California Supreme Court Allows Labor Picketing at Shopping Center

But, the Court also held that the Ralphs Grocery parking lot at the Sacramento area center is NOT a public forum, where speech cannot be prevented.  We posted about the Court of Appeal's decision here, by the way.

The Supreme Court decided that two provisions of California law can protect labor picketing against trespass claims, even though the picketing occurred on private property - a parking lot and entrance to a Ralphs store.   The picketing would be allowed even if non-labor picketing would constitute a trespass.   The way the law allows this is by limiting the grounds under which courts will issue injunctions against picketing to narrow circumstances.  For good measure, the law makes it harder to prove those circumstances than other types of cases.

That sounds a lot like a First Amendment violation to me, because the government is picking and choosing what kind of speech is worthy of protection and what is not.  And that is what Justice Chin essentially said in dissent.  But, the Supreme Court majority disagrees with yours truly on that point, and the Court tends to hold more sway than Greggy's blog, no matter how wrong it is. I kid. :)

OK, here comes a long explanation if you can hang in there - 


So, here's what happened as told by the Supreme Court-

When the College Square Foods Co store opened in July 2007, agents of defendant United Food and Commercial Workers Union Local 8 (the Union) began picketing the store, encouraging people not to shop there because the store‘s employees were not represented by a union and did not have a collective bargaining agreement. The Union‘s agents, in numbers varying between four and eight, walked back and forth on the entrance walkway carrying picket signs, speaking to customers, and handing out flyers. These activities generally occurred five days a week (Wednesday through Sunday) for eight hours a day. The Union‘s agents did not impede customer access to the store.

[ I bolded this because if the union did block access to the store, even the union-friendly law under review would permit an injunction]... Anyway, more from the Court's opinion -

In January 2008, Ralphs notified the Union in writing of its regulations for speech at its Foods Co stores, including the one in College Square. Those store regulations prohibit speech activities within 20 feet of the store‘s entrance and prohibit all such activities during specified hours and for a week before certain designated holidays. The store regulations also prohibit physical contact with any person, the distribution of literature, and the display of any sign larger than two feet by three feet. The Union‘s agents did not adhere to Ralphs‘s speech regulations. In particular, they handed out flyers and stood within five feet of the store‘s entrance. Ralphs asked the Sacramento Police Department to remove the Union‘s agents from the College Square Foods Co store, but the police declined to do so without a court order.

OK, so why did the police refuse to get rid of the trespassers on Ralph's private property?   Because they're in a union, too.   They said would only enforce a court order prohibiting the conduct, unless they saw some sort of crime occurring, which was not happening.  So, off Ralphs went to Court for an injunction, where it met the Moscone Act. 

In essence, the Moscone Act (actually two different laws) says that courts cannot enjoin peaceful picketing, gathering, etc. It also imposes a tough evidentiary burden on employers seeking to obtain an injunction, including a requirement of live witness testimony.

The Court of Appeal decided that Ralphs parking area and store entrance were not public forums, so California's broad constitutional right to free speech in public areas would not apply.  Then  the Court of Appeal said that the Moscone Act unconstitutionally permitted some kinds of speech on private property (labor protests), but did not protect others (e.g., anti-abortion protests).  The lower Court reasoned that when the government chooses one type of content for protection, that violates the First Amendment.

On review, the Supreme Court first held that every outdoor shopping plaza is not a public forum, where the First Amendment protects all kinds of speech:

to be a public forum under our state Constitution‘s liberty-of-speech provision, an area within a
shopping center must be designed and furnished in a way that induces shoppers to congregate for purposes of entertainment, relaxation, or conversation, and not merely to walk to or from a parking area, or to walk from one store to another, or to view a store‘s merchandise and advertising displays.

Applying this standard, the Court then decided that the College Station shopping plaza was not a protected public shopping mall where the First Amendment would apply.

So, now, Ralphs has private property and it wants to eject or limit conduct on its property via an injunction against a trespasser.  The Supreme Court had to decide if the Moscone Act's limits on injunctions violated Ralph's constitutional rights.

The Supreme Court decided the Court of Appeal was wrong, and that the Moscone Act can favor union picketing on private property without violating the Constitution.  Here is the Court's explanation of the law itself:

certain activities undertaken during a labor dispute are legal and cannot be enjoined. (Id., §527.3, subd. (b).) Those activities are:

“(1) Giving publicity to, and obtaining or communicating information regarding the existence of, or the facts involved in, any labor dispute, whether by advertising, speaking, patrolling any public street or any place where any person or persons may lawfully be, or by any other method not involving fraud, violence or breach of the peace.

“(2) Peaceful picketing or patrolling involving any labor dispute, whether engaged in singly or in numbers.

“(3) Assembling peaceably to do any of the acts specified in paragraphs (1) and (2) or to promote lawful interests.” (Code Civ. Proc., § 527.3, subd. (b).)

Expressly excluded from the Moscone Act’s protection, however, is “conduct that is unlawful including breach of the peace, disorderly conduct, the unlawful blocking of access or egress to premises where a labor dispute exists, or other similar unlawful activity.” (Code Civ. Proc., § 527.3, subd. (e).)

In addition, the law imposes burdens on courts and businesses seeking injunctions for violations:

Section 1138.1 prohibits a court from issuing an injunction during a labor dispute unless, based upon witness testimony that is given in open court and is subject to cross-examination, the court finds each of these facts:

“(1) That unlawful acts have been threatened and will be committed unless restrained or have been committed and will be continued unless restrained, but no injunction or temporary restraining order shall be issued on account of any threat or unlawful act excepting against the person or persons, association, or organization making the threat or committing the unlawful act or actually authoriz[ing] those acts. “(2) That substantial and irreparable injury to complainant’s property will follow.

“(3) That as to each item of relief granted greater injury will be inflicted upon complainant by the denial of relief than will be inflicted upon defendants by the granting of relief.

“(4) That complainant has no adequate remedy at law.

“(5) That the public officers charged with the duty to protect complainant’s property are unable or unwilling to furnish adequate protection.” (§ 1138.1, subd. (a).)

OK, I've bolded what makes the Moscone Act tough on those who seek injunctions even against violent union conduct that is unprotected.  First, in most cases, a court will issue a temporary injunction  on papers.  For labor injunctions, there must be live testimony. Second, the injunction can be issued only against individuals that violate the Act specifically, not against a whole union, absent proof that the whole union is actually authorizing the conduct. Tough to get the names of the folks breaking stuff outside your store, right?
Oh, and you have to put on evidenced that the police cannot or will not help. Easy breezy!  These requirements just do not apply to temporary injunctions in other contexts.

So, the Supreme Court did not see a problem with this. First, the Court surveyed a long line of cases recognizing the rights of unions to conduct peaceful picketing on private walkways outside of businesses.  The Court then did its best to overcome federal decisions holding that laws could not restrict one kind of speech, but not another.  The Supreme Court's rationale was that the Moscone Act does not restrict speech, it merely insulates union speech from legal action.

The Supreme Court apparently does not agree that the general rules permitting injunctions restrict speech on private property.  That is, if you come to my business to picket about some non-labor related issue, I can obtain an injunction more easily because I don't have to follow the Moscone Act. As such, the California Code of Civil Procedure contains a content bias.

Anyway, there are a number of concurring and dissenting opinions, too. The Chief Justice tried to write a concurrence softening the blow of the majority ruling, but Justice Liu essentially called "bull" on the CJ's opinion, arguing that the CJ's interpretation of the majority's opinion was not supported.  As I said earlier, Justice Chin wrote a dissent that I thought was correct, but what do I know?

This may not be the end of this discussion. The Court appears to have opined on federal law, which means that the U.S. Supreme Court likely has jurisdiction to consider whether the First Amendment trumps California law.  We will see what happens next.

I know, long post, but complex issue.  Bottom line - business owners have little power to exclude union picketing, absent (1) fairly egregious conduct (2) money to conduct a mini-trial in court to obtain an injunction and/or (3) business-friendly local politicians / police.  I emphasize that this decision applies to any business located on private property, such as an office park complex.  It's not limited to grocery stores or malls.  The Moscone Act protects picketing from trespass injunctions all over the place.

The opinion is Ralphs Grocery Co. v. UFCW, Local 8 and the opinion is here.

Court of Appeal: Employee May Use Ralph Act in Certain Sexual Harassment Cases

Sylvia Ventura was a custodian, working for American Building Maintenance or ABM.  According to her lawsuit, she suffered serious harassment, including touching, threats, etc.  She sued not under the Fair Employment and Housing Act, but under what is known as the Ralph Act, Civil Code Section 51.7.   That section provides in part:

All persons within the jurisdiction of this state have the right to be free from any violence, or intimidation by threat of violence, committed against their persons or property because of political affiliation, or on account of any characteristic listed or defined in subdivision (b) or (e) of Section 51, or position in a labor dispute, or because another person perceives them to have one or more of those characteristics.

So, one of the characteristics in Section 51(b) or (e) is sex. Therefore, violent acts that would be consistent with "sexual harassment" in employment law fall within this definition. 

But the Ralph Act does not require employees to file an administrative charge, the remedies are different, and the statute of limitations is longer. There also is no requirement that the offending conduct satisfy the "hostile work environment" standard applicable to sexual harassment cases.

Upholding a jury's verdict, the court of appeal decided (2-1) that the Ralph Act applies in employment cases, despite overlap with the FEHA. There is precedent for this conclusion.  But the court also held that the Act covered the conduct alleged, even though there was little to no evidence that the harasser was motivated by negative feelings about the plaintiff's sex, i.e., hate.  Rather, the evidence at trial showed that he was enamored / in love, which caused him to engage in inappropriate conduct. 

As the dissent points out, the majority's decision may expand the Ralph Act to cover more than it was intended to address.  It also potentially creates a major collision with the Fair Employment and Housing Act for the reasons I explained above. 

The rest of the opinion, unfortunately, is an indictment of the defense attorneys' advocacy.  For example, the court of appeal noted that the jury found for the plaintiff on a negligence claim, which should have been barred by Workers' Compensation preemption. The court of appeal held that issue was waived because it was not argued in the trial court.  The court of appeal noted other waivers and alleged errors as well, including the failure to differentiate among the defense entities to identify the employer and exonerate the non-employers.  Reading this opinion, one can't help but conclude that getting this employment law litigation business right is tough. There are a lot of time-sensitive substantive and procedural matters to juggle, especially at trial.

The case is Ventura v. ABM Industries Inc., et al. and the opinion is here.






 

California Employers - Don't Forget your EITC Notice....

EITC? Huh?  The California Legislature requires employers to give annual notices to all employees of their right to claim an Earned Income Tax Credit.  Information and sample notices - here.

Happy holidays!

Greg

Court of Appeal Endorses "Business Judgment" Jury Instruction in Discrimination Cases

The court of appeal in Veronese v. Lucasfilm issued a highly significant ruling that will bring some balance to jury instructions in discrimination cases.  The pattern jury instructions (called CACI) do not address adequately that the jury is responsible for finding illegal discrimination only.  It is not entitled to second-guess whether the employer's judgment was sound, whether the employer correctly determined the plaintiff was a bad employee, etc.   Put another way, the employer's business judgment is entitled to deference unless there is evidence of illegal motivation.

So, Lucasfilm was going to hire Julie Veronese to help manage George Lucas's estate. Veronese is the wife of an employment law attorney, plaintiff's side. Ultimately, the employment relationship did not work out, which Veronese attributed to her pregnancy.  Lucasfilm asserted legitimate reasons for ending Veronese's temporary assignment, and for not hiring her into a regular job.    A jury found against Lucasfilm on some claims, awarding her six figures. The attorney's fees award, though, was over one million dollars (!).  [I'm in the wrong business. -ed.].  Oh wait. Right business; wrong side!

Anyway, the employer appealed, primarily arguing that the trial court refused to give what was called a "business judgment" jury instruction.   The court of appeal agreed that the instruction should have been given.  Here is the discussion.

Judge Taylor instructed the jury that it should find for Veronese if her pregnancy was “a motivating reason” for Lucasfilm’s decision, specifically instructing as follows: “Julie Gilman Veronese must prove . . . [t]hat [her] race, gender or pregnancy, or her complaint about pregnancy discrimination was a motivating reason for the discharge . . . .” And “A motivating reason is a reason that contributed to the decision to take action, even though other reasons also may have contributed to the decision.” The instruction was based on CACI 2500. * * * *
It Was Error to Refuse a “Business Judgment” Instruction
Lucasfilm proposed special instruction no. 9, as follows: “You may not find that Lucasfilm discriminated or retaliated against Julie Gilman Veronese based upon a belief that Lucasfilm made a wrong or unfair decision. Likewise, you cannot find liability for discrimination or retaliation if you find that Lucasfilm made an error in business judgment. Instead, Lucasfilm can only be liable to Julie Gilman Veronese if the decisions made were motivated by discrimination or retaliation related to her being pregnant.”

* * *

Refusing this instruction was error.  * * * *
 As our colleagues in Division One have put it, a plaintiff in a discrimination case must show discrimination, not just that the employer’s decision was wrong, mistaken, or unwise. (Reeves v. MV Transportation, Inc. (2010) 186 Cal.App.4th 666, 673-674.) Or, as another Court of Appeal has said, “ ‘The employer may fire an employee for a good reason, a bad reason, a reason based on erroneous facts, or for no reason at all, as long as its action is not for a discriminatory reason. . . . “While an employer’s judgment or course of action may seem poor or erroneous to outsiders, the relevant question is . . . whether the given reason was a pretext for illegal discrimination. The employer’s stated legitimate reason . . . does not have to be a reason that the judge or jurors would act on or approve.” ’ ” (Arteaga v. Brink’s, Inc. (2008) 163 Cal.App.4th 327, 344; accord, Hersant v. Department of Social Services (1997) 57 Cal.App.4th 997, 1005.) In Guz v. Bechtel National Inc. (2000) 24 Cal.4th 317, 358, the Supreme Court affirmed a summary judgment for the employer in an age discrimination case. Doing so, the court noted as follows: “On the other hand, if nondiscriminatory, Bechtel’s true reasons need not necessarily have been wise or correct. [Citations.] While the objective soundness of an employer’s proffered reasons supports their credibility . . . , the ultimate issue is simply whether the employer acted with a motive to discriminate illegally. Thus, ‘legitimate’ reasons [citation] in this context are reasons that are facially unrelated to prohibited bias, and which, if true, would thus preclude a finding of discrimination. (See, e.g., Kariotis v. Navistar Intern. Transp. Corp. (7th Cir. 1997) 131 F.3d 672, 676 [suggesting that proffered reasons, if ‘nondiscriminatory on their face’ and ‘honestly believed’ by employer, will suffice even if ‘foolish or trivial or baseless’]; McCoy v. WGN Continental Broadcasting Co. (7th Cir. 1992) 957 F.2d 368, 373 [ultimate issue is whether employer ‘honestly believed in the reasons it offers’]; see also Fuentes v. Perskie (3d Cir. 1994) 32 F.3d 759, 765 [issue is discriminatory animus, not whether employer’s decision was ‘wrong or mistaken,’ or whether employer is ‘wise, shrewd, prudent, or competent’].)”

 There are other significant jury instructions discussed, including relating to damages.  But the above discussion is key. That is because the jury only has to find discrimination /retaliation are "a" motivating reason for taking action. And a jury only has to find discrimination / retaliation by a "preponderance" of the evidence (50.00001%).   So, the employer should be able to argue to the jury that a decision the jury disagrees with is not ipso facto discriminatory.  Before this decision, it was hard to persuade trial judges to give these instructions.

The case is Veronese v. Lucasfilm LTD and the opinion is here.

U.S. DOT Rejects State Laws Re Marijuana Legalization

The U.S. Department of Transportation requires drug testing of certain commercial vehicle operators, and requires employers to ensure drivers who test positive do not drive.
In the November 2012 elections, states such as Washington and Colorado passed laws legalizing recreational use of marijuana.  There also is a growing number of states with medical marijuana laws.
The DOT has now issued a response to these laws, available here.  In essence, the DOT says that state laws do not affect the federal agency's enforcement position:

We want to make it perfectly clear that the state initiatives will have no bearing on the Department of Transportation’s regulated drug testing program. The Department of Transportation’s Drug and Alcohol Testing Regulation – 49 CFR Part 40 – does not authorize the use of Schedule I drugs, including marijuana, for any reason.

Therefore, Medical Review Officers (MROs) will not verify a drug test as negative based upon learning that the employee used “recreational marijuana” when states have passed “recreational marijuana” initiatives.

We also firmly reiterate that an MRO will not verify a drug test negative based upon information that a physician recommended that the employee use “medical marijuana” when states have passed “medical marijuana” initiatives.

It is important to note that marijuana remains a drug listed in Schedule I of the Controlled Substances Act. It remains unacceptable for any safety‐sensitive employee subject to drug testing under the Department of Transportation’s drug testing regulations to use marijuana.


We want to assure the traveling public that our transportation system is the safest it can possibly be.

IRS 2013 Standard Mileage Rates

The IRS has increased the standard mileage rate for business expenses to 56.5 cents per mile from its current rate of 55.5 cents.  The change will be effective January 1, 2013.  The other mileage reimbursement rates will be

- 24 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations

The IRS announcement is here.

Do You Know Minimum Pay in San Jose?

"LA is a great big freeway. Put a hundr"...oh, is this on?  Oops.

San Jose's voters approved a $10.00 minimum wage, indexed to inflation beginning in 2014. (The California state minimum wage is $8.00.)  San Jose joins San Francisco as the second city to pass its own city wide minimum wage.

The new, 6-page ordinance has a bunch of additional provisions in it.  Payroll records must be kept for four years.  There is a new poster required.  Every employer must provide new employees with the employer's name and address in writing.  The anti-retaliation provision says that any adverse action taken within 90 days of an employee's protected activity related to the minimum wage is presumed to be retaliation.  Oh, and there is a penalty of $50 per employee per pay period for non-compliance.  The ordinance allows for government enforcement, and also creates a private right of action for violations as well.

The new wage is effective 90 days from when its November election is certified.  Our friends at the Cal Chamber say that the new wage will take effect in March 2013 or so.

Here is the ordinance.

Thanks for the tip, Cal Chamber. Happy Thanksgiving everyone.  If you know the owner of a small business in San Jose, you may wish to let him or her know about the new ordinance before he or she is litigated, fined, etc. out of business.

DGV

Court of Appeal: No Dress Code Class Action

Wet Seal is a retailer.   Here are various dress code policies the Company maintained for store employees:

“**Store Employees:

“The Wet Seal, Inc. store employees represent our Company and are required to dress in accordance with the current Company Dress Code guidelines. All employees are required to dress in a manner that is both respectful of our Customers and consistent with the current fashion attire that is reflected in the stores.

“The current Field Dress Code Guidelines can be found in the Store Operations Policies & Procedures Manual. Inappropriate dress will not be tolerated. Any violations of this policy may result in a disciplinary action up to and including termination. . . .”
***

“Wet Seal Employees represent Wet Seal to our Customers. Our Employees must exemplify the fashionable image we want to portray to our Customer. The Employee discount is a benefit that is offered to Employees to purchase and wear current store fashion merchandise. Employees are encouraged to wear Wet Seal merchandise at all times. It is essential that the Employees reflect Wet Seal style during working hours.*

“. . .

“*If an Employee does not have Wet Seal merchandise the Employee should wear clothing consistent with Wet Seal’s brand.”

***

“The Wet Seal and Arden B store Employees represent our Company and are required to dress in accordance with the current Company Dress Code Guidelines. All Employees are required to dress in a manner that is both respectful of our Customers and consistent with the current fashion style that is reflected in the stores. Employees are not required to wear the Company’s clothing.

“Those employees interested in purchasing company merchandise are eligible for an employee discount. . . . Employees are invited to wear Wet Seal or Arden B clothing during work hours, but are not required to do so.”

***

***“Wet Seal team members represent Wet Seal to ‘OUR GIRL.’ Our team members must exemplify the fashionable image we want to portray to ‘OUR GIRL.’ The employee discount is a benefit offered to employees to encourage them to purchase and wear current store fashion. Team members are required to dress in a manner that is both respectful of ‘OUR GIRL’ and consistent with the current fashion trends that are reflected in our stores.”


***

“As a Fashionista on the sales floor, you must represent the Arden B brand, current fashion trends and current color stories presented on the sales floor. [¶] Team members are required to dress in a manner that is both respectful to our customer, professional and consistent with the current fashion trends that are reflected in our stores.” ***

The plaintiffs claimed that the above policies constituted a "uniform," or that the company was mandating that employees buy the company's product, such that the employees should be reimbursed for dressing in the Company's clothing. 

None of this sounds like a uniform / mandatory purchase policy to me.  But what do I  know, I'm just a defense lawyer.   That said,  the plaintiffs in a class action lawsuit alleged "they were told by their managers that the 'Company' required employees to dress in Wet Seal merchandise 'at all times.'" And, "when she was hired her manager told her that the Company required all store employees to dress in Arden B clothing and that the dress code was 'all Wet Seal clothing and accessories.'"

The trial court, though, denied class certification, in part because the above policies did not create a blanket requirement to buy the company's product, or a "uniform," i.e., clothes of a distinctive design or color, and did not mandate purchase of the company's product.

The court of appeal agreed:

First, the written policies do not state that employees were “required” to purchase Wet Seal clothing as a condition of employment. Thus, answering the “central” liability question whether Wet Seal employees were required to wear Wet Seal clothing as a condition of employment or otherwise compelled to purchase Wet Seal merchandise would require several individualized inquiries including “(1) what, if anything, the employee was told by his or her store manager regarding purchasing Wet Seal clothing or wearing Wet Seal clothing to work; (2) if such a discussion occurred, when and with whom the employee had that discussion; (3) how the employee interpreted that discussion; (4) whether the employee’s interpretation was reasonable; and (5) whether the employee then purchased Wet Seal clothing to wear to work pursuant to that discussion.”

Second, the written policies do not “explain with any specificity” what employees are required to wear, but instead use broad and vague standards like requiring employees to dress in a manner “ ‘consistent with the current fashion style that is reflected in the stores’ . . . .” Thus, for example, determining whether the attire allegedly required by Wet Seal constitutes a uniform within the meaning of Wage Order 7 would require several individualized inquiries, including “(1) what was the current fashion style reflected in each store at a given period of time; (2) whether that style was of a distinctive color or design; (3) how each store manager interpreted the phrase ‘Wet Seal style’ or ‘consistent with the current fashion style that is reflected in the stores’; (3) whether each manager required the employees to wear clothing of a distinctive design or color; and (4) whether each manager required the employees to wear clothing that is usual or generally usable in the occupation.”

Third, because the written policy does not describe what an employee is supposedly required to wear, the court found that individualized inquiries would be necessary in order to determine whether any given purchase by an employee constituted a “necessary expenditure” within the meaning of section 2802. For example, individualized inquiries would be necessary to address “(1) what, if anything, the manager told the employee regarding the required wardrobe; (2) assuming the employee purchased certain wardrobe items to wear to work, where the employee purchased those items; and (3) the particular wardrobe items actually purchased.”

The trial court also found that the evidence submitted by both sides demonstrates that the plaintiffs’ theory of liability regarding its dress code claim is not “reasonably susceptible to common proof but rather would require individualized inquiries into a myriad of circumstances depending on the particular direction of individual store managers and supervisors at numerous stores in widely varying locations and over the course of many years.” In reaching this conclusion, the court expressly found that the plaintiffs’ evidence, particularly the 55 employee declarations, demonstrate that “the common written dress code policy did not lead to common dress code practices.”

So, two things - a mushy dress code policy that suggests purchasing company clothing, but does not require it, and that does not mandate a particular color or article of clothing, will not support a uniform / mandatory purchase lawsuit on a class wide basis.  Second, local managers' local policies can still result in significant liability on an individual employee basis, even if class certification is not approved.  So, as always, the devil is in the details.

The case is Morgan v. Wet Seal and the opinion is here. 

San Francisco Minimum Wage to $10.55 effective January 1, 2013

The San Francisco Office of Labor Standards Enforcement announced that the San Francisco minimum wage will increase to $10.55 per hour, effective January 1, 2013.  The statewide minimum is $8.00 per hour.

This hourly rate, up from $10.24 in 2012, is indexed to inflation.  There will be a new minimum wage poster too, natch.  Find it, along with other information about the SF Minimum Wage Ordinance, here.

2013 New California Employment Laws

Our friends at the California Chamber of Commerce sent out this list of new California employment laws taking effect in 2013 (here).  These new statutes are only part of the story though, as the California courts are busy issuing rulings that shape California employment laws.   Let's not forget the federal agencies and courts doing their part as well.

Where will you learn about the most important federal and state rulings and laws changing workplace law in 2013?  That's right, at our annual legal update.  We are offering a live session and a webinar.  Get information here

Greg

California Supreme Court De-Publishes Administrative Exemption Case

I posted about the Court of Appeal's opinion in Harris v. Superior Court here.  That decision, on remand from the California Supreme Court, would have severely limited the administrative exemption.  Fortunately, the California Supreme Court has now de-published the decision (here), so it is no longer good law.  The bad news is that the Supreme Court's guidance on the administrative exemption is rather vague and remains open to lower courts' interpretations.

NLRB: Lawful "At Will" Policies

Here's a long post on employment at will and the NLRB.  But it's worth it!

The NLRB announced on October 31, 2012, that the Office of General Counsel issued advice memoranda regarding "at will" employment policies.  Both employed the same analysis. The General Counsel in both cases determined that the employers' at will language did not violate the NLRA.

The first memo (here) addressed the at-will policy in a Mimi's Cafe's handbook, taken from a restaurant in Arizona.  The policy language was:

AT-WILL EMPLOYMENT

The relationship between you and Mimi's Cafe is referred to as  "employment at will." This means that your employment can be  terminated at any time for any reason, with or without cause, with or without notice, by you or the Company. No representative of the Company has authority to enter into any agreement contrary to the foregoing "employment at will" relationship. Nothing contained in this handbook creates an express or implied contract of employment.

The second memo (here) addressed the at will disclaimer in the handbook of Rocha Transportation, a Modesto, California employer.   The policy at issue read:

Employment with Rocha Transportation is employment at-will. Employment at-will may be terminated with or without cause and with or without notice at any time by the employee or the Company. Nothing in this Handbook or in any document or statement shall limit the right to terminate employment at-will. No manager, supervisor, or employee of Rocha Transportation has any authority to enter into an agreement for employment for any specified period of time or to make an agreement for employment other than at-will. Only the president of the Company has the authority to make any such agreement and then only in writing.

The General Counsel analyzed whether the above "bolded" language in the respective handbooks was unlawful under the NLRA.  Why?  Because the NLRA protects employees rights to organize or engage in concerted activities for their mutual aid and protection.  These are called "Section 7 rights." Even neutral policies that infringe on those rights can be held illegal.

The General Counsel analyzed the policies in a similar way.  This language is quoted from the Rocha memorandum:

An employer violates Section 8(a)(1) of the Act through the maintenance of a work rule or policy if the rule would "reasonably tend to chill employees in the exercise of their Section 7 rights." The Board has developed a two-step inquiry to determine if a work rule would have such an effect. First, a rule is unlawful if it explicitly restricts Section 7 activities. Second, if the rule does not explicitly restrict protected activities, it will nonetheless be found to violate the Act upon a showing that: (1) employees would reasonably construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule has been applied to restrict the exercise of Section 7 rights . . .
(footnotes omitted).

The General Counsel decided the policies did not explicitly restrict Section 7 rights. Neither business issued the policies in response to union activity, and there was no evidence that the policy was applied to restrict Section 7 rights.  

That left the issue of whether employees "would reasonably construe" the at will policies to prohibit Section 7 activity.  The General Counsel decided this policy language would not: 

The provision does not require employees to refrain from seeking to change their at-will status or to agree that their at-will status cannot be changed in any way. Instead, the provision simply prohibits the Employer's own representatives from entering into employment agreements that provide for other than at-will employment.10 Indeed, the provision explicitly permits the Employer's president to enter into written employment agreements that modify the employment at-will relationship, and thus encompasses
the possibility of a potential modification of the at-will relationship through a collective -bargaining agreement that is ratified by the Company president. Accordingly, we conclude that employees would not reasonably construe this provision to restrict their Section 7 right to select a collective -bargaining representative and bargain collectively for a contract.

Here is the General Counsel's analysis of the Mimi's Cafe policy:

We conclude that the contested handbook provision would not reasonably be interpreted to restrict an employee's Section 7 right to engage in concerted attempts to change his or her employment at-will status. First, the provision does not require employees to refrain from seeking to change their at-will status or to agree that their at-will status cannot be changed in any way. Instead, the provision  simply highlights the Employer's policy that its own representatives are not authorized to modify an employee's at-will status. Moreover, the clear meaning of the provision at issue is to reinforce the Employer's unambiguously- stated purpose of its at-will policy: it explicitly states 'Jnjothing contained in this handbook creates an express or implied contract of employment." It is commonplace for employers to rely on policy provisions such as those at issue here as a defense against potential tolegal actions by employees asserting that the employee handbook creates an enforceable employment contract.10 Accordingly, we conclude that employees would not reasonably construe this provision to restrict their Section 7 right to select a collective -bargaining representative and bargain collectively for a contract when considered in context.11 The Region should therefore dismiss, absent withdrawal, the Charging Party's allegation that the Employer's employment at-will policy violates Section 8(a)(1).

(footnotes and citations omitted). 

You may have read that the NLRB was waging war against at will employment policies.  In fact, an administrative law judge previously held that an acknowledgment of employment at will --- "I further agree that the at-will employment relationship cannot be amended, modified or altered in any way." -- was unlawful.  However, the General Counsel noted that the parties settled before the Board could review the ALJ's decision.  The General Counsel stated the law in this area is "unsettled" and that the NLRB offices should submit all cases for review before proceeding.

So, "at will" gets a bit of a reprieve.  It may be wise to have your policy language reviewed for compliance with the NLRA, at least once this area of the law is settled.

DGV

Rounding Hours Worked Is OK if Done Correctly

This post is brought to you by.... See's Candies.  Mmmmm nuts and chews.And their workers still give out those free samples. 

It turns out that See's also can deliver a tasty precedent! From the Court of Appeal.

See's Candy uses a timekeeping software system, known as Kronos, to record its employee work hours. Employees are required to "punch" into the system (located in the back room of each See's Candy store) at the beginning and end of their shifts, as well as for lunch breaks. A Kronos punch shows the actual time (to the minute) when the employee punched into the system. During the relevant times, See's Candy calculated an employee's pay based on his or her Kronos punch times, subject to adjustment under two policies: (1) the nearest-tenth rounding policy; and (2) the grace period policy.

Under the nearest-tenth rounding policy, in and out punches are rounded (up or down) to the nearest tenth of an hour (every six minutes beginning with the hour mark). The Kronos time punches are thus rounded to the nearest three-minute mark. For example, if an employee clocks in at 7:58 a.m., the system rounds up the time to 8:00 a.m. If the employee clocks in at 8:02 a.m., the system rounds down the entry to 8:00 a.m.

So, those are the relevant facts. The trial court held that rounding is not allowed in California, given that California requires payment for all hours worked.  See's argued that the federal rules on rounding should apply, and that they were adopted by the California DLSE.

The Court of Appeal agreed with See's:

In the absence of controlling or conflicting California law, California courts generally look to federal regulations under the FLSA for guidance. (Huntington Memorial Hospital v. Superior Court (2005) 131 Cal.App.4th 893, 903.) The policies underlying the federal regulation — recognizing that time-rounding is a practical method for calculating work time and can be a neutral calculation tool for providing full payment to employees — apply equally to the employee-protective policies embodied in California labor law. Assuming a rounding-over-time policy is neutral, both facially and as applied, the practice is proper under California law because its net effect is to permit employers to efficiently calculate hours worked without imposing any burden on employees. (See Gillings v. Time Warner Cable, LLC, supra, 2012 WL 1656937, at *5.

* * *

Relying on the DOL rounding standard, we have concluded that the rule in California is that an employer is entitled to use the nearest-tenth rounding policy if the rounding policy is fair and neutral on its face and "it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked." (29 C.F.R. § 785.48; see DLSE Manual, supra, §§ 47.1, 47.2.)

To emphasize - the employer will be responsible for ensuring the rounding policy does not unfairly favor the employer.  Over time, "rounding" should come out about even.  If not, the court left open the possibility that the payment system will be found to be illegal.

The case is See's v. Superior Court (Silva) and the opinion is here.
 

California Supreme Court to Decide If Insubordination is Misconduct

Remember when the Court of Appeal decided that "refusing to sign" a document was insubordination, disqualifying a terminated employee from unemployment insurance benefits?  See this post.  That was awesome.

Anyway, the California Supreme Court granted review of the decision, so it's off the books for now.

Stay tuned!

Greg

Court of Appeal on Reporting Time (Redux)

We first blogged about Aleman v. Airtouch Cellular here.  I was pretty excited because I'm a dork. Oh, and because the Court of Appeal addressed two issues that come up all the time for clients, but never in court:  "reporting time" and the "split shift" premium. You remember.  

Anyway, as I predicted, the Supreme Court granted review and held the case, which meant it had no precedential value and pretty much disappeared.  But it's back.  And if it stays on the books this time, it may result in a big change to advice that employment lawyers give their employer clients.

Here are the facts as explained by the Court:

Krofta was required to attend occasional work-related meetings. Most of these were ―store meetings, which would be held once or twice a month on Saturday or Sunday morning, before the store opened, and which would last an hour to an hour and a half. The meetings were scheduled in advance and listed on employees‘ work schedules, and they were recorded in AirTouch‘s electronic timekeeping system.

Krofta‘s timesheets from AirTouch showed that there were five occasions on which he was scheduled to work, and did work, less than four hours (possibly to attend meetings). Separately, the AirTouch timesheets showed there were five times when Krofta worked a split shift—described by the parties for purposes of this litigation as a short shift (generally a meeting) in the morning followed by a longer shift later the same day.

*** Krofta contended, however, that he was owed additional compensation as reporting time pay for the five instances he worked less than four hours, and split shift premiums for the five times he worked a split shift.

REPORTING TIME PAY

Here's how the court analyzed the reporting time pay provision contained in the Wage Orders.  This will result in a big change to advice employment lawyers give to employers:

To simplify, the issue may be framed by the following question: If an employee‘s only scheduled work for the day is a mandatory meeting of one and a half hours, and the employee works a total of one hour because the meeting ends a half hour early, is the employer required to pay reporting time pay pursuant to subdivision 5(A) of Wage Order 4 in addition to the one hour of wages? The answer to this question is no, because the employee was furnished work for more than half the scheduled time. The employee would be entitled to receive one hour of wages for the actual time worked, but would not be entitled to receive additional compensation as reporting time pay. . . . [W]hen an employee is scheduled to work, the minimum two-hour pay requirement applies only if the employee is furnished work for less than half the scheduled time

SPLIT SHIFTS

The court's treatment of split shift pay clarified ambiguity in the law regarding whether split shift premiums are due for workers who make a certain amount more than minimum wage:

Krofta contends that he was owed additional compensation for working split shifts under subdivision 4(C) of Wage Order 4. Subdivision 4(C) is located under the section \4. Minimum Wages. heading of the wage order. It states: \When an employee works a split shift, one (1) houres pay at the minimum wage shall be paid in addition to the minimum wage for that workday, except when the employee resides at the place of employment.. (Cal. Code Regs., tit. 8, ˜ 11040, subd. 4(C).) * * *

*** While subdivision 4(C) applied to Krofta, the provision did not provide him with any tangible benefit, since the total amount of his regular pay was significantly higher than the minimum amount required by subdivision 4(C).

No published California case has previously addressed this direct issue. However, although obviously not binding, a well-respected treatise (Chin et al., Cal. Practice Guide: Employment Litigation (The Rutter Group 2011)) has embraced the same interpretation of subdivision 4(C). The Rutter guide explains the provision thusly: ―[A]n employee earning the minimum wage who works eight hours on a split shift is entitled to receive nine times the minimum hourly wage.‖ (Id. at ¶ 11:682, p. 11-68.) ―This provision also applies to employees paid more than the minimum wage. However, such employees are only entitled to the difference between what they actually earned and what they would have earned had they been paid the minimum wage for their entire shift plus an extra hour.‖ (Id. at ¶ 11:683, p. 11-69.) ***

So, this means that an employee is not required to earn a split shift premium of one hour at minimum wage, unless he or she earns < (minimum wage * hours worked + (minimum wage * 1 hour)).

OTHER ISSUES

If the above weren't enough, this case keeps on giving. The Court held that a release of claims will lawfully include disputed claims for unpaid wages, despite Labor Code Section 206.5, a California statute prohibiting releases of wage claims.

The Court also clarified that on the reporting time claim, either party may seek attorney's fees under Section 218.5, which means that the employer won its fees against the plaintiffs.

So, happy Friday!  Monday won't be so bad either.

The case is Aleman v. Airtouch Cellular and the opinion is here.

California Supreme Court Takes Up Arbitration Again

I posted in detail about Iskanian v. CLS Transportation here.  (This is one of the post-Concepcion cases that address arbitration. )  The California Supreme Court just granted review here.  The Court eventually will explain how Concepcion affects California arbitration law.  But that could take some time... Unfortunately for employers, the Court's grant of review means the Iskanian decision is uncitable going forward.
DGV

California Workers' Compensation Reform Bill

Governor Jerry Brown just signed SB 863, a big workers' compensation reform package, supported by the Cal. Chamber. 

We don't practice in this area, but we know workers' comp. premiums are expensive for employers and administration is employers' responsibility. So, the bill is here.  If I see a good summary I will post it as well.

Much of the bill addresses how the workers' compensation appeals board and medical providers will go about their business.  The Cal Chamber believes it will result in improved efficiency and reduced fraud.  See here. I hope so!

Court of Appeal: Rare Opinion on Inside Sales Exemption

Tyrone Muldrow and a class of recruiters sued their employer, Surrex Solutions Corporation,  for unpaid overtime, meals and breaks.  The trial court held that the employees were exempt undre the "inside sales exemption" and that the company had adequately provided meals and breaks.  The Supreme Court issued a "grant and hold" order pending the decision in Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1037.

On remand after Brinker, the Court of Appeal reaffirmed its earlier decision.  It's blogworthy because of the discussion of the "inside sales exemption" under the wage order .

The exemption is contained in both wage order 4 and wage order 7.  The court did not address which wage order applies, but quoted from wage order 7:

California Industrial Welfare Commission (IWC) Wage Order No. 7-2001 exempts from this statutory overtime compensation requirement "any employee whose earnings exceed one and one-half (1 1/2) times the minimum wage if more than half of that employee's compensation represents commissions." (Cal. Code Regs., tit. 8, § 11070, subd. (3)(D).)

Under federal law, this is known as the "inside sales" or "7(i)" exemption.

For the above exemption to apply, the employees had to be "selling" a product or service. 

Appellants' primary job duty was to recruit "candidates" for employer "clients." Surrex's clients would place "job orders" with Surrex and appellants would search for potential candidates to fill the job orders. Appellants would use various resources to find candidates, including an internal database that Surrex maintained and various "on-line job boards."

The court decided that these recruiters were "selling" the recruiting services, and that the other activities they engaged in were part of the sales process.

The court then decided that the compensation the recruiters received were "commissions" because they were sufficiently related to the sales price - the revenue the business received for placements:

the sole argument that appellants offer to support their contention that the term "commissions" in the commissioned employees exemption (Cal. Code. Regs., tit. 8, § 11070, subd. (3)(D)) should be construed as excluding commission systems such as Surrex's, is that such a formula is "too complex." Appellants' contention that the Surrex's commission system is "too complex" is neither factually accurate nor legally relevant. The formula was clearly stated in the employees' employment agreements and, in most cases, could be calculated simply by knowing the candidate's "bill rate" and "pay rate" (both of which the consulting service managers, themselves, negotiated).15 In any event, appellants fail to cite any authority for the proposition that complexity is, or should be, a factor in determining whether a compensation scheme constitutes a commission under relevant California law.

The court also decided that the commission plan was "bona fide" because the commissions regularly exceeded draw.

So, the court decided that the trial court was correct because the inside sales exemption applies.


There are a couple of things the court did not decide that might have affected the outcome. First, the court did not appear to actually decide if Wage Order 4 or 7 is the correct one. The court quoted from Wage Order 7, which applies to all employees working in the "mercantile" industry.   The definition of "mercantile" applies to the sale of goods, not recruiting agencies. From the Wage Order: "'Mercantile Industry' means any industry, business, or establishment operated for the purpose of purchasing, selling, or distributing goods or commodities at wholesale or retail; or for the purpose of renting goods or commodities."

Rather, Wage Order 4 applies to occupations such as office workers, if an industry order does not apply.

The applicable Wage Order actually does not affect the exemption under California law because that exemption is contained in both Wage Order 4 and 7. (The Court should have cited the correct one, though).   The issue, though, is that the federal "7(i)" exemption applies only to "retail" establishments. In fact, the applicable Department of Labor regulations specifically exclude employment agencies from the definition of a retail establishment. See regulation here.  I can't say for certain that Surrex is not a "retail" establishment under federal law, but someone probably should take a look at that issue if he/she hasn't already. 

This is one of the few instances in which California law is less generous than federal law. Although an employee may be exempt under California law, if an employee is not "exempt" under federal law, then federal law will require overtime for work performed over 40 hours in a work week. I may have missed something, but the court's opinion does not seem to address federal law, or the wage order issue. Yet, the court does acknowledge the existence of the 7(i) exemption at footnote 14 of the opinion. Annnyyyway, I may be nuts, or someone has some splaining to do, or both! The message to our dear readers remains:   Please do not apply the inside sales exemption unless you consider both state and federal law.
 The case is Muldrow v. Surrex Solutions Corp. and the opinion is here.  

Remember to vote

No, no....not that vote.  The ABA is collecting its Top 100 law blogs.  Over 5 years of bloggery and over 500 posts, and we've never won a Webbie, an Emmy or even a scratch ticket. 


Please remedy this oversight by voting for your favorite blogs, and this one too, at the ABA's site.

Thanks!

Court of Appeal: No Waiver of Arbitration and No Class Action Either

The Court of Appeal overturned a trial court's denial of the employer's motion to compel arbitration.  Here are some key points:

1.  The Court of Appeal expressly recognized that an arbitration agreement that is silent regarding class actions cannot be read to require classwide arbitration.

[A] party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so. . . . As the Arbitration Agreement explicitly covers the type of claims that are the subject of Reyes‘s lawsuit and provides only for bilateral arbitration, there is no contractual basis for concluding the parties agreed to submit to class arbitration. Therefore, we conclude that the Arbitration Agreement does not authorize class arbitration.

2. The court held that the employer did not waive the right to arbitrate, even though it did not cite the arbitration agreement in the answer, and though it conducted lots of discovery in court.  The reason is that the employer likely would not have prevailed on a motion to compel arbitration until the U.S. Supreme Court issued its decision in AT&T Mobility v. Concepcion  (2011) 563 U.S. ___ [131 S.Ct. 1740, 179 L.Ed.2d 742].  Therefore, the employer did not "waive" the right to arbitrate, when seeking arbitration would have been futile.

3.  Like pretty much every other court, the court here refused to follow the National Labor Relations Board's decision in DR Horton (holding that arbitration agreements cannot require class action waivers unless the employee can bring a class action in court). 

The decision is Reyes v. Liberman Broadcasting and the opinion is here.

DGV