Recent California Employment Decisions

A furniture delivery driver who made only the final, local leg from a California distribution center to customers was held to fall within the Federal Arbitration Act section 1 transportation worker exemption, even though he made retail rather than wholesale deliveries, because he was actively engaged in the interstate transportation of goods. The practical effect was that the arbitration agreement could not be enforced against his core wage claims. With the FAA out of the picture, Labor Code section 229 let his minimum wage, overtime, meal and rest, and unlawful deduction claims proceed in court without regard to the arbitration agreement, and his representative PAGA claims remained in court under Adolph v. Uber Technologies. Only narrower individual claims, including expense reimbursement, wage statement, and unfair competition claims, were compelled to arbitration.

A Tesla yard hostler who moved inbound trailers on factory grounds was held to fall within the Federal Arbitration Act section 1 transportation worker exemption. In practical terms, that exception means some transportation workers are not subject to the FAA’s strong default rule favoring arbitration, even if they signed an arbitration agreement. The court also explained Labor Code section 229, a California rule that can keep lawsuits for due and unpaid wages in court, but only for claims that are truly seeking unpaid wages rather than every wage-and-hour claim in the case. The result is a careful claim-by-claim arbitration decision with major implications for transportation-adjacent workers.

The Court of Appeal affirmed sanctions against a law firm and attorneys after an opposition brief contained nonexistent citations, fabricated quotations, and serious misstatements of controlling law. The court held that counsel of record bears ultimate responsibility for filed work product and cannot avoid sanctions by blaming a contract attorney, citation checker, or generative AI tool.

The Ninth Circuit granted mandamus after a district court compelled arbitration without deciding whether the FAA or California law supplied the authority to compel. The panel held that a court must decide the FAA section 1 transportation worker exemption before ordering arbitration, because the statutory basis for arbitration can change the enforceability of class waivers and other rights.

Michelle Phan sold cars at two Sacramento-area dealerships. When she sued over unpaid wages and missed breaks, her employer pointed to the arbitration agreements she had signed and asked the court to move her case out of court and into private arbitration. The Court of Appeal refused. The agreement did not just cover job disputes — it required Phan to arbitrate any dispute of any kind, forever, not only against the company but against its owners, its lawyers, and its sister companies, while none of them were required to arbitrate anything against her. The court held that an agreement that lopsided cannot be enforced at all, and the employer’s own HR declaration — admitting the agreement was really just meant for job-related claims — sealed it. Phan’s wage-and-hour class action stays in court, in front of a jury.

The Court of Appeal reversed decertification of an FCRA background-check class action, holding that California state court plaintiffs seeking statutory damages for willful FCRA violations do not need to prove concrete Article III injury. The decision rejects the reasoning of Limon and confirms that Article III standing doctrine does not control California state-court FCRA claims.

A federal magistrate judge recommended final approval of a California wage-statement class settlement involving non-exempt Leprino Foods employees, approving fees, costs, administration expenses, and a claims-made-free distribution process, while reducing the requested class representative service award from $12,500 to $7,500.

A long-running wage-and-hour class action involving roughly 400 California escrow officers ended with a $43.5 million judgment for the class — only to have the Court of Appeal reverse it on two independent grounds. The trial plan violated California Supreme Court precedent on class-wide statistical proof, and the damages phase was improperly delegated to a private referee without the parties' consent. The class was decertified on remand. The named plaintiffs may pursue their individual claims; the trial court may entertain a new class certification motion if a properly structured class is proposed.

A PAGA plaintiff prevailed after trial, but the Court of Appeal affirmed major reductions to both civil penalties and attorney fees. The decision confirms that Labor Code section 2699(e)(2) does not force trial courts to use a single mathematical formula when reducing PAGA penalties, and that a court may apply a negative multiplier to a lodestar when the requested fees are disproportionate to the results obtained.

A 20-month Target employee was terminated for workplace violence policy violations after two days of erratic behavior — which turned out to be caused by undisclosed bipolar disorder he had never told Target about. The Court of Appeal affirmed summary judgment for Target, applying two different FEHA knowledge standards and finding that neither was met. The decision underscores how high the constructive-knowledge bar is for undisclosed mental health conditions and why disclosure is often the most protective step an employee with an invisible disability can take.

When a temp agency placed Robert Toothman at Redwood Toxicology and he later became a direct Redwood employee for nearly four years, Redwood tried to use the old staffing agency arbitration agreement to force his class action into individual arbitration. The Court of Appeal said no — the agreement covered employment with the staffing agency, not the separate direct employment that came afterward. The court rejected every theory Redwood put forward, and the class action survives.

A freight car repairman who worked on decommissioned cars in a rail yard argued he qualified for the Federal Arbitration Act's transportation worker exemption — which would have made his class action waiver unenforceable under California law. The Court of Appeal held he did not qualify. The cars he repaired were not actively carrying goods, and his class of workers was too far removed from the active flow of interstate commerce. The decision reinforces how narrowly California and federal courts are drawing the Saxon framework's transportation worker exemption.

A union plasterer's California wage claims were held to be preempted by federal labor law and pushed to federal court because resolving them required interpreting the collective bargaining agreement. The decision is a reminder that when union workers attempt to vindicate California state wage rights, the structure of the CBA can sometimes determine which forum will hear the case.

An appellate court reversed the denial of class certification for approximately 135 EMS workers who argued their employer wrongly excluded an annual bonus from the regular rate of pay used to calculate overtime. The Court of Appeal held that whether the bonus was truly discretionary versus non-discretionary was a classwide question susceptible to common proof.

A bus driver's wage, overtime, meal and rest break, and retaliation claims were largely dismissed not on the merits but because she filed after the applicable statutes of limitations had expired. The case is a cautionary precedent on the importance of timely filing in California wage-and-hour and employment retaliation matters.

An employer's motion to compel arbitration was denied because the onboarding packet's arbitration, class-action-waiver, and PAGA provisions were internally contradictory and ambiguous. The court held that no clear agreement to arbitrate existed under those circumstances.