Guards at the (Golden) gate: A Giants dilemma

Justice Ruth Bader Ginsburg's dissenting opinion in Lamps Plus, Inc. v. Varela, 2019 DJDAR 3349 (U.S. April 24, 2019), borrowed from Greek mythology by characterizing the majority's position as "Piling Pelion on Ossa," referring to the futile effort of the giants attempting to stack two mountains on top of each other in order to reach the gods. A different kind of Giants, the San Francisco ones, could have used her help in a recent earthquake of a decision by the California Supreme Court rejecting a federal labor preemption defense to an employee's state law unpaid wage claim.

In Melendez v. San Francisco Baseball Associates LLC, 2019 DJDAR 3432 (Cal. April 25, 2019), the California Supreme Court held that a security guard's state law claim for "waiting time" penalties based on unpaid wages could proceed to court instead of being subjected to arbitration under his union's collective bargaining agreement with the Giants. The court reasoned that even though the agreement was relevant to the claim and would have to be "consulted" in resolving it, Melendez had the right to sue for relief instead of pursuing a grievance under the union contract.

George Melendez, a security guard at AT&T (now Oracle) Park in San Francisco, filed a class action on behalf of the security guards working at the stadium after the Giants refused to pay him his "final wages" immediately after the end of each of the team's home stands, concert or other event he worked at. The Giants claimed that the wages were not "final" because its agreement with the Melendez's collective bargaining representative, the Service Employees International Union, contained several provisions which showed that security guards were employed on a continuous year-round basis and were not terminated after single job assignments. Those provisions specifically required drug screening for new hires, provided a probationary period of 500 hours of work, and classified employees for seniority purposes based on the number of hours worked per year. Because of these provisions, the Giants argued that Melendez's claim was preempted by Section 301 of the Labor Management Relations Act, because of required "interpretation and application" of the union agreement in resolving his claims. Conversely, Melendez argued the Giants' failure to pay him wages due at the time of termination entitled him to "waiting time" penalties of up to 30 days' additional pay after the completion of each assignment, based on a prior Supreme Court case which held that a hair dresser who was hired to work for only a single day was required to be paid at the end of that job. See Smith v. Superior Court, 39 Cal. 4th 77 (2006).

Relying on the 9th U.S. Circuit Court of Appeal's decision in Balcorta v. Twentieth Century-Fox Film Corp., 208 F.3d 1102 (9th Cir. 2000), the court rejected the Giants' federal preemption defense. The court stated that not every claim that requires resort to the language in a labor-management agreement is necessarily preempted, and that this is particularly the case when the meaning of the contract is not in dispute. Because the legal character of the claim relied on a state law right that was not substantially dependent on the contract's terms, the employee was permitted to proceed in court with his unpaid wage and waiting time penalty claim.

The Melendez case is consistent with Burnside v. Kiewit Pac. Corp., 491 F.3d 1053 (9th Cir. 2007), in which the court held that an opt-out provision in a state wage order did not convert a claim for unpaid travel time into one triggering Labor Management Relations Act preemption when it was based on a violation of statute. The 9th Circuit has also recently stated that a "Unionized employee cannot be deprived of the full protections afforded by state law simply by virtue of fact that her union has entered into a collective bargaining agreement. We recognize [federal] preemption only where a state law claim arises entirely from or requires construction of a CBA." Alaska Airlines, Inc. v. Schurke, 898 F.3d 904, 914 (9th Cir. 2018).

A review of the arguments summarized by the Supreme Court reveals that one of several things could be done to prevent similar kinds of claims against employers of intermittently employed workers in the future. These include simply paying employees at the end of their assignments, if at all feasible, or converting to a weekly payday schedule for the purpose of enabling employees to be paid sooner than they would under the semi-monthly pay schedule the Giants adopted, which resulted in employees receiving their paychecks between 10 and 25 days after the work was performed. But perhaps the most practical and risk-adverse pay schedule would be one instituted in accordance with Labor Code Section 201.3(b), even if the employees are not technically employed by a "temporary services employer" within the meaning of that statute. That section provides that the employee's wages are due and payable no less frequently than weekly, regardless of when the assignment ends, and that wages for work performed during any calendar week shall be due and payable not later than the regular payday of the following calendar week.

Melendez is an important reminder that with the growth contingent workforces as well as other arrangements that do not follow the simple Monday through Friday, 9-to-5 work schedule, increasing challenges are likely to be made to employer pay practices of this nature -- especially in view of the great degree of scrutiny California employers find themselves under in a legal environment that is rife with class and representative claims.