July 20, 2018

Key California Employment Law Cases: June 2018

This month’s key employment law cases involve payment of union dues by public employees, settlement of work-related disability claims, and rounding of time.

Janus v. American Fed’n of State, County, & Mun. Employees, Council 31, 138 S. Ct. 2448 (2018)

Summary:  Government employees represented by but not belonging to union need not pay fair share or agency fee to cover union’s costs for collective bargaining activities.

Facts:  Plaintiff Mark Janus was a child support specialist working for the State of Illinois.  He was represented by AFSCME, and though he chose not to be a member of the union, he was required to pay fees to the union—a practice that has long been permitted under prior federal case law.  Plaintiff contested the requirement that he pay these fees on First Amendment grounds.

Court’s Decision:  The United States Supreme Court found that requiring individuals who are not members of a union to pay fees to the union—even if the individual is represented by the union for purposes of collective bargaining—violates the First Amendment.  Neither an agency fee nor any other form of payment to a public sector union may be deducted from an employee, nor may any other attempt be made to collect such a payment, unless the employee affirmatively consents to pay.  This decision overturns the prior rule from Abood v. Detroit Board of Education, 431 U.S. 209, 97 S. Ct. 1782 (1977), which was based on protecting the state’s interest in labor peace and in avoiding the problem of employees reaping the benefits of union representation without paying for them.  In Janus, the Court decided that the concerns underlying the Abood decision have since been proven unfounded.  For example, the federal government and the 28 right-to-work states do not allow such fees, yet millions of public employees are represented by unions that effectively serve as the exclusive representatives of all of the employees.  The Court accordingly held that the concerns raised in Abood may be addressed, if necessary, through less restrictive means.

Practical Implications:  This decision is directly applicable only to public sector unions, but should not be ignored by the private sector.  Agency fees are often 75% to 80% of the amount of union dues; therefore, in the short term, this decision deals a substantial blow to revenue streams of public sector unions, and may also result in a drop in membership now that agency fees are not required.  In the long term, public sector unions that thrive are likely to be those that become more competitive by utilizing technology to develop and deliver programs that create immediate value for members, by focusing on initiatives that attract and impact potential members.  Public sector unions that are able to adapt and thrive may become models for leaner and more modern and relevant unions in the private sector as well.

Camacho v. Target Corp., 24 Cal. App. 5th 291, 234 Cal. Rptr. 3d 223 (2018)

Summary:  Settlement of workers’ compensation claim—which included addendum containing additional terms purportedly resolving all claims between parties—did not preclude employee’s subsequent filing of discrimination lawsuit.

Facts:  Plaintiff Camacho and defendant Target settled a workers’ compensation claim using a standard compromise and release form.  The standard form provides that the release applies only to workers compensation-related claims, and not other types of employment claims.  The parties added an addendum, which stated that the settlement included medical temporary disability, vocational rehabilitation, temporary disability, mileage, penalties and interest, reinstatement, lost wages, attorney’s fees, costs, or any other claims for reimbursement, benefits, damages, or relief of whatever nature, including claims under Labor Code sections 132a (discrimination for filing a workers’ compensation claim) and 4553 (for serious and willful misconduct by the employer).  Plaintiff subsequently filed a civil complaint alleging multiple causes of action related to alleged harassment.  The trial court granted defendant’s motion to dismiss based on the addendum.

Court’s Decision:  The California Court of Appeals reversed, finding that the language in the release was not sufficiently clear to put plaintiff on notice that he was signing a general release of liability.  The context of the release clause was unclear, as it was just one of six paragraphs of an addendum, and it was in the midst of technical language unrelated to the release.

Practical Implications:  Employers may not rely on the standard workers’ compensation compromise and release to release all potential claims.  If an employer wants to resolve all claims with a workers’ compensation settlement, the employer should consider using a long-form release agreement, or at least ensuring that clear general release language is added to the compromise and release so there can be no ambiguity that all current and potential claims are released.

AHMC Healthcare, Inc. v. Superior Ct., 234 Cal. Rptr. 3d 804 (Ct. App. 2d Dist. 2018)

Summary:  Timekeeping system that rounds time does not violate California wage laws so long as system does not systematically undercount employee time worked.

Facts:  Defendant hospital maintained a timekeeping system where times entered were rounded up or down to the nearest quarter hour.  Two named plaintiffs brought a class action, alleging that for them, individually, rounding resulted in a minimally lower hours total, and accordingly minimally lower compensation, as compared to their unrounded time.  The parties agreed to a set of stipulated facts.  These facts included an expert’s analysis of the time records of the class, including (1) the number of employees who benefitted from rounding vs. the number who lost time through rounding, (2) the total number of employee shifts in which time was rounded up vs. the total number of shifts in which it was rounded down, and (3) whether the overall benefit of the rounding went to the employees as a whole, or to the employer.  On these facts, the trial court denied the hospital’s motion for summary adjudication.

Court’s Decision:  The California Court of Appeal reversed, finding that the rounding policy was lawful because the rounding policy resulted in almost equal percentages of employees gaining time vs. those losing time, and the overall impact of the rounding policy resulted in an increase of compensable hours as compared to non-rounded time.  This decision reaffirms the rule that a rounding policy is lawful if it is facially neutral, consistently applied, and does not favor the employer to a significant degree.  Additionally, rounding policies are not analyzed on an individual, employee-by-employee basis; a rounding policy may be lawful if it results in undercompensating an individual employee so long as it does not systematically undercompensate employees as a group.  Further, a policy is not unlawful simply because a slight majority of employees end up having their time rounded down, as was the case here.

Practical Implications:  This case confirms that a rounding system must be fundamentally unfair to employees for it to be unlawful.  Nevertheless, employers that round to the nearest five minutes or one-tenth of an hour may be safer than those that round to the nearest fifteen minutes.  Employers should periodically self-audit their rounding system to protect against potential lawsuits.