California Supreme Court to Clarify Standard of Proof in FEHA Discrimination Cases

Last month, the California Supreme Court heard oral arguments in a case that will clarify the standard of proof required for “mixed-motive” discrimination claims under the California Fair Housing and Employment Act (“FEHA”). Harris v. City of Santa Monica, No. S181004 (Cal. Dec. 4, 2012). In mixed-motive cases, both legitimate and illegitimate factors may have contributed to the employment action. Read More

U.S. Supreme Court To Decide Whether Class Action Plaintiffs Can Use Stipulations To Avoid Jurisdiction Under The Class Action Fairness Act

The United States Supreme Court recently granted certiorari to review whether class action plaintiffs can avoid federal court jurisdiction under the Class Action Fairness Act (“CAFA”) by stipulating that their damages do not exceed the federal jurisdictional prerequisite.  This issue is particularly significant to employers because they frequently rely on the CAFA to remove cases to federal court when hit with wage-and-hour and other employment class action lawsuits.  The CAFA generally permits class action defendants to remove cases with minimal diversity to federal court where the amount in controversy exceeds $5 million. Read More

The NLRB Finds That Social Media Policy Violates The National Labor Relations Act

In its first ruling on an employer’s social media policy, the National Labor Relations Board found that Costco Wholesale Corporation’s social media policy in its employee handbook violated the National Labor Relations Act.  Among the policy provisions reviewed, the Board analyzed Costco’s policy prohibiting employees from posting electronically statements that damage the company or any person’s reputation.

In its September 7, 2012 opinion, the Board stated that the “appropriate inquiry” is whether the policy would “reasonably tend to chill employees in their exercise of their Section 7 rights[,]” which provides employees with the right to engage in concerted activity.  While the Board acknowledged that Costco’s policy did not explicitly reference Section 7 activity, the Board did find that the policy’s broad prohibition on statements “clearly encompasses concerted communications protesting [Costco’s] treatment of its employees.”  The Board specifically noted that there was nothing in Costco’s policy that even suggested the exclusion of protected communications.  Accordingly, the Board concluded that Costco’s policy had a reasonable tendency to inhibit employees’ protected activity and thus violated the National Labor Relations Act.

California Court of Appeal Smacks Down Unfair Competition Claim Based on Cursory Pleading

In Aleksick v. 7-Eleven, Inc., California’s Fourth District Court of Appeal provided a stark reminder that claims brought under California’s Unfair Competition Law (“UCL”) must specifically invoke an underlying law or public policy in order to be properly pled.  The plaintiff in Aleksick alleged that 7-Eleven, which provides payroll services to its franchisees, used a payroll system that improperly converted partial hours worked from minutes to hundredths of an hour.  According to the plaintiff, this practice of “truncating” hours shorted employees a few seconds of time for every converted partial hour and thereby violated the UCL, which prohibits “any unlawful, unfair or fraudulent business act or practice.”  The plaintiff’s complaint, however, did not specify any underlying Labor Code section as a basis for plaintiff’s UCL claim.

The court affirmed the trial court’s grant of summary judgment for 7-Eleven on two grounds.  First, the court held that the plaintiff’s complaint failed to specifically allege a statutory predicate for the UCL claim of “unlawfulness,” and that plaintiff’s failure in this regard constituted a forfeiture of her UCL claim.  Second, the court held that, even absent forfeiture of the UCL claim, the claim necessarily failed against 7-Eleven because 7-Eleven was not the plaintiff’s employer.  Rather, under both the applicable Wage Order and the common law, the individual franchisee was the plaintiff’s employer.  As the court observed, only the employer has the duty to pay wages.  Thus, the plaintiff could not assert a UCL claim against 7-Eleven, whether based on an assertion of “unfair” or “unlawful” business practices.

Aleksick is a helpful decision for employers because it reinforces a pleading rule that is not always followed by plaintiffs’ attorneys: complaints alleging UCL claims must specifically invoke the statutory or public policy bases underlying the UCL claims.  It also could cause plaintiffs’ attorneys to think twice before naming franchisors in lawsuits involving allegations of unpaid wages.