Carroll v. City & Cnty. of S.F., 41 Cal. App. 5th 805, 254 Cal. Rptr. 3d 519 (2019)

Summary: Each alleged reduction of monthly disability retirement benefit payments for discriminatory reasons was continuing violation that reset statute of limitations.

Facts: Plaintiff Carroll started working for defendant City and County of San Francisco when she was age 43. After working for defendant for 15 years, she retired at age 58 due to rheumatoid arthritis. Plaintiff applied for disability retirement in June 2000, defendant granted her request, and she started to receive monthly disability retirement benefit payments thereafter. In 2017, plaintiff discovered that because her disability retirement benefits were partially calculated based on her age at the start of her employment, her payments were less than they would have been if she had been under the age of 40 when hired. Plaintiff filed a complaint with the California Department of Fair Employment and Housing (“DFEH”) in November 2017, alleging that defendant’s policy violated the Fair Employment and Housing Act (“FEHA”) by discriminating against employees on the basis of age. She then sued defendant for age discrimination in violation of FEHA. Defendant demurred, arguing that FEHA’s one-year statute of limitations period began running in 2000, the year defendant granted plaintiff’s disability request. The trial court sustained the demurrer, agreeing with defendant that the complaint filed more than 17 years later was untimely.

Court’s Decision: The California Court of Appeal reversed, siding with plaintiff’s position that each time defendant issued her a disability retirement payment it was allegedly violating FEHA by committing an unlawful employment practice. As a result, each monthly issuance of a disability retirement payment was a continuing violation that restarted the statute of limitations. Thus, plaintiff had a cause of action for the one-year period immediately preceding the date on which she filed her DFEH complaint.

Practical Implications: The continuing violations doctrine discussed by this case can also apply to improper denials of vacation and to ongoing incidents of harassment. Employers can minimize application the doctrine by promptly resolving employee concerns when brought to their attention.

Glynn v. Super. Ct., 42 Cal. App. 5th 47, 254 Cal. Rptr. 3d 772 (2019)

Summary: Employee terminated due to employer’s mistaken belief of total disability may sue for disability discrimination absent showing of employer animus.

Facts: Plaintiff Glynn worked as a pharmaceutical sales representative for defendant Allergan. During his employment, plaintiff developed an eye condition that prevented him from being able to drive to sales calls. He took a medical leave of absence and requested reassignment to a position that did not require driving. Six months later, after many emails to human resources and applications for other internal positions, a temporary benefits department employee, Anne Marie Perosino, mistakenly concluded that plaintiff had transitioned from short-term disability to long-term disability and was unable to return to work with or without reasonable accommodation. Based on this mistake, she erroneously believed that defendant was required to terminate plaintiff under its internal policy, and she notified plaintiff of his termination. Plaintiff, who had neither requested nor been approved for long-term disability benefits, promptly emailed and relentlessly attempted to correct the misunderstanding. When defendant failed to reinstate him, he filed suit. Defendant moved for summary adjudication of six of plaintiff’s eight causes of action. The trial court granted defendant’s motion, and plaintiff filed a petition for writ of mandate challenging the trial court’s ruling.

Court’s Decision: The California Court of Appeal granted the petition in part, reversing the trial court’s order granting summary adjudication of plaintiff’s disability discrimination cause of action. First, it was undisputed that Perosino miscategorized plaintiff as totally disabled and unable to perform any work with or without reasonable accommodation. As a result of this mistake, plaintiff’s employment was terminated. Even if defendant’s mistakes were reasonable and in good faith, an employee should not bear the financial brunt of such a mistake. As a result, a lack of animus does not preclude liability for a disability discrimination claim where, as here, plaintiff provided direct evidence of disability discrimination. Specifically, defendant terminated plaintiff’s employment because of Perosino’s mistaken belief that he was disabled and unable to perform any work. The court also held that the trial court erred in granting summary adjudication of plaintiff’s causes of action for retaliation, failure to prevent discrimination, and wrongful termination in violation of public policy.

Practical Implications: This case emphasizes the importance of making accurate decisions that affect an employee’s employment, perhaps with multiple internal reviews, as an employer can be liable for intentional discrimination without having a discriminatory animosity toward the employee.

O'Grady v. Merch. Exch. Prods., Inc., 41 Cal. App. 5th 771, 254 Cal. Rptr. 3d 494 (2019)

Summary: Service charge imposed on customers must be paid to tipped workers if customers would reasonably believe that it represents a gratuity.

Facts: Plaintiff O’Grady worked as a banquet server and bartender at defendant’s Julia Morgan Ballroom. Defendant had a practice of automatically adding a 21 percent service charge to every food and beverage bill. Plaintiff claimed that customers assumed the service charge was paid to the service staff, but defendant kept part of the service charge and distributed the balance to non-service employees and managers. Plaintiff filed suit, alleging that the service charge was a gratuity under California law, and by failing to distribute it to servers, defendant violated California Labor Code section 351. Defendant argued that a service charge can never amount to a gratuity. The trial court agreed and sustained defendant’s demurrer.

Court’s Decision: The California Court of Appeal reversed, holding that the trial court erred in its finding that a service charge can never be a gratuity. The purpose of Labor Code section 351 is to ensure that employees, not employers, receive the full benefit of gratuities that patrons intend for the benefit of employees who serve them. Allowing defendant to retain the service charge for itself, rather than distribute it to service employees, would contradict the purpose of section 351. The trial court’s heavy reliance on previous case law was misplaced as other cases were distinguishable. Moreover, a reasonable customer would expect the gratuity here to go to service employees and not be retained by defendant.

Practical Implications: The law governing gratuities and service charges has been settled in California for a long time. Companies in the hospitality industry would be wise to periodically review their practices in light of these laws.