California Employment Law

'TIS THE SEASON FOR UNPAID INTERNSHIPS (OR NOT)

Nancy Yaffe — Tue, 15 May 2012 16:02:32 -0800

It is starting to feel like summer, with graduation dates on the calendar, long daylight hours, and plenty of high school and college students and recent graduates looking for resume-building work experiences. However, before you bring on any unpaid interns this summer – beware. There has been a recent flurry of lawsuits by interns claiming to be misclassified and seeking unpaid wages.

Attached is a particularly good article by Josh Sanburn at Time summarizing two recent lawsuits by interns in the entertainment and publishing industries (pdf).

While counter-intuitive, interns aren’t supposed to really be helpful to your business; rather they are supposed to learn from you. As the Department of Labor puts it, an employer is not supposed to derive any immediate advantage from the intern, and they can’t displace your regular employees. Also, while California’s DLSE still suggests that an intern be part of some accredited school program, that one fact alone is certainly not sufficient to qualify someone for intern status.

By the way, nothing prevents an employer from calling someone an “intern,” hiring them for a limited period of time, and paying that person minimum wage. In fact, that is often a very viable option.

Bottomline, just because everyone else does it, and has done it for years without getting sued, doesn’t make it’s okay, and doesn’t protect your company from being the next class action headline.

Just What We Need -- More Ways For Employees To Sue Their Employers

Jeff Polsky — Tue, 15 May 2012 08:44:35 -0800

Legislators in California and Washington, D.C. are considering bills to prevent employers from requiring employees to disclose social media user names or passwords. The California bill -- AB 1844 -- passed in the Assembly 73-0. The federal bill -- The Password Protection Act of 2012 -- was introduced last week.

Is there a legitimate basis for this flurry of legislative activity? I have heard not one report of any California employer requiring disclosure of this information. In this sense, it's reminiscent of the legislative attempts to ban discrimination against unemployed people. Or even the Missouri legislation to prevent discrimination against gun owners (as reported here on the Daily Show). Plus, the conduct in question (again, assuming it's even happening) already implicates the National Labor Relations Act, the Stored Communications Act, and myriad other laws respecting employee privacy.

So don't let these legislators fool you into thinking that they're championing employee rights. They're enacting unnecessary legislation to address a non-existent problem and they're doing it because it's popular. By this logic, legislation to prevent employers from executing older employees to control healthcare costs can't be far off.

The Risks to Company Owners of Signing Collective Bargaining Agreements

Jeff Polsky — Mon, 14 May 2012 09:27:53 -0800

My colleague Keith McMurdy explains in his Employee Benefits Blog that company owners signing collective bargaining agreements can be individually responsible for delinquent contributions or withdrawal liability. You can read about it here.

What Has Over A Thousand Thumbs And More Blogs Than Anyone Else? This Firm!

Jeff Polsky — Fri, 11 May 2012 08:15:21 -0800

As Adrian Dayton wrote here in the National Law Journal, "Fox Rothschild leads the pack with 32 blogs from just over 500 lawyers." Why? According to the article, it's because we're "hustling, scrappy, enterpreneurial." I would have said it's because we're the bloggingest bloggers in the legal blogosphere!

A View Of The Post-Brinker Landscape

Kent Bradbury — Thu, 03 May 2012 15:11:50 -0800

In the few weeks since the decision in Brinker v. Superior Court, two court decisions that we know of have invoked the elements of Brinker in their discussions. In the first case, the court in Schulz v. Qualxserve, LLC granted class certification to a group of field technicians who service and repair computers and are paid on a piece-rate basis. Plaintiffs had made a variety of wage and hour claims, including missed meal and rest periods. The employer argued that there was no evidence that it deprived employees of meal and rest periods as a general policy, and therefore class certification of these claims should be denied because individual questions would predominate over a common issue.

While acknowledging that the Brinker decision held that employers are not required to ensure that employees take meal and rest breaks, the Court reiterated the holding that employers are required to ensure that employees are relieved of all duties. Because the plaintiffs were challenging the employers common general policy of not relieving employees of all duties during rest and meal periods, they met the standard for showing that common issues would predominate for these claims, and the Court certified the class. Importantly, the Court noted that in Brinker class certification for the rest period claims was upheld because plaintiffs had challenged a uniform policy, similar to this case.

In the second case, Benton v. Taninco, the Court denied Plaintiffs' motion for class certification in a suit for misclassification and missed meal and rest periods. The Court stated that Plaintiffs were unable to establish uniformity of policies or circumstances at the individual work locations, citing statements from the court in Brinker regarding the analysis of whether common issues predominate in determining liability. Additionally, class certification was inappropriate in this case because, again citing Brinker, some of the employees had been provided all that was necessary in terms of proper meal and rest breaks: the chance to take them.

So, what do these cases teach us about the effects of Brinker? First, class certification of meal and rest periods will be difficult where the employer can show that some of the employees were provided their breaks as required under Brinker. Second, it certainly seems that Brinker will be cited to support class certification of meal and rest period claims when there are common policies or practices that interfere with employees being able to take a "bona fide" meal or rest period.

While this has been said many times already since Brinker came out, employers should examine their policies and practices to be sure they mirror the requirements stated in that decision. Scheduling practices should be re-evaluated if there is a possibility that they could be seen as preventing an employee from being relieved of all duties during the meal period. Plaintiffs in missed meal and rest period claims will be more closely scrutinizing the workflow and scheduling to try to point out general issues that support class certification.

Pretrial Publicity In The Age Of Social Media

Jeff Polsky — Thu, 03 May 2012 10:28:39 -0800

George Zimmerman, who is charged with murdering Trayvon Martin, has launched a website and Facebook and Twitter accounts to proclaim his innocence and solicit donations for his defense. Julie Brook at CEB wrote an interesting post about how California's rules regarding trial publicity would apply if a California defendant did something similar. You can read it here.

California Supreme Court Says No Attorneys Fees in Meal and Rest Period Claims

Kent Bradbury — Tue, 01 May 2012 18:00:40 -0800

In an opinion filed on April 30th, the California Supreme Court held that attorneys' fees are not awarded to the winners in cases involving meal and rest period claims. In Kirby v. Immoos Fire Protection, Inc., the Court unanimously held that neither prevailing plaintiffs nor victorious employers can receive an award of attorneys' fees in these types of cases.

An appeals court affirmed an award of fees to the employer after the plaintiffs dismissed their claims for missed rest periods. The Supreme Court agreed to hear the case to determine if attorneys' fees could properly be awarded for meal and rest break claims under either of two Labor Code sections: section 218.5 (which awards attorneys fees to the prevailing party in actions brought for nonpayment of wages) or section 1194 (which awards attorneys' fees to prevailing employees in actions for unpaid minimum wage or overtime compensation).

Those of you who obsess over California wage and hour law like we do may be thinking, hey, didn't this same court hold in Murphy v. Kenneth Cole that meal and rest period penalties are actually premium wages? So why wouldn't an action to recover these premium wages be an action for nonpayment of wages?

Good question. The Court stated that, based on the plain meaning of section 1194, claims for minimum wage or overtime compensation are not the same as missed rest or meal period claims. The Court also distinguished a meal and rest period claim from a section 218.5 claim for nonpayment of wages. The Court stated that, even though the penalty for a missed rest or meal period is one hour of premium pay, the essence of the wrong is not nonpayment of wages. As a result, awarding attorneys fees for missed meal and rest period claims under a statute intended to cover nonpayment of wages would be confusing the remedy with the violation itself.

After this opinion, combined with the recent decision in Brinker, California employers might be tempted to paint a rosy picture of the future of wage and hour litigation in California. However, I have already heard grumblings about a push for a legislative reaction to Brinker, and in this case, the Court practically invited it by stating that "it is up to the legislature to decide whether section 1194's one-way fee shifting provision should be broadened to include section 226.7 [missed meal and rest period] actions." So we'll see if there's any legislative reaction to the recent wage and hour decisions. Until then, this decision, while favorable to employers, will likely result in plaintiffs' actions being sure to include other claims in addition to meal and rest period violations.

Supporting Diversity

Jeff Polsky — Mon, 30 Apr 2012 12:34:58 -0800

The Bay Area Urban Debate League ("BAUDL") is a debate mentoring program that currently serves 13 Bay Area schools and 350 students. Studies show that these programs improve literacy, GPA, graduation rates, and provide a host of other direct benefits to the participants, their schools, and the community.

Fox Rothschild LLP is proud to be among 10 prominent law firms competing in BAUDL's "Champions of Diversity" fundraising campaign. The initial round runs from April 30 to May 4, during which the firms will compete to see which firm can raise the most money per attorney in its Bay Area office(s). There will then be a second round among the top three finalists from May 7 to 9. The winner gets a full-page ad in California Lawyer.

You can find updated results here (Fox currently holds a slim lead), a press release here, and a SF Chronicle profile ("Debate league helps at-risk kids find their voice") here. You can also contact me directly for more information about this fine organization.

What do you mean I have to show up to work?

Jeff Polsky — Fri, 20 Apr 2012 10:57:58 -0800

I've been meaning to write about the recent 9th Circuit decision in Samper v. Providence St. Vincent Medical Center (pdf). The decision said that attendance is an essential function of the job for a nurse working in the neo-natal intensive care unit of a hospital. But with all the other developments of the past couple of weeks, I didn't get to it.

Fortunately, Robin E. Shea at Employment & Labor Insider not only wrote about the case, but even included a Woody Allen quote! You can read her post here.

Don't think that the Ninth Circuit's going conservative on us by suggesting employees have to come to work. The Court seemed pretty impressed by the fact that, if the plaintiff was a no-show, bad things could happen to sick babies. But it's a start!

A Verb A Verb, My Kingdom For A Verb

Jeff Polsky — Wed, 18 Apr 2012 16:13:17 -0800

According to Shakespeare, “brevity is the soul of wit.” So perhaps the individuals drafting section 11(A) of the Industrial Welfare Commission Wage Orders thought they were being witty when they wrote that “No employer shall employ any person for a work period of more than five (5) hours without a meal period of not less than 30 minutes . . . .” But as the California Supreme Court pointed out in the week-old Brinker decision, “[t]he wage order employs no verb between 'without' and 'a meal period' (e.g., providing, requiring, offering, allowing, granting) to specify the nature of the employer’s duty.”

So that’s what it comes down to in the end. Three years of uncertainty, hundreds of class action lawsuits, and hundreds of millions in attorneys’ fees and settlements over a missing verb. Those drafters really knew how to [insert verb of your choice] things up.

Into the Weeds with Brinker Part 3: Rest Breaks

Nancy Yaffe — Wed, 18 Apr 2012 15:47:05 -0800

While the focus of post-Brinker discussion has been meal breaks, let’s not forget that the Court also clarified rules regarding rest breaks. Again, we have math. The wage orders provide that employers must “authorize and permit” employees to take rest periods “at the rate of ten (10) minutes net rest time per four (4) hours or major fraction thereof.” The Court found that “major fraction thereof” means more than half, and actually gave some details that should be instructive to employers. Employees are entitled to:

• One 10 minute break for shifts between 3.5 and 6 hours.
• Two 10 minute breaks for shifts of more than 6 hours and up to 10 hours.
• Three 10 minute breaks for shifts of more than 10 hours and up to 14 hours.

The Court also held that while rest breaks should generally be taken before and after a meal break, that sequence is not required if not practical. This is excellent news for the hospitality industry. For example, if a restaurant server works 5 pm to 1 am, and takes an early meal break at 6 pm, it is now okay to have the employee take 2 rest breaks thereafter.

The next logical question is whether employees can now combine meal and/or rest breaks. That question was not addressed by the Court, however, the Court did indicate that the best practice is still to have rest breaks and meal breaks in the middle of each work period. So it seems that combining breaks is still a somewhat risky endeavor. Plus, it can be a logistical challenge if employees still clock out for unpaid meal breaks, but don’t for paid rest breaks.

What is the take-away for employers? First, make sure that rest break policies either include the language “every 4 hours or major fraction thereof” or include the specific list of how many breaks an employee is entitled to per hour worked as listed above. Second, confirm that managers understand the number of breaks that must be provided, and don’t engage in conduct that undermines or prevents employees from taking breaks. Third, make sure meal and rest break policies include a sentence about what the employee should do if unable to take breaks for work related reasons.

Don't forget to clarify best practices with regard to rest breaks going forward.

Deadline to Post NLRB Poster Stalled Again

Nancy Yaffe — Tue, 17 Apr 2012 13:07:13 -0800

No need to post that NLRB poster by April 30th. Here's an update from Chip Zuver:

As most of you are already aware, the NLRB issued a rule requiring employers covered by the National Labor Relations Act (the Act) to post a notice advising employees of their rights under the Act, irrespective whether the employer was union or non-union. The notice posting rule was scheduled to go into effect on April 30, 2012.

The National Association of Manufacturers and the South Carolina Chamber of Commerce filed suit claiming the rule exceeded the NLRB's authority. In March 2012, a federal district judge in D.C. ruled that the NLRB had the authority to require employers to post a notice advising employees of their organizational rights. The National Association of Manufacturers then sought to enjoin the implementation of the rule pending its appeal of the district court judge's decision. The judge rejected the request. However, last Friday, a federal district judge in South Carolina concluded that the NLRB exceeded its authority in requiring employers to post the notice. This created a split in the federal courts. Then this morning, the U.S. Court of Appeals for the D.C. stepped in and enjoined enforcement of the notice pending the D.C. Circuit's resolution of the matter on the merits. That means employers do not need to post the notice at this time.

Chances are that the court will not reach a decision on this matter before December 2012. Therefore, employers have at least a temporary reprieve before the notice must be posted.

Into the Weeds with Brinker Part 2: What Does Provide vs. Ensure Really Mean?

Nancy Yaffe — Mon, 16 Apr 2012 11:02:13 -0800

We have all read the alerts and blog postings indicating that employers are only required to “provide” meal breaks, but need not “ensure” that they are taken. What does that really mean for employers? Do employers still need to pay the meal premium for missed breaks, late breaks, and breaks less than 30 minutes?

California law requires employers to pay one hour of pay at the employee’s regular rate of pay for any missed meal. This is called “premium pay” (formerly known as “penalty pay”). Before the Brinker ruling, premium pay was arguably required in other situations too, such as any meal taken after the end of the 5th hour, any meal taken after a 5-hour period of work under the “rolling 5-hour” theory, and for any meal that was not a full 30 uninterrupted minutes.

Employers that were automatically paying the meal premium for missed breaks, breaks taken at the wrong time, and/or breaks that were not a full 30 minutes may not need to keep doing so. Whether premium pay is owed will turn on the question of why the employee missed the break, took the late break or took too short of a break. If it was not based on work requirements, then the meal premium need not be paid. Why? Because the standard now is that employers need only provide the break, but not ensure it is taken.

For example, if an employee is scheduled for a break at noon, but decides to take a late meal break to coincide with a doctor’s appointment at 3:00 pm, then no meal premium is owed because the employee was provided a break by the end of the 5th hour, but decided not to for non-work reasons.

Some employers have set up automated systems that trigger a meal premium when the first 5 hours are worked without a meal break. Those employers may want to change those systems and save associated costs.

A note of caution. Before an employer stops paying meal premium for missed, late or too short meal breaks, it should have a policy that authorizes and permits a meal break by the end of the 5th hour of a shift, and sets out a procedure to follow if work duties prevent employees from taking a break. Employees should sign off on the policy. Even better, employers may now want to schedule breaks to make sure they have proof that breaks were “provided.”

Here’s how it could work. A legal secretary is prevented from taking a meal break by the end of her 5th hour of work due to a time sensitive court filing. She tells the Office Manager that she can’t take a break until the court filing goes out at 3 pm. The Office Manager approves the late meal and processes the meal premium. Another example: A nurse is unable to take a meal break due to a patient emergency. She fills out a standard “Missed Meal” form, her supervisor approves it, and submits it to payroll to pay the meal premium.

Employers should keep in mind that such a case-by-case approach may not be feasible for employers who do not have processes in place to document when a late meal is due to work versus personal purposes. In such cases, keeping systems automated may still be the best practice even though it may result in paying the meal premium when it isn’t necessarily required.

Stay tuned for more practical advice based on Brinker.

DLSE Issues New Form For Wage Theft Protection Act Notice

Jeff Polsky — Mon, 16 Apr 2012 08:31:03 -0800

California employment law is tricky stuff. You have to pay attention or you'll miss something.

Last Thursday, when everyone was paying attention to the Brinker decision, the Division of Labor Standards Enforcement issued a new version of the Wage Theft Protection Act form to be given to all non-exempt, non-union employees at the time of hire. They also expanded the FAQs on the requirement for the second time in three months.

From the beginning, one of my gripes about this form was the question that read:

Employment agreement is (check box): □ Oral □ Written

As discussed in more detail here, in real life, some terms of employment are oral, others are written, and some are implied. Well that question is out. It's been replaced with the (in my opinion) less objectionable:

Does a written agreement exist providing the rate(s) of pay? (check box): □ Yes □ No
If yes, are all rate(s) of pay and bases thereof contained in that written agreement? □ Yes □ No

There's also a much more concise summary of the employer's ongoing duties at the end (one paragraph instead of four).

You can access the new form here. At present, it's only available in English. But the DLSE says other language versions will be posted soon. Employees who've already received the old notice, don't need to be given the new one (unless there's been a substantive change in the information previously provided).

Your ever-vigilant bloggers will continue to keep an eye on developments.

Into the Weeds on the Timing of Meal Breaks Under Brinker

Nancy Yaffe — Fri, 13 Apr 2012 16:25:22 -0800

Now that we all have read about the Brinker ruling, and breathed our collective sigh of relief, it is time to get into the weeds on some very practical issues impacting California employers.

One such issue is the timing of the meal break. The ruling clearly states that the first meal break must start “no later than the end of an employee’s 5th hour of work.” Sounds pretty clear, but is it? Perhaps not if you are mathematically challenged like me.

If a shift starts at 9:00 am, the end of the 5th hour is 1:59 pm. Why? Because you have to count 9:00 am as the first hour. That means that 10 am is the 2nd hour, 11 am is the 3rd hour, noon is the 4th hour, 1 pm is the 5th hour, and 2 pm is the 6th hour. So the employee’s break must commence no later 2 pm, the start of the employee’s 6th hour.

Under Brinker, “early lunching” is okay. So while the meal break must commence by the end of the 5th hour, it no longer must be taken between the 3rd and 5th hour. That concept was based on the “rolling 5-hour rule” now rejected by the Court. Under the rolling 5-hour rule no work period could be more than 5 hours without a meal break, and the timing of the first meal break dictated the timing of the second meal break. Arising from this rule came the 3rd and 5th hour concept, because a meal break between the 3rd and the 5th hour of an 8 hour shift meant that the employee never worked for more than 5 hours without a meal break. So, while the 3rd to 5th hour rule still may be a helpful standard, it is not required.

For example, a restaurant with servers working 4 pm to midnight can provide them with an early meal break at 5 pm before the start of service, instead of between 7 and 9 pm, right at the busiest time.

More to come on other practical aspects of Brinker. Stay tuned.

Long-Awaited Brinker Decision A Relief For Employers

Jeff Polsky — Thu, 12 Apr 2012 14:10:35 -0800

After more than three years and two rounds of briefing, the California Supreme Court has issued its long-awaited decision in Brinker Restaurant Corp. v. Superior Court. Overall, the decision is a significant win for employers. Here are the key points in the unanimous decision that the Court issued today:

Employers do not have to police their employees to make sure that they’re taking their meal breaks. They're required to (1) relieve employees of all duty; (2) relinquish control over their activities; and (3) permit them a reasonable opportunity to take an uninterrupted 30-minute break.
Employers still need a meal break policy and still need to record the time that employees begin and end their breaks. But if employers make the breaks available (as specified in the prior paragraph) and an employee cuts his or her break short (or doesn’t take one), the employer does not owe a penalty. The employer would, however, need to pay the employee for the time worked.
As before, employers have to mean it when they say they’re making the meal breaks available. They can’t pressure employees or provide incentives for them to skip breaks.
There is no rolling 5-hour rule. In other words, there’s no penalty if an employee works 5 consecutive hours without a meal period (as the plaintiffs in Brinker argued). This is a huge relief because, when the Court asked for post-hearing briefing on this issue, it raised the specter that almost every employer in the state had a policy that was wrong.
So the rule for meal periods remains:

o       Employees who work no more than 5 hours get no meal period.

o       Employees who work over 5 but no more than 6 hours get a meal period, unless they’ve waived it in writing. If they don’t waive it, the meal period must begin by the end of the 5^th hour.

o       Employees who work more than 6 but no more than 10 hours get a meal period regardless of whether there’s a waiver. The meal period must begin by the end of the 5^th hour.

o       Employees who work more than 10 hours get a 2^nd meal period. If they work no more than 12 hours they can waive it. If they don’t waive it, the meal period must begin by the end of the 10^th hour.
The rules for rest breaks remain the same.

o       Employees who work no more than 3.5 hours get no rest period.

o       Employees who work 3.5 to 6 hours get 1 rest period.

o       Employees who work more than 6 and up to 10 hours get 2 rest periods.

o       Employees who work more than 10 and up to 14 hours get 3 rest periods.

There will still be wage and hour class actions and, in some ways, the Court lowered the bar on the procedural requirements for getting a class certified. But overall, employers can breathe a collective sigh of relief.

Many thanks to Nancy Yaffe for helping to put this information together. If you'd like to read the full opinion, you can do so here (pdf).

A Useful Questionnaire For Distinguishing Employees from Independent Contractors

Jeff Polsky — Wed, 04 Apr 2012 10:26:36 -0800

We've written quite a bit about the new penalties for mischaracterizing employees as independent contractors. But we haven't talked as much about how to draw the distinction. Partly that's because different government agencies use different approaches. And some of it's due to the fact that these can be very fact-specific determinations and it's hard to discuss them in generalities.

In California, the Employment Development Department administers unemployment, state disability, and workers' comp claims and collects employment-related taxes. They've put together this questionnaire (pdf) that includes three "significant questions," three additional questions, seven questions that address "additional factors," and a discussion of how to interpret the answers. While it's not a perfect tool, it at least provides some insight on how one agency approaches the issue.

If you want to see other agencies' approaches, here are the links for the Division of Labor Standards Enforcement (which enforces wage and hour laws) and the IRS (pdf) (which California's Franchise Tax Board follows).

How Long to Keep Employment Records

Jeff Polsky — Tue, 03 Apr 2012 10:43:23 -0800

As I've written before, the Lilly Ledbetter Fair Pay Act requires employers to revisit their document retention policies. Julie Brook at CEB Blog has put together an excellent list of how long to keep various types of records. Unfortunately (unless you're in the document storage business), some records need to be kept forever.

Are Armendariz and Concepcion on a collision course?

Jeff Polsky — Tue, 03 Apr 2012 09:22:13 -0800

In 2000, the California Supreme Court used its decision in Armendariz v. Foundation Health Psychcare Services to articulate minimum requirements for employment arbitration agreements. Last year, in AT&T Mobility LLC v. Concepcion, the U.S. Supreme Court reiterated that the Federal Arbitration Act preempts state laws that “stand[] as an obstacle to the accomplishment and execution of the full purpose and objectives of [the FAA].”

From my admittedly biased perspective, a number of the Armendariz requirements run afoul of Concepcion. Where, for example, did the requirement of “a modicum of bilaterality” come from? And if federal law preempts limitations on arbitration, how can a state court dictate what level of discovery is required and how much detail must be included in a written decision?

More recently, one California appellate case struck down an arbitration agreement for not providing the employee with a copy of the American Arbitration Association rules. The defendant in that case – Mayers v. Volt Management – has petitioned for review. Last week, the California Supreme Court granted review in Wisdom v. AccentCare, which found an arbitration agreement substantively unconscionable because the acknowledgment said "I agree . . . " instead of "we agree . . . " and that evidenced a lack of mutuality.

There is no doubt that there are judges at all levels of our state court system who are hostile to the idea of mandatory workplace arbitration. The frequency with which they announce new requirements makes it impossible for employers to keep up. If the California Supreme Court doesn’t rein them in, expect the U.S. Supreme Court to intervene. Until then, add this to the areas of California employment law that are rife with uncertainty.

The Meek Shall Inherit Their Own Protected Category (Part 2)

Jeff Polsky — Fri, 30 Mar 2012 09:59:12 -0800

Michael Fox has been writing his blog -- Jottings By An Employer's Lawyer -- for over a decade. Throughout that time, he's been vigilant in opposing "anti-bullying" legislation for the workplace. It's not that he likes bullies (although he did threaten to take my lunch money if I didn't plug his blog). It's that he realizes what a morass it would be if every employee could describe an unpleasant reaction with a co-worker or supervisor as "bullying." Read his latest observations on this topic here.