California courts and Legislature greatly expanded protections for public and private workers in 2017, passing laws and handing down decisions regarding wages, rest periods, harassment, workplace discrimination and free speech among other things.
 
In part two of this two-part series, Best Best & Krieger LLP gives an in-depth look at the noteworthy court cases that will impact public and private employers and their employees.
 
Wage and Hour Disputes
California implemented its new minimum wage standards Jan. 1. The State’s minimum wage rose to $11 for employers with 26 or more employees and $10.50 for those with 25 or fewer.
 
Barring an economic downturn, or other off-ramp event, California’s minimum wage will incrementally rise until it reaches $15 in 2022 for larger employers and 2023 for smaller employers.
 
The salary threshold for executive, administrative and professional exemptions to state overtime rules increased as well. In addition to meeting certain job duties, to be considered exempt, employees must earn a set monthly salary of at least double the minimum wage for full-time employment.
 
With these increases, California continues to surpass federal standards for minimum wage – $7.25 an hour – and overtime pay. The Department of Labor’s new overtime threshold for white-collar workers was set to increase from $23,660 to $47,476, but was delayed by injunction in 2016 after numerous states and business advocacy groups filed suit.
 
The U.S. District Court for the Eastern District of Texas invalidated the DOL’s new overtime rule. While the DOL appealed the decision, it was put on hold while the DOL develops a modified version of the rule.
 
Other significant wage-and-hour decisions handed down in 2017: 

• Alvarado v. Dart Container Corp. was argued before the California Supreme Court in December. The case involves a dispute over Dart’s usage of a federal formula to calculate overtime on flat-sum bonuses. The plaintiff claims Dart improperly calculated overtime pay when it used the federal formula when, instead, it should have used a California Division of Labor Standards Enforcement formula. A decision is expected early this year. 
• Augustus v. ABM Security Systems, Inc. reaffirmed state law requirements that entitle employees to duty-free rest periods. At issue in the case, which reached the California Supreme Court, were the 10-minute rest periods of ABM security guards who were required to keep their radios on and be ready to respond to emergencies and other requests during this time. The court affirmed a $90 million class action judgment for the guards. 
• City of San Gabriel v. Flores became the law of the land after the U.S. Supreme Court denied review of the U.S. Ninth Circuit Court of Appeals ruling that the City of San Gabriel failed to properly compensate its police officers for overtime worked because “cash-in-lieu” benefits were not included in their regular rates. 
• Vaquero v. Stoneledge Furniture LLC will have ripple effects in the retail sector. Commission-paid employees sued Stoneledge for its failure to compensate for non-sales time. The company paid sales employees based on a two-tier commission system with a draw advance against future commissions for employees who failed to earn the minimum pay of $12.01 per hour. The court concluded that commission-based compensation plans must separately account and pay for employee rest periods and non-sales time. 

Harassment, Discrimination and Retaliation Decisions
Employees across the State saw their rights strengthened last year.
 
The following court decisions concern harassment, hostile work environments and more: 

• Aviles-Rodrigues v. Los Angeles Community College District held that the California Fair Employment Housing Act’s 1-year statute of limitations runs from an employee’s last day of employment rather than the date of a decision to terminate or the date that the termination was actually communicated to the employee. The case involved a review committee’s denial of tenure for a professor, who claimed that the denial was based upon his race.  
• Fuller v. Idaho Dept. of Corrections found that an employer’s on-duty response to off-duty misconduct can, by itself, create a hostile work environment. The plaintiff, a parole and probation officer, was assaulted off-duty by her boyfriend and co-worker. The day she filed a protective order against him and informed her employer of his conduct, management sent an email to all employees supporting him. Ultimately, the plaintiff resigned and sued. A trial court sided with the Department because the assault occurred outside the workplace. On appeal, the court found an objective, reasonable woman could find her work environment was altered because her employer’s statements of concern could be interpreted as condoning her assault and its effects, and sent the case back to the lower court for a trial on the merits.  
• Husman v. Toyota Motor Credit Corp. concerned the firing of an openly gay employee. A trial court sided with Toyota on both retaliatory and discrimination claims, but an appellate court reversed the latter discrimination decision. While Toyota had non-discriminatory reasons for the plaintiff’s termination, the plaintiff provided evidence that a manager made negative comments regarding his sexuality and ridiculed him for essentially being “too gay.” Based on that, the court determined that discrimination could have been a substantial motivating factor in the employee’s discharge, and sent the case back to the lower court for a trial on the merits. 
• M.F. v. Pacific Pearl Hotel Management. LLC confirmed that FEHA allows an employee to sue an employer for sexual harassment at the hands of nonemployees. The case stemmed from an engineering manager’s failure to remove an intoxicated trespasser from the Pacific Pearl Hotel and to inform staff of the trespasser’s presence. The lack of communication and failure to check on all housekeeping staff led to the violent assault and rape of a housekeeper. 
• Nakai v. Friendship House Association of American Indians, Inc. discussed the prohibition against marital discrimination, and concluded that the law was designed to prevent discrimination against certain classes of people, and does not extend to the status of being married to a particular person – in this instance the CEO’s daughter. The plaintiff was terminated by his mother-in-law, the CEO of a drug and alcohol rehabilitation program, after his wife claimed that his own previously treated addictions had resurfaced. Nakai sued the program, claiming marital discrimination and that Friendship House had failed to investigate the claims against him. On appeal, the court affirmed Friendship House’s legal right to discharge Nakai, an at-will employee, for any non-discriminatory reason. 
• Reynaga v. Roseburg Forest Product found that the prompt investigation of, and reaction to, harassment and discrimination complaints is not enough. Remedial measures, too, the court held, must also be effective. At issue was the disparate treatment and hostile work environment the plaintiff was subjected to because of his race. While the employer investigated the employee’s harassment claims and knew of misconduct at the hands of his supervisor, the court found that there was a question as to whether it took sufficient steps to remedy the situation to end current — and prevent future — harassment. 

Additionally, the California Fair Employment and Housing Council issued new regulations last May aimed at preventing workplace discrimination of transgender and gender non-conforming employees.
 
Disability Discrimination, Medical Leave Cases
From private to public employers, 2017 was filled with interesting cases regarding employee disability discrimination and medical leave. 

• Alamillo v. BNSF Railway held that excusing an employee’s past misconduct is not a reasonable accommodation under FEHA. The case involved a locomotive engineer who was dismissed after missing 10 on-call shifts within a six-month period. Even though the plaintiff received a sleep apnea diagnosis during a termination appeal, the railway proceeded with his dismissal. The court found that no reasonable accommodation could have prevented his absenteeism at that point.  
• Atkins v. City of Los Angeles serves as a warning for employers regarding temporary accommodations policies. Five police recruits were terminated after being injured in the City’s police academy. While the City fired the recruits for being unable to return to full duty, it had a previous policy on the books allowing recruits to be assigned to light duty pending a full recovery or permanent disability. The court found that an employer’s policy or past practice can entitle employees to light duty as a reasonable accommodation under FEHA. 
• Bareno v. San Diego Community College District issued a reminder for employers to check whether an employee is off work for a medical reason before terminating on the basis of job abandonment. The plaintiff was suspended prior to termination for a variety of performance issues and informed her supervisor she would be taking medical leave when she was set to return. When she did not return from her medical leave, she was terminated from her position for job abandonment despite the fact that she claimed that she had attempted to contact her employer regarding extending her medical leave. A trial court decision was overturned after an appellate court found the timing alone suggested a retaliatory motive. 
• Cornell v. Berkeley Tennis Club found that, for obesity to be considered a disability, it must have a psychological cause and an employer must know about it to be required to provide accommodations. The discrimination and failure to accommodate case stems from a severely obese employee’s grievance against a new supervisor who she claimed made comments about her size and gave preferential treatment to, and paid her less than, non-obese employees. 
• Featherstone v. Southern California Permanente Medical Group determined an employer has no obligation to provide reasonable accommodations if it has no knowledge of an employee’s disability. At the crux of the case was an employee’s resignation that she later withdrew, alleging her severe sinusitis, surgery and medication to treat the illness made her act erratically. The court held the company’s refusal to rescind the employee’s resignation was not an adverse action. 

First Amendment, Free Speech Issues 
The Ninth Circuit also handed down decisions with effects on government workers:  

• Moonin v. Tice held that government policies imposing prior restraints on employee speech as citizens on matters of public concern must bear a “close and rational relationship” to the employer’s legitimate interests. At issue was a policy prohibiting troopers in the Nevada Highway Patrol’s Canine Drug Interdiction Program from discussing the K9 program with any non-departmental or non-law enforcement persons. The policy was announced in a 2011 email. On appeal, the Ninth Circuit affirmed that the policy violated the First Amendment by imposing an impermissible prior restraint on government employee speech.  
• Brandon v. Maricopa County held that government employees commenting on matters of public interest in their official capacity are not protected from discipline under the First Amendment. The plaintiff, a civil litigation attorney with the Maricopa County Attorney’s Office, sued the County after being terminated for comments she made that were in turn printed in a local newspaper about a recent case. The Ninth Circuit found that Brandon did not state a successful First Amendment retaliation claim because she was not speaking within her chain of command and instead was speaking as a lawyer representing the County when she spoke with her local newspaper on a matter that she was representing the County in.

Previously in this Series: Legislative Changes that Impact Employers

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