|October 23, 2013|
Previously published on Fall 2013
On August 27, 2013, the Court of Appeal for the Third District issued a very favorable decision for employers with regard to exhaustion of administrative remedies. In MacDonald v. State of California (2013) 219 Cal. App. 4th 67, the Third District affirmed the trial court's sustaining of a demurrer without leave to amend on the employee's claim for retaliatory and discriminatory discharge in purported violation of California Labor Code sections 1102.5 and 6310. The basis for the trial court and Court of Appeal's decision was the employee's failure to have taken advantage of the administrative remedy provided to employees by California Labor Code section 98.7. This statutory section provides in pertinent part:
Any person who believes that he or she has been discharged or otherwise discriminated against in violation of any law under the jurisdiction of the Labor Commissioner may file a complaint with the division within six months after the occurrence of the violation.
The plaintiff employee worked for the State of California, specifically the California State Assembly at one of its offices in San Joaquin County. After being hired, plaintiff complained to supervisors that one of his supervisors was illegally and/or inappropriately smoking at defendant's office, in violation of the California Labor Code. One of the supervisors told plaintiff that the smoking issues were a serious problem and would "be addressed." Nonetheless, less than two weeks later, plaintiff was fired. Plaintiff filed a complaint, setting forth causes of action for retaliatory discharge, in violation of section 1102.5, and retaliatory and discriminatory discharge, in violation of Labor Code section 6310. The plaintiff had not taken advantage of the administrative remedies set out in Labor Code section 98.7, whereby he could have filed a claim with the labor commissioner.
Plaintiff asked the Third District to review the decision of the trial court sustaining a demurrer to plaintiff's complaint without leave to amend his claims because the plaintiff argued that the administrative remedy set out in section 98.7 was permissive and not mandatory, and was meant to merely add to the potential remedies available to an aggrieved employee.
In rejecting plaintiff's position and in reaching its decision, the Third District focused significantly on the California Supreme Court's decision in Campbell v. Regents of the University of California (2005) 35 Cal.4th 311. The MacDonald court reiterated the rule of exhaustion of administrative remedies referenced in the Campbell case and which it stated was well-established in California jurisprudence. This rule is that where an administrative remedy is provided by statute, relief must be sought from the administrative body and this remedy exhausted before the courts will act. The MacDonald court, most significantly, said that this rule of administrative remedy exhaustion applies even where the administrative remedy is couched in permissive, as opposed to mandatory, language. The Third District rejected plaintiff's arguments that other appellate decisions controlled, stating that there is no requirement that a plaintiff pursue the Labor Code administrative procedure prior to pursuing a statutory cause of action. The Third District noted that these other cases did not reference Campbell and the Third District believed Campbell was dispositive on the issue, even though the Campbell court never addressed California Labor Code section 98.7. The Third District explained that because the administrative remedy at issue in the case before it was provided by statute, the Campbell case controlled and plaintiff was required to exhaust that remedy before filing suit.
This is a very favorable decision to employers. Many employees may not exhaust their administrative remedies before filing suit, and then will have their claims barred. However, it is unclear whether this decision will be followed by other districts and/or whether this is a legal issue the California Supreme Court may see fit to review.