The California Supreme Court decided several significant employment law cases since our last summary in September 2007. The Court’s opinions address a number of topics, including expense reimbursement, employee privacy, government employee due process rights, leaves of absence, drug testing, and retaliation. The Court also accepted review of several decisions that will affect employment law in the months to come. We summarize below the recently decided and pending cases.

Cases Decided

Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal. 4th 554 (2007)

The issue in this case was whether Harte-Hanks could reimburse its outside sales force for mileage by paying a higher “lump sum” in the form of wages and commissions, instead of paying a specified sum for each mile driven, such as the IRS’s “standard” mileage rate. The Court approved the company’s practice, emphasizing that employees may challenge a reimbursement plan if it is inadequate under Labor Code section 2802. That section requires employers to reimburse employees for necessarily incurred business expenses. The “sleeper” issue is that the Court held the IRS mileage reimbursement rate is not a guaranteed lawful way of reimbursing employees for personal automobile use. The Court explained that the mileage rate agreed to between the employer and employee is “merely an approximation of actual expenses” and is less accurate than the actual expense method. Therefore, the employee may challenge the amount of reimbursement, even if the employer uses the IRS rate.

International Federation of Professional & Technical Engineers, Local 21, AFL-CIO v. Superior Court, 42 Cal. 4th 319 (2007)

The court of appeal concluded that the names and salaries of public employees earning $100,000 or more per year, including peace officers, were not exempt from public disclosure under the California Public Records Act. The Supreme Court agreed, finding that disclosure of the salary information at issue would not constitute an unwarranted invasion of personal privacy.

Mays v. City of Los Angeles, 43 Cal. 4th 313 (2008)

The California Public Safety Officers Procedural Bill of Rights Act (POBRA) sets forth a list of basic rights and protections which must be afforded all peace officers by the public entities which employ them. One of those rights is a one-year limitation on investigations of misconduct by a public safety officer. The one-year period runs from the time the misconduct is discovered. Once the public agency decides that discipline may be warranted, it must inform the public safety officer within that one-year period. The issue before the Court was whether the notice required by the POBRA had to specifically identify any contemplated punishment or discipline. The Court concluded that the POBRA did not require notice of specific proposed punishment, only notice that disciplinary action could be taken against the officer for specified misconduct. The noted that it would have been anomalous to require the department to reach a conclusion regarding potential discipline prior to any pre-disciplinary proceedings or response by the officer.

Lonicki v. Sutter Health Central, 43 Cal. 4th 201 (2008)

A nurse requested medical leave from a full-time job because of major depression and work-related stress. She also had a part-time job as a nurse for a different employer, but she did not take medical leave from the second job. The Court held that even though the employee had a part-time job performing the same duties that she claimed she could not perform for the first employer, that fact alone did not conclusively establish the employee did not have a “serious health condition” under the California Family Rights Act. The employee’s second job was simply evidence of her ability to perform the job from which she took leave. The Court also ruled that while employers are not required to obtain a third medical opinion as part of the FMLA/CFRA medical certification process, they run the risk a court or jury will disagree with the employer’s conclusion based on a second opinion that an employee does not have a “serious health condition.”

Ross v. RagingWire Telecommunications, Inc., 42 Cal. 4th 920 (2008)

The Court’s opinion emerged from a collision among principles of constitutional, criminal, and employment law, as well as public policy. The Court decided, 5äóñ2, that employers have no duty under the Fair Employment and Housing Act (FEHA) to make “reasonable accommodation” for marijuana use permitted by California’s Compassionate Use Act. The Court also unanimously ruled that the plaintiff could not maintain a common law action for wrongful termination in violation of public policy for his former employer’s failure to accommodate marijuana use. Rather, the Court reaffirmed its watershed drug testing decision in Loder v. City of Glendale, holding that “[u]nder California law, an employer may require preemployment drug tests and take illegal drug use into consideration in making employment decisions.”

Jones v. The Lodge at Torrey Pines Partnership, 42 Cal. 4th 1158 (2008)

Jones sued the Lodge and a supervisor, asserting FEHA claims for (among other things) sexual orientation discrimination and retaliation. The Court ruled that individuals cannot be personally liable for retaliation under FEHA. Looking to legislative history, the Court determined that the Legislature did not intend to provide for personal liability when it added the word “person” to the statute prohibiting retaliation. The Legislature simply intended to conform the language in the FEHA. The Court relied on its previous reasoning in Reno v. Baird, a 1998 decision holding that individuals are not personally liable for workplace discrimination. The Court pointed out that a supervisor facing personal liability for normal personnel actions such as demotion, termination, and failure to promote, for instance, would face a conflict of interest every time the supervisor considered taking action against an employee.

Pending Cases

There are a number of employment law cases pending before the California Supreme Court on a variety of subjects that of importance to California employers. These include:

  • Roby v. McKesson HBOC: (1) Can management-related acts support a claim for hostile work environment harassment, or must the conduct constituting harassment be limited to acts that have no connection with matters of business and personnel management? (2) May an appellate court may determine the maximum constitutionally permissible award of punitive damages when it has reduced the accompanying award of compensatory damages?

  • Edwards v. Arthur Andersen: Is a non-competition agreement between an employer and an employee that prohibits the employee from performing services for former clients invalid under Business and Professions Code section 16600?

  • Hernandez v. Hillsides: May employees assert a cause of action for invasion of privacy when their employer installed a hidden surveillance camera in the office to investigate whether someone was using an office computer for improper purposes?

  • Spielbauer v. County of Santa Clara: If a public employee exercises his or her Fifth Amendment right against self-incrimination in a public employer’s investigation of the employee’s conduct, must the public employer offer immunity from prosecution before it can dismiss the employee for refusing to answer questions in connection with the investigation?

  • Chavez v. City of Los Angeles: May a court can deny a prevailing plaintiff’s fees pursuant to Code of Civil Procedure section 1033(a) for failing to recover more than the court’s jurisdictional minimum?

  • Arias v. Superior Court: Must an employee suing an employer for wage and hour violations on behalf of himself and others under the Unfair Competition Law (Business and Professions Code section 17200 et seq.) or under the Private Attorneys General Act (Labor Code section 2698 et seq.) bring his claims as a class action?

  • McDonald v. Antelope Valley Cmty. Coll. Dist. : Is the one-year statute of limitations for filing an administrative complaint of discrimination with the Department of Fair Employment and Housing subject to equitable tolling while the employee pursues internal administrative remedies offered by the employer?

  • Miklosy v. U.C. Regents: Does the Whistleblower Protection Act which requires an employee of the University of California to file a complaint with the University and for the University to fail to timely respond before bringing a civil action for damages, require merely the exhaustion of that internal remedy, or if the University timely responds, does the University’s response bar any later action by the employee?

  • Coral Construction, Inc. v. City and County of San Francisco: Does San Francisco’s race- and sex-based public contracting program violate Proposition 209, a 1996 California ballot proposition which amended the state constitution to prohibit public institutions from considering race, sex, or ethnicity in making award decisions?

  • Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court: Do unions have standing to bring claims on behalf of employees for penalties under the Private Attorneys General Act (Labor Code section 2698 et seq.) or the Unfair Competition Law (Business and Professions Code section 17200 et seq.)?

  • Harris v. Superior Court (Liberty Mutual Insurance) : Do claims adjusters employed by insurance companies fall within the administrative exemption to California’s overtime compensation requirement?

Conclusion

As shown above, the California Supreme Court has taken an active interest in employment law cases over the last several years. The Court’s decisions this term will shape California employment law for years to come. Employers should carefully review these decisions and make appropriate changes to their policies and practices.

In addition, because much of employment law is created by statutes, regulations, administrative agency rulings, and lower court decisions, employers also must take steps to remain current on these “lower profile” developments.

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