Wednesday, December 26, 2012

Employers: Be Careful What You Wish For - Your Motion to Compel Arbitration Can Lead to Expensive, Class-Wide Arbitration

In the wake of ATT Mobility v. Concepcion and Stolt-Nielsen v. AnimalFeeds,* many employers have sought to enact new arbitration agreements or to enforce arbitration provisions in older agreements to eliminate their employees' ability to come together when seeking to vindicate their rights to enforce statutory protections for workers. Employers should be careful what they wish for, in seeking to compel arbitration. They may indeed wind up in arbitration - but unable to strike class allegations, and required to pay the full and exhorbitant costs of class-wide arbitration.

In a case on which Bryan Schwartz Law serves as local counsel for Richard J. Burch of Bruckner Burch, in Houston, Texas, the employer is now feeling the danger of a Stolt-Nielsen-based strategy seeking to compel individual arbitration in a putative, wage-hour class action. In the Laughlin v. VMWare case, in which VMWare employees assert they were misclassified as exempt employees and denied overtime and other compensation to which they were entitled, the company moved to compel arbitration based on an agreement which did not specifically provide for class-wide arbitration.

Judge Edward Davila of the Northern District of California struck some of the more offensive provisions of the arbitration agreement under Armendariz v. Foundation Health Psychcare Services (2000) 24 Cal.4th 83, such as a provision which would have required Plaintiff to share the costs of arbitration. However, Judge Davila found these unlawful provisions severable (i.e., refused to kill the whole arbitration agreement). Perhaps most importantly, though, Judge Davila referred to the arbitrator the decision on the Stolt-Nielsen argument - namely, as argued by VMWare, the notion that class-wide arbitration cannot proceed where the parties' arbitration agreement did not expressly consent to class arbitration. His initial decision from early 2012 is available here:

In arbitration, AAA arbitrator LaMothe then rejected the employer’s Stolt-Nielsen motion to strike class allegations, notwithstanding the fact that the agreement did not expressly give permission to bring class allegations, finding the parties' agreement intended to encompass all claims by Plaintiff Laughlin, including her class claims. The AAA order is available here:

In the last 18 months, numerous other arbitrators from JAMS, AAA, and other nationwide arbitration services have likewise denied motions to strike class allegations, employing similar reasoning.

On review, Judge Davila confirmed the arbitrator's partial final clause construction award allowing class allegations to proceed, meaning - in light of all the foregoing - that VMWare will now be forced to arbitrate a putative class action, and will be forced to bear all of the costs of doing so, shown here.

Be careful what you wish for, employers. You may find that sometimes, allowing employees their day in court is better than the alternative.

If you are an employee and have questions about an arbitration agreement you signed, which might affect your right to proceed with class action claims, or other rights, contact Bryan Schwartz Law today.

DISCLAIMER: Nothing in this article is intended to form an attorney-client relationship with the reader. You must have a signed representation agreement with the firm to be a client.

*See our numerous prior blog posts relating to the subject of arbitration class waivers in light of Concepcion and Stolt-Nielsen, including:

http://bryanschwartzlaw.blogspot.com/2012/09/california-supreme-court-grants-review.html

http://bryanschwartzlaw.blogspot.com/2012/09/wage-and-hour-class-actions-sky-is.html

http://bryanschwartzlaw.blogspot.com/2012/01/landmark-decision-by-national-labor.html

http://bryanschwartzlaw.blogspot.com/2011/05/civil-rights-lawyer-and-employee.html

Wednesday, December 19, 2012

A Post-Brinker Victory for Employees: Bradley v. Networkers International, LLC

In the aftermath of the California Supreme Court’s landmark decision in Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004 (Brinker), employers and non-exempt employees are still hashing out the implications of the clarified meal and rest period requirements.  In April, Bryan Schwartz Law discussed the implications of that case on this blog, which can be found here: California Supreme Court's Long-Awaited Brinker Decision.

Last week, in Bradley v. Networkers International, LLC (December 12, 2012)  ---Cal. Rptr.3d ---, 2012 WL 6182473, the California Court of Appeal in San Diego addressed a common problem in meal and rest period cases: where an employer has no compliant meal and rest period policies that are distributed to employees. This case makes clear that a lack of a meal or rest period policy can provide sufficient commonality for class certification, which is a significant victory for plaintiffs.

Background
While the Brinker case was pending, a number of cases appealed to the Supreme Court were granted review and held, pending the decision in Brinker.  Among the cases relegated to judicial limbo was Bradley v. Networkers International, Inc. (Feb. 5, 2009, D052365). In Bradley, three plaintiffs filed a class action complaint against Networkers International, LLC, alleging violations of California’s wage and hour laws including nonpayment of overtime and failure to provide rest breaks and meal periods. The plaintiffs moved to certify the class, which requires that they “demonstrate the existence of an ascertainable and sufficiently numerous class, a well-defined community of interest, and substantial benefits from certification that render proceeding as a class superior to the alternatives.” Brinker, 53 Cal.4th at 1021. The court determined that the plaintiffs did not demonstrate that common factual and legal questions would predominate over the individual issues and denied class certification. The plaintiffs appealed, but the decision was upheld by the California Court of Appeal.

Plaintiffs appealed to the California Supreme Court, which granted petition for review but held the case for over three years until Brinker was resolved. After issuing their decision in Brinker, the California Supreme Court remanded Bradley to the California Court of Appeal, Fourth Appellate District, with directions to vacate its decision on class certification and reconsider the case in light of the Brinker decision.

Before getting to the recent decision from the Fourth Appellate District, a little background is useful. A common fight between employers and employees arises when an employer classifies its employees as “independent contractors,” as opposed to employees. True independent contractors have control over the terms and conditions of their employment and are not subject to California wage and hour protections including overtime and meal and rest periods. Employees, on the other hand, remain under their employer’s control during their working hours and are protected by California’s wage and hour laws. The employee versus independent contractor issue has been a battleground for years in the employment law arena and California courts have developed numerous criteria to assess whether an individual is truly an independent contractor or an employee.

In the recent Bradley case, the three plaintiffs alleged that they were misclassified as independent contractors, and should instead have been treated as employees. All three of the plaintiffs worked for Networkers. Each of the plaintiffs was required to sign an “independent contractor agreement,” which stated that each was an independent contractor rather than an employee. As such, plaintiffs did not receive overtime pay or meal or rest periods. However, contrary to the terms of the agreement, the plaintiffs alleged that they were treated as employees and were subject to the same employment policies.

Networkers argued that plaintiffs’ motion to certify the class should be denied because the case did not involve common questions of fact or law, and therefore, resolution of the case would require mini-trials for each plaintiff. Although the court agreed with Networkers on the first go-around, after the Brinker decision, the court agreed with plaintiffs on all but one cause of action.

The Court of Appeal’s Decision on Remand
Because Networkers applied consistent companywide policies applicable to all employees regarding scheduling, payments, and work requirements, those policies could be analyzed on a class-wide basis. The court would not need to assess them with respect to each potential class member. In analyzing whether class certification was appropriate the court noted that, “[t]he critical fact is that the evidence likely to be relied upon by the parties would be largely uniform throughout the class.” The court held that the factual and legal issues related to the independent contractor issue would be the same among the plaintiff class members, and therefore appropriate for class treatment.

Moreover, in Bradley, as in many workplaces, the employer did not have a policy actually distributed to employees that provides for meal and rest periods. Networkers argued that Brinker was not controlling, in its guidance about meal and rest requirements, because in Brinker the plaintiffs challenged an express meal and rest break policy whereas in Bradley, the plaintiffs were arguing that the employer’s lack of policy violated the law. The Court rejected this argument, holding: “This is not a material distinction on the record before us. Under Brinker, and under the facts here, the employer engaged in uniform companywide conduct that allegedly violated state law.” Bradley, 2012 WL 6182473 *13. The Court noted that plaintiffs had presented evidence on Networkers’ uniform practice and that Networkers acknowledged that it did not have a policy and did not know if employees took meal or rest breaks. In assessing the lack of evidence presented by Networkers and relying on Brinker, the Bradley Court held: “Here, plaintiffs’ theory of recovery is based on Networkers’ (uniform)  lack of a rest and meal break policy and its (uniform) failure to authorize employees to take statutorily required rest and meal breaks. The lack of a meal/rest break policy and the uniform failure to authorize such breaks are matters of common proof.” Bradley, 2012 WL 6182473 *13.

The Bradley decision disposes of a significant hurdle in wage and hour cases by holding that this type of scheme – where no policy is distributed to provide for meal and rest periods- can meet the commonality requirement for class certification. For example, Bryan Schwartz Law is currently representing a group of restaurant workers who were not aware of a meal/rest period policy, and who were not provided with meal or rest periods. In the Bryan Schwartz Law case, there was no policy that provided the workers with coverage to enable them to take their breaks. Under Bradley, certification is appropriate to test, class-wide, whether the employer’s lack of a well-defined policy or practice of providing meal/rest periods violated the Labor Code.

Although several meal and rest period cases have been decided adversely to workers post-Brinker, the Bradley court determined that each of those cases was distinguishable.  In distinguishing Lamps Plus Overtime Cases (2012) 209 Cal.App.4th 35, the Bradley Court of Appeal noted that it was undisputed that the Lamps Plus employer’s written meal and rest period policy was consistent with state law requirements and that the violations differed at each store and with respect to each employee. Similarly, the Bradley court held that Hernandez v. Chipotle Mexican Grill, Inc. (2012) 208 Cal.App.4th 1487 was distinguishable because the only evidence of a company-wide policy or practice was Chipotle’s evidence that it provided meal and rest breaks as required by law. Likewise, Bradley distinguished Tien v. Tenet Healthcare Corp. (2012) 209 Cal.App.4th 1077, noting that in that case there was “overwhelming” evidence that meal periods were made available and the employer’s liability with respect to each employee depended on issues specific to each employee. Brookler v. Radioshack Corp. is an undecided case that was remanded after Brinker involving wage and hour class certification, which may provide additional clarification on these issues.

The court also rejected Networkers’ argument that because each plaintiff would be owed a different amount of damages, the case should not be certified. Relying, in part, on the concurring opinion in Brinker, the court held that even where plaintiffs are required to individually prove damages, individualized damages inquiries do not bar class certification. The court also reversed its prior decision and determined that class certification on the issue of overtime was appropriate because, assuming the plaintiffs were employees, proof of damages could be determined from the common proof of the pay records.

Although the court decided to remand the off-the-clock work issue, it did so because the factual record did not show that there was a uniform policy requiring each employee to work off the clock.

If you believe you have been misclassified as an independent contractor, have meal and rest period claims, or have questions about other wage and hour violations, contact Bryan Schwartz Law.

Disclaimer: Nothing in the foregoing commentary is intended to provide legal advice in a specific case or to form an attorney-client relationship with any reader. You must have a representation agreement with Bryan Schwartz Law to be a client of this firm or author.

Monday, November 26, 2012

What it Means to Stand Up for Our Clients

One of the things that makes me most proud of the work we do, as plaintiffs’ employment lawyers, is that we routinely stand up for the little guy or gal against the bullies – beating the side that is more staffed, better-funded, and has more documents and witnesses at its ready disposal. What we have on our side, usually, is – we strongly believe – the truth of our claims, the righteousness of our cause, and the important public policies we are seeking to vindicate. We have smart lawyers and sympathetic clients. And, there is one other advantage we have: we will stand by our clients and fight for justice, and to protect their rights, even though sometimes there is no “business” reason for doing so – when it only minimally stands to profit our firm, but is just the right thing to do, to let our clients know we are really on their side, and let the bad guys know that there is no easy escape.

Take, for example, our class action practice. Time and again, we have seen employers challenged with class actions lash out against the courageous workers who brought the claims on behalf of their colleagues, terminating their employment, denying them job opportunities, trying to soil their reputations, conducting intrusive discovery into their lives to distract from the real issues, and even sometimes filing counterclaims against them. Repeatedly, we have beaten back such tactics.

Where our named plaintiffs are terminated from employment, stripped of duties or denied career opportunities they deserved, or have received negative references, we have consistently initiated or amended to add (or threatened to amend to add) an individual retaliation cause of action, and my named plaintiffs have consistently received additional compensation when a matter resolves, for having to endure this reprisal. To be sure, our clients tend to feel better off (particularly after achieving additional compensation) when they have moved on from the employer that was depriving them of earned wages or opportunities to advance, or subjecting them to other unlawful employment practices.

We have sought and obtained a court order prohibiting any informal contact with class members (to prevent bad-mouthing and intimidation), requiring corrective notice to be sent to the entire class. We have repeatedly gotten retaliatory counterclaims against representative plaintiffs dismissed or withdrawn with prejudice. I am confident that such counterclaims, in fact, alone warrant adding independent claims for retaliation under federal and state worker protection laws, though each of our cases has settled before we have even had to assert such causes of action, so far.

We have also sought to quash intrusive discovery aimed (I have felt) at harassing my clients and their favorable witnesses, with mixed results. Despite the uncertain success – given courts’ propensity to be permissive in allowing a wide swath of discovery – I maintain that workers who step forward to assert protected claims (and the witnesses who back them) should not be forced to open up their private lives beyond the scope of the issues they have put into dispute. We have fought, and will fight, to keep out records from other employers, unrelated personal emails, extensive personal medical records, and other such information which, when sought, creates an obvious, intimidating effect on those whose participation in vindicating important public policies we should be encouraging, not chilling.

We have also continued to pursue claims on my clients’ behalf even when employers have sought to hide behind bankruptcy or other declarations of insolvency, behind endless appeals and motions, and other tactics that seek to prevent from getting to the heart of the matter. While chasing an empty pocket does not help anyone, I also do not accept that wrongdoers should find it convenient to hide behind their financial irresponsibility to avoid liability.

Today, for example, we finally received an order on a case against the government where my client has been pursuing her claims literally since the late 1980s. The employer has hoped that – despite its losing decision after decision, and refusing to pay up – my client and I would eventually just disappear. But, she stuck to her guns, and we continued to fight on her behalf. The decision today related to reimbursement of my client’s attorneys’ fees on a fight we waged to get her reimbursed for the extra tax consequences she had to pay, because she won all of her backpay for many years in a lump sum in a single year, instead of getting paid the wages steadily over the years in question. Though several years ago my client finally received compensation for the extra tax burden, when the governmental employer had run out of avenues of appeal, they then refused to reimburse my client for the attorneys’ fees owed in chasing down this result. We were forced to file yet another enforcement action and today, years later, my client won again – forcing the agency to pay her fees yet again. This is wasted taxpayer money because the government has continually made bad choices, failing to own up to wrongdoing that began long ago. I can only hope that all of these victories ultimately teach the government’s officials a lesson, so other workers will not suffer like my client did.

So, employees – know this: if you hire this firm, or another reputable plaintiffs’ employment practice like ours, and you remain a good client, we will represent you and pursue your claims through thick and thin, if that is the right decision for you personally and for your case. And, employers – know this: if you are faced with claims of discrimination, whistleblower retaliation, wage violations, or other unlawful employment practices, then by all means investigate and assert reasonable defenses to the claims. But, if the allegations start to appear corroborated (or even viable), pay up, unless your very business model is at stake and it is a principle you must fight to preserve. If you try to shoot the messenger – by attacking the employee who had the courage to bring these matters to your attention- or try to drown the plaintiffs in endless paper, you will only ultimately increase your exposure and prolong the distraction caused by the case against you.

We stand up for our clients.

If you have suffered discrimination, whistleblower retaliation, wage violations, or other unlawful employment practices, contact Bryan Schwartz Law for an initial consultation today. Nothing in this blog posting is designed to create an attorney-client relationship. This firm cannot represent you unless you have a signed representation agreement with the firm.

Thursday, October 25, 2012

Legal Trickery by Small Businesses to Avoid Compliance with Employment Laws - Bryan Schwartz Quoted in Daily Journal Exposé

The following article appeared today in the Daily Journal:

http://www.bryanschwartzlaw.com/DailyJournal10-25-12.pdf

Small businesses use prevention, legal tricks, against class action woes

By Laura Hautala
Daily Journal, Staff Writer

When small business owners Soraya and Patrick Aughney faced allegations of wage-and-hour violations from their employees last year, they opted for an unusual defense: bankruptcy. According to one of their attorneys, it was a choice between that or losing their company, the valet parking service Certified Parking Attendants LLC. "That class claim would have destroyed the business," said David N. Chandler, their Santa Rosa-based bankruptcy lawyer. The plaintiffs were parking attendants who claimed unpaid overtime and meal-and-rest breaks as well as misappropriated tips. Combined with other claims, the action could have cost the Aughneys millions of dollars in back-wages and penalties. James Robert Mortland III et al. v. Certified Parking Attendants LLC et al., CIV1000135 (Marin Super. Ct., filed Jan. 11, 2010). Chandler is up-front about the fact that he used bankruptcy to avoid the plaintiffs' class claims, which have been dismissed in state court and federal bankruptcy court. The named plaintiffs are now filing individually as creditors in the bankruptcy.

Bryan J. Schwartz, the Oakland-based lawyer for the plaintiffs, said he has seen small businesses take such a tack several times. "There's always a moment of truth: will they engage or pull the tablecloth out from underneath?" he said. 

Bankruptcy is only the most dramatic in a range of tactics small businesses use to avoid wage-and-hour lawsuits. And while class actions might seem like a problem limited to bigger, wealthier employers like Wal-Mart Stores Inc and Costco Wholesale Corp., a substantial number of small businesses face these complaints, too.

In fact, while large corporations present deeper pockets, attorneys for employees and companies alike agree that small businesses are more likely to violate labor laws, leading to debilitating penalties.

Some 1,300 employment class actions have been filed in California since 2010, according to Keith A. Jacoby of Littler Mendelson PC, who estimates that a quarter to a third of them were filed against small, private companies. Littler Mendelson tracks employment lawsuit numbers by surveying the filings recorded by Courthouse News Service and LexisNexis's Courtlink database.

Even a business with a single location can be a target, Jacoby said. If some workers decide to sue a high-turnover business such as a 60-employee restaurant, "250 [class members] might be big enough for a class action," he said.

Jacoby said he doesn't recommend the bankruptcy technique Chandler used. "You're just trading one problem for another," he said. But he did say small businesses often have to place money in escrow and enter a multi-year payment plan when they lose class actions.

To avoid such a result, small businesses rely on a variety of legal, insurance and human resource services to avoid making big employment law mistakes or to cover court costs when they do.

For companies that can afford it, such as tech startups with venture capital backing, an ounce of prevention can save millions of dollars in liability.

One such liability is misclassifying workers as independent contractors when they should be employees, which can make employers vulnerable to expensive meal-and-rest claims and IRS enforcement. For this reason, many startups contract with outside companies to handle their human resources and payroll work.

Business insurance also can help buffer companies from claims of harassment, retaliation, wrongful termination and discrimination. "[Insurance] has become more important ever since the economy took a dip, because people had to be let go," said Lou Moreno, Senior Vice President of Heffernan Insurance Brokers in Menlo Park.

But insurance will only go so far when it comes to wage-and-hour claims, which make up between 80 percent and 90 percent of California's employment class actions, according to Littler Mendelson. While employment liability policies cover attorneys fees, the company is on its own to pay back wages and penalties. Moreno said many insurers that do cover attorneys fees for wage-and-hour claims generally won't do so in California because the risk of litigation in the state is much higher.

Small businesses without venture backing, like Certified Parking Attendants, do not typically carry these insurance policies. And without human resource departments or legal advice, they try to avoid class actions with any information available.

"They will rely on free Chamber of Commerce materials, and those are very good, but wage-and-hour law is about technical compliance," said Jacoby, who represents both small and large employers.

Schwartz puts it more strongly, saying these businesses often operate in a "lawless environment," relying on their workers' ignorance of the law to avoid paying legally mandated wages.

For the Aughneys, filing for Chapter 11 bankruptcy protection for their business and Chapter 13 bankruptcy protection to shield their personal assets has allowed them to stay in business.

The legal trick was to keep the employees from filing their claims in bankruptcy court until 180 days after they stopped working for the valet service, thus eliminating the special consideration given in bankruptcy court to wages owed to recent employees.

"You've got to stall them on class certification until the 180-day priority period runs out, and then you drop them into bankruptcy," Chandler said, "and then you're driving the bus."

laura_hautala@dailyjournal.com

Friday, October 12, 2012

Speaking Out Against the Unclean Hands and After-Acquired Evidence Defenses: Bryan Schwartz Authors Cover Feature in Law Review

Bryan Schwartz, principal of Bryan Schwartz Law, co-authored the featured article in the current edition of the California Labor & Employment Law Review, a Bar-published journal that reaches thousands of lawyers in the field statewide.

The story advocates for limiting employers' application of the overused unclean hands and after-acquired evidence defenses. The article is especially timely in light of the California Supreme Court's pending review of Salas v. Sierra Chemical Co., 133 Cal.Rptr.3d 392, review granted November 16, 2011. In Salas, an undocumented ex-employee charged the company with disability discrimination and a denied, reasonable return-to-work accommodation. The employer sought to defend based upon the worker's undococumented status, saying that he had no right to work anyhow and so could not seek relief.

The trial court barred Salas' claims for relief based on the unclean hands and after-acquired evidence doctrines, and the court of appeal affirmed the judgment, but the Supreme Court of California may now decide to what extent, if any, California law should embrace these defenses. In the view of workers' rights advocates, among other problems, these defenses unfairly let wrongdoing employers get off scot-free (or with only limited liability) when employers violate important public policies, like the prohibition on disability discrimination. Indeed, in 2002, the California Legislature passed Senate Bill (SB) 1818, providing that undocumented workers and job applicants are entitled to all civil remedies under state law, except reinstatement - and the Supreme Court will be considering the interplay between this statute and the unclean hands and after-acquired evidence defenses.

The article, co-authored with prominent defense attorney Baldwin Lee, of Allen Matkins, representing the employers' perspective, and with great assistance from 2012 Employee Justice Fellow at Bryan Schwartz Law, Joseph Spadola (Berkeley Law '13), is too lengthy to reproduce in this blog, but the entire article is available by clicking here.

If you have suffered discrimination, retaliation, or wage violations, and the employer is trying to deny you relief based upon the after-acquired evidence doctrine or the unclean hands defense, contact Bryan Schwartz Law today.

Wednesday, September 19, 2012

California Supreme Court Grants Review in Critical Case Regarding Arbitration Class Waivers

Today, the California Supreme Court granted the employees' petition for review in Iskanian v. CLS Transportation of Los Angeles (S204032). This case will determine the real impact of ATT Mobility v. Concepcion on California's workers - in particular: the extent to which employers can include arbitration clauses which waive all class action rights in pre-dispute agreements; whether such agreements can cover claims under the Private Attorney General Act (PAGA), Cal. Lab. Code sec. 2698, et seq.; whether the National Labor Relations Act (as interpreted by the National Labor Relations Board in the D.R. Horton decision) continues to protect workers' right to come together for their mutual aid and protection, after Concepcion; and generally, whether the seminal case of Gentry v. Superior Court (2007) 42 Cal.4th 443, carries any weight post-Concepcion.  The Iskanian Court of Appeal decision, from the employees' perspective, had decided all of these questions wrongly (i.e., that Gentry was undermined, D.R. Horton of no consequence, and class waivers permissible, even as to PAGA) and so the grant of review is a great source of relief to workers and their advocates. The Iskanian decision had split the Courts of Appeal on these issues, because previously, Brown v. Ralphs Grocery Co. (2011) 197 Cal.App.4th 489, review denied October 19, 2011, cert. denied April 16, 2012, had decided several of these issues favorably to workers. Today's grant of review provides hope that Brown will remain the law of the state. More to come on Iskanian in another post.

Monday, September 10, 2012

Wage-and-hour class actions: The sky is falling (or is it?) After Brinker and Duran, what lies ahead?

This article by Bryan Schwartz Law principal, Bryan Schwartz, is the cover feature in the current edition of Plaintiff Magazine.

September 2012
By Bryan Schwartz

In the dark days of 2011 – and as recently as six months ago – it seemed like all might be lost. The industry of wage and hour class litigation had exploded after workers and their lawyers caught wind of early-21st century cases like Bell v. Farmers Ins. Exchange (over $90 million for misclassified claims adjusters), Savaglio v. Wal-Mart ($172 million for missed meal breaks), and SavOn Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 333 (class action is favored mechanism for resolving wage disputes). Now, it seemed on the brink of collapse.

With the end of wage/hour class suits, many of us would need to diversify into other areas of litigation. I saw employment class-action litigators expand into consumer law, begin taking more individual workers’ cases, and try their hands practicing in bankruptcy.

Much worse, workers who count on us in the plaintiffs’ bar to vindicate their rights to fair and lawful wages would be out in the cold, because few of us can afford to offer contingency representation on wage cases worth a few hundred or few thousand dollars, with full fee-shifting on smaller cases uncertain after Chavez v. City of Los Angeles (2010) 47 Cal.4th 970; hourly workers cheated of their pay certainly cannot pay us for services out-of-pocket; and, as California officially recognized with the passage of the Private Attorney General Act of 2004 (PAGA), government agencies are too overburdened to enforce wage and hour laws comprehensively without our help.

During this bleak period, decisions in both the United States Supreme Court and in the California Courts of Appeal seemed to point to one conclusion: judges were getting tired of hearing wage/hour class actions (notwithstanding the extraordinary relief obtained for workers during the last decade of robust private enforcement of wage laws).

In the U.S. Supreme Court, the one-two punch of Stolt-Nielsen v. AnimalFeeds (2010) 130 S.Ct. 1758, and ATT Mobility v. Concepcion (2011) 131 S.Ct. 1740, seemingly reconstituted a 1925 statute, the Federal Arbitration Act (FAA), to empower corporations to sweep away concerted actions by workers asserting wage claims, simply by requiring employees (or applicants) to sign agreements to arbitrate, long before the signers know they will be deprived of lawful wages. Of course, Wal-Mart v. Dukes (2011) 131 S.Ct.2541, considering the merits of claims at the class certification stage and harping on managers’ discretion as anathema to class litigation, sent a chill down most of our spines.

As of early 2012, in the California Courts of Appeal, the eternally-pending review Brinker Restaurant Corp. v. Superior Court (2008) 80 Cal.Rptr.3d 781, created the possibility that meal and rest period claims would be, almost as a matter of law, inherently too individualized (turning on whether workers voluntarily forego breaks) to permit class-wide adjudication. And anyhow, according to Kirby v. Immoos Fire Protection Svcs (2010) 113 Cal.Rptr.3d 370, employers could recover their attorneys’ fees against our clients if we lost any meal/rest period claim – or even lost a class-certification motion on a meal/rest claim. No reasonable plaintiffs’ lawyer could advise a humble, low-wage client to take such a risk.

Then last winter, sounding what seemed to be the final death knell, the Court of Appeal in Duran v. US Bank (2012) 137 Cal.Rptr.3d 391, sought to eradicate virtually any form of class-wide proof in a wage/hour case, essentially stretching the holding of Wal-Mart v. Dukes to mean that relying on statistical or representative proof in a class action impermissibly denies employers of their due process right to defend each employee’s wage claims separately.

There’s always tomorrow

I remember well April 12, 2012, because it was the day the sun broke through again on wage/hour class litigation: The long-awaited day the California Supreme Court ruled in Brinker (2012) 53 Cal.4th at 1004. Sure, the Court did not hand us strict liability for premiums where workers work during meal or rest breaks. Ironically, the employer-side spin doctors used this one holding, that employers cannot be liable for premiums by simply failing to police workers to ensure every break is taken, to paint Brinker as a great victory for their team. But those of us in the trenches of wage/hour class litigation – on both sides – immediately knew differently: That the chief result of Brinker would be to again empower employee advocates in claims where employers, with policies and common practices, refuse to relinquish all control over meal and rest periods owed to workers.

And the sun grew brighter still. In rapid succession: Kirby was decided for employees – holding that employers cannot be entitled to fee-shifting merely based on workers’ unsuccessful litigation of meal/rest period claims; then, the California Supreme Court granted the workers’ petition for review in Duran. In the meantime, during this evolving springtime for wage/hour-class plaintiffs, we began to see that courts were allaying our worst fear – i.e., that Concepcion, Stolt-Nielsen, and Wal-Mart v. Dukes would successfully preclude class litigation of employees’ claims. By April 2012, both the U.S. and California Supreme Courts had denied review of Brown v. Ralphs Grocery Co. (2011) 197 Cal.App.4th 489, which held post-Concepcion that class waivers in arbitration agreements remain inapplicable to PAGA claims and which did not extend Concepcion to undermine Gentry v. Superior Court (2007) 42 Cal.4th 443 (arbitration class waivers unconscionable in employment context). The Court of Appeal’s April 2012 decision in Samaniego v. Empire Today, LLC (2012) 205 Cal.App.4th 1138, review denied (July 11, 2012), described a virtual laundry list of ways in which arbitration agreements might still be found unconscionable under California law, even after Concepcion, applying Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83. Likewise, Federal Circuit and District Courts repeatedly upheld class certification or reversed certification denial orders, or denied motions to stay court actions and compel individual arbitration of claims, defeating companies’ hope that Concepcion, Stolt-Nielsen and/or Wal-Mart v. Dukes would doom employees’ concerted activity.

On top of these developments, the National Labor Relations Board’s (NLRB’s) progressive D.R. Horton, Inc., 357 N.L.R.B. No. 184 (2012 WL 36274), decision from January 2012 reinvigorates a couple other old statutes – the National Labor Relations Act (NLRA) of 1935, long ignored by all but the pure union lawyers, and the Norris-LaGuardia Act of 1932, 29 U.S.C. §§ 102, et seq., articulating a public policy to protect unorganized workers’ right of association. The NLRB reminded workers’ rights advocates that the protections for employees engaged in concerted activities under Section 7 of the NLRA and association covered by the Norris-LaGuardia Act are valuable outside the union context.

California’s Legislature also enacted new workers’ rights bills, with the “Wage Theft Prevention Act of 2011” (AB 469) (effective January 1, 2012), adding Labor Code section 2810.5, requiring that employers provide non-exempt workers with notice at the time of hire containing extensive information affecting their wages and working conditions, with a host of new civil and criminal penalties for wage violations or any failure to pay a Labor Commissioner judgment (Lab.Code, §§ 200.5, 1197.1, and 1197.2). Moreover, effective January 1, 2013, employees’ commission agreements must be transparent, written contracts.

Now, in the fall of 2012, the once-bleak outlook for wage/hour class-action litigators seems not only more hopeful, but presents a host of new opportunities for plaintiffs’ attorneys.

* * * 

With the remainder of this article, I will discuss in more detail five particularly hot battlegrounds in the refreshed struggle for workers’ wages: 1) arbitration class waiver issues post-Concepcion and Stolt-Nielsen; 2) how Wal-Mart v. Dukes is affecting class certification; 3) new challenges and opportunities in misclassification cases where employers claim administrative, professional, and outside sales exemptions; 4) what is the next likely “shoe to drop” from the U.S. Supreme Court’s march to stomp out wage/hour class litigation; and, 5) the implications of Brinker and our battle yet to be won in Duran, to continue allowing courts to be flexible in determining fair and efficient means to hear class-wide proof, through statistical and representative evidence, as has long been permitted under Sav-On.

* * * 

Arbitration class waiver issues post-Concepcion and Stolt-Nielsen

In Stolt-Nielsen, the Supreme Court held that employers could not be required to engage in class arbitration where the arbitration agreement was silent regarding whether such was permitted and where no evidence proved the parties’ intent to agree to class arbitration. Plaintiffs’ advocates feared the Court had created the default position that where an employer forgot to prohibit class prosecution of claims against it in its arbitration provision, the employer would remain immune to class suit or arbitration, since it had not overtly agreed to be subject to class claims. Then, the Court sought to finish the job in Concepcion, using the FAA to preempt California’s Discover Bank v. Superior Court (2005) 36 Cal.4th 148, with its presumption that a class waiver in an adhesion contract is unconscionable, as discriminatory against arbitration. In other words, we worried that companies after Concepcion and Stolt-Nielsen would feel free to prohibit wage/hour class litigation against themselves, explicitly, or by default.

Not so fast, said a host of federal and state courts and administrative agencies. Because Concepcion did not go so far as to eliminate the unconscionability defense (just California’s presumption of unconscionability for class waivers), courts are still finding arbitration agreements unconscionable, applying Armendariz. In Trompeter v. Ally Financial, Inc., 2012 WL 1980894 (N.D. Cal. June 01, 2012), Judge Claudia Wilken found an arbitration agreement procedurally and substantively unconscionable under California law, applying Armendariz, and found the unconscionable provisions not severable, rejecting the defendant’s Concepcion argument in support of a motion to compel arbitration and motion to stay.

In Samaniego, a wage/hour class action, the Court of Appeal affirmed the trial court, finding a host of flaws in the arbitration agreement, applying Armendariz and ultimately rejecting the agreement entirely. No-no’s included: that the take-it-or-leave-it arbitration agreement was only in English, a language the worker could not read; that the agreement was part of a lengthy, single-spaced document in small-font print, “riddled with complex legal terminology,” and with the arbitration provision buried in the 36th of 37 sections; a shortened statute of limitations for claims; unilateral fee-shifting against workers; and the invocation of the American Arbitration Association (AAA) commercial rules, without attaching the rules or providing them otherwise.

In another wage/hour class action, Laughlin v. VMWare, Inc., 2012 WL 298230 (N.D. Cal. Feb. 1, 2012) (Davila, J.), the District Court likewise addressed a Concepcion motion to compel arbitration, applied Armendariz, rejecting several unconscionable provisions (including one that would have made the employee split arbitration fees), but found the unconscionable provisions severable, and referred the entire matter to arbitration. Most notably, the Laughlin court held that it was for the arbitrator to decide the permissibility of class arbitration. (Id. at *8.) On August 27, 2012, the American Arbitration Association issued a Partial Final Award on Clause Construction in the Laughlin matter, finding that the parties' arbitration agreement permits class arbitration.

The latter confronts employers with a “be careful what you wish for” scenario. Wage/hour class arbitration – with costs to be borne by employers – is awfully expensive, i.e., profitable for arbitrators. Indeed, since Concepcion, numerous arbitrators from JAMS, AAA, and other major arbitration services have – like in Laughlin – construed arbitration clauses/agreements to permit class-wide arbitration. Courts are mostly saying that arbitrators have this prerogative. (See, e.g., Sutter v. Oxford Health Plans LLC (3rd Cir. 2012) 675 F.3d 215 (upholding arbitrator decision to construe arbitration agreement to authorize class arbitration); Jock v. Sterling Jewelers Inc. (2nd Cir. 2011) 646 F.3d 113 (same); Fantastic Sam’s Franchise Corp. v. FSRO Ass’n Ltd. (1st Cir. 2012) 683 F.3d 18, 26 (arbitrator decides permissibility of class arbitration). But, see Reed v. Florida Metropolitan University, Inc. (5th Cir. 2012) 681 F.3d 630.)

Also this year, the NLRB decided D.R. Horton, holding that – though the FAA prohibits discrimination against arbitration agreements, preempting state law, the NLRA prohibits barriers to employees (union or non-) engaging in concerted activities for their mutual aid and protection, and the Norris-LaGuardia Act restricts the power of federal courts to issue injunctions to prohibit certain associational activities. These are not preempted by the FAA. Thus, federal law under D.R. Horton prohibits class-action waivers, according to the NLRB, and Concepcion has nothing to say about it. Courts have divided on how, if at all, D.R. Horton must guide their decision-making. Compare Herrington v. Waterstone Mort. Corp., 2012 WL 1242318 (W.D. Wisc. Mar. 16, 2012) (D.R. Horton guides District Court) and Owen v. Bristol Care, Inc., 2012 WL 1192005 (W.D. Mo. Feb. 28, 2012) (same), with Morvant v. P.F. Chang’s China Bistro, Inc., 2012 WL 1604851 (N.D.Cal. May 7, 2012) (Gonzalez Rogers, J.) (Concepcion trumps D.R. Horton and requires compelling arbitration with class waiver) and Nelsen v. Legacy Partners Residential, Inc. (2012) 207 Cal.App.4th 1115 (declining to follow D.R. Horton).

Despite the significant good news for plaintiffs’ advocates in the aftermath of Concepcion and Stolt-Nielsen, the vote is still out on how, ultimately, the cases will impact wage/hour class litigation in California. In Iskanian v. CLS Transportation Los Angeles, LLC (2012) 206 Cal.App.4th 949, the Court of Appeal compelled arbitration with a class waiver, and in so doing, rejected Brown v. Ralphs (carving out PAGA and leaving untouched Gentry’s holding that arbitration class waivers are unconscionable in the employment context), holding that Concepcion effectively overruled Gentry. Iskanian petitioned for review of the Court of Appeal’s decision, and as of the time of this writing, the Supreme Court has not yet decided on the petition. If the Supreme Court takes up Iskanian, it may be the defining case about the effect of Concepcion and Stolt-Nielsen on California laws protecting workers. If the Supreme Court does not grant review, then we will be left scratching our heads about the state of California law on class-action waivers in arbitration agreements, with Court of Appeal authority heading in every direction.

How Wal-Mart v. Dukes is affecting class certification

The intensive merits analysis in Wal-Mart v. Dukes at the certification stage worried many plaintiffs’ advocates that the first law of class certification – that Rule 23 and California Code of Civil Procedure section 382 elements are decided, but merits are not – had lost currency. But the California Supreme Court and numerous federal courts have largely restored order in this regard. The Brinker court, acknowledging that some “peek” at the merits would be necessary at certification to ensure the predominance of common questions, reinforced that – even post-Wal-Mart v. Dukes – such merits-based inquiries are “closely circumscribed” and “limited to those aspects of the merits that affect the decisions essential to class certification.” (Brinker, 53 Cal.4th at 1024 (citations omitted).) In rejecting the Brinker Court of Appeal’s notion that courts must first decide upon the applicable law and resolve legal issues surrounding each element of a proposed class claim before deciding on certification, the Supreme Court expressly condemned a “free-floating merits inquiry” and eschewed resolution of most factual and legal issues at the certification stage. (Id. at 1025.)

Post-Wal-Mart v. Dukes, Federal courts have likewise held that, as the Seventh Circuit put it, “the court should not turn the class certification proceedings into a dress rehearsal for the trial on the merits.” (Messner v. Northshore University Health System (7th Cir. 2012) 669 F.3d 802, 811. See also Sullivan v. DB Investments, Inc (3rd Cir. 2011) 667 F.3d 273, 305-306 (en banc) (merits inquiries very limited); In re Whirlpool Corp. Front Loading Washer Products Liability Litig. (6th Cir. 2012) 678 F.3d 409, 417 (underlying merits no impact on propriety of class action).

Likewise, federal courts have continued to uphold class certification or reverse certification denial under Rule 23. In McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (7th Cir. 2012) 672 F.3d 482, the noted conservative Judge Posner reversed a class certification denial in a disparate impact discrimination case, explaining that the exercise of subjectivity by managers with respect to company policies did not defeat certification, but resulted in a disparate impact. (See also Sullivan, 667 F.3d at 338 (common factual issues predominated among 184 million purchasers, despite variation between state laws at issue); In re Whirlpool, 678 F.3d at 420 (finding predominance and superiority where there were common alleged design flaws, and where small individual recovery would discourage vindication on individual basis); Chen-Oster v. Goldman, Sachs & Co., 2012 WL 2912741 (S.D.N.Y. July 17, 2012) (alleged “common mode of exercising discretion” warranted denial of motion to strike class allegations, distinguishing Wal-Mart v. Dukes).) Meanwhile, in Sanchez v. Sephora USA, Inc., 2012 WL 2945753(N.D. Cal. July 18, 2012) (Armstrong, J.), the Northern District of California held that Wal-Mart v. Dukes reasoning is inapplicable to Fair Labor Standards Act (FLSA) collective action certification under 29 U.S.C. sec. 216(b).1

Misclassification of exempt workers

Class wage claims based upon misapplication of exemption defenses to discrete groups of employees are surviving, but the universe of employees who might assert such misclassification claims is narrower after several recent decisions. For example, the professional exemption became more robust after the Ninth Circuit’s decision in Campbell v. PriceWaterhouseCoopers, LLP (9th Cir. 2011) 642 F.3d 820 and the parallel state decision in Zelasko-Barrett v. Brayton-Purcell, LLP (2011) 198 Cal.App.4th 582, which held that non-licensed individuals practicing in the Wage Order’s recognized professions (e.g., law clerks and junior non-licensed accounting employees) could still be exempt from overtime.

Likewise, the outside sales exemption has become more powerful after Christopher v. SmithKline Beecham Corp. (2012) 132 S.Ct. 2156 (pharmaceutical sales representatives subject to outside sales exemption) and the Ninth Circuit’s In re Wells Fargo Home Mortg. Overtime Pay Litig. (2009) 571 F.3d 953 (outside sales calculus in loan officer case too individualized to permit class action) decision from several years ago.

On the other hand, the administrative exemption has remained a fruitful battleground for wage/hour class-action plaintiffs’ counsel both in California and federal courts. One should still consider arguing the “administrative/production dichotomy” (first embraced in Bell v. Farmers Ins. Exchange (2001) 87 Cal.App.4th 805 (often called “Bell II”)) – i.e., whether the group of employees are primarily administering policies directly related to and of substantial importance to the management or operations of the overall business (exempt) or whether they are principally engaged in helping generate the businesses’ end product (non-exempt). (See Harris v. Superior Court (Liberty Mutual Insurance) (2011) 53 Cal.4th 170, 181.) In Harris, the Supreme Court did not toss out the Bell II framework, but held that the administrative/production worker dichotomy was not a dispositive test as it had been applied in that case, requiring the Court of Appeal on remand to undergo a qualitative and quantitative review under the current Wage Order. (Id. at 190.) However, on remand, re-granting summary adjudication on the administrative exemption defense and rejecting a decertification motion, the Harris Court of Appeal reiterated that the class members (claims adjusters) were not “primarily engaged in work that is directly related to management policies or general business operations” and as such, were not administrative employees under the Wage Order’s exemption. (Harris v. Superior Court (2012) 207 Cal.App.4th 1225. See also adopting the administrative/production dichotomy federally, Davis v. J.P. Morgan Chase & Co., 587 F.3d 529 (2nd Cir. 2009) (mortgage loan underwriters were production employees).)

Anticipating the Supreme Court’s next blow

On June 25, 2012, the U.S. Supreme Court granted certiorari in Symczyk v. Genesis HealthCare Corp. (3rd Cir. 2011) 656 F.3d 189, which stands for the fairly obvious premise that an employer cannot moot an FLSA collective action simply by making an offer of full relief under Fed.R.Civ.P. 68 to the lone named plaintiff. Citing the Supreme Court’s seminal FLSA decision in Hoffmann-La Roche, Inc. v. Sperling (1989) 493 U.S. 165, 170-171, the Third Circuit held:
When a defendant’s Rule 68 offer arrives before the court has had an opportunity to determine whether a named plaintiff has satisfied his burden at this threshold stage [of first-tier FLSA conditional certification], and the court has therefore refrained from overseeing the provision of notice to potential party plaintiffs, it is not surprising to find the offer has also preceded the arrival of any consent forms from prospective opt-ins. If our mootness inquiry in the §216(b) context were predicated inflexibly on whether any employee has opted in to an action at the moment a named plaintiff receives a Rule 68 offer, employers would have little difficulty preventing FLSA plaintiffs from attaining the “representative” status necessary to render an action justiciable notwithstanding the mooting of their individual claims. (Symczyk, 656 F.3d at 198-199.)
Unfortunately, the Supreme Court’s grant of cert. does not bode well for the future of FLSA actions, except in cases where plaintiffs and their counsel are fortunate enough to have a group of plaintiffs and opt-ins willing to step forward from the outset. Clearly, assuming the Supreme Court decides to undermine its prior Hoffman-LaRoche precedent (why else would it have granted cert.?), savvy employers will offer several thousand dollars as soon as a suit is filed to knock off any solo named plaintiff with an offer of full, individual relief, and avoid notice to a class of those similarly-situated.

Brinker, Duran and the future

Last but not least, we return to Brinker and Duran. In Brinker, the Supreme Court reversed and remanded in large part the Court of Appeal, in a unanimous opinion by Justice Werdegar holding that employers must comply with stringent obligations to provide both meal and rest periods to employees or face paying premiums under California Labor Code section 226.7.

The Court of Appeal in Brinker had held that because an employer’s duty was merely to provide” meal periods to employees, employers could avoid class liability with a compliant published policy. The Court of Appeal wrote, in language that would have been devastating to wage and hour class actions had it been upheld by the Supreme Court: “The evidence in this case indicated that some employees took meal breaks and others did not. For those who did not, the reasons they declined to take a meal period require individualized adjudication. Further, plaintiffs’ statistical and survey evidence does not render the meal break claims one in which common issues predominate. While time cards might show when meal breaks were taken and when there were not, they cannot show why.” (80 Cal.Rptr.3d at 810.) The Court of Appeal had engaged in similar reasoning to reject rest break claims.

If that reasoning had prevailed, plaintiffs would seldom, if ever, have been able to show that personal motivations for missing meal and rest periods were sufficiently common to justify class certification. The Court remanded on meal periods. Its holding that the “employer need not ensure that no work is done” during meal periods is really an employee victory, because of the reasoning behind it: “[T]he obligation to ensure employees do no work may in some instances be inconsistent with the fundamental employer obligations associated with a meal break: to relieve the employee of all duty and relinquish any employer control over the employee and how he or she spends the time.” (Brinker, 53 Cal.4th at 1038-1039.)

In other words, Brinker reasoned that employers cannot police employees to make sure that no work is performed because employers may exercise no control over employees during their meal periods. If an employer has a policy restricting employees’ activities during meal periods, that may now clearly be the basis for a meal period class action.

On rest periods, the Supreme Court outright reversed the Fourth District Court of Appeal, explaining: “An employer is required to authorize and permit the amount of rest break time called for under the wage order for its industry. If it does not – if, for example, it adopts a uniform policy authorizing and permitting only one rest break for employees working a seven-hour shift when two are required – it has violated the wage order and is liable.” (Id. at 1033.)

As to the latter, rest break claims can no longer be considered throwaway claims after Brinker – and the proof is in the pudding. In July 2012, Los Angeles County Superior Court Judge John Shepherd Wiley awarded $90 million to security guards for ABM in connection with rest breaks during which they were required to remain on-call. Brinker Restaurant Corporation’s own rest break liability will likely reach the eight-figure range.

The Supreme Court leaned heavily on Sav-On, and cited other key employee-friendly decisions: Dilts v Penske Logistics, LLC, 267 F.R.D. 625 (S.D. Cal. 2010); Bono Enterprises, Inc. v Bradshaw (1995) 32 Cal.App.4th 968; Ghazaryan v Diva Limousine, Ltd., (2008) 169 Cal.App.4th 1524; Bufil v Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193; and Jaimez v. Daiohs USA, Inc. (2010) 181 Cal.App.4th 1286. These decisions now provide a roadmap to certification of meal/rest class actions, post-Brinker. Moreover, over the next year or two, the eight decisions granted review and held pending Brinker, 2 which have all now been remanded to Courts of Appeal, will be decided, fleshing out the meal and rest period standards in the post-Brinker era.

Perhaps most significantly going forward, the Brinker court held: “Claims alleging that a uniform policy consistently applied to a group of employees is in violation of the wage and hour laws are of the sort routinely, and properly, found suitable for class treatment.” (53 Cal.4th at 1033.) Where there is a policy at issue, wage/hour class actions are still available.

The Brinker concurrence, authored also by Justice Werdegar, rejects the Fourth District’s notion that “the question why a meal period was missed renders meal period claims categorically uncertifiable” (Id. at 1052), and goes on to cite Sav-On and Bell, 115 Cal.App.4th 715 (“Bell III”) and embrace “a variety of methods” of proof of class certification, liability, and damages, including “[r]epresentative testimony, surveys, and statistical analysis….” (Id. at 1054.)

Duran’s thrust was the opposite: “that when liability for unpaid overtime depends on an employee’s individual circumstances, employer defendants retain the right to assert the exemption defense as to every potential class member,” precluding the use of such methods of class-wide proof as were embraced in Sav-On, Bell III, and the Brinker concurrence. (Duran, 137 Cal.Rptr.3d at 426.)

In Duran, the trial court allowed selection of 20 representative class members (out of 260) to provide trial testimony and determined class-wide liability on the basis of such. (137 Cal.Rptr.3d at 428.) Whether or not this particular trial plan was optimal, it remains to be seen to what degree if any Duran’s sweeping rejection of sampling and representative testimony will prevail on review. Certainly, the Brinker concurrence gives reason for optimism in the plaintiffs’ Bar. (See also Romero v. Florida Power & Light Co., 2012 WL 1970125 (M.D. Fla., June 1, 2012) (affirming use of representative testimony).)

In sum, paraphrasing Mark Twain, reports of the death of wage/hour class litigation were greatly exaggerated. The wage and hour class-action war wages on.

Bryan Schwartz has an Oakland-based firm representing workers in class, collective, and individual actions in wage/hour, discrimination, whistleblower, and unique federal and public employee claims. He practices in state and federal trial and appeals courts, in arbitration, and before a variety of administrative agencies. Schwartz is a member of the State Bar of California’s Labor & Employment Law Section Executive Committee, and recently chaired the Bar’s Second Annual Advanced Wage & Hour Seminar. He is a leader and amicus writer in the California Employment Lawyers Association (CELA), and authored CELA’s amicus briefs in Brinker and Kirby. He can be contacted at Bryan@BryanSchwartzLaw.com.

Endnotes

  1. This year also saw the final demise of the defense argument circulating for several years asserting that FLSA and state wage law class claims are “inherently incompatible” in the same action because of the different procedural mechanisms (opt-in FLSA collective actions and opt-out class actions) – an argument that had been roundly rejected by all but a few District Courts (the latter mostly within the Third Circuit). Now, the Third Circuit itself finally rejected “inherent incompatibility.” (See Knepper v. Rite Aid Corp. (3rd Cir. 2012) 675 F.3d 249, 262 (“We join the Second, Seventh, Ninth, and D.C. Circuits in ruling that this purported ‘inherent incompatibility’ does not defeat otherwise available federal jurisdiction.”).)
  2. Brinkley v. Public Storage (Supreme Court Case No. S168806); Bradley v. Networkers International LLC (S171257); Faulkinbury v. Boyd & Associates (S184995); Brookler v. Radioshack Corporation (S186357); Tien v. Tenet Healthcare (S191756). Shortly before this edition went to press, Hernandez v. Chipotle Mexican Grill (S188755), Lamps Plus Overtime Cases (S194064), and Muldrow v. Surrex (S200557), on remand, were all decided against the employees by California Courts of Appeal. Each can be distinguished on its facts, if you have a case involving a policy or practice restricting meal and rest period usage. See Lamps Plus, 2012 WL 3587610, at **8, 11 (Cal.App. 2 Dist. August 20, 2012) (citing “overwhelming evidence that Lamps Plus’s policies allowed and encouraged meal periods,” “that Lamps Plus had a meal and rest period policy conforming to the applicable laws and wage orders, and that Lamps Plus disciplined its employees for failing to comply with the policy”); Hernandez, 2012 WL 3579567 (Cal.App. 2 Dist. Aug. 21, 2012) (“The only evidence of a company-wide policy and practice was Chipotle’s evidence that it provided employees with meal and rest breaks as required by law.” (emph. in orig.)). In Muldrow, 2012 WL 3711553, *11 n.17 (Cal.App. 4 Dist. Aug. 29, 2012), the employees conceded that the Brinker court “answered [their claim on appeal] in the negative,” so that case is readily distinguishable, too, where you will not so concede. 


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Thursday, August 30, 2012

Patelco Sued by Misclassified Branch Assistant Managers for Unpaid Wages: Trend of Class Actions Seeking Wages to Continue Post-Brinker, Says Bryan Schwartz

A class action lawsuit that Bryan Schwartz Law filed on Wednesday accuses Pleasanton-based Patelco Credit Union (“Patelco”) of misclassifying dozens of Branch Assistant Managers as exempt employees, and failing to pay workers for overtime and missed meal and rest breaks. Yuliya Clarke, a Martinez resident, filed the case in Alameda County Superior Court.

Patelco, which advertises approximately forty branches locally and assets of over $3.6 billion, classifies Branch Assistant Managers as “exempt.” Yet, Branch Assistant Managers spend the majority of their working time on non-supervisory duties, according to this suit, including day-to-day customer service, opening new accounts, and opening auto loans. If such activities comprise the majority of Branch Assistant Managers’ duties, such would place them well outside the narrow “executive” and “administrative” exemptions to California’s overtime laws.

Clarke, the Plaintiff, alleges that she and the other Branch Assistant Managers routinely worked long hours without receiving any overtime pay. Moreover, Branch Assistant Managers missed their meal and rest breaks and were never paid premiums. In addition, the suit alleges the employees were deprived of itemized wage statements as required by California law, and that the company owes state law penalties.

California’s Supreme Court clarified the state’s wage and hour laws in the Brinker Restaurant Corp. v. Superior Court case, published this April, which many employers had hoped would stem the tide of wage and hour class actions against them, particularly alleging meal and rest period violations. Not according to Clarke’s lawyer, Bryan Schwartz, whose Oakland-based firm litigates many such cases on behalf of workers.

 “Patelco is the latest in a long line of employers to misclassify assistant branch managers as exempt,” said Schwartz, discussing this suit. Such employers as Enterprise Rent-A-Car, Rite-Aid, Diesel clothing stores, Modell’s Sporting Goods, and Family Dollar, along with financial institutions like Patelco – including Citizens Bank and Charter One Bank – have all confronted misclassification suits brought by assistant branch managers and other mid-level managers or small-store branch managers. “It seems that – as with so many other employers – Patelco needs a lawsuit to change its practices and begin paying its assistants the overtime and meal and rest period premiums to which they are entitled under California law,” Schwartz stated.

The lawsuit against Patelco resembles multiple prior cases handled by Bryan Schwartz Law. In Pearson, et al. v. Samsonite Company Stores, Inc.,et al., the firm successfully negotiated a class and collective action settlement in which dozens of Samsonite Store Managers operating small retail locations nationwide received approximately $1 million (nearly $8,300/each) for alleged overtime and other wage and hour violations. In addition to the monetary relief, Samsonite also reclassified its Store Managers as “non-exempt” so the managers would be entitled to overtime in the future. Most recently, on July 18, 2012, in Sanchez v. Sephora, the United States District Court in Northern California granted a motion for conditional class certification of overtime claims involving a nationwide class of “Specialists” – also mid-level, small store managers - represented by Bryan Schwartz Law against the beauty supply retailer.

 “I am eager to help my fellow Branch Assistant Managers recover the unpaid wages we are entitled to, under California law,” said the ex-employee Ms. Clarke about her case. “Hopefully, the credit union will do the right thing quickly here, for the sake of not only its employees but its members,” she said. The case is Yuliya Clarke v. Patelco Credit Union, Alameda County Superior Court Case Number 12645805.

Bryan Schwartz Law is an Oakland, California-based law firm dedicated to helping employees protect their rights in the workplace. Bryan Schwartz Law has successfully litigated individual, class, and collective action complaints nationwide, helping to recover millions of dollars for thousands of employees, forcing corporations and Government agencies to change their practices and punish wrongdoers. For more information, check out Bryan Schwartz Law’s website.

Patelco employees or former employees who would like to learn more about the case should contact Bryan Schwartz at (510) 444-9300, Bryan@BryanSchwartzLaw.com.

Tuesday, August 28, 2012

Turning Back Another Retaliatory Employment Defense Tactic: Quashing Current Employer Subpoenas

Bryan Schwartz Law largely represents employees against their current and former employers – mostly, against their former employers. Few workers are brave enough to sue the entity that pays them every two weeks. Then, sometimes employers are stupid enough to fire employees who have just sued them – and thus incur the likelihood of additional retaliation claims. After employees have moved on – by choice or not – and begin working elsewhere, employers sometimes become curious during the discovery process about how those employees are faring. Some employers are so bold (or foolish, depending on your perspective) as to issue subpoenas to workers’ new employers for testimony and/or records. Sometimes it is an ill-conceived fishing expedition for something, anything to use against an employee. Some former employers seek evidence concerning employees’ post-termination income which might offset liability or support a mitigation defense. Often, ex-employers angered by litigation want to put “the fear of G-d” into employees suing them by trying to show that they can make those employees live in fear and with the taint of litigiousness – even while the workers are trying to start with a clean slate at a new employer. Mostly, such former employer tactics should and do fail.

In California, under Parker v. Twentieth Century-Fox Film Corporation (1970) 3 Cal.3d 176, the measure of recovery by a wrongfully discharged employee is “the amount of salary agreed upon for the period of service, less the amount which the employer affirmatively proves the employee has earned or with reasonable effort might have earned from other employment.” 3 Cal.3d at 181. However, under the Parker rule, though some discovery may be warranted from an employment plaintiff into income earned or efforts made to secure alternative employment, California law does not support discovery from a third-party witness (e.g., subsequent employer) to assist an employer with its mitigation defense.

Because an individual’s employment records (personnel file, income data, etc.), are private, and California has robust protections for individuals’ privacy, employment defendants must show that they have no less intrusive means of obtaining this information, before they might have any viable argument for enforcing a third-party subpoena of a subsequent employer. See El Dorado Savings & Loan Assn. v. Superior Court (1987) 190 Cal.App.3d 342, 346 (refusing to order disclosure of employee personnel file where the relevant information could be obtained through “less intrusive means, such as deposing”); Lantz v. Superior Court, 28 Cal. App. 4th 1839, 1853-54 (1994) (constitutionally protected private information is not discoverable unless the party seeking discovery can demonstrate a “compelling need . . . so strong as to outweigh the privacy right when these two competing interests are carefully balanced”). See also TBG Ins. Services Corp v. Superior Court (2002) 96 Cal.App.4th 443, 449 (employee's personal financial information stored on computer owned by employer); San Diego Trolley, Inc. v. Superior Court (2001) 87 Cal.App.4th 1083, 1097 (information in personnel file of trolley driver regarding his driving history and his mental capabilities at the time of accident in which the plaintiff was injured); Harris v. Superior Court (1992) 3 Cal.App.4th 661, 664 (tax returns and other personal financial information); Moskowitz v. Superior Court (1982) 137 Cal.App.3d 313, 315 (information about individual's salary and fees). Moreover, “where it is argued that a party waives protection by filing a lawsuit, the court must construe the concept of ‘waiver’ narrowly.” See Tylo v. Superior Court (1997) 55 Cal.App.4th 1379, 1387.

The court may quash a subpoena and issue a protective order to protect a witness or party from “unreasonable or oppressive demands, including unreasonable violations of the right of privacy of the person.” Cal Civ. Code. Proc. § 1987.1. A subpoena of a subsequent employer may well be unreasonable and oppressive in that: (1) violates an ex-employee’s right to privacy in his/her personnel records at a current employer; (2) seeks to annoy a third party regarding information readily obtainable from the ex-employee, who is a party; and (3) is almost invariably overbroad, seeking information that is irrelevant to the action before the court and not reasonably calculated to the discovery of admissible evidence.

Though California courts do not appear to have spoken to this precise issue in published opinions quashing subpoenas of subsequent employers of employment litigation plaintiffs, several federal courts have addressed the issue. Those thoughtfully considering the public policy implications have tended to quash subpoenas of records or testimony from subsequent employers. See, e.g., Graham v. Casey’s Gen. Stores, 206 F.R.D. 251 (S.D. Ind. 2002) (ex-employee asserting statutorily-protected claims should not be subject to discovery from a new, current employer, which might tend to harass and intimidate employee from pursuing his rights); Warnke v. CVS Corp., 265 F.R.D. 64 (E.D.N.Y Feb. 24, 2010) (granting a motion to quash subpoenas duces tecum served by defendant on plaintiff's three subsequent employers, to protect “innocent discriminatee” from “the direct negative effect that disclosures of disputes with past employers can have on present employment”); Cannata v. Wyndham Worldwide Corporation, 2011 WL 3794254 (D.Nev. Aug. 25, 2011) (quashing subpoenas for records from subsequent employers of the plaintiff asserting statutory claims, rejecting employer’s “shotgun approach” to discovery).

Among other arguments, plaintiffs and their advocates should fight hard to quash subpoenas of subsequent employers by emphasizing the important public policy objectives under the Fair Labor Standards Act and California Labor Code are only vindicated if workers are not in fear of economic retaliation. See, e.g., Kasten v. Saint-Gobain Perf. Plastics Corp., __ U.S. __, 131 S.Ct. 1325, 1333, 179 L.Ed.2d 379 (2011); Barrentine v. Arkansas–Best Freight Sys., Inc., 450 U.S. 728, 739, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981); Williamson v. General Dynamics Corp., 208 F.3d 1144, 1150 (9th Cir. 2000); Gentry v. Superior Court (2007) 42 Ca1.4th 443, 459-461 (2007). California courts should explicitly follow those federal district courts that have held against employers trying blackball employees in the workforce, when ex-employers try to stigmatize them not only at the employer which was sued, but at subsequent employers, through the use of abusive discovery tactics. Courts should quash subpoenas for records and testimony from subsequent employers.

Contact Bryan Schwartz Law today if your ex-employer is trying to retaliate against you for bringing protected claims against it.

Wednesday, July 18, 2012

Federal Court Grants Conditional Class Certification Applying Lenient FLSA Standard

In a case co-counseled by Bryan Schwartz Law, the federal court for the Northern District of California conditionally certified a class of employees who are suing Sephora, a beauty supply retailer, for unpaid overtime under the Fair Labor Standards Acts (“FLSA”). See Sanchez v. Sephora USA, Inc., Order Granting Plaintiff’s Motion for Conditional Certification, Case No. 11-03396 SBA, Dkt. 27 (July 18, 2012) (Armstrong, J.). Judge Saundra Brown Armstrong pointedly rejected Sephora’s arguments against conditional certification, reinforcing the lenient standard for FLSA claims established in previous decisions such as Stanfield v. First NLC Fin. Servs., LLC, 2006 WL 3190527, at *2 (N.D. Cal., 16 Nov. 1, 2006) (Armstrong, J.).

The decision is a great victory for plaintiffs and employees, making it easier for employees collectively to challenge illegal wage-and-hour practices. With declarations from only four colleagues from other Sephora retail locations, the plaintiff in Sephora was granted permission to send notice to all Sephora employees in her position, inviting them to opt in to her lawsuit. Sephora, supra, at *8.

Below are some highlights from the court’s decision:
a) Plainttiff’s Declarations Need Not Be Very Specific or Tailored to Each Employee 
In granting conditional certification and notice to potential class members, the Sephora court rejected Sephora’s argument that the declarations submitted by the plaintiff were “cookie-cutter,” i.e. used very similar language, noting:

The mere fact that the declarations submitted by Plaintiff are virtually identical does not ipso facto render them incompetent, particularly at this stage of the proceeding where the Court is applying a lenient standard of review.

Sephora, supra, at *3 (citing Keiholtz v. Lennox Hearth Prods., Inc., 268 10 F.R.D. 330,337 n.3 (N.D. Cal. 2010)).

The Court also rejected Sephora’s argument that Plaintiff’s declarations “lacked foundation” or were “vague and ambiguous.”

It is axiomatic that the declarants are competent to articulate what their particular job duties were. Though the declarants may not have provided specific details regarding each and every aspect of their position as a Specialist, the lack of such information does not render their statements “vague and ambiguous” as Sephora asserts.

Sephora, supra, at *3.

b) The Standard For Conditional Certification Is Extremely Lenient 
The Sephora court carefully distinguished the initial stage of conditional certification, where the court is essentially deciding whether to send notice to potential class members, and the second stage, where the court engages in a “more searching inquiry” based on a full factual record. Sephora, supra, at * 4-5. At the initial stage, "[s]ince this first determination is generally made before the close of discovery and based on a limited amount of evidence, the court applies a fairly lenient standard and typically grants conditional class certification." Sephora, supra, at *4 (citing Misra v. Decision One Mortg. Co., LLC, 673 F. Supp. 2d 987, 993 (C.D. Cal. 2008)).

In terms of evidence, “the court requires little more than substantial allegations, supported by declarations or discovery, that the putative class members were together the victims of a single decision, policy, or plan." Sephora, supra, at *4. “[S]ubstantial and detailed” evidence is not necessary at the initial stage, only “some evidence.” Sephora, supra, at *6 (citing Kress v. Pricewaterhouse Coopers, LLP, 263 27 F.R.D. 623, 630 (E.D. Cal. 2009)).

Under this lenient standard, the Court found that the plaintiff’s evidence’s was sufficient for conditional certification:

The job descriptions, documents, admissions and declarations proffered by Plaintiff demonstrate that Sephora's policy of allegedly improperly classifying its Specialists as exempt from the FLSA is widespread and ongoing. This evidence shows Sephora's Specialists were employed with a common job description, performed similar job duties, under identical pay provisions, and is sufficient for conditional certification at this stage of the proceedings.

Sephora, supra, at *6.

c) Dukes does not apply to FLSA claims 
Sephora attempted to use the Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) – which denied class certification in a mass sex discrimination case – to defeat the plaintiff’s motion for conditional certification under FLSA. The Sephora court flatly rejected this argument on the grounds that Rule 23 – and thus Dukes’s stringent commonality requirement – does not apply to FLSA claims:

Sephora has not cited nor has the Court found any authority extending Dukes to a FLSA action, particularly at the frrst stage of the certification process. Indeed, application of Dukes to the conditional certification analysis would be contrary to the weight of authority holding that the FLSA's "similarly situated" requirement is less stringent than Rule 23's standard for class certification. See O'Brien v. Ed Donnelly Enters., Inc., 575 F.3d 567, 584 (6th Cir. 2009) (holding that district court erred in applying Rule 23 standard to determine whether opt-in plaintiffs were similarly situated under the FLSA); see also Grayson v. K Mart Corp., 79 F.3d 1086, 1096 (11th Cir. 1996).

Sephora, supra, at *4.

d) There Are No “Individualized Inquiries” at the Conditional Certification Stage 
Sephora argued that its policies varied from store to store and that therefore “individualized inquiries” were necessary to determine whether plaintiff and other Sephora employees were similarly situated for purposes of class certification. The court dismissed this argument out of hand on the grounds that it “go[es] to the merits and is better addressed at the second stage after discovery has closed.” Sephora, supra, at *7 (citing Stanfield, 2006 WL 7 3190527 at *3).

e) Evidence From the Employer is Irrelevant at the Conditional Certification Stage 
The court rebuked Sephora for relying “heavily on declarations from a number of its employees for the proposition that individualized inquiries are necessary to determine class members’ job duties.” Sephora, supra, at *7. The Court reiterated a clear and simple rule: “[E]vidence from the employer is not germane at the first stage of the certification process, which is focused simply on whether notice should be disseminated to potential claimants.” Sephora, supra, at *7 (citing Grayson, 79 F.3d at 1099 n.17; Luque v. AT & T Corp., 2010 WL 4807088, at *5 (N.D. Cal., Nov. 19, 2010); Kress, 263 F.R.D. at 628)).

f) Plaintiffs Need Not Show that a Sufficient Number of Employees Wish to Opt In 
Lastly, Sephora attempted to argue that plaintiff had not shown that a sufficient number of employees in plaintiff’s position wished to opt in to the lawsuit. The court promptly dispatched this argument noting that there is no authority requiring such a showing and that it would be “counter to the lenient standard applicable to motions for conditional certification.” Sephora, supra, at *8 (citing Delgado v. Ortho-McNeil, Inc., 2007 WL 2847238, at *2 (C.D. Cal., Aug. 7, 2007); Probert v. Family Centered Servs. of Alaska, Inc., 651 F.3d 1007, 1010 (9th Cir. 2011); Tony and Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290, 296 (1985)).

g) Plaintiffs Can Send Their Own Notice To Potential Class Members 
After the court granted plaintiff’s motion for conditional certification and dissemination of notice to class members, Sephora argued that it or a neutral third party should disseminate the class notice. The court rejected this argument as well. Sephora, supra, at *9 (citing Stanfield, 2006 WL 7 3190527 at *5). Instead, the court required Sephora to provide plaintiff with the names, addresses and telephone numbers of potential class members, so that plaintiff could send her own notice. Sephora, supra, at *9. In so holding, the court noted that the disclosure of names, addresses and numbers does not violate class members’ privacy rights. Id. (citing Khalilpour v. CELLCO P'ship, 2010 13 WL 1267749, at *3 (N.D. Cal., Apr. 1, 2010)).
Conclusion

On the basis of these holdings, the Court in Sephora gave the plaintiff permission to send an initial notice to potential class members giving them sixty days to opt in to the lawsuit, as well as a follow-up reminder notice. Sephora, supra, at *8-10. These notices will help inform other Sephora employees in plaintiff’s position that their workplace rights are potentially being violated and will give them the opportunity to vindicate those rights in court.

If you are being denied overtime or other wages as a result of a company-wide policy and wish to pursue an individual or collective action, contact Bryan Schwartz Law.

Disclaimer: Nothing in this article is intended to form an attorney-client relationship with the reader or to provide legal advice in a particular case, but is intended as commentary on a matter of general interest.

Thursday, June 14, 2012

Employees' Rights on Computers in the Workplace

Bryan Schwartz Law's principal, Bryan Schwartz, appeared on National Public Radio's show, "Your Legal Rights," on June 13, 2012, discussing employees' rights with respect to computers at work - and ways they should be cautious, to avoid workplace troubles. Mr. Schwartz's appearance, with Jonathan Wong of Donahue Gallagher, and the show's host, Chuck Finney, is available here. Some subjects covered include computer-related discipline/terminations (e.g., email etiquette-based actions), issues relating to privacy and attorney-client privilege, and how free speech issues interplay with workplace computer issues, especially for public employees. If you have questions about issues relating to computer and Internet usage, that relate to your job, contact Bryan Schwartz Law today.

Monday, April 30, 2012

Meal and Rest Period Litigation Given Another Boost: Supreme Court Reverses Court of Appeal’s Kirby v. Immoos Fire Protection Decision Which Could Have Ended Meal-Rest

In Kirby v. Immoos, 113 Cal.Rptr.3d 370, the Court of Appeal held that an employee not prevailing on a meal-rest claim (or, even one who settled the claims) could be subject to paying the employer's attorneys' fees under Cal. Lab. §218.5, which provides for two-way fee shifting. The consequences of this decision, had it been allowed to stand, would have been disastrous – no employee could risk paying an employer's attorneys' fees to pursue claims arising from meal/rest period violations. The plaintiff's claims might amount to $5,000 and the employer's fees might amount to 100X that much or more – amounts that would bankrupt the average, hourly, non-exempt worker. Since the California Supreme Court and California Legislature have repeatedly emphasized the importance of promoting wage/hour litigation under the Labor Code (see, e.g., Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094), the Court of Appeal's wage/hour claim-killing decision seemed out of line.

Fortunately, this morning, the Supreme Court, in Kirby v. Immoos (http://www.bryanschwartzlaw.com/Kirby_v_Immoos.pdf), rejected the Court of Appeal's incongruous decision, holding as follows:

As we noted in Murphy, "[m]eal and rest periods have long been viewed as part of the remedial worker protection framework," and low-wage workers are the "likeliest to suffer violations of section 226.7." (Murphy, supra, 40 Cal.4th at pp. 1105, 1113-1114.) In giving no indication that section 218.5 applies to meal or rest break claims when it enacted section 226.7, the Legislature could reasonably have concluded that meritorious section 226.7 claims may be deterred if workers, especially low-wage workers, had to weigh the value of an "additional hour of pay" remedy if their claims succeed against the risk of liability for a significant fee award if their claims fail. In light of the statutory text and the legislative history of section 218.5 and section 226.7, we conclude that section 218.5's two-way fee-shifting provision does not apply to section 226.7 claims alleging the failure to provide statutorily mandated meal and rest periods.

Kirby, Slip Op. at p. 17.

The Court did not accept the employees' invitation to treat meal/rest period claims as claims for a "minimum wage" under Cal. Lab. §1194, which expressly precludes two-way fee-shifting for minimum wage and overtime claims. The Court reasoned:

As a textual matter, if plaintiffs were correct that a "legal minimum wage" refers broadly to any statutory or administrative compensation requirement or to any compensation requirement based on minimum labor standards, then section 1194's reference to "legal overtime compensation" would be mere surplusage. For, under plaintiffs' reading, overtime compensation would already be encompassed by the term "legal minimum wage."

Slip Op. at p. 8.

However, the Court left for another day the battle over whether one-way fee-shifting for employees is available for meal/rest claims in suits where they are alleged alongside overtime and minimum wage claims (Slip.Op. at p. 18) –i.e. in most cases where these claims are alleged. This battle – the sequel to Kirby v. Immoos– will most likely be where the rubber meets the road. In the meantime, employees and their advocates should continue to seek attorneys' fees for meal-rest claims alleged alongside overtime and minimum wage claims under §1194. We will also continue to seek fees under Cal. Code Civil Procedure §1021.5, which allows fee-shifting in certain cases brought to vindicate the public interest – like meal/rest litigation so often does.

If you have questions about your meal or rest period claim, contact Bryan Schwartz Law.

Nothing in this article is intended to form an attorney-client relationship with the reader or to provide legal advice in a particular case, but is intended as commentary on a matter of general interest.

Wednesday, April 25, 2012

Employment Discrimination in Academia

Bryan Schwartz Law's work with co-counsel Equal Rights Advocates was recently discussed in the April 2012 Equal Rights Advocates Education Equity Campaign Special Report:

Education Equity Must Include Equity for Educators: ERA Takes on Discrimination in Academia 
ERA, along with co-counsel Bryan Schwartz Law, has recently begun investigating discriminatory tenure, promotion, review, and pay practices at Pitzer College, a member of the Claremont Colleges. A female faculty member of color at Pitzer has alleged that the Pitzer president and other members of the school administration discriminated against women seeking tenure. The client is an accomplished professor who was denied tenure despite two enthusiastically positive recommendations from the College’s tenure committee and positive evaluations from her department, students, and external scholarly reviewers. Female faculty members also report gender-based pay inequities. Our client reports: “I am surprised that a college that so strongly articulates a commitment to social responsibility would not be more concerned with investigating and addressing unequal treatment and would not work harder to maintain a fair, consistent, clear, and transparent process with respect to faculty promotions. I hope that changes will be made so that all junior faculty at the institution, particularly women and women of color, are not subjected to what I have gone through.” ERA is taking on gender discrimination in schools and colleges and the workplace in collaboration with sister organizations across the country, including the American Association of University Women.




Thursday, April 12, 2012

The California Supreme Court’s Long-Awaited Brinker Decision – What Does the Split-the-Baby Approach Tell Us about Meal and Rest Periods in California

Two hours ago, the Supreme Court finally provided the guidance every employer and non-exempt employee in California has been awaiting: what do employers have to do to comply with California’s stringent meal and rest period requirements? See Brinker Restaurant Corp. v. Superior Court (Hohnbaum), S166350 http://www.bryanschwartzlaw.com/Brinker_4-14-12.pdf

Here is what the answer seems to be:

1) Employers do not have to police employees during their meal periods to make sure they are not doing any work. However, employers also cannot control employees’ time or find subtle or not-so-subtle ways of getting employees to work during meal periods. The touchstone for meal periods is the latter: are employees truly relieved of all duty, and relieved of the employer’s control, for an uninterrupted, 30-minute period? (See Brinker, Slip Op. at p. 30, citing DLSE Opinion Letter No. 1991.06.03 (June 3, 1991) “The worker must be free to attend to any personal business he or she may choose during the unpaid meal period.”). As the Supreme Court explained, “Employers must afford employees uninterrupted half-hour periods in which they are relieved of any duty or employer control and are free to come and go as they please.”Brinker, Slip Op. at p. 31. If not, the employer owes a one-hour premium, under Cal. Lab. §226.7.

Bryan Schwartz Law’s amicus brief to the Supreme Court on behalf of the California Employment Lawyers Association and the Consumer Attorneys of California in this matter had urged the Court to adopt essentially a strict liability standard: that employers must ensure that no work be performed, or else pay premiums. The Supreme Court declined this invitation. The Court reasoned, “[T]he obligation to ensure employees do no work may in some instances be inconsistent with the fundamental employer obligations associated with a meal break: to relieve the employee of all duty and relinquish any employer control over the employee and how he or she spends the time. See Morillion v. Royal Packing Co. (2000) [22 Cal.4th 575, 584-585] (explaining that voluntary work may occur while not subject to an employer’s control, and its cessation may require the reassertion of employer control).

Again, control is the critical factor. The Supreme Court’s decision certainly would prevent an employee from, for example, going out to lunch, calling into his/her work voicemail without the employer’s knowledge or direction, and then saying “Gotcha!” and claiming an hour meal premium because he/she worked during lunch.

On the other hand, Brinker embracing the “provide” standard – because of all the discussion on cessation of work and relinquishing of control – does not appear to be a real victory for employers, who may have hoped the decision would put an end to meal period litigation. It won’t. If you are an employee, and your employer puts restrictions on what you can do with your meal period, or pushes you to get work done in a way that makes you work through lunch, then you still may assert meal period claims. You must have a “reasonable opportunity” to take your meal period, that is not impeded or discouraged or controlled by the employer. See Brinker, Slip Op. at p. 36.

PS – if the employer relinquishes control, and an employee chooses to work – with the employer’s knowledge – then the employer must still pay straight time wages for the time worked, but need not pay an additional premium. See Brinker, Slip Op. at p. 35 n. 19. Among other practices, auto-deduct meal periods - where an employer subtracts 30 minutes a day from workers’ timesheets, but knows that employees tend to work through lunch, will seemingly remain unlawful.

2) Employers must provide a meal period by the end of five hours’ work, and another at the end of ten hours’ work. The employee had argued that the second meal period needed to be five hours after the first meal period but the Supreme Court rejected this timing requirement.

3) Employers must provide a ten-minute rest period if employees work over 3.5 hours, and must provide another if employees work over six hours. As far as the timing of the rest period, it should be toward the middle of each four-hour block of work, to the extent practicable – but there will not be much opportunity for asserting claims based on rest break timing, if the employer is giving employees two, ten-minute breaks in an eight-hour shift.

4) For class actions, the Supreme Court rejected the extra layer of factual analysis that the Court of Appeal was requiring, basically saying that if a court needs to look at the facts to know if a particular element is met (e.g., deciding if common issues predominate by seeing if the same policy applied to everyone) then looking at the facts of the case is appropriate – otherwise, not.

In sum, neither plaintiffs’ or defense lawyers can claim a total victory in Brinker, but certainly employees and their advocates live to fight another day, to enforce workers’ important rights to take their breaks and meal periods.

If you have meal and rest period claims or questions, contact Bryan Schwartz Law.

DISCLAIMER: Nothing in the foregoing commentary is intended to provide legal advice in a specific case or to form an attorney-client relationship with any reader. You must have a representation agreement signed with Bryan Schwartz Law to be a client of the firm or this author.