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Some California Employment Case Law Developments in February 2019

by D. Gregory Valenza | | March 3, 2019

Here are some key court decisions affecting California employers in February 2019.

Remember last year when the Ninth Circuit held that the federal Equal Pay Act prohibited any consideration of an applicant’s prior salary?  Me neither, but we posted about it here.  As the post explains, the En Banc Court’s narrow majority went further than the EEOC, and even California law.  The case was styled Rizo v. Yovino.  The court’s en banc opinion is here

Well, that opinion has been overturned by the U.S. Supreme Court. Interestingly, the Court did not address the merits, ie, whether salary history is one factor that an employer may consider when setting compensation of a new employee.  Rather, the high Court ruled that the opinion was invalid because the author, Senior Circuit Judge Stephen Reinhardt, died before the opinion issued.  The money quote:

Because Judge Reinhardt was no longer a judge at the time when the en banc decision in this case was filed, the Ninth Circuit erred in counting him as a member of the majority. That practice effectively allowed a deceased judge to exercise the judicial power of the United States after his death. But federal judges are appointed for life, not for eternity.

The Ninth Circuit’s opinion, being more generous to employees than federal or state law as it was previously understood, was significant. The vote in the Ninth Circuit’s en banc opinion was close. There were several opinions besides the majority’s, in which several judges indicated discomfort with the breadth of the new rule the court announced. The Ninth Circuit now will have to vote again with a panel of eligible judges.  That could result in a modified opinion. In the meantime, California employers should continue to follow California law, in particular, Labor Code section 432.3. The Supreme Court’s per curiam opinion in Yovino v. Rizo is here

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The Court of Appeal held in Marquez v. City of Long Beach, opinion here, that the State of California may dictate a statewide minimum wage and apply it to charter cities, which are granted broad power to manage their own affairs.  In the case, some employees of Long Beach were paid less than the California minimum wage.  Long Beach argued it had the power to set its own minimum wage.  The Court disagreed, focusing on the conclusion that a minimum wage is a matter of statewide concern.  The Court explained that other laws deemed matters of municipal concern were not as universally applicable as the state minimum wage. Rather, the minimum wage was more like the Workers’ Compensation Act, which the California Supreme Court held applies to charter cities. 

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The Court of Appeal held that PAGA penalties must be distributed to all of the employees whom the named plaintiff claims are “aggrieved.”  If you are not sure about PAGA penalties, they are wage-hour penalties that an individual collects on behalf of the state Labor Commissioner. The plaintiff keeps 25% of the recovered amount, and pays the state 75%.  But when the plaintiff sues on behalf of others, in a “representative action,” the plaintiff collects penalties for violations that occurred to these other employees.  In this case, Moorer v. Noble LA Events, Inc. (opinion here), the plaintiff sued for wage-hour violations on behalf of himself, and PAGA penalties on behalf of violations that occurred to other “aggrieved” employees.  After Moorer obtained a default judgment, he insisted that the 25% portion of the penalties belonged to him alone, and not the other employees on whose behalf he sued. After giving Moorer 8 chances to submit a correct default judgment, the trial court dismissed the case.  Regarding Moorer’s argument that he was entitled to keep the entire 25% of the PAGA penalties (over $100,000), the Court held that the California Supreme Court twice has held that penalties must be distributed to the aggrieved workers. 




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