California Labor and Employment Defense Blog

Reasonable Limits On Employee's Time To File A Lawsuit Upheld By Appellate Court in Pearson Dental Supplies, Inc. v. Superior Court (Turcios)

azaller@vtzlaw.com (Anthony Zaller) — Wed, 27 Aug 2008 11:18:13 -0800

Plaintiff Luis Turcios sued his former employer, defendant Pearson Dental Supplies, Inc., for age discrimination under the California Fair Employment and Housing Act (FEHA) (Click here to read the opinion: Pearson Dental Supplies, Inc. v Superior Court (Turcios)). Plaintiff signed an agreement with the employer that contained a mandatory arbitration clause for employment-related claims. The agreement contained a clause that plaintiff would waive any claims unless he submitted the claim to arbitration within one year from the date the dispute arose or from the date plaintiff first became aware of facts giving rise to the dispute.

While the arbitration agreement required that plaintiff submit the claim within one year, FEHA, in Government Code section 12960 requires a similar deadline, and provides, in part:

(b) Any person claiming to be aggrieved by an alleged unlawful practice may file with the department a verified complaint, in writing. . . .
(d) No complaint may be filed after the expiration of one year from the date upon which the alleged unlawful practice.

Government Code section 12965 also provides in relevant part:

(b) If an accusation [in the name of DFEH] is not issued within 150 days after the filing of a complaint, or if the department earlier determines that no accusation will issue, the department shall promptly notify, in writing, the person claiming to be aggrieved that the department shall issue, on his or her request, the right-to-sue notice. This notice shall indicate that the person claiming to be aggrieved may bring a civil action under this part against the person, employer, labor organization, or employment agency named in the verified complaint within one year from the date of that notice.

(emphasis added). Defendant compelled arbitration of plaintiff’s claims and argued that the arbitration provision requiring that plaintiff file the claim within one year controlled and, therefore, plaintiff did not file a timely claim. The arbitrator agreed with the defendant’s argument and granted summary judgment in defendant’s favor. The trial court, however, vacated the arbitration award on the ground that the one-year limitation period impermissibly infringed on plaintiff’s unwaivable statutory rights under the FEHA. Defendant appealed the trial court’s ruling, resulting in this decision.

The appellate court overruled the trial court’s ruling, stating that the arbitration agreement did not infringe upon plaintiff’s unwaivable rights under FEHA. The appellate court stated:

In arguing that the arbitrator’s award violated public policy, plaintiff relies (as did the trial court) on his cause of action alleging age discrimination in violation of the FEHA. Under the FEHA, the plaintiff must file an administrative complaint within one year from the date of the discriminatory act. Then, a civil action must be filed within one year from the date the administrative agency issues a “right to sue” letter. (Gov. Code, §§ 12960, subd. (d), 12965, subd. (b).) Plaintiff urged, and the trial court found, that the arbitrator’s application of the one-year limitations period in the DRA contravened public policy because it shortened the FEHA limitations period. We disagree.

(footnote omitted). The appellate court held that the arbitrator’s enforcement of the one-year arbitral limitation period did not unfairly burden plaintiff’s opportunity to vindicate his FEHA claim. The court noted that “despite adequate opportunity to investigate, prepare, and litigate, plaintiff chose to ignore the arbitration requirement and the arbitral limitation period, and never argued that the limitation period was unconscionable when opposing the petition to compel arbitration.” The court did caution, however, that this case did have unique facts that compelled it to rule in this way. Nevertheless, this opinion confirms that employers may enter into arbitration agreements that reasonably require their employees to submit their claims in a timely manner, or else their claims will be waived.

Podcast On Brinker v. Hohnbaum: What Are Employers' Obligations To Provide Meal and Rest Breaks?

azaller@vtzlaw.com (Anthony Zaller) — Wed, 20 Aug 2008 18:26:38 -0800

Click here to listen to my p odcast on Brinker v. Hohnbaum, for analysis of the decision and what effect the case may have on California's meal and rest break wage and hour litigation. It runs about 13 minutes, and provides a summary of the court's reasoning, and the outcome if the case is appealed to, and granted review by the California Supreme Court.

You may subscribe to the California Employment Law Podcast via iTunes by clicking here, or click here for the RSS feed.

"Silent" Arbitration Agreements are Consistently Found to Authorize Class Wide Arbitration

bvanvleck@vtzlaw.com (Brian Van Vleck) — Wed, 20 Aug 2008 13:19:28 -0800

Conventional wisdom among defense counsel has long been that arbitration is the preferable forum for resolving individual employment disputes such as wrongful termination, discrimination and sexual harassment. As a result, the number of employers with mandatory ADR programs skyrocketed in the 1990's and early 2000's.

By contrast, many defense counsel have come to believe that arbitration is a decidedly less favorable forum for employers when it comes to class-wide claims. The main reason is that the lack of a jury or meaningful appellate review, combined with the more flexible procedural rules of arbitration are likely to result in class certification.

Some employers have sought to have the "best of both worlds" by constructing arbitration programs which require arbitration of individual claims but exclude class actions from arbitration. But as we have previously blogged, under Gentry v. Superior Court, California trial courts will generally refuse to enforce any sort of arbitration provision that attempts to bar class wide arbitration remedies.

The majority of arbitration agreements are simply silent on the whole question of class arbitration. As to these agreements, arbitrators consistently determine that they should be interpreted as allowing a class wide arbitration to take place (assuming, of course, that the arbitrator also finds that the case to be appropriate for class certification). For example, in a very informative post from The Metropolitan Corporate Counsel, authors P. Christine Deruelle and Robert Clayton Roesch surveyed the actual decisions on this issue by neutrals with the American Arbitration Association ("AAA"). They concluded that "At bottom, AAA arbitrators have - almost without exception - construed otherwise silent arbitration agreements to permit class proceedings." As the basis for their conclusion, the authors explained:

As of June 15, 2007, AAA arbitrators have rendered 51 Clause Construction Awards concerning otherwise silent arbitration agreements, and in all but two of those decisions, the arbitrators have allowed classwide proceedings. Three recurring rationales for interpreting an otherwise silent agreement to permit class arbitration appear in these AAA Clause Construction Awards: (i) if the parties intended to prohibit class arbitration, they could have included an express prohibition in their arbitration agreement to this effect; (ii) a misapprehension of Bazzle as specifically authorizing class arbitration where the applicable agreement is silent; and (iii) that silence regarding the propriety of class proceedings renders the agreement ambiguous, which requires that it be construed against the drafter, consistently resulting in a construction favoring class arbitration. In contrast to the 49 AAA Clause Construction Awards construing silence to permit class arbitration, only two such awards have reached the opposite conclusion.

Thus, the proliferation of employment class actions in recent years presents employers with a bit of a conundrum -- do the perceived benefits of arbitrating single plaintiff claims outweigh the perceived detriments of arbitrating employee class actions?

Labor Code Class Actions Consistently Outnumber All Other Categories Combined

bvanvleck@vtzlaw.com (Brian Van Vleck) — Sun, 17 Aug 2008 21:02:20 -0800

The Class Action Defense Blog published by Michael J. Hassen has made a regular weekly feature of tracking the new filings of class actions in state and federal courts in California. The weekly results confirm what most class action practioners have long-recognized -- the deluge of labor law class actions far outnumbers any other category. In fact, employment law class actions (the vast majority of which are based on wage and hour violations), consistently outnumber all other categories of class action lawsuits combined.

For example, over the past week labor law class actions represented nearly two thirds of the total class actions filed. As Mr. Hassen summarizes:

This report covers August 8 - 14, 2008, during which time 37 new class action lawsuits were filed. Labor law class action lawsuits generally top the list of new class action filings in California state and federal courts, often by a wide margin, and this again proved to be the case. Twenty-four (24) new labor law class action lawsuits were filed during the past week, representing 65% of the total number of new class action lawsuits filed during the time period. The only other category that satisfied the 10% threshold involved class action lawsuits alleging unfair business practice claims, which include false advertising claims, with 5 new filings (14%).

Alch v. Superior Court (Time Warner) -- Court Reaffirms Discoverability of Private Employee Data in Class Actions

bvanvleck@vtzlaw.com (Brian Van Vleck) — Fri, 15 Aug 2008 15:31:12 -0800

The California Supreme Court's decision last year in Pioneer Electronics v. Superior Court, 40 Cal.4th 360 (2007), held that the privacy rights of current and former employees will not normally prevent a class action plaintiff from discovering their names, addresses, phone numbers and other data in litigation. Pioneer explained that any privacy concerns could be dispelled by providing the targets of the discovery with a written notice and an opportunity to object.

The Facts of Alch: 47,000 Privacy Notices and 7,700 Objections.

In the aftermath of Pioneer, a steady stream of appellate decisions have reinforced and expanded plaintiffs' rights to pre-certification discovery regarding potential class members. Alch v. Superior Court, 2008 WL 3522099 (2008), is the latest and most expansive of these decisions.

Alch involved a discovery dispute arising as part of a complex litigation alleging that studios and talent agencies have systematically discriminated against older television writers. The plaintiffs subpoenaed documents showing the ages and work histories of thousands of Writers Guild members in the hope that the data would demonstrate a statistically significant pattern of discrimination.

Following the procedure approved in Pioneer, 47,000 members of the Writers Guild received privacy notices. Of these, 4,700 filed objections to the disclosure of their information. The plaintiffs then asked the court to overrule these privacy objections and allow the discovery anyway. The trial court barred further discovery as to the 7,700 objectors. The appellate court granted writ review and reversed the trial court's decision.

The Holding: Privacy Interests Insufficient to Avoid Discovery.

In reaching this result, Alch is interesting for two main reasons.

First, it makes clear that a third party's objection in response to a privacy notice is not at all dispositve. Rather, notwithstanding an individual's objection, the public interest in “facilitat[ing] the ascertainment of truth and the just resolution of legal claims," may still override his or her privacy interest.

In fact, this aspect of Alch tends to beg the question of why the parties should have been required to send 47,000 privacy notices in the first place if the requested information was to be produced regardless of whether anyone objected. (In fairness to the trial court, however, the plaintiffs had trimmed the scope of their discovery requests somewhat by the time the case reached the appellate court). In the future, Courts will inevitably cite the reasoning of Alch as a rationale for dispensing with the cumbersome and expensive privacy notification altogther and merely ordering disclosure in the first instance.

Secondly, Alch is significant for its categorical rejection of what might be termed the "cart-before-the-horse" defense argument to discovery -- i.e., that class-wide discovery should not be allowed until the plaintiffs have first demonstrated that the requested information will prove their claims. As the Court explained:

Real parties' argument is, in effect, a claim that, because privacy interests are involved, the writers must prove that the data they seek will prove their case before they may have access to the data. But there is no support in law, or in logic, for this claim. . . . [s]uch a rule would be wholly impractical and unreasonable in the context of class action litigation requiring complex statistical analysis. . . Some information in the databases doubtless will be, in the end, irrelevant or unusable for any number of reasons, including the subject's lack of interest or availability for television writing. But that does not mean that the overall body of information subpoenaed-demographic and work history information of Writers Guild members-is not directly relevant and essential to the writers' case.

In short, there is now a fairly unassailable wall of authority in place allowing plaintiffs to discover the contact information and vital statistics of potential class members. Many employers may be better served if their defense counsel were to simply acknowledge this new reality rather than engaging in expensive, but ultimately futile attempts to block the discovery.

Plaintiffs Stand To Gain More From Settling? New Study Suggests So

azaller@vtzlaw.com (Anthony Zaller) — Wed, 13 Aug 2008 16:23:42 -0800

A recent New York Times article provides a prelude to a study being unveiled later that examines the psychological issues that clients and lawyers face when deciding whether to take a case to trial.

One of the main findings of the study is that plaintiffs, statistically speaking, stand to gain more in taking a settlement offer than litigating the case.

“The lesson for plaintiffs is, in the vast majority of cases, they are perceiving the defendant’s offer to be half a loaf when in fact it is an entire loaf or more,” said Randall L. Kiser, a co-author of the study and principal analyst at DecisionSet, a consulting firm that advises clients on litigation decisions.

The article also found that defendants made the wrong decision of going to trial (i.e., they plaintiff was willing to take less in a settlement than what the jury eventually found for the plaintiff) less often than plaintiffs. Defendants made the incorrect decision only in 24 percent of cases, according to the study, were plaintiffs were wrong 61 percent of the time. The article states that “[i]n just 15 percent of cases, both sides were right to go to trial — meaning that the defendant paid less than the plaintiff had wanted but the plaintiff got more than the defendant had offered.”

However, the study also concluded that a wrong decision by defendants cost them much more (costing $1.1 million), as opposed to if plaintiffs got it wrong (costing $43,000).

The article also discusses the psychological theory of loss aversion, which could definitely explain litigants’ choices. The article explains:

The findings are consistent with research on human behavior and responses to risk, said Martin A. Asher, an economist at the University of Pennsylvania and a co-author. For example, psychologists have found that people are more averse to taking a risk when they are expecting to gain something, and more willing to take a risk when they have something to lose.
“If you approach a class of students and say, I’ll either write you a check for $200, or we can flip a coin and I will pay you nothing or $500,” most students will take the $200 rather than risk getting nothing, Mr. Asher said.
But reverse the situation, so that students have to write the check, and they will choose to flip the coin, risking a bigger loss because they hope to pay nothing at all, he continued. “They’ll take the gamble.”

Definitely some food for thought for litigators that have to assit clients in the difficult decision about whether to settle or try a case.

CA Supreme Court Holds Non-Competes Are Generally Unenforceable and Release of "Any And All" Claims Not Unlawful

azaller@vtzlaw.com (Anthony Zaller) — Thu, 07 Aug 2008 14:03:58 -0800

In Edwards v. Arthur Anderson LLP, the California Supreme Court ruled on the following issues: (1) To what extent does Business and Professions Code section 16600 prohibit employee noncompetition agreements; and (2) is a contract provision requiring an employee to release “any and all” claims unlawful because it encompasses nonwaivable statutory protections, such as the employee indemnity protection of Labor Code section 2802?

Noncompetition Agreements
Noncompetition agreements are governed by Business & Professions Code section 16600, which states: “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” The statute permits noncompetition agreements in the context of sale or dissolution of corporations (§ 16601), partnerships (§ 16602), and limited liability corporations (§ 16602.5).

Under the common law, as still recognized by many states today, contractual restraints on the practice of a profession, business, or trade, were considered valid, as long as they were reasonably imposed. Andersen argued that California courts have held that section 16600 embrace the rule of reasonableness in evaluating competitive restraints.

The Court disagreed with Anderson, and noted:

We conclude that Andersen’s noncompetition agreement was invalid. As the Court of Appeal observed, “The first challenged clause prohibited Edwards, for an 18-month period, from performing professional services of the type he had provided while at Andersen, for any client on whose account he had worked during 18 months prior to his termination. The second challenged clause prohibited Edwards, for a year after termination, from ‘soliciting,’ defined by the agreement as providing professional services to any client of Andersen’s Los Angeles office.” The agreement restricted Edwards from performing work for Andersen’s Los Angeles clients and therefore restricted his ability to practice his accounting profession.

The Court found that this agreement was invalid because it restrained Edwards’ ability to practice his profession.

However, Anderson argued that section 16600 has a “narrow-restraint” exception and that its agreement with Edwards survives under this exception. Anderson pointed out that a federal court in International Business Machines Corp. v. Bajorek (9th Cir. 1999) upheld an agreement mandating that an employee forfeits stock options if employed by a competitor within six months of leaving employment. Anderson also noted that another Ninth Circuit federal court in General Commercial Packaging v. TPS Package (9th Cir. 1997) held that a contractual provision barring one party from courting a specific customer was not an illegal restraint of trade prohibited by section 16600, because it did not “entirely preclude[]” the party from pursuing its trade or business.

In refusing to accept the “narrow-restraint” exception for noncompetition agreements in California, the Court stated:

Contrary to Andersen’s belief, however, California courts have not embraced the Ninth Circuit’s narrow-restraint exception. Indeed, no reported California state court decision has endorsed the Ninth Circuit’s reasoning, and we are of the view that California courts “have been clear in their expression that section 16600 represents a strong public policy of the state which should not be diluted by judicial fiat.” [citation] Section 16600 is unambiguous, and if the Legislature intended the statute to apply only to restraints that were unreasonable or overbroad, it could have included language to that effect. We reject Andersen’s contention that we should adopt a narrow-restraint exception to section 16600 and leave it to the Legislature, if it chooses, either to relax the statutory restrictions or adopt additional exceptions to the prohibition-against-restraint rule under section 16600.

The Court’s ruling basically eliminates the validity of non-competition agreements under California that are not expressly provided for in Section 16600.

Contract Provision Releasing “Any and All” Claims
The second issues in the case was whether Andersen's condition of Edwards’s obtaining employment that Edwards execute an agreement releasing Andersen from, among other things, “any and all” claims, including “claims that in any way arise from or out of, are based upon or relate to [Edwards’s] employment by, association with or compensation from” Andersen.

Edwards argued that Labor Code section 2804 voids any agreement to waive the protections of Labor Code section 2802 (which provides that employers must reimburse employees for all business related expenses that the employee incurs) as against public policy.

The Court noted that Labor Code section 2804 has been interpreted to apply to Labor Code section 2802, making all contracts that waive an employee’s right to reimbursement null and void. Therefore an employee’s right to be reimbursed for business expenses provided under Labor Code section 2802 are nonwaivable, and any contract that does purport to waive an employee’s right would be contrary to the law. Edwards maintained, therefore, the agreement was an independent wrongful act that would support another claim he was alleged for intentional interference with prospective advantage.

The Court disagreed with Edwards, and concluded that a contract provision releasing “any and all” claims does not encompass nonwaivable statutory protections, such as the employee indemnity protection of Labor Code section 2802. Therefore, such agreements are still valid and enforceable under the law.

East Bay Taxi Drivers Association v. Friendly Cab Co., -- Taxi Drivers Found to be Employees, Not Independent Contractors

bvanvleck@vtzlaw.com (Brian Van Vleck) — Tue, 05 Aug 2008 08:38:47 -0800

The Ninth Circuit’s decision earlier this year in East Bay Taxi Driver’s Association v. Friendly Cab, Inc., 512 F3d 1090 (2008), illustrates how easily courts will pierce through the outward appearances of a “business” contract to find that, at bottom, it is just a glorified employer-employee relationship.

The case involved taxi drivers who were seeking to form a union to bargain with the company that leased their cabs. As employees they would be covered by the National Labor Relations Act (“NLRA”) and could force the company to recognize their union and bargain collectively. This required the Court to detrmine their true status. As the Court explained:

‘Employees' work for wages or salaries under direct supervision. ‘Independent contractors' undertake to do a job for a price, decide how the work will be done, usually hire others to do the work, and depend for their income not upon wages, but upon the difference between what they pay for goods, materials, and labor and what they receive for the end result, that is, upon profits.

The drivers leased their vehicles and kept the fares that they generated. Nevertheless, the Ninth Circuit upheld the NLRB’s determination that they were mere “employees.” The main reason for this outcome was the company’s tight control over the drivers’ operations. For example, the drivers were required to only respond to the company’s radio dispatches and could not pick up fares on their own or advertise their own services apart from the company. The company's high degree of control thus negated the drivers’ opportunity to generate any real “entrepreneurial profit” through their own initiative.

We have blogged repeatedly about the difficulty of maintaining a proper independent contractor status. Unfortunately, the various multifactor tests promulgated by courts and administrative agencies are remarkably unhelpful for predicting which side of the line a worker falls. As the outcome of the East Bay Taxi case illustrates, however, it is probably more useful to view the standard as a simple determination of whether the company’s control prevents the individual from making significant profit from his own business decisions.

Disputes over Unpaid Sales Commissions and Bonus Payments: When Does a Mere Expectation Become an "Earned" Wage? Part I - Performance-Based Employment Compensation as a Unilateral Contract

bvanvleck@vtzlaw.com (Brian Van Vleck) — Sun, 03 Aug 2008 17:36:15 -0800

Most employees are paid for their time. Thus, if they work eight hours at a rate of $25 per hour, or eight weeks at a salary of $2,500 per week, there is little dispute over the amount of wages owed. But disputes begin to multiply where the payment is deferred and is calculated based on meeting certain performance targets. Typical disputes include the following:

• What must the employee do to be considered the originator of a particular sale?
• What happens if the employee closes a sale but the customer never pays for the product?
• What if the salesman closed the sale but the company ships a defective product or otherwise causes the sale to be cancelled?
• What if the commission formula is based on meeting an annual target, but the Company decides to restructure the commission formula halfway through the year?
• What if the employee quits or is terminated after making a sale but before the customer has paid for product?

The first (but by no means the last) step to resolving these questions is to examine the terms of the parties’ contract. To do so, it is important to realize that under California law an enforceable commission contract is typically formed based on the company’s written policies or other communications to the employee concerning what commissions or bonuses he can expect if specified criteria are achieved. This is true regardless of disclaimers stating that the employment itself is terminable at-will or that there is supposedly no contract “of employment.”

In other words, it is not necessary for the parties to have a signed piece of paper for a valid compensation contract to exist. Rather, California generally follows a “unilateral contract” theory of employment compensation. A unilateral contract is one in which a “unilateral” offer to pay for performance is communicated by the employer (e.g., an employer policy stating that “an employee selling $100K in product will be paid a 10% commission”). The employee simultaneously accepts the offer and performs his side of the contract by doing the specified task (i.e., selling $100K in product).

A vested right to a commission payment thus usually arises immediately when the employee performs the requested services, closes the sale, stays employed throughout the year, or achieves any another specified goal. As a result, the employer may be legally barred from thereafter attempting to change the commission structure in a way that would prevent the employee from eventually collecting this entire “earned” commission.

Many employers mistakenly believe that if an employee can be terminated “at-will” his or her commissions may also be reduced at-will. Another common belief is that commissions are only “earned” when they are actually paid out by the employer. At least as to commissions on past sales, these assumptions are usually incorrect as a matter of law.

Understanding exactly when and how a commission or bonus becomes “earned” and vested according to common contract provisions will be addressed in greater detail in future posts. In the meantime, however, it is important to at least recognize the basic legal concept of the "unilateral contract."

DLSE Orders Staff To Follow Brinker

dturner@vtzlaw.com (Daniel Turner) — Thu, 31 Jul 2008 10:38:29 -0800

The DLSE has recently issued a memorandum to its deputy labor commissioners instructing them to follow the holding in Brinker v. Superior Court. The July 25, 2008 DLSE memorandum provides, in pertinent part, that the Brinker decision is “a published decision, and its rulings are therefore binding upon the [DLSE].” In addition, the memorandum makes clear that Brinker:

Held that Labor Code Section 512 and the meal period requirements set forth in the applicable wage order mean that employers “must provide meal periods by making them available, but need not ensure that they are taken. Employers, however, cannot impede, discourage or dissuade employees from taking meal periods.”
Rejected the so-called “rolling five hour” requirement as being inconsistent with the plain meaning of Labor Code Section 512 and the applicable wage order. The memorandum made clear that “[a]n employer must make a first 30-minute meal period available to an hourly employee who is permitted to work more than five hours per day, unless (1) the employee is permitted to work a ‘total work period per day’ that is six hours or less, or (2) both the employee and the employer agreed by “mutual consent” to waive the meal period.
Held that the rest period requirements set forth in the applicable wage order mean that “employers must provide rest periods, but need not ensure that they are taken. Employers, however, cannot impede, discourage or dissuade employees from taking rest periods.”
Held that employers need only authorize and permit rest periods every four hours or major fraction thereof and they need not, where impracticable, be in the middle of each work period.

To review the complete text of the DLSE memorandum click here.

Although this is a significant development as employers frequently find themselves before the labor commissioner, the DLSE memorandum is of little value if an employee chooses to pursue their claims in court. Moreover, the memorandum does not state if the DLSE will continue to follow Brinker in the event the California Supreme Court decides to review the decision. Nevertheless, the DLSE’s position will undoubtedly be welcomed by employers throughout California.

Perspectives on Brinker (Part II) -- When Must Employers Schedule Employee Meal Breaks

bvanvleck@vtzlaw.com (Brian Van Vleck) — Wed, 30 Jul 2008 19:53:51 -0800

In a prior post on Brinker v. Superior Court (Hohnbaum), we examined what the decision means in terms of defining the duty of California employers to make meal and rest breaks "available" to employees. In this post we look at what Brinker says about when during the day those breaks need to be provided.

Brinker analyzes this question based on the language of California Labor Code section 512(a), which provides that “An employer may not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes.”

The Meal Period Timing Issue
At first glance, the phrase “work period” in the above-quoted provision might seem self-explanatory. In fact, hundreds of millions of dollars and the daily activities of millions of people hinge on the semantic ambiguity arising from these two words. The two competing interpretations are as follows:

Interpretation # 1: The Continuous “Work Period.” The five-hour “work period” must refer to any five-hour period of continuous work. Thus, employers must provide at least one meal period for each continuous five-hour period of work.

Interpretation #2: The Cumulative “Work Period.” The five-hour “work period” must refer to the total number of hours worked by the employee during any day. In other words, the statute is merely saying that whenever an employee is required to work more than a total of five hours in a day he must receive a 30 minute meal break at some point in the day – but the statute is not intended to dictate when during the day that break must be taken.

In Brinker v. Superior Court-- the first published opinion to address the issue – the lower court agreed with interpretation # 1. The Appellate Court, however, reversed in favor of interpretation #2. So does this mean that employers now have carte blanche to schedule meal breaks at whatever time of day they wish so long as they give the correct number of meal breaks per day?

We wouldn’t recommend it.

To begin with, there is a good chance that the California Supreme Court will grant review of Brinker– thereby rendering it non-citable. Moreover, the Brinker opinion has some pretty sizable holes in its reasoning. Thus, we would not bet the farm on Brinker’s interpretation holding up in the long run. Any employer who relies on Brinker to aggressively schedule meal breaks very close to the start or end of the workday could therefore find itself exposed to massive penalties if, and when, Brinker is eventually overturned by the Supreme Court.

The Vulnerabilities of Brinker
Brinker is vulnerable to be being overruled on several grounds. For example, Brinker rejects Interpretation #1, above, on the ground that if the Legislature meant to trigger a meal period for each consecutive five hour work period it could have done so without using the words “per day” in the phrase “a work period of more than five hours per day.” Adopting an interpretation that gives significance to every word is one goal of statutory interpretation. But this “per day” reference is a fairly thin reed to grasp for purposes of making this argument.

For one thing, the monetary penalties imposed by the Labor Code do not even arise from Section 512. Rather, it is Labor Code Section 226.7 which imposes a penalty of “one additional hour of pay at the employee's regular rate” for any failure “to provide an employee a meal period . . . in accordance with an applicable order of the Industrial Welfare Commission.” Each of the IWC’s Wage Orders, however, conspicuously omits the very “per day” language that Brinker used as the basis for its ruling.

Brinker dismisses the significance of the Wage Orders themselves by holding that they must be interpreted as if they merely track the text of Section 512(a) verbatim. But why would the Legislature have used a violation of the IWC Wage Orders as the triggering event for imposing a penalty if it believed that the Wage Orders could only duplicate the text of Section 512? Brinker’s dismissive treatment of the actual text of the Wage Orders thus arguably repeals the portion of Section 226.7 that incorporates the Wage Orders by reference. In doing so, Brinker potentially violates its own standard that the words of a statute cannot be rendered meaningless.

Brinker also fails to address the significance of Labor Code Section 512(b), which authorizes the IWC to adopt Wage Orders allowing meal periods to begin "after six hours of work" if it determines that this is "consistent with the health and welfare of the affected employees." This provision presupposes that, in the absence of any new Wage Order provision, an employee cannot agree to wait more than six hours for a meal break.

Brinker also leads to some problematic practical results. For example, the over-arching Legislative purpose was to afford relief from fatigue and hunger that could result from long stretches of constant work. But under Brinker, an employer could schedule an employee to begin work at 9:00 a.m., take a meal break from 9:05 to 9:35 a.m., and then work thirteen hours straight before taking another 30-minute meal break immediately before leaving at around 11:05 p.m. It is hard to envision the Supreme Court endorsing this result as the true intent of the Legislature.

Conclusion
Notwithstanding the undeniably pro-employer Brinker decision, prudent employers should still strive to establish a record of good faith, affirmative efforts to enforce internal meal and rest break policies. Part of this record includes scheduling employee meal periods to begin before the start of any sixth consecutive hour of work. These steps may not be easy at an operational level, but they are necessary to avoid exposure to large-scale class action liability in the long run.

Outdated IRS Rules on Employee Cell Phone Usage Likely To Change

bvanvleck@vtzlaw.com (Brian Van Vleck) — Tue, 29 Jul 2008 23:28:43 -0800

A recent LA Times Article reports that the current IRS rule for expensing employer-provided cell phones is likely to be changing soon. The current rule permits employers to treat employee cell phone reimbursement as a deductible business expense only if the employee has kept a detailed log of every call and the reason for the call.

A bi-partisan bill to dispense with this log-keeping requirement (which is almost universally ignored in practice anyway), is co-sponsored by Reps. Sam Johnson (R-Texas) and Earl Pomeroy (D-N.D.), and has already passed the House.

The cellphone tax law was set "in 1989 when cellphones were huge and when it cost a lot of money to make a phone call," Johnson said. "Nowadays they're a dime a dozen and the cost is way down. If you don't log all your telephone calls, you're going to have some IRS weenie after you. That's why we're trying to get the law changed -- because it just doesn't make any sense anymore."

A change appears likely. When pressed by Johnson at a hearing this year, Treasury Secretary Henry M. Paulson said that updating the rules sounded "like the right idea to me." And the IRS' Advisory Committee on Tax Exempt and Government Entities, calling the rules "burdensome for any employer," recommended last month that the agency loosen reporting requirements for employers and that Congress change the law.

According to the Times article, "Nationwide, about 5.5 million people have cellphone service paid for directly by their employers -- and they are a group that makes up 2.4% of all wireless subscribers." Given the wireless industry's interest in preserving and growing this market, we are willing to bet that the the new legislation is a lock in the coming year.

Perspectives on Brinker: What Must California Employers Do to Make Meal and Rest Breaks "Available" to Their Employees?

bvanvleck@vtzlaw.com (Brian Van Vleck) — Fri, 25 Jul 2008 15:30:37 -0800

In Brinker Restaurant Co. v. Superior Court, ___ Cal.App 4th ___ (2008), the Fourth District Court of Appeal held that “meal periods need only be made available, not ensured.” Thus employers are not strictly liable for missed meal and rest breaks when an employee “merely show[s] that he did not take them regardless of the reason."

So what then, according to Brinker, must an employer do to make a meal or rest break “available”? Or, stated somewhat differently, what are the reasons for an employee missing a break that will trigger a penalty? The following answers seem to emerge from the Brinker decision, and especially from that court’s efforts to factually distinguish the Cicairos and Perez cases which had previously found employer liability for failure to provide breaks.

To begin with, employers cannot actively “impede, discourage or dissuade employees from taking meal periods.”
Moreover, "an employer must do something affirmative to provide a meal period." (Brinker, discussing Perez, 2007 WL 1848037 at *7)”
Thus, an employer’s “obligation to provide [employees] with an adequate meal period [is] not satisfied merely by assuming that the meal periods were taken." (Brinker, quoting Cicairos, 133 Cal.App.4th at p. 962.)
For example, an employer’s “lack of a policy for meal breaks" combined with an on-call policy that requires employers to be constantly available to report to work, is not sufficient to discharge its affirmative duty. (Brinker, discussing Perez, supra, at *7).
Also, failing to record meal periods, while “pressuring” employees to adhere to scheduling policies that make it “harder” to take meal breaks is not sufficient. (Brinker, discussing Cicairos, supra, 133 Cal.App.4th at p. 962.)
Likewise, knowingly permitting employees to work through meal breaks, while not “tak[ing] steps to address the situation,” and implementing “management policies” that make it “harder” to take a break , may “effectively deprive[]” employees of their breaks. (Brinker, discussing Cicairos).

The Brinker case is very likely headed for the California Supreme Court. However, it clearly points to the inevitable direction in which the meal period “policing” rule will evolve. The public policy implications of a strict liability enforcement regime (such as having to fire employees for not complying with employer break policies) will rule out any strict liability standard. Instead, “good employers” who make reasonable efforts to create and enforce internal break polices will not be subject to class-wide liability for failing to achieve an impossible 100% compliance rate. On the other hand, “bad employers” who either have no break policy or who merely go through the motions of compliance will not be allowed to escape liability by claiming their employees are “voluntarily” working through breaks.

Mapping the borderline between these two categories of employers will no doubt generate years of massive, hard fought litigation.

The Brinker Decision Generates A Lot Of Commentary

azaller@vtzlaw.com (Anthony Zaller) — Wed, 23 Jul 2008 17:36:19 -0800

Here is a sampling of what the blogosphere is saying about yesterday's Brinker v. Hohnbaum decision:

UCL Practitioner:

I was co-counsel for the employees in the appellate-level proceedings, and my normal policy is not to blog about my own cases (with an occasional exception if they are already getting outside press or blogosphere coverage). I am putting up this post only because I must clarify a comment that was attributed to me in the Recorder article:

[Kralowec] also said the 4th District's decision creates an appellate split that likely will ensure Supreme Court review. In Cicairos v. Summit Logistics Inc., 133 Cal.App.4th 949, Sacramento's 3rd District ruled in 2005 that employers have an affirmative duty to ensure that employees receive meal periods.

I do believe that the new Brinker decision creates a split in authority with Cicairos, and I also believe that the Supreme Court often grants review to resolve issues that are the subject of a split among the lower courts, particularly when two Court of Appeal panels have handed down conflicting published opinions. However, I did not say that I thought that in this specific case, the split between Brinker and Cicairos "likely will ensure Supreme Court review." I would never say something so presumptuous. It would have been more accurate to say that Brinker creates an appellate split, that such splits often lead to Supreme Court review, that Brinker is a particularly appropriate case for review, and that I certainly hope that the Supreme Court decides to grant review.

What’s New In Employment Law:

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

The Complex Litigator:

I will post more later on this opinion, after I have chance to evaluate it further. For now, courts with pending meal break, rest break and off-the-clock claims should expect for the inevitable onslaught of paper that this will generate.

Wage Law:

However, it was not the first, and Brinker disagrees with many prior opinions, most specifically, Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949, 962-963, which it discussed at length, and Bufil v. Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193, which it did not even mention, and more generally, a string of cases which promote class actions as an efficient way to resolve wage and hour disputes and a string of cases which discuss the remedial nature of wage and hour laws in California. With Brinker and Cicairos presenting such starkly contrasting views on California law, with Brinker presenting so many novel ideas regarding wage and hour claims and class actions, and with so many U.S. District Court cases disagreeing with Cicairos and each other, this case looks like an outstanding candidate for Supreme Court review.

Even the Connecticut Employment Law Blog had something to say about the decision:

Why do I bring this up in a Connecticut blog? For a few reasons. First, there are several Connecticut employers that have California employees, whether through sales or otherwise. Second, California tends to be on the cutting edge of some legal issues. With nearly 36 million people (or roughly 10 times the population of Connecticut), those issues just tend to pop up more than in a small state like Connecticut. Third, the case provides a good opportunity to highlight the Connecticut meal period law -- an underappreciated law that lays out what is necessary and is much different than California.

The consensus across the commentators (including our take on the issue) is that the California Supreme Court will likely grant review of this monumental ruling.

Meal and Rest Break Requirements Clarified By Court in Brinker v. Hohnbaum

azaller@vtzlaw.com (Anthony Zaller) — Tue, 22 Jul 2008 17:32:23 -0800

The Appellate Court, Fourth Appellate District, Division One, issued a much awaited opinion today in Brinker Restaurant Corporation, et al. v. Hohnbaum, et al. (July 22, 2008). The case is one of the first California state appellate court to rule on the parameters of employers’ duties under the California Labor Code requiring rest and meal breaks for hourly employees. As discussed below, the court’s opinion was across the board in favor for California employers. The primarily holding by the appellate court was that an employer does not have to “ensure” that meal and rest breaks are taken, therefore making these types of cases very difficult to certify as a class action.

Due to the monumental impact this case will have on the vast wage and hour litigation in California, this post is longer than we typically like to write. And this post will definitely not be the last time we discuss the case.

Case Background

In November 2005 Brinker filed its first petition for writ of mandate (D047509) in this matter. In the petition, Brinker challenged the court's July 2005 meal period order. Specifically, Brinker requested a writ directing the trial court to "vacate its earlier order holding that: (1) a non-exempt employee is entitled to a meal period for each five-hour block of time worked[; and] (2) the premium pay owed for a violation of [section 226.7] is a wage."

In support of its petition, Brinker argued the trial court erred by interpreting section 512 to mean that an hourly employee's entitlement to a meal period is "rolling," such that "a separate meal period must be provided for each five-hour block of time worked . . . regardless of the total hours worked in the day. In other words, the [court] interpreted the law to be that . . . [o]nce a meal period concludes, the proverbial clock starts ticking again, and if the employee works five hours more, a second meal period must be provided."

Brinker also argued that although an employee working more than five hours and less than 10 hours is entitled under section 512 to a 30-minute meal period at some point during the workday, "nothing in [s]ection 512 . . . requires a second meal period be provided solely because [the] employee works five hours after the end of the first meal period, where the total time worked is less than [10] hours." Brinker further asserted that IWC Wage Order No. 5 also "does not dictate the anomalous result that meal periods must be provided every five hours" because, like section 512, it requires only that an employee working more than five hours "gets a meal period at some point during the workday." Brinker complained that the court's meal period ruling "requires servers to sit down, unpaid, during the most lucrative part of their working day."

Plaintiff’s Motion For Class Certification

Plaintiffs moved to certify a class of "[a]ll present and former employees of [Brinker] who worked at a Brinker[-]owned restaurant in California, holding a non-exempt position, from and after August 16, 2000 ('Class Members')." In their moving papers, plaintiffs alternatively defined the class as "all hourly employees of restaurants owned by [Brinker] in California who have not been provided with meal and rest breaks in accordance with California law and who have not been compensated for those missed meal and rest breaks."

Plaintiffs' motion also sought certification of six subclasses, three of which are pertinent to the appeal: (1) a "Rest Period Subclass," consisting of "Class Members who worked one or more work periods in excess of three and a half (3.5) hours without receiving a paid 10 minute break during which the Class Member was relieved of all duties, from and after October 1, 2000"; (2) a "Meal Period Subclass," consisting of "Class Members who worked one or more work periods in excess of five (5) consecutive hours, without receiving a thirty (30) minute meal period during which the Class Member was relieved of all duties, from and after October 1, 2000"; and (3) an "Off-The-Clock Subclass," consisting of "Class Members who worked 'off-the-clock' or without pay from and after August 16, 2000."

The class in question is estimated to consist of more than 59,000 Brinker employees.

Plaintiffs Rest Break Claims

Plaintiffs allege Brinker willfully violated section 226.7 and IWC Wage Orders Nos. 5-1998, 5-2000 and 5-2001 by "fail[ing] to provide rest periods for every four hours or major fraction thereof worked per day to non-exempt employees, and failing to provide compensation for such unprovided rest periods." Section 226.7, subdivision (a) provides: "No employer shall require any employee to work during any meal or rest period mandated by an applicable order of the [IWC]." (Italics added.)

The pertinent provisions of IWC Wage Order No. 5-2001 are codified in California Code of Regulations, title 8, section 11050, subdivision 12(A), which provides:

Every employer shall authorize and permit all employees to take rest periods, which insofar as practicable shall be in the middle of each work period. The authorized rest period time shall be based on the total hours worked daily at the rate of ten (10) minutes net rest time per four (4) hours or major fraction thereof. However, a rest period need not be authorized for employees whose total daily work time is less than three and one-half (3 1/2) hours. Authorized rest period time shall be counted as hours worked for which there shall be no deduction from wages. (Italics added.)

The court held that the phrase "per four (4) hours or major fraction thereof" does not mean that a rest period must be given every three and one-half hours:

Regulation 11050(12)(A) states that calculation of the appropriate number of rest breaks must "be based on the total hours worked daily." Thus, for example, if one has a work period of seven hours, the employee is entitled to a rest period after four hours of work because he or she has worked a full four hours, not a "major fraction thereof." It is only when an employee is scheduled for a shift that is more than three and one-half hours, but less than four hours, that he or she is entitled to a rest break before the four hour mark.

Moreover, because the sentence following the "four (4) hours or major fraction thereof" limits required rest breaks to employees who work at least three and one-half hours in one work day, the term "major fraction thereof" can only be interpreted as meaning the time period between three and one-half hours and four hours. Apparently this portion of the wage order was intended to prevent employers from avoiding rest breaks by scheduling work periods slightly less that [sic] four hours, but at the same time made three and one-half hours the cut-off period for work periods below which no rest period need be provided.

The court also held that the DLSE’s opinion that the term "major fraction thereof" means any time over 50 percent of a four-hour work period is wrong because it renders the current version of Regulation 11050(12)(A) internally inconsistent. As an employee cannot be entitled to a 10-minute break if she or she "works more than 2 . . . hours in a day," if the employee is not entitled to a 10-minute break if he or she works "less than three and one-half" hours in a day. The court also noted that it is not required to follow the DLSE opinion on the matter, citing Murphy v. Kenneth Cole, 40 Cal.4th at p. 1105, fn. 7.

The court also held that the law does not required employers to provide rest breaks before meal breaks:

Furthermore, contrary to plaintiffs' assertion, the provisions of Regulation 11050(12)(A)do not require employers to authorize and permit a first rest break before the first scheduled meal period. Rather, the applicable language of Regulation 11050(12)(A)states only that rest breaks "insofar as practicable shall be in the middle of each work period." (Italics added.) Regulation 11050(12)(A)is silent on the question of whether an employer must permit an hourly employee to take a 10-minute rest break before the first meal period is provided. As Brinker points out, an employee who takes a meal period one hour into an eight-hour shift could still take a post-meal period rest break "in the middle" of the first four-hour work period, in full compliance with the applicable provisions of IWC Wage Order No. 5-2001.

The court explained that Regulation 11050(12)(A) allows employers some “discretion to not have rest periods in the middle of a work period if, because of the nature of the work or the circumstances of a particular employee, it is not ‘practicable.’” In explaining what “practicable” means, the court specifically mentioned that:

…this discretion is of particular importance for jobs, such as in the restaurant industry, that require flexibility in scheduling breaks because the middle of a work period is often during a mealtime rush, when an employee might not want to take a rest break in order to maximize tips and provide optimum service to restaurant patrons. As long as employers make rest breaks available to employees, and strive, where practicable, to schedule them in the middle of the first four-hour work period, employers are in compliance with that portion of Regulation 11050(12)(A).

Ultimately, the court held that a determination about whether it is practicable to permit rest breaks near the end of a four hour work period is not an issue that can be litigated on a class-wide basis. In overruling the trial court’s granting of class certification the Appellate Court stated:

Had the court properly determined that (1) employees need be afforded only one 10-minute rest break every four hours "or major fraction thereof" (Reg. 11050(12)(A)), (2) rest breaks need be afforded in the middle of that four-hour period only when "practicable," and (3) employers are not required to ensure that employees take the rest breaks properly provided to them in accordance with the provisions of IWC Wage Order No. 5, only individual questions would have remained, and the court in the proper exercise of its legal discretion would have denied class certification with respect to plaintiffs' rest break claims because the trier of fact cannot determine on a class-wide basis whether members of the proposed class of Brinker employees missed rest breaks as a result of a supervisor's coercion or the employee's uncoerced choice to waive such breaks and continue working. Individual questions would also predominate as to whether employees received a full 10-minute rest period, or whether the period was interrupted. The issue of whether rest periods are prohibited or voluntarily declined is by its nature an individual inquiry.

Plaintiffs argued that even if the trial court erred in failing to define the elements of plaintiffs' rest period claims prior to certifying the class the appellate court should remand the case to the trial court to permit the trial court to rule on if plaintiffs' "expert statistical and survey evidence" makes their rest break claims amenable to class treatment. The appellate court refused to remand the case, stating that while courts may use such evidence in determining if a claim is amenable to class treatment, here, that evidence does not change the individualized inquiry in determining if Brinker allowed or forbade rest periods. The court stated:

The question of whether employees were forced to forgo rest breaks or voluntarily chose not to take them is a highly individualized inquiry that would result in thousands of mini-trials to determine as to each employee if a particular manager prohibited a full, timely break or if the employee waived it or voluntarily cut it short. (Brown v. Federal Express Corp. (C.D.Cal. 2008) ___ F.R.D. ___ [2008 WL 906517 at *8] (Brown) [meal period violations claim not amenable to class treatment as court would be "mired in over 5000 mini-trials" to determine if such breaks were provided].)

For these reasons, the appellate court vacated the order granting class certification for the rest break subclass.

Plaintiffs’ Meal Break Claims

In their second cause of action, plaintiffs allege Brinker violated sections 226.7 and 512, and IWC Wage Order No. 5, by failing to "provide meal periods for days on which non-exempt employees work(ed) in excess of five hours, or by failing to provide meal periods [altogether], or to provide second meal periods for days employees worked in excess of [10] hours, and failing to provide compensation for such unprovided or improperly provided meal periods." Plaintiffs claim that Brinker’s “early lunching” policy that required its employees to take their meal periods soon after they arrive for their shifts, usually within the first hour, and then requiring them to work in excess of five hours, and sometimes more than nine hours straight, without an additional meal period violated California law.

Plaintiffs asserted that common issues predominate on their rest break claims because they "presented corporate policy evidence of a pattern and practice by Brinker of failing to provide a rest period prior to employees' meal period as a result of its practice of scheduling meals early." Specifically, plaintiffs argued that "Brinker maintains company-wide policies discouraging rest periods, including requiring servers to give up tables and tips if they want a break and failing to provide rest periods prior to scheduled early meals."

1. Rolling five-hour meal period claim

The lower trial court in this case, found that a meal period "must be given before [an] employee's work period exceeds five hours." The lower court also stated that "the DLSE wants employers to provide employees with break periods and meal periods toward the middle of an employee[']s work period in order to break up that employee's 'shift.'" The court further stated that Brinker "appears to be in violation of [section] 512 by not providing a 'meal period' per every five hours of work."

In overruling the lower court, the appellate court ruled that this interpretation of the law was incorrect and that the trial court’s class certification order rests on improper criteria with respect to the plaintiffs' rolling five-hour meal period claim.

The appellate court began its analysis with Labor Code Section 512, subdivision (a), which provides:

An employer may not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes, except that if the total work period per day of the employee is no more than six hours, the meal period may be waived by mutual consent of both the employer and employee. An employer may not employ an employee for a work period of more than 10 hours per day without providing the employee with a second meal period of not less than 30 minutes, except that if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and the employee only if the first meal period was not waived.

The appellate court held that Section 512(a) thus provides that an employer in California has a statutory duty to make a first 30-minute meal period available to an hourly employee who is permitted to work more than five hours per day, unless (1) the employee is permitted to work a "total work period per day" that is six hours or less, and (2) both the employee and the employer agree by "mutual consent" to waive the meal period.

The appellate court also held that this interpretation of section 512(a), regarding an employer's duty to provide a first meal period, is consistent with the plain language set forth in IWC Wage Order No. 5-2001, which provides in part: "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, except that when a work period of not more than six (6) hours will complete the day's work the meal period may be waived by mutual consent of the employer and the employee."

On the issue regarding when an meal break must be provided the court stated:

With respect to the issue of when an employer must make a first 30-minute meal period available to an hourly employee, Brinker's uniform meal period policy (titled "Break and Meal Period Policy for Employees in the State of California") comports with the foregoing interpretation of section 512(a) and IWC Wage Order No. 5-2001. It provides that employees are "entitled to a 30-minute meal period" when they "work a shift that is over five hours."

The court continued in holding that Section 512(a) also provides that an employer has a duty to make a second 30-minute meal period available to an hourly employee who has a "work period of more than 10 hours per day" unless (1) the "total hours" the employee is permitted to work per day is 12 hours or less, (2) both the employee and the employer agree by "mutual consent" to waive the second meal period, and (3) the first meal period "was not waived."

Plaintiffs argue that Brinker's written meal policy violates section 512(a) and IWC Wage Order No. 5 (specifically, Cal. Code Regs., tit. 8, § 11050, subd. 11(A)) because it allows the practice of “early lunching” and fails to make a 30-minute meal period available to an hourly employee for every five consecutive hours of work. Plaintiffs maintained that every hourly employee should receive a second meal break five hours after they return from the first meal break. The court found this argument unpersuasive:

Under this interpretation, however, the term "per day" in the first sentence of section 512(a) would be rendered surplusage, as would the phrase "[a]n employer may not employ an employee for a work period of more than 10 hours per day without providing the employee with a second meal period of not less than 30 minutes" in the second sentence of that subdivision.

The appellate court held that without a proper interpretation of section 512(a), the lower court could not correctly ascertain the legal elements that members of the proposed class would have to prove in order to establish their meal period claims, and therefore could not properly determine whether common issues predominate over issues that affect individual members of the class.

2. Brinker's failure to ensure employees take meal periods

Plaintiffs also claim that Brinker's uniform meal period policy violates sections 512 and 226.7, as well as IWC Wage Order No. 5, by failing to ensure that its hourly employees take their meal periods. In the primary holding of the case, the appellate court stated:

We conclude that California law provides that Brinker need only provide meal periods, and, as a result, as with the rest period claims, plaintiffs' meal period claims are not amenable to class treatment.

The appellate court disagreed with Plaintiffs’ contention that an employer’s duty was to ensure a meal break. The court stated:

If this were the case, employers would be forced to police their employees and force them to take meal breaks. With thousands of employees working multiple shifts, this would be an impossible task. If they were unable to do so, employers would have to pay an extra hour of pay any time an employee voluntarily chose not to take a meal period, or to take a shortened one.

3. Amenability of plaintiffs' meal break claims to class treatment

The appellate court held that because meal breaks need only be made available, not ensured, individual issues predominate in this case and the meal break claim is not amenable class treatment. The court explained:

The reason meal breaks were not taken can only be decided on a case-by-case basis. It would need to be determined as to each employee whether a missed or shortened meal period was the result of an employee's personal choice, a manager's coercion, or, as plaintiffs argue, because the restaurants were so inadequately staffed that employees could not actually take permitted meal breaks. As we discussed, ante, with regard to rest breaks, plaintiffs' computer and statistical evidence submitted in support of their class certification motion was not only based upon faulty legal assumptions, it also could only show the fact that meal breaks were not taken, or were shortened, not why. It will require an individual inquiry as to all Brinker employees to determine if this was because Brinker failed to make them available, or employees chose not to take them.

The appellate court also found that the evidence does not show that Brinker had a class-wide policy that prohibited meal breaks. Instead, the evidence in this case indicated that some employees took meal breaks and others did not, and it requires the court to perform an individualized inquiring into the reasons why an employee did not take the break. The court also held that the plaintiffs’ statistical and survey evidence does not render the meal break claims one in which common issues predominate because while the time cards might show when meal breaks were taken and when there were not, they cannot show why they were or were not taken.

Plaintiffs’ Off-the clock claim

Plaintiffs also allege Brinker unlawfully required its employees to work off the clock during meal periods. This claim was comprised of two theories: (1) time worked during a meal period when an individual was clocked out; and (2) time “shaving,” which is defined as an unlawful alteration of an employee's time record to reduce the time logged so as to not accurately reflect time worked.

The court held, and the Plaintiffs did not dispute, that employers can only be held liable for off-the-clock claims if the employer knows or should have known the employee was working off the clock. (citing Morillion v. Royal Packing Co., 22 Cal.4th at p. 585.) The evidence also established that Brinker has a written corporate policy prohibiting off-the-clock work. Because of these facts, the court found that plaintiffs' off-the-clock claims are not amenable to class treatment. As the court stated:

Thus, resolution of these claims would require individual inquiries in to whether any employee actually worked off the clock, whether managers had actual or constructive knowledge of such work and whether managers coerced or encouraged such work. Indeed, not all the employee declarations alleged they were forced to work off the clock, demonstrating there was no class-wide policy forcing employees to do so.

The opinion can be viewed at the court’s website [Word] [PDF]. This case will no doubt change many wage and hour litigator's case strategies, unless the California Supreme Court grants review of the decision.

UPDATE: If you rather listen to my podcast on Brinker v. Hohnbaum, click here.

Brinker v. Superior Court: Employers Need Not "Ensure" Meal Periods Are Taken

bvanvleck@vtzlaw.com (Brian Van Vleck) — Tue, 22 Jul 2008 14:02:02 -0800

The California Court of Appeal today issued its eagerly-awaited Brinker decision, which handed a big victory to employers and helped to clarify the standards that apply to the provision of meal periods under Labor Code section 512. To cut right to the chase, the Appellate Court summarized its decision as follows:

Specifically, we conclude that (1) while employers cannot impede, discourage or dissuade employees from taking rest periods, they need only provide, not ensure, rest periods are taken; (2) employers need only authorize and permit rest periods every four hours or major fraction thereof and they need not, where impracticable, be in the middle of each work period; (3) employers are not required to provide a meal period for every five consecutive hours worked; (4) while employers cannot impede, discourage or dissuade employees from taking meal periods, they need only provide them and not ensure they are taken; and (5) while employers cannot coerce, require or compel employees to work off the clock, they can only be held liable for employees working off the clock if they knew or should have known they were doing so. We further conclude that because the rest and meal breaks need only be "made available" and not "ensured," individual issues predominate and, based upon the evidence presented to the trial court, they are not amenable to class treatment.

We’ll be blogging further about the Brinker decision, but the gist of the above-quoted holding is pretty self-explanatory. There is no longer any argument that employers are “strictly liable” for non-compliance with meal or rest period policies. And as a result, class certification will be far more difficult to obtain.

DLSE Public Hearings Air Concerns Regarding Meal Break Issues

bvanvleck@vtzlaw.com (Brian Van Vleck) — Mon, 21 Jul 2008 18:39:54 -0800

Once upon a time, employee meal and rest periods were an obscure legal backwater, which was the exclusive province of hard-core human resources nerds and bureaucrats. But no longer. Class action meal period litigation has now become a multi-million dollar political football.

This new reality was highlighted by response when the DLSE recently held two public hearings on the topic in Sacramento and Los Angeles. Over 200 and 400 concerned individuals showed up in person to the respective meetings, and another 200 written comments were submitted in writing

As the Labor Commissioner explained in her formal written report on the hearings.

It is apparent that emotions surrounding the issue of meal and rest periods have run high for a long time. Conflicts and confusion in the statute and in the IWC orders have proven problematic. The forums demonstrated an urgent need for common sense solutions by the Courts and by the Legislature which would greatly benefit workers and businesses throughout California.

The California Division of Labor Standards Enforcements (or “DLSE”) is the administrative enforcement arm of the Labor Commissioner. As such, it has some limited latitude to influence how courts will define the scope of the meal period requirements – i.e., Labor Code sections 512 and 226.7. At the behest of Governor Schwarzenegger, the DLSE initially sided with employers by issuing an administrative decision that would have cut the relevant statute of limitations from four years to just one year. The Division also propounded a set of “proposed” pro-employer regulations.

The DLSE was forced to beat a hasty retreat, however, when the California Supreme Court issued its decision in Murphy v. Kenneth Cole. This opinion, which constitutes controlling legal authority, took the exact opposite position.

At this point, it appears that the Labor Commissioner has abandoned her own attempts to formally weigh in on any matters of first impression. Instead, the main purpose of the recent hearings is apparently to flag various concerns and ambiguities and beseech the Courts and politicians for more definitive guidance.

The Labor Commissioner’s report recites that “Preserving the right to take meal and rest breaks is critical.” Nevertheless, Ms. Bradstreet primarily calls for more “flexibility” and highlights the following testimony:

Many workers who operate on tips or commissions object to taking breaks at times that cut into their earnings;
To keep consistent staffing, some employers are complying with the letter of law by scheduling “staggered lunch breaks” that begin as early as 9:00 a.m.
Employers are policing compliance by imposing ever-greater disciplinary measures on employees – for example, “UPS reported that in the first eight months of 2007 it issued 7,200 disciplinary citations and fired 22 workers for meal break violations.”

The report and various summaries of the comments on which it is based can be viewed through the following links.

http://www.dir.ca.gov/dlse/mealandrest/MRForumReport.pdf;

http://www.dir.ca.gov/dlse/mealandrest/MRsummaryComments.pdf;

http://www.dir.ca.gov/dlse/mealandrest/MRForumTranscript.pdf.

Department Of Labor's Tool For Posters and Recordkeeping Compliance

azaller@vtzlaw.com (Anthony Zaller) — Tue, 08 Jul 2008 09:13:50 -0800

The U.S. Department of Labor (DOL) recently launched a new resource for employers - The FirstStep Employment Law Advisor. The resource is designed to help employers determine which federal employment laws administered by the DOL apply to their business or organization, what recordkeeping and reporting requirements they must comply with, and which posters they need to post.

I've looked around the site a bit, and think it is a great place for employers to double-check their current posters and document retention policies. The Advisor asks the user a series of questions to focus the results for various types of employers, including non-profit organizations, private sector businesses and government agencies. The FirstStep Employment Law Advisor can be viewed here.

Braun v. Wal-Mart, Inc.: Wal-Mart Hammered For Meal and Rest Break Violations in Minnesota

bvanvleck@vtzlaw.com (Brian Van Vleck) — Tue, 08 Jul 2008 09:03:48 -0800

Companies doing business in California frequently lament the “unique” burdens imposed by California wage and hour laws. But with all the attention on California wage and hour class action litigation, it is worthwhile to remember that many other states actually have similar laws.
No one knows this better than Wal-Mart, which has just been handed another costly meal period class action defeat under Minnesota law in the case of Braun v. Wal-Mart. The International Labor Communications Association blog has a good summary of what the case means for Wal-Mart:

Dakota County District Judge Robert King ordered the company to pay $6.5 million in back pay. In addition, Wal-Mart faces fines as high as $2 billion for the wage-and-hour violations.

King's ruling culminated a seven-year legal battle by four former Wal-Mart workers who filed a class-action lawsuit on behalf of 56,000 current and former employees who worked at Minnesota Wal-Mart and Sam's Club stores between Sept. 11, 1998, and Jan. 31, 2004.

"I was treated like so many of my co-workers," said Nancy Braun of Rochester, Minn., one of the four plaintiffs. "There was just too much work to do and never enough time to do it. There just wasn't enough time in the day to take the breaks we were entitled to."

Judge King found that Wal-Mart repeatedly and willfully violated Minnesota labor laws or its contract with its employees on the issues of contractual rest breaks, statutory meal breaks, shaving time from paid rest breaks and failure to maintain accurate records.

In the decision, the judge found that Wal-Mart was aware that employees were not receiving breaks to which they were entitled. "In essence, they put their heads in the sand," King stated.

He found that Minnesota law requires every employer to provide its employees with a sufficient time to eat a meal. King stated, "No time to eat a meal is not a sufficient time to eat a meal." King found that Wal-Mart violated the meal break law 73,864 times.