Court of Appeal: Statute of Limitations Bars Claims Based on Stale Administrative Charges

When an employee files a series of discrimination charges with the Department of Fair Employment and Housing, may she wait to sue until years later, even if she received "right to sue" letters long before she filed her lawsuit? No.

Esperanza Acuna was employed with San Diego Gas and Electric.  Over a course of several years, she claimed harassment and discrimination by a supervisor, and failure to accommodate  a work-related stress disability.   The court of appeal set out this timeline:

On March 16, 2006, Acuna filed her first DFEH complaint, alleging racial discrimination and harassment, and retaliation for having filed a worker's compensation claim. On March 27, 2006, the DFEH issued a right to sue notice on this first DFEH complaint.

On February 23, 2007, Acuna filed her second DFEH complaint, alleging disability discrimination (failure to accommodate her claimed disability). On February 19, 2008, the DFEH filed a right-to-sue notice on this second DFEH complaint.

On July 11, 2008, SDG&E terminated Acuna's employment.

On October 23, 2008, Acuna filed her third DFEH administrative complaint, alleging various wrongful acts, including her alleged retaliatory termination. On November 7, 2008, the DFEH issued a right-to-sue letter based on this third DFEH complaint.

On November 5, 2009, Acuna filed her lawsuit.

The Court of Appeal decided the statute of limitations barred any claims based on the first two DFEH complaints.  She had until March 2007 to file a lawsuit based on the first charge; she did not.  She had until February 19, 2009 to file the lawsuit based on the second "right to sue" notice.  But she did not file until November 5, 2009.

The Court rejected Acuna's attempt to argue that the "continuing violation" doctrine saved her claims based on the first two "right to sue" letters:

As discussed above, in California the continuing violations doctrine applies to toll section 12960's one-year period for filing a DFEH claim during the time the employee and employer are engaged in informal efforts to resolve the employer's claimed wrongful conduct. (Richards, supra, 26 Cal.4th at pp. 822-823.) The California Supreme Court held this tolling period ends when the employer's determination achieves a level of permanence, i.e., when a reasonable employee would understand that "further efforts to end the unlawful conduct will be in vain." (Id. at p. 823.)

Acuna's allegations establish that a reasonable person would have understood that SDG&E had denied her requests for accommodation no later than February 2007. According to Acuna's allegations, beginning in late 2005, SDG&E repeatedly declined to permit Acuna to return to her job and refused to permit her to work for a supervisor other than Valentine. In response to this conduct, Acuna retained counsel and filed a DFEH complaint. After SDG&E continued to refuse to accommodate her claimed disability, Acuna filed her second DFEH complaint in February 2007. In this complaint, Acuna specifically alleged that SDG&E was refusing to accommodate her disability. By retaining counsel and filing a DFEH complaint, Acuna manifested an understanding that further attempts at informal, rather than formal, resolution of the disability accommodation process would not be successful and were futile. Under these circumstances, the continuing violations doctrine is inapplicable.

The Court also held that the doctrine of "equitable tolling" did not save her stale claims either. 

The equitable tolling doctrine generally requires a showing that the plaintiff is seeking an alternate remedy in an established procedural context. (See McDonald, supra, 45 Cal.4th at p. 102-104; Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1082.) Informal negotiations or discussions between an employer and employee do not toll a statute of limitations under the equitable tolling doctrine. (See 65 Butterfield v. Chicago Title Ins. Co. (1999) 70 Cal.App.4th 1047, 1063.) Acuna does not allege any facts showing she was pursuing an alternate remedy that excused her from timely filing her administrative claim and/or from filing her lawsuit.

Moreover, the equitable tolling doctrine is inapplicable once the employee is on notice that his or her rights had been violated and that her alternate remedies will be unsuccessful. (Richards, supra, 26 Cal.4th at p. 814.) As discussed above, Acuna acknowledged that by February 2007 she understood that SDG&E was refusing to accommodate her disability and was not interested in informally resolving her claims.

So, the Court held that Ms. Acuna can proceed on her timely claims for wrongful termination and her FEHA-based retaliation claim concerning her discharge.

The case is Acuna v. San Diego Gas & Elec. and the opinion is here.

Court of Appeal: Nail Salon Independent Contractors

Happy Nails owns a number of nail salons.  Their workers were independent contractors.  The EDD sought to classify them as employees and lost before the Unemployment Insurance Appeals Board.

The Division of Labor Standards Enforcement was not convinced and instituted proceedings against Happy Nails for not providing itemized wage statements, predicated on the theory that the cosmetologists were really employees.   Happy Nails argued that it already had litigated this issue and that the DLSE should not proceed based on the legal principle known as collateral estoppel.
The DLSE hearing officer ignored Happy's arguments and the prior decisions and held that the workers were employees.

Happy Nails sued the DLSE, claiming violation of due process, and seeking a writ of administrative mandate overturning the DLSE's findings.  The superior court denied Happy's motion for summary judgment on this claim and denied the writ.

The Court of Appeal decided that the trial court should have issued the writ and precluded re-litigation of the independent contractor question, based on collateral estoppel:

For an issue to be precluded from relitigation, the following requirements must be satisfied: (1) the issue must be identical to an issue decided in a prior proceeding; (2) the issue must have been actually litigated in the prior proceeding; (3) the issue must have been necessarily decided in the prior proceeding; (4) the decision in the prior proceeding must be final and on the merits; and (5) the party against whom preclusion is sought must have been a party to or in privity with a party to the prior proceeding. (People v. Garcia (2006) 39 Cal.4th 1070, 1077; Castillo v. City of Los Angeles (2001) 92 Cal.App.4th 477, 481 (Castillo).) As we explain below, each requirement is satisfied in this case.

The court analyzed each factor and decided that Happy Nails established them.  Therefore, the DLSE should have respected the UIAB's decision.

Although this is a procedure-based decision, there is some interesting law discussed in the opinion.  For example, the DLSE argued that the Happy Nails cosmetologists were once classified as employees until the company restructured its relationship with them.  Therefore, the DLSE argued, they could not be re-classified as contractors.  Not so, said the court:

The law[] does not require private parties to share the Commissioner's "once an employee, always an employee" mindset. Rather, private parties are free to change the nature of their business relationship in accordance with the "long-standing established public policy in California which respects and promotes the freedom of private parties to contract" (Brisbane Lodging, L.P. v. Webcor Builders, Inc. (2013) 216 Cal.App.4th 1249, 1262) and which allows them "the widest latitude in this regard" (Stephens v. Southern Pacific Co. (1895) 109 Cal. 86, 89). Our adoption of the position advocated by the Commissioner's counsel at oral argument would effectively nullify the Board's determination and would impermissibly deny Happy Nails and the cosmetologists "their freedom to contract as they please" (Rosen v. State Farm General Ins. Co. (2003) 30 Cal.4th 1070, 1080), which they exercised by restructuring their business relationship.

It also bears noting that this decision holds that different government agencies are considered the same for collateral estoppel purposes when their interests are similar.  Here, the Employment Development Department and DLSE share the common purpose of protecting workers from mis-classification.

Finally, the court sent the case back to the trial court so that it could consider Happy's request for an injunction against the DLSE, prohibiting future claims unless it showed there was a material change, and for attorney's fees.

The case is Happy Nails and Spa of Fashion Valley L.P. v. Su and the opinion is here.

Court of Appeal: On-Call and Sleep Time

CPS guards construction sites.  Some of the security guard employees sleep in on-site trailers.  CPS compensated them for the time they were required to investigate potential problems at the sites, such as break ins.  Otherwise, the employees were considered "on call," but were uncompensated.

On weekday shifts, employees actively worked 8 hours and were "on-call" for eight hours.  On weekends, employees worked 16 hours and were "on call" for eight.  During weekday periods when the construction crews were working, the live-in employees were free to do as they pleased, leave the facility, etc.

The employees who lived in trailers could keep personal items and could have visitors as the client permitted. But families were not permitted to live within the trailers. The trailers were basically small, self-contained, mobile apartments with cleaning facilities, etc.

The live-in employees signed on-call agreements, which provided for circumstances under which the employees could leave the trailers during on-call time:

if a trailer guard wished to leave the jobsite during on-call hours, he or she was required to (1) notify a dispatcher, (2) provide information as to where the guard would be and for how long, and (3) wait for the reliever to arrive.6 After leaving the jobsite, the guard was required to remain within a 30-minute radius and carry a pager or radio telephone. If called during that time, the guard was required to respond immediately. The trailer guards were not allowed to leave a jobsite before a reliever arrived. If no reliever was available, CPS had the right to order a trailer guard to remain at the jobsite, even if the trailer guard had an emergency.

The company did not consider on-call time to be hours worked, but paid employees for time they waited for a reliever or were denied a reliever, as well as when they have to investigate alarms or noises.

Employees sued, claiming they should have been paid for all on-call time, not just the time actually working. The parties agreed that Wage Order 4-2001 applied.

The trial court issued a preliminary injunction, ordering CPS to pay for on-call time pending the resolution of the lawsuit. CPS appealed.  Interestingly, one of the class reps lost a DLSE hearing on the same issue.  Additionally, CPS had sought guidance from the DLSE and U.S. DOL, and conformed its practices based on the opinions received.  Nevertheless, the lawsuits continued and the trial court granted summary adjudication in favor of the plaintiff, holding that the employees should be paid for all on-call time.

So, the issue on review was whether the time employees spent in their trailers should count as "hours worked" under Wage Order 4.  "Hours worked" are “the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.” 

The court thoroughly reviewed what it means to be subject to the employer's control, and cited this seven-factor test for on-call situations:

In resolving the degree to which employees are able to engage in private pursuits during on-call time, courts generally apply seven factors: “„(1) whether there was an on-premises living requirement; (2) whether there were excessive geographical restrictions on [the] employee‟s movements; (3) whether the frequency of calls was unduly restrictive; (4) whether a fixed time limit for response was unduly restrictive; (5) whether the on-call employee could easily trade on-call responsibilities; (6) whether use of a pager could ease restrictions; and (7) whether the employee had actually engaged in personal activities during call-in time.‟”

Applying this and other legal principles discussed in the opinion, the court concluded that the weekday on call time should have been paid as hours worked:

By their presence on site during the on-call hours, the guards perform an important function for their employer and its clients: they deter theft and vandalism. CPS promises its clients security services throughout the night and for 24 hours on Saturday and Sunday, and would be in breach if no security guards were present between 9:00 p.m. and 5:00 a.m. The parties‟ On-Call Agreements designate that period as “free time,” but it is clear from the Agreements and the stipulated facts that trailer guards are not free to leave at will. A guard may leave only when and if a reliever is available. From this, it can reasonably be said that the restrictions on the on-call time are “primarily directed toward the fulfillment of the employer‟s requirements,” and the guards are “substantially restricted” in their ability to engage in private pursuits.



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They are required to live on the jobsite. They are expected to respond immediately, in uniform, when an alarm sounds or they hear suspicious noise or activity. During the relevant hours, they are geographically limited to the trailer and/or the jobsite unless a reliever arrives; even then, they are required to take a pager or radio telephone so they may be called back; and they are required to remain within 30 minutes of the site unless other arrangements have been made. They may not easily trade their responsibilities, but can only call for a reliever and hope one will be found.24

Most important, the trailer guards do not enjoy the normal freedoms of a typical off-duty worker, as they are forbidden to have children, pets or alcohol in the trailers and cannot entertain or visit with adult friends or family without special permission. On this record, we conclude the degree of control exercised by the employer compels the conclusion that the trailer guards‟ on-call time falls under the definition of “hours worked” under California law.

However, the court then decided that the on-call time during the weekend, 24-hour shifts was not hours worked. The court relied on decisions holding that employers may deduct 8 hours of sleep time from employees' work time when they are engaged in 24-hour shifts.  The ruled the following standard would apply to 24-hour shifts:

There are sound reasons for permitting an employer who engages an employee to work a 24-hour shift and compensates him or her for 16 of those hours to exclude the remaining eight hours for sleep time, as long as the time is uninterrupted, a comfortable place is provided, and the parties enter into an agreement covering the period. Most employees would be sleeping for a similar period every day, whether on duty or not, and the compensation provided for the other 16 hours, which should generally include considerable overtime, ensures that the employees receive an adequate wage

So, employers seeking to avoid payment for 24-hour "live in" shifts under Wage Order 4 should ensure: there is an agreement to exclude sleep time, there is a comfortable place to sleep, and the sleep time generally is interrupted.  If the sleep period is interrupted, the agreement should provide for compensation for time worked, and for the entire period if there are frequent or considerable interruptions.


The case is Mendiola v. CPS Security Solutions, Inc. and the opinion is here.