Monday, September 11, 2017
I have been litigating several cases against cosmetology schools which unfairly take advantage of their students to perform unpaid, extensive, revenue-generating work for the schools, peddling branded products, performing services on paying clients, and also, being assigned extensive menial labor in the school salons. These school salons sell cheap haircuts and other cosmetology services to the public, in unfair competition with other low-cost salons - which have to pay their workers' wages. We have sought recovery of the cosmetology students' minimum wages under federal and California law.
After a series of losses in similar cases across the country - and not just in my cases - I went to the Ninth Circuit this morning for what could be our last shot at some justice. The experience reminded me of Jimmy Stewart in Mr. Smith Goes to Washington - except without Clarissa Smith screaming from the audience to try to redeem me - https://www.youtube.com/watch?v=aAjDmw6IrFg.
Here's how I wish I would have concluded my oral argument - I didn't have the time or opportunity to say it:
As I walked to the courthouse early this morning, south of Market Street in San Francisco, I was struck as I have been before by how many people here in the cradle of our tech civilization are left behind, living in poverty on the streets. I don't know each person's story - but how many worked hard, only to be left without wages, without real training, and deep in debt, like the Plaintiffs here? There is so much despair in this tech economy, leaving people behind, that it is shaping elections, moving world events in a dangerous, hopelessness-and-anger-driven direction. Because if you cannot go to school, work hard, and get paid a basic living wage to cover your bills, then the American dream is lost, and our hope is gone.
The federal Fair Labor Standards Act was not designed with a hole in the minimum wage big enough to drive an entire business model through. It was designed, as this Court has said before, to protect "employees" in the broadest sense ever included in any one Act - to provide protection to anyone suffered or permitted to work. If cleaning floors and mirrors, taking out trash, answering phones, selling shampoo and haircuts - are not compensable work - then what is?
The Ninth Circuit has been a bulwark against oppression and injustice before, even in recent days. Let it be so again today.
Posted by Bryan Schwartz Law
Tuesday, September 5, 2017
This is the essentially the question the Ninth Circuit addressed earlier this year in Rizo v. Yovino. In the Rizo case, a female math consultant hired by the Fresno County Schools, Aileen Rizo, was underpaid thousands of dollars compared to her male peers solely because Ms. Rizo’s prior salary was comparatively lower than that of her male peers despite her male peers having less experience. To the dismay of advocates for pay equity nationwide, the Ninth Circuit held that the federal Equal Pay Act of 1963 (29 U.S.C. § 206(d)) does not prohibit an employer from relying solely on employees’ past salary histories to set compensation. 854 F.3d 1161, 1167 (9th Cir. 2017).
The primary flaw in the Ninth Circuit’s opinion stemmed from an overbroad interpretation of its precedent, Kouba v. Allstate Insurance Company. 691 F.2d 873, 876 (9th Cir. 1982). In Kouba, the employer paid its employees a minimum guaranteed salary plus commissions based on employees’ sales. Id. at 874. In setting new employees’ minimum salaries, the employer considered “ability, education, experience, and prior salary.” Id. In this context, where the employer did not rely exclusively on prior salary history in setting employee compensation, the Court previously held that “the Equal Pay Act does not impose a strict prohibition against the use of prior salary.” Id. 878. The Court emphasized that an employer who uses prior salary to set compensation “must” provide “business reasons” that “reasonably explain its use of that factor,” and provided the trial court with a non-exhaustive list of fact-specific questions to consider in evaluating the “reasonableness of this practice.” Id. (emph. added).
Unlike in Kouba, the County in Yovino set new employees’ compensation by increasing their most recent prior salaries by 5% without taking into account employees’ experience or skill. Yovino, 854 F.3d at 1164. Applicants with a master’s degree were given a flat $1,200 bump. Id. Because of the well-established fact that women in nearly every occupation are paid less than men even when controlling for a host of possibly explanatory variables, the County’s exclusive use of employees’ prior salary perpetuated the gender wage gap in contravention of the purpose of the Equal Pay Act. The Tenth and Eleventh Circuits have come to this same conclusion. See, e.g., Riser v. QEP Energy, 776 F.3d 1191, 1199 (10th Cir. 2015) (“the EPA precludes an employer from relying solely upon a prior salary to justify pay disparity”); Irby v. Bittick, 44 F.3d 949, 955 (11th Cir. 1995) (“prior salary alone cannot justify pay disparity”).
The Ninth Circuit, diverging from two of its sister circuits, failed to give sufficient weight to the context in which Kouba was decided, particularly with respect to the fact that the Kouba employer used sex-neutral factors in addition to prior salary history. Instead, the Court read Kouba as permitting a “salary differential based solely on prior earnings” without “attribut[ing] any significance to [the Kouba employer’s] use of these other factors [i.e., ability, education, and experience].” Yovino, 854 F.3d at 1166.
Fortunately, this is not the end of the story. Last week, the Ninth Circuit granted Ms. Rizo’s request for a rehearing en banc, meaning that all eligible judges serving on the Ninth Circuit will rehear the case.
Fifty four years have passed since the Equal Pay Act was signed into law to end the “serious and endemic problem of employment discrimination in private industry—the fact that the wage structure of ‘many segments of American industry has been based on an ancient but outmoded belief that a man, because of his role in society, should be paid more than a woman even though his duties are the same.’” Corning Glass Works v. Brennan, 417 U.S. 188, 195 (1974). Now, the Ninth Circuit has an opportunity to reconsider its erroneous interpretation of the Equal Pay Act and, in the process, move our country closer to achieving the goal of equal pay for equal work.
 California’s state law analog, the Fair Pay Act, expressly prohibits the exclusive use of “[p]rior salary” to “justify any disparity in compensation” with respect to sex, ethnicity, and race. Cal. Lab. Code §§ 1197.5(a)(3), (b)(3).
 See Brief for Equal Rights Advocates et al. as Amici Curiae in Support of Plaintiff-Appellee’s Petition for Rehearing and Rehearing En Banc, pp. 12-15, Rizo v. Yovino (9th Cir. 2017) (No. 16-15372), available at https://nwlc.org/wp-content/uploads/2017/05/5.22.17_Final_Rizo-v.-Yovino_Motion-and-Amicus-Brief-ISO-Petition-for-Reharing-and-Rehearing-En-Banc.pdf
Tuesday, August 29, 2017
California Appellate Court Rules that Victims of Outrageous Workplace Discrimination May Sue Supervisors for Intentional Infliction of Emotional Distress
Earlier this month, a the Fourth District Court of Appeals in San Diego ruled that an employee’s claim against a former supervisor for intentional infliction of emotional distress (“IIED”) in connection with discriminatory conduct could proceed and was not barred by the workers’ compensation exclusivity rule. [Link to opinion in Light v. California Department of Parks &Recreation.] The employee Melony Light, a park aide and office assistant for the California Department of Parks and Recreation, alleges that she was subjected to discriminatory treatment by her supervisor Leda Seals, after Light refused to participate in and defend Seals’ ongoing harassment of a co-worker, Delane Hurley, whom Seals believed to be a lesbian. Among other acts (as alleged by Light), Seals subjected Light to ongoing verbal abuse, demanded that Light lie to Human Rights Office investigators about Seals’ treatment of Hurley, and physically intimidated Light. Eventually, the Department eliminated Light’s working hours, in keeping with one of Seals’ threats to Light.
Light sought and received a worker’s compensation award worth nearly $13,000 for anxiety, nausea, loss of appetite, migraines, asthma attacks, body aches and pains, digestive problems, vomiting, severe abdominal cramps, and tightness in the chest. Under the worker’s compensation exclusivity rule, the worker’s compensation system is generally the exclusive remedy for workers injured on the job, whether the injury is physical or psychological. The policy behind the rule is the “compensation bargain,” under which the employer assumes no-fault liability for workplace injuries, granting the employee relatively swift and certain compensation, but limiting the range of tort remedies available.
But the exclusivity rule is not absolute and, relevant here, a line of cases developed which established that employees may sue employers for IIED where the actionable conduct also violates the California Fair Employment and Housing Act (“FEHA”). These cases established that discriminatory acts fall outside the normal risks inherent to the employment relationship, and thus do not fall within the worker’s compensation bargain. See, e.g., Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, 288 (“A claim for distress arising out of employment is not barred where the distress is engendered by an employer’s illegal discrimination practices.”). This FEHA exception recognizes that discrimination in the workplace is an exceptional injury, for which the worker’s compensation system alone cannot make an employee whole.
However, the viability of the FEHA exception to the exclusivity rule was placed in doubt by another recent ruling of the Fourth District in Yau v. Santa Margarita Ford., Inc. (2014) 229 Cal.App.4th 144, which concluded – without mention of FEHA – that the only viable exception to the exclusivity rule is for workplace injuries incident to a claim for wrongful termination in violation of public policy (also known as Tameny claims). The Yau court took the position that the California Supreme Court had severely limited the ability of employees to bring intentional infliction of emotional distress claims in Miklosy v. Regents (2008) 44 Cal.4th 876 , but the Court in Light concluded that its sister appellate panel had misread Miklosy, which involved an intentional infliction of emotional distress claim in the context of whistleblower retaliation and did not discuss FEHA.
The opinion, authored by Justice Judith McConnell, also rejected the notion that an employee cannot bring an IIED claim against a supervisor, because FEHA does not permit claims against supervisors, finding that an IIED claim is not merely a different rubric to recover for a FEHA (or other workplace violation), but “is a substantively different claim, aimed at a different wrong, and protects a different interest.” In that regard, an IIED claim entails: (1) extreme and outrageous conduct by the defendant, with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff’s suffering severe or extreme emotional distress; and (3) actual and proximate causation. IIED claims thus impose a high bar – and although not all FEHA cases will involve extreme and outrageous conduct by an individual supervisor or manager, many cases will.
The opinion further took aim at the trial court’s conclusion that Light had failed to raise triable issues of material fact as to any adverse employment action sufficient to support a claim for retaliation under FEHA at the summary judgment stage. Justice McConnell noted that Seals had explicitly threatened Light, telling her that she would be moved to a different workplace or terminated if she did not lie to the Human Rights Office. Then, when Light failed to follow orders, her scheduled hours were eliminated. Moreover, Light had been denied training and passed over for promotions. The Fourth District thus concluded that the trial court had erred and that Light’s FEHA retaliation claim could proceed.
In sum, while Light did not introduce the FEHA exception to the worker’s compensation exclusivity rule, the holding establishes its continued viability after Miklosy and Yau. Moreover, because Miklosy and Yau did not involve FEHA claims, Light does not create a direct conflict with those prior cases, making it unnecessary for the Supreme Court to resolve the tension between these lines of cases. Light provides clear encouragement to employees and their advocates to pursue IIED claims against individual managers and supervisors for discriminatory and outrageous conduct, in addition to FEHA claims against the employer. It also sends a clear message to employers that discrimination is not a “normal” part of the employment relationship, even if it is all too common, and that the risk to employers, managers, and supervisors of failing to prevent or take action against discriminatory conduct are substantial.
Monday, July 24, 2017
In an era of increasing uncertainty and danger for immigrants, two recent Ninth Circuit decisions demonstrate a commitment to protecting all workers’ rights.
In April, the Ninth Circuit held that conditioning an employee’s reinstatement on his or her immigration status violates California public policy. In Santillan v. USA Waste of California, Inc., 853 F.3d 1035 (9th Cir. 2017), Gilberto Santillan was a residential garbage truck driver for 32 years. In 2011, Santillan filed a formal grievance through his union asserting that he was wrongfully terminated. In a settlement, USA Waste agreed to reinstate Mr. Santillan, provided that he provide proper work authorization pursuant to the 1986 Immigration Reform and Control Act (IRCA). Santillan could not provide an expiration date for his work authorization, and six days later USA Waste again terminated Santillan, citing his failure to comply with IRCA.
Last month, the Ninth Circuit held that an employer’s attorney can be liable for retaliation where they report an employee to Immigration and Customs Enforcement (ICE). In Arias v. Raimondo, No. 15-16120, 2017 WL 2676771, (9th Cir., June 22, 2017) José Arnulfo Arias filed claims against his employer, Angelo Dairy, for violations of the Fair Labor Standards Act (FLSA) in 2006. The state court trial was set for August 2011. In June 2011, Defendant’s attorney, Anthony Raimondo notified ICE that Arias may be undocumented, to get him deported. Raimondo had reported employees to ICE in at least five other cases. Arias then filed a FLSA retaliation complaint against both Angelo Dairy, which settled prior to the Ninth Circuit decision, and Raimondo. The Ninth Circuit held that Raimondo could be held liable under FLSA for retaliation, reasoning that retaliation provision broadly refers to any person and expressly extends to legal representatives. It further reasoned that the purpose of anti-retaliation provisions is to ensure that workers can exercise their rights without interference.
These decisions are important victories for immigrant workers and their advocates. In California, immigrant workers – even undocumented workers – have the same entitlement to employment protections as other workers. Though dangers remain for immigrant workers, the Ninth Circuit has created stronger protections by removing barriers to reinstatement for immigrant workers. Employers and their agents may also be liable if they report employees to ICE after they assert their rights.
Thursday, July 13, 2017
Today, the California Supreme Court issued an important decision, holding that workers prosecuting wage violations under California’s Private Attorneys General Act of 2004 (“PAGA”) are entitled to receive witnesses’/class members’ contact information without having to prove their entire case first. As explained in Williams v. Superior Court (Marshalls of CA), “California law has long made clear that to require a party to supply proof of any claims or defenses as a condition of discovery in support of those claims or defenses is to place the cart before the horse.” The entire decision is required reading for any wage and hour and/or class action practitioner in California, but a few points are worth highlighting here.
For California employees, the biggest win from the Williams decision is the California Supreme Court’s holding that a worker bringing a representative PAGA enforcement action, like any other plaintiff in a civil state court lawsuit, is not required to prove their case before receiving the information and documents needed to prove their case on behalf of themselves and their co-workers.
The outcome in Williams flows from a plain reading of PAGA and California’s discovery statute, neither of which impose the “modicum of substantial proof” standard MarshallsCA advanced, i.e., “a PAGA-specific heightened proof standard at the threshold, before discovery.” To the contrary, “to insert such a requirement into PAGA would undercut the clear legislative purposes the act was designed to serve” because it would necessarily undermine a representative plaintiff’s ability “to advance the state‘s public policy of affording employees workplaces free of Labor Code violations, notwithstanding the inability of state agencies to monitor every employer or industry.”
Of course, a trial court retains discretion for a “special reason to limit or postpone a representative plaintiff‘s access to contact information for those he or she seeks to represent, but the default position is that such information is within the proper scope of discovery, an essential first step to prosecution of any representative action.”
The California Supreme Court also used the Williams case to reaffirm the broad scope of civil discovery in California state court. While broad discovery requests may result in “a defendant’s inevitable annoyance,” the Court recognized that the California Legislature “granted such a right anyway, comfortable in the conclusion that ―[m]utual knowledge of all the relevant facts gathered by both parties is essential to proper litigation.”
The Court also clarified that the three-step framework established in Hill v. National Collegiate Athletic Assn., not the “compelling interest” analysis in White v. Davis, should be applied to resolve most parties’ privacy objections to discovery requests unless a request constitutes an “obvious invasion of interests fundamental to personal autonomy.” The Court made clear that routine requests for witnesses’/class members’ contact information typically do not warrant “compelling interest” scrutiny, and strongly implied that the Hill test should frequently result in the production of witness/class member contact information, particularly where the parties agree to use a Belaire-West notice and opt-out process.
III. Defendants Asserting “Burden” Objections to Discovery Requests Must Provide Specific Facts About the Cost and/or Administrative Difficulty of Complying.
The Court also underscored that a defendant may not refuse to produce discovery merely because a defendant disagrees with a plaintiff’s legal theory. In so holding, the Court emphasized that “the way to raise” a perceived legal deficiency in a plaintiff’s case “is to plead it as an affirmative defense, and thereafter to bring a motion for summary adjudication or summary judgment, not resist discovery until a plaintiff proves he or she” can overcome the defendant’s affirmative defense. This aspect of the Williams decision will hopefully go a long way towards incentivizing defendants to defend against plaintiffs’ claims on the merits instead of engaging in discovery gamesmanship, typically resulting in unnecessary and costly motion practice.
Moreover, if responding to a discovery request poses a genuine burden for a company, then the company must provide “evidence of the time and cost required to respond” to support its burden objection. While unsurprising, this portion of the opinion should be used by workers’ advocates who receive generalized “burden” objections from defendants which lack any specific facts regarding the nature of the supposed burden to respond.
In Williams, the Court illustrated its point with an example: “depending on the nature of any computer database Marshalls might maintain, providing information for 10,000 employees might prove little different than for 1,000, or 100.” If Marshalls had shown that, for example, each store had its own computer database of employees’ information unconnected to any other store’s database and no other centralized employee database existed, then the company might have had solid grounds to assert that coordinating data retrieval between “approximately 130 stores” in California would have been too costly and time-consuming. In that case, the trial court might have ordered cost sharing between the parties, or a narrower production of information. On the other hand, if Marshalls had been able to produce contact information relatively easily regardless of whether it produced employee information for one store as opposed to all of its stores, then Marshalls’ burden objection likely would not have been sustained.
In the actual case, Marshalls provided no “supporting evidence” regarding the nature of the “time and cost required to” produce contact information for the witnesses/potential class members. Accordingly, the company’s “burden” argument lacked any legal merit.
Williams will be cited by wage and hour practitioners for years to come because it both provides much needed clarification regarding the scope and operation of California’s civil discovery rules as applied to PAGA representative actions, and also affirms the common sense principle that a worker should not have to prove his or her case before receiving the basic information he or she needs to do so.
Workers and workers' advocates should celebrate this tremendous victory weighing in favor of access to justice, and ultimately, robust enforcement of California’s vital labor laws.
If you have believe that you and your co-workers are or have been subject to unlawful pay practices, then please contact Bryan Schwartz Law.
 Williams v. S.C. (Marshalls of CA), No. S227228, 2017 WL 2980258, slip op. at 20 (Cal. July 13, 2017) (“Williams”)
 Williams slip op. at 12, 14.
 Williams slip op. at 13.
 Williams slip op. 11.
 Williams slip op. at 20.
 7 Cal. 4th 1, 35. (1994).
 Williams slip op. at 29.
 Williams slip op. at 25-29.
 Williams slip op. at 31 (citing Union Mut. Life Ins. Co. v. Superior Court, 80 Cal. App. 3d 1, 12 (1978)).
 Williams slip op. at 18 n. 6.
 Williams slip op. at 4.
 Williams slip op. at 18 n. 5.
 Williams slip op. at 18.
 Williams slip op. at 19 (citing Sinaiko Healthcare Consulting, Inc. v. Pacific Healthcare Consultants, 148 Cal. App. 4th 390, 402 (2007)).
Wednesday, July 5, 2017
Ninth Circuit Holds Mortgage Underwriters are Entitled to Overtime Under the Fair Labor Standards Act
Today, the Ninth Circuit held in McKeen-Chaplin v. Provident Savings Bank that mortgage underwriters are entitled to overtime compensation under the federal Fair Labor Standards Act (“FLSA”). The McKeen-Chaplin opinion clarifies the legal analysis for evaluating whether an employer has met the second prong of the administrative exemption test under the FLSA by strongly endorsing the “administrative-production dichotomy.” McKeen-Chaplin, No. 15-16758, 2017 WL 2855084, at *7 (9th Cir. July 5, 2017) (“McKeen-Chaplin”). Under the administrative-production dichotomy framework, “whether [an employee’s] primary duty goes to the heart of internal administration—rather than marketplace offerings” is the key test in determining whether an employer has met the second prong of the FLSA’s administrative exemption. Based upon this important precedent, generally speaking, if an employee’s duties are focused on the core business of a company – like underwriters, working on a bank’s mortgage products – then the employee is not administratively exempt, and is entitled to overtime.
All employees are guaranteed minimum and overtime compensation under the FLSA unless their job duties fall under a specific exemption, such as the administrative exemption. McKeen-Chaplin, at *2. The burden is on the employer to show that a particular exemption defense “plainly and unmistakably” applies to a particular job position. Id. For the administrative exemption to apply, an employee must:
(1) be compensated not less than $455 per week;
(2) perform as her primary duty office or non-manual work related to the management or general business operations of the employer or the employer’s customers; and
(3) have as her primary duty the exercise of discretion and independent judgment with respect to matters of significance.
McKeen-Chaplin, at *3. An employer must completely satisfy all three prongs of this test for the administrative exemption to apply (i.e., for an employer to avoid paying overtime and minimum wage compensation by claiming the administrative exemption applies to its workers). Id.
In McKeen-Chaplin, the Ninth Circuit held that mortgage underwriters are entitled to overtime under the FLSA. In so holding, the Court summarized the operative facts as follows:
Provident’s mortgage underwriters do not decide if Provident should take on risk, but instead assess whether, given the guidelines provided to them from above, the particular loan at issue falls within the range of risk Provident has determined it is willing to take. Assessing the loan’s riskiness according to relevant guidelines is quite distinct from assessing or determining Provident’s business interests. Mortgage underwriters are told what is in Provident’s best interest, and then asked to ensure that the product being sold fits within criteria set by others.
Id. at *4.
In other words, because mortgage underwriters follow their employer’s policies to produce their employer’s products and do not set the employer’s policies or determine their employer’s business objectives, the employer failed to meet the second prong of the three-part administrative exemption test. Because the employer failed to meet all three prongs of the administrative exemption test, and no other exemption applied, the Ninth Circuit held that mortgage underwriters are entitled to overtime compensation.
The Ninth Circuit rejected the lower court’s reasoning that mortgage underwriters performed “quality control” work as a basis to assert that they engaged in work directly related to the company’s management or general business operations. Id. at **6-7. The Ninth Circuit noted, as a factual matter, that the employer maintains a separate, multi-step quality control process which “is not staffed by mortgage underwriters.” Id. at *6.
To drive home the point that merely because a “role bears a resemblance to quality control” does not make such a position exempt from overtime/minimum wage protections, the Ninth Circuit analogized the duties of mortgage underwriters to the undisputedly non-exempt “assembly line worker who checks whether a particular part was assembled properly.” Id. at *7. Even though an assembly line worker inspects a widget on the assembly line to ensure it meets the standards of the employer, the assembly line worker – like the underwriters in McKeen-Chaplin - nevertheless is bound by the product quality standards set by the employer.
Unless employees’ job duties “plainly and unmistakably” make them “administrators or corporate executives” responsible for the employer’s “internal administration,” employers may not avoid paying overtime by classifying them as exempt using the administrative exemption. Id. at **2, 7.
If you have concerns that you may have been incorrectly classified as an exempt employee and deprived of overtime pay, then please contact Bryan Schwartz Law.
 The Ninth Circuit was careful to acknowledge that “the [administrative-production] dichotomy is only determinative if the work falls squarely on the production side of the line.” McKeen-Chaplin, at * 4 (citing 69 Fed. Reg. 22122, 22141 (Apr. 23, 2004).
In addition, because the Ninth Circuit decided this case solely with respect to the second prong of the administrative exemption test, it did not need to address prong (3), i.e., whether mortgage underwriters have as their primary duty the exercise of discretion and independent judgment with respect to matters of significance. McKeen-Chaplin, at *1 n. 1.
Wednesday, June 28, 2017
Beginning July 1, California will require Employers to Provide Notice to Employees about Rights to Domestic Violence Leave
Employees can use this protected leave for matters that arise from being a victim of domestic violence, sexual assault, or stalking, including but not limited to:
• Seeking medical attention for injuries;
• Obtaining services from domestic violence shelters, programs, or rape crisis centers;
• Obtaining psychological counseling;
• Participating in safety planning and taking related actions such as seeking a temporary or permanent relocation.
Employees are also entitled to use any available vacation or sick leave for such purposes.
This new law signed by Governor Brown requires California employers to “inform each employee of his or her rights” when a new employee is hired and to other employees upon request. The Labor Commissioner will develop a form for employers to use for these purposes, which will be published on the Commissioner’s website on July 1, 2017. Notice requirements for employers also take effect on July 1, 2017.