New Law: New Labor Code Section 2500 Protects Grocery Workers' Jobs on Change of Ownership

Just a quick word regarding AB 359, which provides protections to grocery workers upon a change of ownership of a grocery. With certain exceptions, upon the change of control of a grocery, the successor grocery employer must retain eligible grocery workers for a 90-day period, may not discharge those workers without cause during that period, and, upon the close of that period, must consider offering continued employment to those workers. Cal. Labor Code section 2500 et seq.


The text of AB 359 is here. 

Yocupicio v. PAE Group: Ninth Circuit Addresses CAFA Jurisdiction in Case Raising Both Class and PAGA Claims

In Yocupicio v. PAE Group, LLC, ___ F.3d ___ (9th Cir. 7/30/15), the plaintiff filed a class and PAGA representative action alleging a number of wage and hour violations. The defendants removed the case under the Class Action Fairness Act (CAFA), and the district court denied the plaintiff's motion to remand. The plaintiff appealed, and the Ninth Circuit reversed, holding as follows:

CAFA jurisdiction requires the following: a class of more than 100 members, "minimal diversity" among the parties, and an amount in controversy in excess of $5 million. The court found no question that the class claims would "satisfy CAFA’s numerosity and minimal diversity requirements," but the case did not satisfy the amount in controversy requirement. The value of the class claims alone did not satisfy the $5 million requirement, and the district court erred in adding in the value of the PAGA claims to make up the difference. Only class claims count toward the $5 million requirement, and PAGA claims are not class claims. The Court concluded: 

Where a plaintiff files an action containing class claims as well as non-class claims, and the class claims do not meet the CAFA amount-in-controversy requirement while the nonclass claims, standing alone, do not meet diversity of citizenship jurisdiction requirements, the amount involved in the non-class claims cannot be used to satisfy the CAFA jurisdictional amount, and the CAFA diversity provisions cannot be invoked to give the district court jurisdiction over the non-class claims. 

The opinion is available here. 

Williams v. Superior Court: Cal. Supreme Court Grants Review of Holding that Trial Court May Allow Discovery on Incremental Basis in PAGA Action

In Williams v. Superior Court (Marshalls of CA, LLC) (5/15/15) --- Cal.App.4th --- (discussed here), the Court of Appeal held that in a PAGA action, the trial court may require the plaintiff to proceed with discovery incrementally, rather than receiving the names and contact information of allegedly aggrieved employees at the start of the litigation.

The California Supreme Court granted review on August 19, 2015, stating the issues as follows: 

(1) Is the plaintiff in a representative action under the Labor Code Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.) entitled to discovery of the names and contact information of other “aggrieved employees” at the beginning of the proceeding or is the plaintiff first required to show good cause in order to have access to such information?  

(2) In ruling on such a request for employee contact information, should the trial court first determine whether the employees have a protectable privacy interest and, if so, balance that privacy interest against competing or countervailing interests, or is a protectable privacy interest assumed? (See Hill v. National Collegiate Athletic Association (1994) 7 Cal.4th 1; Pioneer Electronics (USA), Inc. v. Superior Court (2007) 40 Cal.4th

Williams v. Superior Court is case no. S227228, and the Court's web page for it is here.

France v. Johnson: Plaintiff Raises Genuine Issue in Age Discrimination Case by Introducing Evidence that Person Involved in Promotion Decision Made Discriminatory Statements and Repeatedly Raised Question of Retirement with Him

In France v. Johnson, ___ F.3d ___ (8/3/15), a border patrol agent sued the Secretary of the Department of Homeland Security (DHS), alleging that DHS violated the Age Discrimination in Employment Act (ADEA) by refusing to promote him because of his age. The district court granted DHS's motion for summary judgment, finding that although France established a prima facie case of age discrimination, he failed to raise a genuine dispute of material fact on the agency's nondiscriminatory reasons for not promoting him. France appealed, and the Ninth Circuit reversed, holding as follows:

Where a plaintiff introduces direct evidence of a discriminatory motive, the McDonnell Douglas burden-shifting analysis does not apply on summary judgment. Although France introduced "some direct evidence and some circumstantial evidence" of discriminatory intent, the Court found it "most appropriate" to use McDonnell Douglas. 

In a failure-to-promote case, a plaintiff may establish a prima facie case of discrimination in violation of the ADEA by producing evidence that he or she was (1) at least forty years old, (2) qualified for the position for which an application was submitted, (3) denied the position, and (4) the promotion was given to a substantially younger person. 

To determine whether the person promoted is "substantially younger" than the plaintiff, an age difference of ten or more years is presumed substantial, and an age difference of less than ten years is presumed insubstantial. A plaintiff can rebut the presumption by showing that the employer considered his or her age to be "significant." Evidence, inter alia, that one of the decisionmakers expressed a preference for younger employees was sufficient to rebut the presumption. France established a prima facie case of discrimination.

DHS established legitimate business reasons for rejecting France, so the Court turned to the final element of the test: the plaintiff's obligation to raise a genuine dispute of material fact as to pretext.

Because "the ultimate question is one that can only be resolved through a searching inquiry—one that is most appropriately conducted by a factfinder, upon a full record," "it should not take much for a plaintiff in a discrimination case to overcome a summary judgment motion." France raised genuine issues sufficient to defeat summary judgment by introducing evidence that one of the decisionmakers - even if not the chief decisionmaker - made discriminatory statements and repeatedly raised the issue of retirement with him. 

The opinion is available here. 

Governor Brown Signs Urgency Legislation Amending Sick Leave Law

Last September, Governor Brown signed California’s new sick leave law, the Healthy Workplaces, Healthy Families Act, or HWHFA. (Quite a name. Rolls right off the tongue.) With limited exceptions, the HWHFA requires employers to provide employees with paid sick leave, which employees can use to care for themselves or their family members. Unfortunately, whether you support the idea of giving employees paid sick leave or not, the law was not very clear. With the law set to kick in on July 15, many employers were still guessing as to how to implement it.

On July 13, with two days to spare, Governor Brown signed legislation to clarify the law. Cal. Labor Code sections 245.5, 246, and 247.5. 

As just one example, the original law provided that employees could accrue sick leave at a rate of not less than one hour of leave for every 30 hours worked, or employers could provide a lump sum of three days or 24 hours at the start of each year. But what about employers whose existing sick leave or paid time off (PTO) policies accrued leave at a different rate? Under the amended law, employers may allow sick leave to accrue a basis other than one hour for each 30 hours worked, as long as (1) the sick leave accrues on a regular basis and (2) the employee will accrue at least 24 hours of sick leave by the 120th calendar day of employment. 

The law amending the statutes, AB 304, was designated as urgency legislation, to go into effect immediately. It is available here. 

Sanchez v. Valencia Holding Co: Cal. Supreme Court Addresses Unconscionability, Enforceability of Consumer Arbitration Agreement

In Sanchez v. Valencia Holding Company, LLC (8/3/15) --- Cal.4th ---, the California Supreme Court has addressed a number of issues involving the enforcement of an arbitration provision in a car dealer's sales contract. 

In the underlying decision, Sanchez v. Valencia Holding Company, LLC (11/23/11) 200 Cal.App.4th 11 (discussed here), the Court of Appeal found the arbitration provision unenforceable as procedurally and substantively unconscionable. The Court held that AT&T Mobility LLC v. Concepcion, 563 U. S. __, 131 S.Ct. 1740 (2011), did not apply because the question was not "the enforceability of a class action waiver or a judicially imposed procedure that is inconsistent with the arbitration provision and the purposes of the Federal Arbitration Act (FAA)." 

The Supreme Court granted review in 2012, stating the issue as whether the FAA, under Concepcion, preempts unconscionability analysis of an arbitration provision in a consumer contract. 

After granting review, the Court issued its decision in Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109 (discussed here), in which it held that unconscionability remains a valid defense to petitions to compel arbitration, provided that they not facially discriminate against arbitration, that they are enforced evenhandedly, and that they do not disfavor arbitration by imposing procedural requirements that interfere with fundamental attributes of arbitration. 

Also after granting review, the Court ordered the parties to brief questions regarding the proper test for finding substantive unconscionability: 

[T]his court has used a variety of terms, including "unreasonably favorable" to one party (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1145); "so one-sided as to shock the conscience" (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (2012) 55 Cal.4th 223, 246); "unfairly one-sided" (Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071-1072); "overly harsh" (Armendariz v. Foundation Health Psychare Services, Inc. (2000) 24 Cal.4th 83, 114); and "unduly oppressive" (Perdue v. Crocker National Bank (1985) 38 Cal.3d 913, 925). 

Which, the Court asked, is the proper test? 

Answering these questions, the Supreme Court reversed the decision of the Court of Appeal, holding as follows: 

A party must show both procedural and substantive unconscionability in order to void a contract. The analysis is "highly dependent on context," and the standard for substantive unconscionability may be stated in any number of different ways, including each of those set forth above. The standard is, "as it must be, the same for arbitration and nonarbitration agreements." 

The contract at issue was one of adhesion. Although not all contracts of adhesion are procedurally unconscionable, the "adhesive nature of the contract is sufficient to establish some degree of procedural unconscionability" and require analysis of substantive unconscionability. 

The contract provided that an award could not be appealed unless: it were for $0; it exceeded $100,000; or it granted a request for injunctive relief. This provision was not substantively unconscionable. The right to appeal awards of $0 or more than $100,000 is not "significantly more beneficial to the seller," the party drafting the contract. And given the "broad impact that injunctive relief may have on the car seller's business," it would not be unreasonable to allow the seller to appeal an award granting injunctive relief. 

The contract provided that the seller would advance the consumer's arbitration fees up to $2,500, subject to apportionment by the arbitrator, and the appealing party would pay the appellate fees and costs, subject to apportionment by the appellate panel. While this clause would be unconscionable in the context of unwaivable statutory employment rights, California allows arbitration fees and costs to be charged to consumers, except those who are indigent. Cal. Code Civ. Proc. 1284.3. As a result, a consumer attacking this clause would need to present evidence of his inability to pay these fees. The plaintiff here did not do so, and the clause therefore is not unconscionable. 

The contract provided that the parties retained their rights to self-help remedies, such as repossession. This was not unconscionable because: it is offset by a provision that allows the parties to go to small claims court; self-help remedies are always sought outside of the litigation process; and repossession fulfills a legitimate business need in the auto industry. 

The Consumer Legal Remedies Act (CLRA) provides that a consumer's waiver of his or her right to bring a class action is "unenforceable and void." This provision is preempted "insofar as it bars class waivers in arbitration agreements covered by the FAA." 

Justice Chin concurred in the result but dissented from the reasoning. He argued: the FAA requires enforcement of the class action waiver; unconscionability remains a valid defense after Concepcion; the consumer failed to establish either procedural unconscionability here; to be substantively unconscionability, a contract -- taken as a whole -- must "shock the conscience," and other formulations of the standard should not be used; and neither the individual clauses challenged nor the arbitration agreement as a whole was substantively unconscionable under any standard endorsed by the majority. 

The opinion is available here. 

U.S. Department of Labor Issues Administrator’s Interpretation on Independent Contractor Classification under the Fair Labor Standards Act

On July 15, 2015, the U.S. Department of Labor's Wage and Hour Division (WHD) issued Administrators Interpretation 2015-1: "Application of the Fair Labor Standards Act's 'Suffer or Permit' Standard in the Identification of Employees Who Are Misclassified as Independent Contractors."

The Interpretation's stated goal is to provide "guidance regarding the application of the standards for determining who is an employee under the Fair Labor Standards Act [FLSA] ... to the regulated community in classifying workers and ultimately in curtailing misclassification."

In order to make the determination whether a worker is an employee or an independent contractor under the FLSA, courts use the multi-factorial “economic realities” test, which focuses on whether the worker is economically dependent on the employer or in business for him or herself. A worker who is economically dependent on an employer is suffered or permitted to work by the employer. Thus, applying the economic realities test in view of the expansive definition of “employ” under the Act, most workers are employees under the FLSA. The application of the economic realities factors must be consistent with the broad “suffer or permit to work” standard of the FLSA.

The Interpretation discusses each of the factors in the multi-factor test, which it lists as follows:

A. Is the work an integral part of the employer's business?  

B. Does the worker's managerial skill affect the worker's opportunity for profit or loss?  

C. How does the worker's relative investment compare to the employer's investment?  

D. Does the work performed require special skill and initiative?  

E. Is the relationship between the worker and the employer permanent or indefinite? 

F. What is the nature and degree of the employer’s control? 

This is the fifth Administrator's Interpretation since the Obama Administration began issuing them in 2010. Prior to 2010, the DOL had issued opinion letters in response to specific questions from the public. The WHD's web page for Administrator's Interpretations is here. 

Teamsters v. Washington Department of Corrections: Female Gender is a Bona Fide Occupational Qualification for Certain Correctional Officers in Female Prison

In Teamsters Local Union No. 114 v. Washington Department of Corrections, ___ F.3d ___ (9th Cir. 6/12/15), the Department of Corrections (DOC) designated a "limited number of female-only correctional positions—specifically, 110 positions to patrol housing units, prison grounds, and work sites." The local union for correctional officers sued the DOC under Title VII, alleging that its policy discriminated against male correctional officers. The district court granted summary judgment in favor of the State, the union appealed, and the Ninth Circuit affirmed, holding as follows:

While Title VII prohibits employment practices that discriminate on the basis of sex, a facially discriminatory employment practice is allowed if sex is a bona fide occupational qualification (BFOQ) for the position. 

To justify discrimination under the BFOQ exception, an employer must show, by a preponderance of the evidence, that: (1) the "job qualification justifying the discrimination is reasonably necessary to the essence of its business"; and (2) "sex is a legitimate proxy for determining" whether a correctional officer has the necessary job qualifications.

"Judgments by prison administrators that are the product of a reasoned decision-making process, based on available information and expertise, are entitled to some deference." The DOC in this case underwent an exhaustive process to determine that sex was a BFOQ for the positions at issue, and the DOC's judgment was entitled to deference.

Female gender was a BFOQ for the positions at issue. The DOC identified several reasons for placing only women into these positions: improving security, protecting inmate privacy, and preventing sexual assaults. Placing only women in these positions was reasonably necessary to the essence of prison administration. The employees' sex was a "legitimate proxy" for determining whether officers had the necessary job qualifications to meet these goals, and alternatives to the sex-based classification were "reasonably considered and refuted."

The opinion is available here.