Top Employment Cases of 2017

• Publication year: 2019
• Author: By Ramit Mizrahi, Andrew Friedman, and Tony Oncidi

Top Employment Cases of 2017

By Ramit Mizrahi, Andrew Friedman, and Tony Oncidi

Ramit Mizrahi is the founder of Mizrahi Law, APC in Pasadena, where she represents employees exclusively. She focuses on discrimination, harassment, retaliation, and wrongful termination cases. She is Chair of the California Lawyers Association Labor and Employment Law Section. She can be reached at ramit@mizrahilaw.com. Andrew H. Friedman is a partner with Helmer Friedman LLP in Culver City, where he primarily represents employees in all areas of employment law. Mr. Friedman is the author of a leading employment law practice guide—Litigating Employment Discrimination Cases (James Publishing, 2007). Anthony J. Oncidi is a partner in and the Chair of the Labor and Employment Department of Proskauer Rose LLP in Los Angeles, where he exclusively represents employers and management in all areas of employment and labor law. His email address is aoncidi@proskauer.com.

During this past year, the United States Supreme Court, the California judiciary and the Ninth Circuit continued to take increasingly divergent paths regarding employment law issues. The United States Supreme Court has taken a narrow view of employee and union rights, while the California Supreme Court, California Courts of Appeal, and the Ninth Circuit have interpreted these rights more broadly. As a result, pre-dispute arbitration agreements and class-action waivers remain enforceable (barring action at the federal level), PAGA is still a powerful tool for employees in wage and hour matters, and many workers previously designated as independent contractors now fall under the protection of California's wage orders. As the #MeToo and #TimesUp movements have influenced more employees to step forward with harassment claims, several opinions involving hostile work environment issues reflect the evolving legal recourse available to victims.

U.S. Supreme Court Narrows Employee Rights with Respect to Arbitration, Labor Unions, and Whistleblowers

In Epic Systems Corp. v. Lewis,¹ the Supreme Court held that arbitration agreements between employers and employees waiving employees' rights to lead or participate in collective or class actions are enforceable under the Federal Arbitration Act (FAA) and do not violate section 7 of the National Labor Relations Act (NLRA). This means that an employer may lawfully require its employees to agree, as a condition of employment, to resolve all employment-related disputes in arbitration on an individual basis, and to waive their right to participate in a class or collective action. Notably, this case does not address whether representative action waivers (i.e., a waiver of the right to bring a PAGA claim) are enforceable.

In Janus v. American Fed'n of State, City, & Mun. Employees, Council 31,² the Supreme Court struck down as unconstitutional provisions of the Illinois Public Labor Relations Act (IPLRA) allowing for non-union members to be charged a percentage of union dues to pay for collective bargaining and other "core" union activities. The law was challenged by a nonunion member, Mark Janus, who was represented by a union in collective bargaining but disagreed with many of the union's public policy positions, including those regarding the pay and working conditions of public employees. Janus argued that requiring him to pay a percentage of union dues to support activities with which he disagreed violated his First Amendment right to freedom of speech. The Supreme Court agreed, overruling earlier precedent in Abood v. Detroit Bd. of Educ.³ which had allowed the mandatory collection of union dues from non-members to support non-political activities including collective bargaining, but disallowed the mandatory collection of such fees for political activities such as supporting candidates for office. The Court found that the distinction drawn between political and apolitical activities of unions in Abood was incorrect, as virtually all of the activities of a union can be characterized as political in the ways urged by Janus. Relying on its previous decisions stating that individuals cannot be compelled to subsidize speech with which they disagree under the First Amendment, the Court struck down parts of the IPLRA and set a precedent that may soon be interpreted to render the entire country a "right to work" state for public employees, i.e., make it unlawful throughout the nation to compel the payment of union dues from nonmembers.

In Digital Realty Trust, Inc. v. Somers,⁴ the Supreme Court held that that the anti-retaliation provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") only applies to individuals who have reported violations of securities laws to the Securities and Exchange Commission (SEC). In doing so, it reversed the Ninth Circuit's holding that a person is protected by Dodd-Frank if they make internal disclosures, even if they did not also make a report to the SEC. In interpreting Dodd-Frank's protections this narrowly, the Supreme Court rejected the SEC's regulation on the topic and the position advocated by the Solicitor General.

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California Supreme Court Interprets Employee Rights Broadly With Respect to Misclassification, Wage and Hour Laws, and Background Checks

In Dynamex Operations W. v. Superior Court,⁵ the California Supreme Court decided what standard applies in determining whether workers should be classified as employees or independent contractors for purposes of the California wage orders. The court held that the "suffer or permit to work" definition of "employ" contained in the pertinent wage order may be relied upon in evaluating whether a worker is an employee or an independent contractor for purposes of the obligations imposed by the wage order. The court determined that in this context the "ABC" test should be applied to determine whether a worker is properly considered an independent contractor:

[W]e conclude that unless the hiring entity establishes (A) that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact, (B) that the worker performs work that is outside the usual course of the hiring entity's business, and (C) that the worker is customarily engaged in an independently established trade, occupation, or business, the worker should be considered an employee and the hiring business an employer under the suffer or permit to work standard in wage orders. The hiring entity's failure to prove any one of these three prerequisites will be sufficient in itself to establish that the worker is an included employee, rather than an excluded independent contractor, for purposes of the wage order.⁶

Note that in Garcia v. Border Transp. Group, the court of appeal held that there is "no reason to apply the ABC test categorically to every working relationship" and that it was logical to apply it only to claims arising under the California wage orders and not to determining...