Ninth Circuit Court of Appeals

The #MeToo movement has understandably made employers more concerned about sexual relations between coworkers. An office romance may seem consensual, but is it really? This is especially problematic when there’s a power differential – such as a supervisor-subordinate relationship.

So what can employers do to prevent coworker relations that they fear may end in a sexual harassment claim? Certainly, employers can establish rules and internal policies discouraging coworker relations. But, as recently affirmed by the Ninth Circuit in Perez v. City of Roseville, there are constitutional limits on what public employers, like State and municipal governments, can do if they discover a consensual office romance.

Coworkers sitting across from each other with heart, symbolizing office romanceIn Perez, the City of Roseville, California investigated police officers Janelle Perez and Shad Begley after Begley’s wife reported that Begley and Perez engaged in sexual conduct while on duty. The investigation revealed that the officers were involved in an extramarital affair, but the City could not prove that they engaged in sexual conduct while on duty. Begley and Perez were written up for violating department policies. A short time later, Perez was fired, purportedly for performance reasons unrelated to the affair. Perez sued, alleging that “her termination violated her constitutional right to privacy and intimate association because it was impermissibly based in part on disapproval of her private, off-duty sexual conduct.” The lower court granted summary judgment for the defendants and Perez appealed.

The Ninth Circuit reversed in part, finding triable issues of fact as to whether Perez was fired for engaging in constitutionally-protected private sexual conduct. The court said: “[T]he constitutional guarantees of privacy and free association prohibit the State from taking adverse employment action on the basis of private sexual conduct unless it demonstrates that such conduct negatively affects on-the-job performance or violates a constitutionally permissible, narrowly tailored regulation.”

In a nutshell, Perez establishes that, at least within the Ninth Circuit (including California), a public employer cannot take adverse action on the basis of an employee’s private, off-duty sexual activity, unless the employer demonstrates that the conduct caused the employee’s job performance to suffer. This holding arguably extends to employees in the private sector too, who are subject to the same constitutional right to privacy and intimate association.

Takeaway: The #MeToo movement has led many employers to believe that all office romances are off-limits and constitute a fireable offense. Not so. At least within the Ninth Circuit, public employers cannot fire employees for private, off-duty sexual conduct that does not adversely impact job performance. Of course, employers can and must address non-consensual conduct and conduct that creates a sexually hostile work environment. But that does not give employers the right to intrude into relationships outside of work that do not directly impact the workplace.

If you have a questions about sexual harassment, office romance, or employee privacy rights, our employment attorneys are here to help.

There’s a saying that “Bad facts make bad law.” At least that’s the way I was taught it. A different version: “Hard cases make bad law” has its own Wikipedia entry. While the wording is different, the meaning is the same. When the facts are extreme, they serve as a poor basis for defining general legal principles.

Here are the bad facts:

A dairy hired an employee even though it knew he was not authorized to work in the US. When he told them after two years that he had a better offer from another dairy, his employer threatened that, if he left, it would report the other dairy to federal immigration authorities. So he stayed.

Nine years later, he sued his employer for a variety of workplace violations, including failure to pay overtime or to provide meal and rest breaks. Ten weeks before the case is going to trial, the employer’s lawyer schedules a deposition of the plaintiff but arranges to have US Immigration and Customs Enforcement (ICE) take him into custody and deport him. There’s even an e-mail from the lawyer to ICE letting them know the employee “will be attending a deposition next week. If there’s an interest in apprehending him, please let me know so that we can make the necessary arrangements…” Apparently, the employee got wind of the plan and agreed to settle his case. To make matters worse, the lawyer had used this ploy on at least five other plaintiffs who were suing his clients.

Copyright: cherezoff / 123RF Stock Photo

The plaintiff then sued the attorney for retaliation under the Fair Labor Standards Act. He chose that statute because it allows such claims against “any person acting directly or indirectly in the interest of an employer in relation to an employee.” The federal district court dismissed the claim because the lawyer did not exercise any control over the plaintiff’s employment. However, the 9th Circuit Court of Appeal reversed. In doing so, it rejected the need for any economic control. It said that, while only employers can be responsible for not paying employees correctly, anyone acting on behalf of the employer can be liable for retaliation.

What the lawyer did was wrong. There are ethical rules that state that an attorney in California “shall not threaten to present criminal, administrative, or disciplinary charges to obtain an advantage in a civil dispute.” Lawyers who violate that rule or otherwise abuse their power, can be sanctioned, suspended, and even disbarred. There are also civil claims available for abuse of process and malicious prosecution. So there are penalties for this type of behavior already. However, giving plaintiff’s the right to sue their employer’s lawyers for retaliation will lead to far more problems than it will solve. Litigation is inherently contentious. Parties tend to dislike the lawyer on the other side. But in every other situation I know of, courts have ruled that there’s no right to sue the other side’s lawyer and that allowing such suits will lead to a multiplicity of litigation. The Ninth Circuit, dealing with an extreme situation, held otherwise. Like the saying goes, bad facts make bad law.

The case is Arias v. Raimondo. You can read the opinion here.

Public employee unions dodged a bulldozer yesterday when the U.S. Supreme Court announced that it had deadlocked 4 to 4 in Freidrichs v. California Teachers Ass’n, the case challenging the constitutionality of compulsory union dues for public employees. On January 12, we wrote that the Supreme Court was poised to end compulsory dues for California teachers, reversing the 9th Circuit decision in Freidrichs and overturning 40 years of the Court’s own precedent. That, of course, was before the death of Justice Antonin Scalia on February 13.

Copyright: moodboard / 123RF Stock Photo
Copyright: moodboard / 123RF Stock Photo

Oh, what a difference an empty chair makes. Scalia was certain to be the fifth vote in favor of ending compulsory dues on First Amendment grounds. Now, with a 4-4 tie, the 9th Circuit opinion stands, and in California (along with 20 other states) public employee unions can continue to force payment of dues under threat of firing.

The unions know that without government coercion, it will be impossible to maintain the cash flow and political influence they currently enjoy. In those states where compulsory dues have been abolished, union collections have dropped by as much as half when dues become voluntary. For now, however, the unions can breathe easy. It will take at least a few years for the issue to percolate back to the Supreme Court, and the result at that time will likely depend on which president fills the empty chair.

Copyright: paylessimages / 123RF Stock Photo
Copyright: paylessimages / 123RF Stock Photo

Most of the California Wage Orders say that: “All working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats.” The problem with that requirement is that no one knows how to define “suitable seats,” “nature of work,” and “reasonably permits.”

As we wrote in March 2014, the Ninth Circuit Court of Appeal had some suitable seating class action cases when it asked the California Supreme Court to clarify what those terms mean. Then last week, as reported in Law360 (subscription), the California Supreme Court invited the Division of Labor Standards Enforcement to file by August 21, 2015 an amicus brief expressing its view on how to define those terms. After that, the parties will have 20 days to respond.

The only thing that’s remotely close to clear at this point is that California employers are facing class action exposure for not following a law that no one knows how to follow. Employers who don’t provide seats for employees should consider doing so if it’s feasible given the job and work environment. On the other hand, given studies showing that sitting is bad for you, it’s may be just a matter of time before employees start suing employers for making them sit.

In November of 2009 we wrote about Campbell v. Pricewaterhousecoopers, LLP, 602 F. Supp. 2d 1163, 1181 (E.D. Cal. 2009), which held that, as a matter of law, a putative class of unlicensed accounting professionals employed by PricewaterhouseCoopers LLP are precluded from exemption from California overtime requirements under the Professional Exemption and the Administrative Exemption set forth in California Wage Order 4-2001.

The issue was certified and accepted for interlocutory appeal, and we filed an Amicus Curiae Brief on behalf of the American Institute of Certified Public Accountants addressing some of the issues raised by the District Court.  The Ninth Circuit issued its Opinion yesterday and the panel reversed the District Court’s findings on these key issues. The panel was mindful of the potential impact of its ruling:

The district court found that unlicensed accountants are categorically ineligible for the exemption as a matter of law, and thus Plaintiffs cannot fall under the exemption because they are not licensed CPAs. This conclusion is contrary to the exemption’s text and structure and would produce highly problematic precedent affecting several non-accounting professions. For that reason, we tread carefully in our analysis of the issue.

The first holding construes the Professional Exemption, Cal. Code Regs. tit 8 § 11040(1)(A)(3), which provides for exemption under two separate paths—i.e., the “Enumerated Professions Exemption” (which requires candidates to be licensed) and the “Learned Professions Exemption” (which requires no license). Departing from the lower court, the Ninth Circuit held that the paths are not mutually exclusive. And it noted the consequences of a contrary holding:

[The lower court’s holding] would create significantly troubling results. For example, California employers would likely have to pay mandatory overtime to the following hypothetical professionals: a recent medical-school graduate working as a resident at a hospital; a first-year associate at a California law firm who has taken the California bar exam but not yet received his results; a law clerk on the Supreme Court of California who is waiting until after her clerkship to take the bar exam; a senior associate at a New York law firm who temporarily relocates to the firm’s California office to handle a trial pro hac vice;or a Chicago lawyer who moves to California to do in-house work for a California corporation.

The second holding, related to the administrative exemption, rejects the district court’s finding that unlicensed accounting professionals work under more than “general supervision.” Here, the Court cited to our brief for the proposition that the AICPA’s Professional Standards say nothing about whether that supervision must exceed mere “general” supervision.