2006 California Labor and Employment Law Update

Index:

1. Harassment
2. Retaliation
3. Americans with Disabilities Act
4. Wage and Hour
5. Employee Meal and Rest Periods
6. Public Sector/Traditional Labor

There was once a time when the scope of employer liability for harassment was fairly limited and encompassed only those acts of harassment that were perpetrated by the employer itself or its supervisory employees. Those days are long gone. In Galdamez v. Potter, 415 F.3d 1015 (9th Cir. July 15, 2005), a recent Ninth Circuit Court of Appeals decision, the court significantly expanded the scope of employer liability for harassment by holding that employers may be held liable for harassment of their employees by third parties such as customers and community members. Id. at 1022. This decision has created an affirmative duty for employers to investigate and remedy harassment of their employees by third parties, which considerably increases the employers’ already sizeable onus to prevent and remedy harassment in the workplace.

In Galdamez, the plaintiff sued her employer, the United States Postal Service, for race, color and/or national origin discrimination in violation of Title VII. Id. at 1019. The plaintiff, a native of Honduras who speaks English with a discernible accent, alleged that she suffered harassment and unwarranted discipline at the hands of her supervisors, customers and various community members on account of her Honduran background. Id. at 1018-19. The jury ultimately returned a verdict for the Postal Service on the grounds that the plaintiff failed to establish that her national origin was a motivating factor in any actionable adverse employment action taken against her by her supervisors. Id. at 1019-1020. After the jury returned its verdict, the plaintiff filed a motion for a new trial on the grounds that the district court erred by, among other things, refusing to give a requested jury instruction on the Postal Service’s potential liability for failing to investigate and remedy the harassment of plaintiff by customers and community members. Id. at 1020-27. The district court denied plaintiff’s motion for a new trial and, with respect to the jury instruction pertaining to the Postal Service’s liability for harassment of Galdamez by third parties, cited the following three rationales to justify its refusal to give the requested instruction:

Title VII does not provide an independent claim for failure to investigate and remedy racial or national origin harassment by third parties (i.e., the employer’s failure to investigate or remedy harassment by third parties must be motivated by racial animus in order to be actionable);

Galdamez was responsible for remedying any alleged harassment herself because she was a management-level employee; and

The evidence did not support the requested instruction. Id. at 1022.

The Court of Appeals considered each of the rationales cited by the district court and decided that the district court "erred as a matter of both law and fact in refusing the instruction" on the Postal Service’s potential liability for the harassment of Galdamez by customers and community members. Id. at 1022. Most significantly, the court held that an employer may be liable for actionable harassment of an employee by third parties if it ratified or condoned the conduct by failing to investigate and remedy the harassment after learning of it.¹

The holding in Galdamez effectively creates a "stand alone" claim under Title VII for the failure of an employer to investigate and remedy harassment of its employees by third parties, such as customers and community members, even if the employer’s failure to investigate and remedy such harassment is not motivated by an improper animus of any kind. Thus, employers are now responsible for controlling not only the actions of their own agents and employees, but also the actions of third party community members. This places a great burden upon employers to respond effectively to complaints of harassment by their employees regardless of the employer’s relationship to the alleged harasser.

In addition to broadening the scope of employer liability for harassment in Galdamez, the Ninth Circuit Court of Appeals also broadened the definition of sex-based harassment and discrimination under Title VII in a recent case entitled Christopher v. National Education Association, Cal. Sup. Ct. Case No. 04-35029p. In Christopher, the Court of Appeals dramatically expanded the definition of sex-based harassment to include not only behaviors that are facially gender-based or motivated by gender bias, but also facially gender-neutral behaviors with no discriminatory animus that are subjectively experienced differently by members of the opposite sex. Id. at 12109-11. Specifically, the Christopher court concluded that a qualitative and quantitative difference between the treatment of men and women in the workplace is enough to support a claim of sexual harassment or discrimination in violation of Title VII, even if there is no direct evidence that the alleged conduct or the motivating intent behind that conduct is sex-specific. Id. at 12105.

The plaintiffs in Christopher were all female employees of the National Education Association—Alaska ("NEA—Alaska") who worked under a supervisor named Thomas Harvey ("Harvey"). Id. at 12106. During the course of the litigation, the female plaintiffs proffered evidence that Harvey frequently shouted at female employees in a loud, profane and hostile manner for little or no reason at all. Id. at 12107. They also demonstrated that Harvey repeatedly exhibited signs of physical aggression toward female employees such as lunging across tables, shaking his fists at them and grabbing their shoulders from behind while yelling at them. Id. at 12107-12108. Furthermore, in addition to the evidence provided by the plaintiffs, a third-party male employee of NEA-Alaska "testified, without prompting, to the ‘general fear of the women at [their] office.’" Id. at 12108.

After reviewing the foregoing evidence, the District Court granted the defendants’ motions for summary judgment on the grounds that a reasonable jury could not find that the harassment alleged by the plaintiffs was "because of sex" within the meaning of Title VII, among other reasons. Id. at 12106. The District Court explained this decision by stating that the absence of any evidence that Harvey committed overtly gender-specific acts was fatal to the plaintiffs’ case because the "because of sex" element of a Title VII harassment claim requires that the behavior in question be either sexual in nature or motivated by sexual animus. Id. at 12110. Accordingly, the District Court opined that, in order to establish their claim, the plaintiffs would have had to present evidence that Harvey’s exchanges with the plaintiffs were motivated by lust or a desire to drive women out of the organization. Id. at 12111.

The Court of Appeals strongly disagreed with the holdings of the District Court and in reversing the lower court’s decision, held that there is no requirement that the hostile acts which form the basis of a Title VII claim be "overtly sex- or gender-specific." Id. at 12109. The Court of Appeals further held that "direct comparative evidence about how the alleged harasser treated members of both sexes is always an available evidentiary route." Id. at 12109-10 (internal citations omitted). Ultimately, the Court of Appeals ruled that the operative question in a Title VII sex-based harassment or discrimination case is whether members of one sex are made to suffer disadvantageous terms or conditions of employment that are not imposed upon members of the opposite sex; i.e., if the sexes are subjected to "differential" treatment. Id. at 12110.

The Court of Appeals went on to hold that a determination regarding "differential" treatment should be made by analyzing the qualitative and quantitative differences between the treatment of men and women in the subject workplace. Id. at 12111-14. For purposes of the qualitative prong of the analysis, the court held that the fact that a purported harasser was equally degrading to both men and women does not defeat a claim that the genders were treated differently, because there may be a subjective difference between the way the degradation was perceived and experienced by the different genders according to the "reasonable woman" standard. Id. at 12111-12. For example, if a supervisor were equally degrading and hostile toward his male and female subordinates, but the female subordinates were more deeply affected by the behavior in accordance with the reasonable woman standard, a trier of fact could conclude that the women were treated "differently," and that "differential" treatment could form the basis for a Title VII claim of discrimination or harassment on the basis of sex.

Similarly, with respect to the quantitative prong of the analysis, the court held that a finding of disproportionate facially gender-neutral hostility towards women cannot be defeated simply by showing that there was an unbalanced distribution of men and women in the workplace (i.e., more women than men) that may have created an illusion of disparate treatment where one did not exist. Id. at 12113-14. Therefore, even if the disparity between the amount of hostility directed towards women and men in the workplace is incidental to the fact that there are simply more women in the workplace and, thus, women as a group receive a greater amount of hostile treatment than men as a group, this would still be enough to support a finding of differential treatment for purposes of a Title VII claim.

Given the foregoing, the Christopher ruling broadens the definition of sex discrimination and harassment under Title VII to a point where a theoretical plaintiff who works under a supervisor who subjects all of his subordinates, regardless of gender, to the same amount of gender-neutral hostility could establish a claim for sex-based harassment or discrimination by alleging that he or she subjectively experienced the hostility differently due to his or her gender and, thus, was subjected to "differential" treatment on the basis of sex in violation of Title VII. Furthermore, under the quantitative analysis, differential treatment can be found even where the disproportionate amount of hostility directed toward one gender is simply incidental to the fact that more members of one gender work under the ill-mannered supervisor. Clearly, this ruling creates a multitude of problems for employers, who will now potentially be liable under a sex-based discrimination or harassment theory for any hostile behavior by its supervisors, even when the behavior itself and the intent motivating it have no relation whatsoever to sex-based bias or animus.

Like the Ninth Circuit Court of Appeals, the California Supreme Court has also greatly expanded the scope of protection from harassment. In Miller v. Department of Corrections, 36 Cal. 4th 446, 30 Cal. Rptr. 3d 797 (2005), the California Supreme Court broadened the definition of hostile work environment sexual harassment under the Fair Employment and Housing Act ("FEHA") to include consensual sexual relationships between supervisors and subordinates, when such relationships create an environment where women are perceived as sexual playthings or are made to believe that their ability to advance professionally depends upon their willingness to engage in sexual relations with their supervisors or management. Id. at 801-2. The indirect consequence of this decision is a heightened burden upon employers to monitor and in some cases possibly to eliminate, fraternization between supervisory employees and their subordinates.

The plaintiffs in Miller, two female employees at a state prison, sued the Department of Corrections for sexual harassment and sex discrimination under the FEHA. Id. at 802. The plaintiffs predicated their claims on the fact that, over the course of seven years, the warden at the prison had concurrent sexual affairs with three subordinate female employees. Id. at 802-8. It was a well-known fact among the plaintiffs and their fellow employees that the warden was carrying on affairs with these women and the plaintiffs claimed that the warden’s affairs led to undeserved promotions for his lovers as well as threats, verbal abuse, physical assaults and loss of job opportunities for the plaintiffs. Id. Specifically, the plaintiffs claimed that the warden orchestrated promotions of his lovers despite the fact that they were not the most qualified candidates for the positions to which they were promoted. Id. The plaintiffs further claimed that when they complained about the disparate treatment, they were undermined, burdened with extra duties and responsibilities and subjected to verbal and physical abuse. Id.

The trial court and lower appellate court both concluded that the plaintiffs’ claims of favoritism and "unfairness" did not constitute actionable conduct. Id. at 808-9. The California Supreme Court, however, rejected the lower courts’ rationale and held that "although an isolated instance of favoritism on the part of a supervisor toward a female employee with whom the supervisor is conducting a consensual sexual affair ordinarily would not constitute sexual harassment, when such sexual favoritism . . . is sufficiently widespread it may create an actionable hostile work environment in which the demeaning message is conveyed to female employees that they are viewed by management as ‘sexual playthings’ or that the way required for women to get ahead in the workplace is by engaging in sexual conduct with their supervisors or the management." Id. at 801-2.

Given the holding in Miller, employers now have a heightened burden to control consensual romantic relationships between supervisory employees and their subordinates, to the extent that such relationships may have a negative effect on the work environment. This not only includes a responsibility to maintain and implement effective harassment policies and complaint procedures, but may also include a responsibility to implement some sort of non-fraternization policy in the workplace. Such policies implicate a whole host of privacy concerns and, if required, will force employers to walk what may prove to be an impossibly fine line between preventing hostile work environment sexual harassment and violating the civil liberties of their employees.

The Fair Employment and Housing Commission ("FEHC") has prepared draft regulations interpreting AB 1825, the new state statute requiring employers to conduct sexual harassment training by January 1, 2006. The FEHC plans to publish these draft regulations for comment by November 1, 2005. The draft regulations include the following significant provisions:

• Employers must provide sexual harassment training to their supervisory employees once every two years.²

• Employers may track compliance with the training requirement by either tracking the training completion dates of its individual supervisors or by designating a training year every two years wherein the employer trains all of its supervisors.

• Businesses created after January 1, 2006 must provide harassment training within six months of their establishment and biennially thereafter.

• Employers must train new supervisory employees (i.e., supervisory employees hired or promoted into a supervisory position after July 1, 2005) within six months of the date the employees assume their supervisory position, and biennially thereafter. If the employer uses the training year tracking method, new supervisors may need to be retrained sooner than every two years in order to be incorporated into the employer’s tracking schedule. (e.g., if an employer has created a training year schedule including 2005, 2007, 2009, etc. and a new supervisor is hired and receives harassment training in 2006, he or she would need to be trained again in 2007 along with the other supervisory employees.

• The training requirement can be met by any of the following: (1) in-person, instructor-led classroom training ("classroom training"); (2) individualized, computer-based training created by a qualified instructional designer ("e-training"); or (3) Web-based seminars created by a qualified instructional designer and taught by a qualified trainer ("Webinars").

• The training must be two hours in length, but it need not be completed in two consecutive hours. Classroom training and Webinars shall have a minimum duration of half an hour per training segment, and e-training shall have a minimum duration of 15 minutes per training segment.

• "Two hours" of harassment training shall mean either two hours of classroom or Webinar training or, the amount of time that the same content may be covered in an e-learning program for an average learner. This means that e-learning programs are not required to have a built-in timer that causes rapid learners to view additional content until the two hour standard.

• E-training and Webinars must include a feedback or a participation component at least once every 15 minutes in order to keep employees engaged in the training.

• Trainers or educators must be qualified to train employees regarding the definition of unlawful harassment, how to intervene when harassing behavior occurs, how to report harassment complaints, how to investigate and respond to a harassment complaint and an employer’s obligation to do so, the illegality of retaliation for filing a harassment complaint, how to prevent retaliation from occurring and the employer’s anti-harassment policy.

Training shall include:

• A definition of unlawful harassment under the FEHA and Title VII;

• FEHA and Title VII statutory provisions and case law concerning the prohibition against and the prevention of unlawful harassment in employment;

• The types of conduct that constitute harassment;

• Remedies available for harassment;

• Strategies to prevent harassment in the workplace;

• "Practical examples," including but not limited to role plays, case studies, group discussions and examples with which the employees will be able to identify and apply in their employment setting;

• The confidentiality of the complaint process;

• Resources for victims of unlawful harassment, such as to whom they should report any alleged harassment;

• Training on how to conduct an effective investigation of a harassment complaint;

• Training on what to do if the supervisor is personally accused of harassment;

• Training on the contents of the employer’s anti-harassment policy and how to utilize it if a harassment complaint is filed.

An employer who has completed training of its supervisors prior to the effective date of these regulations shall be deemed to be in compliance with the harassment training requirement as though the training had been done pursuant to these regulations.

In order to state a claim for retaliation, an employee must establish that she participated in a protected activity and was later subjected to an adverse employment action because of that protected activity. In the recently decided case of Yanowitz v. L'Oreal USA, Inc., 36 Cal. 4th 1028, 2005 Daily Journal D.A.R. 9664, the California Supreme Court analyzed the meaning of the terms "protected activity" and "adverse employment action," as they apply in the retaliation context and concluded that these terms should be broadly defined. The Court’s decision effectively expanded the universe of behaviors and actions that constitute "protected activities" and "adverse employment actions," and made it easier for employees to establish retaliatory conduct.

In Yanowitz, the plaintiff’s male supervisor instructed her to terminate a female sales associate because the supervisor did not believe that the sales associate was physically attractive. Id. at 1038. The plaintiff refused to follow the order because she believed that terminating the sales associate on those grounds would be an act of unlawful discrimination. Id. The plaintiff did not, however, inform anyone of this belief. Id. Nonetheless, she later claimed that she was subjected to retaliatory scrutiny and adverse employment action as a result of her protesting the purportedly discriminatory behavior. Id. at 1041. L’Oreal argued that the plaintiff could not meet her burden of establishing that she engaged in a protected activity because she never actually complained of discrimination, but rather, simply refused to follow her supervisor’s order without any explanation as to why she would not do so. Id. at 1045-6. The Court rejected L’Oreal’s argument and ultimately held that the plaintiff’s refusal to terminate the employee, along with her repeated requests that her supervisor articulate an adequate reason for wanting to terminate the sales associate, was sufficient to constitute a protected activity for purposes of a retaliation claim under the Fair Employment and Housing Act. Id. at 1046-8.

In reaching its decision, the court explained that, standing on its own, an employee’s belief that her employer is engaging in unlawful activity is not sufficient to establish that the employee engaged in a protected activity for purposes of a retaliation claim. Id. at 1046. It reasoned, however, that an employee need not actually complain of discrimination in any specific language, so long as she adequately communicates her belief that the employer is engaging in unlawful conduct. Id. at 1047. Accordingly, the court concluded that clear manifestations of a belief that the employer is acting improperly, such as the plaintiff’s refusal to obey her supervisor’s order, and her repeated requests that the supervisor give her a legitimate reason for the termination, are sufficient to constitute a complaint of discrimination and, thus, a "protected activity" for purposes of a retaliation claim. Id. at 1047-8.

The obvious effect of this holding is an increased burden upon employers to consider carefully the motivating reasons for their employees’ behavior. In the wake of Yanowitz, employers cannot simply take insubordination on its face and react accordingly. Instead, employers must now consider whether the employee has refused to obey orders and perform the required functions of her job because she believes that the employer is engaging in unlawful conduct. Employers no longer have the benefit of expecting an employee to articulate such a belief, but must instead be prepared to take a proactive approach and interpret the behavior of their employees in order to discern the motivation for their insubordinate behavior.

The Yanowitz court not only expanded the definition of "protected activity," but it also defined "adverse employment action" in a way that significantly expanded the universe of employer actions that can now support a claim for retaliation. The Yanowitz decision finally sets forth a clear, operative definition of the term "adverse employment action" for purposes of retaliation claims under the FEHA and, in doing so, answers the many questions raised by prior cases, such as Pinero v. Specialty Restaurants Corp., 130 Cal. App. 4th 635, 30 Cal. Rptr. 3d 348 (2005).

In Pinero, the court explained that, for purposes of retaliation cases, courts generally define "adverse employment action" in one of three ways. Id. at 640-1. According to Pinero, the first group of courts define an adverse employment action as an ultimate employment decision such as termination or hiring, the second group of courts define an adverse employment action as a serious employment decision that materially and detrimentally affects employment and the third group of courts define an adverse employment action as any employment decision that would deter an employee from exercising his or her rights. Id. After setting forth the foregoing, the Pinero court then went on to explain that California had not yet come to a definitive conclusion regarding which standard should be used. Id. Unfortunately, the Pinero court declined to rule on the issue at that time because it determined that the proper definition of "adverse employment action" was irrelevant for purposes of the plaintiff’s case because the actions taken against the plaintiff, such as "nitpicking" and complaints, would not be considered adverse employment under even the least stringent of standards. Id. at 641-2.

Months later, in Yanowitz, the California Supreme Court defined "adverse employment action" as an action that materially affects the terms and conditions of employment. Yanowitz, Cal. 4th at 1052. The court explained that employer actions that are merely upsetting to the employee and do not meaningfully affect the terms, conditions or privileges of his or her employment are not adverse employment actions, while actions that have a detrimental effect on the employee’s performance or potential for advancement are considered adverse employment actions for purposes of establishing unlawful retaliation. Id. at 1053-54.

Interestingly, the court also held that an employee need not establish that any action taken against her, when considered alone, constitutes an adverse employment action. Id. at 1055-56. Rather, an employee can establish that there was an adverse employment action taken against her by showing that she suffered a series of minor actions that, as a collective whole, had the requisite material affect on the terms, conditions and privileges of her employment. Id. Specifically, the court held that the employer’s refusal to provide the plaintiff with resources, its solicitation of complaints about the plaintiff from other employees, its undeserved negative performance evaluations and criticism of the plaintiff and its refusal to allow the plaintiff to rebut said criticism collectively constituted an adverse employment action for purposes of her retaliation claim. Id. at 1060-61.

When considered in conjunction, the broad definitions of "protected activity" and "adverse employment action" proffered by the Yanowitz court significantly lower the bar for employees to establish retaliation claims. This increases employers’ potential liability and places a greater burden upon them to be proactive in ferreting out unarticulated complaints of unlawful behavior and preventing even minor retaliatory behaviors that may constitute a materially adverse employment action when considered as a collective whole.

Prior to the holding in Head v. Glacier Northwest Inc., 2005 WL 1560358 (9th Cir. July 6, 2005), 2005 Daily Journal D.A.R. 8159, a plaintiff pursuing a disability discrimination cause of action was required to establish impairment of major life activities through comparative or medical evidence. Now, given the holding in Head, a purportedly disabled plaintiff can establish such impairment exclusively through his or her own testimony. Needless to say, this dramatically reduces the evidentiary burden upon plaintiffs with respect to establishing their purported disabilities.

The plaintiff in Head was diagnosed with depression or bipolar disorder in early 2001 and his employer was aware of the purported condition. Id. at 1057. In late June 2001, the plaintiff was terminated for getting a loader he was operating stuck in the mud. Id. Shortly thereafter, plaintiff filed a lawsuit against his employer for disability discrimination. Id. The District Court entered partial summary judgment in favor of the defendant with regards to the plaintiff’s disability discrimination claims on the grounds that the plaintiff failed to produce comparative or medical evidence that his purported disability substantially impaired his major life activities and, thus, failed to raise a genuine issue of material fact as to substantial impairment. Id. In reviewing that decision, the Ninth Circuit Court of Appeals held that the Americans with Disabilities Act does not require a plaintiff to set forth comparative or medical evidence to prove substantial impairment, but rather, allows a plaintiff to establish substantial impairment through his or her own testimony alone. Id. at 1058.

The Head decision makes it much easier for an employee to establish that he or she suffers from a disability that substantially impairs major life activities, which, in turn, makes it easier for the employee to establish a cause of action for disability discrimination under the Americans With Disabilities Act. The larger implication of this is that a greater number of meritless disability discrimination claims will survive the summary judgment phase because plaintiffs will essentially be able to establish that they have disabilities that substantially impair their major life activities with their unsubstantiated testimony alone. Naturally, this will increase the aggregate amount of unmeritorious disability discrimination claims and prove quite burdensome for employers.

The court in Conley v. Pac. Gas & Elec., 131 Cal. App. 4th 260, 31 Cal. Rptr. 3d 719 (1st Dist. Cal. App. 2005)was confronted with the novel question of whether a policy requiring exempt employees to use accrued vacation time for partial-day absences of four hours or more changes their exemption status to non-exempt under the salary basis test. After careful consideration, the court decided that this policy is legal and proper, and does not affect the exemption status of the employees to whom it is applied. Id. at 271.

The plaintiffs in Conley argued that the defendant’s policy of deducting vacation time from its exempt employees for partial-day absences of four hours or more was akin to reducing the compensation of those exempt employees. Id. at 267. Accordingly, the plaintiffs argued that the defendant’s policy fell within the ambit of specific federal regulations, which state that if employers reduce exempt employees’ pay for partial-day absences, the employees will be classified as non-exempt for overtime purposes. Id. at 266-7.

The Conley court rejected the plaintiffs’ argument, holding that a company policy requiring exempt employees to use accrued vacation time for partial-day absences is not akin to a reduction in compensation. In justification of its decision, the court reasoned that "PG&E's vacation leave policy neither imposes a forfeiture nor operates to prevent vacation pay from vesting as it is earned." Id. at 270. The Conley court further held that "because the deductions made from vacation leave banks of exempt employees represent days on which those employees have, in fact, taken at least four hours off work," all the defendant’s policy actually does is "regulate the timing of exempt employees’ use of their vacation time, by requiring them to use it when they want or need to be absent from work for four or more hours in a single day." Id.

The decision of the Conley court effectively conforms California state law regarding policies requiring exempt employees to use vacation time for partial-day absences to related federal authority. Accordingly, the holding in Conley allows employers to protect the exempt status of their employees while still establishing and enforcing reasonable policies regarding the effect of partial-day absences on accrued vacation time.

In Reynolds v. Bement, 36 Cal. 4th 1075 (Cal. Sup. Ct. August 11, 2005), the California Supreme Court decided that corporate directors and officers cannot be held individually liable for violation of wage and hour laws. Id. at 1087-88. Specifically, the court opined that the mere fact that an individual officer or director of a company exercises control with regards to the activities of that company does not make him or her liable for wage and hour violations that are only properly attributable to the employer itself. Id. at 1088.

The plaintiff in Reynolds sued his former employer and eight individual officers and directors on the grounds that he was misclassified as exempt and was the victim of various other wage and hour law violations. Id. at 1082-83. Each of the individual defendants was dismissed on the grounds that it would be improper to allow a plaintiff to sue individual agents of the employer on his claims for overtime and other wage and hour claims. Id. at 1083, 1092.

Given the ruling in Reynolds, employees may not proceed against individual agents of their employers for the employers’ violations of wage and hour laws. This limits the liability of individual officers and directors of corporations for the actions of the corporation and effectively prevents employees from piercing the corporate veil in the specific context of wage and hour claims.

The court in Valles v. Ivy Hill Corporation, 410 F. 3d 1071 (9th Cir. 2005) decided that, contrary to popular belief, California state laws pertaining to employee meal and rest periods also apply to employees whose terms of employment are governed by collective bargaining agreements. Id. at 1080. The court further held that an employee’s right to meal and rest periods is not waivable and one not need interpret the terms of the employee’s collective bargaining agreement to determine whether employees have waived that right because the right simply cannot be waived, regardless of any contrary language in a collective bargaining agreement. Id. at 1081.

The plaintiffs in Valles brought an action against their employer, the Ivy Hill Corporation, for violation of California’s Labor Code and wage regulations regarding meal and rest periods. Id. at 1074. The Ivy Hill Corporation removed the action to federal court on the grounds that the plaintiffs’ claims were completely preempted by federal labor law due to the fact that the plaintiffs’ employment was governed by a collective bargaining agreement. Id. The appellate court decided that the unionized plaintiffs were equally entitled to state law protections regarding meal and rest periods, despite the fact that they were subject to a collective bargaining agreement and it remanded the case to state court on those grounds. Id. at 1082. The appellate court further held that a state law claim need not be extinguished simply because a collective bargaining agreement will be consulted during the course of the state law litigation. Id. at 1076. The appellate court further held that the plaintiffs could not have waived their state law rights to minimum meal and rest periods through their collective bargaining agreement because those rights are non-negotiable and non-waivable, as are the penalties associated with failure to provide such meal and rest periods. Id. at 1080-81.

In the wake of the Valles ruling, employers have less latitude to negotiate with their unionized employees beyond the provisions and restrictions of state law. The specific meal and rest period requirements of state law will henceforth apply to unionized employees despite any provisions to the contrary in the employees’ collective bargaining agreement. Furthermore, the state law claims of the employees will not automatically be preempted by federal law simply because a collective bargaining agreement is the operative contract. Accordingly, employers must be careful to comply with state meal and rest period regulations with regards to both unionized and non-unionized employees.

Division of Labor Standards Enforcement Proposed Meal and Rest Period Regulations

On July 7, 2005, the California Division of Labor Standards Enforcement ("DLSE") posted the fourth version of its proposed meal and rest period regulations. The proposed regulations contain the following significant features:

• A provision stating that employers may orally inform employees of their right to take meal and rest periods;

• A provision stating that employers are not required to notify employees that they will not be retaliated against if they exercise their right to take a meal or rest period;

• A provision stating that an employer is deemed to have provided the requisite meal and rest periods if it: (1) informs the employee either orally or in writing after the effective date of the new regulations that the employee has the right to take a meal period; (2) gives the employee a daily opportunity to take a meal period; and (3) maintains accurate time records for covered employees in accordance with applicable sections of the Labor Code and wage orders;

• A provision stating that if the employer cannot meet the foregoing requirements, it will be deemed to have provided the requisite meal or rest period if it can prove that a meal period was, in fact, supplied or made available to the employee and the employee was, in fact, given the opportunity to take the meal period (the employer must still maintain accurate time records);

• A provision stating that while an employer must provide meal and rest periods in accordance with the law, an employee is entitled to request approval to not take the meal period provided or to take only a portion of the meal period provided;

• A provision stating that an employer has the discretion to approve or deny an employee’s request not to take the meal period provided or to take only a portion of the meal period provided and the employer may approve or deny the employee’s request without violating its duty to provide the meal period;

• A provision defining "work period" as "that period of time which begins at the time an employee commences work and ends at the time the employee stops work for the day, excluding any time that is not hours worked;"

• A provision defining "provide" as supplying or making available a meal period to the employee and giving the employee the opportunity to take it; and

• A provision stating that the amount an employer owes for failing to provide an employee with required meal or rest periods constitutes a penalty rather than a wage.

The Ninth Circuit Court of Appeals recently arrived at the crossroads of constitutional law and traditional labor law in the case of AFL-CIO& California Labor v. Chamber of Commerce, Case No. 03-55166 (9th Cir. 2005) (Chamber of Commerce of U.S. v. Lockyer, 2005 WL 2140798, 2005 Daily Journal D.A.R. 10,932) (September 6, 2005), wherein the court struck down a California state statute that barred the use of state funds for union-related speech. In reaching its decision, the AFL-CIO court examined the glaring conflict between the National Labor Relations Act ("NLRA"), which extends employees an opportunity to make free and informed choices about union representation and California Government Code §§ 16645-49 ("the state statute"), which prohibits employers from expending state funds on union-related speech. Id. Based on its analysis of the chilling effect of the state statute on union-related speech by employers and its interpretation of the fundamental tenets of the National Labor Relations Act regarding union-related speech by employers, the court decided that the state statute should be preempted by the NLRA pursuant to the Garmon and Machinists preemption principles articulated by the United States Supreme Court.³ Id.

In defense of the state statute, the appellants argued that the statute was not subject to preemption because:

It was not regulatory in character;

It was enacted pursuant to the state’s spending power (which the appellants contend gives the state the broad right to spend its funds as it sees fit);

The challenge to the statute was cast as a facial, rather than an as-applied, challenge; and

First Amendment doctrines and the permissible limitations on the Federal Grant Programs supported the appellants’ argument against preemption. Id. at 12175, 12200-07.

The court flatly rejected the appellants’ arguments, holding that:

The state statute was regulatory in nature;

The state’s spending power did not provide a defense for the state’s interference with the NLRA;

The facial or as-applied nature of the charge was inconsequential under the given circumstances; and

The First Amendment doctrines and the permissible limitations on the Federal Grant Programs did not support the appellants’ argument against preemption of the state statute. Id.

Pursuant to the foregoing determinations, the court held that the state statute was preempted by the National Labor Relations Act because it purported to regulate and restrict the exercise of employers’ rights to engage in non-coercive, union-related speech that are set forth in the Federal Act. Id. at 12207. Specifically, the court explained that the National Labor Relations Act protects non-coercive employer speech regarding unions. and the state statute impermissibly "undermine[d] the speech rights of employers related to union organizing campaigns…[b]y creating exacting compliance burdens, strict accounting requirements, the threat of lawsuits and onerous penalties." Id. at 12178. Accordingly, the court stated that the state statute was completely preempted with respect to any employer who is subject to regulation by the National Labor Relations Act. Id. at 12207.

For over 70 years, the California Constitution has included a "merit principle" designed to "eliminate the spoils system of political patronage from state employment and to ensure that appointments and promotions in state service be made solely on the basis of merit." California State Personnel Board v. California State Employees Association, Local 100 SEIU, AFL-CIO, Ct. App. 3 C042437, 3 (internal citations omitted). The California Supreme Court recently held in California State Personnel Board that collective bargaining agreements that provide for promotions on the basis of seniority regardless of the comparative merit of the eligible candidates violate this firmly entrenched principle of California law.

The plaintiffs in AFL-CIO, the State Personnel Board ("SPB"), filed a petition for writ of mandate to enjoin the California State Employees Association ("CSEA") and the Department of Personnel Administration ("DPA") from implementing the "post and bid" programs set forth in the collective bargaining agreements that CSEA and DPA had negotiated for state employees bargaining units 1, 4 and 11. Id at 2. The post and bid programs provide that the permanent appointment and promotion of certain classes of state employees into post and bid positions shall be based on seniority in state service. Id at 2. Generally, when state employees are vying for a job position, they must undergo a competitive examination, after which the best candidate for the position is selected based on merit. Id. at 7-8. Pursuant to the post and bid programs, however, state employees who apply for certain positions will be hired into positions based solely on seniority in state service.⁴ Id at 8-9. The plaintiffs objected to the implementation of these post and bid programs on the grounds that they violate the merit principle pertaining to permanent civil service appointments and promotions articulated in the California Constitution. Id at 2.

The defendants contended that the post and bid programs do not violate the California Constitution for two main reasons:

The seniority-based selection procedure occurs during the hiring phase, after the administration of competitive examinations and after employees have been divided according to the rule of three ranks; and

The contractual trial periods and statutory probationary periods enforced after the candidate has been hired ensure that qualified employees are selected for the positions.⁵ Id at 10.

The Supreme Court rejected the defendants’ first argument that the hiring phase after the initial competitive examination and ranking of candidates is completely discretionary on the grounds that the merit principle applies to the hiring and promotion phase of the hiring process as well as to the initial screening process during which the competitive examinations are administered and the employees are ranked. Id. at 15-17. Specifically, the court stated the following:

"Even though the post and bid programs preserve the rule of three ranks, their seniority-based selection procedures leave no room at the post examination hiring phase for comparatively evaluating employees who meet the threshold requirements for eligibility and ranking. By dictating an absolute seniority preference in hiring and foreclosing appointing powers from interviewing eligible candidates and considering a broader and more meaningful range of merit-based criteria as appropriate to determine the candidate most qualified for a posted position, the programs undermine the constitutional mandate that appointments and promotions be based on merit."

Id. at 16-17. The court also rejected the defendants’ second argument on the grounds that the trial and probationary periods "are operative only after state resources have been needlessly consumed in selecting and training the unfit employee and do nothing to mitigate the further time and resources that presumably will be spent finding and training a replacement." Id at 19-20.

In light of the foregoing, the court found the post and bid programs set forth in the subject collective bargaining agreements to be in violation of the California Constitution. Id. at 20. Accordingly, the Legislature may no longer approve collective bargaining agreements that require state employers to make permanent appointments and offer promotions based solely on the seniority status of eligible candidates. Id.

^{1. The court also held that management-level employees such as Plaintiff are entitled to the same amount of protection from harassment as any other employee and the specific evidence of racial harassment of Plaintiff by customers and community members supported a jury instruction on the liability of the Postal Service for such harassment.}

2. The proposed regulations provide that attending harassment training does not create an inference that an employee is a supervisor.

3. The fundamental purpose of the Garmon preemption principle is to uphold national labor policy and vindicate Congress’ decision to entrust the administration of labor policy to the National Labor Relations Board and it is applied where the conduct that the state purports to regulate is either actually or arguably prohibited or protected by the National Labor Relations Act. Id. at 12190-12191. The purpose of the Machinists preemption principle, on the other hand, is to preserve Congress’ intentional balance between the uncontrolled power of management and labor to further their respective interests and it is applied where a state regulation pertaining labor would operate to frustrate the purpose of federal regulation, even when federal law does not expressly protect or prohibit the right at issue. Id. at 12195.

4. Employees seeking post and bid positions must still meet certain minimum eligibility requirements, some of which are determined through competitive examination, but after the minimum eligibility requirements have been met, the employees are not evaluated or considered based on merit, but rather, are automatically placed into the positions according to seniority.

5. Amicus curiae California Correctional Peace Officers’ Association asserted that the post and bid programs are constitutional because seniority is a recognized merit factor that is properly considered during the hiring process. The court rejected this argument and stated that seniority should not be the only factor that administrators are allowed to consider when hiring candidates for post and bid positions, despite the fact that it is a legitimate merit factor that may be a part of the merit calculus. Id. at 10, 13-15.

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