Wednesday, October 23, 2019

Attorney’s Fees Awarded When Whistleblower Acted in the Public Interest

Have you ever blown the whistle on illegal activity in the workplace and then been retaliated against? Did you have trouble finding a lawyer who would represent you? California protects whistleblowers, but defendants sometimes argue that whistleblower retaliation claims under California Labor Code section 1102.5 (California’s general whistleblower statute) do not require defendant to pay the whistleblower’s attorney’s fees. Attorney’s fees awards are critical to helping whistleblowers get their day in court. Because most people can’t afford to hire an attorney on an hourly basis, laws that allow for the recovery of attorney’s fees allow attorneys to take cases on a contingency basis – the attorney only gets paid if you get paid. An award of attorney’s fees also means that the attorney’s payment doesn’t have to come out of the amount you recover. You get your recovery and the attorney gets her fees, without the attorney having to take her fees out of your recovery (typically at least 1/3 to 40% of your recovery).
Attorney’s fees awards are available under California Code of Civil Procedure section 1021.5 where the case involves the enforcement of an important right affecting the public interest if: (1) a significant benefit, monetary or non-monetary, has been conferred on the general public or a large class of persons; (2) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate; and (3) such fees should not in the interest of justice be paid out of any recovery (i.e., the attorneys should not be paid out of what the employee recovers). The question is, does a violation of 1102.5 warrant the recovery of attorney’s fees as outlined in 1021.5? Can whistleblowers recover their attorney’s fees?
The California Court of Appeals recently said yes.
In Hawkins v. City of Los Angeles (2019) 40 Cal.App.5th 384, two employees blew the whistle on illegal activity happening in the City of Los Angeles’ Department of Transportation. Todd Hawkins and Hyung Kim were hearing examiners who reviewed parking violations. When people challenged parking tickets, Mr. Hawkins and Mr. Kim decided whether those people had in fact violated parking laws or if the City had gotten it wrong and needed to issue a refund for the fines they had charged.
Both men complained internally that their supervisor was pressuring them to change decisions from “not liable” to “liable” – in other words, saying people had violated parking laws when they hadn’t and cheating people out of refunds for the fines they had paid. Both men were then fired for speaking up.
They sued for whistleblower retaliation under 1102.5, the California Bane Act, and other claims. They also filed claims with California’s Labor and Workforce Development Agency seeking PAGA (Private Attorneys General Act) penalties. The matter went to a jury trial, and the jury found in the employees’ favor on their 1102.5 and Bane Act claims, awarding Hawkins $238,531 and Kim $188,631 in damages. The trial court then assessed a $20,000 PAGA penalty, and subsequently awarded the employees $1,054,286.88 in attorney’s fees. The City appealed.
The Court of Appeals upheld the jury’s verdict, upholding the award of attorney’s fees for whistleblower retaliation under 1102.5. As the Court explained,

Here, the City argues that a significant benefit was not conferred on the public because all the action did was remedy retaliation for whistleblowing. However, the City ignores the trial court’s finding that the action also conferred a significant public benefit because the public is entitled to fair hearings with respect to parking citations. The Vehicle Code entitles the public to “an independent, objective, fair, and impartial review of contested parking violations.” (Veh. Code, § 40215, subd. (c)(3).) Plaintiffs’ action revealed that, for years, the City had been pressuring, sometimes successfully, hearing examiners to change decisions, usually to find that refunds were not warranted. In short, the public had been deprived of independent and impartial hearings. Instead, the City undermined the process provided by the Vehicle Code to generate revenue.
Mr. Hawkins and Mr. Kim were whistleblowers under 1102.5 who satisfied the requirements under 1021.5 of acting in the public interest, warranting their recovery of attorney’s fees.
                The Court of Appeals also upheld the award for attorney’s fees for Mr. Hawkins’ and Mr. Kim’s PAGA claim. This is a big deal: in an unpublished portion of the opinion, the Court explains that an individual whistleblower under 1102.5 can still be representative of a broader group of people, as required by PAGA, when that individual whistleblower is furthering the public interest. The Court distinguishes another case, Kahn v. Dunn-Edwards Corp. (2018) 19 Cal.App.5th 804, where the plaintiffs’ PAGA claim was denied because it wasn’t representative:

 We express no opinion as to the correctness of Kahn’s holding. Whether correct or not, we do not interpret Kahn so literally as to hold that a plaintiff whose prefiling notice uses the incorrect pronoun—I instead of we and my instead of our—fails to comply with the Labor Code’s administrative procedures. Rather, we must determine whether the prefiling notice, as a totality, gave the requisite notice. Plaintiffs’ prefiling notices are materially different than the notice in Kahn. Their notices referred to complaints that Walton-Joseph had hearing officers change written decisions from not liable to liable. Hawkins referred to Walton-Joseph’s actions “in coercing employees, including Claimant to change their decisions.” (Italics added.) Similarly, Kim referred to another hearing examiner who had complained to government officials about the conduct. Thus, the notices here expressly referred to conduct not limited to the individual complainants. They complained about conduct that impacted them and fellow hearing examiners, as well as the public. We therefore conclude that plaintiffs complied with section 2699.3 [PAGA].
While attorneys cannot cite to the above portion of the Hawkins opinion, it’s worth noting the Court’s implicit suggestion to use the pronoun “we” in PAGA claims to forestall any argument from the defendant employer that the plaintiff does not have a viable PAGA claim.
Hawkins strengthens whistleblower protections, making it more likely that whistleblower cases will be brought to court – and therefore making it more likely that the harms whistleblowers uncover will be remedied. Hawkins will be a key case moving forward to combat public corruption and the silencing of those who dare to speak truth to power.
Bryan Schwartz Law has written about attorney’s fees for whistleblower retaliation and PAGA before. If you believe that you were retaliated against for exposing illegal activity at your workplace, please contact Bryan Schwartz Law today.

Thursday, September 26, 2019

New (Watered-Down) Overtime Pay Rule Announced By Department of Labor

This week, the U.S. Department of Labor announced a final rule that starting January 1, 2020, 1.3 million more American workers will be eligible for overtime pay under the Fair Labor Standards Act (FLSA). The final rule expands the definition of who “non-exempt” workers are, i.e. workers who are subject to minimum wage and overtime pay requirements. “Exempt” workers are exempt from minimum wage and overtime pay requirements. Exempt workers include, for example, those meeting the tests (including the salary-basis test) for the white-collar exemptions as executive, administrative, or professional employees.

The rule is a watered-down version of an Obama Administration proposal, which would have expanded overtime pay to around 4 million workers by raising the maximum salary for which non-exempt workers are entitled to overtime pay to $47,000 a year for full-time work, a highly-compensated employee (“HCE”) exemption level of $147,000, and (perhaps most importantly) tying future increases to the cost of living. That proposal was met by fierce opposition from various business groups, who teamed up with some Republican-controlled states to take the Obama Administration to court, resulting in the rule being blocked by a conservative federal judge in 2017.

Here are the main changes the new rule makes:

·         raises the “standard salary level” to qualify for a white-collar exemption from the current level of $455 per week (equivalent to $23,660 per year for a full-year worker) to $684 per week (equivalent to $35,568 per year for a full-year worker);

·         raises the total annual compensation level for “HCEs from the current level of $100,000 to $107,432 per year;

·         allows employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level; and

·         revises the special salary levels for workers in U.S. territories and in the motion picture industry.

What the new rule does not do is tie the standard salary level to the rate of inflation. Adjusted for inflation, the $23,660/year would rise to a current minimum salary level for non-exempt status of $55,000/year. By also allowing employers to take nondiscretionary bonuses and commissions into account in determining how much employees make and therefore if they’re eligible for overtime pay, the rule immediately undercuts the impact of the relatively small increase provided to the standard salary level. That 10% caveat creates room for confusion and discretion on the part of employers that could adversely affect the very workers the rule is supposedly designed to help. The $107,432/year level for HCEs is also laughably low for many parts of the country where such a salary is much closer to the average.

After 15 years of no updates to overtime pay eligibility, any update is welcome. But once again, the Trump Administration does far less than is needed (and far less than was approved by the prior Administration) to help vulnerable workers. The bottom line: If you make less than $35,568 a year for full-time work, starting next year, you’re more likely to be entitled to overtime pay. But, your employer can count up to 10% of your earnings from things like bonuses and commissions to determine if you qualify for overtime. Note that this new rule doesn’t affect the “outside sales exemption.”

Bryan Schwartz Law has written about overtime issues before here. If you believe you were denied overtime pay you were owed, contact Bryan Schwartz Law today.

Wednesday, September 18, 2019

Congratulations on Your Courage, Governor Newsom!

It is very easy to be cynical about politicians. This is nothing new, but the cynicism has to be at an all-time high based on the extent of media coverage devoted to the current, corrupt, dishonest, morally bankrupt, cowardly occupant of the Oval Office.

As such, it is worth taking a moment to recognize a politician - California's Governor - who acts with real courage. Gavin Newsom did something brave today when he signed into law Assembly Bill 5 (AB5), taking a strong, cutting-edge position toward the developing gig economy and how it affects average Californians. Misclassification of workers as "independent contractors," as Governor Newsom sagely recognized in his signing message, is further "hollowing out" our middle class, and contributing to the erosion of basic worker protections that all people of conscience should agree upon - the minimum wage, paid sick days, and health insurance benefits.

Uber and other gig economy companies are a powerful financial force. By the Governor's strong position today - which more politicians should emulate - he says something unequivocally true: all of us, standing together, are stronger than any corporation.

Thank you, Governor Newsom.

Friday, September 13, 2019

In ZB, California Supreme Court Chips Away at PAGA's Protections for Workers' Rights

On Thursday, the Supreme Court of California ruled that there is no Private Attorneys General Act of 2004, California Labor Code § 2698, et seq. (PAGA) claim for the penalty relating to the "amount sufficient to recover underpaid wages" in California Labor Code § 558(a)(2).  In ZB, N.A. v. Superior Court1, the Court ostensibly teed up the question, on which there was a split of authority, of whether the rule that PAGA claims could not be compelled to arbitration applied to a PAGA penalty requiring restitution of underpaid wages, under California Labor Code § 558, to resolve a split in authority.  The result - that there is no underpaid wage PAGA penalty in the first place - is a disappointing blow to protections for workers' rights.

In reaching this decision, the Court concluded that the amount specified by the phrase "amount sufficient to recover underpaid wages" is not a "civil penalty" but is instead compensatory relief that may be recovered in addition to, and separate from, the civil penalties.  It further analogized § 558 to California Labor Code § 1197.1, which provides for the recovery of "an amount sufficient to recover underpaid wages" in addition to the section's civil penalties, and concluded that the Legislature must have intended for the civil penalties to be separate from the "amount[s] sufficient" described in each respective section.

The Court opined that its decision would "enhance and streamline enforcement of the Labor Code's overtime and workday requirements."  But it is difficult to see how removing a valuable arrow from the State's PAGA enforcement quiver can further these goals.  Less clear still is how the Court's decision can be squared with the Legislature’s clear intent to permit PAGA plaintiffs to recover the full measure of relief that would be available to the State in a public enforcement action and preserve the deterrence scheme that the Legislature envisioned.  These points are particularly salient, as this firm has previously written, because arbitration has the effect of killing statutorily-protected claims and emboldens law-violating employers by further skewing the playing field against workers.

Moving forward, the ZB decision has the impact of limiting the scope of potential PAGA recovery, although legislative amendment could restore the full measure of PAGA relief that, we believe, was originally intended.  Regardless, PAGA will continue to be an important enforcement tool for the State, aided by the workers themselves and their advocates.  Importantly, ZB did nothing to disturb the Court's prior holding in Iskanian v. CLS Transportation Los Angeles (2014) 59 Cal.4th 348, that PAGA is a qui tam statute where workers stand in the shoes of the State in prosecuting wage claims, with waivers of the State's prosecutorial authority unenforceable as a matter of state lawIskanian has survived repeated challenges in the Ninth Circuit Court of Appealsand has been denied certiorari time and time again by the U.S. Supreme Court.

If you are seeking to assert wage claims representing your co-workers and are facing an employer who seeks to force you into individual arbitration, contact Bryan Schwartz Law.

1 On August 29, 2018, Bryan Schwartz Law, on behalf of the California Employment Lawyers Association (CELA), submitted an amicus brief supporting affirmance of the Court of Appeal decision, as discussed in a prior blog post.

Monday, September 9, 2019

Can You Be Fired For Being Gay? The Supreme Court Will Soon Decide.

Next month, the Supreme Court will hear three cases about workplace discrimination. Under Title VII of the 1964 federal Civil Rights Act, it's illegal for an employer to discriminate against an employee on the basis of sex. What "sex" encompasses is what's at issue in these cases. Up until now, federal law has treated "sex" to include gender only, meaning an employer can't discriminate against you just because you're a man or a woman. The question at issue in these cases is whether the word "sex" also encompasses sexual orientation and gender identity. If you identify as LGBTQ+, are you protected from discrimination in the workplace? That's what SCOTUS will soon decide.

In one case, a transgender woman was fired from her job after revealing that she was transgender and would be dressing in accordance with the female dress code for the office. In the other two cases, gay men were fired because of their sexual orientation. 28 states currently have no protections for LGBTQ+ employees in the workplace (although a few of those states protect public sector workers). The Obama Administration had interpreted federal non-discrimination statutes to include discrimination on the basis of sexual orientation and gender identity, but the Trump Administration reversed course, and is essentially saying an employer may fire someone for being gay or transgender, without consequences under Title VII. That shouldn't be surprising coming from an Administration that implemented a transgender military ban (which Bryan Schwartz Law has written about before); denies citizenship for the foreign-born, adopted children of gay couples; and nominates judges to the federal bench who are openly hostile to LGBTQ+ people. The Democrat-controlled House passed the Equality Act earlier this year, which would enshrine LGBTQ+ workplace protections into federal law, but the Republican-controlled Senate has not advanced the Act, making the Supreme Court's upcoming hearing especially important.

In this climate, and given the current composition of the Supreme Court, LGBTQ+ advocates and allies are understandably worried. Some are hopeful that since these cases don't involve interpreting the Constitution (as was required in the same-sex marriage case of Obergefell), but rather a statutory interpretation of Title VII, some of the conservative justices who voted no in Obergefell might vote yes in these cases. Advocates also hope that Chief Justice Roberts will remember what he famously said in 2015 when the Court heard arguments about same-sex marriage: “I’m not sure it’s necessary to get into sexual orientation to resolve this case. I mean, if Sue loves Joe and Tom loves Joe, Sue can marry him and Tom can’t. And the difference is based upon their different sex. Why isn’t that a straightforward question of sexual discrimination?” Excellent question, Chief Justice. We look forward to your answer - which could come anytime between next month and next summer.

If you've been discriminated against in the workplace because of your sexual orientation or gender identity, contact Bryan Schwartz Law today.

Friday, August 30, 2019

Fair and Square: California Supreme Court Recognizes Unruh Act Standing in Case Against Online Purveyor

California’s Unruh Civil Rights Act (“Unruh Act”) protect each person’s right to full and equal access to all California business establishments.  Cal. Civ. Code §§ 51(b)., 52. But the extent to which it applies to online forums presents an interesting question.

Earlier this month, the California Supreme Court weighed in with an important decision in White v. Square, Inc. The Court was asked by the Ninth Circuit Court of Appeals, the court hearing the case, whether a plaintiff may bring a claim under the Unruh Act when the plaintiff leaves a website after encountering discriminatory terms and conditions, without entering into any agreement with the service provider. According to the Court, the answer is yes.

The case involves bankruptcy attorney Robert White’s allegations against Square, a company that provides a service to allow individuals or businesses to receive and accept electronic payments. Mr. White wished to use this service for his bankruptcy practice. He visited the website multiple times, reviewed the documents filed in a previous lawsuit against Square and a bankruptcy law firm, and carefully reviewed the terms and conditions. However, when he visited the web page to register for services, he did not proceed because Square's terms and conditions prohibited the use of its services for certain businesses, including the practice of bankruptcy law. Based on his research, Mr. White believed he could not sign the agreement without committing fraud.

He then filed suit under the Unruh Act, but his case was dismissed. The trial court ruled that White could not proceed with his case because he lacked standing. Standing is a legal doctrine that covers who may bring a particular lawsuit. Generally, people can only bring lawsuits under the Unruh Act in which they themselves “ha[ve] been the victim of the defendant’s discriminatory act.” Angelucci v. Century Supper Club (2007) 41 Cal. 4th 160, 175. The California Supreme Court disagreed with the trial court, holding that Mr. White had sufficiently shown that he was injured by Square’s discriminatory terms and conditions.

The California Supreme Court had previously addressed standing under the Unruh Act with respect to physical stores, but the Court had not yet issued an opinion addressing online forums. In Koire v. Metro Car Wash (1985) 40 Cal. 3d 24, a male plaintiff sued several car washes that observed “Ladies’ Day,” on which female patrons were offered discount prices. The California Supreme Court held that the plaintiff established standing because his requests for the same discount price was turned down. In Angelucci v. Century Supper Club (2007) 41 Cal. 4th 160, a group of men sued a nightclub they frequented where they had been paying more than female patrons. The Court held that the men had standing to proceed under the Unruh Act because they had paid the unfair prices, even though they had not asked to pay the same rate as the female patrons. These brick-and-mortar cases demonstrated the broad reach of standing under the Unruh Act, the Court opined.

The California Supreme Court further likened Square’s website to a physical storefront with a sign that reads, “We sell on credit. (Black people must pay cash.)” According to the Court, a person who declines to enter the store has suffered the type of discrimination envisioned by the Unruh Act and has standing to sue under it. No different if the discriminatory posting were online. In another analogy, the Court compared Mr. White’s experience to that of “an individual who intends to take a drink at a shopping mall and leaves upon encountering unattended segregated drinking fountains.” The result remained the same with Square’s website, in the Court’s view of the Unruh Act.

The Court rejected Square’s arguments to the contrary. Square argued that Mr. White did not sign up for the service, so he was never actually subject to the discriminatory terms and conditions. But the Unruh Act protects against discriminatory terms that deter people from engaging a service to begin with, the Court countered. Similarly, the Court rejected the notion that Mr. White would have needed to show that Square had applied its allegedly discriminatory policy on a particular occasion to prevent Mr. White from patronizing the service in the first place. Square also raised the scepter of overlitigation should plaintiffs like White be allowed to proceed under the Unruh Act, but the Court rejected this argument as well, reasoning that such a consideration was for the legislature, not the courts.

The Court also rejected the reasoning of the Court of Appeals in Surrey v. TrueBeginnings, LLC (2008) 168 Cal. App. 4th 414. The plaintiff in Surrey had sought to patronize an online dating site but decided not to after he discovered that men were charged higher rates than women. The Court of Appeals held that the prospective patron lacked standing because he neither attempted to nor actually patronized the services. The White court expressly held the opposite.

If you have faced discrimination by a business or website, contact Bryan Schwartz Law today.

Tuesday, August 6, 2019

Fair is Hair: California Makes It Illegal to Discriminate on the Basis of Hair Styles

Last month, Governor Newsom signed a landmark anti-discrimination bill into law. This law takes aim at grooming policies that discriminate on the basis of race through restrictions against types of hairstyles.

Under the California Fair Employment and Housing Act (“FEHA”), employers cannot engage in certain employment actions, such as hiring, firing, promoting, or disciplining, on the basis of protected characteristics, including race. One might think that this prohibits discrimination based on hair styles that are historically associated with race. Not necessarily. FEHA does not say so explicitly, California courts have not considered the issue, and some federal courts have held the opposite. SB 188, which goes into effect at the start of 2020, seeks to clarify that race discrimination includes hair-based discrimination.

In enacting SB 188, the California Legislature was concerned by the story of New Jersey high school wrestler Andrew Johnson, who was forced to choose either to cut his dreadlocks or forfeit a match. The Legislature also took note of Rafael Scott and Sheldon Lyke, two African-American men who were turned away from a Chicago nightclub because of their braided hair styles. Even outside the employment context, the Legislature noted in the findings section of SB 188, “hair remains a rampant source of racial discrimination with serious economic and health consequences, especially for Black individuals.”

However, leading federal court decisions have held that hair-based discrimination does not implicate the federal Title VII to the Civil Rights Act of 1964. Federal courts have generally held that federal civil rights applies only to “immutable” characteristics—characteristics a person is born with and cannot control. A New York federal court relied on this notion to rule that an American Airlines grooming policy prohibiting braided hairstyles did not discriminate on the basis of race. Rogers v. Am. Airlines, Inc., 527 F. Supp. 229, 232 (S.D. N.Y. 1981). In the court’s view, the policy did not discriminate on the basis of race because American Airlines employees could choose whether or not to braid their hair.

The 11th Circuit Court of Appeals reached a similar conclusion in EEOC v. Catastrophe Management Solutions, 852 F.3d 1018 (11th Cir. 2011) (“Catastrophe”). In that case, an employer rescinded an employment offer when it learned the prospective employee styled her hair in dreadlocks. According to the employer, the dreadlocks violated the company’s grooming policy, which required employees “to be dressed and groomed in a manner that projects a professional and businesslike image while adhering to company and industry standards.” Again relying on the idea that hair styles are not immutable traits, the 11th Circuit determined that the employer’s grooming policy was not discriminatory.

Some federal decisions have come out the other way. In Jenkins v. Blue Cross Mutual Hospital Insurance, Inc., 538 F.2d 164 (7th Cir. 1976) (“Jenkins”), an employee alleged that she was subject to racial discrimination because she wore an afro. The 7th Circuit Court of Appeals ruled that this allegation sufficiently expressed an actionable discrimination claim. But the Eleventh Circuit distinguished this case, reading it to hold that African-American hair texture is an immutable characteristic while African-American hair styles are not; the employee in Jenkins wore a “natural afro,” while the employee in Catastrophe chose to wear braids.  

The California Legislature passed SB 188 out of concern that state courts looking to the federal courts for guidance would agree with the Catastrophe court. To ensure there would be no confusion, the Legislature included in the section of findings and declarations, “The courts do not understand that afros are not the only natural presentation of Black hair. Black hair can also be naturally presented in braids, twists, and locks.”

In practical terms, SB 188 adds two subsections to FEHA clarifying that “Race” includes traits historically associated with race, including hair texture and protective hairstyles. The law also adds two new subjections to Section 212.1 of the Education Code to the same effect.

Two weeks after California passed SB 188, New York followed suit with a similar law. Perhaps other states will follow.

If you are facing racial discrimination in the workplace based on your hair style, contact Bryan Schwartz Law today.