Disparate Treatment Claims Under Title VII May Be Established Without Showing that the Employer has “Actual Knowledge” of the Need for an Accommodation

EEOC. v. Abercrombie & Fitch Stores, Inc. (2015) 575 U.S. ___

A prospective employee, a practicing Muslim, was denied employment because the employer believed her headscarf would conflict with the store’s “look policy,” which banned “caps.”  The employer believed, but did not know, that the prospective employee wore the headscarf because of her faith.  The Equal Employment Opportunity Commission (EEOC) sued the company for a violation of Title VII.  The district court granted the EEOC summary judgment on the issue of liability, but the tenth circuit reversed, concluding that ordinarily an employer cannot be liable under Title VII for failure to accommodate a religious practice unless the prospective employee provides the employer with actual knowledge of the need for an accommodation.

The United States Supreme Court reversed, holding that a job applicant can show disparate treatment merely by showing that her need for an accommodation was a motivating factor in the employer’s decision.  The Court explained that motive and knowledge are separate concepts.  The disparate treatment provision of Title VII forbids employers to (1) “fail … to hire” an applicant (2) “because of” (3) “such individual’s … religion.”  Title VII’s causation standard prohibits even making a protected characteristic a “motivating factor” in employment decisions.  There is no knowledge requirement.  (This is unlike the Americans with Disabilities Act, which defines discrimination to include an employer’s failure to make “reasonable accommodations to the known physical or mental limitations” of an applicant.)  Further, the Court rejected the company’s argument that its neutral policy cannot constitute “intentional discrimination” because Title VII “does not demand mere neutrality with regard to religious practices … [but rather] gives them favored treatment….”

Notably, the ruling did not determine whether an employer violates the law by failing to hire someone who follows a religious practice, where the employer is completely ignorant of the religious practice.  Yet, in a footnote, Justice Antonin Scalia stated that “[w]hile a knowledge requirement cannot be added to the motive requirement, it is arguable that the motive requirement itself is not met unless the employer at least suspects that the practice in question is a religious practice.”

A Single PAGA Cause of Action Cannot be Split into an Arbitrable Individual Claim and a Non-Arbitrable Representative Claim

Williams v. Sup. Ct. (2015) __Cal.App.4th__

An employee filed a single-count representative action under the Private Attorney General Act (PAGA) alleging the employer’s failure to provide off-duty rest periods to him and similarly aggrieved employees.  In response, the employer moved to enforce the employee’s waiver of his PAGA claim or, alternatively, staying the PAGA claim filed on behalf of the other employees, and sending his “individual claim” to arbitration pursuant to the parties’ arbitration agreement.  The trial court denied the motion to enforce the PAGA waiver as barred by the California Supreme Court’s prevailing decision in Iskanian v. CLS Trans. Los Angeles, LLC, 59 Cal.4th 348, but granted the relief requested as to the individual claim, allowing it to be arbitrated.

The appellate court agreed that the PAGA waiver was unenforceable under Iskanian, but reversed the trial court’s order as to the individual claim.  It noted that several courts have held that a PAGA claim is a single claim, and does not consist of a class claim and an individual claim.  Accordingly, a PAGA claim cannot be split into two separate representative and individual claims.  The court also rejected an argument that Iskanian was inapplicable in the present case because the employee could—under the parties’ agreement—opt out of the PAGA waiver, while in Iskanian the waiver was a condition of employment.  Because current case law holds that PAGA waivers violate public policy, the court found the mandatory or voluntary nature of the parties’ agreement irrelevant; namely, private agreements could not waive public rights.

The Federal Arbitration Act Mandates Arbitration of Arbitrable Employment Claims even though the Motion to Compel Arbitration was Filed 14 Months into the Litigation

Khalatian v. Prime Time Shuttle (2015) __Cal.App.4th__

A driver who entered into an independent contractor agreement with an airport shuttle service sued the company, alleging he was an employee and misclassified as a contractor.  The trial court denied the company’s motion to compel arbitration on the grounds that (1) the company had waived arbitration by litigating the matter for 14 months, and (2) the California Labor Code violations asserted by the driver could not be arbitrated.

The appellate court first found that the trial court erred in not considering the Federal Arbitration Act (FAA), which applied in this case to mandate arbitration.  While Labor Code section 229 provides that claims to collect unpaid wages under Labor Code sections 200-244 belong in court, the FAA governs and preempts section 229 where the dispute involves interstate commerce (but the court noted that this case did not involve a PAGA claim which would not be arbitrable).  Citing a similar airport shuttle case, the court found that the driver’s transport of passengers travelling from numerous states, as well as the company’s use of the internet to advertise and sell its services online in many states constituted interstate commerce under the FAA.

The appellate court also found that the right to arbitrate was not waived as the driver was not prejudiced by the actions taken by the company in the preceding 14 months of litigation.  Namely, a demurrer filed by the company was taken off calendar when the parties agreed to allow an amended complaint.  Also, the one set of interrogatories propounded by the company were responded to with blanket objections, and the driver produced only 177 pages of documents in response to a document request by the company.  The court emphasized that the party seeking to establish a waiver of arbitration “bears a heavy burden of proof,” and delay or expenses incurred absent any prejudice to that party is insufficient to support a waiver.  Here, the driver failed to prove that he provided any strategic information to the company or information that he would not be required to provide in arbitration.

Court has Discretion Regarding Award of Costs to Prevailing Party Defendant in Fair Employment and Housing Act Cases, but May Only Award Costs If Plaintiff’s Case was Objectively Baseless, and Such Costs May be Denied or Reduced for Undue Hardship

Roman v. BRE Properties, Inc. et al. (2015) __ Cal.App.2d __

Plaintiffs (Gabriel Roman and his live-in caregiver/former wife) appealed from the trial court’s grant of summary judgment and award of costs to defendants in this disability discrimination case brought against an apartment complex that denied them the opportunity to view a unit, allegedly because of Mr. Roman’s disability.

The trial court awarded defendants the full $4,994.98 they requested in costs, noting that “[a]s prevailing party under Civil Procedure Code sections 1032 and 1033.5, BRE is entitled to an award of allowable costs as a matter of right.”  The trial court determined that the “frivolous, unreasonable or groundless” standard applied in Fair Employment and Housing Act (FEHA) cases only to an award of attorneys’ fees, not costs.  The trial court further ruled that California law does not exempt an unsuccessful indigent party from an award of costs, and there was no evidence of Ms. Roman’s indigency in any event.

The appellate court affirmed the grant of summary judgment but reversed and remanded the order awarding costs for further proceedings in light of the Supreme Court’s recent decision in Williams v. Chino Valley Independent Fire District (2015) 61 Cal.4th 97, which held (1) that Government Code section 12965(b) vests discretion in the trial courts regarding an award of costs to the prevailing party in a FEHA action, as well as with respect to an award of attorneys’ fees but (2) that the trial court’s discretion in awarding those costs or attorneys’ fees is limited by the rule established in Christiansburg Garment Co. v. EEOC (1978) 434 U.S. 412?that an unsuccessful FEHA plaintiff should not be ordered to pay defendant’s fees or costs unless plaintiff brought or continued the litigation without an objective basis for believing it had potential merit. 

Finally, the appellate court agreed with plaintiffs that the trial court has discretion to deny or reduce a cost award when a large award would impose an undue hardship on the plaintiff.  (There was no evidence in the record that Ms. Roman was indigent, but the appellate court found that plaintiffs should be permitted to introduce additional evidence regarding financial hardship on remand.)

Appellate Court Determines Joint Employers Can be Held Liable for Employee Misclassification

Noe v. Superior Court (2015) 237 Cal. App. 4th 316

Anschutz Entertainment Group (AEG) contracted with Levy Premium Foods (Levy) to manage the food and beverage services at several of AEG’s California entertainment venues.  Levy contracted with Canvas Corporation (Canvas) to provide workers to sell food and beverages at AEG venues.  When retained, Canvas classified these workers as independent contractors.

The workers filed a wage-and-hour class action against AEG, Levy and Canvas contending all entities were liable under Labor Code Section 226.8 for failing to pay minimum wage and willfully misclassifying them as independent contractors.  Section 226.8(a)(1) provides it is “unlawful for any person or employer to engage in . . . [the] willful misclassification of an individual as an independent contractor” and defines “willful misclassification” as “avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor.”  Section 226.8 imposes civil penalties of up to $25,000 for each individual who has been willfully misclassified as an independent contractor.

AEG and Levy filed motions for summary judgment, arguing they could not be held liable under Section 226.8 because they did not make the classification decisions—they were made by Canvas.  The trial court denied the motions on other grounds, but agreed the workers could not pursue a Section 226.8 claim against AEG and Levy because these entities did not make the classification decisions. 

The workers then filed a petition for writ of mandate, appealing the decision.  The appellate court agreed with the workers’ position that Section 226.8 applied to the employer who made the classification decision and joint employers who knowingly assented in the co-employer’s misclassification decision.

However, the appellate court ultimately ruled that summary adjudication was properly granted on the workers claim seeking to collect a civil penalty under Section 226.8 because that cause of action can only be brought by the State’s labor law enforcement agencies or through a PAGA action.  It cannot be enforced through a direct private action.