The California Supreme Court issued several important decisions in 2023 about issues such as COVID-19 take-home exposure and arbitrating Private Attorney General Act (PAGA) claims.

Employers should continue to be aware of several cases pending before the state’s high court. Here are the highlights and what these cases could mean for California employers.

PAGA & Arbitration

Estrada v. Royalty Carpet Mills

Do California courts have discretion to strike or narrow a Private Attorneys General Act (PAGA) claim that is unmanageable?

In Estrada, there were a number of individualized issues and the court dismissed the plaintiff’s PAGA claims for meal and rest period violations as unmanageable. On appeal, the Court of Appeal held that California courts do not have discretion to strike PAGA claims that are unmanageable. Specifically, it held that such discretion would place an extra burden on PAGA plaintiffs that the state need not satisfy, interfering with the purposes of PAGA.

The Court of Appeal in Estrada ruled opposite another district in the California Court of Appeal, which held that trial courts do have inherent authority to strike or narrow unmanageable PAGA claims. The California Supreme Court will now remedy the split between districts and, if it reverses Estrada, employers will have a powerful new tool in PAGA actions.

Quach v. California Commerce Club, Inc.

Must a party opposing a motion to compel arbitration show prejudice to establish that the party who filed the motion to compel waived its right to arbitrate?

In Quach, the defendant waited 13 months into discovery before filing a motion to compel arbitration. Quach argued that the Commerce Club had waived its right to arbitrate by waiting 13 months to move to compel arbitration. Quach further claimed that Commerce Club’s delay forced him to expend time and money preparing for litigation, causing him prejudice.

The trial court agreed, finding Commerce Club had waived the right to arbitrate by propounding a “large amount of written discovery,” taking Quach’s deposition, and expending “significant time meeting and conferring.”

The Court of Appeal disagreed with the trial court, following California Supreme Court precedent that participation in litigation alone cannot support a finding of waiver and that fees and costs incurred in litigation alone will not establish prejudice on the part of the party resisting arbitration.

Meanwhile, the United States Supreme Court has held, in Morgan v. Sundance, Inc., that a party is not required to show prejudice to establish an opposing party’s waiver of its right to arbitrate. The California Supreme Court will provide clarity and may reduce the expense of litigating motions to compel arbitration.

Ramirez v. Charter Communications, Inc.

Is it permissible for an arbitration agreement to allocate interim fees for a motion to compel arbitration to the prevailing party?

Here, Ramirez and Charter Communications, Inc. (Charter) were parties to an arbitration agreement. Charter fired Ramirez and Ramirez sued, alleging claims under the Fair Employment and Housing Act. Charter moved to compel arbitration. The trial court denied Charter’s motion, finding the arbitration agreement substantively unconscionable because it provided for interim fees to be awarded to the prevailing party on a motion to compel arbitration.

The Court of Appeal affirmed the trial court’s order denying the motion to compel arbitration as unconscionable due to the provision at issue, declining Charter’s request to sever that provision and compel arbitration under the remaining agreement.

The California Supreme Court will consider whether parties can agree to arbitration agreements that include interim fee-shifting provisions in favor of a party prevailing on a motion to compel arbitration. Moreover, it will consider whether such a provision is so unconscionable that it invalidates the entire agreement or whether courts may sever those provisions.

Employers should pay close attention to this case, as well as the courts’ recent attitudes towards arbitration agreements. Specifically, if the Court upholds the Court of Appeal’s order, employers may need to remove interim fee-shifting provisions. Regardless of the outcome, employers should review their arbitration agreements to ensure that courts would not interpret their terms as unfairly one-sided and that their agreements contain legally compliant severability clauses.

Fuentes v. Empire Nissan, Inc.

Where an arbitration agreement is fair in substance, is it nevertheless unenforceable for unconscionability where it is a one-page form with tiny, seemingly blurred print, largely unreadable, and presented on a take-it-or-leave-it basis?

Here, the trial court held the arbitration agreement procedurally unconscionable. The Court of Appeal reversed, holding that the substance of the arbitration agreements was fair and there was therefore no reason to invalidate the agreements for unconscionability.

The result of this case will shape the future of employment arbitration agreement enforceability which has been changing dramatically in recent years.

Zhang v. Superior Court

If a party moves to compel arbitration in a non-California forum pursuant to a forum-selection clause and seeks to stay related California litigation under Section 1281.4, can the opposing party preempt the court’s “competent jurisdiction” requiring a stay of the California litigation by merely invoking Labor Code, section 925? Moreover, can a party to an arbitration agreement circumvent the arbitration agreement’s delegation of all issues to an arbitrator by invoking Labor Code, section 925?

Plaintiff Zhang is a former Dentons law firm partner who worked in California. After Dentons removed him from the partnership for diverting money owed to the firm, they initiated arbitration in New York pursuant to a signed arbitration agreement. Zhang then filed suit in California, arguing that he was an employee and that Labor Code, section 925, preempted arbitration in New York. Dentons sought a stay under Section 1281.4. The trial court granted Denton’s motion for a stay. After the Court of Appeal denied Zhang’s petition for a writ and the Supreme Court ordered the Court of Appeal to review, it denied Zhang’s petition on the merits.

This case is crucial for employers because it may affect who can benefit from the Labor Code, section 925, and therefore preempt forum-selection clauses.

Discrimination, Harassment & Retaliation

Bailey v. San Francisco District Attorney’s Office, et al.

Is summary judgment appropriate for the employer on discrimination, harassment, and derivative claims where a non-supervisor used a highly offensive racial slur on one occasion?

The trial court awarded summary judgment to the employer. The Court of Appeal affirmed summary judgment. Now, in a rare less-than-unanimous vote, the California Supreme Court granted review. This case may affect the standards for hostile work environment claims and the level of severity an employee must show to establish a hostile work environment. Employers should continue to be proactive in training employees to avoid the appearance of impropriety in the work environment.

Wage and Hour

Huerta v. CSI Electrical Contractors, Inc.

The U.S. Court of Appeals for the 9th Circuit certified three questions in this case to the California Supreme Court:

(1) Is time spent on an employer’s premises in a personal vehicle, waiting to scan an identification badge, having security guards peer into the vehicle, and exiting a security gate compensable as “hours worked” under California Industrial Welfare Commission Wage Order 16?

(2) Is time spent on the employer’s premises in a personal vehicle driving between the security gate and the employee parking lots, while subject to certain rules from the employer, compensable as “hours worked” or as “employer-mandated travel” under Wage Order 16?

(3) Is time spent on the employer’s premises, when workers are prohibited from leaving by the fact of the location but not required to engage in employer-mandated activities, compensable as “hours worked” within the meaning of Wage Order 16 or Labor Code, section 1194 when the relevant collective bargaining agreement designated that time as an unpaid “meal period”?

In the underlying case, employees commuted to a remote work site to build solar panels. Once they left the highway, they had to drive forty minutes to the muster point, sometimes at a speed as slow as five miles an hour to minimize the disturbance of endangered kit fox species in the area.  Sometimes they had to wait outside the gate off the highway while a biologist cleared the road. Employees were also required to stop at a security gate (the location of which moved during the project) for identification.  Due to the times employees came and left, the lines at the security gate could be five to twenty minutes long.

This case will provide further guidance for what counts as hours worked under California law. The case will also provide guidance on the CBA exception for meal periods contained in Wage Order 16.

Iloff v. LaPaille

For an employer to establish its “good faith” defense to liquidated damages, must it demonstrate that it took affirmative steps to ascertain whether its pay practices complied with the Labor Code and Industrial Welfare Commission Wage Orders? May a wage claimant prosecute a paid sick leave claim in a de novo wage claim trial conducted pursuant to Labor Code section 98.2?

In this case, the plaintiffs filed wage claims with the Division of Labor Standards Enforcement (DLSE) against defendants Cynthia LaPaille and Bridgeville Properties, Inc. (BPI) for unpaid wages in violation of the Labor Code. The plaintiffs received a favorable order from the Labor Commissioner, and BPI appealed to the superior court. In the subsequent superior court action, the plaintiffs were represented by the Labor Commissioner’s office.

Following a de novo trial on the wage claims, the court found that plaintiffs were entitled to unpaid wages and certain penalties but rejected the plaintiffs’ unfair competition law claims under Business and Professions Code § 17200 (the UCL). The court declined to award the plaintiffs liquidated damages, penalties for violations of sick leave notice requirements, and did not impose personal liability on BPI’s CEO, Cynthia LaPaille.

The issues here are the Court of Appeal’s holdings that liquidated damages were not appropriate for failure to pay minimum wages under Labor Code, section 1194.2(a), and that plaintiffs do not have private rights of action for sick leave penalties.

Section 1194.2(a) allows courts to reduce or eliminate liquidated damages where an employer can show that it acted in “good faith” with “reasonable grounds” for believing it did not violate the law. Here, because the plaintiffs initiated the idea of working in exchange for rent, rather than wages, as an independent contractor, and the unsettled status of the law on this subject at the time, the trial court acted within its discretion in finding the defendants acted in good faith.

Moreover, sick leave penalties require independent actions by the Labor Commissioner or Attorney General’s office. Even though the plaintiffs were represented by the Labor Commissioner in their superior court action, this did not suffice to permit their pursuit of sick leave penalties.

Separately, and not at issue with the Supreme Court, the Court of Appeal held that LaPaille may be held personally liable due to her managerial role with BPI under Labor Code § 558.1(a), which expressly permits personal liability for individuals “acting on behalf of an employer.” It further held that the trial court had discretion as to whether equitable relief for unfair business practices would be in the interest of justice, even where Labor Code violations exist. Because the parties appeared to lack understanding as to the plaintiff’s entitlement to wages for the services they performed for BPI, the Court of Appeal found the trial court properly exercised its discretion in denying equitable relief.

Employers should watch this matter for not only how it may affect potential damages in wage and hour litigation for seemingly innocent violations, but also the effect it could have on appeals from Labor Commissioner decisions.

Jackson Lewis continues to track California case law affecting employers. If you have questions about any of the cases pending before the California Supreme Court or related issues, contact a Jackson Lewis attorney to discuss.

As the year wraps up, we review some of the highlights of the California Workplace Law Blog with the top 10 most popular blog posts of 2023.

  1. California’s Paid Sick Leave Requirements Increased Effective 2024
  2. California Enacts Legislation to Support State’s Prohibitions on Employee Restrictive Covenants
  3. State of California Certifies State Minimum Wage for 2024 
  4. Cal/OSHA COVID-19 Prevention Non-Emergency Regulations Have Taken Effect as of February 3, 2023
  5. California Civil Rights Department Updates FAQs on Pay Data Reporting
  6. California Local Minimum Wages Increasing on July 1
  7. The City of Los Angeles Announces the Minimum Wage Rate Increase for July 2023
  8. California Civil Rights Council Modifies Regulations Pertaining to Background Checks
  9. Post It Up – California’s Employer Posting Requirements
  10. CDPH Updates Definition of COVID-19 Outbreak

On January 1, 2024, California’s Senate Bill (SB) 616 takes effect, increasing the amount of paid sick leave employers are required to provide to California employees. In the new year, employers will be required to provide 40 hours of sick leave.  Several cities in California also have their own paid sick leave ordinances, and employers will need to determine which aspects of state and local ordinances apply to their employees.

The City of San Diego’s Office of Labor Standards & Enforcement (OLSE) has issued guidance on complying with state and the City of San Diego’s paid sick leave requirements.

San Diego’s local ordinance already required employers to provide no less than 40 hours of earned sick leave.  The OLSE notes other areas where either the San Diego ordinance is silent or the state statute is more generous, in which case the state statute must be followed.

Of significance, the OLSE notes that while the state statute indicates employees must provide reasonable advance notice for the need for paid sick leave when foreseeable, the San Diego ordinance states that employers cannot require more than seven days’ notice.

If you have questions about compliance with state or local paid sick leave, contact a Jackson Lewis attorney to discuss.

As we wrap up 2023, here is a review of some of the changes to California employment law that will continue to affect employers in 2024.

Legislative Changes

New Law Exempts Certain Airline Cabin Crew from California Meal and Rest Period Requirements

Amendments to California Agricultural Bargaining Process Per Governor’s Agreement with Unions

California Revives Industrial Wage Commission

California Enacts Legislation to Support State’s Prohibitions on Employee Restrictive Covenants

Fast Food Council Redux

Revisions to Student Work Permits

California Mandates Workplace Violence Prevention Plans for All Employers

California’s Paid Sick Leave Requirements Increased Effective 2024

California Bans Inquiries About Applicant Cannabis Use

Revisions to Grocery Worker Recall Rights

COVID-19 Right of Recall Extended

California Adds Leave for Reproductive Loss

California’s New Requirement for Diversity Disclosures by Venture Capital Companies

New California Law Makes Non-Compete Agreements Unlawful, Not Just Void

California Gives Health Care Workers a Raise

Compensation for Food Handler Certification in California

Case Law Changes

The “I Do Not Recall Signing” Defense to Arbitration Agreements Ruled Out by California Court of Appeal

Federal Arbitration Act Preempts California Ban on Mandatory Arbitration Contracts, Ninth Circuit Holds

California Courts Provide Employers More Reasons to Review Their Arbitration Agreements

California Court of Appeal Addresses When Violations are “Willful” or “Knowing and Intentional” for Grant of Certain Wage and Hour Penalties

California Court of Appeal Upholds Proposition 22 as Mostly Constitutional

California Court of Appeal Stresses the Difference Between Substantive and Procedural Unconscionability for Arbitration Agreements

No Religious Accommodation Required from Vaccine Mandate at Fictional Hospital

California Supreme Court Holds Employee Retains Standing for Non-Individual PAGA Claims in Court

California Supreme Court Rules Against COVID-19 Take-Home Exposure Liability for Employers

Administrative Changes
CDPH Updates Definition of COVID-19 Outbreak

State of California Certifies State Minimum Wage for 2024 

California’s Modified Background Regulations Take Effect October 1st

California’s Labor Commissioner Publishes Updated Wage Theft Notice

California Labor Commissioner Publishes Updated FAQ for California Paid Sick Leave

Cal/OSHA Standards Board Adopts Temporary Standard for Silica

Jackson Lewis will continue to track changes that affect California employers in 2023. If you have questions about California workplace law compliance, contact a Jackson Lewis attorney to discuss.

Last week, the Cal/OSHA Standards Board approved an emergency temporary standard regarding respirable crystalline silica (RCS). The standard will take effect December 29, 2023.

The emergency temporary standard (ETS)comes after the California Department of Public Health issued an alert in November of worker deaths due to silicosis, which is caused by silica dust entering the lungs.  

The ETS includes revisions intended to protect workers engaged in high-exposure tasks such as cutting, grinding, and polishing artificial stone and natural stone containing more than 10% crystalline silica.

The ETS includes additional exposure control precautions employers should undertake such as suppression of dust by ensuring water coverage, protecting workers from airborne exposure during housekeeping, and using warning signage.

Covered Employees

The ETS applies to California workers exposed to RCS except:

  • Construction work covered under section 1532.3, which covers exposures to RCS
  • Agricultural operations covered under section 3436, which covers machinery and equipment.
  • Exposures that result from the processing of sorptive clays

Exposure Control Plan and Training

Under the ETS, the written exposure plan is expanded to include:

  • Air monitoring records showing that engineering controls are effective.
  • Procedures for the proper use of personal protective equipment.
  • Documentation of proper report of carcinogen use to Cal/OSHA as required by section 5203.
  • Training procedures to ensure employees can prevent RCS exposures.

The training for employees must include the use of required dust control methods and health hazards and symptoms of RCS exposure.

Cal/OSHA has a Model Exposure Control Plan available on its website.

If you have questions about compliance with the ETS for Silica or related issues, contact a Jackson Lewis attorney to discuss.

In October, California passed Senate Bill (SB) 616, which increases the amount of paid sick leave employers are required to provide to California employees.

The Labor Commissioner recently published an updated Frequently Asked Questions page to cover changes made by SB 616. The following is some information of note from the FAQs.

Notice to Employees / Updated Posting

An employer who previously provided less than 5 days or 40 hours of paid sick leave should provide employees with a new copy of the Notice to Employees required under California’s Wage Theft Protection Act.

Employers must also post the updated paid sick leave poster available on the Labor Commissioner’s website.

Transitioning Plans to Comply

The Labor Commissioner also details how employers can transition plans appropriately to the new requirements under SB 616.

Accrual Method:

For accrual plans that previously provided 3 days/24 hours, if an employer uses an annual start date other than January 1 and implements a 12-month use cap, that cap must change to 40 hours or 5 days on January 1, 2024. The Labor Commissioner provides the following example: if an employer uses the 12-month period of May 1 – April 30 and implements a cap and an employee used 24 hours or three days before January 1, 2024, the employer must allow the employee to use an additional 2 days or 16 hours before April 30 if the employee has accrued that additional leave.

Up-Front Method:

For up-front plans that previously provided 3 days/24 hours, the employer has the choice to frontload the two additional days on January 1, 2024, or move the measurement of the yearly period to January 1, 2024, and frontload five days. 

The FAQs also review issues unrelated to the updates to the state paid sick leave such as when employees are eligible for paid sick leave and reasons paid sick leave may be taken.

If you have questions about compliance with California Paid Sick Leave requirements, or related issues, contact a Jackson Lewis attorney to discuss.

Under the California Wage Theft Protection Act (Cal. Labor Code section 2810.5), all employers are required to provide each employee with a written notice containing specified information at the time of hire, including wage and paid sick leave information. The notice must be in the language the employer normally uses to communicate employment-related information to the employee.

This year California’s legislature passed Senate Bill (SB) 616 and Assembly Bill (AB) 636, which affect the employee notice requirement and therefore, the state’s earlier model notice.  SB 616 increases the amount of paid sick leave employers are required to provide. AB 636 requires an employer to include in the notice information regarding the existence of a federal or state disaster declaration applicable to the county or counties in which the employee will be employed and that was issued within 30 days before the employee’s first day of employment. These revisions to California law take effect January 1, 2024.

In advance of the changes in the law, the Labor Commissioner has published an updated Notice to Employee template that specifies the new required amount of paid sick leave as well as a section for employers to provide notice of disaster declarations, as needed.

As of the publishing of this article, the Labor Commissioner has only published an English-language version of the notice. Employers can go to the Labor Commissioner’s Wage Theft Protection Act page to check for updates to other versions of the template which should be available soon.  

If you have questions about compliance with Labor Code section 2810.5 or related issues, contact a Jackson Lewis attorney to discuss.

The Anaheim Hotel Worker Protection Ordinance takes effect January 1, 2024, though it had a rocky path to passage.

It started with a more expansive ordinance proposed in May, which was sent to the voters in October and failed.

Meanwhile, the City Council passed an ordinance focused on the safety of hotel workers over the summer that will take effect next year. The following is an overview.

Covered Employers

The ordinance covers hotel employers defined as any person who owns, controls, or operates a hotel in the City of Anaheim, and includes any person or contractor who, in a managerial, supervisory, or confidential capacity, employs hotel workers to provide services at a hotel in conjunction with the hotel’s purpose.

Personal Security Devices

As with many of the hotel employee protection ordinances, Anaheim’s ordinance requires covered employers to provide a personal security device commonly referred to as a “panic button” whenever a worker works in a guest room or restroom facility where other workers are not assigned to be present.

Covered employers must also provide training to workers regarding how to use and maintain the personal security device, the hotel’s protocol for responding to activation, and the employee’s rights.

Employers must retain records of incidents where personal security devices were activated for three years from the incident.

Employee Reporting

If a hotel worker brings attention to violent or threatening conduct occurring on hotel property or in the workplace the employee must be afforded the following rights:

  • sufficient paid time off up to 3 hours on the date of the incident to report violent or threatening conduct to a law enforcement agency and to consult with a counselor or advisor of the hotel worker’s choice.
  • Upon request by a hotel worker, a hotel employer shall provide reasonable accommodations to a hotel worker who has been subjected to violent or threatening conduct. Reasonable accommodations may include, but are not limited to, a modified work schedule, reassignment to a vacant position, or other reasonable adjustment to job structure, workplace facility, or work requirements.

If you have questions about the Anaheim Hotel Workers Protection Ordinance or related issues, contact a Jackson Lewis attorney to discuss.

For an employee to be exempt from overtime regulations under California law, the employee must fit into a category of work that is deemed exempt.

The most common exemptions are the executive, administrative, and professional exemptions.  Workers who are employed in administrative, managerial, executive, or professional capacities generally fall under one of these exemptions. Each exemption has detailed requirements as to the amount and type of work performed and most exempt employees must meet a minimum salary threshold. The minimum salary threshold is typically no less than two times the state minimum wage for full-time employment (40 hours).

For certain exempt categories, however, the Department of Industrial Relations sets increases based on changes to the California Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI). For example, under Labor Code section 515.5, certain computer software employees and licensed physicians and surgeons must be paid a statutorily specified rate based on the CPI in order to be deemed exempt from overtime regulations.

Under section 515.5, “employee[s] in the computer software field” who meet certain criteria will be exempt from overtime regulations. The exemption applies to those who are “primarily engaged in work that is intellectual or creative and that requires the exercise of discretion and independent judgment,” are “highly skilled,” and who perform work including programming, systems analysis, and software design. Effective January 1, 2024, the minimum hourly rate for computer software employees to meet this exemption will be $55.58, with a minimum monthly salary of $9649.96 (annually $115,763.35).

Similarly, under Labor Code section 515.6, certain licensed physicians and surgeons must be paid a minimum hourly rate. Effective January 1, 2024, that hourly rate is $101.22 to meet the exemption.

If you have questions about overtime exemption requirements or related issues, contact a Jackson Lewis attorney to discuss.

As the temperatures cool outside, the regulations for indoor heat illness prevention are heating up. Cal/OSHA has been working on a proposed Indoor Heat Illness Prevention Standard since 2017. In the spring Cal/OSHA Standards Board published a draft standard and announced a public hearing on Heat Illness Prevention in Indoor Places of Employment.

On November 9, 2023, the Board issued its Second Notice of Proposed Modifications. These revisions were the result of further comments from stakeholders and Board staff.

Here are some of the proposed modifications:

  • Clarifying that compliance is not required for incidental heat exposures where an employee is exposed to temperatures above 82 degrees for less than 15 minutes in any 60-minute period.
  • Adds a definition for “high radiant heat source,” which is “any object, surface, or other source of radiant heat that, if not shielded, would raise the globe temperature of the cool-down area five degrees Fahrenheit or greater than the dry bulb temperature of the cool-down area.”  
  • Adds detail that measuring temperature and heat index should be done where employees work and at times during the work shift when employee exposures are expected to be the greatest.  
  • Clarifying that Indoor Heat Illness Prevention may be added to training pertaining to heat illness prevention for outdoor employment where employees are affected by both.

The Board is accepting written comments on the modifications of the text and the changes to documents until 5:00 p.m. on November 28, 2023, at the Occupational Safety and Health Standards Board, 2520 Venture Oaks Way, Suite 350, Sacramento, California 95833 or e-mailed to oshsb@dir.ca.gov.

If you have questions about heat illness prevention in the workplace or related issues, contact a Jackson Lewis attorney to discuss.