Friday, January 20, 2017

California Supreme Court Offers Clear Statement: A Rest Period Must Be a Period of Rest

In the final week of 2016, the California Supreme Court handed a victory to workers across the State by clarifying that employers may not require hourly employees to remain on call during mandatory 10-minute rest periods. The Court grounded its decision in the history of the rest-period requirement, statutory interpretation, and common sense, leading to its conclusion that “A rest period, in short, must be a period of rest.”

The case before the Court, Augustus v. ABM Security Services, Inc., involved security guards who were required to keep their pagers and radios on during rest periods and remain ready to respond to calls when needs arose. The security guards won a $90 million victory in the trial court on summary judgment – based on the employer’s admission that it did not relieve guards of all duties during rest periods - but the Court of Appeal reversed. In doing so, the appellate court concluded that state law does not require off-duty rest periods, and furthermore, that “being on call” is not performing work.

Augustus follows a 2012 decision of the state’s high court, Brinker Restaurant Corp. v. Superior Court, which concluded that employees must be relieved of all duties during statutorily required 30-minute meal periods. Now, Augustus confirms that employers must treat meal and rest periods the same way.

In an opinion written by Justice Cuéllar and joined by four Justices, the Court used the dictionary definitions of “rest” – the “cessation of work, exertion, or activity” or “freedom from activity and labor” – as an indication of the legislative intent behind the rest-period requirement. Justice Cuéllar traced the history of the provision, from an Industrial Wage Commission wage order in the 1930s to California Labor Code § 226.7, enacted in 2000. The Court noted indications that the Legislature had intended for meal and rest periods to be treated the same, and further that specific provisions which authorize on-duty rest periods (such as one involving caregivers at 24-hour residential care facilities) would make no sense if any employee can be required to be on duty during a rest period. The Court also looked to guidance from the Division of Labor Standards Enforcement which had determined that rest periods must be duty-free.

The majority also took care to assuage concerns that off-duty rest periods would be too onerous for employers, noting that an employer can call an employee back to work mid-break if there is an urgent need, so long as the employee gets an additional rest break within the prescribed timeframe or the employer pays the employee a premium for the missed break.

In a concurring and dissenting opinion, Justice Kruger agreed that rest periods must be off-duty, but quibbled with the premise that being “on call” is work. She would have remanded the case to the trial court for further consideration of whether this particular on-call policy unreasonably interfered with the security guards rest breaks.

Rather than let this determination devolve into a fact-bound, mushy standard as to what kinds of on-call policies unreasonably interfere with a 10-minute rest break, the Court created a bright-line rule. The Court acknowledged that, as a practical matter, a 10-minute break is exceedingly short and that any interference by the employer is likely to compromise the employee’s ability to briefly rest. The Court further noted that many employees may need to use those ten minutes to  take care of personal matters, such as pumping breast milk or making a phone call to arrange child care. In short, the Court has put employers in California on notice that rest means rest, making it much easier for employees to challenge employer policies that fail to conform to the law.

If you believe that your employer has failed to provide you with off-duty rest periods as required by California law, please contact Bryan Schwartz Law.

Working Backward from My Bliss: I Resist

A wet field of overgrown grass between the vineyards in Sonoma, my children running laughing after a soccer ball and a basketball - nothing contains them. There are no rules to their game, they are uncontrollably happy, they can be and do anything here. We have it good.

We were running 125 years ago, too. Running to America, we fled pogroms where children like mine lived in fear, had nothing, where parents saw only blood and destruction where they lived.

America welcomed my family and we have helped build it. We have followed her rules, paid our taxes, built and supported businesses. We have tried to give more than we have taken. Thousands have led better lives because of us.

Today America changes – says refugees are unwelcome, builds a wall with its hostility. Generations from now we will miss the laughing children’s children of those we exclude.

When we fail to pay it forward, we suddenly fear what is behind us. Just over our shoulder, despair and anger lurk among those we leave suffering.

Violence will meet us if we do not resist non-violently. We must cling to truth, satyagraha. We must produce prohibited salts, boycott buses, lie prostrate before wheels of tanks, and through it all, touch lepers, for the love of G-d.

For the love of children running laughing through the overgrown grass, for the sake of my bliss, today and for the next four years, I resist.

Tuesday, January 17, 2017

On Remand, Ninth Circuit Holds that Car Service Advisors Do Not Fall within the Fair Labor Standards Act’s Car Salesman Exemption from Overtime Pay

On January 9, 2017 the Ninth Circuit held that car service advisors do not fall within the exemption from overtime-compensation for “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles” provided in § 213(b)(10)(A) of the Fair Labor Standards Act (“FLSA”). (Navarro v. Encino Motorcars, LLC, No. 13-55323, Slip Op. 4 (9th Cir. 2017)).

Individuals working as “service advisors” filed an FLSA overtime action against their employer, a dealership that sells and services new and used cars. Plaintiffs alleged that service advisors’ duties include: greeting car owners as they arrive at the dealership’s service area; evaluating cars’ repair and maintenance needs; suggesting services for cars; writing up estimates; and following up with customers. (Slip Op. 4-5)

The U.S. District Court for the Central District of California dismissed the overtime claim. Thus began the case’s long appellate journey. Initially, the Ninth Circuit reversed, holding that a 2011 regulation by the Department of Labor reasonably interpreted § 213(b)(10)(A) to exclude service advisors. The Supreme Court held that the Ninth Circuit’s first decision erred by relying on the 2011 regulation and vacated the decision. The Court then remanded to the Ninth Circuit to construe § 213(b)(10)(A) without deferring to the 2011 regulation. (Slip Op. 5)

On remand the Ninth Circuit performed a detailed inquiry into the text and legislative history surrounding § 213(b)(10)(A). After reviewing “the ordinary meaning of the exemption’s words and the rule that we must interpret exemptions narrowly,” the court concluded, “we are convinced that Congress intended to exempt only salesmen selling cars, partsmen servicing cars, and mechanics servicing cars.” (Slip Op. 23)

However, assuming for the sake of argument that the FLSA’s language leaves room for ambiguity, the court examined the legislative history of the amendments and held that “Congress did not intend to exempt service advisors.” The legislative history for the operative amendments to § 213(b)(10)(A) “reveal[s] clear concerns with applying the overtime-compensation requirement to exactly three categories of a dealership’s employees: automobile salesmen, partsmen, and mechanics. The extensive legislative record . . . contains hardly a mention of service advisors, and the few references that exist display no concern about overtime compensation for service advisors.” On these bases, the Court held that Congress did not intend to exempt service advisors. (Slip Op. 31)

In ruling that Congress did not intend to include service advisors within the § 213(b)(10)(A) exemption, the Ninth Circuit maintains a split with the Fourth and Fifth Circuits as well as the Supreme Court of Montana, each of which has held that car services advisors were exempt from overtime. Walton v. Greenbrier Ford, Inc., 370 F.3d 446 (4th Cir. 2004); Brennan v. Deel Motors, Inc., 475 F.2d 1095 (5th Cir. 1973); Thompson v. J.C. Billion, Inc., 294 P.3d 397 (Mont. 2013). Navarro's journey may include another trip to the Supreme Court.

Monday, January 16, 2017

The Supreme Court to Consider Employees' Right to Seek Class-wide Relief

On Friday, January 13, 2017, the Supreme Court granted certiorari to consider the consolidated appeals of Epic Systems Corp. v. LewisErnst & Young v. Morris, and NLRB v. Murphy OilThe Court will consider a circuit split regarding whether arbitration agreements containing class action waivers are enforceable under the Federal Arbitration Act in the employment context. In Murphy Oil, the Fifth Circuit held that a corporate defendant did not commit unfair labor practices by requiring employees to sign its arbitration agreement, which contained a class action waiver. In Epic and Ernst & Young, the Seventh and Ninth Circuits held otherwise -- that class waivers in arbitration agreements signed by employees violated the National Labor Relations Act because the waivers restricted the workers' right to concerted action. Bryan Schwartz Law blogged about the appellate decisions here and here.

These cases do not dispute that employees may waive their right to proceed with claims against their employer in any forum other than arbitration. Rather, the Seventh and Ninth Circuits have held that employees cannot waive their right to proceed as a class in any forum. These circuits, as well as the current National Labor Relations Board, agree that the National Labor Relations Act of 1935 protects private sector employees' right to concerted action in workplace disputes.

This long-enshrined federally-granted right to concerted action has come under attack since the Supreme Court decided AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011). Concepcion broadly interpreted the Federal Arbitration Act of 1925 to preempt state laws that prohibit contracts from disallowing class-wide arbitration. While Concepcion was a consumer case, many courts, including the Fifth Circuit, have applied its holding to force employees to proceed with their claims against employers in arbitration, and to do so individually, rather than on a class-wide basis.

The Supreme Court should restore order in the lower courts by clarifying that the National Labor Relations Act protects workers' right to concerted action, that this right is not preempted by the Federal Arbitration Act, and that courts must stop applying Concepcion and its progeny to deny workers the right to proceed as a class in any forum. 

Wednesday, December 14, 2016

The Fate of the Department of Labor's New Overtime Rule is in Limbo, and its Prospects are Dim

Recent developments in the judicial and executive branches of the federal government make it unlikely that a key effort by the Obama Administration to raise the wages of American workers will come to fruition. 

            I.                   Overtime Final Rule

Earlier this year, the Department of Labor announced a new rule which would have increased the salary threshold for the executive, administrative, and professional exemptions to the Fair Labor Standards Act (FLSA). The rule was expected to extend the FLSA’s overtime protections to an estimated 4.2 million additional white-collar employees around the country, including managers in the restaurant, retail, and hospitality industries. (Bryan Schwartz Law wrote about the overtime final rule announcement here). The overtime final rule was anticipated to go into effect on December 1, 2016. 

The final rule would:
  • increase the salary level required for the white collar exemptions to apply, from $23,660 to $47,476;
  • increase the compensation level required for the highly compensated employee exemption to apply, from $100,000 to $134,004; and,
  • provide automatic increases to these salary levels every three years based on data reported by the Bureau of Labor Statistics, without requiring a separate rulemaking. 

II.                Final Rule Imperiled by the Courts

On November 22, 2016, U.S. District Court Judge Amos Mazzant granted an emergency motion to preliminarily enjoin the Department of Labor from implementing and enforcing the overtime final rule. Nevada, et al. v. U.S. Dept. of Labor, et al., No: 4:16-CV-00731, Docket No. 60 (E.D. Tex). The court applied the analytical framework set forth in Chevron U.S.A., Inc. v. National Resources Defense Council, Inc., 467 U.S. 837 (1984), to conclude that the Department of Labor’s interpretation of the FLSA’s white collar exemptions, set forth in 29 U.S.C. § 213(a)(1), was not entitled to deference, and was contrary to the language and intent of the statute.

Courts apply a two-step analytical framework to determine whether an agency's interpretation of a statue is entitled to judicial deference. First, the court determines “whether Congress has directly spoken to the precise question at issue.” Id. at 842. “If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.” Id. at 842-43. Second, if Congress’s intent is ambiguous regarding the precise question at issue, then the court will defer to the agency’s interpretation unless it is “arbitrary, capricious, or manifestly contrary to the statute.” Id. at 844.

In Nevada, the court concluded that the final rule was not entitled to Chevron deference. At the first step of analysis, the court interpreted the language of the FLSA's white collar exemptions as describing employee job duties, not employee salaries. Slip. Op. at 11. The Department of Labor added regulations shortly after the FLSA was enacted in 1938 which added salary basis and minimum salary requirements. The court concluded that by significantly raising the salary level required for the white collar exemption to apply, the Department of Labor exceeded its delegated authority because it allowed minimum salary level to supplant the duties test. Slip. Op. at 13.

The court went on to explain that the final rule would also fail at the second stage of the Chevron analysis, because it was not “based on a permissible construction of the statute. Id. (quoting Chevron, 467 U.S. at 843). The court interpreted the final rule as creating a de facto salary-only test. The court concluded that by doing so, the final rule was “contrary to the statutory text and Congress’s intent,” and not entitled to deference on that basis. Slip. Op. at 14.

In a statement released on the agency’s website, the Department of Labor states that it “strongly disagrees with the decision by the court,” explaining that, 

Since 1940, the Department's regulations have generally required each of three tests to be met for the FLSA's executive, administrative, and professional (EAP) exemption to apply: (1) the employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (“salary basis test”); (2) the amount of salary paid must meet a minimum specified amount (“salary level test”); and (3) the employee's job duties must primarily involve executive, administrative, or professional duties as defined by the regulations (“duties test”). The Department has always recognized that the salary level test works in tandem with the duties tests to identify bona fide EAP employees. The Department has updated the salary level requirements seven times since 1938.

III.             Final Rule Imperiled by the President-Elect

The overtime final rule is likely to die during the presidency of Donald Trump.

On December 1, 2016, the Department of Labor filed a notice of appeal to the Fifth Circuit Court of Appeals – home of some of the most conservative appeals judges in the country. Given the high stakes of this case, the non-prevailing party on appeal will probably seek certiorari before a Supreme Court containing one or more nominee selected by president-elect Trump. If Trump’s selection for the Supreme Court is anything like his recent pick to head the Department of Labor, the High Court will have an additional vote in support of the district court’s ruling.

On December 8, 2016, President-elect Trump named Andy Puzder, a fast-food executive, as his pick to head the Department of Labor. Mr. Puzder is vocal opponent of recent efforts to raise the minimum wage, and government regulation of the workplace generally. In a May 18, 2016 Forbes Op-Ed, Mr. Puzder criticized the overtime final rule as “another barrier to the middle class, rather than a springboard.” If confirmed, Mr. Puzder can be expected to impose additional barriers to implementation of the overtime final rule.

In an economy where middle-class workers’ wages have stagnated, President Obama's Administration sought to lift white-collar wages through the overtime final rule. The court’s wrong decision, and president-elect Trump’s signaled direction, will allow the wealthy few to continue to pocket the economy’s profits while middle-class workers watch their standards of living decline. This is an existing trend that will likely grow throughout the Trump presidency. For the next four years, at least, the movement to raise minimum wages should not expect gains at the federal level. In the meantime, the movement should continue to seek victories where possible – on the state and local levels.  

IV.       Possible Silver Lining? Some Employers May be Contractually Obligated to Raise Wages

Because the preliminary injunction issued just one week before the overtime final rule was supposed to take effect, by that time, many employers may have taken steps toward raising their employees’ wages. Even without the rule, some employers may already have contractually obligated themselves to raise their employees’ wages. 

Friday, November 18, 2016

#ApprenticeshipWorks — Unless it maintains the pay gap

The Legal Aid Society-Employment Law Center blogged about Bryan Schwartz Law's case involving construction worker Teresa Caponio, who suffered sex and age discrimination in her apprenticeship - read about it:

Wednesday, November 9, 2016

Can our democracy survive an unfit President? Compassion, not secession

Is the greatest system of government ever invented great enough to be reinvented after it is burned down? Sub -question - was Trump elected in spite of Trump, to say we must have a do-over of our government, by people terrified by the new economy who have experienced that government is not effectively on their side? People whose worst instincts were in some instances preyed upon by the demagogue but who fundamentally just want change?

Or even if he was really elected in part because of bigotry and sexism rather than in spite of it, can we choose to take away a different message - that the real majority of people are just sick of paying so much for government and getting their hopes up that it will provide a real safety net,a real education, real statutory protections - and being constantly let down? When Trump and his sycophants fail at governing - as they will, since they know only how to burn, and not how to build (other than towering monuments to their own names) - can we step into the void and save our inclusive America with a new vision? We must not forget that we are the ones who serve the diverse working class of America, not the sham billionaire bankruptcy artist who can't be bothered to pay livable minimum wages or his fair share of taxes.

We win in the end because we are right on justice and fairness. And we lose if we come out as defenders of an indisputably flawed and too-often inequitable system.

Is there the kernel of a path forward here? I hope so because as much as I despise Trump and his idiocy I cannot despise America, even though many here voted for him. America gave us the opportunity to do what good we do so passionately. Can we find a way in our anger to have compassion for Trump's victims, or some of them, who themselves struggle to make ends meet and cannot see any hope with the current system, other than through a false prophet? We are the compassionate. We are the compassionate. We are the compassionate. Does repeating this give us any chance of internalizing it?

We must fight by all available means against the hatefulness that Trump espoused throughout his campaign. But can we do it without secession from America?