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.

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.

With the turn of the year comes a wave of new California disability and leave laws.  Employers should review their existing policies and procedures to determine if they will be in compliance with these new laws—many of which will go into effect on January 1:  To read more please visit this article at our Disability, Leave and Health Management Blog.

In November 2017, the California Labor Commissioner’s office, Division of Labor Standards Enforcement (“DLSE”), published updated guidance on employer provided paid 10-minute rest breaks.  Specifically, the DLSE maintains that employees must be relieved of all duty during rest breaks, and now has taken the position that employees must be permitted to travel off-site during their ten-minute rest breaks. The DLSE also noted, “As a practical matter, however, if an employee is provided a ten minute rest period, the employee can only travel five minutes from a work post before heading back to return in time.”  The DLSE’s guidance further advised that employers are prohibited from requiring employees to monitor pagers or radios during rest breaks.

This decision follows the California Supreme Court’s decision in Augustus v. ABM (2016) 5 Cal.5th 257, which holds that security guards cannot be deemed to be on duty-free rest breaks when they are required to carry pagers and respond to emergencies on an “as needed” basis.  Jackson Lewis’ analysis of that case is available here:  http://www.jacksonlewis.com/publication/employees-rest-breaks-must-be-duty-california-supreme-court-rules

Effective January 1, 2018, Senate Bill 306 amends Labor Code § 98.7 and adds Labor Code §§ 98.74, 1102.61 and 1102.62 to provide the Division of Labor Standards Enforcement (“DLSE”) with expanded authority to enforce the retaliation provisions of the Labor Code. Specifically:

  • The Labor Commissioner will be authorized to conduct an investigation of an employer and petition a superior court for temporary or permanent injunctive relief (e.g., reinstatement) with or without a complaint having been filed by an applicant or employee with the DLSE, if “reasonable cause exists to believe a violation has occurred” during a field inspection, in the course of adjudicating a wage claim, or in instances of suspected immigration-related threats.
  • In assessing whether “reasonable cause exists to believe a violation has occurred,” the superior court is directed to consider “the chilling effect on other employees asserting their rights under those laws in determining if temporary injunctive relief is just and proper.” However, injunctive relief does not prohibit an employer from disciplining or terminating an employee for conduct unrelated to the claim of retaliation.
  • If the Labor Commissioner determines that an employer has engaged or is engaging in retaliatory acts, the Labor Commissioner will be authorized to issue a citation directing an employer to take various remedial actions (e.g., reinstating an employee or paying lost wages). If the employer disagrees with the citation or the relief ordered, the employer has the burden of seeking review of the citation through an administrative hearing before the Labor Commissioner within 30 days of the citation. Otherwise, the citation becomes final. Following an administrative hearing and issuance of the Labor Commissioner’s decision, an employer has 45 days to request review by a superior court through a writ of mandate. Otherwise, the decision becomes final.
  • Employers may be subject to civil penalties of $100 per day (up to a maximum of $20,000) for willfully refusing to comply with a final order of the Labor Commissioner.
  • The Labor Commissioner is entitled to recover reasonable attorneys’ fees if it is a prevailing party in an enforcement action, to be determined by the court.

Finally, if an employee commences a civil action, the employee is also entitled to seek injunctive relief from the superior court. Should injunctive relief be granted, such an order is not stayed pending appeal.

Please contact Jackson Lewis with any questions that may arise regarding your compliance with the California Labor Code.

The grace period is over. Effective January 1, 2018, the City of Santa Monica’s minimum cap on accrued sick leave for eligible employees will increase from 40 to 72 hours for businesses with 26 or more employees. The accrual-cap for businesses with 25 or fewer employees will increase from 32 to 40 hours… (to read more, please see original post at the Disability, Leave and Health Management blog.)

Beginning with contracts entered into on or after January 1, 2018, direct (general) contractors in California will be held jointly liable for their subcontractors’ unpaid employee wages, fringe benefit or other benefit payments or contributions under Assembly Bill 1701, signed into law by Governor Jerry Brown on October 14th. This joint liability requirement is codified…… (to read more, please see original post at the Wage & Hour Law Update blog.)

Effective January 1, 2018, new obligations will be imposed on California employers to shield their employees from immigration enforcement efforts in the workplace. Governor Jerry Brown signed AB 450 along with Senate Bill 54, a “sanctuary state” legislation that limits California state and local law enforcement agencies’ authority to hold, question, and transfer individuals at the request of federal immigration authorities.

Under AB 450, California’s public and private employers will be prohibited from voluntarily consenting to a federal immigration enforcement agent’s request to enter nonpublic areas in the workplace or to voluntarily allowing the agent access to employee records unless the agent provides a judicial warrant.

Employers must also provide notice to employees as follows:

  • 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. On or before July 1, 2018, the Labor Commissioner will create a template of this notice for employers to use.
  • Post-Inspection Notice: Within 72 hours of receiving written notice of an immigration agency’s inspection results, an employer must provide each affected employee (and his/her collective bargaining representative, if any) with written notice of the results. The notice must include (1) a description of any and all deficiencies or other inspection results related to the affected employee; (2) the time period for correcting any deficiencies identified by the immigration agency; (3) the time and date of any meeting with the employer to correct the deficiencies; and (4) notice that the employee has a right to be represented during any scheduled meeting with the employer. The notice must be tailored to the affected employee and hand-delivered the employee at the workplace. If this is not possible, the employer must endeavor to mail and e-mail the employee and the employee labor union, if applicable.

Finally, an employee is prohibited from re-verifying the employment eligibility of a current employee outside the time and manner required by federal law, under Section 1324a(b) of Title 8 of the United States Code. Violations of this provision can result in civil penalties up to $10,000.

If an employer fails to comply with AB 450, it will be subject to a civil penalty between $2,000 to $5,000 for a first violation and $5,000 up to $10,000 for each subsequent violation. The penalties are recoverable by the Labor Commissioner.

Employers should carefully review and revise their policies and procedures to ensure compliance with AB 450. They should also train their front-line staff to properly handle any workplace visits by immigration authorities, and to provide the proper pre-inspection and post-inspection notices to its employees.  Please contact Jackson Lewis with any questions that may arise regarding your compliance with AB450.

In 2014, the Cal/OSHA Division received a petition for a new workplace violence regulation for general industry.  Petition 542, which was originally submitted on behalf of teachers, has been used as the basis for consideration of a general industry standard on workplace violence.  This year, the CA Standards Board, the entity that promulgates new CA health and safety standards, held meetings on whether a general industry workplace violence standard was necessary.

In 2018, it is expected that the Division will draft a proposed regulation regarding workplace violence for general industry. The proposed regulation will likely include requirements similar to the health care workplace violence regulation (this regulation became effective on April 1, 2017) which requires the establishment, implementation and maintenance of a written Workplace Violence Prevention Plan (WVPP).  It is likely the new regulation will also include new recordkeeping requirements, training requirements, and reporting requirements.

It is the Division’s intent to create a single workplace violence regulation for all general industries, including retail, manufacturing, education, banking and food establishments. Significant compliance issues will result if the Division implements a general industry workplace violence regulation. Employers will have an opportunity to publicly comment on any proposed regulation.  We will continue to update the this blog as developments occur.

Employers subject to California’s mandatory sexual harassment training requirement for supervisors will need to ensure their programs include prevention of harassment based on gender identity, gender expression, and sexual orientation following an amendment (SB 396) to California’s Fair Employment and Housing Act (FEHA).
On October 15, 2017, Governor Jerry Brown signed SB 396 into law. California remains at the forefront of promoting awareness and protections of transgender and gender nonconforming individuals in the workplace.

As of January 1, 2018, employers must display a poster issued by California’s Department of Fair Employment and Housing regarding transgender rights in a prominent and accessible location in the workplace. The Department’s poster is available on its website.

SB 396 amends Government Code section 12950.1, which requires an employer with at least 50 employees to provide supervisors at least two hours of training regarding sexual harassment and abusive conduct. Amended Section 12950.1 includes harassment training on gender identity, gender expression, and sexual orientation. The training must provide examples of such harassment, and the trainer must have knowledge or expertise in this area.

Employers should consult with the Jackson Lewis counsel with whom they work on how best to prepare and deliver compliant and impactful transgender training materials.
In addition to creating new poster and training requirements, SB 396 also amended the Unemployment Insurance Code (UIC) in two significant ways. First, the UIC was amended to include transgender and gender nonconforming individuals as persons eligible for programs and services offered under the California Workforce Innovation and Opportunity Act. Second, the UIC was amended to allow community-based organizations that assist transgender and gender nonconforming individuals to serve as members on the California Workforce Development Board.

(For more on the state regulations in this area, see our article, California’s New Regulations Offer More Protection for Transgender Individuals.)

If you have any questions regarding the new requirements or want to discuss training programs tailored to your organizational needs, please contact our firm’s LGBT national expert or the Jackson Lewis attorney with whom you regularly work.