Newly-Published Labor and Employment Law Cases

August 2024

Bailey v. S.F. Dist. Attorney’s Office (SC S265223 7/29/24) FEHA Racial Harassment and Retaliation

Bailey alleged that a co-worker used a racial slur against her and that when she reported the incident, the human resources manager obstructed the filing of a formal complaint, engaged in a course of intimidating conduct, and threatened Bailey that she was “going to get it.” The Court held that a co-worker’s one-time use of a racial slur may be actionable harassment under the Fair Employment and Housing Act if it is sufficiently severe in light of the totality of the circumstances. The Court further held that a course of conduct that effectively seeks to withdraw an employee’s means of reporting and addressing racial harassment in the workplace is actionable as a retaliation claim under FEHA.

Quach v. Cal. Commerce Club, Inc. (SC S275121 7/25/24) Arbitration

A defendant who engages in substantial litigation conduct before moving to compel arbitration may have waived its right to arbitrate. To find such a waiver, California courts required the party seeking to avoid arbitration to show prejudice from the other party’s delay in compelling arbitration. In Morgan v. Sundance, Inc. (2022) 596 U.S. 411, the U.S. Supreme Court struck down a similar rule adopted by some federal courts, holding that under federal law a court must apply the same rules that apply to any other contract when determining whether a party to an arbitration agreement has lost the right to enforce the agreement, i.e., no showing of prejudice is required. Following Morgan, the California Supreme Court similarly held that prejudice to the other party is not relevant in determining whether a party waived its right to arbitrate through its litigation conduct.

Castellanos et al. v. State of California et al. (SC S279622 7/25/24) Proposition 22

Via Proposition 22, California voters enacted Labor Code section 7451, which makes drivers for app-based transportation or delivery companies independent contractors and not employees of the company as long as several conditions are met. Section 7451 thus exempts certain app-based drivers from California workers’ compensation laws. Plaintiffs alleged section 7451 conflicts with the Legislature’s plenary power over the state’s workers’ compensation system under article XIV, section 4 of the California Constitution. The Court found section 7451 does not conflict with article XIV, section 4 because the constitutional provision does not preclude the electorate from exercising its initiative power to legislate on matters affecting workers’ compensation.

Okonowsky v. Garland (9th Cir. 23-55404 7/25/24) Title VII Sexual Harassment

The court reversed summary judgment in favor of the Bureau of Prisons against a federal prison staff psychologist on her hostile work environment claim under Title VII of the Civil Rights Act of 1964. The court held that the district court erred by considering only some of the evidence, and by applying incorrect legal standards that circumscribed the law concerning hostile work environment claims. The court reaffirmed that the totality of the circumstances in a Title VII sexually hostile work environment claim includes evidence of sexually harassing conduct, even if it does not expressly target the plaintiff, as well as evidence of non-sexual conduct directed at the plaintiff that a jury could find retaliatory or intimidating. The court rejected the notion that only conduct that occurred inside the physical workplace can be actionable, especially in light of the ubiquity of social media and the ready use of it to harass and bully both inside and outside of the physical workplace. The court found Okonowsky had raised triable issues of fact and remanded for further proceedings.

Lopez v. Aircraft Service International, Inc. (9th Cir. 23-55015 7/19/24) Arbitration

Under Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022), any class of workers directly involved in transporting goods across state or international borders falls within the transportation worker exemption in section 1 of the Federal Arbitration Act. The court concluded that a fuel technician who places fuel in a plane used for foreign and interstate commerce is a transportation worker engaged in commerce because such a worker plays a direct and necessary role in the free flow of goods across borders. The court held that to fall within the exemption, there is no requirement that the worker have hands-on contact with goods and cargo or be directly involved in the transportation of the goods.

Kama v. Mayorkas (9th Cir. 23-55106 7/18/24) Title VII Retaliation

The Transportation Security Administration terminated Kama’s employment based on his failure to cooperate in an investigation into whether he received illegal compensation for serving as a personal representative assisting other employees during internal agency investigations. The court held that the temporal proximity between Kama’s EEO complaint and his termination—56 days—was insufficient by itself to establish an inference of retaliatory motive, and that a closer temporal link between Kama’s noncooperation and his termination undermined his temporal proximity argument. The court also rejected Kama’s list of circumstantial evidence that he claimed created an inference of pretext.

Behrend v. San Francisco Zen Center, Inc. (9th Cir. 23-15399 7/17/24) Employment Discrimination | Ministerial Exception

The ministerial exception exempts a church’s employment relationship with its ministers from the application of employment statutes such as the Americans with Disabilities Act. The court held that it was required to take all relevant circumstances into account and to determine whether Behrend’s position as a “Work Practice Apprentice” implicated the fundamental purpose of the exception, which is to ensure the independence of religious institutions in matters of faith doctrine and church government. The court concluded that, even though Behrend performed mostly menial work, the work itself was an essential component of Zen training, and he therefore played a role in carrying out the Center’s mission. The panel concluded that precedent foreclosed the view that only teachers and faith leaders qualify for the ministerial exception.

Ramirez v. Charter Communications, Inc. (SC S273802 7/15/24) Arbitration

The California Supreme Court affirmed the appellate court’s findings that the arbitration agreement Charter Communications sought to enforce against its former employee, Ramirez, was substantively unconscionable because (1) it lacked mutuality in the covered and excluded claims provisions; (2) unreasonably shortened the limitation period; and (3) provided for an unlawful award of attorney fees. Contrary to the appellate court, the Court did not find the agreement’s limitation on the number of depositions unconscionable because its language was ambiguous as to whether the arbitrator could order further discovery. The Court remanded for the appellate court to consider anew whether severance of the unconscionable provisions was appropriate.

Bowen v. Burns & McDonnell Engineering Co., Inc. (CA1/2 A166793, filed 6/17/24, pub. 7/15/24) Privette Doctrine

Under the Privette doctrine (Privette v. Superior Court (1993) 5 Cal.4th 689), a hirer is typically not liable for injuries sustained by an independent contractor or its workers while on the job. An exception to the Privette doctrine may exist when a hirer fails to effectively delegate all responsibility for workplace safety to the independent contractor. Bowen fell from a ladder while working for a 3d-tier contractor. The court held the subcontractor retained no control over whether or how Bowen used the ladder, and did not direct or require Bowen to use the ladder. There was thus no triable issue of material fact as to whether a Privette exception applied.

Cadena v. Customer Connexx LLC (9th Cir. 23-15820 7/10/24) FLSA Overtime Wages

A class of call center workers alleged they were entitled to overtime wages for time spent booting up and shutting down their computers each day. The district court granted summary judgment for the employer, finding the claimed time was “de minimis” and thus not compensable under the Fair Labor Standards Act. The appellate court disagreed with the workers’ argument that the de minimis doctrine no longer applies to claims for overtime wages under 29 U.S.C. section 207. But the court held there were triable issues of material fact as to whether the claimed time was de minimis and remanded for further proceedings.

Morell v. Board of Ret. of the Orange County Employees’ Ret. etc. (CA2/1 B331080 7/10/24) Public Sector Pension

In 1990, the Orange County Employees Retirement System’s governing board adopted a resolution under former Government Code section 31460.1 expressly excluding payments made by an employer to an employee who elected to participate in a flexible benefits program from the definition of “compensation” under the County Employees Retirement Law of 1937. The Legislature repealed section 31460.1 in 1992, but expressly indicated repeal did not affect the validity of any action taken pursuant to the section. During his employment, Morell received a monthly $3,500 optional benefit payment that he allocated between a healthcare reimbursement account and cash. The court held that OCERS properly excluded the $3,500 benefit payment from Morell’s pensionable compensation because the 1990 resolution was still valid despite the repeal of Government Code section 31460.1.

Musquiz v. U.S. Railroad Retirement Board (9th Cir. 23-8 7/3/24) Railroad Retirement Board

For overpayments under the Railroad Retirement Act, the Railroad Retirement Board shall not recover from an individual who is without fault and when recovery would be contrary to the purpose of the RRA or would be against equity or good conscience. (20 C.F.R. § 255.10.) The court agreed with the RRB that Musquiz was not without fault for overpayments between August 2012 and June 2, 2013, but found that Musquiz was without fault for overpayments from June 3. 2013, when the RRB told him they had taken his outside earnings into account and adjusted his annuity payments. Because the RRB concluded Musquiz was without fault for the entire overpayment, the court remanded to the RRB to develop a factual record and make a determination as to whether Musquiz was without fault for overpayments from June 3, 2013.