Court of Appeal Upholds Release of Overtime Claims

Labor Code section 206.5 invalidates releases of wage claims. But when there is a bona fide dispute over whether wages are due, releases are valid. That's what the court of appeal held in Chindarah v. Pick Up Stix.

This was an overtime class action that went to mediation but did not settle. The employer did an "end run" and settled out about 200 employees with individual releases. Employees challenged the validity of the releases under Labor Code section 206.5. But the court of appeal, agreeing with the trial court, held:

The releases here settled a dispute over whether Stix had violated wage and hour laws in the past; they did not purport to exonerate it from future violations. Neither did the releases condition the payment of wages concededly due on their executions. The trial court correctly found the releases barred the Chindarah plaintiffs from proceeding with the lawsuit against Stix.

If this case is not taken up by the Supreme Court for review, it will clarify a longstanding unresolved issue in California law regarding when settlements of wage claims will be enforced.
Employers will be able to settle claims involving uncertain liability, such as for certain meal period claims, or misclassification issues when the factual issues are in dispute.

Read the opinion here.

California Supreme Court Addresses State Employees' Whistleblower Protections

Before a state employee can bring suit under the California Whistleblower law, he or she must seek relief before the State Personnel Board. When the SPB issues "findings," or even when the SPB fails to do so in the time allowed,the law says that the employee may sue in Superior Court. But the court of appeal held that when, as in the present case, an employee receives adverse findings from the SPB, the employee must seek to overturn those findings before going to court.

The Supreme Court reversed that decision, 7-0. The high court held that an employee may proceed to court when the SPB issues or fails to issue findings within the prescribed time, and the employee need not seek a writ or a hearing before an administrative law judge first.

The case is State Bd. of Chiropractic v. Superior Court and the opinion is here.

California Amends Alternative Workweek Law

As part of California's recent budget compromise, the Legislature made welcome revisions / clarifications to the law governing "alternative workweek arrangements." These arrangements are the authorized exemptions to "daily overtime" law.

The bill, AB 5, amends Labor Code section 511. Presumably, the DLSE will revise its manual and the IWC will issue revised wage orders.

First, the law defines what counts as a "work unit" for having the vote for the alternative workweek arrangement:

For purposes of this section, “work unit” includes a division, a department, a job classification, a shift, a separate physical location, or a recognized subdivision thereof. A work unit may consist of an individual employee as long as the criteria for an identifiable work unit in this section is met.

The new law also expressly allows employers to give employees the right to vote on a "menu of options" that includes not only "alternative workweek" schedules (such as 4/10 hour days) but also an eight hour per day option. That will likely result in a lot more votes for passage.

The law also permits employees to move from one option to another weekly. That will give employees the option of working 4/10 one week and then 5/8 the next week if the employer consents.

Here is the statute.

DGV

President Obama Issues Pro-Labor Executive Order No. 4

The President signed a new executive order authorizing "project labor agreements" in certain "large scale" federal construction contracts. The order, signed Feb. 6, 2009, takes effect immediately. Basically, the order authorizes contracting agencies to require private-sector contractors to sign on to a union contract for the life of the project:

The term "project labor agreement" as used in this order means a pre-hire
collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project and is an agreement described in 29 U.S.C. 158(f).

The order applies only to construction projects worth more than $25 million. You can view it here.

Did You Read the "Stimulus" Bill?

What employment law changes are included in the stimulus bill? Law firms are starting to pick over the new law, signed on February 17, 2009.

A number of employment law firms' newsletters report there is a big change to COBRA. To summarize, under the new law, certain employees fired / laid off employees from September 2008 until December 2009 will pay a discounted COBRA premium, which employers apparently will recover as a tax credit. The provision is available only to individuals earning less than $125,000 and married couples with incomes under $250,000. So, that will be easy for employers to administer. Not. I smell full employment for benefits administrators. See? Job creation!

What else is in the "American Recovery and Reinvestment Act" to stimulate employers? We'll find out in the coming days. If you can't wait, or you want to help your representative or Senator understand what s/he voted for, you can read the entire new law here. Just hit "control-F" and search for "COBRA" or "Title III," addressing the COBRA premium discount.

DGV

Ninth Circuit Withdraws "Flyover" Wage and Hour Case

We posted about Sullivan v. Oracle here, and blew a weekend on an article (you don't have to read) here. That's the case where the court of appeals held that an out of state resident is covered by California's wage and hour laws even when he or she works only briefly in California.

The Ninth Circuit decided to withdraw the opinion, here. Instead, the court certified three questions to the California Supreme Court:

First, does the California Labor Code apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs in the circumstances of this case, such that overtime pay is required for work in excess of eight hours per day or in excess of forty hours per week?

Second, does § 17200 apply to the overtime work described in question one?

Third, does § 17200 apply to overtime work performed outside California for a California-based employer by out-of-state plaintiffs in the circumstances of this case if the employer failed to comply with the overtime provisions of the FLSA

So, the California Supreme Court, if it accepts the Ninth Circuit's invitation, will give its input and then the Ninth Circuit presumably will re-issue its opinion with the benefit of California's high court's analysis. Stay tuned.

Ninth Circuit Holds Type 2 Diabetic Was Qualified Individual

The Ninth Circuit avoided deciding whether the ADAAA amendments to the ADA are retroactive by holding that a type-2 diabetic had a disability and was a qualified individual under the original ADA.

Larry Rohr was a welder metallurgy specialist for Salt River Project Ag. Improvement and Power District, a political subdivision of the Arizona state government. He developed type-2 diabetes. His doctors imposed a number of restrictions on his diet and prescribed medication. The timing and management of his blood sugar testing, eating, and administration of medication resulted in a number of restrictions. Additionally, because of his medical condition, he was susceptible to a number of symptoms.

At times, Rohr was assigned to work in the field and out of town trips. His doctors, and the company's imposed a number of restrictions on his work, which included extended travel. Ultimately, the company concluded he could not perform his essential job functions and gave him the opportunity to transfer to another job or take early retirement. He sued for disability discrimination under the ADA. The district court granted summary judgment, holding he was not an individual with a "disability" and that he was not "qualified"

The Ninth Circuit disagreed. The opinion discusses at length the limitations on Rohr's ability to eat, including scheduling his meals, eating at certain times, and adjusting medication for food, testing and exercise. The court said not all diabetics are substantially limited, but that Rohr had a number of challenges that seem common to many with the condition. So, particularly under the new ADAAA amendments, it will be nearly impossible to argue diabetes is not a disability after this opinion.

The court then tackled whether Rohr was "qualified" in that he could perform his essential job functions with or without accommodation. Salt River argued Rohr could not pass a respirator test per OSHA standards. The court found a triable issue of fact because: the test was not required by OSHA, Salt River did not consider other testing methods, and the use of a respirator may not have been "necessary" to the job.

The court rather summarily found the parties' disputed whether aspects of Rohr's job were "essential" including the need to travel extensively.

The court also decided that the ADAAA amendments would have lent further support to the conclusion that summary judgment should be reversed. However, the court declined to rule that the amendments applied to Rohr's case, which was filed long before the president signed the 2008 amendments into law. The court's comments on the ADAAA, all dicta, portend tough sledding for employers seeking to challenge whether someone has a "disability" under the new framework.

The deicsion is Rohr v. Salt River Project and the opinion is here.

Ninth Circuit Grants En Banc Review in Dukes v. Walmart

Almost two years ago, the Ninth Circuit upheld class certification in one of the largest employment class actions ever: Dukes v. Walmart. The complaint alleges company-wide sex discrimination in promotions and other job decisions. We posted on the initial order here.

The Ninth Circuit has now agreed to hear the case "en banc," meaning by a panel of 15 judges rather than three. The original opinion's panel no longer is citable. It probably will be some time until the en banc decision comes out, which could provide significant guidance on class certification in the federal courts within the Ninth Circuit.

California Supreme Court: Public Employee May Be Disciplined for Refusing to Cooperate in Investigation

The California Supreme Court held that a deputy public defender was properly discharged when he refused to answer questions during an internal investigation. He argued that he could not be compelled to answer because he invoked his Fifth Amendment right to refuse to answer questions on the grounds they might incriminate him.

But the investigator, a supervisor attorney at the public defender's office, had informed him that his cooperation in the investigation would not be used against him in criminal proceedings. Was his refusal to testify protected conduct? The court unanimously said "no":

a public employee may be compelled, by threat of job discipline, to answer questions about the employee’s job performance, so long as the employee is not required, on pain of dismissal, to waive the constitutional protection against criminal use of those answers. Here, plaintiff was not ordered to choose between his constitutional rights and his job. On the contrary, he was truthfully told that, in fact, no criminal use could be made of any answers he gave under compulsion by the employer. In the context of a noncriminal public employment investigation, the employer was not further required to seek, obtain, and confer a formal guarantee of immunity before requiring its employee to answer questions related to that investigation.

The case is Spielbauer v. County of Santa Clara and the opinion is here.

President Obama Issues Three Pro-Labor Executive Orders

The President issued three "executive orders" affecting certain federal contractors:

1. Requires contractors to post a poster explaining employees' rights to join or not join unions. View here.

2. Denies federal funds to pay for contractors' activities related to "persuading" employees to join or not join unions. View here.

3. Requires contractors to retain predecessor companies' qualified employees rather than laying them off and hiring their own workers. View here.

I-9 Form Changes

The USCIS has delayed implementation of a new I-9 form containing new employment eligibility documentation requirements. The January 30, 2009 announcement is here. Under the current schedule, a new I-9 form will be required on April 3, 2009. The Jan. 30 order extends the comment period for proposed regulations issued in November 2008.
You can see the new proposed regulations and the sample new I-9 form and instructions here.

Starbucks CEO Salary Cut: Spot the Issue

I saw a news item in the WSJ about the Starbucks CEO's announcement that he's cutting his own salary from $1.2 million to $10,000 per year. Great PR, right? But, let's play "spot the wage and hour issue."

Unless I'm missing something, and I've been accused of missing many things,* Mr. Schultz transformed himself into a non-exempt CEO of a publicly traded corporation! (Yes, the salary is too low to qualify him as exempt under federal law).

I got a laugh out of this, because I'm an idiot. But wouldn't they vet this issue with their employment lawyers?

This is probably not a big deal, since Mr. Schultz is likely not going to sue his own company to recover the overtime wages he will be due once he fails the exempt test. Howard...call me.

*If there is some other aspect of his compensation that qualifies him for the salary test that was not reported in the article, please accept my apologies o SBUX legal team.

Lily Ledbetter "Fair Pay" Act

Ledbetter v. Goodyear was one of those Supreme Court decisions that galvanized politicians, activists, etc. and became a proxy for complaints about "conservative" judges. We posted about that case here. We wrote an article about it here.

The opinion simply held that Title VII discrimination claims apply what's called a "statute of limitations." The "statute of limitations" protects employers from old claims. Claims that cannot be defended because records are gone, witnesses are dead or moved away, etc. It also protects defendants when plaintiffs "sit on their rights" and wait too long to prosecute their claims. By the way, Title VII indeed contains a statute of limitations. The dispute was over how it was applied.

Ledbetter had an Area Manager job with Goodyear for almost 20 years. Over a period of 15 years, her pay slipped as compared with other males. She finally sued for sex discrimination in her compensation under Title VII and the Equal Pay Act. The court held that the claims were time barred, because the allegedly discriminatory decisions to set her compensation were made outside the limitations period. But Ledbetter argued that every time she was paid, it was a new discriminatory act. As if the payroll coordinator knew how her wages were set. Anyway, the Court decided that her claims were time barred because none of the discriminatory decisions occurred within the 300 day limitations period that applies.

The decision hardly broke new ground. But it created a political firestorm, maybe because there was a presidential election campaign going on? Nah. But - but - Ms. Ledbetter spoke at one of the national party political conventions this year. Shhh.

Anyway, new administration, new laws. The Lily Ledbetter Fair Pay Act will make all compensation-based discrimination claims timely as long as one paycheck issued under the discriminatory practice falls within the limitations period. Ripple effects? Settlements, documentation and review of compensation decisions, pay equity studies.... the mind boggles.

Here's the text of the Act, which signed on 1/29/09. Oh its effective date? May 26, 2007 - the day the Supreme Court issued its decision. So, it is retro, at least as to pending cases.

Anyway, this will help you take your mind off Ms. Ledbetter and her new law: EFCA can't be far behind!

Greg

Court of Appeal Applies Anti-SLAPP Law to EDD Report

Dible worked for the Haight Ashbury Free Clinic as a counselor. The clinic terminated her employment for performance reasons. The clinic contested her unemployment claim. Ms. Dible sued for defamation and other claims. However, after some litigation, the clinic moved the court under the anti-SLAPP statute to dismiss the claim. Why? Because the clinic exercised its First Amendment rights to make a report in an official proceeding. The Court of Appeal agreed that the anti-SLAPP statute barred her claim. Dible then argued that she should be able to assert a claim for "defamation by compelled self-publication," because the clinic should have known Dible would have to re-publish to third parties the clinic's assertions regarding her performance.

The Court of Appeal disagreed:

Here we are clearly being asked to create a wider exception for claimants who have not republished where it is foreseeable that they might do so in the future. We decline to do so. Such a rule would require courts to engage in considerable speculation as to future conduct and lead to untenable attempts to speculate on future damage. A court could not, for instance, account for the possibility that after a plaintiff has received an award for damages in the form of lost future wages, he or she might republish while seeking a job and be given the job, thus not be damaged, nonetheless.

Since publication or republication to a third person is necessary to establish the cause of action of defamation, we conclude that plaintiff cannot establish a probability of success upon her defamation claim. The motion pursuant to section 425.16 was therefore properly granted.

The case is Dible v. Haight Ashbury Free Clinic and the opinion is here.

U.S. Supreme Court: Retaliation Provisions Cover Investigation Witness

Vicky Crawford worked for the Metropolitan school district of Nashville and Davidson County, TN. The agency was conducing an investigation into a harassment complaint made against an employee, who happened to be the employee relations director.

The investigator from the human resources department asked Crawford whether she had experienced inappropriate behavior by the director. She disclosed she had witnessed certain conduct. The district later fired Crawford, allegedly for embezzlement. She sued for retaliation.

The issue before the Supreme Court was whether Crawford's participation in the investigation fell within Title VII's anti-retaliation protections. The court unanimously ruled that "opposition" includes providing information during an investigation. The lower courts and the employer argued that it would require something more affirmative - such as making a complaint.

The case is CRAWFORD v. METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY, TENNESSEE and the opinion is here.

Our Little Blog Scores a "TOP" Legal Blogs Mention

We're no. 1! Ok, I'm joking. We're NOT no. 1. No, we're not no. 101 either. But we did score in the top 300 law blogs as measured by rating service Avvo.

And that makes us proud. The kind of pride you feel when someone who has the same first name as you is arrested for pet endangerment. Yes, the crawl-under-your-desk sort of feeling that your humble correspondent has experienced since, oh, fifth grade or so. I know, it's time to up the meds.

Anyway, if you want to find some popular blogs to monitor, here's the list with links to all the heavy hitters. See, you thought this post was going to be a self-indulgent waste of time, didn't you?

Greg

EFCA Debate and Article

So, I wrote this column on the Employee Free Choice (sic) Act or EFCA if you haven't seen it already. Someone must have read it, because I was invited to debate EFCA on the radio on Friday, January 23, 2009 at 7:00 a.m. Roy Ulrich, a lawyer and the host of "Morning Review" on KPFK-FM in LA, hosted the forum.

I was up against a professor from my alma mater. I think she would rescind my diploma if it were up to her.

The interesting aspect of the debate is the opinion my opponent offered about the motivation behind this law. It's not about expanding union representation at the workplace for the sake of workers, etc. It's about the labor "movement." The more members the unions get, the more money they earn. The more money they earn, the more they can lobby politicians and affect election outcomes. Their hope is to elect politicians who will change world TRADE POLICY and become anti-"globalization." Now, *I'm* not saying that's what EFCA is really about. Rather, "that's what she said."

Anyway, if you want to hear my radio stylings, you may do so here. The King of all Media has nothing to worry about. (And "baba booey" to you all.)

DGV

U.S. Supreme Court Clarifies Standards for Unions to Charge Nonmembers Service Fees

An employee member of a collective bargaining unit may choose not to be a member of the union that represents the unit. However, under First Amendment jurisprudence, the union may charge the non-member a "service fee" for bargaining services. But the union must carve out the portion of dues spent on activities unrelated to collective bargaining (such as political activity). In Locke v. Karass, the Court addressed whether the union could include the costs associated with litigation directed by the national union. The Court in a unanimous opinion held that such expenses may be charged as part of the service fee when:

(1) the subject matter of the (extra-local) litigation is of a kind that would be
chargeable if the litigation were local, e.g., litigation appropriately related to collective bargaining rather than political activities, and (2) the charge is reciprocal in nature, i.e., the contributing local reasonably expects other locals to contribute similarly to the national’s resources used for costs of similar litigation on behalf of the contributing local if and when it takes place.

Wake up. This is important stuff. The case is Locke v. Karass and the opinion is here.

Court of Appeal: Waiting Time Penalties Are...Penalties

The Court of Appeal in Pineda v. Bank of America held that "waiting time" penalties imposed under Lab. Code Section 203 are not a form of "wages" or property of the plaintiff. They are indeed penalties, unlike meal period penal- er - premiums. So, the court found, the plaintiffs could not seek waiting time penalties under the unfair competition law, Bus. Prof. Code section 17200. This is important because section 17200 carries with it a four-year statute of limitations.
A year or so ago, a superior court in another case made the extraordinary determination that waiting time penalties are wages, not penalties, and were recoverable under the UCL. So much for that argument.
The opinion in Pineda is here.

Bye Bye Brinkley

The California Supreme Court granted review in Brinkley v. Public Storage, here. We posted about Brinkley, a very employer-friendly meal and rest period decision, here. Yes, yes, I know. We predicted the Supreme Court would grant review in our earlier post. No wonder we rank among the top 700,000 blogs.

Greg

5th Circuit Awards Attorney's Fees Against EEOC

The federal and California courts apply the same standards in awarding attorney's fees in discrimination cases. So, the recent case of EEOC v. Agro Distribution LLC (opinion: here) is relevant to awards of fees in California. And I can write about other circuits' cases if I want to. So there.

The reason I'm writing about this one is that the EEOC pursued a case well beyond the point that it should have determined it lacked merit. The investigator initially assigned to the charge was on a mission. The plaintiff's deposition doomed the plaintiff's claim. The settlement demands were unreasonably high.

The court of appeals first decided that EEOC failed to "conciliate" or attempt to resolve the case in good faith. The agency made a very high demand and then immediately closed conciliation efforts when the demand was rejected, despite the employer's attempt to engage in settlement negotiations. However, the court also found that failure to conciliate is not a jurisdictional defect.

The court then held that the district court's award of fees against the EEOC was within the court's discretion. The district court awarded about $225,000 in fees for the period of time following the plaintiff's deposition until summary judgment. (That's a heck of a bill for post-deposition litigation through summary judgment, but the district court did not find fault in the billings). The court of appeals agreed with the district court that after the plaintiff's deposition, the agency's further prosecution of the case was absolutely unjustifiable.

This case may be used in situations when a case of arguable merit at inception is revealed through discovery to be frivolous, unreasonable, or without foundation. Fees should be awarded in favor of the employer from that point, if not from the beginning of the case.

DGV

Court of Appeal Affirms Jury Verdict Finding Adequate Accommodation

Julie Wilson worked as a radio dispatcher for Orange County's emergency communications system. Because of a disability that was aggravated by stress, she sought accommodations that included assignment only to certain shifts at certain times. The county temporarily gave her exactly what she wanted, but decided initially that the accommodation could not be permanent. After substantial negotiating, leaves, and rejected proposals, the County assented to all of Wilson's requests. The key issue was the delay between her initial request and the final accommodation. A jury returned a verdict for the county on her claim for denial of accommodation. The court of appeal affirmed:

The real gist of Wilson’s complaint is not that she wasn’t accommodated, but that it took too long for her supervisors to finally agree to a permanent arrangement--i.e., that she could return to work at Control One, in her same position, with the restrictions she wanted. It is this delay that forms the basis of her interactive process
claim. She argues that as a matter of law, the County failed to engage in a good faith
interactive process with her because it did not commence the interactive process until June 2005, prior to which the County simply “contrived a circumstance” to justify not engaging in the interactive process—namely, that Wilson’s disability was
only temporary.

* * *

Here, the record demonstrates the County engaged in a process aimed at trying to accommodate Wilson. Indeed, the success of its process is borne out by the fact
that in the end, Wilson got exactly what she wanted—albeit after a series of temporary accommodations.

The case is Wilson v. Orange County and the opinion is here.

SV Employment Law Article Pot Pourri

We publish articles bi-weekly in the Sacramento Daily Recorder newspaper, and about monthly in the San Francisco Daily Journal. Here are some of the articles we've published in the past few months:

STATUTE OF LIMITATIONS FOR FEHA CLAIMS ON THE VERGE OF EXTINCTION
By Jennifer Brown Shaw and Shane K. Anderies
The Daily Recorder
2008-12-30

WILL CONGRESS BAN SEXUAL ORIENTATION DISCRIMINATION?
By Jennifer Brown Shaw and Carolyn Burnette
The Daily Recorder
2008-12-18

DISABILITY DISCRIMINATION AND QUALIFICATION STANDARDS
By Jennifer Brown Shaw and Matthew J. Norfleet
The Daily Recorder
2008-12-02

GOLDEN STATE OF MIND
By D. Gregory Valenza
The Daily Journal
2008-11-28

RECENT DEVELOPMENTS REGARDING INTERNAL EEO COMPLAINT PROCEDURES
By Jennifer Brown Shaw and Becki D. Graham
The Daily Recorder
2008-11-20

NEW LAW AIMS TO ENCOURAGE COMPLIANCE WITH DISABLED ACCESS RULES
By Jennifer Brown Shaw and Carolyn G. Burnette
The Daily Recorder
2008-11-06

ALTERNATIVE POSITIONS AS A REASONABLE ACCOMMODATION: WHAT IS REQUIRED?
By Jennifer Brown Shaw and Shane K. Anderies
The Daily Recorder
2008-10-08

THE ADA AMENDMENTS ACT
By Jennifer Brown Shaw and D. Gregory Valenza
The Daily Recorder
2008-09-24

FLESHING OUT THE ADA
By D. Gregory Valenza
The Daily Journal
2008-09-16

BACKGROUND INVESTIGATIONS KEEP GETTING MORE COMPLICATED
By Jennifer Brown Shaw and Matthew J. Norfleet
The Daily Recorder
2008-09-10

EDWARDS V. ARTHUR ANDERSEN: NON-COMPETE AGREEMENTS AND GENERAL RELEASES
By Jennifer Brown Shaw and Becki D. Graham
The Daily Recorder
2008-08-26

CALIFORNIA SUPREME COURT EMPLOYMENT LAW DECISIONS 2007-2008
By Jennifer Brown Shaw and Shane K. Anderies
The Daily Recorder
2008-07-31

San Francisco Minimum Wage Going UP

1/1/09 - the SF Minimum Wage increases to $9.79. And let's not forget that poster! Here's a free one. The $9.79 minimum applies to all private sector employers. But city government contractors have a higher minimum wage $11.54. And here is your poster, government contractor! Happy new year anyway.

Court of Appeal: Employer Must Disclose Classmember Info Even Over Their Objection?

The general trend has been that the courts do not mind -- at all -- if employees' names and addresses are disclosed to plaintiffs' attorneys in class action cases. The most an employer can hope for is the right to send out an "opt out" form before disclosure, where employees must affirmatively deny their consent to release the information.

Well Crab Addison (operator of Joe's Crab Shack) decided to go one better: send out the "opt-out" form to all employees before it was required to disclose the information in discovery, but without specifically discussing the lawsuit at issue. Here's the form:

RELEASE OF CONTACT INFORMATION
From time to time, Joe’s Crab Shack (the “Company”) may be asked to provide your contact information, including your home address and telephone number, to third parties. The Company may be asked to provide such information in the context of legal proceedings, including class action lawsuits.

We understand that many employees may consider this information to be private and may not want it released. Accordingly, please indicate whether you consent to the disclosure of your contact information by marking the appropriate box.
__ No, I do not consent to the Company’s disclosure of my contact information to third parties.
__ Yes, I consent to the Company’s disclosure of my contact information to third parties.
__ I would like to be asked on a case-by-case basis whether I consent to the disclosure of my contact information to a particular third party, and my contact information should only be provided if I affirmatively consent in writing.

No sale, said the Court of Appeal, affirming the trial court:

to the extent the right to privacy is based on the release forms, there are strong reasons for not giving effect to those forms. Employees indicating that they did not want their contact information disclosed, or wanted disclosure on a case-by-case basis, were unaware at the time they signed the forms of the pending litigation to enforce their statutory wage and overtime rights through a class action lawsuit. We may presume that, had they known about the litigation, their response on the form would have been different. Additionally, the forms apprised them that their contact information could be disclosed if required by law, so they were aware of the limitation on privacy offered by the forms.

So, nice try. With a proper disclosure about any existing litigation, it's possible such a form could be given more deference by a court. But the courts seem unreceptive to efforts to preclude plaintiffs from contacting employees.

The case is Crab Addison, Inc. v. Superior Court and the opinion is here.

Court of Appeal: How to Calculate Overtime on a Bonus

The First District Court of Appeal held that Costco properly calculated overtime on a production bonus in Marin v. Costco, opinion here.

I am frequently asked how bonuses and commissions affect overtime calculations. Basically, the "half time" (or whole-time in the case of double-time overtime) is due on the bonus, once the bonus is allocated to the hours that were necessary to generate it. You worked 1000 total hours including 20 overtime hours during a bonus period. The bonus is $2000. The incremental hourly rate is $2000/1000 hours = $2.00 per hour. That is the amount of wages on which no overtime previously was paid. So, you owe: 1/2 * $2.00 per hour * 20 overtime hours worked = $20.00.

Get it? The court of appeal did. That's the federal formula, and the formula the DLSE endorses. The court did not mention that California law endorses the use of federal overtime calculation rules. But it does. The plaintiffs wanted the overtime to be calculated by dividing the bonus over the straight time hours and then paying time and one-half on that figure. That would have resulted in double counting. In addition, it would have ignored the simple fact that the employee had to work all hours to earn the bonus - straight plus overtime.

So, if your eyes are crossed, welcome to wage and hour law. The opinion is linked above. It's got a detailed explanation of the rule and the arguments in favor and against.

Enjoy your holiday!

Greg

New FMLA poster

Merry Christmas from the US DOL. Here's your new FMLA poster, necessary for complying
with the new regulations when they become effective next month.

Merry Christmas / Happy Chanukah / Happy Kwanzaa! Happy New Year, too.

Greg

Court of Appeal: No Defense Attorneys' Fees for Frivolous Claims?

The Court of Appeal agreed with the district court that Laura Young's FEHA claim for harassment against her former supervisor was frivolous, vexatious, etc. The trial court, however, awarded only one dollar in attorneys' fees against Young. The court's rationale was that since employer Exxon was going to pay the supervisor's fees, and since Exxon did not complain that the action against Exxon itself was frivolous, the court should not award fees that Exxon would ultimately recover.

Does that make a lot of sense? Yes, but only if you're gutting the attorneys' fees statute. Employers are responsible to pay for employees' defense costs under Labor Code section 2802, unless the employee is found to have engaged in actual unlawful harassment. So, a frivolous claim against an employee by implication is part of the claim against the employer, no? And given most claims against individual managers are barred as a matter of law, and given awards of attorneys' fees are as rare as hen's teeth anyway, one would think that a court would want to give effect to the Legislature's decision to permit an award of attorneys' fees when claims are frivolous. Right?

No. The court of appeal agreed with the trial court and held that where, as in this case, the employer is paying an individual employee's defense costs, the trial court need not award attorneys' fees if the claim against the employer is not frivolous. You don't believe me? Here's the quote:

In short, despite its finding that Young’s case against Lopez was frivolous and vexatious, the trial court had the discretion to deny attorney fees to Lopez. Because the award would benefit only Exxon, a defendant which was not otherwise entitled to an award and which did not show it incurred any significant fees on Lopez’s behalf that it would not have incurred in any event, we see no abuse of discretion in the trial court’s decision.

By the way, the attorneys' fees statute, Government Code section 12965(b) is very simple and says nothing about differing standards for employers and employees.

In actions brought under this section,the court, in its discretion, may award to the prevailing party reasonable attorney's fees and costs, including expert witness fees, except where the action is filed by a public agency or a public official, acting in an official capacity.

The statute says nothing about basing awards on who pays the fees. I know it says "discretion," but the courts have held that prevailing plaintiffs are generally entitled to fees as a matter of right, while prevailing defendants have a heavy burden to establish the claims were "frivolous, unreasonable, or without foundation." I think the courts may have lost sight of the plain language of the statute over the years.

While I'm complaining, the Court of Appeal also decided not to publish its analysis of Young's claims on the merits. That means the bar will not benefit from the court's detailed analysis of Young's claims for discrimination, harassment, retaliation, etc. The decision should be published if only because Young claimed a mental disability and that her outbursts and conduct in violation of policy were attributable to the disability. The Court distinguished Gambini v. Total Renal Care, discussed here, and held that Young's disability did not exempt her from termination for her misconduct.

Anyway, I'm sure Exxon is happy to have won the case. But there was a dark lining in a silver cloud that may affect employment litigation for the rest of us. The opinion in Young v. Exxon is here.

Court of Appeal: Summary Judgment Against Plaintiffs Challenging Starbucks' Application

California employers cannot ask applicants to disclose certain convictions for marijuana-related misdemeanors that are more than two years old. Starbucks knew that, and included a disclaimer on the back of its application, viz:

CALIFORNIA APPLICANTS ONLY: Applicant may omit any convictions for the possession of marijuana (except for convictions for the possessions of marijuana on school grounds or possession of concentrated cannabis) that are more than two (2) years old, and any information concerning a referral to, and participation in, any pretrial or post trial diversion program.”

Although that may read like a proper disclaimer, it was included in a larger paragraph of disclaimers located away from the general convictions question, which did not exclude such marijuana convictions. So, the California disclaimer did nothing to stop Erik Lords and his band of merry putative classmembers from filing suit, claiming the application form was defective. Erik and co. wanted about $26 million in penalties. Aggrieved applicants get a penalty of $200 or actual damages for faulty applications.

The court of appeal agreed with the trial court and the plaintiffs that the general disclaimer was improperly placed away from the general convictions question. Had the properly worded disclaimer been placed next to the conviction question, it would have been legally correct, the court said.

But the court of appeal detected a couple of problems with Lords' prayer. [I kill me]. First of all, none of the named plaintiffs had a marijuana conviction. Second, all had read the allegedly hidden language. Third, none was denied employment because of a wrongfully disclosed conviction.

So, the court said:

We see nothing in the statute to support plaintiffs’ claim that the Legislature ntended to protect the privacy interests of job applicants who had no marijuana convictions in their background. As we explain below, we decline to adopt an interpretation that would turn the statute into a veritable financial bonanza for litigants like plaintiffs who had no fear of stigmatizing marijuana convictions.

The case is Lords v. Starbucks and the opinion is here.

No Punitive Damages for Meal and Rest Period Violations

While the wage and hour world waits for the Walmart decision, in which the court awarded roughly $170 million in meal period premiums, penalties and punitive damages. the other courts are working away.

Wait no longer. Ms. Brewer is a waitress at Cottonwood golf resort's restaurant. She sued for meal and break violations among a smorgasbord of other employment claims. She lost on her age discrimination claims. But she won on some Labor Code violations. The jury also awarded her punitive damages, over and above the meal and break premiums, penalties for improper wage statements, etc. (I bet you thought I was going to make food puns throughout this post, didn't you?)

The court of appeal reversed on punitive damages. The court decided that the Labor Code creates new rights not available at common law. Therefore, their remedies are exclusive. The court also held that a claim for unpaid meal periods and other Labor Code violations "arise" out of contract - the employment relationship. As such, punitive damages are not available as a matter of law.

Here's a long quote from the opinion to prove I read it, or at least that I know how to cut and paste:

We agree with Cottonwood’s contention, which Brewer does not dispute on appeal, that the Labor Code statutes regulating pay stubs (§ 226) and minimum wages (§ 1197.1) create new rights and obligations not previously existing in the common law. Moreover, those same statutes provide express statutory remedies, including penalties for the violation of those statutes that are punitive in nature, that are available when an employer has violated those provisions. Section 226, subdivision (e), provides that any employee “suffering injury as a result of a knowing and intentional failure by an employer to comply with [the pay stub requirements] is entitled to recover the greater of all actual damages or fifty dollars ($50) for the initial pay period in which a violation occurs and one hundred dollars ($100) per employee for each violation in a subsequent pay period, not exceeding an aggregate penalty of four thousand dollars ($4,000), and is entitled to an award of costs and reasonable attorney’s fees.” Similarly, section 1197.1, subdivision (a) provides that any employer who pays or causes to be paid to any employee a wage less than the minimum wage “shall be subject to a civil penalty as follows: [¶] (1) For any initial
violation that is intentionally committed, one hundred dollars ($100) for each underpaid employee for each pay period for which the employee is underpaid[;]
[¶] (2) For each subsequent violation for the same specific offense, two hundred fifty dollars ($250) for each underpaid employee for each pay period for which the employee is underpaid regardless of whether the initial violation is intentionally committed.” Here, Brewer sought and recovered the maximum $4,000 penalty available for Cottonwood’s pay stub violations, and the judgment contained an additional penalty of $15,300 pursuant to section 1197.1 for the overtime violations. We are not persuaded by Brewer’s argument that the remedies set forth in the statutory scheme were not intended to be the exclusive remedy available for statutory violations, and Brewer does not articulate any basis for concluding those penalties are so inadequate that other remedies should be permitted. Similarly, the
regulations requiring employers to provide meal breaks (§ 512) and rest breaks
(Cal. Code Regs., tit. 8, § 11090, subd. 12(A)), and providing numerous forms of
remedies for their violation, also appear to have created new rights and obligations not previously existing in the common law, and the statutory scheme provides “a comprehensive and detailed remedial scheme for its enforcement.” (Rojo v. Kliger, supra, 52 Cal.3d at p. 79.) Those remedies include an award in the nature of liquidated damages under section 226.7 (cf. Murphy v. Kenneth Cole
Productions, Inc. (2007) 40 Cal.4th 1094, 1112 [because “damages [from missed
meal and rest breaks] are obscure and difficult to prove, the Legislature may
select an amount of compensation [for the violation] without converting that
remedy into a penalty” for statute of limitations purposes]), injunctive relief
(see generally § 1194.5), and potential statutory penalties (see § 558). We are convinced that, because the meal and rest break provisions of the Labor Code “established a new and comprehensive set of rights and remedies for [employees]… [and] [n]o such specialized rights and remedies existed at common law… the remedy provided in the statute ‘is exclusive of all others unless the statutory remedy is inadequate.’ [Quoting Turnbull, supra, 219 Cal.App.3d at p. 827.]” (De Anza Santa Cruz Mobile Estates Homeowners Assn. v. De Anza Santa Cruz Mobile Estates, supra, 94 Cal.App.4th at p. 916.)

* * *
We are also convinced that, even were the remedies provided by the statutory scheme not the exclusive remedies for the new rights, punitive damages would nevertheless be unavailable because punitive damages are ordinarily limited to actions “for the breach of an obligation not arising from contract” (Civ. Code, § 3294), and Brewer’s claims for unpaid wages and unprovided meal/rest breaks arise from rights based on her employment contract. Brewer argues, without citation to relevant authority, that Cottonwood’s breach of its statutory obligations under the Labor Code is a “breach of an obligation not arising from contract,” thereby supporting the award of punitive damages.

However, in analogous situations, the courts have recognized that, when a statute imposes additional obligations on an underlying contractual relationship, a breach of the statutory obligation is a breach of contract that will not support tort damages beyond those contained in the statute.(See, e.g., Kwan v. Mercedes-Benz of North America, Inc. (1994) 23 Cal.App.4th 174, 187–192 [breach of Consumer Warranty law obligations is breach of contract and does not support tort damages for emotional distress].) We apprehend the Labor Code provisions governing meal and rest breaks, minimum wages, and accurate pay stubs constitute statutory obligations imposed only when the parties have entered into an employment contract and are obligations arising from the employment contract. The breach of an obligation arising out of an
employment contract, even when the obligation is implied in law, permits contractual damages but does not support tort recoveries. (Cf. Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 700.) Although Brewer relies on language from Gould v. Maryland Sound Industries, Inc. (1995) 31 Cal.App.4th 1137, 1147 to assert prompt payment of wages involves sufficiently fundamental public polices that the willful failure to make such payments will support punitive damages, the court in Gould expressly recognized that, although a claim for wrongful discharge in violation of public policy would state a tort claim, a claim seeking tort recoveries based on the allegation the employer otherwise breached the employment contract agreement was barred by Foley. (Gould, at p. 1155.)

The case is Brewer v. Premier Golf Properties and the opinion is here.

IRS Standard Mileage Rate for 2009: $0.55 Per Mile

The IRS announced the standard mileage rates for 2009. Effective January 1, 2009, the reimbursement rate will be $0.55 for business use of a vehicle, $0.24 for moving and medical expenses, and $0.14 for service to charitable organizations. For the second half of 2008, the reimbursement rate actually was higher, at $0.585.

The IRS's announcement is here.

DGV

Definitely summary judgment. Definitely.

FEHA does not protect against bad managers, only decisions and actions with a discriminatory basis. “[I]f nondiscriminatory, [the employer’s] true reasons need not necessarily have been wise or correct. [Citation.] 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.” (Guz, supra, 24 Cal.4th at p. 358; see also Hersant, supra, 57 Cal.App.4th at p. 1005 [“‘The [employee] cannot simply show that the employer’s decision was wrong or mistaken, since the factual dispute at issue is whether discriminatory animus motivated the employer, not whether the employer is wise, shrewd, prudent, or competent.’”].)

So said the court of appeal in Mangano v. Verity, Inc. The opinion is here.

Basically, Mangano was a long term employee at Verity. Springsteel, the CFO, was his boss. Springsteel gave Mangano the nickname "rainman" because he had an uncanny memory, and he was a bit quirky. He also called him Tommy, instead of Tom. ::::Wow, that's why they passed anti-discrimination laws. -Ed. :::: Mangano was turned down for a promotion that was given to a clearly qualified outside candidate. When he applied, he complained about the nicknames, and Springsteel never used them again.

Little did Springsteel (or anyone else) know that Mangano later would be diagnosed with Asperger's syndrome, a form of autism. So, he sued for disability discrimination and harassment. The court of appeal upheld summary judgment. I only blogged about the case because of the point made in the quoted language above.

New FMLA Regulations Are Here

The federal DOL finalized its FMLA regulation revisions. We analyzed earlier drafts here and here. We'll publish a full analysis of the final regulations soon.

To find the new regulations, page down to p. 141 of the PDF, here. The first 140 pages are analysis and commentary. No one can read all that and stay awake. You'll put your eye out. Of course, that could earn you up to 12 weeks of leave....

Greg

H/T Ross Runkel

California's Wage Laws Reach Outside State's Borders

Multi-state employers - take note. In today's mobile world, employees travel from place to place, performing duties as the job requires. When an employee lives in Arizona and works all over the place, including California, must the employee be paid under California law?

Well, yes, at least for the work performed in California, according to the Ninth Circuit Court of Appeals. In what appears to be a straightforward application of "choice of law" principles, the court has probably wreaked havoc on payroll systems, human resources departments, and risk managers all over America. So, Oracle employed instructors who taught other companies' employees how to use Oracle software. Some of the employees lived in Arizona or Colorado, but performed some of the work (sometimes in partial weeks), in California.

The Court of Appeals said that when the non-resident employees work in California, California wage and hour law applies. The court did not say when this rule kicks in - what if an employee flies over California, just passes through, visits California for a one-day business trip, etc.? The question mark means: I dunno. But I know what my next article is going to be about.

The case is Sullivan v. Oracle Corp. Here is the opinion.

Greg

Area Blogger Reads Our Blog!

We have confirmation from teh InTeRw3bs that at least one person has read this page. Thanks to The UCL Practitioner for mentioning us in her Blawg Review # 183. And btw, the UCL Practitioner is always worth a read too if you pay any attention to California's Unfair Competition Law.

DGV

Election Day is a Vote on the Employee Free Choice Act

This is not a "partisan" blog. We don't care for whom you vote. We represent employers/ management, though. So, we tend to discuss legal developments through a prism of how they affect the employer. And that's. O.K.

I bring up the election because, let's face it, all blogs are about the election. Why should ours be any different? Oh, and it's pretty much a given that the fate of the so-called "Employee Free Choice Act" will turn on which candidate is elected President next Tuesday. It pays to know what the law is, what it will bring to your business, and whether you can live with it. We can certainly live with it here at SV (once we hire enough lawyers to handle all of the work that this law is going to generate for us.) Hint hint.

Essentially, the law (if passed) will make it possible for unions to organize workers without a secret ballot election, merely by signing up a "majority" of the workers in an appropriate bargaining unit. Once the union demonstrates its status as representative, contract negotiations must start within 10 days of the union's request. The parties must negotiate a first contract in 90 days. If the parties fail, then there's mediation. If you're ok with all this so far, then here's the part that might concern you if you are a business owner or manager (and maybe if you're a union member too): if mediation fails, a government appointed arbitrator will decide on a first contract for you. ("Hello, I'm the government arbitrator. I'm here to help. So, I'll be deciding the employees' wages, and what the terms of your contract will be, too!") If you don't believe, me, the link to the proposed law is here.

The private sector workforce is about 7% unionized now. When employers are able to explain to employees what unionization will bring, employers win the election about 50% of the time. But when employers are silent, unions win a vast majority of the time - possibly 80% of the time? If there is no secret ballot, no campaign and a union's representation will be based only on whether union organizers can convince employees to sign an authorization card at a pizza and beer fest down at the local union hall? Well, you do the math.

So, here's a selection of law firm articles on the EFCA. If you seek balance, try Yoga. Or you can Google the AFL-CIO's or union advocates' explanation of the law, too. Again, the text of the current version of the bill, HR 800, is here. There, now you can vote.

DGV

Son of Brinker?

Brinker's gone. But Brinkley's here! At least for now. In Brinkley v. Public Storage, Inc., the court of appeal issued a published opinion, in which it held that meal and rest periods merely must be provided, not forced. This holding tracks Brinker v. Superior Court (now on review).
The court in Brinkley relied on federal case law, the same cases on which the court of appeal in Brinker relied.

Given the similarity to Brinker, the Supreme Court may accept review of Brinkley under a "Grant and Hold" order. So, don't rely on Brinkley unless review is denied. We won't learn its fate for a couple of months.

The second key issue in Brinkley is the court's holding that the wage statement statute, Lab. Code section 226 requires proof of injury and some intent on behalf of the employer. That statute provides penalties of up to $4000 per employee for non-compliant wage statements....

Be careful out there!

DGV

DLSE: Brinker is Dead. Long Live Brinker!

Earlier this year, the California Division of Labor Standards Enforcement adopted the meal period standards that the Court of Appeal announced in the famous Brinker decision. We covered that DLSE memo here.

So now that the California Supreme Court decided to review the Brinker case, what will the DLSE do?

Well DLSE just issued a NEW memo in which it rescinds its Brinker memorandum, here. In its new "rescission" memo, the DLSE strongly suggests it will continue to enforce meal period laws such that an employer need not force employees to take meal periods; it simply must offer them. (So, to DLSE, Brinker is gone, but not forgotten).

Good news for employers facing DLSE claims. But in court, this area of the law remains pretty muddy.

Hat tip to Storm and Wage Law.

California Supreme Court Expands "Equitable Tolling" of Limitations Period

When an employee pursues internal remedies rather than filing a charge or lawsuit, the statute of limitations is tolled, the California Supreme Court said today. (That means the statute does not count the time during which the internal remedy is pursued, expanding the limitations period accordingly).

The Antelope Valley school district had a detailed internal procedure for investigating discrimination / harassment complaints. Plaintiff McDonald and others pursued the internal remedies. By the time they filed a discrimination charge with the Department of Fair Employment and Housing, more than a year had passed since the last discriminatory act.

The limitations period is tolled for "continuing violations," for pursuing mandatory administrative agency remedies, and for other reasons. But the Court expanded that legal doctrine to the employer's internal processes. So, if you have an investigation procedure, grievance steps, internal peer review, or other informal, voluntary alternative dispute resolution procedure, the statute of limitations may be "tolled" while those proceedings continue. It will be important to send a letter telling employees when the internal remedies are no longer in effect to trigger the statute. It will also be important to secure witness information, documents, and the like, given that the employer may face litigation over stale issues down the road.

The opinion is McDonald v. Antelope Valley Community College District and the opinion is here.

California Supremes Accept Review in Brinker

In a not-very-surprising development, the California Supreme Court accepted review of the Brinker v. Superior Court decision, discussed here and here. And here.

When the California Supreme Court accepts review, the opinion cannot be cited. So, the law now reverts to the pre-Brinker days. Which means you should read my old article, here.

However, there is one wrinkle that remains to be ironed out. The DLSE, our labor standards agency, has adopted the Brinker opinion as its enforcement position. Will the DLSE leave its interpretation in effect while the high court considers the case? We shall see. The discussion of the DLSE memorandum regarding Brinker is here.

DGV

Reminder to Post Voting Time Notice

So, I hear there's an election soon. There's a rumor it's November 4.

At least 10 days before the election, employers in California must post this notice. Employers also must give employees up to two hours off to vote if they are unable to vote outside of work hours. Here is information from the California Secretary of State about the law.

Ninth Circuit Upholds San Francisco's Health Care Ordinance

A panel of the Ninth Circuit upheld San Francisco's Healthcare Security Ordinance. The ordinance requires employers either to maintain a certain expenditure on health care for its employees or contribute the minimum to the city. The city operates a healthcare access plan, called Healthy San Francisco, funded by these taxes - er - contributions by the employers.

The Golden Gate Restaurant Association challenged SF's plan as preempted by ERISA.
Late in 2007, the district court held ERISA indeed preempted the ordinance. We posted on that here.

The district court's opinion lasted about a week. The Ninth Circuit stayed the district court's decision, foreshadowing its view that ERISA does not preempt the law. The Ninth Circuit panel decided the ordinance neither creates and ERISA plan nor "relates" to a plan. In its long opinion, the court rejected a series of arguments advanced by the Golden Gate Restaurant Association and a number of amici curiae, including the U.S. Department of Labor.
Unless or until the Supreme Court overrules this case, it will probably result in more local ordinances establishing mandatory health care systems. Employers will have to have different benefits coverage in different jurisdictions, pay the higher taxes, or increase coverage to the highest common denominator....

The case is Golden Gate Restaurant Association v. San Francisco, and the opinion is here.

Governor Vetoes AB 437, AB 2279, AB 2918, AB 3062, AB 3063

Governor Schwarzenegger vetoed several employment law bills:

AB 437 - would have stated the Legislature's intent to reject the U.S. Supreme Court's decision in Ledbetter v. Goodyear, regarding the statute of limitations in discrimination cases.

AB 2279 - would have required employers to accommodate the use of medical marijuana.

AB 2918 - would have outlawed most credit checks except in narrow and specified circumstances.

AB 3062 - would have expanded the Labor Code's protection of employees whose wages are garnished.

AB 3063 - would have codified more limits on pre-employment inquiries regarding criminal convictions.

California's Computer Professional Exemption Tweaked

California computer professionals enjoy a special exemption from overtime that has a duties component and a minimum pay component. Last year the Legislature rolled back the minimum pay requirement from $49 / hour down to $36 / hour. Governor Schwarzenegger just signed AB 10, which provides that an employee may be eligible for the special computer exemption if s/he earns a salary of over $75,000 per year. The salary and hourly rate are adjusted each year. AB 10 is here. This is an "urgency" statute, which means it takes effect immediately.

Governor Vetoes AB 2874 and SB 1583

AB 2874 (here)would have lifted the $150,000 cap on damages available in administrative hearings at the Fair Employment Housing Commission;

SB 1583 (here) would have imposed penalties on non-lawyer consultants who gave erroneous advice on classifying employees as independent contractors.

Terminated.

Greg

President Signs ADA Amendments Act

President Bush signed a bill significantly reforming the Americans With Disabilities Act. The new law, which takes effect on January 1, 2009, primarily overturns 9 years of case law interpreting the definition of "disability" under the ADA. Our article on the new law is here. The text of the law is here. Acronym lovers will likely be disappointed by "ADAAA."

DGV

Court of Appeal Upholds Independent Contractor Status

The Court of Appeal rejected a plaintiff's claim that he was an employee rather than an independent contractor. The plaintiff alleged that the independent contractor agreement's "at will" clause established employee status. The court of appeal disagreed, holding that the other indicia of contractor status were so strong that they overcame the at-will employment clause. The court found persuasive that the company did not control the worker, an inspector, at the job site, that he provided his own tools and equipment, that he performed skilled work, and the parties' agreement contemplated the independent contractor relationship.

The case is Varisco v. Gateway Science and Eng'g and the opinion is here.

Avoiding Wage and Hour Liability?

The best way to avoid violating California's wage and hour laws is to become a charter county! OK, you might need an amendment to the constitution, but it may be worth it. In Dimon v. County of L.A. (here), the plaintiffs brought a meal and rest period class action on behalf of deputy probation officers. The trial court dismissed the case on the ground that California statutes governing meal and rest periods were inapplicable to Los Angeles County, because it is a charter county. The court of appeal agreed. This case is similar to Curcini v. Alameda County, which we discussed here.

DGV

Court of Appeal Vacates Denial of Class Certification

A delivery company's drivers brought a putative class action, claiming they were misclassified as independent contractors. The trial court denied class certification. The court also refused to allow pre-certification discovery of the putative class members, relying on case law that has since been overruled. Division 7 of the Second District Court of Appeal vacated the order denying certification, in great part because the trial court denied the plaintiff's motion to compel the identities of class members.

The case is Lee v. Dynamex, Inc. and the opinion is here.

DGV

San Francisco Employers - Mandatory Transportation Benefit Coming

The San Francisco Supervisors passed a new ordinance requiring certain employers to provide certain commuter benefits. The ordinance is here. Here are the highlights:

Covered employers: employ 20 employees or more (anywhere, not just in SF).

Eligible employees: non-exempt employees who perform 10 or more hours of work in SF per week.

Benefit: The employer can either (1) enroll in a "commuter check" program where pre-tax funds are taken out of employees' paychecks so they can purchase transportation with pre-tax dollars or (2) buy employees transit passes worth up to $45.00 per month or (3) operate a "van pool" to take employees to and from work.

Effective Date: On about December 8, 2008.

"Never mind."

The California Supreme Court dismissed review of Harvey v. Sybase, discussed here.

Brinker - Petition for Review filed

The plaintiffs in Brinker v. Superior Court (discussed here) filed their Petition for Review in the California Supreme Court. Docket is here.

New EEOC Guidance on ADA and Performance Standards

The EEOC issued an FAQ-style document explaining employers' obligations under the ADA with respect to enforcing performance standards. This is a helpful document that should clear up some confusion regarding whether and when a disability requires employers to ignore performance and conduct standards applicable to all employees generally. Here is the EEOC's publication.

Can't Currently Count on Kin Care Case

How's that for alliteration? OK, it's Friday. So sue me. Maybe I can represent me. Anyway, the Supreme Court took up McCarther v. Pacific Telesis Group here. The issues on review:

Petition for review after the Court of Appeal reversed the judgment in a civil action. This case presents the following issues: (1) Does Labor Code section 233, which mandates that employees be allowed to use a portion of "accrued and available sick leave" to care for sick family members, apply to employer plans in which employees do not periodically accrue a certain number of paid sick days but are paid for qualifying absences due to illness? (2) Does Labor Code section 234, which prohibits employers from disciplining employees for using sick leave to care for sick family members, prohibit an employer from disciplining an employee who takes such "kin care" leave if the employer would have the right to discipline the employee for taking time off for the employee's own illness or injury?

We posted on this opinion here. We wrote an article here. Much toner and pixels spilled for naught. Now we must wait for the Supreme Court to decide this important wage and hour / leave issue here. If you want us to do an amicus brief while we're waiting, email me.

Court of Appeal: Inadequate Notice of Disability But Sufficient Notice for CFRA Leave

The Court of Appeal decided that Continental Airlines management had insufficient notice that its employee, Henry Avila, had a covered "disability" under the Fair Employment and Housing Act. The employer knew the employee had missed work because he was "sick," was hospitalized for three days, and that he presented a couple of slips from Kaiser putting him off work for short durations. The court, though, found it was undisputed that the employer did not know that the reasons for the absences amounted to a "disability" under FEHA. The plaintiff's failure to accommodate claim failed for the same reason.

However, the court held that Continental was on sufficient notice that the employee needed CFRA leave. Avila's merely calling in sick was not sufficient notice:

That plaintiff called in sick was, by itself, insufficient to put Continental on notice that he needed CFRA leave for a serious health condition. (See Gibbs v. American Airlines, Inc. (1999) 74 Cal.App.4th 1, 9 [“an employee who calls in sick to work for several days while taking antibiotics for an apparent flu has not provided her employer with ‘notice sufficient to make the employer aware that the employee needs CFRA qualifying leave’”]; see also Stevens v. Department of Corrections (2003) 107 Cal.App.4th 285, 292 [“in the context of leave for an employee’s own serious health condition, the mere notice that an employee seeks to use sick time is insufficient to place the employer on notice that the employee seeks CFRA-qualifying leave”] [dictum].)

Yet, the court held (2-1) that the employee's claim that he gave the Kaiser doctor's notes to an unidentified manager was sufficient to create a triable issue of fact that he sufficiently requested a CFRA leave. The employee's testimony was sufficient to require a trial as to whether the company had adequate notice that the employee was hospitalized for 3 days, sufficient to
constitute a "serious health condition" requiring leave. The dissenting justice believe that the employee did not make a sufficient request for leave.

The opinion in Avila v. Continental Airlines is here.

California Paid Sick Leave Bill - Status

AB 2716 is the California bill that would mandate paid sick leave for ALL employers (even small ones), albeit with a few exceptions stated in the bill. The bill is modeled after San Francisco's paid sick leave ordinance, here. This is the probably the bill that would have the most impact on employers if it is passed and signed.
But, according to the Legislature's website, the bill has been placed in the Senate Appropriations Committee's "suspense" file (here). So, this bill may be dead, at least for this session.

DGV

California Supreme Court Says "no" to "Limited" Non-Compete Agreements, but "yes" to Broad Releases

The California Supreme Court issued its opinion in Edwards v. Arthur Andersen - read here -

The Court flatly rejected the "limited" or "narrow" non-competition agreement as unlawful under Bus. and Prof. Code section 16600. The court said that California's unfair competition law bans all non-compete agreements, even when they only restrict the employee's right to work for a limited number of employers. So, bid a sad goodbye to Ninth Circuit cases recognizing the "limited" non-compete such as International Business Machines Corp. v. Bajorek (9th Cir. 1999) 191 F.3d 1033 and General Commercial Packaging v. TPS Package (9th Cir. 1997) 126 F.3d 1131.

Below the fold, but perhaps more importantly, the court upheld a release that covered "any and all" claims. The lower court held that the release was invalid because it included unwaivable claims such as for reimbursement of expenses under Lab. Code section 2802. The court said that general release language such as at issue in Edwards impliedly did not include the release of claims that are not capable of being released:

We apply this rule in holding that a contract provision releasing “any and all” claims, such as that used in the TONC in the present case, does not encompass nonwaivable statutory protections, such as the employee indemnity protection of section Labor Code 2802. In so holding, we interpret the TONC such that it does not violate Labor Code section 2804. As a consequence, the TONC is neither unlawful nor null and void.

So, that's really good news for those of us employment lawyers who don't carve out all unwaivable claims from our releases.

DGV

California Supreme Court Takes Up Harvey v. Sybase

I posted here about Harvey v. Sybase. The California Supreme Court granted review here. The issues are whether the "same actor inference" (against discrimination) applies at trial and heightens the plaintiff's burden, and whether a court of appeal reviews a punitive damages award under the "clear and convincing" evidence standard.

Stay tuned.

Narrowcast Supreme Court Opinion Contains Hidden Gems

So, I actually did not read Miklosy v. Regents on the day it was issued. The headline holding is that the state's Whistleblower Protection Act, Gov't Code section 8547 et seq., does not apply to the University of California, unless the University fails to address an internal complaint. Of course, this case is important to the University, its lawyers, its employees, and people who sue the University. But I'm none of those.

Yet, at the end of the opinion, the Court made some key rulings that affect all of us California employment lawyers:
- the court endorsed the long line of court of appeal decisions holding that individuals may not be held liable for wrongful termination in violation of public policy;
- the court held that claims for intentional infliction of emotional distress are preempted by the Workers' Compensation Act even when the conduct alleged violates public policy. The claim for wrongful termination is not preempted, but the common law IIED claim is.
- public entities may not be sued for wrongful termination in violation of public policy.

DGV

New California Law: Limit on Wage and Hour Releases

The Governator signed another employment law. This one's called AB 2075, which modifies Labor Code section 206.5. already prohibits releases of any claim for wages unless payment has been made. The new subsection (b) will define "release" to include

requiring an employee, as a condition of being paid, to execute a statement of the hours he or she worked during a pay period which the employer knows to be false.

If your organization requires employees to certify their hours before you pay them to avoid later wage claims, you may wish to take a look at your practices. This law will take effect 1/1/09.

DGV

DLSE Memorandum to Staff: Follow Brinker

The California Division of Labor Standards Enforcement has issued a memorandum to its deputy labor commissioners instructing them to follow the court of appeal's decision in Brinker v. Superior Court (Hohnbaum). (If you don't know what Brinker is, see here).

It is unclear whether DLSE will follow this enforcement policy if the Supreme Court accepts review. Also, there is some indication the legislature could address meal periods as part of the state budget negotiations. Finally, if an employee files in court, the DLSE memo will not have much force. So, be cautious before changing your policies until this all shakes out. For now, though, the DLSE is following Brinker. Here is the text of the memo (footnotes omitted):


State of California
DIVISION OF LABOR STANDARDS ENFORCEMENT - HQ
MEMORANDUM
TO: DLSE Staff
FROM: Angela Bradstreet, Labor Commissioner
Denise Padres, Deputy Chief
Robert Roginson, Chief Counsel
DATE: July 25, 2008
SUBJECT: Binding Court Ruling on Meal and Rest Period Requirements

On July 22, 2008, the California Court of Appeal issued its decision in Brinker Restaurant Corp. v. Superior Court of San Diego County (Hohnbaum), (2008) ___ Cal.App.4th ___ , 2008 WL 2806613. The court in Brinker decided several significant issues regarding the interpretation of California’s meal and rest period requirements. The decision is a published decision, and its rulings are therefore binding upon the Division of Labor Standards Enforcement (DLSE).

The decision in Brinker included the following rulings regarding the interpretation of California’s meal and rest period requirements:

Meal Periods

• The court held that Labor Code § 512 and the meal period requirements set forth in the applicable wage order mean that employers must provide meal periods by making them available, but need not ensure that they are taken. Employers, however, cannot impede, discourage or dissuade employees from taking meal periods.1

• The court rejected the so-called “rolling five-hour” requirement as being inconsistent with the plain meaning of Labor Code § 512 and the applicable wage order.2 An employer must make a first 30-minute meal period available to an hourly employee who is permitted to work more than five hours per day, unless (1) the employee is permitted to work a “total work period per day” that is six hours or less, and (2) both the employee and the employer agree by “mutual
consent” to waive the meal period.3 The court also found section 512 to plainly provide that an employer must make a second 30-minute meal period available to an hourly employee who has a “work period of more than 10 hours per day” unless (1) the “total hours” the employee is permitted to work per day is 12 hours or less, (2) both the employee and the employer agree by “mutual consent” to waive the second meal period, and (3) the first meal period “was not waived.”4 Employers are not required to provide a meal period for every five consecutive
hours worked.5 The court held that the employer’s practice of providing employees with an “early lunch” within the first few hours of an employee’s arrival at work did not violate California law, even though that would mean that the employee might then work in excess of five hours without an additional meal period.6

Rest Periods

• The court held that the rest period requirements set forth in the applicable wage order mean that employers must provide rest periods, but need not ensure that they are taken. Employers, however, cannot impede, discourage or dissuade employees from taking rest periods.7

• The court held that employers need only authorize and permit rest periods every four hours or major fraction thereof and they need not, where impracticable, be in the middle of each work period.8 The court interpreted the phrase “major fraction thereof” to mean the time period between three and one-half hours and four hours and not to mean that a rest period must be given every three and one-half hours.9 In so doing, the court rejected as incorrect a 1999 interpretation by the Labor Commissioner that the term “major fraction thereof” means an employer must provide its employees with a 10-minute rest period when the employees work any time over the midpoint of each four hour block of time.10 The court ruled that the rest periods must be given if an employee works between three and one-half hour and four hours, but if four or more hours are worked, it need be given only every four hours, not every three and one-half hours.11

The court also ruled that the applicable wage order rest period provisions do not require employers to authorize and permit a first rest period before the first scheduled meal period. Rather, the applicable language of the wage order states only that rest periods “insofar as practicable shall be in the middle of each work period.” Accordingly, the court concluded, as long as employers make rest periods available to employees, and strive, where practicable, to schedule them in the middle of the first four-hour work period, employers are in compliance with that portion of the applicable wage order.12

The court relied upon the plain meaning of the Labor Code and applicable wage order provisions in making its determinations. The court found persuasive the reasoning in the federal district court decisions in White v. Starbucks (ND Cal. July 2, 2007) 497 F.Supp.2d 1080 and Brown v. Federal Express Corp. (CD Cal. Feb. 26, 2008) 2008 WL 906517, and concluded that employers need not ensure meal periods are actually taken, but need only make them available.13 The court distinguished the decision in Cicairos v. Summit Logistics, Inc. (2006) 133 Cal.App.4th 949, concluding that the facts in Cicairos established that the employer failed to make meal periods available to employees and that the court there only decided meal periods must be provided, not ensured.14 All staff must follow the rulings in the Brinker decision effective immediately and the decision shall be applied to pending matters. Please ensure that any wage claim filed with DLSE that has a meal or rest period issue is reviewed by your Senior Deputy prior to making any final determination on its merits.

New California Statute: SB 940 - Temporary Services Employees

Contrary to what you may think, not all California employment laws are passed on the final day of the legislative session. The legislature not only passed SB 940 in July, but also the Governor signed it. The text of the new law is here.

This new law will change payroll practices applicable to "temporary service" workers as defined in the statute. New Labor Code section 201.3 defines "Temporary services employer" as follows:

an employing unit that contracts with clients or customers to supply workers to perform services for the clients or customers and that performs all of the following functions:
(A) Negotiates with clients and customers for matters such as the time and place where the services are to be provided, the type of work, the working conditions, and the quality and price of the services.
(B) Determines assignments or reassignments of workers, even if workers retain the right to refuse specific assignments.
(C) Retains the authority to assign or reassign a worker to another client or customer when the worker is determined unacceptable by a specific client or customer.
(D) Assigns or reassigns workers to perform services for clients or customers.
(E) Sets the rate of pay of workers, whether or not through negotiation.
(F) Pays workers from its own account or accounts. [and]
(G) Retains the right to hire and terminate workers.

However, "Temporary services employer" does not include any of the following: (A) A bona fide nonprofit organization that provides temporary service employees to clients. (B) A farm labor contractor, as defined in subdivision (b) of Section 1682. (C) A garment manufacturing employer, which, for purposes of this section, has the same meaning as "contractor," as defined in subdivision (d) of Section 2671.

So, if you're a "temporary services employer," or if you use one, read on:

- Unless an exception applies below, covered temporary workers must be paid weekly. Wages for the current week's work are due on the pay day of the following calendar week.

- When an assignment is completed, the final wages for the assignment may be paid on the regular pay day in the week following the completion of the assignment (not the final day).

- If a temp is assigned to work "day to day," from a centralized pool, employees' wages are due AT THE END OF EACH DAY, but only if (A) The employee reports to or assembles at the office of the temporary services employer or other location. (B) The employee is dispatched to a client's worksite each day and returns to or reports to the office of the temporary services employer or other location upon completion of the assignment. (C) The employee's work is not executive, administrative, or professional, as defined in the wage orders of the Industrial Welfare Commission, and is not clerical.

- Striker replacements - Temporary services employees used for strike replacements must be paid AT THE END OF EACH DAY.

- Except as stated above, temporary services employees who are fired by the agency or who quit are paid final pay in the regular way (Lab. Code sections 201, 202).

- None of these rules apply if the employee is assigned to a client for more than 90 days, unless the agency pays weekly in accordance with this new provision.

Employers who use temporary agencies should ensure their vendors comply with these sections, as employees have been known to assert "joint employer" wage claims against the client and the agency.

Those of you who hire striker replacements from temporary agencies should ensure that the agency is capable of paying employees daily.

DGV

EEOC Issues New Guidance on Discrimination Based on Religion

The Equal Employment Opportunity Commission updated its Compliance Manual's section on discrimination based on religion. View it here. This chapter covers the following, according to the EEOC:

I - Coverage issues, including the definition of “religion” and “sincerely held,” the religious organization exception, and the ministerial exception.
II - Disparate treatment analysis of employment decisions based on religion, including recruitment, hiring, promotion, discipline, and compensation, as well as differential treatment with respect to religious expression; customer preference; security requirements; and bona fide occupational qualifications.
III - Harassment analysis, including religious belief or practice as a condition of employment or advancement, hostile work environment, and employer liability issues.
IV - Reasonable accommodation analysis, including notice of the conflict between religion and work, scope of the accommodation requirement and undue hardship defense, and common methods of accommodation.
V - Related forms of discrimination, including discrimination based on national origin, race, or color, as well as retaliation.

This revision gives employers and their lawyers a good opportunity to refresh their understanding of what "religion" means under Title VII and employers' obligations not only to "reasonably accommodate" religious practices, but also to refrain from discrimination, harassment and retaliation based on religion.

DGV

Brinker Article

We published an article on Brinker in the San Francisco Daily Journal today (July 25). The article is here.

DGV

Our U.S. and California Supreme Court Roundup Articles

Here are our articles summarizing the past term's significant employment law decisions from the California and U.S. Supreme Courts. We do this every year no matter how many times you tell us not to. After all, we can't just abandon those firms who glom onto our work product without attribution. Click here:

California Supreme Court roundup.

U.S. Supreme Court roundup.

Brinker: The Watershed Meal Period Decision Comes Down

We will write more later. But let us be one of the first to welcome the Court of Appeal's decision in Brinker v. Superior Court (Hohnbaum) (opinion here). Here is the court's holding.

we conclude the class certification order is erroneous and must be vacated because the court failed to properly consider the elements of plaintiffs' claims in determining if they were susceptible to class treatment.Specifically, we conclude that (1) while employers cannot impede, discourage or dissuade employees from taking rest periods, they need only provide, not ensure, rest periods are taken; (2) employers need only authorize and permit rest periods every four hours or major fraction thereof and they need not, where impracticable, be in the middle of each work period; (3) employers are not required to provide a meal period for every five consecutive hours worked; (4) while employers cannot impede, discourage or dissuade employees from taking meal periods, they need only provide them and not ensure they are taken; and (5) while employers cannot coerce, require or compel employees to work off the clock, they can only be held liable for employees working off the clock if they knew or should have known they were doing so. We further conclude that because the rest and meal breaks need only be "made available" and not "ensured,"individual issues predominate and, based upon the evidence presented to the trial court,they are not amenable to class treatment. Finally, we conclude the off-the-clock claims are also not amenable to class treatment as individual issues predominate on the issue of whether Brinker forced employees to work off the clock, whether Brinker changed time records, and whether Brinker knew or should have known employees were working off the clock.

Wow. So, this is a major decision that could bring meal and break period class actions to a screeching halt, even though the Legislature does not seem inclined to do so. The only thing is, if the Supreme Court grants review, the decision could disappear for as much as a couple of years and could get reversed by the High Court.

So, champagne breaks in the HR department need not be provided or offered - yet.

DGV

Federal Minimum Wage Going Up to $6.55 per hour 7/24/08

Most of us who practice or work in California don't think much about the federal minimum wage. That's because California's minimum wage is far higher than the federal standard. Those of you not subject to California's $8.00 minimum may be interested in the upcoming increase to the federal minimum. The FLSA minimum wage will rise $5.85 to $6.55 per hour on July 24, 2008. It will increase again to $7.25 on 7/24/09, too. Here's a U.S. DOL fact sheet on the federal minimum wage.

DGV

Ninth Circuit on Damages Available under FMLA

Farrell worked for Tri-County Metropolitan Transportation District of Oregon. The district denied some FMLA requests that Farrell made because of his own conditions. A jury awarded him $1,110 in lost wages for the work time Farrell lost because of the emotional distress he suffered when the district denied his FMLA claim. Although emotional distress damages are not available under the FMLA, lost work time is. So, the Ninth Circuit decided, a jury was entitled to award Farrell lost wages due to emotional distress.

The case is Farrell v. Tri-County Metropolitan Transportation District of Oregon and the opinion is here.

Pre-Certification Motion to Strike Class Action Upheld

You can call it the anti-certification motion, the motion to de-certify, or a motion to strike class allegations. Some employers bring preemptive motions to head off plaintiffs' motions for class certification. That's a bold move that could stop a class action in its tracks. Or it could result in a denial that portends rough going when the plaintiff ultimately seeks certification.
BCBG is a retailer who was party to a wage and hour class action (exemptions) that lasted some three years before the company decided to bring matters to a head. The plaintiffs argued that there was no such thing as a motion to strike class allegations. But the court of appeal upheld the procedure here. The case is In re BCBG Overtime Cases.

Charter Counties Not Covered by Labor Code Overtime and Meal/Rest Period Provisions

Chaplains at the (Alameda County) Santa Rita jail brought suit for unpaid overtime and meal / rest periods under the Labor Code. The Court of Appeal affirmed the County's demurrer to the complaint. The court recognized that Alameda County is a "charter" county with the constitutional power to control employees' "compensation." Since overtime and meal/rest period payments are part of "compensation," the applicable provisions in the Labor Code did not apply. (The county has its own provisions regarding such compensation.)

The case is Curcini v. County of Alameda and the opinion is here.

DGV