Although both medicinal and now recreational consumption of marijuana have been legalized in California, this legalization did not impact an employer’s right to discipline or even terminate employees for marijuana use. That could change for medical marijuana users if a bill pending before the California legislature becomes law. To read the rest of this article, please visit our Disability, Leave & Health Management blog here.
Surge of ICE Raids Expected in California Following State Adoption of Immigration Laws
California seems to be at odds with the Trump Administration over many subjects, including the legalization of marijuana, the expansion of off-shore drilling, the elimination of state and local tax deductions, and immigration.
The most recent clash over immigration began with the passage in October of “The California Values Act” (CVA) (SB54) and the Immigrant Worker Protection Act (IWPA) (AB450). Please visit our “Immigration Blog” to continue reading this article found here.
Exemption, Not Pre-Emption: California Federal Court Clarifies Meal and Rest Break Rules May Be Exempt From Labor Code Enforcement For Employers With Valid Collective Bargaining Agreements
In a recent decision, Judge Philip S. Gutierrez of the United States District Court for the Central District of California clarified an available avenue for employers with collective bargaining agreements (“CBAs”) to combat the growing trend of wage and hour lawsuits in California. In granting defendant Kiewit Infrastructure West Co.’s (“Kiewit”) motion for summary judgment (by way of a motion for reconsideration), Judge Gutierrez dismissed various Labor Code claims, including claims for meal and rest break violations, because the claims were exempted by (rather than pre-empted by) Kiewit’s existing CBA. See Peter Zayerz v. Kiewit Infrastructure West Co., 16-CV-6405-PSC (PJW)(January 18, 2018).
The California Labor Code and Industrial Welfare Commission Wage Orders provide for mandatory uninterrupted meal and rest breaks for hourly, non-exempt employees. See Cal. Lab. Code §512(a). Generally, California employers must provide their hourly employees uninterrupted meal periods of not less than thirty minutes for every five hours worked and uninterrupted rest periods of not less than ten minutes for every four hours worked (or major portion thereof). Id. If an employer fails to provide such meal periods and rest breaks, employers may be vulnerable to lawsuits or enforcement actions to seek unpaid wages and costly penalties.
However, pursuant to Labor Code §§ 512(e) and (f), certain unionized employees working in construction, commercial driving, security services, electrical, gas or local publically owned electric utility jobs may be exempt from the Labor Code’s meal and rest break requirements where a valid CBA is in place.
Labor Code §§ 512(e)(1)-(2) provides that, if an employee in the aforementioned industries is covered by a CBA that “expressly provides for the wages, hours of work, and working conditions of employees, and expressly provides for meal periods for those employees, final and binding arbitration of disputes concerning application of its meal period provisions, premium wage rates for all overtime hours worked, and a regular hourly rate of pay of not less than 30 percent more than the state minimum wage rate,” then § 512(e) does not apply to the employer. Cal. Lab. Code §§ 512(e), (f). Instead, the CBA governs and any disputes arising between an employer and employee must be resolved according to the terms of the CBA.
When reconsidering Kiewit’s motion, the Court evaluated the exemptions under Labor Code § 512, and determined that the parties were obligated to resolve their disputes according to the arbitration terms of the CBA. Therefore, the plaintiff’s claims for meal and rest break violations, as well as claims for derivative penalties under the Private Attorneys General Act (“PAGA”) were dismissed.
In industries outside those listed in Labor Code § 512(f), unionized employers may still be able to avoid state law claims for meal and rest break violations, by arguing that the claims are pre-empted by the Labor Management Relations Act (“LMRA”). Such an argument is available where the terms of the CBA relating to the meal and rest breaks are disputed and require interpretation by the court. However, in Kiewit’s case, the Court determined the meal and rest break claims were not pre-empted by the LMRA because there was no dispute as to the interpretation of the CBA. Instead, the claims were statutorily exempted by the Labor Code, thus requiring the parties to resolve their disputes as per their CBA.
California wage and hour lawsuits continue to dominate the legal landscape for California companies. Jackson Lewis is equipped to handle all aspects of labor and employment disputes, including defense against wage and hour class and representative actions and preventative advice and counsel. Please contact our California attorneys if you have further questions.
California Labor Department Releases Form for Employers Responding to Immigration Agency Inspection
California’s public and private employers are prohibited from voluntarily consenting to a federal immigration enforcement agent’s request to enter nonpublic areas in the workplace or to voluntarily allow the agent access to employee records unless the agent provides a judicial warrant. Labor Code 90.2(a)(1).
Employers also must provide notice to employees, called a Pre-Inspection Notice. Within 72 hours of receiving a federal immigration agency’s notice of inspection (“NOI”) of employment records, including I-9 Employment Eligibility Verification forms, an employer must provide notice to each of its current employees.
The posted notice must include: (1) the name of the immigration agency conducting the inspection; (2) the date the employer received notice of the inspection; (3) the nature of the inspection to the extent known; and (4) a copy of the NOI.
California has now released a template Notice of Inspection Form, which meets the requirements under Labor Code 90.2(a)(1).
For a full discussion of the new law, please see our prior blog, “California Shields Workers from Immigration Enforcement While On The Job”
Trial Court Properly Denied Attorneys’ Fees To Plaintiff Who Proved His Termination Was Substantially Motivated By His Disabilities, But Was Not The Prevailing Party At Trial
In Bustos v. Global P.E.T., Inc., (E065869, Cal. Ct. App. January 16, 2018), Plaintiff William Bustos and a number of his co-workers were terminated by Global in an economic layoff. Bustos sued Global alleging his disabilities were a substantial motivating reason for his termination.
At trial, the jury awarded Bustos nothing, although the jury answered “Yes” to the special verdict form question: “Was [Bustos’ disabilities] a substantial motivating reasons for [Global’s] decision to discharge [Bustos]?” The jury also answered “No” to the question of whether Global’s “conduct” was a “substantial factor in causing harm to [Bustos]”.
Based on the jury’s finding that Bustos’ disabilities were a substantial motivating reason for his termination, Bustos’ attorneys requested an award of about $454,000 in fees under the Fair Employment Housing Act, Government Code Section 12965. They cited Harris v. City of Santa Monica (2013) 56 Cal.4th 203, 235, for the proposition that “a plaintiff subject to an adverse employment decision in which discrimination was a substantial motivating factor may be eligible for reasonable attorney’s fees and costs expended for the purpose of redressing, preventing, or deterring that discrimination,” even if that plaintiff did not sustain a compensable injury.
The trial court denied that request, finding that Bustos was not a “prevailing party” under Section 12965 because he failed to recover any economic or equitable relief. (Bustos, supra, *4.) After reviewing the record and Harris, the Court of Appeal affirmed: “It is not beyond reason to conclude that a plaintiff who obtains no relief at trial – either monetary or equitable – has not ‘realized [his] litigation objectives,’ regardless of whether one or more preliminary questions on a special verdict form were answered in his favor.” (Id. at *7, citing Castro v. Superior Court (2004) 116 Cal.App.4th 1010, 1023.)
The Bustos decision should discourage claims for attorney’s fees based only on favorable special verdict form questions where a plaintiff has no practical prevailing party status. This decision, however, may also encourage the pursuit of more equitable claims – injunctive and declaratory relief – in which a plaintiff has another means of realizing prevailing party status.
Workplace Violence, Indoor Heat, Cannabis Regulations on Cal/OSHA 2018 Schedule
Starting the year with a bang, the Cal/OSHA Division said it intends to finalize several new standards this year, including on indoor heat illness prevention. It also intends to release new workplace violence prevention for general industries regulations and new regulations to affect the Cannabis industry. The agency has scheduled three advisory meetings within the next month. To read more, please visit this article on our OSHA Law Blog.
Reminder! California Employers Must Provide Notice of the Federal and California Earned Income Tax Credit
California employers should remember that they must revise their notice to employees regarding the federal Earned Income Tax Notice to include California’s version of it. Effective January 1, 2017, employers must revise their notice to employees regarding the earned income tax credit when issuing W-2 or 1099 forms.
For several years, California employers have been required to notify employees regarding the federal Earned Income Tax Credit. In September 2016, California AB 1847 was signed into law which requires those same employers to also notify employees that they may be eligible for the California Earned Income Tax Credit (“EITC”).
Effective January 1, 2017, the new law states that an employer shall notify all employees that they may be eligible for the federal and the California EITC within one week before or after, or at the same time, that the employer provides an annual wage summary, including, but not limited to, a Form W-2 or a Form 1099, to any employee.
The employer must physically give it to the employee or can mail it to their last known home address. If you have any questions or need the new language, please feel free to reach out to the Jackson Lewis attorney you normally work with or Jonathan A. Siegel.
Obesity Discrimination Claims Allowed to Proceed Under California Law
Is obesity a disability under California law? Are a supervisor’s alleged “fat remarks” sufficient evidence of disability discrimination? On December 21, 2017, a California Appellate Court published an extensive decision regarding obesity as a disability under California law and issued further guidance on both counts. To read the rest of this blog, please visit this post on our Disability, Leave and Health Management Blog.
A PAGA Case Cannot Stand Without Standing: Court of Appeal Affirms Trial Court’s Dismissal of PAGA Action After the Plaintiff Settles His Individual Labor Code Claims in Arbitration
In Kim v. Reins International California, Inc. (B278642, Cal. Ct. App., December 29, 2017), the Court of Appeal for the Second Appellate District addressed for the first time the question of whether an employee-plaintiff, who had settled and dismissed his individual claims under the Labor Code against his employer, was able to maintain a representative action under the Labor Code Private Attorneys General Act (the “PAGA”) on behalf of other “aggrieved employees”. The Court held that because of the settlement and dismissal of his individual claims, the employee-plaintiff was no longer an “aggrieved employee” and therefore did not have standing to represent other “aggrieved employees” under the law.
Under the PAGA, an “aggrieved employee” may bring a representative action on behalf of him or herself and other “aggrieved employees” for any violation of the California Labor Code. Cal. Labor Code §§ 2698, et seq. Since the law was first enacted in 2004, many employers around the state have been on the receiving end of PAGA actions, in which employees can seek substantial civil penalties that were previously only recoverable by the State of California. PAGA cases have become increasingly favored by plaintiffs’ attorneys for a number of reasons, including the fact that PAGA-claims cannot be compelled into arbitration.
This case involves many common elements familiar to experienced class and representative action litigants in California: Kim, a former employee of Reins International, brought a wage and hour class action alleging various violations of the Labor Code as well as a claim for civil penalties under PAGA for the same underlying violations. Kim had also signed an arbitration agreement when he began working for the company. Reins International responded to the lawsuit with a common countermeasure: it moved to compel arbitration of Kim’s individual claims, dismiss the class claims, and stay the PAGA cause of action until the arbitration was complete. The trial court granted the motion to compel arbitration, reserved the issue of class arbitrability for the arbitrator, and stayed the cause of action under PAGA.
While the case proceeded in arbitration, the parties reached a settlement of Kim’s individual claims. Pursuant to the settlement, Kim dismissed his individual claims with prejudice and the class claims without prejudice, leaving only the PAGA cause of action. As a result, the trial court lifted the stay and the parties proceeded to litigate the PAGA claim back in Superior Court.
Following the lifting of the stay, Reins International filed a motion for summary adjudication of the PAGA cause of action in its favor on the grounds that following the settlement and dismissal of all of his individual claims against his employer, Kim was no longer an “aggrieved employee” and therefore could not maintain the PAGA cause of action. The trial court agreed and dismissed the PAGA cause of action.
The Court of Appeal upheld the trial court’s decision, holding that “where an employee has brought both individuals claims and a PAGA claim in a single lawsuit, and then settles and dismisses the individual employment causes of action with prejudice, the employee is no longer an ‘aggrieved employee’ as that term is defined in the PAGA, and therefore that particular plaintiff no longer maintains standing under PAGA.”
The Court was not swayed by Kim’s arguments that the PAGA claim should have been unaffected by his individual settlement in that it did not release the rights and potential claims of other individual employees nor the State of California, in whose stead Kim was seeking civil penalties. In fact, the Court noted that it agreed with Kim’s arguments that his individual settlement did not impair the ability of the State of California nor another employee from pursuing the same claims individually or in a representative capacity under PAGA; nonetheless, his ability to do so ended the moment he settled and dismissed all his individual claims against Reins International.
The Court stated that its holding is confined to the specific circumstances in the case – involving the voluntary settlement and dismissal of individual claims in arbitration – and declined to opine on what effect an adverse determination in arbitration would have on PAGA standing generally. Nonetheless, the Court’s in-depth application of the standing doctrine to PAGA actions – where previously the California Supreme Court has only made surface-level references – has potentially far reaching implications in cases where employees are seeking PAGA penalties for alleged Labor Code violations that they cannot establish they have suffered individually, in cases where the employee litigates and loses in arbitration, and in cases where they have resolved their individual disputes in private settlements. These issues and others will undoubtedly be tackled by the Courts of Appeal and the California Supreme Court as they continue to interpret and mold the PAGA.
It’s Cut and Dry: Ninth Circuit Adopts “Primary Beneficiary” Analysis, Concludes Cosmetology and Hair Design Students Were Interns, Not Employees
Former students at a cosmetology and hair design school with locations in California and Nevada were interns and not employees entitled to wages under the FLSA or state law, the Ninth Circuit has held. Benjamin v. B&H Education, 2017 U.S. App. LEXIS 25672 (9th Cir. Dec. 19, 2017). To read more please visit this article at our Wage and Hour Law Update Blog.
