August 11, 2022

Key California Employment Law Cases: July 2022

Meda v. AutoZone Inc.
, No. B311398, 2022 WL 2813819 (Cal. Ct. App. July 19, 2022)

Summary: Where an employer has not expressly advised its employees that they may use a seat during their work and does not place seats at the employees’ workstations, resolution of the issue of whether an employer has “provided” suitable seating may be inappropriate at the summary judgment stage.

Facts: Plaintiff Monica Meda worked as a sales associate at an auto parts store operated by Defendant AutoZoners. Plaintiff filed an action against Defendant under the California Labor Code Private Attorneys General Act (“PAGA”), alleging that Defendant failed to “provide” suitable seating to employees at the cashier and parts counter workstations, as required by Industrial Welfare Commission Wage Order No. 7. Per company policy, the store had two raised chairs on site that were generally located in or near the manager’s office. No one at the store told Plaintiff that she was allowed to, or was prohibited from, using a raised chair at the front counter workstations, and she never asked for permission to do so. Defendant moved for summary judgment, on the ground that Plaintiff lacked standing to bring a representative action under PAGA because she was not aggrieved by Defendant’s seating policy. Specifically, Defendant contended that it satisfied the seating requirement by making the two raised chairs available to its associates. Moreover, Plaintiff knew seating was available because she had used one of the raised chairs at the cashier workstation after she suffered an on-the-job injury. In opposition, Plaintiff contended that Defendant did not “provide” seating because no one told her chairs were available for use at the front counter workstations, she never saw anyone else use a chair at those workstations, she was only given the option to use a chair as an accommodation after an on-the-job injury, and Defendant was required to provide at least five chairs so that every employee working at the cashier and parts counter workstations could sit at the same time. The trial court granted Defendant’s motion. Plaintiff appealed. 

Court’s Decision: The California Court of Appeal reversed. The court found the undisputed facts created a triable issue as to whether Plaintiff was an “aggrieved employee” for standing purposes. This issue depended on whether Defendant “provided” suitable seating to its customer service employees at the front of the store by placing seats at other workstations in a separate area of the store. The court of appeal concluded that where, as here, the employer does not place a seat at an employee’s workstation and has not expressly advised its employees that they may use a seat during their work, the inquiry as to whether a seat has been “provided” to the employee may be fact-intensive and dependent on a variety of factors, including: the proximity of a seat to an employee’s workstation, the nature of an employee’s job responsibilities, how frequently an employee changes tasks, the physical layout of the workspace, the number of employees sharing a workstation, and the extent to which the location of a seat at or near a workstation may obstruct employees’ tasks or cause congestion in a specific work area. Accordingly, the court held that resolution of this issue at the summary judgment stage may be inappropriate, as it was here.

Practical Implications: This case presents an important reminder to employers about an often-overlooked requirement in the Wage Orders: providing “suitable seats when the nature of the work reasonably permits the use of seats.” Suitable seating cases are not common, but they can be costly. We encourage employers to review, and document, their seating policies, and to communicate these policies clearly to their employees.

Gallo v. Wood Ranch USA Inc., No. B311067, 2022 WL 2913128 (Cal. Ct. App. July 25, 2022)

Summary: California Code of Civil Procedure sections 1281.97, 1281.98 and 1281.99—provisions of the CAA that require an entity to pay its share of arbitration fees within 30 days of the date they are due—are not preempted by the FAA. 

Facts: Plaintiff Sunny Gallo sued her former employer, Defendant Wood Ranch USA Inc., bringing multiple claims based on alleged discrimination and retaliation. As a condition of employment, Plaintiff had agreed to an arbitration provision that specified that while substantive California and federal law would apply to the claims, the CAA would be used to conduct arbitration and pre-arbitration activities. After the trial court compelled the case to arbitration, Defendant failed to timely pay its portion of the arbitration fees. California Code of Civil Procedure sections 1281.97, 1281.98 and 1281.99, part of the California Arbitration Act (“CAA”) require that a company or business that drafts an arbitration agreement to pay its share of arbitration fees within 30 days of the date they are due; and in the event of the entity’s failure to do so, the employee or consumer is entitled to attorney’s fees and costs related to the breach, and also to either (1) continue in arbitration with the entity paying attorney’s fees and costs related to the arbitration or (2) withdraw from arbitration and resume litigation in a judicial forum. After Defendant’s late payment (which was made six days after the statutory deadline), Plaintiff moved to vacate the order to compel arbitration. The trial court granted the motion. Defendant appealed, arguing the operative CAA provisions governing fees in arbitration are preempted by the Federal Arbitration Act (“FAA”).

Court’s Decision: The California Court of Appeal affirmed. The court noted that state laws are preempted by the FAA if they obstruct the objectives of the FAA either by discouraging or prohibiting arbitration. The court found that sections 1281.97, 1281.98 and 1281.99 do not frustrate the goals of the FAA or the parties’ initial agreement to arbitrate. Rather, the provisions are “akin to a statute of limitation,” and accordingly are not preempted by the FAA. 

Practical Implications: As we have been reminding employers since these provisions were codified a couple of years ago, timely payment of arbitration fees is critical. Employers must be careful not to let an arbitration invoice get lost in the shuffle lest they end up on the hook for fees or back in court. 

Leenay v. Superior Court, No. E077292, 2022 WL 2899545 (Cal. Ct. App. July 22, 2022)

Summary: A defendant employer is not entitled to a stay of PAGA actions pending arbitration of similar third-party claims.

Facts: Following consolidation of five actions under the California Labor Code Private Attorneys General Act (“PAGA”), Defendant Lowe’s Home Centers, LLC argued that the PAGA actions should be stayed following resolution of more than 50 other, similar matters in arbitration. The plaintiffs in the PAGA actions (the “PAGA plaintiffs”) were not plaintiffs in any of the underlying arbitral matters. The trial court granted a stay pursuant to California Code of Civil procedure section 1281.4, which requires a court to stay an action pending arbitration “of a controversy which is an issue involved” in the action, finding that the statute “focuses on the issue rather than the parties.” Former employee and PAGA plaintiff Ann Leenay filed a petition for a writ of mandate directing the trial court to vacate its order to stay the proceedings.

Court’s Decision: The California Court of Appeal granted the petition and directed the trial court to vacate the stay. In evaluating section 1281.4, the court considered the statutory language and its legislative history. Incorporating the California Arbitration Act’s definition of “controversy” into section 1281.4, the court found that the plain meaning of “section 1281.4 requires the pending action involve both the arbitrable question and the parties in the arbitration.” As such, “section 1281.4 authorizes a stay only if a court has ordered arbitration of a question between the parties to an agreement, and the same question and the same parties are involved in the pending action.” The court also explained that even if the plain meaning were unclear, the legislative history of section 1281.4 also supported its conclusion because the legislature intended for section 1281.4 to act as a remedy for a party’s failure to arbitrate (i.e., a remedy for arbitral claims, between parties with an arbitration agreement). As the PAGA plaintiffs were not parties to the arbitral actions, section 1281.4 did not authorize, let alone require, a stay.

Practical Implications: Since the United States Supreme Court’s decision in Viking River Cruises v. Moriana, arbitration of PAGA claims has been on the forefront for many employers in California. California courts are still working out the implications of Viking River, and we expect many developments in the coming months and years. This case is just one example of the ways in which the otherwise positive effects of the Supreme Court’s decision can be blunted.