October 13, 2020

Key California Employment Law Cases: September 2020

Sanchez v. Martinez, No. C083268, 2020 WL 5494239 (Cal. Ct. App. Sept. 11, 2020)

Summary: Piece-rate employees who are provided with unpaid rest breaks are entitled to damages in the amount of the minimum wage for actual unpaid time or an additional hour of pay under California Labor Code section 226.7, but they are not entitled to both.

Facts: Plaintiffs in this case were five farm laborers who pruned grape vines at a piece rate. In January 2009, Plaintiffs filed a suit against their former employer based on alleged violations of various labor laws, including a rest-period claim. Following a trial on the merits, the trial court found in favor of the employer on all causes of action. Plaintiffs appealed to the California Court of Appeal, which reversed the trial court’s judgment as to Plaintiffs’ rest-period claim and derivative cause of action under the California Labor Code Private Attorneys General Act (“PAGA”). On remand, the trial court entered judgment in favor of Plaintiffs on their rest-break claim and PAGA claim and awarded Plaintiffs $416 in unpaid minimum wages for actual time worked during rest breaks and $17,775 in civil penalties. Plaintiffs again appealed, claiming they were entitled to be paid the minimum wage for the actual time that they took rest breaks without pay (the “Bluford theory of recovery”) and an “additional hour of pay” under California Labor Code section 226.7 (the “226.7 theory of recovery”).  The employer cross-appealed, claiming there was insufficient evidence to support the trial court’s damages calculation. 

Court’s Decision: The California Court of Appeal affirmed.  The court found both of Plaintiffs’ theories of recovery to be legitimate—notably, acknowledging that the plain language of section 226.7 covers claims for unpaid rest periods. However, the court then explained that since Plaintiffs had already recovered the minimum wage for the actual time they took rest breaks without pay, both the rule against double recovery and the California Supreme Court’s decision in Murphy v. Kenneth Cole Productions, Inc., 40 Cal. 4th 1094 (2007), dictated that they were not also entitled to a statutory pay premium equal to one hour of pay under section 226.7. The court ultimately found none of the parties’ claims warranted reversal.   

Practical Implications: Employers of piece-rate employees in California face a complicated, and evolving, set of rules regarding their obligation to provide paid rest breaks. This case is an important reminder that employers of piece-rate employees should carefully review their rest-break policies to ensure compliance with California law.


SEIU Local 121RN v. Los Robles Regional Medical Center, No. 19-55185, 2020 WL 5583677 (9th Cir. Sept. 18, 2020)

Summary: The arbitrability of a labor issue, where the relevant collective bargaining agreement includes a broad arbitration clause that is silent on the question of who will decide questions of arbitrability, is to be decided by the court, not the arbitrator

Facts: Los Robles Regional Medical Center (the “Hospital”) entered into a collective bargaining agreement (“CBA”) with SEIU Local 121RN (“SEIU”), which represented registered nurses working at the Hospital. The CBA provided for a three-step procedure to address grievances, with the final step resulting in arbitration. There were exemptions to the grievance process, including certain health and safety issues and certain staffing and workload issues. In September 2017, SEIU filed a grievance asserting that the Hospital placed certain types of patients with nurses who did not have the appropriate training to care for those patients. The grievance also accused the Hospital of violating nurse-to-patient ratios established by state law. The Hospital and SEIU were unable to resolve the grievance, and SEIU notified the Hospital that it was pursuing arbitration. The Hospital responded that the grievance was not arbitrable because it was a staffing issue.  In May 2018, SEIU filed a complaint in the district court along with a motion to compel arbitration. The court held that the CBA was broad enough to authorize the arbitrator—rather than the court—to determine whether the grievance was arbitrable and granted SEIU’s motion to compel. In doing so, the district court reasoned that although First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995), established that a court, not the arbitrator, must make the determination whether the arbitrability of an issue is itself arbitrable when the relevant agreement is silent on that question, United Brotherhood of Carpenters & Joiners of America, Local No. 1780 v. Desert Palace, Inc., 94 F.3d 1308 (9th Cir. 1996), held that labor cases are different than commercial arbitration disputes, and an arbitrator should decide arbitrability as long as the agreement includes a broad arbitration clause. The Hospital appealed.

Court’s Decision: The Court of Appeals for the Ninth Circuit reversed and remanded, explaining that the rationale in Desert Palace is “clearly irreconcilable with the reasoning or theory of intervening higher authority” in Granite Rock Co. v. International Brotherhood of Teamsters, 561 U.S. 287, 300–01 (2010), where the United States Supreme Court expressly rejected the notion that labor arbitration disputes should be analyzed differently than commercial arbitration disputes. The Ninth Circuit held that the district court is responsible for deciding whether SEIU’s grievance is arbitrable and remanded for further proceedings.

Practical Implications: In the rough and tumble world of labor negotiations, it can be easy to overlook seemingly arcane questions like whether an arbitrator or a judge should decide whether an issue is arbitrable in the first place. Employers should not lose sight of this issue and should do their best during negotiations to ensure the resulting collective bargaining agreement addresses who decides arbitrability.