LEGISLATIVE

Here are some of the more substantive employment-related bills currently pending before the California legislature or the United States Congress. We will continue to monitor and update on the progress of these bills during the current legislative session.

California

Individual Alternative Work Week Schedules (AB 141)

California Labor Code section 510 currently permits employees to adopt so-called alternative workweek schedules and work up to ten hours per day without overtime, but only if two-thirds of the employees in a “work unit” vote to approve such a schedule. Known as the Workplace Flexibility Act of 2009, this bill would permit an individual non-exempt employee to request an employee-selected flexible work schedule authorizing workdays up to ten hours per day within a forty hour workweek without overtime. Simply summarized, this bill would enable individual employees to request and obtain a flexible work schedule of four 10-hour days without requiring adoption by a super-majority of the employee’s work unit.

DLSE Consulting Services (AB 227)

The Department of Labor Standards Enforcement (DLSE) is responsible for enforcing California’s labor laws. This bill would create a Labor Standards Consultation Unit within the DLSE to provide consulting services to employers or employees regarding compliance with California’s labor standards. This new consulting unit would be permitted to charge for its consulting services up to the actual costs incurred by the unit, and the unit would initially be funded by grants from non-governmental entities. To encourage such consulting services, the DLSE would be prohibited from citing employers for violations uncovered during these consulting services provided the employer remedied the violations within 30 days.

Disciplinary Actions against Public Employees (AB 749)

California law currently contains various provisions relating to civil service and employer-employee relations, including the disciplining of public employees. Current law authorizes the appointing power to take adverse action against public employees for specified actions if advance written notice is provided. This bill would prohibit the imposition of disciplinary action until the State Personnel Board hearing has been completed and an administrative law judge has sustained the charged, except where the continued presence of the employee presents a clear and present danger.

California’s Version of the Lilly Ledbetter Fair Pay Act (AB 793)

In February 2009, President Obama signed the Lilly Ledbetter Fair Pay Act (Ledbetter Act), which essentially overruled the United States Supreme Court decision in Ledbetter v. Goodyear Tire & Rubber Co. (2007) 550 U.S. 618. The Ledbetter Act amended various federal civil rights statutes to clarify that the statute of limitations for discriminatory pay claims is triggered each time the employee receives a paycheck flowing from an original discriminatory decision.

This bill would similarly reject the Ledbetter decision and clarify that the statute of limitations in California for unlawful compensation practices accrues when any of the following occurs: (1) a compensation decision or other practice is adopted; (2) an individual becomes subject to a compensation decision or practice; or (3) an individual is affected by this decision or practice, including each time the employee is paid under that decision or practice. The legislature considered but did not pass a similar bill in 2008, likely because it was awaiting guidance from the federal Congress.

Cal-WARN Act Amendments (AB 842)

California’s version of the federal WARN Act requires employers, except in narrow circumstances, to provide 60 days advance written notice of a mass layoff, relocation or termination. This bill would increase the advance layoff notice period from 60 to 90 days, and similarly expand the employer’s liability for back pay awards from 60 to 90 days.

This bill would also require the Labor and Workforce Development Agency (LWDA) to develop a guide of benefits and services available to employees affected by a WARN-related event, and require employers to provide this guide to employees concurrently with the advance written notice of the impending mass layoff. The bill further provides that 10 percent of civil penalties imposed upon employers for Cal-WARN violations would be used by the LAWDA to fund its new duties under these amendments. The legislature considered but did not pass a similar bill in 2008.

Expanded CFRA Leave Entitlement (AB 849)

California’s Family Rights Act (CFRA) entitles an employee to take up to twelve weeks of unpaid leave because of the employee’s own serious health condition, to bond with or care for a child, or to care for the employee’s spouse [or domestic partner] or parent’s serious health condition. This bill would amend Government Code section 12945.2 and expand the circumstances under which an employee would be permitted to take leave in several respects. First, it would eliminate the age and dependency requirements in the definition of child, thus allowing employees protected leave to care for independent adult children suffering from a serious health condition. Second, it would expand the definition of “parent” to include an employee’s parent-in-law. Third, it would permit employees to take leave to care for a seriously ill grandparent, sibling, grandchild or domestic partner (as that term is defined in Family Code section 297).

Limitations on Obtaining Credit Reports (AB 943)

The federal Fair Credit Reporting Act permits employers to obtain credit reports regarding an applicant or employee seeking promotion provided the employer provides notice that a report is needed and the person authorizes procurement of the credit report. This bill would amend California’s Fair Employment and Housing Act to prohibit employers, except where based upon a bona fide occupational qualification, from refusing to hire or disciplining persons who refuse to authorize employers to obtain a credit report regarding the person. This bill would also create a rebuttable presumption of an unlawful employment practice if an employer takes any such prohibited action within 60 days of the person denying authorization for the employer to obtain the credit report.

Paid Sick Leave Bill Re-Introduced (AB 1000)

Known as the Healthy Workplaces, Healthy Families Act of 2009, this bill would require employers to provide paid sick leave to eligible employees. Employees who work in California for seven or more workdays in a calendar year would be entitled to paid sick leave, which would accrue at the rate of at least one hour for every thirty hours worked. The employee would be entitled to use the accrued paid sick days beginning on the 90^th calendar day of employment, and could use them for their own or a family member’s illness, or for leave related to domestic violence or sexual assault. Unused sick days would carry over to subsequent calendar years, but would not be treated as compensation owed upon termination of employment. This bill would prohibit employers from retaliating against employees who use their paid sick leave.

A similar bill was introduced in 2008 but stalled due to California’s budget problems.

FEHA to Preclude “Familial Status” Discrimination (AB 1001)

This bill would amend FEHA to include “familial status” as an additional basis upon which the right to seek, obtain and hold employment cannot be denied. “Familial status” is defined as the employee residing with an individual under the age of 18 years of age or being in the process of obtaining custody over an individual under 18 years of age. This bill would also amend CFRA to permit employees to take unpaid leave for the serious health condition of the employee’s grandparent, a parent-in-law, a domestic partner or a sibling (in addition to the serious health condition of the employee, or their child, spouse or parent).

Meal Period Reforms (SB 287)

This bill attempts to clarify several meal period obligations in Labor Code section 512. For instance, this bill would clarify that a meal period based on an employee working more than five hours in a day must be “provided” before the employee completes six hours of work, unless the existing waiver provision is invoked. This bill also clarifies that the employer’s requirement to provide a meal period means “making available to the employee” rather than ensuring the meal period is taken. This bill also provides clarifications regarding on-duty meal periods by specifically enumerating the instances under which on-duty meal periods are permitted. It also would require employees to provide three days written advance notice of their intention to revoke an on-duty meal period agreement.

Federal

Employee Free Choice Act Reintroduced (H.R. 1409/S. 560)

The Employee Free Choice Act (EFCA) would significantly amend union organizing rules under the National Labor Relations Act (NLRA). Under EFCA, the National Labor Relations Board (NLRB) would be required to certify a union without directing an election if a majority of bargaining-unit employees signed authorization cards in support of the union. As a practical matter, unions would be able to bypass secret ballot private elections in favor of the card-check process.

Under EFCA, after a union is designated, the employer and union would have ninety days to negotiate a first contract, and if unable to do so, they would be required to undergo thirty days of mediation with a federal mediator. If mediation proved unsuccessful, the parties would be required to submit to binding arbitration in which an arbitrator would produce a two-year contract governing workplace terms and conditions. EFCA also would substantially increase penalties, including back pay plus liquidated damages, on employers that commit unfair labor practices during union organizing drives.

EFCA passed the House last term and is expected to do so again, but its prospects for Senate passage are unclear, particularly since Senator Arlen Spector (R-PA), the only Republican who voted for cloture last year, has recently signaled he opposes cloture this year.

National Labor Relations Modernization Act (H.R. 1355)

This bill has not attracted as much attention as EFCA, but would also substantively amend the NLRB and the union election process. It would require the employer to notify employee representatives about the steps and materials the employer intended to use during the election process, and to provide the union equal access to the employees. Like EFCA, it seeks to shorten negotiations regarding the first collective bargaining agreement by requiring mediation followed by binding arbitration if initial direct negotiations were not completed within the time period proposed in this bill (120 days). It also calls for increased civil penalties for employers who commit unfair labor practices during union organizing drives.

Arbitration Fairness Act of 2009 (H.R. 1020)

This bill would amend the Federal Arbitration Act to prevent employers from requiring employees to agree to arbitrate future employment disputes as a condition of employment. It also provides that the validity or enforceability of an arbitration agreement shall be determined by court under federal law, rather than an arbitrator.

Working Families Flexibility Act (H.R. 1274)

This bill, which would apply to employers with more than fifteen employees, is intended to increase work/life balance by establishing a process for employees to request changes in terms and conditions of employment. It would permit employees to apply for changes regarding the number of hours the employee is required to work, the times when the employee is required to work, and where the employee is required to work. It would require employers to engage in an interactive process with the employee to discuss the employee’s needs and possible accommodations, and require employers to explain the basis for any denial. It would also prevent employers from retaliating against employees who submit such requests.

This bill is substantively identical to last year’s version which stalled in Congress, but was supported by then-Senator Obama.

Paycheck Fairness Act of 2009 (H.R. 12/S. 182)

These bills seek to amend the Equal Pay Act (EPA) and the Fair Labor Standards Act (FLSA) to further eliminate gender-based wage discrimination. They would eliminate the current “any factor other than sex” defense to explain wage differentials, and instead require employers to affirmatively demonstrate any differential resulted from a bona fide factor other than sex, and that the bona fide factor was a business necessity. These bills would also remove the caps on compensatory and punitive damages for EPA violations, and make it easier for plaintiffs to maintain class action suits.

Similar versions of these bills passed the House last year, but stalled in the Senate despite support from then-Senator Obama.

Family Leave Insurance Act of 2009 (H.R. 1723)

This bill is intended to allow employees to take paid leave under the Family and Medical Leave Act (FMLA) and appears similar to California’s Paid Family Leave Act enacted in 2002. This bill would provide 12 weeks of paid benefits to workers who need time off due to the birth or adoption of a child, to care for their own or a family member’s serious health condition, or who need leave under the FMLA’s new military-related leaves. The benefits would be paid through a trust fund financed equally by employers and employees, who will each contribute 0.2 percent of the employee’s pay.

Paid Sick Leave Bill Expected Soon

In the near future Congress is expected to reintroduce the Healthy Families Act (previously considered as H.R. 1542/S. 910), which would require public and private employers with more than 15 employees to provide paid sick leave to their full and part-time employees. Employees working more than 30 hours per week would accrue up to seven days of paid sick leave annually, while part-time employees (more than 20 hours per week) would receive a pro-rata share of paid leave. This leave could be used on an hour-by-hour basis or in the smallest increment the employer’s payroll system tracks, and may be used for the employee’s illness or medical visits, or to care for a sick child, parent, spouse, domestic partner or other individual related by blood.

Prohibition on “Sexual Orientation” Discrimination

Another bill likely to be reintroduced soon is the Employment Non-Discrimination Act (previously considered as H.R. 3685), which would amend Title VII to prohibit discrimination based on sexual orientation, and require employers to provide reasonable access to facilities consistent with the employee’s identified gender. This bill previously passed the House by a sizable margin, and President Obama has previously signaled support for this bill.

AGENCY

California

Updated CFRA Regulations On the Way?

On January 16, 2009, the recently-issued DOL regulations for the Family Medical Leave Act (FMLA) took effect. The California legislature has not yet enacted corresponding changes to California’s Family Rights Act (CFRA), but the California Fair Employment and Housing Commission (FEHC) has recently announced it intends to revise its CFRA regulations to address the recent FMLA regulations. In the interim, the FEHC has prepared a chart comparing the similarities and differences between the updated FMLA regulations and the current version of the CFRA regulations. This chart is available on the FEHC’s website at http://www.fehc.ca.gov/pdf/FMLA-CFRARegsTable-2.pdf.

Federal

New I-9 Form Takes Effect on April 3, 2009

Unless the United States Citizen and Immigration Services Department (USCIS) issues a further delay, the new I-9 Form for determining employment eligibility is scheduled to become effective and will be required for employers to use on April 3, 2009. As reported in prior issues, the new I-9 Form was originally published in December 2008 and scheduled to take effect February 2, 2009, but just before the effective date, the new administration issued a 60-day delay until April 3, 2009. The new I-9 Form amends the list of acceptable documents employers may consider in determining employee eligibility to work.

The new Form I-9 and a new handbook (Form M-274) developed by the USCIS to answer employer questions about the new I-9 Form are available on the USCIS website: www.uscis.gov.

Department of Labor Issues Model Notices for COBRA Premium Subsidy

As discussed in last month’s newsletter, on February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 (ARRA), which contains new COBRA premium subsidies for certain employees (i.e., “assistance eligible individuals”), and imposes new notice and payroll administration responsibilities on employers generally subject to COBRA. Regarding notice, ARRA requires employers to provide notice of the COBRA premium subsidy both to employees terminated after ARRA’s enactment and prior to December 31, 2009, as well as to employees terminated after September 1, 2008 and who had previously declined COBRA coverage (a so-called Extended Election Period Notice).

ARRA required the Department of Labor (DOL) to prepare model notices employers could use to satisfy the newly imposed notice obligations. On March 18, 2009, the DOL announced it had developed three model notices for employers to use, and that these notices were available on its website: www.dol.gov/ebsa/COBRAmodelnotice.html. Just a reminder, employers must provide the Extended Election Period Notice for employees with qualifying events after August 31, 2008 and before February 17, 2009 by April 18, 2009.

A Reminder about ARRA’s Other Employment Law Provisions

In addition to the well-publicized COBRA premium subsidy, ARRA also contains some additional employment-related provisions employers should consider. For instance, it contains a whistleblowing provision prohibiting retaliation against employees who report violations by entities receiving ARRA-related monies. It also expands the Health Insurance Portability and Accountability Act (HIPAA) to include “business associates” (i.e., entities utilizing or disclosing HIPPA-protected information on behalf of a covered entity) and creates new notification requirements for security breaches involving HIPAA information. ARRA also extends the Emergency Unemployment Compensation program (under which recipients receive up to thirty-three weeks of extended unemployment benefits) through the end of 2009. ARRA also places restrictions on executive compensation for businesses receiving funds under the Troubled Asset Relief Program.

EEOC Issues Proposed GINA Regulations

The Equal Employment Opportunity Commission has issued its proposed regulations regarding the Genetic Information Non-Discrimination Act of 2008 (GINA). GINA prohibits discrimination by heath insurers and employers based on a person’s genetic information, and Title II of GINA prohibits the use of or intentional acquisition of genetic information in employment. Amongst other things, these proposed regulations help define a number of new terms not used in other employment discrimination statutes (e.g., “family medical history,” “genetic monitoring,” etc.) and define GINA’s prohibitions and confidentiality requirements. The full-text of these proposed rules can be found at 29 C.F.R. 1635 or online at edocket.access.gpo.gov/2009/E9-4221.htm. The EEOC is accepting comments on these regulations until May 1, 2009, and final regulations are expected later this year.

DOL Issues Numerous Opinion Letters, Many of Which it Also Withdraws

The Department of Labor (DOL) recently issued 36 opinion letters, all of which were authored by the outgoing administration, discussing numerous questions arising under the Fair Labor Standards Act (FLSA). The DOL also announced that almost all of these letters are immediately being withdrawn and that the DOL intends to issue new opinions letters shortly on the issues discussed. In the interim, these issued-and-then-withdrawn opinion letters, most of which address very industry specific issues, can be viewed on the DOL’s website: http://www.dol.gov/esa/WHD/opinion/flsa.htm#2009

JUDICIAL

California

Public Employee Not Required to Reverse Personnel Board’s Adverse Findings Before Filing Whistleblower Lawsuit

After the State Personnel Board (SPB) ruled against her on a California Whistleblower Protection Act (Gov. Code 8547 et seq.) claim, a state employee filed a civil action in state court without first seeking to reverse the SPB’s adverse findings. The public employer argued the employee had failed to exhaust both administrative and judicial remedies by filing suit before first having the board’s adverse findings set aside. The California Supreme Court ruled in the employee’s favor and allowed her to proceed with her civil suit. The Court held the Whistleblower Protection Act requires only the employee first file an administrative claim and have findings issued, and does not require that the findings be favorable or that the employee have unfavorable findings set aside before filing a civil suit. The Court also held that once the SPB issues findings, the employee need not pursue additional administrative remedies or challenge the findings through a petition for writ of administrative mandamus. (State Board of Chiropractic Examiners v. Superior Court of Sacramento County (2009) 45 Cal.4th 963, 2009 Cal. LEXIS 1265.)

Two Appellate Courts Invalidate Arbitration Agreements Containing Class Action Waivers

In Gentry v. Superior Court (2007) 42 Cal.4th 443, 463, the California Supreme Court held class action waivers in arbitration agreements may be unenforceable if the waiver impermissibly interferes with the employee’s ability to vindicate unwaivable statutory rights. Gentry held minimum wage and overtime compensation rights under Labor Code section 1194 were unwaivable, and it articulated the following factors courts should consider when determining whether the class action waiver impermissibly interfered with that right: (1) the modest size of the potential individual recovery; (2) the potential for retaliation against members of the class; (3) the fact that absent class members may be ill-informed about their rights; and (4) other real world obstacles to the vindication of class member rights through individual arbitrations.

Two recent California appellate court decisions have extended Gentry’s analysis to other Labor Code provisions and invalidated the class action waiver and the entire arbitration agreement, thus allowing the employees to pursue their class actions in superior court. (Franco v. Athens Disposal Co., Inc. (2009) 171 Cal.App.4th 1277; Sanchez v. Western Pizza Enterprises, Inc. (2009) ___ Cal.App.4th ___, 2009 Cal.App.LEXIS ___.)

Franco involved a putative class action for alleged meal and rest period violations. The employer attempted to compel arbitration under its arbitration agreement prohibiting class arbitrations and preventing employees from acting as a “private attorney generals” on behalf of other employees. The trial court enforced the arbitration provision and class action waiver and ordered arbitration of just the class representative’s claims. However, the court of appeals not only reversed the order compelling arbitration, but also invalidated the entire arbitration agreement, thus allowing the employee to pursue a class action in state court.

This appellate court extended Gentry’s analysis to statutory meal and rest period claims, and determined this class action waiver was unconscionable given “the modest size of the potential individual recovery, the potential for retaliation against members of the class, and the fact that absent members of the class may be ill-informed about their rights.” The court also held the arbitration agreement impermissibly limited the employee to seeking individual remedies under the Private Attorney General Act (PAGA), and prohibited the employee from recovering penalties owed to other current and former employees. The court concluded the combination of an improper class action waiver and the PAGA limitations rendered the agreement completely unenforceable, so it refused to sever the improper provisions.

In Sanchez, pizza delivery drivers filed a class action alleging the employer failed to reimburse them for all delivery-related driving expenses. As in Franco, the employer attempted to enforce the arbitration agreement, and the class action waiver within the agreement to limit arbitration to the single driver’s claims. Both the trial court and the court of appeal concluded the class arbitration provision was unenforceable under Gentry, and that other arbitration agreement provisions were unconscionable and non-severable.

The appellate court in Sanchez concluded an employee’s right to reimbursement of job expenses under Labor Code sections 2802 and 2804 were unwaiveable. Applying the Gentry factors, the court concluded the class action waiver impermissibly interfered with these plaintiffs’ (many of whom did not speak English and were paid minimum wage), ability to vindicate their rights under Labor Code section 2802. The court also found the agreement procedurally unconscionable because of the disparity in bargaining power between the employer and employee, and concluded it was substantively unconscionable because only a single arbitrator was permitted to handle all arbitrations, thus creating a risk of a “repeat player” effect in the employer’s favor. The combination of the class action waiver and an improper arbitration selection clause rendered the entire agreement unconscionable.

These recent decisions further highlight the judicial hesitancy to enforce class action waivers in arbitration agreements. Furthermore, since the final result in both cases was that the entire arbitration agreement was invalidated, thus leaving the employees free to pursue their class actions in state court, employers may wish to carefully scrutinize their arbitration agreements to determine whether they still want to include class action waivers.

Courts Agree Tip Pooling Arrangements Permissible, But Disagree Whether Employees May Pursue Private Right of Action Against Employer for Tip Pool Violation

In the first of two recent cases discussing this issue, casino dealers filed a class action claiming the employer’s mandatory tip pooling policy violated Labor Code section 351, which prohibits employers from taking any portion of tips left for employees. The California court of appeal reaffirmed tip pools may be permissible provided they comply with statutory requirements, but concluded this pool was illegal because the employer’s “agents” (e.g., shift managers) shared in the tip pool. The appellate court also rejected the dealer’s argument tip pools were permissible only in the group service context (i.e., a restaurant) but not where tips were handed directly to the dealer. The appellate court also held employees may pursue a private right of action to recover for tip pooling violations under Labor Code section 351, and it rejected the reasoning and result in another recent appellate court decision (Lu v. Hawaiian Gardens (2009) 170 Cal.App.4th 466), which had held Labor Code section 351 does not permit private rights of action. (Grodensky v. Artichoke Joe's Casino (2009) __ Cal.App.4th __; 2009 Cal.App. LEXIS 324.)

In the second case (discussed below), another California appellate court disagreed, holding that there is no private right of action for alleged illegal tip pooling under Labor Code section 351 (Etheridge v. Reins Int’l California, Inc. (2009) ___ Cal.App.4th ___; 2009 Cal.App. LEXIS 444.)

In summary, in the last three months, three California courts of appeal have issued conflicting opinions regarding whether Labor Code section 351 permits a private right of action for tip pool violations. (Compare, Lu v. Hawaiian Gardens (2009) 170 Cal.App.4th 466 [no private right of action]; Etheridge v. Reins Int’l California, Inc. (2009) 2009 Cal.App. LEXIS 444 [same]; and Grodensky v. Artichoke Joe's Casino (2009) 2009 Cal.App. LEXIS 346 [Labor Code section 351 permits private right of action].) It remains to be seen whether the California Supreme Court will attempt to resolve this split.

Two Appellate Courts Agree That Tip-Pooling is Not Limited Solely to Employees Providing “Direct Table Service”

In the first case, cocktail servers filed a class action alleging the employer’s tip-pooling policy requiring servers to contribute one percent of their gross sales to bartenders and other employees violated Labor Code section 351. Plaintiffs argued section 351 limits tip pools only to persons who provide “direct table service,” which would not include bartenders who did not bring drinks to the server’s tables. The court of appeal rejected this argument noting tip pools are permitted generally under California law, and observing that section 351 does not limit tip pools only to employees who provide “direct table service.” The appellate court reaffirmed, however, that section 351 prohibits management employees from sharing in the tip pool, which was not at issue in this particular case. (Budrow v. Dave & Buster’s of California, Inc. (2009) 171 Cal.App.4th 875.)

In the second case, servers alleged that the employer’s policy of requiring them to tip out kitchen staff, bartenders and servers who did not provide “direct table service” was illegal. The court affirmed that tip pooling policies are not illegal, and there is no “direct table service” requirement. Rather, the court found that tip pooling is permissible, as long as the participants contribute to the patron’s service, even if not providing direct table service. (Etheridge v. Reins Int’l California, Inc. (2009) ___ Cal.App.4th ___; 2009 Cal.App. LEXIS 444.)

Release for Wages Permissible Where Good Faith Dispute Exists Regarding Whether Wages Are Owed

In a class action involving employees who claimed they were misclassified as exempt and therefore owed unpaid overtime, the employer settled with several class members by paying money in exchange for a release of all overtime claims. Several of the employees who signed settlement agreements subsequently rejoined the class action contending that the releases they signed were void under Labor Code sections 206 and 206.5, which prohibit an employer from requiring an employee to release claims for wages due. The trial court held the prior settlement agreement released these overtime claims, and the court of appeals affirmed.

The appellate court rejected the employees’ argument that the Labor Code effectively precluded any settlement of overtime wage claims. Instead, it concluded Labor Code section 206.5 does not prohibit the release of a claim for wages where there is a good faith dispute over whether any wages are owed, because the wages are not “due” in that instance. The court noted that if the employer prevailed on its argument the employees were exempt, they would not be entitled to overtime generally, so a bona fide dispute existed regarding whether the wages claimed were owed. As such, the parties were permitted to settle the claim through a private agreement. (Chindarah v. Pick Up Stix, Inc. (2009) 171 Cal.App.4th 796.)

Employee Cannot Bring Common Law Tort Claims Against a Public Entity, but Can Pursue Labor Code Claims without First Filing a Labor Commissioner Claim

A public employee sued his employer alleging he was terminated for complaining about improper asbestos removal techniques. The court of appeals held the employee was not required to first exhaust administrative remedies under the employer’s civil service rules because the rules themselves specified they did not apply. The appellate court also held the employee did not have to exhaust administrative remedies with the Labor Commissioner under Labor Code section 98.7 before asserting statutory wrongful discharge claims under the Labor Code (sections 110.2.5 and 6310). The court explained that section 98.7 gives an employee the option of filing a Labor Commissioner claim, but does not require an employee do so. However, the court held the employee’s common law wrongful termination claims were barred by the governmental immunities provided under the Government Tort Claims Act (Gov. Code section 810 et seq.). (Lloyd v. County of Los Angeles (2009) __ Cal.App.4th __; 2009 Cal.App. LEXIS 380.)

McNamara-O’Hara Services Contract Act Does Not Preempt California’s Labor Code

Plaintiff’s employer provided security services to Los Angeles County subject to the McNamara-O’Hara Service Contract Act of 1965 (“SCA”), which governs employee wage and fringe benefit determinations. Plaintiffs filed a class action alleging meal and rest period violations under the California Labor Code, but the employer argued the SCA preempted California’s Labor Code and provided the exclusive remedy. The court of appeal rejected this preemption argument, holding that although there is no private right of action to enforce the SCA, employees governed by the SCA are still free to pursue Labor Code claims for unpaid compensation. (Naranjo v. Spectrum Security Services, Inc. (2009) __ Cal.App. 4th __; 2009 Cal.App. LEXIS 431.)

Federal

District Court Allows Employee to Move Forward With Effort to Impose Individual Liability for Labor Code Violations

Plaintiff, a former automobile mechanic, filed a putative class action alleging violations of state labor laws and unfair competition against his former employer and its owner. Plaintiff alleged the owner could be individually liable because he individually owned and controlled the business, controlled its labor practices and was a “joint employer” or “alter-ego” of the employer entity. Following Reynolds v. Bement (2005) 36 Cal. 4th 1975, the district court noted that a corporate officer generally cannot be liable for the wage and hour violations of the corporation on the basis of his status alone. However, plaintiff had also alleged that the owner had personally “caused” the Labor Code violations at issue, which the court found could subject him to penalties pursuant to Labor Code section 558. The court also found plaintiff adequately pled that the owner was his joint employer. (Ontiveros v. Zamora (E.D. CA 2009), 2009 U.S. Dist. LEXIS 13073.)

This Employment Law Alert is a publication of Wilson Petty Kosmo & Turner LLP and should not be construed as legal advice or a legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only and you are urged to consult an attorney concerning your own situation and any specific legal questions you may have. Internal Revenue Service regulations require that certain types of written advice include a disclaimer. To the extent the preceding message contains advice relating to a tax issue, the advice is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer, for the purpose of avoiding Federal tax penalties. Copyright © 2009 WPKT LLP. All rights reserved.