Continuing what has become the new normal, the courts churned out an astonishing number of employment-law decisions during the past year – often multiple such decisions per day. This article attempts to “cherry-pick” and then briefly summarize not just the most significant employment cases but also those that are of the most utility to the plaintiff-employment practitioner. Continuing what has become the new normal, the courts churned out an astonishing number of employment-law decisions during the past year – often multiple such decisions per day. This article attempts to “cherry-pick” and then briefly summarize not just the most significant employment cases but also those that are of the most utility to the plaintiff-employment practitioner.

Legislation

Although legislation falls outside the purview of this article, one piece of legislation in particular merits attention – the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” (“EFASASHA”), long-championed by Senator Kirsten Gillibrand (D-NY). On February 7, 2022, the U.S. House of Representatives passed EFASASHA by a vote of 335 to 97 (only Republicans voted against the Act). On February 10, 2022, the Senate passed the Act by a voice vote. The Act has seismic consequences for employment law as it bars the enforcement of most pre-dispute forced arbitration provisions in cases alleging sexual assault or sexual harassment. Once President Joseph R. Biden Jr. signs the Act into law (as he has promised to do), it will apply to all pre-dispute arbitration clauses (including those in contracts executed before the law’s enactment).

The law will also invalidate pre-dispute agreements that waive an employee’s right to participate in a joint, class or collective action in court, arbitration or any other forum that relates to a sexual assault or sexual harassment dispute.

Moreover, if a dispute arises about whether a particular claim qualifies as a “sexual assault dispute” or “sexual harassment dispute,” then a court, not an arbitrator, is to answer that question, even if a contractual term exists to the contrary. Unfortunately, EFASASHA is quite narrow in scope as it does not:

1. prohibit forced arbitration provisions outright; instead, it provides what amounts to an “election of remedies,” through which alleged victims can either arbitrate their claims or instead proceed to court; nor
2. apply to forms of discrimination or harassment other than sexual assault and sexual harassment.

Hopefully, Congress will eventually amend the Federal Arbitration Act to expressly provide that it does not cover employment or consumer disputes.

U.S. Supreme Court

Unlike in past years, the Supreme Court issued just two employment-related decisions along with another decision that indirectly impacts employment practitioners.

National Federation of Independent Business v. Department of Labor, Occupational Safety and Health Administration, 2022 WL 120952 (2022)

In perhaps the most consequential recent decisions affecting workers, the U.S. Supreme Court granted a stay of the Occupational Safety and Health Administration’s (“OSHA”) emergency temporary standard requiring all employers of 100 or more individuals to mandate either vaccination for COVID-19 or weekly testing and indoor masking for their employees. The federal agency estimated that over 6,000 lives would be saved within six months of implementing the rule, making the decision a life-and-death one for this nation’s workers.

In a decision penned by Justice Gorsuch (who refuses to wear a mask during oral argument forcing some of his colleagues to appear remotely), the Court concluded that OSHA’s mandate to protect workers from hazards on the job is limited to hazards that uniquely arise in the employment context. The Court indicated it was the proper role of Congress and several states to implement such sweeping policies.

Just such a state-level mandate implemented by the California Occupational Safety and Health Standards Board was upheld in Western Growers Association v. Occupational Safety and Health Standards Board, 2021 WL 6426429 (2021) against attack by the Business Roundtable.

In a related decision, Biden v. Missouri, 2022 WL 120950 (2022), the Supreme Court found that the Secretary of Health and Human Services is empowered to condition the receipt of Medicare and Medicaid funds on requiring health care employers to implement a vaccine mandate for health care staff, finding that the safety of patients in this medical context was sufficient to justify mandatory vaccination regimes.

Van Buren v. United States, 141 S.Ct. 1648 (2021)

Employers and their counsel routinely seek leverage against employees by arguing that they have engaged in criminal activity (a violation of the Computer Fraud and Abuse Act) if they have improper motives in obtaining information from their employers’ computer systems even if that information is otherwise available to them. In Van Buren, the Supreme Court held that the Computer Fraud and Abuse Act covers only those who obtain information from particular areas in the computer – such as files, folders, or databases – to which their computer access does not extend.

Ninth Circuit

The Ninth Circuit decided seven employment cases of note, four involved gender discrimination/harassment, two concerned arbitration, and the last addressed wage and hour issues.

Maner v. Dignity Health, 9 F.4th 1114 (9th Cir. 2021)

In Maner, the Ninth Circuit held that an employer does not violate Title VII’s prohibition on sex discrimination by favoring a supervisor’s sexual or romantic partner over another employee. Applying the test outlined in Bostock v. Clayton County,__ U.S__, 140 S. Ct. 1731 (2020) – that is, whether the employer intentionally relies in part on an individual employee’s sex when taking an adverse employment action – the Ninth Circuit held that a plaintiff cannot assert a Title VII claim based on sexual favoritism. But favoritism based upon coerced sexual conduct may still constitute quid pro quo harassment.

Fried v. Wynn Las Vegas, 18 F.4th 643 (9th Cir. 2021)

Fried deals with the circumstance where an employer will be held liable for a hostile work environment created by the conduct of third parties. Fried, a manicurist at a hotel nail salon, complained that he was sexually propositioned by a customer. His manager told him to continue to perform services for the customer and thereby exposed him to further sexual harassment. According to the appellate court, this response by the employer “discounted and effectively condoned the customer’s sexual harassment and … went a step further by conveying that Fried was expected to tolerate the customer’s harassment as part of his job.” Thus, summary judgment was inappropriate based on this incident alone.

The court also opined on several gendered comments that were made during Fried’s employment, including that he was in a “female job environment” and that he should consider wearing a wig to get more clients, concluding such comments, on their own, did not constitute severe or pervasive harassment.

Freyd v. Univ. of Oregon, 990 F.3d 1211 (9th Cir. 2021)

In a case against a university employer alleging unequal pay based on sex under federal law, the Ninth Circuit reversed summary judgment. The plaintiff pointed to an average difference of $15,000 in annual salary between male and female professors, largely attributable to the employer’s practice of awarding “retention bonuses” to professors who entertained interest from other universities and received offers to move to those schools.

The employer argued that the practice was a business necessity, required for its ability to retain top talent, but the plaintiff argued that the practice disproportionately affected female professors who are less likely to uproot their families and move to other cities. Because the university had not addressed the plaintiff’s contention that awarding an increase to all professors in a department when anyone was awarded a retention bonus would serve the same business purpose, the trial court’s award of summary judgment had been premature.

Meland v. Weber, 2 F.4th 838 (9th Cir. 2021)

In 2018, the California legislature passed, and Governor Jerry Brown signed into law, Senate Bill 826 (“SB 826”) which required all corporations headquartered in California to have a minimum number of women on their boards of directors based on board size. The law further provided that corporations that do not comply with SB 826 may be subject to monetary penalties. In this action, a shareholder of a California company who was responsible for voting for board members brought a section 1983 action alleging that the law required him to discriminate on the basis of sex in violation of the Fourteenth Amendment.

The district court dismissed his claim for lack of standing, but the Ninth Circuit reversed, finding that being subjected to a law that “require[s] or encourage[s]” shareholders to vote in a discriminatory manner is individualized harm sufficient to ground Article III standing. Having survived this preliminary challenge, the substantive decision regarding whether this corporate affirmative action scheme runs afoul of the Constitution remains to be decided in the district court.

Chamber of Commerce of United States v. Bonta, 13 F.4th 766 (9th Cir. 2021)

Over the past few decades, the practice of employers mandating arbitration of employment disputes has proliferated, aided by a slew of decisions by the U.S. Supreme Court under the Federal Arbitration Act (“FAA”) approving the practice. Following the failure of several legislative attempts by the state of California to empower its workers against this system of mandatory arbitration, the Ninth Circuit upheld its latest effort, California Labor Code section 432.6, against an attack by employers.

The statute makes it an unlawful employment practice to condition employment or the receipt of employment benefits upon an employee’s agreement to enter into an agreement to arbitrate employment disputes. By focusing on conduct that takes place before the formation of an agreement to arbitrate, the statute successfully skirted the ambit of the FAA. In affirming the law, the Ninth Circuit created a split with the First and Fourth Circuit, which may tempt Supreme Court intervention. Until that time, employees in California can still refuse to enter into arbitration agreements without risking their jobs.

Ahlstrom v. DHI Mortgage Company, Ltd., L.P., 21 F.4th 631 (9th Cir. 2021)

In this decision, the Ninth Circuit held that, notwithstanding the existence of an arbitration agreement’s delegation clause that provided for issues of contract formation to be decided by the arbitrator, challenges to the very existence of the arbitration agreement must be decided by a court.

American Society of Journalists and Authors, Inc. v. Bonta, 15 F.4th 954 (9th Cir. 2021)

To address the misclassification of employees as independent contractors, California passed Assembly Bill 5, and later AB 2257, which codified a more expansive test for determining a worker’s status, albeit with certain occupational exemptions. Because freelance writers, photographers, and others received a narrower exemption than was offered to certain other professionals, the American Society of Journalists and Authors, Inc. and the National Press Photographers Association (collectively, ASJA) sued, alleging violations of the First Amendment and Equal Protection Clause.

The Ninth Circuit affirmed the dismissal of the lawsuit, finding that Labor Code section 2778 does not implicate either the First Amendment or the Equal Protection Clause, because it does not facially limit what someone can or cannot communicate and does “not restrict when, where, or how someone could speak,” but instead is aimed at regulating the employment relationship.

California Supreme Court

The California Supreme Court issued two pro-employee decisions. The first, a blockbuster, substantially lowered the burden for plaintiff employees on summary judgment and at trial in Labor Code section 1102.5 cases. The second concerned attorneys’ fees on appeal and the statute of limitations in FEHA claims that are based on failure-to-promote allegations.

Lawson v. PPG Architectural Finishes, Inc., 2022 WL 244731 (2022)

In this case, the California Supreme Court addressed the proper standard for the evaluation of whistleblower-retaliation actions under Labor Code section 1102.5, finding that employees need not satisfy the McDonnell Douglas burden-shifting test to make out a case of unlawful retaliation. Instead, the Court held that Labor Code section 1102.6 lays out the proper burden-shifting analysis, as follows: “First, it must be ‘demonstrated by a preponderance of the evidence’ that the employee’s protected whistleblowing was a ‘contributing factor’ to an adverse employment action… Then, once the employee has made that necessary threshold showing, the employer bears ‘the burden of proof to demonstrate by clear and convincing evidence that the alleged adverse employment action would have occurred ‘for legitimate, independent reasons’ even if the employee had not engaged in protected whistleblowing activities.”

Pollock v. Tri-Modal Distrib. Servs., Inc., 11 Cal.5th 918 (2021)

In this case, the Court found that an asymmetric standard regarding attorneys’ fees applies on the appeal of a FEHA claim, i.e., unlike prevailing FEHA plaintiffs, who automatically recover fees, an employer can only recover fees following success on appeal if it can show that the employee’s appeal was frivolous or groundless.

This case also clarified that in a failure-to-promote case, the statute of limitations begins to run when the plaintiff has actual or constructive knowledge of the failure to promote. Where the employer proffered the date on which it promoted another employee over the plaintiff as the date of the alleged failure to promote, but there was evidence casting doubt on whether the plaintiff was informed that she had not received the promotion until much later, the case was remanded for reconsideration of whether the claim was time-barred.

California Court of Appeal

The California Courts of Appeal issued a blizzard of employment decisions.

De Leon v. Pinnacle Property Management Services, LLC, 72 Cal.App.5th 476 (2021)

Although this case involves an arbitration agreement entered into before the effective date of Labor Code section 432.6 (January 1, 2020), the court nevertheless found the agreement was procedurally unconscionable because it was made a condition of employment. The court also found that provisions reducing the statute of limitations to one year for employment claims and limiting discovery to only 20 interrogatories rendered the agreement substantively unconscionable, noting the informational imbalance between employers and plaintiffs in employment cases. Given the adhesive nature of the contract and its severe limitations on discovery, the court refused to sever the offending provisions, instead finding its “multiple defects indicate a systematic effort to impose arbitration on an employee not simply as an alternative to litigation, but as an inferior forum that works to the employer’s advantage.”