California Supreme Court Considers Question About Workplace Retaliation

"Does the evidentiary standard outlined in Section 1102.6 of the California Labor Code replace McDonnell Douglas test as the relevant evidentiary standard for retaliation claims brought under Section 1102.5 of California's Labor Code?" When the Ninth Circuit court certified this question to the Supreme Court of California, they opened up new possibilities that could make disposing of whistleblower retaliation claims more difficult. 

All the Details of the Case: Lawson v. PPG Architectural Finishes, Inc.

Case No.: No. 19-55802

Court:  United States District Court, 9th Cir. 2020

Is the California Supreme Court About to Make Disposing of Whistleblower Retaliation Claims More Difficult? 

Many wonder if the California Supreme Court is about to make disposing of whistleblower retaliation claims more difficult. And they could be right. The Supreme Court did agree to answer the Ninth Circuit Court of Appeals' question regarding California law and unlawful retaliation against employees as alleged in Lawson v. PPG Architectural Finishes, Inc. 

Setting the Evidentiary Standard: Lawson v. PPG Architectural Finishes, Inc. 

The 9th Circuit's request for the California Supreme Court to answer this particular question could result in new evidentiary standards for whistleblower retaliation claims brought under California Labor Code Section 1102.5. In the Lawson case, Mr. Lawson worked as a territory manager with duties involving merchandising products to retail outlets and stocking company displays. Mr. Lawson's supervisor allegedly asked him to manage a product in a way that would fraudulently remove the slow-selling product from inventory. Mr. Lawson refused to carry out the fraudulent task and reported the situation to his employer's ethics hotline - twice. 

The Company's Response to Lawson's Report Regarding Unethical Behavior: 

The second time Lawson reported the situation to the company's ethics hotline, there was an investigation. Simultaneously, Mr. Lawson received poor performance ratings, was issued a performance improvement plan, and then terminated. Mr. Lawson claims that he was retaliated against as a whistleblower. 

What is the McDonnell Douglas Test? 

The trial applied the McDonnell Douglas test in the Lawson case. The McDonnell Douglas test employs burden-shifting between the plaintiff and the defendant in employment law cases. The test originated in connection with Title VII (the federal statute that governs discrimination, harassment, and retaliation in the workplace). After using the McDonnell Douglas test to determine that the plaintiff failed to fulfill his burden to present facts that show retaliatory behavior and a causal relationship between the behavior and the adverse employment action, the trial court granted the employer's motion for summary judgment. 

Appealing to the Ninth Circuit Court: Lawson v. PPG Architectural Finishes, Inc.

In his appeal to the Ninth Circuit Court, Lawson argued that the trial court should have applied the evidentiary standard outlined in California Labor Code 1102.6. It states that once a preponderance of evidence demonstrates whistleblower activity was a contributing factor in retaliatory action against an employee, the burden of proof is on the employer to show alleged actions were taken for legitimate, non-retaliatory reasons. In requesting the California Supreme Court consider the question, the Ninth Circuit Court pointed out three published California appellate court decisions that applied McDonnell Douglas after the amendment. This presents a contradiction between California statute and the state's court rulings. 

If you need to discuss California state labor laws or if you need to file a California workplace retaliation lawsuit, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

United Airlines California Workers File Suit Due to Wage Statement Violations

Many workers, particularly those who work in the transportation industry, must travel for their job. For example, airline employees often travel and work for their employer in various states. What happens when one state’s employment laws are far more burdensome than the rest? 

The Details of the Case: Ward v. United Airlines, Inc. 

Case No. 16-16415 (9th Cir., Feb. 2, 2021)

United Airlines Granted Summary Judgement by District Court: 

After the District Court granted summary judgment to United Airlines for two consolidated actions brought by certified classes of United pilots and flight attendants that live in California, the Ninth Circuit reversed the summary judgment. The pilots and flight attendants allege that their wage statements from United Airlines violate California Labor Code 226.

Does California Labor Code 226 Apply? 

The panel put the question before the California Supreme Court: does California Labor Code 226 apply? After considering the facts of the cases, the California Supreme Court held that California Labor Code 226 applies if the “employee’s principal place of work is in California.” The California Supreme Court set forth the “Ward test” as a set of principles to define Section 226’s permissible reach. 

Applying Section 226 Under the Ward Test: 

According to the Ward test, Section 226 didn’t fall into either of the “invalid” categories. The panel also did not find merit in the Defendant’s argument that applying the Ward test directly regulates interstate commerce. The panel also rejected United Airlines’ argument that applying Section 226 to plaintiffs under the Ward test violated the dormant Commerce Clause. Instead, the panel held that the Airline Deregulation Act of 1978 and the Railway Labor Act did not preempt the application of Section 226. 

Did United Airlines Comply with Section 226? 

While the California Supreme Court decided Section 226 applied in this case, they did not determine whether United Airlines complied with Section 226. The case was directed to district court to modify the class definitions, conform to the California Supreme Court’s definition of Section 226’s permissible reach, modify the class period in the Ward case to extend the date of judgment, determine if the Defendant complied with Section 226, and if not, determine what relief should be awarded to the Plaintiffs. 

In conclusion, transportation companies with employees based in California are bound by Section 226’s wage statement requirements unless they can prove that complying would pose a significant burden with substantial financial costs.

If you need help with employment law violations in the workplace, get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP today. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

SpaceX Faces Hiring Discrimination Complaint

Elon Musk’s rocket company SpaceX is facing claims that their hiring practices are discriminatory against non-U.S. citizens. 

All the Details of the Case: United States of America v. Space Exploration Technologies Corp., d/b/a SpaceX

Court: United States District Court for the central district of California

Case No.: 2:21-mc00043

The U.S. Department of Justice is currently investigating SpaceX due to alleged company-wide discriminatory practices against non-U.S. citizens during the hiring process. The company was issued a subpoena for information, but court documents indicate that the company is not responding with the info. 

Alleged Discrimination During Hiring Process Based on Citizenship: 

The investigation started after the DOJ received an employment discrimination complaint from a non-U.S. citizen. The individual claimed that SpaceX discriminated against him due to his citizenship status. 

A Summary of the Case History: United States of America v. Space Exploration Technologies Corp., d/b/a SpaceX

It is alleged that in March 2020, during an interview for a Technology Strategy Associate position at SpaceX, the company asked questions about the applicant’s citizenship status. Ultimately, the applicant was not hired. The applicant claims the company chose not to hire him for the position because he is not a U.S. citizen or a lawful permanent resident. Plaintiff’s counsel filed a request for a judge to order SpaceX to comply with an administrative subpoena seeking hiring practice documentation. 

Allegations of Discrimination in the Hiring Process at SpaceX:

A non-U.S. citizen made the original allegation of discriminatory hiring practices. After interviewing for an open position at SpaceX, the applicant got in touch with the DOJ’s Employee Rights Section to complain about SpaceX’s hiring practices. The applicant alleges that he was not hired for the open SpaceX position because he was not a U.S. citizen. 

In response to the complaint, the DOJ started an investigation.  

Is the DOJ’s Request for Supporting Documentation Burdensome? 

According to the DOJ, they notified SpaceX of the open investigation on June 8, 2020, and requested the company provide information related to the standard hiring and employment eligibility verification process currently in use. Court documents indicate that SpaceX responded in August 2020, providing a Form I-9 spreadsheet with info about employees dating back through June 2019, but refused the DOJ’s requests for additional documentation like copies of SpaceX employees’ social security cards, driver’s licenses, and passports. They obtained a subpoena on October 7, 2020. After a petition to the DOJ administrative tribunal to dismiss the subpoena was denied, SpaceX was again ordered to comply. On December 11, 2020, SpaceX responded, stating that they would not provide additional documentation in response to the administrative subpoena. The IER argues the additional documentation is necessary as it will show the extent of non-U.S. citizen hires at the company, while SpaceX claims it is a burdensome request since they would allegedly need to retrieve each document manually.                        

If you have questions regarding employment law and how it protects California employees from workplace retaliation, get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

Faulty Pay Stubs Result in Over $100M Award to Employees

The Ninth Circuit heard a California employer's appeal of a $102 million damages award for a class action suit alleging California Labor Code violations. Over $48 million of the award was designated for violations of the California Labor Code's itemized wage statement requirement. The additional $48 million covered penalties under PAGA (Private Attorneys General Act). Additional penalties were assessed against the employer due to PAGA penalties for violating the Labor Code's final wage statement provisions and PAGA penalties for violations of meal period mandates. 

Details of the Case: Robert Magadia v. Wal-Mart Associates, Inc.

Court: United States District Court, N.D. Cal.

Case No.: 5:17-cv-00062

Does Proposition 22 Apply in this Situation? 

Currently, Proposition 22 is limited to app-based rideshare app and delivery companies. However, this legislation's passage could spur activists in other industries to bring serious arguments for independent contractors classification to California voters. 

Summary of the Case: Robert Magadia v. Wal-Mart Associates, Inc.

The plaintiff in the case had no monetary loss from the technical pay stub violation. The argument in the case focused primarily on whether the plaintiff suffered any injury sufficient enough to confer standing to sue under PAGA. The only alleged harm the plaintiff suffered was the inability to confirm he was paid fair compensation for his work as agreed. However, according to the plaintiff in the case, his injury was not the main issue. He argued that under PAGA, he was entitled to enforce state law and pursue relief on behalf of workers in similar situations (the class of aggrieved workers in the case was approximately 50,000). The violation claim occurred after the company failed to identify how bonuses were calculated into their workers' hourly rate for overtime calculations. 

Was the Labor Law Violation Intentional? 

Another question that came up during the case was whether or not the pay stub violation was intentional, which is required by statute before assessing damages. The ruling of the Ninth Circuit could narrow the trial courts' ability to impose PAGA penalties on California employers in cases where the plaintiff has not suffered financial harm. However, inadvertent violations that seem harmless can lead to significant penalties for California employers, particularly in situations where wage statements are not fully compliant with California Labor Code. 

If you have questions about California labor law violations or how employment law protects you against labor law violations, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

Workplace Retaliation: Claim Fails When Employees Age Discrimination Opposition Seen as Unclear

In a recent workplace retaliation case, the claim failed when a California appeals court ruled that the employer could not possibly have been aware of their former employee's actions taken to oppose the age discrimination of a co-worker at the company. 

All the Details of the Case: Susan Colborn, Plaintiff and Appellant, v. Chevron U.S.A. Inc., Defendant

Court: Court of Appeal of the State of California, First Appellate District, Division Two

The Plaintiff, Susan Colborn, is a former employee of the Defendant, Chevron. The Plaintiff alleges she worked for Chevron from 1988 until she was terminated in March 2011. 

History of the Case: Susan Colborn v. Chevron U.S.A. Inc.

Colborn alleges that in January 2011, Chevron management assigned her direct report a low-performance rank - lower than what they previously agreed on. As a result, Colborn claims she contacted HR to lodge a complaint that the final ranking given to her direct report was not fair. According to the suit, the HR department advised Colborn that the performance rank would not be changed. 

Details of the Case: Susan Colborn v. Chevron U.S.A. Inc.

The direct report in receipt of the allegedly unfair performance rank was supposed to be put on a performance improvement plan. However, Colborn refused to do so. She also refused to meet with HR about the issue. On February 23, 2011, Colborn received her own ranking, and it was the lowest ranking she had ever received in her history with the company (23 years of employment). On March 10, 2011, Colborn was fired. 

Lawsuit Filed Claiming Wrongful Termination and Retaliation: 

Colborn filed a lawsuit after Chevron terminated her employment. Plaintiff claimed that she was terminated in retaliation, which is a violation of California labor law. According to court documents, the Plaintiff alleged Chevron fired her because she complained that her direct report's performance ranking was discriminatory due to age. 

The Trial Court Dismissed the Complaint:

Colborn brought her retaliation claim under the California Fair Employment and Housing Act (FEHA). The Act makes it unlawful for an employer to fire an employee because they opposed an unlawful practice. However, before the case went to trial, the trial court dismissed Colborn's complaint. So she appealed. 

The Burden to Introduce Facts in FEHA Retaliation Claims: 

The California Supreme Court adopted a three-state burden-shifting test for discrimination claims, the McDonnell Douglas test. The test applies to any FEHA discrimination and retaliation claims. Under the McDonnell Douglas test, Plaintiff must produce facts that a jury could use to infer discrimination occurred in the situation. Plaintiffs must show that they engaged in activities protected by FEHA, the employer took adverse employment action against them in response, and there was a causal connection between the two. 

A Prima-Facie Case of Retaliation: 

If the Plaintiff can present facts fulfilling the three above requirements, this is known as a prima-facie case. When the Plaintiff fulfills the burden to present the necessary facts, a presumption of discrimination arises and shifts the burden of producing evidence showing there was no discrimination onto the employer who must present facts showing they acted for nondiscriminatory reasons. The Defendant in this case successfully argued that the Plaintiff did not establish a causal link as required, and that even if they did, the case should be dismissed because the employer met its burden to establish a legitimate nonretaliatory reason for the adverse employment action. The appeals court agreed and affirmed the trial court's decision to dismiss because there was no evidence to show that the employer knew that the Plaintiff's actions were based on her belief that the employer was engaging in age discrimination against her direct report. As such, a causal connection was not established. 

If you have questions about California labor law violations or how employment law protects you against labor law violations, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

2020 Chipotle Case Could Have Fundamentally Changed How FLSA Cases are Litigated

One of the most significant cases in class and collective litigation in 2020 was Chipotle Mexican Grill v. Scott. 

Details on the Case: Chipotle Mexican Grill v. Scott

Case No.: 17-2208, 2nd Circuit

The U.S. Supreme Court weighed in on a critical issue connected to collective action under the FLSA in 2020. The court was asked to consider what it means for a putative class of workers to be “similarly situated” for purposes of being considered a collective under FLSA. 

Who is “Similarly Situated” for FLSA Collective Actions? 

During Chipotle Mexican Grill v. Scott, parties involved claimed there was an “intractable conflict” among the federal courts on the issue of determining who is “similarly situated” for FLSA collective actions. This question and the resulting litigation could have had ground-shifting implications. However, after the parties involved signaled their intent to settle on December 31, 2020, the court did not take up the case even though it could have fundamentally reshaped how FLSA cases, in general, are handled and litigated. Even though this particular case wasn’t litigated, 2020 saw a steady shift in the courts on the issue of defining “similarly situated” for FLSA collective actions. 

The Plaintiffs: Chipotle Mexican Grill v. Scott

In Chipotle Mexican Grill v. Scott, seven named plaintiffs represented six putative classes (under Federal Rule of Civil Proc. 23(b)(3)). The plaintiffs also filed suit on their own behalf and on behalf of 516 additional individuals that opted in on a conditionally certified collective action under the FLSA (Fair Labor Standards Act). The plaintiffs alleged that the company misclassified workers as exempt in violation of state labor laws. Collective plaintiffs alleged that the company misclassified them as exempt in violation of the FLSA. 

The “Similarly Situated” Issue: Chipotle Mexican Grill v. Scott

After the district court denied class certification, the Second Circuit affirmed the order denying class certification based on a lack of predominance and superiority. According to the record, the court could not find that the district court’s conclusion was outside the range of permissible decisions. However, the court did vacate the district’s court order to decertify the collective action based on a legal error. The Second Circuit Court found that the district court improperly analogized the standard for maintaining a collective action (under the FLSA to Rule 23 procedure). As the district court’s decision was based on the inaccurate analogy when they determined that the named plaintiffs and opt-in plaintiffs were not “similarly situated,” the 2nd Circuit Court vacated the order. The improper application of the “sliding scale” analogy to Rule 23 in this case improperly conflated section 216(b) with Rule 23 and the latter rule’s stricter requirements.

If you have questions about California labor law violations or how employment law protects you against labor law violations, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

The “Gig” Driver Misclassification Issue Outlasted the Pandemic of 2020

The outcome of some recent California lawsuits could alter how California handles issues of classification for employees and independent contractors in the gig economy. 

Details About Referenced Cases: 

People of the State of California v. Uber Technologies, Inc., et al

Filed: 10/22/2020 in the Court of Appeal of the State of California First Appellate District Division Four

A160701, A160706 (City and County of San Francisco Sup. Ct. No. CGC-20-584402)

Dynamex Operations West, Inc. v. Superior Court of Los Angeles County

Court: Los Angeles County Superior Court

Case No: BC332016

Rideshare Company Drivers: Employees or Independent Contractors

The California Court of Appeals upheld a trial court ruling that major rideshare companies Uber and Lyft both classify their California drivers as employees rather than independent contractors (People of the State of California v. Uber Technologies, Inc., et al.) The suit started over claims that both companies were violating California state law AB-5, which requires employers classify their workers as employees unless they can prove that the worker is "free from the control and direction of the hiring entity in connection with the performance of the work." The trial court ruled in favor of the state. 

Distinguishing Between Employees and Independent Contractors: 

Courts attempting to differentiate between employees and independent contractors using similar wording usually focus their determinations on the level of independence or control the worker retains compared to the employer. However, determining how much control the employer retains over their worker while performing their work is not the only factor. The issue often hinges on the individual's work itself - and whether or not it falls "outside" the hiring entity's usual course of business. 

Are Drivers Performing Work Outside Uber & Lyft's Usual Course of Business? 

The trial court ruled in favor of California, granting a preliminary injunction prohibiting the two major rideshare companies from classifying their drivers as independent. They found that their drivers were not performing work outside the company's "usual course" of business. Uber and Lyft appealed the trial court's decision. However, Justice Jon Streeter of the Court of Appeals upheld the lower court's decision. He stated that the drivers' misclassification would cause significant irreparable harm noting the lack of wage protections, rest periods, meal breaks, overtime pay, health insurance, etc.

Prop 22 Opposes General Push of California Case Law Toward Greater Classification as Employees:

While California case law's general direction reflects a push toward a greater classification of California workers as employees, Proposition 22 presented a challenge when California voters adopted it in the November 2020 election. This proposition counteracted AB-5. The proposition was backed by the rideshare companies and organizations supporting the classification of gig-economy workers as independent contractors instead of employees. The California Supreme Court's decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles resulted in a "presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission." AB-5 took this presumption and codified the decision of the court. Proposition 22 presented a different definition in opposition to the presumption created by the court's findings in Dynamex Operations West, Inc. v. Superior Court of Los Angeles and the subsequent AB-5. According to Proposition 22, drivers are only considered "engaged" after picking up a passenger, delivery, etc. The definition created by Proposition 22 removes a significant amount of time previously considered to be engaged in work such as when the driver is marked as "available" for a pickup. As such, drivers cannot receive payment for this time or mileage, and they cannot accrue any other type of benefits. 

In our increasingly technology-driven society, the debates for handling gig-economy workers will continue. In addition to rideshare drivers for companies like Uber and Lyft, the issue directly affects many other workers connected to different industries like Grub Hub, and Uber Eats delivery drivers, etc. The debates defining when an individual is "engaged" in work will significantly narrow the definition of when a worker should be classified as an independent contractor.

If you have questions about California labor law violations or how employment law protects you against labor law violations, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.