This month’s key California employment law cases involve wage and hour and discrimination issues.

Wage & Hour - Batze v. Safeway, Inc., 10 Cal. App. 5th 440, 216 Cal. Rptr. 3d 390 (2017)

Summary: While determination of exempt or nonexempt status should be made on weekly basis, factfinder may use evidence from weeks in which evidence is available to make reasonable inferences for weeks in which evidence is not available.

Facts: Plaintiffs, grocery store assistant managers, brought individual claims for unpaid overtime against defendant grocery store after class certification was denied. Plaintiffs argued they were misclassified as exempt because a majority of their time was not spent performing managerial duties. After a bench trial, the trial court found in favor of defendants, finding that plaintiffs spent more than fifty percent of their time performing managerial tasks, and met all other qualifications for exempt status. Plaintiffs appealed, arguing that because defendants bore the burden of proof, and because the ratio of nonexempt to exempt activities must be determined on weekly basis, no inferences could be made regarding weeks in which defendants produced no testimonial evidence regarding plaintiffs’ activities.

Court’s Decision: The California Court of Appeal affirmed, finding that substantial evidence supported the trial court’s decision. Although an employee’s exempt or nonexempt status may vary each week, the trier of fact can make reasonable inferences about an employee’s activities in earlier or later periods, especially when an employee’s duties have not changed significantly over time. Defendants produced sufficient evidence to enable the trial court to make reasonable inferences about those periods during which evidence was not available.

Practical Implications: Since an employer bears the burden of proof to establish exempt status, an employer should ideally have weekly evidence of an employee’s activities. When this is not practicable, this decision allows a factfinder to make reasonable inferences to fill in gaps in this evidence.

Discrimination - Santillan v. USA Waste of Cal., Inc., 853 F.3d 1035 (9th Cir. 2017)

Summary: Incorrect interpretation of law contrary to public policy is not legitimate business reason to satisfy employer’s burden of proof to show action is not discriminatory or retaliatory.

Facts: Plaintiff drove a garbage truck driver for defendant. Although he was rarely disciplined during his thirty-year tenure, defendant terminated plaintiff in 2011 for allegedly causing, or being involved in, four accidents in a twelve-month period. Plaintiff, who was fifty-three at the time, was replaced by a driver thirteen years younger with substantially less experience. After his termination, plaintiff filed a grievance under defendant’s collective bargaining agreement. During the grievance process, defendant received hundreds of letters from local homeowners in support of plaintiff. In 2012, plaintiff and defendant reached a settlement whereby plaintiff would be reinstated if he passed a drug test and criminal background check, and provided documentation of his right to work in the United States. While plaintiff passed the drug test and background check, he was unable to provide proper documentation of his work eligibility. Defendant then notified him that because he had failed to provide proof of his right to work in the United States, in violation of the Immigration Control and Reform Act (“IRCA”) and the settlement agreement, he was again being terminated. After his second termination, plaintiff filed suit in state court alleging age discrimination and retaliation, which was removed to federal court. The federal district court granted defendant’s motion for summary judgment, holding that plaintiff had failed to present a prima facie case of discrimination, and that defendant’s termination of his employment for failure to provide proof of work authorization was legitimate and not retaliatory.

Court’s Decision: The Court of Appeals for the Ninth Circuit reversed, holding that defendant failed to provide a legitimate business reason to rebut plaintiff’s prima facie showing of discrimination and retaliation. First, plaintiff’s testimony that he was one of five older employees to be terminated, along with evidence of the age and experience gap between plaintiff and his replacement, were sufficient to establish a prima facie case. Second, plaintiff was exempt from IRCA’s requirements, and making plaintiff’s reinstatement contingent on his immigration status was against public policy. Defendant could not rely on an incorrect view of the law or a violation of public policy as a legitimate reason for terminating plaintiff’s employment.

Practical Implications: An employer must carefully consider its reasons for termination, especially if based on its interpretation of a particular law. Under this decision, a misreading of the law, even if inadvertent, will bar an employer from relying upon it as a legitimate business reason for the termination.