Friday, May 1, 2015

Workers Prevail in Fight Against Binding Arbitration

On April 29, 2015, the United States District Court for the Central District of California, Hon. Phillip S. Gutierrez, issued an important decision denying defendants' motion to compel arbitration on an individual basis in Maria Ford, et al. v. Gary Yasuda, et al. finding an arbitration agreement unenforceable on grounds of waiver. The opinion provides a well-reasoned decision on conduct inconsistent with arbitration rights and resulting prejudice suffered by the non-moving party. In its decision, the court held that defendants had actively litigated the case in federal court and warned against defendants attempting to compel arbitration for fear of future unfavorable rulings.

The Ford plaintiffs allege that while enrolled at Milan Institute of Cosmetology they were “employees” when they performed services on their paying customers, sold products and services for the for-profit business and engaged in janitorial work including stocking supplies and laundering towels on behalf of defendants Milan Institute of Cosmetology and Gary Yasuda. Because they were not paid wages or provided any employee benefits to which they were due, the Ford plaintiffs brought suit in October 2013 on behalf of themselves and others who enrolled at Milan. 

The court denied defendants’ motion which sought to compel individual arbitration and relief, in the alternative, to extend the scheduling order to allow more time for discovery it had not initiated pending the motion to compel, in its entirety. The court found that defendants abandoned their rights to arbitration by unreasonably delaying filing a motion to compel arbitration seventeen months into the litigation. The court also found that defendants' delay was unjustified where it could not rest on claims on any “precedential, procedural, or other barriers to arbitration.” The opinion exposed defendants' “protracted silence regarding arbitration” as a conscious effort to seek judicial judgment on a threshold legal question then shop for a more receptive forum after an adverse ruling on the issue.

                The court found prejudice in the time defendants took after the filing of the complaint and after it raised arbitration as an affirmative defense before moving to compel. The court also found prejudice to the Ford plaintiffs due to a previous order by the court on defendants’ motion to dismiss which “resolved a crucial issue in [plaintiffs] favor.” Discussed in a previous Bryan Schwartz Law blog post, the court determined that “[b]ased on Martinez, the Court concludes that the California Supreme Court would hold that [Defendants’] students may be properly classified as its employees, if they are within the definition of ‘employment’ established by the IWC.” The court’s analysis highlights that where motions practice requires the litigation of claims on the merits “touch[ing] on the basic issues in the case,” a motion to compel following the motions practice will not be received favorably. As is the case here, plaintiffs would be substantially prejudiced by a need to relitigate matters decided by the district judge. 

The decision not only permits the Ford plaintiffs to proceed in the vindication of their statutory employment rights on behalf of themselves and others similarly situated in federal court, but also enumerates conduct of parties moving to compel arbitration that run afoul of a good faith exercise of arbitration rights. Read the full opinion here.

Monday, April 27, 2015

Young v. United Parcel Service, Inc. Strengthens Pregnant Workers’ Right to Accommodation

In Young v.UPS, a 6 to 3 Supreme Court majority vacated a Fourth Circuit decision upholding a District Court decision granting UPS summary judgment and supported a driver’s pregnancy discrimination claims. The Court resolved a Circuit split regarding employers’ duty to accommodate pregnancy-related limitations. Justice Breyer, writing for the Court, explained that Young demonstrated a genuine issue of material fact as to whether UPS’s facially neutral reasons for not accommodating her were a pretext for pregnancy discrimination. Only Justices Thomas, Scalia, and Kennedy dissented.

I.                   Young’s Story

Young worked as a part-time delivery driver for UPS. She became pregnant in fall 2006, and her doctor told her that she should not lift more than 20 pounds during the first 20 weeks of her pregnancy, or more than 10 pounds thereafter. With this lifting restriction, UPS told her that she could not work during her pregnancy because UPS required drivers to be able to lift parcels weighing up to 70 pounds (and up to 150 pounds with assistance). UPS also told her that she was not qualified for a temporary alternative work assignment even though UPS promised to provide temporary alternative work assignments to employees who were injured at work based on a collective bargaining agreement. Young, as a result, stayed home and remained on a leave of absence without pay during most of her pregnancy, and eventually lost her employee medical coverage.

Young sued UPS, claiming that UPS discriminated against her by failing to accommodate her during her pregnancy. UPS filed a motion for summary judgement, arguing that there is no duty to accommodate pregnancy, and that Young did not fit into any of the three categories of drivers UPS would accommodate under its company policy: (1) those who injured at work; (2) those who lost their Department of Transportation (DOT) certifications, and (3) those who suffered from a disability covered by the Americans with Disabilities Act of 1990 (ADA). In reply, Young proffered the following facts she believed she could prove to support her claims. First, her co-workers were willing to help her with heavy packages, but UPS denied this as an accommodation. Second, UPS accommodated other drivers who suffered disabilities that created work restrictions similar to hers. Third, a UPS shop steward who had worked for UPS for roughly a decade testified in his deposition that “the only light duty requested restrictions that became an issue” at UPS “were with women who were pregnant.”

II.                Holdings of the District Court and the Fourth Circuit

The District Court granted UPS’ motion for summary judgment. It reached two conclusions. First, Young could not show intentional discrimination through direct evidence merely based on the fact that UPS denied her accommodation requests and approved of accommodating others. Second, Young could not make out a prima facie case of pregnancy discrimination under McDonnell Douglas because those drivers who were accommodated by UPS (on-the job injuries, DOT or ADA categories) and Young were too different to be deemed similarly situated. In short, the District Court treated UPS’ reliance on its three-category facially neutral policy as a legitimate, nondiscriminatory reason for refusing to accommodate Young. The District Court found that Young created no genuine issue of material fact as to whether UPS’s reason was pretextual. The Fourth Circuit affirmed the District Court’s findings.

III.             The U.S. Supreme Court        

A. Disputes over Interpretations of the Second Clause of the Pregnancy Discrimination Act (PDA) under Title VII

Young filed a petition for certiorari asking the U.S. Supreme Court to review the Fourth Circuit’s interpretation of the PDA under Title VII, and the Supreme Court granted her petition. The focus of the dispute was the PDA’s second clause: “Women affected by pregnancy, childbirth, or related medical conditions shall be treated the same for all employment-related purposes . . . as other persons not so affected but similar in their ability or inability to work.” Young contended that a court, under the second clause of the PDA, should find a Title VII violation whenever a pregnant worker is not accommodated as other workers who have similar inability to work. UPS, in contrast, maintained that the second clause merely incorporated pregnancy discrimination into the ban on sex discrimination, and held that courts should compare accommodations a pregnant worker receives with those received by other workers within a facially neutral policy.

Justice Breyer, in the majority opinion, while denying pregnant women have an unconditional “most-favored-nation” status under the PDA and while refusing to give special weight to the EEOC’s 2014 guidelines supporting Young’s interpretation, held that UPS’s interpretation failed to carry out Congress’ objectives in the PDA. First, UPS’s interpretation would render the second clause of the PDA superfluous because the first clause of the PDA already defined pregnancy discrimination as a kind of sex discrimination. Second, accepting UPS’s interpretation (followed by the dissent) would revive the Court’s decision under General Electric Co. v. Gilbert, 429 U.S. 125 (1976) -- one that the Congress passed the PDA to overturn. The employer’s plan in Gilbert was similar to the UPS’s facially neutral accommodation policy. The Gilbert employer plan “provided non-occupational sickness and accident benefits to all employees without providing disability benefit payments for any absence due to pregnancy,” and thus did not violate Title VII, because pregnancy was neither a disease nor necessarily a result of accident. Justice Breyer, invoking California Fed. Sav. & Loan Assn. v. Guerra, 479 U.S. 272 (1979), emphasized that the first clause of the PDA reflected the Congress’ disapproval of the reasoning in Gilbert by expressly adding pregnancy to the definition of Title VII’s sex discrimination, while the second clause was intended to overrule the holding of Gilbert and to illustrate how pregnancy discrimination could be remedied.

      B. Applying the McDonnell Douglas Framework Under the Second Clause of the PDA to Young’s Case

Justice Breyer clarified the McDonnell Douglas framework under which pregnant workers, when being denied an accommodation under the PDA’s second clause, could show disparate treatment through indirect evidence. To make out a prima facie case, the pregnant worker must show: (1) that she belongs to the protected class (pregnancy); (2) that she sought accommodation; (3) that the employer did not accommodate her, and (4) that the employer did accommodate others “similar in their ability or inability to work.” Then, the burden of proof shifts to the employer and the employer could justify its refusal to accommodate her by showing “legitimate, non-discriminatory” reasons. To rebut the employer’s justifications, the pregnant worker may in turn show that the employer’s proffered reasons are in fact pretextual through two steps. First, the pregnant worker can provide sufficient evidence showing that the employer’s policies impose a significant burden on pregnant workers. Second, the pregnant worker can further demonstrate that the employer’s “legitimate, nondiscriminatory” reasons are not sufficiently strong to justify the burden. After the pregnant worker meets the above evidentiary standards, an inference of intentional discrimination may arise. For example, when the pregnant worker provides evidence demonstrating that the employer accommodated a large percentage of non-pregnant workers while failing to accommodate a large percentage of pregnant workers, this creates a genuine issue of material fact as to whether a significant burden is imposed upon pregnant workers.

Applying the clarified framework and viewing the record in the light most favorable to Young, Justice Breyer held that Young created a genuine dispute as to whether UPS provided more favorable treatment to at least some employees whose situation cannot reasonably be distinguished from hers. Also, the Fourth Circuit failed to consider whether UPS’s three-category policy significantly burdened pregnant women and whether UPS’s justifications were strong enough to justify such a burden. The lower courts, on remand, will need to determine whether Young created a genuine issue of material fact regarding whether UPS’s reasons were pretextual. 

Justice Alito concurred with the majority and held that UPS’ justifications for differentiating drivers in the three categories of accommodated workers were not clear enough to justify their decision to treat pregnant drivers less favorably.

If you believe that your employer imposed an unjustifiable burden upon you during your pregnancy, please contact BryanSchwartz Law

Wednesday, April 1, 2015

Ninth Circuit: Employee’s Statements Suffice to Overcome Employer’s Summary Judgment Motion

In the context of employment discrimination litigation, one of the most challenging tasks for both the aggrieved employee and his or her attorneys is to find evidence beyond the employee’s own statements. For example, when you informed your supervisor of your disabled status over the phone, and your supervisor verbally declined your accommodation requests, how can you prove this conversation happened? Your supervisor may deny the conversation took place.

The Ninth Circuit Court of Appeals recently announced good news for workers who must rely upon their own testimony to survive an employer’s motion for summary judgment. In Nigro v. Sears, Roebuck and Co., 778 F.3d 1096 (9th Cir. 2015)the Ninth Circuit reversed the district court’s summary judgement in favor of Sears on the plaintiff’s claims under California’s Fair Employment and Housing Act (FEHA). The Court held that the District Court erred in disregarding the plaintiff’s declaration and deposition testimony because it was “self-serving.” As the Ninth Circuit explained, “declarations are often self-serving, and this is properly so because the party submitting it would use the declaration to support his or her position.” Id. at 1098. Ultimately, the fact “that evidence is to a degree self-serving is not a basis for the district court to disregard the evidence at the summary judgment stage.” Id. In Nigro, the plaintiff’s testimony – plus a statement of a witness that the supervisor had admitted “I’m done with that guy” about the plaintiff – were sufficient to overcome summary judgment on Nigro’s disability-based wrongful termination claim.

The Ninth Circuit reiterated in Nigro the important holding that it should not take much for employees in a discrimination case to overcome a summary judgment motion.

The Ninth Circuit also reversed summary judgment on Nigro’s FEHA claims based upon denied disability accommodation and failure to engage in the interactive process. The District Court concluded that there were no genuine issues of material fact because Nigro “continued to be accommodated…despite ‘any actual or perceived irritation’” by the boss. Id. at 1099. But the Ninth Circuit found, based upon the plaintiff’s testimony, that the supervisor’s boss “chilled” Nigro’s right to use an accommodation and stifled the interactive dialogue, and as such, that summary judgment should have been denied on both counts. Id. Nigro’s testimony that he spoke to the supervisor’s boss about accommodations in a single phone conversation was enough to obligate Sears to participate in the interactive process.

If you have concerns over the way your employer is responding to reasonable accommodation requests, please contact BryanSchwartz Law

Saturday, February 28, 2015

California Supreme Court: On-Site Guards’ On-Call and Sleep Time Must Be Compensated

Does your employer require on-call hours, to remain on your employer’s premises or to stay so close to your workplace that you cannot effectively use the time for personal purposes? Your time spent on call (including your sleep time, if you are on call overnight) may be counted as hours worked, and thus must be compensated, based on a recent California Supreme Court’s decision, Mendiola v. CPS Security Solutions, Inc., 60 Cal. 4th 833 (2015).

CPS Security Solutions, Inc. (“CPS”) employs on-call guards to provide security at construction sites. These on-call guards have different job obligations on weekdays and weekends. On weekdays, they work 16-hour shifts, with 8 hours on duty (patrolling the work sites) and 8 hours on call, whereas on weekends, they work 24-hour shifts, with 16 hours on duty and 8 hours on call. CPS signed an on-call agreement with each guard, and based on this agreement, CPS requires these guards to reside in the trailers CPS provides while they were on duty. These guards can keep personal items in the trailers, but children, pets, and alcohol are not allowed. Adult visitors are permitted only when CPS’s clients give approval. When these on-call guards want to leave the work site while on call, they have to notify a dispatcher, wait for a reliever, and remain on-site, even in the case of personal emergency, if no reliever is available. When they are relieved, they still have to stay within a 30-minute radius of the facility and accessible by a pager or phone. Based on the on-call agreement, these guards receive no compensation for their on-call time unless: (1) they are required to conduct an investigation while on call, or (2) they wait for (or have been denied) a reliever. CPS may deduct 8 hours of “sleep time” from their 24-hour shifts.

The trial judge, in response to these guards’ class action lawsuit claiming CPS violated Industrial Welfare Commission (IWC) Wage Order No. 4 and Labor Code statutes, concluded that CPS must pay for these on-call hours. The Court of Appeal agreed with the trial court in part and held that these guards were entitled to compensation for their on-call hours. However, the Court of Appeal disagreed with the trial court about the issue of “sleep time” and held that CPS may deduct 8 hours of sleep time from these guards’ 24-hour shifts.

The California Supreme Court partially agreed with the Court of Appeal’s holding and concluded that CPS must pay for these on-call hours. First, the Supreme Court agreed that CPS exercises substantial control over these guards during on-call hours. Examples of CPS’s substantial control include requiring these guards to “reside” in their trailers as a condition of employment while on call and to stay no more than 30 minutes away from their work sites even when they are relieved. Second, the fact that these guards can engage in such limited personal activities as sleeping, showering, eating, reading, watching TV and browsing the Internet while on call does not eliminate CPS’s control over them, because they are still required to remain at the workplace. Third, given that CPS’s business model is based on the idea that it provides construction sites with an active security presence during the morning and evening hours, these guards “mere presence” on the work sites while on call is integral to CPS’s business and primarily for the benefit of CPS.

In terms of the “sleep time” issue, the California Supreme Court disagreed with the Court of Appeal and held that sleep time may not be excluded from the guards’ 24-hour shifts because Wage Order 4 does not permit the exclusion of sleep time from compensable hours.

The California Supreme Court built upon its decision in Morillion v. Royal Packing Co. (2000) 22 Cal. 4th 575, 582, that “an employee who is subject to an employer's control does not have to be working during that time to be compensated.” The Court confirmed the factors California courts consider in determining the extent of an employer’s control during on-call time, including: “(1) whether there is an on-premises living requirement; (2) whether there are excessive geographical restrictions on employee’s movements; (3) whether the frequency of calls is unduly restrictive; (4) whether a fixed time limit for response is unduly restrictive; (5) whether the on-call employee can easily trade on-call responsibilities; (6) whether use of a pager can ease restrictions, and (7) whether the employee actually engages in personal activities during call-in time.” Mendiola, 60 Cal.4th at 841. In addition, whether the on-call waiting time is spent primarily for the benefit of the employer and its business may be another determinative factor. 
The nature of certain jobs requires employees to be “on call” or “on standby,” ready to respond promptly to instant business needs. With the rapid advancement of technology, more on-call jobs, relying on communication through electronic devices, have also been created. If your employer: (1) requires you to remain on the workplace or to stay close to the workplace while on call, and (2) imposes so many restrictions during on-call time that may indicate a substantial extent of control over you, then you may be spending your on-call waiting time primarily for the benefit of your employer. You may be entitled to be compensated for the entirety of your on-call time, including any sleep time.

If you have any concerns about your on-call, standby, or sleep time, contact Bryan Schwartz Law for more information.

Tuesday, January 20, 2015

U.S. Supreme Court Denies Certiorari Review of Iskanian, Preserving Tool for Enforcing California Wage Laws

Today, the Supreme Court denied CLS Transportation Los Angeles v. Iskanian ("Iskanian"), declining to consider overturning a California Supreme Court decision holding that “representative actions” under the Labor Code’s Private Attorneys General Act (“PAGA”) cannot be barred by arbitration agreements. The denial of review leaves in place a potent tool for employees to step in on behalf of the state to enforce their wage rights.

We previously blogged about the California Supreme Court’s "Iskanian" decision in detail here. The decision ruled in favor of the employees, holding that their right to bring a representative PAGA action was not preempted by the Federal Arbitration Act. Monetary recoveries by plaintiffs in PAGA actions are split between the employees and the State. In holding that employees cannot waive the right to bring PAGA actions, the California Supreme Court reasoned that PAGA is an enforcement mechanism designed by the Legislature to carry out the State’s interest in assuring compliance with state wage laws, not merely a matter of contract between private parties.

In seeking certiorari from the U.S. Supreme Court, the employer argued that the right to bring representative PAGA actions should be treated like the right to bring class actions – a right that may be waived in arbitration agreements under the U.S. Supreme Court’s decision in AT& T Mobility v. Concepcion, 131 S. Ct. 1740 (see our blog post on Concepcion here).

By declining to accept the case for review, the U.S. Supreme Court did not disturb California’s effort to allow its wage laws to be enforceable via representative actions brought by employees.

Wednesday, January 7, 2015

Who is Liable for Wage Violations in California? The Growing Joint Employer Standard

While most employees can answer the question, “Who do you work for?” the question of who is a liable employer under California wage laws hasn’t been so simple. However, if recent trends continue, finding the answer will be easier.

Determining who may be accountable for wage violations affects workers across many sectors of the economy, and many businesses and their leaders. Consider these examples:

A large company considers its drivers independent contractors. The company has policies governing the drivers' uniforms, their vehicles, the way they are dispatched, and reserves the right to terminate the drivers’ contracts at any time. Are the drivers properly classified as independent contractors? Assume each driver is instead a “franchisee,” and employs drivers himself. Are workers for particular franchisees also employees of the large company that is the ultimate franchisor?

A large corporation has many subsidiaries and takes a “shared services” approach, providing human resources, payroll and other key employment-related functions for its subsidiaries. Yet, the corporation takes the position that workers at each subsidiary can only collect (or litigate against, or certify a class) as to the particular subsidiary where each worker spends her days. Is the large corporation also potentially susceptible for wage claims in its subsidiaries, or a company-wide class action that affects all of its subsidiaries?

A big business uses small (potentially insolvent) janitorial services labor contractors to staff its cleaning jobs, and these personnel are receiving less than the minimum wage. To what extent is the big business on the hook for the actions of its labor subcontractors?

A closely held restaurant employs 50 people. It is incorporated, with the sole owner as its lone officer and director. The owner has ultimate authority over hiring and firing workers and — though he has some subordinate managers — has made policy statements from time to time. Can the owner be held personally liable for wage violations under California or federal wage laws as a joint employer?

This year, California’s courts and legislature have helped get closer to answers regarding many of these questions.

Employers: tread carefully

The Borello decision defined an independent contractor. S. G. Borello & Sons Inc. v Dept. of Industrial Relations, 48 Cal. 3d 341 (1989). In response to abuses of the designation, the state Legislature recently added civil and criminal sanctions for willful misclassification — 2011’s Senate Bill 459, which added Labor Code Sections 226.8 and 2753. California’s Employment Development Department has been taking a hard line against independent contractor designations where employers have not paid unemployment insurance or other taxes.

In Ayala v. Antelope Valley Newspapers Inc., 59 Cal. 4th 522 (2014), the state Supreme Court made it easier to certify California class actions based upon independent contractor misclassification. The Supreme Court held that the trial court erred in denying certification of a class of delivery workers who sued a daily newspaper which had classified them as independent contractors. The trial court found too many individual inquiries were necessary into the way different newspaper delivery workers operated.

But the trial court in Ayala missed the crux of the inquiry: Whether a common law employer-employee relationship exists turns foremost on the degree of a hirer’s right to control how the end result is achieved. Because of the preeminence of the right to control test under Borello, as reinforced by Ayala, common proof —  e.g., what rights are reserved to the employer in the governing contracts — will often answer the independent contractor versus employee inquiry. Courts likely will certify more independent contractor misclassification class actions.

The 9th U.S. Circuit Court of Appeals applied California independent contractor law, applying the “right to control” test, in Ruiz v. Affinity Logistics Corp., 754 F.3d 1093 (9th Cir. 2014) (decided shortly before Ayala), and Alexander v. FedEx Ground Package System Inc., 765 F.3d 981 (9th Cir. 2014) (applying Ayala). The Ruiz decision previews Ayala by focusing on the right to control, rejecting an independent contractor classification scheme. Alexander stands for the proposition that if an employer’s workforce is doing the work of employees, the employer cannot avoid complying with the Labor Code’s employee protections by artful contract language. The concurrence quoted Abraham Lincoln: “If you call a dog’s leg a tail, how many legs does a dog have? …. Four. Calling a dog’s tail a leg does not make it a leg.”

One caveat: Where a business goes one step further than independent contractor classification, and has franchisees, the franchisor’s vicarious liability for a franchisee’s employment practices may be limited to situations where it maintains “a comprehensive and immediate level of ‘day-to-day’ authority over matters such as hiring, firing, direction, supervision, and discipline of the employee.” Patterson v. Domino’s Pizza, 60 Cal. 4th 474, 499 (2014) (in a Fair Employment and Housing Act harassment case).

The growing joint-employer standard

Workers have found it difficult to prove Labor Code Section 2810 liability, regarding contracts for insufficient funds. They rarely have access to evidence showing their employer-subcontractors paying substandard wages entered into contracts which the primary contractors knew contained insufficient funds to cover minimum wages. This year, the Legislature responded, and Gov. Jerry Brown approved Assembly Bill 1897, creating Labor Code Section 2810.3. It makes businesses whose workers are supplied by labor contractors jointly responsible for wage payments.

This year may also have doomed the use of parent/subsidiary and holding company relationships between corporate entities to create a loophole in California’s wage laws. In Castaneda v. Ensign Group Inc., 229 Cal. App. 4th 1015 (review denied Dec. 17, 2014), workers brought suit against a parent company owning a “cluster” or “portfolio” of companies providing nursing care, including the entity where the named plaintiff worked. The parent company argued that because the subsidiary was registered as an independent entity, and hired and paid the plaintiff and set his schedule, only the subsidiary could be held liable for wage violations as the plaintiff’s “employer.” But the Court of Appeal held that a jury could conclude that the parent company was the plaintiff’s joint employer. Building on Martinez v. Combs, 49 Cal. 4th 35 (2010), as well as the Court of Appeal decision in Guerrero v. Superior Court, 213 Cal. App. 4th 912 (2013), the Castaneda court explained that an “entity that controls the business enterprise may be an employer even if it did not ‘directly hire, fire or supervise’ the employees.” Quoting Martinez, Castaneda emphasized: “The basis of liability is the owner’s failure to perform the duty of seeing to it that the prohibited condition does not exist.”

Following Castaneda, individual owners — not just corporate owners — may be liable as joint employers for wage violations, where they fulfill one of the tests outlined by the Martinez v. Combs, Industrial Welfare Commission-inspired framework (“employ” means either: to control wages, hours, and working conditions; to suffer and permit to work (hire and fire); or to engage – under the common law definition). California courts have not yet issued published authority on this specific point — Bain v. Tax Reducers Inc., 161 Cal. Rptr. 3d 535 (2013), was ordered depublished by the state Supreme Court after holding with scanty analysis that an individual owner could not be a joint employer.

In Dynamex Operations West Inc. v. Superior Court, 230 Cal. App. 4th 718 (review filed Nov 24, 2014), the Court of Appeal reiterated the broadly protective joint employer standard under the California Labor Code, invoking Martinez v. Combs and the IWC Wage Orders. “Martinez, in effect, fills the gap between the common law employer-focused approach and the need for a standard attuned to the needs and protection of employees. As the court recognized, the IWC wage orders provide an employee-centric test gauged to mitigate the potential for employee abuse in the workplace.”

Federal courts have been similarly “employee-centric” in applying California law — for example, in Carrillo v. Schneider Logistics, a Wal-Mart distribution subcontractor agreed to pay $21 million after Wal-Mart was found potentially liable for Schneider’s wage violations as a joint employer under both California and federal law. 2014 WL 1893956 (C.D. Cal. Jan. 14, 2014).

Going forward, businesses and their leaders, when they control — or have the right to control — wages, hours, and working conditions — or the right to hire and fire workers — should take measures to ensure that workers are being paid in accordance with California law — or face costly consequences.

Bryan Schwartz Law's principal first published this article in the Daily Journal on December 30, 2014, under the title, "2014 gave more clarity on liability for wage violations"

Bryan Schwartz is an Oakland-based attorney representing workers in class, collective, and individual actions in wage/hour, discrimination, whistleblower, and unique federal and public employee claims. He is an Executive Board member for the California Employment Lawyers Association (CELA) and Secretary of the State Bar of California’s Labor & Employment Law Section. He can be contacted at

Tuesday, December 9, 2014

Integrity Staffing Solutions v. Busk: Why shouldn’t people get paid for their time when it is controlled by the employer?

Today, the Supreme Court overturned a decision from the Court of Appeals for the Ninth Circuit and held that warehouse workers who were required to stay after normal hours on the job to undergo security screenings were not entitled to pay while they wait for and go through the screenings. The decision in Integrity Staffing Solutions v. Busk is available here. The workers – who retrieved products from warehouse shelves and packaged them for shipment to Amazon customers – spent roughly 25 minutes each day to undergo the screenings, which were conducted to prevent employee theft. 

Plaintiffs had argued, and the Ninth Circuit had held, that under the Fair Labor Standards Act of 1938 (FLSA), postshift activities that would ordinarily be classified as noncompensable are nevertheless compensable if the postshift activities are necessary to the principal work and performed for the employer’s benefit.  The Ninth Circuit explained that the screenings were “necessary” to the employee’s primary work, since the warehouse employees were required to undergo the screenings, and waited in security lines many hours a year for the employer’s benefit. 

Overturning the Ninth Circuit, in an opinion by Justice Thomas, the Supreme Court ruled that the security screenings were noncompensable. To support this conclusion, the Court explained that: (1) the warehouse workers were hired to retrieve products from warehouse shelves and package them for shipment, not to undergo security screenings; and (2) the security screenings were not “integral and indispensable” to the employees’ duties, as the employer could have “eliminated the screenings altogether without impairing the employees’ ability to complete their work.” The Court faulted the Ninth Circuit for focusing on whether an “employer required a particular activity” and not on whether an employer is performing work that the employee is “employed to perform.”

It should not matter that the employer could have eliminated the screenings, or that the employees were not hired to undergo security screenings. Apparently, the employer felt that maintenance of the security of the warehouse was an integral and indispensable part of the employees’ jobs – the employer required the workers to undergo a long security check, every single day. The Ninth Circuit had taken a fairer approach, which comports with our basic understanding of what deserves compensation. You should be paid for the time you spend doing whatever the employer requires you to perform, while you are under the employer’s control, and acting for the benefit of the employer. It should not matter whether certain job responsibilities the employer has given you could be altogether eliminated by the employer, because in fact, the required activities prevent you from going home and doing the things you want to be doing.

Employees are not entitled to get paid for their ordinary commute time: they could detour to take a child to school, stop for a drink with a friend after work, pick up dinner or drycleaning – or do whatever might interest them. This time is not under an employer’s control. California’s Labor Code takes the right approach – and California wage claims are unaffected by Integrity Staffing Solutions. As discussed in a previous blog post, under California law, an employer must compensate employees when an employee is “subject to the control of an employer” with no personal freedom to “use the time effectively for their own purposes.” For example, an employer must compensate employees for travel time if the employees are required to travel in a company-provided transportation, or if the employer subjects employees to restrictions during their commute via company vehicles, such as not permitting personal stops, forbidding them from picking up passengers, and forbidding the use of a cell phone except to answer calls from company headquarters.  

Once a worker submits to his or her employer’s control, foreclosed from doing activities in which he or she might otherwise engage, the time should be compensated. Why shouldn't people get paid to work, if their time is encumbered by their employers?