What’s New?

Some Recent Non-COVID-Related Employment Law Decisions for California Employers

by D. Gregory Valenza | |

Here are summaries of a few recent, non-COVID-related decisions that may be of interest to California employers. 

Fair Credit Reporting Act

The Fair Credit Reporting Act is the federal law regulating how background / credit checks are conducted. California has its own version. California employers have to comply with both. However, the federal law must be obeyed,  if California’s law is silent on a particular issue, or if federal law sets a tougher standard than California law.  Yes, it happens.

The Ninth Circuit Court of Appeals has issued several FCRA in recent years. Here is one more, which should enable employers to breathe a bit easier: Luna v. Hanson & Adkins Auto Transport, Inc.  Opinion here.

The plaintiffs in this class action made two claims alleging violations of the FCRA.  First, the plaintiffs made a novel argument that a required “disclosure” of the employer’s intention to seek a “consumer report” (background check) violated the FCRA because the employer provided the disclosure along with numerous other application materials, as employers usually do.  The Ninth Circuit tossed that claim:

Were we to accept Luna’s argument that a FCRA disclosure cannot be presented together with other employment documents, “it is difficult to see how an employer could ever provide an applicant written application materials without violating FCRA’s standalone document requirement.” Id. Hansen & Adkins’s disclosure may have been provided alongside other application materials, but it appeared in a standalone document—precisely what FCRA requires.

Luna’s second claim was that the required “authorization” to obtain a background check violated the FCRA because the authorization was inserted at the end of the employer’s application for employment.  The court previously ruled that the “disclosure” must be in a “standalone” document, consisting *solely* of the disclosure.  But must the applicant’s “authorization”  also be in a separate document?  No, the court ruled:

This attempted wholesale importation of FCRA’s disclosure requirements runs aground on the statutory language, which provides only that a prospective employer must obtain the authorization “in writing.” 15 U.S.C. § 1681b(b)(2)(A)(ii). Crucially, the authorization subsection of FCRA lacks the disclosure subsection’s standalone document requirement. **** As FCRA dictates only that a consumer authorization be “in writing,” without specifying its format, Hansen & Adkins’s authorization conformed to the requirements of the statute. 

SLAPPed for Suing a Former Employee 

Labor Commissioner claims for alleged wage and hour violations are “tried” via informal “Berman” hearings. These hearings are typically brief. A Deputy Labor Commissioner hears the case in an office setting. Lawyers may represent either employee or employer, but are not required. Rules of evidence are not observed. There usually is no advance discovery process, other than records subpoenas.  

In this lawyer’s experience, the majority of these Berman hearings are decided in favor of the plaintiff / employee, at least in part. Appealing a Labor Commissioner decision is difficult – by design, costly, and can result in a huge adverse attorney’s fee award in favor of the employee.  See our article here. 

Employers often have strong feelings when they lose at the Labor Commissioner’s office.  Sometimes, employers believe the employee won the case because he or she lied.  It may be tempting to sue the employee, the Labor Commissioner, and everyone responsible for such an outrage.  

Suing the employee and the Labor Commissioner, though, generally is not a viable solution.  That’s what happened in Patel v. Chavez (opinion here).  The Court of Appeal upheld an “anti-SLAPP” motion to dismiss a lawsuit that Patel brought against former employee Chavez.  Patel believed Chavez lied at a Labor Commissioner hearing, resulting in an award against Patel’s company.  So, Patel sued Chavez, the Deputy Labor Commissioner, and the Labor Commissioner herself for violation of his civil rights / denial of due process, under a federal civil rights law, 42 USC §1983.  The two officials were dismissed.  Chavez, the former employee, brought an anti-SLAPP motion to strike the claims against him.  Anti-SLAPP motions are a procedural motion designed to terminate “retaliatory” lawsuits based on protected conduct – such as testifying in your own wage hearing.  The thing about anti-SLAPP motions – if the defendant (Chavez here) wins, he gets his attorney’s fees.  

The Court of Appeal  found that Chavez’s testimony was the kind of protected conduct that fall within the anti-SLAPP statute.  So, to defeat the anti-SLAPP motion, Patel had to prove to the court, with evidence, that he likely would win his claim under section 1983.  The thing is, though, section 1983 requires “state action” and Chavez was a private person.  Patel therefore had no viable way to win his case against Chavez. 

Labor Commissioner Appeal Bonds

Speaking of the Labor Commissioner, one reason why appeals from adverse rulings are difficult for employers is that they have to post a bond to appeal. The bond is in the amount of the award, which means purchasing a bond from a surety (for a premium) or posting the full amount of the award in court.  What is an employer to do, though, when the Labor Commissioner Award is $2.5 million dollars? 

That’s what the Court of Appeal considered in Cardinal Care Management LLC v. Afable (opinion here). Basically, Cardinal lost a multi-employee claim before the Labor Commissioner. The award was $2.5 million.  Cardinal understandably wanted to appeal, but could not post the bond.  The bond requirement is jurisdictional. Failure to comply, on time, is grounds for dismissing an appeal from a Labor Commissioner award.  

The important point for employers in this case is that there in fact *is* one way to avoid the Labor Commissioner appeal bond requirement. That is to claim “indigency.”  The superior court will conduct a hearing to determine if the employer should be excused from posting the bond because it is indigent. As the Court of Appeal explained:

An escape valve exists for employers who are unable to post the necessary security: “[A] party appealing a decision of the Commissioner is entitled as a matter of due process to seek relief from the section 98.2(b) undertaking requirement. ‘The right of an indigent civil litigant to proceed in forma pauperis is grounded in a common law right of access to the courts and constitutional principles of due process. [Citations.] “[R]estricting an indigent’s access to the courts because of his poverty . . . contravenes the fundamental notions of equality and fairness which since the earliest days of the common law have found expression in a right to proceed in forma pauperis.” ’ ” (Burkes v. Robertson (2018) 26 Cal.App.5th 334, 343-344 (Burkes).) Thus, statutory provisions applying to all bonds include an exception for indigency. (Williams v. Freedomcard, Inc. (2004) 123 Cal.App.4th 609, 614 (Williams).) Specifically, Code of Civil Procedure section 995.240 provides that a court “may, in its discretion, waive a provision for a bond in an action or proceeding . . . if the court determines that the principal is unable to give the bond because the principal is indigent and is unable to obtain sufficient sureties.” 

Cardinal did not adequately establish it was indigent. The Superior Court therefore dismissed its Labor Commissioner appeal.  To add insult to injury, the plaintiffs recovered attorney’s fees against Cardinal for attempting to appeal. The opinion above addresses Cardinal’s arguments that it was denied due process and other errors. However, the Court of Appeal was unmoved. 



Never Miss a Post
Please enter all required fields Click to hide
Correct invalid entries Click to hide

Shaw Law is Hiring!