Case and Administrative Highlights from 2014

There were a host of clarifications regarding labor and employment laws this past year. Here is a compilation of case and administrative highlights from 2014:

Vranish v. Exxon Mobile Corp.: Overtime in Collective Bargaining Agreements

The California Court of Appeal held that employees covered by a collective bargaining agreement that definitively provided “premium wage rates for all overtime hours worked” under California Labor Code section 514 were not entitled to additional daily overtime. Therefore, Labor Code section 514 permits employers and unions to define overtime in a collective bargaining agreement in a manner that trumps California’s overtime rules.

Sandifer v. U.S. Steel Corp.: Unionized Employers Don’t Pay for “Donning and Doffing”

The U.S. Supreme Court held that under the Fair Labor Standards Act, an employer did not have to pay its unionized employees for the time spent before and after their shifts when they put on or took off safety clothing (“donning and doffing”) and related items. This was a significant win for unionized employers, and particularly for companies that have specifically negotiated or instituted a practice of not compensating “donning and doffing” time.

Integrity Staffing Solutions, Inc. v. Busk et al.: Employers Don’t Pay for Security Screening Time

The California Supreme Court held that the time spent by workers waiting to undergo and undergoing security screenings is not compensable under the Fair Labor Standards Act. Specifically, the Court noted that security screenings were not “principal activities,” but rather “noncompensable postliminary activities.”

Vance v. Ball State: Clarification of When Employees are Title VII Supervisors

Currently, employers are strictly liable for their supervisors if the supervisor sexually or racially harasses an employee. The Supreme Court held that a co-worker cannot be deemed a supervisor merely for having the ability to direct the employee’s daily work activities. Rather, the employee in question is deemed Title VII supervisor if the employer empowers his or her to take “tangible employment actions” against the alleged victim.

University of Texas Southwestern Medical Center v. Nassar: Plaintiffs Have a Higher Burden of Proof in Retaliation Cases

In this case, the Supreme Court held that plaintiffs have a higher burden of proof (but-for causation, as opposed to the lessened causation test) in retaliation cases. Now plaintiffs must prove that retaliation was the “determinative influence” on the case, rather than just a motivating factor.

Burwell v. Hobby Lobby Stores, Inc.: Employers Allowed to Object to Providing Contraception for Religious Reasons

The Supreme Court ruled that the Department of Health and Human Services could not require closely held corporations to provide employees with no-cost access to contraception, if in violation of the Religious Freedom Restoration Act. This holding does not apply to non-profit religious groups.

Lane v. Franks: Protection for Testimony in Criminal Cases

In this case, the employee was fired after testifying in an FBI case against an elected official, who was being paid by the employer despite the official doing no work for the program. The Supreme Court held unanimously that the First Amendment “protects a public employee who provided truthful sworn testimony, compelled by subpoena, outside the course of his ordinary job responsibilities.”

Escriba v. Foster Poultry Farms, Inc.: Employees Expressly Declining to Use FMLA Leave Can Be Denied Relief Under Statute

In this case, the Ninth Circuit ruled that an employee can expressly decline to use FMLA leave. When doing so, the employee loses FMLA protections even if the underlying reasons for such leave would have invoked the protection.

White v. County of Los Angeles: Employer’s Fitness of Duty Evaluation Following FMLA Leave

In this case, the employee was ordered by the employer to under a second reevaluation of her fitness to return to duty. The court held that because the return-to-work certification from the plaintiff’s doctor did not preclude a potential finding of unfitness for duty, the employer’s order that the employee appear for a medical reevaluation was not in violation of the FMLA.

Iskanian v. CLS Transportation of Los Angeles: Employer Foreclosure of Workers from Pursuing Class Action Waivers in Arbitration Agreements

In this case, the California Supreme Court nullified its holding in Gentry v. Superior Court, which denied the enforceability of class action waivers. The Court held that the Federal Arbitration Act (FAA) preempted a state law rule permitting courts to invalidate class action waivers in employment arbitration agreements under certain circumstances. However, the court also ruled that a pre-dispute private contract cannot forfeit a worker’s right to represent the state to pursue civil penalties under the Private Attorneys General Act of 2004 (PAGA). This case resolves questions of the enforceability of class action waivers and waivers of representative PAGA claims, but there are questions that remain regarding whether PAGA actions should be stayed pending arbitration of concurrently filed individual claims.

Ayala v. Antelope Valley Newspapers, Inc.: Independent Worker Classification Clarification

This case held that the principal consideration for class certification in an independent contractor misclassification case is whether there is a common way to show the extent of the hirer’s “right to control” the workers. The key component of this relationship is now how much control the employer exercises, but how much control the hirer retains the right to exercise power over the individual hired.

Paratransit, Inc. v. CUIAB: Employee Refusing to Sign Disciplinary Notice Does Not Cause Disqualification from Unemployment Benefits

The California Supreme Court held that Paratransit’s employee’s refusal to sign a disciplinary notice did not disqualify him from receiving unemployment benefits. The Court further noted that the employee’s refusal to sign did not amount to gross misconduct because he “acted out of a genuine belief that signing the notice would be an admission of allegations he disputed, and that belief was not so unreasonable under the circumstances as to constitute misconduct within the meaning of the [California Unemployment Insurance Code].”

Stenehjem v. Sareen: Threat to File False Criminal Complaint is Extortion

In this case, an employee sued his former employer for defamation. His employer filed a cross-complaint for civil extortion, alleging that the employee threatened to file a false criminal complaint unless the employer agreed to a monetary settlement. The California Court of Appeals held that the employee’s pre-litigation e-mail threatening to file the false complaint was extortion as a matter of law, and not free speech.

Patterson v. Domino’s Pizza, LLC: Franchisor Not Liable for Franchisee’s Sexual Harassment Allegations

A franchisee’s employee alleged she was sexually harassed by a store’s assistant manager. The franchisor argued that the franchise contract stated there was no “principal and agent” relationship between it and the franchisee, and that it disclaimed any relationship with its franchisee’s employees. Furthermore, the franchisor argued that it assumed “no rights, duties, or responsibilities” as to the employees. The Supreme Court of California granted summary judgment to the franchisor on the ground that “the imposition and enforcement of a uniform marketing and operational plan cannot automatically saddle the franchisor with responsibility for employees of the franchisee who injure each other on the job.”

Peabody v. Time Warner Cable, Inc.: Commissions Paid in One Pay Period Cannot Be Reassigned to Another Period to Satisfy Minimum Earning Requirements for Inside Sales Exemption

The employee, a commissioned salesperson, sued her employer for wage and hour violations (failure to pay minimum wage, overtime pay). The employer argued the employee was exempt from overtime pay under the “commissioned employee” exemption, which requires the employee’s earnings to exceed one and one-half times the minimum wage. It also argued that they paid minimum wage by allocating commissions in which they were paid to pay periods where the plaintiff earned them. The California Supreme Court held that an employer cannot attribute commission wages paid in one period to other pay periods.

Alexander v. FedEx Ground Package Sys., Inc.: California’s Right to Control Test Determines Employee Status

In this case, package delivery drivers were improperly classified as independent contractors. The Ninth Circuit held that drivers were employees as a matter of law under California’s right-to-control test. This test looked at the employer’s ability to control the appearance of the drivers and vehicles, shifts, procedure for delivery, and so on.

Rhea v. General Atomics: Exempt Employees Can Be Required to Use Vacation Leave Hours When Absent

The California Court of Appeals held that while employers could not deduct monetary pay when exempt employees were absent for a partial day, the employer could require exempt employees to use their vacation or leave time. While California law prohibits employers from forfeiting vacation time, the requirement to use vacation time for partial-day absences does not comprise forfeiture.

McLean v. State: Labor Code 202 and 203 Prompt Payment Requirements Apply to Employees Who Retire

Here, the California Court of Appeals held that the term “quits” in Labor Code section 202 and 203 encompasses all employees who quit, even if to retire. Therefore, employers must promptly pay employees who have retired.

EEOC Commentary: Use of Social Media

The Equal Employment Opportunity Commission (EEOC) reiterated that personal information from social media postings cannot be utilized to make employment decisions on prohibited bases, such as gender, race, or religion. In particular, the EEOC noted that “[federal] EEO laws do not expressly permit or prohibit use of specific technologies…the key question is how the selection tools are used.”

DLSE & Labor Code section 2810.5: Paid Sick Leave Posting

The Division of Labor Standards Enforcement (DLSE) is requiring employers to include information about an employee’s right to paid sick leave in the “Notice to Employee,” which is a form required for all California nonexempt employees. While employers are not required to provide paid sick leave until July 1, 2015, this notice must be used starting January 1, 2015.

National Labor Relations Board 29 CFR Parts 101, 102, and 103: Rule Changes for “Quickie Elections”

The National Labor Relations Board (NLRB) issued amendments that removed barriers “to the fair and expeditious resolution of representation cases.” The amendments listed simplify these case procedures, codify best practices, and make them more transparent and uniform.

Significantly, these amendments revised rules and regulations governing union elections. The new union election rules and regulations not only shorten the period between the filing of a representation petition and the election, but require employers to provide unions work employees’ contact information earlier in the process for more efficient communication. The effect of the rules would make it more difficult for employers to contact employees in response to a union organizing campaign.

Click here for the full text of the amendments.

National Labor Relations Board McDonald’s Ruling: Joint Liability for Franchises

The NLRB ruled that McDonald’s could be held jointly liable for their franchise operators’ labor and wage violations. As a result, McDonalds could be held at least partially responsible for actions taken at thousands of its restaurants. While this ruling applies specifically to McDonalds, it sets precedent to impose joint liability on other companies. California passed related law AB 1897, effective on January 1, 2015, that imposes joint liability on companies if their subcontractors violate workplace laws. See below for more information about AB 1897.