January 15, 2018

Key California Employment Law Cases: December 2017

This month’s key California employment law cases involve recovery of attorney’s fees by a prevailing defendant and the California Labor Code Private Attorneys General Act (“PAGA”).

Lopez v. Routt, 17 Cal. App. 5th 1006, 225 Cal. Rptr. 3d 851 (2017)

Facts: Plaintiff sued her employer and supervisor for harassment in violation of the California Fair Employment and Housing Act (“FEHA”).  The matter was tried to a jury, which found in favor of defendants.  As a prevailing party, the supervisor moved to recover attorney’s fees under FEHA’s fee shifting provision.  The trial court denied the motion, concluding he had failed to establish plaintiff’s claim was frivolous according to the standard laid out for Title VII claims in Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 98 S. Ct. 694 (1978), as applied to FEHA claims by Cummings v. Benco Bldg. Servs., 11 Cal. App. 4th 1383, 1388, 15 Cal. Rptr. 2d 53, 56 (1992).  The supervisor appealed.

Court’s Decision: The Court of Appeal affirmed, holding that, like a prevailing employer defendant, a prevailing individual defendant in a FEHA action must meet the same frivolousness standard laid out in Christianberg in order to collect attorney’s fees from a FEHA plaintiff.  

Practical Implications:  Employers should expect individual supervisors to rely more heavily on the employer’s counsel to defend claims against them rather than their own private counsel.  Under this case, employers cannot seek to recover attorney’s fees on behalf of an individual supervisor any more than they could have done on behalf of the employer.

Lawson v. ZB, N.A., 18 Cal. App. 5th 705 (2017)

Facts:  Plaintiff sued defendant employer for numerous wage-and-hour violations and sought penalties under the California Labor Code Private Attorneys General Act (“PAGA”).  Plaintiff’s action identified Labor Code section 558 as one of the statutory bases for seeking penalties.  Section 558 permits recovery of fixed statutory penalties as well as underpaid wages.  Defendant filed a motion to compel individual arbitration pursuant to an arbitration and class action waiver agreement plaintiff signed upon her hire.  Defendant sought to arbitrate plaintiff’s individual Labor Code claims as well as the underpaid wages portion of her claim under section 558.  The trial court granted the motion pursuant to the decision in Esparza v. KS Indus., L.P., 13 Cal. App. 5th 1228, 1233, 221 Cal. Rptr. 3d 594, 597 (2017).  Plaintiff filed a writ petition seeking review of the trial court’s order.

Court’s Decision: The California Court of Appeal granted the petition and ordered the trial court to vacate its order.  The court expressly rejected the reasoning and holding in Esparza, instead concluding that although the underpaid wages portion of section 558 is only payable directly to employees and not to the state, it is nevertheless part of the civil penalties statute of section 558 that is only recoverable pursuant to a PAGA claim and, thus, may not be arbitrated.

Practical Implications:  This case creates a split among the Courts of Appeal on whether claims for unpaid wages under Labor Code section 558 can be arbitrated.  Without guidance from the California Supreme Court, trial judges may choose whether to follow this opinion and preclude arbitration of unpaid wages that are recoverable under section 558, or to follow the opinion in Esparza and compel arbitration of unpaid wages recoverable under section 558.