In The News

Daily Journal Features Year-End Review of Employment Law by Principal Dave Ezra

(filed under: In The News | December 19, 2012)

California employers rack up ‘wins’ in 2012 decisions
By David B. Ezra

California’s legal environment is challenging for employers. But some recent judicial decisions are making the legal environment more manageable. Earlier this year, the state Supreme Court decided Brinker Restaurant Corp. v. Superior Court, 53 Cal. 4th 1004 (2012). Employers applauded Brinker’s common sense holding that employers who make appropriate meal periods available need not go so far as to ensure that employees actually use the meal opportunities. While Brinker received the most attention, it was not the only pro-employer decision that was handed down this year.

Time clock rounding.

See’s Candy Shops, Inc. v. Superior Court, 210 Cal. App. 4th (2012), was an important time clock rounding decision. A class action lawsuit challenged See’s time clock rounding policies. See’s rounded to the nearest 10th of an hour and it had a stated policy of allowing employees to clock in or out 10 minutes before or after the end of a shift. The class argued that California Labor Code Sections 204 and 510’s references to “all wages” and “any work” should be read to forbid virtually any rounding. The appellate court was not impressed, stating: “An employer is entitled to use the nearest-tenth rounding policy if the rounding policy is fair and neutral on its face and it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.”

The court did suggest that statistical evidence showing that the rounding policies generally favored employees could constitute an effective defense. However, if an employer strongly disciplines de minimus late starts, such that employees regularly arrive and clock in early and almost never arrive and clock in late, the facially neutral rounding policy could unlawfully result in employees disproportionately working a few minutes off the clock time each day. In See’s there was no convincing disproportionality evidence. In fact, the evidence reflected the opposite – that most employees benefited from rounding.

Wrongful termination.

In Dutra v. Mercy Medical Center, 209 Cal. App. 4th 750 (2012), the court terminated a wrongful termination lawsuit. Mercy Medical Center said it terminated Michelle Dutra because she gossiped while on duty, altered a check, and falsified her time card. Dutra, however, claimed she was wrongfully terminated for making a worker’s compensation claim.

Dutra argued that Labor Code Section 132a articulated a public policy against employer retaliation in the face of an employee’s worker’s compensation claim. Section 132a affords a remedy when an employee is fired for making a worker’s compensation claim, but that remedy is before the Worker’s Compensation Appeals Board – not in superior court.

While acknowledging that Section 132a declares that it is the “policy of this state that there should not be discrimination against workers who are injured in the course and scope of their employment,” the court did not allow a violation of Section 132a to support a common law action for wrongful termination in violation of a public policy.

The court in Dutra distinguished City of Moorpark v. Superior Court, 18 Cal. 4th 1143 (1998). Moorpark held that Section 132a does not provide an exclusive remedy against disability discrimination. Citing Moorpark, the appellate court decided that where a public policy includes substantive limitations on the available remedies, “these limitations also circumscribe the common law wrongful discharge cause of action.” The court in Dutra concluded that because Section 132a “establishes a specific procedure and forum for addressing a violation,” allowing an employee to “pursue a tort cause of action based on a violation of Section 132a would impermissibly give [the employee] broader remedies and procedures than those provided by the statute.” Therefore, the trial court had correctly dismissed Dutra’s lawsuit.

The state Supreme Court recently indicated that it is extending the time to grant or deny review of Dutra through Jan. 24, 2013. But even if review is denied, Dutra does not mean that California employers can terminate employees who make worker’s compensation claims with impunity. In addition to Section 132a, other common causes of action may be available to an employee who is terminated after an on-the-job injury. As the court explained, Dutra “chose not to amend her complaint. It was [Dutra] that through declining to amend her complaint foreclosed all possible remedies except the [Worker’s Compensation Appeal Board].”

Employment contracts.

In Touchstone Television Productions v. Superior Court, 208 Cal. App. 4th 676 (2012), the court addressed an employer’s refusal to extend an employment contract. The plaintiff was a television actress who appeared in a show known as “Desperate Housewives.” She had a one-season agreement, and the show’s producers had an exclusive option to renew her contract annually for up to six additional seasons.

The contract had been renewed several times. During the fifth season the actress was allegedly involved in a “battery” incident involving the show’s creator, and she complained to the producers – who then decided not to exercise the season six option. The actress subsequently appeared in three additional episodes. Her character was then “killed off” in a fictional car accident.

On a writ petition, the appellate court held that there could be no wrongful termination suit. The trial court “erred when it denied [the producers’] motion for a directed verdict. [The actress] cannot pursue a cause of action for wrongful termination in violation of public policy because, contrary to what she claims, she was not fired, discharged or terminated.” Instead, the producers had merely elected not to renew the option.

The court drew a distinction between circumstances where the employee was allowed to finish out the term of the existing contract and circumstances where an employer ends the employment in the middle of the contractual term.

The court did allow the actress to pursue a statutory claim under Labor Code Section 6310 – which generally prohibits employers from discharging employees who complain about unsafe working conditions.

Rest breaks and fees.

Finally, even an employer’s loss offered good news. In Kirby v. Immoos Fire Protection, Inc., 53 Cal. 4th 1244 (2012), the plaintiff sued numerous defendants, alleging violation of the obligation to provide rest breaks. The plaintiffs settled with some defendants and voluntarily dismissed others with prejudice. Following its dismissal, Immoos moved for (and received) an award of attorneys’ fees.

The state Supreme Court reversed. The court’s decision in Murphy v. Kenneth Cole Productions, Inc., 40 Cal. 4th 194 (2007), had identified the “additional hour pay” an employee receives from missed rest breaks as a “wage” for statute of limitations purposes. However, Kirby found that the “additional hour pay” was [not] a wage for purposes of assessing attorney fees. The court rejected the employee’s argument that attorneys’ fees could only be available under Labor Code Section 1194 (which offers one-way fee shifting) because the “additional hour pay” constitutes a statutory minimum wage. Second, the court concluded that payments made for missed rest breaks would not constitute an “action brought for the nonpayment of wages” under Labor Code Section 218.5’s two-way fee shifting provision.

Despite the employer’s loss, Kirby’s holding reduces the incentive for employees (and their attorneys) to pursue recovery of allegedly missed rest breaks.

2012 was good to California employers, at least in terms of several published judicial opinions. It will be interesting to see if the trend continues in 2013.

David B. Ezra is a principal in Berger Kahn ALC’s Orange County office. He can be reached at