Key 2024 Court Cases Affecting Employers

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In Episode 197 of The Workplace podcast, CalChamber Associate General Counsel Matthew Roberts and Employment Law Subject Matter Expert Vanessa Greene discuss three recent court cases affecting employers.

Huerta v. CSI Electrical

In March 2024, the California Supreme Court issued a decision in Huerta v. CSI Electrical Contractors. The two main issues in this case pertain to travel time and meal periods, Greene says.

The facts are that electrical contractor employees who were working on a solar project in a remote area near San Luis Obispo would start their shift by going to an employee parking area for the solar project. But getting there was quite the journey.

The employees first had to drive down a designated road where they had to pass a guard shack, then they had to drive several more miles to a security gate. And when they got to the security gate, they had to spend anywhere between five to 30 minutes undergoing a security check. Then they had to drive another 10 to15 minutes to get to the employee parking lot. During this time, they were not being paid.

Additionally, employees were subject to collective bargaining agreements that provided them with a 30-minute unpaid meal period, but exempted them from the other California-specific meal break requirements. During this unpaid meal period, the employer did not allow employees to leave the worksite and required the employees to stay in a dedicated break area.

The employees filed suit for unpaid wages for the time they spent driving to the employee parking lot and for missed meal period premiums, arguing that the employer had sufficient control over the employees during both this travel time and this meal period time.

The California Supreme Court found that the employees’ time for the security procedures counted as hours worked and must be compensated. Even though the employees were in their personal vehicles, the employees were subject to employer control because they were confined to their vehicles and had to sit between five to 30 minutes and undergo a badge screening and vehicle inspection.

Regarding the issue of travel time for traveling from the parking lot to the gate, the court declined to make a specific decision, Greene says.

“But the court did give us some insight. It said that for travel time like that to be compensable, the employee’s presence must be required for a reason other than accessing the worksite. And in this situation, it really appeared there wasn’t really any other reason,” Greene says.

In other words, it’s a commute, Roberts adds.

Although the meal periods were subject to the collective bargaining agreement, the court said, “You can’t bargain away an employee’s right to be paid for what has essentially turned into an on-duty meal period where the employer is exercising all of this control over the employee,” Greene explains.

Naranjo v. Spectrum Security

In the Naranjo v. Spectrum Security Services, Inc. decision issued on May 6, the California Supreme Court held that an employer’s good faith dispute can prevent the employee from collecting penalties and attorneys’ fees.

In the case, the employee, Naranjo, argued that his employer had failed to include missed meal premium amounts on his wage statement. The real issue, Greene explains, was whether the employer knowingly and intentionally failed to include that information on Naranjo’s wage statements.

The court held that if the employer can show that they genuinely believed they were complying with the law, they can overcome the “knowing and intentional” requirement and avoid wage statement violations, even if their understanding was later found to be incorrect, Greene says.

“So in other words, employers can establish what’s called a ‘good faith’ defense to these wage statement violations. And this is a really big win for employers, because penalties for wage statement violations can be substantial and can add up really quickly if you have a lot of employees,” Greene tells Roberts.

And how might an employer establish a good faith defense?

Greene says that an employer must be able to show that they did their best to comply with the law. She recommends that employers continue to follow best practices, like auditing their wage statements, making sure the statements are accurate, making sure they have included all the things that are required under the Labor Code, and also auditing their pay practices on a regular basis.

Muldrow v. City of St. Louis

On April 17, the U.S. Supreme Court issued a ruling in Muldrow v. City of St. Louis holding that Title VII of the Civil Rights Act protects against discriminatory job transfers.

In Muldrow, Officer Muldrow, who had a good reputation, was transferred into another role by a new commander, who replaced her original role with a male officer.

In her new position, Mudrow kept her same rank and salary, but she lost other benefits related to her previous role, including her FBI credentials. In her previous role, she investigated public corruption and human trafficking, and oversaw the gang unit where she also served as the head of the gun crimes unit. In her new position, Mudrow performed duties like street patrol and administrative work.

“The key question in this case really was whether this job transfer itself — without any change in pay, without any change in rank — whether that constituted enough harm to be actionable under sex discrimination laws,” Greene explains.

The Supreme Court said that for the transfer to be considered discriminatory, an employee has to show some disadvantage to their employment, or that they were treated worse because of their protected trait.

A takeaway for employers from this case, Greene says, is that all employment decisions, such as transferring someone to another department or terminating someone, need to be rooted in a legitimate business reason. Additionally, it’s a good practice for employment decisions like this to be reviewed by either HR or some kind of top-level manager, not just be made unilaterally by an employee’s supervisor or manager.