Employees of Food 4 Less
stores filed two class action lawsuits against their employers, Food 4 Less
Holdings, Inc., and Ralphs Grocery Co., seeking to recover unpaid overtime
wages. The suits alleged that the employees were improperly classified as
exempt managers and denied overtime pay under
While those class
actions were pending, the employers allegedly pressured employees to opt out of
the lawsuits and threatened to retaliate against workers who didn’t. Then, once
the class action lawsuits settled, the employers paid a $10,000 bonus to
employees who had dropped out to reward their loyalty to the company. The
employers also held a party for these employees and served them a steak dinner.
And then, the employers were served up with yet another lawsuit.
Employees Challenge Bonus
Payments to Others
A group of employees who
had not opted out of the original class actions filed suit, claiming that by providing
the bonus and other benefits only to employees who pulled out of the initial
class action suits, the employers discriminated and retaliated against the
employees who continued to participate in those cases. One purpose of the
payment, the employees alleged, was to discourage other workers from deciding
to participate in yet another pending case.
The employees claimed
these actions violated Labor Code Section 98.6, which protects employees from
discharge or discrimination for exercising rights protected by the Labor Code,
such as the right to sue for unpaid overtime. The employees also charged that
the employers’ actions amounted to retaliation in violation of public policy.
Food 4 Less and Ralphs
argued that they paid the $10,000 to the employees who opted out to settle
those workers’ individual overtime claims and not to retaliate against
employees who stayed in the class action.
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Bonus Denial Not
Discriminatory
Now a California Court
of Appeals has dismissed the retaliation suit. With respect to the Labor Code
98.6 claim, the question was whether by denying employees a bonus because they
exercised their rights under the Labor Code, the employers discriminated
against or discharged them.
An employer that
penalizes or disciplines an employee for participating in a legal proceeding or
engaging in other Labor Code-protected conduct would violate the statute
because it could undermine the employee’s right to engage in the protected
conduct or deter others from doing so, the court said. However, not giving a
discretionary bonus because the employee engaged in protected conduct doesn’t
actually penalize an employee but only fails to reward—and, thus, it doesn’t undermine
the employee’s right to engage in the protected conduct or deter others.
What’s more, the
employers paid the $10,000 bonus after the class actions had settled and didn’t
tell employees before the settlements that a bonus would be paid only to
employees who opted out. Therefore, the bonus payment couldn’t have influenced
an employee’s decision to participate in or opt out of the class actions. In
sum, denying a discretionary bonus here was not discrimination under Labor Code
Section 98.6. To rule otherwise, said the court, would invite litigation
challenging a wide range of legitimate personnel decisions.
No Public Policy
Violation
The court went on to
rule that the bonus denial didn’t violate
to sue for unpaid overtime. For a public policy claim to succeed, employees
must show that they engaged in an activity protected by public policy— here,
filing an overtime lawsuit—and because of that, the employer took adverse
action against them, such as punishment or discipline. But here, the employees
weren’t subjected to an adverse action; they simply didn’t receive a
discretionary benefit.
Caution Required
Although the court let
the employers off the hook here, this case is a good reminder of the importance
of avoiding retaliation against an employee who exercises rights in the Labor
Code, such as pursuing the recovery of back wages and overtime. To avoid
problems, here are two pointers:
1. Have a policy. It’s a good idea to have
a written policy that protects employees from reprisal for making good-faith
complaints or participating in investigations or legal proceedings.
2. Train managers. Managers and supervisors
should receive training about your antiretaliation policy, including what
amounts to an adverse employment action.
_
1 Cychner v. Food 4 Less
Holdings, Inc.,
Court of Appeals (Dist. 2) No. B178279, 2006 (unpublished)