Key California Employment Law Cases: August 2018

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This month’s key employment law cases address pre-employment physicals, appeals from California Labor Commissioner awards, and background checks.

EEOC v. BNSF Ry. Co., 902 F.3d 916 (9th Cir. 2018)

Summary: Requiring job applicant to obtain and provide MRI examination as condition of employment violated ADA by discriminating on basis of perceived disability.

Facts: Plaintiff received a conditional job offer from defendant contingent on plaintiff’s satisfactory completion of a post-offer medical review.  During the medical review, plaintiff disclosed he had injured his back four years before, suffering a two-level spinal disc extrusion.  Plaintiff’s primary care doctor, a chiropractor, and the doctor defendant’s subcontractor hired to examine plaintiff all determined he had no current limitations due to his back and found no need for follow-up testing.  Yet, as a condition to consider him further for the job, defendant demanded that plaintiff obtain an MRI of his back at his own cost or it would treat him as having declined the offer.  Plaintiff was in bankruptcy at the time and did not obtain the MRI.  As a result, defendant revoked plaintiff’s job offer.  The Equal Employment Opportunity Commission (“EEOC”) sued defendant.  The federal district court concluded that defendant’s actions violated the Americans with Disabilities Act (“ADA”), and it issued a nationwide injunction that prohibited defendant from engaging in certain hiring practices. 

Court’s Decision:  The Court of Appeals for the Ninth Circuit affirmed the judgment imposing ADA liability, but vacated the injunction and remanded with instructions for the district court to apply the traditional four-factor test to determine whether to issue a permanent injunction, and if so, the scope of the injunction.  The EEOC was entitled to summary judgment because it demonstrated all three elements of a disability discrimination claim by showing that (1) plaintiff had a disability within the meaning of the ADA because defendant perceived him to have a back impairment; (2) plaintiff was qualified for the job; and (3) defendant impermissibly conditioned plaintiff’s job offer on him procuring an MRI at his own expense because it assumed he had a back impairment.

Practical Implications:  Requiring a job applicant to undergo further physical examination despite medical evidence of no limitations may violate the ADA based on a perceived disability. 

Nishiki v. Danko Meredith, APC, 25 Cal. App. 5th 883, 236 Cal. Rptr. 3d 626 (2018)

Summary:  Attorney’s fee award under Labor Code section 98.2 affirmed where award makes employee successful party on appeal in superior court despite failing on some claims.

Facts: Plaintiff, a former employee of defendant law firm, resigned by sending an email on November 14 after normal business hours to the law firm’s partners.  The firm mailed her a handwritten check on November 18.  The amount on the check in numerals was $2,880.31, the correct amount, but it was spelled out as “Two thousand eight hundred and 31/100.”  On November 26, plaintiff sent an email stating she was unable to deposit the check because of the inconsistency.  A corrected check was mailed on December 5.  Plaintiff then filed a complaint with the California Labor Commissioner seeking unpaid vacation, rest period premiums, and waiting time penalties.  She prevailed only on her waiting time penalties claim in the amount of $4,250.  Defendant appealed.  The trial court affirmed and awarded plaintiff attorney’s fees of $86,160 under Labor Code Section 98.2. 

Court’s Decision:  The California Court of Appeal affirmed but reduced the award of waiting time penalties to $2,250, holding that the waiting time started on November 26, the day defendant received notice of the problem with the original check, and ended on December 5 when it sent the replacement check.  In upholding the award of attorney’s fees, section 98.2 explicitly provides that an employee is successful if the superior court awards an amount greater than zero, and thus the Legislature made clear that a claimant who achieves only minimal success should be considered successful for purposes of an award of attorney’s fees.  Plaintiff’s success on the waiting time penalties claim, although ultimately reduced, supported an award of attorney’s fees.

Practical Implications:  Employers should think twice before appealing a Labor Commissioner’s award because the trial court must award the employee his or her attorney’s fees if the employee has any success in court.  Attorney’s fees in court often exceed the damages or penalties awarded by the Labor Commissioner.  

Connor v. First Student, Inc., 5 Cal. 5th 1026, 236 Cal. Rptr. 3d 826 (2018)

Summary:  Employer and investigative consumer report service required to comply with Investigative Consumer Reporting Agencies Act even if they complied with Consumer Credit Reporting Agencies Act.

Facts:  Current and former bus drivers filed a class action against their employer and the investigative consumer reporting agencies that conducted their background checks.  The background checks at issue elicited information about the employees, including criminal records, sex offender registries, address history, driving records, and employment history.  Before conducting these checks, the employer sent employees a notice that authorized the reporting agency to prepare a consumer report or investigative consumer report.  The notice included a check box that (1) generally described the employee’s rights under the California Investigative Consumer Reporting Agencies Act (“ICRAA”); (2) informed the employee that he or she could check the box to receive a copy of the report, and (3) warned that by checking the box the employee was releasing the employer from all claims and damages arising out of or relating to its background investigation.  Plaintiffs alleged that the notice did not satisfy ICRAA’s specific requirements and that the employer was required to obtain written authorization to conduct the background checks.  Defendant moved for summary judgment, claiming that ICRAA was unconstitutionally vague as applied to plaintiffs’ claim because it overlaps with the California Consumer Credit Reporting Agencies Act (“CCRAA”).  The trial court granted the motion.  The California Court of Appeal reversed, finding that although ICRAA and CCRAA might overlap to some degree, there is no positive repugnancy between them that would render ICRAA unconstitutional. 

Court’s Decision:  The California Supreme Court affirmed, holding that some overlap between the two statutes does not render ICRAA unconstitutionally vague when the statutes are otherwise unambiguous.  Employers can comply with both statutes without undermining the purpose of either.  If an employer seeks a consumer’s credit records exclusively, then the employer need only comply with CCRAA.  An employer seeking any other information that is obtained by any means must comply with ICRAA.  When information revealed in an ICRAA background check contains information bearing on a consumer’s credit worthiness, credit standing, or credit capacity, the two statutes overlap.  A regulated party is expected to know and follow the requirements of both statutes, even if that requires greater formality in obtaining a consumer’s credit records (e.g., seeking a subject’s written authorization to conduct a credit check if it appears possible that the information ultimately received may be covered by ICRAA).

Practical Implications:  Employers must comply with both the California Investigative Consumer Reporting Agencies Act and the California Credit Reporting Agencies Act if they seek any information beyond credit records.  Employers should ensure that their background check providers are doing so because the employer can be held liable for a mistake.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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