Labor & Employment Law Blog

1. Summary of the Ruling

In Gonzalez v. Nowhere Beverly Hills LLC, 2024 WL 4948533 (Dec. 3, 2024), the California Court of Appeal for the Second District held that plaintiff-employees cannot simultaneously allege their employers’ corporate subsidiaries and parent companies acted as “joint employers,” while also attempting to avoid arbitration with these related entities by arguing they were not parties to the employment contract and arbitration agreement.

In the recently decided Howell v. State Department of State Hospitals, 2024 WL 4997719 (December 5, 2024), the trial court and court of appeal upheld a Scrooge-like verdict by a jury that resulted in Ms. Howell’s receiving NO emotional distress damages and limited attorneys’ fees even though the jury found she had been discriminated against based on a mental disability.  A closer examination of why Ms. Howell found a lump of coal in her holiday stocking is merited.

On April 17, 2024, the U.S. Supreme Court issued a decision which will make it easier for employees to establish discrimination under Title VII of the U.S Civil Rights Act of 1964. In the case of Muldrow v. City of St. Louis (USSC Case No. 22-193), the Court held that an employee need only show that an employment action brought about "some harm to an identifiable term or condition of employment," as opposed to "materially significant disadvantage” in those terms or conditions. The Court expressly acknowledged that this is a less burdensome standard than those which had been adopted by federal appellate courts in the past, and that "many cases will come out differently" under this new standard. 

Given the current state of the economy, many employers are considering reductions in work hours and potential layoffs.  As businesses consider taking action to save money and prevent potential closure, they must do so carefully in order to manage and reduce risk of future litigation related to its actions.  This blog discusses the appropriate steps that a business must take when conducting a reduction in force (“RIF”).

Recent mass layoffs by tech companies, such as Twitter and Meta, have made headlines.  The massive layoff by Twitter on November 4, 2022 has already resulted in a lawsuit filed by former Twitter employees for violations of the federal Worker Adjustment and Retraining Notification (“WARN”) Act.  The WARN Act requires certain employers to provide 60-day advance notice in cases of qualified plant closings and mass layoffs, allowing employees and their families with transition time to seek alternate employment or skills training.

Often it is said that “the best result in mediation is the one that makes everyone equally unhappy.”  Even so, experience proves that the party who usually comes out best in mediation is the one who is most prepared.  This article provides some common sense, practical tips to help with that preparation.

Mediation has become an essential part of litigation because the risks of going to trial are so considerable.  A defendant that cannot resolve a case before trial runs the risk of a court or jury awarding substantial damages to the plaintiff.  If the plaintiff recovers anything at all, the defendant also may have to pay the plaintiff’s attorneys’ fees and costs.  Even when defendants win (and they do), the fees they pay to their own counsel to secure a defense win are substantial.  Plaintiffs also are at risk.  While many plaintiffs may have contingent fee arrangements with their own counsel, a losing plaintiff likely will be on the hook for significant hard costs incurred in litigation by their own counsel.  Even worse, they can be responsible for the defendant’s legal costs, and on rare occasions, attorneys’ fees.

The federal Fair Credit Reporting Act (“FCRA”) permits background checks for employment purposes, so long as employers obtain authorization from and provide the appropriate “stand-alone” disclosure to the applicant or employee regarding the background check, among other requirements. Willful violations of the FCRA’s stand-alone disclosure requirement can lead to recovery of statutory damages ranging from $100 to $1,000 per violation. Thus, a central issue in FCRA cases is whether the employer’s violation is “willful,” which requires a showing that the defendant’s conduct was “intentional” or “reckless.” 

On October 7, 2021, Governor Newsom signed SB 331 to place additional restrictions on employers offering severance agreements and settling employment claims alleging harassment, discrimination or retaliation based on purported violations of the Fair Employment and Housing Act (“FEHA”). The new law, which is effective January 1, 2022, expands California’s current legal restrictions under California Code of Civil Procedure Section 1001. Currently, CCP section 1001 prohibits various confidentiality and non-disparagement clauses in settlement agreements, specifically those that would prevent disclosure of factual information relating to claims of sexual assault, sexual harassment, workplace harassment or discrimination based on sex, or retaliation against a person for reporting such acts.

Even seemingly minor wage and hour violations present a very real threat of crippling or potentially ruinous liability for California’s employers when assessed in class and Private Attorneys General Act (“PAGA”) representative action lawsuits. To make matters worse, plaintiffs are increasingly targeting individual owners and agents in addition to their corporate employer, which begs the question: When can individuals be held personally liable in wage and hour lawsuits?