California Supreme Court Depublishes Court of Appeal Decision Requiring Employees To Exhaust Administrative Remedies Before Filing Certain Labor Code Claims

Aaron MacDonald, a former employee for the State of California and the California State Assembly, complained to his supervisors that one of them was smoking illegally at the office.  Less than two weeks later, he was fired.  MacDonald filed suit for retaliatory discharge in violation of Labor Code §1102.5 and retaliatory and discriminatory discharge in violation of Labor Code §6310.

MacDonald’s former employers filed demurrers (aka motions to dismiss), which the trial court sustained without leave to amend, holding that MacDonald was required to exhaust the administrative remedy set forth in Labor Code §98.7 before pursuing his statutory claims in court.  As such, the trial court dismissed his Labor Code §§1102.5 and 6310 claims for failure to previously file a complaint with the California Labor Commissioner.

On August 27, 2013, the Court of Appeal agreed and affirmed the trial court’s ruling, holding:

“The rule of exhaustion of administrative remedies is well established in California jurisprudence. “In brief, 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.” [Campbell v. Regents of University of California (2005) 35 Cal.4th 311], 321, quoting [Abelleira v. District Court of Appeal (1941) 17 Cal.2d 280], 292. This is so even where the administrative remedy is couched in permissive, as opposed to mandatory, language. (See Williams v. Housing Authority of Los Angeles (2004) 121 Cal.App.4th 708, 734.) Here, an administrative remedy is provided in section 98.7. Thus, in accordance with Campbell, we conclude that plaintiff was required to exhaust that remedy prior to pursuing the underlying action.”

However, on October 11, 2013, the Legislature enacted Assembly Bill No. 263, which added a new subdivision, namely subdivision (e), to Labor Code §98.7, stating, “[i]n the enforcement of this section, there is no requirement that an individual exhaust administrative remedies or procedures.”

Directly on the heels of Assembly Bill No. 263, on November 26, 2013, the California Supreme Court ordered the Court of Appeal’s decision in MacDonald not published.  Thus, the Court of Appeal’s holding in MacDonald that an employee is required to exhaust the administrative remedy by filing with the Labor Commissioner prior to pursuing an action under Labor Code §§1102.5 and 6310 in court is no longer good law.