With the new year comes the likelihood that the U.S. Supreme Court, the California Supreme Court, and the Ninth Circuit will issue a number of significant decisions spanning a range of topics in the employment arena. In addition to the new California laws that have recently come into effect, covered here, California employers should watch these three litigation areas as well: READ MORE
What We May See from the California Supreme Court in 2019
2018 saw some major developments in employment law, particularly in California. The California Supreme Court embraced the ABC test for independent contractors in Dynamex, and rejected the de minimis doctrine for Labor Code claims in Troester. While 2019 has already brought legislative changes through the #metoo laws effective January 1, attention should also be on cases before the California Supreme Court. These cases may present new challenges for all employers, but particularly for media companies and employers doing business across state lines. The Court’s decisions in these cases have the potential to increase employers’ exposure to liability. We highlight some such cases here. READ MORE
Exhaustion Matters – Don’t Try Going It Alone Under PAGA
A recent decision by the California Court of Appeal provides two important reminders for practitioners handling Private Attorneys General Act (“PAGA”) claims. First, exhausting administrative proceedings matters. Second, PAGA claims are representative claims – not individual actions.
Under PAGA, an “aggrieved employee” may file a representative action on behalf of himself or herself and other current and former employees to recover civil penalties for violations of the California Labor Code. READ MORE
Take Out and Classification Take-Aways: Federal Court in California Finds Food Delivery Drivers Are Independent Contractors
In the first federal court in California to issue a rule on classification of gig-economy workers, the Northern District of California recently concluded that restaurant delivery drivers are properly classified as independent contractors instead of employees under California law.
In Lawson v. Grubhub, Inc., No. 15-cv-05128-JSC (N.D. Cal. Feb. 8, 2018), Plaintiff Raef Lawson worked as a restaurant delivery driver for Grubhub for four months in late 2015 and early 2016. Grubhub is part of the growing gig-economy, connecting diners to local restaurants through its internet food ordering app. Lawson brought his claims both in an individual capacity and as a representative action pursuant to the California Private Attorney General Act (PAGA). The critical question before the court was whether Lawson was an employee or an independent contractor. READ MORE
CA Court of Appeal Ruling Takes PAGA Standing By The Reins
Since its inception, the Private Attorneys General Act of 2004 (“PAGA”) has been a thorn in employers’ sides by allowing “aggrieved employees” to seek civil penalties on behalf of the State of California and other “aggrieved employees” for violations of the California Labor Code. In a small victory for employers, the California Court of Appeal recently bestowed a key limitation on what it means to be an aggrieved employee for purposes of PAGA standing. Specifically, the court held that an employee who settles his individual Labor Code claims against his employer no longer has standing as an “aggrieved employee” under PAGA. READ MORE
It’s Smooth Sailing for a Shipping Company After Ninth Circuit Arbitration Victory
Last month, the Ninth Circuit issued a notable opinion addressing the enforceability of arbitration agreements in Poublon v. C.H. Robinson Co., 846 F.3d 1251 (9th Cir. 2017), mandate issued (Feb. 24, 2017). In Poublon, the employee filed a class action even though she signed a dispute resolution agreement that prohibited representative actions and required her to mediate and arbitrate all other claims. The court evaluated the agreement to determine if it was unconscionable under California law, which looks at both procedural and substantive unconscionability on a sliding scale. Although the court held that a few provisions were substantively unconscionable, the court severed and reformed the offending provisions and largely upheld the dispute resolution agreement. READ MORE
Pulling the Seat From Under PAGA Plaintiffs
From the time of its enactment, the California Private Attorneys General Act of 2004 (“PAGA”) has been a thorn in the side of employers. For example, the California Supreme Court insists PAGA actions are not class actions, but that hasn’t stopped aggrieved employees from seeking class-wide discovery. And because PAGA permits employees to seek penalties for unconventional causes of action previously off-limits to private plaintiffs (such as the California Wage Order’s suitable seating requirement), employers must grapple with new uncertainties.
But one aspect of PAGA that provides some relief to employers is the requirement that plaintiffs exhaust administrative remedies before filing a lawsuit. To satisfy this this requirement, a plaintiff is required to send a notice to her employer and the Labor Workforce Development Agency (“LWDA”) setting forth the “specific provisions” of the Labor Code allegedly violated and explaining the “facts and theories to support the alleged violation” and then wait 65 days before filing suit. This notice requirement has two purposes: (1) to give the LWDA sufficient information to determine whether the alleged violation justifies an investigation and/ or citation and (2) to put the employer on notice so that it may voluntarily cure the alleged violation. Oftentimes, however, plaintiffs’ notice letters are deficient because they fail to include sufficient facts and theories to inform the employer or the LWDA of the nature of the claims. In such cases, plaintiffs have failed to exhaust administrative remedies.
Judge Gonzalo Curiel’s recent decision in Gunn v. Family Dollar Stores, Inc., Case No.: 3:14-cv-1916-GPC-BGS (S.D. Cal. Dec. 2, 2016), reminds us of the standard that notice letters must meet. Plaintiff Gunn’s notice letter advised the LWDA of his intent to file a PAGA action for violations of Wage Order 7-2001, Section 14, and “[s]pecifically . . . allege[d] that Family Dollar failed to provide suitable seats to Plaintiff and other current and former employees when the nature of their work reasonably permits the use of seats, in violation of California Labor Code section 1198 and Wage Order 7-2001, section 14.” Judge Curiel held that such an allegation was insufficient to meet PAGA’s standards. As he noted, plaintiffs must detail the “facts and theories” supporting their alleged violations. But here, the plaintiff’s allegations simply parroted the language of the underlying regulation, amounting to nothing more than a “string of legal conclusions” devoid of any of the facts or theories required by the Labor Code. The court rejected the plaintiff’s contention that facts could be implied by his allegations (i.e., that the class of employees at issue would not include office employees because they have seats).
The most notable aspect of Judge Curiel’s opinion, however, was his denial of the plaintiff’s request for leave to amend. Although the court recognized leave to amend tends to be granted freely, he disagreed that applied to defective PAGA notices. The court stated that “courts have granted PAGA claimants leave to amend only when the plaintiff’s complaint failed to adequately plead exhaustion, not when Plaintiff provided defective notice to the LWDA” (emphasis added). Indeed, granting the plaintiff leave here would tacitly endorse a strategy that precludes the LWDA from receiving the information necessary “to intelligently assess the seriousness of the alleged violation,” thereby frustrating the purpose of PAGA’s statutory notice requirement.
While the unpublished opinion in Gunn will not likely mark a sea change in how courts treat PAGA actions, it is nevertheless a victory for California employers. Those facing suitable seats claims, which are based on a notoriously ambiguous statute, may have the most to gain.
California Enacts New PAGA Amendments as Part of Governor’s Budget Bill
The Private Attorneys General Act of 2004 (“PAGA”) authorizes aggrieved employees to file lawsuits to recover civil penalties on behalf of themselves, other employees and the state of California for Labor Code violations. In January, Governor Brown submitted a budget proposal that sought greater oversight of PAGA claims and amendments to the PAGA statute. On June 15, 2016, the California Legislature approved Governor Brown’s budget proposal which included significant amendments to PAGA (Labor Sections 2698-2699.5). SB 836 went into effect on June 27, 2016 and provides:
- The Labor and Workforce Development Agency (“LWDA”), the agency which coordinates workforce programs by overseeing seven major departments that serve California businesses and workers now has 60 days to review a notice under Labor Code § 2699.3(a). Prior to the amendments, the LWDA had 30 days to review. Additionally, the time for the LWDA to investigate a claim is extended to 180 days (it was 120 days);
- A Plaintiff cannot file a civil action until 65 days after sending notice to the LWDA (previously 33 days);
- The LWDA must be provided with a copy of any proposed settlement of a PAGA action at the time it is submitted to the court;
- A copy of the court’s judgment and any other order that awards or denies PAGA penalties must be provided to LWDA;
- All items that are required to be provided to the LWDA must be submitted online, including PAGA claim notices and employer cure notices or other responses;
- A $75 filing fee is required for a new PAGA claim notice and also for any initial employer response to a new PAGA claim notice. The filing fee may be waived if the party on whose behalf the notice or response is filed is entitled to in forma pauperis status; and
- When a plaintiff files a new PAGA lawsuit in court, a filed-stamped copy of the complaint must be provided to LWDA. This requirement only applies to cases in which the initial PAGA claim notice was filed on or after July 1, 2016.
What Can Brown Do For PAGA? Budget Proposal Seeks Greater Oversight of PAGA Claims
California Governor Jerry Brown’s administration recently submitted a budget proposal to the California Legislature that would increase State oversight of Private Attorneys General Act (PAGA) claims and amend the PAGA statute accordingly. The proposal has significant implications for the administration of PAGA claims going forward.
Legislative Updates Employers Should Know About to Avoid Wringing in the New Year
The California legislature played an active role in 2015 by enacting new rules and amendments in many employment areas. The following covers some of the key highlights, some of which became effective on January 1, 2016.