Key California Employment Law Cases: May 2021

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Magadia v. Wal-Mart Associates, Inc., No. 19-16184, 2021 WL 2176584 (9th Cir., May 28, 2021)

Summary:  An employee lacks Article III standing to bring a PAGA claim in federal court for Labor Code violations that the employee did not personally suffer.

Read our in-depth analysis HERE.

Smith v. BP Lubricants USA Inc., No. E073174, 2021 WL 1905229 (Cal. Ct. App., May 12, 2021)

Summary:  African-American employee sufficiently alleged claims for intentional infliction of emotional distress and Unruh Act violations against non-employer company and its representative where representative allegedly made racially offensive comments to employee in front of colleagues during training.

Facts:  Plaintiff Robert Smith, an African-American employee at Jiffy Lube, attended a presentation for Jiffy Lube employees to learn about a new product by Defendant BP Lubricants USA, Inc. (“BP”). A BP company representative led the presentation. The presentation was attended by approximately 50 Jiffy Lube employees and supervisors. During the presentation, the BP company representative made racially charged comments to Plaintiff, including saying that Plaintiff “sound[ed] like Barry White,” saying that he could not see Plaintiff, and asking how attendees would feel about Plaintiff’s “big banana hands working on [their] car[s].”  According to Plaintiff, everyone except African-American employees laughed at these comments, including three of Plaintiff’s supervisors. Plaintiff sued BP and the individual company representative for harassment under the Fair Employment and Housing Act (“FEHA”) and for racial discrimination under the Unruh Act. Although BP was not his employer, Plaintiff alleged that BP violated FEHA’s prohibition on racial harassment in the workplace by “aiding and abetting” Jiffy Lube’s harassment and discrimination against him. Plaintiff also sued the company representative for intentional infliction of emotional distress (“IIED”). Defendants demurred to Plaintiff’s complaint.  The trial court sustained the demurrer without leave to amend, and Plaintiff appealed.

Court’s Decision:  The California Court of Appeal affirmed the order sustaining the demurrer to Plaintiff’s FEHA claim, holding that Plaintiff had failed to allege any facts suggesting concerted activity between Jiffy Lube, BP, and the BP representative to commit FEHA violations, as required for non-employer liability for “aiding or abetting workplace discrimination” under FEHA. The court, however, reversed the orders sustaining the demurrer as to Plaintiff’s IIED and Unruh Act claims. The court held that Plaintiff sufficiently pled IIED and Unruh Act claims by alleging that the BP representative acted intentionally or unreasonably with recognition that his acts were likely to result in illness through mental distress, rendering the acts “extreme and outrageous” as required to state an IIED claim. Further, Plaintiff plausibly alleged that the representative was acting as a “business establishment” when he gave his presentation because he was acting on behalf of BP, which, undisputedly, was a business generally open to the public.  Plaintiff likewise plausibly alleged that the representative treated Plaintiff differently during the presentation in violation of the Unruh Act by making offensive, racist comments to him only.

Practical Implications:  This case serves as a reminder that businesses may be subject to Unruh Act liability in connection with employee presentations or trainings even where the presentation or training itself is closed to the public.

General Atomics v. Superior Court, No. D078211, 2021 WL 2176921 (Cal. Ct. App., May 28, 2021)

Summary:  Wage statement reflecting standard hourly rate, hours, and pay for all hours worked including overtime, and then reflecting overtime hours at a rate of 0.5 times the regular rate complied with California Labor Code section 226(a)(9).

Facts:  Defendant General Atomics issued wage statements that included entries for regular rate of pay and overtime pay. The entries for regular rate hours and pay included all hours worked by an employee during the pay period, including overtime hours. The wage statements also identified the number of overtime hours, and calculated pay at a rate of 0.5 times the regular rate. Plaintiff Tracy Green sued General Atomics, alleging that it failed to provide accurate, itemized wage statements showing “all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee,” in violation of Labor Code section 226(a)(9). Specifically, Plaintiff alleged that General Atomics failed to identify the correct rate of pay for overtime wages because the wage statements showed “0.5 times the regular rate of pay rather than 1.5.” Plaintiff did not contend that General Atomics had incorrectly calculated overtime pay or failed to pay the correct amounts. General Atomics moved for summary adjudication, contending that its wage statements complied with section 226 because they showed the applicable hourly rates—i.e., the standard contractual hourly rate and the overtime premium rate—and the hours worked at each. The trial court denied General Atomics’ motion. General Atomics challenged the trial court’s order by petition for writ of mandate.

Court’s Decision:  The California Court of Appeal granted the petition for writ of mandate, directing the trial court to vacate its order and enter an order granting General Atomics’ summary adjudication motion. The court explained that the applicable hourly rates were (1) the standard hourly rate determined by contract or other agreement between the employee and employer, and (2) the overtime premium hourly rate, determined by statute, that must be added to the employee’s standard wages to compensate the employee for working overtime. The court reasoned that, although the statutory overtime rate is 1.5 times the regular rate, an employee does not always earn 1.5 times the regular rate for every overtime hour, in addition to the standard rate for non-overtime hours. Given the complexities of determining overtime compensation in various contexts (for example, where the employee earns multiple hourly rates in a single pay period), the format adopted by General Atomics was acceptable. While other formats may also be acceptable, General Atomics’ format adequately conveyed the information required by section 226 and also allowed an employee to readily determine, with simple math, whether his or her wages were correctly calculated, which the court emphasized is the central purpose of section 226.

Practical Implications:  This case is welcome news for employers, many of whom list overtime on their wage statements the way General Atomics did. That said, this case, along with the Magadia case discussed above, are important reminders for employers to remain vigilant about their wage statements. Even the smallest error on employees’ wage statements can mean expensive litigation and large monetary exposure.  

Bannister v. Marinidence Opco, LLC, No. A159815, 2021 WL 2036529 (Cal. Ct. App., Apr. 30, 2021)

Summary:  Employer failed to authenticate employee’s electronic signature on arbitration agreement where parties presented conflicting evidence as to execution and where no employee-specific usernames or passwords were required.

Facts:  Plaintiff Maureen Bannister, a former employee at Defendants’ skilled nursing facility, filed a lawsuit against Defendants alleging discrimination, retaliation, defamation, and other claims. In response, Defendants moved to compel arbitration, claiming that at the time they acquired the skilled nursing facility from the previous owner, Plaintiff electronically signed an arbitration agreement. After Plaintiff presented evidence that she never saw the arbitration agreement during the onboarding process or touched the computer purportedly used to sign the agreement, and did not affix her electronic signature to it, the trial court denied Defendants’ motion. The trial court held that Defendants failed to meet their burden of establishing the existence of a valid arbitration agreement by a preponderance of the evidence because, among other things, no employee-specific usernames or passwords were required to access the onboarding portal, and each employee’s Social Security number was available in the employee’s personnel file. Defendants appealed.

Court’s Decision:  The California Court of Appeal affirmed. The court held that substantial evidence supported the trial court’s finding that Defendants failed to prove that Plaintiff electronically signed the arbitration agreement and that Defendants failed to authenticate the electronic signature on the arbitration agreement as Plaintiff’s. Notably, Defendants’ evidence did not establish that Plaintiff was assigned a unique, private username and password such that she would be the only person who could have accessed the onboarding portal and signed the agreement. Instead, the evidence indicated that the requisite “Client ID” and pin code were the same for all employees, and Defendants’ human resources manager had the information necessary to access the onboarding portal via employee personnel records. Accordingly, the evidence showed that Plaintiff was not the only person who could have executed the arbitration agreement, precluding a finding of legal error by the trial court.

Practical Implications:  Although unique employee usernames and passwords are not necessarily the only method for authenticating an employee’s electronic signature on an arbitration agreement, employers will undoubtedly find it helpful if forced to compel arbitration of employment disputes.

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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