January 2011

California Supreme Court Confirms Longstanding Rule Concerning Employee Layoffs

IAFF, Local 188 vs. Public Employment Relations Board
City of Richmond (Real Party in Interest)
California Supreme Court No. S172377

On Monday, January 24, 2011, the California Supreme Court issued an opinion regarding an employer's duty to bargain under the Meyers-Milias-Brown Act ("MMBA") in connection with layoffs. The opinion was authored by Acting Chief Justice Kennard, with a concurring and dissenting opinion filed by Justice Baxter.

The Bottom Line: The Supreme Court simply affirmed a longstanding rule - that there is no duty to bargain over an employer's decision to layoff, but there is a duty to bargain over the implementation and effects of the decision. This has been the ongoing advice of labor attorneys for years. There is no new law in this decision that should cause public employers to change their practices.

Discussion: Since approximately 1974, it has been the rule in California that public employers need not negotiate with labor unions about the decision to initiate layoffs. However, public employers must negotiate concerning the effects or impacts of the layoffs. The City of Richmond observed this advice in connection with firefighter layoffs, and the Fire Union claimed that the failure to negotiate constituted an unfair practice under the MMBA.

This case affirms the rule. The Court expressly states: "We now reaffirm this rule. Under the MMBA, a local public entity that is faced with a decline in revenues or other financial adversity may unilaterally decide to lay off some of its employees to reduce its labor costs. In this situation, a public employer must, however, give its employees an opportunity to bargain over the implementation of the decision, including the number of employees to be laid off, and the timing of the layoffs, as well as the effects of the layoffs on the workload and safety of the remaining employees." (Op. at 19.)

One additional aspect of the opinion is to define the criteria for permitting review of a decision by the Public Employment Relations Board ("PERB"). The Court agreed with the court of appeal that when PERB refuses to issue a complaint under the MMBA, a superior court may review the decision by mandamus. The review is limited to determining "whether PERB's decision violates a constitutional right, exceeds a specific grant of authority, or is based on an erroneous statutory construction." Justice Baxter dissented from this portion of the opinion.

For more information about this case or other labor and employment matters, contact Art Hartinger at 800.464.3559.

Title VII Anti-Retaliation Provisions Are Held Applicable to Complaining Employee's Fiancée

Eric L. Thompson v. North American Stainless, LP

United States Supreme Court

In Thompson v. North American Stainless LP, the United States Supreme Court unanimously held that the anti-retaliation provisions in Title VII of the Civil Rights Act of 1964 ("Title VII") protected an individual from being terminated in retaliation for his fiancée's prior complaint of discrimination to the Equal Employment Opportunity Commission ("EEOC"). The Supreme Court's decision overturned a Sixth Circuit Court of Appeals' ruling that a retaliation claim could not be brought by an individual who did not engage in the underlying protected activity. While this decision opens the door to third-party retaliation claims under Title VII, the Supreme Court was reluctant to provide a bright-line rule regarding the kinds of relationships and circumstances that support third-party retaliation claims under Title VII.

Eric Thompson and his fiancée, Miriam Regaldo, were both employees of North American Stainless ("NAS") in 2003. In February 2003, the EEOC notified NAS that Regaldo had filed a charge alleging sex discrimination. NAS terminated Thompson three weeks after NAS learned about Regaldo's sex discrimination complaint.

Thompson believed that NAS terminated him in order to retaliate against Regaldo for filing her complaint with the EEOC. Accordingly, Thompson filed a lawsuit against NAS alleging that NAS violated Title VII's anti-retaliation provisions. The District Court granted summary judgment to NAS, concluding that Title VII "does not permit third party retaliation claims." After a panel of the Sixth Circuit reversed the District Court's decision, the Sixth Circuit granted rehearing en banc and affirmed the District Court's earlier decision granting summary judgment. Notably, the Court reasoned that because Thompson did not engage in any statutorily protected activity, Thompson was not in the class of persons entitled to bring a retaliation claim under Title VII.

The Supreme Court disagreed, and held that Thompson fit within the class of persons entitled to bring a retaliation claim based on the protected activity of Regaldo. The Court reasoned that if Thompson was terminated based on the protected activity of his fiancée, that injuring Thompson was the employer's intended means of harming his fiancée. Under those circumstances, the Court held that Thompson's claim was well within the zone of interests protected by Title VII, and determined that Thompson had standing to bring a retaliation claim against NAS.

While the Supreme Court's decision in Thompson opened the door to third-party retaliation claims, it declined to identify a fixed class of relationships for which third-party reprisals are unlawful. Rather, it provided the following minimal guidance regarding the circumstances that may support such a claim: "firing of a close family members will almost always meet the . . . standard, and inflicting a milder reprisal on a mere acquaintance will almost never do so . . "

For more information about this case or other labor and employment matters, contact Jesse Lad at 800.464.3559.