Issue
A California Court of Appeal recently considered whether the Labor Management Relations Act preempts a claim based on state wage laws. (Prachasaisoradej v. Ralphs Grocery Co., (2004 Daily Journal D.A.R. 11,115, Cal.App. 2 Dist., Sept. 8, 2004))
Facts
Mr. Prachasaisoradej, who worked for Ralphs Grocery as a produce manager, filed a lawsuit against his employer. He claimed his bonus was calculated in violation of California state law because his employer deducted losses for cash and merchandise shortages, workers’ compensation, tort claims, and other types of losses beyond his control. Ralphs argued that the federal Labor Management Relations Act preempted Mr. Prachasaisoradej’s claim. The trial court agreed, dismissed the lawsuit, and awarded substantial attorney fees to Ralphs.
Appellate Court Decision
The Court of Appeal reversed the trial court’s dismissal of the lawsuit and award of attorney fees to Ralphs.
The purpose of the Labor Management Relations Act is to create a uniform body of federal law to resolve disputes arising from collective bargaining agreements. Federal courts have concluded that the Act preempts claims in state courts if those claims are based on the breach of a collective bargaining agreement or require the interpretation of the agreement. However, the Act does not preempt state claims if they do not depend on collective bargaining agreements. The Court of Appeal concluded that Mr. Prachasaisoradej’s claim did not depend on his employment contract with Ralphs. Even though he was part of a collective bargaining agreement, it provided only that bonuses would not be used to avoid the terms of the agreement. It did not specify how a bonus should be calculated. The Court determined that Mr. Prachasaisoradej’s claim was not based on and required no interpretation of the collective bargaining agreement.
Mr. Prachasaisoradej’s claim was that Ralphs took deductions from his bonus that violated California state law. For example, California employers are not allowed to pass along the costs of workers’ compensation to their employers. They are also prohibited from deducting the costs for inventory or cash shortages from an employee’s wages unless those losses are directly attributable to that specific employee’s intentional or grossly negligent act. These are non-negotiable rights dictated by state law. Parties cannot bargain away those rights with a collective bargaining agreement and the Labor Management Relations Act does not preempt such state laws. The Court determined that Mr. Prachasaisoradej should be allowed to proceed with his lawsuit. It also reversed the award of attorney fees.
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