Labor and Employment Litigation Update Friday, November 6, 2020

Brian P. Walter, Partner, Liebert Cassidy Whitmore

DISCLAIMER This publication is provided for general information only and is not offered or intended as legal advice. Readers should seek the advice of an attorney when confronted with legal issues and attorneys should perform an independent evaluation of the issues raised in these materials. The League of California Cities® does not review these materials for content and has no view one way or another on the analysis contained in the materials.

Copyright © 2020, League of California Cities®. All rights reserved. This paper, or parts thereof, may not be reproduced in any form without express written permission from the League of California Cities. For further information, contact the League of California Cities at 1400 K Street, 4th Floor, Sacramento, CA 95814. Telephone: (916) 658-8200.

League of California Cities 2020 City Attorneys’ Department Virtual Conference

Labor and Employment Litigation Update

Brian P. Walter LIEBERT CASSIDY WHITMORE 6033 West Century Blvd., Fifth Floor Los Angeles, CA 90045 Telephone: (310) 981-2000 Facsimile: (310) 337-0837

Labor and Employment Litigation Update

Brian P. Walter, Partner, Liebert Cassidy Whitmore

DISCRIMINATION AND HARASSMENT

General Information about Discrimination and Harassment can be found in the Municipal Law Handbook, Chapter 4, “Personnel,” Section VIII, “Antidiscrimination Laws.” http://onlaw.ceb.com/onlaw/gateway.dll?f=templates&fn=default.htm&vid=OnLAW:CEB

Employee Who Was Terminated Because of a Mistaken Belief He Was Unable to Work Need Not Prove Employer Had a Discriminatory Intent To Prove Disability Discrimination

Glynn v. Superior Court of Los Angeles County (Allergan) (2019) 42 Cal.App.5th 47

John Glynn worked for Allergan as a pharmaceutical sales representative. His job required him to drive to doctors’ offices to promote pharmaceuticals. In January 2016, Glynn requested, and Allergan approved, a medical leave of absence for his serious eye condition. Glynn’s doctor indicated that Glynn was unable to work because he could not safely drive. While on medical leave, Glynn repeatedly requested reassignment to a vacant position that did not require driving, but he was never reassigned.

On July 20, 2016, while on medical leave, Glynn became eligible for long-term, as opposed to short-term, disability benefits. That day, a temporary employee in Allergan’s benefits department sent Glynn a letter informing him that his employment was terminated due to his “inability to return to work by a certain date with or without some reasonable accommodation.” The temporary employee who sent Glynn the letter mistakenly believed that Allergan policy required termination once an employee transitioned from short-term to long-term disability benefits. In reality, Allergan’s policy only required termination once the employee had applied and been approved for long-term disability benefits.

The day after Glynn received the termination letter, he emailed a letter to the Human Resources Department stating that: he never applied for long-term disability benefits; he could work in any position that did not require driving; and he disputed the termination decision. After Allergan did not reinstate Glynn, he sued the company alleging various disability discrimination and other claims.

In the lawsuit, Allergan moved for summary judgment, and the district court dismissed a number of Glynn’s claims, including his disability discrimination claim. However, the Court of Appeal concluded that the trial court erred in dismissing Glynn’s disability discrimination claim.

California has adopted a three-stage burden-shifting test for Fair Employment and Housing Act (FEHA) discrimination claims. However, this three-stage test does not apply if the employee presents direct evidence of discrimination. In disability discrimination cases, the

threshold issue is whether there is direct evidence that the motive for the employer’s conduct was related to the employee’s physical or mental condition.

Here, the court concluded there was direct evidence of discrimination. An employee alleging disability discrimination can establish the employer’s intent by proving: (1) the employer knew that employee had a physical condition that limited a major life activity, or perceived him to have such a condition; and (2) the employee’s actual or perceived physical condition was a substantial motivating reason for the employer’s decision to terminate or to take another adverse employment action. Allergan terminated Glynn because a temporary employee perceived, albeit mistakenly, that he was totally disabled and unable to work.

The court further reasoned that even if the employer’s mistake was reasonable and made in good faith, a lack of discriminatory intent does not preclude liability for a disability discrimination claim. This is because California law does not require an employee with an actual or perceived disability to prove that the employer’s adverse employment action was motivated by animosity or ill will against the employee. Instead, California’s law protects employees from an employer’s erroneous or mistaken beliefs about the employee’s physical condition. In short, the Legislature decided that the financial consequences of an employer’s mistaken belief that an employee is unable to safely perform a job’s essential functions should be borne by the employer, not the employee, even if the employer’s mistake was reasonable and made in good faith. Accordingly, the court found that the trial court should not have dismissed Glynn’s disability discrimination claim.

This case highlights that even good faith mistakes can be the basis of a discrimination claim. Cities should ensure that employees responsible for making or approving termination decisions are well versed in the agency’s reasonable accommodation policies to limit the risk of mistakes.

Each Disability Retirement Check That Was Based on an Allegedly Discriminatory Policy Was a New Unlawful Employment Action.

Carroll v. City and County of San Francisco (2019) 41 Cal.App.5th 805

Joyce Carroll started working for the City and County of San Francisco (City) when she was 43 years old. After 15 years of service, Carroll retired at age 58 due to rheumatoid arthritis. On June 22, 2000, Carroll applied for disability retirement, and the City granted her request. Accordingly, Carroll received monthly disability retirement benefit payments.

On November 17, 2017, more than 17 years after her retirement, Carroll filed a complaint with the Department of Fair Employment and Housing (DFEH) alleging that the City violated the Fair Employment and Housing Act (FEHA) by discriminating against employees on the basis of age. Specifically, Carroll alleged that the City intentionally discriminated against employees hired over the age of 40 by providing them with reduced retirement benefits.

The City’s charter provides that the maximum disability benefit a disabled employee can receive is one-third of average final compensation. If an employee’s benefit falls below one-third

of final average compensation, but the employee has worked for the City for at least 10 years before retiring, the City credits additional service time to the employee to increase the benefit. However, the City limits this imputed service time to the number of years the disabled employee would have worked for the City had he or she continued City employment until age 60. Accordingly, Carroll alleged that the City violated the FEHA by using a standard policy that had a disparate impact on older employees because older employees were entitled to less imputed service and thus, reduced retirement benefits.

The City moved to dismiss Carroll’s lawsuit arguing that the statute of limitations barred her claims because she failed to timely file an administrative charge. The City argued that the limitations period began running in 2000 when it granted Carroll’s disability retirement. Accordingly, the City argued the charge Carroll filed in 2017 was well outside the one-year statute of limitations. The trial court agreed and dismissed the lawsuit. Carroll appealed.

On appeal, Carroll argued that each retirement check she received constituted a new FEHA violation. The Court of Appeal sided with Carroll and concluded that an unlawful event occurred each time Carroll received a discriminatory disability retirement payment. Accordingly, the limitations period restarted with each allegedly discriminatory check. The court reasoned that an employer’s discriminatory decision to take an unlawful employment action is actionable not only when made but also when prohibited acts or practices occur because of that decision.

The court noted that an unlawful action occurred each time the City paid the allegedly discriminatory retirement benefits. This interpretation is consistent with the FEHA and the command that courts liberally interpret its provisions. Moreover, the court noted that federal cases, that addressed whether paychecks issued pursuant to a discriminatory compensation scheme under Title VII, and other state court decisions, also support this conclusion.

Carroll also argued that her lawsuit was timely under a specific variation of the “continuing violation theory.” That theory applies when an employee alleges a systematic corporate policy of discrimination against a protected class that was enforced during the limitations period and the employee is seeking to recover for injury during the limitations period. The court also agreed that Carroll’s lawsuit was timely under this theory because she alleged the City used a fixed discriminatory policy to pay reduced retirement benefits to employees hired over the age of 40, and that the City used this policy each month by paying reduced retirement benefits.

The court also determined that Carroll could maintain a “disparate impact” claim against the City. An employee can establish a disparate impact claim by demonstrating that an employer uses a particular employment practice that causes a disparate impact on one of the protected classes. The court noted that because the City’s monthly application of an employment policy has a disparate impact on employees who began their employment over 40, she could sue for these payments under that theory as well.

The impact of periodic payments – such as disability checks or paychecks – on a discrimination or wage and hour claim – greatly expands the time in which an employee or former employee can sue a city.

Summary Judgment Upheld Where Employee Presented No Evidence of an Adverse Employment Action and Failed to Notify Employer of a Disability.

Doe v. Department of Corrections and Rehabilitation (2019) 43 Cal.App.5th 721

John Doe worked as a psychologist at Ironwood State Prison for the California Department of Corrections and Rehabilitation (CDCR). Between 2013 and 2016, Doe submitted three accommodation requests to assist him with his concentration, including a quieter workspace, a thumb drive, and a small recorder. In support of his requests, Doe submitted medical notes from his physician, which indicated that Doe had a “learning disability,” a “chronic work related medical condition” and a “physical disability” that made him “easily distracted” and disorganized when under stress.

When CDCR could not accommodate Doe’s requests, he voluntarily took two paid medical leaves of absence. In 2016, during a third leave of absence, Doe submitted his resignation. Doe then sued CDCR, alleging discrimination, retaliation and harassment based on disability in violation of the Fair Employment and Housing Act (FEHA). Doe alleged he had two disabilities: asthma and dyslexia. Doe also alleged CDCR violated FEHA by failing to both accommodate his disabilities and engage in the interactive process.

The trial court granted summary judgment for CDCR and Doe appealed. The Court of Appeal affirmed summary judgment for CDCR on the following grounds.

The Court of Appeal held that Doe’s discrimination and retaliation claims failed because he presented no evidence that he was subjected to an adverse employment action—an essential element of both claims. Doe alleged CDCR subjected him to adverse employment actions by (i) criticizing his work performance, (ii) ordering a wellness check when he was out sick, (iii) suspecting him of bringing his personal cell phone into work in violation of work policy, (iv) assigning him to a primary crisis position on the same day as a union meeting, and (v) forcing him to take medical leave when he did not receive his requested accommodations.

The Court of Appeal held that the CDCR’s alleged actions were minor conduct that upset Doe but did not threaten to materially affect the terms and conditions of his job. Therefore, the actions did not reach the level of an adverse employment action. Further, Doe’s decision to take medical leave was not an adverse employment action because the leave was voluntary and Doe requested it. The Court of Appeal also affirmed that CDCR’s failure to accommodate Doe’s alleged disability did not qualify as an adverse employment action for the purposes of a discrimination or retaliation claim.

As for Doe’s harassment claim, the Court of Appeal held that none of the alleged conduct was subjectively severe enough to constitute harassment. Rather, each incident involved a personnel decision by Doe’s supervisor within the scope of his supervisory duties. Simply because Doe felt his supervisor performed those duties in a negative or malicious way did not transform the conduct into disability harassment.

Finally, the Court of Appeal held that Doe’s accommodation and interactive process claims failed because he presented insufficient evidence to support that CDCR was on notice that he had a FEHA-covered disability. Doe’s medical notes indicated that he had a “chronic work related medical condition” and “physical disability,” but did not state that Doe had asthma or dyslexia. Further, the medical notes failed to describe the extent of limitations his disability caused, which rendered CDCR unable to determine whether it could reasonably accommodate Doe.

Cities should request employees provide reasonable documentation to support a request for accommodation for an alleged disability. This allows a city to determine whether there is a FEHA-covered disability and to consider the full range of potential accommodations in the interactive process.

Filing of Worker’s Compensation Claim Supported Equitable Tolling of Deadline to File FEHA Discrimination Claim Where There Was Factual Overlap Between Claims.

Brome v. California Highway Patrol (2020) 44 Cal.App.5th 786

Jay Brome began his employment with the California Highway Patrol (CHP) in 1996. During his nearly 20-year career, other officers subjected Brome, who was openly gay, to derogatory, homophobic comments, singled him out for pranks, repeatedly defaced his mailbox and refused to provide him with backup assistance during enforcement stops in the field.

Brome eventually transferred CHP offices seeking a better work environment, but the offensive comments about his sexual orientation continued. Officers at Brome’s new office also frequently refused to provide Brome with backup assistance during enforcement stops, including high-risk situations that should be handled by at least two officers. Brome was the only officer who did not receive backup. Further, when Brome won an officer of the year award, the CHP never displayed his photograph, which was a break from practice.

Through 2014, Brome continued to complain to his supervisors. They told him they would look into it, but the problems continued, and Brome believed management refused to do anything about it. As a result, Brome feared for his life during enforcement stops, experienced headaches, muscle pain, stomach issues, anxiety and stress, and became suicidal. In January 2015, Brome went on medical leave and filed a workers’ compensation claim based on work- related stress.

After Brome took leave, his captain sent him a letter stating that he hoped they could work together to resolve Brome’s work-related issues. Brome’s workers’ compensation claim was eventually resolved in his favor, and on February 29, 2016, Brome took industrial disability retirement.

On September 15, 2016, Brome filed a complaint with the Department of Fair Employment and House (DFEH) asserting discrimination and harassment based on his sexual orientation and other claims under the Fair Employment and Housing Act (FEHA). The next day, Brome filed a civil lawsuit. The CHP sought to dismiss the lawsuit as untimely. Under the FEHA

at the time of the lawsuit, an employee’s DFEH complaint must have been filed within one year of the alleged discriminatory or harassing conduct. While the crux of Brome’s claims occurred before his medical leave in January 2015, Brome did not file his administrative complaint until September 15, 2016. Accordingly, the CHP argued that Brome could only sue based on acts occurring on or after September 15, 2015. While Brome argued that various exceptions to the one-year deadline applied, the trial court ultimately dismissed Brome’s lawsuit. Brome appealed.

The Court of Appeal considered three exceptions that could extend the one-year deadline: equitable tolling, continuing violation, and constructive discharge.

First, the court determined that Brome’s workers’ compensation claim could equitably toll the one-year deadline for filing his DFEH complaint. The equitable tolling doctrine suspends a statute of limitations to ensure fairness. To use equitable tolling, the employee has to prove: (1) timely notice; (2) lack of prejudice to the employer; and (3) his or her own good faith conduct. The court concluded that Brome could establish all of the elements. Brome’s workers’ compensation claim put the CHP on notice of his potential discrimination claims because it had to investigate the circumstances that caused him work-related stress. The court said that a reasonable jury could not find that applying the equitable tolling doctrine would prejudice the CHP. Finally, the court noted that Brome exhibited good faith and reasonable conduct in waiting to file his complaint until after the resolution of his workers’ compensation claim.

Second, the court determined that the statute of limitations could be extended as a continuing violation. That doctrine allows liability for conduct occurring outside the statute of limitations if the conduct is sufficiently connected to conduct within the limitations period. To establish a continuing violation, an employee must show that the employer’s actions are: (1) sufficiently similar in kind; (2) have occurred with reasonable frequency; and (3) have not acquired a degree of permanence. The homophonic conduct against Brome was ongoing and very common, and a jury could find that it was reasonable for Brome to seek a fresh start at a different office and request assistance from his supervisors there once similar problems arose. Further, Brome’s supervisors consistently told him they would look into and address his concerns.

Finally, the court concluded that the constructive discharge theory could possibly apply. To establish constructive discharge, an employee must show that working conditions were so intolerable that a reasonable employee would be forced to resign. The court found that Brome raised a triable issue as to whether his working conditions were so bad a reasonable employee would have resigned. For example, Brome was routinely forced to respond to high-risk situations alone. For these reasons, the court held that the trial court erred in dismissing Brome’s lawsuit. The court remanded the case back to the trial court for further proceedings.

Effective January 1, 2020, the statute of limitations to file a DFEH claim has been extended from 1 to 3 years. Cities have a legal duty to promptly investigate claims of discrimination and harassment to not only limit liability, but to provide a safe and productive workplace for all employees.

U.S. Supreme Court Confirms a “But-For” Causation Standard for Section 1981 Discrimination Claims.

Comcast Corp. v. Nat’l Ass’n of African Am.-Owned Media (2020) 140 S.Ct. 1009

African-American entrepreneur Byron Allen owns Entertainment Studios Network (ESN), which operates seven television networks. For years, ESN sought to have Comcast Corporation (Comcast), a cable television conglomerate, carry its channels. However, Comcast refused and cited lack of demand, bandwidth constraints, and other programming preferences for its decision. ESN then sued Comcast under 42 U.S.C. section 1981 (Section 1981). Section 1981 guarantees that all persons have the same right to make and enforce contracts as is enjoyed by white citizens. ESN alleged that Comcast systematically disfavored “100% African American- owned media companies” and that the reasons Comcast cited for refusing to carry its channels were pretextual.

The case made its way up to the United States Supreme Court (USSC) to resolve a split among the U.S. Circuit Court of Appeals regarding what type of causation is required to prevail in a Section 1981 claim. Some circuits, including the Ninth, say that a plaintiff only needs to show that race played “some role” in the defendant’s decision-making process. Other circuits, however, have held that a plaintiff needs to establish that racial animus was a “but-for” cause of the defendant’s conduct. Under that standard, a plaintiff must demonstrate that if not for the defendant’s unlawful conduct, its alleged injury would not have occurred.

The USSC concluded that in a Section 1981 claim, the plaintiff bears the burden of showing that race was the but-for cause of its injury. The court examined the statute’s language, structure and legislative history to determine that a Section 1981 claims requires but-for causation. For example, the court noted that when it first inferred a private cause of action under Section 1981, it described it as “afford[ing] a federal remedy against discrimination . . . on the basis of race,” which strongly supports a but-for causation standard. The court also noted that the neighboring statute, 42 U.S.C. section 1982, demands the same causation standard.

While ESN argued that the “motivating factor” causation test found in Title VII of the Civil Rights Act should apply, the USSC declined to extend that standard to Section 1981 claims. The court noted that Section 1981 predates the Civil Rights Act by nearly 100 years and does not reference “motivating factors.” The court explained: “[We] have two statutes with two distinct histories, and not a shred of evidence that Congress meant to incorporate the same causation standard.” The court also dismissed ESN’s argument that the motivating factor test should apply only at the pleading phase of a case.

The USSC found that to prevail on a Section 1981 claim, a plaintiff must initially plead and ultimately prove that but-for race, the plaintiff would not have suffered the loss of a legally protected right.

It is far more challenging to establish the but-for causation standard than the motivating factor causation standard. Because the Ninth Circuit previously applied the motivating factor causation standard, this Supreme Court decision moves the goal post to win a Section 1981 claim further down the field.

Nurses’ Jury Verdict Vacated for Failure to Exhaust DFEH Administrative Remedies. Alexander v. Cmty. Hosp. of Long Beach (2020) 46 Cal.App.5th 238 Three nurses, Judy Alexander, Johann Hellmannsberger, and Lisa Harris, worked in the Behavioral Health Unit of the Community Hospital of Long Beach (Community Hospital). Community Hospital contracted with Memorial Psychiatric Health Services (MPHS) to operate its Behavioral Health Unit. Pursuant to the contract, MPHS provided administrative services for the unit and employed and managed its director, Keith Kohl. Community Hospital separately contracted with Memorial Counseling Associates (MCA) to provide physicians for the unit. One of the nurses complained multiple times to Community Hospital’s Director of Education that Kohl discriminated against her in favor of male staff, particularly gay male staff. The nurse also indicated she wanted to file a formal complaint, but the Human Resources Director told her the last person who complained no longer worked there. The nurse never filed a formal complaint and instead transferred to a different shift to avoid Kohl. Later, the three nurses were wrongly accused of using a physical restraint on a patient without a doctor’s order. Kohl subsequently terminated the three nurses. While the nurses found new employment, they were terminated from their jobs after the Department of Justice arrested them for the prior incident at Community Hospital. A jury later acquitted them of criminal charges. Following the nurses’ terminations, a number of other Community Hospital staff complained that Kohl had created a hostile work environment by favoring male employees. Eventually, Community Hospital demanded that MPHS remove Kohl from his position. The three nurses then filed a lawsuit against Community Hospital and MCA for various claims, including violations of the Fair Employment and Housing Act (FEHA). They later amended their civil complaint to name MPHS as a defendant but never filed a Department of Fair Employment and Housing (DFEH) administrative complaint against MPHS. After testimony regarding Kohl’s conduct and favoritism towards gay, male staff, the jury found against Community Hospital on all of the nurses’ claims, and found in favor of MCA. It also found against MPHS on the nurses’ causes of action for negligent supervision and FEHA violations. The jury awarded damages totaling $4,734,973. On appeal, MPHS argued that the court should reverse the judgment against it on the FEHA claims. MPHS argued that because the nurses did not mention MPHS in their DFEH complaint, they never exhausted their administrative remedies. Under the FEHA, a person claiming to be aggrieved by an alleged unlawful practice must first file an administrative complaint with the DFEH stating “the name and address” of the employer alleged to have engaged in the unlawful conduct. While the nurses tried to argue for an exception to the exhaustion requirement, the court dismissed their argument. Since the nurses did not mention MPHS in their DFEH complaint, they could not bring a civil lawsuit against MPHS for

violations of the FEHA. The court also found insufficient evidence to support the negligent supervision verdict against MPHS. Community Hospital also appealed the jury verdict. It argued that the trial court made several errors and that there was insufficient evidence to support one of the nurse’s FEHA and wrongful termination claims. The Court of Appeal agreed. The court reasoned that the trial court errors unfairly conveyed to the jury that Community Hospital was liable. The court also concluded that no evidence suggested that Kohl ever targeted one of the nurses who was a heterosexual male, or that the male nurse (Hellmannsberger) witnessed “severe or pervasive” conduct necessary to support a hostile work environment claim. Accordingly, the court determined that the nurse could not establish that the sexual favoritism was so severe or pervasive as to alter his working conditions or create a hostile working environment. Further, the court concluded that insufficient evidence supported the nurses’ other common law claims for defamation and negligent supervision. This case shows how an employee’s failure to exhaust administrative remedies can eliminate a jury verdict, but only if the issue is properly preserved for appeal.

ADA Case Dismissed After Employer Learned Mid-Litigation That the Plaintiff Did Not Meet the Job Prerequisites. Anthony v. Trax Int’l Corp. (9th Cir. 2020) 955 F.3d 1123 In 2010, TRAX, a contractor for the Department of the Army, hired Sunny Anthony as a Technical Writer. Anthony had a history of post-traumatic stress disorder and related anxiety and depression. After her condition worsened, Anthony obtained leave under the Family and Medical Leave Act (FMLA) in April 2012. Anthony’s physician indicated her condition would likely continue through May 30, 2012. On June 1, 2012, Anthony requested to work from home, but TRAX denied her request. While TRAX extended her FMLA leave another 30 days, the Benefits Coordinator indicated Anthony would be fired if she did not receive a full medical release from her physician by the time her FMLA leave expired. After Anthony did not submit a full release, TRAX terminated her employment on July 30, 2012. Soon after, Anthony filed a lawsuit against TRAX under the Americans with Disabilities Act (ADA) alleging that the company failed to conduct the legally-required interactive process with her and that she was terminated because of her disability. Over the course of the litigation, TRAX discovered that contrary to her representation on her employment application, Anthony lacked the bachelor’s degree required for all Technical Writers. The district court dismissed Anthony’s claims against TRAX, finding that in light of the after-acquired evidence that Anthony did not have a bachelor’s degree, she was not a “qualified individual” entitled to protection under the ADA.

The ADA protects only “qualified individuals” from employment disability discrimination. The law defines a “qualified individual” as “an individual who, with or without reasonable accommodation, can perform the essential functions of the employment position that such individual holds or desires.” The ADA’s implementing regulations further expand this definition of the term “qualified.” Under the regulations, there is a two-step inquiry for determining if the individual is qualified. First, the individual must satisfy the prerequisites of the job. Second, the individual must be able to perform the essential functions of the position, with or without reasonable accommodation. On appeal, the Ninth Circuit affirmed the district court’s dismissal of the case. Anthony argued that the U.S. Supreme Court case McKennon v. Nashville Banner Publishing Co., 513 U.S. 352 (1995) precluded the use of after-acquired evidence to demonstrate that she was unqualified because she failed to satisfy the prerequisites prong. The court disagreed because Anthony’s case was different. In McKennon, the employer had conceded it had unlawfully discriminated against the employee on the basis of age, so it could not use after-acquired evidence of employee wrongdoing to excuse its discrimination by asserting that the employee would have been fired anyway. The Ninth Circuit concluded that the limitation on the use of after-acquired evidence under the McKennon case did not apply to evidence that shows that an ADA plaintiff is not a “qualified individual.” Additionally, the Ninth Circuit found that TRAX had no obligation to have an interactive process with Anthony to identify and implement reasonable accommodations. The court noted that under the ADA, an employer is obligated to engage in the interactive process only if the individual is “otherwise qualified.” The court reasoned that because it was undisputed that Anthony did not satisfy the job prerequisites for the Technical Writer position, she was not “otherwise qualified,” and TRAX was not obligated to engage in the interactive process. Unlike the ADA, California’s anti-discrimination statute does not specifically require that an employee be “otherwise qualified” in order to trigger the right to an interactive process. (Gov. Code § 12940, subd. (n).) In order to prove a case of disability discrimination under California law, however, employees must show prove they are a “qualified individual … who has the requisite skill, experience, education, and other job-related requirements of the employment position such individual holds or desires, and who, with or without reasonable accommodation, can perform the essential functions of such position.” (2 Cal. Code Regs sections 11065(o) and 11066(a).)

Employee Does Not Need to Establish But-For Causation to Prevail Under the ADEA. Babb v. Wilkie (2020) 140 S.Ct. 1168 Noris Babb, who was born in 1960, is a clinical pharmacist at the U.S. Department of Veterans Affairs Medical Center in Bay Pines, Florida. In 2014, Babb sued the Secretary of Veterans Affairs (VA) alleging, among other claims, a violation of the federal Age Discrimination in Employment Act (ADEA). Babb’s age discrimination claim was based on the following personnel actions: (1) in 2013, the VA took away Babb’s “advanced scope” designation, which made her eligible for promotion; (2) she was denied training opportunities and passed over for positions in the hospital’s anticoagulation clinic; and (3) in 2014, Babb was placed in a new position in which her holiday pay was reduced. Babb also alleged that her supervisors made a variety of age-related comments. The district court dismissed Babb’s claims finding, that while Babb established a prima facie case of discrimination, the VA had legitimate reasons for its actions and no jury could reasonably conclude those reasons were pretextual. The case made its way to the U.S. Supreme Court (USSC). The ADEA provides that “all personnel actions affecting employees or applicants for employment who are at least 40 years of age … shall be made free from any discrimination based on age.” On appeal, the VA argued that this provision imposes liability only when age is a but-for cause of an employment decision. In other words, the alleged unlawful conduct would not have occurred but for the employee’s age. Babb, on the other hand, argued that this ADEA language prohibits any adverse consideration of age in the decision-making process. Accordingly, Babb argued that but-for causation of a challenged employment decision was not needed. Ultimately, the USSC relied on the plain meaning of the statutory language to determine that age did not need to be a but-for cause of an employment decision in order for there to be a violation of the ADEA. The court reasoned that while age needed to be a but-for cause of discrimination, it did not need to be a but-for cause of the personnel action itself. It noted that if age discrimination plays any part in the way a decision is made, then the action is not “free from” any discrimination as required by the ADEA. Thus, the court found that the ADEA does not require proof that an employment decision would have turned out differently if age had not been taken into account. However, the USSC found that but-for causation is important in determining the appropriate remedy for an ADEA claim. It reasoned that employees who demonstrate only that they were subjected to unequal consideration cannot obtain reinstatement, back pay, compensatory damages, or other forms of relief related to the end result of an employment decision. To obtain such remedies, these employees must show that age discrimination was a but-for cause of the employment outcome. This case stands in contrast to Comcast Corp. v. National Association of African American- Owned Media, discussed above, where the USSC confirmed a “but-for” causation standard for

Section 1981 discrimination claims. Accordingly, cities should be aware that different types of discrimination claims may use different causation standards.

Trial Court Properly Dismissed Discrimination Claims Against Staffing Agencies. Ducksworth v. Tri-Modal Distribution Servs. (2020) 47 Cal.App.5th 532 Bonnie Ducksworth and Pamela Pollock are customer service representatives at Tri- Modal Distribution Services (Tri-Modal). Both Ducksworth and Pollock applied for their positions at Tri-Modal through Scotts Labor Leasing Company, Inc. (Scotts), a staffing agency. Accordingly, Scotts hired Ducksworth and Pollock, and leased them to Tri-Modal in 1996 and 1997, respectively. In 2006, another staffing agency, Pacific Leasing, Inc. (Pacific), took over Scotts’ role for Ducksworth and Pollock. Both Scotts and Pacific were responsible for tracking and processing payroll, health insurance, workers’ compensation, and other payments for employees leased to Tri-Modal. However, Scotts and Pacific were not involved in the day-to-day supervision of Ducksworth and Pollock. For example, Tri-Modal set their work schedules and provided them with their work assignments. The decision to give any employee leased by Scotts or Pacific to Tri-Modal a raise was made solely by Tri-Modal. After failing to be promoted for decades, Ducksworth and Pollock sued Tri-Modal, Scotts, and Pacific for racial discrimination under the Fair Employment and Housing (FEHA). Pollock also alleged sexual harassment against Tri-Modal and its executive vice president, Mike Kelso. Pollock alleged that after she ended a dating relationship with Kelso, he blocked her promotions. The trial court dismissed the racial discrimination claim against Scotts and Pacific because undisputed evidence showed that Tri-Modal solely made the decision to promote an employee. The trial court also dismissed Pollock’s sexual harassment claim against Kelso based on the statute of limitations. Ducksworth and Pollock appealed. On appeal, the court affirmed the trial court’s decision to dismiss the racial discrimination claim against Scott and Pacific. The court noted that because they were not involved in the decisions Ducksworth and Pollack attacked, they could not be liable for discrimination. The court also confirmed that the trial court correctly dismissed Kelso from the action. Under the FEHA at that time, an employee was required to first file a complaint with the Department of Fair Employment and Housing (DFEH) within one year from the alleged misconduct. Pollock filed her DFEH complaint on April 18, 2018, so she could only bring claims for conduct occurring after April 18, 2017. While the decision to promote another employee over Pollock was made in March 2017, Pollock alleged that her DFEH complaint was still timely because the promotion did not take effect until May 1, 2017. However, the court disagreed. The court noted that based on the language of the FEHA, the statute of limitations for a failure to promote claim runs from when the employer tells the employee they have been given (or denied) a promotion. Accordingly, because alleged misconduct occurred before April 18, 2017, Pollock’s claim was barred by the statute of limitations.

This case demonstrates the importance of evaluating the statute of limitations for an employee alleging claims under the FEHA.

Trial Court’s Series of “Grave Errors,” Including Improperly Admitting Unrelated DFEH Complaints as “Me Too” Evidence and Reviving an Issue That Had Already Been Summarily Adjudicated, Warranted Reversal of $13 Million Jury Verdict. Pinter-Brown v. Regents of University of California (2020) 48 Cal.App.5th 55 Dr. Lauren Pinter-Brown sued The Regents of the University of California (The Regents) for gender discrimination based on a series of events that took place while she was a Professor of Medicine at UCLA. The jury found in favor of Dr. Pinter-Brown and awarded her more than $13 million in economic and noneconomic damages. However, due to what the Court of Appeal characterized as a “series of grave errors that significantly prejudiced The Regents’ right to a fair trial by an impartial judge,” the Court of Appeal reversed. First, the trial court delivered a presentation to the jurors highlighting major figures from the women’s suffrage and civil rights movements and told the jury their duty was to stand in the shoes of Dr. Martin Luther King and bend the arc of the moral universe toward justice. After the trial court’s presentation, counsel for The Regents moved for a mistrial, but the judge denied the motion, believing that his presentation did not prejudice the jury. The Court of Appeal found that the trial court had framed the case as part of a centuries-long fight against discrimination and inequality which stacked the deck against The Regents. Second, the trial court allowed the jury to hear about substantial “me too” evidence in the form of a long list of all Department of Fair Employment and Housing (DFEH) complaints from across the entire University of California system over a more than five year period. The Court of Appeal noted that “me too” evidence can be admissible to prove intent and motive as to the plaintiff’s own protected class, which could establish that an employer’s stated reason was pretext. However, the admissibility of “me too” evidence hinges on how closely related the evidence is to the plaintiff’s circumstances and theory of the case, and the “me-too” doctrine does not permit a plaintiff to present evidence of discrimination against employees outside the plaintiff’s protected class to show discrimination or harassment against the plaintiff. The Court of Appeal held that the evidence should not have been admitted because there was no information about who the alleged victims in the DFEH complaints were, which departments employed the complainants or who their supervisors were, whether they complained to the medical school, or whether the complaints had any merit, nor was there any information about the factual scenarios underlying the complaints. The Court of Appeal held evidence was run of the mill, impermissible propensity evidence which should never have been presented to the jury. Third, the trial court improperly allowed the jury to learn of the contents and conclusions of a report prepared by retired California Supreme Court Justice Carlos Moreno following an investigation into racial and ethnic bias and discrimination at UCLA. Although the trial court did not allow the report itself into evidence on hearsay grounds, it allowed the plaintiff to ask

multiple witnesses extensive questions about the report’s findings and impermissibly allowed the contents of the otherwise inadmissible report to come in through the witnesses. The Court of Appeal noted that secondary evidence of a document that is hearsay is “no more admissible” than the document itself, “which is to say, not at all.” Finally, despite the trial court having earlier summarily adjudicated Dr. Pinter-Brown’s FEHA retaliation claim in The Regents’ favor, the trial court allowed Dr. Pinter-Brown to “amend” her complaint according to proof after the close of evidence to resurrect the very same retaliation claim. The Court of Appeal observed that the purported amendment was nothing more than the original retaliation cause of action with the phrase “Retaliation for Complaining of Gender Discrimination and/or Harassment” changed to “Retaliation for Opposing Gender Discrimination and/or Harassment.” The Court of Appeal held that once the trial court adjudicated the retaliation claim, the judgment as to that issue was final and could not be revived. Moreover, the Court of Appeal said it was highly prejudicial for The Regents to have that judgment nullified at the close of evidence and to then have to argue an issue it could not have reasonably been expected to defend. The Court of Appeal held the trial court’s cumulative errors were highly prejudicial warranting reversal in that they evidenced the trial court’s inability to remain impartial, creating the impression that the court was partial to Dr. Pinter-Brown’s claims. This case is extremely helpful for its thorough discussion of the circumstances under which “me too” evidence is not admissible.

Title VII Protects Gay and Transgender Employees. Bostock v. Clayton Cty., Georgia (2020) 140 S. Ct. 1731 The U.S. Supreme Court (USSC) considered three similar cases regarding whether Title VII’s non-discrimination protections apply to gay or transgender employees. In each case, the employee sued the employer under Title VII of the Civil Rights Act of 1964 alleging unlawful discrimination on the basis of sex. In the first case, Gerald Bostock worked as a child welfare advocate for Clayton County, Georgia. After Bostock began participating in a gay recreational softball league, influential community members made disparaging comments about his sexual orientation. Not long after, the county fired Bostock for conduct “unbecoming” of a county employee. In the second case, Donald Zarda worked as a skydiving instructor at Altitude Express in New York. A few days after Zarda mentioned he was gay, the company fired him. In the third case, Aimee Stephens worked at R. G. & G. R. Harris Funeral Homes in Garden City, Michigan. When Stephens first started working at the funeral home, she presented as male. Two years into her service with the company, Stephen’s clinicians diagnosed her with gender dysphoria and recommended that she begin living as a woman. After Stephens wrote a

letter to her employer explaining that she planned to live and work full-time as a woman, the funeral home fired her, telling her “this is not going to work out.” Title VII provides that it is “unlawful … for an employer to fail or refuse to hire or to discharge any individual, or otherwise discriminate against any individual … because of such individual’s race, color, religion, sex, or national origin.” Accordingly, the USSC evaluated whether discrimination because of someone’s sexual orientation or gender identity was discrimination on the basis of sex. The USSC concluded that an employer who fires an individual merely for being gay or transgender violates Title VII. The court analyzed the Title VII statute and previous USSC decisions. The parties conceded that the term “sex” referred to the biological distinctions between male and female. However, the Court noted that the inquiry did not end there. The USSC also reasoned that the phrase “because of” incorporated a “but-for” causation standard into Title VII. This means that an employer cannot avoid liability just by citing some other non- discriminatory factor that contributed to its challenged employment action. The USSC also noted that in so-called “disparate treatment” cases, the Court has held that the difference in treatment must be intentional. Finally, the Court recognized that the statute’s repeated use of the term “individual” means that the focus is on “a particular being as distinguished from a class.” Using this analysis, the USSC announced the following rule: an employer violates Title VII when it intentionally fires an individual based in part on sex. Because discrimination of the basis of homosexuality or transgender status requires an employer to intentionally treat individual employees differently because of their sex, an employer who intentionally penalizes an employee for being homosexual or transgender violates Title VII. Unlike Title VII of the Civil Rights Act of 1964, FEHA expressly prohibits sexual orientation discrimination and explicitly defines discrimination on the basis of sex to include gender identity and gender expression. (Gov. Code §§ 12926, subd. (r) & (s).)

Service in Work Release Program is Not Employment Under the FEHA.

Talley v. County of Fresno (2020) 51 Cal.App.5th 1060

Ronald Talley is physically disabled and has to wear a foot brace to walk. He pleaded nolo contendere to a criminal offense. Instead of serving his 18-day sentence in Fresno County Jail, Talley was eligible to participate in the Adult Offender Work Program (AOWP) administered by Fresno County’s Probation Department. Talley was injured while performing work in the AOWP and received workers’ compensation benefits. Talley then sued Fresno County alleging, among other things, that the County violated the FEHA by failing to both accommodate his physical disability and to engage in the interactive process with him.

Because the FEHA generally protects employees only, Talley’s claims rested on the theory that AOWP participants are County employees for the purposes of the FEHA. However, the County argued that because Talley was not paid for his time in the AOWP, he was not an employee under the FEHA. The County also argued that Talley’s non-FEHA claim was barred by workers’ compensation exclusivity. The trial court agreed and entered judgment in favor of the County on all of Talley’s claims. Talley appealed.

On appeal, the Court of Appeal affirmed the trial court’s decision to enter judgment in favor of the County on all of Talley’s claims. The Court of Appeal found that being paid is an essential condition to establish employee status under the FEHA. Because Talley did not receive direct or indirect pay, he was not an employee for purposes of the FEHA.

This decision clarifies who is considered an employee under FEHA so that cities can better understand when workers who do not fit within the traditional category of a paid employee are covered by FEHA.

Employee Did Not Prove Discriminatory Animus For Supervisors’ Age-Related Comments.

Arnold v. Dignity Health (2020) 53 Cal.App.5th 412.

Virgina Arnold worked at Dignity Health (Dignity) as a medical assistant. During her employment, Arnold received numerous verbal and written warnings for various performance deficiencies. In September 2012, Arnold’s supervisor issued her a final written warning and three-day suspension for failing to follow Dignity’s process for addressing scheduling errors. Arnold’s union grieved her final warning and a previous warning. Dignity and the union agreed to reclassify Arnold’s prior warnings to a lesser level of warning. Under the agreement, Dignity also issued a new final written warning and three-day suspension for additional instances of misconduct that occurred while the grievance was pending.

In June 2013, Arnold’s supervisor contended that Arnold threw away a specimen cup still containing patient health information. Arnold refused to take responsibility when her supervisor questioned her and blamed a co-worker. Arnold’s supervisor also learned that Arnold kept a photograph of a male model with his shirt unbuttoned in a cupboard near her desk, which her supervisor concluded was inappropriate in the workplace.

Given Arnold’s previous discipline, Dignity determined that termination was necessary. Arnold’s supervisor provided her with a letter explaining she was being terminated for: (1) failure to safeguard personal health information, a Health Insurance Portability and Accountability Act (HIPAA) violation; (2) display of inappropriate materials in the workplace; (3) careless performance of duties; (4) failure to communicate honestly during the course of the investigation; and (5) failure to take responsibility for her actions.

Following her termination, Arnold initiated a lawsuit against Dignity and other employees alleging discrimination, harassment, and retaliation based on her age and her association with her African-American coworkers in violation of the California Fair Employment and Housing Act (FEHA). Arnold is over seventy and African-American. To support her age claims, Arnold cited multiple instances when her supervisors commented on her age and asked about her plans for retirement. Arnold claimed that after learning she had recently celebrated her birthday, one of her supervisors stated, “Oh, I never knew you were that old” and “Oh, how come you haven’t retired?” To support her association claims, Arnold alleged Dignity failed to follow up on a complaint she made that her African-American coworkers were being mistreated.

Ultimately, the trial court decided in favor of Dignity’s pre-trial motion, finding that Dignity established legitimate, non-discriminatory reasons that were not pretextual for terminating Arnold’s employment. Arnold appealed the trial court’s decision regarding her claims for discrimination based on her age and association with African-Americans.

The FEHA makes it unlawful for an employer to discriminate against an employee because of several protected classifications, including age and association with those of a protected status. California courts use a three-stage burden-shifting test to analyze FEHA discrimination claims. Under this test, the employee must first establish the essential elements of a discrimination claim. If the employee can do so, the burden shifts back to the employer to show that the allegedly discriminatory action was taken for a legitimate, non-discriminatory reason. If the employer meets this burden, the presumption of discrimination disappears and the employee then has the opportunity to attack the employer’s legitimate reason as pretext for discrimination.

On appeal, Arnold argued that the trial court was wrong to enter judgment in favor of Dignity because Arnold had presented evidence that Dignity’s reasons for terminating her employment were not credible. She also argued she presented substantial evidence of age and association discrimination, including that her supervisors repeatedly used age-based discriminatory language and did not respond to her complaints regarding racially prejudiced behavior toward other African-American employees. The Court of Appeal, however, found that the trial court properly entered judgment in favor of Dignity.

Regarding Arnold’s age discrimination claim, the court noted that the supervisors who made comments about her age were not materially involved in the decision to terminate her employment. Thus, any comments Arnold’s supervisors made did not support the conclusion Dignity terminated her based on discriminatory animus. The court also concluded that age-based comments - such as the supervisors saying they did not know she was “that old” or asking her why she had not retired - did not indicate a discriminatory motive. The court opined that the comments one of Arnold’s supervisors made around her birthday occurred during “a natural and appropriate occasion for discussing a person’s age and future plans.”

As to Arnold’s association discrimination claim, the court found that the employee to whom Arnold complained about the mistreatment of other African-American employees was also not involved in Arnold’s termination. There was no evidence that anyone involved in the decision to terminate Arnold’s employment knew about her complaint or that it factored into the determination to fire Arnold. Accordingly, the Court of Appeal held that the trial court did not err in entering judgment in favor of Dignity for Arnold’s claim for association discrimination.

This case concluded that the comments Arnold’s supervisors made about her age did not indicate a discriminatory motive, and were “benign and even complimentary.” Regardless, any age- related comments in the workplace are dangerous and liability in these cases is often highly fact- specific.

Continuing Violation Exception Saves Sexual Harassment Claims. Blue Fountain Pools and Spas Inc. v. Superior Court of San Bernardino County (2020) 53 Cal.App.5th 239 Daisy Arias worked for Blue Fountain Pools and Spas (Blue Fountain). While Arias was working for Blue Fountain, she experienced sustained, egregious sexual harassment, primarily from a salesperson named Sean Lagrave who worked in the same office. Arias repeatedly complained about Lagrave’s conduct over the course of her decade-long employment. In April 2017, Lagrave yelled at her, used gender slurs, and physically assaulted her. Arias told the owner of Blue Fountain at the time, Farhad Farhadian, that she wasn’t comfortable returning to work with Lagrave. Farhadian refused to remove Lagrave and subsequently terminated Arias’ health insurance. Before Farhadian told Arias to pick up her final paycheck, he had repeatedly ignored her complaints and participated himself in creating a sexualized office environment. Arias then filed a complaint with the California Department of Fair Employment and Housing (DFEH) and sued Blue Fountain, Farhadian, and Lagrave alleging, among other claims, sexual harassment and failure to prevent sexual harassment. Blue Fountain, Farhadian, and Lagrave filed a motion to have the claims dismissed. The trial court denied their motion. Blue Fountain, Farhadian, and Lagrave brought a petition for writ of mandate to renew their argument that Arias’ claims were barred by the statute of limitations. Under the Fair Employment and Housing Act (FEHA) at the time this case began, an employee was required to first file a complaint with the DFEH within one year of the alleged misconduct. However, courts recognize an exception for continuing violations. To establish a continuing violation, an employee must show that the employer’s actions are: (1) sufficiently similar in kind; (2) have occurred with reasonable frequency; and (3) have not acquired a degree of permanence. In their writ petition, Blue Fountain, Farhadian, and Lagrave argued that Arias could not meet the third element– that Blue Fountain’s actions had acquired a degree of permanence – because Arias admitted she felt that further complaints about the hostile work environment were futile after the company’s prior management failed to address her numerous complaints. The Court of Appeal disagreed.

First, the Court of Appeal noted that Arias presented evidence of several incidents of sexual harassment that occurred in the one year preceding her termination that were within the complaint-filing period. Accordingly, the court concluded it would have been improper for the trial court to dismiss her claims, even if it determined the incidents outside the limitations period could not be the basis for liability. Second, the court found that while Arias had been subject to sexual harassment since she started working at Blue Fountain in 2006, Farhadian purchased the company and took over operations in January 2015. Thus, even if the conduct of prior management made Arias’ further complaining futile, the arrival of new management created a new opportunity to seek help and Arias could establish a continuing violation with respect to all of the complained of conduct that occurred during Farhadian’s ownership. Finally, the court identified a factual dispute over whether and when Blue Fountain made clear no action would be taken and whether a reasonable employee would have decided complaining was futile. Because Arias continued making complaints and tried complaining to different people, the Court of Appeal reasoned that this question needed to be resolved by a jury, not the trial court. Accordingly, the court denied Blue Fountain, Farhadian, and Lagrave’s writ petition and concluded that Arias’ claims could proceed to trial. Effective January 1, 2020, an employee now has three years, instead of the one year, from the date of the allegedly discriminatory conduct to file an administrative complaint with the DFEH. (Gov. Code § 12960(e).)

RETALIATION

General Information about Retaliation can be found in the Municipal Law Handbook, Chapter 4, “Personnel,” Section VI, “Employee Rights Against Retaliation.” http://onlaw.ceb.com/onlaw/gateway.dll?f=templates&fn=default.htm&vid=OnLAW:CEB

A Violation of Guidelines That Employee Created Was Not Sufficient to Support His Labor Code Section 1102.5 Whistleblower Claim.

Nejadian v. County of Los Angeles (2019) 40 Cal.App.5th 703

Patrick Nejadian worked for the County of Los Angeles (County) as a Chief Environmental Health Specialist in the land use program. That program dealt with private wells and on-site wastewater treatment systems (i.e., septic systems) on properties without access to public water or sewer systems.

After working in the land use program for several years, Nejadian took it upon himself to develop guidelines that would standardize the requirements for septic systems across all County offices. By the end of 2009, he had completely rewritten the former set of guidelines and

procedural documents for on-site wastewater treatment systems. His guidelines are now used throughout the County, with only minor modifications.

After the 2010 Station Fire destroyed multiple homes in Tujunga Canyon, the County’s Director of Environmental Health Division, Angelo Bellomo, told Nejadian to disregard several of the guidelines’ requirements in order to have several homes rebuilt. Nejadian refused, but the projects were ultimately approved by Nejadian’s superiors. Nejadian responded by refusing to cooperate with the changes and requested a transfer every six months thereafter.

Nejadian also revised a set of guidelines that addressed rebuilding structures following a fire or other natural disaster. He revised the guidelines, but according to Nejadian, management amended them by watering down the requirements he had drafted and disregarding the County Code sections that were involved. Nejadian told Bellomo and other managers that he disagreed with management’s amendments and that they violated the County Code.

Nejadian sued the County and his claims for age discrimination and retaliation under FEHA proceeded to a jury trial. Nejadian claimed that the County refused to approve his transfer requests and failed to promote him in retaliation for his actions. After two days of trial, the Court permitted Nejadian to amend his complaint to add a cause of action for violation of Labor Code section 1102.5(c). The jury found for Nejadian and awarded him almost $300,000 in damages. The County appealed the decision, claiming that Nejadian had failed to prove his claims.

Labor Code section 1102.5(c) prohibits employers from retaliating “against an employee for refusing to participate in an activity that would result in a violation of state or federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation.”

The Court of Appeal held that in order for Nejadian to prevail on his Section 1102.5(c) cause of action, he was first required to prove that the conduct he refused to participate in would result in an actual violation of or noncompliance with a local, state, or federal statute, rule, or regulation. But, Nejadian failed to show that any actual laws, rules, or regulations were violated. In fact, Nejadian appeared to rely on the fact that his guidelines were being violated. The Court of Appeal held that the fire-rebuild guidelines were not statutes, rules, or regulations; they were simply guidelines, and did not fall within the scope of section 1102.5(c). Therefore, as a matter of law, Nejadian failed to establish the minimum requirements to support his case for violation of Section 1102.5(c).

This case confirms that a violation of a guideline is not sufficient to support a Labor Code Section 1102.5(c) violation. Instead, an employee bears the burden of proving that an actual violation of a local, state, or federal statute, rule, or regulation would occur if he participated in a specific activity.

Employees Win Labor Code Section 1102.5 Whistleblower Lawsuit by Showing a Causal Link Between Their Protected Activity and Their Terminations.

Hawkins v. City of Los Angeles (2019) 40 Cal.App.5th 384

City of Los Angeles Department of Transportation (City DOT) hearing examiners Todd Hawkins and Hyung Kim sued the City. They claimed that they were fired in retaliation for whistleblowing on the City DOT’s alleged conduct to pressure hearing examiners to change their decisions. The employees prevailed on their Labor Code section 1102.5 whistleblower retaliation claim and received an award of attorneys’ fees. The City appealed the verdict.

The parking adjudication division of the City DOT handles appeals from individuals who contest their parking fines, citations, and impounds. Dissatisfied individuals can request a hearing. A hearing examiner presides over the hearing, which provides “an independent, objective, fair, and impartial review of contested parking violations.” Hawkins and Kim were part-time hearing examiners, who worked on an as-needed basis.

In 2012, Hawkins and Kim began reporting City DOT Office Manager Carolyn Walton- Joseph for pressuring hearing officers to change their decisions, which they claimed deprived individuals of their due process. In August 2012, Kim wrote a letter to his division head reporting Walton-Joseph’s actions. In May 2013, Hawkins wrote to DOT’s General Manager, Jamie de la Vega, regarding Walton-Joseph’s actions, and included Kim’s 2012 letter. The City opened an investigation into Hawkins’s and Kim’s allegations.

In October 2013, the investigator concluded that although Walton-Joseph and another manager, Kenneth Heinsius, forced hearing examiners to change decisions, they had not abused their authority. The City DOT then fired Hawkins in November 2013 and fired Kim in December 2013.

At trial, the jury found that the City DOT had violated the Labor Code section 1102.5 whistleblower statute by retaliating against Hawkins and Kim. On appeal, the court held that Hawkins and Kim had established a causal link by the one to two months’ proximity in time between the completion of the investigation into their complaints and their firings. Additionally, the court found that the City DOT’s reasons for firing Hawkins and Kim were pretextual, in part, because they were not fired soon after their allegedly poor behavior, but soon after they complained about being pressured to change their decisions.

In the published portion of the case, the Court of Appeal upheld the attorneys’ fees award, due to the interference in the hearing process, which deprived the public “of independent and impartial hearings.”

This case demonstrates that a city must be able to show a legitimate reason for terminating an employee whistleblower. The court was influenced by the fact that the city continued to employ the whistleblowers despite their allegedly poor behavior.

Police Officer Fails to Timely File a Government Claim in Labor Code Section 1102.5 Whistleblower Retaliation Case. Willis v. City of Carlsbad (2020) 48 Cal.App.5th 1104 James Willis began his employment with the City of Carlsbad’s Police Department in 2008. In 2012, Willis created a fictitious email account under a pseudonym, wrote a critical email about another detective who worked in his unit, and sent the email to various news organizations and government entities. Willis admitted that he wrote the email during an internal investigation several months later. In 2013, Willis was reassigned from the crimes of violence unit to patrol. In 2014, Willis was promoted to corporal and elected president of the local police officer’s association. In 2015, Willis complained that the Department’s monthly performance review for patrol officers constituted an illegal quota under the Vehicle Code because it collected statistical data about arrests and citations. Later that year, Willis was not selected for a promotion to sergeant. In December 2015, Willis filed a complaint with the Department of Fair Employment and Housing and a government tort claim against the City, including, among other allegations, retaliation based on his reassignment to patrol in 2013 and failure to be promoted in 2015. The City deemed all acts occurring before June 2015—six months before the date it received Willis’s claim—untimely because they occurred beyond the six-month period to present a claim under the Government Claims Act. In 2016, Willis then brought a civil lawsuit against the City, alleging in part that the City engaged in whistleblower retaliation in violation of Labor Code section 1102.5 by denying him promotions after he reported alleged misconduct by another officer in 2012 and complained in 2015 about the Department program he believed was an unlawful quota system. Before trial, the City successfully moved to strike Willis’s allegations of retaliatory acts that occurred before June 2015 on the grounds that he failed to timely present a government tort claim. The jury ultimately found that the City denied Willis a promotion in part because he reported that the City had engaged in unlawful conduct. However, the jury also found that the City would have still denied Willis the promotion for legitimate independent reasons, and therefore, the court entered judgment for the City on the whistleblower retaliation claims. Willis appealed, claiming the trial court erred by striking certain allegations outside of the Government Claims Act’s six-month deadline. Willis argued that the deadline to file a government tort claim was either equitably tolled, or his whistleblower retaliation claim had not accrued by reason of the continuing tort/continuing violation doctrine. First, the Court of Appeal determined that the doctrine of equitable tolling, which suspends a statute of limitations under certain circumstances to ensure fairness, cannot be invoked to suspend the six-month deadline under the Government Claims Act because the deadline to file a government claim is not a statute of limitations. A statute of limitations is intended to prevent a party from being surprised by a claim after evidence has been lost, memories have faded and witnesses have disappeared. However, the government claim deadline

serves a different purpose - to give a public entity prompt notice of a claim to enable it to adequately investigate and settle the claim prior to litigation to avoid taxpayer expense. The court stated that these public policy considerations would not be served by tolling the government claim deadline while a plaintiff pursues other legal remedies against a public entity. Second, the Court of Appeal concluded that the six-month deadline to file a government claim could not be extended by the continuing violation doctrine. Unlike equitable tolling, which stops (or “tolls”) the statute of limitations, the continuing violation doctrine affects the timing on when the cause of action accrued. The continuing violation doctrine provides that conduct that occurs outside a statute of limitations period may still be actionable if the conduct is sufficiently connected to conduct within the limitations period. To establish a continuing violation, an employee must show that the employer’s actions are: (1) sufficiently similar in kind; (2) have occurred with reasonable frequency; and (3) have not acquired a degree of permanence. However, the court determined that Willis’s allegations, including reassigning him and denying him promotions, were permanent at the time the personnel decisions were made, which precluded application of the continuing violation doctrine. For these reasons, the Court of Appeal held the trial court did not abuse its discretion in striking allegations from Willis’s complaint due to his failure to present a timely government claim. This case confirms that courts generally interpret an employee’s six-month deadline to file a government claim for personal injuries under the Government Claims Act as a strict deadline. Also, while a public employee is not required to file a government claim for Fair Employment and Housing claims, a public employee is required to file a government claim prior to suing for violations of section 1102.5.

EMPLOYEE EVALUATIONS AND DISCIPLINE

General Information about Evaluations and Discipline can be found in the Municipal Law Handbook, Chapter 4, “Personnel,” Section IX, “Evaluating and Disciplining Employees” as well as Section X, “Employee Separation and Termination.” http://onlaw.ceb.com/onlaw/gateway.dll?f=templates&fn=default.htm&vid=OnLAW:CEB

Civil Service Commission Abused Its Discretion by Reducing Deputy’s Discipline For Dishonesty And Failure to Report Use of Force.

County of Los Angeles v. Civil Service Com. of County of Los Angeles (2019) 40 Cal.App.5th 871

In 2010, Los Angeles County Sheriff’s Department (Department) Deputies Mark Montez and Omar Lopez strip-searched an inmate who stole items from a commissary cart. Lopez searched the inmate while Montez monitored the hallway to provide security. During the search, Lopez struck the inmate multiple times with his fist. Montez was aware of the assault, but did not participate.

After the inmate threatened the commissary employee who reported the theft, Lopez took the inmate to a control booth and shoved his face into a wall, causing severe bleeding. Montez was not present during the second assault, but he arrived shortly thereafter. Montez also stood in front of the bloody wall, which led the Department to determine he was aware of the second assault. Montez did not report either assault. A custody assistant, a non-sworn employee working in the facility, also observed the second assault but did not report it.

In the subsequent investigation, Montez denied hearing any indications of assault during the first incident, and denied observing blood on the wall after the second incident. As a result, the County terminated Montez for failing to report the use of force and making false statements during the investigation.

Montez appealed his discharge to the County’s Civil Service Commission. The Commission found that the Department had proven the misconduct. But, the Commission decided Montez’s penalty was too severe because of the lesser penalty a non-sworn custody assistant received. The custody assistant, who witnessed but failed to report the second assault, also made false statements during the investigation. The custody assistant, however, received only a five-day retraining discipline with pay. The Commission reduced Montez’s discharge to a 30-day suspension without pay.

The County petitioned the trial court to overturn the Commission’s penalty determination. The trial court agreed with the County, and issued an order directing the Commission to set aside its decision to reduce Montez’s discipline. Montez appealed.

On appeal, the court determined that the Commission abused its discretion when it reduced Montez’s discipline. Courts will not change the disciplinary penalty that an administrative body – like the Commission – imposes, unless there has been an abuse of discretion. In public employee discipline cases, the primary consideration in assessing the disciplinary penalty is the extent to which the employee’s conduct resulted in harm to the public service. Other relevant factors are the circumstance surrounding the misconduct, and the likelihood of its recurrence. If the administrative body’s findings are not in dispute, however, an abuse of discretion occurs when the findings do not support its decision.

In this case, the Commission’s findings were not in dispute. Montez had failed to report two incidents of inmate abuse and had not been truthful in the Department’s investigation. Peace officers are held to higher standards of conduct than civilian employees. Courts consider peace officer dishonesty to be highly injurious to the employing agencies and the public service. The court concluded that Montez’s failure to report two incidents of abuse of an inmate constituted an “inexcusable neglect of his duty to safeguard the jail population,” and his lies during the subsequent investigation “brought discredit upon his position and department, and forever undermined his credibility.”

Moreover, Montez never recanted the false statements he made to the Department’s investigators, and repeated them at the hearing before the Commission. The court found that honesty is not an isolated or transient behavior; instead, it is a continuing trait of character. The court found that the County did not need to retain deputies who lie to protect other deputies who harm inmates.

Thus, the court found that the Commission’s decision to reduce Montez’s discharge to a 30-day suspension was unsupported by its own findings.

This case is another in a long line of cases that finds that termination is an appropriate penalty for peace officer dishonesty. Also important to this decision was that the deputy continued to be dishonest at his appeal hearing.

Deputy Sheriff’s Probationary Period Lawfully Extended During Time He Was Completely Relieved of Duty.

Amezcua v. Los Angeles County Civil Service Commission (2019) 44 Cal.App.5th 391

In January 2015, the Los Angeles County Sheriff’s Department hired David Amezcua as a Deputy Sheriff Generalist. The Department placed him on a 12-month probationary period pursuant to the County’s Civil Service Rules. Under those rules, the probationary period cannot be less than six months nor more than 12 months. However, the rules also provide that if an employee is absent during the probationary period, the appointing power can calculate the probationary period on the basis of actual service, exclusive of the time away. Determining when the probationary period ends is important because an employee on probation can be terminated without a hearing, but a permanent employee cannot.

In July 2015, Amezcua became the subject of an administrative investigation. A female inmate at the detention center where he worked complained that he had asked her inappropriate personal questions and expressed a desire to have a relationship with her. A few days later, the Department placed Amezcua on Relieved of Duty status.

In August 2015, the Department sent Amezcua a letter notifying him that his probationary period was being extended because he had been absent as a result of his Relieved of Duty status.

On July 18, 2016, even though the administrative investigation was deemed unresolved, the Department terminated Amezcua without a hearing. The Department concluded that Amezcua had a “propensity to engage in inappropriate communication with inmates, lack of attention to safety, unethical conduct, and poor judgment.” Amezcua filed an appeal of his termination with the Civil Service Commission, but the Commission denied his appeal. Amezcua subsequently filed an amended appeal, which the Commission again denied.

Amezcua then petitioned the superior court to review the Commission’s denial of his appeal. Amezcua alleged that the Department violated the Public Safety Officers Procedural Bill of Rights Act by denying him an administrative appeal. Amezcua argued that he was never absent from duty and that his firing as a probationary employee was improper because he became a permanent employee in January 2016, that is, 12 months from the date of his hire. The superior court denied Amezcua’s petition, finding that “there should be no dispute that [Amezcua] was absent from duty when he was on relieved on duty status.” Thus, the Department was entitled to extend his probationary period and terminate him without a hearing. Amezcua appealed.

First, Amezcua argued to the Court of Appeal that the Department was not authorized to extend his probationary period. The Court of Appeal rejected this argument and found that the plain words of the County rules permit the “appointing power,” in this case, the Department, to “calculate the probationary period on the basis of actual service exclusive of time away.”

Second, Amezcua argued that because he was paid while on Relieved of Duty status, the Department could not exclude this time from his probationary period. Once again, the court disagreed, concluding that the rules made no reference as to whether his absence was paid or unpaid.

Finally, Amezcua argued that he was engaged in the duties of a deputy sheriff while he was on Relieved of Duty status, and thus was not absent from duty. However, Amezcua was not able to describe what, if any, duties he performed while on Relieved of Duty status.

Accordingly, the Court of Appeal concluded the superior court properly denied Amezcua’s petition. Amezcua was a probationary employee at the time of his termination, and not entitled to a hearing to challenge the discipline.

Cities do not need cause to release employees during the probationary period. As a result, cities should carefully track the length of a probationary period. This case approved a rule that excluded leave time from the probationary period. Such a provision helps ensure that a city has the benefit of the entire probationary period to evaluate the employee.

Civil Service Rules Prevented the Extension of a Sheriff Deputy’s Probationary Period For Time He Was Assigned to Administrative Non-Peace Officer Duties.

Trejo v. County of Los Angeles (2020) 50 Cal.App.5th 129

Christopher Trejo began work as a deputy sheriff with the Los Angeles County Sheriff’s Department (“Department”) in February 2014. Pursuant to the County’s Civil Service Rules (“Rules”), deputy sheriffs serve 12-month probationary periods before promotion into a permanent position, based on the employee’s performance of the essential duties of the position. The rules also provide that a probationary period shall not last more than 12 months from the date of appointment. However, the County may stop the 12-month clock if the employee is absent from duty. The Rules allow the County to then recalculate the length of time remaining on probation “on the basis of actual service exclusive of the time away.” The Rules define “actual service” as “time engaged in the performance of the duties of a position or positions including absences with pay.”

In June 2014, the Department investigated whether Trejo violated the Department’s use- of-force policies. Pending the investigation, Trejo was relieved of duty and reassigned to administrative duties in the records unit. In this assignment, Trejo did not perform all of the essential duties of a deputy sheriff.

In August 2014, the Department extended Trejo’s probationary period because he was relieved of peace officer duties during the investigation. The Department informed Trejo that his probationary period would be recalculated upon his return to assigned duty as a deputy sheriff.

In January 2016, the Department released Trejo from probation. Although the Department’s letter informed Trejo of certain appeal rights, it did not notify Trejo of any rights to a Skelly hearing or other due process procedures because it did not consider Trejo to be a permanent employee. Following a name-clearing hearing, the Department issued a decision confirming Trejo’s termination.

Trejo filed a request for a hearing before the Civil Service Commission, asserting he was a permanent employee at the time of his termination. The Commission determined that Trejo’s petition was untimely and made no ruling on whether he was entitled to pre-termination rights.

Trejo then filed a petition for writ of mandate in superior court against the County, claiming that the Department unlawfully extended his probationary period. The trial court granted the petition and ordered the County to set aside Trejo’s dismissal on the grounds that he was a permanent employee entitled to pre-disciplinary rights.

The County appealed, claiming that the trial court: (i) relied on an erroneous interpretation of the Rules; and (ii) lacked jurisdiction because Trejo failed to exhaust his administrative remedies. The Court of Appeal disagreed on both counts.

First, the Court of Appeal examined the plain language of the Rules and held that the time Trejo spent on administrative duty in the records unit was “actual service,” and therefore, Trejo became a permanent employee 12 months after his probationary period began. The court stated that Trejo’s circumstances were different from those who are entirely relieved of duty (as in the Amezcua case above) and placed on paid administrative leave.

Second, the court concluded that Trejo did not fail to exhaust all administrative remedies available to him because the available grievance procedure excluded appeals of probation extensions and claims regarding the interpretation of the Rules.

For these reasons, the court affirmed the trial court’s order to set aside Trejo’s dismissal. The court provided Trejo backpay from the date of his dismissal and all applicable pre- disciplinary rights as a permanent employee.

Cities should closely review all applicable rules and procedures in determining whether an employee has achieved permanent status. Courts tend to narrowly interpret any rule that allows an employer to extend an employee’s probationary period.

Appellate Court Upholds Deputy’s Termination for Failing to Report a Use of Force. Pasos v. Los Angeles County Civil Service Commission (2020) 52 Cal.App.5th 690 Meghan Pasos was a deputy sheriff with the Los Angeles County Sheriff’s Department (Department) at the Men’s Central Jail. Another deputy, Omar Lopez, took an inmate to an area outside of the view of surveillance cameras and pushed the inmate’s head against a wall, causing severe bleeding from the inmate’s face. The use of force also left blood on the inmate’s clothes, the wall and the floor. Pasos was standing approximately four or five feet away at the time of the assault, but claimed she was monitoring inmates in a nearby hallway and was not paying attention to Lopez and the inmate. Pasos then turned around to see the bloodied inmate, and Lopez confirmed he had shoved the inmate’s head into the wall. Pasos told Lopez to “handle the paperwork” to which Lopez replied that he would, but he never did so. The inmate later reported his assault. Since no deputies reported a use of force incident involving the inmate, the Department opened an investigation into the inmate’s complaint. During her interview, Pasos admitted she did not report the incident because she was afraid of the repercussions of “ratting on” a fellow deputy. Following the investigation, the Department discharged Pasos based on her failure to report Lopez’s use of force or to seek medical assistance for the inmate. The division’s acting chief determined discharge was appropriate because Pasos’s conduct violated the Department’s policies on general behavior, performance standards, use of force procedures, and safeguarding persons in custody. Further, the chief determined Pasos’s conduct perpetuated a code of silence among the deputies, which undermined the Department’s operation of the jail and brought embarrassment to the Department. A panel of three commanders from other divisions reviewed Pasos’s case and agreed with the chief’s decision. Pasos appealed her discharge to the Los Angeles County Civil Service Commission (Commission). The Commission sustained the discharge based on the grounds that Pasos’s behavior was so egregious that it merited the highest level of discipline. Pasos then challenged her discharge in superior court. The trial court held the Commission abused its discretion in upholding the discharge. The trial court said the chief could not discharge every deputy involved in any aspect of inmate abuse in order to deflect media and public criticism. The trial court said that the chief’s job was to impose fair and appropriate discipline for each instance of misconduct. The trial court found for Pasos and directed the Commission to set aside her discharge, award her back pay, and consider a lesser penalty. The Department appealed, claiming the trial court substituted its own discretion for that of the Department in determining the appropriate penalty. The Court of Appeal agreed and reversed. First, the Court of Appeal held the Department followed its written guidelines for discipline by discharging Pasos. Pasos’s failure to report the use of force was egregious because it perpetuated a code of silence among deputies in the jail, which encouraged other deputies to ignore their responsibilities, and brought embarrassment to the Department. That type of

misconduct violated the Department’s general behavior policy, which states that the penalty may range from a written reprimand to discharge. Second, the Court of Appeal upheld the penalty of discharge because Pasos’s conduct harmed the public service. Pasos’s claim she had no duty to report ran counter to her initial stated reason for not reporting the use of force—that she did not want to “rat” on her partner. The penalty of discharge was supported because Pasos’s actions betrayed the public’s trust in peace officers to guard the peace and security of the community. The Court of Appeal noted that California cases often hold that a betrayal of the public trust is grounds for termination. The Court of Appeal noted in a footnote that this misconduct was likely to recur given Pasos’s stated fear from the consequences of “ratting” on a fellow deputy, and minimization of her responsibility to report the severe battery. For these reasons, the Court of Appeal reversed the trial court’s order and ordered the trial court to enter a new judgment upholding Pasos’s discharge. The public is more keenly aware and critical use of force incidents. This case demonstrates that a “code of silence” regarding these incidents, and the resulting breach of trust between the agency and the public, harms the public service and supports severe discipline.

WAGE AND HOUR

General Information about Wage and Hour issues can be found in the Municipal Law Handbook, Chapter 4, “Personnel,” Section III, “Wage and Hour Laws.” http://onlaw.ceb.com/onlaw/gateway.dll?f=templates&fn=default.htm&vid=OnLAW:CEB

Judge Not Required to Approve FLSA Litigation Settlement.

Mei Xing Yu, et al v. Hasaki Restaurant, et al. (2nd Cir.2019) 944 F.3d 395

Mei Xing Yu worked as a sushi chef at a restaurant owned and operated by Hasaki Restaurant, Inc. Yu sued Hasaki in New York State, on behalf of other similarly situated employees, for violating the Fair Labor Standards Act (FLSA) overtime provisions and New York labor laws. About three months later, Hasaki sent Yu a settlement offer for $20,000 plus reasonable attorneys’ fees pursuant to Federal Rule of Civil Procedure 68 (Rule 68 offer).

Within a month, Yu sent the court notice that he was accepting the Rule 68 offer. The judge did not enter judgment. Instead, the judge directed the parties to submit a joint letter explaining why the settlement was fair and reasonable. Alternatively, the judge allowed the parties to argue why they believed that the judge was not required to approve their Rule 68 settlement. The parties submitted a joint letter stating their opinion that the judge was not required to approve their settlement. The US Secretary of Labor submitted an amicus brief stating that judicial approval was required for FLSA settlements. Although Rule 68 contains mandatory language requiring the clerk of the court to enter judgment without judicial approval, the judge noted that there were narrow exceptions to that rule for bankruptcy and class action settlements. The judge decided that FLSA settlements also fell within that narrow exception of

Rule 68 offers that require judicial approval. The parties appealed to the US Court of Appeals for the Second Circuit.

The Second Circuit reviewed whether a Rule 68 offer of judgment that disposes of a FLSA claim in litigation needs to be reviewed by a district court or the US Department of Labor (DOL) for fairness before the clerk of the court can enter judgment.

The Second Circuit found that although FLSA authorizes the DOL to bring FLSA actions and to supervise the payment of unpaid wages or overtime pay, nothing in the FLSA commands that FLSA litigation can only be settled with a judge’s approval. Conversely, the bankruptcy law, for example, explicitly requires judicial approval of settlements.

The Second Circuit also reviewed and dismissed several arguments that the amici parties raised to support their contention that judicial review and approval was required for FLSA settlements. The Second Circuit decided that no implied requirement for judicial approval could be read into Supreme Court or other court precedents, the FLSA’s legislative history, or the remedial purpose of the FLSA.

This case is limited to FLSA cases that are filed in the Second Circuit and settled through Rule 68 offers of compromise. It is unknown if the Ninth Circuit would follow this precedent. Because this case is thorough and well-reasoned, however, it is persuasive.

ABC Independent Contractor Test is Retroactively Applicable to Wage and Hour Claims.

Gonzalez v. San Gabriel Transit (2019) 40 Cal.App.5th 1131.

Francisco Gonzales worked as a driver for San Gabriel Transit (SGT), a company that coordinates with public and private entities to arrange transportation services. In February 2014, Gonzales filed a class action seeking to represent over 550 drivers that SGT had engaged as independent contractors from February 2010 to the present. Gonzales alleged that by misclassifying drivers as independent contractors, SGT violated various provisions of the California Labor Code and wage order provisions.

The trial court found that Gonzales failed to demonstrate that SGT misclassified drivers as independent contractors under the standard described in Borrello v. Department of Industrial Relations, and denied the motion for class certification. While this appeal was pending, the California Supreme Court decided Dynamex v. Superior Court of Los Angeles, in which it adopted the “ABC test” to analyze the distinction between employees and independent contractors.

Under the ABC test, an individual providing services for compensation is an employee rather than an independent contractor unless the hiring entity demonstrates that: (1) the individual is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract terms and in fact; (2) the individual performs work that is outside the usual course of the hiring entity’s business; and (3) the individual is

customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

On appeal, the court concluded that the ABC test in Dynamex is retroactively applicable to pending lawsuits regarding wage and hour claims. The court noted that the Dynamex opinion did not address whether the ABC test applies to non-wage order related Labor Code claims. The court answered that question by concluding that it would apply the ABC test to Labor Code claims that allege wage orders violations. On the other hand, the court will apply the Borello test to claims not directly based on wage order protections.

The court reasoned that when an employee seeks primarily to enforce provisions of the Labor Code, which incorporates the California wage orders, the employee is actually seeking to enforce the applicable wage order. The court further reasoned that because most of the statutory claims alleged in the case were rooted in wage order protections and requirements, the ABC test applied.

The court reversed the order denying the motion for class certification and remanded the case to apply the ABC test to determine whether the class certification requirements are satisfied in light of the ABC test factors.

The ABC test is a pro-employee departure from the previous standard for determining whether an individual is an independent contractor or employee. Since January 1, 2020, the ABC test has been codified, first as California Labor Code section 2750.3 (a.k.a. “AB-5”), and more recently AB2257 repealed Labor Code section 2750.3 on September 4, 2020, and replaced it with Labor Code sections 2775-2787.

Time Spent in Mandatory Exit Searches Constituted “Hours Worked” for Purposes of California Minimum Wage Law.

Frlekin v. Apple Inc. (2020) 8 Cal.5th 1038

Apple uses a “Employee Package and Bag Searches” policy. This policy imposes mandatory, thorough searches of employees’ bags, packages, purses, briefcases, and personal Apple technology devices before the employees can leave an Apple retail store for any reason.

Under the policy, Apple employees must clock out before the exit search. Employees estimate that exit searches range from five to 20 minutes, depending on manager or security guard availability.

A number of Apple employees filed a lawsuit in federal court alleging that Apple failed to pay them minimum and overtime wages for their time spent waiting for and undergoing exit searches in violation of California law. Industrial Welfare Commission Wage Order 7 (“Wage Order 7”) requires employers to pay their employees a minimum wage for all “hours worked,” which is defined as “the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required

to do so.” The first clause of the definition – “the time during which an employee is subject to the control of an employer” – is known as the “control clause.”

The district court concluded that the time spent by employees waiting for and undergoing exit searches was not compensable as “hours worked” under California law. The court determined that the control clause required the employees to prove that: (1) the employer restrains the employees’ action during the activity in question; and (2) the employees had no plausible way to avoid the activity. The employees appealed to the U.S. Court of Appeals for the Ninth Circuit. The Ninth Circuit asked the California Supreme Court to address the state law issue.

The California Supreme Court, however, determined that the employees’ time related to exit searches was indeed “hours worked” under the control clause. The Court reasoned that the employees are clearly under Apple’s control while waiting for and undergoing the exit searches. Apple employees are subject to discipline if they refuse the searches. Apple also confines its employees to the premises while they wait for and undergo the search, and requires employees to perform specific tasks such as locating a manager and unzipping compartments and removing items for inspection.

While Apple argued that the employee’s activity had to be “required” or “unavoidable” in order to be compensable, the Court disagreed. The Court noted that those words did not appear in the control clause and that such a definition would be at odds with the wage order’s fundamental purpose of protecting and benefitting employees. The Court also rejected Apple’s argument that California precedent supports the notion that an activity has to be “unavoidable” in order to be compensable because the Court was not aware of any California case discussing the precise issue of whether time spent at the worksite relating to searches is compensable as “hours worked.”

The Court noted that while exit searches may not be “required” in a formal sense because employees could choose not to bring personal belongings to work, as a practical matter they are. Employees have little genuine choice concerning whether to bring ordinary, everyday items such as a wallet, keys, and a cell phone to work. Indeed, Apple markets its iPhone as an “integrated and integral” part of the lives of its customers.

Ultimately, the Court concluded that the level of the employer’s control over its employees, rather than the mere fact that the employer requires the employees’ activity, is determinative of whether an activity is compensable under the “hours worked” control clause. The Court also concluded that courts should consider additional relevant factors, including the location of the activity, the degree of the employer’s control, whether the activity primarily benefits the employee or employer, and whether the activity is enforced through disciplinary measures. Applying these factors to this case, the Court determined that it was clear the employees were subject to Apple’s control during the exit searches and must be compensated for their time.

While Wage Order 7 does not apply to the public sector, the hours worked section of Wage Order 4 is applicable to cities and other public agencies and contains the same language the Court interpreted in this case. Accordingly, this decision offers guidance to cities as to how California courts would interpret the “hours worked” language in Wage Order 4.

Employer Liable for Low Level Payroll Employee’s Willful FLSA Violations.

Scalia v. Employer Sols. Staffing Grp., LLC (9th Cir. 2020) 951 F.3d 1097

Employer Solutions Staffing Group (ESSG) is a group of staffing companies that contracts with other companies to recruit employees and place them at jobsites. In 2012, ESSG contracted with Sync Staffing (Sync), which placed the recruited employees at a jobsite run by TBG Logistics (TBG). At TBG, the recruited employees unloaded deliveries for a grocery store. TBG maintained a spreadsheet of the employees’ hours, which it sent to Sync. Sync then forwarded the spreadsheet to ESSG.

Michaela Haluptzok, an ESSG employee, was responsible for processing the TBG payroll. The first time Haluptzok received one of the spreadsheets, she sent a report to Sync showing that employees who had worked more than 40 hours per week would receive overtime pay for those hours. A Sync employee told Haluptzok to pay all of the hours as “regular hours,” instead of overtime. Haluptzok complied, even though it meant she had to dismiss numerous error messages on the payroll software. Haluptzok processed all of the TBG spreadsheets in this same manner until ESSG’s relationship with TBG and Sync ended in July 2014. Haluptzok admitted that she knew the recruited employees were not being paid overtime owed to them.

In August 2016, the U.S. Secretary of Labor sued ESSG, TBG, and Sync for violations of the Fair Labor Standards Act (FLSA). The Secretary reached settlements with TBG and Sync. The Secretary moved for judgment against ESSG on the grounds that ESSG willfully violated the FLSA when Haluptzok failed to pay 1.5 times the FLSA regular rate of pay for hours worked in excess of 40 hours per workweek. The district court granted the Secretary’s motion, and ordered ESSG to pay approximately $78,500 in unpaid overtime plus an equal amount in liquidated damages. ESSG appealed to the U.S. Court of Appeals for the Ninth Circuit.

First, ESSG argued that it could not be liable for the actions of a low-level employee such as Haluptzok. The Ninth Circuit disagreed. ESSG chose Haluptzok as its agent for payroll processing, so it could not disavow her actions merely because she lacked a specific job title or a certain level of seniority. Allowing ESSG to evade liability simply because none of its supervisors or managers processed the payroll would create a loophole that would be inconsistent with the FLSA’s purpose of protecting workers.

Second, ESSG argued that the Secretary’s lawsuit was not timely because its FLSA violations were not willful. Ordinarily, a two-year statute of limitations applies for claims under the FLSA. However, when a violation is willful, a three-year statute of limitations applies. A violation is willful when the employer either knew or showed reckless disregard for whether its conduct was prohibited by the FLSA. The Ninth Circuit concluded that ESSG acted willfully. Haluptzok dismissed the payroll software’s repeated warnings about overtime pay, and she never received any explanation from Sync that justified dismissing the software error messages. The three-year statute of limitations applied for that willful violation, so the Secretary’s lawsuit was timely.

Third, ESSG argued that liquidated damages were inappropriate because it acted in good faith. The FLSA mandates liquidated damages equal to the unpaid overtime compensation unless an employer acts in good faith. But because ESSG’s actions were willful, they were not in good faith.

Finally, ESSG contended that it could seek indemnification or contribution from another employer for the damages the district court awarded. The Ninth Circuit, however, determined that the FLSA did not implicitly permit such indemnification for liable employers, and it declined to make new federal common law recognizing those rights.

The employer in this case tried to avoid liability because a rank and file employee completed the payroll instead of a manager or supervisor. Cities typically use rank and file employees to process payroll. Agencies can properly pay employees and avoid liability by training payroll employees how to comply with the FLSA.

INDEPENDENT CONTRACTORS

County and Privately-Owned Medical Clinics Were Joint Employers. County of Ventura v. Public Employment Relations Bd. (2019) 42 Cal.App.5th 443 Ventura County owns and operates Ventura County Medical Center (VCMC). VCMC contracts with a number of privately-owned clinics to provide medical services throughout the County. The contracts between VCMC and the clinics are almost identical. Each clinic is owned by a physician, who serves as the clinic’s medical director. Under the contracts, the clinics manage day-to-day operations and provide physicians and staff. However, the County provides and maintains the facilities, equipment, and furnishings for the clinics to operate; approves the operating budget for each clinic; and owns all revenues and accounts payable that the clinics generate. The County also trains clinic employees on VCMC policies. Clinic employees must attend a VCMC orientation and wear a badge that affiliates them with VCMC. Further, the County periodically reviews the work of clinic employees and conducts audits. Clinic employees could be disciplined if they did not follow VCMC policies. SEIU, Local 721 (SEIU) sought to represent clinic employees. However, the County refused to process the representation petition. The County said it was not the “employer, joint or otherwise, of the persons SEIU purports to represent.” Subsequently, SEIU filed an unfair practice charge with the Public Employment Relations Board (PERB) alleging that the County violated the Meyers-Milias-Brown Act by denying the petition. The Administrative Law Judge (ALJ) dismissed the unfair practice charge. The ALJ found that PERB did not have jurisdiction because the County was not a single or joint employer of the clinic employees. SEIU challenged the ALJ’s decision, and PERB reversed the ruling.

PERB found that SEIU had meet its burden of proof under both the single and joint employer doctrines. The County then petitioned the Court of Appeal to review PERB’s decision. The court affirmed PERB’s decision and concluded that the County and the private medical clinics are joint employers. A joint employer relationship exists when two or more employers exert significant control over the same employees so as to share or co-determine essential terms and conditions of employment. A joint-employer relationship is established if an entity retains the right to control and direct the activities of the person rendering service, or the manner and method in which the work is performed. The court found that substantial evidence supported PERB’s finding that the County was a joint employer of clinic employees. For example, the clinic employees’ salaries and benefits were part of the clinic’s annual operating budget, which the County had to approve. The County also owned all revenues and accounts payable that a clinic generates. Moreover, the County had a right to control patient care and personnel policies, training, and other employment conditions. Finally, the County indicated that it had a right to control clinic operations on its various federal and state reporting forms. Thus, the court determined PERB correctly found the County was a joint employer of the clinic employees. Many cities believe that contracting for services prevents a joint employment relationship. This case shows that significant control can create a joint employment.

Independent Contractor Surgeon Was Not Entitled To Title VII Protections Henry v. Adventist Health Castle Med. Ctr. (9th Cir. Aug. 14, 2020) --- F.3d ---, 2020 WL 4726540 David Henry is a board-certified general and bariatric surgeon licensed to practice medicine in Hawaii. Dr. Henry joined the staff of Adventist Health Castle Medical Center (Castle) in 2015 and performed surgeries there. During his time at Castle, Dr. Henry signed two agreements with the medical center. Under the first agreement, Dr. Henry agreed to operate a full-time private practice of medicine. The second agreement required Dr. Henry to be on-call in Castle’s emergency department for five days each month. Both agreements indicated that Dr. Henry “shall at all times be an independent contractor.” While on call, Dr. Henry was not required to be present at Castle’s facility unless there was an emergency. When performing surgeries for Castle, Castle decided which surgical assistants would support him, supervised their performance and pay, and determined which medical record system would be used for care provided at the facility. Castle required Henry to comply with its Code of Conduct and bylaws, and it paid Henry $100 per 24-hour on-call shift if there was no emergency intervention, and $500 for each emergency he handled. Castle issued Dr. Henry a 1099 tax form, and it did not provide any employee benefits. Dr. Henry also leased

space from Castle for elective surgeries on non-Castle patients and performed some surgeries at a competing hospital where he had clinical privileges. While working at Castle, Dr. Henry complained about discrimination. Dr. Henry’s complaint initiated a review of his past surgeries, which led to his precautionary suspension and eventually the recommendation that his clinical privileges be revoked until he completed additional training and demonstrated competency in various areas of concern. Dr. Henry then sued Castle, alleging violations of Title VII of the Civil Rights Act of 1964 for racial discrimination and retaliation. Castle moved to dismiss the case. Castle argued that because Dr. Henry was an independent contractor and not an employee, he was not entitled to Title VII protections. The district court agreed and found in favor of Castle. Dr. Henry appealed to the U.S. Court of Appeals for the Ninth Circuit. In deciding whether an individual is an employee under Title VII, courts evaluate “the hiring party’s right to control the manner and means by which the product is accomplished.” Courts make this determination considering a number of factors including: (1) the skill required; (2) the source of the instrumentalities and tools; (3) the location of the work; (4) the duration of the relationship between the parties; (5) whether the hiring party has to right to assign additional projects to the hired party; (6) the extent of the hired party’s discretion of when and how long to work; (7) the method of payment; (8) the hired party’s role in hiring and paying assistants; (9) whether the work is part of the regular business of the hiring party; (10) whether the hiring party is in business; (11) the provision of employee benefits; and (12) the tax treatment of the hired party. Applying these factors to this case, the Ninth Circuit concluded that the district court properly determined Dr. Henry was an independent contractor, and not an employee. First, the court considered Dr. Henry’s compensation. The court reasoned Castle only paid Dr. Henry for on-call time –$100 per shift or $500 per emergency intervention—which accounted for 10% of his earnings. Castle did not provide any employee benefits. Dr. Henry and Castle also reported his earnings to the IRS as if Dr. Henry were an independent contractor. The court noted that these factors weighed in favor of Dr. Henry’s independent contractor status. Second, the court found that Dr. Henry’s limited obligations to Castle also indicated an independent contractor relationship. Dr. Henry had the freedom to run his own private practice, was only required to be on call in Castle’s emergency department five days per month, and was free to be elsewhere during his on-call shifts unless an emergency arose. Dr. Henry also leased Castle space for elective surgeries on his own patients and performed general surgeries at a competing hospital. The court noted that employees generally do not have this level of work freedom and that Castle did not have the level of control present in employment relationships. Finally, the court emphasized that both contracts between Dr. Henry and Castle called him an independent contractor. Dr. Henry argued that the high skill level that surgeries require, Castle’s provision of assistants and medical equipment, and Castle’s mandatory professional

standards weighed in favor of an employment relationship. The court concluded these factors did not outweigh the evidence suggesting he was an independent contractor. Thus, the Ninth Circuit found that Dr. Henry was not entitled to Title VII protections as an independent contractor. This case demonstrates that independent contractor or employee status depends of an analysis of many factors.

ATTORNEY’S FEES

Trial Court Improperly Applied Local Market Rate When Calculating Fee Award. Caldera v. Dep’t of Corr. & Rehab. (2020) 48 Cal.App.5th 601 Augustine Caldera is a prison correctional officer at the California State Institute for Men in San Bernardino County. After Caldera’s supervisor and other prison employees mocked and mimicked Caldera’s stutter, Caldera filed a formal grievance with the California Department of Corrections and Rehabilitation (CDCR) in 2008. The CDCR rejected Caldera’s grievance finding that his stutter was not a recognized disability. After the CDCR rejected Caldera’s grievance, Caldera contacted numerous local lawyers in the Inland Empire. However, all of the attorneys Caldera contacted declined to take on his case. An attorney in Pasadena, Todd Nevell, eventually agreed to represent Caldera on a contingency basis. Caldera then brought suit against the CDCR and his supervisor for various causes of action, including discrimination in violation of the Fair Employment and Housing Act (FEHA). After many years of litigation and multiple appeals, a jury returned a verdict in favor of Caldera. Subsequently, Caldera filed a motion for attorney’s fees. Under the FEHA, a court has the discretion to award reasonable attorney’s fees and costs to the prevailing party. In calculating the fee award, courts generally multiply the number of hours spent on the case by the attorney’s applicable hourly rate. Courts also frequently increase this amount by applying a multiplier to account for other factors such as the difficulty of the litigation and the novelty of the issues. While Caldera requested $2,468,365 in attorney’s fees, the court ultimately awarded him only $810,067.50. This was in part because the court found that Nevell’s requested $750 hourly rate was well above the average $450 to $550 hourly rate for attorneys in San Bernardino County. Caldera appealed. On appeal, the court concluded that if an employee must hire out-of-town counsel, the trial court, when setting the hourly rate, must consider the attorney’s home market rate, rather than the local market rate. The court reasoned that there was unrefuted evidence that Caldera was unable to find an attorney who would take his case in the Inland Empire, and it noted that the hourly rate the trial court applied was lower than similarly experienced attorneys in Los Angeles

County. Thus, the court directed the trial court to recalculate the fee award based on Nevell’s home market rate. This case demonstrates how substantial attorney’s fee awards can be in employment litigation. Attorney’s fees can be far greater than expected if the employee has to use legal counsel from outside the area.

LABOR RELATIONS AND THE MMBA

General Information about Labor Relations and MMBA can be found in the Municipal Law Handbook, Chapter 4, “Personnel,” Section XI, “Labor Negotiations and the Meyers-Milias- Brown Act (MMBA)” http://onlaw.ceb.com/onlaw/gateway.dll?f=templates&fn=default.htm&vid=OnLAW:CEB

PERB Directs City to Reinstate Proposal It Withdrew Three Years Earlier.

City of Palo Alto, PERB Decision No. 2664-M (2019)

The City of Palo Alto and the Utilities Management & Professional Association of Palo Alto (“UMPAPA”) negotiated their initial collective bargaining agreement. Throughout the bargaining, the parties deferred negotiations on non-economic issues. Following the City’s last, best, and final economic proposals, the City proposed that the parties bifurcate economic issues from non-economic issues. This would allow the pay increases to go into effect while the parties continued to negotiate non-economic terms.

UMPAPA took the City’s economic proposals to its members, who ratified them. After UMPAPA ratified the City’s economic proposals, the City made a non-economic proposal seeking to include an “at-will” provision for eight management positions. After UMPAPA rejected that proposal, the City withdrew the bifurcation plan.

The Administrative Law Judge (ALJ) concluded this constituted bad faith bargaining in violation of the Meyer-Milias-Brown Act (MMBA). Neither party excepted to the ALJ’s findings on liability.

However, UMPAPA requested that the Public Employment Relations Board (PERB) alter the ALJ’s proposed remedial order and require the City to reinstate the bifurcation proposal and the related last, best, and final economic proposals that the ALJ had determined were withdrawn in bad faith. Further, UMPAPA requested that PERB amend the proposed order to include an attorney’s fee award.

PERB noted that a properly designed remedial order seeks to restore the situation to what the situation would have been without the unfair labor practice. Thus, PERB directed the City to put the bifurcation proposal and the related last, best, and final economic proposals back on the table if UMPAPA requested. PERB reasoned that reinstating these proposals would restore the situation as nearly as possible to what would have existed but for the City’s withdrawal of the proposals.

However, PERB declined to amend the proposed order to include an attorney’s fee award. To obtain reimbursement of attorney’s fees or other litigation expenses while litigating a matter in front of PERB, the moving party must demonstrate that the claim, defense, motion, or other action was “without arguable merit” and pursued in “bad faith.” PERB reasoned that while the positions taken by the City’s representatives were unsuccessful, they were nonetheless positions that a prudent representative might legitimately take in good faith.

This case illustrates PERB’s power to determine a remedy. PERB remedies can include reinstating a withdrawn proposal, even if the city withdrew the proposal years earlier.

County’s Security Staffing Decision Was Non-Negotiable, But Union Should Have Received Opportunity for Effects Bargaining.

County of Santa Clara, PERB Decision No. 2680-M (2019).

The County of Santa Clara (County) staffed its hospitals and medical clinics with non- sworn Protective Service Officers (PSO) to provide security services. Due to security concerns at the Hospital’s Emergency Department in 2013 or 2014, the County began augmenting security by adding roving deputy sheriffs. The use of deputy sheriffs at the sites caused the number of incidents at the Emergency Department to drop by 44%.

The County acquired a new site for a primary care clinic in 2016, known as Valley Health Center Downtown (VHCD). During construction, the PSOs patrolled VHCD to protect its fixtures. After construction was completed, the County decided to assign a deputy sheriff during the swing shift at VHCD as the regular security presence, in lieu of a PSO. A County official allegedly did not provide the union with notice of the staffing decision because he did not believe the deputy sheriffs would be performing bargaining unit work. Although a PSO would sometimes work the swing shift if no deputy was available, the County’s decision was to assign a deputy sheriff as the regular swing shift security presence, in lieu of a PSO.

SEIU, Local 521, the union that represents the PSOs, filed an unfair practice charge with the Public Employment Relations Board (PERB). The PERB charge alleged that the County unilaterally removed bargaining unit work from SEIU by staffing the VHCD with a deputy sheriff during the swing shift, rather than a PSO, in violation of the Meyers-Milias-Brown Act (MMBA) and PERB Regulations.

The California Public Employees Relations Board (Board) adopted the Administrative Law Judge’s proposed decision. That decision found that assigning deputy sheriffs in security positions at the VHCD constituted a change in policy. During the construction of VHCD, the County had exclusively employed PSOs to perform VHCD security work. Although the County had previously used deputies at the Hospital’s Emergency Department, those deputies were only supplemental to PSOs. At VHCD, the deputy sheriff displaced the PSO who would have been assigned to the swing shift. Testimony at the hearing indicated that the deputies and the PSO’s were performing the same work at VHCD -- checking on clinic staff, securing the premises, and

preventing and deterring crimes. The Board found only minor differences in the duties of PSOs and the deputy sheriffs at VHCD.

The Board noted that while the County’s decision to use deputies on the swing shift at VHCD did eliminate some bargaining unit work, the decision also involved the County’s freedom to manage its affairs unrelated to any employment-specific concerns. The Board found that bargaining would be required only if the benefit for labor-management relations and the collective bargaining process outweighed the burden placed on the County. The Board concluded that the County did not violate its duty to meet and confer by failing to bargain with SEIU over its staffing decision, because the County’s concern for employee and patient safety outweighed the benefits of bargaining.

The Board did find, however, that the County violated its duty to meet and confer over the implementation and effects of its staffing decision. The MMBA duty to bargain also includes the implementation of a non-negotiable management decision that has a foreseeable effect on matters within the scope of representation. Staffing VHCD with a deputy sheriff, rather than a PSO, had foreseeable effects on wages, hours, and other terms and conditions of employment for PSOs. The Union was not required to demand effects bargaining because the Union had no prior notice of the staffing decision. The County was required to provide SEIU with notice and an opportunity to bargain the reasonably foreseeable effects of its staffing decision before it implemented the change.

Although a managerial decision is not subject to meet and confer, a city must still meet and confer over the implementation and effects of a management decision that has a foreseeable effect on matters within the scope of representation.

Union Not Required to Exhaust Administrative Remedies Because MOU Did Not Provide for Class Grievances.

Association for Los Angeles Deputy Sheriffs v. County of Los Angeles (2019) 42 Cal.App.5th 918

The Association for Los Angeles Deputy Sheriffs (ALADS) represents non-management deputy sheriffs and peace officers employed in the County of Los Angeles District Attorney’s office. In 2017, the memorandum of understanding (MOU) between ALADS and the County contained provisions requiring the County to match compensation increases given to other safety employee unions. The MOU also contained a grievance procedure that ended in binding arbitration, to resolve any alleged violations of the MOU’s terms. However, the MOU did not provide for class grievances.

During the MOU’s effective period, the County approved a salary adjustment for another County safety employee union. ALADS thereafter initiated two grievances concerning the County’s alleged failure to increase the salaries of ALADS’s members to match the salary adjustment approved for other safety employees. As part of the grievance procedure, ALADS sent written requests for arbitration to the Employee Relations Commission (ERCOM). The County objected to the requests because ALADS could not initiate a grievance on behalf of the

individuals it represents. According to ALADS, the County also refused to comply with a discovery order from ERCOM. As a result, the arbitrator handling the grievances took the scheduled arbitrations off calendar.

ALADS then sued the County; its lawsuit requested a writ of mandate requiring the County to comply with the MOU’s compensation provisions. The County filed a demurrer on the grounds that ALADS failed to exhaust the administrative remedies provided by the MOU. The trial court agreed and sustained the demurrer without leave to amend.

The Court of Appeal reversed and remanded the case back to the trial court for further proceedings. The failure to arbitrate in accordance with the grievance procedures in a MOU is a failure to exhaust administrative remedies. The Court of Appeal examined an exception to the exhaustion of remedies requirement. Under that exception, exhaustion of administrative remedies is not required if the available remedy is inadequate, or if pursuing that remedy would be futile.

ALADS argued that because class-wide relief was not available through the MOU’s grievance process, it would need to prosecute separate individual grievance actions on behalf of each of its 7,800 members. The Court of Appeal agreed that would be an onerous, time- consuming process. The Court of Appeal decided that remedy was inadequate and that the exception to the exhaustion requirement applied.

There is no need to exhaust administrative remedies if the judicial action seeks relief on behalf of a class, and the available administrative procedures do not provide class-wide relief. Although ALADS’s action against the County was a representative action on behalf of its members and not a class action, that distinction was immaterial because ALADS sought relief on behalf of a designated group of persons (its members), which was similar to a class action.

This case illustrates why a city may not always rely on a failure to exhaust administrative remedies defense despite an employee or labor union’s failure to use an MOU grievance procedure. Accordingly, cities should closely examine their grievance procedures and consider whether to provide for class grievances.

Unions Are Not Required To Refund Agency Fees Paid Prior To Janus Decision

Danielson v. Inslee (9th Cir. 2019) 945 F.3d 1096

In Janus v. American Federation of State, County, & Municipal Employees, Council 31, 138 S.Ct. 2448 (2018), the U.S. Supreme Court (“USSC”) held that mandatory agency fees – fees nonmember employees pay to the employee organization for its collective bargaining activities – are unconstitutional. Following the Janus decision, three public sector employees who were not members of their employee organization, filed a class action lawsuit against their union pursuant to 42 U.S.C. section 1983. The lawsuit sought declaratory and injunctive relief and reimbursement of the agency fees the employees had paid to the union. The employees argued that the union should return any agency fees paid prior to Janus because the fees were collected unlawfully and should have always been considered unconstitutional.

The union filed a motion to dismiss the claims for declaratory and injunctive relief as moot based on Janus. The union argued that the court should also dismiss the claim for the reimbursement of the fees because the union had collected them in good faith reliance on state law and then-binding USSC precedent. Prior to Janus, the USSC had concluded that agency fees were permissible. The district court agreed and dismissed the employees’ claims. The employees appealed the dismissal of their claims for reimbursement of the fees paid.

On appeal, the employees argued that the union could not raise “good faith” as an affirmative defense to liability under 42 U.S.C. section 1983. First, they argued that the Court should disregard one of its prior decisions in favor of another, contrary decision. The Court explained that why the holdings in its two decisions were consistent.

The employees argued that the good faith defense was inapplicable because they were seeking only restitution of the agency fees they paid, and not damages. Again, the Ninth Circuit disagreed. It noted that their constitutional injury was “the intangible dignitary harm suffered from being compelled to subsidize speech they did not endorse. It is not the diminution in their assets from the payment of compulsory agency fees.” On that basis, the Ninth Circuit determined that the employees were in fact seeking compensatory damages, not true restitution of the agency fees they had paid.

Finally, in affirming the district court’s dismissal, the Ninth Circuit held that the union properly relied on both the state law and then-binding USSC precedent. For that reason, the Ninth Circuit determined that the union could use a good faith defense. The Ninth Circuit explained, “We hold that the Union is not retrospectively liable for doing exactly what we expect of private parties: adhering to the governing law of its state and deferring to the Supreme Court’s interpretations of the Constitution. A contrary result would upend the very principles upon which our legal system depends. The good faith affirmative defense applies as a matter of law, and the district court was right to dismiss [the] claim for monetary relief.”

The Danielson decision, together with Government Code section 1159 (which provides public agencies immunity from employee claims for reimbursement of mandatory agency fees paid pre- Janus), effectively relieves public sector unions in California from liability for any pre-Janus agency fee deductions.

Agency Must Meet and Confer About Privacy Concerns in Response to Union’s Request for Unredacted Investigation Report.

City and County of San Francisco, PERB Decision No. 2698M (2020)

Employee A worked for the City and County of San Francisco and was the subject of a disciplinary investigation. As a result of the investigation, Employee A received a written warning regarding disruptive behavior.

The Service Employees International Union (SEIU) filed a grievance on Employee A’s behalf. On November 9, 2018, a SEIU Field Representative requested “a copy of interview questions to all witnesses named in the written warning . . . a copy of the interview answers of all

witnesses of [sic] the written warning . . . [and] [a]ny other evidence, such as notes, internal complaints, email communications, etc..” The Field Representative noted that the information was needed so that SEIU could “investigate the grievance.”

On November 20, 2018, the City sent the Field Representative a copy of the investigative report that had seven pages redacted. When the Field Representative requested a description of the redacted information, a City administrator noted that the redacted information was unrelated and not used to support Employee A’s written warning.

In December 2018, a Field Representative requested a full, unredacted version of the investigation report because SEIU needed the information to conduct an investigation and make its own assessment. A City administrator responded that the investigative report belonged to the City Attorney and he would forward the representative’s request.

The Field Representative sent another request to the City for the report in January 2019. The Field Representative filed an Unfair Practice Charge in February 2019. In March 2019, a City administrator sent the Field Representative another version of the investigation report. This version had only five redacted pages. The administrator said that the City was providing that version of the report “on a non-precedent setting basis, after carefully weighing the privacy interest of the witnesses.” This copy of the report had redactions in the Background section of the report. The City said that the redacted information pertained to another investigation that was not relevant and would violate the privacy interest of another employee. At no time did the City offer to meet and confer about the redactions or indicate that the City would be willing to negotiate about them.

The Public Employment Relations Board (PERB) held that the MMBA duty to meet and confer extends to union requests for information during a contractual grievance process. The City argued that it had no duty to meet and confer because SEIU never made such a request. PERB disagreed, noting that SEIU attempted to get clarification from the City about the redactions, but that the City replied in a conclusory matter. Each time the City provided another copy of the investigation report, it decided unilaterally what to redact. PERB held that a union has no duty to request meet and confer if the employer has unilaterally decided what to redact and has presented its decision as a fait accompli rather than a proposal.

A union has a right to information that is necessary and relevant to represent its members, as well as the right to meet and confer with the employer over alleged privacy concerns that may arise regarding investigation reports. A city faced with this situation potentially could avoid an unfair labor practice charge by meeting with the union to explore the best way to redact the report while giving the union a level of access to the information it sought. This case also demonstrates the danger in including extraneous or unrelated information in investigation reports.

City Policy Prohibiting Stickers on Employees’ Hardhats Violated MMBA. City of Sacramento, PERB Decision No. 2702-M (2020). Employees in the City of Sacramento’s Maintenance Services Division (MSD) are required to wear hardhats while working. Six of the seven MSD sections exclusively use a white, full-brimmed hardhat manufactured by ERB Industries (ERB) bearing the City seal. ERB affixes the seal by applying ink directly to the hardhat before shipping the hardhats to the City. An ERB warning label inside each hardhat states “Do not apply adhesive. These chemicals may weaken the shell.” Despite this warning, MSD employees sometimes attach headlamps to their ERB hardhats using clips and removable adhesive. The City provides employees in the seventh MSD section an orange hardhat manufactured by Petzl. Like the ERB hardhats, Petzl cautions against applying chemical adhesive or stickers to its hardhats unless those are supplied or recommended by Petzl. All MSD employees are expected to inspect their hardhat each day before use; however, management is responsible for deciding when to retire or replace a hardhat. In 2016, an MSD Operations General Supervisor became concerned that it was unsafe to adorn the hardhats with any stickers, decals, or paint because these substances could hinder their inspection for signs of wear, cracks, and other deterioration. In April 2017, the MSD circulated a memorandum to some employees providing that “So as to not compromise the integrity of the protective shell, hardhats must be free of stickers, decals, or any other markings (except for the City seal) and not be painted.” Prior to this memorandum, the MSD did not have a written policy regarding the placement of stickers or paint on hardhats. Employees were, however, permitted to wear union pins and other insignia on their work uniforms or other personal property. The City notified Stationary Engineers Local 39 (Local 39) – an employee organization representing some MSD employees – of the written hardhat policy. Local 39 asserted that the City’s policy would infringe on employees’ rights to place union insignia on their hardhats. After the City distributed the policy, Local 39 filed an unfair practice charge against the City. The Administrative Law Judge (ALJ) dismissed the charge, finding the policy was justified by the City’s legitimate concerns for employee safety. Local 39 subsequently filed exceptions with the Public Employment Relations Board (PERB). California public employees have long had the right to wear union insignia in the workplace. A restriction on the right to display union insignia and messages regarding working conditions is presumptively invalid. Instead, an employer may prohibit employees from displaying union insignia and messages in the workplace only if “special circumstances” exist to justify the prohibition. The employer has the burden of establishing that its policy is justified by special circumstances. PERB has outlined several factors to determine whether such circumstances exist, including whether the insignia could jeopardize employee safety, disrupt employee discipline, or negatively affect the employer.

In this case, PERB found that the City could not establish any foreseeable safety issues arising from stickers on hardhats. PERB reasoned that while employees were required to inspect their hardhats every day, neither the applicable memorandum of understanding nor the MSD policies prescribed any regular inspection of hardhats. Thus, PERB reasoned that the City had not “shown so great a safety-related concern for dented, gouged, or otherwise damaged hardhats that would institute regular and closer inspections of them.” Further, PERB noted that it was undisputed that some MSD employees affixed headlamps to their hardhats using clips and removable adhesive. The City presented no evidence that the adhesive used to affix the headlamps had been supplied by the manufacturer; had damaged the hardhat; or had prevented employees from detecting such damage. PERB also explained that this history of adhesive use on hardhats without incident also weighed against finding special circumstances. Accordingly, PERB found the City failed to carry its burden of establishing safety-based special circumstances justifying its policy completely banning stickers, decals, and paint on MSD employees’ hardhats. Thus, PERB determined that the City’s policy interfered with employees’ and Local 39’s rights under the MMBA. This case demonstrates that a city has the burden of proving that special circumstances justify prohibiting union insignia. That proof must include concrete evidence that it is foreseeable that employee safety will be threatened by displaying the insignia and that the city has acted consistently with its stated concern.

RETIREMENT

Whether Employee Could Have Been Reasonably Accommodated in a Different Work Location Was Irrelevant to Her Entitlement to CalPERS Disability Retirement.

McCormick v. California Public Employees’ Retirement System (2019) 41 Cal.App.5th 428

Cari McCormick worked as an appraiser for Lake County from a location within a courthouse. She developed symptoms she felt were caused by the courthouse environment, including pain, fatigue, and dizziness. McCormick asked the County for accommodations, such as permission to telecommute, but her supervisors declined to let her work anywhere other than in the courthouse. She filed a claim for workers’ compensation and took an extended leave of absence. As part of the workers’ compensation process, the courthouse was tested. The tests revealed no mold and showed acceptable air quality. Her workers’ compensation claim was denied and the County terminated her employment because she had exhausted her medical leave.

After her termination, McCormick applied for disability retirement through the California Public Employees’ Retirement System (CalPERS). In her application, she stated her disability was respiratory and that she had systemic health problems because of her exposure to the courthouse’s indoor environment. She explained that she could work in another building as long as she remained asymptomatic, but the County would not allow her to work outside the

courthouse. CalPERS denied her application. McCormick appealed the decision. The administrative law judge (ALJ) concluded that her condition did not prevent her from performing her job duties. The CalPERS Board of Administration adopted the ALJ’s decision. The trial court denied the petition for writ of administrative mandate that McCormick filed to challenge the CalPERS decision. The trial court stated that McCormick could perform her job duties, but not in the courthouse.

The Court of Appeal considered whether McCormick was incapacitated, within the meaning of the CalPERS standard at Government Code section 21156, because of her inability to perform her duties in a particular location – the courthouse. The court noted that some 2006 legislative changes to section 21156 focused the CalPERS disability retirement standard on whether employees were substantially incapacitated from performing their duties for their actual employer. The court found that McCormick’s theoretical ability to perform the duties of an appraiser for another employer, did not mean that she was not disabled under the CalPERS standard. The court concluded that CalPERS must grant disability retirement under section 21156 when, due to a disability, the employee can no longer perform her duties at the only location where her employer will allow her to work.

The court then turned to CalPERS’ argument that members are ineligible for disability retirement when they are “physically capable of performing all of the usual duties for their actual employer, and the only impediment to performing the duties is [the] employer’s alleged failure to provide reasonable accommodations.” State and federal laws require employers to make reasonable accommodation for the known disability of an employee, unless doing so would produce undue hardship to the employer’s operation. But the court did not address whether a reasonable accommodation was possible. Instead, the court analyzed what role, if any, the existence of a theoretical accommodation plays in determining a member’s eligibility for disability retirement. The court concluded that CalPERS could not deny disability retirement under section 21156 when, due to a medical condition, employees can no longer perform their duties at the only location where their employer will allow them to work.

This decision shows how an employer’s failure or inability to provide a reasonable accommodation might result in an employee’s CalPERS disability retirement. Furthermore, a failure to accommodate may violate state and federal anti-disability discrimination laws.

VICARIOUS LIABILITY

City Was Not Liable for Fatal Accident That Occurred During Employee’s Commute to Work.

Bingener v. City of Los Angeles (2019) 44 Cal.App.5th 134

Kim Rushton worked for the City of Los Angeles as a chemist at one of the City’s water treatment plants. In 2015, while Rushton was commuting to work in his own car, he struck and killed pedestrian, Ralph Bingener, who was stepping off the curb into a crosswalk. Rushton was not performing any work for the City at the time, and his job did not require him to be in the field or drive his personal car. The City did not compensate Rushton for his commute time.

At the time of the accident, Rushton was receiving treatment for chronic health problems, including neuropathy in his feet, a tremor, and occasional seizures. However, Rushton testified that his conditions were controlled and did not contribute to the accident in any way. Additionally, two months before the accident, Rushton was injured on the job. Rushton’s physicians prescribed various work restrictions when he returned to work, but they did not place any restrictions on his driving.

Bingener’s surviving brothers sued. They alleged the City was vicariously liable for Rushton’s negligence. An employer is vicariously liable for the wrongful acts its employees commit within the scope of their employment. However, an employee is generally not acting within the scope of employment when going to or coming from the regular place of work, with some exceptions. This rule is known as the “going and coming” rule. The City moved for summary judgment based on the coming and going rule, and the trial court agreed. Bingener’s brothers appealed.

On appeal, the court concluded that the going and coming rule applied. Rushton was on his normal morning commute, and his work did not require him to use his personal car. Rushton worked in a water treatment plant, and he never went out in the field. Further, nothing about Rushton’s job as a chemist made the chance that he would hit a pedestrian during his ordinary commute a foreseeable risk for the City.

While Bingener’s brothers argued that the “work-spawned risk” exception to going and coming rule applied, the court disagreed. The work-spawned risk exception applies if an employee endangers others with a risk arising from or related to work. The brothers claimed that Rushton’s driving to work was a foreseeable risk to the City. However, the court noted that there was no evidence that the City knew or should have known that Rushton was a dangerous commuter. In fact, Rushton testified that his conditions did not contribute to the accident, and his physician, not the City, approved Rushton’s return to work without limitation on his driving. Accordingly, the court concluded that the accident was not a foreseeable event as is required to hold an employer vicariously liable.

While cities are generally not liable for wrongful acts that happen on an employee’s commute to work, a city can be liable for injuries an employee causes while driving within the scope of employment.

Volunteer Was Not Acting in the Course and Scope of His Volunteer Work During Commute.

Savaikie v. Kaiser Found. Hosps. (2020) 52 Cal.App.5th 223

Ralph Steger was a volunteer for Kaiser who provided pet therapy to a Kaiser patient at an assisted living facility. In July 2015, after a therapy session, Steger drove his own car to his credit union to do some personal business. On his way home from the bank, Steger struck and killed Wyatt Savaikie, a pedestrian who was crossing the street. Following the accident, Savaikie’s parents filed a lawsuit against Kaiser alleging that Kaiser was vicariously liable for Steger’s negligence.

Kaiser filed a motion to dismiss the lawsuit because Steger was not acting within the scope of his volunteer work at the time of the accident. Kaiser argued that the so-called “coming and going” rule applied. Under that rule, an employer is not liable for an employee’s negligent acts committed during the commute to or from work. Savaikie’s parents argued that an exception to the rule applied. The trial court disagreed, finding that in order to hold Kaiser liable for Steger’s accident, Steger must have stuck Savaikie in the course and scope of his volunteer work for Kaiser. Savaikie’s parents appealed.

First, the Court of Appeal considered whether the “required-vehicle” exception to the coming and going rule applied. Under the required-vehicle exception, if an employer requires an employee to furnish a vehicle as an express or implied condition of employment, the employee will be in the scope of his employment while commuting to and from the workplace. A Kaiser employee testified that Kaiser did not require Steger to use his own car and that other methods of transportation, such as Uber or Lyft, were permissible. While there was testimony regarding whether Kaiser offered mileage reimbursement to volunteer pet therapists, the court noted that payment for travel expenses is not evidence of an implied requirement that an employee must use his own vehicle. Finally, the court rejected the Savaikie’s arguments that Kaiser’s requirements that Steger provide annual proof of vehicle insurance and transport the therapy dog inferred that Kaiser required Steger to use his own car. The court concluded that there was no evidence that Kaiser expressly or impliedly required Steger to use his own car.

Next, the court evaluated whether Steger’s use of his personal car provided an incidental benefit to Kaiser. The Savaikies suggested that a variation on the vehicle use exception focuses on whether the employer receives an incidental benefit from the employee’s use of the employee’s own car. The court declined to find that there was a distinct exception for such a situation. Instead, the court proposed that the employer’s incidental benefit is a factor to consider in deciding whether an implied vehicle use requirement exists. But, because there was no requirement that Steger use his own car as a condition of his volunteer work, there was no triable issue as to whether the incidental benefit pertained to the case.

Lastly, the court considered the Savaikie’s argument that a “special mode of transportation” exception to the coming and going rule applied. The court reasoned that even if using a specially equipped vehicle is alone sufficient to create an exception to the coming and

going rule, there is no evidence Steger had such a vehicle. Steger simply used a harness and clips to secure his therapy dog in the back of his vehicle; he did not make any modifications to the vehicle itself.

Cities that require an employee to use a personal car as a condition of employment may be liable for that employee’s car accidents, even if the accidents do not occur at the workplace.