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There are people out there who believe the rules are stacked in favor of employees when it comes to employment lawsuits here in the Generally Sunny State.  Why?  Look no further than the rules on the recovery of attorney’s fees.

Despite a very neutral sounding statute that allows for “the prevailing party” in FEHA cases to recover his, her, or its attorney’s fees from the non-prevailing party, the reality is (as interpreted by our Courts of Infinite Wisdom) that prevailing employees “ordinarily” recover their fees, whereas prevailing employers are only entitled to their fees if they can show the plaintiff’s case was frivolous or brought in bad faith.

In other words, prevailing employees get damages and their attorney’s fees; prevailing employers get ... nothing.

This has had quite an impact on how employment cases, especially small ones, are filed and litigated in the state.  The value of a $10,000 case becomes $10,000 plus attorney’s fees.  How much in attorney’s fees?  Well, that depends, does it not, on how much work the employee’s attorney puts into the case?  Do you see the incentives here?  If the attorney works the case up more and more and more, then the employee can recover more and more and more...even if the actual damages to the employee are pretty small.

Could you turn an $11,500 employee verdict into an attorney’s fee application for $870,000?   

The employee in Chavez v. City of Los Angeles thought so.  In fact, so did the appellate court, which ordered the trial court to grant the plaintiff’s fee application, thereby obligating the employer to pay over $1 million (if you count its own attorney’s fees) to cover an $11,500 verdict for the employee. 

In its infinite wisdom, the Supremes reversed.  (Here is the Supreme Court's decision.)  And in the process, the Court may have swung the Giant Employment Law Pendulum (the GELP for short) just a wee bit back in the employer’s direction. 

Here’s what happened....

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Good news for California employers in sexual harassment cases arrived recently in the 4th District Court of Appeal's opinion in Haberman v. Cengage Learning, Inc., 2009 DJDAR 17689 (12/18/09).  In Haberman, the court held that a plaintiff who alleges upwards of 10-20 "incidents" of so-called sexual harassment comprised of comments like, "You look really hot today" or "My customer says he really wants to date you" or asking plaintiff if she has any friends "who just want to have sex" - failed to establish a hostile environment sexual harassment claim and summary judgment was proper.

In Haberman, the plaintiff alleged sexual harassment against two individuals, based on six incidents against one and 13 against the other.  As to the first individual, the court held that most of the incidents alleged against him were not sexual in nature and the few that were were not sufficiently severe or pervasive to constitute sexual harassment.  As to the other individual, the court determined two of the 13 alleged incidents were not sexual in nature and the remaining 11 incidents, while possibly vulgar, were brief and isolated and insufficient to constitute a hostile environment.

Haberman is important for defendants/employers....

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Part 5 (The Final Entry):  The California Courts In Action

This is where the action has been in 2009 employment law -- in the appellate courts.  From commuting to class actions, tip pools to trade secrets, California’s courts were busy.  In this, our final installment of the year in review, we look at just a few employment decisions we found particularly interesting.

On The Subject Of Commuting…: 

A few commuting technicalities were cleared up for employees and employers in 2009, including a clarification of exactly what constitutes the commute.  (And all this time I thought it was all that sitting in traffic I do twice a day, along with tens of thousands of my closest smog-spewing friends.)

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Part 4:  The Legislative And Executive Bodies

As we continue our journey through some of the more noteworthy employment developments in 2009, we note that Congress and the California legislature each had its hands in the works, as did the Executive branch who, judging by the 750 pages of regulations it propounded in interpreting the FMLA, clearly needs more to do.  While there were scores of new laws and regulations touching upon the minutiae of our daily worklife existence, a few stand out.

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Pausing on our trip down memory lane, we take a quick peek around the corner at what the California Supreme Court will be soon be waxing so eloquently about.  Here are this reporter’s favorites:

Shorten Those Pesky Statutes Of Limitations?:  Why can’t employers simply impose an Armendariz-compliant arbitration requirement on their employees as a condition of employment, and (while they are at it) include a provision whereby the parties “agree” that the statute of limitations will be shortened to something less than that permitted by FEHA?  Seems reasonable (if you are an employer), doesn’t it?  The Supreme Court will help us with this when it rules in Pearson Dental Supplies, Inc. v. Superior Court (No. S167169.)  The matter is fully briefed.  (Check here for latest court update or to request automatic email notifications about the case.)

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NOTE FROM THE EDITOR:  We reported on the Quon v. Arch Wireless case many moons ago (see here for our summary).  In that opinion, the Ninth Circuit held that -- in the case before it -- the employee police officers had a reasonable expectation of privacy in the text messages they sent and received on their employer-provided PDAs. 

The media had a field day, proclaiming the end of employer monitoring of employee electronic communications.  However, as we explained in our summary, the case didn't go that far.  It was limited to situations where the electronic communication did not reside on the employer servers (contrary to the practice of most company email systems), and where there was an informal policy that the employer would not monitor the communications (contrary to most employers' express policy permitting monitoring).

Guess what?  This may not be the end of the story.  According to Alston & Bird employment and privacy specialist Jesse Jauregui, today the U.S. Supreme Court has just picked up the case for review (under the caption City of Ontario, California v. Jeff Quon, et al.).  See here.

Based on how the Ninth Circuit usually gets treated by the U.S. Supremes, anyone want to bet how this one will come out?

Here's Jesse's take on the Supreme Court's action:

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NOTE FROM THE EDITOR:  I am soooo happy I have colleagues like Eileen Scofield who love immigration law...so I don't have to.  I don't even have to like it very much.  In fact (just between us), I don't even have to understand it.  Eileen does.  And boy does she ever.  Understand it, that is. 

Here's what I mean.  Eileen is a member of the AILA's (American Immigration Lawyers Association) National Verification & Documentation Liaison Committee and chairperson of the E-Verify National Liaison Committee, and recently wrote up a summary of executive level meetings she and her Committee had with the Obama administration's Department of Homeland Security to discuss immigration and verification issues.  I tried really hard to follow it, but it is simply over my head.

But it's right up the alley of fellow immigration specialists (affectionately known as Immigration Geeks, or IGs), and so it is for all you IGs out there that this post is dedicated.

For the rest of us mortals, well, when faced with an immigration issue, I recommend you do what I do (after plugging my ears, closing my eyes, and saying "nah nah I can't hear you"):  Call Eileen.

INTRO:  Way back in 1986, with the passage of the Immigration Reform and Control Act (IRCA), employers were officially deputized as pseudo-immigration officers in the battle against illegal immigration, charged with screening and enforcing various immigration laws.  Initially, this was through the use of the I-9 Employment Verification Form, whereby every employer was to verify the identity and work authorization of every new employee hired.  However, not surprisingly, in the last 24 years, this process, and the related liability, has expanded and now includes other employer tools such as social security number verification processes (SSNVS), E-Verify processes, and more.

What follows is Eileen's summary of her Committee's discussions with the Department of Homeland Security, particularly as to those issues with the greatest impact on employers, including DHS search tools, E-Verify changes, and fines for I-9 violations.  (MDY)

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As promised, we continue our trip down memory lane by looking at some of the more significant California Supreme Court employment decisions in 2009.  Don’t bother putting on your shoes, it’s a really short trip.  In fact, in this reporter’s humble opinion, the 2010 journey will be much more interesting as there are a number of novel issues fully briefed just waiting for that splash of Supreme Court brilliance.  For now, we look at employer spying, supervisor harassment, punitive damages, and the infamous 17200 unfair competition law.

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A jury found the California Unemployment Insurance Appeals Board, one of the most notoriously employee-friendly governmental bodies in the State, liable under FEHA for unlawful retaliation against one of its employees. 

On appeal, the court affirmed the judgment, finding there to be sufficient evidence to support the jury's verdict.  [George v. Cal. Unempl. Ins. Appeals Bd. (CA5 F055385 12/9/09)]

Am I the only one who finds this incredibly ironic???

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Part 1:  The U.S. Supremes

We here at Alston & Bird’s Who’s The Boss? employment blog have taken a look in the rearview mirror to see what has happened in our insular world over the past 12 months or so.  We looked at court cases, legislative enactments, and regulatory developments, particularly those impacting California.  What we found was pretty interesting, even entertaining. 

While the developments seem more along the lines of moderate refinements than any earth-shattering alterations in the basic power balance between employers and employees, their impact will nonetheless be felt in various degrees as we head into the next decade. 

With no promises that these are the “most significant’ employment law developments of 2009, we nonetheless share what we think are some of the more interesting highlights of the year.

We’ll do this in stages. 

• Today, we’ll highlight four U.S. Supreme Court opinions impacting employers. 

• We’ll follow this with highlights from the California Supreme Court.  Don’t blink, there aren’t many.

• Next, we’ll look at some of the more interesting issues still on the California Supreme Court’s docket for next year.  There are a bunch.

• Then comes legislative and executive developments (were 750 pages of FMLA regulations really necessary?)

• Finally, we’ll take a look at some of the California appellate court employment opinions that made headlines or simply impacted employers, employees, or their attorneys.

[Our thanks to Employment Law 360, which ran a version of this article in two parts in its influential employment law publication.]

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Now what has the California Supreme Court done to employment law here in the Golden State?

In Roby v. McKesson (S149752), the latest masterpiece from the state’s top court, it looks as if both employees and employers can claim a modicum of victory. 

The employees will find it easier to assert and prove harassment claims against individual supervisors, which will make it easier to (a) defeat removal to federal court based on diversity jurisdiction; and (b) defeat summary judgment of harassment claims by individual supervisor defendants.

For the employers?  The Court may be signaling further disenchantment with high punitive damages, particularly in cases involving high non-economic (emotional distress) damages where there is little evidence that upper management knew about the bad conduct.

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If only I could be paid for my commute.  See, I live in the South Bay (the Southern California version) and commute to downtown Los Angeles along the 405, 105 and 110 freeways.  It's neither quick, nor particularly attractive.  (I save a little time in my Natural Gas Honda Civic, which gets me in the carpool lane, but not nearly as much as I did P.H. (pre-hybrid).  Now that those pesky Prius’ are allowed in the carpool lanes, I often go no faster than the carbon monoxide spewing Hummers two lanes over.)

So imagine if I could get paid for commuting.  I’d be rich!... and wouldn’t need to commute to work anymore.  Think of the incentives in car-happy California?  I might even want to drive in the slow lanes (which is redundant, especially during “rush hour,” which isn’t an hour and no one rushes.)

But getting paid to sit in morning gridlock listening to NPR (fine, Mark & Brian) would be wrong, wouldn’t it?

Mike Rutti decided to find out (or perhaps his attorney did).  Rutti v. Lojack Corp. is the result.

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Martha Doty, one of our California L&E specialists, has been railing for years (at least it seems like years to those of us who have to listen to it in group meetings and lunchroom therapy sessions) against the ease by which employees can destroy diversity jurisdiction – and hence prevent removal to federal court – by the simple artifice of naming sham defendants.  Indeed, at the risk of further educating and emboldening the plaintiff’s bar, Martha even wrote a piece on the apparent upsurge in the use of defamation claims as the diversity-killing tool de jour:  “Defamation: The New Diversity-Killing Claim For Employment Actions.” 

Well, for once, there is some good news for diversity employers.  As Martha explains in her new piece, the U.S. Supreme Court has provided employers with a little help in the battle against sham defendants.  Read on to find out how Twombly and Iqbal are changing the removal landscape.

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Plaintiffs have grown increasingly clever at frustrating defendants hoping to remove cases to federal court, by joining non-diverse defendants based on the barest of allegations.

Given the high bar required for defendants to establish fraudulent joinder, district courts are increasingly finding even those thin allegations sufficient to defeat removal, particularly in employment cases.

For example, a plaintiff alleging slander based on a supervisor’s statement that the plaintiff had a conflict of interest was held to have stated facts sufficient to defeat fraudulent joinder where the plaintiff had alleged in conclusory fashion that the alleged defamatory statement “was made with malice,” that the defendants knew the statements “were false when they made them,” and that the plaintiff “could allege facts sufficient to support malice.”  The district court remanded the case to state court, ruling that these boilerplate and conclusory allegations were sufficient because the defendant had not established that “there was no possibility” the plaintiff could recover.  In other words, merely pleading the basic elements of a cause of action, with no added facts about the particular employment relationship at issue, defeated diversity.

The standard should be higher.  Two recent U.S. Supreme Court decisions may bolster defendants’ efforts to establish the insufficiency of boilerplate allegations, force plaintiffs to plead more facts, and defeat remand motions to keep cases in federal court.

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From time to time, our firm sends out advisories to our clients regarding labor and employment issues that are particularly topical.  Today's introduction to the new proposed disability regulations is an example.  In the advisory that follows, Rory Diamond summarizes the EEOC's proposed new definition of "disability" and some of its expected consequences.  Employers everywhere should keep abreast of these important changes.

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On January 1, 2009, the Americans with Disabilities Act Amendments Act of 2008 (ADAAA) went into effect, greatly expanding the definition of “disability” in the Americans with Disabilities Act (ADA).  The ADAAA overrides the holdings in several U.S. Supreme Court decisions and some EEOC regulations that Congress felt construed the definition of “disability” too narrowly.

On September 23, 2009, the EEOC published in the Federal Register a long-awaited Notice of Proposed Rulemaking (NPR) seeking to implement the ADAAA.  [See “Regulations to Implement the Equal Employment Provisions of the Americans with Disabilities Act,” 74 Fed. Reg. 48431, 48440 (Sept. 23, 2009) (to be codified at 29 C.F.R. pt. 1630).]  The new proposed definition of “disability” incorporates many medical impairments.  The changes apply to both the ADA and the Rehabilitation Act (covering Federal employees).

Outlined below is a guide to the more significant changes we can expect should the NPR become regulation.

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We all know that non-competes are generally verboten in California.  If you aren’t sure, read this brilliant blog entry (and this one).  California is very protective of its workers’ rights to move from job to job, shopping his or her talents to the highest bidder (so to speak).

We also know that California is very protective of an employer’s right to protect its intellectual property, including especially its trade secrets.  This includes, of course, customer lists and client information under proper circumstances.

So what happens when these two important and closely protected public policies crash head on into one another? 

What happens when workers want to compete with their former employer by soliciting business from the employer’s customers…and the customer contact information is both stored in the employer’s database and (with a little digging) available from public sources?  Who wins this one? 

A new California case helps us sort it all out.

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Remember way back when, when we reported on the reversal of the $86 million Starbucks tip pool verdict?  You can read about it here.  At the time, we agreed with the court's decision, opining that:

It made no sense to deprive hard working baristas, who happen to also be shift supervisors, of tips they helped generate.  These folks steam the soy and press the espresso, standing shoulder to shoulder with their barista brethren, doling out caffeinated charm to an often charmless public, and deserve the tips just as much as those they supervise.

Not surprisingly, the winners of that $86 million windfall were not pleased to see their tip money evaporate like the steam off a freshly foamed decaf cappuccino, dusted with cinnamon (I'm telling you, with similes like this, I should have been a novelist!).  They did what anyone would do in their shoes, they pleaded with the Supreme Court to review the appellate ruling.

Alas, it was to no avail.  Yesterday, the Supremes in their infinite wisdom declined to hear the case (only Justice Werdegar voted in favor of review), thereby leaving the tip jar $86 million short, according to the plaintiffs. 

So now what?  It's not clear there is any more steam in this engine (I'm on a roll).  The appellate court ordered that judgment be entered in Starbuck's favor, and that's apparently the end of it.

Or is it?  According to the IWW Starbucks Workers Union, it is already gearing up for a new class action, this one (according to the Union's website) based on alleged use of "harsh police-style interrogation tactics" that has led to "numerous false confessions, which Starbucks has then used to terminate or extort 'restitution' from employees."

As I said before:  "I think I’ll grab my decaf cappuccino and watch the show."

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A small splash was made recently when a Sacramento television news station reported that the California Department of Public Health had issued a memo to furloughed employees that they should consider taking a second job at Target or Macys.

It seemed the government workers at the DPH didn’t like the idea of being told to moonlight at local retailers.  And who can blame them.

Only that’s not really the way it happened.  (I know, hard to believe a local television news report might have misinterpreted something and then blown it all out of proportion.)

Nonetheless, this provides a few valuable lessons for both employers and employees when circumstances are such that secondary employment may become necessary.

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What does the California Supreme Court's recent decision in Hernandez v. Hillsides, Inc. mean to California employers who have legitimate needs for workplace video surveillance of its employees and work areas?  Plenty. 

Alston & Bird workplace privacy specialist Jesse Jauregui not only explains the case, but offers valuable insights and tips to California employers.  (Our thanks to Employment Law 360 for publishing the article in its August 13, 2009, edition.)

The two ends of the workplace privacy spectrum have been fairly well defined by prior California law.  On the one hand are those cases that have allowed covert videotaping in open and accessible workplace areas. 

On the other hand are those cases that find a violation of the right to privacy by videotaping areas reserved for personal acts such as employee restrooms and dressing areas. 

In Hernandez v. Hillsides, Inc., S147552 (August 3, 2009), the California Supreme Court was confronted with a scenario that falls between those extremes and further delineated the extent to which an employer may conduct workplace video surveillance of its employees without violating their right to privacy. 

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