Employment Law

One Day of Rest Mandated by California Supreme Court

Why it matters

Resolving a contentious issue of California law, the state’s highest court ruled that one day of rest is guaranteed for each defined workweek, although an employer is not forbidden from allowing an employee, fully apprised of his or her entitlement to rest, to independently choose not to take a day off. The issue arose when two employees of Nordstrom claimed the employer required them to work for more than six consecutive days without a day off, in violation of the state’s “day of rest” statute. Following a bench trial, a federal court judge ruled in favor of Nordstrom. The plaintiffs appealed, but uncertain about how to interpret the statute, the U.S. Court of Appeals for the Ninth Circuit certified three questions to the California Supreme Court. Answering the questions, the unanimous court held that a day of rest is guaranteed for each workweek, although periods of more than six consecutive days of work that stretch across more than one workweek are not per se prohibited. The exemption for employees working shifts of six hours or less applies only to those who never exceed six hours of work on any day of the workweek, the court added, and if on any one day an employee works more than six hours, a day of rest must be provided during that workweek. Finally, the court ruled an employer “causes” its employees to go without a day of rest when it induces the worker to forgo rest to which he or she is entitled. However, employers may permit an employee to voluntarily choose not to take a day of rest, after being informed of his or her rights under the law.

Detailed discussion

In 2009, Christopher Mendoza filed suit against his former employer, Nordstrom. According to Mendoza, during his tenure as a barista at a Nordstrom espresso bar and as a sales representative in the cosmetics department, the national retailer violated Sections 551 and 552 of the California Labor Code, the so-called day of rest law.

Section 551 provides that “[e]very person employed in any occupation of labor is entitled to one day’s rest therefrom in seven,” while Section 552 states that “[n]o employer of labor shall cause his employees to work more than six days in seven.” California Labor Code Section 556 exempts an employer from the day of rest requirement “when the total hours [worked by an employee] do not exceed 30 hours in any week or six hours in any one day thereof.”

Mendoza claimed he worked more than six consecutive days on three occasions, one time working 11 days straight (although working fewer than six hours on two of those days), seven days straight another time (with fewer than six hours on three days) and eight consecutive days on a third occasion (with fewer than six hours on five days). On each of these occasions, Mendoza was not originally scheduled to work more than six consecutive days but did so after being asked by a coworker or supervisor to fill in for another employee.

A second employee, Megan Gordon, joined the suit in April 2011. She worked as a fitting room attendant at a Nordstrom Rack store for more than six consecutive days on one occasion, although on two of those days she worked fewer than six hours.

After a two-day bench trial, a California federal court judge sided with Nordstrom. Gordon and Mendoza appealed to the U.S. Court of Appeals for the Ninth Circuit. A panel of the federal appellate court considered the issue and, finding no controlling California precedent and an ambiguous statutory text, turned to the California Supreme Court for help.

The panel certified three questions to the state’s highest court:

  1. Is the day of rest required by Sections 551 and 552 calculated by the workweek, or does it apply on a rolling basis to any seven-consecutive-day period?
  2. Does the Section 556 exemption for workers employed six hours or less per day apply so long as an employee works six hours or less on at least one day of the applicable week, or does it apply only when an employee works no more than six hours on each and every day of the week?
  3. What does it mean for an employer to “cause” an employee to go without a day of rest: force, coerce, pressure, schedule, encourage, reward, permit or something else?

Answering the first question, the court began with the premise that the text of the statutory is “manifestly ambiguous” and the legislative history “sheds limited light.” The court turned to other interpretive sources, including the regulatory and statutory contexts of which the day of rest laws are a part.

For example, the court reviewed the history of the Industrial Welfare Commission Wage Orders, noting that the statutory day of rest protection was understood by the IWC to ensure a weekly day of rest, not a “rolling seven” guarantee, with each iteration of the wage order continuing to make clear that the day of rest guarantee applied on a weekly, rather than rolling, basis. Interpreting Sections 551 and 552 as applying on a weekly rather than rolling basis harmonizes the statutory guarantees with the history of the wage orders, the court wrote.

Further, this interpretation comports with the statutory context, particularly given that the legislature has expressly defined a “week” and a “workweek” as “any seven consecutive days, starting with the same calendar day of each week”—not a rolling period of any seven consecutive days, the court said. The exceptions to the day of rest back this up, as Section 510—which provides consideration in the form of premium pay when circumstances dictate forgoing a day of rest—applies to “the seventh day of work in any one workweek.”

“That is, premium pay is available not on a rolling basis, for any seventh consecutive day of work, but only for employees who must work every day of an employer’s established regularly recurring workweek,” the California Supreme Court said. “The logical inference is that the Legislature views only a seventh day of work during an established workweek as an exception to sections 551 and 552, and intends the day of rest guarantee to apply on a weekly basis.”

The court was not persuaded by the plaintiffs’ argument that this reading of the statute would permit employers to regularly impose schedules in which employees may rest no more than one day in 12. “If at one time an employee works every day of a given week, at another time shortly before or after she must be permitted multiple days of rest in a week to compensate, and on balance must average no less than one day’s rest for every seven, not one for every 12,” the court said.

As for the six-hour-day exception, the court said the elimination of the seventh-day-rest protection applies only to employees who work no more than six hours each and every day of the given week. This reading avoids absurdities that would result from alternative interpretations, the court found, such as if an employer permitted a single day of six hours or less to eliminate seventh-day-rest protection.

Finally, the court turned to the meaning of “cause” in Section 552. The court rejected Nordstrom’s proposal that the term should be understood as limited to a requirement or use of force. “Rather, an employer’s obligation is to apprise employees of their entitlement to a day of rest and thereafter to maintain absolute neutrality as to the exercise of that right,” the court explained. “An employer may not encourage its employees to forgo rest or conceal the entitlement to rest, but is not liable simply because an employee chooses to work a seventh day.”

To read the opinion in Mendoza v. Nordstrom, Inc., click here.

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Boundaries of PAGA Discovery: California Supreme Court Considers Scope of Discovery Limits

Why it matters

What are the boundaries of discovery for plaintiffs in Private Attorneys General Act cases in California state court? The California Supreme Court heard oral argument on the issue recently, one that is of premium importance to employers and employees alike given the increasing popularity of PAGA claims in employment lawsuits. The case involves Michael Williams, a former employee of Marshalls Inc., who brought a representative action under PAGA accusing the retailer of various Labor Code violations. When the employer objected to answering special interrogatories, Williams moved to compel discovery, arguing that the information requested was vital to the prosecution of his PAGA claims. A trial court granted the motion in part and the plaintiff appealed. An appellate panel affirmed and the plaintiff appealed again to the state’s highest court. While the court appeared sympathetic to the employer’s concerns that a PAGA lawsuit could require burdensome discovery in what could be a meritless case, the court also appeared skeptical about placing limits on what plaintiffs could ask for and about whether the information requested of Marshalls was as difficult to provide as the employer contended.

Detailed discussion

After a little over a year of employment, Michael Williams filed a representative action against Marshalls Inc. under the Private Attorneys General Act (PAGA) alleging his former employer failed to provide its employees with meal and rest breaks or premium pay in lieu thereof, among other violations of the state’s Labor Code.

The plaintiff served special interrogatories seeking production of the names and contact information of all nonexempt Marshalls employees in California who had worked for the company over a roughly two-year period. The employer objected to the discovery on the ground it was irrelevant, overbroad and unduly burdensome, and implicated the privacy rights of its employees.

Williams then moved to compel the discovery, arguing the contact information was routinely discoverable in representative employee actions and vital to the prosecution of his PAGA claims.

The trial court granted the motion in part, compelling Marshalls to produce contact information for the employees at the Costa Mesa store where Williams worked, but denying production of the contact information of employees at the other 128 Marshalls stores statewide. Williams could renew his motion to compel the remaining information after he had been deposed “for at least six productive hours,” the court added, although Marshalls could attempt to show the plaintiff’s substantive claims had no factual merit in its opposition to such a motion.

An appellate panel affirmed the order, ruling that discovery of Marshalls’ employees’ contact information statewide was premature.

“At this nascent stage of plaintiff’s PAGA action there has as yet been no discovery—plaintiff has not even sat for his own deposition,” the court wrote. “The litigation therefore consists solely of the allegations in his complaint. But plaintiff alleges therein only that at the Costa Mesa store, he and perhaps other employees at that store were subject to violations of the Labor Code. Nowhere does he evince any knowledge of the practices of Marshalls at other stores, nor any fact that would lead a reasonable person to believe he knows whether Marshalls has a uniform statewide policy. That being the case, it was eminently reasonable for the trial judge to proceed with discovery in an incremental fashion, first requiring that plaintiff provide some support for his own, local claims and then perhaps later broadening the inquiry to discovery whether some reason exists to suspect Marshalls’ local practices extend statewide.”

The procedure proposed by Williams—“which contemplates jumping into extensive statewide discovery based only on the bare allegations of one local individual having no knowledge of the defendant’s statewide practices”—would be a “classic” use of discovery tools to wage litigation rather than facilitate it, the appellate panel said.

Even standing in as proxy for the Division of Labor Standards Enforcement by filing a PAGA claim did not change the court’s opinion, as “nothing in the PAGA suggests a private plaintiff … is entitled to the same access” as the DLSE. “We think it prudent that absent any express direction from the Legislature to the contrary, discovery in a civil action brought under the PAGA be subject to the same rules as discovery in civil actions generally,” the court wrote.

Employee privacy interests also outweighed the plaintiff’s need for disclosure, the court found. The California Constitution provides that all individuals have a right of privacy, which limits what courts can compel through civil discovery. Applying a balancing test, “we conclude Marshalls’ employees’ privacy interests outweigh plaintiff’s need to discover their identity at this time,” the appellate panel wrote. “Those interests begin with the employees’ right to be free from unwanted attention and perhaps fear of retaliation from an employer. On the other hand, plaintiff’s need for the discovery at this time is practically nonexistent.”

Williams appealed again. At oral argument, the California Supreme Court appeared hesitant to adopt the employer’s position to set a “low bar” for plaintiffs’ attorneys before proceeding with PAGA discovery. While Chief Justice Tani Cantil-Sakauye found the argument “cogent and reasonable,” she did add, “I’m having a hard time finding [it] in the PAGA statute.”

Marshalls told the state’s highest court that it was not seeking a special rule for discovery in PAGA cases, but simply trying to avoid a situation where plaintiffs could file a meritless claim and then seek broad discovery to burden an employer.

Justice Leondra R. Kruger questioned the extent of the burden on Marshalls to provide the information requested by Williams, to which the employer responded, “days and days.”

To read the appellate court opinion in Williams v. Marshalls of CA, click here.

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Ninth Circuit OKs Use of Prior Salary in EPA Dispute

Why it matters

An employer can pay a female employee less than her male counterpart for the same work if he was paid more in his previous job and the employer used prior salaries as a factor in a reasonable business policy, the U.S. Court of Appeals for the Ninth Circuit recently ruled. Aileen Rizo, a math consultant with the public school system in Fresno County, CA, sued under the Equal Pay Act when she learned that her male counterparts were all paid more than she was. The employer defended the pay scale by pointing to its “Standard Operation Procedure 1440,” where initial salary level is set by the employee’s most recent prior salary, plus 5 percent. The county said the pay differential was based on a “factor other than sex,” i.e., Rizo’s prior pay. Although a district court denied summary judgment in favor of the employer, the federal appellate panel reversed and remanded the case for the district court to evaluate the business reasons proffered by the county. Notably, the case was brought prior to California’s enactment of the Fair Pay Act, which permits the use of salary history as a factor as long as any pay difference is also based on at least one other factor (such as job experience). But the case could have a continuing impact. As the decision broadens a circuit split on the use of prior salary as a factor in pay differential under the EPA—with contrary authority from at least two other circuits—Supreme Court review is a possibility.

Detailed discussion

While having lunch with her coworkers at the Fresno County School District one day, Aileen Rizo learned that a male math consultant who had recently been hired was paid more than she was. She then discovered that all her male counterparts were paid more than she was and filed suit under the Equal Pay Act (EPA).

The employer conceded that it paid Rizo less than comparable male employees for the same work. But the county presented an affirmative defense that the pay differential was based on a “factor other than sex,” specifically, prior salary. The employer used a salary schedule known as “Standard Operation Procedure 1440” to determine the starting salaries of management-level employees. The schedule consists of 12 “levels,” each with progressive “steps” within. New math consultants receive starting salaries within Level 1, which has ten steps.

To determine the step within Level 1 on which the new employee will begin, the county considers the employee’s most recent prior salary and places the employee on the step that corresponds to his or her prior salary, increased by 5 percent. When Rizo began working for the employer, she was placed at Level 1, Step 1 for an annual salary of $62,133, plus a $600 stipend for her master’s degree. The new hire started on Level 1, Step 9.

The county moved for summary judgment but the district court denied the motion, ruling that to permit a pay structure based on prior salary would perpetuate a discriminatory wage disparity between men and women, even if it was motivated by a legitimate nondiscriminatory business purpose.

On appeal, the U.S. Court of Appeals for the Ninth Circuit reversed. The EPA permits wage disparity when it occurs based on “any other factor other than sex,” the panel said, including prior salary. However, an employer can maintain a pay differential based on prior salary only if it shows that the factor “effectuate[s] some business policy” and that the employer “use[s] the factor reasonably in light of the employer’s stated purpose as well as its other practices,” pursuant to a 1982 Ninth Circuit decision in Kouba v. Allstate Insurance Co.

In Rizo’s case, the county offered four business reasons for using Standard Operation Procedure 1440: The policy is objective, encourages candidates to leave their current jobs for the county (because of the automatic 5 percent pay bump), prevents favoritism and ensures consistency, and is a judicious use of taxpayer dollars. The district court did not evaluate whether these reasons effectuate a business policy or determine whether the county used prior salary “reasonably,” the Ninth Circuit said, and should do so on remand.

The panel was not swayed by an argument from the plaintiff (and the Equal Employment Opportunity Commission as amicus curiae) that permitting prior salary alone as a factor other than sex perpetuates existing pay disparities, undermining the purpose of the EPA. Prior salary should be used only in combination with another factor, Rizo and the EEOC told the court.

“[W]e do not see how the employer’s consideration of other factors would prevent the perpetuation of existing pay disparities if … prior salary is the only factor that causes the current disparity,” the court wrote. For example, a male and a female employee, each with the same education and number of years’ experience as the other, where the male employee was paid a higher prior salary than the female employee, would end up with the same result as Rizo if a new employer sets salaries by considering education, years of experience and prior salary.

“If prior salary alone is responsible for the disparity, requiring an employer to consider factors in addition to prior salary cannot resolve the problem that the EEOC and the plaintiff have identified,” the court said.

The panel remanded the case with instructions that the district court evaluate the four business reasons offered by the county to determine whether the employer used prior salary “reasonably in light of [its] stated purpose[s] as well as its other practices,” noting that the burden of persuasion rests on the employer.

To read the decision in Rizo v. Yovino, click here.

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New York’s Highest Court Defines and Imposes Liability on Out-of-State “Employer”

Why it matters

Answering three certified questions from the U.S. Court of Appeals for the Second Circuit, New York’s highest court ruled that an “employer” can be liable for discrimination in employment on the basis of criminal conviction and that the determination of an employer is based primarily on the power “to order and control” the employee in his or her performance of work. The state’s discrimination law does reach out-of-state employers, however, who “aid or abet” employment discrimination against individuals with a prior criminal conviction, the court added. A pair of moving men sued Allied Van Lines and its parent company, alleging the defendants were liable under a state law banning the denial of employment based on criminal convictions—even though they were not the plaintiffs’ direct employer. When a district court granted the defendants’ motion to dismiss and the plaintiffs appealed, the Second Circuit asked the New York Court of Appeals to clarify issues of state law. In addition to finding that application of the statute is limited to an “employer,” the court elaborated on how to determine who is an employer and recognized that liability can extend to an out-of-state nonemployer who “aids or abets” violations of the statute.

Detailed discussion

Hired in 2008 and 2010, two employees of Astro Moving and Storage Inc. had prior criminal convictions for sexual offenses against young children. Astro later entered a contract with Allied Van Lines to perform moving services that ultimately constituted 70 to 80 percent of Astro’s work. The contract required Astro to adhere to Allied’s guidelines, which included a prohibition on workers who failed the criminal background screen if they had a conviction for a sexual offense.

Astro fired the movers, who filed suit against Astro, Allied and Sirva, Allied’s parent company. The complaint stated violations of the New York State Human Rights Law Sections 296 (15) and (6), which prohibit discrimination against individuals with prior criminal convictions.

A district court granted Allied and Sirva’s motion for summary judgment, holding that the state law applies only to employers, a category that Allied and Sirva did not fit with regard to the plaintiffs, and that neither defendant could be liable for aiding and abetting because neither participated in firing the plaintiffs. The movers appealed and the U.S. Court of Appeals for the Second Circuit certified three questions to New York’s highest court.

The first question asked whether liability under Section 296 (15) of the statute is limited to an aggrieved party’s “employer,” and the court answered in the affirmative. The law states: “It shall be an unlawful discriminatory practice for any person, agency, bureau, corporation or association, including the state and any political subdivision thereof, to deny any license or employment to any individual by reason of his or her having been convicted of one or more criminal offenses … when such denial is in violation of the provision of article twenty-three-A of the correct law.” The court found that when reading the section as a whole—and incorporating Article 23A, which specifies that it applies to applications “at any public or private employer”—proper interpretation limited liability to employers. The legislative history supported this conclusion, the court said, with references strictly to “public agencies and private employers.”

On the second question—how to define the scope of the term “employer” under the Human Rights Act—the majority looked to New York’s lower courts. A 1985 appellate panel decision, State Div. of Human Rights v. GTE Corp., delineated four factors: the selection and engagement of the employee; the payment of salary or wages; the power of dismissal; and the power of control of the employee’s conduct. “[C]ommon-law principles, as discussed in GTE, determine who may be liable as an employer under section 295 (15) of the Human Rights Law, with greatest emphasis placed on the alleged employer’s power ‘to order and control’ the employee in his or her performance of work,” the court wrote.

The third question turned to a separate provision of the statute, Section 296 (6), where the court considered the limits of liability for “aiding and abetting” violations of Section 296 (15). “Section 296 (6) extends liability to persons and entities beyond joint employers, and this provision should be construed broadly,” the court said, to effectuate its purpose of protecting applicants with criminal convictions. “Section 296 (6) also applies to out-of-state defendants.”

Under this interpretation, answering the second and third questions was unnecessary, the dissent said. “[T]he majority’s approach is too limited and excludes certain actors who serve as obstacles to employment opportunities for persons with criminal convictions,” the dissent concluded.

To read the opinion in Godwin v. Sirva, Inc., click here.

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Profanity Moves Worker’s Speech Outside NLRA Protection, ALJ Rules

Why it matters

An administrative law judge with the National Labor Relations Board upheld a worker’s termination based on his use of profanity, determining that he stepped outside the bounds of the protection of the National Labor Relations Act. Railroad car repair worker Eric Schultz engaged in a conversation with a supervisor that began with a request for a lunch break and complaints about working in bad weather and devolved into a profanity-laced tirade (including “F**k you” and “f**k this job”), for which he was fired. Schultz filed a charge with the NLRB, asserting that his comments about the break and the weather constituted concerted activity protected by the NLRA. But the ALJ disagreed. “Overall … I find that while Schultz may have been engaged in protected, concerted activity when he complained to other employees about working out in the rain and cold, he lost the protection of the act by his insubordinate conduct and profane statements directed at members of management, in the work area, in the presence of other employees,” the ALJ wrote. Schultz was unable to sway the ALJ with his argument that profanity was common in the rail yard. The decision stands in contrast to a recent opinion from the U.S. Court of Appeals for the Second Circuit, where the panel found that a profane social media post remained under the protection of the NLRA.

Detailed discussion

Located in Belvidere, IL, Harbor Rail Services Company performs railcar repair, inspection, cleaning and pretrip services for railroad companies at various locations. Eric Schultz began working for the company in October 2015 as a pretrip laborer. His duties included cleaning railcars and getting them ready for use. Each morning, a supervisor would make the daily job assignments, which varied from day to day.

On Jan. 8, 2016, Schultz was assigned to prep railcars. It was a cold and rainy day, and Schultz spoke to the other workers about the weather conditions. Supervisor Kenyada Clark came out to the work site, and a verbal confrontation ensued between Clark and Schultz during which Schultz directed obscenities at Clark. Schultz was terminated and filed an unfair labor practice charge against HRSC.

After a hearing before Administrative Law Judge Andrew S. Gollin, the ALJ determined that Schultz’s use of obscenities was so opprobrious that it caused him to lose the protection of the National Labor Relations Act (NLRA). “I find that Schultz was engaged in protected, concerted activity prior to the confrontation, but his statements and insubordinate conduct caused him to lose the protection of the Act,” the ALJ wrote, meaning the employer’s decision to discharge him did not violate Section 8(a)(1).

Schultz testified that the employees were “irritated” because they were cold and wet and believed they were not going to get a break for another hour or so. The conversation with the supervisor “escalated,” he told the ALJ, and while employees were cursing it was “not in a threatening fashion.” While he admitting to using obscenities directed at Clark, Schultz said profanity was common in the rail yard.

In his testimony, Clark said Schultz was trying to “rowdy up the team,” and “stopping people from doing their job.” Since it was not break time, Clark asked Schultz to stop making those comments, and he responded by yelling and cursing at Clark, including “F**k this s**t,” “F**k this job” and “F**k you.”

Weighing the credibility of the two witnesses, the ALJ credited Clark over Schultz, whose testimony “seemed contrived, self-serving, and calculated to neatly fall within the parameters of what the law requires.” Gollin wrote that the testimony “struck me as an exaggerated effort by Schultz to portray his actions as concerted, as opposed to personal griping.” Schultz also minimized or omitted key events until cross-examination.

After establishing the events in question, the ALJ determined Schultz was initially engaged in protected, concerted activity under Section 8(a)(1) of the NLRA. “Even though Schultz was the only one Clark heard complaining about the weather, and while it may have been in the context of his personal griping about having to work outside on the railcar rather than on the supply buggy, Schultz was, using Clark’s phrases, ‘trying to get everybody in an uproar’ and trying to ‘rowdy up the team’ by walking around talking to them about his complaints about the weather,” Gollin said.

There was no dispute that the employer took action against Schultz for conduct that occurred while he was engaged in protected activity, but applying a four-factor test, the ALJ found that his conduct was sufficiently opprobrious to remove it from the protection of the NLRA. The first factor, the location where the outburst occurred, was very significant in balancing the employee’s right to engage in protected activity against the employer’s right to maintain order and discipline in the workplace—and weighed heavily in favor of HRSC.

“An employer’s interest in maintaining order and discipline is affected less by a private outburst in an area away from other employees than an outburst in the work area that is witnessed by other employees,” the ALJ explained. “Schultz’s outburst occurred in the work area, in the presence of more than a quarter of [the employer’s] workforce that Schultz had stopped from working at the time.”

The second factor—the subject matter of the discussion—weighed in favor of protection. “Even though Schultz and the other pretrip laborers were expected to work outside in the elements, Schultz’s raising issues about the weather and working outside relates to working conditions, and, therefore, is a subject matter that favors protection,” Gollin wrote.

But the third factor, the nature of the outburst, weighed against protection, the ALJ said. Schultz’s contention that profanity was common in the rail yard overstated the evidence. While profanity was used, it was not typically directed at other individuals, let alone a member of management. “I find the combination of Schultz’s insubordinate refusal to return to work and his yelling and use of profanity toward Clark, in front of other employees, as well as his continued yelling and use of profanity when [another supervisor] arrived, was conduct of such a character as to render him unfit for further service,” the ALJ wrote.

The final factor—whether the misconduct was provoked by an unfair labor practice—did not weigh in favor of protection, Gollin noted. “Overall … I find that while Schultz may have been engaged in protected, concerted activity when he complained to other employees about working out in the rain and cold, he lost the protection of the Act by his insubordinate conduct and profane statements directed at members of management, in the work area, in the presence of other employees,” the ALJ concluded.

To read the decision in Harbor Rail Services Company, click here.

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