California Employment Law : Employment Lawyer & Attorney : Fox Rothschild Law Firm : San Francisco, Oakland, Los Angeles, San Diego

California retail businesses must once again accept unions picketing and demonstrating on their private walkways and outside their store entrances, courtesy of the California Supreme Court.   On December 27, 2012, the California Supreme Court in Ralphs Grocery Company v. UFCW, Local 8 held that a store in a strip mall could not prevent a union from peacefully picketing on the private walkway in front of the store entrance.  

Ralphs opened a Food Company warehouse in Sacramento. The union picketed the store to organize the facility. Ralphs had a lawful company policy that prohibited speech activities on its property under certain circumstances. The union disregarded the rule and, after the police refused to get involved, Ralphs sought an injunction. In doing so, it argued that the union trespassed on its private property. The union raised the defense that its activity was protected under the Moscone Act and California Labor Code Section 1138.1. 

The Moscone Act (California Code of Civil Procedure section 527.3) provides in part that certain activities, including peaceful picketing or patrolling during a labor dispute, are legal and cannot be enjoined. California Labor Code section 1138.1 limits when courts can issue an injunction during a labor dispute.

The trial court found for the union concluding that Ralphs could not satisfy the requirements of 1138.1. The Court of Appeal disagreed, concluding that the Moscone Act and 1138.1 were unconstitutional because they provided greater protection to speech related to labor disputes than to other speech.  

The California Supreme Court reversed. It acknowledged that Ralphs' entrance was private property, but disagreed that the Moscone Act and Labor Code section 1138.1 are unconstitutional. The California Supreme Court concluded that the Court of Appeal misinterpreted two U.S. Supreme Court cases, Mosley and Carey, that struck down statutes that treated labor speech differently than other speech. The California Supreme Court said that the Moscone Act and 1138.1 were rationally related to the State’s interest in protecting collective bargaining without unwarranted interference from the courts.

Hopefully, Ralphs will appeal this decision to the U.S. Supreme Court where the decision may be reversed and the Moscone Act and California Labor Code section 1138 invalidated since they clearly treat speech regarding labor disputes differently than all other speech. The U.S. Supreme Court in Mosley and Carey declared similar statutes regulating speech unconstitutional where the statutes exempted labor speech from the regulations

In the meantime, businesses should continue to call the police when unions picket on their private property in violation of their access rules and disrupt their business, and then hope the police are responsive. Only as a last resort should the business seek injunctive relief because Labor Code Section 1138.1 makes meeting the requirements for injunctive relief difficult.  

Thanks to labor law afficionado Chip Zuver for these insights.

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As the US Supreme Court debates who is and who isn’t a supervisor for purposes of Title VII liability, California employers can be forgiven for yawning. It's unquestionably an important issue, since employer liability for harassment by supervisors is all but automatic. But whatever the Court concludes will have little if any impact here in the Golden State.

For years, plaintiffs suing in California have preferred bringing claims under California’s Fair Employment and Housing Act to bringing analogous claims under Title VII. Filing the claims under the FEHA allows them to avoid both federal court (where it’s easier to have weak claims dismissed) and Title VII’s limits on non-economic damages (the FEHA has no such limits).

So what definition of supervisor applies under the FEHA? The one in Government Code sec. 12926(s):

"Supervisor" means any individual having the authority, in the interest of the employer, to hire, transfer, suspend, layoff, recall, promote, discharge, assign, reward, or discipline other employees, or the responsibility to direct them, or to adjust their grievances, or effectively to recommend that action . . . .

Those last six words expand the definition from those who make decisions to those with authority to make recommendations. So in the coming months, when the Supremes resolve who qualifies as a supervisor under Title VII, expect them to come up with something considerably narrower than what California employers are working with, which will only add to the list of reasons why discrimination claimants in California don’t sue under federal law.

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Like so much of California employment law, the limits on an employer's ability to drug test are not well defined. 

• The ability to test applicants is relatively unfettered. You can test applicants after you've offered the job, but before they start work.
   
• If you have a reasonable suspicion that the employee is using illegal drugs, and something objective to support the suspicion, courts will generally allow you to test.
   
• In some industries, such as transportation, there are specific testing requirements.
   
• Here's where the uncertainty creeps in: The ability to randomly or routinely test current employees depends on a balancing test. You balance the employees' privacy interests against the employer's need to test.
   

Balancing tests are logical and easily explained. What they aren't is helpful. How confident can you be that the conclusion you reach will be the same one reached by a judge, jury, or arbitrator? And even if you're right, are you willing to spend the money it takes to get to that point if the issue gets litigated?

I'm bringing up this this issue in response to this post by Earl Phillips in his British Columbia Employer Advisor discussing Canadian employers frustrations with their drug testing laws. There you can't test applicants and generally can't test employees unless there's a reasonable suspicion, they're returning from rehab, or there's been some incident.

Usually, this is the point where I complain that it's hard for employers trying to comply with the laws of one jurisdiction, much less the conflicting laws of multiple jurisdictions. But I'm in too good a mood following the Giants win in Game 1 of the World Series.

So continuing that optimism, I'll instead wonder aloud whether there are real opportunities here to transfer applicants and employees to whichever jurisdiction allows the testing the employer wants to conduct. Then the reader can wonder (hopefully not aloud) whether anyone suggesting such a thing ought to be drug tested. 

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Following complaints of accounting irregularities, a Delaware corporation negotiated a separation agreement with its then CEO. The separation agreement did not include a release of liability, but did state that the CEO was resigning "freely and voluntarily" "at the Company's request." The CEO then sued in California (where he worked) claiming that he was terminated in retaliation for complaining about overly aggressive tactics used by the investigators hired to look at the accounting problems and conflicts of interest by a law firm representing the company.

The employer prevailed on summary judgment by relying on the internal affairs doctrine. The doctrine stems from the premise that it is impractical to have multiple states regulating a corporation's internal affairs. Under Delaware law, a CEO serves at the pleasure of the Board of Directors and cannot sue for wrongful termination unless a specific statute authorizes such a claim. 

The employee took a writ and the appellate court, in a decision handed down last month (pdf), reversed. While paying lip service to the internal affairs doctrine, the appellate court decided that California had "vital interests" at stake that justified applying California law.

The two lessons from this decision are (1) don't assume that California courts won't get involved in an issue just because applicable law or the parties' agreement specifies that another state's law will control; and, on a more practical level (2) a separation agreement that doesn't include a release of claims leaves the employer vulnerable.

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After more than three years and two rounds of briefing, the California Supreme Court has issued its long-awaited decision in Brinker Restaurant Corp. v. Superior Court. Overall, the decision is a significant win for employers. Here are the key points in the unanimous decision that the Court issued today:

• Employers do not have to police their employees to make sure that they’re taking their meal breaks. They're required to (1) relieve employees of all duty; (2) relinquish control over their activities; and (3) permit them a reasonable opportunity to take an uninterrupted 30-minute break.
   
• Employers still need a meal break policy and still need to record the time that employees begin and end their breaks. But if employers make the breaks available (as specified in the prior paragraph) and an employee cuts his or her break short (or doesn’t take one), the employer does not owe a penalty. The employer would, however, need to pay the employee for the time worked.
   
• As before, employers have to mean it when they say they’re making the meal breaks available. They can’t pressure employees or provide incentives for them to skip breaks.
   
• There is no rolling 5-hour rule. In other words, there’s no penalty if an employee works 5 consecutive hours without a meal period (as the plaintiffs in Brinker argued). This is a huge relief because, when the Court asked for post-hearing briefing on this issue, it raised the specter that almost every employer in the state had a policy that was wrong.
   
• So the rule for meal periods remains:
  
  o       Employees who work no more than 5 hours get no meal period.
  
  o       Employees who work over 5 but no more than 6 hours get a meal period, unless they’ve waived it in writing. If they don’t waive it, the meal period must begin by the end of the 5^th hour.
  
  o       Employees who work more than 6 but no more than 10 hours get a meal period regardless of whether there’s a waiver. The meal period must begin by the end of the 5^th hour.
  
  o       Employees who work more than 10 hours get a 2^nd meal period. If they work no more than 12 hours they can waive it. If they don’t waive it, the meal period must begin by the end of the 10^th hour.
   
• The rules for rest breaks remain the same.
  
  o       Employees who work no more than 3.5 hours get no rest period.
  
  o       Employees who work 3.5 to 6 hours get 1 rest period.
  
  o       Employees who work more than 6 and up to 10 hours get 2 rest periods.
  
  o       Employees who work more than 10 and up to 14 hours get 3 rest periods.

There will still be wage and hour class actions and, in some ways, the Court lowered the bar on the procedural requirements for getting a class certified. But overall, employers can breathe a collective sigh of relief.

Many thanks to Nancy Yaffe for helping to put this information together. If you'd like to read the full opinion, you can do so here (pdf).

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We've written quite a bit about the new penalties for mischaracterizing employees as independent contractors. But we haven't talked as much about how to draw the distinction. Partly that's because different government agencies use different approaches. And some of it's due to the fact that these can be very fact-specific determinations and it's hard to discuss them in generalities.

In California, the Employment Development Department administers unemployment, state disability, and workers' comp claims and collects employment-related taxes. They've put together this questionnaire (pdf) that includes three "significant questions," three additional questions, seven questions that address "additional factors," and a discussion of how to interpret the answers. While it's not a perfect tool, it at least provides some insight on how one agency approaches the issue.

If you want to see other agencies' approaches, here are the links for the Division of Labor Standards Enforcement (which enforces wage and hour laws) and the IRS (pdf) (which California's Franchise Tax Board follows).

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In 2000, the California Supreme Court used its decision in Armendariz v. Foundation Health Psychcare Services to articulate minimum requirements for employment arbitration agreements. Last year, in AT&T Mobility LLC v. Concepcion, the U.S. Supreme Court reiterated that the Federal Arbitration Act preempts state laws that “stand[] as an obstacle to the accomplishment and execution of the full purpose and objectives of [the FAA].”

From my admittedly biased perspective, a number of the Armendariz requirements run afoul of Concepcion. Where, for example, did the requirement of “a modicum of bilaterality” come from? And if federal law preempts limitations on arbitration, how can a state court dictate what level of discovery is required and how much detail must be included in a written decision?

More recently, one California appellate case struck down an arbitration agreement for not providing the employee with a copy of the American Arbitration Association rules. The defendant in that case – Mayers v. Volt Management – has petitioned for review. Last week, the California Supreme Court granted review in Wisdom v. AccentCare, which found an arbitration agreement substantively unconscionable because the acknowledgment said "I agree . . . " instead of "we agree . . . " and that evidenced a lack of mutuality.  

There is no doubt that there are judges at all levels of our state court system who are hostile to the idea of mandatory workplace arbitration. The frequency with which they announce new requirements makes it impossible for employers to keep up. If the California Supreme Court doesn’t rein them in, expect the U.S. Supreme Court to intervene. Until then, add this to the areas of California employment law that are rife with uncertainty.

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Last week, California and The U.S. Department of Labor agreed to work together to go after employers who misclassify employees as independent contractors. My colleague Keith Reinfeld wrote about it here. California is the 12th state to join with the DOL in this regard. But there's no word on how the feds and the states are working together.

This remains an area where employers face significant exposure. As Kent Bradbury wrote late last year, recently enacted California Senate Bill 459 allows the state to impose civil penalties of $5,000 to $25,000 for "willful" misclassification of employees. 

While these classifications face increased government scrutiny, the underlying decisions remain challenging. The states and federal government and the various agencies within those jurisdictions each use slightly different tests to determine an individual's status.

If you have independent contractors doing the same work as your employees, or working exclusively for your company, on your premises, using your equipment, then it's time to evaluate whether those classifications are proper. If you wait for the government or a group of disgruntled workers to raise the issue, the costs of fixing things goes up tremendously.

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Patience is a virtue. I get that. It’s just not one of my virtues. That’s why I wrote here and here and here about wanting the California Supreme Court to hurry up and give us a decision in Brinker Restaurant Corp. v. Superior Court. We’ve been waiting more than 3 years for a decision from the court in a case that will define the scope of an employer’s obligation to provide meal periods to non-exempt employees (and thereby all but determine the outcome of hundreds of pending cases).

Well the latest word is that we’ll have a decision in April 2012. But I’m done stressing about it. California Supreme Court Justices take your time. I’m going to work on being in the moment. OOOOMMMMMMMMMM.

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We've been waiting (forever it seems) for the California Supreme Court to issue its decision in Brinker Restaurant Corp. v. Superior Court. Based on oral argument last month, things look relatively promising for employers who've taken the position that they're only required to make meal periods available to employees (as opposed to ensuring that they actually take them).

But another issue is lurking out there and, recognizing its significance, the Court has taken the unusual step of accepting briefing on an issue after the case was argued. The issue involves how to interpret the requirement in the wage orders that "no employer shall employ any person for a work period of more than five (5) hours without a meal break of not less than 30 minutes . . . ." [Let's ignore for now the exception for work that's completed in six hours.]

Most employers and their lawyers (and commentators and just about everyone else who's addressed the issue) interpret that to mean that employees who work more than 5 hours get a meal period and employees who work more than 10 hours get a second meal period.  But an issue arose at the Brinker argument about whether an employee can ever be required to work more than five consecutive hours without a meal period.

Take the example of an employee who works from 8:30 a.m. to 5 p.m. with a 30-minute meal period from 11:30 a.m. to noon. Let's assume that the employee occasionally works 10 minutes past 5 p.m., for which the employer properly pays overtime. The Brinker plaintiffs are arguing that the employee worked a period of over 5 hours (noon to 5:10 p.m.) and is therefore entitled to a second meal period.  If the employer, like the overwhelming majority, didn't provide a second meal period in that situation, the the employee would be entitled to a one-hour penalty for each occasion when that occurred.   

This so-called "rolling 5" interpretation is the subject of the post-hearing briefing in Brinker. As reported by Ben James in Employment Law 360, the California Employment Law Council sought and obtained permission to file a brief on the issue. In doing so, it warns that "a tsunami of massive class actions will descend on California's already hard-pressed employers" if the Court adopts such an interpretation and makes it retroactive. 

The plaintiffs will also get a chance to brief the issue. Eventually, in theory, we'll get a decision. But until then, the uncertainty that affects thousands of employers and hundreds of pending cases remains.

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Thanks to Kent Bradbury for the following post:

Among several employment-related bills signed into law by Governor Brown recently was SB 459, a bill that significantly raised the stakes in the continuing game of cat and mouse we know as the proper classification of independent contractors.  It includes the following provisions: 

• A prohibition on "willful" misclassification of employees as independent contractors.
• Civil penalties assessed by the Labor and Workforce Development Agency of $5,000 to $15,000 ($10,000 to $25,000 for an established pattern or practice).
• Labor Commissioner may assess additional civil and liquidated damages.
• Joint and several liability for a consultant that advises an employer to treat an employee as an independent contractor.
• Reporting to the State Contractor's Licensing Board for contractor employers, and a requirement that the Board initiate disciplinary procedures for violators.  
• Posting of a notice on the website or in a public area of the employer for one year if found to be in violation. 

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All right -- that may be overly dramatic.  But this month, Governor Jerry Brown signed SB 559 -- a law to prevent discrimination (in employment and housing) based on "genetic information."  The bill amends the Fair Employment and Housing Act and the Unruh Civil Rights Act to prohibit employers from seeking information regarding:

• An individual's genetic tests;
• Genetic tests of the individual's family members; and
• Whether any of the individual's family members have a particular disease or disorder. 

Since the federal Genetic Information Nondiscrimination Act already prohibits employment discrimination based on genetic information, it's not clear what this new law adds.  But if you're responsible for keeping your company's equal employment opportunity policy current, make sure you have "genetic information" listed as one of the protected categories.

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Even after all these years, I'm still shocked when I read about employment cases in other jurisdictions and realize how different the result would be if the case had been in California.  The latest example is Nyrop v. Independent School Dist. No. 11, a decision issued earlier this month by the Eighth Circuit Court of Appeal (and accessible here).  Nyrop affirmed a determination by the district court that a Minnesota teacher's multiple sclerosis didn't constitute a disability under the Americans with Disabilities Act.

The decision turned on the issue whether Nyrop was substantially limited in a major life activity.  Nyrop presented evidence that, because of her MS, she had problems controlling her tongue and larynx which prevented her from speaking clearly and projecting her voice.  She also described impairments in terms of feeling and sensation, muscle control, strength, and sensitivity to temperatures above 70 degrees.  Despite all this, the court concluded that Nyrop could not pursue a claim under the ADA because she was not substantially limited in any major life activity.

California's Fair Employment and Housing Act defines "limits" and "life activities" more broadly than federal law.  As a result, in California, I'm certain that the plaintiff would have been allowed to proceed with her claim.  Does this mean that employers should move their operations to Minnesota?  No.  First, the winters are brutal.  Second, this Brett Favre thing got tiresome two retirements ago.  Third, federal law is catching up with California.  The Nyrop case arose before enactment of amendments to the ADA.  Those amendments, which took effect in 2009,  broadened the definition of what constitutes a disability.  So while California law is definitely more employee-friendly here, Federal law is heading in that direction.

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