Tag Archives: Employment

McDonald’s On The Hook For Class Certification Of Wage And Hour Claims Under Ostensible Agency Theory

Emily Leahy 
Emily Leahy
July 18, 2016

Despite finding that as a matter of law McDonald’s was not directly liable as a joint employer, a California federal judge granted class certification to McDonald’s workers, saying the claims against McDonald’s Corp. can proceed on a classwide basis under a theory of ostensible agency.  Under this theory, McDonald’s could be liable because employees reasonably believed they were employed by McDonald’s.

The Facts

The workers filed the class action in 2014, alleging a variety of wage and hour violations by defendant the Edward J. Smith and Valerie S. Smith Family Limited Partnership (“Smith”), which owns and operates five restaurants in California under a franchise agreement with McDonald’s. Plaintiffs also sued McDonald’s on direct and vicarious liability grounds.

McDonald’s moved for summary judgment on the grounds that it was not a joint employer. The Court granted summary judgment on plaintiffs’ direct liability theories, finding that McDonald’s is not directly liable as a joint employer with the Smiths, but denied it on the issue of whether McDonald’s may be liable on an ostensible agency basis. Ostensible agency exists where (1) the person dealing with the agent does so with reasonable belief in the agent’s authority; (2) that belief is “generated by some act or neglect of the principal sought to be charged,” and (3) the relying party is not negligent. Kaplan v. Coldwell Banker Residential Affiliates, Inc., 59 Cal. App. 4th 741, 747 (1997).

Plaintiffs then settled with the Smiths, leaving the McDonald’s entities as the last standing defendants.

Plaintiffs moved for certification of a class to pursue claims for: (1) miscalculated wages; (2) overtime; (3) meals and rest breaks; (4) maintenance of uniforms; (5) wage statements; and (6) related derivative claims.

Ostensible Agency Not A Bar To Class Certification

McDonald’s argued that allegations of ostensible agency are incapable of being resolved on a classwide basis because they involve individualized questions of personal belief and reasonable reliance on an agency relationship.

The court disagreed, holding that ostensible agency does not demand unique or alternative treatment, and “certainly does not stand entirely outside Rule 23 as impossible to adjudicate on a classwide basis.”

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CA Supreme Court Enforces Broad, Non-Negotiable Arbitration Clause In Employment Agreement

Neil Bardack 
Neil Bardack
March 31, 2016

The California Supreme Court surprisingly upheld an arbitration agreement in a pre-printed, non-negotiable employment agreement which broadly required the employee to arbitrate any employment-related disputes with the company in the case of Baltazar v. Forever 21 (S208345, March 28, 2016). Although the employee, Maribel Baltazar, at first refused to sign the agreement as she did not want to be bound to arbitrate, she begrudgingly relented, signed and was hired. She later resigned and sued the company for sexual harassment, sex discrimination, and retaliation.

The trial court denied a motion to compel arbitration, finding procedural unconscionability because the employee was required to sign a pre-printed, non-negotiable agreement as a condition of employment and she was not provided with a copy of the arbitration rules. The trial court also found substantive unconscionability because the agreement gave the employer greater protections with the right to seek injunctive relief to protect trade secrets and required arbitration under the rules of the American Arbitration Association even if the court found the agreement unenforceable. This was an expected result in a state trial court based upon the existing body of appellate decisions which are hostile to forced arbitration in employment and consumer settings.

However, the Court of Appeal reversed the trial court. Although agreeing that the employee did not have meaningful choice in signing the employment agreement, the appellate court disagreed with the trial court’s conclusion that the agreement was substantively unconscionable because it permitted either party to seek injunctive relief, even if such relief more often served the interests of the employer rather than the employee.  Further, even if the AAA rules were found unenforceable, they could still could arbitrate under the California Arbitration Act.

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Hanson Bridgett Brings Home Appellate Victory for California Employers, Defeating ‘Boss-ectomy’ Claims

Adam Hofmann 
Adam Hofmann
May 28, 2015

California employers have been facing increasing incidents of so-called “boss-ectomy” claims, in which an employee claims to be disabled as a result of anxiety, depression, or other mental condition caused by the stress of working for a particular supervisor. As a result of her condition, the employee asserts a right to extended leave and a change of supervisor as an accommodation for her disability. Tuesday’s decision in Higgins-Williams v. Sutter Medical Foundation should put an end to that.

Applying the well-established standard for demonstrating a disability under the Americans with Disabilities Act, federal courts have universally concluded that an employee’s inability to work with a particular supervisor is not a “substantial limitation” on a major life activity and, therefore, is not a disability protected by the ADA. (See, e.g., Kennedy v. Dresser Rand Co. (2nd Cir. 1999) 193 F.3d 120; Gaul v. Lucent Technologies, Inc. (3rd Cir. 1998) 134 F.3d 576; Weiler v. Household Fin. Corp. (7th Cir. 1996) 101 F.3d 519.) California plaintiffs, however, have asserted that an employee’s inability to work with an assigned supervisor satisfies the lesser standard for demonstrating a disability under California’s Fair Employment and Housing Act, which recognizes conditions that merely limit—as opposed to substantially limit—a major life activity.

Continue reading Hanson Bridgett Brings Home Appellate Victory for California Employers, Defeating ‘Boss-ectomy’ Claims

Sidestepping Sexual Harassment Allegations at Startups

Emily Taylor 
Emily Taylor
May 20, 2015

An article that appeared on SFGate, “Techies flock to Mission Control, S.F. members-only sex club,” discusses the activities of some tech workers in San Francisco, including several described startup founders, all in their 20s and 30s, which if discussed in the workplace, could quickly lead to situations that might result in sexual harassment claims. While the article discusses an extreme example, other activities and conversations that may seem relatively inoffensive have the potential to lead to allegations of harassment and costly litigation.

A startup may begin with a few friends working on an idea together. In such a collaborative environment, the lines between supervisors and subordinates and employees’ personal and professional lives, may blur. Coworkers may go to a bar together for drinks after work. They may also engage in joking or teasing or discuss with each other aspects of their personal lives, such as romantic and family relationships. Nothing is inherently wrong with this, but the potential for legal headaches arises when that group of coworkers includes a mixture of supervisors and subordinates and especially if it includes a startup’s founders. Employees may interpret certain comments or questions about their romantic or family lives as harassing, and the scene is set for a lawsuit.

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Defending Discrimination Lawsuits in Silicon Valley Before They Are Filed

Emily Taylor 
Emily Taylor
April 6, 2015

Employment policies and procedures are often an afterthought when starting a tech company, but they could mean the difference between success or failure.  Even well-established tech companies are learning their lessons the hard way.

A lawsuit filed in March by a former computer engineer at Twitter serves as a wake-up call for tech companies to have clear, written, nondiscriminatory, employment policies and procedures and to train supervisors on those policies.  These simple steps could prevent costly employment discrimination lawsuits altogether, or at a minimum, enhance the defensibility of such cases.

Implementing equal employment opportunity and anti-discrimination policies early as well as the consistent enforcement of such policies help promote a non-discriminatory culture as a company develops.

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