Weekly Law Resume: Labor Law – Exhaustion of Administrative Remedies Required

by Low, Ball & Lynch
Contact

Aaron MacDonald v. State of California, et al.
Court of Appeal, Third District (August 27, 2013)

In this case, the Third District of the Court of Appeal acknowledged and clarified the question that troubled many employers until now. Namely, an employee must exhaust the administrative process created by Labor Code § 98.7 before filing a whistleblower retaliation lawsuit brought under Labor Code §1102.5.

Plaintiff Aaron MacDonald (“MacDonald”) was hired by the State of California (“State”) to work for the California State Assembly (“Assembly”) at an office in San Joaquin County. A few months after starting his new job, MacDonald complained to several of his supervisors that one of them was illegally smoking in the office, violating two state laws. One of the supervisors assured MacDonald that the problem was serious and would be dealt with, but two weeks later, MacDonald was fired. MacDonald filed suit against the Assembly and the State for retaliation, discrimination and wrongful termination.

MacDonald claimed: (1) retaliatory discharge in violation of Labor Code § 1102.5; and (2) retaliatory and discriminatory discharge in violation of Labor Code § 6310. The defendants demurred, arguing that MacDonald was required to exhaust his administrative remedy with the Labor Commissioner under Labor Code § 98.7 before he could sue. The trial court agreed and sustained the demurrer, dismissing the case with prejudice. MacDonald appealed.

The Third District Court of Appeal affirmed the trial court’s decision, stating that MacDonald was required to exhaust administrative remedies by taking his complaint to the Labor Commissioner before suing in court. Specifically, Labor Code § 1102.5 provides employees with protection from retaliation for “disclosing information to a government or law enforcement agency, where the employee has reasonable cause to believe that the information discloses a violation of state or federal statute, or a violation or noncompliance with a state or federal rule or regulation. Government Code § 7597 provides public employees with similar protection. In 2003, § 1102.5 was amended to provide protection for employees who refuse to participate in illegal activities. Labor Code § 1102.5 (c) bars retaliation “for refusing to participate in an activity that would result in a violation of state or federal statute, or a violation or noncompliance with a state or federal rule of regulation.”

Labor Code § 98.7 provides an administrative remedy for employees seeking protection of Labor Code § 1102.5 and Government Code § 7597. It states that an employee “ . . . may file a complaint with the division within six months after the occurrence of the violation..” If the Labor Commissioner finds that a violation has occurred, it shall order appropriate remedies. The same remedies are available in a lawsuit. If the employer fails to comply within ten days, the Labor Commissioner may file an action in court, or if the commissioner declines to act, the employee may bring action in court.

MacDonald argued that the language of Labor Code § 98.7 is permissive, and not restrictive. MacDonald relied on the court of appeal case Lloyd v. County of Los Angeles (2009) 172 Cal.App.4th 320, which held that the Labor Code did not require exhaustion of administrative remedies prior to suing in court. Lloyd’s ruling emphasized the language of the Labor Code provision, which states that a party “may file a complaint” with the Labor Commissioner, rather than using a restrictive words such as “must” or “shall.” The court of appeal criticized Lloyd, stating that the case incorrectly interpreted the law. The appellate court noted that the longstanding rule in California is that if an administrative remedy is provided in a statute, that remedy must be pursued before suing in court, even if the statute uses non-mandatory language such as the word “may.”

After criticizing the reasoning in Lloyd, the appellate court held that another case, Campbell v. Regents of University of California (2005) 35 Cal.4th 311, more accurately interpreted the law regarding exhaustion of administrative remedies in the Labor Code. Campbell involved a lawsuit by an employee of the Regents of the University of California and stated that the employee was required to exhaust the university’s internal administrative remedies before suing in court.

The court of appeal rejected MacDonald’s contention that Campbell only applied to internal department administrative remedies, not remedies contained in the Labor Code. The Appellate Court emphasized that Campbell regarded the university’s internal rule as if it were a statute, and held that the Labor Code requires exhaustion of administrative remedies before filing a lawsuit.

COMMENT

With this split in authority, it is probable that the Supreme Court will address the issue of permissive or mandatory exhaustion of remedies. In the meantime, MacDonald is beneficial to employers in that the Labor Commissioners can resolve many claims speedily, without the involvement of the courts. This also translates into fewer costs for the employer. Unlike litigation, the administrative process can be completed in months rather than years, which is particularly important in matters where liability exists.

For a copy of the complete decision see:

http://www.courts.ca.gov/opinions/documents/C069646.PDF

 

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.

© Low, Ball & Lynch | Attorney Advertising

Written by:

Low, Ball & Lynch
Contact
more
less

Low, Ball & Lynch on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.