Ninth Circuit Holds Applicant Drug Testing Policy Violates Fourth Amendment

The City of Woodburn, Oregon, has an applicant drug testing policy. All prospective applicants must be screened for illegal drugs prior to hire.

As a government employer, Woodburn is bound to follow the U.S. Constitution. Drug testing is a "search" within the meaning of the Fourth Amendment. To avoid securing a warrant to conduct the search, the City must demonstrate a sufficient reason to conduct the drug testing without one.

Lanier applied for a job as a part-time worker in the city's library. She refused the drug test and was not hired. She claimed that requiring her to take a drug test as an applicant violated her rights. The Ninth Circuit agreed. The court held that the city's articulated reasons - general societal problems with drug abuse, protecting children in the library, and the adverse effect drug use has on work performance were sufficiently special. Not so, said the court of appeals. Rather, to conduct applicant drug testing, the City would have to demonstrate that these factors were specific problems in the City's workforce, and involving the particular job for which Lanier applied.

Unless the U.S. Supreme Court reverses this decision, many government drug testing programs for applicants will be invalid. The case also may have ripple effects for private employers. In California, for example, applicant drug testing by private employers is generally lawful. The courts have relied on constitutional jurisprudence in reaching that decision. So, stay tuned.
The case is Lanier v. City of Woodburn. The opinion is here.

Resident Employees Paid Only For Time Worked

Industrial and Welfare Commission Order No. 5-2001 contains a special provision applicable to employees who are required to reside on the premises. These employees are required to be paid only for the time spent actually working, rather than their entire time on the premises, even if they are "on call." The Isners were resident managers of a non-profit home for the elderly. They were required to live on the premises. When they were "on call," they had to remain within earshot of call alarms and respond to "emergencies." They sought compensation for all on-call time. But the Court of Appeal decided that their employer, Falkenberg, compensated them properly for only the time they actually spent working.
The case is Isner v. Falkenberg. The opinion is here.

Recent Shaw Valenza Articles Winter/Spring 2008

In case you missed them, here are some recent articles we've published on a variety of topics. None was an Oprah selection of the month.

NO INDIVIDUAL LIABILITY FOR RETALIATION UNDER THE FEHA
By Jennifer Brown Shaw and Shane Anderies
The Daily Recorder
12 March 2008

NEW PROPOSED REGULATIONS FOR THE FMLA
By Jennifer Brown Shaw
The Daily Recorder
26 February 2008

ONE TOKE OVER THE LINE
By D. Gregory Valenza
The Daily Journal
15 February 2008

EXPANSION OF FMLA LEAVE FOR FAMILIES OF SERVICE MEMBERS
By Jennifer Brown Shaw and Matthew J. Norfleet
The Daily Recorder
13 February 2008

LEDBETTER V. GOODYEAR: WHAT DOES IT STAND FOR AND WILL IT STAND?
By Carolyn G. Burnette and D. Gregory Valenza
Employment & Labor Relations Law - American Bar Association
1 February 2008

FREE SPEECH AND THE PRIVATE SECTOR WORKPLACE
By Jennifer Brown Shaw and Becki D. Graham
The Daily Recorder
30 January 2008

SHOULD PAY CARDS BE TREATED THE SAME AS PAYCHECKS?
By D. Gregory Valenza
The Daily Journal
18 January 2008

EMPLOYEE TERMINATIONS: STEPS TO REDUCE LIABILITY
By Jennifer Brown Shaw
The Daily Recorder
15 January 2008

PREVENTING UNION ACTIVITIES VIA COMPANY EMAIL GETS EASIER
By Jennifer Brown Shaw
The Daily Recorder
2 January 2008

UPDATED EMPLOYEE POLICIES FOR 2008
By Jennifer Brown Shaw
The Daily Recorder
18 December 2007

DISABILITY AS A JUSTIFICATION FOR EMPLOYEES' MISCONDUCT?
By D. Gregory Valenza
The Daily Journal
7 December 2007

Cease and Desist Letter Gets SLAPP Protection

Here's the way the court put it:

An employer fired one of its employees amid allegations that the employee had misappropriated customer lists and solicited his employer’s customers to start a
competing business. Several months before litigation was commenced by the employer against its former employee, the employer’s attorney drafted a letter to the employer’s customers that accused the employee of breach of contract and
misappropriation of trade secrets, and that “suggest[ed]” to the customers that, to avoid potential involvement in any ensuing litigation “as a material witness, or otherwise,” the customers should not do business with the former employee. The employee commenced a defamation action against the former employer. We hold that, in the circumstances of this case, the lawyer’s letter to the customers was a “writing made in connection with an issue under consideration or review by a . . . judicial body” (§ 425.16, subd. (e)(2)) and therefore covered by the anti-SLAPP statute because the letter directly related to the employer’s claims against the employee, and the employer was seriously and in good faith contemplating litigation against the employee.

Of note, the court also ruled that it made no difference that the lawyer sent the letter to its customers rather than just the former employee. The court also said that the litigation privilege was irrelevant to whether the communication satisfied the requirements of the anti-SLAPP statute. However, the litigation privilege would be relevant to the second prong of anti-SLAPP analysis - the plaintiff's chance of success on the merits.

This case is good news for practitioners who send out "cease and desist" letters to former employees accused of violating restrictive covenants. It's also good news for employers, as they could have found it harder to find lawyers to send out such letters if the former employee could freely sue for defamation.

The case is Neville v. Chudacoff. The opinion is here.

California Court of Appeal Upholds Rare Attorneys Fees Award Against Plaintiff

Daniel Villanueva sued the City of Colton for discrimination under the Fair Employment and Housing Act. The trial court sustained nearly all of the City's objections to his evidence, leaving him with virtually no opposition to the City's motion for summary judgment. He lost. Then the trial court awarded the City $39,000 in attorneys fees for pursuing a frivolous case. The Court of Appeal held that the City properly won summary judgment, that the unchallenged evidentiary objections precluded the court's consideration of excluded evidence, and that on the merits there was nothing to the case. The court then held that 1) the trial court must consider the employee's ability to pay an attorneys' fees award and 2) the plaintiff put on no evidence of inability to pay. So, the trial court's award of fees was upheld, as the case was frivolous.

The case is Villanueva v. City of Colton. Opinion is here.

Court of Appeal: $44 recovery; $500 in fees

The Second District Court of Appeal reversed a trial court's refusal to grant attorneys' fees in a wage and hour case. The amount in controversy was: $44.63. The plaintiff, Harrington, unsuccessfully tried to bring a class action. His individual claim was for one day of unpaid overtime. Because of penalties, etc., the case settled for $10,500, plus "reasonable attorneys fees." The trial court said that the $10,500 was enough to pay the attorneys.
The Court of Appeal held that the trial court was required to award "reasonable" attorneys' fees to Harrington as the prevailing party. The court then said there was "no way on earth" that Harrington's attorneys were entitled to the $46,000 in fees they claimed. Instead, the court fixed a reasonable amount at ... $500. That's enough for a nice lunch for the whole office, guys. Celebrate the win!

Harrington v. Payroll Entertainment Services, Inc.

California Supreme Court: No Individual Liability for Retaliation Under FEHA

Years ago, lower courts held that individual managers may be held liable for "retaliation," i.e, taking negative action against an employee for his or her engaging in protected activity. At the same time, the courts decided individual managers could not be held liable for "discrimination," i.e., taking adverse action based on an employee's membership in protected groups. Back in 1998, the California Supreme Court ruled in Reno v. Baird that supervisors could not be held liable for discriminatory decisions amounting to "personnel actions."

The difference in the courts' treatment of these two types of actions apparently was based on differences in language between the statute barring "discrimination" and the section prohibiting "retaliation." However, a primary policy underlying Reno - permitting managers to manage without fear of personal liability - was inconsistent with holding managers personally liable for retaliation. That is, a manager's "retaliatory" decision is based on an unlawful motivation, just as a "discriminatory" decision.

The California Supreme Court finally reviewed the issue of individual liability for managers based on allegations of retaliation in violation of FEHA. In Jones v. Lodge at Torrey Pines, the Court decided that Reno's rationale controlled the question and that individuals could not be held personally liable. The opinion is here.

The Legislature has never overturned Reno. When the Supreme Court held in Carrisales v. Dept. of Corrections that individual non-supervisors could not be held personally liable for harassment, the Legislature moved quickly and specifically passed a law imposing such liability.

Perhaps the Legislature will seek to do so again. However, as the Court pointed out, a manager facing personal liability for normal personnel actions (demotion, termination, failure to promote, compensation, discipline, etc.) will face a conflict of interest every time he or she faces the issue of whether to take adverse action against an employee. With harassment, on the other hand, a manager may avoid liability simply by refraining from engaging in conduct that may amount to "harassment." Hopefully, the Legislature will consider that issue carefully before seeking to overturn Reno or Jones.

U.S. Supreme Court: A Charge by Any Other Name... Is Still a Charge

The U.S. Supreme Court decided 7-2 that an EEOC Intake Questionnaire was a valid substitute for the official "Charge" of Discrimination. Justice Kennedy, writing for the Court, reasoned that the Intake Questionnaire, coupled with an attached affidavit, contained all the information required of a Charge by regulation. The attached affidavit also contained a request for the EEOC to act. That was enough in the case at bar. However, the EEOC need not deem every Intake Questionnaire to be a Charge.

The employer, Federal Express, did not receive notice of the Charge, nor was it given the opportunity for conciliation, all of which appear to be contemplated by the Age Discrimination in Employment Act. The majority recognized that problem, suggesting the district court can stay the civil action pending the conciliation process.

The majority also suggested that the result might be different under Title VII. The procedural rules and laws differ slightly under the ADEA, which permits lawsuits after agency inaction for more than 60 days. The EEOC also may commence litigation under the ADEA without a charge, so long as it first attempts to conciliate.

Justice Thomas, joined by Justice Scalia, dissented.

This case will create problems for employers seeking to invoke the statute of limitations in federal discrimination actions. Additionally, as Justice Thomas pointed out in the dissent, becaause not every Intake Questinonaire will qualify as a Charge, there most likely will be litigation over this issue, driving up litigation costs and delays. It remains to be seen whether the EEOC accepts the Court's suggestion to clarify its rules on filing Charges.

The case is Federal Express Corporation v. Holowecki, and the opinion is here.

U.S. Supreme Court Punts on "Me Too" Evidence in Discrimination Cases

Mendelsohn sued Sprint for age discrimination. At trial, she attempted to admit evidence that other Sprint employees were subjected to age discrimination, even though by different supervisors at different times, and otherwise unrelated to the discrimination she experienced. This is known as "me too" evidence. The district court held the evidence was irrelevant and inadmissible. The Tenth Circuit Court of Appeals reversed, believing the district court adopted a "per se" rule excluding "me too" evidence based on Tenth Circuit precedent.
The U.S. Supreme Court, in a unanimous ruling, reversed the Tenth Circuit. However, the Court did not analyze the extent to which "me too" evidence is admissible. Rather, this case was decided as a matter of civil procedure / evidence law. On the merits, the court said that "me too" evidence is neither per se admissible or inadmissible, and the decision to admit it is within the trial court's discretion based on factors normally applicable to the relevance analysis. No guidance on this issue at all.
The case is Sprint / United Mgmt. Co. v. Mendelsohn. The opinion is here.

U.S. Supreme Court: ERISA Actions Against Fiduciaries

There is nothing like an ERISA case to stimulate debate and discussion at the water coolers of all employment lawyers' firms. OK, I'm kidding. I think. But from what I'm reading, this is an important ERISA case that may result in more claims.

The Supreme Court decided that individual members of a defined contribution plan may sue plan fiduciaries for misconduct that depletes the value of the individual account within the plan. The case is Larue v. DeWolff et al. and the opinion is here.

U.S. Supremes: Arbitrate Claims Under Labor Commissioner's Jurisdiction

The California Labor Commissioner has primary jurisdiction over disputes under California's Talent Agencies Act. (Lab. Code section 1700 et seq.). But some television star named "Judge Alex" (not the Chief Judge of the Ninth Circuit) Ferrer, and his entertainment lawyer, Preston, agreed in their contract to arbitrate any disputes between them. When Preston attempted to collect fees he alleged were due him, the Labor Commissioner took the claim and refused to stay it pending arbitration.

Judge Alex sought an order compelling arbitration, which was denied. The California Court of Appeal held that Federal Arbitration Act did not trump the Labor Commissioner's jurisdiction, because the FAA does not apply to administrative agency jurisdiction.

The U.S. Supreme Court disagreed, and held that an arbitrator gets to decide whether Preston's agreement with Ferrer was enforceable under the Talent Agencies Act. In so holding, the Court clarified that when a party challenges an entire contract is unenforceable, not just the arbitration clause, the arbitrator decides that issue, even if the alternative forum is an administrative agency under state law.

The case is Preston v. Ferrer. The opinion is here.

NLRA Preempts California Wrongful Termination Claim

Richard Luke was suspended for alleged dishonesty regarding his whereabouts. He then sent an email to his employer's parent's management entitled "trouble brewing." He was promptly fired the next day for circulating an anti-management petition and for ignoring the "chain of command." He testified at his deposition that he and other employees discussed working conditions such as being passed over for promotion, and physical conditions at the wine-label manufacturing plant at which he worked. He thought that was why he was fired. He said discharging him for that reason violated the public policy expressed in Labor Code section 232.5 (no adverse action against employee who "discloses" working conditions.).
In Luke v. Collotype Labels USA, Inc., opinion here, the court of appeal found that section 232.5 is preempted by the National Labor Relations Act. Essentially, Luke's working with other employees to complain about promotions and plant conditions was a "concerted activity" that were "arguably" protected by the NLRA. As such they fall within the "Garmon" preemption doctrine.
Although the court in Luke did not even cite the court of appeal's decision in Grant-Burton v. Covenant Care, 99 Cal.App.4th 1361 (2002), opinion here, this decision contradicts Covenant Care's holding that a common law wrongful termination claim based on section 232 (prohibiting discharge for discussing wages) was viable. The court in Covenant Care addressed the NLRA, but noted the parties had not raised Garmon preemption on appeal, and left that issue for remand. (That sound you hear is me, smacking my forehead really hard.) With all due respect to the court of appeal in Covenant Care, that case was incorrectly decided, as shown by the decision at blog.

U.S. DOL Proposes Revised FMLA Regulations

The U.S. DOL has been hard at work considering revisions to the FMLA regulations. We posted about the initial report here. Lots of time has passed, and the present administration is coming to a conclusion. So, I'm sure employers were wondering if there would indeed be new regulations as much as we were.

Wait no longer! There will be new proposed regulations published in the Federal Register on February 11. Here they are, all 470ish pages of discussion, analysis and proposed regulations. There also are proposed regulations regarding the new FMLA amendments regarding servicemembers.

We will publish an article on the draft regulations in the coming weeks. Until then, get your reading glasses, you're on your own. Thank you Ross Runkel and your Employment Law Memo!

DGV

Court of Appeal Holds IT Employee Is... Exempt

A network administrator's job is described as follows in the opinion -

Combs served first as manager of capacity planning, and then as director of network operations. He voluntarily resigned in November 2004. Combs's resumé, which he prepared after he left Skyriver, indicated that as Skyriver's director of network operations, he was responsible for (among other things) "project management, budgeting, vendor management, purchasing, forecasting, [and] employee management"; management of "overseas deployment of wireless data network"; management of "the integration and standardization of three networks into the Skyriver architecture"; and the overseeing of "day to day Network Operations." At trial, Combs acknowledged his resumé was accurate. He testified that his "core" responsibility at Skyriver was "maintaining the well-being of the network," and he spent 60 percent to 70 percent of his time carrying out that responsibility. Combs called a number of witnesses who also confirmed that Combs's resumé was accurate. Specifically, Scott Akrie, who as Skyriver's chief technical officer supervised Combs from 2001 to about mid-2003, and Edward West, Skyriver's former vice president of operations, who supervised Combs from late 2003 until Combs left Skyriver, both testified that Combs's description of his duties in his resumé was accurate, as did Michael Williams, Skyriver's director of field operations. Combs's own testimony and the documentary exhibits (including Combs's resumé and some of his e-mails) showed that he was responsible for maintaining, developing and improving Skyriver's network, and his duties involved high-level problem solving and "troubleshooting"; preparing reports for Skyriver's board of directors; capacity and expansion planning;
planning to integrate acquired networks into Skyriver's network; lease negotiations; and equipment sourcing and purchasing.

The Court of Appeal decided the employee was exempt under the administrative test. Of note, the Court decided that the trial court was not required to analyze the case under the "administrative/production" dichotomy that has become important in recent cases. Acknowledging the importance of federal FLSA regulations in the analysis of the exempt duties under California law, the court had no trouble upholding the trial court's determination that Combs spent over 50% of his time on exempt, administrative duties, and that he had the
requisite discretion and independent judgment.

The case is Combs v. Skyriver Communications and the opinion is here.

California Supreme Court Takes Up "Stray Remarks"

In a discrimination case, the plaintiff may attempt to introduce allegedly biased comments by a person unrelated to the negative decision that is the subject of the lawsuit. A number of courts, including in California, have characterized these as 'stray remarks' that have no bearing on the plaintiff's case, and which do not defeat motions for summary judgment.

In last year's decision in Reid v. Google (opinion here), the Court of Appeal expressed disdain for the "stray remarks" doctrine, saying the trial court should have let a jury decide their importance. The California Supreme Court accepted review and will consider whether such evidence defeats a motion for summary judgment.

The Cal. Supreme Court appeared to leave untouched a number of other issues the Court of Appeal addressed, such as whether the "shifting burdens" analysis is mandatory, the use of statistics in individual discrimination cases, and other bedrock employment law issues.

The Supreme Court also will resolve once and for all - must the trial court specifically rule on objections to evidence submitted in support or opposition to a summary judgment motion? The Reid court decided trial courts need not do so, contrary to a recent spate of appellate decisions holding that they must.

Oh, and I, for one, welcome our new Google overlords. They do host this blog after all.

FMLA Amendments Signed - Leave for Relatives of Military

Congress passed FMLA amendments expanding FMLA protection leave taken under certain circumstances by relatives of soldiers. We covered the amendments here. The president initially vetoed the law in which the FMLA amendments were contained. Now he has signed them. They are included within HR 4986, as section 585. (It's a big bill, concerning a number of issues related to defense; so, please scroll to that section). We will be writing an article regarding compliance with this new law over the next couple of weeks.

Greg

Court of Appeal: Stock Options OK Form of Payment

The Court of Appeal upheld a stock option plan against a claim that it worked illegal forfeitures under the California Labor Code. The Court held that Citigroup's stock option plan was valid because, in a "two-step" transaction, it gave employees cash with the right to buy options at a heavily discounted price. The catch was they forfeited it if they did not remain employed.
The Court held this plan, as drafted, was not an illegal forfeiture.

The Court also noted even if the options were granted directly, the forfeiture would be valid because it was express and clear.
Of significance to wage and hour wonks, like me, the court also addressed whether payment in stock options was a violation of the Labor Code's requirement of the form of payment. I once posited that issue to a DLSE official and received a chilling answer. But no. The court said Section 212 does not apply when payment is made in stock options. That should give everyone a sigh of relief. ::Sigh::: The case is Schachter v. Citigroup and the opinion is here.

Ninth Circuit: Cab Operators Were Employees, Not Independent Contractors

When a union organizes an employer's workers, the National Labor Relations Act governs the union election. Independent contractors cannot be organized because they are not considered "employees." When an employer claims that workers are independent contractors as a defense to union organizing, the NLRB (and a reviewing court) will apply federal law. In NLRB v. Friendly Cab Co., opinion here, the Ninth Circuit held that Friendly's cab drivers were employees, not independent contractors, and therefore were properly organized by the union. The opinion thoroughly discusses the criteria federal courts apply to independent contractor analysis in the labor law context.

February 1 Is OSHA Log Day!

February 1 is when all good employers' thoughts turn to their OSHA 300 logs.
Here is a helpful reminder from our friends at the California Chamber of Commerce.

Greg

California Supreme Court: No Accommodation for Medical Marijuana

The California Supreme Court decided today that there is no duty under the Fair Employment and Housing Act to "reasonably accommodate" medical marijuana use as treatment for a "disability." The Court also held the plaintiff could not state a claim for wrongful termination in violation of public policy based on California's Compassionate Use Act, aka Prop. 215. The Legislature may pass a law amending FEHA to require accommodation of medical marijuana use, assuming the Governor would sign such a bill. Or, another initiative may be presented to the voters. Until then, though, employers may deny employment based on positive drug tests for marijuana, medical or otherwise. The case is Ross v. RagingWire Telecomm., Inc. The opinion is here.

I admit this is an especially nice post to write, considering I principally authored the employer's briefs at the Court of Appeal and in the Supreme Court. Shameless plug, I know, but this has been a long time coming! And a thank you to my former colleagues Marlena (Ct.App.) and Tim (S.Ct.) for their hard work on the briefs, and to my former partner, Rob, for arguing at the Supreme Court.

Greg