California Court Answers the Question: When Do California’s Laws Prohibiting Consideration of Arrests Protect Remote Workers?

In Saberin v. Alation, Inc., the Court of Appeal considered whether California’s “no-arrest-record” statute, Labor Code section 432.7, affords protections to employees who work in a different state.¹ While noting how remote work has become increasingly common since the pandemic, the Court of Appeal affirmed the trial court’s order refusing to vacate an arbitration award in the employer’s favor. Even though the employer prevailed in its argument that the remote worker was not protected by the statute, the Court of Appeal’s reasoning counsels caution for personnel actions regarding workers in California and elsewhere. Information about an employee’s arrest or pending charges can pose a dilemma for California employers.

Background

The plaintiff, based in Utah, sued his employer, headquartered in California, in San Mateo County Superior Court, asserting the employer terminated his employment in violation of the Labor Code. The plaintiff was arrested in Florida during his vacation. The employer learned of the arrest when investigating the plaintiff’s absence from work. The employee who located the arrest record worked in Utah. 

The employer terminated the plaintiff’s employment based on the arrest and his dishonesty about why he missed work. The termination decision was made by two employees working in Illinois, though one of them ordinarily worked from his home in California. A third employee working in California provided “input” into the decision. (The plaintiff’s direct supervisor worked in Washington.) The charges against the plaintiff were subsequently dismissed, i.e., he was not convicted.

In arbitration, the defendant prevailed on its argument that the plaintiff lacked any rights under the Labor Code, i.e., that the statute does not apply extraterritorially. The trial court denied the plaintiff’s petition to vacate the arbitration award and the Court of Appeal agreed the arbitrator did not make an error of law. Initially, the Court of Appeal explained that California courts must engage in a statute-specific analysis to determine if a statute applies extraterritorially. The Court of Appeal then ruled that the legislature intended the Labor Code to reach both employees and employers in California. Regarding the latter, the Court of Appeal emphasized that the Labor Code will apply only if the unlawful conduct at issue has a “sufficient connection” to California.² The Court of Appeal held that the connection to California was too tenuous because the termination decision was made by decisionmakers in Illinois at the time. The Court of Appeal deferred to the arbitrator’s factual finding that the “input” from the California employee was not “substantive” in the decision to terminate the plaintiff's employment.

Takeaways

Because the Court of Appeal did not rely merely on the plaintiff’s residence in Utah and considered the particular facts involving the location of the decisionmakers when the decision was made, the opinion counsels caution for California employers when considering arrests and other protected records (e.g., a referral to, and participation in, any pretrial or posttrial diversion program, etc.) for employees working in California and even in a different state. California’s fair employment agency, the California Civil Rights Department (CRD), is aggressively asserting the rights of individuals who have had contact with the criminal justice system.³ Local laws affording such protection continue to proliferate.