Employment Law Observer

Insight & Commentary on Employment & Agency Issues

Employment Discrimination Plaintiff Cannot Change Legal Theories at Trial

Posted in California Court of Appeal, Case Updates, Fair Employment and Housing Act

In Rosenfeld v. Abraham Joshua Heschel Day School, Inc., the Second Appellate District held that a plaintiff whose pleadings alleged intentional employment discrimination could not assert a disparate impact theory for the first time at trial.

The case highlights the distinction between “disparate treatment” and “disparate impact” theories under California’s Fair Employment and Housing Act (“FEHA”).  Disparate treatment is intentional discrimination against an individual on prohibited grounds, such as race, sex or another protected category.

Under a disparate impact theory, a plaintiff is not required to prove intentional discrimination.  A disparate impact exist where an employer’s facially neutral policy has a disproportionate adverse impact on a protected class.

Rosenfeld was a teacher at a private Jewish elementary school in Northridge, California.  She resigned in August of 2007 at the age of 60 and later sued the school for age discrimination.

In her pleadings, Rosenfeld alleged that the school gradually reduced her hours to an intolerable level “in an effort to force her out because of her age.”  The school countered that the reduction in Rosenfeld’s hours was due to a decline in enrollment.

Rosenfeld’s pleadings solely alleged age discrimination under a theory of disparate treatment.  Shortly before trial, however, Rosenfeld filed a trial brief alleging disparate impact for the first time.  The trial court precluded her from arguing disparate impact, stating that Rosenfeld couldn’t “raise a completely different theory on the eve of trial.”

The jury ultimately returned a defense verdict.  Rosenfeld unsuccessfully moved for a new trial and then appealed, among other things, the trial court’s decision to disallow the disparate impact claim.

On appeal, Rosenfeld argued that she was not required to specifically plead disparate impact.  The school was sufficiently on notice of the disparate impact theory, Rosenfeld argued, because she had retained a statistical expert and proposed a disparate impact jury instruction.

The court rejected this argument.  Affirming the trial court’s ruling, the court noting that Rosenfeld’s pleadings, discovery responses and case management conference statements never mentioned a disparate impact theory.

Thus, Rosenfeld failed to give timely notice to [the school] that she intended to pursue a disparate impact theory at trial.”

The Rosenfeld case makes clear that an employment discrimination plaintiff must explicitly allege a disparate impact if he or she wants to proceed under that theory.  It is not enough to assert that the disparate impact theory is implicit in the intentional discrimination claims.  This is a positive development for employers.

Rite Aid Cashiers Can Proceed with Class Action

Posted in California Court of Appeal, Case Updates, Class Actions

In Hall v. Rite Aid Corp., the Fourth Appellate District reversed the trial court’s decertification of a putative class of cashiers who challenged their employer’s policy of requiring them to stand while checking out customers.

The case is the latest in a series of California appellate opinions holding that a determination on class certification must focus on the plaintiff’s theory of liability – not the merits of the underlying allegations.

Kristen Hall, a former employee of Rite Aid, alleged that the company had violated the Labor Code by improperly forbidding its cashiers from sitting while they checked out customers.  Hall moved for class certification, arguing that common issued predominated among potential class members because all the company’s cashier/clerks had similar job duties that could be performed while seated, and that the company’s standard check out counters could accommodate seats with minor modifications.

Rite Aide countered that class treatment was inappropriate because (1) the percentage of time clerks spent behind the check-out counter varied from 2 to 99 percent and (2) clerks performed a variety of different tasks when they were not checking out customers, depending on the store where they worked.

The trial court initially granted Hall’s motion for class certification.  Three weeks before trial, however, it reversed course and granted Rite Aid’s motion for decertification.  The court held that the Labor Code at issue required an examination of the employee’s job as a whole rather than a discrete subpart of his or her duties.  Hall appealed the decision.

The appeals court struck down the decertification order.  The court based its analysis on the California Supreme Court’s ruling in Brinker Restaurant Corp. v. Superior Court.  There, the state’s highest court clarified that courts considering class certification must focus on plaintiff’s theory of liability and determine whether common legal and factual issues are likely to be presented.  “Disputes over the merits of a case generally must be postponed until after class certification has been decided,” the Court held.

With those principles in mind, the Hall court held that the trial court improperly focused on the merits of plaintiff’s case, i.e. variations among class members regarding their job as a whole.  Certification was appropriate, the court held, because plaintiff’s theory of liability addressed a companywide policy that lent itself to class treatment.

Hall’s proffered theory of liability is that, regardless of the amount of time any particular Cashier/Clerk might spend on duties other than check-out work, Rite Aid’s uniform policy transgresses (the Labor Code) because suitable seats are not provided for that aspect of the employee’s work that can be reasonably performed while seated.”  (Emphasis in original).

Accordingly, the court held that Hall’s case could proceed as a class action.  Whether a particular case is suitable for class treatment can present challenging issues.

Barger & Wolen attorneys are available to answer any questions you may have.

Same Sex Harassment Is Actionable, California Court of Appeal Affirms

Posted in California Court of Appeal, Case Updates, Fair Employment and Housing Act, Hostile Work Environment, Retaliation, sexual harassment

In Lewis v. City of Benicia, the First Appellate District affirmed once again that in California, same-sex harassment is actionable.

Brian Lewis, a volunteer and later paid intern at the City of Benecia’s water treatment plan, claimed he was sexually harassed by two male supervisors (Hickman and Lantrip) in violation of the California Fair Employment and Housing Act (FEHA), that he was subject to retaliation when he complained of the harassment, and that the City was liable for failing to prevent sexual harassment.

Among other rulings challenged on appeal, the trial court granted summary judgment in favor of Hickman and Lantrip, and granted the City’s motion for judgment on the pleadings.  Lewis challenged these and other rulings.

First, the Court of Appeal reversed the trial court’s granting of Hickman’s motion for summary judgment.  As the Court of Appeal explained,

sexual harassment can occur between members of the same gender as long as the plaintiff can establish the harassment amounted to discrimination because of sex.”

California appellate districts had been divided as to the meaning of the term “because of sex,” with some courts ruling that the plaintiff needed to show evidence that the alleged harasser was acting out of genuine sexual interest, and others ruling that same-gender harassment could also consist of comments amongst heterosexuals designed to humiliate the plaintiff and challenge his gender identity.

In 2013, the California Legislature resolved this split among appellate courts by amending the FEHA to clarify that “[s]exually harassing conduct need not be motivated by sexual desire.”  However, as the Court ruled, there was no need to address the effect of this amendment on the present case (i.e., whether the 2013 amendment could operate retroactively as to events that occurred in 2008 and 2009), because “the present case allows an inference that Hickman was motivated by sexual interest.”

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Watch Out Employers: Changing Benefits During a Union Election Carries Risks

Posted in NLRB

by Ali Reza Mokhtari Fox

In Woodcrest Health Care Center and 119 SEIU, United Healthcare Workers Eastt, the NLRB ruled that an employer violated federal labor laws by improving health care benefits for some employees while declining to extend such improvements to those employees eligible to vote in a union election.

The decision shows how cautious employers must be when changing benefits during a union election period. It also provides a roadmap for how employers can avoid the appearance of impropriety. Continue Reading

Compliance: Employers closely watching Supreme Court’s ruling in Canning

Posted in NLRB, Opinion, United States Supreme Court

The Court’s ruling will likely define the scope of the president’s recess appointments power for future administrations.

It’s easy to identify recess in an elementary school day: The bell rings, the kids tumble out of class and the yard fills with playful shrieks and laughter.

Not so with Congress. The U.S. Senate’s chambers may be dark, official business on hold, the senators all home on vacation, and yet the legislative body may still be in session.

The issue of defining “recess” for the Senate lies at the center of NLRB v. Canning, a case currently before the U.S. Supreme Court. The outcome could have a significant impact on employers. At stake is the status of hundreds of National Labor Relations Board (NLRB) rulings on issues ranging from employee social media policies to the legally permissible scope of workplace rules relating to employer confidentiality, employee discipline and off-duty employee access to the workplace.

More broadly, the Court’s ruling will likely define the scope of the president’s recess appointments power for future administrations. Presidents must normally obtain Senate consent to fill federal agency board positions. The Constitution permits Presidents to unilaterally fill agency vacancies when the Senate is in recess, an anachronism to the days when Congress recessed for months at a time.

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This article first appeared in InsideCounsel.

Obama Administration Delays Another Provision of Affordable Care Act

Posted in Affordable Care Act

The Obama administration will allow health insurers to continuing offering plans that fail to meet the Affordable Care Act’s (ACA) minimum requirements for another two years.

The extension, widely viewed as a political move to assist Democrats in the upcoming mid-term elections, applies to policies issued up to October 1, 2016.

Significantly, the change likely will not affect the estimated 900,000 Californians whose plans were cancelled under the ACA.  That’s because Insurance Commissioner Dave Jones declined to accept the President’s invitation last fall to allow insurers to continuing offering non-compliant policies through 2014.

The issue arose after it became apparent that approximately 4.7 million Americans would lose their insurance plans because they fell short of the ACA’s coverage mandates.  This created a public relations nightmare for President Obama, who had repeatedly promised that consumers could keep their exiting policies.

To stanch the damage, the administration allowed insurance companies to extend cancelled policies for one year, provided insurance commissioners and state regulators were on board.

In addition to California, states refusing to implement the president’s “fix” include New York, Massachusetts, Arizona, Colorado, Virginia, West Virginia, Oregon and Minnesota, as well as Washington, D.C.

Fewer Class Actions Remanded To State Court

Posted in 9th Circuit Court of Appeals, Case Updates, Class Actions, Wage & Hour

By Ali Reza Mokhtari Fox

The Daily Journal reported last week that new standards established by the Ninth Circuit in the 2013 case Rodriguez v. AT&T Mobility Services LLC have resulted in fewer wage and hour class action cases being remanded to state court.

Previously, under Lowdermilk v. United States Bank National Association, employer defendants were required to prove with “legal certainty” that there was at least $5 million at stake before the case could qualify for federal jurisdiction under the Class Action Fairness Act.  In Rodriguez the court reduced the standard to a simple preponderance of evidence.

As the Daily Journal reported, under the old standard many wage and hours cases were remanded to state court, but now the trend is toward cases staying in the federal court system.  The article quotes attorney Ken Sulzer as saying, “In the past, approximately 90% of these cases were remanded. . . .  The upshot is more of these cases will be kept in federal court.”  Sulzer is currently working on Woodward v. Healthcare Services Group Inc., in which the Ninth Circuit ordered U.S. District Judge Margaret M. Morrow to reconsider her decision to remand to state court because of the new standards.

Defense attorneys in general welcome the change because prior to Rodriguez, cases could be remanded for numerous, sometimes seemingly minor reasons.  Now in light of Rodriguez many observers think the game has been brought to a more level playing field, the Daily Journal reported.

While plaintiff’s attorneys would like to downplay the trend Rodriguez is creating, it appears at least for now that defense attorneys in wage and hour litigation have gained some ground in the ongoing struggle between removal and remand in class actions.

Obama Administration Relaxes Employer Mandate

Posted in Affordable Care Act

The moving target that is the Affordable Care Act’s employer mandate keeps on moving.

The Treasury Department today issued a rule relaxing important employer requirements under the ACA, foremost among them to postpone the mandate for businesses with between 50 and 99 employees until 2016.

This is the second major postponement of the ACA’s employer mandate:  Last summer, the Obama Administration delayed implementation for all qualifying businesses from January 2014 to January 2015.

In addition, the administration today reduced the percentage of employees large employers will have cover from 96 percent to 70 percent until 2016.  It also clarified that volunteers will not be counted as full-time employees under the ACA.

We will report more about these changes in the coming weeks.  For now, click here for a rundown of today’s rule from the Washington Post’s Wonkblog.

Compliance: Making sense of the myriad tests for independent contractor v. employment status

Posted in Affordable Care Act, Independent Contractor v. Employee

The question of whether a worker is an employee or an independent contractor can have very important consequences, as the two categories receive very different treatment under the law.

To name only a few differences, there are no federal or state income tax withholding obligations for independent contractors; wage and hour laws do not apply to independent contractors; most anti-discrimination laws do not apply to independent contractors. And, of course, the employer mandate under the Affordable Care Act does not apply in the case of independent contractors. There is a lot riding on the question.

It can sometimes be difficult to predict whether a worker will be deemed an employee or an independent contractor, but there are multiple tests depending upon which area of law is implicated.

For example, where a worker is claiming to be an employee and is seeking remedies under California law (for example, state wage and hour or state discrimination claims), the primary test of employment relationship is whether the principal has the right to control not just the means, but also the manner in which the results are achieved. Added to this are a series of “secondary factors,” such as whether the worker is engaged in a distinct occupation, whether the worker supplies the tools and instrumentalities for the job, the method of payment, whether the worker has a substantial investment in the business, whether the worker hires employees to assist him, whether the parties believe they are creating an employer-employee relationship, and the degree of permanence of the relationship.

Read more at InsideCounsel.

Obama Administration Bends Individual Mandate Rules

Posted in Affordable Care Act

With the deadline to select health coverage just days away, the Obama administration has given an early Christmas present to individuals whose policies were cancelled because of the Affordable Care Act (“ACA”).

Those individuals will be temporarily “exempted” from the ACA’s individual mandate, according to a bulletin issued late Thursday from the Department of Health and Human Services.  The rule change was spearheaded by a group of Democratic senators, many of whom face tough re-elections battles next year.

The ACA includes a hardship exemption for people who have undergone “an unexpected natural or human-caused event.”  The administration’s rule change places having your health plan cancelled under that definition.

This is the second unilateral revision the Obama administration has made to the ACA in response to public outrage over cancelled policies.  Last month the administration allowed insurers to continue offering health plans that fell short of the ACA’s mandates for another year – though individual states were left to decide whether to green light the extension.

The newest change effectively undercuts the individual mandate, a central feature of the ACA, which was schedule to take effect on January 1.  Individuals who qualify for the exemption can now either opt out of coverage, purchase bare bones “catastrophic” coverage, or sign up for a plan under an ACA exchange.

The revision raises numerous thorny questions, including the fairness of exempting individuals simply because their former plans failed qualify under the federal health law.

In addition, fewer young, healthy individuals will be signing up on the exchanges, exacerbating concerns about the fundamental economic viability of the ACA.  As Karen Ignagni, president of America’s Health Insurance Plans, told the Washington Post:

This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers.

Most employers will not be affected by exemption, as it primarily applies to individual and small group plans.  However, changes in the marketplace now could impact premiums and other aspects of coverage of 2015.

We will keep you posted of significant developments.