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NOVEMBER 2003 I. LEGISLATIVE/REGULATORY
UPDATE “Bounty Hunter” Legislation Signed Into Law On October 14, 2003, Governor Davis signed SB 796 (Dunn) which permits employees to bring civil actions against their employers to collect penalties for violations of the California Labor Code. Prior to the enactment of SB 796, the California Labor and Workforce Development Agency, and its departments, divisions, commissions, agencies, etc. (collectively, “the Agency”) was solely responsible for assessing and collecting penalties for such violations. SB 796 now permits employees to bring civil actions to recover penalties if the Agency does not do so. Employees also remain free to seek actual damages from their employers. Penalties collected in employees’ actions will (with limited exceptions) be distributed 50% to the State’s General Fund, 25% to the Agency for education, and 25% to the aggrieved employee. The employee is also authorized to recover attorney’s fees and costs associated with the lawsuit. SB 796 (through new Labor Code section 2699(e)) also establishes new fines and penalties. The California Chamber of Commerce has dubbed SB 796 as “The Bounty Hunter Bill,” as it rewards private citizens for assuming the legal enforcement role normally undertaken by the Agency.
AB 276 (Koretz) was enacted to amend Labor Code section 210 which sets forth penalties associated with the failure to make timely wage payments and for the unlawful withholding of wages. AB 276 doubles penalties for both initial and subsequent violations from $50 to $100 and from $100 to $200, respectively.
II. JUDICIAL UPDATE
On September 30, 2003, the Ninth Circuit Court of Appeals held that an employer may legally refuse employment to an individual based on that person’s refusal to sign an agreement to arbitrate all claims arising from his employment. In Equal Employment Opportunity Commission v. Luce, Forward, Hamilton & Scripps, the employee, Donald Lagatree, was presented with Luce Forward’s standard employment offer letter on his first day of work. The letter included an arbitration provision requiring Lagatree to submit “all claims arising from or related to [his] employment” to binding arbitration. Lagatree refused to execute the agreement, stating that it unfairly denied him of his constitutional right to a jury trial. Luce Forward told Lagatree that the agreement was “non-negotiable,” and withdrew its job offer. Lagatree’s sued Luce Forward in a civil court, alleging wrongful termination in violation of public policy and violation of the California unfair competition law, seeking lost wages, emotional distress, and punitive damages. He also filed a charge of discrimination with the Equal Employment Opportunity Commission (“EEOC”) alleging that he was wrongfully terminated in retaliation for his refusal to sign the arbitration agreement. Citing the 1998 Ninth Circuit opinion in Duffeld v. Robertson Stephe & Co., the EEOC claimed that Luce Forward’s actions constituted unlawful retaliation against Lagatree. The Ninth Circuit, however, held that Duffeld “was wrongly decided” and overruled itself. Thus, appropriately crafted compulsory arbitration agreements remain both valid and enforceable.
A California court of appeal has ruled that the internal policies of the California Department of Labor’s Division of Labor Standards Enforcement (“DLSE”) does not carry the force of law. As such, California courts do not have to follow the DLSE’s internal policies or enforcement guides when interpreting the wage orders that have been issued by the Industrial Welfare Commission. In California School of Culinary Arts v. Lujan, the California Court of Appeal for the Second District confirmed that “DLSE’s primary function is enforcement, not rule making.” In doing so, the court echoed the 1996 holding in Tidewater Marine Western, Inc. v. Bradshaw, which stated that the DLSE manual is simply an interpretation of the law, and does not constitute “regulations” to which any court must defer in reaching a decision.
If you would like to discuss these or
any other employment law matters, please do not hesitate to contact
any member
of Klinedinst's Employment Law
Department.
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