Good Cause to Terminate Manager Who Initiated Transfer of Whistleblower

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In Jameson v. Pacific Gas & Electric Co., Cal. Ct. App. Case No. A147515 (11/1/2017), the First Appellate Division affirmed summary judgment in favor of defendant PGE on the grounds that it had good cause to terminate its former employee, Steve Jameson.

Jameson’s employment history with PG&E extended back to 1977. He had risen in the ranks from apprentice welder to construction specialist/manager and in 2012 to Regional Construction Manager. In June 2013 a subordinate employee, Paul Nelson, reported a safety issue that was escalated to Jameson. Shortly thereafter, Nelson was transferred to another work location. Nelson complained about retaliation and the company launched an investigation, which determined that Jameson had made many more complaints about Nelson’s performance after the safety complaint than before. The conclusion was that Jameson had retaliated against Nelson.

Jameson sued for wrongful termination, claiming that he had an implied agreement with PG&E to only be terminated for good cause, due in part to his tenure of service. However, the Court did not need to reach this issue because it determined that PG&E did in fact have good cause: “PG&E met its summary judgment burden to show it acted reasonably and in good faith after an appropriate investigation determined Jameson retaliated against Nelson. The question, then, is whether Jameson demonstrated a triable issue of fact existed as to the adequacy of the investigation or PG&E’s good faith in relying on it. He did not.” For example, he did not identify evidence to support an inference that the investigator was biased, and the court of appeal found that he had “misrepresented” the investigator’s report, which found that Jameson had initiated the decision to transfer Nelson. Thus, summary judgment was appropriate.

The case demonstrates the difficulties and hurdles a plaintiff may encounter when there is a documented legitimate reason justifying the termination that independently withstands scrutiny. Moreover, a claim entirely predicated on an implied contract that at will employment does not apply is a dangerous tightrope to walk.

Employers Cannot Request Salary History of Applicants

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On October 12, 2017, Governor Brown signed into law AB 168, which prohibits employers from asking about a candidate’s salary history as part of its determination as to whether to offer employment, or how much to pay. The new Labor code section 432.3, which takes effect on January 1, 2018, also requires employers to provide the pay scale for the position for which the candidate is applying, upon “reasonable request” by the candidate.

The exceptions are, first, that employers may consider salary information that is publicly available pursuant to federal or state law (e.g., under the California Public Records Act or the Freedom of Information Act). Second, salary history may be discussed if an applicant “voluntarily and without prompting” discloses it to his or her potential employer. However, even then, an employer cannot rely solely on prior salary to justify pay disparities.

Employers (and recruiters) should therefore review their employment applications and remove portions seeking wage or benefit information. Managers and interviewers must be trained not to ask candidates questions about salary history. Notably,m this new law applies to employers of any size.

Moreover, employers will need to develop a salary range each job position in California in order to respond to the “reasonable requests” of applicants for this information. It is not clear what information must be included in the pay scale, including whether it includes incentives.

Although the statute does not specify penalties for non-compliance, this could form a predicate for a claim for penalties under the Private Attorneys General Act (“PAGA”).

Ninth Circuit Clarifies “Day of Rest” Rule in Dismissing PAGA Claim

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In Mendoza v. Nordstrom, Inc., 9th Cir. No. 12-57130 (8/03/2017), the Ninth Circuit affirmed a judgment against Nordstrom, Inc. for violation of California’s “day of rest” law. Plaintiff Christopher Mendoza had argued that Nordstrom violated Labor Code section 551, which grants employees a right to one “day’s rest” in seven and section 552, which provides that no employer “shall cause his employees to work more than six days in seven,” and thus was subject to penalties. Mendoza had claimed that he had worked more than six days three times during his employment, including times where he worked 11, 7, and 8 days. The district court had held that the seven-day period was “rolling” and based on any consecutive 7-day period, rather than based on a workweek, but that here this did not apply because Nordstrom employed Mendoza for six hours or less “on at least one day” of a week, triggering an exemption under section 556, and that there was no coercion (Mendoza willingly performed the work).

On appeal, the Ninth Circuit held that the District Court was incorrect on two counts.
First, sections 551 and 552 should be based on a workweek basis, such that each 7-day workweek (usually Monday through Sunday or Sunday through Saturday) operated as its own 7-day period. Employees are only entitled to one day of rest in each workweek. Second, the Court held that the exemption under section 556 only applied if the employee did not work more than 6 hours in any day of a workweek,, not just one day of a workweek.

However, the district court’s errors did not change the ultimate result because Mendoza (and other plaintiffs) were not “aggrieved employees” under the Private Attorneys General Act, because in each instance in which they worked 7 or more days in a row, those days were split over two workweeks, and in each one of those workweeks there was at least one day of rest. Therefore, a dismissal of the PAGA claim was appropriate.