California Labor &
Employment Law Blog
Feb 20, 2013

Latest Activity from the California Supreme Court

Topics: Arbitration Agreements, Court Decisions, Employee Leave, Wage & Hour Issues

This week the California Supreme Court was busy deciding whether to review some notable employment decisions.  In favorable news for employers, the Court denied review in See's Candy Shops v. Superior Court (Silva), the time rounding case in which a California Court of Appeal recently held that time rounding policies are permitted under California law. The Court granted review of Richey v. Autonation, a case addressing whether employers can assert an "honest belief" defense to liability on a claim under the California Family Rights Act.  In the Richey case, the employer had a somewhat ambiguous policy prohibiting employees from engaging in other employment while on CFRA leave.  An employee took a CFRA leave of absence, but while on the leave, engaged in his own self-employment.  The employer believed the employee was abusing his CFRA leave and terminated his employment.  The employee sued, the case was ordered to arbitration pursuant to an arbitration agreement between the parties, and the arbitrator found in favor of the employer on the ground that the honest belief defense provides a complete defense to liability.  The employee appealed, and a California court reversed, which is unusual given the narrow standards for review and reversal of arbitration decisions.  The court of appeal held that the employer could not avoid liability under CFRA based solely on an "honest" belief that the employee was abusing the leave.  The court held that the employer must produce evidence demonstrating that the employee actually was abusing the leave.  The California Supreme Court has now granted review of that decision. 

Finally, the Court this week granted review of Franco v. Arakelian, another case addressing enforceability of employment arbitration agreements in California. The Franco court held, contrary to some other California courts, that PAGA claims cannot be compelled to arbitration and that the United States Supreme Court decision in AT&T v. Concepcion does not preempt California law on enforceability of class action waivers in the employment context.  The California Supreme Court has granted review in several similar cases, and this week's grant of review in Franco was on a "grant and hold" basis pending the Court's decision in Iskanian v. CLS Transportation.  Stay tuned for guidance from the California Supreme Court on these important employment law issues.

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