Feb. 22, 2006 The California Supreme Court Lines Up a Busy Year on the Employment Law Front

On February 22, 2006, the California Supreme Court granted review in two more cases of interest to California employers. In 2006, the Court is slated to provide guidance on several important issues.

The first case is Murphy v. Kenneth Cole. The issue the Supreme Court will review is whether the one hour premium pay for violation of meal or rest period rules is a penalty or a wage. As we reported in our e-Update of January 27, 2006, the California Labor Commissioner and two Courts of Appeal have issued rulings defining the one hour premium as a penalty, not a wage. Another Court of Appeal (in San Diego) recently issued a contrary ruling, defining the premium pay as a wage.

This issue is important because if the premium pay is a penalty, a one-year statute of limitations applies, and terminated employees suing for the penalty are not entitled to waiting time penalties. In contrast, if the premium pay is a wage, the statute of limitations can be up to four years, and former employees would be entitled to waiting time penalties if they succeed in their claim.

In the second case, Gattuso v. Harte-Hanks Shoppers, the Court of Appeal ruled that it is permissible for an employer to rely on increased compensation, instead of a mileage reimbursement procedure, to satisfy its obligations under Labor Code section 2802 to reimburse an employee for expenses related to the use of the employee’s personal vehicle for work. This case is important because there is a dearth of case law interpreting an employer's obligations under Labor Code section 2802, which has recently become a focus of wage and hour litigation.

This year promises to be a busy one for the California Supreme Court in the area of employment law. In addition to Cole and Harte-Hanks, the Court is currently reviewing cases involving the following issues:

  • Can the use of coarse and vulgar language in the workplace constitute sexual harassment under the Fair Employment & Housing Act? Would imposition of FEHA liability based on such speech infringe on a defendant's constitutional free speech rights? (Lyle v. Warner Brothers Television Productions)

  • Does California law preclude an employer from terminating an employee for away-from-work use of marijuana for medicinal purposes pursuant to the Compassionate Use Act? (Ross v. Ragingwire Telecommunications, Inc.)

  • Does an employer accused of disability discrimination in violation of the Fair Employment and Housing Act bear the burden of establishing that the plaintiff is incapable of performing his essential job functions with reasonable accommodations? (Green v. State of California)

  • Does an employee's ability to perform the same job functions for a different employer preclude her right to medical leave for employer-specific stress-related reasons under the California Family Rights Act? (Lonicki v. Sutter Health Center)

  • Does an employee bonus plan based on a profit figure that is reduced by a store's expenses, including the cost of workers' compensation insurance and cash and inventory losses, violate California law? (Prachasaisoradej v. Ralphs Grocery Company)

The Court has scheduled oral argument only in the Lyle v. Warner Brothers case, so a decision in that case could be handed down in the next 60-90 days. We do not expect a decision in the other cases until the third quarter of 2006, or later. Of course, we will send out e-Updates when the Court issues decisions in these cases.

This E-Update was authored by Fred Plevin. For more information, please contact Mr. Plevin or any Paul, Plevin attorney at 619-237-5200.