UPDATES FOR CALIFORNIA EMPLOYERS – OCTOBER, 2014

Interns Are Protected Against Employment Discrimination and Harassment

On September 9, 2014, California Governor Jerry Brown signed AB 1443.  This bill extends California’s anti-harassment and anti-discrimination protections to unpaid interns.  Employers are now prohibited from discrimination against unpaid interns based on race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status in the “selection, termination, training or other terms” of the interns.  AB 1443 also prohibits harassment of unpaid interns based on the same protected characteristics.  Lastly, AB 1443 makes employers liable for sexual harassment of unpaid interns by non-employees if an employer knew or should have known of the conduct but failed to promptly take corrective action.

Holding Company With No Employees May Be Liable for Wage and Hour Violations of Subsidiary

In Castaneda v. The Ensign Group, the California Court of Appeal held that a “corporation with no employees [that] exercises some control over [a] corporation with employees…may be the employer of the employees of the corporation it owns.”  The court therefore held that triable issues of material fact existed as to whether a holding company that had no employees was plaintiff’s employer, and accordingly, denied defendant’s motion for summary judgment.  As background, the plaintiff, Castaneda, worked for Cabrillo Rehabilitation and Care Center.  Plaintiff brought a wage and hour class action against defendant, The Ensign Group.  The Ensign Group was the parent company of Cabrillo Rehabilitation and Care Center.   In response, The Ensign Group filed a motion for summary judgment, asserting that it was only a holding company with no employees, and was not engaged in the direction, management, or control of Cabrillo Rehabilitation and Care Center’s employees.  The trial court granted defendant’s motion for summary judgment; however, the Court of Appeal reversed the trial court’s ruling because it found triable issues of material fact regarding The Ensign Group’s role in the employment relationship with plaintiff.

Professor’s Failure to Undergo Fitness-For-Duty Assessment Justified Termination

In Kao v. University of San Francisco, the plaintiff, John S. Kao, was a professor at the University of San Francisco.  Plaintiff had a series of confrontations with co-workers in which he became enraged and threatened them.  Consequently, defendant, the University of San Francisco, informed Kao that he would need to undergo a fitness-for-duty assessment (“FFD”), or else he would be placed on a leave of absence.  Kao refused to undergo the FFD, and accordingly, was placed on a leave of absence.  Defendant subsequently terminated Kao’s employment.  Kao sued the University of San Francisco for disability discrimination under California’s Fair Employment and Housing Act (“FEHA”).  Following a jury trial, the jury returned a verdict in favor of the University of San Francisco, and Kao appealed.  The Court of Appeal affirmed, holding that defendant was not required to engage in an interactive process with Kao as required under FEHA because Kao had never sought an accommodation from defendant for any disability, nor had he ever acknowledged to defendant that he had a disability.  The Court of Appeal explained that, unless a disability is obvious, it is the employee’s responsibility to initiate the interactive process.  Furthermore, the Court of Appeal found that defendant had produced substantial evidence at trial establishing that the FFD was “job related and consistent with business necessity” as required by FEHA, since defendant had received multiple complaints about Kao’s behavior and therefore needed to obtain a FFD to ensure the safety of its other employees.