We invite you to review our newly-posted September 2024 California Employment Law Notes, a comprehensive review of the latest and most significant developments in California employment law. The highlights include:

• Co-Worker’s Single Use Of “N-Word” Can Create A Hostile Work Environment
• Co-Worker’s Social Media Posts Can Create A Hostile Work Environment
• Unions Lose Latest Attempt To Classify Uber/Lyft Drivers As Employees
• Termination Of Employment 56 Days After EEO Complaint Was Not Retaliatory
• Party To Contract May Assert Fraudulent Concealment Claim Under Certain Circumstances
• Non-Compete Associated With Partial Sale Of Business Must Be “Reasonable” To Be Enforced
• Former LA Times Columnist Was Properly Awarded $3.5 Million In Fees/Costs Following $1.25 Million Judgment
• Discrimination Claim Of Worker Who Performed “Mostly Menial Work” For Buddhist Temple Was Barred
• PAGA Plaintiffs Did Not Have Standing To Intervene In Parallel Action Involving Overlapping Claims
• Corporate Pilots Are Exempt From FLSA Overtime Pay

Co-Worker’s Single Use Of “N-Word” Can Create A Hostile Work Environment

Bailey v. San Francisco Dist. Attorney’s Office, 16 Cal. 5^th 611 (2024)

Twanda Bailey, an African-American clerk in the San Francisco District Attorney’s Office, sued her former employer for racial discrimination and harassment, retaliation, and failure to prevent discrimination in violation of California’s Fair Employment and Housing Act. The claims stem from a single incident in which one of Bailey’s co-workers with whom she shared an office called her the “N-word.” The trial court granted, and the Court of Appeal affirmed summary judgment for the employer, concluding that no trier of fact could find severe or pervasive racial harassment based on being “called a ‘[N-word]’ by a co-worker [rather than a supervisor] on one occasion.”

However, in this opinion, the California Supreme Court reversed, holding that the trial and appellate courts placed undue emphasis on the speaker’s status as a co-worker, rather than a supervisor. “This case involves an unambiguous racial epithet … [t]he word was used only once; it was not overheard but directed specifically at Bailey. Although it was not physically threatening, a jury could find that use of the slur was ‘degrading and humiliating in the extreme.’” The Court further noted that Bailey and her co-worker shared an office space, shared work duties and were asked to cover each other’s desks, which meant that Bailey could not distance herself — physically or otherwise — from her co-worker. Further, the record could support a finding the racial slur interfered with Bailey’s work performance, as Bailey’s psychiatrist provided a letter indicating she was being treated for severe anxiety and depression that developed as a result of workplace stress. Finally, the Court concluded that the HR Manager’s “purposeful obstruction” of Bailey’s complaint about her co-worker “could be understood as quintessentially retaliatory.”

Co-Worker’s Social Media Posts Can Create A Hostile Work Environment

Okonowsky v. Garland, 109 F.4^th 1166 (9^th Cir. 2024)

Lindsay Okonowsky, a former staff psychologist at the Federal Correctional Complex at Lompoc, discovered that a corrections lieutenant (Steven Hellman) with whom she worked and who was responsible for overseeing the safety of guards, prison staff, and inmates had created an Instagram page that contained multiple posts that were overtly sexist, racist, anti-Semitic, homophobic, and transphobic. Approximately 100 of Okonowsky’s co-workers followed the page, which explicitly or impliedly referred to the prison, prison staff, and inmates. Additionally, some of the posts contained derogatory images resembling Okonowsky and specifically referred to her, including a post “joking” that the all-male custody officers would “gang bang” Okonowsky at her home.

After Okonowsky discovered the account, she promptly reported it to her supervisors. However, one of her supervisors told her the page was “funny” and another stated that the page was not “a problem.” After her report, the Instagram page “began to increasingly target her with … posts [she] reasonably perceived to be an effort to intimidate her and discourage her from making further complaints.” Two months after Okonowsky first complained about the Instagram postings (and after a new female warden arrived at Lompoc), the prison issued a cease-and-desist letter to Hellman, stating that his posts appeared to have violated the anti-harassment policy of the Bureau of Prisons. The letter did not stop Hellman, who continued for at least another month to make near-daily harassing posts on his Instagram page before he took down his Instagram page. Okonowsky later left the prison in search of a different job.

Okonowsky sued the Bureau of Prisons for sex discrimination under Title VII, alleging the Bureau failed to take adequate measures to address a hostile work environment at the prison. The district court granted the Bureau’s motion for summary judgment. The district court limited its consideration of the evidence to just five posts made on the page that targeted Okonowsky because of her sex. The district court concluded that the five posts “occurred entirely outside of the workplace” because the posts were made on a staff member’s personal Instagram page and none of the five posts was ever sent to Okonowsky, displayed in the workplace, shown to Okonowsky in the workplace, or discussed with Okonowsky in the workplace without her consent. The Ninth Circuit reversed, concluding that “offsite and third-party conduct [like the co-worker’s Instagram page] can have the effect of altering the working environment in an objectively severe or pervasive manner.” Furthermore, a triable issue of fact existed as to whether the prison failed to take prompt and effective remedial action to address Okonowsky’s allegedly hostile work environment.

Unions Lose Latest Attempt To Classify Uber/Lyft Drivers As Employees

Castellanos v. State of Cal., 16 Cal. 5^th 588 (2024)

In the latest attempt by the Service Employees International Union (SEIU) to prevent Uber, Lyft, DoorDash and similar app-based drivers from being classified as independent contractors (and thereby escape the union’s reach), the California Supreme Court determined that Proposition 22 (passed overwhelmingly by the voters of the State of California in 2020 and supported by 87% of the drivers themselves) is constitutional. The purported constitutional infirmity of Proposition 22 (codified at Bus. & Prof. Code § 7451) identified by the SEIU concerns the California legislature’s “plenary power” to create and enforce a “complete system of workers’ compensation.” The union argued that because the drivers are exempt from workers’ compensation, Proposition 22 conflicts with the legislature’s “plenary power.” The Supreme Court held (consistent with an opinion of the California Attorney General) that the legislature does not have the sole authority – to the exclusion of the initiative power – to govern workers’ compensation.

Termination Of Employment 56 Days After EEO Complaint Was Not Retaliatory

Kama v. Mayorkas, 107 F.4^th 1054 (9^th Cir. 2024)

Meyer Kama, who was formerly a transportation security officer with the TSA, alleged Title VII retaliation after he was terminated for failing to cooperate with an investigation into whether Kama and other officers improperly received compensation for serving as personal representatives to other employees during internal agency investigations. Kama contended his employment was terminated 56 days after he complained about being denied intermittent leave under the FMLA – Kama claimed the termination had “temporal proximity” to his EEO complaint. The district court granted summary judgment to the employer, and the Ninth Circuit affirmed, holding that “temporal proximity” alone is not enough to establish retaliation in every case. The Court held that 56 days was a relatively long period of “proximity” as compared to “only a few days” as existed in the cases cited in Kama’s brief. Further, there was a relatively “close temporal link” between Kama’s noncooperation with the investigation and the termination of his employment. Finally, the Court recognized that the TSA must be given “wide latitude” to determine the terms of employment of its screeners. Compare Cal. Labor Code §§ 98.6(b)(1), 1102.5, and 1197.5 (rebuttable presumption of retaliation if employer takes adverse action against employee within 90 days of protected activity).

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