Contributors

Christian Scali

Founder and Managing Shareholder

Eric P. Weiss

Principal

California and Federal courts of appeal published opinions on a wide variety of employment-related cases including wage and hour, whistleblower retaliation, discrimination/ADA, class actions, PAGA claims, and workers compensation. The results are a mixed bag for employers.

Of note, the United States Supreme Court was given the opportunity to rule on a crucial ADA issue: whether an ADA “tester” has standing to challenge a business’ failure to provide disability accessibility on its website even if the tester had no plans to visit the business’ premises. Unfortunately, SCOTUS “punted” by dismissing the appeal on a procedural technicality. As a result, the issue remains unresolved.

Wage and hour

Court of Appeal holds that employer’s overtime compensation payments on employee’s bonus satisfied both federal and state employment law because it comported with the incentive compensation plan in the employment contract.

In Lemm v. Ecolab plaintiff employee appealed from a judgment in favor of his employer, Ecolab, Inc. Plaintiff sued Ecolab under the Private Attorneys General Act (“PAGA”) alleging Ecolab improperly calculated the overtime due on a nondiscretionary bonus paid to plaintiff and other similarly situated employees. Ecolab successfully moved for summary judgment on the ground its formulation of the overtime payment comported with the Fair Labor Standards Act of 1938 (“FLSA”). On appeal, Plaintiff argued California authorities require a different method of calculation and supersede federal authority in this instance because California provides greater protection to employees like him.

The Court of Appeal affirmed. The court explained that having exercised the independent judgment the Supreme Court compels, it is not persuaded Ecolab was required to use the exact formulation presented in the section 49.2.4 example to calculate a percentage-based bonus such as the one plaintiff received. Ecolab demonstrated plaintiff would have been paid the same amount whether Ecolab used the section 49.2.4 formula from the Division of Labor Standards Enforcement Manual, as plaintiff contended, or the federal regulation formula set forth in C.F.R. section 778.210, so long as the calculation did not include overtime on overtime.

Court of Appeal affirms trial court ruling that employer’s posting of Labor Code Section 2055 surety bond to operate a car wash did not also qualify as a bond for appeal of a Labor Commissioner decision.

In Adanna Car Wash v. Gomez Adanna Car Wash Corporation (“Adanna”) appealed from the superior court’s dismissal of its trial de novo appeal from the Labor Commissioner’s award of back wages and other damages in favor of Adanna’s former employee, Gomez. The trial court dismissed the appeal for lack of jurisdiction because Adanna failed to post with the trial court an appeal bond required by Labor Code section 98.2. Adanna contended that it, in fact, had complied with section 98.2, pointing to a surety bond that it had posted earlier under a different Labor Code provision, section 2055. The section 2055 undertaking is required of all car wash owners as a condition of operating a car wash business.

The Court of Appeal affirmed, agreeing with the trial court that the section 2055 bond was not the appeal bond required under section 98.2. The court reasoned that the signature of Adanna’s insurer’s attorney is nowhere to be found. Execution by the surety is a prerequisite for a valid bond in an action or proceeding. Ultimately, the court held that a section 2055 car wash bond is not an appeal bond under section 98.2(b). Because exhibit A to Adanna’s notice was not an appeal bond, Adanna failed to file the requisite undertaking per section 98.2(b). As such, the court held, the superior court lacked jurisdiction over the Adanna’s de novo appeal, and Gomez’s motion to dismiss was properly granted.

Court of Appeal holds that a newly enacted Labor Code statute that classified university instructors as “professional employees” did not apply retroactively to University of San Francisco’s prior violations.

In Gola v. University of San Francisco the University of San Francisco’s (“University”) adjunct faculty taught individual classes on a semester-by-semester basis. Their appointment letters referred to the Collective Bargaining Agreement (“CBA”), specified a per-course salary, and estimated the number of work hours. Although the letters specified a work appointment from the first day of classes to the end of the semester, adjuncts were required to work outside of these time periods to prepare a syllabus and submit final grades. Adjuncts’ wage statements did not show the number of hours worked or an hourly pay rate.

Gola, one of the adjunct professors, brought putative claims for unpaid wages and failure to pay compensation at the time of discharge, citing work done outside of the assignment period and after the adjuncts’ “termination,” and alleged that the University failed to issue wage statements in compliance with Labor Code 226(a). Gola asserted a derivative claim under the Private Attorneys General Act (“PAGA”) seeking civil penalties.

The trial court held that two causes of action were preempted by the Labor Management Relations Act (29 U.S.C. 141) because they could not be resolved without interpreting the CBA. On the wage statement claim, the court concluded that adjuncts were not exempt employees and that the University was liable for penalties because it knew that facts existed bringing its actions within the provisions of Labor Code section 226. The court calculated statutory damages and PAGA penalties and awarded Gola attorneys’ fees and costs.

The court of appeal affirmed, rejecting arguments that newly-enacted Labor Code 515.7—permitting employers to classify certain adjunct faculty as exempt from specified wage statement requirements—should be applied retroactively. Specifically, the court held that the Legislative history and remedial purpose of the newly-enacted statute exempting adjunct faculty from specified wage statement requirements did not overcome the presumption against retroactivity.

Court of Appeal holds that employee’s firing from her temporary assignment at a bank did not constitute a “discharge” under the Labor Code because her employment relationship with the staffing agency had not ended.

In Young v. RemX Specialty Staffing employer RemX Specialty Stagging (“Employer”), a temporary staffing company, hired Young as a temporary worker in 2013 and assigned Young to a temporary position at Bank of the West (“BOW”). On Friday, August 16, Young had a telephone altercation with Employer’s representative, who claimed Young was verbally abusive. Young testified the representative “basically” told Young she was “fired” and “implied” the firing was from Employer, rather than the BOW assignment. A contemporaneous internal email characterized the representative’s message to Young as being that she was not to return to BOW due to her threatening behavior. Young reported for work at BOW on Monday, August 19. Another Employer representative escorted her out. Young was paid on August 23, for work performed the week of August 12 and on August 30 for work performed on August 19, in accordance with Employer’s regular payroll schedule.

Young sued the Employer in 2014. In 2021—after arbitration of Young’s individual claims and dismissal of her class claims, Young’s only remaining claim was for Private Attorneys General Act (“PAGA”) penalties based on Employer’s alleged failure to timely pay final wages to a discharged employee in violation of Labor Code 201.3(b)(4). Employer prevailed on summary judgment.

The court of appeal affirmed summary judgment for Employer. The court held that section 201.3(b)(4) applies when a temporary services employer discharges an employee from employment with the temporary services employer, not when that employer terminates an employee from a particular work assignment. Young failed to demonstrate a dispute of fact as to whether she was discharged from work with Employer.

Court of Appeal reverses trial court holding that IBM, plaintiff’s employer, was obligated by Labor Code section 2802(a) to reimburse work-from-home expenses incurred by its employees as a direct result of their job duties even though the employer did not directly cause the expenses, and despite Governor’s COVID-19 Stay at Home Order.

In Thai v. International Business Machines plaintiffs were IBM employees. The lead plaintiff was Paul Thai. To accomplish their duties, they required, among other things, internet access, telephone service, a telephone headset, and a computer and accessories. On March 19, 2020, Governor Newsom signed the COVID-19 “stay home” order. IBM directed Thai and thousands of his coworkers to continue performing their regular job duties from home. Thai and his coworkers personally paid for the services and equipment necessary to do their jobs while working from home. IBM never reimbursed its employees for these expenses.

In December of 2020, another employee, Javed, filed this action under California’s Private Attorneys General Act (“PAGA”). An amended complaint added Thai as the lead plaintiff. IBM’s demurrer was sustained without leave to amend on the grounds that “IBM was acting in response to government orders” and, as such, there was an “intervening cause precluding direct causation by IBM.”

The court of appeal reversed. Specifically, the court held that Labor Code section 2802(a)) requires an employer to reimburse an employee “for all necessary expenditures . . . incurred by the employee in direct consequence of the discharge of his or her duties.” The trial court’s conclusion that the Governor’s order was an intervening cause of the work-from-home expenses that absolved IBM of liability under section 2802 is inconsistent with the statutory language. The work-from-home expenses were inherent to IBM’s business and the work performed was for the benefit of IBM.

California Supreme Court grants review of two Court of Appeal opinions to decide whether State Agencies are exempt from certain Labor Code violations.

In Stone v. Alameda Health System Alameda Health System (“Alameda”), was a hospital authority that was created under Health and Safety Code 101850 as “a public agency for purposes of eligibility with respect to grants and other funding and loan guarantee programs.” The plaintiffs worked for Alameda and claim Alameda “automatically deducted ½ hour from each workday” to account for a meal period, although employees “were not allowed or discouraged from clocking out for meal periods.” The trial court dismissed their class action Labor Code claims, reasoning that Alameda was a “statutorily created public agency” beyond the reach of the Labor Code and Industrial Welfare Commission (“IWC”) Wage Order invoked in the complaint. The trial court further held that a Private Attorneys General Act (“PAGA”) claim would not lie because Alameda is not a “person” within the meaning of Labor Code section 18, there was no underlying statutory violation from which the PAGA claim could derive, and Alameda’s “public agency” status exempted it from punitive damages pursuant to Government Code section 818.

The court of appeal affirmed the dismissal of the fourth cause of action for failure to provide accurate itemized wage statements (Labor Code §§ 226, 226.3);but otherwise reversed. The court reasoned that Alameda lacks many of the hallmarks of sovereignty. As such, subjecting Alameda to liability would not infringe upon any sovereign governmental powers. Alameda is not a “municipal corporation” and therefore is not excluded from the category of “governmental entit[ies].” As such, the court held there are at least some Labor Code violations for which a PAGA suit against Alameda may proceed.

Note: On May 17, 2023, the California Supreme Court granted plaintiffs’ petition for review. The Supreme Court further noted: “[t]he opinion of the Court of Appeal . . .may be cited, not only for its persuasive value, but also for the limited purpose of establishing the existence of a conflict in authority that would in turn allow trial courts to exercise discretion under Auto Equity Sales, Inc. v. Superior Court to choose between sides of any such conflict.

In Krug v. Board of Trustees of the California State University the California State University (“CSU”) directed that instruction be provided remotely as a result of the COVID-19 pandemic. To provide such instruction, plaintiff, a biology professor at CSU-Los Angeles, incurred expenses for a computer and other equipment that CSU refused to reimburse. Plaintiff sued CSU’s Board of Trustees on behalf of himself and similarly situated faculty under the Private Attorney General Act (“PAGA”), alleging Labor Code section 2802 obligated CSU to reimburse employees for necessary work-related expenses. CSU demurred, arguing that as a department of the State, it enjoys broad exemption from Labor Code provisions that infringe on its sovereign powers. Plaintiff appealed from a judgment of dismissal entered after the trial court sustained CSU’s demurrer without leave to amend.

The Second Appellate District affirmed. The court explained that absent express words or positive indicia to the contrary, a governmental agency is not within the general words of a statute. The court further wrote that although this exemption is limited to cases where the application of the statute would impair the entity’s sovereignty, subjecting CSU to Labor Code section 2802, in this case, would do so because it would infringe on the broad discretion CSU enjoys under the Education Code to set its own equipment reimbursement policies. Further, the court noted that because CSU did not violate section 2802, Plaintiff is not an “aggrieved employee” for purposes of PAGA. His PAGA claim therefore fails with his section 2802 claim.

Note: on December 13, 2023, the California Supreme Court granted plaintiff’s petition for review. The Supreme Court noted: “Further action in this matter is deferred pending consideration and disposition of related issues in Stone v. Alameda Health Care.”

Ninth Circuit holds that an employer’s temporary furlough of employees due to COVID-19 constituted a “discharge” that required immediate payment of earned wages as required by the California Labor Code.

In Hartstein v. Hyatt Corp. plaintiffs, members of a certified class, were former California employees of Hyatt Corporation (“Hyatt”) who were laid off after the COVID-19 pandemic struck in March 2020. Plaintiffs were laid off in March 2020 and then terminated in June 2020. Plaintiffs contend that Hyatt violated California law by failing to pay them immediately for their accrued vacation time and by failing to compensate them for the value of free hotel rooms employees received each year. The district court granted summary judgment in favor of Hyatt and dismissed the case with prejudice.

The Ninth Circuit affirmed in part and reversed in part the district court’s summary judgment. The court concluded that the prompt payment provisions of the California Labor Code required Hyatt to pay plaintiffs their accrued vacation pay in March 2020. The California Division of Labor Standards Enforcement (“DLSE”) opinion letter and its Policies and Interpretations Manual establish that a temporary layoff without a specific return date within the normal pay period is a “discharge” that triggers the prompt payment provisions of California Labor Code section 201. Hyatt, thus, should have paid the accrued vacation pay at the initial layoff in March 2020 because the temporary layoff was longer than the normal pay period, and there was no specific return date. The panel reversed the district court’s grant of summary judgment to Hyatt as to the vacation pay claim and remanded for the district court to consider whether Hyatt acted willfully in failing to comply with the prompt payment provisions.

Court of Appeal holds Arbitration Agreements signed by Uber and Lyft with their drivers do not require arbitration of claims against Uber and Lyft brought by the State of California to protect drivers.

In re: Uber Technologies Wage and Hour Cases the People and the Labor Commissioner in California filed an action against Uber and Lyft in 2020 on the grounds they had misclassified their drivers as independent contractors, violating California labor laws, including the Labor Code and the Unfair Competition Law (“UCL”). The State sought remedies such as injunctive relief, civil penalties, and restitution to protect workers’ rights and ensure compliance with labor regulations.

At the heart of the dispute were arbitration agreements embedded within contracts between Uber, Lyft, and their drivers. These agreements required that all disputes be resolved through arbitration, rather than traditional court proceedings. These contracts often included clauses that prevented drivers from participating in class-action lawsuits.

In response to the State’s complaint, Uber and Lyft filed motions to compel arbitration of the State’s claims, but these motions were denied.

On appeal, Uber and Lyft argued that the Federal Arbitration Act (“FAA”) should override state laws hindering arbitration agreements. They contended that their arbitration agreements were valid and that the State’s claims were essentially proxies for drivers bound by these arbitration agreements.

The Court of Appeal rejected this preemption argument, clarifying that the FAA mandates arbitration only when parties have explicitly agreed to it. Since the government entities had not signed these arbitration agreements, the FAA did not compel arbitration. The court emphasized that government agencies had the authority to pursue restitution on behalf of drivers without their explicit consent, citing independent statutory grounds for this authority.

Uber and Lyft also raised equitable estoppel arguments, claiming that the State was effectively enforcing contracts between the companies and their drivers without being signatories. They argued that this created an unfair legal scenario. Moreover, they asserted that it was unjust for the State to proceed with the case while preventing them from enforcing arbitration agreements with drivers. The Court of Appeal disagreed with these arguments, emphasizing that the State was enforcing labor and consumer protection laws, not driver contracts. The court dismissed the notion of unfairness and maintained that the State’s actions were within its statutory authority to protect public interests.

Ultimately, the court upheld the order denying Uber and Lyft’s motions to compel arbitration, underscoring that having arbitration agreements with individual employees will not necessarily prevent California agencies from having authority to pursue Labor Code violations against an employer.

In a wage and hour class action case, the Ninth Circuit affirms order limiting employer’s communications with potential plaintiffs in collective employment action on grounds that the employer’s prior communications regarding the suit had been coercive and misleading.

In Dominguez v. Better Mortgage Corp. the plaintiff, Lorenzo Dominguez, who was a former employee of Better Mortgage Corporation (“Better Mortgage”), alleged that the company violated federal and state wage-and-hour laws, primarily by failing to pay overtime to him and other mortgage underwriters. Upon being sued, Better Mortgage attempted to reduce the size of the potential class and collective action by persuading employees to agree not to join any collective or class action and to settle their claims individually. The district court found that Better Mortgage’s communications were misleading and coercive. As such, the court nullified the resulting new employment agreements and release agreements, and ordered the company to communicate with current and former employees about wage-and-hour issues only in writing and with prior approval.

The Ninth Circuit affirmed the district court’s order imposing a communication restriction on Better Mortgage finding it both justified and tailored to the situation created by the employer’s misleading and coercive communications. However, the Ninth Circuit dismissed for lack of jurisdiction the employer’s appeal from the district court’s order nullifying agreements between the employer and current and former employees. The appellate court found that it lacked jurisdiction to consider the merits of the nullification order because the issue was raised in an interlocutory appeal and did not fit any exception that would allow for review.

Ninth Circuit holds that “opt-out fees” deducted from their compensation to fund health care plans were not part of employees’ “regular rate” of pay, but rather were exempted as contributions irrevocably made by an employer pursuant to health insurance plan.

In Sanders v. County of Ventura plaintiff employees who opted out of their union and employer-sponsored health plans received a monetary credit, part of which was deducted as a fee that was then used to fund the plans from which plaintiffs had opted out. Plaintiffs sued their employer, County of Ventura (“County”), arguing that this opt-out fee should be treated as part of their “regular rate” of pay for calculating overtime compensation under the Fair Labor Standards Act (“FLSA”). County moved for summary judgment which was granted by the district court.

The Ninth Circuit affirmed the district court’s grant of summary judgment. The court held that the opt-out fees were not part of the employees’ “regular rate” of pay, but rather were exempted as “contributions irrevocably made by an employer to a trustee or third person pursuant to a bona fide plan for providing” health insurance under 29 U.S.C. section 207(e)(4).

Whistleblower/discrimination

Ninth Circuit holds that former IRS agent failed to establish discrimination claim when the direct evidence largely supported her termination based on agent’s unauthorized inspections of tax return information.

In Opara v. Yellen plaintiff was terminated from her employment as a Revenue Officer at the Internal Revenue Service (“IRS”) for assessed Unauthorized Access of Taxpayer Data (“UNAX”) offenses. After unsuccessfully pursuing an internal Equal Employment Opportunity (“EEO”) complaint, Plaintiff brought suit against the Treasury Secretary in the United States District Court for the Central District of California alleging that her termination was based on impermissible criteria of age and national origin in violation of the Age Discrimination in Employment Act (“ADEA”) and Title VII of the Civil Rights Act of 1964, respectively. The district court granted summary judgment to the Treasury Secretary on the grounds that Plaintiff: (1) failed to establish a prima facie case of age discrimination; and (2) failed to show that the IRS Management’s proffered reasons for terminating her were pretext for age or national origin discrimination.

The Ninth Circuit affirmed. The court wrote that at step one of the legal framework for a discrimination action, the district court found that none of plaintiff’s evidence established a prima facie case of age discrimination. The court agreed with the district court that most of Plaintiff’s evidence comprised “circumstantial evidence”—her superior’s alleged exaggeration of her offenses, assignment of menial tasks, selection of draconian penalties. The court held, however, that the record was not devoid of direct evidence of age discrimination. The panel was satisfied that the record taken as a whole supported plaintiff’s prima facie case of age discrimination. However, the court affirmed since it found that the held that the Treasury Secretary’s proffered reasons for its action was sufficient to negate discrimination.

Court Of Appeal gives Fire Protection District broad discretion to discipline a fire captain.

In Griego v. City of Barstow plaintiff Griego was a captain in the Barstow Fire Protection District. The City of Barstow fired him for criminal and perjurious acts, for willful refusal to comply with official orders, and for setting a poor professional example for his subordinates, as well as for other charges no longer at issue. Plaintiff appealed through nonbinding advisory arbitration. Plaintiff filed a petition for writ of administrative mandate in the superior court. The superior court, exercising its independent judgment as to the City’s findings of misconduct, granted the writ in part and denied it in part. The City appealed.

The Court of Appeal reversed and found that the City Manager had connected her decision to three serious, sustained allegations by Griego, namely: refusing to follow an express directive, issued multiple times, not to coach softball while on duty; carrying a concealed handgun without a permit; and lying under penalty of perjury about possessing firearms. The Court of Appeal distinguished Griego’s case from another precedent in that Griego was “an experienced but defiantly insubordinate supervisor [who set] an intolerable example by repeatedly flouting direct commands from his superior.” The Court concluded that the sustained allegations of Griego’s misconduct demonstrated a lack of credibility, reliability, and trustworthiness, and were therefore a reasonable basis for the City’s decision to sustain termination.

Ninth Circuit holds that Courts may not use an ADA serial litigant’s history in order to establish credibility as to whether he has standing in future ADA claims.

Langer v. Kiser involved the Americans with Disabilities Act (“ADA”) the intent of which is to improve equality of access to goods and services offered by places of public accommodation. However, plaintiff’s law firms have recruited serial litigants—also known as “professional plaintiffs” or “paid testers”—to repeatedly sue businesses for minor, technical violations without actually seeking to purchase anything at all. The goal is extort an early settlement from the defendant that consists almost entirely of “recovery” of attorney’s fees which are awarded under the ADA to the prevailing party.

The Ninth Circuit considered the question of standing in a case involving a serial litigant who had previously filed close to 2,000 ADA lawsuits. Private plaintiffs are limited to seeking injunctive relief under Title III of the ADA, so a plaintiff suing a place of public accommodation must show a sufficient likelihood of injury in the future to establish standing. For an ADA “tester,” the stated primary purpose of visiting a place of public accommodation is to “test” compliance with accessibility laws, rather than to purchase goods and services. In Langer, the district court noted this, doubted the plaintiff’s intent to return because of his involvement in so many ADA lawsuits, and it dismissed his case for lack of standing.

The plaintiff appealed and presented the Ninth Circuit with the question of whether a district court may rely on a plaintiff’s litigation history to question his credibility and intent to return to a place of public accommodation. At the time Langer issued, the Ninth Circuit had previously concluded that a plaintiff suing under Title III of the ADA can establish standing through being a “tester.” The Langer court expanded on this precedent, confirming that a plaintiff’s motivation for visiting a public accommodation was irrelevant to standing. And while Courts of Appeal typically give great deference to district court findings relating to credibility, the panel deemed the district court’s credibility determinations improper to the extent they relied on the plaintiff’s serial litigation history.

Court of Appeal rules that both the Fair Employment and Housing Act (“FEHA”) and California’s Pregnancy Disability Leave law (“PDL”) require a plaintiff to prove that she has a condition related to pregnancy and, with a reasonable accommodation, the plaintiff could have performed the essential functions of the job.

In Lopez v. La Casa de Las Madres Lopez became the manager at La Casa’s domestic violence shelter in 2014. After giving birth in 2016 , Lopez experienced complications, and provided La Casa with periodic certifications to extend her leave. Lopez alleged that during this period La Casa failed to engage in an interactive process to determine if Lopez’s disability could be accommodated, and refused to provide two “modest” accommodations suggested by Lopez’s healthcare provider: (1) time off to allow Lopez to continue mental health treatment; and (2) flexible/shortened workdays if Lopez found work to be overwhelming and triggered severe anxiety/depressive symptoms. Lopez’s healthcare provider said that it was “unknown” for how long these accommodations would be necessary.

La Casa made a determination that it could provide Lopez time off for therapy, but could not function indefinitely without someone in Lopez’s position. Nor could Lopez’s job be “performed without making significant decisions and facing stressful situations at unpredictable times.” La Casa offered Lopez an extended leave and an alternative assignment as a Data Entry specialist. Lopez claimed she was ultimately forced out of her job “due to normal complications experienced after her pregnancy.”

The court of appeal affirmed a judgment in favor of La Casa. A claim under the Fair Employment and Housing Act (“FEHA”) requires proof that the plaintiff had a condition related to pregnancy, childbirth, or a related medical condition; the plaintiff requested accommodation of this condition, with the advice of her health care provider; the plaintiff’s employer refused to provide a reasonable accommodation; and with the reasonable accommodation, the plaintiff could have performed the essential functions of the job. The trial court correctly applied those elements, properly placing the burden on Lopez to prove that she had a condition related to pregnancy and that she was able to perform the essential functions of her job with reasonable accommodation.

Court of Appeal holds that a hospital employee’s evidence of a potential adverse reaction to a mandated flu shot was not sufficient to show she suffered from a physical disability for purposes of a discrimination claim against the hospital.

In Hodges v. Cedars-Sinai plaintiff was employed by defendant hospital and, as a condition of employment, was required to get a flu vaccine. Plaintiff sought an exemption based on a medically recognized contraindication, presenting a doctor’s note that recommended she avoid the vaccine based on her history of cancer and general allergies. However, neither of these was a medically recognized contraindication, and Defendant terminated her employment.

Plaintiff filed suit under the FEHA for disability discrimination. The trial court granted summary judgment in Defendant’s favor, plaintiff appealed.

The Court of Appeal affirmed, finding that the employer did not engage in disability discrimination and that employer’s reason for terminating plaintiff’s employment was legitimate and lacked pretext. Further, the court rejected Plaintiff’s retaliation claim.

California Supreme Court holds that a business entity acting as an agent of an employer may be held directly liable as an “employer” for alleged violations of California’s Fair Employment and Housing Act.

In Raines v. US Healthworks Medical Group plaintiffs Kristina Raines and Darrick Figg were job applicants who received offers of employment contingent upon passing a medical screening. The screening included a detailed health history questionnaire that the applicants were required to complete. These pre-employment screenings were not conducted by the plaintiffs’ prospective employers, but instead by third-party occupational health services providers. Plaintiffs sued these providers on behalf of a putative class, alleging that the questions were intrusive and overbroad in violation of California’s Fair Employment and Housing Act (“FEHA”). Plaintiffs sued in state court, and the providers removed the case to federal court.

FEHA generally precludes “any employer or employment agency” from “requir[ing] a medical or physical examination” of a job applicant. It does, however, allow employers to require such examinations of a “job applicant after an employment offer has been made,” so long as the examination is “job related and consistent with business necessity.” FEHA defines “employer” as “any person regularly employing five or more persons, or any person acting as an agent of an employer, directly or indirectly.”

The providers argued that even if they were “agents” of the plaintiffs’ prospective employers, agents could not be held directly liable for FEHA violations separately from their employer-principals. The district court agreed.

On appeal, the Ninth Circuit observed the significance of the issue on employment litigation throughout the state, and that the California Supreme Court had previously reserved judgment on the issue in Reno v. Baird, 18 Cal. 4th 640 (1998). The Ninth Circuit accordingly certified the question of an agent’s direct liability under the FEHA to the California Supreme Court. The specific question was: “California’s Fair Employment and Housing Act defines ‘employer’ as ‘any person regularly employing five or more persons, or any person acting as an agent of an employer.’ Can a business acting as an agent of an employer be held directly liable for employment discrimination?”

The California Supreme Court answered “Yes” to the above questions. The Court found support for its interpretation in FEHA’s legislative history, which showed that the Legislature borrowed from National Labor Relations Act provisions interpreted to impose employer status on certain employer agents. Consulting analogous federal decisions regarding antidiscrimination laws, the Court determined that a business-entity agent could bear direct FEHA liability only when it carried out FEHA-regulated activities on behalf of an employer. The Court further reasoned that public policy supported its construction: extending FEHA liability to the business entity most directly responsible for the violation furthers FEHA’s remedial purpose. Finally, the Court distinguished its earlier opinions holding that individual employees of the same employers are not subject to FEHA liability. The rationale for those opinions did not apply to a business entity employing five or more employees that carries out FEHA-regulated activities on behalf of an employer.

Ninth Circuit affirms summary judgment and holds that City’s Fire Chief was terminated for misconduct not because of his religion.

In Hittle v. City of Stockton plaintiff Hittle served as the City’s Fire Chief before he was fired (following an investigation by an outside investigator) because he lacked effectiveness and judgment in his ongoing leadership of the Fire Department; used City time and a City vehicle to attend a religious event and approved on-duty attendance of other Fire Department managers; failed to properly report his time off; engaged in potential favoritism of certain employees; endorsed a private consultant’s business in violation of City policy; and had potentially conflicting loyalties in his management role and responsibilities.

Hittle sued the City under Title VII and the California Fair Employment and Housing Act (“FEHA”), alleging his termination was “based upon his religion.” Hittle pointed to what he characterized as “direct evidence of discriminatory animus” based on a comment made by the Deputy City Manager Laurie Montes that Hittle was part of a “Christian coalition” and part of a “church clique” in the Fire Department. However, the evidence showed that Montes was repeating what was written in anonymous letters sent to the City and that the comment did not originate with Montes herself. The district court granted City’s motion.

The Court of Appeal affirmed, noting Monte’s remarks were in any event “more akin to ‘stray remarks’ that have been held insufficient to establish discrimination.” Further, based on the investigation, the Court held that defendants’ legitimate non-discriminatory reasons for firing Hittle were not mere pretext for religious discrimination.

Court of Appeal holds that Facebook can be sued for discrimination by steering ads away from women and older users.

In Liapes v. Facebook, Inc. plaintiff Samantha Liapes filed a class action lawsuit against Facebook in 2020, alleging that Facebook’s advertisement practices discriminate against people with protected characteristics, particularly age and gender, after it failed to show her advertisements relating to insurance. While Facebook claimed its “ad tools” are neutral and that it had the right to send different ads to different people, the Court of Appeal ultimately disagreed after a years-long legal battle.

Specifically, the Court of Appeal ruled in favor of Liapes under California’s Unruh Civil Rights Act claim, which provides protection from discrimination by businesses, opening the door for other lawsuits alleging further discriminatory ad targeting practices by Facebook. The court reasoned that Facebook, which receives more than 98% of its revenue from advertisers, makes the final decisions about which users will receive the ads, and “expressly uses age and gender” in those decisions.

Ninth Circuit holds that courts may discretionarily award attorney’s fees and costs to the defendant if it prevails in an ADA claim.

In Garcia v. Gateway Hotel LP Garcia, sued Gateway Hotel under the Americans with Disabilities Act (“ADA”). He alleged that the hotel’s website reservation policies and practices violated Section 302(e) of the ADA by not adequately informing guests of the hotel’s accessibility features. Gateway prevailed and filed a motion to recover its attorney’s fees and costs from Garcia and the law firm representing him. The district court granted the motion.

The Ninth Circuit affirmed the trial court’s award of litigation costs in favor of Gateway Hotel LP, finding that the trial court did not abuse its discretion when it awarded the hotel the costs it incurred in successfully defending Garcia’s ADA lawsuit. The Ninth Circuit’s analysis focused on Federal Rule of Civil Procedure 54(d)(1) which gives courts the discretion to award costs to a prevailing defendant. The court clarified the circumstances under which a defendant may be awarded costs in an action brought under the ADA. The Court of Appeals concluded that the fee-and cost-shifting provision of the ADA (requiring defendant businesses to pay the plaintiff’s fees and costs) provides that a “prevailing ADA defendant may be awarded its costs at the district court’s discretion and without a finding that the action was frivolous, unreasonable or without foundation.”

Court of Appeal holds that the ADA does not apply to websites without a connection to a physical location.

In Martin v. THI E-Commerce, LLC plaintiffs Dominick Martin and Rusty Rendon filed suit under the Unruh Civil Rights Act (“Unruh Act”) for disability discrimination, contending that one of THI E-Commerce’s websites discriminated against the blind by being incompatible with screen reading software. The trial court dismissed plaintiffs’ complaint on the grounds that a website is not a “place of public accommodation” which is required in an action under the Unruh Act.

On appeal, plaintiffs contended the court erred by concluding that a website was not a “place of public accommodation” under the Americans with Disabilities Act (“ADA”) (incorporated into the Unruh Act). Although this was an issue that has split the federal courts (and California Courts of Appeal), the appellate court here concluded the ADA unambiguously applied only to physical places (i.e. brick and mortar locations).

Ninth Circuit holds that refusal to rehire union-affiliated former employees upon completion of hotel renovations was unlawful discrimination where employer’s stated reasons for the refusal were pretextual and antiunion animus contributed to the decision.

In Kava Holdings LLC v. NLRB UNITE HERE Local 11 (“Union”) was the exclusive collective bargaining representative for a unit of employees whom Kava Holdings LLC (“Kava”) employed at the Hotel Bel-Air. Kava temporarily closed the hotel for extensive renovations and laid off all the unit employees. As Kava prepared to reopen the hotel, Kava conducted a job fair to fill about 306 positions. Approximately 176 union-affiliated former employees applied for those positions. Kava refused to rehire 152 of them.

The National Labor Relations Board (“Board”) found that Kava committed unfair labor practices by refusing to hire former employees because of their union affiliation, by refusing to recognize and bargain with the Union, and by unilaterally changing unit employees’ terms and conditions of employment, in violation of the National Labor Relations Act. The Board ordered various remedies, including reinstatement of the former employee applicants who were affected by Kava’s discriminatory conduct. Kava petitioned for review of the Board’s order and a supplemental remedial order, and the Board cross-applied for enforcement.

The Ninth Circuit denied in part and dismissed in part Kava’s petition for review and granted the Board’s cross-petition for enforcement of its order, which found that Kava committed unfair labor practices. The court held that substantial evidence supported the Board’s finding that Kava committed an unfair labor practice by refusing to rehire union-affiliated former employees so that Kava could avoid its statutory duty to bargain with the Union. The court further held that substantial evidence supported the Board’s finding that Kava committed an unfair labor practice by refusing to recognize and bargain with the Union as it reopened the Hotel and by unilaterally changing the bargaining unit’s established pre-closure terms and conditions of employment.

Court of Appeal holds that a women’s soccer player recruited to play at UC-Berkeley sufficiently alleged sexual harassment by the head coach since the coach berated players in a gender-based manner.

In Thomas v. The Regents of the University of California Thomas was recruited to play on the women’s soccer team at the University of California, Berkeley (“UCB”), played on the team during her freshman year and, in the spring of that year, was released from the team. She filed an action in federal court against UCB, the team’s head coach (“McGuire”), and the Director of Athletics (“Knowlton”), alleging that she turned down a scholarship to another school based on McGuire’s recruitment efforts and that McGuire failed to disclose his “abusive” coaching style and the team’s culture of intimidation and fear.

After her federal suit was dismissed, Thomas sued the same defendants in state court, alleging claims against McGuire and Knowlton for violation of the Unruh Act and negligence; against McGuire for breach of fiduciary duty and fraud; and against UCB under Government Code section 815.2. The trial court dismissed the action.

The court of appeal affirmed the dismissal of the suit, reinstating only a claim of sexual harassment (Civil Code section 51.9) against McGuire and UCB. The court held that Thomas failed to state a negligence claim against McGuire, Knowlton, or UCB and, further, that there is no authority imposing on a university a duty to protect students from harm of a non-physical nature.

Court of Appeal holds that golf course did not discriminate against plaintiff with pulmonary arterial hypertension because it provided reasonable modifications to its golf cart policies, exempting him from many, though not all cart restrictions.

In Lurner v. American Golf Corp. plaintiff Lurner was a member of Marbella Golf and Country Club (“Marbella”) where he played golf. Defendants American Golf Corporation and Root’N USA Corporation owned and operated Marbella. On May 14, 2016, Lurner was diagnosed with pulmonary arterial hypertension (“PAH”). Given this disability, plaintiff claimed he had to drive his golf cart to wherever his ball landed on the golf course. But for safety reasons, Marbella had rules governing where golfers could drive their golf carts. Some of those restrictions applied to all members, including golfers with disabilities.

Plaintiff filed suit alleging defendants failed to accommodate his disability and denied him full and equal enjoyment of the golf course. After the case proceeded to trial, the jury returned a verdict in favor of defendants. The jury found defendants did not “discriminate against or deny [plaintiff] full and equal access to and enjoyment of accommodations or advantages or facilities or services at [Marbella] at any time after May 14, 2016.”

The Court of Appeal affirmed the trial court: “Assuming, without deciding, Marbella’s policies had a discriminatory effect in practice, there was substantial evidence defendants modified their policies for plaintiff.”

Court of Appeal affirms summary judgment for employer finding that employee’s termination was justified after warning the employee of unprofessional behavior following an investigation.

In Martin v. Board of Trustees of the California State University California State University (“CSU”) hired Jorge Martin as the director of university communications of California State University at Northridge’s Marketing and Communications Department (the “Department”). The Vice President of CSU testified that after speaking with employees while investigating complaints against Martin, he determined that Martin could not be an effective department leader because he disregarded CSU’s direction regarding professionalism; staff could not work with him; and subordinates were intimidated and threatened by him.

After being terminated by CSU, Martin filed a complaint against CSU alleging gender, race, color, and sexual orientation discrimination under the Fair Employment and Housing Act (“FEHA”); race, gender, and sexual orientation harassment; and failure to prevent harassment and discrimination. CSU filed a motion for summary judgment or summary adjudication which was granted by the trial court.

The Court of Appeal affirmed. The court found that the trial court correctly granted summary judgment on Martin’s discrimination claims. The court explained that CSU established a legitimate reason for the termination. Moreover, the court held that plaintiff failed to submit evidence that creates a dispute of material fact as to pretext. Similarly, the court explained that plaintiff had not established a dispute of fact regarding whether CSU’s internal investigation was pretextual. The court wrote that plaintiff failed to produce substantial evidence of any bias in the investigation, and his statistical evidence was not probative of discriminatory motive. Further, plaintiff’s evidence of CSU’s commitment to diversity did not create a triable issue of discriminatory motive.

Court of Appeal holds that the litigation privilege barred district attorney’s unfair competition claims against law firm representing “serial” ADA litigants.

In People v. Potter Handy, LLP the district attorneys of Los Angeles and San Francisco (“People”) filing a complaint against the law firm Potter Handy, LLP and several of its attorneys (collectively, “Potter”) on the grounds that Potter filed numerous lawsuits under the American with Disabilities Act (“ADA”) containing allegations that the law firm knew to be false and that it “files the complaints as part of a shakedown scheme to extract coerced settlements from small business owners in California,” which the People alleged constitutes “unlawful” business practices under California’s Unfair Competition Law (“UCL”).

The primary basis for the People’s UCL claim derived from Business and Professions Code section 6128(a) which makes it a misdemeanor for an attorney who “[i]s guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party.” In June 2022, Potter demurred to the People’s complaint on multiple grounds, including that the People’s UCL claim was barred by California’s litigation privilege. Under the litigation privilege, communications made as part of a judicial proceeding are generally privileged under the concept that litigants should be free to access the court without the concern of facing derivative tort actions. One of the recognized exceptions to this privilege is where a statute, like section 6128(a), is more specific than the litigation privilege and its enforcement frustrated when in conflict with the privilege’s application. Under this exception, courts limit the privilege’s reach if its application is inconsistent with another statute.

The trial court sustained Potter’s demurrer without leave to amend finding that the People’s UCL claim was based on conduct that falls directly within the purview of the litigation privilege, and that no exception applied. The People then appealed.

The Court of Appeal affirmed the trial court’s ruling finding that no exception existed to the litigation privilege for the People’s UCL claim. The Court of Appeal opined that here, an exception to the litigation privilege was not proper because other remedies under which the People can prosecute such claims remain viable, such as State Bar disciplinary proceedings and criminal prosecution under section 6128(a).

Court of Appeal holds that co-employee complaints against employee who brought a sexual harassment lawsuit were inadmissible because their substance had minimal relevance to her credibility.

In Argueta v. Worldwide Flight Services, Inc. plaintiff, Argueta, worked for Worldwide Flight Services (“Worldwide”). Several employees working under Argueta lodged complaints against her for bullying, harassment, and other misconduct. In response, Argueta filed a complaint against Worldwide for sexual harassment and retaliation, alleging that she was sexually harassed by a certain Mr. Nguyen, an employee of Worldwide, and that the company had failed to prevent the harassment. The company investigated the allegations and issued a “Letter of Concern” to Nguyen, imposing certain conditions on his continued employment.

Argueta eventually resigned, citing a hostile work environment. At trial, the jury returned a verdict in favor of Worldwide. Argueta appealed, arguing that the trial court erred in admitting evidence of the substance of the complaints made against her by other employees.

The Court of Appeal agreed with Argueta, finding that the admission of the substance of the complaints was prejudicial. The court ruled that such evidence had little relevance to Argueta’s claims of sexual harassment and was highly prejudicial to her case, potentially causing the jury to view her as a bad person.

Court of Appeal reverses summary judgment on grounds that that the trial court used outdated standards to grant summary judgment on FEHA sexual harassment claim.

In Beltran v. Hard Rock Hotel Licensing, Inc. Stephanie Beltran, a server at the Hard Rock Hotel in Palm Springs, sued her employer alleging she had been sexually harassed by Juan Rivera, the former General Manager of the hotel. Beltran reported to Human Resources that Rivera had “grabbed or slapped her ass.” Beltran also testified in her deposition about “multiple incidents of conduct over a period of months, including leering gestures, hand massages, and inappropriate questions, which culminated with the slapping or groping incident.” The trial court granted summary adjudication in favor of the employer.

The Court of Appeal reversed, holding that this evidence was more than sufficient to raise a triable issue of fact as to whether “a reasonable person who was subjected to the harassing conduct would find that the conduct so altered working conditions as to make it more difficult to do the job.” In so holding, the Court of Appeal relied principally upon Government Code section 12923 and the case law that post-dates the January 1, 2019 effective date of the statute. The Court of Appeal noted: “In light of this statute, we conclude that because the trial court used outdated standards to conclude no triable issue of material fact existed, summary adjudication should not have been granted as to the hostile work environment cause of action.”

United States Supreme Court punts when given opportunity to decide whether an ADA tester has standing to challenge a hotel’s failure to provide disability accessibility information on its website, even if she has no plans to visit the hotel.

In Acheson Hotels, LLC v. Laufer Deborah Laufer, a prolific litigant with physical disabilities and vision impairments, sued Acheson Hotels for failing to publish information about their accessibility on their website, which is required under the Americans with Disabilities Act (“ADA”).

The district court dismissed the lawsuit, finding that Laufer lacked standing to sue because had no plans to visit the hotel and thus suffered no injury as a result of the lack of information on the website. The First Circuit reversed, concluding that Laufer’s lack of intent to book a room at the hotel operated by Acheson does not negate the fact of injury.

The question posed by the Supreme Court was: “Does an ADA ‘tester’ have Article III standing to challenge a hotel’s failure to provide disability accessibility information on its website, even if she has no plans to visit the hotel?” Rather then answer the question, the Supreme Court punted. Specifically, the Court vacated the case as moot because Laufer voluntarily dismissed her pending suits in lower courts with prejudice due to serious misconduct by her lawyers.

Class action

Ninth Circuit orders reversal of district court’s class certification order where the class action procedure was improperly used to expand or modify the substantive rights provided for class members under ERISA.

In Wit v. United Behavioral Health beneficiaries of ERISA-governed health benefit plans brought an action against the claims administrator for the health plan on behalf of three putative classes for breach of fiduciary duty and improper denial of benefits, alleging that administrator improperly developed and relied on internal guidelines that were inconsistent with terms of class members’ plans and with state-mandated criteria. The beneficiaries alleged that the administrator deviated from the widely accepted clinical standards of care for mental health and addiction. Beneficiaries moved to certify classes. The district court granted motion. Following a bench trial, the district court entered judgment for beneficiaries. The administrator appealed.

The Ninth Circuit affirmed in part. Specifically, the Ninth Circuit held: (1) plaintiffs in the case did have standing to bring their claims forward; (2) the district court did not err in certifying three classes to pursue the fiduciary duty claim, but erred in its certification of the denial of class benefits; (3) the district court erred to the extent it determined that the ERISA plans required the care utilization review guidelines to be coextensive with generally accepted standards of care and reversing the judgment on the beneficiaries denial of benefits claim; and (4) remanded to the district court to answer the threshold question of whether the fiduciary duty claim was subject to the plans’ administrative exhaustion requirement.

PAGA

According to Court of Appeal, to meet intervention threshold requirements, non-party PAGA claimants may have a “significantly protectable” interest, even though the state is the real party in interest.

In Accurso v. In-N-Out Burgers representatives in two pending overlapping Private Attorneys General Act (“PAGA”) actions filed a proposed complaint in intervention in a third PAGA action against the same employer and moved to intervene and for a stay of proceedings. The Court of Appeal held, as a matter of first impression, that non-party PAGA claimants who seek to intervene in overlapping PAGA cases must have a “significant protectable interest” pursuant to Code of Civil Procedure section 387 that meets the threshold requirements of rule governing intervention but “personal interest” is not required.

Note: On November 29, 2023, the California Supreme Court granted the employer’s petition for review. The Court further indicated that the matter is deferred pending consideration and disposition of related issues in Turrieta v. Lyft (Seifu) which is currently on appeal following a January 2022 Court of Appeal opinion. In granting review in Turrieta, the Supreme Court noted that the “issue to be briefed is limited to the following: Does a plaintiff in a representative action filed under the PAGA have the right to intervene, or object to, or move to vacate, a judgment in a related action that purports to settle the claims that plaintiff has brought on behalf of the State?”

Employee’s meal and rest break PAGA claims survive summary judgment since employer failed to meet its burden of production to defeat PAGA standing issue.

In Arce v. The Ensign Group, Inc. an employee of a nursing facility claimed the facility, where she worked as an aide for nine years, was so chronically understaffed that she never took a rest break and frequently had to work through her meal breaks. After her termination, plaintiff brought a claim under the Labor Code Private Attorneys General Act of 2004 (“PAGA”) against her employer. Employer moved for summary judgment, arguing that plaintiff lacked standing to bring a representative PAGA action. The trial court granted summary judgment on a different issue, holding that plaintiff had not offered any “competent proof that one or more cognizable Labor Code violations occurred during her employment in connection with her right to meal and rest periods.” The court entered a judgment of dismissal, and plaintiff appealed.

The Court of Appeal reversed. The court concluded that the employer did not produce sufficient evidence to meet its initial burden of production on the standing issue, i.e., that plaintiff had not suffered a Labor Code violation during her employment. The court explained that plaintiff’s complaint alleged that “scheduling and understaffing issues, high patient-to-nurse ratio, and a heavy workload” made it functionally impossible for her to take meal and rest breaks. Employer’s moving papers did not address or negate those allegations. Because the employer did not furnish evidence tending to negate the allegations that their practices conflicted with their written break policies, it did not meet the initial burden of production, and summary judgment should have been denied.

Workers compensation

Court of Appeal holds that where employer’s provision of first aid occurred as part of its employer role, worker’s compensation was exclusive remedy for decedent-employee’s family.

In Jimenez v. Mrs. Gooch’s Natural Food Markets, Inc. the wife and children of a deceased employee brought an action against the decedent’s employer, which operated a grocery store, for wrongful death. Plaintiffs alleged that the employee left employer’s store while on a break when he was hit by pickup truck while using crosswalk at nearby intersection. The employee walked back to store where he told his supervisors that he was injured and wanted to go home. The employee’s supervisors examined his head and gave him ice for his injury. They asked him to wait while they printed out forms and discussed which ones he had to fill out. They made him sign a single form, and a coworker later drove employee home, but employee died a few hours later. The employer demurred to complaint, alleging that Workers’ Compensation Act (“WCA”) provided the sole and exclusive remedy for plaintiff’s wrongful death claims. The plaintiffs argued that the employer was liable for negligence outside the workers’ compensation scheme because it acted in a dual capacity after the accident through its employees. In addition to acting as an employer, Mrs. Gooch’s also allegedly acted as a provider of emergency first aid services. The trial court sustained the demurrer without leave to amend, and plaintiffs appealed.

The Court of Appeal affirmed on the grounds that the “dual-capacity” exception to the WCA’s sole and exclusive remedy rule did not apply since plaintiffs did not allege that the store employees rendering assistance were medical professionals. Rather, plaintiffs alleged that the employee received first aid assistance from employer in its capacity as his employer. As such, the allegations did not suggest that employer or its employees assumed a separate and independent role as providers of medical services unrelated to the employment relationship.

Elementary school volunteer was an “employee” whose sole remedy for her injury at a spelling bee was workers’ compensation because the school district previously passed a resolution rendering volunteers employees.

In Perez v. Galt Joint Union Elementary School District plaintiff, a volunteer at elementary school spelling bee brought a personal-injury action against a school district arising from serious injuries she sustained while volunteering when she fell off school’s stage and down an adjacent stairway. Following a bench trial, the trial court entered judgment in favor of the school district on the basis that a resolution by governing board of the district pursuant to Labor Code section 3364.5 had converted the volunteer’s status to that of an employee under the Workers’ Compensation Act, rendering workers’ compensation the sole and exclusive remedy. Plaintiff argued that because there was no evidence the district board members were aware of their duties under Labor Code section 3364.5 when she was injured, none of the members were present at the event at which she was injured (nor was there evidence they knew about the bee), she was not “authorized by the governing board” to act as a volunteer, and she was not performing services under their “direction and control” at the time she was injured. The volunteer appealed.

The Court of Appeal affirmed holding: (1) that so long as a resolution has been passed at some point by the governing board of a district and not later rescinded, Labor Code section 3364.5 does not require that district board members and staff be aware of the statute at the time a volunteer is injured in order for it to apply; (2) district board members do not need to know about and authorize a specific volunteer’s involvement in a specific activity for the exception to apply; and (3) district board members do not need to directly control and direct a volunteer’s actions for the exception to apply. The court added: “The broad purpose of Labor Code section 3364.5, reflected in the legislative history, reinforces our decision that the statute does not apply just in the narrow circumstances and to the narrow class of volunteers to which plaintiff’s reading would have us apply the statute.”