Newly-Published Labor and Employment Law Cases

Galaza v. Mayorkas (9^th Cir. 21-15464 2/28/23) Aviation and Transportation Security Act | Preemption over Rehabilitation Act  
The ASTA establishes basic qualifications for the position of ATSA security screener, and vests the Administrator of the TSA with the authority to determine additional employment standards and training for security screeners. The Rehabilitation Act protects qualified individuals with disabilities from being subjected to discrimination under activity conducted by any Executive agency because of his or her disability. 29 U.S.C. § 794(a).  The ATSA authorized the Administrator of the TSA to set aside employment standards for security screeners as necessary to fulfill the TSA’s screening functions under the ATSA. A statutory note to the ATSA provides that the Administrator is authorized to do so notwithstanding any other provision of law. The panel held that use of the phrase “notwithstanding any other provision of law” reflected legislative intent to preempt the provisions of the Rehabilitation Act.     

County of Sonoma (PERB Dec No. 2772a-M 2/28/23) Negotiability of Peace Officer Investigation Procedures under MMBA
On remand from the court of appeal, PERB affirmed its prior holding that voter-approved amendments to a county ordinance which created a parallel investigative scheme applicable to county peace officers were within the Meyers-Milias-Brown Act’s scope of representation. PERB held that, at the time the amendments were placed on the ballot, it was reasonably foreseeable that the amendments would have a significant and adverse effect on officers’ terms and conditions of employment. However, because the parties had resolved all outstanding meet-and-confer issues while the case was on appeal, PERB issued only cease-and-desist and notice posting orders.       

Naranjo v. Spectrum Security Services, Inc. (CA2/4 B256232A opn. on remand 2/27/23) Premium Pay 
In Naranjo v. Spectrum Security Services, Inc. (2022) 13 Cal.5th 93, the California Supreme Court held that premium pay under Labor Code section 226.7(c) constitutes “wages subject to the same timing and reporting rules as other forms of compensation for work.” On remand, the court of appeal concluded: (1) substantial evidence supports the trial court’s finding that Spectrum presented defenses at trial—in good faith—for its failure to pay meal premiums to departing employees and therefore, Spectrum’s failure to pay meal premiums was not “willful” under section 203; and (2) because an employer’s good faith belief that it is in compliance with section 226 precludes a finding of a knowing and intentional violation of that statute, the trial court erred by awarding penalties, and the associated attorneys’ fees, under section 226.   

Galarsa v. Dolgen California, LLC (CA5 F082404A 2/24/23) Arbitration | Post-Viking River Cruises 
Viking River and the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.) do not invalidate the rule of California law that a provision in an arbitration agreement purporting to waive an employee’s right to pursue representative actions is not enforceable as to representative claims pursued under PAGA. While PAGA claims that seek to recover civil penalties for Labor Code violations suffered by plaintiff must be sent to arbitration in accordance with the principles established by Viking River and the FAA, the PAGA claims seeking to recover civil penalties for Labor Code violations suffered by employees other than plaintiff may be pursued by plaintiff in court.  

Lin v. Kaiser Foundation Hospitals (CA2/4 B314162 2/24/23) Disability Discrimination  
Lin’s disability claim survives summary judgment because, while Kaiser planned, at least tentatively, to layoff Lin before Lin became disabled, it did not make its final determination to terminate Lin until after Lin had become disabled.  Thus, there was evidence from which a reasonable jury could conclude that Kaiser’s ultimate decision to terminate Lin was motivated, at least in substantial part, by concerns Kaiser had about Lin’s disability.

Wood v. Kaiser Foundation Hospitals (CA4/1 D079528 2/24/23) Healthy Workplaces, Healthy Families Act | Lab. Code § 248.59(e) Statutory Interpretation 
California’s Healthy Workplaces, Healthy Families Act of 2014 (the Act) (Labor Code, § 245 et seq.) generally requires employers to provide eligible employees with at least three paid sick days per year. Labor Code section 248.5(e) provides that “any person or entity enforcing this article on behalf of the public as provided for under applicable state law shall, upon prevailing, be entitled only to equitable, injunctive, or restitutionary relief . . . .” The statute’s text and history provide compelling evidence that the phrase “on behalf of the public as provided under applicable state law” in section 248.5(e) was intended to refer to actions prosecuted under the UCL—not PAGA.

Helix Energy Solutions Group, Inc. v. Hewitt (US 21-984 2/22/23) FLSA Exemption
An employee who is paid a daily rate, i.e., only paid for each day they work, is not paid on a salary basis as defined in 29 C.F.R. § 541.602(a), which requires the employee to receive “a predetermined amount constituting all or part of the employee’s compensation . . . for any week in which the employee performs any work without regard to the number of days or hours worked.” Because he was not paid on a salary basis, Hewitt did not meet the FLSA’s bona fide executive exemption even though he earned over $200,000 annually.

Kappouta v. Valiant Integrated Services (9^th Cir. 21-56310 2/17/23) Defense Contractor Whistleblower Protection Act | Statute of Limitations   
To survive a motion to dismiss under the Defense Contractor Whistleblower Protection Act, 10 U.S.C. § 4701(a)(1)(A), a plaintiff must plausibly allege that: (1) she made a disclosure that she reasonably believed was evidence of a violation related to a Department of Defense contract; and (2) her employer discharged, demoted, or otherwise discriminated against her because of that disclosure. The court affirmed dismissal of Kappouta’s complaint because her allegation that she was fired for reporting being shoved by an intoxicated co-worker did not allege a sufficient next between the shove and the Department of Defense-Valiant contract.

Garcia v. State Dept. of Developmental Services (CA3 C094235, filed 1/26/23, ord. pub. 2/21/23) POBRA | Statute of Limitations   
Under the Public Safety Officers Procedural Bill of Rights, Government Code section 3304(d)(1), an employing agency must complete its investigation of misconduct and notify the officer of its intent to impose discipline “within one year of the public agency’s discovery by a person authorized to initiate an investigation of the allegation of an act, omission, or other misconduct.” The limitations period for an act of misconduct begins to run on the date the agency discovers the misconduct, not the date it initiates an investigation into unrelated misconduct. Under this rule, as under similar discovery rules, each act of misconduct must be considered separately in determining the date the agency discovered the misconduct.

McLaren Macomb (NLRB 07-CA-263041 2/21/23) Severance Agreement Terms
Severance agreements that contain broad proscriptions on employees’ exercise of NLRA Section 7 rights have long been held unlawful because they purport to create an enforceable legal obligation to forfeit those rights. Severance agreements that broadly prohibited employees from making statements that could disparage or harm the employer’s image and further prohibited them from disclosing the terms of the agreement were unlawfully coercive in violation of NLRA Section 8(a)(1).

Chamber of Commerce v. Bonta (9^th Cir. 20-15291 2/15/23) AB 51 | FAA Preemption 
The panel majority held that “AB 51’s penalty-based scheme to inhibit arbitration agreements before they are formed violates the ‘equal-treatment principle’ inherent in the [Federal Arbitration Act] and is the type of device or formula evincing hostility towards arbitration that the FAA was enacted to overcome. Because the FAA’s purpose is to further Congress’s policy of encouraging arbitration, and AB 51 stands as an obstacle to that purpose, AB 51 was therefore preempted” by the FAA. “Because all provisions of AB 51 work together to burden the formation of arbitration agreements,” the panel found it could not sever Labor Code section 433 (making violation of AB 51 a misdemeanor) and uphold the balance of AB 51.

Armstrong v. Michaels Stores, Inc. (9^th Cir. 21-15397 2/13/23) Exercising Right to Arbitrate 
Michaels did not waive its right to arbitrate by waiting 10 months to move to compel arbitration. Even under the lower standard announced in Morgan v. Sundance, Inc. (2022) 142 S. Ct. 1708, there was no waiver because Michaels repeatedly reserved its right to arbitration, did not ask the district court to weigh in on the merits, and did not engage in any meaningful discovery.

Degala v. John Stewart Company (CA1/2 A163130 2/7/23) Privette Doctrine 
Under Privette v. Superior Court (1993) 5 Cal.4th 689, the hirer of an independent contractor is not liable for on-the-job injuries sustained by the contractor’s employees unless some exception applies. One such exception, recognized in Hooker v. Department of Transportation (2002) 27 Cal.4th 198, is when the hirer retains control over any part of the contractor’s work and exercises that control in a way that affirmatively contributes to the plaintiff’s injury. Summary judgment reversed and matter remanded for trial as to whether the site owner and general contractor were liable to Degala under a retained control theory.

Stone v. Alameda Health System (CA1/5 A164021M, filed 2/3/23, mod. 2/6/23) Labor Code | Sovereign Governmental Entity 
Public hospital authority was not immune from claims under Labor Code sections 226.7, 512, 1174, 1174.5, and 1175 because applying those sections to the authority would not infringe upon any sovereign governmental powers. The authority also was not immune from a claim under Labor Code section 204 (requiring timely semimonthly payment of wages) because it was not a “municipal corporation” under Labor Code section 220(b), which provides an exemption from section 204 for “payment of wages of employees directly employed by any county, incorporated city, or town or other municipal corporation.”

Rocha v. U-Haul Co. of Cal. (CA2/1 B3225992/2/23) Arbitration 
The appellate court affirmed an order compelling arbitration of the Rocha brothers’ claims against their former employer, U-Haul, finding the arbitration agreement was not unconscionable. The court remanded the matter to allow the Rochas to amend their complaint to allege Labor Code violations by their former manager at U-Haul for work they allegedly performed at his residence solely for his personal benefit.

Clarkson v. Alaska Airlines (9^th Cir. 21-35473 2/1/23) USERRA Paid Leave 
Under USERRA § 4316(b)(1), “a person who is absent from a position of employment by reason of service in the uniformed services” shall be “deemed to be on furlough or leave of absence” and shall be “entitled to such other rights and benefits not determined by seniority as are generally provided by the employer” to other employees on nonmilitary furloughs or leaves of absence. The appellate panel reversed the district court’s conclusion that Clarkson’s short-term military leave was not comparable as a matter of law to other leaves for which the airline paid employees, such as jury duty, bereavement, and sick leave, and remanded for a jury to determine comparability.