United States: California Employment Law Notes - March 2015

Employee Who Was Working Elsewhere During Medical Leave Of Absence Was Properly Terminated

Richey v. AutoNation, Inc., 182 Cal. Rptr. 3d 644 (Cal. S. Ct. 2015)

Avery Richey worked for Power Toyota Cerritos, part of the AutoNation consortium of automobile dealerships, for approximately four years before allegedly injuring his back while moving furniture at his home. Following the injury, Richey applied for and was granted a medical leave of absence (which was extended on multiple occasions) under the California Family Rights Act ("CFRA") and the federal Family and Medical Leave Act. Approximately one month before Richey allegedly injured his back, he began working on plans to open his own seafood restaurant, and Richey's supervisors at Power Toyota had met with him to discuss his performance and attendance problems and their concern that he had become "distracted." Power Toyota had a written policy prohibiting employees from engaging in outside work while out on an approved CFRA leave of absence. After a Power Toyota employee observed Richey "sweeping, bending over, and hanging a sign using a hammer" at his restaurant while on leave, the company fired him. Richey exhausted his administrative remedies under the California Fair Employment and Housing Act and filed a civil action in court against his employer for racial discrimination, harassment, retaliation for taking CFRA leave and failure to reinstate him following CFRA leave. The civil action was compelled to arbitration, based upon the parties' express agreement to have all employment disputes arbitrated.

After an 11-day hearing, the arbitrator rejected all of Richey's claims and concluded that "Power Toyota [could legally] terminate Mr. Richey if it has an 'honest' belief that he is abusing his medical leave and/or not telling the company the truth about his outside employment." Richey sought to vacate the award on the ground that the arbitrator committed reversible legal error by accepting Power Toyota's honest belief defense. The trial court denied Richey's motion to vacate the award; the Court of Appeal reversed the trial court's judgment, concluding that the arbitrator violated Richey's right to reinstatement under the CFRA; and the California Supreme Court in this opinion reversed the Court of Appeal on the ground that any error that the arbitrator may have committed did not deprive Richey of an unwaivable statutory right to reinstatement because the arbitrator found that he was dismissed for violating his employer's written policy prohibiting outside employment while on medical leave.

Disability Discrimination Claims Were Properly Dismissed On Summary Judgment

Nealy v. City of Santa Monica, 2015 WL 632228 (Cal. Ct. App. 2015)

Tony Nealy worked as a solid waste equipment operator for the City of Santa Monica before injuring his knee in July 2003 while moving a large bin full of food waste. Nealy was temporarily totally disabled due to the injury until 2005 when he was released to do "light duty" work after which time he was reassigned to a groundskeeper position. A year later, Nealy again injured himself on the job (this time a lower back injury) and never returned to work again. Over the next several years, Nealy and the City had several "accommodations meetings," which did not result in an offer of a job for which Nealy could perform the essential functions with an accommodation. Finally, in 2010, Nealy submitted an application for a job as a city planning staff assistant, but the City determined that Nealy did not meet the necessary qualifications for the position. The City then sent Nealy a letter stating it was unable to provide him with reasonable accommodation into an alternative position because he was not minimally qualified for the only position available at the time that was not a promotion.

Nealy exhausted his administrative remedies and filed a lawsuit against the City, alleging disability discrimination, failure to reasonably accommodate a disability, failure to engage in the interactive process and retaliation. The trial court granted summary judgment in favor of the City, and the Court of Appeal affirmed. The Court first affirmed summary judgment based on the statute of limitations and the inapplicability of the "continuing violation doctrine." The Court also affirmed summary judgment based on evidence that Nealy could not perform some of the essential functions of the solid waste equipment operator, with or without reasonable accommodation, and that the City was not required to eliminate essential functions of the job (e.g., heavy lifting and kneeling) as part of a reasonable accommodation. The City also was not required to "provide an indefinite leave of absence to await possible future vacancies" in jobs Nealy might be able to perform. The Court also affirmed summary adjudication of the claims for failure to engage in the interactive process (the City met with and informed Nealy about its vacant positions) and retaliation (Nealy's exercise of his right to request reasonable accommodation was not protected activity within the meaning of the statute). Compare Nigro v. Sears, Roebuck & Co., 2015 WL 774633 (9th Cir. 2015) (summary judgment in favor of employer in disability discrimination case reversed, based principally upon employee's own "self-serving" testimony

Applicant Could Proceed With Race Discrimination Claim Despite Undisclosed Criminal Conviction

Horne v. District Council 16 Int'l Union of Painters & Allied Trades, 2015 WL 681433 (Cal. Ct. App. 2015)

Raymond E. Horne was a glazier and a member of the glazier's union. He also served as an officer and a member of the council and of the executive board of the union. Horne, who is African American, twice applied for an organizer position with the council but both times the position was filled by whites. Horne sued the union for racial discrimination under the Fair Employment and Housing Act. During discovery, Horne admitted that he had been convicted of possession of narcotics for sale and that he had served a prison term for that conviction. He also admitted that his citizenship rights had been revoked as a result of the conviction, but denied that those rights had not been restored. When, during the course of the lawsuit, the union found out about the conviction, it asserted that under federal law (29 U.S.C. § 504(a)), Horne was barred from employment as a union organizer because of the criminal conviction. The trial court granted the union's motion for summary judgment, and the Court of Appeal initially affirmed, holding that Horne was disqualified for the organizer position due to the criminal conviction. However, following the California Supreme Court's opinion in Salas v. Sierra Chem. Co., 59 Cal. 4th 407 (2014), the case was remanded from the Supreme Court back to the Court of Appeal, and in this opinion, the Court of Appeal reversed the summary judgment that had been granted in favor of the union on the ground that while after-acquired evidence may limit the damages recoverable in an employment case, it cannot be used as "an absolute bar to a worker's FEHA claims." The Court also rejected the union's claim that Horne's claims are preempted by Section 504(a) of the federal Labor-Management Reporting and Disclosure Act.

Federal Air Marshal Could Proceed With Whistleblower Lawsuit

Department of Homeland Sec. v. MacLean, 574 U.S. ___, 135 S. Ct. 913 (2015)

Robert J. MacLean became a federal air marshal for the TSA in 2001. In that role, MacLean was assigned to protect passenger flights from potential hijackings. In July 2003, the Department of Homeland Security issued a confidential advisory about a potential hijacking plot by al Qaeda to be executed by the end of summer 2003. A few days later, MacLean received a text message from the TSA cancelling all overnight missions from Las Vegas (where MacLean was stationed) until early August. MacLean believed that cancelling those missions during a hijacking alert was dangerous and illegal insofar as federal law required the TSA to put an air marshal on every flight that "presents high security risks." After MacLean learned from a supervisor that the missions had been canceled due to budgetary restrictions and that "nothing could be done," he contacted an MSNBC reporter and told him about the canceled missions. Following publication of the MSNBC story, several Members of Congress criticized the cancellations and, within 24 hours, the TSA reversed its decision and put air marshals back on the flights. MacLean was subsequently fired for disclosing sensitive security information without authorization. The Merit Systems Protection Board held that MacLean did not qualify for protection because his disclosure was "specifically prohibited by law." However, the United States Court of Appeals for the Federal Circuit vacated the Board's decision, and the United States Supreme Court in this opinion affirmed the Court of Appeals, holding that MacLean's disclosure was not prohibited by the TSA regulations because regulations do not qualify as "law" under the applicable whistleblower statute.

San Quentin Correctional Officer Could Proceed With Civil Claim For Injury Suffered While On Prison Premises

Wright v. State of Cal., 183 Cal. Rptr. 3d 135 (Cal. Ct. App. 2015)

Monnie Wright was a correctional officer at San Quentin State Prison who lived on the premises of the prison in a unit he rented from the State of California. Wright was injured when he fell in the course of his walk from his home to his place of work at the prison. Following his injury, Wright sought and obtained workers' compensation benefits exceeding $137,000. Wright then filed a civil suit against the State, alleging premises liability for an allegedly defectively constructed and dangerously maintained stair that crumbled beneath him. The State moved for summary judgment on the ground that workers' compensation provided the exclusive remedy for Wright's claim because he was injured on the employer's premises (the "premises line rule"). The trial court granted the State's motion for summary judgment, but the Court of Appeal reversed, finding a triable issue of material fact as to whether Wright's injury arose out of and in the course of his employment. See also Schultz v. WCAB, 232 Cal. App. 4th 1126 (2015) (premises line rule applied and going-and-coming rule did not preclude award of workers' compensation benefits to employee injured in a traffic accident on a United States Air Force base not generally open to the public).

Security Guards Are Entitled To Compensation For All On-Call Hours Spent At Employer's Worksite

Mendiola v. CPS Sec. Solutions, Inc., 60 Cal. 4th 833 (2015)

CPS employed on-call guards to provide security at construction worksites. Part of each guard's day was spent on active patrol. Each evening, guards were required to remain on call and on premises at the worksite to respond to disturbances should the need arise. By written agreement, on-call guards were required to reside in a trailer at the worksite. An on-call guard had to notify a dispatcher and indicate where he or she would be and for how long. If another employee was not available to provide relief, the guard had to wait onsite until the reliever arrived. If relieved, guards had to be accessible by pager or radio phone and to stay close enough to the site to return within 30 minutes. The guards were paid hourly for the time spent patrolling the worksite, but received no compensation for on-call time unless an alarm or other circumstance required that they conduct an investigation or they were waiting for or had been denied a reliever. In this putative class action, both sides sought declaratory relief as to the lawfulness of CPS's on-call compensation policy. The trial court granted plaintiffs' motion for summary adjudication of their declaratory relief claim, concluding the on-call hours constituted compensable "hours worked" within the meaning of the applicable wage order. The Court of Appeal affirmed in part and reversed in part, and the California Supreme Court concluded in this opinion that plaintiffs' on-call hours constituted compensable hours worked and that CPS could not exclude "sleep time" from plaintiffs' 24-hour shifts.

$90 Million Judgment In Favor Of Security Guards Who Remained On Call During Rest Breaks Is Reversed

Augustus v. ABM Sec. Servs., Inc., 182 Cal. Rptr. 3d 676 (2015)

In this class action lawsuit, plaintiffs alleged that ABM did not provide rest periods to its security guard employees because it failed to relieve them of all duties and required them to remain on call during their breaks. The trial court certified the class and granted plaintiffs' motion for summary adjudication, concluding an employer must relieve its employees of all duties during rest breaks, including the obligation to remain on call. The trial court also granted plaintiffs' motion for summary judgment on the issue of damages, awarding plaintiffs more than $90 million in statutory damages, interest, penalties and attorney's fees. The Court of Appeal reversed the grant of summary adjudication and summary judgment, holding that "Labor Code § 226.7 prescribes only that an employee not be required to work during a rest break, not that he or she be relieved of all duties, such as the duty to remain on call. Remaining on call does not itself constitute performing work." However, the Court affirmed the trial court's order certifying the class, in light of evidence that ABM possessed a uniform policy of requiring its security guards to remain on call during their rest breaks. The fact that the policy may not have been uniformly applied "would go only to the issue of damages." Compare Mies v. Sephora USA, Inc., 2015 WL 798709 (Cal. Ct. App. 2015) (trial court properly denied certification to putative class of "Specialists" who manage 10 to 45 subordinate employees where evidence showed they "handled their time very differently" in performing a wide variety of tasks).

Employer Met Its Burden Of Proving At Least $5 Million Amount In Controversy For CAFA Removal

LaCross v. Knight Transp. Inc., 775 F.3d 1200 (9th Cir. 2015)

In this putative class action, plaintiffs alleged that Knight Transportation had misclassified them as independent contractors when in fact they were employees who were not reimbursed their lease-related and fuel costs as required by Labor Code § 2802. Knight removed the case from state to federal court under the Class Action Fairness Act ("CAFA"), estimating the amount in controversy for reimbursing the drivers' lease and fuel costs to be in excess of the $5 million minimum amount in controversy required for CAFA removal. Knight based its estimate on the actual fuel costs invoiced on Knight's fuel cards for the first quarter of 2014 and then multiplied that amount ($2.3 million) by the 16 quarters in the four-year class period for a total of $36.8 million. Knight had an alternative, lower estimate of $21 million. The United States Court of Appeals for the Ninth Circuit held that Knight's "chain of reasoning and its underlying assumption to extrapolate fuel costs... [is] reasonable" and that the employer had satisfied its obligation to prove that the amount in controversy exceeded $5 million. See also Ibarra v. Manheim Invs., Inc., 775 F.3d 1193 (9th Cir. 2015) (CAFA removal case remanded to district court so that both sides could submit evidence related to the contested amount in controversy).

Health Care Employees Should Not Have Been Permitted To Waive Their Second Meal Periods

Gerard v. Orange Coast Mem. Med. Ctr., 2015 WL 535730 (Cal. Ct. App. 2015)

In this putative class/Private Attorney General Act ("PAGA") action, Jazmina Gerard (and others) challenged a hospital policy that allowed health care employees who worked shifts longer than 10 hours to voluntarily waive one of their two meal periods, even if their shifts lasted longer than 12 hours. Plaintiffs alleged that they all signed second meal period waivers and occasionally worked longer than 12 hours without being provided a second meal period. The trial court granted summary judgment against Gerard and denied class certification to the other plaintiffs. The Court of Appeal reversed, holding
that Wage Order No. 5, Section 11(D), is partially invalid to the extent it permits employees in the health care industry to waive their second meal periods for shifts longer than 12 hours.

Ninth Circuit Submits Day Of Rest Questions To California Supreme Court

Mendoza v. Nordstrom, Inc., 2015 WL 691304 (9th Cir. 2015)

The United States Court of Appeals for the Ninth Circuit has certified three questions to the California Supreme Court: (1) Is the one day of rest in seven as required by Labor Code § 551 calculated by the workweek or on a rolling basis for any consecutive seven-day period?; (2) Does the exemption from Section 551 found in Labor Code § 556 (applicable when the total hours of employment do not exceed 30 hours in any week or six hours in any one day) apply when an employee works less than six hours in any one day of the applicable week or does it apply only when an employee works less than six hours in each day of the week?; (3) What does Labor Code § 552 mean when it says that an employer may not "cause his employees to work more than six days in seven?" Does "cause" mean "force, coerce, pressure, schedule, encourage, reward, permit, or something else?"

FLSA Claims Were Properly Dismissed At Pleadings Stage

Landers v. Quality Communications, Inc., 771 F.3d 638 (9th Cir. 2015)

Greg Landers, who was employed as a cable services installer, brought suit individually and on behalf of other similarly situated persons, alleging that Quality failed to pay him and the other employees minimum and overtime wages in violation of the Fair Labor Standards Act ("FLSA"). The district court granted Quality's motion to dismiss based on FRCP 8(a)(2) and 12(b)(6), concluding that the complaint did "not make any factual allegations providing an approximation of the overtime hours worked, plaintiff's hourly wage, or the amount of unpaid overtime wages..." Landers expressly declined an opportunity to amend his complaint, electing instead to stand on his claims as alleged. The United States Court of Appeals for the Ninth Circuit affirmed dismissal of the complaint, applying the United States Supreme Court's opinions in Twombly and Iqbal to the pleading in this case. The Court held that Landers failed to state a claim for unpaid minimum and overtime wages in that the complaint did not allege facts showing that
there was a given week in which Landers was entitled to but denied minimum or
overtime wages.

Second-Place Bidder On Public Works Contract Could Proceed With Tortious Interference Claim

Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc., 2015 WL 738675 (Cal. Ct. App. 2015)

Between 2009 and 2012, American Asphalt South, Inc. ("American") outbid Roy Allan Slurry Seal, Inc. ("Allan") or Doug Martin Contracting, Inc. ("Martin") on 23 public works contracts totaling more than $14.6 million to apply a slurry seal protective coating to various roadways throughout Southern California. Allan and Martin sued American in five counties, alleging intentional interference with prospective economic advantage and other torts, claiming that American had only been able to submit the lowest bids by paying its workers less than the statutorily required prevailing wage. The trial court sustained the demurrer to the interference claim, but the Court of Appeal reversed, holding that plaintiffs as the lawful and second lowest bidders had a reasonably probable economic expectancy that they would be awarded the contracts but for American's allegedly illegal acts in underpaying its employees. The appellate court affirmed dismissal of claims for predatory pricing under the Unfair Practices Act and for an injunction under the Unfair Competition Law.

California Employment Law Notes - March 2015

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