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California workers who have been subject to unfair or illegal employment practices by their employers may have several different routes to fight back against unfair treatment by employers. In addition to state legal remedies, such as a breach of contract claim, wronged employees can pursue federal legal and administrative remedies through federal courts or the U.S. Department of Labor. California has also passed laws allowing wronged employees to seek equitable remedies for mistreatment.

One such remedy comes through applying California’s Unfair Competition Law (UCL), which gives workers a separate cause of action to address unfair labor practices. The California Court of Appeals recently heard a case in which a plaintiff brought a claim of unlawful business practices under the UCL against their former employer, alleging that the defendant’s failure to pay the plaintiff’s due wages was a violation of the law. In the recently decided case, the plaintiff brought suit against the defendant for failing to pay sufficient wages under an employment agreement. According to the procedural history discussed in the appellate opinion, the plaintiff made legal claims for breach of contract based on unpaid wages and failure to reimburse business expenses and brought up equitable claims under the UCL with the same complaints.

The defendant responded to the plaintiff’s lawsuit by seeking to compel arbitration of the plaintiff’s claims as agreed to in the employment contract. The parties’ employment contract contained a provision that legal claims for wage loss would be handled in arbitration; however, the contract specifically stated that equitable claims under the UCL were not subject to mandatory arbitration. The plaintiff agreed to dismiss their non-UCL claims but sought to have the UCL claim heard in court, not at arbitration. Based on the language of the arbitration agreement in the employment contract, the trial court denied the defendant’s motion to compel arbitration, triggering the appeal.

The United States Supreme Court is set to address whether emotional distress damages are available to those who prove disability discrimination under federal law. Disability discrimination can impact a person and their family in a myriad of ways. While a financial loss is the most apparent, emotional distress can have a life-changing impact on a person’s livelihood. California state and federal law prohibit discrimination based on a person’s disability in employment, government programs, private and non-profit businesses, commercial facilities, transportation, and telecommunications. Those who experience discrimination in these settings can hold the violating party liable for their damages. However, plaintiffs often encounter challenges in establishing emotional distress damages.

Emotional distress damages include a variety of harms, including:

  • Psychiatric conditions such as anxiety and depression;

California employment laws afford workers a variety of protections and legal rights. One of the most essential rights employees have is the right to litigate certain claims against their employer.

The main alternative to court for resolving a dispute between an employee and an employer is arbitration. Arbitration uses a supposedly neutral third party to resolve disputes in and out of the employment context. Because arbitration often yields a faster resolution than a trial would, many employers require their employees to sign an arbitration agreement as a condition of their employment. Once signed, arbitration agreements essentially waive an employee’s right to sue her employer in court.

A recent case helped cement the principle that California employees cannot be compelled to arbitrate claims under a major employment law in the state, even when they have signed an agreement to arbitrate disputes arising out of the employment.

Given the growth of the “gig economy” in recent years, a growing number of companies are relying less on employees and more on independent contractors. While hiring independent contractors affords companies and individuals greater flexibility, it also opens the door to potential abuses by employers.

Employees Versus Independent Contractors

Historically, most companies hired employees to perform all the necessary tasks related to the business. However, hiring an employee is expensive for a company because it must pay payroll taxes and often feels competitive pressure to provide employees with certain benefits, such as health and dental insurance. Moreover, employees are entitled to receive a minimum wage, and certain employees must be paid overtime wages. Employees are also covered by workers’ compensation insurance.

Independent contractors, on the other hand, are much less expensive for businesses to use. For example, a business can use independent contractors only when needed without worrying about paying for their benefits. While the use of independent contractors used to only be common in certain industries, that’s changed in recent years.

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Although arbitration agreements mean that a case must be resolved through arbitration, not all agreements are enforceable. If a party does not have a real opportunity to negotiate the terms of the contract or a contract heavily favors one party, these may be indications that the agreement is unconscionable and thus, unenforceable. A California court recently found that an arbitration agreement signed between an employer and an employee was unconscionable based on those circumstances. In that case, the plaintiff submitted an electronic application for employment with a property management company. The plaintiff electronically signed an agreement that was required as a precondition to employment. In the agreement, it stated that the plaintiff and the property management company agreed to settle all “claims, disputes, and controversies” related to the plaintiff’s application for employment, employment, and cessation of employment with the company exclusively through final and binding arbitration.

The plaintiff obtained employment at the company and later filed a claim against the company, alleging that he was not compensated for overtime work or certain business expenses and that he was not provided with accurate wage statements. He also alleged that he injured his back at work, took leave, and once he was able to return to work, he never heard back from the company. The company argued that the suit was required to be resolved through arbitration based on the language of the agreement. The plaintiff argued in part that the agreement was unconscionable and could not be enforced.

Unconscionability Under California Law

The Court of Appeals of California recently issued an opinion addressing several employment claims, including whether a union may be responsible for aiding and abetting discrimination. The plaintiff in this matter filed a wrongful termination case against his employer, a janitorial services company, and the union that represents the employer. The relevant issue on appeal is whether the trial court erred in denying the plaintiff’s leave to amend to claim that the Union aided and abetted the employer’s violation.

In 2012, the employer hired the plaintiff to work as an “additional services” employee to provide janitorial services at a location. About a year later, the employer-provided written confirmation that the plaintiff was a “permanent employee.” In 2014, the plaintiff took leave under the California Family Rights Act (CFRA) to care for his terminally ill wife. A day after returning to work, his supervisor informed him that he was terminated because another employee had filled the position. Shortly after his termination, the plaintiff filed a discrimination and retaliation charge against his employer and the Union.

In response, the employer argued that they unintentionally and erroneously issued the plaintiff a “permanent employee” letter. Further, they explained that another employee was next in line to obtain the position according to their seniority scheme. The Union argued that their actions were not motivated by discrimination but solely their responsibility to enforce their seniority hiring protocols.

California’s anti-SLAPP statute refers to the Strategic Lawsuits Against Public Participation. Lawmakers designed the statute to protect those who wish to speak out about public policy issues against more powerful corporate entities. In California, the term primarily refers to lawsuits stemming from discouraging speech about significant issues or public participation in governmental proceedings.

While the statute provides many benefits, it also has significant implications for California employees wishing to pursue employment discrimination or retaliation against their employers. Anti-SLAPP statutes permit defendant employers to present a motion to strike causes of action that stems from “any act of that person in furtherance of the person’s right of petition or free speech under the United States Constitution or the California Constitution; in connection with a public issue.”

Following a California Supreme Court case, the Court held that the anti-SLAPP statutes do not include an exception for retaliation or discrimination claims. As such, a plaintiff’s allegations against an employer’s motives will not protect the claim from preliminary screening for merit.

An alarming decision from a California appeals court highlights the importance of reviewing any paperwork related to a potential employment claim. In that case, an employee filed a California employment lawsuit against her employers in April 2019. While the case was pending, in December 2019, the employers allegedly told the employee to sign some paperwork at work. The employee claims that her employers told her that the paperwork related only to “updates to ‘expired’ paperwork.” She also alleged that her employers said that she would be fired, and her paychecks would be withheld if she failed to sign the paperwork. She claimed she was not permitted to consult with her attorney before doing so. She signed the paperwork, which included an arbitration agreement. Her employers then used the agreement to compel arbitration in the lawsuit.

The arbitration agreement stated that the employee agreed to resolves any disputes related to her employment in arbitration. It also included a delegation clause, which stated that the arbitrator would have the exclusive authority to resolve disputes related to the “interpretation, applicability, enforceability or formation of this agreement, including the assumption that this agreement is unenforceable.”

In court, the employee argued that the arbitration agreement was unenforceable due to fraud, duress, and un-conscionability. However, the California court found that it could not rule on the validity of the agreement because of the delegation clause. In 2010, the U.S. Supreme Court held that if a delegation clause is “clear and unmistakable,” a court has to enforce it. This means that unless no agreement between the parties took place, the arbitrator must decide any questions related to the agreement’s validity. The court found that the delegation clause in the agreement clearly and unmistakably assigned the issues of validity of the agreement to the arbitrator.

Recently the Court of Appeals issued a decision in a California employment discrimination case involving several claims, including pregnancy-related and sex discrimination. The plaintiff asserts that her employer, a dental group, terminated her position because she attempted to become pregnant. In response, the defendant argued that the decision did not stem from discrimination. Instead, the defendant contended that the company was undergoing a reorganization; the plaintiff lost her job because her performance scores put her at the bottom of the metric they used to rate employee performance.

Under California law, courts use the federal burden-shifting test for evaluating wrongful discharge lawsuits. In these cases, plaintiffs must show that the employer’s actions were more likely than not based on a prohibited discriminatory criterion. If the plaintiff meets this burden, a presumption of discrimination arises, and the employer must establish a legitimate, nondiscriminatory reason for their action. If the employer meets this burden, the burden shifts back onto the employee to establish “substantial evidence” that the defendant’s nondiscriminatory reason was pre-textual or that the employer acted with animus.

Under this framework, an employee’s evidence is subject to scrutiny, and their subjective belief does not create a genuine issue of material fact. Instead, the proffered evidence must establish a causal link between the employer’s motivation and termination. Moreover, circumstantial evidence of discrimination must be “substantial” and specific.”

Earlier this month, the California Department of Public Health issued an order (the “Order”) directing certain workers who provide services or work in specified facilities to have their first dose of a one-dose regimen or their second dose of a two-dose regimen of the Covid-19 vaccine by September 30, 2021. While the COVID-19 pandemic remains a significant health concern, the mandate is causing many people to question the scope of control California employers have over their workers.

The Order applies to healthcare facilities such as acute care hospitals, nursing facilities, intermediate care facilities, psychiatric hospitals, adult day health care centers, ambulatory surgery centers, chemical dependency recovery hospitals, doctor offices, hospice facilities, and pediatric day health and respite care facilities. Unlike many other California employment laws, the Order applies to all “workers,” not just employees. Workers include paid and unpaid individuals who work in indoor settings where patients receive care or have access to for any reason.

The Order allows limited and narrow exceptions for qualifying medical reasons and religious beliefs. In these cases, the worker may decline the vaccine if they provide written proof from their treating medical doctor, nurse practitioner, or medical professional practicing under a physician’s license. Workers should be aware that the exemption does not require the healthcare provider to indicate the underlying medical condition. However, the statement should indicate the length of time the patient’s inability to receive the vaccine will be or whether the inability is permanent. Workers who receive the exemption must undergo weekly or biweekly testing and wear a mask.

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