On November 13, 2012, the California Court of Appeal expressly rejected the viability of the “honest belief” defense in Richey v. Autonation, Inc.  In Richey, an employer terminated an employee who was on California Family Rights Act (“CFRA”) leave because, during that leave, the employee was allegedly working at a restaurant he owned.  Shortly thereafter, the employee initiated a lawsuit against the employer setting forth, among other things, claims for violation of CFRA.  After submitting the matter to arbitration, the employer successfully defended itself against the employee’s CFRA claims based upon the “honest belief” defense which states an employer who honestly believes that it is discharging an employee for misusing leave is not liable even if the employer is mistaken.  Objecting to the application of the “honest belief” defense under California law, the employee filed a motion to vacate the arbitration award.  The trial court denied the motion, confirmed the arbitrator’s decision and awarded costs. Plaintiff appealed.

The California Court of Appeal expressly rejected the viability of the “honest belief” defense and found it was contrary to established California law specifying an employer may not terminate an employee taking CFRA leave based solely on the fact the employee is working part time at another comparable job.  In further emphasis, the Court continued, “an employer may not, in terminating an employee who has been granted CFRA leave, defend a lawsuit from that employee based on its honest belief that employee was abusing his leave.”  Rather, the employer must present traditional evidence justifying its termination decision such as the employee’s employment would have otherwise ceased regardless of the CFRA leave.  Thus, the decision in Richey and the significant authority cited in support significantly weakens any discussion of the “honest belief” doctrine with respect to CFRA claims in California.

Our colleague at the Workplace Privacy Blog has reported that the California Attorney General has started to enforce the state’s Online Privacy Protection Act.  Regardless whether a company is located in California, the Act requires any company that maintains a website that collects personal information about Californians to maintain a privacy policy on the site. Please read: California AG Begins Enforcing the State’s Online Privacy Protection Act for Websites, Aps.

 

In a case that could impact employers whose employees use their own vehicles for work, the California Supreme Court granted review to address whether an employer’s insurance policy covered a deadly automobile accident caused by an employee driving his own car. American States Ins. Co. v. Ramirez, No. S205073 (Cal. Oct. 24, 2012). Although this case is still pending, it should remind employers whose employees drive personal vehicles on company business to evaluate with their insurance brokers whether to obtain insurance coverage covering accidents that occur while the employees are working since the employer is likely to be sued. 

 

Employers should also recall that if an employer requires employees to insure their cars for more than the statutory minimum level of insurance, the California Division of Labor Standards Enforcement takes the position that employers must reimburse employees for those expenses under Labor Code Section 2802. We will continue to provide updates regarding the California Supreme Court’s review of the case as appropriate.

 

A new case presents a mixed bag of results for California employers. As a general matter, California employers should be careful when classifying individuals as independent contractors, rather than employees. Reversing the denial of class certification in an action for various Labor Code violations, a California Court of Appeal held that whether newspaper delivery carriers were independent contractors or employees of the newspaper was amenable to class action treatment through common proof. Ayala v. Antelope Valley Newspapers, Inc., No. B235484 (Cal. Ct. App. Oct. 17, 2012). However, the Court affirmed the denial of class certification on the carriers’ claims for unpaid overtime and meal and rest period violations because such claims would require individual factual assessments.

This case provides employers with guidance regarding defending against wage hour class actions. Significantly, the appellate court held certain issues, such as payment of overtime or provision of meal or rest periods, are highly individualized since they depend on how many hours per day and week individuals work. The Court indicated such inquiries may render class certification inappropriate. Where the Court is being asked to examine the nature of a particular job and the employer’s control, the Court noted such issues may lend themselves to class treatment. There are many more issues in this case and employers should also be weary that the case could be appealed by either or both parties.

 

Employers must carefully draft arbitration agreements and ensure the agreements are regularly updated for compliance with state and federal law. A California Court of Appeal held that owner-operator truck drivers were not required to arbitrate whether they were misclassified as independent contractors where the parties’ arbitration agreements applied to any dispute that arose “with regard to its application or interpretation.” Elijahjuan v. Superior Court, No. B234794 (Cal. Ct. App. Oct. 17, 2012).  The Court found that the misclassification claims fell outside the arbitration provision because it did not concern the application or interpretation of the Agreements; rather, the drivers sought to enforce their rights under the California Labor Code.  

The Court’s decision reiterates California’s hostility toward enforcing arbitration agreements and reminds employers that they need to make clear that all claims regarding the parties’ relationship are covered by the arbitration agreement. In light of this ever-changing legal climate, employers should continue to consult with their legal counsel when reviewing the enforceability of arbitration agreements. For a detailed discussion regarding this case, please see our article by clicking here

 

Another arbitration case which is unfavorable to employers. A California Court of Appeal ruled that a human resources director who never signed the employer’s arbitration agreement, concealed that fact from her employer, and quit her job before doing so, could not be required to arbitrate her employment claims. Gorlach v. The Sports Club, No. B 233672 (Cal. Ct. App. Oct. 16, 2012). The Court rejected the employer’s equitable estoppel and implied contract theories and affirmed the denial of the employer’s motion to compel arbitration.

This case illustrates a pitfall for the unwary employer implementing an arbitration program. If an employer intends to require employees to sign an arbitration agreement as a condition of employment or continued employment, the employer needs to obtain a signed agreement. In addition, the employer should develop a system to audit that those signatures are obtained, including the signatures of members of management. There are also numerous other potential pitfalls with arbitration agreements so we suggest working with legal counsel prior to moving forward.

 Written by: Joseph Lazzarotti

Late last week, California Governor Jerry Brown "took to Twitter, Facebook, Google+, LinkedIn and MySpace to announce that he has signed two bills that increase privacy protections for social media users in California."

As discussed, one of the bills, A.B. 1844, updates California’s Labor Code to significantly limit when employers could ask employees and job applicants for social media passwords and account information. However, the law permit employers to request an employee to divulge personal social media activity reasonably believed to be relevant to an investigation of allegations of employee misconduct or employee violation of applicable laws and regulations. This exception  applies so long as the social media is used solely for purposes of that investigation or a related proceeding.

The other bill, S.B. 1349, establishes a similar privacy policy for postsecondary education students with respect to their use of social media. While the bill prohibits public and private institutions from requiring students, prospective students and student groups to disclose user names, passwords or other information about their use of social media, it stipulates that this prohibition does not affect the institution’s right to investigate or punish student misconduct

The new laws take effect Jan. 1, 2013.

California’s Third Appellate District has held that a violation of Labor Code section 132a cannot support a common law claim of wrongful termination in violation of public policy. In general terms, Labor Code section 132a states an employer may not discriminate against an employee for filing a workers’ compensation claim or for having a work related injury. These kind of claims are adjudicated by the California Workers’ Compensation Appeals Board. In Dutra v. Mercy Medical Center Mount Shasta, (C067169, Sept. 26, 2012), the Court found that Labor Code section 132a does not represent the sort of public policy which provides the basis for a common law wrongful termination in violation of public policy claim in civil court. In so ruling, the Court distinguished an earlier California Supreme Court case, City of Moorpark v. Superior Court, Cal. 4th 1143 (1998). In Moorpark, the Supreme Court acknowledged that Labor Code section 132a is not an exclusive remedy and plaintiffs may pursue parallel common law claims. The Dutra court agreed but held Moorpark did not specify which common law claims were appropriate following a Labor Code section 132a violation. Analyzing the underlying policy of Labor Code section 132a, the Court found that it is not a proper basis for a public policy wrongful termination claim. Accordingly, a plaintiff may not claim she was wrongfully terminated in violation of public policy in civil court merely because her termination allegedly violated Labor Code section 132a. Employers should consult with their legal counsel to determine how the decision may impact their operations, if at all. The case may also be appealed by a party.  

California Governor Jerry Brown has signed into law a bi-partisan measure that seeks to curb rampant, frivolous Americans with Disabilities Act access lawsuits in the state and expand access to businesses for those with disabilities.  This is good news for California businesses.  The state reportedly has 12 percent of the country’s disabled population, but 40 percent of the nation’s ADA lawsuits. For a detailed article on the bill which has many different elements to it, please see our article entitled, "New California Law Targets Frivolous Disability Access Lawsuits."

On August 29, 2012, California passed AB 1875. The Bill adds section 2025.290 to the California Code of Civil Procedure, which limits oral depositions in civil litigation to seven hours or less. However, the new law does not apply to cases brought by employees or applicants arising out of or relating to employment. The new law provides for exceptions where any circumstances or actions unfairly impede or delay the deposition. The law also makes exceptions for expert witness depositions, depositions in complex litigation, and depositions of “persons most qualified.”