Seyfarth Synopsis: Employment-related cases pending before the California Supreme Court concern various questions that sometimes seem technical, but the answers they elicit will have big consequences. Questions raised by the current crop of cases include standing to sue, the availability of certain claims and remedies, federal preemption of California laws, what counts as compensable time, and—that perennial favorite—how to interpret the infernal PAGA statute.

We expect the California Supreme Court in 2019 to issue decisions addressing many important issues in private employment. Some topics easily warrant their own article or blog post, and will receive that treatment as the Supreme Court’s decisions emerge. But it’s not too soon to highlight some coming attractions.

Anti-SLAPP and Alleged Employer Motive

  • Is an employer’s anti-SLAPP motion to strike an employee’s suit affected by the employer’s alleged discriminatory motive? In Wilson v. Cable News Network, Inc., the Supreme Court has agreed to decide “whether an employee’s claims for discrimination, retaliation, wrongful termination, and defamation arise from protected activity for purposes of a special motion to strike,” and “what is the relevance of an allegation that the employer acted with a discriminatory or retaliatory motive?”

Application of CA Wage-Hour Law to Out-of-State Employers

  • Does California employment law apply to non-California residents who work in California on a transitory basis? In Ward v. United Airlines and Oman v. Delta Air Lines, the Supreme Court has accepted the Ninth Circuit’s request to address five questions:
    • (1) “Does California Labor Code section 226 apply to wage statements provided by an out-of-state employer to an employee who resides in California, receives pay in California, and pays California income tax on her wages, but who does not work principally in California or any other state?”
    • (2) Does the exemption in Wage Order 9 for collective bargaining agreements (CBA) under the Railway Labor Act bar a wage statement claim brought under California Labor Code section 226 by an employee who is covered by such a CBA?
    • (3) “Do California Labor Code sections 204 and 226 apply to wage payments and wage statements provided by an out-of-state employer to an employee who, in the relevant pay period, works in California only episodically and for less than a day at a time?”
    • (4) “Does California minimum wage law apply to all work performed in California for an out-of-state employer by an employee who works in California only episodically and for less than a day at a time?”
    • (5) “Does the Armenta/Gonzalez bar on averaging wages apply to a pay formula that generally awards credit for all hours on duty, but which, in certain situations resulting in higher pay, does not award credit for all hours on duty?

Arbitration

  • When is an arbitration remedy broad enough to preclude an employee’s resort to a Berman hearing? Under existing law, employers cannot necessarily compel employees to arbitrate wage claims unless and until employees have had the chance to bring those claims before the Labor Commissioner in a “Berman hearing.” In OTO, L.L.C. v. Kho, the Supreme Court has agreed to decide these issues:
    • “(1) Was the arbitration remedy at issue in this case sufficiently affordable and accessible within the meaning of Sonic-Calabasas A, Inc. v. Moreno (2013) … to require the company’s employees to forego the right to an administrative Berman hearing on wage claims?
    • (2) Did the employer waive its right to bypass the Berman hearing by waiting until the morning of that hearing, serving a demand for arbitration, and refusing to participate in the hearing?”

Compensability

  • Does an employee engage in compensable work while waiting for the employer to inspect a bag the employee chose to bring to work? In Frlekin v. Apple, Inc., the Supreme Court has accepted the Ninth Circuit’s request to decide this issue: “Is time spent on the employer’s premises waiting for, and undergoing, required exit searches of packages or bags voluntarily brought to work purely for personal convenience by employees compensable as ‘hours worked’ within the meaning of California Industrial Welfare Commission Wage Order No. 7?”
  • Is walking to and from a time clock compensable hours worked? In Stoetzl v. State of California, the Supreme Court has agreed to decide this issue: “Does the definition of ‘hours worked’ found in the Industrial Wage Commission’s Wage Order 4, as opposed to the definition of that term found in the federal Labor Standards Act, constitute the controlling legal standard for determining the compensability of time that correctional employees spend after signing in for duty and before signing out but before they arrive at and after they leave their actual work posts within a correctional facility?”

Liability for Wage Payment

Preemption—By the FAA and the LMRA

  • Is a PAGA suit for unpaid wages immune from arbitration? In its 2014 Iskanian case, the California Supreme Court acknowledged that the Federal Arbitration Act (FAA) preempts state laws against class-action waivers in arbitration agreements, but also held that representative PAGA actions are not subject to mandatory arbitration. Now, in Lawson v. Z.B., N.A., the Supreme Court has decide to whether a representative action under PAGA, seeking recovery of individualized lost wages as civil penalties under Labor Code section 558, falls within the preemptive scope of the FAA.
  • Does federal labor law preempt a claim for termination wages? In Melendez v. San Francisco Baseball Associates, the Supreme Court has agreed to decide this issue: “Is plaintiffs’ statutory wage claim under Labor Code section 201 subject to mandatory arbitration pursuant to section 301 of the Labor Management Relations Act because it requires the interpretation of a collective bargaining agreement?”

Remedies

  • Can an employee seeking unpaid wages use the tort of conversion? In Voris v. Lampert, the Supreme Court has agreed to decide this issue: “Is conversion of earned but unpaid wages a valid cause of action?”

Rest Breaks & Meal Periods

  • Rest breaks for ambulance attendants on 24-hours shifts. In Stewart v. San Luis Ambulance, Inc., the Supreme Court accepted the Ninth Circuit’s request to decide these issues: (1) “Under the California Labor Code and applicable regulations, is an employer of ambulance attendants working twenty-four hour shifts required to relieve attendants of all duties during rest breaks, including the duty to be available to respond to an emergency call if one arises during a rest period?: (2) “Under the California Labor Code and applicable regulations, may an employer of ambulance attendants working twenty-four hour shifts require attendants to be available to respond to emergency calls during their meal periods without a written agreement that contains an on-duty meal period revocation clause? If such a clause is required, will a general at-will employment clause satisfy this requirement?” (3) “Do violations of meal period regulations, which require payment of a ‘premium wage’ for each improper meal period, give rise to claims under sections 203 and 226 of the California Labor Code where the employer does not include the premium wage in the employee’s pay or pay statements during the course of the violations?”

Standing for PAGA Claims

  • Can a PAGA plaintiff settle his individual wage and hour claims and still pursue his PAGA action as an “aggrieved employee”? In Kim v. Reins International California, Inc., the Supreme Court has agreed to decide whether an employee bringing an action under PAGA loses standing to pursue representative claims as an “aggrieved employee” by dismissing his or her individual claims against the employer.

Workplace solution. Some of the issues raised by the above cases may seem relatively minor, technical, or limited to particular industries. Yet many a significant class action has turned upon issues no more monumental. We will keep our eyes and ears on the Court’s progress and keep readers updated with the latest developments.

Seyfarth Synopsis: Governor Jerry Brown has already signed into law legislation covering meal period exceptions for truck drivers delivering commercial feed, adding communications to be considered as “privileged” for purposes of defamation suits, removing a reference to the seven-day waiting period for disability benefits under the paid family leave program, and clarifying salary history information.

As temperatures begin to drop, with pumpkin spiced lattes and the smells of dew in the air, things are still heating up in the Governor’s office. With only 16 days remaining in his signing period of his final term in office, the Governor has been active. This week he has been focused on bills covering climate—as he kicked off the Global Climate Action Summit on September 12 and recently signed bills blocking offshore oil drilling expansion, reducing carbon emissions, and setting a 100% clean electricity goal for the state. In addition, the Governor signed a much talked about bill, SB 954, requiring printed disclosures to mediation participants concerning mediation confidentiality.

While we’re keeping an eye on all employment bills sitting on his desk, here’s a quick recap of what he has already approved.  All these new laws take effect January 1, 2019 unless otherwise stated.

Meal Periods. Sponsored by the California Grain and Feed Association, AB 2610 carves out an exemption to Labor Code 512 by allowing truck drivers who transport commercial feed (i.e., livestock feed) to “remote, rural areas” to take a meal period after the sixth hour if their regular rate of pay is at least one and a half times the state minimum wage and the driver is subject to overtime pay.  Drivers must still be provided a second meal period at the tenth hour. The bill does not define “remote, rural areas,” but bill sponsors point to factors such as road conditions – narrow, twisting, in higher elevations or mountainous regions; limited rest stops, closed rest stops, or lack of road space to safely take a meal period; and low average speeds (e.g., 40-50 mph).

Privileged Communications. AB 2770 amends Section 47 of the Civil Code to add three types of communications regarding sexual harassment that are now considered “privileged” communications—meaning they cannot be used as a basis for defamation claim—unless they are made with malice (i.e., statements made with complete disregard for the truth or false accusations made out of spite, ill will, or hatred towards the alleged harasser). Specifically, the bill protects:

  1. Reports of sexual harassment made by an employee to their employer based on credible evidence and without malice;
  2. Communications made without malice regarding the sexual harassment allegations between the employer and “interested persons” (such as witnesses or victims); and
  3. Non-malicious statements made to prospective employers as to whether a decision to rehire, or not, would be based on a determination that the former employee engaged in sexual harassment.

Paid Family Leave. Prior legislation that went into effect on January 1, 2018 removed the seven-day waiting period before an eligible employee may receive family temporary disability benefits (under the paid family leave program, which provides wage replacement benefits to workers who take time off work to care for a seriously ill family member or to bond with a minor child within one year of birth or placement). AB 2587 removes the seven-day waiting period reference in Section 33013.1 of the Unemployment Insurance Code, since the waiting period rule has been removed.

Salary History Information. This year’s Fair Pay Act bill, AB 2282, was noted as sensible legislation that amends and clarifies ambiguities in Labor Code sections 432.3 and 1197.5 created by prior pay equity legislation—AB 1676 (Chaptered in 2016) and AB 168 (Chaptered in 2017). Read our in-depth analysis of AB 2282 here.

Immigration Status. SB 785, which went into effect upon the Governor’s signing on May 17, 2018 with a January 1, 2020 sunset date, prohibits the disclosure of an individual’s immigration status in open court in a civil or criminal action unless the party wishing to disclose the information requests a confidential in camera hearing and the judge deems the evidence relevant and admissible.

What other new laws will fall upon our Californian employers? We’ll keep our eyes and ears glued to his office anxiously waiting to see what may fall next—fueled by our PSL coffees, of course. Stay tuned for our next in-depth update coming after Governor Brown’s last day to sign or veto bills deadline of September 30th.