Legal Alerts

Plaintiff Must Exhaust Administrative Remedies in Labor Code Retaliation or Discrimination Actions

On August 27, 2013, a California Court of Appeal in MacDonald v. State of California held that an employee must first exhaust the administrative remedy provided by the California Labor Commissioner, set forth in Labor Code section 98.7, prior to bringing claims in civil court for retaliation or discrimination in violation of the Labor Code. This decision creates an opportunity for defendant employers to potentially dismiss Labor Code retaliation or discrimination causes of action early in litigation, due to the procedural deficiency in a plaintiff employee’s complaint.

The plaintiff in MacDonald was employed by the California State Assembly, a defendant in this matter. Several months into his employment, he witnessed his supervisor smoking in the defendant’s offices where he worked, in apparent violation of the California Labor Code and Government Code. The plaintiff, then, complained to his superiors about this incident and was told it was a serious issue which would be addressed. Less than two weeks later, the plaintiff was fired.

The plaintiff brought suit against the defendants under two Labor Code whistleblower statutes, section 1102.5, regarding the violation of state or federal rule or regulation, and section 6310, pertaining to a health or safety concern in the workplace. The defendants demurred to the complaint arguing that the plaintiff failed to exhaust his administrative remedies as provided by Labor Code section 98.7 and required by the California Supreme Court in Campbell v. Regents of University of California (2005) 35 Cal.4th 311, 321. The trial court granted defendants’ demurrer without leave to amend and dismissed plaintiff’s section 1102.5 and 6310 causes of action, for failure to previously file a complaint with the Labor Commissioner as proscribed by section 98.7.

The Court of Appeal affirmed the trial court’s decision, explicitly rejecting a prior Second Appellate District decision, Lloyd v. County of Los Angeles (2009) 172 Cal.App.4th 320, 323, which held that “is no requirement that a plaintiff pursue the Labor Code administrative procedure prior to pursuing a statutory cause of action.” Rather, the MacDonald Court held that Campbell, a California Supreme Court decision, is controlling and clearly stated that:

“the 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 Court in MacDonald noted that Lloyd“inexplicably fails to mention Campbell in its analysis,” and further pointed out that no published California decisions have relied upon Lloyd for the proposition that an employee need not exhaust the administrative remedy provided by the Labor Code prior to bringing a civil suit. With respect to the plaintiff’s claims, then, the Court held that, as Labor Code section 98.7 provides an administrative remedy, the plaintiff was required to first exhaust such before pursuing the underlying action and his failure to do so barred his claims and the demurrer was sustained.

MacDonald makes clear that an employee plaintiff must first exhaust the administrative remedy under Labor Code section 98.7, prior to pursing retaliation or discrimination claims under the Labor Code in civil court. Section 98.7 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.” 

As such, an employee who wishes to file suit under the Labor Code for retaliation or discrimination must first file a complaint with the Labor Commissioner within six months, otherwise his or her claims will be subject to demur for failure to exhaust administrative remedies and likely dismissed without leave to amend. 

The MacDonald decision provides defendant employers with another tool in their arsenal in defending against employee retaliation and discrimination claims brought under the Labor Code. Defendants should review a plaintiff’s civil complaint to determine if an administrative claim was filed with the Labor Commissioner within six months of the alleged retaliatory or discriminatory action and timely demur if the plaintiff has failed to exhaust administrative remedies.

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• Labor & Employment