Saturday, November 15, 2014

Court of Appeal: Meal Period Class Action Not "Welcome to Walgreens"

This is not a class action post, bored blog readers. Read this one if you are interested in meal and break issues.

The Court of Appeal affirmed the denial of class certification in a meal and break case.  The ruling is against a recent tide of class action opinions.  The opinion, though is good not only about class certification, but about explaining meal break rules.

The Court of Appeal explained the current state of California law on meal breaks in refreshing, plain English, as follows:


Under the make available standard, the employer merely must make meal breaks available. That is, the employer must relieve the employee of all job duties for the meal break, and then the employer may allow employees to decide for themselves whether to take the break. This make available standard thus allows an employee to choose to skip the break and, for instance, to leave work early instead. If the employer provides a break opportunity to the worker, the employer incurs no liability if the employee then decides to skip or delay the break.

Walgreens employees sometimes did decide to skip or delay breaks. One employee explained, for instance, that “I generally take my lunch breaks, but about once a week I will skip lunch because I want to be able to leave work early.” Another testified that, “[e]ven though it has always been Walgreens’ policy to provide a 30-minute meal period, I preferred to skip mine and instead leave early. If I am not hungry, which is typically the case, I do not need a meal period, especially since it is unpaid time.” There was other similar evidence about skipping or delaying breaks. 
The Court then explained what the law is not.

Under the alternative ensure standard, an employer must ensure employees take breaks. That is, an employer must make workers take meal breaks whether they want them or not. Employers are liable for missed meal breaks even when workers choose to skip their breaks because the ensure rule makes breaks mandatory. 
Recall that the California Supreme court has rejected the "ensure" standard.

The Court of Appeal then explained why the "make available" standard is not amenable to class certification:

Meal break classes are harder to certify under a make available test because the fact of a missed break does not dictate the conclusion of a violation (and thus employer liability). Rather, under the make available standard you additionally must ask why the worker missed the break before you can determine whether the employer is liable. If the worker was free to take the break and simply chose to skip or delay it, there is no violation and no employer liability. This make available test thus can make analysis of break violations more complex than under the ensure standard.
Amen.  Bold is mine.

The plaintiff, curiously, argued that Walgreens management's emails insisting that employees take meal breaks supported class certification.  The trial court disagreed and so did the Court of Appeal:


“Just an FYI . . . if anyone is on this list, they did not receive a lunch. Please, you must talk to the assistant managers and find out why. . . . please make a big deal about this . . . remind employees that it is their job to ask for a break or lunch if they did not receive it, but also remind the Managers on duty that they must have a break schedule created for every shift . . . there is no negotiation about this . . . there is no excuse not to give a break or lunch . . . look at your schedule and make sure you have the right people at the right time." 
* * * *

This email evidence cut against Collins’s motion. “[A]n employer may not undermine a formal policy of providing meal breaks by pressuring employees to perform their duties in ways that omit breaks.” (Brinker Restaurant Corp. v. Superior Court, supra, 53 Cal.4th at p. 1040.) These emails, however, do not show Walgreens pressuring employees to omit breaks. They show the opposite: Walgreens pressuring store managers to ensure employees took meal breaks. The emails show respect for workers’ rights, not pressure against them.

Here's a part of the opinion that makes me want to apply for State Bar Judge. The Court of Appeal exposed the plaintiff's attorney's practices of drafting form declarations containing information that contradicted what employees had told the plaintiffs'  lawyers, which the employees then signed anyway:

Collins presented 44 form declarations. They were mostly identical. Each one
stated that on some occasions “meal periods were not made available to me.” The ostensible reason was “we were short-handed and I was required to work through my meal period.” 
The trial court gave the declarations no weight because they were unreliable. Most deposition witnesses recanted their declarations to some degree or entirely. The prevalence of falsity in the declarations raised questions about how Collins’s lawyers had created these declarations in the first place. * * * 

The trial judge repeatedly said these declarations “appalled” him, and he told counsel, “You know better.” 
The trial court was “especially troubled” that, once deposed, so many witnesses recanted their declarations. 
Form declarations present a problem. When witnesses speak exactly the same words, one wonders who put those words there, and how accurate and reliable those words are. 
There is nothing attractive about submitting form declarations contrary to the witnesses’ actual testimony. This practice corrupts the pursuit of truth.
It was not error for the trial court to give these unreliable declarations no weight. 
To employers:
- Ensure your meal period policies are lawful and require employees to take meal periods. Do not make them "optional" because of the "make available" legal standard.  If they do not take them, contrary to company expectations, that will not result automatically in liability and will help  thwart class certification.
- Follow up on policies by auditing compliance and ensuring management and employees understand, in writing, that they are expected to comply with the policy, not wink at it.

To defense lawyers:
- Depose declarants and find out how they filled out declarations that are too good to be true. Do not accept form declarations that result in mass, identical testimony.

This case is In re Walgreens Overtime Cases and the opinion is here.

Wednesday, November 12, 2014

San Francisco Minimum Wage Going Up; Oakland's Too

The San Francisco minimum wage will increase as follows in the years to come:

 Effective Date
 Minimum Wage Rate
 01/01/2015
 $11.05
 05/01/2015
 $12.25
 07/01/2016
 $13.00
 07/01/2017
 $14.00
 07/01/2018
 $15.00
 Following Years 07/01
 CPI Increase



That is the result of a ballot measure that the San Francisco electorate passed on election day this year.  You can find more information here.  Note that the minimum wage increases twice in 2015: once on January 1 and once on May 1.  That should keep the poster-hangers and payroll services busy.

Over in Oakland, the voters passed a different minimum wage increase. Beginning March 2, 2015, Oakland's minimum wage increases to $12.25 per hour. Yep, higher than San Francisco's, at least for a couple of months.  Then, the Oakland minimum wage will increase annually every January 1, indexed to inflation.

Oakland also passed a paid sick leave ordinance and made it unlawful for hospitality industry employers to retain service charges.  Read about the Oakland ordinance here.





Thursday, October 30, 2014

California Employers: Remember Voting Time Obligations and Poster

I'm a bit late with this reminder:  At least 10 days before the November 4 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.

NLRB Doubles Down: Again Holds Waivers of Class Actions in Arbitration Agreements Illegal

It's election time. So here's a short political rant:  The National Labor Relations Board is one of the administrative agencies that prove the cliche: elections have consequences.  (The President nominates the Board's members, each of whom is confirmed by the Senate to a five-year term.)  The President packed the Board with "recess appointments" after the Senate would not confirm his nominees. The Supreme Court voided those recess appointments. And then the Senate confirmed a slate of 5 nominees in a political compromise over filibusters and such.  Because advice and consent on the merits. End rant.

Whether you agree or disagree with the administration's politics, it's no secret that the NLRB has set about expanding the reach of the National Labor Relations Act, into non-union settings (like social media policies; handbook policies against insubordination, disloyalty, etc.; confidentiality agreements; and more).  It is not an exaggeration to say that non-union employers face more scrutiny by the National Labor Relations Board than they ever have in the past.

The Board also has weighed in on private agreements to arbitrate. The Board made news a couple of years ago when it held that an employer's requiring employees to waive the right to pursue class relief in mandatory arbitration agreements violated the National Labor Relations Act.  That was the "DR Horton" decision here.  The essence of DR Horton is that class action waivers violate the National Labor Relations Act by requiring employees to give up the right to act in a group (class) concerning wages, hours, or other terms and conditions of employment.

But the Fifth Circuit Court of Appeals refused to enforce DR Horton, meaning it could not be enforced against DR Horton in court, or against other employers as precedent.  Other courts also declined to follow DR Horton in part because it has nothing to do with the National Labor Relations Act, and in part because the U.S. Supreme Court has found class waivers to be fine under the Federal Arbitration Act.  Even the California courts of appeal have refused to hold class waivers unenforceable under DR Horton.

So, given that courts, which interpret the law that Congress enacts, universally rejected DR Horton, the NLRB's decision is probably relegated to the dust-bin of blips in the employment law radar, never to be heard from again, right?

Political rant redux: Nah, this is the 2014 National Labor Relations Board. They are not constrained by silly federal and state judges and stuff!  Ok, I'm done.

The Board's new decision, Murphy Oil (opinion here) gives new life to DR Horton.  Based primarily on encouraging law review articles written by law school professors, 3 of 5 members decided to re-affirm DR Horton and declare once again that class action waivers in arbitration agreements violate the NLRA, and will maintain this position until the U.S. Supreme Court says otherwise.  Given it will take the federal courts and Supreme Court a few years to take up the issue, this will be the Board's position for a while.

So, in this new case,  Sheila Hobson worked for a Murphy Oil facility and signed an arbitration agreement containing this language:
INDIVIDUAL AND COMPANY UNDERSTAND THAT, ABSENT THIS AGREEMENT, THEY WOULD HAVE THE RIGHT TO SUE EACH OTHER IN COURT, TO INITIATE OR BE A PARTY TO A GROUP OR CLASS ACTION CLAIM, AND THE RIGHT TO A JURY TRIAL, BUT, BY EXECUTING THIS AGREEMENT, BOTH PARTIES GIVE UP THOSE RIGHTS AND AGREE TO HAVE ALL EMPLOYMENT DISPUTES BETWEEN THEM RESOLVED BY MANDATORY,
FINAL AND BINDING ARBITRATION. ANY EMPLOYMENT RELATIONSHIP BETWEEN INDIVIDUAL AND COMPANY IS TERMINABLE AT-WILL, AND NO OTHER INFERENCE IS TO BE DRAWN FROM THIS AGREEMENT.
Hobson later sued Murphy under the Fair Labor Standards Act, asserting a collective action along with three other employees.  The federal district court ordered Hobson to individual arbitration.   But Hobson filed a complaint (charge) with the NLRB and the NLRB's General Counsel charged Murphy with an unfair labor practice (forcing Hobson to give up the right to collectively pursue her wage claims).

The NLRB decided 3-2 that Murphy violated the NLRA, that DR Horton was correctly decided and valid, that the circuit courts that rejected it were wrong, and that the 2 dissenting Board members were also wrong.

What is the upshot?

1. Class action waivers in arbitration agreements remain enforceable in court.

2. Employers maintaining class arbitration waivers may expect unfair labor practice charges before the NLRB, including non-union employers.

3.  NLRB orders are not enforceable by themselves, in that the NLRB has to go to a federal court of appeals to obtain a judgment. So, unless a circuit court of appeals enforces the Board's order, the legal effect of an unfair labor practice finding is limited to whatever sanctions the Administration can levy on employers who are federal contractors found to violate the NLRA, and to whatever retribution the NLRB may bring against the employer for refusing to comply with its unenforceable order.

4. If a circuit court does choose to enforce the order, it could create a circuit split, providing some incentive for the U.S. Supreme Court to take up the case.

Be careful out there.

Monday, October 06, 2014

Governor Brown Signs End of Session Employment Laws Part II

Here are some of the other employment laws that Governor Jerry Brown has signed, which will result in new obligations and liabilities in 2015.  

AB 1897 (text is here)  This new law states that employers that use temp agencies ("labor contractors") are liable for the unpaid wages and liability for failure of the contractor to secure workers' compensation insurance.  There are exceptions for certain types of labor.  Additionally, this law applies only to employers of > 25 workers, who hire more than 5 temps from agencies at a time.  So, for example, if your company hires a vendor to work in your manufacturing plant during a busy season. Then the vendor doesn't pay the employees.  You, the employer, will be liable for those payments on the same basis as the vendor.  Neat, right?  Also, employers and vendors cannot contract away this liability in the service agreement.

AB 1660. (text is here).  The California legislature is not done passing employment laws that make it illegal to take action against those applicants / employees who cannot lawfully be employed.  See, if you intentionally employ people who are unauthorized to work, it can be a federal crime. If you don't employ them, you can get sued for violating California law.  Another reason it's fun to be a California employer, eh gang?

The most recent law is AB 1660. This one addresses California's new driver's license that is specially created for "persons of undocumentation," or whatever the term is now.  If you see such a driver's license, do not take negative action against an employee for having one.  That's because:
It is a violation of the California Fair Employment and Housing Act (Part 2.8 . . . for an employer or other covered person or entity, pursuant to Section 12940 of the Government Code and subdivision (v) of Section 12926 of the Government Code, to discriminate against a person because the person holds or presents a driver’s license issued pursuant to this section, or for an employer or other covered entity to require a
person to present a driver’s license, unless possessing a driver’s license is required by law or is required by the employer and the employer’s requirement is otherwise permitted by law. Nothing in this section shall be construed to limit or expand an employer’s authority to require a person to possess a driver’s license.
So, first, it's "national origin" discrimination to take action against someone who has one of these special driver's licenses. Therefore, if an employee can present sufficient documentation to satisfy the I-9 requirements, it's probably a FEHA violation to deny employment based on the fact that the employee cannot establish the bona fides needed for a "regular" driver's license.

Second, it's illegal to ask to see a driver's license, unless the employer requires the employee to have one.  So:  It's probably best not to inspect an employee's driver's license for driving authorization until after the employee is hired.

The law also provides that driver's license information is confidential.  That means it should not be copied and routinely given out. The law does not designate personnel files as confidential, but they are treated as such to protect employees' privacy. So, there's an argument that third party subpoenas for personnel records should not mandate automatic disclosure of driver's licenses unless there is a sufficiently important reason.

That all said, this law recognizes that the employer has the right to obtain proper authorization for an employee to work, including proper documentation to support an I-9 Form.  The law also says it's not a violation to enforce the IRCA by refusing to hire someone who cannot pass the I-9 Form requirements.  So, there's that.



Wednesday, October 01, 2014

California Governor Brown Signing More New Employment Laws at End of 2014 Session (Part I)

The 2014 legislative session is over.  But employers will be remembering this one for a long time.  California Governor Jerry Brown signed a host of new laws at the end of the session.  Many deal with narrow-cast and public sector-related funding issues, which I won't cover here.  (You're welcome).

But there are several highlights among the new bills that merit your attention.  Thanks as always to Phyllis Cheng, on behalf of the California Bar's Labor and Employment Law section, for compiling the information and sending it out.

AB 1723 expands the Labor Commissioner's power to issue citations for under payment of wages to include waiting time penalties (not a new penalty, but a different method of enforcement).

AB 2617 appears to prohibit pre-dispute releases between employers and independent contractors that include waivers of claims under the "Ralph" and Bane Civil Rights Acts.  These are civil rights laws prohibiting hate crimes and violence based on protected criteria.  This law does not appear to apply to employees, but it's unclear because it's written so poorly.  But it only applies to provisions included in a contract for goods and services, and only prohibits waivers when "entering" into the contract (such as an independent contractor agreement (or offer letter if it applies to employees).  This law will take effect because the Governor also signed AB 2634.

AB 26 and AB 2272 expand prevailing wage law.  Prevailing wage is an inflated minimum wage rate that must be paid to "public works" contracts.  These laws expand what are "public works" and what is included in the term "construction" among other things. If you have state contracts, please review these with your lawyers.





Did the California Legislature Kill Arbitration?

Could be.  Certainly, arbitration services should be concerned that their services may not command the interest they once did.

Governor Brown just signed AB 802. This law applies to new arbitrations administered after 1/1/2015.

I'm going to call this law the "Slow Death to Arbitration Act."  Catchy? The plaintiff trial lawyers legislators who came up with this one are evil geniuses. If your company conducts arbitration, you are going to want to read this one.

One of the benefits of arbitration is that it's private. Not anymore. The major arbitration services, such as JAMS, AAA, etc. must publish at least quarterly a report and post it on its website.  The information will list the good and the bad, will give anyone who looks a free directory of plaintiff attorneys who have sued your companies, and more.  How about the number of mediations you've been involved in?

I'm highlighting in bold what employers should be most concerned about.

(1) Whether arbitration was demanded pursuant to a pre-dispute arbitration clause and, if so, whether the pre-dispute arbitration clause designated the administering private arbitration company.

(2) The name of the nonconsumer party, if the non consumer party is a corporation or other business entity, and whether the nonconsumer party was the initiating party or the responding party,
if known.

(3) The nature of the dispute involved as one of the following: goods; credit; other banking or finance; insurance; health care; construction; real estate; telecommunications, including software and Internet usage; debt collection; personal injury; employment; or other. If the dispute involved employment, the amount of the employee’s annual wage divided into the following ranges: less than one hundred thousand dollars ($100,000), one hundred thousand dollars ($100,000) to two hundred fifty thousand dollars ($250,000), inclusive, and over two hundred fifty thousand dollars ($250,000). If the employee chooses not to provide wage information, it may be noted.

(4) Whether the consumer or nonconsumer party was the prevailing party. As used in this section, “prevailing party” includes the party with a net monetary recovery or an award of injunctive relief.

(5) The total number of occasions, if any, the non consumer party has previously been a party in an arbitration administered by the private arbitration company.

(6) The total number of occasions, if any, the non consumer party has previously been a party in a mediation administered by the private arbitration company.

(7) Whether the consumer party was represented by an attorney and, if so, the name of the attorney and the full name of the law firm that employs the attorney, if any.

(8) The date the private arbitration company received the demand for arbitration, the date the arbitrator was appointed, and the date of disposition by the arbitrator or private arbitration company.

(9) The type of disposition of the dispute, if known, identified as one of the following: withdrawal, abandonment, settlement, award after hearing, award without hearing, default, or dismissal without hearing. If a case was administered in a hearing, indicate whether the hearing was conducted in person, by telephone or video conference, or by documents only.

(10) The amount of the claim, whether equitable relief was requested or awarded, the amount of any monetary award, the amount of any attorney’s fees awarded, and any other relief granted, if any.

(11) The name of the arbitrator, his or her total fee for the case, the percentage of the arbitrator’s fee allocated to each party, whether a waiver of any fees was granted, and, if so, the amount of the waiver.

So, now, the enforceability of an arbitration agreement will be one issue. Whether you want the results of all your arbitrations posted online, with all the above information included, is something else.  Employers will have to consider whether to use private arbitration services, and whether this information revealed to the public makes arbitration an attractive alternative.

Good luck in 2015. 

Tuesday, September 23, 2014

Court of Appeal: Federal OSHA preempts Unfair Competition Claims ( B&P Section 17200)

California's unfair competition law, Business and Professions Code section 17200, is quite broad.  Plaintiffs can bring claims for injunctive relief and restitution for just about anything they can prove is unlawful, unfair, or fraudulent.
California’s “UCL defines ‘unfair competition’ as ‘any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.’ [Citation.] By proscribing ‘any unlawful’ business act or practice (ibid.), the UCL ‘“ borrows”‘ rules set out in other laws and makes violations of those rules independently actionable.”
The District Attorney of a jurisdiction also may use another section of the UCL, section 17204, to collect statutory penalties; private litigants cannot.  Such penalties are in addition to whatever other remedies are available.

Per the Court of Appeal in Solus Industrial Innovations LLC v. Superior Court, here's what happened:
Solus makes plastics at an Orange County manufacturing facility. In 2007, Solus installed an electric water heater intended for residential use at the facility. In March 2009, that water heater exploded, killing two workers instantly in what district attorney refers to as an “untimely and horrific death.”
As a result, Cal-OSHA investigated and fined Solus.  Because there was a death, Cal OSHA also referred the case to the district attorney, who prosecuted company officials.  But the DA also brought a civil action for penalties under the UCL. 

The company argued that federal OSHA preempts the UCL claim.  Federal OSHA preempts all workplace safety laws.  However, the Secretary of Labor may approve a state plan to substitute for the federal enforcement scheme, under certain conditions.

The problem for the DA is that the Secretary of Labor did not consider or approve private enforcement under the UCL by a DA.  Rather, it approved the Cal OSHA enforcement scheme.  Therefore, the Court of Appeal held that the DA could not maintain a civil claim for penalties under the UCL based on a workplace safety violation subject to Cal OSHA's jurisdiction.

Here's the money quote:
In light of our determination that state regulation of workplace safety standards is explicitly preempted by federal law under the OSH Act, and that consequently California is entitled to exercise its regulatory power only in accordance with the terms of its federally approved workplace safety plan, we conclude the district attorney cannot presently rely on the UCL to provide an additional means of penalizing an employer for its violation of workplace safety standards.
So, the Secretary of Labor would have to approve a modification to the California OSH law.  I imagine that could occur if California acts to make the change and submits it to our current administration. But we'll have to wait and see.

The opinion in Solus Industrial Innovations LLC v. Superior Court is here.

Sunday, September 14, 2014

More New California Employment Laws... Anti-Bullying Training and Unpaid Intern Harassment

The Governor has signed or is about to sign two more employment laws:

AB 1443 by Assemblymember Nancy Skinner (D-Berkeley) – This new bill amends the Fair Employment and Housing Act to prohibit harassment against unpaid interns (in case they would not quality as "employees.").

The other new law requires a longer discussion.  AB 2053 by Assemblymember Lorena Gonzalez (D-San Diego) expands California's anti-harassment training law, AB 1825.  Employers must include as part of AB 1825 training information about "abusive conduct."   So, the Fair Employment and Housing Act is where AB 1825 sits.  And AB 1825 training originally was targeted at harassment that is illegal under FEHA, although it also must include training about discrimination and retaliation too.
 
Under the new law, though, employers must include information about conduct that is not covered by the Fair Employment and Housing Act.  That is because that law covers conduct that is motivated by sex, race, and other protected categories.  Here's the definition:  
For purposes of this section, “abusive conduct” means conduct of an employer or employee in the workplace, with malice, that a reasonable person would find hostile, offensive, and unrelated to an employer’s legitimate business interests. Abusive conduct may include repeated infliction of verbal abuse, such as the use of derogatory remarks, insults, and epithets, verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or
undermining of a person’s work performance. A single act shall not constitute abusive conduct, unless especially severe and egregious.
So, no requirement of race, sex, or national origin-based hatred or bias. 

Most of the definition of abusive conduct prohibits treatment that is out of bounds, and which would be probative of a harassment claim if related to a protected status.  Training cannot hurt.  And as of now, as stated, "abusive conduct" is not prohibited by law.  

But the definition includes "derogatory remarks," that a "reasonable person" would find "humiliating."   For example, " Bob, you did a terrible job on that project.  Derogatory? Sure.  Humiliating?" Could be, right?   Perhaps the law requires repeated conduct, because it says "a single act" is not abusive conduct.  But even that proviso has a wiggle for single acts that are "especially severe and egregious."  Employers and managers will have to rely on "malice" to differentiate between harsh criticism and "abusive conduct."  Malice, though, is not defined in this statute, though it means "hatred or ill will" in other contexts.

We'll see how this shakes out. I'm sure that adding "abusive conduct" to FEHA is only one or two legislative sessions away.  Illegal harassment is not protected by the First Amendment, says the California Supreme Court. Is there a first amendment issue here?  We'll have to see that as well.   Stay tuned.  

This new law kicks in January 1, 2015.  I'm off to modify our training programs now.





Court of Appeal: Lying on Timesheets re Break Time is Misconduct: No Unemployment for You

The Court of Appeal in Irving v. California Unemployment Insurance Appeals Board reversed a trial court ruling awarding an ex-employee unemployment benefits.

The Unemployment Ins. Appeals Board had ruled against the employee.
The administrative law judge found plaintiff exceeded the break times permitted by the district and made false entries on the time records. Plaintiff’s conduct constitutes dishonesty within the meaning of California Code of Regulations, title 22, section 1256-34, subdivision (a) which states in part, ‘“Dishonesty’ includes such acts and statements as lying, theft, making false entries on records, and other actions showing a lack of truthfulness and integrity. . . .” Here, plaintiff on four occasions took excessive breaks. And then he, by his own admission and the documentary evidence, failed to correctly state on his written timesheets how long the excessive breaks lasted. Based upon the foregoing, plaintiff committed misconduct within the meaning of section 1256.

If you read the opinion, you will see that the employee made a variety of excuses why he falsified time records to show that he took compliant breaks, while in reality he had taken overly long ones.  If you sift through it, you'll see the trial court's and employee's argument was that he had a "good faith" misunderstanding about whether he was doing something wrong.

The court of appeal rejected these arguments and the trial court's conclusions, relying on the EDD's regulations:



There is no basis for a finding that a reasonable person would have thought plaintiff’s conduct was not dishonest under the circumstances. As noted, one sentence in California Code of Regulations, title 22, section 1256-34, subdivision (b) mirrors the good faith misunderstanding language in section 1256, “Dishonesty does not exist if the employee’s act or statements arise from a good-faith misunderstanding between the employer and employee where a reasonable person would not have interpreted the acts or statements as dishonest under the circumstances.”

This rule, with its multiple uses of negatives, incorporates the following elements. For purposes of finding misconduct based upon dishonest actions, dishonesty does not exist under specified circumstances set forth in California Code of Regulations, title 22, section 1256-34, subdivision (b). For purposes of California Code of Regulations, title 22, section 1256-34, subdivision (b), the necessary circumstances must involve a dispute between the employer and the employee concerning whether conduct is dishonest. However, the dispute must arise from a good-faith misunderstanding between the employer and the employee. The good-faith misunderstanding is viewed from a reasonable person’s perspective; not from the employee or employer’s standpoint. Once the good faith dispute concerning whether the conduct is dishonest is viewed in that context, there are generally two possible outcomes. The first potential outcome is that if a reasonable person would not have interpreted the employee’s conduct as dishonest, then there has been no dishonesty. Under this first potential outcome, the employee is entitled to recover unemployment compensation benefits. By contrast, the second possible outcome arises if a reasonable person would have interpreted the employee’s conduct as dishonest. If a reasonable person concludes the employee’s conduct is dishonest, then there has been dishonesty for purposes of denying recovery of unemployment insurance benefits. Here, a reasonable person would not have interpreted plaintiff’s actions in taking four excessively long breaks and repeatedly falsifying his time records as honest. There is no evidence that a good-faith misunderstanding existed or could exist concerning plaintiff’s admitted taking of excessive breaks on four occasions and falsifying his time records.
But the court noted that this was a public employer, and that its conclusion might not apply automatically in a private sector setting.  Editorial comment: $%^&*
It bears emphasis that unlike other disputes that arise in the workplace, making false entries in a public document can be, depending on the circumstances, a crime. (Gov. Code, §§ 6200-6201; Pen. Code, § 115, subd. (a); see People v. Garfield (1985) 40 Cal.3d 192, 196.)
The court also rejected the "everybody does it" gambit:
The fact that other employees took excessive breaks is legally irrelevant. California Code of Regulations, title 22, section 1256-34, subdivision (b) addresses the situation when other employees engage in dishonest acts. When an employee engages in dishonest acts or statements and is thereby discharge, it is not an excuse that other employees engaged in an equally culpable act. (Ibid.) This rule applies even though the employer has no specific rule forbidding dishonesty. (Ibid.) 
The case is Irving v. California Unemployment Insurance Appeals Board and the opinion is here.