California Supreme Court Determines that the Meaning of "Discharge" Under Labor Code Secti

The California Supreme Court ruled last week that although an agreement between a union and an employer may be relevant to a wage and hour lawsuit and may need to be consulted to resolve it, when the parties’ dispute turns on an interpretation of state law — namely, the meaning of “discharge” under Labor Code section 201 — rather than an interpretation of the agreement itself, such a lawsuit is not preempted and state courts may decide it on the merits. (See, Melendez v. San Francisco Baseball Associates LLC (April 25, 2019) 2019 S.O.S. 1953.)

Under California’s labor laws, “[i]f an employer discharges an employee, the wages earned and unpaid at the time of discharge are due and payable immediately.” (Lab. Code, § 201, subd. (a).) In Melendez, the plaintiff employees are security guards at what used to be named AT&T Park in San Francisco and is now named Oracle Park (the park), and they are suing San Francisco Baseball Associates LLC (the Giants) for allegedly violating this provision. They claim they are discharged after every Giants homestand, at the end of the baseball season, and after other events at the park, and they are entitled under Labor Code section 201 to receive their unpaid wages immediately after each such discharge. The Giants deny that the security guards are discharged on those occasions. They contend that Labor Code section 204, which generally requires semimonthly payment of employees’ wages, applies to the guards. The issue before the Supreme Court was whether the lawsuit requires interpretation of the collective bargaining agreement that the guards’ union has entered into with the Giants. If so, this lawsuit is preempted under federal law and must be submitted to arbitration. (See, e.g., Livadas v. Bradshaw (1994) 512 U.S. 107 (Livadas).) In its decision, the Melendez court concluded that, although the agreement between the union and the Giants may be relevant to this lawsuit and may need to be consulted to resolve it, the parties’ dispute turns on an interpretation of state law — namely, the meaning of “discharge” under Labor Code section 201 — rather than an interpretation of the agreement itself. Accordingly, the Melendez court ruled that the lawsuit is not preempted and the state court may decide it on the merits.