U.S. Supreme Court Upholds U.S. DOL's "Administrator Interpretations"

In 2010, the U.S. Department of Labor began issuing "Administrator Interpretations."  These are analyses of regulations that are broader and more comprehensive than the traditional opinion letters that DOL used to issue. The opinion letters generally were targeted to respond to requests made by individual stakeholders, often employers.  The Administrator Interpretations contain the DOL's view on how its regulations apply generally, not in response to a particular set of facts.

The DOL issued three of these in 2010, of which two remain published on its website. (Here)  These two address the definition of "clothes" under part of the Portal-to-Portal Act and whether mortgage loan officers qualify as "exempt" under the Fair Labor Standards Act.  In 2014, the DOL issued two more interpretations concerning home health care workers.

On the issue of mortgage loans officers, the DOL has changed its views several times in opinion letters over the years.  The 2010 Administrator Interpretation opines that mortgage loan officers are non-exempt.  Here.  That is because they primarily sell, and salespersons are not exempt under the "administrative test."

It has been argued that the Administrator Interpretations are actually in the nature of regulations, rather than opinion letters.  As such, the argument goes, they cannot be issued without going through the formalities of the federal Administrative Procedure Act.  That Act requires the agency to issue proposed regulations, followed by notice and comment by the public.  

There has also been a dispute as to whether an agency's "flip-flopping" or reversal of a prior interpretation is akin to a regulation, requiring APA procedures.  The Court of Appeals for the District of Columbia Circuit had held that when the DOL issues an interpretation that contradicts prior interpretations it is making what is in effect a new or amended regulation.

The U.S. Supreme Court in Perez v. Mortgage Bankers Association upheld the right of the DOL to issue these Administrator Interpretations without going through the APA requirements.   The Court disapproved the DC Circuit's approach and held that the Administrative Procedure Act does not require "notice and comment" procedures when the agency interprets its own regulations.

First, the APA does not require procedural safeguards with respect to agency interpretations generally.  But what is the difference between an interpretation and new rule?  Here is what the Court said:

the critical feature of interpretive rules is that they are “issued by an agency to advise the public of the agency’s construction of the statutes and rules which it administers.” Shalala v. Guernsey Memorial Hospital, 514 U. S. 87, 99 (1995) (internal quotation marks omitted). The absence of a notice-and-comment obligation makes the process of issuing interpretive rules comparatively easier for agencies than issuing legislative rules. But that convenience comes at a price: Interpretive rules “do not have the force and effect of law and are not accorded that weight in the adjudicatory process.” Ibid.

The Supreme Court rejected the Mortgage Bankers Association's argument that the DOL's decision to reverse course is analogous to amending the regulation.   The Court also refused to address the argument that the Administrator Interpretation was in fact a "legislative rule" or regulation rather than an interpretation of an existing rule.  That is because, the Court wrote, the parties had not litigated the case under that theory.

All nine justices rejected the D.C. Circuit's approach. But three justices pointed out in concurrences and partial dissents that the majority's decision allowed too much discretion in the administrative agencies' power to interpret their own regulations.  These justices based their objections not on the Administrative Procedure Act, but on the constitution's separation of powers.  Those arguments did not carry the day in this case.  However, the three justices signaled a willingness to walk back some older precedents on the power of administrative agencies.

What does this all mean?
- the DOL will continue to be allowed to issue Administrator Interpretations
- Administrator Interpretations may be attacked as inconsistent with the underlying regulation, but under a very deferential standard of review by the courts.
- The courts do not have to give deference to an Administrator Interpretation the same way that it must give deference to a regulation, particularly when the interpretation is inconsistent over time.
- Mortgage loan officers are probably non-exempt under the FLSA for now and the reasonably foreseeable future.

This case is Perez v. Mortgage Bankers Association and the opinion is here. 

P.S. I wrote about the first three Administrative Interpretations here.  The Supreme Court issued its ruling on the definition of clothes in Sandifer v. U.S. Steel, which I wrote about here.

U.S. Supreme Court Explains Burdens in Pregnancy Discrimination Cases

The Supreme Court analyzed the federal Pregnancy Discrimination Act, which amended Title VII of the Civil Rights Act of 1964.  The Court in an opinion written by Justice Breyer on behalf of himself and five more justices, analyzed how pregnant employees can prove discrimination in cases where they cannot do their jobs, but claim other employees were provided accommodations not afforded to the pregnant workers.

The facts are as follows, per the Court:

Peggy Young, worked as a part-time driver for the respondent, United Parcel Service (UPS). Her responsibilities included pickup and delivery of packages that had arrived by air carrier the previous night. In 2006, after suffering several miscarriages, she became pregnant. Her doctor told her that she should not lift more than 20 pounds during the first 20 weeks of her pregnancy or more than 10 pounds thereafter. App. 580. UPS required drivers like Young to be able to lift parcels weighing up to 70 pounds (and up to 150 pounds with assistance). Id., at 578. UPS told Young she could not work while under a lifting restriction. Young consequently stayed home with- out pay during most of the time she was pregnant and eventually lost her employee medical coverage.

Young's theory of discrimination was

that her co-workers were willing to help her with heavy packages. She also said that UPS accommodated other drivers who were “similar in their . . . inability to work.” She accordingly concluded that UPS must accommodate her as well.

UPS, on the other hand, 

responded that the “other persons” whom it had accommodated were (1) drivers who had become disabled on the job, (2) those who had lost their Department of Transportation (DOT) certifications, and (3) those who suffered from a disability covered by the Americans with Disabilities Act of 1990 (ADA), 104 Stat. 327, 42 U. S. C. §12101 et seq. UPS said that, since Young did not fall within any of those categories, it had not discriminated against Young on the basis of pregnancy but had treated her just as it treated all “other” relevant “persons.”

So, Young sued. Her federal claim under the Pregnancy Disability Act required the Court to interpret this language:

“women affected by pregnancy, childbirth, or related medical conditions shall be treated the same for all employment-related purposes . . . as other persons not so affected but similar in their ability or inability to work....”

The Court rejected the plaintiff's argument that the employer must provide pregnant employees the same accommodations it provides to any other worker, even if some nonpregnant workers would not receive that accommodation. For example, the plaintiff sought to invalidate policies that provide accommodations only to employees with industrial injuries. Here's what the court wrote:

We doubt that Congress intended to grant pregnant workers an unconditional most-favored-nation status. The language of the statute does not require that unqualified reading. The second clause, when referring to nonpregnant persons with similar disabilities, uses the open-ended term “other persons.” It does not say that the employer must treat pregnant employees the “same” as “any other persons” (who are similar in their ability or inability to work), nor does it otherwise specify which other persons Congress had in mind.

So, how can a plaintiff prevail in a pregnancy discrimination lawsuit involving denial of accommodation?  The Court answered.  First -

plaintiff alleging that the denial of an accommodation constituted disparate treatment under the Pregnancy Discrimination Act’s second clause may make out a prima facie case by showing, as in McDonnell Douglas, that she belongs to the protected class, that she sought accommodation, that the employer did not accommodate her, and that the employer did accommodate others “Similar in their ability or inability to work.”

Then it's the employer's turn - 

The employer may then seek to justify its refusal to accommodate the plaintiff by relying on “legitimate, nondiscriminatory” reasons for denying her accommodation. 411 U. S., at 802. But, consistent with the Act’s basic objective, that reason normally cannot consist simply of a claim that it is more expensive or less convenient to add pregnant women to the category of those (“similar in their ability or inability to work”) whom the employer accommodates. 

And finally - the employee will have to prove pretext to prevail. The Court offered some advice for plaintiffs -

If the employer offers an apparently “legitimate, non- discriminatory” reason for its actions, the plaintiff may in turn show that the employer’s proffered reasons are in fact pretextual. We believe that the plaintiff may reach a jury on this issue by providing sufficient evidence that the employer’s policies impose a significant burden on pregnant workers, and that the employer’s “legitimate, nondiscriminatory” reasons are not sufficiently strong to justify the burden, but rather—when considered along with the burden imposed—give rise to an inference of intentional discrimination.

The plaintiff can create a genuine issue of material fact as to whether a significant burden exists by providing evidence that the employer accommodates a large percentage of nonpregnant workers while failing to accommodate a large percentage of pregnant workers. Here, for example, if the facts are as Young says they are, she can show that UPS accommodates most nonpregnant employees with lifting limitations while categorically failing to accommodate pregnant employees with lifting limitations. Young might also add that the fact that UPS has multiple policies that accommodate nonpregnant employees with lifting restrictions suggests that its reasons for failing to accommodate pregnant employees with lifting restrictions are not sufficiently strong—to the point that a jury could find that its reasons for failing to accommodate pregnant employees give rise to an inference of intentional discrimination.

So, this case calls into question light duty and other accommodation policies that would categorically exclude pregnant employees.  But it does not outright invalidate them.  The Court's explanation of pretext is strange.  The Court wants a jury to decide whether the employer's explanation for a policy is not "sufficiently strong" to justify the burden on pregnant employees.  So, the Court IS sitting as a "super-personnel department" now?

Finally, in 2014, the EEOC issued Enforcement Guidance broadly interpreting the Pregnancy Disability Act's provisions.  The EEOC apparently issued these regulations after the Court granted review of this case.   The Court was not amused:

we have long held that “the rulings, interpretations and opinions” of an agency charged with the mission of enforcing a particular statute, “while not controlling upon the courts by reason of their authority, do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance.” Skidmore v. Swift & Co., 323 U. S. 134, 140 (1944). See Brief for United States as Amicus Curiae 26.

But we have also held that the “weight of such a judgment in a particular case will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors that give it power to persuade, if lacking power to control.” Skidmore, supra, at 140. These qualifications are relevant here and severely limit the EEOC’s July 2014 guidance’s special power to persuade. 

We come to this conclusion not because of any agency lack of “experience” or “informed judgment.” Rather, the difficulties are those of timing, “consistency,” and “thoroughness” of “consideration.” The EEOC promulgated its 2014 guidelines only recently, after this Court had granted certiorari in this case. In these circumstances, it is fair to say that the EEOC’s current guidelines take a position about which the EEOC’s previous guidelines were silent. And that position is inconsistent with positions for which the Government has long advocated. . . . Nor does the EEOC explain the basis of its latest guidance.  Does it read the statute, for example, as embodying a most-favored-nation status? Why has it now taken a position contrary to the litigation position the Government previously took? Without further explanation, we cannot rely significantly on the EEOC’s determination. 

Ouch.

So, the Court sent the case down to the circuit court for examination of its decision upholding summary judgment in favor of UPS.

In dissent, Justice Scalia, along with Thomas and Kennedy, argued that the pregnancy discrimination provision is the same as the prohibition of sex discrimination.  The dissent accused the majority of making up a mushy test that had no basis in the text of the law. And the dissent writes that the majority conflated the concept of disparate treatment and disparate impact. 

This case is Young v. United Parcel Service, Inc. and the opinion is here.

Court of Appeal: No Duty to Remove Essential Job Functions as Reasonable Accommodation and More...

The Court of Appeal in Nealy v. City of Santa Monica upheld summary judgment in a disability discrimination case.  The case involved an injured "solid waste equipment operator," which may mean garbage truck operator.  Nealy injured his right knee lifting a large bin, leading to several surgeries.

In a nutshell, the City allowed Nealy a long leave of absence. They met with him several times. His doctors placed many physical restrictions on him, precluding him from the heavy lifting required of the solid waste equipment operator.   Nealy asked for accommodations, including removing lifting requirements and allowing Nealy to work on one particular type of truck. The City took the position it was not required to remove essential job functions.  The City also looked into transfers. But  Nealy apparently was not qualified for the open, available jobs.

Nealy sued for disparate treatment, denial of reasonable accommodation, and failure to engage in the interactive process. He also sued for retaliation.  The Court of Appeal upheld summary judgment on several grounds.  The explanation of the law on each claim is clear and will help employers understand the legal issues. So, here goes:

Reasonable accommodation

The elements of a reasonable accommodation cause of action are (1) the employee suffered a disability, (2) the employee could perform the essential functions of the job with reasonable accommodation, and (3) the employer failed to reasonably accommodate the employee’s disability. (Wilson v. County of Orange (2009) 169 Cal.App.4th 1185, 1192; Nadaf-Rahrov, supra, at p. 977.)  * * *  The fact that one essential function may be up for debate does not preclude summary judgment if the employee cannot perform other essential functions even with accommodation.

In this case, there was copious evidence that Nealy could not perform one or more of the job's essential functions. The Court rejected his arguments about accommodations via removal of essential functions. 

FEHA does not obligate the employer to accommodate the employee by excusing him or her from the performance of essential functions. (Lui v. City and County of San Francisco (2012) 211 Cal.App.4th 962, 985.) There is no dispute heavy lifting was an essential function of the solid waste equipment operator—even for those who operated the automated side loader. 

The Court then turned to reassignment as a form of accommodation.  Here's the legal standard:

FEHA requires the employer to offer the employee “comparable” or “lower graded” vacant positions for which he or she is qualified. (Cal. Code Regs., tit. 2, § 11068, subd. (d)(1), (2).) FEHA does not require a reassignment, however, if there is no vacant position for which the employee is qualified. (Cuiellette v. City of Los Angeles (2011) 194 Cal.App.4th 757, 767.) Additionally, FEHA does not require the employer to promote the employee or create a new position for the employee to a greater extent than it would create a new position for any employee, regardless of disability. (Cal. Code Regs., tit. 2, § 11068, subd. (d)(4); Spitzer, supra, 80 Cal.App.4th at p. 1389.)  * * * 

In cases when courts have found a triable issue on reassignment, the employees have adduced evidence obtained through discovery that vacant positions for which they were qualified existed during the relevant period, but the employer failed to offer the positions to them. (Nadaf-Rahrov, supra, 166 Cal.App.4th at p. 968; Spitzer, supra, 80 Cal.App.4th at p. 1390.) Nealy has not adduced any such evidence here to dispute the City’s evidence that no other vacant positions for which he was qualified existed during the relevant period in 2010. Under FEHA, the City was thus relieved of its duty to reassign Nealy. (Spitzer, supra, 80 Cal.App.4th at p. 1389.)  * * * 

 In short, an employer can prevail on summary judgment on a claim of failure to reasonably accommodate by establishing through undisputed facts that “there simply was no vacant position within the employer’s organization for which the disabled employee was qualified and which the disabled employee was capable of performing with or without accommodation . . . .”

Disparate treatment

The Court also held that because Nealy was not a "qualified individual," he could not prevail on a disability discrimination claim.

The showing required is identical to that required for a cause of action for failure to reasonably accommodate. That is, a qualified individual is someone who is able to perform the essential functions of his or her job, with or without reasonable accommodation. (Id. at p. 262.) FEHA permitted the City to discharge Nealy if he was unable to perform the essential functions of his job even with reasonable accommodations. (Gov. Code, § 12940, subd. (a)(1) [“This part does not prohibit an employer from . . . discharging an employee with a physical or mental disability . . . where the employee, because of his or her physical or mental disability, is unable to perform his or her essential duties even with reasonable accommodations . . . .”]; Green v. State of California, supra, at p. 262.) 

Interactive Process

To prevail on a claim for failure to engage in the interactive process, the employee must identify a reasonable accommodation that would have been available at the time the interactive process occurred. (Scotch v. Art Institute of California (2009) 173 Cal.App.4th 986, 1018 (Scotch); Nadaf-Rahrov, supra, at p. 984.) “An employee cannot necessarily be expected to identify and request all possible accommodations during the interactive process itself because ‘“‘[e]mployees do not have at their disposal the extensive information concerning possible alternative positions or possible accommodations which employers have . . . .’”’” (Scotch, supra, at p. 1018.) But the employee should be able to identify specific, available reasonable accommodations through the litigation process, and particularly by the time the parties have conducted discovery and reached the summary judgment stage. (Id. at p. 1019.) * * * *

The only accommodations Nealy argues should have been available are (1) restructuring his old job so that he did not lift heavy objects or kneel; (2) assigning him to the automated side loader permanently; (3) reassigning him to another position; and (4) retraining. As we concluded above, the first two were not reasonable accommodations allowing him to perform the essential functions of the job, and the third was not reasonable because there were no vacant positions for which he was qualified. The fourth—retraining—does not assist Nealy. He provides absolutely no detail as to what type of retraining would have enabled him to perform the solid waste equipment operator job or some other vacant position. The bare assertion that the City should have provided retraining does not create a triable issue of fact. 

Retaliation

Nealy also lost on his retaliation claim.  The Court of Appeal made clear that he had not "engaged in a protected activity" merely by asking for a reasonable accommodation. The Court listed what counts as protected activity under the statute.

FEHA makes it unlawful for the employer to discharge or discriminate against an employee because he or she has “opposed any practices forbidden under this part or because the person has filed a complaint, testified, or assisted in any proceeding under this part.” (Gov. Code, § 12940, subd. (h).) Thus, protected activity takes the form of opposing any practices forbidden by FEHA or participating in any proceeding conducted by the DFEH or the State Fair Employment and Housing Council (FEHC). (Cal. Code Regs., tit. 2, §§ 11002, subds. (a), (b), 11021, subd. (a).) 

Opposing practices forbidden by FEHA includes seeking the advice of the DFEH or FEHC; assisting or advising any person in seeking the advice of the DFEH or FEHC; opposing employment practices the employee reasonably believes to exist and believes to be a violation of FEHA; participating in an activity perceived by the employer as opposition to discrimination; or contacting, communicating with, or participating in the proceeding of a local human rights or civil rights agency regarding employment discrimination.  * * * * 

 And then the Court emphasized:

Nealy does not identify any activity that qualifies as protected activity. He contends his protected activity was seeking the City’s assistance to return to work—that is, seeking reasonable accommodation—and initiating the interactive process. These acts alone do not amount to “oppos[ing] any practices forbidden under” FEHA or participating in DFEH or FEHC proceedings. (Gov. Code, § 12940, subd. (h); Rope, supra, 220 Cal.App.4th at p. 652.) If they did, this interpretation of protected activity “‘would significantly blur and perhaps obliterate the distinction between an action for failure to accommodate or engage in the interactive process and retaliation.’” (Rope, supra, at p. 653.) 

* * * *

This case is Nealy v. City of Santa Monica and the opinion is here.


 

Ninth Circuit: Summary Judgment in Employment Discrimination Cases Should Not Happen Much

The Ninth Circuit reversed summary judgment in a disability discrimination case alleged under the California Fair Employment and Housing Act.  We can't even say what the facts are, because the court does not recite them.

What we do know is:

To establish that he was terminated by Sears because of his disability, Nigro submitted a declaration stating that on June 29, 2009, he had a phone conversation with Larry Foerster, General Manager of the Sears Carlsbad store at which Nigro worked, and Foerster told him that “[i]f you're going to stick with being sick, it's not helping your situation. It is what it is. You're not getting paid, and you're not going to be accommodated.” Nigro also testified in his deposition that Sears's District Facilities Manager Alan Kamisugu told him not to be concerned about his pay issue because Chris Adams, Sears's District General Manager, had indicated to Kamisugu that Nigro was “not going to be here anymore.” The district court disregarded the evidence proffered by Nigro, on the basis that “the source of this evidence is Nigro's own self-serving testimony.”
* * * *
Nigro's direct supervisor Jason Foss also testified that Chris Adams said to him—referring to Nigro—that “I'm done with that guy .” 

What's so unusual about this case, warranting the court to publish the opinion?  Maybe it's because the district court found that Nigro's declaration could be disregarded as "self-serving."  The court explained that is not a basis to ignore the plaintiff's declaration:

We have previously acknowledged that declarations are often self-serving, and this is properly so because the party submitting it would use the declaration to support his or her position. S.E.C. v. Phan, 500 F.3d 895, 909 (9th Cir.2007) (holding that district court erred in disregarding declarations as “uncorroborated and self-serving”). The source of the evidence may have some bearing on its credibility, and thus on the weight it may be given by a trier of fact. But that evidence is to a degree self-serving is not a basis for the district court to disregard the evidence at the summary judgment stage. See 10A Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 2727 (3d ed. 2011) (“[F]acts asserted by the party opposing the [summary judgment] motion, if supported by affidavits or other evidentiary material, are regarded as true.”). Here, Nigro's declaration and deposition testimony, albeit uncorroborated and self-serving, were sufficient to establish a genuine dispute of material fact on Sears's discriminatory animus. We conclude that the district court erred in disregarding Nigro's testimony in granting Sears's motion for summary judgment. 

The Court also reversed summary judgment on the plaintiff's claims for denial of accommodation and failure to engage in the interactive process, also on the basis of alleged hostility by General Manager, Foerster. 

The Court then commented about summary judgment in discrimination cases as follows, which is why I entitled this post the way I did:

We have previously held in several cases that it should not take much for plaintiff in a discrimination case to overcome a summary judgment motion. See, e.g., Diaz v. Eagle Produce Ltd. P'ship, 521 F.3d 1201, 1207 (9th Cir.2008); Davis v. Team Elec. Co., 520 F.3d 1080, 1089 (9th Cir.2008); Metoyer v. Chassman, 504 F.3d 919, 939 (9th Cir.2007); Dominguez–Curry v. Nevada Transp. Dep't, 424 F.3d 1027, 1042 (9th Cir.2005); Chuang v. Univ. of Cal. Davis, Bd. of Trustees, 225 F.3d 1115, 1124 (9th Cir.2000). “This is 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.” Id.

Here, Nigro presented several state law claims that deserved trial. It should not take a whole lot of evidence to establish a genuine issue of material fact in a disability discrimination case, at least where the fact issue on discrimination is genuine and the disability would not preclude gainful employment of a person working with accommodation. We acknowledge that this is not a wholly one-sided case on the side of Nigro, and Sears put forward substantial evidence showing that it had a non-discriminatory reason for terminating Nigro's employment, i.e., Sears's position that Nigro did not comply with Sears's attendance and leave policies resulting in job abandonment. It is possible that Sears will prevail at trial, but the statements attributed to Sears's supervisors by Nigro are, if not dispositive, sufficient to raise a genuine issue for the trier of fact. See Metoyer, 504 F.3d at 939 (holding that an employer's evidence of a non-discriminatory motive does not warrant entry of summary judgment when the employee also proffered evidence to the contrary).

Sure, it's still possible to win summary judgment in state and federal court.  However, there of late has been a shift in courts' willingness to grant summary judgment, at least in my opinion.  The trial courts may fear reversal, as appellate courts frequently do.  Trial courts may perceive that employers rarely take cases to trial and settle, which makes it unlikely that a courtroom will be clogged with cases that cannot be won at trial.  Who knows why the pendulum is shifting.  But it is.  

Employers and their lawyers are going to have to decide how to address this shift, whether it be arbitration in lieu of the court system, taking every case to trial until the courts shift back towards summary judgment, lobbying for a change in the law, or something else. 

This case is Nigro v. Sears Roebuck & Co. and the opinion is here. 

Court of Appeal Finds Insufficient Evidence Attributing Electronic Signature to Employee

Employers increasingly rely on electronic acknowledgements of policies and procedures.  An "electronic signature" is valid under California law.  But the reason those signatures exist is so that employers can prove the employee read and signed the document.  That's what Moss Bros. Auto found out in a recent case.

The document was an arbitration agreement, which Moss Bros. claimed that its employee, Ruiz, signed.  However, Ruiz claimed he did not "remember" signing it.  So, Moss Bros. had to establish that he did when it moved to compel Ruiz to arbitrate his wage-hour claims.

Moss Bros. adduced the declaration of its business manager, Mary K. Main, who was “required to be familiar with the generation and maintenance” of employee personnel records. Main summarily asserted that Ruiz “electronically signed” the 2011 agreement “on or about September 21, 2011,” and that the same agreement was presented to “all persons who seek or seek to maintain employment” with Moss Bros. or its affiliated dealerships and service/parts centers. Main did not explain how Moss Bros. verified that Ruiz, or other Moss Bros. employees, electronically signed the 2011 agreement. 

The 2011 agreement is just over two pages in length. “Ernesto Zamora Ruiz” appears in print on the first page, under the title, “Employee Acknowledgment and Agreement,” and the phrases “Ernesto Zamora Ruiz (Electronic Signature)” and “9/21/2011 11:47:27 AM” appear in print on the third page, under the signature and date lines of the 2011 agreement. 

In a supplemental declaration, Main testified that Ruiz had to log in using a unique user name and password. 

The court of appeal decided that was not enough because Main did not "authenticate" the electronic signature.  here is the standard for doing so:

Civil Code section 1633.9 addresses how a proponent of an electronic signature may authenticate the signature—that is, show the signature is, in fact, the signature of the person the proponent claims it is. The statute states: “(a) An electronic record or electronic signature is attributable to a person if it was the act of the person. The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.” (Civ. Code, § 1633.9, subd. (a), italics added.) 

Here, the court found that Main's testimony about the general procedures applicable to electronically signing the arbitration agreement was insufficient.  The court provided some hints as to what would have been enough:

Main did not explain that an electronic signature in the name of “Ernesto Zamora Ruiz” could only have been placed on the 2011 agreement (i.e., on the Employee Acknowledgement form) by a person using Ruiz’s “unique login ID and password”; that the date and time printed next to the electronic signature indicated the date and time the electronic signature was made; that all Moss Bros. employees were required to use their unique login ID and password when they logged into the HR system and signed electronic forms and agreements; and the electronic signature on the 2011 agreement was, therefore, apparently made by Ruiz on September 21, 2011, at 11:47 a.m. Rather than offer this or any other explanation of how she inferred the electronic signature on the 2011 agreement was the act of Ruiz, Main only offered her unsupported assertion that Ruiz was the person who electronically signed the 2011 agreement. In the face of Ruiz’s failure to recall electronically signing the 2011 agreement, the fact the 2011 agreement had an electronic signature on it in the name of Ruiz, and a date and time stamp for the signature, was insufficient to support a finding that the electronic signature was, in fact, “the act of” Ruiz. (Civ. Code, § 1633.9, subd. (a).) For the same reason, the evidence was insufficient to support a finding that the electronic signature was what Moss Bros. claimed it was: the electronic signature of Ruiz. (Evid. Code, § 1400, cl. (a).) This was not a difficult evidentiary burden to meet, but it was not met here. 

As a result, the court found there was insufficient evidence of an agreement to arbitrate and upheld the trial court's denial of Moss Bros.'s petition to compel arbitration.

Yes, it may be that Moss Bros. failed to compel Ruiz to arbitrate due to a poorly drafted declaration, rather than some flaw in the electronic signing protocol.  But litigators need proof that an employee signed handbook acknowledgements, training attendance forms, etc. Although an arbitration agreement was involved here, this decision applies to all sorts of electronically signed documents.  The average manager has no idea how the electronic signing process works, cannot testify that he or she actually saw the employee at the computer electronically signing, etc.

Therefore, when implementing electronic versions of documents, employers must have their IT professionals build in ways to do so.  For example, there could be an acknowledgment email sent to the employee, with a copy to the employer.  Or  the IT management could create a step-by-step explanation of how the system ensures that the  name appearing on the electronic application is attributable to the actual person and not merely inserted later. 

This case is Ruiz v. Moss Bros. Auto and the decision is here.

Ninth Circuit to California Supreme Court: About that One Day's Rest in Seven Law?

If only I could ask the California Supreme Court to answer some wage and hour questions for my clients and me. Fortunately, the federal Ninth Circuit Court of Appeals has that authority.
In this instance, the Ninth Circuit has asked the California Court to take up three questions pertaining to California's rarely litigated "day of rest" laws.   In California, there is a statute requiring "one day's rest" in seven. There are some exceptions too.

Here are the questions the Court asked about these statutes:

"Rolling v. Workweek" 

(A) California Labor Code section 551 provides that “[e]very person employed in any occupation of labor is entitled to one day’s rest therefrom in seven.” Is the required day of rest calculated by the workweek, or is it calculated on a rolling basis for any consecutive seven- day period?

This question is very important.  Sometimes employees may work seven days in a row, but across two different work weeks.  If the rule is any consecutive seven days, that could cause significant scheduling issues.

Exemption for Part Timers?

(B) California Labor Code section 556 exempts employers from providing such a day of rest “when the total hours of employment do not exceed 30 hours in any week or six hours in any one day thereof.” (Emphasis added.) Does that exemption apply when an employee works less than six hours in any one day of the applicable week, or does it apply only when an employee works less than six hours in each day of the week?

The Court wants to know:  may an employee work 7 days if he works 8-8-8-5-8-8-8 without causing a violation?  Or must the hours be under 6 for each day worked in the seven consecutive days, e.g., 5-5-5-5-5-5-5?

Switching / Trading Shifts 

(C) California Labor Code section 552 provides that an employer may not “cause his employees to work more than six days in seven.” What does it mean for an employer to “cause” an employee to work more than six days in seven: force, coerce, pressure, schedule, encourage, reward, permit, or something else? 

Here the Court wants to know whether an employer violates the law merely by allowing a worker to work 7 days in a row?  For example, what if an employee is scheduled to work only 6 days per week. But the employee 'picks up" a shift because a co-worker asks him or her to do so?

* * * *

The Supreme Court may decline to answer the questions, but may choose to do so.   If the Court rules in favor of the employee-friendly interpretation presented as an alternative in the Ninth Circuit's order, it would completely change the way employers schedule employees, and likely would result in fewer hours worked per employee.   So, this is a very important case for the Supreme Court to rule on.

The case is Mendoza v. Nordstrom, and the opinion is here.  Interesting reading, employers and lawyers.

Court of Appeal Limits Meal Break Waivers in Healthcare Industry

Here's one of those cases where California's labyrinth of employment laws conflict, the employer chooses to rely on one of them, and the employer finds out it made the wrong choice.  The lesson arises in the context of a meal break class action.

Many health care workers work 12-hour shifts, often as part of an alternative workweek arrangement.  And many of this 12-hour shift workers prefer to keep the day 1/2 hour shorter, and, therefore, waive a second meal period.  Otherwise, they are going to be at work for at least 13 hours for each 12-hour shift, because they have to take two meal periods of at least 30-minutes each.  It seems to me the employer does not gain financially from permitting employees to waive the second meal period; the meal period is unpaid.  Only the employee benefits, because the employee can go home 1/2 hour earlier.  

Fortunately, the Industrial Welfare Commission Wage Orders include one applicable to the health care industry.  This is Wage Order 5-2001.  Section 11(D) of that Wage Order says:

Notwithstanding any other provision of this order, employees in the health care industry who work shifts in excess of eight (8) total hours in a workday may voluntarily waive their right to one of their two meal periods.” 

Relying on that provision, Orange Coast Memorial Medical Center issued a policy allowing health care workers to voluntarily waive second meal periods. Employees duly signed waivers authorizing this waiver. However, because of the language in Section 11(D), the waiver applied even when employees occasionally worked more than 12 hours. 

So, what's the problem?  Well, the Labor Code also contains meal period requirements, enacted as part of AB 60, that 1999 law that created the penalties for meal period violations, among other things.

Labor Code Section 512(a) provides in pertinent part:

 “An employer may not employ an employee for a work period of more than 10 hours per day without providing the employee with a second meal period of not less than 30 minutes, except that if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and the employee only if the first meal period was not waived.” (Italics added.) 

Furthermore, section 516 explains: “Except as provided in Section 512, the [IWC] may adopt or amend working condition orders with respect to break periods, meal periods, and days of rest for any workers in California consistent with the health and welfare of those workers.” (Italics added.) 

Rejecting the hospital's arguments, the Court of Appeal held that Section 11(D) of the Wage Order could not stand because section 512 of the Labor Code was controlling.  Therefore, under Section 512 and 11(D) employees could waive second meal periods. But, because of Section 512's limitations, the waiver is valid only if the total hours worked were 12 or less. 

That means 

- if an employee has to work 12 1/2 hours, the meal period waiver is invalid, and
- the employee must either take a second meal period or be paid one extra hour of premium pay.

Given that employees' shifts sometimes will go longer than 12 hours because of unanticipated issues that arise after the 10th hour of work, employers will have to be nimble to schedule second meal periods or pay the one-hour premium.

More bad news, the hospital argued that the decision should not be retroactive, because the hospital relied on the Wage Order, which has the force of law.   The Court of Appeal decided that prior decisions of the courts held that no Wage Order could grant any waivers or vary the meal period structure set forth in section 512.  Therefore, Section 11(D) of the Wage Order was invalid from the beginning, waiting only for a court to expressly say so.  The Court held that the hospital would be liable for meal period premiums resulting from its employing health care workers for more than 12 hours without providing a second meal period.

So, this case applies only to the health care industry, and only to meal period waivers allowing a waiver for shifts > 12 hours.  But it's also precedent that precludes employers from relying on Wage Order provisions that are more employer-friendly than AB 60 allows.

This case is Gerard v. Orange Coast Memorial Med. Ctr. and the opinion is here. 

Court of Appeal Finds Rest Periods Valid Even If Employees Potentially Could be Interrupted

The Court of Appeal ruled that security guards' rest periods were lawful, even though employees might have to respond to an emergency call during a rest period.  We're especially happy about this decision because we wrote an amicus curiae brief supporting the employer on behalf of the California Chamber of Commerce.

As explained by the Court:

Plaintiff Jennifer Augustus and others, formerly security guards employed by defendant ABM Security Services, Inc. (hereafter ABM), allege on behalf of themselves and a class of similarly situated individuals that ABM failed to provide rest periods required by California law in that it failed to relieve security guards of all duties during rest breaks, instead requiring its guards to remain on call during breaks. 

So, the security guards were posted a job sites, where they were responsible for ensuring the security of the property, responding to calls, etc.  They were provided rest periods in accordance with the law (at least 10 minutes, paid, for each four hours of work).  But

ABM admitted it requires its security guards to keep their radios and pagers on during rest breaks, to remain vigilant, and to respond when needs arise, such as when a tenant wishes to be escorted to the parking lot, a building manager must be notified of a mechanical problem, or an emergency situation occurs. 

Of note, the plaintiffs did not provide any evidence that an employee's rest period was actually interrupted. Ever. However, The trial court ruled that the Plaintiffs' rest periods were not valid, because of the potential for interruption.  The trial court also awarded the class $90 million in rest period premiums and penalties because every rest period was noncompliant.

The Court of Appeal disagreed.  In doing so, it analyzed what the employer must do to authorize and permit a valid rest period.  Here's the meat of the analysis:

The text of the wage order does not describe the nature of a rest period, but section 226.7 offers a partial definition: “An employer shall not require an employee to work during a meal or rest or recovery period.” (Italics added.)   *** Section 226.7 therefore provides our only guidance as to the nature of a rest break, and it says only that an employee cannot be required “to work” during a break. ***

Not only did the IWC decline to distinguish between on- and off-duty rest periods, its prescription that on-duty meal periods be paid, coupled with the mandate that all rest periods be paid, implies rest periods are normally taken while on duty, i.e., while subject to employer control. There is no support, therefore, in the text of Wage Order No. 4, the Labor Code, or any DLSE opinion letter for plaintiffs’ claim that a rest break is valid only if the employee is relieved of all duties. ***

After a petition for rehearing, the Court considered the effect of Mendiola v. CPS Security Solutions, a recent California Supreme Court decision that we blogged here.  There, the Supreme Court held that time an employee was required to remain on premises was compensable as hours worked, even though the employees were permitted to sleep and were not formally "on duty."  The Court rejected the plaintiff's argument that Mendiola required the court to hold that being on-call means no rest period:

On-call status is a state of being, not an action. But section 226.7 prohibits only the action, not the status. In other words, it prohibits only working during a rest break, not remaining available to work. * * *

“In sum, although on-call hours constitute “hours worked,” remaining available to work is not the same as performing work. (See Mendiola, supra, 2015 Cal. LEXIS at p. 9 [distinguishing readiness to serve from service itself]; see also Cal. Code Regs., tit. 8, § 11040, subd. 2(K) [distinguishing “hours worked” from work actually performed].) Section 226.7 proscribes only work on a rest break.” 

The Court then held that the trial court properly certified the class. However, the effect of that part of the ruling is to doom the entire class's claim.

This case is Augustus v. ABM Security Services, Inc. and the opinion is here.  Please note, however, that the court modified the opinion at the end, and the modifications have not yet been integrated into the main opinion.

Have a restful weekend!

CA Supreme Court: Employer Lawfully Fired Employee on CFRA Leave Who Violated Employer's Policy

The California Supreme Court did not decide whether an employer's "honest belief" that an employee is misusing family or medical leave is a defense to a claim against an employer for violating the California Family Rights Act.  Instead, the Court decided whether a court had the power to vacate an arbitrator's decision because the arbitrator's ruling adopted the "honest belief" defense.  BUT, if you get through the arbitration portion of this post, you'll see that the high Court announced an important rule regarding CFRA leave. 

First, arbitrators' decisions generally are NOT reviewable for legal error, because arbitration is supposed to be quick and less expensive than litigation. But a few years ago, the California Supreme Court carved out an exception for statutory claims based on "unwaivable" rights (such as the Fair Employment and Housing Act, or the California Family Rights Act).  The Court held in Pearson Dental Supply v. Superior Court (my post is here.) that an appellate court may vacate an arbitration award when the arbitrator's legal error denies the plaintiff a hearing. 

In the present case, Richey v. Autonation, the Supreme Court held that the court of appeal did NOT have the power to vacate an arbitrator's decision that Automation lawfully fired Richey, based on its honest belief that Richey was abusing CFRA leave. Regardless of whether the honest belief defense is valid in California, the arbitrator's decision is unreviewable for that kind of claimed legal error.

The error addressed in Pearson Dental therefore kept the parties from receiving a review on the merits. Its narrow rule was sufficient to resolve the case. (Ibid.) Plaintiff here has not advocated for a greater scope of judicial review in cases involving unwaivable statutory rights, and thus, there is no reason to go beyond the framework Pearson Dental established.

But that's only half the story.

The Court also ruled that even if the arbitrator relied on the "honest belief" defense erroneously, Richey would have lost anyway.  That is because, the Court found, Automation justifiably fired Richey while he was on CFRA leave, because Richey violated Automation's policy prohibiting work during CFRA leave:

Even if the arbitrator erred, and even if such an error could serve as a basis for vacating an arbitration award, plaintiff has not shown that the error was prejudicial.  

Here, the arbitrator found plaintiff was fired because he violated Power Toyota‘s employment policy against outside work while on approved CFRA medical leave, not because he was on approved leave. 3 The evidence to support that finding, as reflected in the arbitrator‘s factual findings, was overwhelming. Power Toyota explicitly warned plaintiff that its policy prohibited any outside employment, including self-employment, while on leave. Plaintiff knowingly ignored the warnings. Power Toyota invited plaintiff to communicate regarding his outside employment, and he deliberately avoided any such communication. ***

[P]laintiff blatantly ignored his superiors‘ clear instructions not to work at the restaurant while on CFRA leave. To ignore this fact and to hold that Power Toyota could not have fired plaintiff under any circumstances for violating company policy while on leave would ignore the rule that plaintiff had ―no greater right to reinstatement or to other benefits and conditions of employment than if [he] had been continuously employed‖ during the statutory leave period. (29 C.F.R. § 825.216(a).)

The arbitrator found plaintiff‘s firing was based on a clear violation of company policy — a legally sound basis for upholding the arbitrator‘s award — and would likely have made that finding regardless of the evidence or findings as to the employer‘s honest belief plaintiff was misrepresenting his medical condition. 

So, you thought it was an arbitration case, but it's really a very significant CFRA case.  Richey v. Automation is here.

California Employers: A Reminder from CalOSHA

CalOSHA reminds employers to post their Form 300A, which must include any reportable injury or death during the previous reporting period.  See the handy press release here, which contains links to forms and other information

A Pot Pourri of Recent Employment Law Decisions

Here are some recent significant California employment law developments I missed. Long post, but chock full of employment law goodness. Or something:

Employer's Summary Judgment on Disability Discrimination and Related Claims
The court of appeal in Swanson v. Morongo Unified School District (opinion here) reversed summary judgment in favor of the school district.

Swanson was a teacher who was treated with breast cancer.  The school district voted not to renew her contract based on her performance.  Swanson believed the district's vote was based on her cancer and treatment.  She also claimed that the district failed to accommodate her by refusing to allow her to teach a second grade class rather than the assignment they gave her, and failed to adequately engage in the "interactive process."

On the discrimination claim, the court of appeal acknowledged the district demonstrated Swanson's poor performance as a legitimate reason.  That shifted the burden to Swanson to raise a triable issue of fact regarding whether discrimination motivated the district, rather than performance. Here is the pretext analysis:

Swanson had to present evidence showing (1) the District’s stated reason for not renewing her contract was untrue or pretextual; (2) the District acted with a discriminatory animus in not renewing her contract; or (3) a combination of the two. *** We conclude Swanson met this burden by presenting evidence establishing a triable issue of fact on whether the District intentionally discriminated against her when making its teaching assignments and its treatment of her after her cancer diagnosis and medical leaves. ***We conclude Swanson met this burden by presenting evidence establishing a triable issue of fact on whether the District intentionally discriminated against her when making its teaching assignments and its treatment of her after her cancer diagnosis and medical leaves. 

Here's the evidence the court found significant:

The evidence the parties presented establishes the following disputed facts creating a triable issue on Swanson’s liability theory: (1) Swanson performed well in the teaching assignments she held during her first two years with the District, but the District gave her a new teaching assignment for the first full school year after she completed her cancer treatments; (2) the District gave Swanson the new assignment knowing it would require her to spend additional time planning and preparing to teach her new class and Swanson’s weakened health condition impaired her ability to do so; (3) the District denied Swanson’s request to teach a second grade class similar to one she recently had taught at her previous school, and instead assigned the available second grade class to another teacher; (4) the District assigned Swanson to teach a kindergarten class even though she had not taught kindergarten in nearly 30 years and expressed concern her weakened immune system could not protect her from the many illnesses prevalent in kindergarten classes; (5) although promising to do so, Lowe did not provide Swanson the preevaluation format she needed to prepare for her first series of teacher observations; (6) the District did not provide Swanson the mentor teacher she requested after receiving the remediation plan or any of the other training or assistance she requested; (7) Lowe told Swanson the District wanted him to make a determination on her employment status before he had time to complete the second series of teacher observations; (8) Lowe asked Swanson to resign her teaching position even though he gave her a positive review on the first teaching observation following the remediation plan and implied her review on the second observation also would be positive; and (9) the District’s Board of Education voted not to renew Swanson’s contract before she completed the remediation plan and all of the observations were conducted.

This is to say that the court of appeal felt that a jury should decide whether the district's personnel actions against Swanson that led to her poor performance were motivated by her disability. Therefore, to win these cases, the employer should show on summary judgment that it treated the plaintiff the same as the other, similarly situated, employees.

On the failure to accommodate claim, the plaintiff claimed she would have been able to perform her essential job functions if she was assigned to teach a second grade class, rather than the kindergarten class she was assigned. Although the district showed the court several accommodations it provided, the court was unpersuaded that the district was entitled to summary judgment:

Swanson does not claim the District failed to grant her leave or any other scheduling accommodation. Instead, she alleges the District failed to reasonably accommodate her cancer-related conditions because it refused to provide her the accommodation she sought after the District decided to move her out of the reading specialist position she held during the 2007/2008 school year. Specifically, she alleges the District refused her request to teach an available second grade class. According to Swanson, the second grade class assignment was a reasonable accommodation that would allow her to perform her essential job functions because she recently had taught a second grade class when working in another district, and therefore was familiar with the curriculum and children of that age. Swanson alleged any other new teaching assignment would require additional time to prepare and plan lessons, but the effect of her cancer treatments jeopardized her ability to prepare for her new assignment. 

         *  *  *

To meet its initial burden on Swanson’s failure to accommodate claims, the District therefore had to present evidence showing the second grade position Swanson sought was not available or otherwise was not a reasonable accommodation, or the fifth grade or kindergarten assignments the District offered were reasonable accommodations that would have allowed Swanson to adequately perform her essential job functions. The District produced no such evidence. 

The court also held that the district did not adequately engage in the interactive process to determine an accommodation:

The District contends Swanson’s interactive process claims fail because it engaged in the interactive process by switching her from fifth grade to kindergarten when she objected to the fifth grade assignment. That contention is not adequate to satisfy the District’s initial burden on summary judgment. The FEHA required the District to engage in an ongoing dialogue regarding the accommodations Swanson believed she needed to mitigate her cancer-related conditions, but the District failed to present any evidence to show it engaged Swanson in such a dialogue. For example, the District offers no evidence to show it discussed with Swanson the second grade assignment she sought or provided any explanation why it could not grant her request as a reasonable accommodation. To the contrary, the evidence shows the District simply assigned Swanson to teach kindergarten and failed to engage in any further discussion with her. Accordingly, the trial court erred in granting summary judgment on the interactive process claims. 

Arbitration Compelled Even Though Insufficient Proof Unsigned Arbitration Policy Was in Effect

Stephanie Cruise signed an employment application with Kroger Corporation, in which she agreed to mandatory, final, binding arbitration. The application referenced a separate mediation and arbitration policy, which was "incorporated by reference."  After her termination, Cruise sued Kroger. Kroger moved to compel arbitration. The trial court denied the motion, holding that Kroger had not proved that Cruise had received the arbitration policy, or that the one attached to the motion was the one she had allegedly received.

The court of appeal reversed the trial court and ordered arbitration. The court held that the following language in the application "eliminate[d]" Cruise's argument there was no agreement to arbitrate:

“MANDATORY FINAL & BINDING ARBITRATION: I acknowledge and understand that the Company has a Dispute Resolution Program that includes a Mediation & Binding Arbitration Policy (the ‘Policy’) applicable to all employees and applicants for employment . . . . I acknowledge, understand and agree that the Policy is incorporated into this Employment Application by this reference as though it is set forth in full, . . . the Policy applies to any employment-related disputes that exist or arise between Employees and the Company . . . and that the Policy requires that any Employee who wishes to initiate or participate in formal proceedings to resolve any Covered Disputes must submit the claims or disputes to final and binding arbitration in accordance with the Policy.” (Italics added.)

The court rejected Cruise's argument that the employer did not sign the application, reasoning that the employer submitted the application to Cruise of signature, and that it was Kroger's own application, after all.

BUT, what of the policy?  The court of appeal accepted the trial court's conclusion that the employer had not established the existence of the policy, which governed the terms and procedures re arbitration. The court of appeal, however, ruled that Cruise was still obligated to arbitrate, only under the California Arbitration Act.

The only impact of Kroger‟s inability to establish the contents of the 2007 Arbitration Policy is that Kroger failed to establish that the parties agreed to govern their arbitration by procedures different from those prescribed in the CAA (§ 1280 et seq.). Unless the parties otherwise agree, the conduct of an arbitration proceeding is controlled by the CAA. (See, e.g., §§ 1281.6, 1282, 1282.2.) Here, because Kroger failed to establish an agreement to the contrary, the instant arbitration proceeding is to be governed by the procedures set forth in the CAA. Because this arbitration is controlled by California statutory and case law, Cruise‟s arguments that Kroger‟s Arbitration Policy is unconscionable, both procedurally and substantively, are meritless.

If this case remains good law, then (1) employers can include clear agreements to arbitrate in applications and (2) they can rely on the California Arbitration Act rather than prescribe specific procedures.

This case is Cruise v. Kroger Co .and the opinion is here.

                                                                 * * *
Here are some narrow decisions, but which may contain helpful holdings for other cases.

LA Hotel Service Charge Ordinance - Class Action - UCL Claim 

The court of appeal in Audio Visual Services Group, Inc. v. Superior Court opinion here, handled a narrow issue: whether Los Angeles's Hotel Service Charge Reform Ordinance applied to third party employees who do not traditionally depend on tips.  The Ordinance requires certain hotels to pay certain employees all service charges added to customers bills.  The Audio Visual employees provided AV services to hotels, for which they charged a fee plus a service charge. The plaintiffs sued, claiming they were owed that service charge. The Court of Appeal issued a writ, sustaining the employer's demurrer to the class complaint (extraordinary in and of itself). The court of appeal decided that the ordinance does not apply to Audio Visual's employees.  Of note, the court clearly held that the employees "unfair competition claim" under Business and Professions Code section 17200 was not actionable because the statutory claim also was without merit. So, this case can help in other UCL actions. Money quote:

In light of our construction of the Ordinance that Solares, an audio-visual technician, is not among the class of hotel workers entitled to be paid service charges pursuant to the Ordinance, Solares cannot assert a UCL claim against PSAV. Business and Professions Code section 17200 defines “unfair competition” as “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with [Business and Professions Code ] Section 17500) of Part 3 of Division 7 of the Business and Professions Code.” The UCL claim is dependent upon a violation of the Ordinance. Thus, the class action complaint failed to state a cause of action.

U.S. Supreme Court: Whistle Blower Under Homeland Security Act Protected

Department of Homeland Security v. MacLean (opinion here)  involves an Air Marshall who reported  to MSNBC that the TSA had canceled Air Marshall missions during a time when there was a heightened security alert regarding possible Al Qaeda highjackings.  He had been told that TSA canceled missions to save money.  After MacLean made the disclosure, TSA reversed its position under pressure from Congress.

The TSA discovered MacLean was the leaker and fired him in 2006.  He sued for whistleblower retaliation. TSA argued that MacLean's disclosure was "specifically prohibited" by its regulation, which was as good as "law." TSA had issued regulations prohibiting disclosure of what they called "sensitive security information." That information could include "information concerning specific numbers of Federal Air Marshals, deployments or missions, and the methods involved in such operations.”

Federal law generally provides whistleblower protections to an employee who discloses information revealing “any violation of any law, rule, or regulation,” or “a substantial and specific danger to public health or safety.” 5 U. S. C. §2302(b)(8)(A). An exception exists, however, for disclosures that are “specifically prohibited by law.”

So, the question for the Court was whether MacLean's disclosure was prohibited by law.  The Court held (7-2) that the statute's use of "specifically prohibited by law" meant statutory law, rather than regulations.  The Court reasoned that Congress had used "law, rule or regulation" throughout the whistleblower law, but limited the disclosure exception only to "law."

 

CA Supreme Court: On-Premises, On-Call Time = Hours Worked (All Sleeping Time Too).

The California Supreme Court (unanimously) affirmed the Court of Appeal's decision in Mendiola v. CPS Security Solutions, Inc.  We posted about the Court of Appeal's decision here.  However, the Supreme Court actually went farther than the Court of Appeal in deciding that security guards' on-premises, on-call time is compensable as hours worked.

At issue were security guards who were required to remain on premises and on call at times when they were not active.  When "on-call" time applied, they could stay in trailers provided for their use on the construction sites to which they were assigned.  They were paid for time actually worked, but not for time they were "on call" in the trailers. There are more details in the post linked above.

The Supreme Court agreed with the court of appeal that the on-call time involved significant enough employer control to constitute hours worked.  Here's some of the key analysis:

California courts considering whether on-call time constitutes hours worked have primarily focused on the extent of the employer’s control.  * * * Indeed, we have stated that “[t]he level of the employer’s control over its employees . . . is determinative” in resolving the issue. * * *  ‘When an employer directs, commands or restrains an employee from leaving the work place . . . and thus prevents the employee from using the time effectively for his or her own purposes, that employee remains subject to the employer’s control.  According to [the definition of hours worked], that employee must be paid.’ ”  (Id. at p. 583.)
Courts have identified various factors bearing on an employer’s control during on-call time:  “ ‘(1) whether there was an on-premises living requirement;  (2) whether there were excessive geographical restrictions on 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.’  ([Owens v. Local No. 169 (9th Cir. 1992) 971 F.2d 347,] 351, fns. omitted.)”  (Gomez v. Lincare, Inc. (2009) 173 Cal.App.4th 508, 523-524 (Gomez).)    Courts have also taken into account whether the “[o]n-call waiting time . . . is spent primarily for the benefit of the employer and its business.”  

The Supreme Court, applying these factors, easily found sufficient control:

The guards here were required to “reside” in their trailers as a condition of employment and spend on-call hours in their trailers or elsewhere at the worksite.  They were obliged to respond, immediately and in uniform, if they were contacted by a dispatcher or became aware of suspicious activity.  Guards could not easily trade on-call responsibilities.  They could only request relief from a dispatcher and wait to see if a reliever was available.  If no relief could be secured, as happened on occasion, guards could not leave the worksite.  CPS exerted control in a variety of other ways.  Even if relieved, guards had to report where they were going, were subject to recall, and could be no more than 30 minutes away from the site.  Restrictions were placed on nonemployee visitors, pets, and alcohol use. 

Additionally, the Court of Appeal correctly determined that the guards’ on-call time was spent primarily for the benefit of CPS.  

So, we're not talking about a beeper or a requirement that on call employees call into work within 30 minutes of a page.  We're also not talking about special rules applicable to ambulance drivers. We're talking about people required to live on the premises during on-call periods. We are also not talking about the specific sleep provisions contained in Wage Order 5 and 9. So,
relax those of you who have on-call employees who are not required to stay at work.

Of note, though, the Court rejected federal regulations that allow on-premises employees to be uncompensated when they are free to engage in personal pursuits.  Therefore, the level of control that one must exercise over an on-premises employee is not dependent on federal case law.

The Court of Appeal cut CPS some slack, holding that an employee could agree that 8 of a 24 hour shift was unpaid sleep time under certain conditions. But the Supreme Court was having none of it.
Analyzing the control issue, the Court said that the employees were sleeping on premises, they were restricted and, therefore, they were "engaged to wait."

Finally, the Court took a slap at the Legislature concerning the difficulty employers have in deterring how to conduct themselves under the myriad wage hour laws:

We acknowledge CPS’s efforts to ascertain whether its policy complied with California’s labor laws and recognize the difficulty it and other employers can face in this regard.  Several factors may contribute to ongoing uncertainty, including the defunding of the IWC and the lack of adequate funding for DLSE enforcement.  Such issues, however, must be addressed by the Legislature

So, employers should ensure that their on-call policies comply with this new decision, particularly employers who exercise significant control.  The Court did not reject or modify the multiple factor test for on-call employees who are not required to live or sleep on premises.

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

.