In a welcome decision, University of Texas Southwestern Medical Ctr. v. Nassar, No. 12-484 (June 24, 2013), the U.S. Supreme Court ruled yesterday that retaliation claims under Title VII of the Civil Rights Act of 1964 must be established using a “but-for” causation standard, denying the argument asserted by plaintiff and the EEOC that the more easily satisfied “motivating factor” test should be used in determining causation in retaliation cases.  Employers thus can successfully defend retaliation claims under Title VII unless an employee can show they would not have taken the adverse action in question but for the alleged retaliatory intent. For more on the Supreme Court’s decision in Nassar, click here.

Not surprisingly, current California law would call for a different result. As one Court of Appeal has observed, “[I]t is well established that a plaintiff in a retaliation case need only prove that a retaliatory animus was at least a substantial or motivating factor in the adverse employment decision.” (George v. California Unemployment Ins. Appeals Bd. (2009) 179 Cal.App.4th 1475, 1492 [102 Cal.Rptr.3d 431].) In contrast to the “but-for” causation standard adopted by the U.S. Supreme Court in Nassar, California’s “substantial or motivating” factor test offers a greater chance for employees to successfully assert retaliation claims even when the evidence shows the employer would have taken the adverse action in question with or without any alleged retaliatory intent.

 

In Vance v. Ball State University, No. 11-556 (June 24, 2013), the United States Supreme Court defined “supervisory” authority under Title VII of the Civil Rights Act of 1962 as requiring the power to make “a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits.” The Court rejected the Equal Employment Opportunity Commission’s broader definition of supervisor which includes authority to direct other employees as a basis for finding supervisor status. Plaintiff Vance argued that her co-worker, who allegedly slapped, threatened and used racial epithets towards her, had authority to “direct her work” and thus was a supervisor for whose actions her employer could be held vicariously liable. The Court disagreed, and held that an employee can be a “supervisor” for purposes of imposing vicarious liability on an employer under Title VII of the Civil Rights Act of 1964 only if the employee is empowered by the employer to take tangible employment actions against the victim. For more on the Vance v. Ball State decision, click here.

California courts applying California law would likely reach the opposite result. The California Fair Employment and Housing Act adopts a broader definition of supervisor and specifically includes “the responsibility to direct employees” as a basis for finding supervisor status so long as that individual exercises independent judgment. Cal. Govt. Code Section 12926(s), Chapman v. Enos (2004) 116 Cal.App.4th 920, 930. In Vance v. Ball State, the Court viewed the authority to direct daily work activities as “nebulous,” “ill-defined” and overly fact specific whereas it deemed its “tangible employment action” test to be an “easily workable” “brightline” rule that makes determining supervisor status something that can be “readily determined” based on documentation and addressed at the summary judgment stage or earlier.  California employers defending  harassment claims under the FEHA may wish to consider asserting the same logical argument, but should first carefully evaluate the issue with counsel.

 

The California Supreme Court has just ruled that Los Angeles County must provide the union representing its employees under an “agency shop” agreement with the home addresses and telephone numbers of all county employees, including non-union employees. County of Los Angeles v. Los Angeles County Employee Relations Comm’n (Serv. Employees Int’l Union, Local 721), No. S191944 (Cal. May 30, 2013). Although the Court recognized that non-union employees have a right to privacy in their home addresses and telephone numbers under the California Constitution and their disclosure would constitute a serious invasion of that right, the Court determined the union’s interest in communicating with employees significantly outweighed their privacy rights. For more on why the Court elevated union over individual rights, click here.

Score one for Washington in a recent dispute between competing employers from Washington and California.  In Meras Engineering, Inc. v. CH20, Inc., a Northern District of California Court enforced a forum selection clause designating Washington as the venue for all disputes — rejecting the California parties’ argument that litigating in Washington would defeat California’s strong public policy against covenants not to compete.  The mere possibility that a Washington Court might subsequently apply Washington law instead of California law failed to move the Court — at least in this case.   This case strengthens the hand of employers who incorporate choice of venue provisions in their employment agreements and carries obvious implications for California and Washington employers alike.  Click here for more on Meras Engineering v. CH20.

Most litigation over whether employees are classified properly as exempt from overtime turns on whether employees spend the majority of their work time performing exempt duties. However, employers should not forget the salary basis requirement. In Negri v. Koning & Associates, No. H037804 (Cal. Ct. App. May 16, 2013), the California Court of Appeal assumed that an insurance adjuster performed more than 50% of his time performing exempt duties, but still found he had been misclassified as exempt because he was paid an hourly rate based solely on the number of hours he worked processing claims and was not guaranteed a minimum salary. Labor Code Section 515(a) exempts an employee from overtime pay eligibility only if s/he is “primarily engaged in the duties that meet the test of the exemption, customarily and regularly exercises independent judgment and discretion in performing those duties and earns a monthly salary no less than two times the state minimum wage for full time employment.” In Negri, even though the employee’s hourly rate significantly exceeded two times the state minimum wage, his wages did not constitute a salary. Consequently, the employer wound up paying 20 hours of overtime for all 66 weeks the employee worked for the company.  For more on Negri, click here http://www.courts.ca.gov/opinions/documents/H037804.PDF.

California law prohibits “use it or lose it” vacation policies and, under Section 227.3 of the California Labor Code, requires all accrued vacation to be paid on termination of employment, “unless otherwise provided by a collective bargaining agreement.” Examining the meaning of the collective bargaining exception for the first time, the California Court of Appeal ruled that the employer was liable for unpaid pro rata vacation because the union agreement did not “clearly and unmistakably waive” the employees’ rights under Section 227.3. Choate v. Celite Corp., No. B239160 (Cal. Ct. App. May 2, 2013). However, the Court reversed the judgment imposing waiting time penalties against the employer because the employer did not act willfully in its vacation payment practices.  For more on Choate, click here .

 

While employees continue to challenge binding arbitration agreements with gusto, California courts have shown a consistent willingness to enforce agreements where fundamental fairness exists. In Serpa v. California Surety Investigations, Inc., No. B237363 (Cal. Ct. App. Apr. 19, 2013), a California Court of Appeal reversed a trial court order denying the employer’s motion to compel arbitration. Even though the arbitration agreement itself was not mutual because it required only the employee to arbitrate disputes, the employer’s handbook — which was incorporated into the arbitration agreement — applied the arbitration policy to the employer and employees alike. Therefore, the Court held the handbook “salvaged” the arbitration agreement. It also rejected the argument that the employer could unilaterally change the handbook policy at any time, finding that the implied covenant of good faith and fair dealing limited the employer’s right to alter the agreement unilaterally and defeated the employee’s illusory promise and unconscionability theories. Click here for more information.

The California Court of Appeal has ruled that public agencies are prohibited from using partners in the same law firm as an advocate in a contested matter and as an advisor to the decision maker in the same matter, even if the law firm has established an ethical wall between the partners. Sabey v. City of Pomona, No. B239916 (Cal. Ct. App. Apr. 16, 2013). The Court found that, although there was no evidence of bias or improper conduct — as the attorneys did not communicate about the matter and could not access each other’s files — the situation created the appearance of unfairness and bias because the attorneys, as partners, owed one another a fiduciary duty of loyalty. Consequently, the Court held that the public agency’s law firm could not serve as both advocate and advisor, and the use of an ethical wall was not sufficient to prevent actual or the appearance of unfairness and bias. For details on Sabey, please see Private Attorneys from Same Firm Cannot be Public Entity’s Advisor and Advocate in Single Matter, California Court Rules.

Employees often attempt to prove discrimination by offering evidence that other, similar employees were subject to the same treatment, often referred to as “me too” evidence. The California Court of Appeal rejected an employee’s attempt to use “me too” evidence when the employee sought to introduce evidence showing how employees outside his protected class were treated. Hatai v. Department of Transp., No. B236757 (Cal. Ct. App. Mar. 28, 2013). However, the Court allowed the employee to introduce evidence of discrimination against other persons of the same race as the employee.

Kenneth Hatai, who was of Japanese and Asian ancestry, claimed that his boss, Sameer Haddadeen, who was of Arab ancestry, discriminated against him based on his Asian national origin and ancestry. At trial, Hatai attempted to introduce evidence showing that Haddadeen discriminated against anyone who was not an Arab. The trial court refused to allow Hatai to introduce this evidence, and the Court of Appeals agreed and ruled that the “me too” doctrine only permitted Hatai to present evidence that Haddadeen subjected other employees of East Asian or Japanese ancestry to similar discriminatory conduct, but not employees outside of his protected class.

For details on Hatai, please see California Appeals Court Rejects ‘Me Too’ Evidence in Race and National Origin Discrimination Case.

Class certification is unwarranted where auto center managers and assistant managers alleged they were improperly classified as exempt and denied overtime and meal and rest breaks in violation of the California Labor Code, the California Court of Appeal has ruled in Dailey v. Sears, Roebuck and Co.Statistical Sampling Could Not Establish Liability in Wage-Hour Class Action, California Court Rules, for more information.) The Court also held the class representative failed to show the employer had a uniform policy of depriving managers of meal or rest breaks., No. D061055 (Cal. Ct. App. Mar. 20, 2013). Affirming a trial court determination, the Court concluded that the class representative could not rely on random statistical samples to establish liability and that individual issues predominated over common issue in this case. (See our article,