CalEmployeeRights

Cal. Supremes Hold That FEHA Statute Of Limitations Tolled By Pursuit Of Internal Remedies

        In McDonald v. Antelope Valley Community College Dist., ___ Cal.4th __ (No. S153964, Oct. 27, 2008) the Court found that the voluntary pursuit of internal remedies tolls the statute of limitations in a FEHA action.

                More after the jump

Ministerial Exception Bars Fired Minster’s Claims

       A former minister was barred by the ministerial exception from pursuing his claims for statements made by his church to the congregation that the homosexual pastor was fired for engaging in “sinful” conduct. In Gunn v. Mariners Church, Inc. (2008) __Cal.App.4th___ (G038445), the court of appeals affirmed the lower court’s decision granting the religious employer, Mariners Church’s motion for summary judgment against Robert Gunn, a former worship director at the church.

       The church terminated Gunn upon discovering his sexual orientation and then proceeded to make statements about the termination to church staff and congregation. The day after the termination, some of the senior church leaders announced to the congregation that Gunn had been terminated due to his “sinful” conduct, had suffered “a breakdown in character” and was a “broken man.” Gunn sued the church for intentional infliction of emotion distress, defamation and invasion of privacy.

Independent Contractor vs. Employee- At-Will Agreement Not Determinative

     An important preliminary question in employment cases is: Is the plaintiff an employee or an independent contractor?  This question is important because it determines what rights the plaintiff has.  For example, an independent contractor cannot bring a cause of action for wrongful termination in violation of public policy, while an employee can. 

     The primary way to differentiate between an employee and an independent contractor is based upon control.  An employer has the right to control the manner and means by which an employee accomplishes the result desired.  On the other hand, the independent contractor follows the employer’s desires as to the work to be accomplished, but can accomplish this work in whatever manner he or she desires. 

California Supreme Court Limits Non-Compete Provisions

                Yesterday in the case of Edwards v. Arthur Anderson LLP, ___Cal.4th___ (August 7, 2008) the California Supreme Court issued a strong statement against the enforceability of covenants not to compete.  Under this ruling, unless such a covenant  falls squarely within one of the statutory exceptions, it will not be upheld. 
                Raymond Edwards was a CPA working in Arthur Anderson’s Los Angeles office.  As part of his employment offer in 1997 Edwards signed a covenant not to compete.  This agreement stated that for eighteen months after the end of his employment, he would not perform professional services for any client on whose account he worked in the eighteen months prior to the end of his employment.  It also prevented him from performing any professional services for any client of the Los Angeles office of Arthur Anderson for twelve months. 
                In 2002 Arthur Anderson sold its tax service group to HSBC.  In order to be offered employment with the new HSBC group, Arthur Anderson had to waive the covenant not to compete regarding Edwards.  Arthur Anderson stated it would only waive this covenant not to compete if Edwards signed away various other rights.  Edwards refused and HSBC withdrew its offer of employment to Edwards.
                Edwards brought suit under California Business and Professions Code §16600, alleging that this covenant not to compete was invalid and restricted his right to practice his trade.  Arthur Anderson countered that the California Supreme Court should accept the 9th Circuit’s “narrow-restraint exception” to Section 16600, as outlined in Campbell v. Trustees of Leland Stanford Jr. Univ. (9th Cir. 1987) 817 F.2d 499.  Under this narrow-restraint exception, a covenant not to compete only violates Section 16600 if it completely restrains the employee from practicing his profession, trade or business.  It does not violate this section if it only places limited restrictions on the employee. 
                In Edwards, the California Supreme Court flatly rejected the “narrow-restraint exception” to Section 16600.  The Court held that “California courts have been clear in their expression that section 16600 represents a strong public policy of the state which should not be diluted by judicial fiat.”  (Edwards at p. 13. (citing Scott v. Snelling and Snelling, Inc. (N.D.Cal. 1990) 732 F. Supp. 1034, 1042.))
                Therefore, going forward, California courts will probably strike any covenant not to compete that does not fall squarely within a statutory exception to Section 16660.

Attorneys' Fees to Employees in Contract Cases

       As noted previously here, it appears that California courts are becoming more liberal in granting attorney fees in employment cases, specifically contract cases.  As we discussed, in the case of Otay River Constructors v. San Diego Expressway (2008) 158 Cal.App.4th 796,  the court held that a plaintiff who successfully opposed a motion to compel arbitration was entitled to attorney fees.

        Now, in the case of Profit Concepts Management, Inc. v. Griffith (2008) ___ Cal. App. 4th ___ (Fourth Appellate Dist., No. G039077)  the court held that a former employee who was dismissed from a suit for lack of jurisdiction was the prevailing party and thus entitled to attorney fees under the employment contract.

        Greg Griffith, a resident of Oklahoma, was a former employee of Profit Concepts.  A portion of his employment contract contained a provision stating that if Profit Concepts was the successful litigant in an action to enforce the terms of or an action resulting from the contract it was entitled to attorney fees.  Under Civil Code §1717  this unilateral right to receive fees became reciprocal.

        Following an employment dispute, Profit Concepts Management sued in California court for, among other things, breach of contract.

        Griffith moved to quash service of a summons for lack of personal jurisdiction.  Profit Concepts did not oppose this motion, and the motion was granted.  Griffith then moved for an award of attorney fees under the contract.  The trial court granted this motion as well.  Profit Concepts appealed.

        The Court of Appeals upheld the grant of attorney fees.  The Court reasoned that under CCP §1032(a)(4),  when a party receives other than monetary relief, the trial court can determine who is the prevailing party.  The trial court had found Griffith the prevailing party, so he was entitled to attorney fees under the contract.

                                                                     -- Michael Sachs

Cal Supremes Clarify California Family Rights Act

California law, like the Federal law, protects the rights of an employee with a “serious health condition” that makes the employee “unable to perform the functions” of his or her job.  The California Family Rights Act, or CFRA (Gov. Code sections 12945.1, 12945.2) allows eligible employees twelve weeks of unpaid leave and continuance of health benefits.

Like the Federal act, the CFRA provides that an employer who disputes a physician’s finding of an employee’s right to leave can, at its own expense, seek a second opinion from a physician of its choosing.  If that does not resolve the dispute, the employer may arrange for a third examination, also at its expense, by a physician agreed to by both employer and employee.  The determination of the third physician is binding on employee and employer.

In Lonicki v. Sutter Health Central (2008) ___Cal.4th___ (S130839), the California Supreme Court made two significant rulings:

• While the employer can get the second and third opinion, it doesn’t have to do so.  If the employer believes the employee is not entitled to leave, it can simply deny the leave request, and discipline or terminate the employee for not coming to work.  Of course, the employee can then sue the employer for damages for violating CFRA, and if the employer is wrong, it will lose the suit.

• If the employee gets another job that is anything other than identical to the job from which the employee is taking leave, this may be strong evidence that the employee is actually able to perform the functions of his or her previous job.  But it isn’t conclusive, and the employee may still be entitled to a jury trial as to whether he or she was entitled to leave.  And under this decision, it sounds like almost no two jobs will ever be identical.

Supremes Decide Jones v. Lodge at Torrey Pines

The California Supreme Court has decided in Jones v. Torrey Pines (2008) ___ Cal.4th ___ (S151022) that non-employer individuals cannot be held liable for retaliation.  The applicable part of the FEHA, Government Code section 12940(h) makes it unlawful for "any employer, labor organization, employment agency, or person to discharge, expel, or otherwise discriminate against any person because that person has filed a complaint, testified, or assisted in any proceeding" under FEHA.  Two California courts of appeal and the Ninth Circuit have all held that this language is unambiguous and means what it says:  an individual may not retaliate against a person who exercises FEHA rights, and can be held liable if he or she does.  Taylor v. City of Los Angeles Dept. of Water & Power (2006) 144 Cal.App.4th 1216;  Walrath v. Sprinkel (2002) 99 Cal.App.4th 1237;  Winarto v. Toshiba America Electronics Components (9th Cir. 2001) 274 F.3d 1276.

Not so, said the Supreme Court:  the use of the term "person" is ambiguous, and the Court therefore goes through an extensive amount of "interpretation" to render the word surplusage to support its holding. In an  impassioned and very well-reasoned dissent, Justice Moreno (joined by Justices Werdegar and Kennard) assails the Court for implementing its own views of public policy and incentivizing supervisors who harass to also retaliate against employees who oppose the harassment in an effort to dissuade their victims from reporting the conduct. 

The majority argues that it is only addressing retaliation for complaining of discrimination, not harassment (fn. 4) and that it is not expressing an opinion as to whether retaliation for complaining of harassment makes a supervisor liable.  So this window remains slightly open.  But as Justice Moreno shows in his dissent (the majority doesn't discuss the facts of the case at all), the complaints which formed the basis for the retaliation clearly related to harassment.

All in all, not a good day for plaintiffs in FEHA retaliation cases.

Wrongful Termination Case Based on Labor Code Section 232.5 is Preempted by NLRA

California has two statutes, Labor Code sections 232 and 232.5, that protect the rights of employees to disclose information about their compensation or working conditions.  The first, Labor Code section 232, was enacted in 1984, provides:

No employer may do any of the following:

(a) Require, as a condition of employment, that an employee refrain from disclosing the amount of his or her wages.

(b) Require an employee to sign a waiver or other document that purports to deny the employee the right to disclose the amount of his or her wages.

(c) Discharge, formally discipline, or otherwise discriminate against an employee who discloses the amount of his or her wages.

This statute was broadly interpreted by the Court of Appeal in Grant-Burton v. Covenant Care, Inc. (2002) 99 Cal.App.4th 136. There, the court upheld a claim for wrongful termination against public policy after an employee was allegedly terminated for telling co-employees (during an exchange of information between co-employees) that she did not receive a bonus.  The court held that (a) section 232 set forth the public policy of the state protecting employees from adverse employment action for disclosing information about “wages,” and (b) that the statute was intended to protect employees who wanted to discuss “some aspect of their compensation, for example, a possible increase in pay, perceived disparities in pay, or the awarding of bonuses.”

Only months after the court’s Grant Burton decision, the legislature enacted Labor Code section 232.5:

No employer may do any of the following:

(a) Require, as a condition of employment, that an employee refrain from disclosing information about the employer's working conditions.

(b) Require an employee to sign a waiver or other document that purports to deny the employee the right to disclose information about the employer's working conditions.

(c) Discharge, formally discipline, or otherwise discriminate against an employee who discloses information about the employer's working conditions.

(d) This section is not intended to permit an employee to disclose proprietary information, trade secret information, or information that is otherwise subject to a legal privilege without the consent of his or her employer.

In the following six years, no California court has issued a published decision involving section 232.5. . . . . until now.

More after the jump.

Employment Cert Petitions Before US Supreme Court

The final two employment cases before the Supreme Court on Cert petitions to be decided on January 11, 2008 are James v. Metropolitan Government of Nashville and Progress Energy, Inc. v. Taylor.  James asks who, the judge or the jury, should decide if retaliatory actions are severe enough to violate Title VII, 42 U.S.C. 2000e et seq   Taylor relates to whether or not an employee can retroactively release claims under the Family and Medical Leave Act, 29 USC 2601 et seq.

More after the jump.

"Reasonable Factors" -- Who Has the Burden of Proof in ADEA Cases?

The ADEA prohibits age discrimination in employment.  At the same time, 29 U.S.C. section 623(f)(1) allows "differentiation" between persons in different age groups if that differentiaion is based on "reasonable factors other than age."  Does the employer have the burden of proving that its "differentiation" was based on reasonable, non-age based factors, or does the employee have the burden of showing it was not?  This issue is now before the US Supreme Court on cert petition, and the solicitor general has urged the court to grant cert in Meacham v. Knolls Atomic Power Lab.  A copy of the federal government’s amicus curiae is available here.

Clifford Meacham and other employees of Knolls Atomic Power Laboratory were subjected to an involuntary reduction of force. The company had developed a three part process for determining which employees to terminate. While age was not an explicit part of the process, 30 of the 31 employees terminated were over the age of 40. At the time of the layoff, only 60% of the work force was over 40 years old. Meacham and other employees brought suit for age discrimination under the ADEA. At trial, the jury found that the plaintiffs established disparate-impact.

The defendant appealed and the Second Circuit Court of Appeals affirmed the trial court’s decision.  In this first appeal, the court evaluated disparate-impact under the framework described in Wards Cove Packing Co. v. Atonio, (1989) 490 U.S. 642. In affirming, the court found that the defendant could have designed an involuntary reduction in force that was less vulnerable to bias.

Shortly after the employer filed a cert petition, the Supreme Court issued its decision in Smith v. City of Jackson (2005) 544 U.S. 228. The Supreme Court then granted cert in Meacham, vacated the judgment and remanded it for further proceedings based on Smith.

On remand the Second Circuit vacated the original judgment and instructed the district court to enter judgment for Knolls. The appeals court held that based on Smith, the plaintiff bears the burden of persuasion that the employer’s justification in unreasonable.  It is the plaintiffs’ appeal of this decision which is currently before the Court on a cert petition.

In its amicus brief the federal government is asking the Supreme Court to grant cert to determine whether the employee or the employer bears the burden of persuasion in establishing "reasonable factors other than age" under section 623 (f)(1).

The Ninth Circuit addressed this issue in 1983 in the case Criswell v. Western Airlines, Inc. (9th Cir. 1983) 709 F.2d 544. In Criswell the Ninth Circuit held that the employer, not the employee, bears the burden of persuasion in establishing reasonable factors other than age. Therefore, if the Supreme Court does grant cert and affirms the holdings in Meacham  it's holding would likely affect application of the ADEA in California and the 9th Circuit.

Additional discussion of the Meachum case can be found at Scotusblog.

                                                                --Michael Sachs