AB 2716, requiring paid sick leave, has passed the state Assembly. It goes to the Senate, but I would assume this one gets vetoed. The California Chamber of Commerce opposes this measure, and the Governor has vetoed almost every bill they have opposed.
The City & County of San Fransisco has enacted a similar ordinance.
The Sac Bee has more.
This is the fun thing about employment law. Just when the courts resolve some arcane aspect of wage and house law that other lawyers think is unbelievably esoteric, a new one pops up:
Wage and hour lawyers are talking about a law and motion ruling made last week by Orange County Superior Court Judge David Velasquez, holding that waiting time penalties under Labor Code § 203 were recoverable as restitution under Business & Professions Code § 17203. In Ybarra v. Aramark Corp., No. 30-2008-00180008-CU-OE-CXC, the court treated section 203′s “wages of the employee [that] shall continue as a penalty” as ordinary wages.
This, of course, will touch off a big hullaballoo.
This particular statute is even more ambiguous than the meal/rest breaks because it says, “the wages of the employee shall continue as a penalty.” This could mean it’s both a vested wage and a penalty, the latter being unavailable under the UCL. Of course, this is a smaller issue because it is automatically capped at 30 days, but still raises all of the other questions that the rest/break “premiums” did, and it continues a trend. The latter fact may be the most alarming for the defense bar.
I admire this lawyer’s creativity, even if I think this ruling isn’t correct and will only add fuel to the blowback fires that are already burning.
The always excellent UCL Practitioner has the order, here.
The materials linked on this page are an interesting read.
The best thing about this initiative is that it focuses on employer compliance, which is simultaneously most effective for employers and least effective for attorney billings. Littler correctly sees the potential for its own earnings, and the truth of compliance being the best approach, as a big part of the way forward.
Also interesting is Appendix D, which is part of a questionaire Littler uses when doing audits. Over the years we all develop our line of questions, but having it carefully systematized like that helps a lot.
Since I’ve started looking at potential cases on the Plaintiffs side, I’ve noticed that I focus on a few things a little bit differently. One of those agrees with this statement in Littler’s materials: namely, that in any intake situation involving an employee, the attorneys quickly turn to wage and hour topics, no matter what the conversation starts with.
Ignoring potential sweeping reforms for a minute, what is to be done? As things stand right now (in California) arbitration is basically becoming less effective by the day, and does not prevent class actions. No one seems to think that the DLSE is an option, and bills trying to make it so fail. This situation puts plaintiffs in court and making class action allegations based on the “micro-technical” violations.
Littler’s white paper gets the answer right as far as I’m concerned: “total compliance” on the inside. It’s really the best option under every employer’s own power.
I’d love to draw the conclusion that this is the Second District walking back the malign effects of the one cent recovery rule. I’d love to draw the conclusion that evidence and word-of-mouth anecdotal evidence about the DLSE meant that civil courts were reconsidering just how much deference to give them, as others have done.Instead, I think this test fails the smell test, and the judges just didn’t like the chutzpah of such a disproportionate fee to recovery ratio. There’s nothing to indicate that they understand just how commonplace this is, or the litigation it creates.So, in the meantime, I’ll take this as a possible sign of a change in law coming, but I wouldn’t count on it having meaningful effect now.
This is a case every counsel for an employer should use as an example of why compliance is so important. We can kvetch all we want about the laws, but kvetching doesn’t get financial results.
This case was over a ministerial error of $44.63. The Defendant settled for $10,500.00 plus reasonable attorneys’ fees to be determined by the Court.
The trial court awarded no fees in response to the Plaintiff’s request for over $46k in fees. The Court of Appeal reversed and only awarded $500.
While the courts weren’t having any of the exorbitant attorneys’ fee arguments, they still had to award something because that’s what the law requires. But that’s not what strikes me here.
What strikes me is a $10,500+ (ultimately a nice round $11k) for a $44.63 screw up. Not to mention all of the attorneys’ fees involved, including on the appeal.
The bottom line is: don’t underpay your employees. Err on the side of overpayment. If you don’t like it, write a letter to your state representatives (who really should do something about this.)
I know they settled here so it doesn’t matter–but does anyone think that if this case had ended up in a $10,500.00 judgment that there would be an Eighth Amendment challenge?
This is another “advance sheet” pro-employer case. But look at the issue: temp agency workers who are still ostensibly “on the roll” at temp agencies are owed waiting time penalties. This is an instance of the L’Oreal genus, which followed the valid-only-when-they’re-valid DLSE interpretation.
Since temp agencies can be on the hook for FEHA violations, are they off the hook after this discharge, or are they in trouble coming and going?
(Thanks to BD for pointing this out.)
I’ve now had a chance to more fully digest the Gattuso opinion. The issue that it resolves is actually rather narrow, and of little utility in either enforcing employee rights or giving compliance guidance to employers. It’s almost useless.The advance-sheet summary of the case is that Labor Code 2802 reimbursements can be paid in the form of a higher salary or commission, so long as there is a formula. Omitted from that summary is that
[i]f the employee can show that the reimbursement amount that the employer has paid is less than the actual expenses that the employee has necessarily incurred for work-required automobile use (as calculated using the actual expense method), the employer must make up the difference.
(Slip. Op. at 16.) (Emphasis added.) What’s more, even though
as with other terms and conditions of employment, a mileage rate for automobile expense reimbursement may be a subject of negotiation and agreement between employer and employee. . . any agreement made by the employee is null and void insofar as it waive the employee’s rights to full expense reimbursement under section 2802.
(Slip. Op. at 17.) (Emphasis added.) What the Supreme Court has done here is, instead of creating a clear rule to follow like they did with “enhanced wages are okay,” they made an extremely fact intensive analysis, subject to lots of error for any employer who misses something in its calculation. Instead of creating a safe harbor, they’ve destroyed the jetty.
The IRS rate isn’t good enough, even though the DLSE and just about everyone else is happy with it. It may be highly impractical to ever conclusively show that the reimbursement is enough, given, as the court points out, the differences in makes and models of car, costs of insurance, fluctuating gas prices, etc.
The California Supreme Court also takes yet another shot at the DLSE, reminding us all that their Opinion letters carry no weight, except when they do.
On the surface, this appears to be a “pro-employer” opinion. It’s not–it’s a disaster, and it will make issues of proof very complicated in any 2802 case–maybe even per se summary judgment proof.
UPDATE:Is this an overreaction? It’s been pointed out to me that this doesn’t change much, except perhaps eliminating the former presumption that the IRS rate was ok. I see every Supreme Court case as being a bad result if it doesn’t give a good rule to follow, because so few cases make it that far. By not viewing the world through the lens of black and white, there are those out there who want to comply–if they just knew how.
WageLaw has an interesting update on Brinker, including a copy of the DIR’s request for publication.They note that:
Proving that it is now little more than a political spoil, Labor Commissioner Angela Bradstreet also sought publication of the opinion, even though it contradicted a long-standing DLSE position (taken when the GOP did not control the DLSE’s policies).
The DIR has not returned multiple requests for comment on this matter. The DIR assures me my request has been forwarded to “the appropriate person,” but I’ve heard nothing.
This is a pro-employer decision allowing for Labor Code section 2802 reimbursements to be made by base salary or compensation increases, provided there is a method to the apportionment.
More to come. . . (We’re busy today!)
You can read Walsh & Walsh’s extended take here, or Shaw Valenza’s here. If I have anything to add, it will be up this week.
UPDATE: Nice prediction on this by Walsh & Walsh, by the way. Good job!
At the request of the Court of Appeal, review is granted on this court’s own motion. The cause is transferred to the Court of Appeal, Fourth Appellate District, Division One, with directions to vacate its opinion and reconsider the matter as it sees fit. The petition for review is denied as moot. The requests for publication are denied as moot. Votes: George, C.J., Kennard, Baxter, Werdegar, Chin, Moreno and Corrigan, JJ
Interesting. I was hoping for a meatier opinion. Maybe that’s what we’ll get.
UPDATE: This is also interesting. The Court of Appeal asked the Supreme Court to deny all of the requests for publication, but look who one of the parties requesting publication was:
| 10/30/2007 | Filed request to publish opinion. | Department of Industrial Relations |
That wouldn’t have anything to do with Miles Locker’s involvement as amicus curiae for the other side, would it? I’ll try and find out more.
Rehearing denied and Remittitur issued. Case closed.
The Supreme Court docket is here.
That’s Kimberly A. Kralowec of The UCL Practitioner.
10/22/2007
Petition for review filed
Adam Hohnbaum et al., Real Parties in Interest by Kimberly A. Kralowec. counsel
The docket is here.
I was preparing to explore the theorizing that I and other bloggers did in the wake of Genrty that it would have implications for employment contracts in general, when I came across this footnote in the recent Murphy v. Check ‘N Go case. “Plaintiff requests judicial notice of information on the process for bringing claims before the Labor Commissioner, which is offered to show that this process ‘does not provide the same protections for the employee and is not an adequate substitute for a court proceeding. . . .’” (Slip. Op. at 9-10 n.1)
I’ve noticed a few times where this has come up. Here, it was a submission by Plaintiff/Appellee. The California Supreme Court did it in Gentry, the Court of Appeal did it in Sumuel v. ADVO, Inc. The Court’s have also declined to give any weight to the DLSE’s opinion letters, and disavowed the notion that the DLSE could issue precedent opinions.
A couple of years ago, the Legislature passed a bill (which was vetoed) that would have required the employer to show up at the DLSE hearing instead of skipping them and waiting for their day in court (AB 879 of 2005.) I was told by a spokesman for the bill’s author that this was to prevent employees from “spinning their wheels” with the Labor Commissioner.
Now, employers generally hate the DLSE and the entire Berman hearing process. The so-called de novo review has been rendered almost useless for employers because in order to avoid paying the employee’s attorney’s fees, you must negate all of their recovery. But, the DLSE is, on its face, an even cheaper and more streamlined way to resolve wage hour disputes than the arbitrations many businesses are spending major coin to uphold. There are no class actions. There are no punitive damages. There is almost no discovery. Lawyers aren’t required. The rules of evidence are very liberal.
On the other side, employees don’t need a lawyer, get help from the staff, and generally get their money in a matter of weeks, not months or years. The notion that small recoveries don’t work there are ridiculous. I’ve been sent to defend claims of around $100! The employee only lost a few hours of paid time off. On top of that, the waiting time penalties almost always make it a gainful proposition for the employee, who does not end up giving a huge chunk to an attorney. And guess what? They have really smart, experience, and knowledegable attorneys like Bill Reich who will represent you for free if there’s an appeal.
Yet, no one wants to go there. No one wants it to do anything or have anything to do with it. Is this simple interest group stuff and/or turf battle stuff? (It’s unfair for employer-side attorneys, not cost effective for their clients, cuts into plaintiff’s attorney’s “market share,” and does a judicial function that the courts think/know they’re the best at) Is that too cynical? or too naive? I’m not sure.
One of the contentions is they can’t handle the extra load. Last I checked, the courts were bursting at the seems themselves. It seems to me that given the choice, funding the DLSE to handle a higher load is cheaper than doing the same in the courts. But if we fund up the courts, then are we paying for the DLSE for?
Please leave comments or send me an e-mail if you have any thoughts about this. I am genuinely confused.
Applying Gentry‘s unconscionability analysis, the First District struck down an arbitration agreement including a class action waiver. (It did not appear to apply the “statutory mandate” part of Gentry.)
Also significant here is that this is another reversal of a trial court’s supposedly broad discretion to make class certification decisions. Here the class certification was reversed. Is it going too far to wonder if Sav-On is a dead letter, both in its “pro-class” and “pro-discretion” senses?
We’ll all digest this over the coming days, but here is some of the choice language:
Furthermore, because (as the parties acknowledge) Brinker’s hourly employees
may waive their rest breaks, and thus Brinker is not obligated to ensure that its employees
take those breaks, any showing on a class basis that plaintiffs or other members of the
proposed class missed rest breaks or took shortened rest breaks would not necessarily
establish, without further individualized proof, that Brinker violated the provisions of
section 226.7, subdivision (a) and IWC Wage Order No. 5 as plaintiffs allege in their
complaint.
(Slip. Op. at 25)
They punted on the big question about whether employers must “force” meal periods, but they implied in a few places that’s where they would go:
“The term “provide” is defined in Merriam-Webster’s Collegiate Dictionary (11th ed. 2006) at
page 1001 as “to supply or make available.” (Italics added.)”
(Slip. Op at 30.)
In White v. Starbucks Corp. (N.D.Cal. July 2, 2007) 497 F.Supp.2d 1080
(Starbucks), the United States District Court for the Northern District of California
recently concluded that, under sections 512(a) and 226.7, “the California Supreme
Court . . . would require only that an employer offer meal breaks, without forcing
employers actively to ensure that workers are taking these breaks,” and stated that “the
employee must show that he was forced to forego his meal breaks as opposed to merely
showing that he did not take them regardless of the reason.”
(Slip. Op. at 39-40)
At the end of the day, the Court didn’t address that issue, and I don’t think we’re done here. This one is unpublished. I’ll post if there are any requests for publication added to the docket.
Shaw Valenza has their take here.
My guess on why they didn’t publish this? Two reasons: (1) they think it’s going up a level anyway, or (2) they think it’s going down and back up. I can see either or both happening.
Meanwhile, unless you’ve got the coin to fight one up to the Tenderloin, keep ensuring your employees take their meal periods.
Bruce Nye at Cal Biz Lit has an interesting post on Gentry (h/t The UCL Practitioner.)
In my original post on Gentry, I noted that:
I think the practical effect of this case will far exceed its holding. In fact, I expect it to add new dimensions to practically every employment case. If every employment contract of this kind has some procedural unconscionability, and that allows an analysis of potentially unconscionable substantive terms…
Mr. Nye at Cal Biz Lit recently stated that he thinks the language goes beyond just employment contracts:
It isn’t clear after this case that any contract of adhesion can escape scrutiny for substantive unconscionability if the side with the power has expressed a preference that the “little guy” sign it and hasn’t given him clear, conspicuous warning that some parts of it aren’t to his advantage. The possibility of opening every contract to scrutiny for fairness is fairly breathtaking.
I don’t take it quite that far. Sure, that is the reductio ad absurdum of the language in that case; however, realistically, this case isn’t going to radically alter all aspects of contract law. Employment contracts are a special case that have long been recognized as asymmetrical in power, and vast quantities of statutes, public policy, and case law reflect that. Without much exaggeration, I’d say that’s what 75% of the Labor Code is about.
What about the other “little guy” situations? I suppose it will depend on the power dynamic of the relationship, but I’m not sure just how far that deviates from the existing framework. I would never underestimate the creativity of my colleagues, so I don’t doubt that language from Gentry will be used in many situations where it doesn’t apply, like the million dollar company versus the mutli-million dollar company. Will it succeed? My Ouija board says no, but it’s often broken.
It will indeed be interesting to see how this plays out.
The Legislature is busy with other things this week, so we turn to the courts.
“Wage Law” has more on Brinker, here.
The one and only unanimous view we’ve heard is that Miles Locker argued well for the amici and that the justices seemed very interested in what he had to say about the DLSE regulations and practices. Aside from that, defense lawyers seemed to believe the employer’s side was better presented, and employees’ lawyers thought the opposite.
Shocker! I didn’t hear it, and regardless of who argued it better, I don’t expect any huge deviation from precedent from the Court of Appeal. Maybe the Supremes will take it up. We’ll see.
Next week’s Business Week has an article about the state of overtime laws in the U.S. From the first graf:
Do America’s decades-old overtime laws make sense anymore? Despite the litigation they are generating, there’s almost no political momentum to change them.
If the author means there’s no political momentum to repeal overtime laws, he’s probably correct, but wise old codgers like me remember in the deep dark past the great overtime regulation revolution of 2004. Those changes required a fair amount of political capital, too.
The crux of the argument is that overtime laws are not achieving their original policy aim:
Yet it’s generally accepted that overtime laws don’t achieve one of their main New Deal-era goals: increasing employment. The initial idea was that companies would choose to hire extra workers rather than pay existing ones time and a half. But that calculus doesn’t hold these days, given the enormous fixed costs of such things as benefits and training for each additional employee.
That may be true, but the original 70 year old policy aim, I submit, is irrelevant. In politics, anything you’ve given to some group that’s advantageous to them, they want to keep. Telling someone they don’t need their extra pay because it’s not creating more workers isn’t going to fly. That’s the politics of it. Policy-wise, there has to be negative implications to that kind of change to wages.
This article started out suggesting that overtime litigation was the concern–is there no common ground between business and labor on that aspect? If not, I suspect the sides are much, much closer than they would be on eliminating overtime.
What’s the solution?