What Employers Can Expect from the California Supreme Court in 2015

By lfsuser on February 27, 2015

alifornia may be known as an employee-friendly state, but every once in a while the California Supreme Court will render a decision favorable to employers. In 2014, the Supreme Court’s ruling in Duran v. U.S. Bank indicated that certifying wage and hour claims had become far too easy for plaintiffs to obtain. The Duran decision now requires trial courts to consider whether the trial of a certified claim can be one that is manageable – an issue that has been largely neglected until this decision. In another (somewhat) employer-friendly case, Iskanian v. CLS Transportation Los Angeles, LLC, the California Supreme Court followed the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion in ruling that an class action waivers contained in arbitration agreements are enforceable. At the same time, Iskanian also held that a claim under the Private Attorneys General Act of 2004 (“PAGA”) is not subject to mandatory arbitration and therefore, an employee’s right to file a PAGA claim cannot be waived by arbitration.

2015 promises to bring further changes in the following areas of employment law:

Arbitration Agreements

In a pair of cases currently pending before the California Supreme Court, further clarification regarding arbitration agreements is anticipated. The first of those cases, Baltazar v. Forever 21, Inc., No. S208345, will address whether employees are free to challenge the enforceability of arbitration agreements on the ground that the agreement is unconscionable. The Court noted this possibility in its Iskanian decision, and Baltazar is expected to more fully address this issue. The second arbitration case, Sandquist v. Lebo Automotive, Inc., No. S220812, the California Supreme Court will tackle the issue of whether the trial court or the arbitrator must decide whether the parties agreed to class arbitration when the arbitration agreement itself is silent on the issue of class action.

Joint Employment Relationship

In 2014, the California Supreme Court held in Patterson v. Domino’s Pizza, LLC that a franchisor was not liable for the acts of its franchisee’s supervisor because no joint employment relationship existed between the franchisor and franchisee. The Court found that the franchisor did not engage in the day-to-day activities over the franchisee’s operations in order to create an employment relationship. This issue will be revisited in State ex rel. Department of California Highway Patrol v. Superior Court, No. S214221.

Class Certification Standard

In Dynamex Operations West, Inc. v. Superior Court, No. S222732, the California Supreme Court will address the Wage Order’s definition of employment within the context of determining the appropriate standard for class certification. Dynamex is an important case for employers because the lower court arguably created a different definition of “employee” for determining if an individual is misclassified as an independent contractor with respect to violations of the Wage Orders. The issue will now be whether the definition of an employee can be determined either by the Wage Order’s definition of employee or by the common law test for distinguishing between employees and independent contractors.

Standard for Employer to Recover Costs in FEHA Cases

Finally, in Williams v. Chino Valley Independent Fire District, No. S213100, the California Supreme Court will determine whether the employer in a case brought under the Fair Employment and Housing Act (FEHA) must show that the employee’s claim was frivolous, unreasonable, or groundless in order to recover its “ordinary costs.”

We will provide you with updates as further developments in these and other cases occur.

This document is intended to provide you with general information about legal developments. The contents of this document are not intended to provide specific legal advice. If you have questions about the contents of this alert, please contact Hannibal Odisho at 415-697-3463 or at hodisho@aghwlaw.com. This communication may be considered advertising in some jurisdictions.