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NOT ALL ABERCOMBIE EMPLOYEES WILL BE SHIRTLESS
RELIGIOUS DISCRIMINATION
EEOC v. Abercrombie & Fitch Stores, Inc. (US 14–86 6/1/15) Title VII/Religious Discrimination & Reasonable Accommodation

Respondent (Abercrombie) refused to hire Samantha Elauf, a practicing Muslim, because the headscarf that she wore pursuant to her reli­gious obligations conflicted with Abercrombie’s employee dress policy. The Equal Employment Opportunity Commission (EEOC) filed suit on Elauf’s behalf, alleging a violation of Title VII of the Civil Rights Act of 1964, which, inter alia, prohibits a prospective employer from refusing to hire an applicant because of the applicant’s religious prac­tice when the practice could be accommodated without undue hard­ship. The EEOC prevailed in the District Court, but the Tenth Cir­cuit reversed, awarding Abercrombie summary judgment on the ground that failure-to-accommodate liability attaches only when the applicant provides the employer with actual knowledge of his need for an accommodation.

Held: To prevail in a disparate-treatment claim, an applicant need show only that his need for an accommodation was a motivating fac­tor in the employer’s decision, not that the employer had knowledge of his need. Title VII’s disparate-treatment provision requires Elauf to show that Abercrombie (1) “fail[ed] . . . to hire” her (2) “because of ” (3) “[her] religion” (including a religious practice). 42 U. S. C. §2000e–2(a)(1). And its “because of” standard is understood to mean that the protected characteristic cannot be a “motivating factor” in an employment decision. §2000e–2(m). Thus, rather than imposing a knowledge standard, §2000e–2(a)(1) prohibits certain motives, re­gardless of the state of the actor’s knowledge: An employer may not make an applicant’s religious practice, confirmed or otherwise, a fac­tor in employment decisions. Title VII contains no knowledge re­quirement. Furthermore, Title VII’s definition of religion clearly dicates that failure-to-accommodate challenges can be brought as disparate-treatment claims. And Title VII gives favored treatment to religious practices, rather than demanding that religious practices be treated no worse than other practices. Pp. 2–7.

731 F. 3d 1106, reversed and remanded.
SCALIA, J., delivered the opinion of the Court, in which ROBERTS,

C. J., and KENNEDY, GINSBURG, BREYER, SOTOMAYOR, and KAGAN, JJ., joined. ALITO, J., filed an opinion concurring in the judgment. THOMAS, J., filed an opinion concurring in part and dissenting in part.
Read the full text here
http://www.supremecourt.gov/opinions/14pdf/14-86_p86b.pdf

Lately there’s been a lot of talk about — and a lot of money spent on — eating food that’s fresh, locally produced, sustainably grown, humane, etc. And while it’s terrific that we’re paying so much attention to the impact our food has on the environment and on ourselves, there’s one key element that’s been left out of most of these conversations.

Her.

I’m pretty sure Claudia and her working conditions aren’t what popped into your head, right?

It’s no coincidence that Claudia and her wages don’t come to mind. A lot of restaurants probably don’t want us to know that we’re paying their workers’ wages. Wait, what?

Yep, the minimum wage for tipped workers in this country is only $2.13 an hour ( Not applicable to California). But even with tips, female tipped workers make a median wage of only $8 an hour. And on top of that, many restaurants also mistreat their employees, for example by requiring them to report higher tips than they actually earned or making them work off the clock.

Take Claudia, for example.

“And one night, Claudia worked a full night’s shift at the IHOP at Houston, Texas, and earned some money in tips, but at the end of the night, a couple walked out without paying the bill. And the manager said to her, even though it is illegal and even though IHOP is a mega corporation, ‘You’re going to be held responsible for that bill.’ And so Claudia ended up paying $20 because that bill was $20 more than everything she had earned that entire night in tips — for the luxury of having worked a full night’s shift at the IHOP in Houston, Texas. And again, I cannot tell you how many thousands of times I have heard that same story.”

Most tipped workers also don’t get benefits like paid sick leave.

I’ll say that again: Most tipped workers don’t get benefits like paid sick leave. If they’re living paycheck to paycheck, they often can’t afford to take unpaid time off. A lot of the people who touch our food only get paid if they go to work, sick or not.

How about a side of H1N1 with those waffles?

And don’t even get me started on the treatment of female restaurant workers.

“The restaurant industry has the highest rates of sexual harassment of any industry in the United States.”

It also happens to be the industry in which many young women get their start in the working world.

The images above are fictional, but the stories aren’t.

The Fair Minimum Wage Act was blocked in the Senate in April 2014, but since then, individual states and companies have raised wages on their own (woo!), and support continues to grow.

This Month in Labor and Employment Law News

  • Claims brought in the California courts under the Private Attorney General Act (“PAGA”) will be exempt from arbitration in the wake of the United States Supreme Court’s decision to deny review of the California Supreme Court’s decision in CLS Transportation Los Angeles LLC v. Ishanian (2014) 59 Cal.4th 348. Results in federal court may vary.
  • President Obama signed a memorandum on January 15 giving federal employees at least six weeks paid leave after giving birth. He also proposed that Congress pass legislation providing $2.2 billion to help states create their own paid leave programs, a proposal most commentators decreed unlikely to succeed.
  • The Los Angeles Superior Court certified a class of about 1600 California Superior Court judges, Court of Appeal justices and California Supreme Court justices, plus about 1800 retirees. The class action alleges the judicial officers were denied raises to which they are entitled under Government Code §68203

Welcome to 2015

Top Three Newly-Published Labor and Employment Cases

  • Mendiola v. CPS Security Solutions, Inc. (California Supreme Court, January 8, 2015) 2015 DJDAR 277. The California Supreme Court held security guards were owed regular and overtime pay for all time required to be at the worksite, including sleeping time. The wage order language interpreted does not apply to the public housekeeping industry or to some workers performing health care duties.
  • Swanson v. Moreno Unified School District (California Court of Appeal, December 23, 2014) 2014 DJDAR 17043. A teacher defeated summary judgment in an employment discrimination case, even though it was undisputed she was discharged based on her poor performance reviews, because the employer “set her up for failure by giving her difficult assignments without the resources required to succeed…”
  • Ibarra v. Manheim Investments (9th Cir., January 8, 2015) 2015 DJDAR 285. When plaintiffs challenge removal under the Class Action Fairness Act, evidence by both sides must be allowed to prove whether over $5 million is in controversy (and the federal courts thereby have jurisdiction). In December, the U.S. Supreme Court held in Dart Cherokee Basin Operating Co., LLC v. Owens that removal notices need not include detailed proof of the amount controverted.

 

As the year comes to a close, it’s time for a “Top Five” list.

  • No. 5:  New California Law Says Proof of Sexual Desire is Not Required to Win Sexual Harassment Claim

 The California Legislature deserves recognition for a new law that strengthens protection against sexual harassment on the job. For years, employers have tried to defend against sexual harassment claims by arguing that the harassment, although boorish, was not illegal because it was not based upon sexual desire.  This “defense” goes something like this — The boss who “joked” with his female subordinate about hopping over to a motel for the night wasn’t actually attracted to her, so that couldn’t be sexual harassment.  Or as the employer claimed in one infamous case, the ironworkers who hazed a new guy on the crew with threats of sexual violence couldn’t have perpetrated sexual harassment since they were all straight.  Earlier this year, the California legislature took away this excuse when it amended the Fair Employment and Housing Act to specifically provide that “sexually harassing conduct need not be motivated by sexual desire.”  These few short words will provide powerful protection for victims of workplace sexual harassment.  As important, the change reminds employers and the courts that sexual harassment is about abuse of power, not sex.

  • No. 4:  California Supreme Court Guarantees that Undocumented Workers are Protected Against Discrimination

The California Supreme Court took aim at the hypocrisy of employers who hire and exploit undocumented workers. It has often been noted that low wage workers, regardless of their immigration status, are frequent victims of workplace violations. Undocumented workers, fearful that any complaint regarding a violation of these rights might result in their deportation, are a particularly vulnerable group.  This year, in Salas v. Sierra Chemical Company, the California Supreme Court ruled that an employer who discriminates or retaliates against an undocumented worker can be held liable. While the case limits the damages available to these employees, it does provide that employers who violate the workplace rights of undocumented employees will be held accountable for their actions.

  • No. 3:  Public Awareness and Outrage Are Building Against Wage Theft As Employee Rights  Are Vindicated in High Profile Cases

While the phrase “wage theft” has been around for years to describe employers who fail to pay overtime or other wages earned by their employees, a number of cases in 2014 have raised public awareness and built public outrage regarding the all-too-common practice of employers forcing employees to work without pay.  Studies suggest that employers are ripping their workers off to the tune of more than $50 billion annually.

The year began with a high profile wage-theft story from an unlikely quarter with the filing of a class action lawsuit against the Oakland Raiders by one of their cheerleaders, Oakland Raiderette Lacy T. The lawsuit sparked similar lawsuits at four other NFL franchises and, as important, a national conversation about wage theft.   In March, seven class action lawsuits were filed across the country against MacDonald’s on behalf of workers in the fast food franchise restaurants alleging its franchises did not pay employees for all hours worked and forced them to work through breaks. Challenges to wage theft kept rolling throughout the year.  In November, employees of Yank Sing, a high end San Francisco dim sum restaurant recovered a landmark settlement — $4 million in back pay and benefits for “blatant” wage theft in settlement of a lawsuit brought by Advancing Justice -Asian Law Caucus, a public interest civil rights organization. These high profile lawsuits have increased public awareness of wage theft and their examples serve as a deterrent to future wage theft.

  • No. 2:  National Labor Relations Board Opens the Door for Retail Workers to Organize by Department

The federal administrative agency that oversees labor-management relations also took steps to level the playing field for workers in 2014.  In July, the NLRB issued a decision that makes it far easier for unions to get a foothold in large retailers, including Walmart.  In a case involving Macy’s department store, the NLRB ruled that the United Food and Commercial Workers could organize a subgroup of 41 cosmetic workers at a 150-employee store.  Before this change, unions faced huge challenges because they were required to win storewide votes.  As of 2013, only 4.6% of workers in the retail industry were members of unions, as reported by the Wall Street Journal.   That’s down from more than 6% in 2003.  The UFCW is campaigning to organize retail workers at stores like Bloomingdales, Macy’s, Target and, of course, Walmart.

  • No. 1:  Increases in Minimum Wage for Workers 

Without question, the movement that gained the most momentum this year for workers was the campaign to increase the minimum wage.    President Obama called upon Congress to raise the minimum wage from $7.25 an hour to $10.10 an hour, and signed an Executive Order to raise the minimum wage to $10.10 an hour for new federal contract workers.  Unfortunately, the gridlocked Congress did not act to increase the minimum wage that applies to all workers around the nation. However,  eleven states (California, Connecticut, Delaware, Hawaii, Maryland, Massachusetts, Michigan, Minnesota, Rhode Island, Vermont, and West Virginia) and the District of Columbia did raise their minimum wage.

As of January 1, 2015, twenty-nine states and the District of Columbia will have minimum wages that exceed the paltry $7.25 per hour that workers earn under the federal minimum wage.  The highest minimum wage in the nation is in the District of Columbia, where the minimum wage is $9.50 an hour.  And, by January 1st, six other states (California, Connecticut, Massachusetts, Rhode Island, Vermont and Washington) will have legally mandated minimum wages of at least $9.00 an hour. While significantly more work remains to be done in this area, increases in the minimum wages are a meaningful development for millions of low-wage workers in this country.

So, as the year 2014 comes to a close, let’s toast these advancements for workers and rededicate ourselves to improving the working lives of all employees in the new year.

 

Landers v. Quality Communications

(9th Cir. 12-15890 11/12/14) FLSA/Wage & Hour

The panel affirmed the dismissal, pursuant to Rule 8 of the Federal Rules of Civil Procedure, of an action under the Fair Labor Standards Act, alleging failure to pay minimum wages and overtime wages.

The panel held that under Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), it is not enough for a complaint under the FLSA merely to allege that the employer failed to pay the employee minimum wages or overtime wages. Rather, the allegations in the complaint must plausibly state a claim that the employer failed to pay minimum wages or overtime wages. Agreeing with the First, Second, and Third Circuits, the panel held that detailed factual allegations regarding the number of overtime hours worked are not required, but conclusory allegations that merely recite the statutory language are not adequate. A plaintiff asserting a claim to overtime payments must allege that she worked more than forty hours in a given workweek without being compensated for the hours workedin excess of forty during that week.

The panel held that the complaint in this case did not state a plausible claim because it did not allege facts showing that there was a specific week in which the plaintiff was entitled to but denied minimum wages or overtime wages.

SICK LEAVE FOR ALL.    ISN’T IT ABOUT TIME?

On September 10, 2014,  Governor Brown signed the Healthy Workplaces, Healthy Families Act of 2014 (“California paid sick leave act”) with an effective date of January 1, 2015. California has become the second state to mandate that certain employers provide paid sick leave to employees.

Employers with employees who work in California will need to provide up to 24 hours of paid sick time to current and new employees beginning on July 1, 2015. For employers in the three California cities that already require paid sick leave, coupling multiple laws may prove awkward.

Covered Employees

The paid sick leave act applies to any employer that has at least one employee who works more than 30 days in a year in the state of California. All employees who work more than 30 days in a year in California are covered (including part-time and temporary employees), with the exception of (a) employees covered by a valid collective bargaining agreement that provides paid leave and has other required provisions; (b) employees in the “construction industry” covered by a valid collective bargaining agreement;3 (c) providers of in-home supportive services; and (d) individuals employed by an air carrier as a flight deck or cabin crew member (provided they receive compensated time off).

What you can expect

Employees get one hour of sick time for every 30 hours worked (including overtime hours). Employees who are exempt administrative, executive, or professional employees accrue sick time based on the employee’s normal work week or a 40-hour work week, whichever is less. Employees first become eligible to accrue paid sick time on July 1, 2015; however, they will not begin to accrue paid sick time until they have worked in California for 30 days (within a year) from July 1, 2015 or from the commencement of hire, whichever is later. Thus, for an employee hired before July 1, 2015, the earliest that accrual might begin is July 31, 2015 (assuming the employee works every day in July). 

 

Godfrey v. Oakland Port Services

(CA1/2  A139274 10/28/14) Wage & Hour  (From the actual opinion)

Named plaintiffs Lavon Godfrey and Gary Gilbert initiated this class action lawsuit against Oakland Port Services Corp., doing business as AB Trucking (AB).  They alleged that AB did not pay its drivers for all hours worked, misclassified some drivers as non-employee trainees and did not pay them at all, and failed to provide required meal and rest breaks.  Plaintiffs sought certification of the class of drivers who performed work for AB out of its Oakland, California facility.  The trial court granted the class certification motion, and the case proceeded to a bench trial.  Plaintiffs prevailed on most of their causes of action and the court awarded the class a total of $964,557.08.  In a post-judgment order, the court awarded attorney fees, litigation expenses, and class representative enhancements to plaintiffs.

On appeal, AB relies primarily on the argument that federal law preempts application of California’s meal and rest break requirements to motor carriers.  AB also argues in passing that the court order granting class certification was unsupported by substantial evidence, but without addressing the evidence presented on the motion; that the court should have reserved individual determinations of damages for the claims administration process; that AB’s drivers are expressly excluded from coverage under Industrial Welfare Commission (IWC) Order No. 9-2001; and that the award of attorney fees and class representative enhancements should be reversed.  We find no merit in AB’s preemption or other arguments and affirm.

http://www.courts.ca.gov/opinions/documents/A139274.PDF

  • TOP THREE CASES OF THE LAST MONTH
  • Dynamex Operations West, Inc. v. Superior Court (California Court of Appeal, October 15, 2014) 2014 DJDAR 14072. For claims covered by IWC wage orders, workers are employees if the defendant (a) exercises “control over the wages, hours or working conditions,” or (b) “suffers or permits” the workers to work, or (c) creates “a common law employment relationship.”
  • The Retail Property Trust v. United Brotherhood of Carpenters (9th Circuit, September 23, 2014) 2014 DJDAR 13131. A shopping mall’s claims against a labor union and others for trespass and nuisance were not preempted by the LMRA because the mall sought only time, place and manner restrictions to limit “raucous and threatening picket activity.”
  • Network Capital Funding Corporation v. Papke (California Court of Appeal, October 9, 2014) 2014 DJDAR13841. Courts, not arbitrators, must decide whether arbitration agreements allow class action arbitration, absent clear and unmistakable agreement that the arbitrator decides. Sandquist v. Lebo Automotive, Inc. (2014) 228 Cal.App.4th 65 reached the opposite conclusion.

 

October 22, 2014

Newly enacted Labor Code §2810.3 makes businesses whose workers are supplied by labor contractors jointly responsible for payment of wages, securing workers compensation insurance, and workplace safety

Fairness study with monkeys demonstrates how important equal pay is for people.

 

Castaneda v. Ensign Group, Inc.

(CA2/6 B249119A 9/15/14) Employer Defined  Was the employer trying to do an end run around Martinez vs. Combs?

A corporation with no employees owns a corporation with employees.  If the corporation with no employees exercises some control over the corporation with employees, it also may be the employer of the employees of the corporation it owns.

Plaintiff John Castaneda appeals a summary judgment in favor of defendant The Ensign Group, Inc. (Ensign) in his class action lawsuit.  He seeks damages for nonpayment of minimum and overtime wages.   We conclude there are triable issues of fact whether Ensign was Castaneda’s employer.  We reverse.

http://www.courts.ca.gov/opinions/documents/B249119A.PDF

 

Dilts v Penske Logistics Inc.

(9th Cir. 12-55705 9/8/14) Meal & Rest Breaks/FAA Preemption

The panel filed an order amending its previous opinion and concurrence, and in the amended opinion the panel reversed the district court’s dismissal, based on federal preemption, of claims brought by a certified class of drivers alleging violations of California’s meal and rest break laws.

The panel held that California’s meal and rest break laws as applied to the motor carrier defendants were not “related to” defendants’ prices, routes, or services, and therefore they were not preempted by the Federal Aviation Administration Authorization Act of 1994.

District Judge Zouhary concurred, and wrote separately to emphasize that the defendant failed to carry its burden of proof on its preemption defense.

http://cdn.ca9.uscourts.gov/datastore/opinions/2014/09/08/12-55705.pdf

Kao v. University of San Francisco
(CA1/3 A135750, filed 8/4/14, pub. ord 9/3/14) Workplace Threats/Fitness for Duty
Plaintiff John S. Kao sued the University of San Francisco (USF) for violations of the Fair Employment and Housing Act (Gov. Code, § 12900 et seq. (FEHA)), the Unruh Civil Rights Act (Civ. Code, § 51 et seq.), and the Confidentiality of Medical Information Act (Civ. Code, § 56 et seq.) in connection with the events surrounding his termination as a professor at USF. He also asserted causes of action against USF for violation of his right to privacy (Cal. Const., art. 1, § 1), and against USF and its Assistant Vice President for Human Resources, Martha Peugh-Wade, for defamation.

USF directed Kao to have a fitness-for-duty examination after faculty members and school administrators reported that his behavior was frightening them, and the university terminated his employment when he refused to participate in the examination. The court granted a nonsuit against Kao on the defamation cause of action, and a jury ruled against him on his other claims. Kao contests the judgment on multiple grounds, but his principal contention is that USF could not lawfully require the examination. We disagree and affirm the judgment for USF.
http://www.courts.ca.gov/opinions/documents/A135750.PDF

Jiminez v, Allstate Insurance Co.
(9th Cir. 12-56112 9/3/14) Class Certification
The panel affirmed the district court’s grant of class certification to about 800 Allstate Insurance Company employees in California who alleged that Allstate had a practice or unofficial policy of requiring its claim adjusters to work unpaid off the-the-clock overtime in violation of California law.
The panel held that the district court did not abuse its discretion in applying Fed. R. Civ. P. 23(a)(2)’s commonality requirement.

The panel also held that the class certification order did not violate Allstate’s due process rights. Specifically, the panel held that the class certification order preserved Allstate’s opportunity to raise any individualized defenses at the damages phase, and that the district court’s approval of statistical modeling did not violate Allstate’s due process rights.
http://cdn.ca9.uscourts.gov/datastore/opinions/2014/09/03/12-56112.pdf

California Labor Code Section 2802
Sometimes you just have to appreciate what you have. Introducing an old friend,Labor Code Section 2802.
2802. (a) An employer shall indemnify his or her employee for all
necessary expenditures or losses incurred by the employee in direct
consequence of the discharge of his or her duties, or of his or her
obedience to the directions of the employer, even though unlawful,
unless the employee, at the time of obeying the directions, believed
them to be unlawful.
(b) All awards made by a court or by the Division of Labor
Standards Enforcement for reimbursement of necessary expenditures
under this section shall carry interest at the same rate as judgments
in civil actions. Interest shall accrue from the date on which the
employee incurred the necessary expenditure or loss.
(c) For purposes of this section, the term “necessary expenditures
or losses” shall include all reasonable costs, including, but not
limited to, attorney’s fees incurred by the employee enforcing the
rights granted by this section.

Patterson v. Domino’s Pizza
(SC S204543 8/28/14)
Franchisor Liability for Sexual Harassment of Franchisee’s Employee

Franchising, especially in the fast-food industry, has become a ubiquitous, lucrative, and thriving business model. This contractual arrangement benefits both parties. The franchisor, which sells the right to use its trademark and comprehensive business plan, can expand its enterprise while avoiding the risk and cost of running its own stores. The other party, the franchisee, independently owns, runs, and staffs the retail outlet that sells goods under the franchisor’s name. By following the standards used by all stores in the same chain, the self-motivated franchisee profits from the expertise, goodwill, and reputation of the franchisor.

In the present case, a male supervisor employed by a franchisee allegedly subjected a female subordinate to sexual harassment while they worked together at the franchisee’s pizza store. The victim, who is the plaintiff herein, sued the franchisor, along with the harasser and franchisee. The plaintiff claimed that because the franchisor was the “employer” of persons working for the franchisee, and because the franchisee was the “agent” of the franchisor, the latter could be held vicariously liable for the harasser’s alleged breach of statutory and tort law.

The trial court granted summary judgment for the franchisor on the ground the requisite employment and agency relationships did not exist. The Court of Appeal disagreed, and reversed the judgment of the trial court.
We granted review to address the novel question dividing the lower courts in this case: Does a franchisor stand in an employment or agency relationship with the franchisee and its employees for purposes of holding it vicariously liable for workplace injuries allegedly inflicted by one employee of a franchisee while supervising another employee of the franchisee? The answer lies in the inherent nature of the franchise relationship itself.
Over the past 50 years, the Courts of Appeal, using traditional “agency” terminology, have reached various results on whether a franchisor should be held liable for torts committed by a franchisee or its employees in the course of the franchisee’s business. In analyzing these questions, the appellate courts have focused on the degree to which a particular franchisor exercised general “control” over the “means and manner” of the franchisee’s operations.
Meanwhile, franchising has seen massive growth. A franchisor, which can have thousands of stores located far apart, imposes comprehensive and meticulous standards for marketing its trademarked brand and operating its franchises in a uniform way. To this extent, the franchisor controls the enterprise. However, the franchisee retains autonomy as a manager and employer. It is the franchisee who implements the operational standards on a day-to-day basis, hires and fires store employees, and regulates workplace behavior.
Analysis of the franchise relationship for vicarious liability purposes must accommodate these contemporary realities. The imposition and enforcement of a uniform marketing and operational plan cannot automatically saddle the franchisor with responsibility for employees of the franchisee who injure each other on the job. The contract-based operational division that otherwise exists between the franchisor and the franchisee would be violated by holding the franchisor accountable for misdeeds committed by employees who are under the direct supervision of the franchisee, and over whom the franchisor has no contractual or operational control. It follows that potential liability on the theories pled here requires that the franchisor exhibit the traditionally understood characteristics of an “employer” or “principal;” i.e., it has retained or assumed a general right of control over factors such as hiring, direction, supervision, discipline, discharge, and relevant day-to-day aspects of the workplace behavior of the franchisee’s employees. (See Vernon v. State of California (2004) 116 Cal.App.4th 114, 124 (Vernon) [considering “the ‘totality of circumstances’ that reflect upon the nature of the work relationship of the parties”].)
Here, the franchisor prescribed standards and procedures involving pizza-making and delivery, general store operations, and brand image. These standards were vigorously enforced through representatives of the franchisor who inspected franchised stores. However, there was considerable, essentially uncontradicted evidence that the franchisee made day-to-day decisions involving the hiring, supervision, and disciplining of his employees. Plaintiff herself testified that after the franchisee hired her, she followed his policy, and reported the alleged sexual harassment to him. The franchisee suspended the offender. Nothing contractually required or allowed the franchisor to intrude on this process.

Plaintiff highlights the franchisee’s testimony that a representative of the franchisor said the harasser should be fired. But, consistent with the trial court’s ruling below, any inference that this statement represented franchisor “control” over discipline for sexual harassment complaints cannot reasonably be drawn from the evidence. The uncontradicted evidence showed that the franchisee imposed discipline consistent with his own personnel policies, declined to follow the ad hoc advice of the franchisor’s representative, and neither expected nor sustained any sanction for doing so.
For these reasons, we will reverse the Court of Appeal’s decision overturning the grant of summary judgment in the franchisor’s favor.
For the full opinion
http://www.courts.ca.gov/opinions/documents/S204543.PDF

Slayman v. FedEx
(9th Cir. 12-35525 8/27/14) Class Certification/Employment Status (Oregon)
The panel reversed the Multidistrict Litigation Court’s grant of summary judgment to FedEx Ground Package System, Inc., its denial of plaintiff FedEx drivers’ motion for partial summary judgment, and its certification of plaintiffs’ classes insofar as they sought prospective relief in two class actions alleging that FedEx drivers in Oregon were employees rather than independent contractors.
The panel held under Oregon law that plaintiff FedEx drivers were employees as a matter of law under both the right-to-control and economic-realities tests. The panel remanded to the district court with instructions to enter summary judgment for plaintiffs on the question of employment status. The panel also held that one of the classes lacked Article III standing to seek prospective relief, and the other class’s claims for prospective relief became moot before the Multidistrict Litigation Court certified the class.
http://cdn.ca9.uscourts.gov/datastore/opinions/2014/08/27/12-35525.pdf

Alexander v. FedEx
(9th Cir. 12-17458 8/27/14) Class Certification/Employment Status (California)
The panel reversed the Multidistrict Litigation Court’s grant of summary judgment entered in favor of FedEx Ground Package System, Inc., and its denial of a plaintiff class of FedEx drivers’ motion for partial summary judgment in a class action alleging that FedEx drivers in California were employees rather than independent contractors.
The panel held that the plaintiff FedEx drivers were employees as a matter of law under California’s right-to-control test. The panel remanded to the district court with instructions to enter summary judgment for plaintiffs on the question of employment status.

Judge Trott, joined by Judge Goodwin, concurred. Judge Trott wrote that FedEx’s labeling of the drivers as “independent contractors” in its Operating Agreement did not conclusively make them so.

http://cdn.ca9.uscourts.gov/datastore/opinions/2014/08/27/12-17458.pdf

U. Health Ctrs. of San Joaquin v. Super. Ct.
(CA5 F067763 8/25/14) Arbitrator’s Mandatory Disclosure Obligations

The trial court vacated an arbitration award issued in favor of defendant United Health Centers of the San Joaquin Valley, Inc. (UHC) in a wrongful termination case brought against it by its former employee, plaintiff Jennifer Vradenburg-Haworth. The basis of the trial court’s action was that the neutral arbitrator failed to comply with the mandatory disclosure requirements of Code of Civil Procedure section 1281.9 and the ethics standards for arbitrators. Although UHC presented evidence from which the trial court could find that Vradenburg-Haworth’s counsel forfeited the right to seek to have the award vacated on this basis, as that principle is explained in Dornbirer v. Kaiser Foundation Health Plan, Inc. (2008) 166 Cal.App.4th 831 (Dornbirer), the trial court determined that, pursuant to section 1281.85, subdivision (c) (hereafter 1281.85(c)), an arbitrator’s mandatory disclosure obligations cannot be waived, and refused to consider Dornbirer. The question before the court is whether the forfeiture principles stated in Dornbirer remain viable after the enactment of section 1281.85(c). The court concluded that they do. Accordingly, the court granted UHC’s petition for writ of mandate and reversed the trial court’s order vacating the arbitration award.

http://www.courts.ca.gov/opinions/documents/F067763.PDF

Cochran v. Schwan’s Home Service
(CA2/2 B247160 8/12/14) Reimbursement of Employee Personal Cell Phone Use for Work-Related Calls

The court held that when employees must use their personal cell phones for work-related calls, Labor Code section 2802 requires the employer to reimburse them. Whether the employees have cell phone plans with unlimited minutes or limited minutes, the reimbursement owed is a reasonable percentage of their cell phone bills. Because the trial court relied on erroneous legal assumptions about the application of section 2802, the court reversed the order denying certification to a class of 1,500 service managers in an action against Schwan’s Home Service, Inc. (Home Service) seeking reimbursement of work-related cell phone expenses.

Gregory v. Cott
(SC S209125 8/4/14) In-Home Caregiver Liability
Verbatim from the case
The question in this case is whether patients suffering from Alzheimer’s disease are liable for injuries they inflict on health care workers hired to care for them at home. Because agitation and physical aggression are common late-stage symptoms of the disease, injuries to caregivers are not unusual. California and other jurisdictions have established the rule that Alzheimer’s patients are not liable for injuries to caregivers in institutional settings. We conclude that the same rule applies to in-home caregivers who, like their institutional counterparts, are employed specifically to assist these disabled persons. It is a settled principle that those hired to manage a hazardous condition may not sue their clients for injuries caused by the very risks they were retained to confront.

This conclusion is consistent with the strong public policy against confining the disabled in institutions. If liability were imposed for caregiver injuries in private homes, but not in hospitals or nursing homes, the incentive for families to institutionalize Alzheimer’s sufferers would increase. Our holding does not preclude liability in situations where caregivers are not warned of a known risk, where defendants otherwise increase the level of risk beyond that inherent in providing care, or where the cause of injury is unrelated to the symptoms of the disease.

We encourage the Legislature to focus its attention on the problems associated with Alzheimer’s care giving. The number of Californians afflicted with this disease can only be expected to grow in coming years. Training requirements and enhanced insurance benefits for caregivers exposed to the risk of injury are among the subjects worthy of legislative investigation.

Don’t you just love it when the court gets it right?

Rhea v. General Atomics (CA4/1 D064517 7/21/14)
Exempt Employees/Partial Day Absence Deductions
Another screw job for the worker. This case says that no matter how much extra you work without additional pay as an exempt employee, your company can dock your PTO when you take off for an hour to have a chipped tooth repaired. It reminds me of the coin toss joke, heads I win, tails you lose.
This appeal presents a challenge to General Atomics’ employment practice of requiring exempt employees to use their annual leave hours when they are absent from work for portions of a day. Although Conley v. Pacific Gas & Electric Co. (2005) 131 Cal.App.4th 260, 263 (Conley) established that California law does not prohibit an employer “from following the established federal policy permitting employers to deduct from exempt employees’ vacation leave, when available, on account of partial-day absences,” appellant Lori Rhea contends that Conley was wrongly decided, or in the alternative, that even under Conley, General Atomics is not permitted to deduct from an exempt employee’s leave bank when the employee is absent for less than four hours.
The court concluded that Rhea’s contentions are without merit, and accordingly the court affirmed the trial court’s judgment in favor of General Atomics.

http://www.courts.ca.gov/opinions/documents/D064517.PDF

Harris v. Pac Anchor Transportation, Inc.,
No. S194388 (July 28, 2014):
In a unanimous decision, the California Supreme Court held that the Federal Aviation Administration Authorization Act of 1994 (FAAAA) does not preempt an action brought under California’s Unfair Competition Law (UCL) when the action does not relate to the prices, routes, or services of a motor carrier with respect to the transportation of property. Now, the state of California can proceed with its action against a trucking company and its owner for allegedly misclassifying their drivers as independent contractors and for other violations of California’s labor and unemployment insurance laws.
In the last year our firm has handled several significant trucking company cases and we hope to do more now that the question of classification has been resolved. Interestingly, Pac Anchor Transportation was represented by an attorney in a neighboring office. Small world

Peabody v. Time Warner Cable
(SC S204804 7/14/14)
Commissioned Employee Exemption

Susan Peabody worked for Time Warner Cable, Inc. (Time Warner), as a commissioned salesperson. She received biweekly paychecks, which included hourly wages in every pay period and commission wages approximately every other pay period. After Peabody stopped working for Time Warner, she sued, alleging various wage and hour violations. Time Warner removed the matter to federal court and successfully moved for summary judgment. Peabody appealed.

At the request of the United States Court of Appeals for the Ninth Circuit (Peabody v. Time Warner Cable, Inc. (9th Cir. 2012) 689 F.3d 1134 (Peabody); Cal. Rules of Court, rule 8.548), the California Supreme Court considered whether an employer may attribute commission wages paid in one pay period to other pay periods in order to satisfy California’s compensation requirements. The California Supreme Court concluded the answer is no. Read more by downloading the full text of the case.

http://www.courts.ca.gov/opinions/documents/S204804.PDF

Paratransit, Inc. v. Unemployment Ins. Appeals Bd.
(SC S204221 7/3/14) Disobedience Not Misconduct/Unemployment Insurance

In this case, an employee refused his employer’s repeated orders to sign a written disciplinary notice, because he disputed the notice’s factual allegations and thought he was entitled to consult with his union representative first. There is no dispute over whether the employer was within its rights to fire the employee for his insubordination. The only question is whether that single act of disobedience constituted misconduct within the meaning of California’s Unemployment Insurance Code. If so, then the employee is disqualified from receiving unemployment compensation benefits.

Based on the undisputed facts in the administrative record, the court concluded the employee’s refusal to sign the disciplinary notice was not misconduct but was, at most, a good faith error in judgment that does not disqualify him from unemployment benefits.

Burwell v. Hobby Lobby Stores, Inc.
(US 13–354 6/30/14)
The Supreme Court ruled on Monday (6/30/14) that requiring family-owned corporations to pay for insurance coverage for contraception under the Affordable Care Act violated a federal law protecting religious freedom. It was, a dissent said, “a decision of startling breadth.”

The 5-to-4 ruling, which applied to two companies owned by Christian families, opened the door to many challenges from corporations over laws that they claim violate their religious liberty. Keep in mind that there are many billion-dollar family-owned businesses, including many of the businesses that are in control of our government like the Koch brothers who run a multi billion dollar company and spend millions of dollars to control local and national elections. 5 to 4 rulings are the legacy of the Bush I & II and Reagan administrations. Three bad presidents and five insane Supreme Court justices will ruin our country forever.

The decision, issued on the last day of the term, reflected what appears to be a key characteristic of the court under Chief Justice John G. Roberts Jr. — an inclination toward nominally incremental rulings with vast potential for great change.

Salas v. Sierra Chemical Co., S196568 (June 26, 2014): On June 26, the California Supreme Court issued a decision holding that federal immigration law does not preempt a California law that extends state law protections to all workers regardless of their immigration status. However, the court held that federal law does preempt state law on the issue of liability for lost wages for any period after an employer discovers that an employee is not authorized to work in the United States.
The first part of the Salas decision runs counter to the Supreme Court of the United States’ decision in Hoffman Plastic Compounds, Inc. v. NLRB (2002) 535 U.S. 137—a point made by Justice Baxter’s scathing dissent. Hoffman concluded that federal immigration policy is undermined when an alien who is unauthorized for employment, and who obtained it by criminal means, seeks unearned wages for being terminated from the job he or she was never entitled to have. In Hoffman, the Supreme Court refused to allow back pay awards to illegal aliens. It said: “awarding back pay to illegal aliens runs counter to policies underlying IRCA [the Immigration Reform and Control Act].”
The second part of the decision is equally troublesome. The court held that the doctrines of after-acquired evidence and unclean hands are not complete defenses to an employee’s claim for violations of FEHA or state public policy, but can be a factor in limiting the employee’s recovery. The court did not explain how these defenses should be applied to limit recovery.

Von Nothdurft v. Steck (CA5 F066608 6/26/14)
Resident Management/Wages or Rental Credit:

John Steck hired Brenda Leigh Von Nothdurft to work as a resident manager at an apartment complex he owned. The two of them signed a management agreement which provided that Von Nothdurft would be compensated by, among other things, “[f]ree rent of a three bedroom apartment during the term as manager.” Believing she had not been adequately compensated, she sought to recover wages for all of her work without deduction for her free apartment.

The court said Von Nothdurft can’t have it both ways. The court concluded the parties’ agreement satisfies the requirements of the applicable wage order to allow Steck to take a rental credit against Von Nothdurft’s wages, so we affirm the judgment.

Here is the full text of the decision:
http://www.courts.ca.gov/opinions/documents/F066608.PDF

Senate Bill No. 1360
Passed the Senate April 1, 2014
Secretary of the Senate
Passed the Assembly June 19, 2014
Chief Clerk of the Assembly
This bill was received by the Governor this day of , 2014, at o’clock m.
Private Secretary of the Governor

An act to amend Section 226.7 of the Labor Code, relating to
compensation.
legislative counsel’s digest
SB 1360, Padilla. Compensation: rest or recovery periods.
Existing law prohibits an employer from requiring an employee
to work during a meal or rest or recovery period mandated by an
applicable statute, or applicable regulation, standard, or order of
the Industrial Welfare Commission (IWC), the Occupational Safety
and Health Standards Board, or the Division of Occupational Safety
and Health and establishes penalties for an employer’s failure to
provide a mandated meal or rest or recovery period. Existing wage
orders of the IWC require that a rest period be counted as hours
worked, for which there shall be no deduction from wages.
This bill would provide that a rest or recovery period mandated
pursuant to a state law, including, but not limited to, an applicable
statute, or applicable regulation, standard, or order of the IWC,
the board, or the division, shall be counted as hours worked, for
which there shall be no deduction from wages. The bill would
declare that provision to be declaratory of existing law.
The people of the State of California do enact as follows:
SECTION 1. Section 226.7 of the Labor Code is amended to
read:
226.7. (a) As used in this section, “recovery period” means a
cooldown period afforded an employee to prevent heat illness.
(b) An employer shall not require an employee to work during
a meal or rest or recovery period mandated pursuant to an
applicable statute, or applicable regulation, standard, or order of
the Industrial Welfare Commission, the Occupational Safety and
Health Standards Board, or the Division of Occupational Safety
and Health.
(c) If an employer fails to provide an employee a meal or rest
or recovery period in accordance with a state law, including, but
not limited to, an applicable statute or applicable regulation,
standard, or order of the Industrial Welfare Commission, the
Occupational Safety and Health Standards Board, or the Division
of Occupational Safety and Health, the employer shall pay the
employee one additional hour of pay at the employee’s regular
rate of compensation for each workday that the meal or rest or
recovery period is not provided.

(d) A rest or recovery period mandated pursuant to a state law,
including, but not limited to, an applicable statute, or applicable
regulation, standard, or order of the Industrial Welfare
Commission, the Occupational Safety and Health Standards Board,
or the Division of Occupational Safety and Health, shall be counted
as hours worked, for which there shall be no deduction from wages.
This subdivision is declaratory of existing law.
(e) This section shall not apply to an employee who is exempt
from meal or rest or recovery period requirements pursuant to
other state laws, including, but not limited to, a statute or
regulation, standard, or order of the Industrial Welfare
Commission.

Iskanian v. CLS Transportation

(SC S204032 6/23/14) Arbitration/PAGA
The court buried Gentry, but gave new life to PAGA claims. What a wonderful, wild, inconsistent world in which we live.

On June 23, 2014, in a decision with significant ramifications for California employers seeking to use class action arbitration waivers as a deterrent to wage and hour class action litigation, the California Supreme Court issued its long-awaited decision in Iskanian v. CLS Transportation Los Angeles, LLC. As you will read, the court had to be consistent with United States Supreme Court’s recent decisions, but the California Supreme Court just carved out a really big exception with PAGA.

Here is a portion of the opinion.
In this case, we again address whether the Federal Arbitration Act (FAA) preempts a state law rule that restricts enforcement of terms in arbitration agreements. Here, an employee seeks to bring a class action lawsuit on behalf of himself and similarly situated employees for his employer’s alleged failure to compensate its employees for, among other things, overtime and meal and rest periods. The employee had entered into an arbitration agreement that waived the right to class proceedings. The question is whether a state’s refusal to enforce such a waiver on grounds of public policy or unconscionability is preempted by the FAA. We conclude that it is and that our holding to the contrary in Gentry v. Superior Court (2007) 42 Cal.4th 443 (Gentry) has been abrogated by recent United States Supreme Court precedent. We further reject the arguments that the class action waiver at issue here is unlawful under the National Labor Relations Act and that the employer in this case waived its right to arbitrate by withdrawing its motion to compel arbitration after Gentry.

The employee also sought to bring a representative action under the Labor Code Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.). This statute authorizes an employee to bring an action for civil penalties on behalf of the state against his or her employer for Labor Code violations committed against the employee and fellow employees, with most of the proceeds of that litigation going to the state. As explained below, we conclude that an arbitration agreement requiring an employee as a condition of employment to give up the right to bring representative PAGA actions in any forum is contrary to public policy. In addition, we conclude that the FAA’s goal of promoting arbitration as a means of private dispute resolution does not preclude our Legislature from deputizing employees to prosecute Labor Code violations on the state’s behalf. Therefore, the FAA does not preempt a state law that prohibits waiver of PAGA representative actions in an employment contract.

Finally, we hold that the PAGA does not violate the principle of separation of powers under the California Constitution.

Lane v. Franks (US 13–483 6/19/14)
First Amendment Protection of Public Employee’s Subpoenaed Testimony/Qualified Immunity

As Director of Community Intensive Training for Youth (CITY), a pro­gram for underprivileged youth operated by Central Alabama Com­munity College (CACC), petitioner Edward Lane conducted an audit of the program’s expenses and discovered that Suzanne Schmitz, an Alabama State Representative on CITY’s payroll, had not been re­porting for work. Lane eventually terminated Schmitz’ employment. .Shortly thereafter, federal authorities indicted Schmitz on charges of mail fraud and theft concerning a program receiving federal funds. Lane testified, under subpoena, regarding the events that led to his terminating Schmitz. Schmitz was convicted and sentenced to 30 months in prison. Meanwhile, CITY was experiencing significant budget shortfalls. Respondent Franks, then CACC’s president, ter­minated Lane along with 28 other employees in a claimed effort to address the financial difficulties. A few days later, however, Franks rescinded all but 2 of the 29 terminations—those of Lane and one other employee. Lane sued Franks in his individual and official ca­pacities under 42 U. S. C. §1983, alleging that Franks had violated the First Amendment by firing him in retaliation for testifying against Schmitz. The District Court granted Franks’ motion for summary judgment, holding that the individual-capacity claims were barred by qualified immunity and the official-capacity claims were barred by the Elev­enth Amendment. The Eleventh Circuit affirmed, holding that Lane’s testimony was not entitled to First Amendment protection. It reasoned that Lane spoke as an employee and not as a citizen be­cause he acted pursuant to his official duties when he investigated and terminated Schmitz’ employment.

1. Lane’s sworn testimony outside the scope of his ordinary job du­ties is entitled to First Amendment protection. Pp. 6–13.

(a) Pickering v. Board of Ed. of Township High School Dist. 205, Will Cty., 391 U. S. 563, 568, requires balancing “the interests of the[employee], as a citizen, in commenting upon matters of public con­cern and the interest of the State, as an employer, in promoting the efficiency of the public services it performs through its employees. ”Under the first step of the Pickering analysis, if the speech is made pursuant to the employee’s ordinary job duties, then the employee is not speaking as a citizen for First Amendment purposes, and the in­quiry ends. Garcetti v. Ceballos, 547 U. S. 410, 421. But if the “em­ployee spoke as a citizen on a matter of public concern,” the inquiry turns to “whether the relevant government entity had an adequate justification for treating the employee differently from any other member of the general public.” Id., at 418. Pp. 6–8.

(b) Lane’s testimony is speech as a citizen on a matter of public concern. Pp. 8–12.

(1) Sworn testimony in judicial proceedings is a quintessential example of citizen speech for the simple reason that anyone who tes­tifies in court bears an obligation, to the court and society at large, to tell the truth. That obligation is distinct and independent from any separate obligations a testifying public employee might have to his employer. The Eleventh Circuit read Garcetti far too broadly in hold­ing that Lane did not speak as a citizen when he testified simply be­cause he learned of the subject matter of that testimony in the course of his employment. Garcetti said nothing about speech that relates to public employment or concerns information learned in the course of that employment. The critical question under Garcetti is whether the speech at issue is itself ordinarily within the scope of an employee’s duties, not whether it merely concerns those duties. Indeed, speech by public employees on subject matter related to their employment holds special value precisely because those employees gain knowledge of matters of public concern through their employment. Pp. 9–11.

(2) Whether speech is a matter of public concern turns on the “content, form, and context” of the speech. Connick v. Myers, 461

U. S. 138, 147–148. Here, corruption in a public program and misuse of state funds obviously involve matters of significant public concern. See Garcetti, 547 U. S., at 425. And the form and context of the speech—sworn testimony in a judicial proceeding—fortify that con­clusion. See United States v. Alvarez, 567 U. S. ___, ___. Pp. 11–12.

(c) Turning to Pickering’s second step, the employer’s side of the scale is entirely empty. Respondents do not assert, and cannot demonstrate, any government interest that tips the balance in their favor—for instance, evidence that Lane’s testimony was false or erro­neous or that Lane unnecessarily disclosed sensitive, confidential, or privileged information while testifying. Pp. 12–13.

1. Franks is entitled to qualified immunity for the claims against him in his individual capacity. The question here is whether Franks reasonably could have believed that, when he fired Lane, a govern­ment employer could fire an employee because of testimony the em­ployee gave, under oath and outside the scope of his ordinary job re­sponsibilities. See Ashcroft v. al-Kidd, 563 U. S. ___, ___. At the relevant time, Eleventh Circuit precedent did not preclude Franks from holding that belief, and no decision of this Court was sufficiently clear to cast doubt on controlling Circuit precedent. Any discrepan­cies in Eleventh Circuit precedent only serve to highlight the disposi­tive point that the question was not beyond debate at the time Franks acted. Pp. 13–17.

2. The Eleventh Circuit declined to consider the District Court’s dismissal of the claims against respondent Burrow in her official ca­pacity as CACC’s acting president, and the parties have not asked this Court to consider them here. The judgment of the Eleventh Cir­cuit as to those claims is reversed, and the case is remanded for fur­ther proceedings. P. 17.

SOTOMAYOR, J., delivered the opinion for a unanimous Court.

More New Cases for June 2014 about arbitration clauses

IN WHAT HAS TO BE THE MOST ILL CONCEIVED DECISION OF THE TWENTY-FIRST CENTURY WE OFFER MALONE V. SUPERIOR COURT. BE CAREFUL NOT TO FALL OUT OF YOUR SEAT LAUGHING AT THE LAST LINE

Malone v. Superior Court (California Bank & Trust), No. B253891 (June 17, 2014):
Keeya Malone was hired by California Bank & Trust (CB&T) in 2007. At the time she was hired, she allegedly accepted the company handbook, which contained an arbitration agreement. The agreement contained a delegation clause stating, “[t] he arbitrator has exclusive authority to resolve any dispute relating to the interpretation, applicability, or enforceability of this binding arbitration agreement.”

Her employment with CB&T ended in 2010. In 2013, she filed a wage and hour lawsuit and sought to pursue a class action lawsuit against CB&T. CB&T asked the court to compel arbitration. Since the arbitration agreement did not allow for class arbitration, CB&T asked that Malone arbitrate her claim on an individual basis. Malone challenged the arbitration agreement on the basis that it was unconscionable and, therefore, unenforceable.

The trial court found that the delegation clause itself was not unconscionable and noted that the arbitrator can address whether the arbitration agreement as a whole is unconscionable. Malone appealed.

The Court of Appeal agreed with the trial court. The court clarified that some of the prior case law, that found delegation clauses unconscionable, relied on the notion that the arbitrator may have a self-interest in finding the agreement enforceable. The court noted that the Federal Arbitration Act (FAA) preempts such reasoning and stated, “This analysis is nothing more than an expression of a judicial hostility to arbitration, based on the assumption that a paid decision-maker cannot be unbiased, and it, therefore, is wholly barred by the FAA.” IN OTHER WORDS, AN ARBITRATOR WHO STANDS TO MAKE TENS OF THOUSANDS OF DOLLARS BASED ON THE OUTCOME OF HIS OWN DECISION CAN BE “UNBIASED”. THIS IS, PERHAPS, THE CRAZIEST DECISION IN THE LAST COUPLE OF YEARS AND WE’VE HAD SOME REALLY CRAZY DECISIONS CONCERNING ARBITRATION.

Kim v. Konad USA Distribution,
No. G048443 (June 12, 2014):
In a recent decision, the California Court of Appeal held that an employer that waited until a trial ended to raise an objection about exhausting administrative remedies had waived its right to make the objection. The court held that the employer’s objection—that the employee failed to show that she had exhausted her administrative remedies under the Fair Employment and Housing Act (FEHA)—was untimely since a full trial on the merits of the case had already taken place.

Malone v. Super. Ct.
Arbitration/Delegation Clause and Unconscionability

Plaintiff and petitioner Keeya Malone brought a wage and hour action against her former employer, defendant California Bank & Trust (CB&T). CB&T moved to compel arbitration, pursuant to a clause in its employee handbook. Malone opposed the petition arguing, inter alia, that the arbitration agreement was unconscionable. CB&T responded that the arbitration agreement contained a so-called “delegation clause,” providing that issues relating to the enforceability of the arbitration agreement were themselves delegated to the arbitrator for resolution. The dispute in this case then turned to the issue of whether the delegation clause itself was unconscionable. Malone relied exclusively on three cases which held such clauses to be unenforceable: Murphy v. Check ‘N Go of California, Inc. (2007) 156 Cal.App.4th 138 (Murphy); Bruni v. Didion (2008) 160 Cal.App.4th 1272 (Bruni); and Ontiveros v. DHL Express (USA), Inc. (2008) 164 Cal.App.4th 494 (Ontiveros). Malone filed a petition for writ of mandate and the court issued an order to show cause, in order to address the issue of the continuing viability of Murphy, Bruni, and Ontiveros. The court concluded that a portion of the rationale underlying these cases is no longer viable, and that what remains of the cases is an insufficient basis on which to establish unconscionability of the delegation clause. The court therefore denied Malone’s petition.
There are many reasons why this is a terribly unfair case. The arbitrator isn’t a neutral when it comes to deciding whether arbitration moves forward or the case gets remanded back to the trial court. The defendant gets to have a crucial decision decided by a biased fact finder. Talk about a stacked deck.

New Cases for June 2014

A. Duran v. U.S. Bank National Association (California Supreme Court, May 29, 2014) 2014 DJDAR 6773.
Statistical evidence may be used to establish both liability and damages in class action overtime cases, but the sampling must be representative, the statistical analysis scientific, and the statistical margin of error low. Employers do not have the “right to litigate an affirmative defense as to each individual class member,” but must be allowed to impeach the statistical model.

B. Jong v. Kaiser Foundation Health Plan, Inc. (Cal.App., May 30, 2014) 2014 DJDAR 6511.
An employee cannot recover overtime pay unless the employer knew or should have known that this specific employee worked overtime.

C. Petrella v. Metro-Goldwyn-Mayer, Inc. (U.S. Supreme Court, May 19, 2014) 2014 DJDAR 6168.
Laches may no longer asserted as a complete defense to any claim for damages for which Congress has specified a statute of limitations. Is this the death of laches for all but equitable claims lacking a statute of limitations?

May 1, 2014

 White v. County of Los AngelesIn a recent decision, the California Court of Appeal held that an employer can seek a second opinion of an employee’s fitness for duty after the employee returns from leave under the Family and Medical Leave Act (FMLA). Reversing a lower court’s ruling, the Court of Appeal held that an employer that is unsatisfied with the the employee’s physician opinion can restore the employee to work and then obtain its own evaluation of the employee’s fitness for duty.

April 6, 2014

Labor activists will file papers Monday to give San Francisco voters a chance to raise the minimum wage to $15 an hour – the highest in the nation.

While Congress balks over raising the federal minimum wage to $10.10 an hour, the city’s November ballot will probably include the “Minimum Wage Act of 2014,” which is designed to lift base pay roughly 40 percent from its current $10.74.

The ballot measure, designed by SEIU Local 1021 and groups including the Alliance of Californians for Community Empowerment, gives businesses with fewer than 100 employees until 2017 to lift wages to $15 an hour. But they must raise wages to $13 an hour by 2015 and $14 by 2016, according to the proposal.

Companies with more than 100 employees would have until 2016 to raise wages to $15 an hour. They must lift base wages to $13 an hour by January, the proposal says. The measure would cover all part-time, temporary and contract employees.

The proposal would also create a new Employment Standards Oversight Committee with four members appointed by the Board of supervisors and three by the mayor – to monitor how the new law is implemented and enforced.

“This is about lifting up everybody in the community, not just low-wage workers,” said a spokeswoman for the San Francisco Progressive Workers Alliance.  “When low-income people have more money, they will spend it in the community, helping small businesses and everybody.”

New Post Harris vs. City of Santa Monica jury instructions

Mendoza vs Western Medical Ctr. Santa Ana

(January 14, 2014): A California Court of Appeal recently held that a retrial is necessary in the case of a gay nurse who was fired after his employer investigated his claim that his supervisor, who was also gay, sexually harassed him. The court found that the jury, which awarded $238,328 in damages to the employee, received improper jury instructions. The jury should have been asked to decide whether the employee’s harassment complaint was a “substantial motivating factor”—not just “a motivating factor”—for the hospital firing him.

Cheal vs. El Camino Hospital

January 2014

In a recent decision, the California Court of Appeal held that a worker may proceed with her claim for age discrimination following her discharge from employment for allegedly poor performance. The court held that the issues to be decided at trial are (1) what the employer considers competent job performance and (2) whether the employee performed her job at that level.

“bans the box”

On February 14, 2014, San Francisco Mayor Edwin M. Lee signed San Francisco’s Fair Chance Ordinance, which “bans the box” on employment applications and restricts private employers’ ability to use criminal history information.  The new law will become effective on August 13, 2014.

“constructively quit”, or not

Kelly vs. California Unemployment Insurance Appeals Board(February 10, 2014): A California Court of Appeals recently upheld a trial court’s decision that an employee, who was fired for making what the employer considered unreasonable requests, is entitled to unemployment benefits. The court found that the employee did not “constructively quit” her job by making these requests.

California Employer Liable for Employee’s Accident During Commute

A California Court of Appeal held that an employer was vicariously liable for a car accident that occurred when an employee was driving home from work.  Moradi v. Marsh USA,  (September  2013):

The employee, Judy Bamberger, was a salesperson for Marsh USA. She was required to use her personal vehicle to travel to and from the office and make other work-related trips during the day. On April 15, 2010, she used her car to transport herself and some coworkers to a company-sponsored event.  While driving home from the office, Bamberger decided to stop for some frozen yogurt and go to a yoga class. While turning into the parking lot of the yogurt shop, her car collided with a motorcycle driven by Majid Moradi.

Moradi sued Bamberger and Marsh. The company filed a motion for summary judgment on the basis that Bamberger was not “working, nor pursuing any task on behalf of the employer.” The trial court granted summary judgment, finding that Bamberger was not acting within the scope of her employment when the accident occurred.

The Court of Appeal reversed the judgment. It noted that under the “going and coming” rule employers are generally not liable for an employee’s actions during the employee’s commute to and from work. However, under the “required vehicle exception,” the employer can be held liable if it required the employee to use his or her personal vehicle for work, the use of which “gives some incidental benefit to the employer.” Marsh previously provided company vehicles to salespeople, but had changed its policy.

The court found that the planned stops for frozen yogurt and a yoga class did not constitute “an unforeseeable, substantial departure from the [Bamberger’s] commute.” According to the court, “the planned stops were not so unusual or startling that it would be unfair to include the resulting loss among the other costs of the employer’s business.”

Supreme Court Allows Rule:  Plaintiff Is Responsible for Recording Time Worked

October 26, 2013

The U.S. Supreme Court has declined to review the Sixth Circuit Court of Appeals’ decision in White vs Baptist Memorial Healthcare Corporation upholding summary judgment and dismissal of a nurse’s Fair Labor Standards Act (FLSA) wage meal/rest break claims because she failed to follow procedures for reporting time spent working during automatically deducted unpaid meal breaks. The decision highlights how an employer may avoid potential unpaid wage liability by taking proactive steps to ensure that employees are appropriately paid for all time worked.

In November 2012, the Sixth Circuit affirmed summary judgment for the employer, finding that the hospital did not know and did not have reason to know the plaintiff was not paid for missed meal breaks because she failed to use an exception log to record the extra time worked. The evidence that led to this decision included: (1) a handbook provision stating employees would be compensated if they missed a meal break or it was interrupted because of a work-related reason; (2) instructions to employees to record all time worked during meal breaks in an exception log; (3) employee training about the meal break policy and exception log; and (4) a signed acknowledgement by the plaintiff stating she understood the meal break policy.

The plaintiff claimed the Sixth Circuit decision provided “an incentive for employers to remain willfully ignorant of the time their employees have worked, inviting them to establish company policies designed to allow them to escape liability for time their employees actually worked, regardless of their knowledge of that time.”   The plaintiff also argued that when an employer fails to keep accurate time records an employee cannot be denied FLSA recovery based on an inability to “prove the precise extent of uncompensated work.” This argument, of course, ignored the fact that the absence of an accurate record was caused by the plaintiff’s failure to follow the established procedure for reporting missed or interrupted meal breaks.

“Under the FLSA, if an employer establishes a reasonable process for an employee to report uncompensated work time the employer is not liable for non-payment if the employee fails to follow the established process.” The hospital argued this statement must be viewed in the context of the court’s overall analysis of the hospital’s lack of actual or constructive knowledge that the plaintiff allegedly worked without pay during meal breaks. The court considered the plaintiff’s failure to follow reporting procedures as part of its broader inquiry into the hospital’s actual or constructive knowledge.

How to Pay for Nannies and Home Care Workers  October. 22, 2013

What makes outsourcing your payroll the better choice?
Outsourcing reduces the complexity and risk of running your
own payroll, while helping ensure greater accuracy, with
up-to-date tax rates and regulatory information that can be
lacking in a software solution.

As you can read below, the log regarding home healthcare workers continues to evolve on nearly daily basis.Every month we are approached by nannies and families that hirer than with regard to overtime, rest break and meal break issues.  Because the law reaches back for four years, this is not an area you want to ignore.

“Domestic Worker Bill of Rights.”

October 1, 2013

Governor Jerry Brown signed AB 241, also known as the “Domestic Worker Bill of Rights.”  Under this new law, California workers in many households will be entitled to overtime pay (at the rate of 1.5 times their regular rate of pay) for all hours worked in excess of 9 hours per day or 45 hours per week.  AB 241 is the state’s second attempt at passing a domestic workers’ bill of rights.

The Fair Labor Standards Act (FLSA) entitles all live-out domestic workers to overtime rates for all hours worked over 40 in a workweek. So, the weekly overtime threshold of 45 hours mandated in AB 241 is only applicable to live-in personal attendants.

Managers Are Not Exempt When They Perform Exempt and Nonexempt Tasks Simultaneously

Heyen vs. Safeway Inc.              September 2013

The California the California Court of Appeals confirmed that managers who simultaneously perform exempt and nonexempt tasks, when the primary purpose of the task is not related to supervision, or the operations of a particular department, are not exempt and are entitled to receive overtime compensation.

Sleep Time Pay:  New Rules Apply in California

Mendiola vs. CPS Security Solutions, Inc.       September 2013

Security company may deduct eight (8) hours of sleep time from the pay of security guards working a 24 hour shift when appropriate accommodations are provided and the employer and employee previously agree to such terms in writing.

What’s really crazy about this case is that although the guards for free to pursue their personal pursuits in their own trailer, they could not have alcohol ,were not allowed to have pets, couldn’t have children visit them and were only allowed adult visitors when permitted by the employer.  Guards could not leave the site during on call hours unless someone was there to relieve them. The guards had to wear radios for pagers. The guards were required to disclose in advance where they were going and for how long.  The Trial court correctly granted the employee’s motion for summary adjudication allowing them to be paid for this time because they were under the control of the employer.  After the trial court made the right call, the Court of Appeals got it wrong and allowed the employer to deduct for sleep time.  The court of appeal said that as long as sleep was uninterrupted and comfortable the State had an interest in allowing employers to deduct for sleep time.  This is in direct violation of the provisions of California Wage Order Number 4.   For those of you reading this blog, this case is a game changer in the wage in hour field in California.

US Supreme Court Puts Another Nail in the Employee Rights Coffin

October 2013

In University of Texas SW. Medical Ctr. vs. Nasser, the United States Supreme Court ruled that a plaintiff/employee claiming retaliation must prove that unlawful retaliation was the “but for” cause of the adverse action (termination, demotion, etc.  Essentially, this means that employee must prove that retaliation was the “but for” cause of the adverse action and not something else in addition to retaliation.  Previously, a plaintiff only had to show that retaliation was one of the motivating factors leading up to the adverse action

SUPREME COURT REVIEWS SEVERANCE PAYMENT TAX TREATMENT  10/2/13

The U.S. Supreme Court will consider if severance payments made to terminated employees are subject to Social Security and Medicare taxes (“FICA” taxes).

The U.S. Court of Appeals in United States v. Quality Stores, Inc., No. 10-1563 (6th Cir. Sept. 7, 2012) affirmed a lower court ruling that severance payments were notwages subject to Social Security and Medicare taxes. The Internal Revenue Service disagreed and asked review.

Quality Stores gave severance payments to terminated employees and all payroll taxes, including FICA, were withheld from such payments.  FICA taxes are also paid by the employer.   After payment, the employer filed for a tax refund claiming the payments were supplemental unemployment benefits and not wages for FICA purposes.   The district and appellate court held the severance were not payment for services under FICA but related to the “elimination of employment,” so these payments were not subject to FICA although subject to income tax. The IRS’s position was that the severance payments were not exempt from FICA taxes.

We’ll keep you informed when the court renders a decision.

Dept. of Labor Issues Final Rule Extending Minimum Wage, Overtime to Home Care Workers 9/17/13

The Department of Labor’s Wage and Hour Division has released its final ruling extending minimum wage and overtime protections under the Fair Labor Standards Act (FLSA) to home care workers. Under the final rule, effective on January 1, 2015, employers such as home care staffing agencies are not entitled to claim either the FLSA’s companionship services or live-in domestic service employee exemptions.  The changes to current regulations will apply the FLSA’s overtime requirements to millions of direct care workers, including home health aides, personal care aides and nursing assistants.

Governor Brown Approves Minimum Wage Increases 9-27-13

Governor Jerry Brown has laid the groundwork for California to have the highest minimum wage in the country by 2016. The increase will occur in two phases. On July 1, 2014, the state minimum wage will increase from $8 to $9 per hour.   On January 1, 2016, California’s minimum wage will increase to $10 per hour.

California’s minimum wage increases will have a huge impact on California employers and businesses and employees. the increases will not only impact non-exempt hourly employees, they will also affect how exempt employees must be paid.

IRS Will Begin New Service Charge Rules Effective January 1, 2014

In June 2012 the IRS issued Revenue Ruling 2012-18, explaining the difference between a tip and service charge, and pointing out that services charges are wages. While both service charges and tips are subject to employment taxes, there are different reporting obligations associated with each category.  This is important because some catering companies charge a service charge, but do not share the service charge with wait staff.

The IRS also said that “mandatory tips” – often imposed by restaurants for parties larger than six or eight patrons – are service charges and are, therefore, wages rather than tips. This clarification has significant implications for businesses that had been treating “mandatory tips” as tips rather than wages. The designation of “mandatory tips” as wages may have not only employment tax implications, but also wage rate implications because, as wages, mandatory tips may impact the regular rate of pay for hourly employees and, therefore, impact how overtime is calculated.

In light of these changes, employers with tipped employees should review their treatment of all forms of tips and service charges and ensure they are properly reporting and classifying them for both tax and hourly rate-calculation purposes.