What's New in Employment Law?

State High Court Orders Review of Case to Clarify Legality of Rounding Timecard Entries - California Chamber of Commerce

2012-01-24T12:19:00.000-08:00

The California Supreme Court directed the Fourth District Court of Appeal to review a case involving whether "rounding" time clock entries is lawful under California law. Federal law permits rounding, and the California Division of Labor Standards Enforcement has permitted as a matter of policy, so long as the "rounding" evens out or favors the employee. A trial court recently ruled that a class action involving rounding could proceed against an employer, See's Candies. See's sought a writ in the Court of Appeal, which summarily denied the Petition. The Supreme Court, however, unanimously voted to Order the Court of Appeal to hear See's petition on the merits.

The petition for review is granted. The matter is transferred to the Court of Appeal, Fourth Appellate District, Division One, with directions to vacate its order denying mandate and to issue an order directing respondent Superior Court to show cause why the relief sought in the petition should not be granted. Votes: Cantil-Sakauye, C.J., Kennard, Baxter, Werdegar, Chin, Corrigan, Liu, JJ.

This does not mean See's will win. The Court of Appeal may decide in favor of the employee. But at least we'll have our first appellate decision on the issue of rounding.

I will let you know when the Court of Appeal decides the case. If you want to follow along the docket is here.

Thanks to the CalChamber for letting us know about this.

DGV

California Supreme Court to Revisit Arbitration Ruling

2012-01-17T05:19:00.000-08:00

The U.S. Supreme Court in November ordered the California Supreme Court to revisit its decision in Sonic-Calabasas A v. Moreno. So, the California Supreme Court just issued the following order:

In light of the United States Supreme Court's order vacating our judgment in the above-entitled case and remanding the cause to this court "for further consideration in light of AT&T Mobility LLC. v. Concepcion, 563 U.S. __ (2011) [131 S.Ct. 1740]," the parties are requested to brief the significance of that case. The parties are requested to file and serve simultaneous briefs by February 10, 2012, and may file and serve reply briefs by February 24, 2012.

We posted about Sonic-Calabasas here.

What's going on here, is that the California Supreme Court decided in Sonic-Calabasas A, 4-3, that an arbitration agreement requiring employees to arbitrate instead of going through the labor commissioner's informal hearing procedure was unlawful. The decision in my opinion cannot survive the Fedreal Arbitration Act, particularly after the U.S. Supreme Court's decision in AT&T v. Concepcion (discussed here).

So, there will be a round of briefing and then the Court will probably schedule oral argument in the future and issue a new opinion.

DGV

Court of Appeal Holds Arbitration Agreement Invalid

2012-01-15T09:16:00.000-08:00

Yes, again.This time, the court refused to enforce an arbitration agreement that was included in an application form. (Don't do this). The key issues for the court were (1) that the agreement was written in the first person so as to suggest it was one-way (2) that the agreement referenced the AAA arbitration rules, but did not attach them to the agreement (3) that there was no language explaining that "binding arbitration" means you give up the right to trial in court and (4) that the agreement was "take it or leave it."

The one-way language and the inclusion of the agreement to arbitrate in the application materials probably weakened this arbitration agreement such that it was easy to invalidate. But on the issue of "arbitration rules," the court does not mention that the AAA employment rules are modeled after the California Supreme Court's decision in Armendariz, that they provide more employee protection than the statutory arbitration acts, and that Armendariz itself does not require attaching the rules. Indeed, Armendariz allows for implying the statutory rules if an arbitration agreement is silent regarding matters such as discovery.

On the issue of explaining what "binding arbitration" means, Armendariz does not require that either. The term "binding" is not too complex.

The labyrinth of requirements the courts are imposing in the name of "unconscionability" is going to make it hard for employers to create a "bullet-proof" agreement. Sooner or later, a court will consider whether the unconscionability doctrine has been stretched too far, and that it is a back-door attack on the Federal Arbitration Act's preemption law. Until then, employers should be aware that arbitration agreement law is in flux and that their agreements may be challenged on a variety of grounds that may not always be obvious.

This case is Wisdom v. Accentcare and the opinion is here.

U.S. Supreme Court on Ministerial Exception to Title VII

2012-01-14T11:56:00.000-08:00

The U.S. Supreme Court decided for the first time that there is a "ministerial exception" to anti-discrimination laws such as the ADA. The lower courts for many years recognized that exception.

At issue was Hosanna-Tabor Evangelical Lutheran Church and School and its discharge of a former teacher, Cheryl Perich. Perich was classified as a "called" teacher, rather than a "lay" one. Called teachers have to satisfy certain requirements, cannot be removed except for cause and by a vote of the congregation, and hold the title “Minister of Religion, Commissioned.”

As a called teacher, Perich

taught math, language arts, social stud- ies, science, gym, art, and music. She also taught a reli- gion class four days a week, led the students in prayer and devotional exercises each day, and attended a weekly school-wide chapel service. Perich led the chapel service herself about twice a year.

Perich developed symptoms of narcolepsy, which resulted in her inability to perform her job. She later was discharged, after she threatened to file a Charge. The EEOC took up her case and sued on her behalf.

The District Court dismissed the case; the Sixth Circuit reversed, holding that a retaliation claim under the ADA could proceed against the Church.
The unanimous Court, recognizing there is a ministerial exception, put it this way:

We agree that there is such a ministerial exception. The members of a religious group put their faith in the hands of their ministers. Requiring a church to accept or retain an unwanted minister, or punishing a church for failing to do so, intrudes upon more than a mere employment decision. Such action interferes with the internal governance of the church, depriving the church of control over the selection of those who will personify its beliefs. By imposing an unwanted minister, the state infringes the Free Exercise Clause, which protects a religious group’s right to shape its own faith and mission through its appointments.

The Court did not set out a specific test, but noted that (1) the Church held Perich out to be a minister (2) the Church had a ceremony and the congregation was involved in her investiture (3) she had significant religious training as a prerequisite (4) she held herself out to be a minister and even took a special tax deduction applicable only to members of a ministry (5) her duties involved significant religious teaching activities.

Based on that, the Court decided that Perich met the standards of the ministerial exemption. The Court was careful to note that the term "minister" was misleading because the exception applies to religions that do not include "ministers." The Court also refused to address the "parade of horribles" the EEOC argued, such as that Church employers would be exempt from wage-hour or criminal violations towards "ministerial" employees.

The case is Hosanna-Tabor Evangelical Lutheran Church and School v. Perich and the opinion is here.

NLRB Decide Class Action Waivers Violate the National Labor Relations Act

2012-01-07T08:01:00.000-08:00

If you need more convincing that the National Labor Relations Board's work will affect the private-sector workplace (even after all the Facebook hoopla), here it is.

DR Horton, a home builder, imposed a mandatory arbitration agreement. The agreement required the employee to assert all claims related to his employment in arbitration. The agreement further states:

that the arbitrator “may hear only Employee’s individual claims,” “will not have the author- ity to consolidate the claims of other employ- ees,” and “does not have authority to fashion a proceeding as a class or collective action or to award relief to a group or class of employees in one arbitration proceeding”

The NLRB first held, in agreement with its administrative law judge, that the arbitration agreement unlawfully precluded an employee from filing a charge with the NLRB. So, arbitration agreements must carve-out the right to do so.

The groundbreaking part of the decision is that requiring an employee to arbitrate all claims and only on an individual basis violates the National Labor Relations Act's guarantee of the right to engage in "concerted activity":

[The arbitration agreement] requires employees, as a condition of their employment, to refrain from bringing collective or class claims in any forum: in court, because the [agreement] waives their right to a judicial forum; in arbitration, because the [agreement] provides that the arbitrator cannot consolidate claims or award collective relief. The [agreement] thus clearly and expressly bars employees from exercising substantive rights that have long been held protected by Section 7 of the NLRA.

The Board decided this case with just two members, because the lone Republican (Member Hayes) recused himself. It is unfathomable why the Board did not wait until it had a full complement for such an important decision, but that's the way things go. We'll see if the courts decide that the decision is invalid under the Supreme Court's decision in New Process Steel v. NLRB (discussed here) (Board must have three member quorum). I did not research whether 2 + 1 recused member is sufficient or whether New Process Steel will apply.

The Board was careful to note that an arbitration agreement that permits class actions to be filed in court, while mandating arbitration of individual claims would be lawful:

We need not and do not mandate class arbitration in order to protect employees’ rights under the NLRA. Rather, we hold only that employers may not compel employees to waive their NLRA right to collectively pursue litigation of employment claims in all forums, arbitral and judicial. So long as the employer leaves open a judicial forum for class and collective claims, employees’ NLRA rights are preserved without requiring the availability of classwide arbitration. Employers re- main free to insist that arbitral proceedings be conducted on an individual basis.

This decision likely will be challenged in appeals court and then to the Supreme Court. So, the arbitration see-saw is not going to stop swaying yet. For now, though, arbitration agreements containing class action waivers are subject to attack before the National Labor Relations Board. Plaintiff lawyers thinking of challenging arbitration agreements on this basis in court may run into something called "Garmon" preemption. :)

So, to sum up:
- class waivers in arbitration agreements are lawful, if the arbitration agreement applies only to claims brought on an individual basis;
- an arbitration agreement cannot prevent an employee from filing a charge
- this decision applies only to employers covered by the National Labor Relations Act (so it does not cover certain small employers, agriculture, government employees, etc.) Most private sector employers, union and non-union, are covered.
- this decision is subject to further review, and there will be lots of it.

The case is DR Horton and the decision is here.

DGV

President Appoints Three to NLRB

2012-01-04T22:25:00.000-08:00

The "recess" appointments fill up the Board to 5 members. Guess what? The full Board is not stacked with pro-management Board members. Read the announcement and bios here.

DLSE revises FAQs on Wage Theft Notice...

2012-01-04T04:23:00.000-08:00

I posted about the Division of Labor Standards' Enforcement's template Notice here and about the FAQs here. The DLSE apparently has thought better of its requirement that even current employees receive a notice (because that plainly was not in the statute). So, the agency revised its FAQ's, here. Slightly concerned employers I spoke with ... please take note.

DGV

Court of Appeal Finds "At Will" Insurance Agent Was Independent Contractor

2012-01-02T04:35:00.000-08:00

Happy New Year!

Kimbly Arnold was an agent working for Mutual of Omaha. She was non-exclusive, and sold other lines as well. She was "at will" but was paid solely on commissions, had no office space unless she paid for it, had no supervisor or other personnel "managing her." Her only job requirement was to submit at least one application for insurance every six months.
Arnold took a job with another company requiring an exclusive relationship. She then brought a class action alleging failure to reimburse expenses under Labor Code Section 2802, and failure to pay wages at the time of termination. Both of these claims require an "employment" relationship.
Agreeing with the trial court, the Court of Appeal held that Arnold was an independent contractor, based in part on this evidence:

Mutual managers make themselves available to assist agents, as distinguished from supervising them. Training is generally not mandatory and is offered chiefly for the guidance of "new" agents. Training is required only with respect to compliance with state law directives. Managers provide assistance with sales or clients when an agent "wants them to assist." Software is provided by Mutual as a "best practice[e]" to enable agents to sell its products more successfully. Conference rooms, if available, are provided as a courtesy to agents seeking to set up a meeting and have no other space in the office. Mutual policy does not otherwise reimburse agents for regular business expenses, such as entertaining a client, although it does provide certain "prospecting" credits, beginning when an agent is newly appointed, by which the agent might apply for reimbursement for mailings, newsletters, and similar expenses to generate new business for Mutual products. The credits must be used and have no separate compensatory value. While Mutual pays its agents in two-week periods, payments are comprised of commissions and bonuses established by policy, and there is no guaranteed compensation; advances may be authorized only by a general manager in the event an agent has submitted an application for which a policy is likely to be issued. Advances are rare, due to the policy to pay commissions only on business actually issued, as opposed to routine advances for the purpose of regularizing payment amounts. . . ..

Arnold used her own judgment in determining whom she would solicit for applications for Mutual‟s products, the time, place, and manner in which she would solicit, and the amount of time she spent soliciting for Mutual‟s products. Her appointment with Mutual was nonexclusive, and she in fact solicited for other insurance companies during her appointment with Mutual. Her assistant general manager at Mutual‟s Concord office did not evaluate her performance and did not monitor or supervise her work. Training offered by Mutual was voluntary for agents, except as required for compliance with state law. Agents who chose to use the Concord office were required to pay a fee for their workspace and telephone service. Arnold‟s minimal performance requirement to avoid automatic termination of her appointment was to submit one application for Mutual‟s products within each 180-day period. Thus, under the principal test for employment under common law principles, Mutual had no significant right to control the manner and means by which Arnold accomplished the results of the services she performed as one of Mutual‟s soliciting agents.
The additional factors of the common law test also weigh in favor of finding an independent contractor relationship. Although Mutual could terminate the appointment at will, a termination at-will clause for both parties may properly be included in an independent contractor agreement, and is not by itself a basis for changing that relationship to one of an employee.
Notably, Arnold was engaged in a distinct occupation requiring a license from the Department of Insurance, and was responsible for her own instrumentalities or tools with the exception of limited resources offered by Mutual to enhance their agents‟ successful solicitation of Mutual‟s products. Arnold was required to pay a fee for the use of Mutual‟s office space and telephone service. Although Mutual paid its agents in a systematic way every two weeks, Arnold‟s payment itself—chiefly commissions—was based on her results and not the amount of time she spent working on Mutual‟s behalf. Finally, both Arnold and Mutual believed, at the time of her appointment, they were creating an independent contractor relationship and not an employee relationship.

Thus, the court went through the typical analysis of an independent contractor relationship under California's "common law" test and came up with little evidence of an employer-employee relationship. The court rejected Arnold's attempt to define employee more broadly by using a Labor Code Section that contains no definition of employee... (Lab. Code 2750).

Anyway, the case is Arnold v. Mutual of Omaha Ins. Co. and the opinion is here.

Wage Theft Protection Act - FAQs from the DLSE

2012-01-01T09:14:00.000-08:00

Here are some FAQs regarding the new notices that must be provided to employees "at the time of hire."
Some thoughts:

1. The DLSE apparently takes the position that the notice must be provided to existing employees, although that requirement is not contained in the statute.
2. Remember that changes to any of the items in the notice have to be communicated, either by a proper wage statement or a new notice.
3. It is not mandatory to use DLSE's template form. Employers may create their own. However, all the information on the DLSE's form (even the information not specified in the statute, must be listed on a separate form, rather than incorporated into a larger contract, offer letter, or handbook).
4. If the notice is given electronically, the DLSE requires some method of obtaining an acknowledgement from the employee.
5. The DLSE's notice requires specification of whether there is an oral or written employment agreement. Every employee is employed pursuant to an "agreement," even if the employee is "at will." (An agreement is as simple as "I will pay you if you work today." It also could include a written offer letter or a formal employment contract). So, employers should specify whether the employment contract is oral or written without fear that this provision somehow compromises at-will employment.
6. The penalty for non compliance is not specified in the law and, therefore, will likely be the "PAGA" penalties of $100 per employee per pay period for the initial violation and $200 per pay period per employee for subsequent violations. So, it is wise to comply with this law.

Happy New Year anyway!

DGV

California Supreme Court Clarifies Administrative Exemption

2011-12-31T14:14:00.000-08:00

The Supreme Court issued a unanimous decision rejecting the lower court's interpretation of the "administrative exemption."

Frances Harris and other claims adjusters sued Liberty Mutual Ins. Co., claiming that claims adjusters were mis-classified as exempt. The Court of Appeal agreed, holding that claims adjusters are part of an insurance company's "production" and therefore cannot be performing "administrative" functions. The Court of Appeal also included some disturbing language in its opinion regarding how "important" the administrative work must be, and that only work at a high level would count towards the exemption.

The Supreme Court disagreed. However, the Court limited its holding to setting out the proper standards for determining whether someone is performing "administrative" work. It did not rule one way or the other regarding whether the claims adjusters were exempt.

The Supreme Court summarized as follows:

Federal Regulations former part 541.205(a), (b), and (c) must be read together in order to apply the ―directly related‖ test and properly determine whether the work at issue satisfies the administrative exemption. For example, former part 541.205(b) supplied a general description of the types of duties that constitute ―administrative operations of the business. It included work performed by ―white-collar employees engaged in ̳servicing‘ a business as, for example, advising the management, planning, negotiating, [and] representing the company. The dissent below argued, ―That is what claims adjusters do—they negotiate settlements (and conclude some without seeking approval), advise management, and process claims.‖ The incorporation of former part 541.205(b) shows that whether work is part of the ―administrative operations‖ of a business depends, in part, on whether it involves advising management, planning, negotiating, and representing the company. It is not so narrowly limited as the majority below declared.

In addition to the above regulations, the Supreme Court referred the Court of Appeal to the Wage Order definition of the administrative exemption.

Thus, the "duties test" for the administrative exemption is analyzed using former 29 CFR 541.205 (now 541.201-203) in its entirety. [Because these regulations have been amended, it will be important to find the 2001 version of the federal rules. ]

It remains to be seen how the courts interpret the Supreme Court's guidance. But if the Court of Appeal's test had been affirmed, it would have severely curtailed the exemption. We at least know that the Supreme Court disagreed with that approach.

The opinion is Harris v. Superior Court (Liberty Mut. Ins. Co.) and the opinion is here.

More on AB 469 Notice "Template"

2011-12-29T16:27:00.000-08:00

Per my previous post, the DLSE issued its "template" for compliant AB 469 disclosures. See the post re DLSE template here.

An impolitic or imprudent employment lawyer might say that the DLSE's waiting until December 29 to issue a template implementing AB 469 disclosures (to begin on 1/1/12) was arrogant, unconscionable, and all but a gift to plaintiff lawyers. But I've never been one of those rash people. :::whistling::::

What makes this all more galling is that the DLSE has imposed requirements over and above what the statute actually provides for. DLSE had the right to expand on the law's requirements becuase the statute says that the required disclosure must include "any other information the Labor Commissioner deems material and necessary."

That's all fine, but how about more than 2 work days' notice of what you think is necessary? Not to mention that 90% of management is on vacation. Employers likely planned the new notices would include only the items expressly identified in the law, given DLSE's failure to promptly issue its template. Now they have to re-tool, which may be easier to do in a mom & pop store, but not so easy when there are multiple outlets and hundreds of new hires to process.

Perhaps the DLSE didn't care because the notice provision does not apply to...the DLSE (!) or other government employers. Go figure.

Oh well, enough whining. The DLSE model includes a couple of itsems not specified in the actual statute: 1) the name and address of a PEO or other third party that administers the hiring process (but not a payroll processor or recruiting agency) 2) whether the employment agreement is oral or written... there may be more. I just got the thing today and all...

DGV

California DLSE Issues Template AB 469 Notice... IMPORTANT

2011-12-29T13:08:00.000-08:00

AB 469 requires employers to give new hires, at the time of hire, a notice containing certain information listed in the law. The statute also requires the California Division of Labor Standards Enforcement to issue a model notice. The DLSE finally did so, and it is here.
Happy New Year!

U.S. Dept of Labor to Cut Overtime Exemption for Home Caregiver Agencies

2011-12-29T08:19:00.000-08:00

The Fair Labor Standards Act exempts from minimum wage and overtime law:

domestic service employees employed ``to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves (as 
such terms are defined and delimited by regulations of the 
Secretary).

Section 13(b)(21) exempts any employee employed "in domestic service in a household

and who resides in such household."

Under current regulations, an employer such as an agency can employ these caregivers and live-ins and treat them as exempt under the FLSA. That is, qualifying employees would be paid a certain amount of money to perform the duties without tracking their time or receiving overtime premiums. Presumably, the agencies markup this rate to add overhead and profit and then charge the patient a fixed amount of money for the service.

The U.S. DOL has issued a proposed regulation (here) that would prohibit home care agencies from treating caregivers as exempt. However, individual caregivers not employed by an agency or its individual employer (the patient or patient's family) still may assert the exemption. (Note - After a humongous analysis and notice of proposed rule making, the proposed regulations are all the way at the very end of the link). Here is the section that applies to third party agencies:

Sec.  552.109  Third Party Employment.

    (a) Third party employers of employees engaged in companionship services within the meaning of Sec.  552.6 may not avail themselves of the minimum wage and overtimeexemption provided by section 13(a)(15) of the Act, even if the employee is jointly employed by the individual or member of the family or household using the services. However, the individual or member of the family or household, even if considered a 
joint employer, is still entitled to assert the exemption, if the employee meets all of the requirements of Sec.  552.6.
    (b) * * *
    (c) Third party employers of household workers engaged in live-in domestic services within the meaning of Sec.  552.102 may not avail themselves of the overtime exemption provided by section 13(b)(21) of the Act, even if the employee is jointly employed by the individual or member of the family or household using the services. However, the individual or member of the family or household, even if considered a 
joint employer, is still entitled to assert the exemption.

This is one cryptic draft regulation. Even if the individual's family is a joint employer with whom?? The public can comment until Feb. 27, 2012. Maybe they'll clear it up.

The proposed regulation also revises the definition of "companionship services" and "live-in domestic services. To see those, click the link above and scroll way down to the draft regulation at 552.6. Employees who do not pass the duties tests in these regulations also must be treated as non-exempt - by individual employers and agencies alike.

California employers will be affected by this, because the federal rule will apply even if California would extend the exemption to home agencies. If federal law says no exemption, that controls. Also, this change would not affect most employers. But it sure will affect people who count on home care agencies to deliver services. Who is going to pay for the overtime and other obligations (like record keeping) that the lost exemption will cause?

DGV

Court of Appeal Makes Christmas Come Early for Employers re Reporting Time and Split Shifts

2011-12-24T17:33:00.000-08:00

The Court of Appeal issued a ruling that may change the way us employment lawyers advise clients. But WARNING, this decision is not yet final and cannot be relied upon just yet.
Anyway the first issue deals with "reporting time" pay. California's IWC Wage Orders require "reporting time pay," viz:

Each workday an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee‘s usual or scheduled day‘s work, the employee shall be paid for half the usual or scheduled day‘s work, but in no event for less than two (2) hours nor more than four (4) hours, at the employee‘s regular rate of pay, which shall not be less than the minimum wage.‖ (Cal. Code Regs., tit. 8, § 11040, subd. 5(A).)

It has been long understood (not just by me) that if an employee has to come in for a scheduled meeting on a day off, the employer must pay at least 1/2 the employee's regular scheduled shift (up to 4 hours).Don't take my word for it, here's what the Division of Labor Standards Enforcement has written about it:

Required "Training" Or "Staff" Meeting Attendance. DLSE has been asked on a number of occasions how the Reporting Time provisions of the Orders affect a situation where the employer requires employees to attend a short training meeting, staff meeting or similar gathering under a variety of circumstances. Most common are:

Required meeting is scheduled for a day when the worker is not usually scheduled to work. The employer tells all of the workers that attendance at the meeting is mandatory and a one- or two-hour shift is "scheduled" for this meeting. For those workers not "regularly scheduled" to work, the employee must be paid at least one-half of that employee’s usual or scheduled day’s work. * * *

Well, the Court of Appeal disagreed with the DLSE's analysis. AirTouch Cellular scheduled meetings lasting two hours or less. Some employees came in specially for the meeting and claimed they were owed up to 4 hours' pay (1/2 the regular shift). The court said:

To simplify, the issue may be framed by the following question: If an employee‘s only scheduled work for the day is a mandatory meeting of one and a half hours, and the employee works a total of one hour because the meeting ends a half hour early, is the employer required to pay reporting time pay pursuant to subdivision 5(A) of Wage Order 4 in addition to the one hour of wages?

The answer to this question is no, because the employee was furnished work for more than half the scheduled time. The employee would be entitled to receive one hour of wages for the actual time worked, but would not be entitled to receive additional compensation as reporting time pay.

If that wasn't enough, the Court then resolved another mystery that has vexed employers and their lawyers for years: When, if ever, is a "split shift" premium due to an employee who earns more than minimum wage for the day? See, the wage order requires split shift premiums, but the provision is expressed in terms of "minimum" wage. The court of appeal agreed with a district court when it held that "The plain language of the split shift regulation reflects an intent to ensure that an employee who works a split shift must be compensated highly enough so that he or she receives more than the minimum wage for the time actually worked plus one hour."

Therefore, an employee who earns more than $72 for an 8 hour day (assuming an $8 minimum wage) does not receive a split shift premium, even if he works a split shift. The court unfortunately did not say what happens when the day is shorter than 8 hours. ... must the employee still earn $72 for the day even if he only works 6 hours?

Anyway, this wage and hour obscurity is probably dry as dirt for some of you. For others, though, this case could result in significant payroll savings.

And DLSE, remember when I asked you the split shift question in a request for opinion letter like 3 years ago? Remember? Never mind.

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

DGV

NLRB Giving and Taking Away

2011-12-23T11:14:00.000-08:00

Two items from your friends at the National Labor Relations Board.

As predicted, the new NLRB rights poster (discussed here) is postponed again - this time until April 2012. Announcement here. H/T Ross Runkel.

For the bad news, the Board just finalized revisions to election rules. (Announcement is here). Here is a redline of the changes to the election procedures. The new rules severely curtail pre-election hearings on such matters as whether the voting unit is appropriate and who is eligible to vote. Little things like that. As a result, elections will occur much more quickly after a petition is filed, and there will be shorter "campaign" periods.

Look for the Union label! There probably will be a few more of them starting next year!

San Francisco Update

2011-12-21T11:04:00.000-08:00

Employers operating in SF - couple of things to note.

First, a new poster! This one must be posted by employers with more than 20 employees who are covered by San Francisco's health care program. Under that program, employers must spend a certain amount per hour on health care coverage for San Francisco based employees. That amount starts at $1.46 per hour for employers of 20-100 employees. Read the poster and download it here.

Second, the San Francisco minimum wage, is going up! San Francisco employers must start paying $10.24 minimum starting 1/1/12. That's a big jump from this year's minimum of $9.92, because the minimum wage is indexed to inflation. Prices have been going up too, except for home prices of course! And employers have to post the updated poster, which is here.

San Francisco employers- here's wishing you an enjoyable winter celebration of pointy sustainably grown trees, except for those of you who are enjoyment-challenged or hypofuniacs.

DGV

Brinker delayed

2011-12-19T16:56:00.000-08:00

The Supreme Court is considering even more briefing in the Brinker case re meal and rest periods. So, they are going to delay the opinion past the normal 90 days from argument. Here is the order:

Pursuant to California Rules of Court, rule 8.520(f)(7) and this court's December 2, 2011, order, the parties' answers to the amicus curiae brief of the California Employment Law Council, addressing the grounds for prospectively applying portions of this court's eventual decision on the merits, are due Tuesday, January 3, 2012. Each party may file a simultaneous reply to the other party's answer within 10 days thereafter. Submission of the cause is vacated. (See Cal. Rules of Court, rule 8.524(h)(1) [submission runs from expiration of the time in which to file briefs, including supplemental briefs].) The cause will be resubmitted on January 13, 2012.

IRS Standard Mileage Rates for 2012 - Business Rate Unchanged

2011-12-13T09:52:00.000-08:00

The IRS announced its 2012 Standard Mileage Rates here. Employers rely on this rate when reimbursing the use of personal vehicles. However, the business rate is unchanged from the mid-2011 adjustment. From the IRS announcement:

Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

55.5 cents per mile for business miles driven
23 cents per mile driven for medical or moving purposes
14 cents per mile driven in service of charitable organizations

Happy holidays!

Greg

Ninth Circuit: No Duty to Accommodate Unqualified Applicant With Disability

2011-12-12T06:47:00.000-08:00

Trish Johnson was a special education teacher. She was required to maintain a teacher certification. To do so, she had to satisfy certain continuing education requirements, including having 3 hours of college credit over a five year period. Johnson failed to complete the college credit on time and told her bosses she would lose her certification. Her school district could have petitioned the state for an exemption, but declined to do so. Johnson lost her certification and was fired.
She sued under the ADA, claiming the school district had to apply for and obtain the exemption as a form of accommodation of her depression and other mental impairments.
Agreeing with the district court, the Ninth Circuit upheld summary judgment. The court held that a plaintiff under the ADA must establish she is a "qualified individual with a disability" or no accommodation is due.
The court noted EEOC regulations provide "that a 'qualified individual with a disability' is one 'who satisfies the requisite skills, experience, education and other job related requirements of the employment position such individual holds or desires, and who, with or without reasonable accommodation, can perform the essential functions of such position.” 29 C.F.R. § 1630.2(m) (emphasis added).
So, the court reasoned, Johnson was required to hold the "requisite" job related requirements of the job without accommodation. She did not maintain the requisite continuing education requirements and, therefore, lost her certification.
So, by way of example given in the opinion, an employer hiring a CPA can require the CPA to be licensed and need not provide "accommodation" that helps the applicant obtain the license (like tutoring). A law firm does not have to help a law clerk pass the bar, etc.
The case is Johnson v. Bd. of Trustees and the opinion is here.

Court of Appeal: Church-owned School Exempt from Marital Status Discrimination Claims

2011-12-12T06:25:00.000-08:00

Sara Henry divorced and began living with a boyfriend, with whom she had a child. She worked for the Red Hill Evangelical Lutheran Church of Tustin as a teacher and administrator for a church-owned and operated preschool. After the church discovered Henry's living situation, it discharged her. She sued for marital status discrimination.
Henry argued the church fired her because of her "marital status" in that she was unmarried and living with her boyfriend. The church contended it was concerned with her living with her boyfriend while unmarried. Regardless, the church won the case because it is not considered an "employer" under the Fair Employment and Housing Act. As the court of appeal found, the definition of "employer" in FEHA ‟does not include a religious association or corporation not organized for private profit." Govt Code § 12926, subd (d). The court also found that Henry was not covered by Title VII of the Civil Rights Act of 1964. Therefore, without a statutory basis, her claim for wrongful termination in violation of public policy failed as well.
The case is Henry v. Red Hill Evangelical Lutheran Church of Tustin and the opinion is here.

California - New Wage Rates Announced for Computer Exemption

2011-11-19T11:55:00.000-08:00

Under Labor Code Section 515.5, some computer software employees are considered exempt if they meet certain duties and compensation criteria. The compensation rate is supposed to vary with the rate of inflation.

The California Division of Labor Statistics and Research has just adjusted the minimum pay rates for the exemption for 2012:

Old hourly rate: $37.94
New rate: $38.89

Old monthly salary: $6,587.50
New monthly salary: $6,752.19

Old annual salary: $79,050.00
New annual salary $81,026.25

The DLSR's memorandum announcing the change is here.

Thanks to the Cal Chamber for pointing this out.

Greg

No Individual Liability for Supervisors Under Military Service Anti-Discrimination Law

2011-11-12T16:16:00.000-08:00

Mario Pantuso is a member of the U.S. Navy. He served six months in Iraq and then sought return to his job at Safway Services. Denied reinstatement, he sued Safway and two former supervisors under the Military and Veterans Code for discrimination. If you are unfamiliar with that law, here it is, as quoted by the court:

Section 394, subdivision (a) reads: “No person shall discriminate against any officer, warrant officer or enlisted member of the military or naval forces of the state or of the United States because of that membership. No member of the military forces shall be prejudiced or injured by any person, employer, or officer or agent of any corporation, company, or firm with respect to that member‟s employment, position or status or be denied or disqualified for employment by virtue of membership or service in the military forces of this state or of the United States.” (Italics added.)

Section 394, subdivision (d) reads in part: “No employer or officer or agent of any corporation, company, or firm, or other person, shall discharge any person from employment because of the performance of any ordered military duty or training or by reason of being an officer, warrant officer, or enlisted member of the military or naval forces of this state . . . .” (Italics added.)

So, the individual managers sought to have the claims against them dismissed. The trial court refused, and they took a writ to the court of appeal. The court of appeal agreed that there is no individual liability for supervisors under the Military and Veterans Code. The court reasoned that the law is written similarly to the Fair Employment and Housing Act and has a similar purpose. Because individuals cannot be held liable for discrimination and retaliation under FEHA, the same result should obtain. The court pointed out that some federal decisions impose liability for individuals under the federal USERRA. But the plaintiff was proceeding under state law, and the language of USERRA is different.

Because the narrow issue was whether individuals could be held liable, there was no discussion of the merits of the lawsuit itself.

The case is Haligowski v. Superior Court and the opinion is here.

DGV

Brinker (Meal Period Case) Oral Argument

2011-11-09T06:30:00.000-08:00

I am told there are lawyers who waited hours to get a seat at the California Supreme Court's hearing on Brinker v. Superior Court. It's called "Youtube." Look into it.

For those of you who would not wait in line for a courtroom hearing, the oral argument is here.

As you will see, it looks like some justices are concerned that employers should not have to force employees to take meal periods. The court will issue its decision within 90 days.

AB 469 - Read Our Article

2011-10-24T06:21:00.000-07:00

We've summarized AB 469 - California's Wage Theft Prevention Act in an article here. This one will require employers' attention soon.

DGV

Employer Who Sues Ex-Employee Does Not Have to "Indemnify" Ex-Employee for His Attorney Fees

2011-10-14T08:31:00.000-07:00

Nicholas Laboratories, LLC sued its former employee, Chen. Ultimately, the parties resolved the case. Chen sought reimbursement of his fees under Labor Code Section 2802.

Section 2802, subdivision (a), states: "An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful."
Chen's claim was that the fees he incurred defending himsel was a business expense that arose because of my work for my former employer.

No sale.

Thus, we conclude the attorney fees incurred by Chen do not fall within the domain of section 2802. We are not persuaded that the Legislature, in drafting section 2802, intended to depart from the usual meaning of the word "indemnify" to address "first party" disputes between employers and employees. The Legislature could have specifically provided in section 2802 that attorney fees incurred defending an action by the employer were recoverable by a prevailing employee. The fact that the Legislature did not do so suggests disputes between employers and employees are subject to the ordinary rules applying to the recovery of attorney fees in California litigation.

The court also decided Corporations Code Section 317, containing another indeminification provision, does not apply to LLCs.

The case is Nichols Laboratories, LLC v. Chen and the opinion is here.

DGV

AB 469 -California Adopts NY "Wage Theft" Law

2011-10-13T05:21:00.000-07:00

When I covered some of Governor Jerry Brown's last minute bill signings, I left out perhaps the most obnoxious new law. That's what I get for hurrying.

Effective 1/1/12, employers are going to have to begin complying with Labor Code Section 2810.5. This law requires employers to provide new hires with a written notice of various items of information:

(A) The rate or rates of pay and basis thereof, whether paid by the hour, shift, day, week, salary, piece, commission, or otherwise,including any rates for overtime, as applicable.
(B) Allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances.
(C) The regular payday designated by the employer in accordance with the requirements of this code.
(D) The name of the employer, including any "doing business as" names used by the employer.
(E) The physical address of the employer's main office or principal place of business, and a mailing address, if different.
(F) The telephone number of the employer.
(G) The name, address, and telephone number of the employer's workers' compensation insurance carrier.
(H) Any other information the Labor Commissioner deems material and necessary.

The good news is that the law requires the Labor Commissioner to prepare a template and make it available.
More good news - this provision does not apply to exempt employees (although if someone claims to be "misclassified" then there will be a dispute over whether this notice was due.) So, employers may want to provide the notice to exempt employees anyway.

Mostly bad news though - If an employer makes changes to the above listed information, the employer must provide notice of the change within seven days either by providing a written amendment, a whole new notice, or via paycheck stub if that information is contained in the paycheck stub.

Naturally, even though items C and G are already covered by required posters, the law does not repeal the poster requirement.

Public employers need not worry about this because they are exempt from the requirement!
Most employees covered by a valid collective bargaining agreement also are not entitled to the notice (if they make more than 30% more than minimum wage).

This provision is contained in AB 469. This new law contains other provisions, such as increasing a variety of penalties. It also imposes more disclosure requirements on Farm Labor Contractors.

Of significance, it increases the statute of limitations for the DLSE to collect penalties from 1-3 years. That new statute of limitations does not appear to apply to private enforcement actions, though.

Again, this applies only to new hires, but it takes effect on 1/1/12. Employers will have to put in place procedures very quickly. However, employers already operating in New York will recognize that this new law is quite similar to a NY law enacted a year or two ago.

Yep, I can smell the number of jobs this one is going to create. At the DLSE and law firms! OK, I kid, I kid. ::cough:::

We will have more information about this as it becomes available...

AB 469 is here.

Governor Jerry Brown's Actions on Pending Workers' Compensation Legislation

2011-10-11T09:20:00.000-07:00

Our friends at the California Chamber of Commerce prepared a nice summary of what became of the proposed workers' compensation bills this year: Your can find the roundup here.

California Governor Brown Signs Employment Bills at Last Minute

2011-10-10T06:32:00.000-07:00

In my last post, I said that Governor Jerry Brown vetoed a bunch of ill-conceived laws. Well, I posted too soon, and I take that back.

On October 9, the final day he could do so, Governor Brown signed some employment law bills that make significant changes to employment law for California employers -

AB 22 - available here. This new law bans most employers (not financial institutions or businesses required by law to perform credit checks) from obtaining credit information about applicants or employees, except in limited circumstances. The law does not preclude criminal background checks, references, etc. - only credit information. It does not apply to managers covered by the executive exemption (creating another basis for liability where there is a dispute / lawsuit over misclassification). There are a few other exceptions as well. This is a huge issue for many employers who will have to change their practices.

AB 592 - available here. This law adds an express prohibition of "interference" with California Family Rights Act leave, similar to what is contained in the FMLA's text. This is not a big change.

SB 299 - available here. This provision seems to overlap AB 592, but also requires employers to extend group health coverage to employees taking PDL for the entire four month duration of PDL. The extension of health coverage will apply even if there is no FMLA entitlement. Between 592 and 299, it appears that the 12-week cap on employer paid benefits that applied to combined PDL/CFRA leave is gone. Will ERISA preempt this provision? Does the health care reform law affect it? Stay tuned. If this provision holds, get ready to modify all your policies again.

AB 1236 - available here - allows employers to choose to use E-Verify, but prohibits cities or counties from requiring private employers to do so. So, this is not a ban on E-Verify. Breathe.

AB 887 - available here - further defines "gender" in a variety of laws, including the Fair Employment and Housing Act. Here's new Section 12940(p) - which already prohibited discrimination and harassment based on "gender." This law specifically defines "gender" some more.

(p) "Sex" includes, but is not limited to, pregnancy, childbirth, or medical conditions related to pregnancy or childbirth. "Sex" also includes, but is not limited to, a person's gender. "Gender" means sex, and includes a person's gender identity and gender expression. "Gender expression" means a person's gender-related appearance and behavior whether or not stereotypically associated with the person's assigned sex at birth.

SB 459 - Available here - This new law imposes a fine of between $5000 and $25,000, for "willfully" misclassifying someone as an independent contractor, and makes it a crime and imposes joint liability for a non-attorney consultant to advise an employer to do so. Employers also will not be able to make deductions from contractors' pay that they would not have been able to make had the contractors been employees. What's "willful" misclassification?

"Willful misclassification" means avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor.

This is going to be big. I wish I had one of those Drudge Report siren thingies.

OK, that's all the valuable information I can impart for now. (There may be more bills that I missed, which I will cover later.) But I have to go to work and get ready for all these laws!

DGV

New CA Law Requires Written Commission Agreement

2011-10-07T16:46:00.000-07:00

Governor Brown has mercifully vetoed many of the ~~loony~~ ill-conceived employment law bills that the legislature passed this term. But he signed AB 1396, which is going to impose a serious burden on employers who pay employees via commission.

The new law requires employers who pay employees via commission to (1) have a written contract with the employee regarding commissions (2) include the method for calculating the commissions (3) require the employee to sign a "receipt" retained by the employer.

Also, the contract remains in effect until a new commission plan has superseded it or employment terminates, even if the old plan expires.

Finally, the law attempts to define commission and excludes bonuses, but then includes bonuses that are a percentage of sales or profits. Now, commissions aren't percentages of profits. So, some bonuses will be included in this provision.

I predict a lot of work for SV drafting commission plans in 2012.

The law takes effect 1/1/13. The text is here.

DGV

NLRB Poster Implementation Delayed Until 1/31/12.

2011-10-05T12:41:00.000-07:00

Poor poster companies! The NLRB has decided to delay implementation of the new poster. (See post here). The new implementation date is 1/31/12. The NLRB says the delay is due to ~~the Whitehouse freaking out about the 2012 election? the abysmal jobless economy? lawsuits?~~ its desire to conduct outreach and education among members of the business community.
See the press release here.

H/T Ross Runkel
DGV

Brinker!! Argument is 11/08/11

2011-10-04T16:32:00.000-07:00

The California Supreme Court will hear arguments in Brinker v. Superior Court (see a bunch of posts here) regarding employers' obligations to provide meal periods. Argument is November 8 in San Francisco. I'm so excited, I need a rest period. Docket is here.

DGV

Ninth Circuit - Inconsistency Costs Employer Summary Judgment

2011-09-26T17:47:00.000-07:00

So, the Ninth Circuit in Earl v. Nielsen Media Research reversed summary judgment in an age discrimination case. Earl violated several company policies over time. She was placed on a Development Improvement Plan and ultimately was fired. As she was nearly 60, she claimed age discrimination motivated her discharge.

The Ninth Circuit reversed summary judgment. Earl showed that younger employees violated the same policies without getting fired. Because they were sufficiently similar employees (same positions, same policy violations), they were adequate to satisfy the "similarly situated" requirement for comparing employees. When you read this case, you will know why we management side lawyers always preach consistency.

The court's second point was that the employer did not apply a performance improvement plan to plaintiff Earl, which they had done for other employees. The court rejected the company's argument that it employed people "at will" and could deviate from the progressive discipline system.

Earl was terminated after receiving a single DIP. She never received a PIP, a much more serious warning. Earl has presented evidence that in terminating her without first issuing a PIP, Nielsen deviated from its normal internal disciplinary procedure. In May 2006, Nielsen did not terminate employee 46432, a younger recruiter, even though he had extremely serious performance issues, because he had received only a DIP. In an email exchange with other company officials, Bob Burns wrote: “As much as it sounds reasonable to terminate him without a PIP, it would not be consistent with our procedure.” Employee 46432 was eventually terminated, but only after issuance of a PIP.

Thus, the court found that the company's insistence on a PIP for a younger employee in the name of consistency raised a factual question regarding the company's willingness to forgo the PIP re Earl. It is unclear whether the company tried to show the court there were a variety of employees of a variety of ages who had received and not received PIPs. If so, perhaps the employer would not have lost this point.

If your organization uses PIPs and other progressive discipline, it is important to understand that if you make an exception, you risk a claim of disparate treatment unless you can explain why employees who receive different treatment are not similarly situated. It also is important to ensure that progressive discipline is not applied differently to different protected individuals.

The opinion is Earl v. Nielsen Media Research, Inc. and the opinion is here.

DGV

Dukes v. Walmart Fallout

2011-09-17T13:04:00.000-07:00

Eveyone knows about the Dukes v. Walmart case (post is here). Well, Ellis v. Costco is another "big box" retailer case, in which female managers challenged Costco's promotion practices.

According to the opinion, Costco does not document or set concrete standards re promotion to General Manager and it always promotes from within the ranks of its AGMs. Several female Costco employees brought a nationwide class action, claiming Costco's promotion practices discriminated against women.

The Ninth Circuit reversed the district court's grant of class certification. The opinion finds many errors with the district court's reasoning, mainly because of Dukes' interpretation of the class action standards in federal court (Rule 23). For example, the district court failed to conduct a "rigorous analysis" regarding whether a common question of law or fact would affect the entire proposed class's rights to recovery. The court of appeals also held the district court did not consider whether individual circumstances rendered the plaintiffs incapable of proving the "typicality" element. Costco put forward evidence regarding the named plaintiffs that appeared to explain individualized reasons why each plaintiff did not succeed.

The court of appeals also rejected certification under Rule 23(b), which permits class certification in cases where the relief sought is primarily an injunction rather than damages. Again, relying on Dukes, the court of appeals noted Walmart precludes certification under Rule 23(b)(2) when each class member would be entitled to an award of money damages. Moreover, former employees cannot bring claims for injunctive relief, as injunctions operate prospectively and former employees will have no stake in them.

There is more. But this case places into focus that Dukes will have a profound effect on large employment law class actions in federal court. It remains to be seen how California courts deal with Dukes, but the state's courts do rely on federal law when evaluating class actions.

The case is Ellis v. Costco and the opinion is here.

Ninth Circuit Interprets Learned Professional Exemption

2011-09-17T12:36:00.000-07:00

The State of Washington's Department of Social and Health Services employ social workers, whom the agency classifies as exempt under the Fair Labor Standards Act. The state relies on the "learned professional exemption," which means "an employee whose primary duties require 'knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction.'” 29 C.F.R. § 541.300(a)(2)(I).

The state's requirements for social worker positions included:

at least a “[b]achelor’s degree or higher in social services, human services, behavioral sciences, or an allied field,” as well as eighteen months as a Social Worker 1 or two years’ experience in an equivalent position. Candidates for Social Worker 3 must meet the same educational requirements and have additional work experience. Within one year of their appointment, new employees in these positions must complete a formal training program that includes four weeks of classroom instruction and two weeks of field instruction.

The state also had guidance regarding when equivalent work experience could substitute for specialized degrees.

Reversing the district court, the court of appeals decided that the social worker position was not "exempt" automatically and required a trial to find out the facts. The court explained:

while social workers no doubt have diverse jobs that benefit from a multi-disciplinary background, 6 the “learned professional” exemption applies to positionsthat require “a prolonged course of specialized intellectual instruction,” not positions that draw from many varied fields. While particular coursework in each of the acceptable fields may be related to social work, DSHS admits that it does not examine an applicant’s coursework once it determines that the applicant’s degree is within one of those fields. For the “learned professional” exemption to apply, the knowledge required to perform the duties of a position must come from “advanced specialized intellectual instruction” rather than practical experience. 29 C.F.R. § 541.301(d). The requirement of a degree or sufficient coursework in any of several fields broadly related to a position suggests that only general academic training is necessary, with the employer relying upon apprenticeship and experience to develop the advanced skills necessary for effective performance as a social worker.

So, the issue is not whether a job requires a college degree generally. The issue is whether the job requires a college degree in a particulars skill that is directly related to the job.

The case is Solis v. State DSHS and the opinion is here.

California Supreme Court Limits Employer Liability to IC's Employees

2011-08-29T07:38:00.000-07:00

Typically, when an organization hires a vendor / independent contractor, the hiring organization is not liable to the vendor's employees when something goes wrong. The vendor/contractor is the "employer" responsible to its own employees.

As explained by the California Supreme Court:

Defendant US Airways uses a conveyor to move luggage at San Francisco International Airport. The airport is the actual owner of the conveyor, but US Airways uses it under a permit and has responsibility for its maintenance. US Airways hired independent contractor Lloyd W. Aubry Co. to maintain and repair the conveyor; the airline neither directed nor had its employees participate in Aubry‘s work.

The conveyor lacked certain safety guards required by applicable regulations. Anthony Verdon Lujan, who goes by the name Verdon, was inspecting the conveyor as an employee of Aubry, and his arm got caught in its moving parts.

Plaintiff SeaBright Insurance Company, Aubry‘s workers‘ compensation insurer, paid Verdon benefits based on the injury and then sued defendant US Airways, claiming the airline caused Verdon‘s injury and seeking to recover what it paid in benefits. Verdon intervened as a plaintiff in the action, alleging causes of action for negligence and premises liability.

Of special relevance to this case, the insurance company argued that US Airways was liable because of its obligations under CalOSHA to provide a "safe workplace." The issue was whether US Airways could delegate the duty to provide a safe workplace to its contractor, with respect to the safety of the contractor's employees.

Was US Airways liable for the injury to Verdon, even though Aubry was Verdon's employer and Verdon was covered by Workers' Compensation Insurance? Hmmm? Heck I don't know, I was asking you.

Oh, right the California Supreme Court knows. And the Court said:

plaintiffs here cannot recover in tort from defendant US Airways on a theory that employee Verdon‘s workplace injury resulted from defendant‘s breach of what plaintiffs describe as a nondelegable duty under Cal-OSHA regulations to provide safety guards on the conveyor. Hence, the Court of Appeal erred in reversing the trial court‘s grant of summary judgment for defendant.

The court emphasized that US Airways owed its own employees a non-delegable duty to provide a safe workplace. But Verdon, an employee of Aubry, could not look to US Airways for relief.

The decision is Seabright Ins. Co. v. US Airways and the opinion is here.

NLRB Soon to Require Poster!

2011-08-27T16:42:00.000-07:00

Effective this November, Non-union employers will have to post a new poster explaining to employees their rights under the National Labor Relations Act. For a simple posting regulation, there sure are a lot of rules.

- Multiple languages if more than 20% of employers speak a language other than English
- posting on intranets
- size of the poster, placement, etc.

The poster's content basically is a short seminar on the National Labor Relations Act, the right to unionize, what unfair labor practices are, how to file a charge, etc. Handy!

The good news is that the NLRB will let you download the poster free from its website, or you can order paper copies gratis from the Agency. So, printing costs will be minimal.

The regulations are at the bottom of this long long website page, which includes the "comments" to the final proposed rules and the NLRB's response to them.
DGV

Court of Appeal: No Reinstatement after 12 weeks of CFRA Leave

2011-08-20T10:50:00.000-07:00

After taking 19 weeks of leave, the first 12 of which was covered under the California Family Rights Act, LA County reinstated Katrina Rogers, but then transferred her to a new job as a business decision. Rogers did not take the transfer well and sued under various causes of action, including the CFRA. A jury awarded her damages and the county appealed.

The court first rejected Rogers' argument that the transfer amounted to "interference" with her rights under the CFRA:

Here, the following is undisputed—the County accorded Rogers the full 12 workweeks of leave to which she was entitled under the CFRA; Rogers did not return to work at the end of this period, but instead remained on leave for 19 weeks; and the decision to transfer her was made within the 12-week leave period, but never communicated to Rogers during her leave. Rogers nevertheless argues that she suffered interference with her CFRA rights because the transfer decision was made during her protected CFRA leave. But she cites no authority to support her position, which we therefore disregard. (Perez v. Grajales (2008) 169 Cal.App.4th 580, 591–592.) Based on the foregoing, we conclude that Rogers’s right to reinstatement expired when the 12-week protected CFRA leave expired. Her CFRA interference claim therefore fails as a matter of law, and should never have been submitted to the jury.

Then the court turned to Rogers' claim that the transfer was "retaliation" for her exercising her rights. The court could not find any evidence that the county took its action because Rogers took leave, other than the fact that she took it and the transfer occurred thereafter:

In short, Rogers “failed to establish the requisite causal connection between her protected actions in taking a CFRA medical leave” and the decision to transfer her to another position. (Neisendorf, supra, 143 Cal.App.4th at p. 519.) “The unchallenged finding that [the County] had a legitimate, nondiscriminatory reason to [transfer Rogers], which had nothing to do with her CFRA leave, bars [Rogers] from articulating a cognizable cause of action for the jury’s consideration based on [the County’s] alleged refusal to honor the CFRA’s right to reinstatement.” (Id. at p. 520.) The Neisendorf court cited to several federal courts interpreting the FMLA that endorse this principle. (See e.g. Throneberry v. McGehee Desha County Hosp. (8th Cir. 2005) 403 F.3d 972, 979 [“‘As long as an employer can show a lawful reason, i.e., a reason unrelated to an employee’s exercise of FMLA rights, for not restoring an employee on FMLA leave to her position, the employer will be justified to interfere with an employee’s FMLA leave rights’”].) Like the Neisendorf court, we conclude that because the County’s “legitimate, nondiscriminatory reason” for the decision to transfer Rogers eliminated any obligation the County might have had to reinstate her, Rogers “could not state a valid claim under the CFRA.” (Neisendorf, supra, at p. 520.)

The decision is important regarding CFRA/FMLA leave, but it does not address reasonable accommodation obligations under the ADA/Fair Employment and Housing Act. So, employers still need to consider reinstatement following extended leave when an employee has a covered disability and takes more leave than allowed under CFRA / FMLA.

The case is Rogers v. County of LA and the opinion is here.

Pre-Bar Admission Law Grads Can Be Exempt

2011-08-20T10:23:00.000-07:00

Matthew Zelasko-Barrett graduated law school and obtained a job with Brayton-Purcell, a large, Marin County firm. Before passing the bar and becoming a licensed lawyer, he was designated a Law Clerk II; after admission he became an associate. After quitting, he decided to sue Brayton-Purcell, claiming he was "mis-classified" as exempt during his time as a Law Clerk II.

Although licensed, salaried lawyers qualify as exempt, so do "learned" professionals. The associate's principal argument was that because licensed professionals qualify as exempt under one part of the definition, unlicensed lawyers cannot. The court of appeal rejected that argument.

It bears noting that the Law Clerk II's duties practically mirrored a licensed associate's, with the exception of signing documents as a lawyer, court appearances, etc. Had the Law Clerk II's duties been more clerical, this case might have come out another way.

The court here also heavily relied on a 9th Circuit decision, in which the Court of Appeals held that certain accountants were exempt, even though they were not licensed as CPAs. CPA is another category of licensed professional. See Campbell v. Pricewaterhouse Coopers, LLP (E.D.CA 2009) 602 F.Supp.2d 1163, 1172, revd. (2011) 642 F. 3d 820. The district court held that the accountants were non-exempt, but the court of appeals reversed and held they were.

That means this case has more applicability than just to law firms. The other licensed professionals are: "medicine, dentistry, optometry, architecture, engineering, teaching, or accounting." Again, unlicensed professionals will have to pass the duties test of the exemption and receive the required salary.

The case is Zelasko-Barrett v. Brayton-Purcell LLP and the opinion is here.

Court of Appeal: "Me Too" Evidence of Harassment Admissible to Prove "Intent"

2011-08-14T14:53:00.000-07:00

So, a plaintiff in a sexual harassment case attempts to introduce evidence that the harasser harassed other employees, but not in the plaintiff's presence, and that the conduct was not directed to the plaintiff.
Can the plaintiff use that information to prove she was harassed? Basically, the plaintiff wants to say, "the defendant is a bad person because he mistreated others; therefore, it is more likely that he harassed me even though he denied doing so." That's what's called "character evidence," and it's usually inadmissible.

Except when it's admissible. The Evidence Code allows for admission of "character" evidence if used to prove intent, motivation, common plan, and other things.

Thomas Anton was a lawyer. Lorraine Pantoja was a member of the staff. Pantoja alleged Anton touched her inappropriately, used slurs and profanity, and engaged in other conduct amounting to sexual harassment. Anton denied engaging in those behaviors.

Pantoja's lawyers attempted to introduce other female employees' testimony that Anton engaged in similar conduct towards them. Anton successfully had that conduct excluded as character evidence. But Pantoja's lawyers argued that evidence was necessary to prove Anton's intent. A jury decided in favor of Anton. Pantoja appealed.

The court of appeal reversed the defense verdict and judgment. The court decided that the trial court erroneously did not permit "me too" evidence to prove Anton's anti-female intent. The evidence also was admissible to impeach Anton's denials. A significant issue was whether Anton used profanity "at the situation" or directed towards females.

This case is significant for a few reasons:

1. The appellate court's discussion of intent suggests that the plaintiff must prove intent to win in a sexual harassment case. I think the court meant that the harassment must be "based on" the plaintiff's sex, race, etc. But intent to harm or to discriminate actually is not an element of a harassment case. If conduct has the "effect" of creating an objectively hostile work environment in the eyes of a reasonable victim, that's supposed to be enough.

2.. The court did not mention whether a defendant would be entitled to a special jury instruction explaining that the purpose of the testimony is not to establish the plaintiff's claim of a hostile environment or damages. Defendants certainly should request such an instruction, or the jury may be confused into thinking that the plaintiff can prove her own work environment was hostile because of the way others were treated, even outside of her presence.

3. The court does not take into account the possibility that if a bunch of people testify about the defendant, the jury will find in the plaintiff's favor just to punish the defendant, even if the evidence of conduct against the plaintiff is thin. The court did not draw the line at all - allowing evidence by employees who did not even work at the same time as the plaintiff.

4. This case makes it highly dangerous to retain an employee who has previously been found to violate an anti-harassment policy. If all evidence of harassment conduct against other employees is admissible, even offered by employees who did not work at the same time as the plaintiff, then it will be a big risk to permit an employee previously identified as a "harasser" to stay employed..

The case is Pantoja v. Anton and the opinion is here.

Court of Appeal: False Social Security Number = Unclean Hands = No Case

2011-08-14T13:28:00.000-07:00

Vicente Salas worked for Sierra Chemical Company. He was seasonal, and was repeatedly laid off and re-hired. Along the way, he injured himself. The company allegedly denied him re-hire after he did not produce a release from his doctor. Salas claimed he was told he had to be 100% healed, which is one of those ADA no-nos. He sued for a variety of employment based claims, including disability discrimination, failure to provide reasonable accommodation, etc.

But Sierra found out that Salas used a false social security number and obtained summary judgment because of the "unclean hands" / after acquired evidence defenses. (The trial court actually denied the motion, but the court of appeal issued an order to show cause in response to a petition for a writ, resulting in the trial court's changing its mind.)

Salas's use of another person's Social Security number to obtain employment with Sierra Chemical went to the heart of the employment relationship and related directly to his claims that Sierra Chemical wrongfully failed to hire him following his seasonal lay off and discriminated against him by failing to provide a reasonable accommodation for his back injury. Because Salas was not lawfully qualified for the job, he cannot be heard to complain that he was not hired. This is so even though he alleges that one reason for the failure to hire was Sierra Chemical's unwillingness to accommodate his disability.

In light of the nature of the misrepresentation, the fact that it exposed Sierra Chemical to penalties for submitting false statements to several federal agencies, and the fact that Salas was disqualified from employment by means of governmental requirements, we conclude that Salas‟s claims are also barred by the doctrine of unclean hands.

The court also rejected Salas' claim that the Legislature foreclosed the unclean hands/ after acquired evidence defense by passing SB 1818, which provides in pertinent part:

"The Legislature finds and declares the following: [¶] (a) All protections, rights, and remedies available under state law, except any reinstatement remedy prohibited by federal law, are available to all individuals regardless of immigration status who have applied for employment, or who are or who have been employed, in this state. [¶]

(b) For purposes of enforcing state labor, employment, civil rights and employee housing laws, a person‟s immigration status is irrelevant to the issue of liability...

The court noted that SB 1818 was intended to be "declarative of existing law," and so it did not abrogate existing defenses to employment law actions.

The upshot is that this case denies relief to employees who falsify their employment credentials, resulting in a violation of law if the employer continues to employ the employee. The employer will have to show as well that the employer's settled policy is to discharge / refuse to hire employees who commit the type of violation at issue.

The case is Salas v. Sierra Chemical Co. and the opinion is here.

DGV

Court of Appeal Raps Employee Appellant

2011-08-14T12:58:00.000-07:00

This one is mainly for the practitioners.

Richard Foust lost at court trial, in which he sued his former employer, San Jose Construction Company, for breach of contract. He appealed from the judgment. The court of appeal not only affirmed, but also held the appeal was frivolous and imposed sanctions. Foust apparently failed to provide an adequate record, made arguments for the first time in his reply, and generally made it impossible for the appellate court to adequately consider his appeal.

The court sanctioned Foust $6000, payable to the court, for the frivolous appeal, and awarded sanctions to San Jose in the amount of $8743.

The obvious takeaway - If you're going to appeal, it's best to designate an adequate record or the appellate court may make losing more expensive.

The opinion is Foust v. San Jose Construction Company, Inc. and the opinion is here.

Court of Appeal: What's a Vacation?

2011-08-06T10:48:00.000-07:00

Some companies give paid "sabbaticals" to long term employees. I am jealous of people who work for those companies.

Eric Paton worked for Advanced Micro Devices for seven years before he resigned. He then sued AMD, claiming the sabbatical that he had not yet earned had "vested" during his entire employment, like vacation. Therefore, he claimed, he was entitled to a proportional amount of sabbatical pay upon his termination of employment. His lawsuit is a class action, brought on behalf of some 1400 former employees who had earned portions of their sabbaticals.

Preposterous, you say? Not so fast, said the court of appeal.

To figure out whether the sabbatical is vested vacation, which must be paid out upon termination under Labor Code Section 227.3, the court came up with a definition of "vacation:"

It is paid time off that accrues in proportion to the length of the employee's service, is not conditioned upon the occurrence of any event or condition, and usually does not impose conditions upon the employee's use of the time away from work.

Thus, consistent with the employment lawyer's understanding of vacation, holidays and sick days are not vacation because they are "conditioned upon the occurrence" of sickness or holidays. Paid days off that do not require a condition to occur (like PTO and floating holidays) tend to fit within this definition.

The court then considered what is a true sabbatical. The court borrowed from a test the state Division of Labor Standards Enforcement developed, and added an additional criterion:

First, leave that is granted infrequently tends to support the assertion that the leave is intended to retain experienced employees who have devoted a significant period of service to the employer. Every seven years is the traditional frequency and it seems an appropriate starting point for assessing corporate sabbaticals, as well. In many cases, an interval of seven years would be long enough for an employee to gain experience and demonstrate expertise that an employer might want to retain. Greater or lesser frequency could be appropriate depending upon the industry or particular company involved.

Second, the length of the leave should be adequate to achieve the employer's purpose. Since we are concerned here with unconditional sabbaticals given for the purpose of reenergizing the employee then, as the Labor Commissioner suggested, the length of the leave should be longer than that “normally” offered as vacation. Since regular vacation time may be used for rest, a sabbatical ought to provide the extended time off work that regular vacation does not.

Third, a legitimate sabbatical will always be granted in addition to regular vacation. . . .Because an employer could offer a minimal vacation plan and reward senior staff with sabbaticals as a way to avoid the financial liability of a more generous vacation plan, the employer's regular vacation policy should be comparable to the average vacation benefit offered in the relevant market.

A fourth factor is one that is implicit in the DLSE test but is not called out specifically. Since a sabbatical is designed to retain valued employees, then a legitimate sabbatical program should incorporate some feature that demonstrates that the employee taking the sabbatical is expected to return to work for the employer after the leave is over.

Applying this test, the court decided that AMD's plan raised a triable issue of fact regarding whether it was a true sabbatical or deferred vacation. The court's central concern was the purpose of establishing the program: is it just added vacation for long term employees, or is it an incentive for employees to remain employed with AMD and improve their productivity upon return to work (sabbatical). So, the court remanded the case for trial.

The decision is Paton v. Advanced Micro Devices and the opinion is here.

California Legislature Clarifies Paid Bone Marrow Leave

2011-08-05T09:07:00.000-07:00

Governor Brown just signed SB 272, which clarifies last year's paid bone marrow /organ donation leave law. That law requires employers to grant up to five days' paid leave for bone marrow donation and up to 30 days' paid leave for organ donation.

Key changes: The new bill clarifies a few thing: the time off for bone marrow / organ donation leave is measured in "business days" rather than calendar days. The employer may require the employee to use up to five days of PTO for bone marrow leave and up to two weeks of PTO for organ donation leave. The 12 month period for measuring entitlement is "rolling" based on the date of the leave request.

The new bill is here.

Court of Appeal: Employee Repudiated Settlement Agreement

2011-07-30T14:30:00.000-07:00

So, Thomas Ferguson was a bad policeman, having been picked up in a sting, for soliciting a prostitute. Facing discharge, he made a deal with his employer, Cathedral City, and settled for a suspension. But part of the settlement depended on the resolution of criminal charges pending, i.e., if he was found guilty, he would resign. Ferguson's lawyer wrote the city, complaining they were trying to influence the DA in Ferguson's criminal case. He went too far, though, and said the settlement agreement was void. No settlement agreement, no suspension. The city fired Ferguson, even though his NEW lawyer tried to take back the repudiation of the settlement.

No dice. Upholding the discharge, the Court of Appeal addressed repudiation of a contract and a settlement agreement in particular:

once Ferguson committed his anticipatory breach on June 23, 2007, the City could then elect its remedies, which in this instance meant the reinstatement of Ferguson‟s discharge. The City was no longer bound by the separation agreement and was excused from further performance: “The real operation of a declaration of intention not to be bound appears to give the promisee the right . . . to act upon the declaration and treat it as a final assertion by the promisor that he is no longer bound by the contract, and as a wrongful renunciation of the contractual relation into which he has entered. If [the promisee] elects to pursue the latter course, it becomes a breach of contract, excusing performanceon his part and giving him an immediate right to recover upon it as such. Upon such election the rights of the parties are to be regarded as then culminating, and the contractual relation ceases to exist, . . . [Emphasis added.]”

In English, the employer has two options: treat the agreement as canceled, relieving the employer of obligations under the settlement agreement (such as a neutral reference, COBRA, unpaid settlement sums), or sue for breach of the agreement to recover the settlement proceeds and any damages occasioned by the breach.

Of note, the court held also that Ferguson's attorney had the power to repudiate Ferguson's agreement.

Although a public sector case, the discussion re breach of settlement agreements is generally applicable.

The case is Ferguson v. City of Cathedral City and the opinion is here.

2011 IRS Mileage Reimbursement Rate Went Up mid-year!

2011-07-21T14:15:00.000-07:00

The IRS just increased the standard mileage reimbursement rate. This is the default rate most companies use to pay employees for using their own cars for business. The new rate, effective July 1, 2011, is $0.55, which will remain in effect through December 31, 2011.

The IRS's new rate for computing deductible medical or moving expenses will also increase by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

The IRS announcement is here.

DGV

Court of Appeal Steps Around Concepcion

2011-07-16T10:59:00.000-07:00

So, you may have heard (over and over again), the U.S. Supreme Court in AT&T Mobility Services v. Concepcion (discussed here, article here) decided that California cannot hold arbitration agreements unconscionable because they require only individuals to arbitrate and prohibit class actions in arbitration.

The first Court of Appeal to address post-Concepcion arbitration agreements is in Brown v. Ralphs Grocery. A wage-hour class action, the plaintiffs also sought relief under California's Private Attorney General Act, or PAGA, which allows recovery of penalties on behalf of the named plaintiff and other, unnamed, aggrieved employees. The penalty money is split 75/25 with the state. See generally Labor Code Section 2699.

The trial court held that the class action waiver in Ralphs arbitration agreement was unconscionable, following the California Supreme Court's decision in Gentry v. Superior Court. But the U.S. Supreme Court invalidated Gentry in the Concepcion case.

The Court of Appeal neatly side-stepped that little problem. Instead, the court held that the plaintiff failed to establish via "substantial evidence" that the class action waiver was indeed unconscionable under Gentry.

In doing so, the Court established that class action waivers are not automatically unconscionable under Gentry, and that the plaintiff had to produce evidence satisfying Gentry's four-factor test. Of course, this is all moot, because Gentry is not good law.

The Court's second task was to consider whether the PAGA claim-waiver in the arbitration agreement was unconscionable. Here, the Court decided Concepcion did not apply. That is because, the court reasoned, a PAGA claim is asserted by the individual, not a "class." Without a class, Concepcion would not apply - directly. Rather, the plaintiff would go to arbitration and litigate the PAGA claim. If successful, the plaintiff would distribute the "bounty" of the penalties to the state and keep 25% for him or herself. Given there was a waiver of PAGA claims in the arbitration agreement, though, the court said that the agreement prohibiting arbitration of PAGA claims was unconscionable.

The decision may not survive on the books if the Supreme Court (California or US) decides to accept review. On review, it will be interesting to see if, following Concepcion, the parties to an arbitration agreement may carve-out claims that can and cannot be arbitrated. In this instance, the question would be who would be authorized to pursue a PAGA claim if every employee signed an arbitration agreement. If the PAGA waiver is enforceable, the result might be no one. That's something that the courts might find troubling.

The plaintiff's bar is cheering this Brown decision as an end-run around Concepcion. But everyone should keep the corks in the champagne. There are other legal battles left to fight. For example, is it ok for the parties to let the arbitrator decide whether an arbitration clause is unconscionable, and avoid some courts' rather anti-arbitration posture regarding employment arbitration agreements. (There, I said it). The California courts have not yet definitively decided this issue just yet:

We note that in general, the question whether an arbitration agreement is unconscionable or contrary to public policy is for the court, not the arbitrator, to decide. [Citation.] Recently, the Supreme Court held, in a case brought in federal court, that the question of unconscionability of an arbitration agreement may be for the arbitrator to decide when the agreement has clearly and unmistakably delegated that issue to the arbitrator. (Rent-A-Center[, supra,] 561 U.S. , [177 L.Ed.2d 403, 130 S.Ct. 2772, 2778–2779].) Sonic[-Calabasas A, Inc.] has not contended that the arbitration agreement delegates responsibility to the arbitrator to decide questions of the agreement's unconscionability or violation of public policy. We thus have no need to decide whether Rent-A-Center's five-to-four decision applies to actions brought in state court (see Preston [v. Ferrer (2008)] 552 U.S. 346, 363 [169 L.Ed.2d 917, 128 S.Ct. 978] (dis. opn. of Thomas, J.) [reaffirming the view of Justice Thomas that the FAA does not apply to state court proceedings]), nor whether we would adopt a similar rule as a matter of state law.”

Hartley v. Superior Court, 2011 Cal. App. LEXIS 824 (Cal. App. 4th Dist. June 28, 2011) (quoting (Sonic-Calabasas A, Inc. v. Moreno (2011) 51 Cal.4th 659, 688, fn. 12).

The fat lady is not singing, but she is kind of confused. Time will tell! In the meantime, wait to see if Brown remains good law. If it does, don't include PAGA waivers in your arbitration agreements. And talk to your lawyer about including clear and unmistakable language in your arbitration agreement concerning whether the court or the arbitrator will decide unconscionability.

The opinion in Brown v. Ralphs Grocery is here.

DGV

Court of Appeal on Discovery of Co-Workers' Files in Discrimination Cases

2011-07-16T08:34:00.000-07:00

The appellate courts rarely get involved in discovery issues. It's usually up to the trial courts and parties to fight about what is relevant, what is a privacy issue, etc. So, guidance from the Court of Appeal is a welcome development.

Timothy Joyce sued his former employer, Life Technologies Corporation (LTC), for age discrimination and retaliation. In essence, Life Technologies merged with Joyce's former employer and he was laid off. He alleged that he was on a hit-list of over 40 employees, and that he was set up for termination, among other things.

In litigation, Joyce sought through interrogatories data about co-workers including:

(a) The names of all employees terminated during a two-year period, November 1, 2008 to June 28, 2010.

(b) The department each worked for when terminated.

(c) The date of termination.

(d) The age of each at termination.

(e) The reason for termination.

(f) Whether severance benefits were offered.

(g) Whether offered severance benefits were accepted.

(h) A description of any offered severance benefits.

(i) A detailed explanation of reasons for any failure to offer severance benefits.

(j) The identity (including name, address and telephone number) of all former Applied Biosystems employees still employed by LTC after the RIF.

(k) Whether the terminated employees were former employees of Appelera or Applied Biosystems.

LTC and Joyce became involved in a discovery dispute, which resulted in a trial court order granting access to the information, but requiring the parties to first send a letter to employees notifying them of the proposed disclosure. the information would be disclosed unless the employees at issue filed a motion for protective order. The court of appeal noted that there was no provision for protection of the information and no "opt-out" other than via a formal motion.

The court first noted that statistical information could be relevant to a disparate impact claim and that the RIF provided for the requisite facially neutral practice. Joyce also wanted the data for a disparate treatment claim, i.e., intentional discrimination. The court of appeal pointed out that statistical evidence is far less important in disparate treatment cases:

Statistical evidence may also be utilized in a disparate treatment case. However, because discriminatory intent must be shown in such a case, statistical evidence must meet a more exacting standard. “[T]o create an inference of intentional discrimination, statistics must demonstrate a significant disparity and must eliminate nondiscriminatory reasons for the apparent disparity. Aragon [v. Republic Silver State Disposal Inc. (9th Cir. 2002) 292 F.3d 654, 663 (Aragon) (finding that statistics unsupported by other probative evidence of discrimination was insufficient to show pretext and to demonstrate discrimination); see also Coleman v. Quaker Oats Co. (9th Cir. 2000) 232 F.3d 1271, 1283 (holding that to raise a triable issue of fact regarding pretext based solely on statistical evidence, the statistics „must show a stark pattern of discrimination unexplainable on grounds other than age‟); United States v. Ironworkers Local 86 (9th Cir. 1971) 443 F.2d 544, 551, fn. omitted] . . . (holding that use of statistical evidence „is conditioned by the existence of proper supportive facts and the absence of variables which would undermine the reasonableness of the inference of discrimination which is drawn.‟).” (Gratch v. Nicholson (N.D.Ca. 2005, No. C04-03028 JSW) 2005 WL 2290315, *4.)

Thus, “[a]lthough use of statistics is permissible [in a disparate treatment case], statistical evidence „rarely suffices to rebut an employer‟s legitimate, nondiscriminatory rationale for its decision to dismiss an individual employee.‟ Aragon[, supra, at p. 663, fn. 6.] . . . [T]his is so because „in disparate treatment cases, the central focus is less on whether a pattern of discrimination existed [at the company] and more how a particular individual was treated and why. As such, statistical evidence of a company‟s general hiring patterns, although relevant, carries less probative weight than it does in a disparate impact case.‟ [Ibid., citing LeBlanc v. Great Amer. Ins. Co. (1st Cir. 1993) 6 F.3d 836, 848-49.]” (Gratch v. Nicholson, supra, at p. *4, fn. 4.)

The court therefore found that at least some of the information sought would be arguably relevant to Joyce's claims. But the court then turned to privacy analysis.

The court held that Joyce had made no showing that the identities, addresses and other private information of co-workers, particularly those who were not contended to be witnesses to any discriminatory conduct against Joyce, were sufficiently "needed" to overcome the individuals' privacy interests. The court distinguished the "class action" discovery cases because the identities of class members are really the identities of potential witnesses, and because of the specific issues that arise in class certification proceedings.

Significantly, the court pointed out that there was no reason why statistics could not be developed without disclosure of individuals' personal information, absent a showing that LTC would provide unreliable data without giving out names and addresses, etc. Joyce also failed to adequately demonstrate the need for the breadth of information he sought.

The court also criticized the court's order because it placed too high a burden on objecting employees. The court noted that if the information had been subpoenaed, a simple objection by the third party could stop the disclosure, rather than a formal motion. Also, the court would have permitted the plaintiff to send out a notice to third parties, thereby requiring disclosure of names and addresses before the employees had a chance to object.

Finally, the trial court did not put any safeguards in place regarding the use or custody of the needed information via a suitable protective order.

Disputes such as these are common in employment law. Therefore, when "meeting and conferring," lawyers may use this case to limit disclosure of private personnel information absent a sufficient showing of need, and ensure that private information is kept that way during and after litigation.

The opinion is Life Technologies Corporation v. Superior Court and the opinion is here.

Court of Appeal: That's Not a Split Shift

2011-07-07T18:28:00.000-07:00

Under California's Wage Orders -

“Split shift” means a work schedule, which is interrupted by non-paid non-working periods established by the employer, other than bona fide rest or meal periods.
And "when an employee works a split shift, one (1) hour’s pay at the minimum wage shall be paid in addition to the minimum wage for that workday, except when the employee resides at the place of employment."

The question is: If you work an over night shift, such that you start at 10:p.m., end your shift at 7:00 a.m., and then return to work later the same day, is that a split shift? No, said the Court of Appeal in Securitas Security Services, Inc. v. Superior Court (opinion here).

So, DLSE? You don't have to issue that opinion letter I asked you to issue years ago. (!)

DGV

California Supreme Court: Out of State Employers Bound by California Overtime Law...

2011-06-30T18:28:00.000-07:00

...when employees work in California for at least a day or a week at a time.

Sullivan v. Oracle is a wage hour class action we addressed here. If you don't remember, you're forgiven. This was back in 2008. I had more and darker hair; Lehman Brothers was a functioning company. You could buy a Pontiac. Remember?

Anyway, so Sullivan and his class were employees who periodically worked in California. They wanted California wage law to apply during any full day in which they worked in California. The federal court of appeals asked the California Supreme Court to answer "certified questions."

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?

Here, the Court said "yes." When employees visit California from other states, California overtime laws apply:

To exclude nonresidents from the overtime laws’ protection would tend to defeat their purpose by encouraging employers to import unprotected workers from other states. Nothing in the language or history of the relevant statutes suggests the Legislature ever contemplated such a result.

The Court ensured its holding was limited to overtime, not necessarily to other wage-hour laws:

the case before us presents no issue concerning the applicability of any provision of California wage law other than the provisions governing overtime compensation. While we conclude the applicable conflict-of-laws analysis does require us to apply California’s overtime law to full days and weeks of work performed here by nonresidents (see post, at p. 12), one cannot necessarily assume the same result would obtain for any other aspect of wage law. California, as mentioned, has expressed a strong interest in governing overtime compensation for work performed in California. In contrast, California’s interest in the content of an out-of-state business’s pay stubs, or the treatment of its employees’ vacation time, for example, may or may not be sufficient to justify choosing California law over the conflicting law of the employer’s home state. No such question is before us.

The court then turned to the second question:

Second, does [Business and Professions Code section] 17200 apply to the overtime work described in question one? Third, does [section] 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?”

The Supreme Court noted it already has held that the UCL applies to overtime claims. Therefore, the Court answered "the second certified question as follows: Business and Professions Code section 17200 does apply to the overtime work described in question one. "

As for the third question, the Supreme Court decided that out of state plaintiffs could not sue a California-based employer for overtime violations occurring outside of California. Thus, merely because an employer is headquartered in CA, that does not make the employer subject to suit under the UCL for alleged wrongs entirely occurring somewhere else.

The case is Sullivan v. Oracle Corp. and the opinion is here.

Facebook -

2011-06-25T12:42:00.000-07:00

No, not the NLRB again. On this fifth anniversary of the blog, we are proud to launch our Facebook page here. Yeah, we know, we're a few years late to the party. Please "like" us to pieces anyway. We'll be BFF. TTFN.

DGV

Ninth Circuit En Banc Expands ERISA liability

2011-06-25T12:30:00.000-07:00

The Ninth Circuit issued an "en banc" opinion to set the law in the Circuit regarding who is a proper defendant in certain ERISA cases.

Laura Cyr worked for CTI as a vice president. CTI offered long term disability benefits through Reliance Insurance. Reliance ultimately controlled whether benefits would be awarded, but it was not the "plan administrator" under ERISA. Cyr sued CTI for unequal pay, resulting in a settlement and a retroactive adjustment to her salary. She was on a "long term disability" at the time, and sought an increase to her benefits. Reliance allegeldy denied that application. So Cyr sued CTI as the plan administrator, CTI's Long Term Disability Plan, and Reliance under different sections of ERISA and the common law.

In the 9th Circuit, beneficiaries were limited to suing the plan and plan administrator for denial of benefits under ERISA plans. But no more. The en banc court overruled prior decisions to that effect.

We conclude, therefore, that potential liability under 29 U.S.C. § 1132(a)(1)(B) is not limited to a benefits plan or the plan administrator. Reliance is a proper defendant in a lawsuit brought by Cyr under that statute.

As a result, insurance companies will now be sued where they have a role in denying benefits independent of the plan administrator, which apparently was the case here. It's unclear whether this decision will result in increased premiums and legal costs, not to mention conflicts of interest between insurers and employers. We shall see.

The case is Cyr v. Reliance Standard Life Ins. Co. et al. and the opinion is here.

U.S. Supreme Court on FELA Liability

2011-06-25T11:02:00.000-07:00

Most of you don't care about this, but when the U.S. Supremes decide an employment law case, I just have to post.

The Federal Employers’ Liability Act (FELA), 45 U. S. C. §51 et seq. renders railroads liable for employees’ injuries or deaths “resulting in whole or in part from [carrier] negligence.” This is basically in lieu of workers' compensation benefits for railroad employees covered by the FELA.

Robert McBride, a locomotive engineer, injured his hand while operating a manual brake. He brought suit against his employer, CSX.

The issue was what is the causation standard under the FELA. Must the railroad's negligence be the "proximate" cause of the injury (i.e., the harm was the probable consequence of the risk), or does some other standard apply?

The Court held that a much lower standard applies under FELA than under traditional negligence cases. Surveying years of precedent, the Court upheld the lower courts' jury instruction:

defendant railroad “caused or contributed to” a railroad worker’s injury “if [the railroad's] negligence played apart—no matter how small—in bringing about the injury.” That, indeed, is the test Congress prescribed for proximate causation in FELA cases.

Again, this decision is limited to injuries under the FELA. So, it is not applicable to most employers.

The case is CSX Transportation, Inc. v. McBride and the opinion is here.

Supreme Court Rules on Dukes v. Walmart

2011-06-20T08:12:00.000-07:00

The U.S. Supreme Court issues its opinion in Dukes v. Walmart. Here is the opinion.

Wal-Mart, the country's largest employer, faces the largest employment law class action ever. We've posted about it a number of times as it made its way through the courts. The U.S. Supreme Court decided to review the case to see if the Federal Rules of Civil Procedure authorizes a class action under the facts presented.

The facts that give rise to the discrimination claims are as follows:

Pay and promotion decisions at Wal-Mart are generally committed to local managers’ broad discretion, which is exercised “in a largely subjective manner.” 222 F. R. D. 137, 145 (ND Cal. 2004). Local store managers may increase the wages of hourly employees (within limits) with only limited corporate oversight. As for salaried employees, such as store managers and their deputies, higher corporate authorities have discretion to set their pay within preestablished ranges.

Promotions work in a similar fashion. Wal-Mart permits store managers to apply their own subjective criteria when selecting candidates as “support managers,” which isthe first step on the path to management. Admission to Wal-Mart’s management training program, however, does require that a candidate meet certain objective criteria,including an above-average performance rating, at least one year’s tenure in the applicant’s current position, and a willingness to relocate. But except for those requirements, regional and district managers have discretion to use their own judgment when selecting candidates for management training. Promotion to higher office—e.g., assistant manager, co-manager, or store manager—is similarly at the discretion of the employee’s superiors after prescribed objective factors are satisfied.

Thus, there is no "corporate wide" policy of intentional or even unintentional discrimination. Rather, the plaintiffs asserted the following theory regarding class-wide discrimination on behalf of hundreds of thousands of store level employees and supervisors:

local managers’ discretion over pay and promotions is exercised disproportionately in favor of men, leading to anunlawful disparate impact on female employees, see 42 U. S. C. §2000e–2(k). And, respondents say, because Wal-Mart is aware of this effect, its refusal to cabin its managers’ authority amounts to disparate treatment, see §2000e–2(a). . . . [T}the discrimination to which they have been subjected is common to all Wal-Mart’s female employees. The basic theory of their case is that a strong and uniform “corporate culture” permits bias against women to infect, perhaps subconsciously, the discretionary decisionmaking of each one of Wal-Mart’s thousands of managers—thereby making every woman at the company the victim of one common discriminatory practice.

The plaintiffs sought injunctive relief, monetary relief that is considered "equitable" such as back pay, and punitive damages. They did not seek individual compensatory damages for emotional distress or front pay, because doing so would be unauthorized by Federal Rule of Civil Procedure 23.

Federal Rule of Civil Procedure 23, contains a number of requirements. The plaintiff must satisfy all of the 23(a) provisions:

“(1) the class is so numerous that joinder of all members is impracticable,“(2) there are questions of law or fact common to the class, “(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and “(4) the representative parties will fairly and adequately protect the interests of the class”

The Supreme Court held that there was insufficient common law or fact questions. 5-4, the Court explained what "common questions of law or fact" means:

Commonality requires the plaintiff to demonstrate that the class members “have suffered the same injury,” Falcon, supra, at 157. This does not mean merely that they have all suffered a violation of the same provision of law. Title VII, for example, can be violated in many ways—by intentional discrimination, or by hiring and promotion criteria that result in disparate impact, and by the use of these practices on the part of many different superiors in a single company. Quite obviously,the mere claim by employees of the same company that they have suffered a Title VII injury, or even a disparate impact Title VII injury, gives no cause to believe that all their claims can productively be litigated at once. Their claims must depend upon a common contention—for example, the assertion of discriminatory bias on the part of the same supervisor. That common contention, moreover, must be of such a nature that it is capable of classwideresolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.

The Court, 5-4, squarely rejected that a common policy of decentralized decisions can support a class action where the standard requries proof of common issues of fact:

The only corporate policy that the plaintiffs’ evidence convincingly establishes is Wal-Mart’s “policy” of allowing discretion by local supervisors over employment matters.On its face, of course, that is just the opposite of a uniform employment practice that would provide the commonality needed for a class action; it is a policy against having uniform employment practices.

To sustain a class action under the federal rules, the plaintiff must establish one of the elements under Rule 23(b). The plaintiffs in Dukes relied on Rule 23(b)(2):

Rule 23(b)(2) allows class treatment when “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.”

Therefore, Dukes did not rely on (b)(3), which is the familiar standard permitting damages when "common issues" predominate. This is the basis for most class actions seeking money. Unlike (b)(2), classes under (b)(3) are entitled to "opt out," and must receive adequate notice. Rule 23(b)(2) is more concerned with injunctive and declaratory relief.

The question was whether the monetary relief that the plaintiffs sought was authorized under Rule 23(b)(2). The Court (9-0) held that it was not:

Rule 23(b)(2) applies only when a single injunction or declaratory judgment would provide relief to each member of the class. It does not authorize class certification when each individual class member would be entitled to a different injunction or declaratory judgment against the defendant.

The Supreme Court held that "backpay" was not authorized generally by Rule 23(b)(2), and the only monetary relief available would be when it was intertwined with a particular injunction. In Dukes' case, the injunction would not be common to each member of the class, anyway, so there could be no common monetary relief either.

So, we'll have an article, and you'll be hearing a lot about this case in the coming days. I hope this brief summary was helpful. It will result in less blockbuster class actions in federal court. However, it does not necessarily mean that smaller class actions will be limited when there is a common practice causing a common injury.

HAPPY 5TH ANNIVERSARY TO SHAW VALENZA

2011-06-19T17:34:00.000-07:00

We made it 5 years! So, this is going to be one of those self-promoting / congratulatory posts....

We opened our doors 6/19/06. And we started this little blog thing of ours on 6/26/06. Seems like it was just yesterday. And by "yesterday" I mean Saturday, 20 years ago.

We've been so fortunate to work with great people and organizations. We wanted to honor our clients in some way to thank them for our success. But many are not local, and many have anti-gift policies now. So, rather than throw a party or send gifts, we made a donation to Guide Dogs for the Blind. Yes, you can call them to make sure.

We have a terrific team of lawyers and non-lawyers in our Sacramento and San Francisco offices. Since they are local and certainly have no non-gifting policies, we celebrated with a dinner. We also thank our departed staff and lawyers, who helped us in our formative years. We hope you had dinner somewhere equally wonderful.

Speaking of offices, we just moved to new space in Sacramento (980 9th St., Ste. 2300, if you are planning on, you know.....visiting. Or visiting.

Our "refreshed" website will roll out imminently, as will our new Facebook presence. It seems Facebook and Twitter may have replaced blogging as a medium for timely updates. But we're stubborn and committed, and somewhat retro. So, we will press on here until we are posting to an empty room. In case you prefer Twitter, go here. And we're putting the finishing touches on our Facebook page. So you will be able to "like" us to your heart's content. We are nothing if not accessible. And wordy.

So, thanks for hanging in there with us for these 5 years, loyal clients, and the other readers (yes, Dad, I mean you. And happy father's day, by the way).

Jennifer and Greg

Upcoming Training Scheduled

2011-06-12T08:25:00.000-07:00

PREVENTING HARASSMENT AND OTHER EEO ISSUES AT WORK: IT’S ALL ABOUT RESPECT (AB 1825 COMPLIANCE)

This interactive, engaging, and practical seminar complies with and exceeds California's sexual harassment prevention training requirements (as described in Assembly Bill 1825/Government Code section 12950.1). Through real world examples, hypothetical scenarios, practical guidance, and humor, we address the "gray" areas in equal employment opportunity compliance. We address a number of topics, including:

Harassment, discrimination and retaliation prevention
Supervisors' responsibilities to identify and report policy violations
The difference between law and policy
Principles of mutual respect and the Platinum Rule
Responsibility for "out-of-work" conduct
The internal complaint process, including the "15-minute rule"
"Bad" vs. unlawful conduct

Employees love this program! Certificates are provided upon seminar completion.

Trainers:	Jennifer Brown Shaw, Esq.
Date:	June 14, 2011
Time:	8:30 a.m. - 11:30 a.m. (Registration at 8:00 a.m.)
Location:	600 I Street Commission Room Sacramento, CA 95814
Cost:	$65.00

Court of Appeal Rejects Same-sex Harassment Claim

2011-06-07T06:05:00.000-07:00

As stated by the court of appeal,

Patrick Kelley was an apprentice ironworker employed by respondent The Conco Companies (Conco). He complained that he was subjected to a barrage of sexually demeaning comments and gestures by his male supervisor, and later to similar comments by male coworkers, and that he was also subjected to physical threats by coworkers in retaliation for his complaints about his supervisor. Kelley‘s employer changed his work site to separate him from his harassers, but Kelley was later suspended by his union from its apprenticeship program rendering him ineligible for employment. After the suspension expired, he was not rehired by Conco.

Sounds like sexual harassment? Wrong. The court of appeal decided that the supervisor's verbal abuse was not truly based on Kelley's sex. Therefore, although rude, the conduct was not actionable under the Fair Employment and Housing Act:

The sine qua non of any sexual harassment claim is that the plaintiff suffered discrimination because of sex. (Lyle, supra, 38 Cal.4th at pp. 279–280; Oncale v. Sundowner Offshore Services, Inc. (1998) 523 U.S. 75, 81 (Oncale).) ― ‗ ―The critical issue . . . is whether members of one sex are exposed to disadvantageous terms or conditions of employment to which members of the other sex are not exposed.‖ ‘ [Citations.]‖ (Lyle, at pp. 279–280, quoting Oncale, at p. 80.) A FEHA plaintiff must show ― ‗ ―that gender is a substantial factor in the discrimination, and that if the plaintiff ‗had been a man she would not have been treated in the same manner.‘ [Citation.]‘ [Citations.] Accordingly, it is the disparate treatment of an employee on the basis of sex . . . that is the essence of a sexual harassment claim.

The court then surveyed the law and held that sexual harassment is not actionable under FEHA unless there is some link to sexual desire, or treatment that occurs only because of the victim's sex. That is, merely because Kelley's boss used vicious slurs against Kelley, calling him a number of names and using sexually suggestive language, the boss did so out of anger, and not sexual desire or motivation.

The court, however, revived Kelley's retaliation claim because even though Kelley did not have a viable harassment claim, he had a good faith claim of retaliation.

This case, if it stays on the books, may change some folks' understanding of what "harassment" is. But it should not change employers' responses to the kind of conduct that occurred in the facts of the opinion, nor should employers rely on this opinion as a way to give a harasser a free pass. Trust me, when you read the facts, you'll see what I mean.

The case is Kelley v. The Conco Companies, Inc. and the opinion is here.

Supreme Court Unanimously Limits Employers' Right to Attorneys' Fees in Discrimination Cases

2011-06-06T19:12:00.000-07:00

In federal cases alleging discrimination, harassment, retaliation and violations of civil rights, when may a defendant employer recover attorneys' fees? It is long settled that defendants may recover only when the plaintiff's claims are "frivolous, unreasonable or without foundation." What about when just some of the claims are frivolous? The Supreme Court answered that question, unanimously, with Justice Kagan writing the opinion:

Section 1988 allows a defendant to recover reasonable attorney’s fees incurred because of, but only because of, a frivolous claim. Or what is the same thing stated as a but-for test: Section 1988 permits the defendant to receive only the portion of his fees that he would not have paid but for the frivolous claim.

The Court then went on to hold that if the defendant spends fees on issues that deal with both frivolous and nonfrivolous claims simultaneously, the defendant may not recover fees:

But if the defendant would have incurred those fees anyway, to defend against non-frivolous claims, then a court has no basis for transferring the expense to the plaintiff. Suppose, for example, that a defendant’s attorney conducts a deposition on matters relevant to both a frivolous and a non-frivolous claim—and more, that the lawyer would have taken and committed the same time to this deposition even if the case had involved only the non-frivolous allegation. In that circumstance, the work does not implicate Congress’s reason for allowing defendants to collect fees. The defendant would have incurred the expense in any event; he has suffered no incremental harm from the frivolous claim. In short, the defendant has never shouldered the burden that Congress, in enacting §1988, wanted to relieve. The basic American Rule thus continues to operate.

Thus, the Supreme Court unanimously made sure that defendants will have a tough time recovering fees in cases including both frivolous and non-frivolous claims, just like the Ninth Circuit decided in Harris v. Maricopa County, which I discussed here. Yes, I thought the Court of Appeals was out to lunch. I was wr-wr-wr... incorrect. No wonder I don't have a vote on either court. My opinion, though, remains the same. The Supreme Court joins the Ninth Circuit in making it very difficult for defendants to recover attorneys' fees in frivolous discrimination cases, unless the case is entirely frivolous. There is little incentive for the plaintiff to dismiss the frivolous component.

The Supreme Court decision is Fox v. Vice and the opinion is here.

U.S. Supreme Court: States May Require E-Verify

2011-05-26T20:14:00.000-07:00

Arizona has a mandatory "E-verify" law. Arizona's law suspends or revokes businesses' licenses if they employ illegal aliens unauthorized to work in the U.S. It also mandates the use of "E-Verify," a federal program permitting electronic verification of an employee's authorization to work in the US.
The Chamber of Commerce and civil rights groups argued that the Arizona law is preempted by federal immigration law. All lower courts disagreed, and so did the Supreme Court.
In a fractured opinion, the Court held that the federal Immigration Reform and Control Act does not stop Arizona from either suspending business licenses or requiring use of E-Verify. In fact, the law only requires employers to use E-Verify if they wish to rely on a "good faith" defense to proof that the employer is employing unauthorized workers.
Justice Kagan did not participate, and only four justices concurred in parts of the opinion. However, the continued viability of the Arizona law was upheld 5-3. So, Arizona is free to require employers to employ only authorized workers or risk losing the right to operate in Arizona.
The case is Chamber of Commerce v. Whiting and the opinion is here.

U.S. Supreme Court on ERISA Remedies

2011-05-17T11:34:00.000-07:00

Cigna Corporation changed its pension plan back in 1998. Janice Amara, on behalf of herself and 25,000 beneficiaries sued under ERISA, claiming CIGNA's changes violated the law. In particular, the plaintiffs challenged the notice of changes CIGNA provided.

The district court agreed CIGNA's notice provisions were improper, particularly in a newsletter that, the court found, painted too-rosy of a picture of the impending changes and ordered monetary relief based on the conclusion that the disclosures caused "likely harm."
On review, the Supreme Court decided the district court's reasoning was wrong, but that it reached a nearly correct result. The Court discussed the available remedies under ERISA.

The Court held that district court have broad discretion to fashion remedies as "equitable" relief. Without a lot of legal mumbo jumbo, equitable remedies normally are injunctions, but there are some that include money. In the CIGNA case, the district court had held that only those plaintiffs who "relied" on the erroneous information to their detriment could recover money. The Supreme Court disagreed, saying that not all "equitable" remedies required a showing of reliance. .

A key take-away for non-ERISA people is that the courts here found that a newsletter previewing potentially detrimental changes to the plan was incomplete and misleading. So, HR practitioners, beware of informal communications regarding changes to your ERISA covered benefit plans.

The opinion is Cigna Corp. v. Amara and the opinion is here.

DGV

Another Meal / Break Class Action Dies; Everyone Waiting for Brinker

2011-05-11T06:46:00.000-07:00

Selections from the Supreme Court mailbag re Brinker meal period case.
Dear Supreme Court. The suspense is killing us. Please send Brinker soon - Love Plaintiff's bar.
Dear Supreme Court: Take your time. - Best wishes, Defense bar.

The letter writers wait for the Supreme Court's decision in Brinker (on what the meal period laws require). Meanwhile, the Courts of Appeal keep cranking out decisions that consistently hold meal periods do not have to be forced, and therefore meal period class actions are properly not certified when the employer demonstrates it "provides" the opportunity to take them.

The latest opinion re meal period class actions is called Lamps Plus Overtime Cases, or Flores v. Lamps Plus. As stated, the court decided that the class certification was properly denied, and along the way held that meal periods need not be forced, but merely must be authorized and permitted. The opinion is here.

Court of Appeal Affirms Denial of Class Certification in Retail Store Exemption Case

2011-05-01T19:51:00.000-07:00

The Court of Appeal in Mora v. Big Lots Stores held the trial court did not abuse its discretion in refusing to certify a class of hundreds of Big Lots store managers. This is another exemption class action decision, but it's interesting for a few reasons.

First, the plaintiffs went after store managers of HUGE discount stores, where the store manager was the only exempt manager, supervising dozens of employees. They should stop doing that. (They're not going to listen).

Second, the courts are tired of the argument that larger corporations standardize their policies such that managers are necessarily non-exempt. As I just discussed in the Marlo v. UPS post, that argument does not fly. (Good news for you larger corporations).

Third, the trial court credited the employer's detailed and individualized declarations of its managers over the boiler-plate declarations submitted by the plaintiffs. Winning a class certification motion may well turn on the quality of the declarations and other evidence submitted.

Finally, the court's opinion is a good example of how the Supreme Court's decision inSav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319 has affected class action law in California. The Court of Appeal does not disturb class certification decisions if (1) there is substantial evidence to support the trial court's finding (either way) and (2) the trial court applies the right legal standards. This of course can cut in favor of either the employees or the employer, depending on who won in the trial court. Needless to say, it's important to win there.

The case is Mora v. Big Lots Stores and the opinion is here.

Court of Appeal Rejects Employment Application Class Action

2011-05-01T19:08:00.000-07:00

Several years ago, the wage and hour "flavor of the month" was the employment application. (Lately, it's been "suitable seating" and paycheck stubs). Plaintiffs filed a series of class actions usually attacking employment applications' conviction inquiries. In California, an applicant is not required to disclose misdemeanor marijuana possession convictions more than two years old, you know.

Starbucks was sued under this theory some years ago. But the Court of Appeal held in 2008 that the plaintiffs lacked standing to sue because they did not have marijuana convictions that would have had to have been disclosed.

In Starbucks I, supra, 168 Cal.App.4th 1436, we held that neither plaintiffs nor the tens of thousands of job applicants they purported to represent were entitled to recover statutory penalties where they did not have any marijuana convictions to disclose. We stated, "Only an individual with a marijuana-related conviction falls within the class of people the Legislature sought to protect." (Id. Id. at p. 1451.)

After the appeal, the trial court dismissed the named plaintiffs as lacking "standing" to sue. The plaintiffs' lawyers, though, attempted to substitute new plainitffs to continue the class action. They also limited the complaint and class to those applicants with applicable convictions. Then, they asked the trial court to compel Starbucks to review its own applications and identify to the plaintiffs' counsel anyone who filled out an application more than two years after incurring a marijuana-related conviction. (I don't know how Starbucks would know this). Starbucks appealed this discovery order, too.

The court of appeal held that the plaintiffs were not entitled to the discovery. The court noted that California law protects the privacy of individuals with stale marijuana convictions. The plaintiffs wanted to invade that privacy to find a new plaintiff. But the court noted that there did not seem to be any interest in pursuing this class action among the potential 135,000 applicants to Starbucks during the relevant period, despite the prior published opinion. So, the court denied discovery and let the superior court take the next step, to dismiss the class action (most likely).

The case is Starbucks v. Superior Court and the opinion is here.

Ninth Circuit Upholds De-Certification of Exemption Class Action

2011-05-01T18:48:00.000-07:00

Michael Marlo was a supervisor for UPS. He filed a class action alleging violation of California wage and hour laws, based on alleged mis-classification of his position as "exempt." The district court initially certified a class, but later "de-certified" it, holding that common issues did not predominate over individual issues.
Marlo's individual claim went to trial. A jury found in his favor on some of the claims (that he was mis-classified in certain roles), but that he was exempt when he held an "on-road" supervisor position. After judgment, Marlo appealed the district court's de-certification of the class.

On appeal, the Ninth Circuit affirmed the district court. The court found that the plaintiff failed to establish that common issues predominate. First, the court of appeals rejected the plaintiff's argument that UPS's "blanket" classification of a group of employees established common issues:

Marlo contends that he satisfied his burden of establishing predominance by submitting evidence of UPS’s centralized control, and uniform policies and procedures. But a blanket exemption policy “ ‘does not eliminate the need to make a factual determination as to whether class members are actually performing similar duties.’ ” In re Wells Fargo Home Mortg. Overtime Pay Litig., 571 F.3d 953, 959 (9th Cir. 2009) (citation omitted). Specifically, the existence of a policy classifying FTS as exempt from overtime-pay requirements does not necessarily establish that FTS were misclassified, because the policy may have accurately classified some employees and misclassified others.

Of special significance, the court of appeals found that individual issues predominated because the employees' exempt status must be measured on a work-week by work-week basis:

Nor, contrary to Marlo’s assertion, did the district court err in requiring a week-by-week determination of exempt status. IWC Wage Order No. 9 states that in determining whether an employee is “primarily engaged” in exempt work, “[t]he work actually performed by the employee during the course of the workweek must, first and foremost, be examined and the amount of time the employee spends on such work . . .shall be considered.” Cal. Code Regs. tit. 8, § 11090(1)(A)(1)(e). California courts have construed this requirement to mean that “[u]nder California law, the Court must determine whether any given class members (or all the class members) spend more than 51% of their time on managerial tasks in any given workweek.” Dunbar v. Albertson’s, Inc., 47 Cal. Rptr.3d 83, 86 (Cal. Ct. App. 2006) (emphasis added). Therefore, the district court did not incorrectly apply California law by requiring a week-by-week showing of work the FTS actually performed.

The case is Marlo v. UPS, Inc. and the opinion is here.

Welcome Back, Arbitration?

2011-04-27T15:51:00.000-07:00

I think the rumors of the demise of employment arbitration might have been exaggerated. I for one am guilty of presuming arbitration was dead. And who can blame me, what with the California courts and the 9th Circuit?

Well, today, the U.S. Supreme Court breathed new life into employment arbitration. The Court held that the Federal Arbitration Act preempts California case law prohibiting arbitration agreements that exclude class actions.

So, if arbitration agreements can require only individual arbitration, that means that employers may avoid those expensive California wage and hour class actions by properly implementing arbitration agreements.

The interesting question that the Supreme Court did not decide today is what about California case law imposing lots of other conditions and burdens on employment arbitration. The "Armendariz" line of cases impose special burdens on arbitration that do not apply equally to other kinds of contracts. If you read Concepcion a certain way, Armendariz will not be around long. For example consider this statement in the opinion:

Parties could agree to arbitrate pursuant to the Federal Rules of Civil Procedure, or pursuant to a discovery process rivaling that in litigation. Arbitration is a matter of contract, and the FAA requires courts to honor parties’ expectations. Rent-A-Center, West, 561 U. S., at ___ (slip op., at 3). But what the parties in the aforementioned examples would have agreed to is not arbitration as envisioned by the FAA, lacks its benefits, and therefore may not be required by state law.

Of course, I've been wrong before. Like when I thought arbitration was dead.

The case is AT&T Mobility LLC v. Concepcion and the opinion is here.

Court of Appeal Clarifies "Alter Ego" Liability for Employment Claims

2011-04-16T18:06:00.000-07:00

Cooper was the sole shareholder and day to day operator of Auburn Honda, a corporation. A group of former employees sued Auburn Honda and Cooper for age discrimination and other things. Cooper moved for summary judgment on the ground he could not be held liable, since only the employer is liable for employment discrimination. The plaintiffs argued Cooper indeed was the employer as an "alter ego" of the corporation.

The court did not permit the plaintiffs to claim Cooper was the alter ego of Auburn in opposition to the motion for summary judgment. So, small business owners, here is the discussion of application of the alter ego doctrine to a shareholder:

To succeed on their alter ego claim, plaintiffs must be able to show: (1) such a unity of interest and ownership between the corporation and its equitable owner that no separation actually exists, and (2) an inequitable result if the acts in question are treated as those of the corporation alone. (Sonora Diamond, supra, 83 Cal.App.4th at p. 538.)

Several factors are to be considered in applying the doctrine, among them are: “„[c]ommingling of funds and other assets, failure to segregate funds of the separate entities, and the unauthorized diversion of corporate funds or assets to other than corporate uses; . . . the treatment by an individual of the assets of the corporation as his own; . . . the failure to obtain authority to issue stock or to subscribe to or issue the same; . . . the holding out by an individual that he is personally liable for the debts of the corporation; . . . the failure to maintain minutes or adequate corporate records . . .; sole ownership of all of the stock in a corporation by one individual or the members of a family; . . . the failure to adequately capitalize a corporation; the total absence of corporate assets, and undercapitalization; . . . the use of a corporation as a mere shell, instrumentality or conduit for a single venture or the business of an individual or another corporation; . . . the concealment and misrepresentation of the identity of the responsible ownership, management and financial interest, or concealment of personal business activities; . . . the disregard of legal formalities and the failure to maintain arm's length relationships among related entities; . . . the use of the corporate entity to procure labor, services or merchandise for another person or entity; . . . the diversion of assets from a corporation by or to a stockholder or other person or entity, to the detriment of creditors, or the manipulation of assets and liabilities between entities so as to concentrate the assets in one and the liabilities in another; . . . the contracting with another with intent to avoid performance by use of a corporate entity as a shield against personal liability, or the use of a corporation as a subterfuge of illegal transactions; . . . and the formation and use of a corporation to transfer to it the existing liability of another person or entity.‟ . . . [¶] This long list of factors is not exhaustive. The enumerated factors may be considered „[a]mong‟ others „under the particular circumstances of each case.‟" (Morrison Knudsen Corp. v. Hancock, Rothert & Bunshoft, LLP (1999) 69 Cal.App.4th 223, 249-250, quoting Associated Vendors, Inc. v. Oakland Meat Co. (1962) 210 Cal.App.2d 825, 838-840.)

So, the court held that Cooper did not qualify as an alter ego under this list of factors because the Plaintiffs did not bring forth sufficient evidence.

The case is Leek v. Cooper and the opinion is here.

Court of Appeal Reconsiders, but then Re-Affirms Case re Work Week

2011-04-15T10:40:00.000-07:00

We previously wrote about Seymore v. Metson Marine here. Then we wrote an article covering it and other new wage-hour cases here. This was the case in which the court held that the employer could not set a workweek to start on a day when the employees did not begin the week.

I am not so presumptuous to think the employer's lawyers or the court read my article, but maybe the they heard the other HOWLS from the employment bar about how bad a case this was. So, the employer filed a petition for re-hearing, and the Court actually granted re-hearing and issued a new opinion.

The employer's lawyers submitted copious new case law, regulations, and new facts to support its argument that the employer can set the workweek for Monday when the employees start their 14-day hitches on Tuesday. (That was the issue the Court of Appeal addressed in the initial opinion).

The Court on re-hearing remarked how much new information the employer's lawyers provided in support. I think the Court was a bit miffed that the initial briefing was not as thorough as it might have been. Nevertheless, the Court affirmed its decision to reverse summary judgment. This time, however, the Court allowed more flexibility for employers to start the work-week on a different day than the employees' actual work begins, as long as there is a sufficient business reason for doing so (other than avoiding payment of overtime). The court hinted that Metson set up its work week for the purpose of avoiding certain wage-hour obligations.

So, the new opinion in Seymore v. Metson Marine is here. It is now going to be up to the Supreme Court to de-publish or review this case. On the bright side, the current version of the opinion is less dangerous for employers than the original one was.

DGV

Court of Appeal Says No Acommodation for Violent Threats

2011-04-13T19:04:00.000-07:00

Disagreeing with the Ninth Circuit's ~~ridiculous insane~~outlier opinion in Gambini v. Total Renal Care (in which the court of appeals said that a bi-polar employee who threw papers at her boss was immune from discharge), the Court of Appeal held that the Orange County Superior Court lawfully fired an employee who made violent threats against co-workers. The Court of Appeal decided that a "bi-polar" employee does not have the right to threaten co-workers, even if that conduct is caused by the disability. Chalk one up for reasonable.
Oh the court also held that checkig the box for "denial of family care leave" on an administrative charge is NOT sufficient to exhaust administrative remedies on disability discrimination.
I've written about Gambini here. And here.
This decision is Wills v. Superior Court and the opinion is here.

Ninth Circuit Allows FEHA National Origin Claim

2011-04-05T04:58:00.000-07:00

Raytheon Company is a defense contractor. The federal government required Raytheon to require security clearances.

Raytheon hired Hossein Zeinali for an enginerring position requiring a Secret security classification. While he was waiting for the security clearance, Raytheon let him perform other duties not requiring the Secret authorization. Ultimately, the Department of Defense denied the security clearance. So, Raytheon fired him. Zeinali sued for national origin discrimination.

The Ninth Circuit first held that it had jurisdiction, rejecting Raytheon's contention that there was none because federal courts cannot second-guess denials of security clearances. Although federal courts indeed cannot overturn determinations about security clearances, that is not what Zeinali was suing about. He did not contest that he was rejected. Rather, he argued that Raytheon's decision to fire him because he did not meet the job qualification - obtaining the clearance - was pretextual.

The court agreed with Zeinali. He produced evidence that although Raytheon consistently said he would have to have a security clearance to retain his job, and although Raytheon imposed this requirement on many employee positions, Raytheon did not always enforce the requirement:

In light of the fact that Raytheon retained multiple non-Iranian engineers after their security clearances were revoked, Zeinali has raised triable disputes regarding (1)whether security clearances were a bona fide requirement for Raytheon engineers, and (2) whether Raytheon’s central purported reason for terminating him (his lack of a security clearance) was pretextual. The Supreme Court’s McDonnell Douglas opinion contains a salient observation about pretext:

“Especially relevant to such a showing [of pretext] would be evidence that white employees involved in acts against [the employer] of comparable seriousness to the [plaintiff’s disruptive protesting activities] were nevertheless retained or rehired. [An employer] may justifiably refuse to rehire one who was engaged in unlawful, disruptive acts against it, but only if this criterion is applied alike to members of all races.” McDonnell Douglas, 411 U.S. at 804.

Analogously, in the present case, Raytheon would certainly be justified in firing employees who lack security clearances, “but only if this criterion is applied alike to members of all races.” Id.; see also Godwin v. Hunt Wesson, Inc., 150 F.3d 1217, 1220 (9th Cir. 1998) (holding that pretext is shown if other employees with similar qualifications are treated more favorably).

So, here's a message you may have heard from an employment lawyer. Consistency. There, no charge.

The case is Zeinali v. Raytheon Company and the opinion is here.

U.S. Supreme Court on FLSA Retaliation

2011-03-24T15:53:00.000-07:00

The U.S. Supreme Court held that the Fair Labor Standards Act's anti-retaliation provision covers oral and written complaints, whether internal or to the government. So, here's some invaluable and insightful advice: don't retaliate against employees who complain about alleged wage and hour violations. Try not to decide whether to retaliate based on if a complaint is oral or written, mmmkay?

In a nutshell, Kasten claimed he complained to management and other employees about the location of the time clocks at the St. Gobain factory. Because of the time clock's placement, he did not get paid for "donning and doffing" time. The company allegedly fired Kasten for not keeping his time card correct. Kasten claimed it was retaliation for his complaints. The district court dismissed the case because Kasten had not "filed" a written complaint with the government and, therefore, was not covered by the anti-retaliation provision in the FLSA. The Supreme Court took time out of its busy day to resolve a dispute among the lower circuit courts over whether a written complaint was required.

The case is Kasten v. St. Gobain Performance Plastics, Inc., and the opinion is here.

Ninth Circuit Defines FMLA Interference Claim

2011-03-17T21:57:00.000-07:00

Hello, it's been a while. I've missed you. You never write. You never tweet. Alas. But I press on to write about the FMLA.

Diane Sanders worked for Newport, Oregon. She took an FMLA leave. Her doctor believed the air quality at work was poor and she suffered from certain chemical sensitivities. The Oregon OSHA and the city's own experts found the air to be within legal standards. After receiving an extended FMLA, her doctor released her to return to work provided the City stop using "low grade" paper, which the City apparently agreed to do.

The City refused to reinstate Sanders from her leave. The City took the position that it could not provide her with a safe workplace because it was not clear what caused her medical issues.

A jury found that the City acted lawfully. But the trial court found in Sanders' favor on a state law claim under Oregon's family leave law. Oregon claims are tried to the court rather than a jury.

The Ninth Circuit explained there are two types of FMLA claims: discrimination/retaliation and interference. Sanders pursued an interference claim at trial. The court explained the applicable legal analysis:

The Sixth and Seventh Circuits have ably summarized the elements of an employee’s prima facie case where the employer fails to reinstate the employee:“the employee must establish that: (1) he was eligible for the FMLA’s protections, (2) his employer was covered by the FMLA, (3) he was entitled to leave under the FMLA, (4) he provided sufficient notice of his intent to take leave, and (5) his employer denied him FMLA benefits to which he was entitled.” [citations] We agree with this approach. In interference claims, the employer’s intent is irrelevant to a determination of liability.. . .

The court then went on to hold that if the employee makes out a prima facie case, the employer bears the burden of establishing that the employee was not entitled to reinstatement. That is, the employer must prove that the employee was denied reinstatement for one of the reasons authorized by the FMLA, such as that the employee would not have remained employed if she had not taken leave. Because the district court's jury instructions required the plaintiff to prove she was denied reinstatement "without reasonable cause," the court vacated the judgment in the City's favor.

The case is Sanders v. City of Newport and the opinion is here.

Ninth Circuit: Ban on Applicants Who Test Positive for Drugs Not ADA Violation

2011-03-03T04:51:00.000-08:00

The Pacific Maritime Association has a "one-strike" rule. If you fail a drug or alcohol test during the applicant screening process, you are barred from consideration for employment. Forever.

Santiago Lopez applied for a longshoreman's job, but he tested positive for marijuana. He claims that when he applied, he was addicted. But once he become a recovering addict, he was entitled to reapply with the protections of the ADA.

The Ninth Circuit disagreed, upholding summary judgment. The court said that the one-strike rule applies to anyone who fails a drug/alcohol test, not just addicts or recovering addicts. The employer also had no knowledge that Lopez was a recovering addict, only that he previously had failed the test.

A dissenting judge in this 2-1 opinion would have given Lopez a chance to save his disparate impact claim. Lopez argued that a rule barring all persons from re-applying could have a "disparate impact" on recovering alcoholics/drug abusers. But Lopez did not support that argument with statistical proof and, therefore, the court did not allow the claim to proceed.

The case is Lopez v. Pacific Maritime Association and the opinion is here.

U.S. Supreme Court Grabs Cat's Paw

2011-03-01T21:22:00.000-08:00

There goes Justice Scalia again, ruling for... employees! Writing for a 6-2 majority, Justice Scalia says:

When the company official who makes the decision to take an adverse employment action is personally acting out of hostility to the employee’s membership in or obligation to a uniformed service, a motivating factor obviously exists. The problem we confront arises when that official has nodiscriminatory animus but is influenced by previous company action that is the product of a like animus in someone else.

Basically, two lower level supervisors were hostile towards Vincent Staub, an xray tech at a hospital. they were annoyed at his reserve duty, which caused absences that had to be covered. As a reservist, Staub was entitled to job protection under USERRA. USERRA protects against discrimination against members of the military, basically under the same standards as Title VII. Thus, if anti-military bias is a "motivating factor" in a negative employment decision, the plaitniff can win.

Here, a non-biased manager fired Staub, but based on a report by the biased supervisors. The hospital argued that discrimination was therefore not a motivating reason. This presented a "cat's paw" theory, where the employer claims that the innocent supervisor's decision is independent from the biased supervisor's motivations.

The Supreme Court held:

that if a supervisor performs an act motivated by anti military animus that is intended by the supervisor to cause an adverse employment action,3 and if that act is a proximate cause of the ultimate employment action, then the employer is liable under USERRA

The court did say that the biased supervisor has to have some causation for the negative employment decision or the "motivating reason" standard fails.

Bonus: Those of us unfamiliar with Aesop now know the meaning of the "Cat's Paw" theory.

1The term “cat’s paw” derives from a fable conceived by Aesop, put into verse by La Fontaine in 1679, and injected into United States employment discrimination law by Posner in 1990. See Shager v. Upjohn Co., 913 F. 2d 398, 405 (CA7). In the fable, a monkey induces a cat by flattery to extract roasting chestnuts from the fire. After the cat has done so, burning its paws in the process, the monkey makes offwith the chestnuts and leaves the cat with nothing. A coda to the fable (relevant only marginally, if at all, to employment law) observes that the cat is similar to princes who, flattered by the king, perform serviceson the king’s behalf and receive no reward.

Although this is a USERRA case, given the similiarities with anti-discrimination laws, look for this theory to be applied in Title VII cases as well

The case is Staub v. Proctor Hosp. and the opinion is here.

Court of Appeal Limits' Employers' Discretion to Set the Workweek/Workday

2011-03-01T05:22:00.000-08:00

The employees at Metson Marine, Inc. worked 14-day straight "hitches," during which they slept on their ships and had to remain within 30-45 minutes of the ship during downtime. These 14-day hitches started on Tuesdays. But the workweek was set as Monday at 12:01 a.m. through Sunday at 11:59 p.m. As a result, Metson claimed that employees worked a six-day week, followed by a 7 day workweek, and then a two day workweek.

The plaintiffs challenged the employer's designation of the workweek because it resulted in a less favorable calculation of overtime and of seventh day pay. The employer relied on certain rulings by the Division of Labor Standards Enforcement, which basically say that the employer can designate any workweek or workday that it wants to, as long as it's consistent.

Surprise, Metson! The Court of Appeal, reversing summary judgment, held that the DLSE's interpretations are entitled to no respect. Rather, a workweek must coincide with the beginning of the work period actually worked:

Plaintiffs contend that premium pay must be calculated based on the "fixed and regular" schedule actually worked and that Metson should not be allowed to subvert the employee protections of section 510 by designating an artificial workweek that does not correspond with the period actually worked. Asserting that their workweek actually began and ended on Tuesday, plaintiffs argue that Metson was required to pay overtime wages for work performed on the seventh and 14th day of each hitch. We agree.

Relying on a federal district court opinion, the Court of Appeal held that the employer cannot set a workweek that differs from the workweek that employees actually work.

Much like the case before this court, the employer in In re Wal-Mart Stores, Inc. relied on the DLSE‟s interpretation of section 500 that " „[t]he beginning of an employee‟s workday need not coincide with the beginning of that employee‟s shift, and an employer may establish different workdays for different shifts.‟ " (In re Wal-Mart Stores, Inc., supra, 505 F.Supp.2d at p. 617.) The court rejected the DLSE interpretation, noting that "the California Supreme Court has held that interpretations contained in the DLSE Manual are non-binding and are entitled to no deference. (Tidewater Marine Western, Inc. v. Bradshaw, supra, 14 Cal.4th at p. 568.) Therefore, to the extent that the DLSE‟s opinion . . . is inconsistent with the Labor Code‟s goal of promoting employee protection, this opinion should be ignored." (In re Wal-Mart Stores, Inc., at p. 617.)

But it's unclear whether the Court of Appeal intends its holding to apply to worksites where employees work from week to week and have different work different days off every week. If an employer sets the workweek from 12:01 a.m Monday to 12:00 p.m. Sunday for all employees, what happens when some employees have Mondays off? What if employees sometimes have Mondays off, and sometimes Tuesdays? Does the employer have to set a different workweek for each employee each week? Also, what happens when employees report to work at different times? When does the workday start? What if the employee is late to work on the first day? Must the workday begin late just to ensure that the employee receives the maximum potential overtime pay? Hopefully, the court will re-consider the breadth of its holding in a petition for re-hearing, or maybe will be depublished..

The court also dealt with "on call" pay. The employees were on for 12 hours and off for 12 hours during the hitches. They rarely were called back to work for emergencies. However, they had to remain within 30-45 minutes of the ship, and could not drink. They also were required to sleep on the ship. On those facts, the court decided that the requirement of sleep on the shift turned all of the down time (less an 8-hour period for sleeping) into hours worked. The court excluded the 8 hours of sleep time on the basis of an agreement between the employer and employees. Unless your business requires employees to sleep on premises, this case probably won't result in a change in the law on this point. However, if you want to exclude sleep time from hours worked when employees are required to sleep on premises, have an agreement.
The case is Seymore v. Metson Marine, Inc. and the opinion is here.

California Supreme Court Holds No Arbitration in Lieu of Labor Commissioner Hearing

2011-02-25T08:36:00.000-08:00

The California Supreme Court decided that an employer cannot require an employee to go to arbitration instead of a "Berman" hearing before the Labor Commissioner. Rather, the employee must be permitted to go to the labor commissioner and then the arbitration agreement can be used for the "appeal" de novo.
This 4-3 decision involves lengthy discussions of preemption and unconscionability.

The majority, led by retiring Justice Moreno, finds that the waiver of the labor commissioner hearing deprives the employee of so many benefits that the arbitration agreement violates public policy. The U.S. Supreme Court may take a look at this one under the Federal Arbitration Act. Until then, though, employees get to see the Labor Commissioner, even if they have arbitration agreements.

The case is Sonic-Calabasas A, Inc. v. Moreno and the opinion is here.

Court of Appeal: Meals and Breaks are Penalties for Attorneys Fees Law

2011-02-25T07:47:00.000-08:00

Did you know the Labor Code permits employers to recover attorney's fees when the employer wins certain wage claims? It's true.

Labor Code section 218.5 contains a reciprocal fee recovery provision in favor of the "prevailing party" in certain wage disputes. Section 218.5 states, in relevant part: "In any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions, the court shall award reasonable attorney‟s fees and costs to the prevailing party if any party to the action requests attorney‟s fees and costs upon the initiation of the action. . . . [¶] This section does not apply to any action for which attorney’s fees are recoverable under Section 1194."

In light of the last sentence, claims involving "overtime" are not subject to this fee statute, but rather section 1194. That is a "one way" fee provision that precludes employers from recovering fees even when they win claims for unpaid overtime. Thus, the Court of Appeal decided that UPS could not recover attorney's fees when it won a lawsuit by a single plaintiff challenging his exemption.

But what if the complaint alleges unpaid overtime AND other wage claims. The Court of Appeal decided that fees MAY be recovered by employers relating to the non-overtime-related claims. But then things got weird.

In United Parcel Service Wage and Hour Cases, the court dealt with Thomas McGann's individual claim, which not only involved overtime, but also meals and breaks. UPS sought its fees when it prevailed on the meal and break portion of the case.

Section 218.5 applies only to "wage" claims. Rather than award UPS the fees, the Court of Appeal held that meal and rest period penalties are penalties for purposes of the attorneys' fees statute permitting employers to recover attorney's fees for unsuccessful suits to recover wages. But wait. I thought the California Supreme Court said that meal period penalties were wages for the purposes of the statute of limitations. You're right. The Supreme Court did so in the Murphy v. Kenneth Cole case, discussed here.

But the Court of Appeal decided that Murphy does not apply because it did not address attorney's fees, but rather which statute of limitations should apply.

UPS contends Murphy establishes that an action for recovery of the statutory remedies for missed meal and rest breaks is a claim for “nonpayment of wages” within the meaning of Labor Code section 218.5. UPS offers no analysis to support its contention that Murphy, which decided a statute of limitations question under the Code of Civil Procedure, should control or guide our analysis of the Labor Code attorney fees provisions. We are not persuaded that extending the holding in Murphy to the discreet fee issue presented here is appropriate or in keeping with our duty to construe statutes regulating the conditions of employment liberally, “with an eye to protecting employees.” (Murphy, supra, 40 Cal.4th at p. 1111; accord, Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785, 794.)

Recognizing that the statutory remedy for denial of breaks -- payment of one additional hour of regular pay for each day a break is denied -- was susceptible to an interpretation as a wage and also as a penalty, the Supreme Court in Murphy found the remedy provided in Labor Code section 226.7 was primarily intended “to compensate employees for their injuries” occasioned by missed breaks and was, therefore, akin to a wage for purposes of assigning the appropriate statute of limitations. (Murphy, supra, 40 Cal.4th at p. 1111.) The court therefore gave employees the benefit of the three-year statute of limitations. However, nothing in the Murphy opinion suggests the court intended its decision to permit a prevailing employer-defendant in a section 226.7 action to recover attorney fees from the unsuccessful employee. To so find would undermine the Supreme Court‟s heavy reliance in its analysis on the principle that statutes governing working conditions must be liberally construed in favor of employees.

So, the court instead decided that section 218.5 permits employers to recover attorney's fees when wage claims are based on contractual wages, such as unpaid bonuses, rather than wages - such as meal period penalties- that are required by statute. I guess vacation pay disputes won't result in awards of attorneys' fees either now?

Sorry - but if Murphy held that meal periods are subject to the limitations period applicable to wages not penalties, then Murphy said that meal and break penalties are wages. Since 218.5 applies to "wages" and not just "contractual-based wages" the court giveth something to the statute, and taketh away from employers.

The case is United Parcel Services Wage and Hour Cases, and the opinion is here.

Court of Appeal: Union Representing County Employees Entitled to Contact Information of Non-Union Members

2011-02-25T07:26:00.000-08:00

To facilitate union organizing and collective bargaining, the union representing LA county employees wanted the county to disclose the names and addresses of employees who opted not to be represented by the union. These employees paid an "agency" fee, lower than union dues, but were not full fledged members.

Reviewing the case, the court of appeal decided that the county must disclose the information, but first must give the employees the right to "opt out" of the disclosure, similar to the law that applies in class action discovery:

Pioneer Electronics because there is no underlying presumption these non-member County employees would want their personal information disclosed, as might be the case in class-action litigation in which the disclosure might lead to affirmative relief or the vindication of statutory rights. Rather, the opposite is true. As in Valley Bank, employees would assume the personal information they provided to their employer as a condition of employment would not be further disseminated. While there may be a parallel between union representation and class representation, we cannot assume these non-member County employees would perceive a benefit to having their personal information disclosed to the Union. These County employees, whether by inaction or action, are not Union members, and they have a right not to join the Union. The non-members‟ failure to voluntarily provide their personal information to the Union might indicate their desire not to join the Union, indifference, or simply a desire not to be bothered at home by unwanted mail and telephone calls.

we hold non-member County employees are entitled to notice and an opportunity to object to the disclosure of their personal information. The privacy concerns here are more significant than in

The court rejected the union's argument it was entitled to the information regardless of the employees' objection.

The case is County of LA v. LA County Employee Relations Commission and the opinion is here.

Court of Appeal: Reporting Time Pay and Discharge

2011-02-18T17:02:00.000-08:00

The Court of Appeal addressed California's "reporting time" pay requirement in the context of discharge.
First it explained "reporting time" pay in the Wage Orders.

Section 5(A) of Wage Order Number 5-2001 states: “Each workday an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee‟s usual or scheduled day‟s work, the employee shall be paid for half the usual or scheduled day‟s work, but in no event for less than two (2) hours nor more than four (4) hours, at the employee‟s regular rate of pay, which shall not be less than the minimum wage.” (Cal. Code Regs., tit. 8, § 11050, subd. 5(A).)

The employee was called in for an unscheduled day to be fired. The company paid the employee 2 hours, but the employee wanted four hours' pay. The Court of Appeal held that only two hours of reporting time pay was due. In explaining why, the court will help employers in the case of meetings that are scheduled on employees' days off.

If an employee is required to work, reports to work, and is not put to work or does not work half of the employees‟ usual or scheduled day‟s work, the employee is paid a half-shift reporting wage not to exceed four hours. (Cal. Code Regs., tit. 8, § 11050, subd. 5(A).) If an employee is not scheduled to work or does not expect to work his usual shift, but must report to work for a meeting, the employee falls into the regulatory category of those employees called to work on their day off for a scheduled meeting. Price was entitled to the minimum payment, which is what he received.10

* * *

We do not agree with Price that he is entitled to receive more than the two-hour minimum; he did not report to work with the expectation that he would work a scheduled shift, but rather was scheduled to attend a meeting for an unspecified number of hours. Nor do we agree with Price that the term "usual" in the statute means the average of his previously scheduled days‟ worked during his employment at Starbucks. Rather, the term "usual" refers to the employee‟s expectation of the hours in the customary workday, just as, in the alternative, a scheduled work day formalizes the expectation of the hours worked. During his employment, Price's expectations of hours worked was solely based upon his scheduled hours. Price was not scheduled to work on November 16, and his expectation was he had been called to work for a meeting on his day off. He did not lose any pay because of a scheduling error. He was paid for reporting to the meeting consistent with the reporting time pay regulation.

This case also is very good because it, once again, says you have to have an actual injury to recover on a wage statement claim. No injury, no money. And a missing piece of information is not an injury.

The case is Price v. Starbucks Corp. and the opinion is here.

Court of Appeal: Up to 2 Meal / Rest Period Penalties Per Day

2011-02-17T07:32:00.000-08:00

The Court of Appeal in UPS v. Superior Court decided that when an employee claims to have been denied both meal AND rest periods in a single day, s/he may recover two of the one-hour penalties made available under Labor Code Section 227.6. So, one penalty is available for however many meal periods are denied in a day, and a separate penalty is available for however many rest periods are denied.
The case is UPS v. Superior Court and the opinion is here.

Court of Appeal Upholds the Denial of Meal Period Class Action

2011-02-17T07:21:00.000-08:00

While the world waits for the California Supreme Court to issue the fabled Brinker decision on meal periods, the courts of appeal continue to find that employers need only make available meal periods, and not force them.

The latest opinion involves a class action over meal and rest breaks and wage statements. The trial court found that the company took great measures to provide meal breaks and that, therefore, it would be impossible to have a class claim over denial of same. The court also held that wage statement claims require proof of actual injury, which is another subject that the California Supreme Court is considering.

I don't see anything new here for HR to be concerned with. There is a heady discussion of when courts can rely on precedent that is subsequently "de-published," but that's only good for procedure geeks like moi.

This opinion is in Tien v. Tenet Healthcare and it is available here.

Ninth Circuit: Pharmaceutical Sales Representatives are Exempt under FLSA

2011-02-15T05:48:00.000-08:00

The plaintiffs in Christopher v. SmithKline Beecham Corp. were pharmaceutical sales representatives. They visit doctors on behalf of the company and attempt to persuade the doctors to prescribe their particular drugs to patients. The company argued that these employees were exempt as "outside sales." The employees argued they were not sales persons, primarily because the patients themselves were the buyers, not the doctors.

The Ninth Circuit disagreed, holding that pharmaceutical sales reps obtain "sales" by convincing a doctor to agree to prescribe the product (a non-binding commitment).

The case is interesting for two reasons. First, the court explains what kinds of activities the outside sales exemption covers, and there is not much case law on this in the Ninth Circuit. In particular, there is a lengthy discussion about the difference between "selling" and "promoting." The former is exempt and the latter is not. Second, the court refused to follow the US Department of Labor's current position on the exemption, which carried the day in another case in the Second Circuit. In re Novartis Wage & Hour Litig., 611 F.3d 141 (2d Cir. 2010).

California law should follow the FLSA outside sales exemption. So this case may be helpful in California cases as well. But, as the Novartis case shows, the US DOL and some courts do not agree that pharmaceutical salespersons are exempt, so keep that in mind.

The case is Christopher v. SmithKline Beecham and the opinion is here.

Medical Pot at Work - It's Back!

2011-02-11T12:58:00.000-08:00

The California state senate apparently is taking up another attempt to stop "discrimination" against the stoned at work. (Yes, there are some exceptions, e.g., they can't be too stoned - impaired - or work at a safety sensitive job). Just read the bill....The text of SB 129 is here.

Like the failed Prop 19, which the voters rejected last year, this bill is too vague and makes it harder for employers to fire people who come to work buzzed than it is to fire people who come to work drunk. There, I said it. Unlike Prop. 19, this bill allegedly applies only to "medical marijuana" users, not recreational users.

For the record, I have nothing against pot, medical marijuana, caring cannabis, or wacky weed. I don't care if pot is legal or illegal. But I care if people are stoned when making my dinner, caring for my relative in the hospital, fixing my car, or doing my books, etc. The new bill is too solicitous of pot smokers. Sorry to harsh your mellow.

DGV

Follow us on Twitter.

2011-02-04T16:18:00.000-08:00

And that's an order. Ok, not really. Anyway, I'm not sure why an employment lawyer needs to be on Twitter. I guess it's a way for me to "blog" in fewer than 200 characters, without the guilt. Or the grammar. And then there's the really significant reason. It justifies an iPad 2.0 when it comes out. One cannot tweet effectively without a sleek, shiny Apple product.

Anyway, I'm going to try to tweet about employment law-related articles, announcements by other tweeting employment law-related government agencies, new cases, etc. And of course I'll "retweet" everything by Justin Bieber, whoever he is. Who says I'm old and out of touch? Oh. Right. I do.

We'll still blog about more in-depth analyses of employment law cases, too. So, please do not despair if you're not part of the twittering horde.

But if you ARE in our super cool club of twittering employment law-lovers, please follow us on Twitter and do your bit to make us the 3,000,000th most popular member. OK, it's a stretch goal. You can sign up here:

Greg

Court of Appeal: Sexual Harassment Claim Untimely

2011-01-30T06:02:00.000-08:00

You have to file an administrative charge with the Department of Fair Employment and Housing within a year of the last act about which you claim is harassment, discrimination, or retaliation. So, when Irene Trovato testified at her deposition that the last time Michael Allyn harassed or retaliated against her was January 31, 2007, the charge she filed on May 8, 2008, was untimely.

In opposition to her employer's and Allyn's summary judgment motion, she submitted a declaration under penalty of perjury in which she said that the harassment continued until she left her employment in May 2007 (which would have rendered her charge timely fled). But, she contradicted her clear deposition testimony, which you cannot do.
Then, Trovato claimed the "continuing violation doctrine," which has gutted the statute of limitations in these types of cases, rendered her claim timely. But the court of appeal said the doctrine did not apply:

The case is Trovato v. Becton Coulter, Inc. and the opinion is here.

Trovato also argues that she still reported to Allyn after January 31, 2007, until she resigned in May 2007, and that this assignment alone—without any other evidence—was sufficient to constitute harassment or retaliation. There is no authority for this argument, and its acceptance would extend the statute of limitations indefinitely.

The conclusory statements in Trovato’s declaration are not sufficient to raise a triable issue of material fact on the statute of limitations issue, and she cannot defeat the grant of summary judgment by contradicting her sworn deposition testimony on material points in a later-filed declaration. (Shin v. Ahn (2007) 42 Cal.4th 482, 500, fn. 12; D’Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 22; Whitmire v. Ingersoll-Rand Co. (2010) 184 Cal.App.4th 1078, 1087.)

California Court Again Holds California Pro-Picketing Law is Unconstitutional

2011-01-28T19:40:00.000-08:00

The Third District Court of Appeal previously held that California's statutes prohibiting courts from enjoining most union picketing are unconstitutional. See my earlier post here. The California Supreme Court granted review in that case.

Now the Fifth District Court of Appeal has held the same thing, and involving the same employer, Ralphs Grocery, albeit at a different location. Money quote:

Laws which prohibit speech based on its content — or, in this case, based on the failure of the speech to address a "labor dispute" — are presumptively invalid. (Simon & Shuster, Inc. v. Members of N.Y. State Crime Victims Bd. (1991) 502 U.S. 105, 116.) Such laws are permitted only if they serve a compelling state interest and are narrowly drawn to accomplish that interest. (Mosley, supra, 408 U.S. 92, 95.) The desire to provide the broadest forum for expression in labor disputes is not a compelling state interest. (Carey v. Brown, supra, 447 U.S. 455, 466.)
We conclude the state may not act to selectively create a free speech right applicable only to the few, while excluding all others, in the absence of a compelling state interest. As a result, we hold that the Moscone Act and Labor Code section 1138.1 contravene the free speech provisions of California Constitution article I, section 2, by discriminatorily conferring speech rights on some, but not all, Californians without a compelling state interest.

Read this one quickly because the Supremes likely will take it up along with the earlier Ralphs case.
The case is Ralphs Grocery Co. v. UFCW Union Local 8 and the opinion is here.

Ninth Circuit: WARN Act Opinion

2011-01-27T18:03:00.000-08:00

The WARN Act requires companies to give at least 60 days' notice of shutdowns and mass layoffs that affect a certain number of people. For example, to be covered, a "mass layoff" must involve an "employment loss" for a group comprised of at least 50 employees who constitute at least 1/3 of the workforce.

The thing is, the law and regulations contain a number of exceptions and special definitions regarding who is an employee, who counts as a layoff, etc. There are so many moving definitions and exceptions, it is impossible (or maybe just dumb) to give WARN advice "off the cuff."

One of the key definitions is "employment loss" because that's how you tell how many employees are affected by a layoff or shutdown. If < 50 employees have suffered an "employment loss" then federal WARN is not triggered.

So, in Collins v. Gee West, the employer was looking for a buyer and gave less than 60 days' notice of a shutdown. Collins and other sued for the WARN damages due for failure to give 60 days' notice.
But the Company's notice was that the shutdown would occur on October 7. By that date, all the employees had quit for other employment. The Company argued that these employees voluntarily departed before the October 7 shutdown date. Having voluntarily departed, they did not suffer an employment loss.

The district court bought that argument and granted the employer's motion for summary judgment. On appeal, not so much. The Ninth Circuit held that when folks leave employment after being told the business is going to shut down, that is not a "voluntary departure" exception to the "employment loss" definition. As the court pointed out, if that were the case, then the only way to tell whether a WARN notice was due would be after the fact. So, the employer must reasonably calculate how many employees are anticipated to be affected by the employer's layoff or shutdown decision. The fact that an employee does not wait to the last day to leave does not eliminate the requirement of counting that employee as part of the layoff.

I figured there would be a discussion of the defenses to inadequate notice like the "faltering company" exception. Maybe next time.

The case is Collins v. Gee West and the opinion is here.

.

Court of Appeal Upholds Wage Statement Penalties

2011-01-26T18:07:00.000-08:00

So, several employees of Heritage Residential Care, Inc. "lacked social security numbers." Naturally, the employer immediately fired them.

No, silly, the employer re-classified them as independent contractors! Because, after all, without social security numbers, the employer could not withhold taxes. And you have to withhold an employee's taxes. But you don't have to withhold an independent contractors! Brilliant!

As you can imagine, since this has come to my attention over here, the employer's deft maneuver did not end well. Employees sued for penalties, among other things, because the employer did not provide adequate "wage statements" per Labor Code section 226.

After losing before the Labor Commissioner, they sought review on whether the failure to issue compliant wage statements was "inadvertent." If so, Section 226.3 permits the Labor Commissioner to take that into consideration in deciding whether to assess the penalties.

No sale. After a painstakingly thorough analysis of the meaning of "inadvertence," the court of appeal decided it simply means that it was unintentional. Here, the employer intentionally chose to issue 1099 forms to these employees, because they lacked social security numbers.

Therefore, employers who intentionally issue defective wage statements, or who skip issuing them on purpose, will not qualify for the statutory leniency built into Labor Code section 226.3.

The case is Heritage Residential Care, Inc. v. DLSE and the opinion is here.

U.S. Supreme Court Recognizes Third-Party Retaliation Claims

2011-01-24T18:59:00.000-08:00

Justice Scalia for a unanimous Supreme Court wrote that employees may claim retaliation when they are associated with someone ELSE who engaged in protected activity. What?

Miriam Regalado was engaged to Eric Thompson. They both worked for North American Stainless. So, Miriam filed a charge with the EEOC alleging sex discrimination. NAS fired Thompson three weeks later.

Thompson then filed a retaliation charge. But Thompson did not actually engage in protected activity. Regalado was the one who filed with the EEOC.

So, was it retaliation under Title VII to fire Thompson? The Supreme Court said yes. Relying on the Court's expansive definition of retaliation set forth in Burlington N. & S. F. R. Co. v. White, 548 U. S. 53 (2006),the court said:

“the antiretaliation provision, unlike the substantive provision, is not limited to discriminatory actions that affect the terms and conditions of employment.” Id., at 64. Rather, Title VII’s antiretaliation provision prohibits any employer action that “well might havedissuaded a reasonable worker from making or supporting a charge of discrimination.” Id., at 68 (internal quotation marks omitted).
And of course, they found that firing a fiance "well might have dissuaded" the complainant from making or supporting a charge: NAS argued, where do you draw the line? Trusted co-worker? Girlfriend? What third parties are close enough to the complainant. The Court could not find any language in Title VII to support setting down a blanket rule.

We must also decline to identify a fixed class of relationships for which third-party reprisals are unlawful. We expect that firing a close family member will almost always meet the Burlington standard, and inflicting a milder reprisal on a mere acquaintance will almost never do so, but beyond that we are reluctant to generalize.
The court next decided that Thompson had standing to sue under Title VII because he was a "person aggrieved." The Court knew it was opening a can of worms to let third parties sue. So, it limited Title VII standing to those covered by the "zone of interests" Title VII seeks to protect. Thompson was an employee at the same company as his fiance, and, most importantly, according to the complaint, the company fired him for the purpose of hiring the fiance who filed the charge.

The case is Thompson v. North American Stainless Inc. and the opinion is here.
DGV

U.S. Supreme Court Upholds Background Check Questions

2011-01-24T08:17:00.000-08:00

The U.S. Supreme Court ducked deciding whether the U.S. Constitution protects individuals' right to privacy in personal information. Instead, they "assumed" that there was such a protection and then decided that NASA's background questions were constitutional no matter what. This provoked a concurrence in the judgment only from Justice Scalia (and another, short one from Justice Thomas), as both of them wanted the court to decide the constitution contains no such right.

The employment law issue here is whether NASA's questions were appropriate issues to ask applicants and employees. Most federal government employees are subjected to a standard background check. But contract employees were only recently added, following the 9/11 attacks. NASA employed a number of contract employees at its Jet Propulsion Lab, and had to implement the checks for current employees, some of whom were employed for many years.

The questions included standard background information, but then asked about drug use, sales, etc., and asked for explanations if the employee admitted to involvement with illegal drugs. After the employee answered the questions, the agency sent out questionnaires to landlords and references on a standard form. That standard form contains a number of questions to which plaintiffs objected:

the form asks if the reference has "any reason to question" the employee’s "honesty or trustworthiness." Id., at 97. It also asks if the reference knows of any "adverse information" concerning the employ. If "yes" is checked for any of these categories, the form calls for an explanation in the space below. ... That space is also available for providing "additional information" ("derogatory" or "favorable") that may bear on "suitability for government employment or a security clearance." Ibid.

The Ninth Circuit held that the request for an explanation by the employee about drug treatment or counseling did not serve a legitimate interest sufficient to overcome the employee's privacy rights. The court of appeals also decided that the reference forms contained open ended questions that infringed on privacy rights without sufficient linkage to the job.

On review, the Supreme Court decided that these questions do not infringe upon privacy rights even if they were protected by the Constitution:

The questions challenged by respondents are part of a standard employment background check of thesort used by millions of private employers. See Brief for Consumer Data Indus. Assn. et al. as
*** [W]e conclude that the chal-lenged portions of both SF–85 and Form 42 consist of reasonable, employment-related inquiries that further the Government’s interests in managing its internal opera-tions. See Engquist, 553 U. S., at 598–599; Whalen, 429 U. S., at 597–598. As to SF–85, the only part of the formchallenged here is its request for information about “any treatment or counseling received” for illegal-drug use within the previous year. The “treatment or counseling”question, however, must be considered in context. It is a followup to SF–85’s inquiry into whether the employee has“used, possessed, supplied, or manufactured illegal drugs” during the past year. The Government has good reason toask employees about their recent illegal-drug use. Like any employer, the Government is entitled to have itsprojects staffed by reliable, law-abiding persons who will“‘efficiently and effectively’” discharge their duties. See Engquist, supra, at 598–599. Questions about illegal-drug use are a useful way of figuring out which persons havethese characteristics.Amici Curiae 2 (hereinafter CDIA Brief) ("[M]ore than 88% of U. S.companies . . . perform background checks on their employees"). The Government itself has been conducting employment investigations since the earliest days of the Republic.

The court's decision is important to private sector employers looking to justify personal questions and investigative consumer reports. The court recognized the legitimacy of these issues, including questions about drug use. That should help private-sector and public employers with invasion of privacy claims related to drug testing and background investigations.

Of course the court did not deal with the issue of "adverse impact" discrimination claims here. But the defense to adverse impact is "job related and consistent with business necessity." Language in this opinion should help estasblish this defense.

The opinion is NASA v. Nelson and it is here.
DGV

Ninth Circuit Pretty Much Kills Most Attorneys' Fees Awards to Employers

2011-01-20T18:45:00.000-08:00

In a case where the court readily acknowledged that the plaintiff's claims were frivolous, the court invented a whole new standard for awarding attorney's fees. The fees statute says the "prevailing party" is entitled to "reasonable attorney's fees." Then the courts said that employers can recover fees only if the plaintiff's claims are frivolous.

In this case, Harris v. Maricopa County Superior Court, the court of appeals decided if the plaintiff asserts multiple claims, the defendant can recover fees only on the amount of time spent exclusively on frivolous claims. So, let's say the defense counsel spends time that overlaps on frivolous and non-frivolous claims - the attorneys' fees cannot be recovered at all.

In essence, they might as well have said, "if there are multiple claims, unless they are all 100% frivolous, the defendant shouldn't even bother trying for attorney's fees." Instead, the court hides its true intention by setting a new standard ensuring it's impossible to recover fees, without really saying so. Judge Stephen Reinhardt, who has never met a plaintiff he didn't like, laughed at employers like this:

Although the court may not have erred in determining that the claim was frivolous, it nonetheless erred in awarding substantial fees to defendants on this claim. Almost every time entry in defendants’ fee petition for work related to the hostile work environment claim was also listed as related to some or all of Harris’s nonfrivolous discrimination claims. As we have already explained, in a civil rights action with multiple claims, only some of which are groundless, a defendant is entitled only to those fees attributable exclusively to defending against plaintiff’s frivolous claims. If the work is performed in whole or in part in connection with defending against any of plaintiff’s claims for which fees may not be awarded, such work may not be included in calculating a fee award. Accordingly, the fees properly attributable to this claim, if any, would be quite minimal.

The court's rationale is that the law is "solicitous" of plaintiffs' complaints in civil rights cases. The court more accurately is "solicitous" of bad faith lawsuits with no chance of succeeding. It is not mutually exclusive to allow plaintiffs with bona fide claims to have a day in court, while still enforcing some minimal standards. If a case is frivolous, that means it never should have been brought. It is only fair to defray some of the employers' costs in defending against a lawsuit that never should have been filed in the first place.

Oh, I'm not the only one who smacked his forehead after reading the opinion in this case. There was a dissent that pretty much calls bull on the majority. Perhaps the full en banc court will take up this issue.

The opinion is Harris v. Maricopa County Superior Court and the opinion is here.

DGV

Court of Appeal: No Attorney-Client Privilege for Employee's Emails to Lawyer

2011-01-15T11:22:00.000-08:00

Gina Holmes worked for Petrovich Development Co. LLC as assistant to the CEO, Paul Petrovich. She was pregnant early in her employment and got into a discussion with her boss about the length of her leave and their respective feelings about her pregnancy. Although it appeared that they had cleared the air, Holmes simultaneously attempted to hire a lawyer, via email at work. Apparently, Holmes became upset that Petrovich forwarded her emails to others in the organization and quit, claiming constructive discharge, discrimination, harassment, etc.

The trial court summarily dismissed the harassment, discrimination and retaliation claims. The court of appeal affirmed - holding that the harassment evidence was limited to email correspondence that was neither severe nor pervasive.

The court of appeal also affirmed dismissal of the claim that Holmes was forced to resign. The court noted that when a plaintiff cannot establish a hostile work environment, a constructive discharge claim is a higher standard and must also fail. Holmes' retaliation claim failed too, because of the lack of an adverse action.

That left claims for intentional infliction of emotional distress and invasion of privacy, which were tried to a jury. The jury found for the defendants. On appeal, Holmes claimed the trial court should not have allowed Petrovich to use the emails she sent to a lawyer seeking a referral, in which she explained her situation. The trial court held that Holmes waived the privilege because she used company email, and there were clear policies explaining the company's right to monitor email.

The court of appeal agreed that Holmes waived the privilege Here is the money quote:

Although a communication between persons in an attorney-client relationship "does not lose its privileged character for the sole reason that it is communicated by electronic means or because persons involved in the delivery, facilitation, or storage of electronic communication may have access to the content of the communication" (§ 917, subd. (b)), this does not mean that an electronic communication is privileged (1) when the electronic means used belongs to the defendant; (2) the defendant has advised the plaintiff that communications using electronic means are not private, may be monitored, and may be used only for business purposes; and (3) the plaintiff is aware of and agrees to these conditions. A communication under these circumstances is not a “„confidential communication between client and lawyer‟” within the meaning of section 952 because it is not transmitted “by a means which, so far as the client is aware, discloses the information to no third persons other than those who are present to further the interest of the client in the consultation . . . .” (Ibid.)

When Holmes e-mailed her attorney, she did not use her home computer to which some unknown persons involved in the delivery, facilitation, or storage may have access. Had she done so, that would have been a privileged communication unless Holmes allowed others to have access to her e-mails and disclosed their content. Instead, she used defendants‟ computer, after being expressly advised this was a means that was not private and was accessible by Petrovich, the very person about whom Holmes contacted her lawyer and whom Holmes sued. This is akin to consulting her attorney in one of defendants‟ conference rooms, in a loud voice, with the door open, yet unreasonably expecting that the conversation overheard by Petrovich would be privileged.

Lawyers for employees obviously should take note and advise employees not to use monitored email systems. Employers should ensure their email policies are comprehensive and clear regarding employees' expectations of privacy.

The case is Holmes v. Petrovich Development Company LLC and the opinion is here.

NY Government: Going to California...

2010-12-28T15:41:00.000-08:00

We sent out an email blast to our clients with known NY Operations, but I'm reposting it here in case I missed anyone... If you don't care about NY wage and hour law, stop reading. And I mean it.

The NY Legislature took a big step towards full employment for wage and hour lawyers with the passage of the Wage Theft Protection Act. This new law, signed by outgoing NY Governor David Patterson on December 13, 2010, will become effective on April 12, 2011. Employers should start preparing now.

To summarize, this new law requires employers to provide additional information regarding wage payments, and imposes stiff penalties for employers who fail to comply with their wage payment obligations.

Highlights of the New Legislation

Ø Enhanced Notice Requirements: New York wage law already requires employers to give new employees written notice of their rate(s) of pay, overtime rate (if applicable) and regularly scheduled paydays. Employers must also state whether the employee is paid by the hour, shift, day, week, piece, commission, etc., and any intent to claim allowances (e.g., tip, meal or lodging allowances) as part of the minimum wage. Additionally, the notice must include the employer's name, any "doing business as" name, and the employer's physical address, mailing address (if different) and telephone number.

The Act requires employers to give employees notice not only at the time of hire, but also annually, on or before February 1 of each year. Notice must be given in both English and the employee's native language, and employees must acknowledge receipt in writing. Also, employers must provide at least seven calendar days' notice of any changes to the information required to be disclosed, unless the changes are reflected in new wage statements accompanying employees' pay.

Employers must maintain employee notice and acknowledgment records for a period of six years. If notice is not provided to employees within 10 days of initial employment, employers will be subject to penalties of $50 per employee, per week (up to $2,500), in addition to costs and reasonable attorney's fees. The Act permits the New York Labor Commissioner to bring an enforcement action and to seek additional penalties for noncompliance with this requirement.

Ø Employee Wage Statements: The Act requires employers to provide wage statements to their employees with each paycheck specifying the: (1) dates of the applicable pay period; (2) employee's name; (3) employer's name, address and telephone number; (4) rate and basis of pay; and (5) allowances, if any, claimed as part of the minimum wage. For non-exempt employees, the statement must also include the applicable regular and overtime pay rates, in addition to the number of regular and overtime hours worked during the pay period. Payroll records containing this information must be maintained for six years (up from three years). Violations can result in civil damages of $100 for each workweek that the violation occurred (not exceeding $2,500), in addition to costs and reasonable attorney's fees. Additional penalties may be sought and awarded in actions for noncompliance brought by the New York Labor Commissioner on an employee's behalf.

Ø Increased Civil/Criminal Penalties: The Act provides for increasingly strict penalties against employers who fail to pay their employees properly. First, the Act permits liquidated damages against an employer of up to 100% of the total amount of wages found to be due (up from 25% under existing law), unless an employer can prove it had a good faith basis for believing that it was in compliance with the law. Additionally, employers found liable who fail to pay the amount owed pursuant to a final judgment within 90 days will now be assessed an additional 15% in damages. The Act provides for the employee's recovery of prejudgment interest and reasonable attorney's fees in any civil action to recover unpaid wages.

The Act also imposes more stringent criminal penalties for failure to pay minimum wage or overtime wages due. It provides that an employer (including the officers or agents of any corporation, partnership or limited liability company)found not to have paid an employee's wages is guilty of a misdemeanor and will be fined between $500 and $20,000 or be imprisoned for less than one year for each offense. The Act treats each failure to pay employee wages within any workweek as a separately actionable offense. Repeat offenses may result in felony charges, more fines, and up to one year in jail. The Act threatens similar criminal penalties against employers who fail to maintain adequate employee wage records. Initial violations will be deemed misdemeanors, with fines between $500 and $5,000, or up to one year of imprisonment. For subsequent record violations, employers may face felony fines of between $5,000 and $20,000, imprisonment for a period of not more than a year and one day, or both.

Ø Posting Requirement: Employers found liable under the Act may be ordered by the Labor Commissioner to conspicuously post documentation explaining the violation(s) for up to one year.

Ø Whistleblower Protections: The Act also strengthens protections for whistleblowers in cases involving wage violations. Significantly, the Act protects employees from unlawful reprisal (including threats of retaliation) who raise a complaint based upon a "reasonable" and "good faith" belief that their employer has violated the law--even if no violation actually occurred. It also protects employees who assist in the investigation of another employee's complaint, or who have otherwise exercised rights protected by the Act. Upon a finding of retaliation, the Labor Commissioner may award compensatory and liquidated damages (not to exceed $10,000), enjoin acts of retaliation, and order injunctive relief, which may include employee reinstatement. Employees also may make claims of retaliation in court, with similar remedies awarded. Retaliation claims must be made within two years of the alleged retaliatory act, although the two-year statute of limitation is tolled by the filing of an administrative charge with the Labor Department.

To ensure compliance, and avoid the significant penalties for violations, employers with New York operations should carefully review the full text of the New York Wage Theft Prevention Act, which can be found here: http://open.nysenate.gov/legislation/bill/S8380 . Employers must also review and revise their pay practices by the Act's April 12, 2011, effective date.

Thanks to my pal and competitor Tony Rao for pointing this out and thanks to Alex Sperry of our Sacramento office for drafting the analysis.

DGV

NLRB Going Wild

2010-12-21T16:44:00.000-08:00

The National Labor Relations Board is proposing a regulation that requires all employers under the NLRB's jurisdiction - both union and non-union- to post a notice explaining to employees their rights under the National Labor Relations Act. That notice will include helpful information like how to file an unfair labor practice complaint, the right to collectively bargain and elect a union, etc. The entire contents of the notice is posted below. The proposed regulations currently require qualifying employers to post the notice on paper with the other millions of government posters, and also send the notice out by email or put it on a company intranet. Multiple languages, etc. too.

The proposed regulations are here. A "fact sheet" is here. Read the whole proposed poster below.

This NLRB is on a tear and it won't be long before private sector employers will have to wake up and smell the union. This time I may have to dust off my copy of The Developing Labor Law. My competitors may have to dust off their labor lawyers. OK, I kid! I had too many cookies.

DGV

“EMPLOYEE RIGHTS UNDER THE NATIONAL LABOR RELATIONS ACT

“The National Labor Relations Act (NLRA) guarantees the right of employees to organize and bargain collectively with their employers, and to engage in other protected concerted activity. Employees covered by the NLRA* are protected from certain types of employer and union misconduct. This Notice gives you general information about your rights, and about the obligations of employers and unions under the NLRA. Contact the National Labor Relations Board (NLRB), the Federal agency that investigates and resolves complaints under the NLRA, using the contact information supplied below, if you have any questions about specific rights that may apply in your particular workplace.

“Under the NLRA, you have the right to:

• Organize a union to negotiate with your employer concerning your wages, hours, and other terms and conditions of employment.
• Form, join or assist a union.
• Bargain collectively through representatives of employees’ own choosing for a contract with your employer setting your wages, benefits, hours, and other working conditions.
• Discuss your terms and conditions of employment or union organizing with your co-workers or a union.
• Take action with one or more co-workers to improve your working conditions by, among other means, raising work-related complaints directly with your employer or with a government agency, and seeking help from a union.
• Strike and picket, depending on the purpose or means of the strike or the picketing.
• Choose not to do any of these activities, including joining or remaining a member of a union.

“Under the NLRA, it is illegal for your employer to:

• Prohibit you from soliciting for a union during non-work time, such as before or after work or during break times; or from distributing union literature during non-work time, in non-work areas, such as parking lots or break rooms.
• Question you about your union support or activities in a manner that discourages you from engaging in that activity.
• Fire, demote, or transfer you, or reduce your hours or change your shift, or otherwise take adverse action against you, or threaten to take any of these actions, because you join or support a union, or because you
engage in concerted activity for mutual aid and protection, or because you choose not to engage in any such activity.
• Threaten to close your workplace if workers choose a union to represent them.
• Promise or grant promotions, pay raises, or other benefits to discourage or encourage union support.
• Prohibit you from wearing union hats, buttons, t-shirts, and pins in the workplace except under special circumstances.
• Spy on or videotape peaceful union activities and gatherings or pretend to do so.

“Under the NLRA, it is illegal for a union or for the union that represents you in bargaining with your employer to:
• Threaten you that you will lose your job unless you support the union.
• Refuse to process a grievance because you have criticized union officials or because you are not a member of the union.
• Use or maintain discriminatory standards or procedures in making job referrals from a hiring hall.
• Cause or attempt to cause an employer to discriminate against you because of your union-related activity.
• Take other adverse action against you based on whether you have joined or support the union.

“If you and your co-workers select a union to act as your collective bargaining representative, your employer and the union are required to bargain in good faith in a genuine effort to reach a written, binding agreement setting your terms and conditions of employment. The union is required to fairly represent you in bargaining and enforcing the agreement.

“Illegal conduct will not be permitted. If you believe your rights or the rights of others have been violated, you should contact the NLRB promptly to protect your rights, generally within six months of the unlawful activity. You may inquire about possible violations without your employer or anyone else being informed of the inquiry. Charges may be filed by any person and need not be filed by the employee directly affected by the
violation. The NLRB may order an employer to rehire a worker fired in violation of the law and to pay lost wages and benefits, and may order an employer or union to cease violating the law. Employees should seek assistance from the nearest regional NLRB office, which can be found on the Agency’s website:

www.nlrb.gov.

You can also contact the NLRB by calling toll-free: 1-866-667-NLRB (6572) or (TTY) 1-866-315-NLRB (1-866-315-6572) for hearing impaired.
“*The National Labor Relations Act covers most private-sector employers. Excluded from coverage under the NLRA are public-sector employees, agricultural and domestic workers, independent contractors, workers employed by a parent or spouse, employees of air and rail carriers covered by the Railway Labor Act, and supervisors (although supervisors that have been discriminated against for refusing to violate the
NLRA may be covered).

“This is an official Government Notice and must not be defaced by anyone.”

Lactation Accommodation Information. .

2010-12-21T15:33:00.000-08:00

The helpful folks at the U.S. Department of Labor wants you to know about the new federal requirement that employers grant time off for women to express breast milk. The DOL's fact sheet is posted here.
You may recall this requirement was included in the "healthcare reform" law. I have not yet seen any legislative effort to grant male workers equal rights in this area. But hope springs eternal.
DGV

Top 100 Employment Law Blogs

2010-12-20T06:32:00.000-08:00

Yeah, another day, another award. We were included in the Delaware Employment Law Blog's top 100 employment law blogs. See the post here. We're # 17, even. But it seems they grouped them by certain criteria, and then ordered them alphabetically. So, who knows whether they just like us or REALLY really like us. Disirregardless, it's an honor to be read and recognized. So, thank you Delaware Employment Law Blog!

Besides tooting our horn, the purpose of this post is to give you access to at least 100 employment law blogs that post in different states, on a variety of topics. The folks at the DELB put a lot of time and effort into compiling this information, not to mention their substantive posting over there. Take advantage of all their hard work.Knowledge is POWER people! Whew. I just got all red and stuff.

DGV

Payroll Company Not an "Employer" for Wage Hour Purposes

2010-12-18T15:01:00.000-08:00

If an employer "outsources" payroll services to another company, can that payroll service company be held liable for wage-hour violations as an "employer?" No.

The California Supreme Court in Martinez v. Combs (discussed here) determined who is liable under California wage and hour law - i.e., who is an "employer." The court of appeal in Futrell v. Payday California, Inc., applied Martinez's definition of "employer" in deciding that a payroll service provider was not an "employer."

Futrell provided private police / crowd control services for a Reactor, a production company that makes commercials. The production company "payrolled" its employees through Payday, a payroll service company. Futrell brought a class action against Payday, alleging wage-hour violations. Payday prevailed on a motion for summary judgment because the trial court held Payday was just a vendor of Futrell's actual employer, the production company.

The court of appeal held that Martinez restricts who may be held liable for wage-hour violations. The court rejected Futrell's argument that Payday exercised control over his wages:

There is no evidence in the record showing Payday exercised any control over Futrell‟s hours or working conditions. Reactor hired Futrell, and arranged and supervised the location shoots. . . . This means the only possible linchpin for finding that Payday was Futrell‟s employer is whether Payday “exercised control over his wages.”

If Payday had merely collected tax information from workers, kept track of time cards, calculated pay and tax withholding, and submitted reports to Reactor detailing such information, leaving it for Reactor to issue paychecks to the workers on its productions, we would have an easy case; Reactor would be the only employer. In our view, the issue in this case then comes down to whether Payday exercised “control over workers‟ wages” by going beyond handling the ministerial tasks of calculating pay and tax withholding, and by also issuing paychecks, drawn on its own bank account. We think not.

. . .. . Writing on a clean slate, we conclude that “control over wages” means that a person or entity has the power or authority to negotiate and set an employee‟s rate of pay, and not that a person or entity is physically involved in the preparation of an employee‟s paycheck. This is the only definition that makes sense. The task of preparing payroll, whether done by an internal division or department of an employer, or by an outside vendor of an employer, does not make Payday an employer for purposes of liability for wages under the Labor Code wage statutes.

The court then reached a similar conclusion under the federal Fair Labor Standards Act:

Although the FLSA applies a slightly different test than California law, the predominant factor remains the control an alleged employer exercises over an employee. Incorporating the reasons explained above into the FLSA test, we find Payday was not Futrell‟s employer for purposes of the FLSA. The economic reality existing between Futrell and Payday is that the latter prepared paychecks for the former for the work he performed on behalf of his actual employer, Reactor.

This case will come as good news to PEOs and other HR outsourcing companies, who may have been sued as "joint employers" for wage and hour violations. The court here, though, held that nothing in the opinion affects the analysis of who is the "employer" under any other body of law except wage-hour.

The case is Futrell v. Payday California, Inc. and the opinion is here.

San Francisco Minimum Wage Going Up 1/1/2011

2010-12-17T08:29:00.000-08:00

San Francisco has its own minimum wage law. It is indexed to inflation. It did not rise in 2010. However, it's rising as of 1/1/2011. The new rate will be $9.92 per hour. There of course is a new poster! Get information here.

Court of Appeal: Employer's Lawsuit Against Terminated Employees Beats Anti-SLAPP Motion

2010-12-15T06:13:00.000-08:00

Overhill Farms received notice from the IRS that hundreds of its employees' social security numbers were invalid. The company gave employees a chance to correct the problem. Those who did not were terminated. The law imposes fines and potential criminal liability on employers who permit employees to work with false social security numbers.

Led by an activist organization, some of the terminated employees began protesting at Overhill. The protestors accused Overhill of being racists and ageists, and all kinds of other -ists because of the termination decision based on the IRS's action. The leaflets they handed out said, among other things:

“OVERHILL FARMS UNFAIR and RACIST EMPLOYER.” The leaflets distributed at the protests contained the heading “OVERHILL FARMS UNFAIR AND RACIST.” Overhill is “[a]n abusive and racist employer in the manner that it treats its workers,” which “discriminates against Latinos”; has “unfairly terminated 300 workers,” has “fired workers for expressing themselves freely according to the First Amendment of the U.S. Constitution,” has “exploited Latinos for 30, 20, 15 and 10 years and then threw them to the streets — many single female heads-of-household,” and has exploited part-time workers “visciously as if modern slavery were in place.”

Well, Overhill fought back. It sued the protestors for a variety of torts, including defamation, interference with prospective economic advantage, and unfair business practices. But the protesters challenged the lawsuit as a "SLAPP" - a lawsuit in retaliation for their First Amendment activity - protesting.
Protesting of course is protected by the First Amendment. But the First Amendment does not protect against libel - provably false statements of fact. Certain types of false statements have to be made with malice to constitute defamation.

The court of appeal said that merely calling Overhill "racist" was not defamatory:

We agree that general statements charging a person with being racist, unfair, or unjust – without more – such as contained in the signs carried by protestors, constitute mere name calling and do not contain a provably false assertion of fact. Similarly, references to general discriminatory treatment, such as that contained in the handbill and flyer here, without more, do not constitute provably false assertions of fact. (See, e.g., Beverly Hills Foodland v. United Food & Commercial Workers Union, Local 655 (8th Cir. 1994) 39 F.3d 191, 196 [“‘[T]o use loose language or undefined slogans that are part of the conventional give and take in our economic political controversies — like ‘unfair’ and ‘fascist’ — is not to falsify facts.’ [Citations.]”].)

But, the protestors went further:

The press release contains language which expressly accuses it of engaging in racist firings and declaims upon the disparate impact the firings have had on “immigrant women.” Similarly, after discussing Overhill’s termination of one-fourth of Overhill’s work-force, the leaflets explicitly assert that the discrepancy in social security numbers was merely a “pretext” to eliminate certain workers, and refers to Overhill’s conduct as “racist and discriminatory abuse against Latina women immigrants.” Moreover, in almost every instance, defendants’ characterization of Overhill as “racist” is supported by a specific reference to its decision to terminate the employment of a large group of Latino immigrant workers. The assertion of racism, when viewed in that specific factual context, is not merely a hyperbolic characterization of Overhill’s black corporate heart – it represents an accusation of concrete, wrongful conduct.

The court therefore held that generally calling someone racist is hyperbole. But saying that an employer fired an employee due to unlawful discriminatory motive is a provable assertion of fact. That conclusion could have ripple effects beyond protesting. For, if this opinion stands, when an employee alleges wrongful termination due to discrimination, retaliation, etc., an employer is within its right to sue for defamation if it can prove that the statement is false.

The decision was 2-1. The dissent said:

I part company with the majority opinion in two fundamental respects. First, my colleagues in the majority have incorrectly made this court the first state or federal appellate court in America, ever, to hold that the epithet “racist” constitutes a provably false assertion of fact as the basis of a claim of defamation. The majority attempts to argue that it is only so holding because the term “racist” was used in combination with other words. But those other words are not actionable and the majority does not and cannot argue otherwise. Whether the word “racist” is used as a noun or an adjective in combination with other words does not matter.

Second, in my view, the majority misapplies the United States Supreme Court opinions in Milkovich v. Lorain Journal Co., supra, 497 U.S. at page 19 and Linn v. United Plant Guard Workers (1966) 383 U.S. 53, 58. Defendants’ communications in their dispute with their employer simply did not contain a provably false fact and the reasons for their allegations were disclosed. (Franklin, supra, 116 Cal.App.4th at p. 387.) The majority opinion’s parsing of the one word “discrepancies” in reaching its conclusion is not consistent with United States Supreme Court jurisprudence in defamation cases. I agree the employees’ claims might not be persuasive, but that does not make them defamatory.

My thought is that the California or US Supreme Court will take up this case. A lot of former employees accuse their employers of being "racist" or discriminatory in making employment decisions. One can imagine the argument that this decision will interfere with the enforcement of the civil rights laws. One can also argue that the term "racist" or "discriminatory" is a powerful weapon and should not be tossed around without a factual basis to back it up. There's the rub. We'll see what happens next.

The opinion is Overhill Farms, Inc. v. Lopez and the opinion is here.

DGV

U.S. Supremes Grant Review of Walmart Class Action

2010-12-07T06:47:00.000-08:00

So, I have posted on Dukes v. Walmart for a few years now... here and here. This is the class action involving potentially 1.5 million current and former Walmart employees all over the country.
The U.S. Supreme Court decided to consider some issues that arise in federal class actions:

Whether claims for monetary relief can be certified under Federal Rule of Civil Procedure 23(b)(2)—which by its terms is limited to injunctive or corresponding declaratory relief—and, if so, under what circumstances.

and

Whether the class certification ordered under Rule 23(b)(2) was consistent with Rule 23(a).

Here's a comprehensive post with cites to all kinds of relevant information from Ross Runkel's Employment Law blog.

Federal Rule of Civil Procedure 23 governs class actions. So, that's what the court is referring to above. In essence the court is deciding whether and to what extent a court can order money to be paid if a class action is certified under Rule 23(b)(2), which is supposed to apply only to class actions seeking injunctions.

Yes, on the surface, the legal issues may read like real snoozers for HR and most employment lawyers. But the case is gold for civil procedure junkies. And don't let all that civil procedure jargon fool you. The stakes are incredibly high and the court has the opportunity to shape how federal class actions in discrimination cases may be asserted. The court's decision could well shape how multi-state employers implement policies to avoid class action treatment of seemingly unrelated decisions.... So, stay tuned!

DGV

IRS Standard Mileage for 2011

2010-12-07T06:32:00.000-08:00

The IRS raised the standard mileage rate for automobile reimbursement to .... $0.51. Don't trust me? The link is here.

51 cents per mile for business miles driven
19 cents per mile driven for medical or moving purposes
14 cents per mile driven in service of charitable organization

DGV

California Supreme Court: Waiting Time Penalties are..Penalties!

2010-11-18T11:50:00.000-08:00

I know, sounds obvious. But folks were claiming that waiting time penalties, like meal period penalties, are a form of wage. They were making this argument to permit claims for waiting time penalties under California's unfair competition law, because that law has a four year statute of limitations.

No sale, said the California Supreme Court in Pineda v. Bank of America (opinion here). In that case, Pineda received his wages four days late. He brought a class action for waiting time penalties. on behalf of everyone who was paid late under Bank of America's final pay policies.

Pineda argued that he should be able to sue for waiting time penalties under California's unfair competition law (Bus. Prof. Code section 17200). The Supreme Court rejected that argument because waiting time penalties are not "restitution," the only time that money is recoverable under the UCL. Plaintiffs wanted to use the UCL to benefit from that law's four-year statute of limitations.

But the Supreme Court giveth, and taketh away. The other issue decided today is that the statute of limitations for waiting time penalties is not affected by whether the employer ultimately paid the wages, albeit late.

The lower courts dismissed the case because he did not file his case within a year of his termination. The lower courts applied case law like in McCoy v. Superior Court (2007) 157 Cal.App.4th 225, 229-230. There, the court of appeal held a one-year statute of limitations applies to waiting time penalty claims if the wages are paid as of the time of suit.

The Supreme Court rejected McCoy and held that in all instances, the waiting time penalty statute, Labor Code Section 203, imposes the same statute of limitations. That section says that the statute of limitations for waiting time penalties is the same as the limitations period applied to the underlying wage claims. The Supreme Court said that rule applies whether the wages are paid or not at the time of suit.

DGV