In today’s world, especially post- COVID-19, many businesses allow employees to work remotely from a location outside of a company’s headquarters. Remote work adds additional complexity to laws affecting the employer-employee relationship. A California Court of Appeal (the “Court”) decision highlights the importance of understanding how your remote employee’s location may impact your company and influence the location of a possible lawsuit between you and the employee.[1]
Background
American Pacific Printers College, Inc., a subsidiary of Comprehensive Print Group LLC (collectively, “Comprehensive Print”), hired Eleanor Malloy (“Malloy”) in 2018 as an assistant to Comprehensive Print’s Chief Executive Officer, Stanley Spencer (“Spencer”) at its Orange County office.[2] In March of 2020, due to the COVID-19 pandemic, Comprehensive Print allowed Malloy to start working remotely from her home in Los Angeles County.[3]
In September of 2020, Malloy told Spencer she was pregnant, and he said she could continue working remotely during and after the pregnancy due to health concerns surrounding the ongoing COVID-19 pandemic.[4] On March 3, 2021, however, at 37 weeks pregnant, Malloy sought emergency medical treatment for pregnancy-related conditions.[5] Malloy sent Spencer and a Comprehensive Print payroll representative a doctor’s note authorizing her leave from work until May of 2021.[6] On March 14, 2021, Malloy gave birth to her son and told Comprehensive Print she planned to return to work in May.[7]
In April before Malloy’s scheduled return to work date, Spencer called Malloy to discuss returning to work in person, but Malloy said she could not for at least a month.[8] Spencer demanded she immediately return to work in person, and the next day, April 13, 2021, called and fired her because she refused.[9] Malloy received a termination letter listing March 3, 2021, as the separation date.[10]
The Lawsuit in Los Angeles County
Thereafter, Malloy filed a lawsuit in Los Angeles Superior Court against Comprehensive Print for pregnancy and gender discrimination and sex- and gender-based harassment in violation of California’s Fair Employment and Housing Act (“FEHA”);[11] interference with leave rights and retaliation under California’s Pregnancy Disability Leave Law (“PDLL”) and California’s Moore-Brown-Roberti Family Rights Act (“CFRA”); failure to prevent harassment, discrimination, and retaliation in violation of FEHA; and wrongful termination.[12] Malloy sued Spencer for sex- and gender-based harassment. [13]
The FEHA Venue Statute
A special FEHA venue statute controls in a “mixed” lawsuit when causes of action under FEHA are brought along with non-FEHA causes of action arising from the same facts as was the case here.[14] FEHA’s venue statute allows plaintiffs to file a lawsuit “in any county in the state in which the unlawful practice is alleged to have been committed, in the county in which the records relevant to the practice are maintained and administered, or in the county in which the aggrieved person would have worked . . . but for the alleged unlawful practice.”[15]
Request for Change of Venue to Orange County
Spencer responded to Malloy’s complaint and requested a change of venue to Orange County[16] because he argued, per the FEHA venue statute, the alleged unlawful practices occurred in Orange County, all lawsuit-related records were in Orange County, and Malloy’s employment was in Orange County where she would have continued to work but for her separation of employment.[17] Malloy asserted proper venue was in Los Angeles County because the unlawful employment practices occurred in Los Angeles County while she worked from home or where she was on protected pregnancy disability leave, and she would have continued working in Los Angeles County at least until June of 2021 if not for the FEHA violations.[18] The Superior Court in a very brief order sided with Spencer and granted his motion for a change of venue to Orange County and also allowed joinders by Comprehensive Print.[19]
Malloy Petitions California Court of Appeal for Review
Subsequently, Malloy filed a writ of mandate with the California Court of Appeal to review the Superior Court’s order granting Spencer’s motion for change of venue to Orange County.[20]
Issue before the Court of Appeal
The issue before the Court was whether any of the alleged unlawful employment practices occurred in Los Angeles County within the meaning of California Government Code Section 12965(c)(3), the special FEHA venue statute, or whether termination of Malloy’s employment before she returned to remote work from her home qualified Los Angeles County as the county Malloy would have worked but for the unlawful practices.[21]
Court of Appeal’s Analysis
1. In What County Did the Unlawful Practice Occur?
In analyzing the FEHA statute, the Court found the alleged unlawful employment practices, sex-, gender-, and pregnancy-based discrimination occurred in Orange County, because that is where Malloy’s employment status evaluations occurred, including the decision to fire her.[22] Interference with Malloy’s PDLL rights, however, occurred in Los Angeles County.[23] Because of her pregnancy-related condition, Malloy’s doctor ordered her on March 3, 2021, not to work through May 9, 2021; Malloy was on leave at her home in Los Angeles County where she worked on March 3, 2021, when Spencer demanded she immediately return to work in Orange County and then fired her when she refused.[24]
The Court said the FEHA venue statute should be construed “broadly to effectuate its purpose” to permit venue in a county most appropriate and convenient to a plaintiff.[25] Thus, it concluded that Malloy properly filed her cause of action for interference with her PDLL rights, and therefore all of her causes of action “arising from the same set of operative facts[,]” in Los Angeles County.[26]
2. Where Would Malloy Have Worked But For the Unlawful Employment Practices?
The Court addressed the remaining arguments and continued analyzing where Malloy would have worked but for the unlawful employment practices, again finding in Malloy’s favor that Los Angeles County was the correct location to have filed the lawsuit; Los Angeles County was where Malloy would have worked but for Spencer’s termination of Malloy’s employment, resulting in interference with her leave rights and retaliation for exercising them.[27]
Conclusion
Ultimately, the Court held in favor of Malloy, ruling that proper venue was in Los Angeles County. [28] For an employer with any remote employees, this highlights the importance of knowing the state and local laws applicable within the employee’s remote location as well as having a thorough understanding of an employee’s rights under federal and state law. California’s FEHA venue statute may sound inconsequential, but its implications are far reaching: if an employee alleges any violation of a FEHA-protected right alongside any other cause of action arising from the same set of facts, that FEHA statute will control, and your remote employee’s location will suddenly become very important and possibly determinative of the outcome of a potential lawsuit. Please reach out to Neumann & Associates, Inc. for questions regarding the analysis of this case as well as to answer any other legal questions you may have.
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[1] See Malloy v. Superior Court, 83 Cal. App. 5th 543 (Sept. 19, 2022).
[2] Id. at 547. Malloy alleges at the Orange County office Spencer “routinely made offensive comments to and about her, including denigrating her because of her gender, expressing an inappropriate interest in her personal life and suggesting they could become a couple.” Id. at 548.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] Id.
[10] Id.
[11] Cal. Gov’t Code Section 12900 et seq.; Malloy, 83 Cal. App. 5th at 547.
[12] Malloy, 83 Cal. App. 5th at 547.
[13] Id.
[14] Id. at 549 (citing Brown v. Superior Court, 37 Cal. 3d 477 (1984)). The Supreme Court in Brown realized that employment discrimination victims are “frequently unemployed—many times as the result of the alleged discrimination” and routinely lack financial resources. Id. at 546 n.3 (citing Brown, 37 Cal. 3d at 486).
[15] Id. at 546; Cal. Gov’t Code § 12965(c)(3)(emphasis added). Section 12965(c)(3) further provides that “if the defendant is not found within any of these counties, an action may be brought within the county of the defendant’s residence or principal office” which parallels California’s general venue statute found in California Civil Code Section 395. Id. at 546 n.2.
[16] The Court notes that “for whatever reason” Spencer is the only defendant in the case who moved to change venue even though the only cause of action alleged against him was for sex- and gender-based harassment. Id. at 553 n.12.
[17] Id. at 549 (quoting Cal. Gov’t Code Section 12965). Spencer alternatively urged the Superior Court to exercise its discretion to order a change of venue to Orange County based on the convenience of witnesses and to promote the ends of justice under California Code of Civil Procedure Section 397(c), but the Superior Court did not rule on that motion. Id. at 549, 560.
[18] And wrongful termination. Id. at 549.
[19] Id. at 550.
[20] Id.
[21] Id. at 553.
[22] Id. at 554. The Court noted that because Malloy learned about the termination via e-mail or phone and not in person did not mean the unlawful practices were committed wherever Malloy was when she received the information; the FEHA venue statute is not that expansive. Id.
[23] Id. at 554-55.
[24] Id. at 555.
[25] Id.
[26] Id. (citing Brown, 37 Cal. 3d at 487)(emphasis added).
[27] Id. at 556-58. Venue is proper where Malloy would have worked but for that demand (Los Angeles County), not where she would have worked had she complied with it (Orange County). Id. at 556.
[28] Id. at 555-56.