This article is Part 1 of a two-part series providing an overview of recent California Supreme Court decisions in employment law.

The California Supreme Court issued several decisions during the past year that may affect California employers. We summarize the most important of these decisions below.

Sandquist v. Lebo Automotive, Inc. (July 28, 2016)

Sandquist sued Lebo Automotive, Inc. (Lebo) on behalf of a class of current and former employees, claiming violations of the Fair Employment and Housing Act (FEHA). Lebo moved to compel individual arbitration based on an arbitration agreement Sandquist signed on his first day of employment. The Court granted review to determine who decides whether the arbitration agreement permits or prohibits class arbitration – a court or the arbitrator?

The Court concluded that “no universal rule allocates this decision in all cases to either arbitrators or courts.” Rather, who decides the availability of class arbitration is “a matter of agreement, with the parties’ agreement subject to interpretation under state contract law.”

McLean v. State of California (August 18, 2016)

Under Labor Code sections 202 and 203, an employer who “willfully fails” to make prompt payment of the final wages owed to an employee who “quits” is subject to penalties of up to 30 days’ wages. However, the Labor Code does not define the term “quit.” The Court granted review to determine if sections 202 and 203 apply when public sector employees “retire.”

The Court interpreted “quit” broadly to mean “a voluntary departure from a particular employment, whatever its motivation.” An employee who “retires” has voluntarily left their employment. The Court found the Legislature did not intend to disqualify retirees from seeking prompt payment of final wages. Therefore, sections 202 and 203 apply when public employees retire from their employment.

Kesner v. Superior Court (December 1, 2016)

The plaintiff’s uncle worked in a plant that manufactures brake shoes, where he was regularly exposed to asbestos fibers. The plaintiff spent three nights per week at his uncle’s home. After the plaintiff died of mesothelioma, a cancer associated with asbestos exposure, the plaintiff’s representative sued the uncle’s employer, claiming the plaintiff’s exposure to asbestos fibers carried home on his uncle’s clothes contributed to his contracting mesothelioma.

The Court held that employers have a duty to “exercise ordinary care in their use of asbestos,” which includes taking “reasonable care to prevent… transmission” of asbestos fibers from the premises to an employee’s household on the employee’s person, clothing, or personal effects. However, this duty extends only to members of a worker’s household, not a visitor.

Augustus v. ABM Security Services, Inc. (December 22, 2016)

The plaintiffs worked as security guards for ABM Security Services, Inc. (ABM). ABM required guards to carry pagers or radios during required rest periods and respond to calls as needed. The plaintiffs sued ABM, alleging that the company failed to provide uninterrupted rest periods as required by law.

The Court held that employers must “relieve employees of all work duties and employer control” during the rest periods mandated by law. As a result, employees cannot be required to be “on call” during breaks. The Court essentially applied the same standard to paid rest periods that it applied to unpaid meal periods in Brinker v. Superior Court.

City of San Jose v. Superior Court (March 2, 2017)

Ted Smith made a request to the City of San Jose under the California Public Records Act (PRA), seeking in part emails and text messages “sent or received on private electronic devices” used by certain city officials. The City disclosed all requested records maintained on City servers, but declined to seek out and disclose communications made using the individuals’ personal accounts.

The Court held that emails and texts regarding the public’s business, sent or received on a public official’s personal electronic device, using private (non-government) servers are “public records” subject to disclosure under the PRA. However, agencies need only disclose records they can locate “with reasonable effort.”

McGill v. Citibank, N.A. (April 6, 2017)

McGill opened a credit card account with Citibank, N.A. (Citibank). McGill’s agreement with Citibank included an arbitration provision. The arbitration clause mandated arbitration of individual claims, and also included a waiver of the right to seek injunctive relief on behalf of the public, as authorized by consumer protection laws.

McGill filed a class action seeking an injunction to prohibit Citibank from engaging in allegedly illegal marketing practices, and Citibank petitioned to compel arbitration. The Court held that a provision in a predispute arbitration agreement that waives the right to seek public injunctive relief in any forum is contrary to public policy and unenforceable.

Although not an employment case, this opinion is significant for employers seeking to mandate arbitration of all claims, while limiting remedies that are not individual-specific.

Shaw v. Superior Court (April 10, 2017)

Health and Safety Code section 1278.5 provides whistleblower protection to patients, nurses, medical staff, and health care workers. The Court held there is no statutory right to a jury trial in a cause of action for retaliatory termination under section 1278.5. However, there is a right to a jury trial in a related action for wrongful termination in violation of public policy.

Part 2 of this article will be printed next time.

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