reasoning, individual debtors will remain on the hook for 75% of any PAGA penalties awarded against them even after emerging from bankruptcy.

However, the decision also offered two silver linings for employers. The court held that the other 25% of the penalty (payable to the “aggrieved employees”) and any statutory attorneys’ fees awarded do not fall within the Section 523(a)(7) exception, because they are payable to private individuals or entities, not the government. Patacsil, 2023 WL 3964908, at *9-10. It also held that the PAGA judgment did not fall within Section 523(a)(6), which does not permit discharge of debts for “willful and malicious injury.” Id. at *5. Had it held otherwise, the entire judgment may have been deemed nondischargeable, rather than just the 75% of penalties payable to the government.

In practice, it may be difficult for plaintiffs to recover PAGA penalties from individual debtors in bankruptcy. Moreover, courts should take care to avoid this scenario in the first place by exercising their discretion to reduce PAGA penalties when an award would otherwise be “confiscatory.” Cal. Lab. Code § 2699(e)(2). However, the Patacsil case illustrates yet another way PAGA stacks the deck against employers.

Under-the-Radar Concessions in Adolph Could Shorten PAGA’s Parade Of Horribles

By Jonathan Slowik on June 16, 2023 Posted in Arbitration Agreements, PAGA, Wage and Hour

On May 10, 2023, the California Supreme Court heard oral argument in Adolph v. Uber Technologies, Inc., a closely watched case that will decide whether a Private Attorneys General Act (PAGA) plaintiff loses standing to pursue a representative claim when their individual PAGA claim is compelled to arbitration.

Observers hoping for a sign that the court was inclined to rule for the employer may have come away disappointed, as the justices mostly kept their cards close to their vests. (One of the few highlights was Chief Justice Guerrero’s pointed questions about how the plaintiff’s interpretation of “aggrieved employee” could be harmonized with other sections of the statute—an argument we previewed here.)

However, Adolph made two notable concessions during argument that could take two of the worst-case scenarios for employers off the table.

First, Adolph conceded that if a plaintiff loses on the merits in individual arbitration—that is, the arbitrator finds the plaintiff is not an aggrieved employee—the arbitrator’s finding would preclude the plaintiff’s representative claim once confirmed in court. Conflicting decisions from the Court of Appeals regarding the preclusive effect of an arbitration award in PAGA cases raised the specter of a plaintiff losing in individual arbitration, then pursuing a representative claim in court as if the arbitration never happened. Adolph did not attempt to argue that the Supreme Court should endorse such an outcome.

Second, Adolph acknowledged that, except in unusual cases, a plaintiff’s non-individual PAGA claims should be stayed pending the arbitration of their individual PAGA claims. A recent string of Court of Appeal decisions on the standing issue was mostly silent on whether the court action should be stayed when a PAGA plaintiff’s individual claims are compelled to arbitration.

If the Supreme Court rules for Adolph and allows plaintiffs to pursue non-individual PAGA claims in court even after being compelled to arbitration, it would be well-advised to incorporate Adolph’s concessions into its decision. When an employee has agreed to bring all employment-related claims in individual arbitration, at a minimum the employer should be able to expect the employee to pursue individual arbitration first, and for the case to be over if the employee loses in that forum. Thus, employers can hold out hope that even a bad outcome in Adolph will come with some reasonable guardrails.

Tags: arbitration, California Supreme Court, PAGA, wage and hour

12 California Counties and Municipalities Increasing Minimum Wage Rates on July 1

By Mark Theodore and Michelle Lappen on June 15, 2023 Posted in California Labor & Employment Law, Minimum Wage, Payroll, Wage and Hour, Wage Statements

As we previously covered here, the State of California and select California cities increased the minimum wage effective January 1, 2023. Now, another round of minimum wage increases from a dozen localities will take effect on July 1, 2023.

The following list contains the local minimum wage rate, effective July 1, 2023, for non-exempt employees working in each of the California counties and municipalities listed below:

Locality	Minimum Wage Rate Per Hour
Alameda	$16.52
Berkeley	$18.07
Emeryville	$18.67
Fremont	$16.80
City of Los Angeles	$16.78
County of Los Angeles (unincorporated areas only)	$16.90
Malibu	$16.90
Milpitas	$17.20
Pasadena	$16.93
San Francisco	$18.07
Santa Monica	$16.90
West Hollywood	$19.08

These local minimum wage increases do not impact the salary requirement for overtime-exempt employees who, under California law, must receive a salary that is not less than two times the state minimum wage.

California employers should work with their payroll providers to increase the relevant minimum wage for affected employees and to ensure that the new rate is paid and properly recorded on employee pay stubs by July 1, 2023.

The “Real Slim Shady’s” Days May Be Numbered (At Least in the Workplace)!

By Tony Oncidi and Ryan McGill on June 9, 2023 Posted in Discrimination, Entertainment Industry, Harassment, Sexual Harassment, Title VII

Fed up with hearing “very offensive” songs like Eminem’s “Stan” and Too $hort’s “B*job Betty” on the job, Stephanie Sharp and several other employees (including a male) filed a hostile work environment claim under Title VII against their employer. Plaintiffs claimed they could not escape the music because it was “[b]lasted from commercial-strength speakers” that were mounted on forklifts and driven around the warehouse where they worked. Sharp v. S&S Activewear, LLC, 2023 WL 3857491 (9th Cir. June 7, 2023).

Plaintiffs claimed the music encouraged male employees to make sexually graphic gestures and remarks and to openly share pornographic videos in the workplace.

A lower court dismissed the claim, relying upon what is sometimes referred to as the “equal opportunity harasser” defense, which some employers have argued should shield them from liability where there is evidence that employees outside the protected group have been subjected to the same or similarly objectionable behavior. In short, the trial court found that the claim failed as a matter of law because the music was offensive to both men and women.

However, the Ninth Circuit reversed, squarely rejecting the “equal opportunity harasser” defense and holding that harassment need not be directly targeted at a particular plaintiff to support a harassment claim. The court found that the repeated and prolonged exposure to music “saturated with sexually derogatory content” could constitute “music as harassment.”

Importantly, the result may be different under California’s anti-discrimination law, the Fair Employment and Housing Act (“FEHA”). In 2006, the California Supreme Court held in the landmark Lyle v. Warner Bros. Television Prods. opinion that a fired female assistant who had worked in the writers’ room of the television show “Friends” and who complained of hearing lewd and offensive language and sounds and observing obscene gestures made by the writers did not have a viable sexual harassment claim because:

Here, the record discloses that most of the sexually coarse and vulgar language at issue did not involve and was not aimed at plaintiff or other women in the workplace. Based on the totality of the undisputed circumstances, particularly the fact the Friends production was a creative workplace focused on generating scripts for an adult-oriented comedy show featuring sexual themes, we find no reasonable trier of fact could conclude such language constituted harassment directed at plaintiff because of her sex within the meaning of the FEHA.

From a practical point of view, employers should renew their efforts to police the workplace and eliminate any visual or auditory materials that could be considered offensive. Employers should also train their employees, and especially supervisors, to refrain from saying, doing, or tolerating anything that could be construed as illegal harassment while encouraging employees to come forward with their complaints to HR as soon as they perceive something that could be harassing.

It May Be Time To Update Those Arbitration Agreements Again!

By Tony Oncidi, Mark Theodore, Jonathan Slowik and Ariel Brotman on June 5, 2023 Posted in Arbitration Agreements, California Labor & Employment Law, California Labor Code, PAGA, Wage and Hour

Back in the “good old days,” arbitration agreements barred just about any type of civil litigation that was filed in court. Then, as we reported in 2014, the California Supreme Court determined that Private Attorneys General Act (“PAGA”) claims are immune from arbitration in Iskanian v. CLS Transp. Los Angeles, LLC – which, unsurprisingly, led to an avalanche of PAGA claims being filed as plaintiffs’ lawyers scrambled to make their cases arbitration-proof (at least as to those pesky PAGA claims).

In response to Iskanian, some employers immediately and dutifully revised their arbitration agreements to exclude PAGA claims. For the record, we remained skeptical of the durability of Iskanian and generally did not advise employers to surrender on this issue – at least not until the United States Supreme Court had weighed in.

Lo and behold, in June 2022, the United States Supreme Court proved us right and in Viking River Cruises v. Moriana held that the Federal Arbitration Act preempts Iskanian’s holding that PAGA actions could not be divided into individual and representative claims brought on behalf of other allegedly “aggrieved employees.” Thus, according to Viking River, arbitration agreements are enforceable to the extent they require arbitration of individual PAGA claims.

Now, proving that no good deed goes unpunished, an appellate court has decided that a law-abiding employer that relied to its detriment upon Iskanian and included a broad PAGA carve out in its arbitration agreement could not compel to arbitration an employee’s individual PAGA claim – even though that claim would have otherwise been arbitrable but for the Iskanian-inspired carve out. Duran v. EmployBridge Holding Co., 2023 Cal. App. LEXIS 426 (Cal. App. 5th Dist., Apr. 27, 2023).

Even agreements that do not include broad PAGA carve outs may face additional scrutiny—especially to the extent courts seek to avoid the Viking River rule and keep PAGA cases out of arbitration. In a case decided the same week as Duran, the Court reviewed an arbitration agreement that included a waiver of representative actions (unenforceable as to the representative PAGA claims under Iskanian and Viking River) but also had a savings clause which provided that if the waiver was unenforceable, “then this agreement is invalid and any claim brought on a class, collective, or representative action must be filed in a court of competent jurisdiction[.]” Westmoreland v. Kindercare Educ. LLC, 90 Cal. App. 5th (2023). Although the savings clause was no doubt inspired by Iskanian, the Court found that it was actually a “poison pill,” because instead of expressly allowing the individual PAGA claim to be severed and sent to arbitration (as Viking River would dictate), it simply “invalidates the agreement.” Id. at 982. Ironically, had the employer “included a waiver of representative claims” with no savings clause, “the result . . . could have been substantially similar to that in Viking River.” Id.

We will continue to monitor these decisions and provide any relevant updates. In the meantime, employers should carefully review and update their post-Iskanian arbitration agreements. Employers would be well-advised to consider excising language broadly excluding PAGA claims from arbitration, and also to scrutinize their agreements for unintended “poison pills” that could invalidate them altogether.

Unfortunately, recent case law in this area has made determining exactly what is and is not arbitrable under PAGA almost as complicated as “splitting the atom”!

“Runaway Juries” And The Lure Of Arbitrating Employment Disputes Highlighted In Latest Podcasts

By Tony Oncidi on May 25, 2023 Posted in Arbitration Agreements, California Labor & Employment Law, Jury verdicts

Labor & Employment Co-Chair Tony Oncidi was recently interviewed for the Lexis Practical Guidance podcast (links below):

In “Runaway Juries in Employment Litigation Podcast,” Tony discusses some astoundingly large jury verdicts (greater than $100 million!) in recent single-plaintiff California employment trials and provides cogent insights about how to avoid same.
As one solution to runaway juries, Tony describes both the pros and cons of adopting workplace arbitration agreements in “Is L&E Arbitration the Answer? Podcast.” He also addresses practical strategies for employers when implementing same.

California Supreme Court Expands Employee Whistleblower Protections

By Tony Oncidi, Wesley C. Shelton and David Gobel on May 24, 2023 Posted in California Labor & Employment Law, California Labor Code, Whistleblowers

The California Supreme Court has held that an employee who makes a whistleblower complaint to his or her employer may bring a retaliation claim under the whistleblower statute (California Labor Code § 1102.5(b)) even if the subject of the complaint was already known. Previous case law held that an employee whistleblower complaint regarding an alleged violation of the law that was already known to the employer that received the complaint was not protected by law. It is now clear, however, that employers may not retaliate against an employee who has made a whistleblower complaint, regardless of whether the employer or agency already had knowledge or information about the alleged violation.

The Court’s decision in People ex rel. Garcia-Brower v. Kolla’s, Inc (May 22, 2023) arose from a complaint made by a bartender to her employer that she had not been paid wages owed to her for three shifts she had worked at Kolla’s Inc., a nightclub in Orange County, California. Upon receiving the complaint, the owner of the nightclub responded by threatening to report the employee to immigration authorities, terminating her employment, and telling her never to return to the nightclub. The employee then filed a complaint against the nightclub with the California Division of Labor Standards Enforcement (DLSE), and the DLSE concluded that the nightclub had unlawfully retaliated against the employee. When the nightclub refused to pay damages, the California Labor Commissioner sued for various violations, including unlawful retaliation under Section 1102.5(b).

The trial court and a subsequent court of appeal ruled against the Labor Commissioner’s claim for retaliation after finding that the bartender’s complaint was not a protected “disclosure” under Section 1102.5(b). Those courts reasoned that a “disclosure” required “the revelation of something new, or at least believed by the discloser to be new, to the person or agency to whom the disclosure is made.” Because the nightclub presumably knew that it had failed to pay the employee the wages that were due, the employee’s complaint did not qualify as a “disclosure” as required by Section 1102.5(b).

The California Supreme Court saw it differently, relying upon a different interpretation of the statutory meaning of the word “disclosure.” The Court found that the term “disclosure” under Section 1102.5(b) “includes protection for disclosures made to ‘another employee who has the authority to investigate… or correct the violation,’ without regard to whether the recipient already knows of the violation.” Because it was immaterial whether the nightclub had knowledge of its failure to pay the employee for wages earned, the nightclub’s actions, including threatening to report the employee to immigration authorities, terminating her employment, and instructing her never to return to work, constituted unlawful retaliation under Section 1102.5(b).

In accordance with this new interpretation of “disclosure” under Section 1102.5(b), California employers must now ensure that they do not retaliate against employees who make a whistleblower complaint, even when the subject of the complaint is already known to the employer.

Tags: retaliation

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