December 15, 2022 | From HRCalifornia Extra, by Michelle Galbraith, J.D.; HR Adviser, CalChamber 

During the COVID-19 pandemic, nearly 35 percent of U.S. businesses increased their number of teleworkers, according to the U.S. Bureau of Labor Statistics, which also reported that of those businesses, more than 60 percent intend to keep their teleworking arrangements in place permanently. 

“When a business chooses to allow permanent teleworking, a number of employment-related issues are implicated, including timekeeping, expense reimbursement and workers’compensation coverage,” said Bianca N. Saad, CalChamber’s Vice President of Labor and Employment for Content, Training and Advice. “Foundational to all issues, however, is which jurisdiction’s laws apply to the teleworking employee.”  

In general, the laws of the state and/or locality where an employee performs work will govern that worker’s employment relationship. This means that out-of-state workers for a California business may not be covered by California-specific laws such as Paid Sick Leave, Paid Family Leave or the California Family Rights Act. 

And a new case decided by a California Court of Appeal has clarified that this concept extends also to the choice of venue for filing a lawsuit under the California Fair Employment and Housing Act (FEHA). The court held that a teleworking employee may bring suit against her employer in the county where she performed work, rather than in the county where the employer’s office is located (Malloy v. Superior Court, 83 Cal.App.5th 543 (2022)). 

Wrongful Termination 

In 2018, Eleanor Malloy began working for Comprehensive Print Group, LLC at a location in Orange County as an assistant to its CEO, Stanley Spencer. The complaint she would later file alleged that for the first 18 months of employment, Spencer made a number of offensive comments to her.  

In March of 2020, Malloy and her coworkers began working remotely due to the COVID-19 pandemic. That September, Malloy informed Spencer that she was pregnant. According to her complaint, he congratulated her and stated that she could continue working from home during and after her pregnancy. Malloy’s doctor placed her on a two-month-long pregnancy disability leave (PDL).  

But just over a month into her pregnancy leave, Malloy claimed that Spencer called her to discuss her availability for in-person work. When she informed him that if she had to return in person, she would need an extra month of leave to find childcare, he fired her for refusing to “immediately” return to work.  

Malloy filed suit for various harassment, discrimination and wrongful termination claims in Los Angeles County Superior Court; this was the county in which she resided and where she was performing work at the time of termination.  

Spencer moved to change venue to Orange County Superior Court, the county of Comprehensive Print Group’s primary location. Spencer stated that all alleged misconduct occurred in Orange County; records and witnesses relevant to her employment were in Orange County; and that had she not been terminated, she would be working in Orange County.  

Malloy countered that the illegal act — wrongful termination — occurred when she was at her home in Los Angeles County, which also is where Comprehensive Print Group delivered all termination paperwork to her. Additionally, she stated that had she not been terminated, she anticipated continuing to work from home. The trial court disagreed and changed the venue to Orange County. 

Malloy appealed. 

Selecting Appropriate Venue 

California’s FEHA states that an employee may file a lawsuit in the county where an unlawful employment practice was committed, where the records relevant to the lawsuit are maintained, or where the employee would be working had the unlawful practice not occurred.  

As pointed out in the appellate court’s opinion, the Legislature allowed plaintiffs this flexibility around venue, recognizing that geography could create a barrier to filing a FEHA-related lawsuit. Additionally, the Supreme Court has recognized that victims of wrongful employment actions may be unemployed and could lack the financial resources to travel to a distant county to pursue litigation.  

Turning to the factors used for determining appropriate venue, the Malloy court agreed with Spencer that the allegedly unlawful acts took place in Orange County, as Spencer evaluated Malloy’s availability and made the decision to fire her from his office there. And although Malloy received the termination phone call at her home in Los Angeles County, the court stated that doesn’t mean the unlawful practices were committed wherever Malloy was at the time she received the information. The court pointed out that if an employee is terminated over the phone while on vacation in Lake Tahoe, that doesn’t mean that the venue for a wrongful termination suit would be Lake Tahoe.  

However, the court placed more weight on the location where Malloy felt the impact of Spencer’s actions, as opposed to his location when he performed them. For example, Malloy claimed that Spencer unlawfully interfered with her ability to take PDL. At the time of her termination, Malloy was taking leave in Los Angeles County, and had Spencer not fired her, she would have continued her leave in that location. Therefore, the court said, any interference with her ability to take that leave had to occur in Los Angeles County.  

Turning to the question of where Malloy would have worked had the allegedly unlawful act not occurred, the court again agreed that it would have been Los Angeles County. Spencer’s demand that Malloy return to work in Orange County constituted the basis of her unlawful interference with leave claim. The court determined that venue is proper where Malloy would have worked were it not for that demand — not where she would have worked if she’d complied with it.  

Finally, the court noted that requiring venue in the county of a business’ corporate office would create a hardship for many employees in the modern workforce.  

The court considered the modern realities of employees today interviewing, filling out hiring paperwork and conducting 100 percent of their job duties remotely and away from their employer’s location. Requiring those workers to travel to the county of their employer’s headquarters, according to the court, would create barriers to enforcement of employee protection laws.  

The court therefore held that Spencer’s motion to change venue to Orange County should be denied and the case restored to Los Angeles County Superior Court.  

Lessons for Employers 

Here are a few key takeaways for employers in light of this decision:  

  • The Malloy holding is specific to the FEHA claims made by the plaintiff; lawsuits brought under other statutes may have different standards for establishing a venue. 
  • Consider the potential impact of other jurisdictions’ laws when determining whether to permit teleworking; if you allow remote work, review state and local laws for all locations where remote employees work, and ensure that they are provided with appropriate posters and notices for those locations. 
  • The venue question is just one small aspect of Malloy’s claim for wrongful termination, which will now proceed through the trial court on her substantive claims. Employers can avoid similar litigation problems by training managers on employee leave entitlements and consulting with legal counsel prior to terminating an employee on a protected leave.