California Labor and Employment Defense Blog

What Does it Mean to Be Terminated "Because Of" A Protected Characteristic -- Harris v. City of Santa Monica

Brian Van Vleck — Fri, 08 Feb 2013 09:18:59 -0800

Under California law it is illegal to terminate an employee "because of" his race, gender, religion, etc. In Harris v. City of Santa Monica, the California Supreme Court delved into the question of what that means where an employer had "mixed motives" for a decision.

In a mixed-motives case . . . there is no single “true” reason for the employer's action. What is the trier of fact to do when it finds that a mix of discriminatory and legitimate reasons motivated the employer's decision? That is the question we face in this case.

Such a "mixed motive" scenario scenario might arise, for example, where a decisionmaker clearly considered an employee's race (or other protected status) in deciding to terminate. But where there is also clear evidence (such as poor performance or misconduct) that the employer would inevitably have made the same decision even if race had not been considered.

[W]hat legal consequences flow from an employer's proof that it would have made the same employment decision in the absence of any discrimination. To be clear, when we refer to a same-decision showing, we mean proof that the employer, in the absence of any discrimination, would have made the same decision at the time it made its actual decision.

This question led the Court down the rabbit hole of what might be termed the metaphysics of causation. For example, the Court considered at length whether an employee who would have been terminated anyway has still been discriminated against if his protected status also played a "substantial" or "motivating" factor in the employer's mind. In the end, the Court emerged with the following standard:

We hold that under the FEHA, when a jury finds that unlawful discrimination was a substantial factor motivating a termination of employment, and when the employer proves it would have made the same decision absent such discrimination, a court may not award damages, backpay, or an order of reinstatement.

Harris v. City of Santa Monica is important insofar as it clarifies the language that courts should include in their instruction to the jury. However, I am skeptical that such granular semantic distinctions will make any difference to the deliberations of real jurors. Jurors don't need an instruction to know what "because of" means. They will continue to evaluate the credibility of witnesses and the totality of evidence and will arrive at their own gut level determination of whether the plaintiff was discriminated against "because of" his protected status.

Internal Sexual Harassment Complaints are Protected by Anti-SLAPP statute -- Aber v. Comstock

Brian Van Vleck — Mon, 04 Feb 2013 21:55:08 -0800

California's so-called anti-SLAPP statute, CCP section 425.16 et seq., is a powerful weapon for quickly disposing of lawsuit based on allegations that arise out of free speech or "public participation." To proceed with such a lawsuit the plaintiff must present admissible evidence establishing that he is "likely to prevail." Moreover, he must normally make this heightened showing at the start of the case without the benefit of any discovery. Most lawsuits which are covered by the anti-SLAPP statute fail to survive this rigorous test and are dismissed, which also triggers an obligation to pay the other side's attorney fees.

In Aber v. Comstock the Califonia Court of Appeal has significantly expanded the reach of the anti-SLAPP statute by extending its protection to purely internal complaints of sexual harassment. As the court explained:

Aber argued that her statements to Bush, the Kluwer HR manager, are protected under section 425.16, subdivision (e)(1) and (e)(2), as statements prior to litigation or other official proceedings. Her theory was that the statements were necessary to address a commonly used affirmative defense by an employer in a sexual harassment case—a defense, not incidentally, that Kluwer has in fact asserted against Aber here. We agree.

As a result, the accused harasser's lawsuit for defamation based on these internal allegations was dismissed under the anti-SLAPP procedure. Aber thus serves as a cautionary tale to any employer or co-employee who might otherwise be tempted to file a cross-complaint against a sexual harassment accuser -- unless your counterclaim is exceptionally strong on its face it will likely backfire and result in liability for attorney fees under the anti-SLAPP statute.

Class Certification is Appropriate Where Employer has No Break Policy -- Bradley v. Networkers International, LLC

Brian Van Vleck — Thu, 27 Dec 2012 10:46:16 -0800

The Fourth District Court of Appeal decision in Bradley v. Networkers International, LLC is significant because it directly addresses how the landmark Brinker decision should effect class certification of meal and rest break claims. (Bradley is also significant concerning misclassification of independent contractors but that warrants a whole separate post).

The employer in Bradley had never promulgated any policy specifically authorizing meal and rest breaks. Originally the trial court had denied certification and the appellate court had upheld the denial on the ground that it would be necessary to individually determine which workers had the opportunity to take breaks and whether they had voluntary chosen to waive the breaks. The Supreme Court issued a "grant and hold" and then remanded for reconsideration in light of its Brinker decision.

The Bradley Court explained upon remand that Brinker had changed everything. Under the Supreme Court's new rules the same record now required class certification of the meal and rest period claims. First, because Brinker clarified that employers have a legal obligation to affirmatively provide breaks, not having a policy is itself a common class-wide policy that warrants certification.

Networkers argues Brinker is not controlling because in Brinker the plaintiffs challenged an express meal and break policy whereas here plaintiffs are challenging the fact that the employer's lack of a policy violated the law. This is not a material distinction on the record before us. Under Brinker and under the facts here, the employer engaged in uniform companywide conduct that allegedly violated state law.

Secondly, the lack of an affirmative meal and rest break policy effectively takes the issue of "waiver" off the table, removing it as an obstacle to certification as well.

[A]s Brinker made clear, an employer is obligated to provide the rest and meal breaks, and if an employer does not do so, the fact that an employee did not take the break cannot reasonably be considered a waiver. “No issue of waiver ever arises for a rest break that was required by law but never authorized; if a break is not authorized, an employee has no opportunity to decline to take it.”

Prior to Brinker many employers got by with arguing that they did not prohibit breaks and that it was therefore up to their workers to take meal and rest breaks and that they could not prove that they had not voluntarily chosen to take breaks. Bradley is crystal clear in holding that this is no longer an option.

Under Brinker, the failure to implement and enforce an affirmative break policy (including records of whether the breaks were actually taken), is a substantive violation of the employer's legal duty under the Labor Code. Under Bradley this substantive violation will also be certified as a class action. In short, an employer without an affirmative break policy is now officially a sitting duck.

Bad "Business Judgment" is not Discrimination -- Veronese v. Lucasfilm

Brian Van Vleck — Wed, 26 Dec 2012 10:31:56 -0800

The challenge in discrimination cases is always proving the subjective intent of the decisionmaker. In other words, was the decision motivated by some legitimate business reason, or did the company base its decision on the plaintiff's _______? [fill in the legally protected category]

As there is no way to peer into the mind of a decisionmaker the fact-finder must resort to making inferences from the surrounding circumstances. And this raises a host of thorny issues regarding what constitutes legitimate evidence to prove up this inference of discrimination, and how such evidence may be considered.

For example, in Veronese v. Lucasfilm a jury found that Lucasfilm had not hired the plaintiff due to her pregnancy. The reviewing court, however, reversed the verdict and remanded the case for retrial because the judge had failed to give the jury the following special instruction:

You may not find that Lucasfilm discriminated or retaliated against Julie Gilman Veronese based upon a belief that Lucasfilm made a wrong or unfair decision. Likewise, you cannot find liability for discrimination or retaliation if you find that Lucasfilm made an error in business judgment. Instead, Lucasfilm can only be liable to Julie Gilman Veronese if the decisions made were motivated by discrimination or retaliation related to her being pregnant.

The purpose of the instruction is merely to advise the jury that it is not illegal, by itself, to treat someone unfairly or to do something that seems illogical. Going forward some version of this instruction, which the parties and the Court referred to as a "business judgment instruction," will effectively be mandatory in all disparate treatment discrimination cases.

Companies should not rely too heavily on this "business judgment" rule, however. Like many legal instructions it may not have much impact on the deliberations of real juries. Jurors are looking for logical reasons to explain what happened. It is not particularly persuasive for an employer to argue that "our reason for firing the plaintiff may seem illogical and unfair but he still can't prove the real reason was discrimination." Jurors are usually more than willing to chose an illegal reason over an illogical reason as the most likely version of what really happened.

Employees Who Wear "Two Hats" Can Have Two Separate Employment Contracts -- Faigin v. Signature Group Holdings

Brian Van Vleck — Thu, 06 Dec 2012 13:15:57 -0800

For various legal and financial reasons large corporations frequently do business through an array of interrelated parent, subsidiary and sibling entities. Executives and other employees are frequently shifted back and forth or end up working for two different entities at the same tme. (I have been involved in several cases in which highly placed executives literally did not know which corporate entity employed them.)

The holding in Faigin v. Signature Group Holdings, Inc. illustrates that one consequence of this scenario is that an employee who works for two different entities may have two different contracts. The employee may have an integrated, written employment contract with a parent company that is terminable at-will. But unless the contract is specifically worded to govern all employment with related entities there is no reason that a "dual employee" cannot also have a separate implied agreement with a subsidiary company that requires a higher standard for termination. As the Faigin Court explains:

A subsidiary employing an individual who has a written employment contract with the parent conceivably could agree to continue to employ the individual unless there is good cause to terminate the employment even if the parent, for whatever reason, terminates the individual's employment with the parent.

Thus, the Court upheld a $1.37 million wrongful termination award against a subsidiary company despite the fact that the executive's written contract with the parent company stated that his employment was terminable at-will.

Employers who wish to avoid this problem might draft their an at-will termination provision to specifically govern any potential employment relationships with related companies. But having one corporation control the labor policies of another in this manner naturally tends to erode any claim that they are entirely separate entities and thus open the possibility of alter ego claims and the like.

Is Your Company A "Large Employer" Subject to "Obamacare" -- Understanding the 50 full-time Equivalent Threshold

Brian Van Vleck — Sat, 24 Nov 2012 23:31:11 -0800

It has been well-publicized that, beginning in January 2013, employers with more than 50 full-time employees will be required to comply with "Obamacare" by either providing insurance benefits for their employees or paying a penalty. There has been much speculation for example that the American economy will begin to resemble France, in which an inordinate number of employers stop hiring at exactly 49 employees to avoid the regulations that kick in at 50 employees.

But if any employer wishes to follow this "49'er" strategy it needs to understand that Obamacare's definition of a "large employer" subject to coverage is actually based on a special definition of "full-time equivalent" employees. In essence, the new law aggregates all part-time hours worked and treats 120 monthly part-time hours worked by any number of individuals as equivalent to one full-time employee. For example, as explained by a report of the Congressional Research Service

"Full-time employees” are those working 30 or more hours per week. The number of full-time employees excludes those full-time seasonal employees who work for less than 120 days during the year. [However] The hours worked by part-time employees (i.e., those working less than 30 hours per week) are included in the calculation of a large employer, on a monthly basis, by taking their total number of monthly hours worked divided by 120.

Employers may also be tempted to avoid application of the statute by obtaining services from independent contractors rather than employees. In California, however, employer must be very careful to avoid the penalties and liabilities that can result from misclassifying employees as independent contractors.

At-Will Termination May Be Fatal to Independent Contractor Status -- Monarrez v. Automobile Club of Southern California

Brian Van Vleck — Wed, 21 Nov 2012 22:07:26 -0800

In Monarrez v. Automobile Club of Southern California a motorist was struck by a car while his disabled vehicle was being hooked up by a tow truck operator who had been dispatched by the defendant. This raised the question of whether the tow truck operator was an employee for whom the dispatching company was legally responsible, or an independent contractor.

In conducting this analysis the Court hit all the usual points. Noting for example that "The label placed by the parties on their relationship is not dispositive" and that the essence of the test is "whether the principal has the right to control the manner and means by which the worker accomplishes the work."

But most interesting was the degree to which the court stressed the company's right to terminate the relationship at-will as a nearly outcome-determinative indication of "control."

The right to terminate employment at any time strongly tends to show the subserviency of the employee, since it is incompatible with the full control of the work usually enjoyed by an independent contractor. Perhaps no single circumstance is more conclusive to show the relationship of an employee than the right of the employer to end the service whenever he sees fit to do so.

Other courts have tended to treat the right to terminate at-will as a mere "secondary" factor apart from the central control issue. But if the trend is to treat an at-will termination provision as dispositive (or nearly so) it will go a long way toward creating a bright-line rule which can be evaluated on the face of the parties' contract.

Monarrez involved tort liability to an injured third party. But the greatest exposure for many employers will arise from Labor Code section 226.8 which imposes a penalty of up to $25,000 for each misclassified contractor (not to mention the separate obligations to reimburse the expenses and pay overtime wages to misclassified employees).

Time "Rounding" and "Grace Period" Policies -- See's Candy Shops v. Superior Court

Brian Van Vleck — Tue, 20 Nov 2012 12:00:52 -0800

In See's Candy Shops v. Superior Court, the Court addressed two separate issues concerning the recording and calculation of hours worked by non-exempt employees: (a) to what extent may employers "round" worker time entries; and (b) to what extent may employers base hours of pay on "scheduled" work times that differ from the actual time punch records.

Rounding of Time Entries.

It is a fairly common practice for employers -- especially those using commercial time tracking software such as Kronos -- to calculate work time based on "rounded" time entries. For example, if an employee clocks in for work at 8:53 a.m. the policy may "round" this entry to the nearest 15-minute interval and therefore pay the worker only for time worked after 9:00 a.m.

See's Candy reached the common sense conclusion that rounding is fine as long as the incidents of "rounding up" and "rounding down" roughly cancel each other out, thereby resulting in a generally accurate measure of hours worked.

Assuming a rounding-over-time policy is neutral, both facially and as applied, the practice is proper under California law because its net effect is to permit employers to efficiently calculate hours worked without imposing any burden on employees.

Employers cannot assume, however, that a policy is always permissible merely because it rounds up as well as down. The key phrase here is that the policy must also be fair to the employee "as applied."

For example, consider an employer that requires its workers to be on the job by no later than 9:00 a.m. but also prohibits unauthorized overtime or clocking in early. This combination of policies would basically require (or at least strongly encourage) employees to always clock in between 8:53 a.m. and 9:00 a.m. but never later. Over time, and over the course of an entire labor force, this systemic rounding bias could result in a substantial amount of unpaid work time.

Unpaid "Grace Period" Time.

A related practice evaluated in See's Candy is a a so-called "grace period" policy. Under this policy "employees whose schedules have been programmed into the Kronos system may voluntarily punch in up to 10 minutes before their scheduled start time and 10 minutes after their scheduled end time." However, "Because See's Candy assumes the employees are not working during the 10–minute grace period, if an employee punches into the system during the grace period, the employee is paid based on his or her scheduled start/stop time, rather than the punch time."

As the Court explained the "grace period" policy presented a different issue from rounding. Under the rounding policy the employees were admitedly working and the issue was whether the policy resulted in an accurate record of their work hours. Under the "grace period" policy the employer "assumed" that no work was being performed and the issue was whether that assumption was accurate.

If the evidence later shows that the employees were working or “under the control” of See's Candy during the grace period and they were not paid for this time, they may be entitled to recover those amounts in the litigation and any applicable penalties.

Conclusion

Internal policies like "rounding" or "grace periods" do not create special defenses to wage claims. Rather, like any other employer policy, they are valid or invalid only to the extent they comply with the standard legal obligation to accurately record and pay for all hours actually worked. The test is therefore how the polices operate in practice in combination with the Company's actual work requirements and other policies.

Supperior Court Issues a $90 Million Cautionary Tale Against Playing Too Close to "The Cliff" With Meal and Rest Break Policies -- Augustus v. American Commercial Security

Brian Van Vleck — Thu, 19 Jul 2012 08:05:24 -0800

At this point employers should not need any further "wake up" call to get their meal and rest policies in compliance with California law. But if anyone is still unconvinced of the potential exposure the granting of a summary judgment in the amount of $89,741,426 in Augustus v. American Commercial Security should be persuasive.

As the ruling in Brinker made clear, the essence of a compliant meal or rest break is that the employer has affirmatively relieved the employee of all work duties within the prescribed time windows and for prescribed durations. Once the employer has discharged this obligation it has "provided" a break and it doesn't have the further obligation to force the employee to actually go off duty or stay off duty for the entire break period.

But woe unto the employer whose policies fall short of actually "providing" a compliant break in the first place. In that case the employer forfeits any argument that any missed break was the result of the employee voluntary decision to waive it. (Since an employee can't waive something he never received.)

That is exactly what happened in the Augustus case. The defendant was a security guard company which required its guard to remain "on-call" during breaks. Judge Wiley's order granting summary judgment explains how this one policy error ended up costing the company nearly $90 million:

In general, ACSS balks at the notion that the employer must relieve workers of all duties for the rest break to be legally valid. Put simply, if you are on call, you are not on break. . . . [¶] . . .Substantively, California's labor law gave advance notice of the penalties for depriving workers of rest breaks. Those penalties are straightforward and chastening. When the view is clear and the exposure chastening , the rational hiker steers clear of the cliff. ACSS broke the law and must pay according to that law.

Court Clarifies Scope of Permissible Commission Chargebacks -- DeLeon v. Verizon Wireless, LLC

Brian Van Vleck — Thu, 12 Jul 2012 14:48:20 -0800

In DeLeon v. Verizon Wireless, LLC the California Court of Appeal upheld the right of an employer to reclaim or "charge back" commissions which are provisionally advanced for sales that are later canceled.

California case law has been clear for some time in holding that the claw back of an "advance" that was never actually earned is not an illegal deduction from wages. The usual scenario is an advance on a seemingly valid sale that is never finally consummated because the customer either cancels the order or fails to pay.

DeLeon represents a slight variation on these facts only because it allowed commission advances to be reversed up to a year after the initial sale had been made where a customer canceled his cell phone service. But in the context of an ongoing service plan (which may well have included loss leader incentives for the initial sign up), this is just a natural extension of the general rule that earning a commission may be legitimately conditioned on completing a final sale.

Nevertheless, the discussion in DeLeon, especially when considered in conjunction with last month's decision in Sciborski v. Pacific Bell, begins to shed light on how courts will distinguish a legitimate contractual condition on earning a commission from an unlawful "deduction" or "withholding" of wages.

Under the principles discussed in these two opinions it appears that courts will generally allow employers to deny a commission payment if an employee fails to fulfill a term that:

Is clearly expressed , preferably in writing, before the employee performs the work; and
Is related to the sale itself.

By contrast, courts will tend to find a violation of California law where an employer denies a commission payment for a reason that:

Is unrelated to the successful completion of the particular sale itself;
Is outside the employee's ability to control or influence;
Is unpredictable or arbitrary; or
Is shifting a cost of doing business which the employer should pay to the employee.

It may be a long time before the case law is crystal clear in this area but the main outline of the rules is starting to come into focus.

Charging Union Dues for Politcs may Violate Free Speech Rights of Non-Members -- Knox v. SEIU

Brian Van Vleck — Mon, 25 Jun 2012 14:28:38 -0800

In Knox v. Service Employees Int' Union, Local 1000, the SEIU imposed a special assessment on all employees which it represented -- union members and non-members alike -- in order to fund a special campaign to defeat Propositions 75 and 76, which were part of Arnold Schwarzenegger's 2005 attempt at public finance reform.

The non-members brought a class action alleging that this violated prior Supreme Court precedent holding that a public sector union cannot charge non-member employees for the cost of its political activities without first giving them prior written notice and an opportunity to opt out of the payments (i.e., so-called "Hudson Notice"). The Court agreed.

The result itself was pretty obvious. But what was really interesting about the decision is the extent to which the Supreme Court laid the groundwork for a future decision that might strip unions of the right to make coerced political contributions from non-members. For example, the Court first explained that imposing mandatory charges for political purposes inevitably raises serious First Amendment concerns:

When a State establishes an “agency shop” that exacts compulsory union fees as a condition of public employment, the dissenting employee is forced to support financially an organization with whose principles and demands he may disagree. Because a public-sector union takes many positions during collective bargaining that have powerful political and civic consequences the compulsory fees constitute a form of compelled speech and association that imposes a “significant impingement on First Amendment rights.”

In contrast with this impingement on employee constitutional free speech rights, the Court noted that "“unions have no constitutional entitlement to the fees of nonmember-employees” and their “collection of fees from nonmembers is authorized by an act of legislative grace . . . that we have termed “unusual” and “extraordinary.” Interestingly the Court then cast doubt on the continuing validity of the precedents allowing such political deductions under certain circumstances as an "anomaly" that may violate the First Amendment.

By authorizing a union to collect fees from nonmembers and permitting the use of an opt-out system for the collection of fees levied to cover nonchargeable expenses, our prior decisions approach, if they do not cross, the limit of what the First Amendment can tolerate.

(emphasis added).

Thus, while the SEIU's political charges were easily struck down because they were not preceded by notice and a right to opt-out, the Court clearly implied that even these procedural protections may not be enough to justify such deductions in the future.

Court Clarifies When Commissions Are "Earned" or "Vested" -- Sciborski v. Pacific Bell Directory

Brian Van Vleck — Tue, 12 Jun 2012 12:15:35 -0800

Most commission plans contain some sort of caveat to the effect that the employer reserves the right to change or modify the commission calculation at any time before the commission is earned or paid out. This can be problematic in California, as commissions are a form of "wages" which are fully protected by the Labor Code. And the Labor Code generally prohibits the reduction of any wage once it has become earned and vested.

Determing when a commission is vested (and thus no longer subject to reduction) is a tricky business that involves an interplay between private contract terms and public wage protection statutes. The recent opinion of the Fourth District Court of Appeals in Sciborski v. Pac. Bell Directory contains some very useful guidance, however.

Sciborski had been paid a commission on an account that the Company claimed she had been assigned only due to a "clerical error." The Company claimed that proper assignment of the account was a threshold condition that had not been satisfied and that no commission had been properly earned. The Court disagreed. It found that the parties' commission agreement did not expressly address this scenario. More importantly, the Court also found that any implied contract term that would deny a commission under these circumstances would be unenforceable under California law in any event.

[A]n employer's right to define an “earned” commission in the employment contract is not unlimited. Generally, the essence of an advance is that at the time of payment the employer cannot determine whether the commission will eventually be earned because a condition to the employee's right to the commission has yet to occur or its occurrence as yet is otherwise unascertainable. Thus, for example, an employer may expressly condition an earned sales commission on the sale becoming final (e.g., no returns within a specified time or final payment received) or on the employee completing work in providing follow-up services to the customer. But an employer may not require an employee to agree to a wage deduction in the guise of recouping an advance based on conditions that are unrelated to the sale and/or that merely reflect the employer's attempt to shift the cost of doing business to an employee. Where a deduction is unpredictable, and is taken without regard to whether the losses were due to factors beyond the employee's control, an employer cannot avoid a finding that its sales commission policy is unlawful simply by asserting that the deduction is just a step in its calculation of commission income.

(Internal citations and punctuation omitted)

The message of Sciborski is that one-sided conditions on an employee's right to finally "earn" a commission are likely unenforceable. If the employee has done all of the work necessary to make the sale and the revenue is received by the employer, then a court may reject attempts to impose additional conditions -- especially where these conditions are "unrelated to the sale," "unpredictable," or "beyond the employee's control."

Employers Shalt Not "Encourage" Employees to Work During Meal Breaks -- Brinker v. Superior Court

Brian Van Vleck — Sat, 21 Apr 2012 18:01:04 -0800

The California Supreme Court's long-awaited decision in Brinker v. Superior Court finally addressed the question of what an employer must do to effectively "provide" a meal break and thereby avoid the one-hour of pay due as premium or penalty pay.

In Brinker the plaintiffs advocated for a rule that merely allowing an employee to work during his meal period must trigger a penalty. The defense bar advocated for a rule that no penalty is owed unless the employer has affirmatively "forced" the employee to work. The Court however went for a middle ground. Under the new rule an employer must take certain affirmative steps (and refrain from others) in order to meet its legal obligation to provide a compliant meal break.

What An Employer Must Do to Avoid A Penalty.

In particular, the employer must have a policy and affirmatively create the actual conditions that will "relieve the employee of all duty" and allow him to engage in any personal business or leave the premises during for the entire 30-minute break period. If an employer takes these afirmative steps in good faith and the employee nevertheless performs work during his break no penalty is owed.

What An Employer Cannot Do Without Paying a Penalty.

Many employers are clearly over-reading Brinker as simply allowing them to propound a policy and then having their workers "waive" their breaks. In reality, Brinker is replete with warnings that this "waiver" defense will be difficult to establish and will be forfeited if the company engages in any practices that have the intent or effect of "undermining" break rights. These forbidden practices include:

"discouraging" or "impeding" workers from taking breaks.
“pressuring employees to perform their duties in ways that omit breaks.”
“creating incentives to forego” breaks.
“otherwise encouraging the skipping of legally protected breaks.”

Courts and parties will have to grapple with the meaning of these terms in individual cases and different industries. But it seems to me that meal break litigation will start to resemble nothing so much as Title VII disparate impact cases -- i.e., the focus of litigation will be on whether facially neutral business practices may have crossed the line into having an impermissible (and perhaps unintended) effect on employee rights.

Brinker v. Superior Court Decision To Be Published Tomorrow

Anthony Zaller — Wed, 11 Apr 2012 11:44:51 -0800

The California Supreme Court announced today that the opinion in Brinker v. Superior Court (Hohnbaum) will be published tomorrow at 10:00 a.m. The opinion will address many issues surrounding meal and rest break requirements under the California Labor Code, such as whether employers need to ensure or simply provide meal breaks, and when breaks should be taken during a shift.

For more information on the decision we will be holding a webinar next Wednesday at 10:00 a.m. PST. Registration information is here.

Keith Oberman sues Al Gore's Current TV for Wrongful Termination -- Olbermann Broadcasting Empire v. Current TV, LLC

Brian Van Vleck — Sun, 08 Apr 2012 07:22:36 -0800

Political commentator Keith Olbermann was recently terminated from Current TV, a start-up political network backed by Al Gore. The well-publicized termination involved allegations of not showing up for work and being generally insufferable.

Olbermann has now filed his own wrongful termination complaint in Los Angeles Superior Court, alleging that Current TV breached the contract first due to its incompetent production of his show. The gist of his theory is captured in the opening paragragh:

After being enticed to leave MSNBC and come to Current with promises of editorial control, freedom from corporate influence, and the professional support to produce a high-caliber political commentary show of the type his viewers have come to expect, Keith Olbermann was disheartened to discover Al Gore, Joel Hyatt, and the management of Current are no more than dilettantes portraying industry executives.

Oddly, while the Complaint is supposedly premised on Current TV's breach of contract, it fails to allege any specific facts establishing the formation of a valid contract, the terms of the contract, or how the alleged conduct (if true) would have been a breach of any particular contract term.

Olbermann's attorneys undoubtedly realize this makes the lawsuit legally defective on its face. So the omissions probably stem from one of two reasons, either: (a) the Parties have struck an agreement to keep the contract out of the public record to avoid embarrassment; or (b) the Complaint is not really intended not as a serious legal pleading but more of a lengthy press release (which is immune from defamation liability as a public filing).

Webinar - The Impact of Brinker: Understanding The Supreme Court's Decision On Meal & Rest Breaks

Anthony Zaller — Thu, 05 Apr 2012 22:51:51 -0800

Be among the first in California to understand the complete impact the monumental decision in Brinker v. Superior Court will have on employers. The Court’s decision is expected on April 12, and Anthony Zaller and Daniel Turner will analyze and discuss the impact of the decision. The webinar will explain the decision and what it means for employers and wage and hour class actions, discussing among other items:

Can meal periods be offered to employees, or do they need to be ensured?
When during the shift can meal and rest periods be taken?
What does the Court’s ruling mean for the status of meal and rest break class actions and class certification issues?
What is the impact for cases currently being litigated?

The cost is $150 per connection.

Date: Wednesday, April 18
Time: 10:00 a.m. PST

Click here to register. Existing clients can email us here to have the fee waived.

Unpaid Wages May be Recovered Under PAGA -- Thurman v. Bayshore Transit Management, Inc.

Brian Van Vleck — Thu, 01 Mar 2012 12:34:39 -0800

Since its passage in 2004 the Labor Code Private Attorney General Act of 2004 (aka "PAGA") has been a persistent thorn in the side of the defense bar. The statute created a private right of action to enforce almost every section of the Labor Code and also created new monetary penalties for violations where none had existed before.

What was even worse (fom the Defendant's perspective) is that PAGA authorized a single person to bring a representative action on behalf of an entire group of similarly "aggrieved" employees without having to obtain a formal class certification from the court.

The only mitigating factor was that while PAGA's procedural remedies were sweeping, its substantive remedies were limited to monetary penalties and injunctive relief and did not include the recovery of actual unpaid wages . . . until now.

The Fourth District Court of Appeal decision in Thurman v. Bayshore Transit Management, Inc. has just opened a whole new horizon for PAGA litigation by holding that the statute can serve as a vehicle for wage recovery. (At least as to the wages covered by sections 500-556 of the Code, which includes both meal period premiums and overtime.)

The opinion gets to this result in two steps: First, the Court finds that Labor Code section 558 authorizes the award of a "civil penalty" for violating sections 500-556 that may include "an amount sufficient to recover underpaid wages." Next, the Court finds that this penalty (which would otherwise be enforceable solely by the Labor Commissioner), can be recovered in a private lawsuit under PAGA. And . . . Voilà!

Plaintiffs now have a brand new way to recover unpaid wages on a class-wide basis without class certification.

Seventh Circuit Finds Wal-Mart v. Dukes Does Not Limit Certification of Impact Cases -- McReynolds v. Merrill Lynch

Brian Van Vleck — Tue, 28 Feb 2012 09:33:17 -0800

Judge Posner of the Seventh Circuit produces more than his fair share of insightful analysis in his opinions. A case in point is McReynolds v. Merill Lynch.

The issue was whether Merill Lynch's policy of allowing its advisors to form self-selecting teams resulted in a harmful disparate impact on its black financial advisors. Relying on Wal-Mart v. Dukes, the trial court denied class certification on the ground that the plaintiffs' theory turned on proof of individual acts of discrimination by the individual advisors who allegedly excluded blacks from their internal teams.

Posner's opinion reversed the denial of class cert. In doing so, the Court made some potentially far-reaching points concerning the lessons of Wal-Mart, and the nature of class certification generally.

The crucial point about Wal-Mart is that there was no company-wide policy at issue. Rather, it involved a theory of liability under which individual managers intentionally discriminated against women in violation of the company's policy. Thus,

Wal–Mart holds that if employment discrimination is practiced by the employing company's local managers, exercising discretion granted them by top management (granted them as a matter of necessity, in Wal–Mart's case, because the company has 1.4 million U .S. employees), rather than implementing a uniform policy established by top management to govern the local managers, a class action by more than a million current and former employees is unmanageable; the incidents of discrimination complained of do not present a common issue that could be resolved efficiently in a single proceeding.

By contrast, a different analysis applies where the plaintiffs are challenging the (intentional or unintentional) effect of a class-wide policy. As the Court explained with the following hypothetical example:

Suppose a police department authorizes each police officer to select an officer junior to him to be his partner. And suppose it turns out that male police officers never select female officers as their partners and white officers never select black officers as their partners. There would be no intentional discrimination at the departmental level, but the practice of allowing police officers to choose their partners could be challenged as enabling sexual and racial discrimination—as having in the jargon of discrimination law a “disparate impact” on a protected group—and if a discriminatory effect was proved, then to avoid an adverse judgment the department would have to prove that the policy was essential to the department's mission. [Citations.] That case would not be controlled by Wal–Mart (although there is an undoubted resemblance), in which employment decisions were delegated to local managers; it would be an employment decision by top management.

The main take-away point for class certification is significant because it applies to the entire spectrum of putative class claims, including wage and hour claims: individual intent cannot be determined on a class-wide basis but the impact of a policy can be determined on a class-wide basis, even if its impact is partly due to the intentional acts of individuals.

NLRB Holds Class Arbitration Waivers Are an Unenforceable "Unfair Labor Practice" -- D.R. Horton, 357 NLRB No. 184

Brian Van Vleck — Mon, 13 Feb 2012 09:50:00 -0800

The National Labor Relations Board (NLRB) has now weighed into the fray concerning the enforceability of class arbitration waivers. Its January 3, 2012 decision in D.R. Horton, 357 NLRB No. 184, the Board held that class arbitration waivers are unenforceable under the federal National Labor Relations Act (“NLRA”).

The Right to Bring Class-Wide Claims is a Form of “Protected Concerted Activity” under Section 7 of the NLRB.

As the Board’s decision explains, Section 7 of the NLRA expressly protects the rights of employees to engage in “concerted activity” for purposes of “mutual aid or protection.” Over 80 years of decisional law, the scope of this “mutual aid or protection” clause has been broadly interpreted to include just about any effort by more than one employee to raise complaints or improve working conditions. In addition, “the Board has consistently held that concerted legal action addressing wages, hours or working conditions is protected by Section 7.”

The Board then made the short analytical leap to conclude that class litigation is a form of protected concerted activity, holding that:

When multiple named-employee-plaintiffs initiate the action, their activity is clearly concerted. In addition, the Board has long held that concerted activity includes conduct by a single employee if he or she “seek[s] to initiate or to induce or to prepare for group action.” [Citation] Clearly, an individual who files a class or collective action regarding wages, hours or working conditions, whether in court or before an arbitrator, seeks to initiate or induce group action and is engaged in conduct protected by Section 7.

These forms of collective efforts to redress workplace wrongs or improve workplace conditions are at the core of what Congress intended to protect by adopting the broad language of Section 7. Such conduct is not peripheral but central to the Act's purposes. After all, if the Respondent's employees struck in order to induce the Respondent to comply with the FLSA, that form of concerted activity would clearly have been protected. See NLRB v. Washington Aluminum Co., 370 U.S. 9 (1962). Surely an Act expressly stating that “industrial strife” can be “avoided or substantially minimized if employers, employees, and labor organizations each recognize under law one another's legitimate rights in their relations with one another,” equally protects the concerted pursuit of workplace grievances in court or arbitration. To hold otherwise, the Supreme Court recognized in Eastex [Inc. v. NLRB, 437 U.S. 556 (1978)],“could ‘frustrate the policy of the Act to protect the right of workers to act together to better their working conditions.”’437 U.S. at 567 (quoting Washington Aluminum , 370 U.S. at 14).

By extension requiring employees to forego collective legal action is an “unfair labor practice” under Section 8(a)(1) of the Act, which prohibits any restraint or interference with Section 7 rights.

At this point it is probably worth pointing out that (contrary to a misconception among many employers and employees), NLRB Section 7 rights are not limited to union members or union organizing activities. Rather, these rights extend to virtually all non-managerial employees regardless of union affiliation. Thus, the prohibition on waiving class litigation or arbitration rights under D.R. Horton, applies equally to union and non-union workforces alike.

Section 7 of The NLRB Trumps The Policy Concerns AT&T Mobility v. Concepcion.

In AT&T Mobility v. Concepcion, the U.S. Supreme Court upheld the enforceability of a class action waiver contained in a consumer arbitration agreement. However, as the NLRA was enacted after the FAA and is more specific in its protections it would necessarily trump the FAA and the holding in Concepcion.

As a result, the D.R. Horton decision essentially holds that collective or class claims by employees must be carved out of any general rule upholding waivers in other contexts. As the Board explained:

[T]he holding in this case covers only one type of contract, that between an employer and its covered employees, in contrast to the broad rule adopted by the California Supreme Court at issue in AT&T Mobility. Accordingly, any intrusion on the policies underlying the FAA is similarly limited.

The Board’s interpretation of the NLRA is not, strictly speaking, binding on court or arbitration proceedings. However, it is very likely to be followed by any court or arbitrator tasked with deciding whether a class arbitration agreement is enforceable. Unless overturned on appeal, the D.R. Horton case thus appears to be a nearly fatal blow to employer attempts to enforce arbitration waivers.

California Supreme Court Decision in Brinker Delayed

Brian Van Vleck — Wed, 21 Dec 2011 09:02:58 -0800

The California Supreme Court may generally take as long as it likes to decide a case. The only semi-firm deadline is created by California Rule of Court 8.524(h)(1), providing that a case is deemed "submitted" upon completion of oral argument, and the Constitutional requirement to decide a matter within 90 days of submission (See Cal. Const. Article IV, Sec. 9).

The completion of oral arguments in Brinker v. Superior Court on November 9, 2011 thus stoked expectations that the blockbuster meal break and class action issues raised in the case were finally on the verge of resolution after more than three years on the Supreme Court's docket.

But not so fast . . . the Supreme Court has now ordered further briefing and has vacated the "submitted" status of the case. Under this latest order the case will be deemed "resubmitted" on January 13, 2012. This gives the court until at least April 12, 2012 to issue its decision.

This delay is frustrating for all the courts, attorneys, and parties who are awaiting some clarity on these thorny legal issues.

However, I do find it interesting that the further briefing ordered by the court concerns the extent to which its ultimate decision may apply prospectively only. To me this suggests that: (a) The Court's decision will not merely uphold the (pro-employer) decision below; and (b) The opinion will set forth a new and detailed quasi-legislative standard for determining whether an employer has successfully provided timely and realistic meal and rest breaks to its employees.