Bryan Schwartz Law

Landmark Decision by National Labor Relations Board Gives Hope of Level Playing Field for All Workers

2012-01-09T15:25:00.001-08:00

Last year, the U.S. Supreme Court ruled in AT&T Mobility v. Concepcion that the California Supreme Court’s Discover Bank rule – that arbitration agreements negating the ability to proceed collectively/as a class were presumably unconscionable, because of unequal bargaining power – was contrary to the Federal Arbitration Act (FAA), because it was discriminatory against arbitration. See my blog post of May 2011, discussing this decision:

http://bryanschwartzlaw.blogspot.com/2011_05_01_archive.html

Last week, the National Labor Relations Board (NLRB) took a bite out of Concepcion’s impact, when it held that arbitration agreements precluding joint, class, or collective actions violate Section 7 of the National Labor Relations Act, which protects the right to engage in concerted action for mutual aid or protection. See the NRRB’s landmark decision in D.R. Horton, Inc., and Michael Cuda, Case 12-CA-25764, here:

http://www.bryanschwartzlaw.com/horton.pdf

What does this mean for regular folks in the workplace? Simply put, it means that the playing field still has a chance at being level – at least until the Supreme Court gets a hold of the D.R. Horton decision.

If you have a wage/hour claim or some other kind of claim, and you are trying to pursue the claim with other employees/former employees – because there is power in numbers, when you are fighting an employer which has an unequal share of the bargaining power – then it is important to learn whether the employer required you to sign an arbitration agreement barring class or collective action when you were hired. Many employers do so require.

If the employer has a policy making its workers sign contracts prohibiting class/collective/joint action against it, or had such a rule within the last 180 days, then you can file an unfair labor practice charge (ULP) with the NLRB, employing the reasoning of D.R. Horton:

https://www.nlrb.gov/sites/default/files/documents/48/nlrbform501.pdf

Under D.R. Horton, you will still have a chance to make a greater impact than you could make as one employee against a big employer.

If you have questions about how to handle your claims that may be subject to an arbitration agreement and/or a ban on class/collective action, contact Bryan Schwartz Law today: bryan@bryanschwartzlaw.com

Disclaimer: Nothing in this posting, for general information only, is intended to create an attorney-client relationship. Bryan Schwartz Law does not represent you unless and until you have a signed representation agreement with the firm. You alone are responsible for any deadlines that concern your claims, until you hire an attorney to represent you.

Workplace Safety Violations Result in Serious Consequences for Employers

2011-12-30T15:50:00.001-08:00

The tragic case of Margarita Mojica, a 26-year-old printing plant worker killed at work in 2008, should stand as a sobering reminder to employers that workplace safety should be given the highest priority. Though protecting employees' lives should be incentive enough, employers like Ms. Mojica's may be criminally liable under the California Labor Code as well as criminal statutes.

In Ms. Mojica's case, the owner and manager of the San Francisco-based Digital Pre-Press International now face criminal charges for her death that was caused by a power press machine that lacked proper mechanical and handling safeguards. Ms. Mojica's case is but one of the approximately 6,000 workplace deaths that happen annually in the United States.

In a preliminary hearing, Judge Newton Lam found that a jury could find the employers committed criminal negligence in Ms. Mojica's untimely death. The defendants could each face up to four years and eight months of incarceration, plus fines of up to $250,000. The corporation faces up to $1.5 million in fines.

The California Labor Code contains numerous sections that impose criminal liability for employer violations. Although employers may not be frequently prosecuted for violations of the Labor Code, this case should remind employers that these criminal violations can be extremely serious.

If you believe you are working in an unsafe workplace due to faulty equipment, exposure to chemicals, or other inadequate safety measures, call Bryan Schwartz Law for a free consultation today: 510-444-9300.

Bryan Schwartz Law Goes to Trial on Behalf of Whistleblower Against Government Corruption

2011-11-13T12:01:00.001-08:00

Bryan Schwartz Law is in the midst of a month-long jury trial on behalf of our client, whistleblower Denise Winters, against her employer, the County of Solano - an exurban/rural County located between the San Francisco Bay Area and Sacramento.

The following lead story by Jess Sullivan was published today in the Daily Republic newspaper, in Solano County:

http://www.dailyrepublic.com/news/topstories/trial-under-way-for-whistle-blower-county-employee-suing-county/

Trial under way for whistle-blower employee suing county

FAIRFIELD — A jury trial got under way this week for a Solano County employee who sued the county claiming she is the victim of retaliation and harassment for blowing the whistle on her boss’ massive amount of questionable paid overtime.

Denise Winters was an office assistant who was responsible for time sheets for her small group of coworkers including her supervisor within the county’s Department of Information Technology.

Winters was troubled that her supervisor, Sherrie Filbert, was racking up lots and lots of overtime during the 2007 and 2008 fiscal year.

Filbert had more than 1,100 hours of overtime and worked almost exclusively at her home on evenings and weekends. Filbert, a county employee of nearly 30 years, was racking up 20, 30 and sometimes 40 hours of overtime weekly, according to court records.

The overtime cost taxpayers more than $41,000.

Winters reported the overtime to the County Auditor Controller’s Office in 2008. Simona Padilla-Scholtens, the auditor-controller, looked at overtime and quickly turned the matter over to the District Attorney’s Office because of the possibility that criminal fraud had been committed. No charges were ever filed after the investigation.

Filbert was put on paid administrative leave for six months while county staff tried to figure out what she had done. Ultimately, Filbert was given a two-week suspension for dishonesty. Then she went back to her old job, which included supervising Winters.

Winters claims she then began to suffer harassment and retaliation in the workplace. Within a few months, Winters’ name was put on a layoff list and in spite of her seniority, she was laid off. She was the only person in her office who was laid off. But she landed another job with the county, with less pay, working in the First 5 program.

Winters sued the county in 2010.

During the first week of testimony, jurors learned that Filbert’s boss, Russ Hansen, and his boss, Ira Rosenthal, had signed off on the overtime week after week until Winters reported the dubious overtime to the Auditor Controller’s Office.

Rosenthal said in an email that the overtime had been appropriate to which another county department head responded saying “The Easter Bunny is real, too.”

Padilla-Scholtens testified that Hansen and Rosenthal had not been paying attention to the overtime Filbert had been running up. Hansen and Rosenthal also said the overtime was not approved in advance and that the overtime was mostly for a project that had no defined scope and with no defined time frame.

That same year the Auditor Controller’s Office checked on all the overtime being paid to more than 1,400 county employees. The bulk of that overtime went to law enforcement and jail guards, making Filbert stand out. Filbert had the second-highest amount of overtime among all county employees. Documents showing which county employee racked up even more overtime have been redacted.

Filbert’s overtime was for a project she took on at her own initiative. Filbert decided to try to reconcile and untangle very old accounts of receivable invoices for equipment managed by the technology department, much of it used by other county departments.

Filbert’s time sheets reflect that she worked every single day for three months, frequently from 7 a.m. to 11 p.m. Most weekends she worked 12 hours on both Saturday and Sunday. She did the work at home without a county computer and without a link to the county’s computer network, according to Winters’ attorney.

Eventually the Auditor Controller’s Office determined that the project Filbert undertook could have been done in 40 to 100 hours, not in the more than 1,100 hours. They took over the project and concluded it shortly after Filbert was put on administrative leave.

The attorney representing the county, Carolee Kilduff, said Filbert had taken on the enriching project for partly personal reasons. Kilduff said the that Filbert found the project was “fun.”

“It was her recreation,” Kilduff told jurors, likening the project to doing a jigsaw puzzle.

Kilduff concedes the oversight of Filbert by Hansen and Rosenthal was “lax” and that there “should have been better communication” about Filbert’s project with her bosses.

Kilduff told jurors that Rosenthal’s decision to lay off Winters had nothing to do her reporting Filbert’s overtime.

The trial is scheduled to resume Monday.

Are You Accused of Having “Unclean Hands?”

2011-10-24T11:33:00.000-07:00

The “unclean hands” defense and its evil twin sister, the “after-acquired evidence” doctrine, are used by many employers facing a lawsuit as an excuse to dredge up anything they can find on the employee suing them. Before filing a lawsuit against your employer or former employer, you need to anticipate that they will do this, and be prepared. If you have too many skeletons in your own closet, you may want to think twice about bringing a suit in the first place. This does not mean, however, that employers’ attempts to soil the employee suing them always succeed – in fact, there are many ways that these attempts fail, as a matter of law.

Basically, the “unclean hands” defense is based on an equitable principle that a defendant should not have to pay someone accusing the defendant of wrongdoing when the plaintiff himself or herself is just as guilty of the bad practice that is the subject of the suit. The “after-acquired evidence” doctrine gained strength after the United State Supreme Court’s decision in McKennon v. Nashville Banner Publishing Co. (1995) 513 U.S. 352, which has been applied to hold that for someone suing based on violation of an important statute, like the anti-discrimination laws, he or she cannot have the entire suit eliminated based upon “unclean hands” – because of the public policy promoted by the statute itself. In other words, a discriminator should not get off the hook just because the discrimination victim had some problems, too – because our society has determined that discrimination is wrong. However, if the employer or ex-employer finds viable “after-acquired evidence,” the relief that the discrimination victim himself or herself might receive can be limited in some cases – i.e., if the employer can show that the employee would have been terminated anyhow for something the employer has learned after the suit was filed (a common example is proven fraud in your employment application), then the employee may not have a right to get his/her job back, or get back pay after the date on which the after-acquired evidence was discovered.

Here are some arguments you should raise if you are confronted with the “unclean hands” defense or “after-acquired evidence" doctrine:

In California, under the Fair Employment and Housing Act (FEHA) and whistleblower protection laws in the Labor Code, the unclean hands doctrine is inapplicable, when the defense purports to relate to acts occurring in the course of the employment relationship. See Murillo v. Rite Stuff Foods, Inc. (1998) 65 Cal.App.4th 833, 848-851 (FEHA case in which neither the after-acquired-evidence rule nor the unclean hands doctrine was applicable to claimed sexual harassment damages, notwithstanding her misconduct in misrepresenting her citizenship status). In general, “equitable principles may not be applied in opposition to statutory enactments or to defeat public policy established by the Legislature.” Angelucci v. Century Supper Club (2007) 41 Cal.4th 160, 171 (citing 13 Witkin, Summary of Cal. Law (10th ed. 2005) Equity, § 3, p. 285; McKennon, 513 U.S. at 360–362.

As the United States Supreme Court noted in McKennon, “We have rejected the unclean hands defense ‘where a private suit serves important public purposes’” like the elimination of workplace discrimination. McKennon, 513 U.S. at 360-361. See also Mortgages, Inc. v. U.S. D. Ct. For D. of Nev. (9th Cir. 1991) 934 F.2d 209, 213 (district court erred when it denied a motion to dismiss the counterclaims based on bad faith by False Claims Act (FCA) relators, reasoning that “[t]he FCA did not intend to ameliorate the liability of wrongdoers by providing defendants with a remedy against a qui tam plaintiff with ‘unclean hands.’”); Ramirez v. Greenpoint Mortg. Funding, Inc., 268 F.R.D. 627, 638 (N.D. Cal. 2010) (Henderson, J.) (rejecting unclean hands defense in discrimination case based on public policy favoring broad equitable relief).

California law concerning public policy statutes is consistent with the federal precedents: “Where an employer has fired a worker in violation of a statutory ban on discrimination in the workplace, the purpose and effect of the antidiscrimination statutes are unacceptably undermined by a principle that would allow a fact that played no part in the firing decision to bar any recovery.” Camp v. Jeffer, Mangels, Butler & Marmaro (1995) 35 Cal.App.4th 620, 633. “When a plaintiff alleges wrongful termination in violation of public policy, that cause of action, like one based on discrimination, serves sufficiently important public purposes to outweigh a claim of unclean hands.” Id. at 635-636; General Dynamics Corp. v. Superior Court (1994) 7 Cal.4th 1164, 1181 (“[T]he doctrinal foundation of the public policy tort claim is not so much the plaintiff's continued interest in employment as the preservation of the public interest.”); De Burgh v. De Burgh, 39 Cal. 2d 858 (1952) (noting that “equity does not deny relief on the ground of plaintiff’s unclean hands when to do so would be harmful to the public interest”).

The only exception to the prohibition on an unclean hands defense to a public policy-driven statutory claim is where an employee's subsequently discovered wrongdoing would have prevented employment by the defendant from the outset. See, e.g., Murillo, 65 Cal.App.4th at 845 (plaintiff misrepresented herself as a legal resident alien, and her misrepresentations about her immigration status “went to the heart of the employment relationship,” and so precluded reinstatement remedy); Camp, 35 Cal.App.4th at 636, 638-639 (plaintiffs were convicted felons; defendant was precluded by law from employing convicted felons). In Camp, misrepresentations by the employees jeopardized the defendant law firm’s contracts with a government agency and potentially subjected the firm to accusations that it had made false statements to the government. Id. at 636-637. Camp suggested that unclean hands defenses are inapplicable where the supposed violations by the plaintiff relate to “internal, self-imposed requirements for the job” or its “voluntarily adopted policy.” Id. See also Cooper v. Rykoff-Sexton, Inc. (1994) 24 Cal.App.4th 614, 618-619 (reversing a summary judgment for employer on “unclean hands” where there was resume fraud by an employment discrimination plaintiff, finding that automatic forfeiture of claims was “too harsh a penalty” in many cases of misconduct – holding, “Where an employer has fired a worker in violation of a statutory ban on discrimination in the workplace, the purpose and effect of the antidiscrimination statutes are unacceptably undermined by a principle that would allow a fact that played no part in the firing decision to bar any recovery.”).

In sum, public policy underlying FEHA, Cal. Lab. §1102.5, and other important statutory protections, may prevent application of the unclean hands defense in your case, unless the evidence the employer possesses meets the tough “would have prevented employment” or “heart of the employment relationship” standard.

It is also important to argue that misconduct triggering the unclean hands doctrine must relate directly to the transaction at issue. See Camp, 35 Cal.App.4th at 638-639; Farahani v. San Diego Community College Dist. (2009) 175 Cal.App.4th 1486, 1495 (defense “closes the doors of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief”) (emph. added). See also Lane v. Micro-Focus (U.S.), Inc. (W.D.Wash. 2010) 2010 WL 5018146, at *11 (dismissing unclean hands defense where Defendants did not show any “willful misconduct that has an immediate and necessary relation to Plaintiff’s requested relief”).

If the supposed misconduct does not relate to any actions you took for personal gain, then unclean hands may not be applicable. See CrossTalk Productions, Inc. v. Jacobson (1998) 65 Cal.App.4th 631, 643 (finding that the allegedly “unclean” conduct of the plaintiffs differed from that of the defendant because the plaintiffs “had nothing to gain”). See, e.g., Dawe v. Corrections USA (E.D. Cal. 2010) 2010 WL 682321, at *26-27 (rejecting unclean hands defense where defendants did not meet initial burden of presenting evidence that plaintiffs’ actions were wrongful). Whistleblower statutes, in particular, tend to recognize that sometimes “wrongdoers might be rewarded” – but establish that such a cost is worthwhile to incentivize those knowledgeable about unlawful schemes to step forward. Recall, supra, Mortgages, 934 F.2d at 213 (discussing that the FCA was established to “set[] a rogue to catch a rogue”). If you were not complicit in the scheme you have helped expose, or if you feared retaliation in speaking out about it, then the unclean hands defense may not apply.

A defendant employer should also be precluded from advancing an “after-acquired evidence” defense unless the employer learns for the first time about employee wrongdoing that would have led to the discharge in any event. See Camp, 35 Cal.App.4th at 632. It is the employer’s burden to “establish that the wrongdoing was of such severity that the employee in fact would have been terminated on those grounds alone if the employer had known of it at the time of the discharge.” McKennon, 513 U.S. at 362-363. See also Brahmana v. Lembo, 2011 WL 1674993, at *9-11 (N.D.Cal. 2011) (rejecting equitable defense where employee failed to disclose criminal record or prior incarceration, even though employee handbook noted material omissions on employment application could result in termination); Cooper, 24 Cal.App.4th at 617-619 (facts of the case did not support a complete bar to relief, because the employee had a spotless and competent work record with the employer until he was terminated); Murillo, 65 Cal.App.4th at 845-84 (after-acquired-evidence rule would not have supported summary adjudication of wrongful termination claims, because triable issue existed as to whether employer would have terminated the employee had it known that she was an undocumented alien). Like in Murillo, id., where there was evidence that the employer had hired other undocumented aliens despite knowledge of their immigration status and fraudulent documents, your employer cannot rely upon “after-acquired evidence” where it has acknowledged that it does not terminate other employees for such conduct as is alleged against you.

Perhaps most importantly, if you can show the employer knew of your supposed misconduct while you were employed, and did not terminate you, the “after-acquired evidence” defense is inapplicable. Whereas in Murillo, there was a triable after-acquired evidence issue, because nothing in the record indicated that the employer knew previously that the employee in question was ineligible to work (id., 65 Cal.App.4th at 845-84), in your case, the opposite may be true – the employer may not be in a position to claim recent discovery of any misconduct.

Finally, you may argue that the court should rule upon the defenses in equity – they are only a matter for the jury if they are “so intertwined with legal claims that [they] cannot be separately tried to the judge.” Unilogic, Inc. v. Burroughs, Corp. (1992) 10 Cal.App.4th 612, 623.

If you have questions about the applicability of the “unclean hands” defense or “after-acquired evidence” doctrine in your case, please contact Bryan Schwartz Law.

*Note: nothing in this article, intended to be of general interest, is intended to create an attorney-client relationship or constitute legal advice to you. Each case is different, and Bryan Schwartz Law does not represent you unless you have a signed representation agreement with the firm.

What is an "adverse action?"

2011-09-28T16:53:00.000-07:00

If you are an employment discrimination victim or a whistleblower who suffered retaliation at the hands of your employer, to have an opportunity to recover you must show you suffered an “adverse action.” Some things that feel adverse to you are not necessarily “adverse actions” that will give rise to a case. On the other hand, an employer is wrong if it tells you that only a termination or a demotion is an “adverse action.”

If you were terminated, laid off, demoted, or in some other way lost pay as a result of the employer’s discriminatory or retaliatory action against you, then you suffered an adverse action. See, e.g., Guz v. Bechtel Nat'l Inc., 24 Cal.AppAth 317, 355 (“termination, demotion, or denial of an available job " is adverse action); Thomas v. Department of Corrections (2000) 77 Cal.App.4th 507, 511 (termination of employment and demotion are adverse actions); McRae v. Dep't of Corrections and Rehab. (2006) 142 Cal.AppAth 377, 393 (action that results in a reduction in pay satisfies requirement); Little v. Windermere Relocation, Inc. (9th Cir. 2002) 301 F.3d 958, 970 (pay cut is adverse employment action).

This is true even if the employer subsequently took some action to mitigate its damages. For example, in a case on which Bryan Schwartz Law recently defeated an employer’s summary judgment motion, the employer argued that, because our client was hired into another position after she was initially laid off, she did not suffer an adverse action. The employer’s argument failed. If you suffered a materially adverse consequence – even if it is relatively small, based on some type of mitigation – this should be sufficient to constitute an adverse action.

Likewise, if you are placed in a position with less advancement potential, fewer promotion opportunities, a less distinguished title, or suffered some other material loss of benefits or significantly diminished material responsibilities, you may have suffered an adverse action. See, e.g., Burlington Northern & Santa Fe Railway Co. v. White, 548 U.S. 53, 126 S.Ct. 2405, 2416 (2006)(reassignment to less desirable job responsibilities may be materially adverse action); Patten v. Grant Joint Union High School Dist. (2005) 134 Cal.App.4th 1378, 1389-1390 (lateral transfer without change in wages, benefits and duties may be an adverse employment action where the transfer is in reality a demotion, or there are significantly diminished material responsibilities); Akers v. County of San Diego (2002) 95 Cal. App. 4th 1441, 1456-1457 (diminished promotion opportunities is adverse action).

A hostile working environment can constitute an “adverse action.” It is also true, though, that “social slights” or “mere reduction in pleasantries” are not enough, usually, to constitute an adverse action, standing alone – though they may be important background evidence of discriminatory or retaliatory animus. On the other hand, both California and Federal courts will look at the totality of circumstances to determine whether the work environment or your job has been sufficiently for an adverse action to be established. See Yanowitz v. L 'Oreal USA, Inc.
(2005) 36 Ca1.4th 1028, 1055 ("no requirement that an employer's retaliatory acts constitute one swift blow, rather than a series of subtle, yet damaging, injuries”).

The Federal standard to prove that a retaliatory adverse action occurred is easier to meet than the California standard, as articulated in Yanowitz. In Federal courts, you may be able to prove an adverse action if you can show that the employer took any action against you which might tend to discourage a reasonable person from engaging in protected activity. See Ray v. Henderson, 217 F.3d 1234 (9th Cir. 2000). The Ray decision suggests that, if your former employer where you previously complained of discrimination or blew the whistle retaliates by giving a negative job reference to a different potential employer (even if you ultimately get the job you were seeking), this can be an adverse action, because it might tend to discourage people from speaking out against discrimination or other unlawful activities. Id. at 1242.

If you believe you may have been subjected to an adverse employment action based on discrimination or whistleblower retaliation, and want to speak to a lawyer, contact www.BryanSchwartzLaw.com today.

Good New Case Law on Using Testimony from Other Victims in Harassment Cases:

2011-08-31T17:42:00.001-07:00

Fifth District Court of Appeal Gets it Right in Pantoja v. Anton, 198 Cal.App.4th 87 (2011)

On August 9, 2011, the Fifth District released a strong published opinion on “me too” evidence, and other evidentiary issues in sexual harassment and race discrimination cases. Pantoja v. Anton, 198 Cal.App.4th 87 (2011). This opinion injects a much-needed dose of common sense into the law around proving that harassment occurred—something that is often a “he said-she said” situation.

The plaintiff, Lorraine Pantoja sued her former employer, Thomas Anton, under California’s Fair Employment and Housing Act for sex and race discrimination and harassment, among other claims, while she was employed as a receptionist/secretary in Mr. Anton’s law office. Id. at *12. Ms. Pantoja alleged that Mr. Anton engaged in the following conduct, among other acts: slapping Ms. Pantjo’s buttocks, touching her leg while offering $200, referring to his employees as “my Mexicans,” and ultimately calling Ms. Pantoja a “stupid bitch” and then firing her. 198 Cal.App.4th 87, at *2.

At trial, the trial court in Kern County refused to admit evidence from Ms. Pantoja’s female coworkers of Anton’s conduct towards them that was not necessarily witnessed by Ms. Pantoja. Id. at *4. Ms. Pantoja sought to admit this “me too” evidence to show that Mr. Anton engaged in a pattern of harassment and race discrimination against his female, often Latina employees. Id. at *6. This evidence included extensive testimony from other employees that Mr. Anton inappropriately touched them, said things like “monkeys can do your job better than you,” telling a female employee on a ladder “I could see right through that skirt,” and “I have three Mexicans working for me. I’ve never had that many working for me before. Usually you hire Mexicans to do your maid work.” Id. at *8-9. However the Court reasoned that such “me too” evidence ran afoul of California’s evidence rules against “character evidence” and prevented the jury from hearing this testimony.[1]

However, the trial court allowed Mr. Anton to admit evidence supporting his general course of conduct. For example, the court allowed Mr. Anton’s lawyers to lead him to testimony that any physical contact with his employees was merely “avuncular” or “uncle like.” Id. at *8. This testimony was not limited to the time that Ms. Pantoja was employed. Id.

The Court of Appeal found that the trial court committed error by allowing what was essentially a double standard in favor of Mr. Anton:

We conclude that, in the event this case is retried, both parties need to be given the opportunity to present their evidence in an even-handed manner. Only then will the jury be able to fulfill its responsibility of determining where the truth actually lies based on a balanced and accurate review of admissible evidence.

Id. at *25. Importantly, the Court also found that the trial court erred in that “[its] decision that all evidence supporting a sexual harassment plaintiff's case must be limited to evidence of specific events that took place in the plaintiff's presence[. This ruling] had the unfortunate result of skewing the evidence.” Id. at *23.

This decision is important for plaintiffs in harassment cases, since, absent such “me too” evidence from co-workers willing to tell the truth about harassment that they endured, harassing incidents are frequently merely “he said-she said” situations. Harassment often occurs one-on-one, without many other witnesses. Likewise, harassers are seldom foolish enough to commit their harassment in writing.

With this decision, the challenging task of proving that inappropriate touching occurred, or that inappropriate words were spoken, has been made a bit easier for harassment victims.

Read the Opinion Here: http://www.courtinfo.ca.gov/opinions/documents/F058414.PDF

If you believe you have been harassed or discriminated against in your workplace, contact Bryan Schwartz Law today: Hillary@bryanschwartzlaw.com, 510-444-9300.

[1] See Cal. Evid. Code § 1101.

Bryan Schwartz Law Represents California Employment Lawyers Association to California Supreme Court

2011-07-15T09:12:00.000-07:00

Amicus Brief Argues for Reversal of Kirby, et al. v. Immoos Fire Protection, Inc., Shifting Burden of Defendants' Attorneys Fees to Plaintiffs in Unsuccessful Meal-Rest Period Premium Litigation

Click here to read the brief Bryan Schwartz Law submitted to the California Supreme Court on July 11, 2011, as amicus curiae on behalf of the California Employment Lawyers Association, an organization of approximately 1,000 attorneys representing workers throughout California in wage and hour, discrimination, whistleblower, and other types of cases.

The brief argues that the decision of the Court of Appeal in Kirby, et al. v. Immoos Fire Protection, Inc., 113 Cal.Rptr. 370 (2010), review granted November 17, 2010 (Case Number S185827) ("Kirby"), would destroy workers' ability to sue to recover unpaid meal and rest period premiums, when employers steal time from them during their breaks.

Kirby disregarded the extensive Supreme Court jurisprudence requiring construction of the California Labor Code in the most protective manner to employees that is possible, based on a reasonable interpretation of the language of the statutes. In reversing, the Supreme Court should hold that Kirby erred in reading California Labor Code section 218.5, which provides for two-way fee-shifting in cases other than those encompassed in California Labor Code section 1194, to apply to meal and rest period premium cases under California Labor Code sections 226.7 and 512 and the Wage Orders of the Industrial Welfare Commission.

Specifically, California Labor Code section 1194 allows only one-way fee-shifting - i.e., that an employer found to violate the law must pay the attorneys' fees of the person who brought the claim, but the opposite is not true. California Labor Code section 1194 includes claims for overtime and for "the legal minimum wage." In Murphy v. Kenneth Cole (2007) 40 Cal.4th 1094, 1109-1110, the California Supreme Court found that the meal and rest period premiums required under Section 226.7, etc.(an additional hour of pay at an employee's regular rate) are wages. Thus, they are the legal minimum wage that an employer must pay whenever an employee misses breaks, and Section 1194 is applicable.

The decision also erred in reading section 218.5's preclusion of two-way attorneys' fees shifting in "any action" seeking compensation under section 1194 to be limited only to the cause of action alleging overtime and "legal minimum wage" claims, instead of the whole civil action. Since meal/rest claims are generally brought together with overtime and other minimum wage violation claims, it only makes sense for "any action" in section 218.5 to refer to the whole case. Otherwise, it is unclear what will happen when someone loses a case in which a worker says that he/she missed meal periods, and as a result, had unpaid overtime as well - i.e., worked through lunch periods, so actually worked 8.5 hours a day, instead of the maximum 8 regular hours, but never got paid overtime for the extra half hour.

Employees should not be forced to pay their employers' attorneys' fees every time their cases to enforce the law do not succeed. Simply put - neither they, nor their lawyers, could afford the risk, and as such, the consequence of Kirby would be to kill litigation seeking to enforce the meal and rest period premium laws of California. With the government enforcement agencies seriously understaffed, private enforcement is the only way to give employees a fighting chance of enforcing their rights to either receive meal and rest periods in California workplaces, or be paid premiums by their employers.

When Your Employer Must Pay for Your Travel Time

2011-06-29T10:00:00.000-07:00

In general, an employer does not need to compensate you for time spent traveling that is a normal commute from home to work and back. However, there are a couple of key exceptions. Under California law, one exception is when an employer requires you to take company-provided transportation and you are subject to the control of the employer. See Morillion v. Royal Packing Co., 22 Cal. 4th 575, 578 (2000).

In the Morillion case, the employer, Royal Packing Co., required its employee farm workers to meet for work each day at parking lots or assembly areas. Id. at 579. From these departure points, Royal transported employees to their job sites in busses which Royal provided and for which Royal paid, and returned them to the departure points at the end of the each day. Id. The employees were prohibited from using their own transportation to get to the job sites. Id. The California Supreme Court found the level of Royal’s control over its employees meant they should have been on the clock while on the busses, since the employees could not commute to the job sites on their own, decide which route to take, or which mode of transportation to use. Id. at 586-87. The Morillion decision means that an employer must compensate employees for their compulsory travel time, including time spent waiting for your employer’s transportation to take you to work. See id. at 587.

It is true that an employer may provide and require you to take a company vehicle without having to compensate you for travel time. However, if the employer subjects you to restrictions, such as not permitting personal stops, forbidding you from picking up passengers, and forbidding the use of a cell phone except to answer calls from company headquarters, the employer may be liable for that travel time. See Rutti v. Lojack Corp., Inc., 596 F.3d 1046, 1061-62 (9th Cir. 2010).

In general, if you take advantage of optional company-provided transportation, your employer does not need to pay you for travel time. See Overton v. Walt Disney Co., 136 Cal. App. 4th 263, 271 (Cal. Ct. App. 2006). For example, Disney did not have to compensate employees for the time they spent on a free, optional shuttle bus provided by Disney from the employee parking lot to the entrance of Disneyland. Id. The Disneyland employees could take alternative forms of transportation, such as taking public transportation, a vanpool, or getting dropped off, so they were not under Disney’s control. Id.

You might also be entitled to compensation for travel time under the federal Fair Labor Standards Act if you perform any work that is deemed to be an “integral and indispensable” part of your main work activities. D A & S Oil Well Servicing, Inc. v. Mitchell, 262 F.2d 552, 555 (10th Cir. 1958). Such activities include picking up and transporting necessary equipment or receiving work instructions at a meeting point prior to traveling to the work site. See, e.g., Smith v. Aztec Well Servicing Co., 462 F.3d 1274, 1289 (10th Cir. 2006). Furthermore, you should almost always get paid for travel time from job site to job site in a single day, assuming that such travel is not a part of your normal commute from home to the normal job site, or between home and the first or last job site. See Wirtz v. Sherman Enterprises, Inc., 229 F. Supp. 746, 753 (D. Md. 1964). For example, employees who install cable, make repairs to telephone lines, inspect houses, or wait to receive the next limousine driving assignment are all entitled to be paid for the time they spend getting to one work site to another. See Steelman v. Telco Tel. Co., 2001 WL 21361, at *1, 3 (D. Or. Jan. 5, 2001); Ghazaryan v. Diva Limousine, Ltd., 169 Cal. App. 4th 1524, 1527-28 (Cal. Ct. App. 2008).

If you believe you are not receiving proper compensation for travel time between job sites, or for travel time where your employer requires you to meet at mandatory location prior to traveling to your job site, or if your employer restricts what you do when you travel to or from work, or imposes work requirements on you during this travel time, please contact Bryan Schwartz Law (at bryan@bryanschwartzlaw.com).

For Government Contract Employees, Your Employer is Not Just Who Signs the Paycheck

2011-06-06T12:38:00.000-07:00

You were interviewed and hired by a private firm, but sent to work at a government agency as a government contractor. You report your hours, receive healthcare benefits, and receive your paycheck from the firm, but your office is at the government agency. The growth and popularity of government contract workers at various local and federal government agencies may lead to confusion about who is technically the “employer.” When government contract employees have an unlawful termination claim, whether due to discrimination or harassment, whistleblower, retaliation, or overtime and other wage claims, both the private firm and the government agency could be on the hook as joint employers. Thus, a government contractor should pursue his or her claims against both entities if either the private sector employer or government agency mistreated the employee and violated state or federal law.

Courts determine whether a contract worker is deemed a government employee for purposes of an employment discrimination lawsuit by looking at whether the employer “has retained for itself sufficient control of the terms and conditions of employment of the employees who are employed by the other employer.” Lopez v. Johnson, 333 F.3d 959, 963 (9th Cir. 2003) (citing Redd v. Summers, 232 F.3d 933 (D.C. Cir. 2000) (internal citations omitted)); Strolberg v. Akal Sec. Co., 2005 WL 5629026, at *6 (D. Idaho Jan. 19, 2005). The courts look at “the extent of the employer’s right to control the means and manner of the worker’s performance [as] a primary factor,” as well as other factors including whether the employer furnished the employee’s equipment and place of work, the length of time the employee worked, and whether the work was an integral part of the employer’s business. Lopez at 962-63 (citing Lutcher v. Musicians Union Local 47, 633 F.2d 880, 883 (9th Cir. 1980) and Mitchell v. Frank R. Howard Mem’l Hosp., 853 F.2d 762, 766 (9th Cir. 1988)).

In Strolberg v. Akal Sec. Co., the court found employees of Akal Security Co., a private security company, to also be government employees of the United States Marshal’s Service (“USMS”) for purposes of a claim under the Rehabilitation Act – even though the USMS had limited control over the terms and conditions of the employees’ work. Strolberg at *1. Akal Security was responsible for managing court security officers’ (“CSO”) work hours and assignments, payment of salaries, and scheduling of vacation, discipline, and performance of services. Id. at 7. Also, the USMS did not normally direct CSOs’ activities nor have intent to enter into an employment relationship. Id. at *8. Yet, the court found the USMS to be the CSOs’ joint employer. Id. Examples indicating that the USMS was a joint employer included the USMS providing training; furnishing radio, weapons, handcuffs, and identification; determining routes, schedules, and operating procedures for CSO patrols and stations; and providing the premises where the CSOs worked. Id. at *7-8. The USMS could not directly fire CSOs, but could evaluate CSOs and direct CSOs in the event of emergencies. Id. at *8. The Strolberg case shows that the employer need not control everything about the contract worker’s employment, but just some significant aspect of it.

Be cautioned: the government may well try to tell you that you are not its employee, and that you have no right to file claims against it. Do not believe it. You should make sure that you register a complaint with the proper government authorities very quickly after you suffer an adverse employment action, because the government tends to have very short deadlines for filing complaints. Often, if you do not file against the government quickly, you will lose the right to hold the government accountable.

In one example, Bryan Schwartz Law’s client Garnett Gebhardt sought to hold both the U.S. Department of Energy (“DOE”) and Northrop Grumman liable as joint employers for her claims of harassment and discrimination. Gebhardt v. Chu, 2010 WL 5211459, at *1 (N.D. Cal. Dec. 16, 2010). While contracting firm Northrop Grumman signed Ms. Gebhardt’s paychecks and provided employee benefits, Ms. Gebhardt worked in DOE facilities, used a DOE email address, and worked directly under a Senior Counterintelligence Officer and federal employee. Id. With limited exceptions, Equal Employment Opportunity Commission (“EEOC”) regulations require that federal employees (or federal contract employees) consult with the proper Equal Employment Opportunity (“EEO”) counselor at the agency within 45 days of the matter alleged to be discriminatory in order to file a civil suit. Id. at *6.

In the Gebhardt case, although (before hiring Bryan Schwartz Law) Ms. Gebhardt complained to DOE officials and attempted multiple times to contact a DOE Human Relations Specialist in order to properly file an EEO complaint, the DOE took the position that Ms. Gebhardt never properly filed an administrative complaint against it. Id. at *3-4. The DOE argued that the DOE Human Resources Specialist was not an “EEO” official that was logically connected with the EEO process. Id.at *9. The DOE also argued that if there was an EEO complaint filed by Ms. Gebhardt, she had directed it to Northrop Grumman and not the DOE. Id. at 10. However, Bryan Schwartz Law successfully convinced the court that it should reject the DOE’s arguments that Ms. Gebhardt’s complaints were untimely (under the legal principle of equitable tolling) because Ms. Gebhardt and her counsel were told by the DOE that her complaint was being handled, even though it was not. Id. at *13.

Though Bryan Schwartz Law ultimately succeeded in saving her claims against the DOE, the Gebhardt case shows how important it is to be quick and persistent in pursuing your employment claims with the appropriate channels at both your government agency and contracting firm. The agency or firm may mislead you into filing a complaint with one employer only, or with an individual or office not charged with handling EEO complaints.

If you are unsure who your “employer” is or where to file a complaint, you could very well have joint employers and should pursue action against both. In particular, if you are a government contractor and you have a discrimination, whistleblower, or wage and hour claim arising out of either your contracting firm or government agency, please contact Bryan Schwartz Law (at bryan@bryanschwartzlaw.com).

Civil Rights Lawyer and Employee Advocate Bryan Schwartz Speaks Out on NPR Against ATT Mobility v. Concepcion

2011-05-30T10:10:00.000-07:00

On May 4, 2011, Bryan Schwartz (www.BryanSchwartzLaw.com) advocated the interests of employees and consumers in an hour-long radio broadcast, on National Public Radio, of a debate between Mr. Schwartz and Baldwin Lee, who is an employers'-side attorney and head of the Employment group at Allen Matkins.

To find out how ATT Mobility v. Concepcion will affect you, in your daily life - whether you know it or not - listen to Mr. Schwartz's points by clicking on the link below:

"Your Legal Rights: a Debate on the ATT Mobility v. Concepcion Supreme Court
Decision, and How it Affects Your Rights in the Workplace,"
May 4, 2011, National Public Radio, KALW San Francisco 91.7 FM.

Disability Rights Organizations Voice Support for Class Action on Behalf of Disabled Foreign Service Applicants

2011-04-28T10:52:00.000-07:00

A consortium of more than 100 national, disability-related organizations joined in support of the class action which was certified in September 2010, seeking to end the United States Department of State’s practice of discrimination against people with disabilities, records of disabilities, and perceived disabilities in the hiring process for Foreign Service Officers. At the request of the State Department, the class certification decision in Meyer v. Clinton (Department of State), a case brought by Bryan Schwartz Law, is currently under review by the United States Equal Employment Opportunity Commission (EEOC).

The Consortium for Citizens with Disabilities wrote to the EEOC, addressing the State Department’s so-called “worldwide availability” policy, which required that applicants prove they are able to work at more than 250 diplomatic posts worldwide, without reasonable accommodations of any kind or need for ongoing medical treatment, before being hired into the Foreign Service. Thus, for example, an applicant (like the Class Agent, Ms. Meyer) who the State Department admitted was able to work at more than 85% of posts without any accommodations, could not be hired, at all, into the Foreign Service, without undergoing a special “waiver” process to prove he or she had “extraordinary qualifications” not required of other, non-disabled applicants. Only a tiny fraction of disabled applicants receive Foreign Service jobs after this discriminatory “waiver” process.

Though numerous court and EEOC decisions have found the application of the “worldwide availability” requirement unlawful, it has never been addressed on a class-wide basis. The Consortium’s letter stated, “The time has come to stop handling these challenges to a discriminatory policy piecemeal – and to address head-on the whole ‘worldwide availability requirement’ as implemented.”

Bryan Schwartz, attorney for the Class Agent, stated, “This support of the organized, disability rights community is critical. This Consortium is a major stakeholder in the EEOC’s performance of its mission to eliminate workplace discrimination, and I hope the EEOC will take the Consortium’s well-reasoned amicus letter very seriously – as it should.”

For more information about Meyer v. Clinton, contact Bryan Schwartz.

The complete letter reads as follows:

April 27, 2011
Carlton M. Hadden, Director
Office of Federal Operations
U.S. Equal Employment Opportunity Commission
One NoMa Station
131 M Street, NE
Suite 5SW12G
Washington, DC 20507

Re: Amicus Letter in Support of Opposition to the Agency’s Appeal of Class Certification Decision in Meyer v. Clinton, OFO No. 07-2011-007; EEOC No. 570-2008-00018X

Dear Director Hadden:

The Rights Task Force, the Employment and Training Task Force and the International Task Force of the Consortium for Citizens with Disabilities (CCD) submit this amicus letter in support of the opposition to the agency’s appeal of the class certification decision in the above-referenced case. This case challenges the State Department’s practice, under its “worldwide availability” policy, of banning people with a variety of disabilities from Foreign Service officer positions.

The CCD is a coalition of more than 100 national disability-related organizations working together to advocate for national public policy that ensures full equality, self-determination, independence, empowerment, integration and inclusion of children and adults with disabilities in all aspects of society. The mission of the Rights Task Force of the CCD is to focus on civil rights and protections for people with disabilities, and for enforcement of rights provisions by federal agencies. The Employment and Training Task Force works on issues relevant to the employment of people with disabilities, particularly issues related to the programs and projects funded under the Rehabilitation Act of 1973, as amended. The International Task Force advocates for United States and international policies which promote the rights and inclusion of persons with disabilities worldwide. Accordingly, the undersigned task forces of the CCD have an especially strong interest in the issues presented by this case, including ensuring the exacting implementation of federal employment policy that maximizes the employment opportunities for Americans with disabilities.

We urge the Commission to uphold certification of the proposed class in this case. The State Department’s worldwide availability policy negatively affects hundreds of employees and job applicants, and needlessly deprives the country of the tremendous public service that could be provided by these outstanding job candidates. In urging this case go forward as a class action, we simply seek to advance the EEOC’s rallying cry that “[t]he Federal Government shall be a model employer of individuals with disability.” 29 CFR 1614.203(a).

Class complaint processing is appropriate because this case meets all of the criteria set forth by the Commission in 29 CFR 1614.204. In addition, this case focuses on a “broad pattern of workplace discrimination,” which is exactly the type of case that the Commission targeted when adopting its current regulations for class complaint processing. As the Commission confirmed in 1999: “[c]lass actions play a particularly vital role in the enforcement of the equal employment laws. They are an essential mechanism for attacking broad patterns of workplace discrimination and providing relief to victims of discriminatory policies or systematic practices.” 64 Fed. Reg. 37651 (1999).

The time has come to stop handling these challenges to a discriminatory policy piecemeal – and to address head-on the whole “worldwide availability requirement” as implemented.

Respectfully submitted,

CCD Rights Task Force Co-Chairs:

Mark Richert
American Foundation for the Blind

Curt Decker
National Disability Rights Network

CCD Employment and Training Task Force Co-Chairs:

Cheryl Bates-Harris
National Disability Rights Network

Alicia Epstein
NISH

Susan Goodman
Down Syndrome Congress

Charlie Harles
Inter-National Association of
Business, Industry & Rehabilitation

Susan Prokop
Paralyzed Veterans of America

Paul Seifert
Council of State Administrators of Vocational Rehabilitation

CCD International Task Force Co-Chairs:

David Hutt
National Disability Rights Network

Deb Ziegler
Council for Exceptional Children

cc: Kimberly A. Jackson, Agency Representative
Office of the Legal Advisor, Department of State
Email: Jacksona2@state.gov

Bryan J. Schwartz
Bryan Schwartz Law
Attorneys for Class Agent and the Class
Email: Bryan@BryanSchwartzLaw.com

Joseph V. Kaplan
Passman & Kaplan, PC
Co-counsel
Email: jkaplan@passmanandkaplan.com

State Department Disability Class Action - Announcement

2011-04-25T10:20:00.000-07:00

Check out Bryan Schwartz Law's new website:

www.StateDepartmentDisabilityClass.com

ATTENTION -

If you are a current or former employee of or applicant to the United States Department of State Foreign Service with a disability, a record of a past disability, or a condition perceived by the State Department as a disability:

-Were you denied Class 1 medical clearance?

-Have you been denied desirable or prestigious State Department posts because of your medical condition?

-Have you been denied reasonable accommodations for your disability?

-Have you been harmed by the so-called "worldwide availability" requirement?

If your answer to any of these questions is "Yes," you may have a discrimination claim to bring immediately against the State Department.

If the State Department’s Office of Medical Services (MED) denied your Class 1 clearance, affecting your employment with another Government agency, you may also have a claim.

Bryan Schwartz Law has certified a nationwide class of applicants to the Foreign Service who were denied Class 1 medical clearance based on their supposed lack of "worldwide availability," which is currently being reviewed by the United States Equal Employment Opportunity Commission. Click here to read this momentous decision: http://www.bryanschwartzlaw.com/Meyer%20class%20certification%20decision.pdf

You must file an EEO claim with the State Department within 45 days of any unfavorable action you believe is related to your disability, record of a disability, or perceived disability, by contacting the State Department’s Office of Civil Rights: http://www.state.gov/s/ocr/ or by email: socr_direct@state.gov.

Contact Bryan Schwartz Law or co-counsel, Passman & Kaplan, PC, today if you believe you might have a claim!

Bryan Schwartz
Bryan Schwartz Law
180 Grand Avenue, Suite 1550
Oakland, California 94612
Tel. (510) 444-9300
Fax (510) 444-9301
Email: Bryan@BryanSchwartzLaw.com
Website: www.BryanSchwartzLaw.com

Joseph Kaplan
Passman & Kaplan, PC
1090 Vermont Avenue, Ste. 500
Washington, DC 20005
Tel. (202) 789-0100
Fax (202) 789-0101
Email: JKaplan@PassmanandKaplan.com
Website: www.PassmanandKaplan.com

Kasten v. Saint-Gobain - Is the United States Supreme Court Becoming Pro-Employee?

2011-04-05T17:42:00.000-07:00

There is a lot of talk about the Supreme Court’s pro-business bent during the current Chief Justice’s tenure. For example, see “Justices Offer Receptive Ear to Business Interests,” The New York Times, December 18, 2010 (http://www.nytimes.com/2010/12/19/us/19roberts.html). A leading Supreme Court advocate for business interests, Carter G. Phillips, who represents the Chamber of Commerce and argues more Supreme Court cases than any active lawyer in private practice, is said to have boasted recently: “I know from personal experience that the chamber’s support carries significant weight with the justices….Except for the solicitor general representing the United States, no single entity has more influence on what cases the Supreme Court decides and how it decides them….” (Republished in http://www.dailykos.com/story/2011/03/14/956322/-The-SCOTUS,-the-Chamber-of-Commerce,-and-a-Code-of-Conduct). The low point for those concerned with corporate excesses infecting the Supreme Court was the January 10, 2010, Citizens United v. Federal Elections Commission decision (http://www.law.cornell.edu/supct/html/08-205.ZS.html), holding that election laws cannot restrict independent campaign expenditures by corporations, construing such as an improper restriction on free speech precluded by the First Amendment. The Citizens United case was essentially grounded in the notion that corporations are entitled to protection of their individual liberties, like human beings.

But, notwithstanding the early returns, so to speak, we should be careful not to judge the Roberts court too soon. People change…maybe. In any event, in Kasten v. Saint-Gobain Performance Plastics Corp., No. 09-834 (March 22, 2011) (http://www.supremecourt.gov/opinions/10pdf/09-834.pdf), the Supreme Court got one right, when they very easily could have gotten it wrong, if the Court was indeed inherently skewed to corporations. While I would like to see the result as a product of brilliant advocacy by my former firm, Nichols Kaster (www.nka.com), who represented the Petitioner – which, no doubt, it was – I would like even more to see the result as evidence of fairness toward America’s workers that will manifest itself in important upcoming decisions. Time will tell.

In Kasten, the employee brought an anti-retaliation suit against his former employer, Saint-Gobain, under the Fair Labor Standards Act of 1938 (FLSA), which provides minimum wage, maximum hour, and overtime pay rules; and which forbids employers “to discharge . . . any employee because such employee has filed any complaint” alleging a violation of the FLSA, 29 U. S. C. §215(a)(3). (Saint-Gobain had violated the FLSA by placing timeclocks in a location that prevented workers from receiving credit for the time they spent donning and doffing work-related protective gear.)

The employee said he was discharged because he orally complained to company officials about the timeclocks. The District Court and Seventh Circuit rejected the employee’s claims, concluding that the FLSA’s anti-retaliation provision did not cover oral complaints – i.e., that orally complaining is not “fil[ing] a complaint” which engenders the statute’s protection. The Supreme Court vacated the summary judgment against the employee, and remanded to the Seventh Circuit, with not only Justice Kennedy, but Justices Roberts and Alito in the majority, along with Justices Ginsburg, Sotomayor, and Breyer. (Kagan sat out.) Only Justices Scalia and Thomas voted to affirm the Seventh Circuit’s narrow – but not insane – construction of the FLSA, i.e., that the protection from retaliation against a worker who has “filed any complaint” only relates to written complaints.

The Supreme Court found that there was at least one dictionary definition which allowed the possibility that the term “file” a complaint encompassed an oral complaint, stating, “This possibility is significant because it means that dictionary meanings, even if considered alone, do not necessarily limit the scope of the statutory phrase to written complaints.” This was so, even though “[f]ilings may more often be made in writing.” In other words, the Supreme Court grabbed hold of any possibility that the statute could be construed in a way to benefit employees, and chose to construe it in this most protective manner.

Likewise, the Court acknowledged that to “file any complaint” was not language as broad as other language in statutes, which expressly encompassed oral complaints, but admitted a different possibility – “that Congress did not believe the different phraseology made a significant difference in this respect.” The Court concluded, “The bottom line is that the text, taken alone, cannot provide a conclusive answer to our interpretive question. The phrase ‘filed any complaint’ might, or might not, encompass oral complaints.” Again, the Supreme Court gave the employee, Kasten – and all employees – the benefit of the doubt.

In law school, we learn that on summary judgment, the non-moving party is supposed to receive this sort of benefit of all presumptions, and that our system of justice favors the right of parties to be fully and fairly heard. In practice, however, employees’ advocates have wondered if the Supreme Court might be moving toward summary dispositions more often against our clients. In Kasten, though it was not a case about the summary judgment standard, the High Court also reinvigorated the idea of giving plaintiffs a chance to be heard.

Most importantly, the Court rested its holding on the underlying purpose of the FLSA, asking rhetorically, “Why would Congress want to limit the enforcement scheme’s effectiveness by inhibiting use of the Act’s complaint procedure by those who would find it difficult to reduce their complaints to writing, particularly illiterate, less educated, or overworked workers?” The Court suggested that “broad rather than narrow protection to the employee” was intended under the FLSA. While holding that employers need to be given “fair notice” of wage complaints to serve as a condition precedent for a retaliation complaint, the Court held that the standard can be met by oral complaints, as well as by written ones.

Predictably, Justices Scalia and Thomas provided a lengthy dissent giving employers the way out – going so far as to argue that “complaints” only cover an “official grievance filed with a court or an agency, not oral complaints.” Their interpretation ignores the purpose of the FLSA and the realities of the workplace – where most workers subject to wage violations are unsophisticated, and can suffer reprisal long before they make it to a court or government entity with their concerns.

But, the importance of Kasten is not that two justices on the farthest right margin of the Court did not side with employees – but rather, that all of the other justices did the right thing. In the coming months, the Court will decide important cases for employees – the AT&T Mobility v. Concepcion and the Wal-Mart v. Dukes matters, which will resolve, for all practical purposes, to what extent class actions are available to employees (and others) whose rights have been violated. Will employees have the opportunity to level the litigation playing field with employers possessing far superior resources, preventing employers from dividing and conquering, and limiting the windfall employers receive because so few employees have the resources and courage to step forward alone? Indeed, the Court heard oral argument in the Wal-Mart v. Dukes case last week, and Justice Scalia again was transparent in his disdain for the employees’ case. Let us hope that, once again, in deciding these cases, as in Kasten, Justices Scalia and presumably Thomas will be in the dissent, and the rest of the Supreme Court again will consider, first and foremost, how workers in America will be affected every day by the decisions they render.

Federal Government Applicants: Watch Out for the “Optional Form 306” (OF-306) Trap

2011-02-28T18:30:00.000-08:00

To be hired into the Government, you will need to complete a lot of paperwork, including probably an “Optional Form 306” (OF-306) which asks you a host of background questions about whether you have any criminal history, etc. You should tell the truth on this form! If there is an error on this form, you could be fired during your probationary period.

In your probationary period, you are, however, entitled to notice in writing and an opportunity to respond before you can be fired for a pre-employment reason, like a false or erroneous answer on the OF-306. See 5 C.F.R. §315.805. HOWEVER, Government agencies are trying a clever new tactic to get around this important requirement which allows you to explain yourself – making you re-sign the OF-306 during Entry-on-Duty (“EOD”). By re-signing the document on your first day at work, the Government argues, it is no longer a pre-appointment issue, and therefore, you are not entitled to the notice/opportunity to respond provided by §315.805. Do not let an Agency get away with this strategy, which goes against decades of history reinforcing your right to be heard before being fired for something you did before you started working for the Government.

In the nearly 50 years since the implementation of the regulation requiring procedural safeguards in terminations of probationary employees for pre-employment reasons, never has any precedent allowed an Agency to avoid the requirements of 5 C.F.R. §315.805 simply because an employee attested to the veracity of his pre-employment submissions during Entry-On-Duty.

Though procedural safeguards for terminations of federal employees were not incorporated specifically into the original rule creating a Civil Service Commission (the Pendleton Act, 22 STAT. 403, ch. 27, (1883)), they were implemented nearly 100 years ago - in the Lloyd-LaFollette Act of 1912, 37 Stat. 555; 5 U.S.C. §652. See Bush v. Lucas, 462 U.S. 367, 381-384, 103 S.Ct. 2404, 76 L.Ed.2d 648 (1983). Section 6 of the Act of August 24, 1912 provides, inter alia: “That no person in the classified civil service of the United States shall he removed therefrom except for such cause as will promote the efficiency of said service and for reasons given in writing and the person whose removal is sought shall have notice of the same and of any charges preferred against him, and be furnished with a copy thereof, and also be allowed a reasonable time for personally answering the same in writing….”

Leading up to World War II, Title 5 of the Code of Federal Regulations of 1938, Sections 7.1(c), 12.1, and 12.101 specifically provided for notice in writing with a “full statement of reasons” to a probationary employee, but did not enumerate that termination of a probationary employee for pre-appointment reasons required additional procedures. 5 CFR from 1938, secs 7.1 and 12.1, 12.101. Indeed, the Civil Service Commission’s powers in 1938 were quite limited, even for employees who had completed their probationary periods. See, e.g., 5 CFR from 1938, at 12.4.

The number of federal employees exploded with World War II, and various Executive Orders and revisions to the 1912 Act were implemented to allow exploration of federal employees’ backgrounds – and, in particular, their loyalty to the United States, in light of the War and the surge of McCarthyism (searching for associations with Communists) during the Cold War thereafter. See, e.g., Cole v. Young, 351 U.S. 536, 76 S.Ct. 861, 100 L.Ed. 1396 (1956) (discussing history of loyalty oaths and dismissal of employees with pre-employment history of Communist associations); Exec. Order No. 10,450, 18 Fed. Reg. 2489, 1953 WL 5976 (Pres.Exec.Order) (Pres. Eisenhower-era Executive Order authorizing agencies to conduct loyalty review for inter alia Communist associations and mandating the Civil Service Commission to track loyalty investigation information); Welcker v. U.S., 752 F.2d 1577, 1578-1579 (Fed. Cir. 1985) (discussing history of loyalty oaths).

In 1954, President Dwight Eisenhower expanded the power of the Civil Service Commission generally to encompass greater investigative authority. See Exec. Order No. 10,577, 19 Fed. Reg. 7521, 1954 WL 6021 (Pres.Exec.Order). Under Sec. 5.4(c) of EO10577, the Commission was empowered to overturn adverse actions and reinstate employees where procedures were not followed in effecting such, or where adverse actions were “taken for political reasons except as may be required by law, or resulted from discrimination because of marital status.”

By the final months of John F. Kennedy’s presidency, on the brink of the civil rights era, still reeling from the abuses of McCarthyism, new regulations were implemented largely reflecting the same procedural safeguards for probationary employees related to terminations on pre-employment grounds that are in place today. Published September 14, 1963, to go into effect just days before Kennedy’s assassination (November 17, 1963), the Federal Register, beginning at 22 Fed.Reg. 10022, contains 5 C.F.R. § 315.805 regarding termination of probationers for conditions arising before appointment.

The 1963 regulation states:

When an agency proposes to terminate an employee serving a probationary or trial period for reasons based in whole or in part on conditions arising before his appointment, the employee is entitled to the following:

(a) Notice of proposed adverse action. The employee is entitled to an advance written notice stating the reasons, specifically and in detail, for the proposed action.
(b) Employee's answer. The employee is entitled to a reasonable time for filing a written answer to the notice of proposed adverse action and for furnishing affidavits in support of his answer. If the employee answers, the agency shall consider the answer in reaching its decision.
(c) Notice of adverse decision. The employee is entitled to be notified of the agency's decision at the earliest practicable date. The agency shall deliver the decision to the employee at or before the time the action will be made effective. The notice shall be in writing, inform the employee of the reasons for the action, inform the employee of his right of appeal to the appropriate office of the commission, and inform him of the time limit within which the appeal must be submitted as provided in § 315.806(d).

As such, by 1963, the regulation we have today was largely in its final form, and gave probationary employees important procedural protections as to adverse actions premised on matters which arose pre-employment, which, earlier (recall the 1938 regulations) had only been available after probation. See also Christian v. New York State Department of Labor, Division of Employment, 414 U.S. 614, 618 n. 4, 94 S.Ct. 747, 39 L.Ed.2d 38 (1974) (citing 5 C.F.R. §315.805 with essentially the same requirements as today).

Though the Civil Service Reform Act of 1978 (CSRA) is considered the most comprehensive legislation expanding Federal employees’ rights since the Pendleton Act of 1883 (see N.L.R.B. v. Ohio New and Rebuilt Parts, Inc., 760 F.2d 1443, 1446 (6th Cir. 1985) (citing S.Rep. No. 969, 95th Cong., 2d Sess. 45, S.Rep. No. 95-969 (1978), the CSRA did not shift the strong regulatory, procedural protections already in place to protect probationary employees relating to terminations for pre-employment reasons. The CSRA did implement strong language intending to ensure that Federal employees be terminated “for the right reasons” – and not arbitrarily or capriciously – and the Merit Systems Protection Board was created to replace the Civil Service Commission with that paramount objective. The framers of the CSRA explained, “The Merit Systems Protection Board will assume principal responsibility for safeguarding merit principles and employee rights…,” noting, “There is little doubt that a vigorous protector of the merit system is needed.”

One of the cardinal values underpinning the creation of the Board was to protect applicants and probationary employees, as well as longer-term employees, “against inquiries into, and actions based upon, non-job-related conduct.” “The privacy and constitutional rights of applicants and employees are to be protected.” See also the Senate Report, stating: “Employees are to be retained on the basis of their performance….”; “Employees are to be protected against arbitrary action….” The legislative history regarding performance-based actions (under Section 43 of the CSRA) notes that “it is inappropriate to restrict an agency's authority to separate an employee who does not perform acceptably during [the probationary] period,” but there is no similar language regarding conduct-based actions under Chapter 75, and certainly no such language relating to pre-employment reasons for termination. In sum, probationary employees had been and remained procedurally-protected after the CSRA’s passage. Indeed, the Senate Report discussing the rationale for the CSRA’s provisions on conduct-based adverse actions focused largely on how extensively the procedural protections for employees were increased and codified by the statute.

Until the administration of Bill Clinton eliminated the Federal Personnel Manual in 1994 during its “reinventing government” campaign, the latter gave detailed instructions on how Federal agencies were to comply with §315.805. Though the Manual is no longer extant, it remains illustrative of the sort of things agencies can do to ensure compliance with the largely-unchanged §315.805:

Termination for pre-appointment reasons. When the termination action is initiated for reasons based in whole or in part on something that occurred before entrance on duty (such as the intentional falsification of application forms or other pre- appointment documents), the probationer is entitled to advance notice which:
-- states the reasons in sufficient detail for the employee to be able to understand and reply to them;
-- informs the employee that he or she may reply in writing with supporting affidavits;
-- identifies the individual or office to receive the reply; and
-- sets a reasonable time for its preparation and return of the reply.
(This gives the probationer essentially the same consideration he or she would have received from OPM had the derogatory information come to light before appointment.)

A probationer is not entitled to a hearing. If after giving bona fide consideration to the employee's response, the agency decides to proceed with the termination, it must notify the employee at or before the time the action will be made effective. The notice must state the reasons for the action and clearly identify which of the charges in the advance notice are being relied upon, the effective date, and the right to appeal to the Merit Systems Protection Board under the limited circumstances in section 8-7 of this subchapter. (The probationer may appeal only the procedures, not the merits of the action.) The procedures discussed in this paragraph do not apply when OPM directs the termination.

Federal Personnel Manual: 8-6.d, “Taking Action against Probationers.”

Though 5 C.F.R. §315.805 has been amended since it took roughly its present form in the early 1960’s, it has never been amended to permit terminations of probationary employees relating to their responses on pre-employment or EOD forms without providing such individuals their procedural rights. See, e.g., 55 Fed. Reg. 29339-01, 1990 WL 335863 (F.R. July 19, 1990) (amendment expanding scope of protections of §315.805). Most recently, in 2008, the Office of Personnel Management (OPM), now charged (along with the President) with issuing regulations governing appointments and the probationary period (5 U.S.C. §1302; 5 U.S.C. §3321), only expanded the rights accorded regarding terminations during probationary periods, conforming to several precedential Federal Circuit and Merit Systems Protection Board cases. See 72 Fed. Reg. 23772-01, 2007 WL 1243729 (F.R. May 1, 2007) (notice of proposed rulemaking outlining intent of regulatory changes to adopt into regulations the interpretations provided in significant decisions of this Court and the Board, regarding manner of crediting time toward completion of probationary period); 73 Fed. Reg. 7187-01, 2008 WL 319999 (F.R. February 7, 2008) (final rule embracing this rationale and adopting the current language of §315.805, with the introduction to the regulation still (as in 1963) containing the procedural entitlements where terminations are proposed “based in whole or in part on conditions arising before his appointment”).

In this most recent revision to §315.805, OPM did not adopt a standard to reform the regulations in the manner the Government is now seeking to implement - i.e., that pre-appointment matters subject to the employee’s attestation during EOD become post-appointment matters, eliminating the Board’s jurisdiction to hear procedural challenges.

If you have a case involving termination from the Federal Government during your probationary period for pre-employment matters, contact Bryan Schwartz Law (bryan@bryanschwartzlaw.com) today.

Quick Takes: Employment Discrimination

2011-01-21T16:07:00.000-08:00

Many interesting stories about workplace discrimination have made the news recently and we decided to try a slightly different format this month. Instead of focusing on one topic, we will briefly discuss a few of them.

Discrimination in the Workplace—Amplified by the Recession?

Discrimination claims with the federal Equal Employment Opportunity Commission have risen to an all-time high—nearly 100,000 complaints were filed over the last year, according to Catherine Rampell in her article entitled, “More Workers Complain of Bias on the Job, a Trend Linked to Widespread Layoffs,” New York Times, Jan. 11, 2011. This increase is possibly a result of the high number of private sector layoffs. Id.

The highly competitive job market may also be used as an excuse to discriminate. Terry K. Nance, a 76 year old from Charlottesville, VA, who has been unable to find retail work for the last year and a half, told the New York Times: “I think there’s age discrimination from these companies because they don’t want an old body and an old face fronting for them . . . . When I go back in and I show up [at] these same places I’ve applied to and never heard back from, I see younger faces in there all the time. It’s a revolving door of young people.” Id.

If you have not been hired for a position you applied for and you have reason to believe that it was because of your race, national origin, sex, sexual orientation, religion, or disability, contact an attorney at Bryan Schwartz Law right away: Hillary@bryanschwartzlaw.com.

The Glass Ceiling—Still Intact in California

Discrimination persists at the highest levels of business leadership in California. A recent study of California’s 400 largest public companies conducted by the UC Davis Graduate School of Management found that women hold only 9.5% of the state’s highest-paid management and board positions. See “UC Davis Study Finds Women Scarce at the Top of Corporate California,” available at www.gsm.ucdavis.edu/census. Moreover, more than a third (141) of these 400 companies have no women whatsoever on their boards of directors or as top executives. Id. Only 4% of these top California companies have a woman CEO. Id.

If you have been passed over for a promotion because of your gender, contact an attorney at Bryan Schwartz Law right away: Hillary@bryanschwartzlaw.com.

Employers Must Prove that They Took Immediate and Appropriate Corrective Action to Correct Hostile Work Environment Harassment—Even in Circumstances when Customers/Clients are the Harassers

Joyce Turman worked for a halfway house as a resident monitor in Salinas, CA from 1999 to 2004. The halfway house served to transition federal and state prisoners into society prior to their full release. In her job, Ms. Turman alleged that the residents regularly propositioned her for sex, subjected her to crude sexual gestures, and called her “whore” and other even more explicit slurs. When Ms. Turman complained to her supervisor about this conduct, she was told that the residents “don't really mean it,” and that that she should “try and be nicer to ‘em.” He also told Ms. Turman not to write the residents up for disciplinary violations as often as she did. Ms. Turman claimed that this abuse made her feel degraded and sick. In 2004, Ms. Turman was terminated based on a rule against women working alone at night in the facilities and a reduction in staffing numbers.

Ms. Turman filed a sex discrimination and harassment lawsuit challenging her termination and the hostile work environment created by the residents. The halfway house argued that “harassment by prisoners is inherently part of the job,” as a method to excuse their failure to take corrective action. The Court of Appeal (Sixth District) ruled otherwise and clarified that the halfway house was still under an obligation under the California Fair Employment and Housing Act to take immediate and appropriate action to correct the situation, reasoning that “[w]hile it may be true that male residents who are living under restricted conditions are more likely to harass or mistreat their female supervisor, it does not absolve [the halfway house’s] legal responsibility . . . .” Turman v. Turning Point of Central California, 191 Cal.App.4th 53 (2010).

Workplace harassment frequently comes from clients, customers, and co-workers, as well as supervisors. Employees have a right to be free from workplace harassment based on sex or other protected characteristics, and employers have an affirmative obligation, once they are aware of the harassment, to take immediate and appropriate corrective action to remedy the situation.

If you have been passed harassed at work, contact an attorney at Bryan Schwartz Law right away: Hillary@bryanschwartzlaw.com.

Washington Post Story Regarding Disability Class Action Against U.S. State Department Brought by Bryan Schwartz Law

2010-10-20T10:03:00.001-07:00

To read a Washington Post article regarding an impactful case being litigated by Bryan Schwartz Law, click on this link:

http://www.washingtonpost.com/wp-dyn/content/article/2010/10/19/AR2010101907821.html

Historic Lawsuit Aims to Open State Department to Disabled Foreign Service Officers

2010-10-20T10:00:00.000-07:00

Class Agent was a qualified candidate who passed rigorous exams and was denied employment solely on the basis of her medical condition.

The United States Equal Employment Opportunity Commission (EEOC) has certified a class action brought on behalf of all disabled Foreign Service applicants against the U.S. State Department by San Francisco Bay Area attorney Bryan Schwartz. The Class Agent in the matter, Doering Meyer, is a woman with multiple sclerosis (MS) who qualified for a Foreign Service Officer position after a rigorous screening process – only to be denied employment because her multiple sclerosis automatically disqualified her, under the State Department guidelines challenged in the suit.

“I feel great today knowing we will be making a difference for others with disabilities. I am as happy today as I was angry when I was denied the career of my dreams without being evaluated as an individual, as required by the law,” said Doering Meyer upon hearing the news of the class certification decision. After being denied for years, Meyer ultimately joined the Foreign Service after a “waiver” process, with the help of Schwartz, her attorney. “I’ve always been inspired by leaders like Secretary Hillary Clinton who believes rights for the disabled were fundamental civil rights. I am hopeful she will now change this misguided policy,” Meyer added.

The September 30th decision, by Administrative Judge Mary Elizabeth Palmer of the EEOC’s Baltimore office, found that the Foreign Service’s “worldwide availability” hiring requirement is properly the subject of a class action. Under the “worldwide availability” requirement, a Foreign Service Officer candidate must be able to serve at any of the State Department’s approximately 270 foreign posts, without the need for any ongoing medical treatment. Even if a disabled worker can serve at 80% of the Foreign Service posts around the world without any treatment, or at 100% of the Foreign Service posts with reasonable accommodations for her disabilities, she is not eligible to be hired into the Foreign Service under the challenged policy, Judge Palmer’s decision found. For decades, thousands of disabled Americans have been denied entry into the Foreign Service and discouraged from even applying for such positions based on the way the “worldwide availability” rule has been enforced, according to Schwartz.

The ruling particularly questioned the State Department’s blanket assessment approach toward disabled applicants. The EEOC stated:

“No individualized assessment was done of [Meyer’s] impairment or how it would limit her ability to do the duties of the position(s) she sought in particular countries around the world. Rather, when the [State Department’s] Office of Medical Services determined (or perceived) that she had a permanent or long-lasting medical condition or record of such a condition, she was denied medical clearance. ”

The Rehabilitation Act (Rehab. Act), which is like the Americans with Disabilities Act and applies to all Federal employees and applicants for employment, requires that government agencies consider each person with a disability on his or her own merits and based on his or her own limitations (or lack thereof). The Rehab. Act requires the government to provide reasonable accommodations to people with disabilities, where such accommodations could enable the applicants to perform the duties of a position without imposing an undue hardship on the government agency.

Indeed, the Rehab. Act calls upon the Federal government to be a model employer of disabled workers. Yet, in Meyer’s case, and those of dozens like her across the United States, the State Department simply disregarded these requirements, and categorically decided that, because Meyer was once diagnosed with MS, she could not be in the Foreign Service.

Prior to being denied from the Foreign Service, Doering Meyer, recently of St. Paul, Minnesota – whose MS had long been in remission – went through a two and a half year screening process, in which she passed challenging oral and written exams and was provided a conditional offer of appointment extended to less than 5% of those who apply. The offer was contingent on passing the security, suitability, and medical clearances – and, although Meyer also passed the security and suitability tests, she was denied a medical clearance based on her MS.

Amazingly, the State Department decided that because people with MS may be susceptible to complications in humid climates – though there was no evidence of such in Meyer’s own history – Meyer could not be posted anywhere worldwide. Eventually, after her attorney, Bryan Schwartz, intervened, Meyer was granted an exceptional waiver to be hired to the Foreign Service despite her medical history - the only person who received such a waiver that year. After nearly two years of additional delay, she was finally placed in a Foreign Service position.

“We hope through this suit that we will finally change this insidious State Department policy which for so long has closed the doors of opportunity to disabled Americans, so that the Foreign Service will truly be the face of all Americans around the globe,” said Attorney Bryan Schwartz. “The Obama Administration stands for the message that we should tell our children that they can be whatever they want to be when they grow up. Now, it is time for the State Department to help us to live up to that promise,” Schwartz added.

For more information about this case, Meyer, et al. v. Clinton (Department of State), please contact Bryan Schwartz: Bryan@BryanSchwartzLaw.com.

JPMorgan Chase Sued By Misclassified Appraisers for Unpaid Wages

2010-10-06T09:41:00.000-07:00

OCTOBER 6, 2010 (OAKLAND, CA) – Appraisers at JPMorgan Chase filed a class and collective action suit this week seeking to recover millions of dollars in unpaid wages based on the financial services giant’s practice of misclassifying these employees as “exempt” from overtime pay, among other violations of California and federal law. Appraisers are responsible to check home valuations for home loans sold by JPMorgan Chase using certain well-defined criteria. The Appraisers allege that they are held to strict production standards and must follow detailed internal guidelines with every appraisal, placing them squarely outside of the so-called “white collar” exemptions to the Fair Labor Standards Act and California wage and hour protections.

“The company finally made us hourly employees this past summer,” said Mary Ann Adlao of San Ramon, California, one of the lead plaintiffs in the suit, “but they did not repay us for unpaid overtime and other owed wages for all the years we have worked for the company and its predecessors while we were misclassified.” “It’s just another example of a giant bank cutting corners at the expense of its employees,” Adlao continued.

The lawsuit, filed in the San Francisco-based U.S. District Court for the Northern District of California, alleges that Adlao and co-plaintiff Marian Williams have worked for Chase and a mortgage subsidiary, EMC Mortgage, and its predecessors in interest, Bear Stearns and Encore Credit Corporation, for well over forty hours per week and eight hours a day without overtime pay and meal and rest period premiums. The suit also alleges the employees, who worked in California and Arizona, were deprived of itemized wage statements and denied certain reimbursements, both required under California law.

“Given the recent court precedents emphasizing that production employees are non-exempt, and the company’s own implicit admission that the employees were misclassified – when Chase recently made them hourly – we are confident that these Appraisers are entitled to the back wages and other relief sought in the Complaint,” said Bryan Schwartz, whose firm, Bryan Schwartz Law (www.BryanSchwartzLaw.com) represents the plaintiffs. “We look forward to bringing Chase’s practices to light and recovering the wages that our clients and their co-workers earned but were not paid,” said Schwartz.

For more information about this case, Adlao, et al. v. JPMorgan Chase & Co., et al. (Case No. Civ-10-4508 EMC), please contact Hillary Jo Baker Hillary@bryanschwartzlaw.com.

Reasonable Accommodation With Time Off or Reduced Hours

2010-10-05T10:47:00.000-07:00

An employee is undergoing chemotherapy. An employee suffers from an auto-immune disorder. An employee suffers from circulatory difficulties. Whatever the disability, the employee’s doctor has asked for time off for the employee. Or, perhaps the employee’s doctor has asked for a permanent limitation in the employee’s work hours, because of the employee’s condition. What is the extent of the employee’s entitlement to accommodation with time off or limited duty hours?

Of course, if an employee worked the requisite hours in the preceding year and otherwise qualifies for Family Medical Leave Act or California Family Rights Act leave, they will be entitled to some time off. However, what accommodations should/must an employer make when this statutorily-provided leave is expired?

First, the employer should be mindful of the fact that, under the ADA Amendments Act (ADAAA), the term “disability” is broadly construed and covers, e.g., cancer in remission and autoimmune disorders like rheumatoid arthritis, without regard for “mitigating measures” like chemotherapy. See, inter alia, ADAAA § 2(a); ADAAA § 4; 42 U.S.C. § 12102(4)(D), as amended. Though employers might formerly have defended an action by arguing that the purported disability only limits the employee in a particular job or narrow class of jobs (e.g., under Toyota Motor Mfg., Ky., Inc. v. Williams, 534 U.S. 184 (2002)), now, the employer can safely assume the employee requiring substantial time off or a limited work schedule will qualify under the definition of disability, and should move quickly to the reasonable accommodation inquiry.

Second, federal regulations define “reasonable accommodations” as “[m]odifications or adjustments to the work environment . . . that enable a qualified individual with a disability to perform the essential functions of that position.” 29 C.F.R. § 630.2(o)(1)(ii). Both the FEHA and ADA specifically list scheduling adjustments as examples of “reasonable accommodations” and use identical language. See Cal. Gov. Code § 12926(n)(2) (“Job restructuring, part-time or modified work schedules”) and 42 U.S.C. § 12111(9).

Numerous courts have endorsed these regulatory examples as well. See, e.g., Jensen v. Wells Fargo Bank, 85 Cal.App.4th 245, 263 n.6 (2000) (reasonable accommodation may include part-time or modified work schedules) (citing Cal. Admin. Code tit. 2, § 7293.9(a)(2)); Witchard v. Montefiore Medical Center, 2009 WL 602884, at *16 (S.D.N.Y. Mar 9, 2009) (“Examples of reasonable accommodations may include, but are not limited to . . . “part-time or modified work schedules”) (quoting 29 C.F.R. § 1630.2(o)(2)(i) and (ii)); Falor v. Livingston County Community Mental Health, 2003 WL 21684183, at *5 (W.D.Mich. May 30, 2003) (“Examples of “reasonable accommodation” include, without limitation . . . part-time or modified work schedules”) (quoting 42 U.S.C. § 12111(9)(B)); Valentine v. American Home Shield Corp., 939 F.Supp. 1376, 1399 (N.D.Iowa 1996) (“part-time employment is a possible reasonable accommodation”).

So, the employer should assume that the employee’s condition is a disability if he or she needs a reduced work schedule and/or extra time off, and should assume that such an accommodation is among those which might generally be considered a reasonable accommodation. However, the inquiry only begins there. Must an employer make a temporarily reduced work schedule a permanent accommodation, and how much time off must an employer allow an employee?

A. An Employer May Not Eliminate Reasonable Accommodations Simply by Designating them as “Temporary.”

As the Equal Employment Opportunity Commission's (EEOC's) interpretive guidance on the ADA makes clear, the duty to identify and provide a reasonable accommodation under the ADA is an ongoing duty to identify and provide accommodations that enable the employee to perform the essential functions of the job held or desired. 29 C.F.R. § 1630.9. This issue was analyzed in depth last year by a California Court of Appeal in A.M. v. Albertsons, 2009 WL 2986423 (Cal. App. 1 Dist., Sept. 18, 2009). The court stated, “Once a reasonable accommodation has been granted, then the employer has a duty to provide that reasonable accommodation.” Id. at *6. The A.M. v. Albertson’s court ultimately upheld a $200,000 jury verdict for the plaintiff based upon one instance in which the employer failed to provide her with the prior agreed-upon accommodation. Id. at *7. An employer should not assume that its obligation to provide accommodations is fleeting or can be addressed by calling certain accommodations “temporary.”

B. An Employer Should Consider Reassignment a Last Resort and Make Time Off and Reduced Hours Adjustments First.

Courts do not favor demoting an employee or sending him or her to a career “Siberia” as a result of limitations requiring reasonable accommodations. On the contrary, reassignment is considered an accommodation of “last resort” and adjustments to work schedules should be considered first. See, e.g., Spitzer v. The Good Guys, Inc. (2000) 80 Cal.App.4th 1376, 1389 (citing Aka v. Washington Hospital Center (D.C. Cir. 1998) 156 F.3d 1284, 1304, and acknowledging a duty to reassign a disabled employee "who cannot be otherwise accommodated"); Cravens v. Blue Cross and Blue Shield of Kansas City (8th Cir. 2000) 214 F.3d 1011, 1019 (relying on Aka, 156 F.3d at 1301, to conclude that "reassignment is an accommodation of last resort"). See also 29 C.F.R. App. § 1630.2(o) (EEOC's interpretive guidelines provide that “reassignment should be considered only when accommodation within the individual's current position would pose an undue hardship.”).

The California Court of Appeal upheld a jury verdict of $1,990,385 in compensatory damages, $1,200,000 in punitive damages against the defendant, and $7,000 in punitive damages against the defendant’s CEO in a case where an employer failed to reasonably accommodate an employee undergoing breast cancer treatment by allowing her to reduce her hours worked in the office. See McGee v. Tucoemas Federal Credit Union, 153 Cal. App. 4th 1351, 1355-1356 (2007), cert. denied 128 S.Ct. 1890 (2008). Following the refusal to reasonably accommodate her disability, McGee was demoted, lost her medical insurance, and received a pay cut that resulted in a 50% loss of income. Id. at 1356. The court reasoned that the punitive damages were not excessive in light of defendants’ pattern of behavior and failure to accommodate McGee’s disability before demoting her. Id. at 1362.

Among other themes, McGee drives home the point that if reassignment is necessary, then the employee should be reassigned to a comparable position, when possible. See also, e.g., Pattison v. Meijer, Inc., 897 F. Supp. 1002, 1007 (W.D. Mich. 1995) (“the employer may reassign the employee to a lower graded and paid position [only] if it is not possible to accommodate the employee in the current position and if no comparable positions are vacant or soon to be vacant.”).

C. An Employee May Be Able to Perform the Essential Functions of a Position Even if a Modified Work Schedules or Time Off Must Be Provided.

Employers may sometimes argue that “full-time work” or attendance without additional days off is an “essential function” and that, if an employee cannot do these, he/she is not a Qualified Individual with a Disability, as required for protection under the California and federal anti-discrimination laws. This approach may be unsuccessful for an employer, if it cannot show that it would suffer an undue hardship with the needed accommodations.

In Norris v. Allied-Sysco Food Services, Inc., 948 F. Supp. 1418 (N.D. Cal. 1996), Magistrate Judge Wayne Brazil let stand a jury verdict of $300,000 in favor of a plaintiff whose requests for the reasonable accommodation of either a part-time or work-from-home schedule were denied. Id. at 1421-1422. The court analyzed the “essential functions” of her job, which predominantly included the administrative and clerical tasks of record-keeping and communication with corporate officers and merchandisers, as well as occasional field sales. Id. at 1427. The court concluded that a reasonable jury could find that the essential functions of the job were administrative and clerical. Id. at 1431. Consequently, a reasonable jury could have also found that “Norris’ array of medical problems—back pain, chronic fatigue syndrome, neck pain, irritable bowel disease, urinary incontinence, and stress—would have made it difficult for her to put in full days of work or to adhere strictly to a regular work schedule” and that she would have been reasonably accommodated by being permitted to work part-time and from home. Id. at 1431.

On the other hand, in Raine v. City of Burbank, 135 Cal. App. 4th 1215, 1218 (2006), the plaintiff was a law enforcement officer who injured his knee and subsequently had difficulty running, jumping, kneeling, and lifting. Id. Significantly, the plaintiff conceded that these activities were essential to his position as a school patrol officer. Id. He was temporarily given an entirely different job at the department’s front desk, but when he was unable to return to his position, the defendant refused to extend the temporary position to a permanent one, and the plaintiff was terminated. Id. Because there was no reasonable accommodation which would allow the plaintiff in Raine to perform the essential job duties of his police officer position, and his temporary reassignment was much more than a modification of his original position, the Raine case is distinguishable from a case in which an employee has requested a mere schedule change.

As such, in general, a restriction on work hours does not affect an “essential function” of the employee’s position to the point that accommodating the employee’s disability would create a “new” job. If the employee is capable of performing all requisite job tasks, and the restriction is merely a matter of schedule, then the employer should provide the requested accommodation unless there is a demonstrated undue hardship. Employees should argue that work in excess of 40 hours is not a job function at all, for example, but a matter of time on duty and workload, which can be redistributed to other employees without undue hardship. Even if the number of hours on duty is viewed as a function, schedule requirements for employees’ positions may be viewed by a court as “marginal” rather than “essential” functions of a position. See 29 C.F.R. § 1630.2(n)(2)(ii).

D. An Employer Must Prove that Significant Difficulty or Expense Prevents it From Making a Time Off or Scheduling Adjustment Accommodation.

To avoid its obligation to provide a reasonable accommodation for an employee’s disability, an employer must establish that it would be an undue hardship to do so. 42 U.S.C. 12112(b)(5)(A); Cal. Gov. Code § 12940(m). See also Spitzer, 80 Cal. App. 4th at 1389-1390 (describing employers’ high burden of proof in this regard); Stoll v. The Hartford, 2006 WL 3955826, at *9 (S.D.Cal. Nov. 6, 2006) (“responsibility squarely lies with defendant to establish . . . there simply was no vacant position within the employer’s organization for which the disabled employee was qualified and which the disabled employee was capable of performing with or without accommodation . . . .”) (internal citations omitted).

To prevail on an undue hardship argument, an employer must show that accommodating an employee’s disability would require significant difficulty or expense, when considered in light of factors including, among others: the nature and cost of the accommodation needed; the employer’s overall financial resources; the number of persons employed by the employer; the impact of such accommodation upon the operation of the employer’s facility; the number, type, and location of the employer’s facilities; and the employer’s types of operations, including the composition, structure, and functions of the employer’s workforce; the geographic separateness, administrative, or fiscal relationship of the facility or facilities in question to the employer. 42 U.S.C. § 12111(10)(B); see also Cal. Code Regs. § 7293.9.

Generally, based on these guidelines, a Fortune 500 corporation with thousands of employees and a wide variety of employment opportunities will struggle to make a colorable argument that accommodating an employee’s disability would require significant difficulty and expense. Furthermore, an employer which has already allowed an employee to perform the essential functions of his/her job with a reduced schedule on a “temporary” basis will have difficulty showing an undue hardship, and is likely barred from asserting an undue hardship defense regarding an accommodation it already provided, which it is obligated to continue. See A.M., 2009 WL 2986423 at *6. Consider how offensive this discriminatory tactic would be, when applied to other types of accommodations, e.g., providing a person with quadriplegia with adaptive computer hardware, but labeling it “temporary” and then removing such hardware.

Yet, as to a time off accommodation, courts have not required employers to keep an employee on the rolls indefinitely who is unable to work. See, e.g., Green v. State, 42 Cal. 4th 254, 258 (2007) ("the law allows the employer to discharge an employee with a physical disability when that employee is unable to perform the essential duties of the job even with reasonable accommodation."). See also Dudley v. California Dept. of Transp., 213 F.3d 641, at **2 (9th Cir. 2000) (unpublished) (citing Nowak v. Sf. Rita High School, 142 F.3d 999, 1004 (7th Cir.1998)) ("The ADA does not require an employer to accommodate an employee who suffers a prolonged illness by allowing him [or her] an indefinite leave of absence"); Norris, 948 F. Supp. at 1421 (argument that indefinite leave cannot be a reasonable accommodation is supported by case law); Hanson v. Lucky Stores, Inc., 74 Cal. App. 4th 215, 226-227, (1999) ("Reasonable accommodation does not require the employer to wait indefinitely for an employee's medical condition to be corrected.").

Employees should be specific in time off and reduced hours requests, to avoid the argument that the accommodation they seek would create an undue hardship, like an indefinite leave of absence.

If you are a disabled employee who has suffered an adverse employment action based on a request for time off or a modified work schedule, contact Bryan Schwartz (Bryan@BryanSchwartzLaw.com) today.

Disclaimer: Nothing in this posting is intended in any way to form an attorney-client relationship or any other contract. It is designed solely to provide general information about one area of the practice at Bryan Schwartz Law. Be mindful of any deadlines you have approaching that relate to your legal situation, and make sure that you meet them. Bryan Schwartz Law does not assume any responsibility for advice given regarding any aspect of your case until you have a signed legal services agreement engaging the firm’s representation.

Wronged in the Workplace? Don’t Quit (if You Can Help It)!

2010-09-24T22:17:00.000-07:00

Former JetBlue flight attendant Steven Slater has become something of a polarizing figure over the last few months—a folk hero to some,[1] and a fraud to others.[2] While working aboard a Pittsburg to JFK flight that had just landed, the JetBlue flight attendant lost his patience after reportedly enduring verbal abuse from a passenger. Slater made a grand exit by grabbing a beer in each hand, deploying the plane’s emergency slide, and broadcasting his resignation over the public address system. He then slid away, got in his car, and went home.[3] Slater currently faces criminal charges for his actions. He is also reportedly in talks for a reality show in which he would “help other people quit their jobs in the most flamboyant way possible.”[4]

For those exasperated with their jobs, Slater’s story may be inspiring—he lived out a fantasy many have at one time or another during their working lives. Telling the boss what you really think of him or her and making a grand exit may sound like a satisfying finish to a frustrating job. However, from a legal perspective, this almost never benefits any potential employment claims you may have premised on wrongful termination. More often, it is likely to foreclose many claims that you would otherwise have been able to plead. Why is this? Simply put, you cannot challenge a termination, except in very limited circumstances, if you quit.

Employees can sometimes still claim wrongful termination if they quit under circumstances referred to as “constructive discharge.” To sustain a constructive discharge claim under California law, an employee must show:

1) The conditions or actions of the employer were so intolerable or aggravated that a reasonable person in her position would have resigned;

2) The employer actually knew of the conditions, and

3) The employer could have remedied the situation but did not.[5]

Furthermore, a single or trivial incident of misconduct by an employer is not enough to establish a claim.[6] The California Supreme Court in Turner v. Anheuser-Busch emphasized that “[t]he conditions giving rise to the resignation must be sufficiently extraordinary and egregious to overcome the normal motivation of a competent, diligent, and reasonable employee to remain on the job to earn a livelihood and to serve his or her employer. The proper focus is on whether the resignation was coerced, not whether it was simply one rational option for the employee.”[7]

Though many workers may feel like their workplace is intolerable, the standard to show this in court is very high. Some examples of situations that have been found not to be constructive discharge include receiving a poor performance rating, accompanied by a demotion and reduction in pay;[8] reducing compensation and a changed annual bonus structure;[9]and, being sexually harassed by a supervisor, as long as the employer issues the supervisor a letter of reprimand.[10] Therefore, by and large, a constructive discharge claim is a loser.

A final consideration, if you are thinking of quitting your job, is that it can be far more difficult to receive unemployment insurance if you resign, depending on your situation.[11]

If you think your rights have been violated in the workplace, contact an attorney at Bryan Schwartz Law right away, before you make the decision to quit: Hillary@bryanschwartzlaw.com.

[1] As an example, see Newsweek’s Seven Reasons We Love Steven Slater, available at http://www.newsweek.com/2010/08/16/7-reasons-we-love-steven-slater.html

[2] See, e.g., http://online.wsj.com/video/opinion-journal-hes-no-hero/DDE8C0DF-3CCF-471A-8B97-4D12028AEB21.html?KEYWORDS=steven+slater

[3] Note that his story has not been substantiated by subsequent investigations. See http://online.wsj.com/article/SB10001424052748703453804575480113748502880.html?KEYWORDS=steven+slater

[4] http://jobs.aol.com/articles/2010/08/17/jetblue-steven-slater-gets-reality-show/

[5] Turner v. Anheuser-Busch, Inc. (1994) 7 Cal.4th 1238

[6] Id.

[7] Turner, 7 Cal.4th at 1246 (emphasis added)

[8] Id. at 1247

[9] King v. AC & R Advertising (9th Cir. 1995) 65 F.3d 764, 767

[10] Casenas v. Fujisawa USA, Inc. (1997) 58 Cal.App.4th 101, 110

[11] See California Employment Development Department website, http://www.edd.ca.gov/Unemployment/FAQ_-_Eligibility.htm#IjustquitmyjobWillIbeeligible

Get Paid What You are Owed!

2010-07-28T14:18:00.000-07:00

You May Be Entitled to Recover Extra Money with California’s Split-Shift Premiums.

When an employer assigns you shifts in the morning and afternoon, with a large break in between, the employer is basically compromising your whole day, without paying you for it. Has your employer ever asked you to work a “split shift” like this? If so, you may be entitled to extra compensation under a sparsely-utilized provision found in most California Industrial Welfare Commission (“IWC”) Wage Orders.

A split shift is defined as a “work schedule, which is interrupted by non-paid, non-working periods established by the employer, other than bona fide meal or rest break periods.” Cal. Code Regs., tit. 8 §11010, subd. 2(M). For example, an hourly employee who has been assigned a morning shift from 8 a.m. to noon, plus an evening shift from 2 p.m. to 6 p.m., has been assigned to work a split shift, and is likely entitled to extra pay, assuming that the two-hour break between shifts is non-paid and non-working.

California frowns on employers assigning employees to work split shifts, which cause a major burden on employees and keep employers from having to hire more workers. However, many employers fail to pay the split-shift premium. We suspect this practice is rife in the promotional modeling (i.e., for promo models) and valet parking industries, for example.

Are You Entitled to a Split-Shift Premium?

The IWC has codified protections for employees who are scheduled to work split shifts in most industries. [1] Under most of the IWC’s Wage Orders, “[w]hen an employee works a split shift, one hour’s pay at the minimum wage shall be paid in addition to the minimum wage for that workday, except when the employee resides at the place of employment.” (e.g., Cal.Code Regs., tit.8 §11010, subd. 4(C).) This additional hour of wages granted to an employee for every day that s/he works a split shift is commonly known as a “split-shift premium.”

How Much Time Do You Have to Recover an Unpaid Premium?

California Courts have provided further guidance on the nature of these split-shift premiums and the duration of the statute of limitations that applies to these claims. In Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1111-12, the California Supreme Court explained that the purpose of the split-shift premium is to: 1) compensate employees; and 2) “‘encourage proper notice and scheduling… consistent with maximum hours and minimum pay requirements.’” Id. (citing California Manufacturers Assn. v. Industrial Welfare Com. (1980) 134 Cal.App.3d. 95, 112). The Murphy Court further clarified that “split-shift pay provisions do not become penalties for statute of limitations purposes simply because they seek to shape employer conduct in addition to compensating employees.” Murphy v. Kenneth Cole Productions, Inc. 40 Cal.4th at 1112 (citing Caliber Bodyworks Inc. v. Superior Court (2005) 134 Cal.App.4th 365, 381). Because split-shift premiums have been interpreted to be wages owed to an employee (rather than penalties), and in light of California Business & Professions Code §17200, any employee who seeks to recover unpaid split-shift premiums has a four-year statute of limitations in which to do so.

How Can You Recover Unpaid Split-Shift Premiums?

Though not a heavily litigated area of wage and hour law, at least one court has provided guidance regarding how you can recover split-shift premiums. In Kamar v. Radioshack Corporation, et al. 2008 WL 2229166, *9 (C.D. Cal. May 15, 2008), a federal judge in Los Angeles, interpreting California law, held that split-shift premiums “are enforceable to the same extent as minimum wage and overtime requirements.” The Court further clarified that “section 1194 [of the Labor Code] should be construed to include premium wages created by the IWC to reinforce basic wage and hour standards, and it is likely that the California Supreme Court would see it that way.” Id. By classifying split-shift premiums as wages recoverable in the same way as minimum wage and overtime premiums under §1194 of the California Labor Code, the Kamar court extended a private right of action for individuals to sue their employers directly for these unpaid, split-shift premiums, as well as for applicable interest, attorneys’ fees, and costs of suit.

Other Considerations

If your employer makes you travel between locations during the time between assignments on a single day, without compensation for travel time and/or reimbursement for expenses, this is also improper. Are you assigned to work one location in the morning, or early afternoon, and another later in the evening, with a trek between locations (and probably no time for breaks or meals) in between? Do something about it!

You deserve to be paid extra if you are an hourly employee (i.e., non-exempt) and your employer assigns you to work non-traditional hours – that is, something other than a standard eight-hour shift (or nine hour shift, if you have an unpaid lunch hour). If you have been assigned to work a split shift, but have not been paid extra for it, please contact Bryan Schwartz Law today.

[1] Certain on-site occupations in the construction, drilling, logging and mining industries and miscellaneous employees not covered by the first fifteen Wage Orders may not be entitled to the split-shift premium. To determine which Wage Order is applicable to your industry, please visit http://www.dir.ca.gov/iwc/wageorderindustries.htm.

Getting the Bad Guys to Pay

2010-06-30T12:16:00.001-07:00

How the California Supreme Court’s Martinez v. Combs Decision Might Affect Which “Employers” Can Be Liable Under the State’s Overtime Laws

Crafty employers have long sought clever ways of avoiding the broad protections the California Labor Code provides to workers with regard to minimum wage and overtime payment requirements. California, which has some of the nation’s most protective employee rights laws, has enacted minimum wage and overtime requirements through its system of Wage Orders issued through the Industrial Welfare Commission (IWC).

The minimum wage and overtime protections afforded to employees have long been limited to traditional “employer/employee” relationships. However, California’s law and courts have sometimes provided employees and their lawyers with muddied guidance as to the meaning of the critical term “employer.” Because of this, employers and individual managers have been able to avoid legal liability for violating minimum wage and overtime laws by setting up elaborate employment systems with third party contractors and other intermediaries acting as straw men and protecting the true employer. For example, garment workers have long worked for nearly insolvent subcontractors who are, for all intents and purposes, controlled by large corporations. The corporations dictate the terms of employment, the subcontractors pay the workers, and should the subcontractors violate wage and hour laws, they would incur liability leaving the large, solvent corporations off-the-hook. Such examples permeate many employment sectors in California, but particularly those with the lowest paid and most vulnerable workers. However, the California Supreme Court has recently taken steps to provide lawyers with guidance as to who may be considered an employer in the context of California wage and hour laws.

The court in Martinez v. Combs, 2010 WL 2000511 (Cal. S.Ct. May 20, 2010), faced the question of how to define which persons may be held liable as employers under California Labor Code Section 1194 (relating to payment of minimum wage and overtime compensation). Plaintiffs in Martinez were seasonal agricultural workers who sued their employer, two produce merchants with whom their employer contracted, and a field representative for one of the produce merchants, seeking to recover unpaid minimum wages. Though the Court found ultimately that the two produce merchants and the field representative were not the Plaintiffs’ employers, the Court broke new ground elaborating the definition of “employer” for the purposes of California wage and hour law. As the Court noted, this is an issue which has only been examined once since the Legislature created the IWC in 1913.

Here is what the Court held, and what it may mean to an employee:

The IWC Reigns Supreme

In a bow to the California Legislature’s intent, the Court held that “an examination of section 1194 in its full historical and statutory context shows unmistakably that the Legislature intended to defer to the IWC’s definitions of the employment relationship in actions under the statute.” Martinez at *16. The court thus acknowledged the IWC’s definition of “employer,” found within its various Wage Orders, to be dispositive in any dispute as to the presence of an employer/employee relationship.

The IWC defines an employer as: Any person who, directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person.

The court further noted that within the context of this definition, the term “employ” carries significant legal meaning. As such, the court adopted the IWC’s definition of “employ” as: To engage, suffer, or permit to work.

By adopting these definitions, the court arguably broadened the scope of who can be deemed an “employer” under California wage and hour laws that had been defined by prior Supreme Court decisions, Reynolds v. Bement 36 Cal.4th 1075, Bradstreet v. Wong 161 Cal App.4th 1440 (holding that the common law definition of “employer” was controlling in California wage and hour cases thereby finding that individual corporate officers could not be held liable as employers),thereby arguably providing legal recourse to individuals in non-traditional employer/employee relationships.

In analyzing the significance of adopting the IWC’s definition of “employer” for the purposes of Labor Code Section 1194 lawsuits, the court noted that the “language consistently used by the IWC to define the employment relationship…was commonly understood to reach irregular working arrangements that fell outside the scope of the common law.” Martinez 2010 WL 2000511 at *17. Given this analysis, the court stepped away from prior holdings in Reynolds v. Bement and Bradstreet v. Wong by finding that the common law definition of “employer” was not controlling in Section 1194 cases. Instead, the court held that “the IWC’s definition of employment incorporates the common law definition as one alternative.” Martinez at *16.

To make sense of the potentially broadening effect of the Court’s analysis in Martinez v. Combs, let us examine the different scenarios where a party can be found to be an employer.

When an agent or person engages a person to work:

The definition of “engage” is rooted in the common law’s treatment of an employment relationship. The common law’s definition of an employment relationship was premised on a traditional master/servant relationship. However, the Court gave limited treatment of this term, only noting that “'to engage’ has no other apparent meaning in the present context than its plain, ordinary sense of ‘to employ,’ that is to create a common law employment relationship.” Martinez at *16.

When an agent or person suffers or permits a person to work:

A person suffers or permits an employee to work when he or she has the right to hire and fire the workers, the right to set the wages and hours of the workers, and tell the workers when and where to report to work. However, if a person does not have the power to stop an employee from working, he or she cannot suffer or permit a person to work. As the Court indicated, the basis of liability under the “suffer or permit to work” standard is “the defendant’s knowledge of and failure to prevent the work from occurring.” Martinez at *20. Consider a situation where you were hired and receive your paychecks from company X, but you work in a factory owned by company Y, are told when to work and how to complete your work by supervisors of company Y, and can be fired by the supervisors of company Y. Under the holding in Martinez, both company X and Y could be your employers and you would be entitled to sue both or either for any violations of California minimum wage and overtime laws.

When an agent or person has control over the wages, hours, or working conditions of a person:

This condition is related to that previously described under the “suffer or permit” standard. An individual or entity may be deemed your employer for the purposes of California wage and hour law if that individual or entity: controls the wages you earn, including but not limited to setting your wage rate and paying your checks; controls the hours you work; or controls your working conditions. Your working conditions are situations such as where you work and how you are to perform work. When an individual or entity controls any of these aspects of your work, he/she/it may be considered your employer.

Remnants of Reynolds

Though the court seemingly moved away from its prior decision in Reynolds by finding that the IWC’s definition of “employer,” as opposed to the common law’s definition, is controlling in Section 1194 wage and hour cases, the Supreme Court notably upheld the holding in Reynolds that “the IWC’s definition of ‘employer’ does not impose liability on individual corporate agents acting within the scope of their agency.” Martinez at *18. However, one can arguably read this holding to mean that the Supreme Court is attempting to limit the holding of Reynolds to its facts. In Reynolds, the Plaintiff, a “shop manager” for a chain automobile painting business, sued his corporation and individual shareholders and corporate officers for violations of Labor Code Section 1194. The court held that common law clearly establishes that “corporate agents acting within the scope of their agency are not personally liable for the corporate employer’s failure to pay its employee’s wages.” Reynolds 36 Cal.4th at 1087.

The Martinez court’s decision to uphold this vestige of Reynolds created an inconsistency left to be resolved by the Court in future decisions or by the Legislature through a clear statement of its intent. However, until that is done, we are left with mixed messages: the Court, through its adoption of the IWC’s definition of “employer,” held that an employer can be “any person,” yet on the other hand the Court, through its refusal to fully overturn Reynolds, held that the IWC’s definition of employer does not impose liability on individuals in their capacity as corporate agents.

What It All Means

The court explicitly opens the door to create liability in instances where multiple employers control various factors of an employee’s work. So for instance, if one company signs your paychecks and tells you where to work but another company determines your wages, retains the right to hire and fire you, and controls how you are to complete your work, the second company may now be considered an employer and be held liable for any violations of California wage and hour laws.

However, because the Court declined to completely overturn Reynolds, there is some uncertainty as to how future courts will decide cases where individuals, as well as corporate bodies, are defendants under wage and hour claims in California. Because the Court in Martinez was clear to hold that the critical elements necessary to find an employment relationship are the ability to supervise, hire and fire, set the wages, and control the working hours and conditions of the employee, plaintiffs’ attorneys have an opportunity to plead that such individuals who control these aspects of an employment relationship are indeed employers and hence liable.

Because employers often find ways to evade liability through new and creative employment structures, it is up to brave employees to challenge practices they deem unfair. Warning signs may include situations such as being hired and paid by one company but being directed at your worksite by agents of another company. By challenging such practices, employees can help further define this area of the law in light of Martinez v. Combs.

If you question why you are not receiving compensation to which you believe you are entitled, and you want advice from an attorney, please contact Bryan Schwartz.

What to Expect When You Contact a Workers’ Rights Lawyer and How to Put Your Best Case Forward

2010-05-27T17:46:00.000-07:00

It is a big step to decide to seek legal assistance for your employment matter. Here at Bryan Schwartz Law, we have represented hundreds of people who have faced discrimination, harassment, wage theft, retaliation, and numerous other workplace wrongs. We understand that deciding to contact a lawyer can be daunting. We hope this blog post can help clarify the process and help you better understand what to expect when you contact a workers’ rights attorney.[1] If you are considering contacting an attorney for help with your employment problem, here are some tips on how to present your best case and what to expect from the initial consultation process.[2]

1. Be Prepared With a 3-D Presentation: Deadlines, Documents, and Dates

Telling your potential employment lawyers that you feel you were wrongfully terminated is not going to help him or her very much in deciding whether to take your case. Be prepared to flesh out the story of why you feel you were wronged with a 3-D presentation—Deadlines, Documents, and Dates. As a general practice at Bryan Schwartz Law, we ask all potential clients to initially provide us with a brief summary of the workplace issue they are contacting us about and for a detailed timeline of events. This information is meant to help us understand and evaluate your case as quickly as possible. We recognize that your employment matter is very important to you and that you need to receive information from us in a timely manner. If you are prepared from the beginning to provide us with your written summary and timeline, as well as documents related to your case, we can get back to you as quickly as possible. Below are a few more details about the 3-D Presentation.

Deadlines & Dates

Employment claims virtually always come with a filing deadline. Some deadlines can come very quickly, especially for federal and state employees. Therefore, it is extremely important for us to figure out what your deadlines are. If you call an attorney with a filing deadline in a week, you will have a difficult time finding representation. So that your potential attorney may analyze your pertinent deadlines, come prepared with your timeline and all dates concerning your case. Your timeline may be fairly basic, like the following hypothetical example:

Jan. 10, 2010—Notified Manager X that I was pregnant

Jan. 15, 2010—Received first ever negative performance evaluation

Jan. 30, 2010—Notified HR Manager that I would request maternity leave in June

Feb. 5, 2010—Notified that I was terminated because “my personal priorities were getting in the way of those of Company” and that my maternity leave would be a “drain on Company resources.”

March 1, 2010—Found out from co-worker Doe that Company had hired a male in my former position

March 15, 2010—Filed pregnancy and sex discrimination complaint with Department of Fair Employment and Housing (Cross-filed with EEOC)

Documents

The attorney you contact will most likely ask you early on for documents supporting your claims. Depending on the type of case that you have, examples of these types of documents could include: termination letters; disciplinary documents; administrative charge documents with, for example, the Department of Fair Employment and Housing or the Equal Employment Opportunity Commission; paystubs; W-2s; and emails supporting your claims. When you are asked for documents, we suggest you go through your documents carefully and select only the documents you think are the most helpful to your case. If you submit hundreds of pages to your potential attorney and most of the pages do not help your case, it will take longer for the lawyer to evaluate the case. Furthermore, you may inadvertently send the message that you are not interested in putting a lot of effort into your own case. As with many things, a good rule to go by is quality, not quantity.

If possible, it is a great idea to be prepared with electronic scans (or extra copies) of the documents that you think support your case before you start contacting attorneys. It is also a good idea to prepare a summary and timeline in advance—your potential attorney will admire the fact that you are so prepared, and it might even help you to organize your thoughts and get a clearer picture of your case from the beginning.

Our friends at Workplace Fairness—a terrific website with many helpful articles about employment issues that affect workers—have a very helpful article about building the best case you can. See http://www.workplacefairness.org/buildcase. In section 2 of the article, Workplace Fairness lists the types of documents you should gather in preparation for your case. This list is a great starting point, though some documents may not be available or necessary in your particular situation.

2. Be Patient (But a Little Persistence Doesn’t Hurt)

Please bear in mind that every firm that represents employees operates their intake process a little bit differently. Here at Bryan Schwartz Law, your case will be assessed by an attorney right from the start. Like many firms that represent workers, our firm is small. It is always of the utmost importance to us that you are treated with respect and that your case is evaluated in a timely manner. We understand how stressful it is to try to find an attorney, and we understand that you are eager to hear back from us. However, it is the nature of our work that we may have out-of-town travel, depositions, court dates, or brief filing deadlines that come up at any given time. Therefore, it may take us slightly more time to review your case during one of those weeks than it would during a week with fewer pressing deadlines, etc.

If you have contacted an attorney and have not heard back within a few days (or shorter if your matter is particularly urgent), you will not be faulted if you call to follow up. Bear in mind, however, that acting like too much of a “squeaky wheel” may not benefit your case in the end. Lawyers must assess whether your case would be a good “fit” for their firm, and if a potential client has unrealistic expectations, or is simply rude, this can be a red flag for the case down the road. Why? Lawyers are constantly thinking ahead—about things like, how would this person hold up if he or she had to testify on the stand? How would he or she do in a deposition? Will he or she cooperate in the litigation process even if it gets frustrating at times? Will he or shee be reasonable in settlement negotiations?

On a related note, you should make sure to honor the commitments that you make to your potential attorney. For example, if you have not already provided documents to the firm, they will most likely request supporting documents for your case. If you say you will email documents by a certain date, hold yourself to that commitment. Just as it is the attorney’s responsibility to follow up with you, you have a responsibility to follow up with your potential attorney. If you have a delay in sending documents or otherwise responding, a short “heads-up” email will do the trick.

3. Be Ready to Listen

When we get a potential client call at Bryan Schwartz Law, it is always our goal to treat you with dignity and respect. It is also our job and our responsibility to candidly assess whether our firm will take your case. When you contact an attorney about your case, bear in mind that it is possible that the lawyer will tell you news that you will not like to hear. Employment cases often involve painful experiences and can bring up strong emotions. Remember that, unfortunately, there are many situations in which employees face treatment that is unfair, disrespectful, or even downright cruel, but that do not rise to the level of a legal violation.[3]

Another part of our job is to assess your case for issues you may not have considered. Sometimes clients initially believe they have one kind of case, and end up hiring an attorney to represent them in entirely different employment matters of which they learn from counsel. It is an employment lawyer’s job to spot workplace violations, so don’t be surprised if the lawyer with whom you are speaking asks you a question that you may not have expected—e.g., you may come in thinking you have a discrimination case, and the attorney will ask if you were paid overtime.

We recommend against exaggerating about the strength of the merits of your case. Attorneys will see through such pronouncements, and they may even reflect poorly on your credibility. If your case truly is a “slam dunk,” let your documents show that. Clients who spend extensive time repeating that their case is a winner often do themselves a disservice.

4. What if the Firm Does Not Take Your Case?

Many considerations go into a law firm’s decision in whether to take a case—these reasons may have to do with the firm’s assessment of the merits of your case, or they may have to do with the firm’s workload, variety of cases at a given time, geographical considerations, conflicts of interest, or other factors. If your case is turned down, please do not be angry. Many winning cases have been turned down by multiple law firms before the clients have found the right fit. That being said, be willing to hear and understand vulnerabilities in your case if an attorney shares them with you. You may disagree, another lawyer may see the case differently, but we urge you to be realistic about your case. Employment cases are challenging to win, and you are not doing yourself a favor if you refuse to take a realistic look at yours. We wish you the best of luck in your case and commend your bravery for standing up for your rights.

If you feel you have been wronged in the workplace, contact Bryan Schwartz Law today: Hillary@bryanschwartzlaw.com.

[1] Another helpful article on this topic can be found at Workplace Fairness: http://www.workplacefairness.org/takecase.

[2] Please note that every firm handles potential client inquiries in its own way. If you are inquiring about a firm’s legal services and have questions about the process, it is always a good idea to ask them directly what you can expect.

[3] A prime example of this issue is the lack of protection for employees who are terminated in retaliation for taking bereavement leave for the death of a close loved one. Currently, the law affords no protection for this situation, though efforts continue to change this. See, e.g., Lange v. Showbiz Pizza Time, Inc. (D. Kan. 1998) 12 Fed.Supp.2d 1150, 1154-1155. AB 2340, a bill currently pending in the California Assembly, would provide up to three days of job-protected time off for bereavement of the loss of a spouse, child, parent, sibling, grandparent, grandchild, or domestic partner (available at: http://leginfo.ca.gov/pub/09-10/bill/asm/ab_2301-2350/ab_2340_bill_20100506_amended_asm_v98.pdf), and our firm strongly supports this legislation. Governor Schwarzenegger vetoed a similar piece of legislation in 2007. (Veto statement available at: http://info.sen.ca.gov/pub/07-08/bill/sen/sb_0501-0550/sb_549_vt_20071013.html).

Bryan Schwartz Publishes Article With Settlement Guidance for Class Action Attorneys

2010-04-13T09:39:00.001-07:00

Bryan Schwartz, along with collaborator Randall Crane, published: “How to win court approval for your class-action settlement – Learn to avoid delays that occur if the court rejects or requires modification of your settlement,” in Plaintiff magazine, the April 2010 edition, at pages 16-21.

Click on the following link to view the article:

Plantiff's Magazine

Court Approves Approximately $1 Million in Relief for Dozens of Misclassified Samsonite Store Managers in Bryan Schwartz Law’s Class Action Settlement

2010-04-12T15:26:00.000-07:00

Wage/Hour Class and Collective Action Settlement Provides Back Wages, Penalties, and Interest

The U.S. District Court for the Northern District of California, Hon. Jeffrey S. White, granted final approval of a settlement agreement negotiated by Bryan Schwartz Law, in which more than 80 current and former Samsonite Store Managers collected approximately $1 million, pocketing on average nearly $8,300 each in back wages, interest, and penalties.

The case, Pearson, et al., v. Samsonite Company Stores, Inc., et al., Civ. No. 09-1263, was first filed just over a year ago, alleging that Samsonite’s retail and outlet stores in the United States improperly employed Store Managers without paying them overtime and other compensation to which they were due under federal law (the Fair Labor Standards Act), as well as the laws of California and New York. The suit contended that the employees were improperly classified as “exempt” from overtime based on being “executives,” but that they did not meet the tests for establishing this exemption under the federal and state laws.

During the course of the litigation of the case, the lead Defendant, Samsonite Company Stores, Inc., declared bankruptcy. Discovery also revealed that, although Samsonite continued to deny liability, many of the Store Managers were paid varying sums previously in a company settlement with the Bush Administration’s Department of Labor, or were paid amounts in company attempts to pursue waivers from individual members of the class before it was certified by the Court. Samsonite also reclassified all of its Store Managers as non-exempt and started paying them overtime. Moreover, the Ninth Circuit Court of Appeals, which oversees the United States District Court for the Northern District of California, along with at least one judge in the Northern District, recently issued decisions making class certification in wage/hour, misclassification cases much more difficult.

“Though we had a lot of obstacles, we were able to obtain an exceptional result for the class – after the Bush Administration investigated the matter but basically let the company off the hook,” said Bryan Schwartz, Plaintiffs’ class counsel, following the Court’s approval of the settlement. “The proof is in the pudding,” he continued, pointing out that a very high percentage, almost 90%, of the class members affirmatively filed claim forms, opting to accept the settlement, with “not a single class member rejecting the deal.”

Schwartz explained that, as a result of the case, the company has paid or will pay Store Managers $966,251.08, plus the employer’s share of payroll taxes on the back wages, minus appropriate attorneys’ fees and costs. “And, all Store Managers are now and will hereafter be paid overtime at Samsonite – something of which we are very proud.”

Rosalie “Lee” Pearson (a former Samsonite Store Manager in San Francisco) was one of two representative plaintiffs in the matter, who first brought the case to Schwartz’s attention. She reacted emotionally to the Court’s approval of the settlement, saying, “I am pleased that, because we stepped forward, no one else at this company will suffer like I did.” She concluded, “It just goes to show that sometimes our system of justice works – if you have the right attorneys on your side!”

Attorneys' Fees in Your Wage/Hour Class Action - Lawyers: You'd Better Be Ready to Justify Them!

2010-03-09T14:44:00.000-08:00

You are an attorney and have just settled your wage/hour class action. Get ready to justify your fees, and make sure they are proportional both to the work expended and the benefits obtained for class members.

You should not assume that your court will agree that you are entitled to fees reflecting 40%, a third, or even 25% of the common fund in your wage/hour class action settlement. Of course, we believe that because we take the risk in wage/hour class litigation, we deserve a fair reward. This sometimes, particularly when there is an early resolution, would mean collecting a percentage of the common fund which results in a fee award many times larger than our lodestar fees tracked on a case. These big wins make up for cases where we have less success – working many hours for only a slim payout, no payout, or owing costs to a defendant at the end of the case. Yet, even in common fund cases, courts are looking critically at lodestar fees to determine the appropriateness of the multiplier that would result from using the common fund method, judged against the actual payout to the class members. Be ready!

The Ninth Circuit has long placed in its district courts’ discretion whether to use the common fund or lodestar method for calculating reasonable attorneys’ fees. See, e.g., Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002). Regardless, the Ninth Circuit recommends checking the value of fees as a percentage of the common fund against what fees would be using the lodestar method, to ensure that the fees awarded are based on an appropriate (i.e., not too high) multiplier. Id. at 1047, 1050-1051; Glass v. UBS Financial Services, Inc., 331 Fed.Appx. 452, 456-457 (9th Cir. 2009). While the district courts are entitled to weigh results achieved for the class and favorable settlement timing in giving a large multiplier (id. at 457; see also generally Lealao v. Beneficial California, Inc. (2000) 82 Cal.App.4th 19, 26), after many years of seeing large wage/hour settlements, courts are becoming more reluctant to do so – i.e., having seen it all, they are less likely to be as impressed by your wage/hour settlement result than you might wish.

For example, in Tarlecki v. Bebe Stores, Inc., 2009 WL 1364340, **3-4 (N.D.Cal. May 14, 2009) (Patel, J.), Judge Patel reduced attorneys’ fees from the desired $290,000 award (a modest 21.3% of the common fund, and less than the attorneys’ lodestar of billed fees, of nearly $310,000) to $200,000, noting that the $290,000 sought would equal approximately 86.2% of the total actually recovered by the class in the claims-made settlement. 2009 WL 3720872, at *2. Judge Patel weighed the low response rate, the weak merits of the underlying case, and the rapidity with which the settlement was obtained in making a downward departure from the Ninth Circuit’s 25% benchmark for attorneys’ fees in a wage/hour class action, common fund case. Id. at *5. Judge Patel’s award was based on a finding regarding the “work that was actually done,” and a decision that “work in the amount of $200,000 is, or should have been, sufficient to accomplish what plaintiffs' counsel accomplished.” Id. at *5.

Judge Patel is not the only judge, when determining fee awards, willing to take a hard look at the work performed by plaintiffs’ counsel. Building upon (among others) the oft-cited decision in Lealao, 82 Cal.App.4th at 26, by Presiding Justice J. Anthony Kline of San Francisco’s 1st District Court of Appeal, California decisions (not necessarily in the wage/hour context) have suggested that your common fund fee award may be measured against the lodestar fees proven – and your lodestar award (in a case where there is no common fund established) may be measured against what it might be in a common fund case, i.e., as a reasonable percentage of the class recovery. See, e.g., In re Sutter Health Uninsured Pricing Cases (2009) 171 Cal.App.4th 495, 512 (trial court properly cross-checked the common fund attorneys’ fees against lodestar fees and determined whether the common fund percentage sought was reasonable based upon the fairness of the would-be lodestar multiplier); Lealao, 82 Cal.App.4th at 45 (common fund method may be used to cross-check the lodestar against the value of the class recovery); Chavez v. Netflix, Inc. (2008) 162 Cal.App.4th 43, 65 (same). See also generally, some examples of class cases in which the fees sought were substantially reduced, Chavez, 162 Cal.App.4th at 63-64 ($393,000 reduction in fees because document reviews by partners could have been done by associates or paralegals, excess time was spent responding to discovery, and court appearances did not need to be billed by two attorneys); EnPalm, LLC v. Teitler (2008) 162 Cal.App.4th 770 (permissible to reduce $50,000 fee to $5,000 because action could have been resolved earlier, in court’s opinion).

Thus, though it is true that detailed time sheets are not required of class counsel to support fee awards in class action cases in California (e.g., Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 254-255), as a plaintiffs' wage/hour class action lawyer, you will have much smoother sailing on fees if you are able to show that your lodestar is close to or exceeds what you hope to reap from attorneys fees in a common fund settlement. See, e.g., McPhail v. First Command Financial Planning, Inc., 2009 WL 839841, *8 (S.D. Cal. March 30, 2009) (“the proposed attorneys' fee award [in a common fund class action settlement] is less than Class Counsel's lodestar calculation, buttressing the Court's finding of reasonableness.”). In sum, be on notice: rather than rubber stamping your proposed fee award, the Court is likely to take seriously its obligation to “ensure that the fee awarded is within the range of fees freely negotiated in the legal marketplace in comparable litigation.” Lealao, 82 Cal.App.4th at 49-50.

State of the Union at Bryan Schwartz Law

2010-01-27T16:10:00.000-08:00

A year ago today, I announced the opening of Bryan Schwartz Law. I directed people to my new website, www.BryanSchwartzLaw.com, and asked them to send their friends in need of employment advice my way. I asked my friends who are employment attorneys to send me any cases they were not going to handle, and to think of me if they had matters in which they needed co-counsel.

I am pleased and proud to say that Bryan Schwartz Law has been a great success though its first year in operation. Of approximately 350 potential cases that I have received, I have accepted about 35 of them, including several class and multi-plaintiff actions. I have settled or otherwise resolved favorably 11 cases, including a class action, resulting in well over $1.5 million in recovery for employees around the country. I have helped employees save their jobs, be compensated unpaid wages, obtain relief for discrimination they have suffered, and negotiate beneficial severance arrangements.

Some other highlights of Bryan Schwartz Law’s first year have included:

filing and settling a Federal District Court wage/hour class and collective action against Samsonite, resulting in nearly $1 million in relief for approximately 90 misclassified Store Managers across the country – an agreement which received the Court’s preliminary approval in December 2009, when the class was certified;

filing suit in California state court on behalf of a class of hundreds of parking attendants and other employees of Certified Parking Attendants, LLC, which engaged in flagrant violations of a host of state and federal wage and hour laws, utterly depriving its employees of overtime, meal/rest period premiums, and other compensation to which they were entitled;

filing suit in Federal District Court in Washington, DC, on behalf of 20 former executives of IndyMac Bank, who were not only laid off and deprived of all of the severance and bonus compensation to which they were entitled by their employment agreements, but from whom IndyMac Resources, Inc. (an IndyMac Bank subsidiary) is now trying to claw back compensation already paid;

defeating summary judgment in an individual age discrimination case in California state court after oral argument, at which I persuaded the court to reverse its tentative ruling granting partial summary judgment striking punitive damages claims;

appearing as amicus curiae (a friend of the Court) in the California Supreme Court on behalf of the California Employment Lawyers’ Association in the matter of Brinker v. Superior Court, S166350, one of the most significant employment cases pending in California, which will define the standard for meal/rest period compliance for all employers of hourly workers in the state;

hiring my first employees – Hillary Baker, an associate, who recently graduated from Hastings College of the Law and passed the California Bar, after working for several top plaintiffs’ employment law firms; Leslie Gordon, an intern for summer 2009, of the University of North Carolina; and Eric Barba, of the University of California Los Angeles law school, who will be a law clerk for summer 2010, who is a recipient of the California Employment Lawyers’ Association’s Diversity Fellowship;

being appointed to a prestigious post on the California Bar’s Labor and Employment Law Section Executive Committee, and to the Board of Directors of FAIR, the California Employment Lawyers Association’s non-profit foundation;

speaking at the State Bar Labor and Employment Law Section’s annual meeting, the Hastings Women’s Law Journal’s annual symposium, at a forum at UC Berkeley (Boalt Hall) School of Law sponsored by the California Employment Lawyers Association and Berkeley Journal of Employment and Labor Law, at the Employment Law Center, and at a meeting of SCORE (a partner of the U.S. Small Business Administration (SBA));

serving as Of Counsel to the firm of Hoffman & Lazear;

and

creating a successful employment law blog (bryanschwartzlaw.blogspot.com) and website (www.BryanSchwartzLaw.com), which both receive extensive Internet traffic.

My primary goal for the upcoming year is to continue attracting and accepting cases which help the individuals and groups of workers involved, and which have the potential to create a better legal climate for employees throughout the workforce.

I hope to win summary judgment in the matter of Ulloa v. United States Postal Service, on behalf of a disabled former Postal worker in Arizona, and to win class certification in the matter of Meyer v. United States Department of State, on behalf of all disabled/perceived as disabled Foreign Service Officer applicants nationwide. Both motions are fully briefed and pending decisions.

I hope to remain active in the California and National Employment Lawyers Associations and the California State Bar’s Labor and Employment Law Section, and will be speaking at seminars, conferences, conventions, and/or events sponsored by all of these organizations throughout the year.

I hope to finally post the Spanish translation of my website. I hope to continue: writing provocative blog postings and other articles in hot areas of employment law; providing a fulfilling and fun work environment for my employees; providing useful support in Hoffman & Lazear matters in which I can be of assistance; and, to continue supporting my family, which will be moving to a new home in Alameda, California.

Thank you for your support over the last year. Please, keep thinking of Bryan Schwartz Law if you or someone you know needs help with a workplace or civil rights issue.

All the best,

Bryan Schwartz

Death to the Reversionary, "Claims-Made" Settlement

2009-12-14T15:25:00.000-08:00

One wage/hour settlement practice which both California and federal courts have rejected in recent years is the reversionary, or “claims-made,” settlement. In a reversionary or claims-made settlement, defendants receive a complete waiver and agree to pay an amount of money – and plaintiffs’ attorneys collect fees based upon a percentage of this amount of money – even though both sides know that defendants will only, in actuality, be paying a fraction of the agreed-upon amount.

The idea of a reversionary, claims-made settlement is that the defendants will actually be paying “up to” the amount indicated, depending on the number and value of the claims that are submitted. So, if only 50% of eligible claims are submitted, then defendants may wind up paying only half of the agreed-upon amount, with the rest reverting to defendants, though the plaintiffs’ attorneys still collect fees on the full settlement amount. Though many courts no longer permit this practice, defendants still frequently try to offer claims-made (aka reversionary) settlements (which can be easy to sell to the corporate client – “I know X sounds bad, but you’re really only paying Y, so don’t worry!”). Some plaintiffs’ counsel may still agree to claims-made/reversionary settlements, too – but I urge you not to do so!

One top plaintiffs' firm that now has an absolute policy not to enter into any claims-made, reversionary settlements is Schneider Wallace Cottrell Brayton Konecky, of San Francisco. In Kakani v. Oracle Corp., 2007 WL 1793774 (N.D.Cal. June 19, 2007) (Alsup, J.), the Northern District of California – an epicenter of nationwide wage/hour class and collective action litigation – denied preliminary approval to a claims-made settlement of $9 million, which would have awarded $2.25 million (25%) in attorneys’ fees to Schneider Wallace and their co-counsel for plaintiffs, regardless of how many claims were submitted. As Judge Alsup explained, rejecting the deal, the “$2.25 million might wind up being more in fees than the class receives in payments.” Id. at *5. See also Zucker v. Occidental Petroleum Corp., 192 F.3d 1323, 1329 (9th Cir. 1999) (after parties to a securities class action had agreed in settlement that class counsel would receive almost $3 million in fees, despite not securing any actual damages payable to class members, Ninth Circuit affirmed district court’s right to drastically reduce fee award, based on the rule that “the reasonableness of attorneys' fees is within the overall supervisory responsibility of the court in a class action”).

In Kakani, the Court explained that, “Such a [reversionary] scheme would be a bonanza for the company,” because Oracle would have eliminated all liability as to class members, regardless of how many claims they actually paid. Kakani, 2007 WL 1793774 at *5. Ultimately, the Northern District of California rejected the Kakani agreement, finding, “Without doubt, the main losers under this proposal would be those absent class members who wind up not submitting a timely claim and/or who never receive a notice letter in the first place.” The Court continued to state, “The Settlement Agreement expressly recognizes that some workers will never get any actual notice [e.g., because of bad addresses] and/or submit claims …. Nonetheless, Oracle specifically extracted a concession that all settlement amounts attributable to those workers would revert to Oracle…, yet those workers' rights would be erased.” Id.

The Kakani court effectively concluded what any lay person would know instinctively, looking at a class action settlement in which a company gets off the hook cheaply while the plaintiffs’ lawyers and representative plaintiffs make out big: that such a settlement does not suggest arms’-length bargaining, but rather, stinks of collusion. The inference may not be justified in every case - certainly even the most highly-regarded plaintiffs' attorneys, like Schneider Wallace, have at times (in the past) agreed to claims-made, reversionary agreements - but even this appearance of conspiracy can be and should be avoided, in my view.

California state courts have followed the Northern District of California’s lead in looking with disfavor upon reversionary, claims-made settlements, with one superior court judge in the complex litigation unit of Alameda County – a favorite place for plaintiffs to file wage/hour class actions – ruling unequivocally that, “The Court will not approve a settlement that contains a reversion to a defendant,” and denying proposed settlements on that ground. The judge in question, Steven A. Brick, relies upon “Managing Class Action Litigation: A Pocket Guide for Judges,” published by the Federal Judicial Center, which addresses reversion clauses and explains:

“A reversion clause creates perverse incentives for a defendant to impose restrictive eligibility conditions and for class counsel and defendants to agree to an inflated settlement amount as a basis for counsel fees. Instead of approving a settlement with a reversion clause, consider encouraging the parties to use an alternative approach, such as pro-rating the total settlement amount among the class members who file claims. Prorating is a straightforward way to avoid the possibility of unclaimed funds and has become a standard practice in class settlements."

Managing Class Action Litigation at p13.
See http://www.fjc.gov/public/pdf.nsf/lookup/classgde.pdf/$file/classgde.pdf.

Judge Brick has also issued guidelines for obtaining approval of a class settlement -
http://www.17200blog.com/orders/Judge_Brick_Guidelines_for_Counsel_re_Class_Settlement_Applications_2-18-2009.pdf.

These guidelines cite the influential decision in Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal. App. 4th 116, 129-133, requiring parties seeking approval of a class settlement to demonstrate the true value to the class of the settlement, and showing that such represents a reasonable compromise. It is impossible to show the value of a settlement to the class, and hence, that the settlement value is reasonable, if a settlement promises money which ultimately reverts to the employer under the agreement’s terms.

There are many ways to avoid the pitfall of a reversionary, claims-made settlement – the first of which is for plaintiffs and their counsel, when negotiating an agreement, to absolutely reject any offer containing such a term, like Bryan Schwartz Law (www.BryanSchwartzLaw.com) does and Schneider Wallace does. Defendants and their counsel should be made to understand that the dollar value reached at the end of the negotiation is the actual amount defendants are spending – and not a penny less. Waived claims should be paid claims. It is up to plaintiffs’ advocates to do everything we can to make sure that employers do not get off easy for their wage/hour violations – and claims-made, reversionary settlements are inherently an easy out for employers.

Rather than having a reversion, a settlement can contain terms having any unclaimed funds be distributed to the participating class members in a second allocation. If the remainder amount is modest, it should go directly to a suitable cy pres recipient. Indeed, if a claims-made settlement agreement does not state where unclaimed funds will go, then – at least in California – such funds will go to a cy pres recipient (under Cal. Code Civ. Pro. §384), and will not revert to defendants. Cundiff v. Verizon California, Inc. (2008) 167 Cal.App.4th 718, 721-722.

Without a reversionary/claims-made term of the agreement, the parties to settlement and absent class members share a common interest – maximizing participation in the settlement, so the largest number of people benefit from the agreement, and hence, release claims. The parties will thus collaborate on ensuring that class members are actually contacted and appropriately encouraged to step forward and assert their claims. This way, the settlement value will be the amount that gets into class members’ hands to quiet their claims – as it should be – and plaintiffs’ counsel will have amply justified his/her fee as a percentage of the common fund.

PS - I note, only as a footnote, because of its very limited application, that the Ninth Circuit has permitted, in one instance, a limited reversionary clause in an unpublished opinion, in Glass v. UBS Financial Services, Inc., 331 Fed.Appx. 452 (9th Cir. 2009), in which any attorneys' fees allocated in the settlement which were not approved by the Court would revert to the defendants. While describing the pitfalls of a reversionary provision, and noting that reversionary provisions are generally "problematic," the Ninth Circuit permitted this limited reverter in the Glass case based upon a specific finding that the class received "exceptional" results from the agreement notwithstanding the provision. Id. at **2.

The New Rules of Negotiating Wage/Hour Class Action Settlements – An Introduction

2009-10-30T17:09:00.000-07:00

Back in the "good old days," which weren't always so good for everyone, and weren't that long ago (or old), for that matter, wage/hour class action settlements came easily, with big potential windfalls for the named plaintiffs and their lawyers. Courts are getting tired of these types of settlements - and, in my view, rightfully so, to a large degree.

Class action wage/hour lawyers need to keep in mind why most of us came to this area of the law - to make an impact on wage theft practices impacting large segments of the workforce, by hitting employers the only way we can make it count - at the bottom line. Letting employers off the hook relatively cheaply - with broad waivers for which absent class members get little or nothing in return - is wrong, whether the plaintiffs' lawyers and their named plaintiffs reap a hefty reward or not.

On the other hand - equally importantly - defendants have woken up from the shock of being repeatedly stung in these cases and have started to develop too-clever new means of killing claims for segments of the class, including getting cheap waivers of claims from individuals in the putative class in an efffort to whittle down the numbers of eligible class members. When defendants collect waivers of claims, without fully disclosing the extent of their potential liabilty to these putative class members, and pay pennies on the dollar compare to what they ought to be paying, these employers violate the robust public policies protecting workers' rights to be compensated fairly, and favoring class actions to vindicate wronged employees' wage/hour rights. Clear U.S. Supreme Court precedent and California Labor Code regulations state that employees' rights to be paid their wages are unwaivable. These employers may also violate their ethical obligations (e.g., Cal. Rules of Professional Conduct 3-600), since their interests are or may become clearly adverse to the putative class members' whose waivers they are soliciting, and since they are trying to pressure these under-informed employees to take substantially less than what they are (or arguably may be) owed.

In a series of blog entries over the coming months, I will discuss the string of recent cases in which courts have reacted to plaintiffs and defendants testing the limits of wage/hour settlements, and I will offer some thoughts as to where the courts and parties will be (or should be) drawing the lines in the months and years to come.

Reading the Crystal Ball: Plaintiffs’ Class Action Attorneys Weigh in on Top 5 Evolving Areas of Wage/Hour Law in California

2009-09-29T18:14:00.000-07:00

Copyright Bryan Schwartz 2009, for the 2009 State Bar Labor and Employment Law Conference

Bryan@BryanSchwartzLaw.com

Plaintiffs’ lawyers can be a trendy lot. We need to know what issues are hot, what issues are not, who is bringing what – otherwise, we might find ourselves a step behind in the footrace for good cases. And no one is shooting for that 11th Place ribbon, after all.

Having conducted an entirely non-scientific, non-comprehensive survey of leaders in plaintiffs’-side wage/hour litigation around California, and bringing in my admitted biases based on the matters that happen to be sitting on my desk now, I have developed a Top 5 watch list of areas which might show significant movement in 2010.

#5: Independent Contractor-Franchisee Abuse:

With the economy faltering, plaintiffs’ lawyers perceive that employers are more likely than ever to push the envelope on independent contractor classification, even going so far as to label some employees “franchisees.” By using the independent contractor designation, employers ostensibly avoid overtime and other wage/hour concerns, unemployment liability, federal and state tax deductions, workers’ compensation, wrongful termination hazards, etc. – in one fell swoop, drastically improving their bottom line by slashing the number of “employees.” Independent contractors can be terminated at a moment’s notice. Rather than having employees and all the burdens associated with such, by taking the next step and creating franchisees instead of employees, employers might even hope to generate income to improve their financial outlook, e.g., by charging franchise fees. Janitorial and transportation services are industries where such practices are rife.

However, employers should remain wary of overstepping into the independent contractor/franchise arrangement. Plaintiffs’ attorneys – and the government – are watching this area closely. Philip Monrad of Oakland, whose firm Leonard Carder has litigated regarding independent contractor designations for many years against FedEx, has other major independent contractor cases (with co-counsel) presently in litigation against UPS Supply Chain Solutions, Carey Limousine, and SuperShuttle. Mr. Monrad reports that because of the surge in unemployment claims (probably the biggest growth area in 2009) – and employers attempting to disclaim unemployment liability by claiming independent contractor designation – EDD has created a task force to crack down on independent contractor misclassification. Recall Air Couriers Intern. v. Employment Development Dept. (2007) 150 Cal.App.4th 923 (citing S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341), in which the employer wound up in litigation with EDD over its independent contractor classification – and lost. SuperShuttle is litigating now with EDD, and plaintiffs’ attorneys hope for a similar result. We may learn in 2010 to what extent plaintiffs’ attorneys and their clients can benefit from the fruits of EDD’s battles over independent contractor issues.

Independent contractor cases will still make good class actions in 2010. Earlier this year, Mr. Monrad’s firm obtained FLSA conditional certification of a class of “independent contractor” drivers alleging that they were misclassified, in Labrie v. UPS Supply Chain Solutions, Inc., 2009 WL 723599 (N.D.Cal. March 18, 2009) (Hamilton, J.). Providing first-tier FLSA notification under Hoffman-LaRoche to the class, the Court found most persuasive plaintiffs’ undisputed averments supporting certification that: (1) drivers were uniformly classified by defendant as “independent contractors;” (2) drivers were required to sign the same or similar contracts, setting forth the relationship between defendant and the drivers; (3) drivers performed pick-up and delivery services for defendant and its customers at the direction of the company’s dispatchers; (4) drivers regularly and consistently worked more than 8 hours per day and 40 hours per week, and were not compensated for overtime, time waiting for assignments, or return travel time; (5) drivers were paid according to a standard formula devised by defendant; and (7) drivers were subject to a nationwide policy with respect to rules for dispatchers in dealing with drivers. Labrie, 2009 WL 723599, at *7. Where plaintiffs can provide declarations from a group uniformly classified as independent contractors whose job performance is in fact controlled day-to-day by the employer, and who work extensive overtime, Labrie is a good model to obtain class certification. See also Khairy, et al v. SuperShuttle (N.D. Cal. May 21, 2009), Case No. 3:08-cv-02993 (White, J.), Docket #124 (“Order Granting Motion to Facilitate Collective Action Notice”).

And while on the subject of federal court – recall that the definition of “employer” under the FLSA is essentially broader than under any other statute,[1] such that it is certainly “legally possible to be an employee for purposes of the FLSA and an independent contractor under most other statutes.” Hopkins v. Cornerstone Am., 545 F.3d 338, 347 (5th Cir. 2008).

On the other hand, the recent cases of Ali v. U.S.A. Cab Ltd. (2009) 176 Cal.App.4th 1333, 98 Cal.Rptr.3d 568, and Cristler v. Express Messenger Systems, Inc. (2009) 171 Cal. App.4th 72, stand for the proposition that plaintiffs with independent contractor cases – like all other putative class actions – should stay as far as possible away from California’s Court of Appeal in San Diego.

In Ali, the Court of Appeal upheld a certification denial, relying upon differences in declarations from the cab drivers at issue, showing divergent levels of the drivers’ usage of the services of the company’s dispatcher. Ali¸ 98 Cal.Rptr.3d at 581. The Court weighed and credited evidence that the drivers assumed “entrepreneurial risk” and provided “tools or instrumentalities of their own in connection with the services they render[ed]” in finding that individualized considerations would predominate and that the group lacked commonality. Id.

In Cristler, the Court of Appeal was unmoved by plaintiffs’ argument that the trial court's instruction that the plaintiff had “the obligation to prove that [the class members] were [defendant’s] employees” was improper – holding that the instruction did not improperly shift the burden of proof on the question of independent contractor status to the plaintiff. Cristler, 171 Cal.App.4th at 84. Employers might be tempted to believe that plaintiffs’ rebuttable presumption on the question of “employer” status is weakened after Christler, but even San Diego’s Court of Appeal acknowledged that the rebuttable presumption is intact, as long as plaintiffs present some evidence linking themselves to the employer. Id. at 84. See also id. at 83 (citing Lujan v. Minagar (2004) 124 Cal.App.4th 1040, 1048 [“There is a rebuttable presumption that one who furnishes services for an employer is an employee. (§ 3357.)”].)

Defendants may attempt to test – and plaintiffs may be fighting them in 2010 – regarding how far companies can push the “entrepreneurial risk” argument, like in Ali. We may expect to see cases where employers cross the line in arguing that their operational controls over employees are in fact just proper enforcement by a franchisor seeking to protect its trademark and the goodwill of its brand against abuse by franchisees. Mr. Monrad imagines that case law may develop in 2010 where employers try to argue that their controls over employees are merely just the company communicating to its contractors the details of the government’s regulations over the industry in question – as opposed to the controls of the employer over an employee. See, e.g., Southwest Research Institute v. Unemployment Ins. Appeals Bd. (2000) 81 Cal.App.4th 705 (methods the plaintiff was required to follow were dictated by health and safety regulations imposed by government agencies, so the putative employer did not exercise the requisite level of control over the plaintiffs’ work to categorize the plaintiff as an “employee”). Regardless, 2010 promises to be an interesting year in independent contractor/franchisee misclassification cases.

#4: Efforts to Undermine Class Litigation Through Individual Releases
In Chindarah v. Pick Up Stix, Inc. (2009) 171 Cal.App.4th 796, the company attempted settlement with individual putative class members after settlement of the lawsuit in mediation failed. Id. at 798. When many putative class members accepted the settlement offers, they executed general releases benefiting the company. Id. The releases required admissions that undermined the allegations in the lawsuit concerning the executive exemption, and a release of all overtime liability and any other Labor Code violations, agreeing not to participate in a class regarding the released claims. Id. Several of those who accepted the settlement offers and signed the general releases subsequently joined the putative class action, claiming the releases violated Labor Code sections 206 and 206.5 (providing that an employer shall not require the execution of a release of a claim or right on account of wages due), and the company cross-complained against them, alleging breach of contract. Id. The trial court held that the Labor Code did not prohibit the releases because a bona fide dispute existed as to the classification of the employees, and the Court of Appeal affirmed. Id. at 798-799, 803-804. See also Watkins v. Wachovia Corp. (2009) 172 Cal.App.4th 1576, 1587 (following Chindarah).

According to David Lowe, of San Francisco’s Rudy Exelrod Zieff & Lowe, Chindarah and Watkins will not be last word on releases – more litigation on this issue can be expected around the state throughout 2010, as California employers are now emboldened to try to undermine class litigation through individual releases, and California employees’ attorneys are ready for a fight.

As Chindarah recognized, the federal law under the FLSA is opposite to the Chindarah holding, providing that statutory rights to overtime, etc., are unwaivable. Chindarah, 171 Cal.App.4th at 804 (citing Lynn’s Food Stores, Inc., v. United States (11th Cir. 1982) 679 F.2d 1350, 1352-1353). See also Barrentine v. Arkansas-Best Freight System (1981) 450 U.S. 728, 739, 101 S.Ct. 1437, 67 L.Ed.2d 641 (unwaivable statutory rights). As Chindarah also recognized (171 Cal.App.4th at 803), the California Supreme Court’s holding in Gentry v. Superior Court (2007) 42 Cal.4th 443, 456, aligns California law with Barrentine, holding that the right to overtime is unwaivable, and generally extolling the class action mechanism as the best means of enforcing wage/hour laws in most cases. See Gentry, 42 Cal.4th 459-464. The Chindarah decision minces words, holding that, notwithstanding Gentry, “there is no statute providing that an employee cannot release his claim to past overtime wages as part of a settlement of a bona fide dispute over wages.” Chindarah, 171 Cal.App.4th at 803.

The California Supreme Court denied review of Chindarah on June 10, 2009, and Chindarah’s holdings have since been repeated by Watkins, but other Courts of Appeal may well split with this line of cases, or effectively distinguish them. Chindarah, for example, did not deal with Cal. Labor Code §206.5’s provision that neither a right nor a “claim” on wages can be waived in a release – which some courts might hold does not permit a release even of claims that are disputed. Other plaintiffs and courts might seek to clarify the undefined “bona fide dispute” holding, defining a “bona fide” dispute essentially as one in which the employer would ultimately prevail on liability.

In the meantime, plaintiffs’ attorneys will likely more often file in Federal court, pleading FLSA claims – where such damaging waivers are patently ineffective. Defendants, for their part, are likely to try to have Chindarah elevated to the status of Sacred Legal Doctrine and try to have it spill over into the FLSA context – arguing, for example, that similar reasoning should allow them to obtain waivers of (for example) certain rights in FLSA cases (e.g., the right to pursue collective action).

Regardless, it seems evident that in many class actions in California, the Chindarah release approach will be hotly litigated in 2010, and the ramifications of this decision so frustrating to plaintiffs’ counsel will be further defined.

#3: Where to Go With Tip Pooling/Allocation Cases
In 2008, Plaintiffs attorneys were jubilant when Rudy Exelrod and Oakland’s Goldstein Demchak Baller Borgen & Dardarian won a B.P.C. §17200 verdict worth over $100 million from Starbucks on behalf of baristas, whose tips in the tip box on the register counter were shared with Starbucks’ shift supervisors, in violation of Labor Code §351. Apparently, those nickels and dimes add up to $1.71/hour per barista, times over 100,000 baristas working a lot of hours = a lot of tip money.

Section 351 provides that no employer or employer’s agent shall collect, take or receive any gratuity paid, given to, or left for an employee by a patron, and the trial court found that Starbucks’ shift supervisors were the employer’s “agents,” under §350(d) – a finding undisturbed by the Court of Appeal. However, the Court of Appeal in San Diego reversed the trial verdict based on the notion that the tips left in the tip box were not actually given to baristas, but given to both baristas and the shift supervisors who also serve customers. Chau v. Starbucks Corp. (2009) 174 Cal.App.4th 688, 691. The Court of Appeal held that nothing prohibits supervisors from sharing in proceeds placed in collective tip boxes, coining the term “tip allocation” to distinguish Chau from prior cases prohibiting agents from partaking in line employees’ tip pools. Id. at 691, 695-696, 703-706 (distinguishing Leighton v. Old Heidelberg, Ltd. (1990) 219 Cal.App.3d 1062, and Jameson v. Five Feet Restaurant, Inc. (2003) 107 Cal.App.4th 138). For example, in Jameson, the Court of Appeal held that under §351, tip pooling is only permitted among employees who are neither employers nor agents under §350. Id. at 144-145.

David Borgen, co-chair of the National Employment Lawyers’ Association wage and hour committee, whose firm co-counseled the Chau case on plaintiffs’ behalf, believes that when employers overreach relying on the Starbucks case, they will still get slapped down in 2010. Though the Supreme Court denied review of Chau on September 9, 2009, Jameson is still good law. Employers’ agents who do not provide customers service the majority of the time, but still take a portion of their employees’ tips, or agents who engage in traditional tip pooling with their employees – taking a portion of tips given directly to first-line servers at tables, for example – will still be vulnerable to class action litigation. On the flip side, now perhaps low-level supervisors who have not been provided a tip allocation (like Starbucks shift supervisors received) but who did provide customer service can argue that they should have been receiving a portion of the tips – the opposite of the Chau plaintiffs’ argument, but a possibility in light of the Court of Appeal’s holdings.

Finally, the Supreme Court did grant review in Grodensky v. Artichoke Joe's Casino (2009) 91 Cal.Rptr.3d 732 (S172237) and Lu v. Hawaiian Gardens Casino, Inc. (2009) 88 Cal.Rptr.3d 345 (S171442) to determine whether there is a private right of action under §351. While the issue may have little consequence to plaintiffs’ lawyers accustomed to using B.P.C. §17200 in any event (e.g., Chau was brought strictly under §17200), the Supreme Court may use the occasion to further define the scope of permissible tip pooling in 2010 (which had been raised in both the Grodensky and Lu review petitions), laying out the battle grounds in tipping cases for years to come.

#2: Certification Wars in Misclassification Cases
Of course, the defining moment of most wage/hour cases is the class certification motion, when we learn whether we are dealing with a big case, or little or no case at all. The often-friendly 9th Circuit dealt plaintiffs’ attorneys a body blow recently in deciding the companion cases of In re Wells Fargo Home Mortg. Overtime Pay Litigation, 571 F.3d 953 (9th Cir. 2009) and Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935 (9th Cir. 2009), in which the 9th Circuit rejected Northern District of California Judge Marilyn Hall Patel’s holding in In re Wells Fargo that:

"[I]t is manifestly disingenuous for a company to treat a class of employees as a homogenous group for the purposes of internal policies and compensation, and then assert that the same group is too diverse for class treatment in overtime litigation. This is particularly true in a situation such as this, where the difficulty of proving hours worked and compensation received is exacerbated by defendants' complete failure to maintain pertinent records. Accordingly, plaintiffs have satisfied their burden and demonstrated that common issues predominate."

In re Wells Fargo, 571 F.3d at 956. See also Wang v. Chinese Daily News, Inc., 231 F.R.D. 602, 612-13 (C.D.Cal. 2005) (predominance based on policy of treating employees in a certain position as uniformly exempt). Essentially, the Court of Appeal held that plaintiffs cannot establish predominance under the Fed.R.Civ.P. 23(b)(3) requirement in a wage/hour misclassification case just by establishing that the entire class was classified in the same manner by the employer. Discussing the outside sales requirement, the 9th Circuit explained, “Often, this exemption will militate against certification because, as the district court noted, it requires ‘a fact-intensive inquiry into each potential plaintiff's employment situation....’” In re Wells Fargo, 571 F.3d at 959. In Vinole, the 9th Circuit held that an employer may preemptively move to deny class certification – before plaintiffs have even filed their Rule 23 motion. Id., 571 F.3d at 948.

Matthew Helland, of Nichols Kaster in San Francisco, a firm which is currently litigating dozens of wage/hour class actions nationwide and in California, foresees that in 2010, employers in federal court will seek to revisit certification, seeking de-cert in many previously certified misclassification cases, relying on In re Wells Fargo and Vinole. Defendants may be chomping at the bit, ready to collect hundreds of declarations giving courts ominous indicators of “thousands of mini-trials” regarding “individualized circumstances.” Defendants are further likely to try to get the In re Wells Fargo and Vinole reasoning to permeate California’s state court jurisprudence. California’s Supreme Court, in fact, is still deciding on Harris v. Superior Court (2007) 64 Cal.Rptr.3d 547 (review granted November 28, 2007), in which a class of allegedly misclassified claims adjusters was decertified by the trial court, but re-certified and held to be non-exempt as a matter of law under the administrative/production worker dichotomy by the Court of Appeal, applying the Bell v. Farmers Ins. Exchange line of cases. See Bell v. Farmers Ins. Exchange (2001) 87 Cal.App.4th 805; Bell v. Farmers Ins. Exchange (2004) 115 Cal.App.4th 715. Some worry that the Supreme Court may dispense with the entire administrative/production worker dichotomy reasoning in deciding Harris.

However, plaintiffs still have quite a few arrows left in their quiver when it comes to certification. The 9th Circuit did recognize that uniform classification remains a factor (but not the only factor) when determining predominance under Rule 23(b)(3). In re Wells Fargo, 571 F.3d at 957-958. Unfortunately for the plaintiffs, Judge Patel’s decision in In re Wells Fargo was highly vulnerable to being overturned because the court certified the class, even while finding “serious issues regarding individual variations among [class members’] job duties and experiences.” Id. at 957. Suffice it to say, plaintiffs can still win certification where they demonstrate that job duties, job descriptions, compensation schemes, and the employer’s expectations were common to the class – as the plaintiffs in In re Wells Fargo have argued in their renewed class certification motion, after the 9th Circuit’s remand to Judge Patel. See In re Wells Fargo, Case No. MDL 06-1770, Docket #305 (September 15, 2009).

Moreover, plaintiffs bringing state claims might have an opportunity to avoid the problems of certification altogether in 2010. In Arias v. Superior Court (Angelo Dairy) (2009) 46 Cal.4th 969, the Supreme Court affirmed the Court of Appeal’s holding that a plaintiff does not need to comply with class certification requirements of California Code of Civil Procedure §382 when bringing claims under the Private Attorney Generals Act (PAGA), Labor Code §2699 (id. at 988) – unlike under §17203, as amended by the voters’ Proposition 64. Id. at 980. PAGA, in subdivision (a), says that “[n]otwithstanding any other provision of law” an aggrieved employee may bring an action against the employer “on behalf of himself or herself and other current or former employees.” The Supreme Court explained that, “[i]n a lawsuit brought under the act, the employee plaintiff represents the same legal right and interest as state labor law enforcement agencies-namely, recovery of civil penalties that otherwise would have been assessed and collected by the Labor Workforce Development Agency.” Id. at 986. The Supreme Court in Arias went on to hold that, “[b]ecause an aggrieved employee's action under the Labor Code Private Attorneys General Act of 2004 functions as a substitute for an action brought by the government itself, a judgment in that action binds all those, including nonparty aggrieved employees, who would be bound by a judgment in an action brought by the government.”Id. The Supreme Court explained that non-party employees – who would not have received any class certification notice nor have been afforded the opportunity to be heard – could benefit from a favorable judgment by seeking other remedies in addition to civil penalties (e.g., back wages and premiums), by using collateral estoppel. Id. at 986-987. Yet, they would not be bound by any adverse judgment as to remedies other than civil penalties. Id.

How the repercussions of In re Wells Fargo, Vinole, Harris and Arias will play out in 2010 is anyone’s guess, but assuredly, employers and employees will be litigating and re-litigating class certification issues in misclassification cases across California trying to build on these precedents (or, in the case of Harris, anticipated precedents).

#1: Meal/Rest Period Litigation – Explosion or Implosion
The biggest pending wage/hour case in California is Brinker Restaurant Corporation, et al. v. Superior Court (Hohnbaum) (2008) 80 Cal.Rptr.3d 781 (S166350), which San Diego’s Tracee Lorens, lead counsel for the plaintiffs, hopes and believes will be decided this coming year, after oral argument in the early months of 2010. Ms. Lorens reports that 23 amici have been filed in the case on behalf of dozens of organizations (including the undersigned’s amicus on behalf of the California Employment Lawyers Association). Virtually every workplace in the state will be affected by the Brinker decision, since none of us really knows, awaiting this decision, what we are supposed to do about meal and rest period premiums for non-exempt employees in our workplaces or in our cases.

At stake in Brinker is the viability of Cal. Labor Code §226.7 and §512, which require that employers pay one-hour premiums each time employees do not receive proper meal or rest periods. Or, is that what the Labor Code requires? Perhaps the Labor Code only requires employers to have a policy on the books officially allowing for compliant meal periods or rest periods, but leaving the rest up to employees. Or, perhaps the law requires something in-between – some level of employers ensuring that proper meal/rest periods are taken, but short of employers’ strict liability for premiums when meal/rest periods are missed. How different are the levels of obligation incumbent on employers with respect to meal periods compared to rest periods, if at all? The crux of the issue (and the reason, Ms. Lorens believes, the Supreme Court will want to decide promptly) is the vagueness of the statute requiring that employers “provide” breaks or else pay premiums. How should “provide” be interpreted? Like San Diego’s Court of Appeal decided in Brinker, or like the Court of Appeal in Sacramento, in Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949, 962-963?

Also at stake in Brinker is the viability of survey evidence to prove class claims. Brinker’s heavy reliance on the “individualized inquiry” line of reasoning and skepticism over survey evidence could devastate class wage/hour litigation, if adopted by the Supreme Court. As employers well know, without the use of special tools like surveys and statistics, proving liability and damages will always be an uphill battle in a class action – since plaintiffs will rarely equal defendants in the declaration collection race, inasmuch as defendants have a captive audience of employees.

At stake in Brinker may be more than just meal/rest period litigation – it may be the future of class wage/hour litigation in the state. In cases like Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575, Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, and Gentry, 42 Cal.4th at 443, the California Supreme Court has established itself as a powerful force in ensuring (or at least, providing) employee-friendly workplaces in California, sympathetic to wage/hour class actions. Does the denial of review in the Cristler v. Express Messenger Systems, Chindarah v. Pick Up Stix, and Chau v. Starbucks indicate that the Supreme Court is growing impatient with wage/hour class litigation, or does Arias mean the Supreme Court remains favorably disposed to wage/hour classes, but was just too busy to hear these 2009 cases? My crystal ball says that the Brinker decision, possibly just around the corner, will answer a lot of questions for California’s employment lawyers.

####

[1] Section 203(d) of the FLSA defines the term “employer” very broadly, as “any person acting directly or indirectly in the interest of an employer in relation to an employee….” 29 U.S.C. §203(d). See Falk v. Brennan, 414 U.S. 190, 195, 94 S.Ct. 427, 38 L.Ed.2d 406 (1973) (noting the “expansiveness” of the FLSA’s definition of “employer”). See also Randolph v. Budget Rent-A-Car, 97 F.3d 319, 326 FN1 (9th Cir. 1996) (“The definition of the term ‘employee’ in the FLSA is extremely broad….(‘The Fair Labor Standards Act defines ‘employee’ simply as ‘any individual employed by an employer,’ and ‘employ’ as including ‘to suffer or permit to work.’ 29 U.S.C. §§ 203(e)(1), 203(g)). Thus, the term ‘employee’ is used in the broadest sense ‘ever ··· included in any one act.’”) (Emph added.); Bonnette v. California Health & Welfare Agency, 704 F.2d 1465, 1469 (9th Cir. 1983) (FLSA’s expansive employer definition).

In Supreme Court Amicus Brief, Bryan Schwartz Law Weighs In Regarding California Non-Exempt Workers' Meal and Rest Periods

2009-08-21T10:47:00.000-07:00

California's Supreme Court has before it the case of Brinker v. Superior Court, S166350, in which the Supreme Court will decide for all non-exempt workers in California to what extent, if any, they have any real entitlement to take the meal and rest periods guaranteed them by California law. Though California law provides that employers must pay costly premiums if their employees work through meal and rest periods, in Cal. Labor Code sec. 226.7 - to push employers to ensure that their employees are taking breaks - the Brinker decision completely undercuts the law. The decision gives employers an incentive to publish a superficially-compliant meal/rest policy, without giving actual breaks to their employees.

Follow this link to read the brief submitted by Bryan Schwartz Law to the California Supreme Court on behalf of amici curiae, the California Employment Lawyers' Association and the Consumer Attorneys of California, asking the Supreme Court to reverse Brinker:

http://www.bryanschwartzlaw.com/Brinker.pdf

California's workers' well-being depends on it!

Bryan Schwartz

Starbucks: Robbing from Peter Barista to Pay Paul Supervisor

2009-08-14T11:43:00.000-07:00

Bryan Schwartz Law submitted the following amicus letter to the California Supreme Court, on behalf of the California Employment Lawyers Association, asking the Court to grant review in a case of statewide significance to service employees, called Chau v. Starbucks. The case involves whether employers can steal tips, left by customers in tip boxes or tip cups at the register, to allocate a portion of them toward subsidizing otherwise subpar wages of supervisors. Before the Chau decision by the Court of Appeal, it was clear, from the California Labor Code and Courts of Appeal interpreting it, that employers could not pool tips between the employer's agents (aka supervisors) and non-agents (aka, in this case, baristas).

In case you're wondering, "How much do those little tips in the tip box/cup mean, anyhow?" --After a full trial on the merits, the lower court in Chau awarded the Starbucks baristas $86 million in restitution, plus interest and attorneys' fees. Hopefully, the Supreme Court will fix the injustice created by the Chau Court of Appeal and reinstate the employees' restitution.

--

The Honorable Ronald M. George, Chief Justice
and Associate Justices
California Supreme Court
350 McAllister Street
San Francisco, CA 94102

Re: Amicus Curiae Letter (Rule 8.500(g)); Supreme Court Case No. S174601
Chau, et al. v. Starbucks Corporation (June 2, 2009) 174 Cal.App.4th 688, 94
Cal.Rptr.3d 593, Fourth Appellate District, Division One, Case No. D053491,
Reversing San Diego Sup. Ct. Case No. GIC836925

Dear Chief Justice and Associate Justices:

This is a letter under Rule 8.500(g) in support of the petition for review by the Plaintiffs in Supreme Court Case No. S174601, Chau, et al. v. Starbucks Corporation (July 2, 2009) 174 Cal.App.4th 688, 94 Cal.Rptr.3d 593, Fourth Appellate District, Division One, Case No. D053491 (hereafter, Chau). This letter, on behalf of the California Employment Lawyers Association (CELA), supports the Plaintiffs’ request for review, to have this Court clearly hold that employers cannot require non-supervisory employees to share tips with supervisory employees who are agents of the employer. The Court of Appeal’s decision in Chau contradicts California Labor Code §§350(a) and (d) and §351, and also contradicts the Court of Appeal decisions in Jameson v. Five Feet Restaurant (2003) 107 Cal.App.4th 138, 131 Cal.Rptr.2d 771, and Leighton v. Old Heidelberg, Ltd. (1990) 219 Cal.App.3d 1062, 268 Cal.Rptr. 647, which construe Labor Code §351 to establish a bright-line rule prohibiting tip-pooling with an employer’s agents. Thus, Chau throws into confusion a previously-settled rule regarding the allowable reaches of a tip pool, potentially affecting the income of millions of California service industry workers.

This Court has never directly addressed the proper scope of tip pooling, even though it has discussed Cal. Lab. Code §351 (see Industrial Welfare Com. v. Superior Court (1980) 27 Cal.3d 690, 166 Cal.Rptr. 331, and Henning v. Industrial Welfare Com. (1988) 46 Cal.3d 1262, 252 Cal.Rptr. 278), in the context of applying tip credits against the minimum wage. Currently, the Court has before it two cases regarding whether §351 permits a private right of action.[1] Supreme Court review in the instant case would complement the latter.

California Courts of Appeal have long followed Leighton, 219 Cal.App.3d 1062 (decided closely on the heels of Henning), which ruled that employer-mandated tip pooling between servers and bussers at a restaurant is permitted under §351. Under §351, however, tip income left by patrons in a tip container for all servers may not be used by an employer to subsidize the wages of its agents, whether those agents also provide customer service or not. See generally Etheridge v. Reins Intern. California, Inc. (2009) 172 Cal.App.4th 908, 91 Cal.Rptr.3d 816.

I. Interest of Amicus

CELA is a statewide non-profit organization dedicated to protecting workers’ rights. CELA’s member attorneys represent employees in all types of employment cases in state and federal courts and before administrative agencies, including employment discrimination, wrongful discharge, wage and hour, and unemployment insurance matters. In each of these substantive areas of law, CELA’s members and their clients challenge employers who fail to adhere to California and federal employment laws. CELA frequently appears as amicus curiae in matters before this Court, including, e.g., recent appearances in Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 56 Cal.Rptr.3d 880, Gentry v. Superior Court (2007) 42 Cal.4th 443, 64 Cal.Rptr.3d 773, and Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, 81 Cal.Rptr.3d 282.

CELA’s members have an abiding interest in the scope of permissible tip pools, directly at issue in this case. In particular, CELA seeks to ensure that the concept of tip pooling is not abused so as to undermine non-agents’ gratuities, guaranteed to be separate from agents’ compensation by Labor Code §§351 and 350(d), and that the State’s wage and hour laws are “liberally construed with an eye to promoting [worker] protection,” as this Court required in Henning, 42 Cal.3rd at 1269 (citing Industrial Welfare Com’n, 27 Cal.3d at 700-703). CELA maintains that this Court should not permit an interpretation, like that applied in Chau, which results or could result in tips which should be received by millions of California non-supervisory workers being misappropriated to defray employers’ payroll costs with respect to their agents.

II. Review is Warranted

A. The Court Should Resolve Chau’s Split With Jameson, Which Held that Employers May Not Pool Tips Between Agents and Non-Agents.

In Jameson, 107 Cal.App.4th 138 at 141, the Court of Appeal concluded that a tip pool benefitting "floor managers" was illegal because floor managers had sufficient supervisory duties to be considered the employer's agents rather than employees. See also Etheridge, 172 Cal.App.4th at 921 n.17 (citing Jameson). Here as in Jameson, substantial evidence supports the trial court’s conclusion after a full trial on the merits that Starbucks’ shift supervisors are “agents,” with whom, according to statute, non-agents like Plaintiffs may not be forced to share tips. See Petition for Review at pp. 16-18.

Supreme Court review is appropriate because the Court of Appeal’s application of the law permits what Jameson expressly forbids – tip pooling with supervisory employees who happen also to perform customer service functions. Jameson, 107 Cal.App.4th at 144-145.[2] In Chau, the Court of Appeal repeatedly emphasizes that the shift supervisors, whom the trial court found to be agents – a conclusion which the Court of Appeal did not dispute[3] –should be able to take a portion of the tips from Starbucks’ tip boxes because of the supervisors’ customer service responsibilities.[4]

The Chau court’s attempt to avoid an overt split with Jameson by inventing a new term for Starbucks’ practice – “tip apportionment,” as opposed to “tip pooling” – is at best flimsy, at worst disingenuous. The crux of the Court of Appeal’s distinction is that at Starbucks, the tips are left in a box at the register, rather than on a table or with a server. Chau, 174 Cal.App.4th at 700 (“[T]he legal principles prohibiting an employer from requiring an employee to share his or her personal tip with the employer's agent (‘mandatory tip pooling’) do not logically apply to an employer policy requiring equitable apportionment of the proceeds in a collective tip box (‘tip apportionment’).”). In Jameson, where the employer was taking a portion of the tips left on the table and giving it to its agents, it was apportioning tips in a prohibited manner (one might call it, “tip apportionment”). The essence of Jameson is precisely the opposite of what Chau holds – that an agent, though he or she may do some customer service duties, cannot share in the tips to be distributed to non-agents. Any factual distinction between the cases is immaterial, since in both cases the employer decided who may share customers’ tips and in neither case was the customers’ tipping intent manifest.

The real reason the Court of Appeal splits with Jameson may have more to do with the magnitude of Starbucks’ violation and the considerable restitutionary verdict after trial. Chau, 174 Cal.App.4th at 701, 706 (emphasizing Jameson’s $1,075 verdict and Chau’s $86 million result). But California law should not require restitution in small, individual cases of tip theft, but not when statewide, multi-million dollar violations are established. On the contrary, California’s interest in worker protection (see, e.g., Henning, 42 Cal.3rd at 1269) should be, if anything, more heightened in a case, like Chau, with a statewide impact, involving over 120,000 employees.

The Supreme Court should grant review to resolve Chau’s apparent split with Jameson, and should conclude that Jameson was right that, under Labor Code §351, employers may not pool or “apportion” pooled tips between non-agents and agents.

B. The Supreme Court Should Reject the Court of Appeal’s Presumption of Customers’ Intent in Chau.

Repeatedly, the Court of Appeal emphasizes its presumption that Starbucks's customers intended that their tips be shared among baristas and shift supervisors.[5] However, the Court of Appeal in Leighton, 219 Cal.App.3d 1062, 1069, long ago, properly rejected attempts by courts to presume the intentions of tipping customers where, as here, their intention was not explicit, i.e., where a customer left a tip on a table or in a cup or box. As the Leighton court explained, “[M]uch is made of for whom the gratuity is left, the intention of the patron in leaving it, and the lack of evidence offered by [the employer] in this connection. We dare say that the average diner has little or no idea and does not really care who benefits from the gratuity he leaves, as long as the employer does not pocket it, because he rewards for good service no matter which one of the employees directly servicing the table renders it.” (emph. added) Id. The Leighton court continued to describe the “near impossibility of being able to determine the intent of departed diners in leaving a tip.” Id. Under Leighton, the only bright-line rule as regards tip pooling (or tip apportionment) is that agents of the employer must be excluded.

Until Chau, the Leighton decision’s discussion of the perils of attempting to infer customer intent where tips are left collectively has been followed by every California Court of Appeal to rule in a tip pooling case. See, e.g., Etheridge, 172 Cal.App.4th at 921-922; Budrow v. Dave & Buster's of California, Inc. (2009) 171 Cal.App.4th 875, 880 n.4, 90 Cal.Rptr.3d 239. See also Jameson, 107 Cal.App.4th at 144-145 (same holding). See also depublished cases currently being reviewed by this Court on other grounds, Grodensky, 91 Cal.Rptr.3d at 755, 767-769; Lu, 88 Cal.Rptr.3d at 358.[6] This Court should restore the status quo ante by granting review and overturning Chau, which improperly relied on the appellate court’s interpretations of what it believed Starbucks’s customers’ intention must have been in leaving tips in a box at the register. Chau, 174 Cal.App.4th at 704 (“It is undisputed (and certainly the only reasonable conclusion) that by placing a tip in a collective tip box, the customer understands that this gratuity will be shared by all the service employees-baristas and shift supervisors.”). There was no substantial evidence in the record establishing whether Starbucks’ customers had the intention to tip agents of the employer. See Chau, 174 Cal.App.4th at 706 (citing plaintiffs’ petition for rehearing, stating, “They assert that customer intent was not an issue at trial, and note that neither party presented any testimony from a customer as to the customer's subjective intent in placing a tip in a collective tip box or how the customer intended to allocate a tip for more than one employee.”). As discussed above, even if customers did have an intention to tip agents, applying Labor Code §351 and 350(d), and affirming Jameson, Leighton, and the decisions following them, the Supreme Court should establish unequivocally that the employer was not permitted to pool or apportion or share tips between agents and non-agents.

C. Public Policy Dictates that Employers Should Not Be Permitted to Allocate Pooled Tips Between Agents and Non-Agents.

By blurring the bright-line rule that employers cannot pool, apportion, or share tips between agents and non-agents, and by rejecting the general prescription against inferring customers’ intentions regarding tips, the Court of Appeal in Chau has effectively rendered Labor Code §§350(d) and 351 meaningless and weakened the well-established precedents of Jameson and Leighton. Applying Chau, an employer can now easily force tip sharing between agents and non-agents with impunity, simply by ensuring that tips are placed in a box or cup and “apportioning” them to supplement service-providing supervisors’ wages. As this Court has repeatedly emphasized, California’s employees are entitled to greater protection than this.

The Court of Appeal did not dispute that substantial evidence supported the trial court’s findings that shift supervisors are agents, and plaintiffs’ Petition for Review cites a host of activities performed by supervisors which give them control or direction or supervision over the non-agent baristas, such as opening and closing stores, monitoring time cards, controlling cash, etc. Petition for Review at p. 17 n. 10. It does not require a leap of imagination to realize that shift supervisors can use this control, direction, and supervisory authority to skew the proportion of the tips that they receive, by, among other things, ensuring that they receive more work hours that count toward their allocation of the tips. The Labor Code expressly seeks to avoid this conflict by precluding tip sharing among the employer’s agents and non-agents, and Chau should not be permitted to undermine this clear rule.

In Henning and Industrial Welfare Commission, this Court explained that tips should not be used by employers to avoid paying market wages to non-tipped employees. See also Etheridge, 172 Cal.App.4th 908, discussing Henning and Industrial Welfare Commission (“Even though an employer can no longer use tip sharing to subsidize minimum wages of non-tipped employees, it is possible that an employer could use tip sharing to subsidize market wages of non-tipped employees, resulting in the same evil. Thus, when considering tip pooling, it is important to make certain that the employer is not using the tip pool as a de facto tip credit against market wages.”). Plaintiffs’ and CELA’s interest, and that supported by California’s public policy, is not to reduce the actual wages of shift supervisors – far from it – but rather, to make sure that Starbucks, and not its front-line baristas, bears the burden of paying shift supervisors the competitive wages they deserve.

III. Conclusion

For the foregoing reasons, CELA requests that this Court grant the Plaintiffs’ petition for review.

Thank you for your consideration.

CALIFORNIA EMPLOYMENT LAWYERS’ ASSOCIATION
BRYAN SCHWARTZ LAW
___________________________
Bryan J. Schwartz
180 Grand Avenue, Suite 1550
Oakland, CA 94612
Tel. 510-444-9300
Fax 510-444-9301
Email: Bryan@BryanSchwartzLaw.com
Website: http://www.bryanschwartzlaw.com/

[1] S172237 (Grodensky v. Artichoke Joe's Casino (2009) 91 Cal.Rptr.3d 732, 755, 767-769); S171442 (Lu v. Hawaiian Gardens Casino, Inc. (2009) 88 Cal.Rptr.3d 345, 358).

[2] The Jameson Court of Appeal explained: “Five Feet [the employer] argues that although the floor managers are involved in hiring, discharging, and supervising employees, they also serve patrons and thereby earn a share of the tips. Five Feet contends, therefore, the floor managers do not fall within the definition of agent in section 350. But the definition of agent under section 350 does not include a requirement that an agent's duties exclusively consist of hiring, discharging, or supervising employees. Section 350 does not even require that an agent spend the majority of his or her time performing such functions. Therefore, it is irrelevant that the floor managers at Five Feet perform other duties in addition to the functions described in section 350, subdivision (d)…. Under section 351, tip pooling is only permitted among employees who are neither employers nor agents under section 350.” Id.

[3] The Court of Appeal expressly did not decide this issue, ruling instead as a matter of law that supervisors can share in tips left collectively for customer service employees.

[4] See, e.g., Chau, 174 Cal.App.4th at 703 (“Starbucks's policy ensures that if a customer places money in a collective tip box with the intention that it be shared among baristas and shift supervisors, each employee will retain his or her fair share of the tip proceeds.”), 705 (“the vast majority of the time shift supervisors and baristas perform the same jobs….”).

[5] See, e.g., Chau, 174 Cal.App.4th at 703 (“In this way, Starbucks effectuates the customer's intent and does not permit the misappropriation of gratuities intended for a certain employee or employees.”), 704 (“[B]y placing a tip in a collective tip box, the customer understands that this gratuity will be shared by all the service employees—baristas and shift supervisors.”), 706 (“the testimony by baristas and shift supervisors was undisputed that customers leave tips in the collective tip boxes for the service team, which includes both shift supervisors and baristas”).

[6] CELA’s position is that several of these cases go too far in ignoring customers’ intent, even where it is manifest, e.g., where tips are given directly to casino dealers but taken by the employer to share with other non-agents. However, Chau’s position – inferring customers’ intent to share tips with the employer’s agents – is simply unprecedented.

9th Circuit Court of Appeals Gets it Wrong: Wage-Hour Class Actions Endangered Species in Federal Court

2009-07-10T10:50:00.000-07:00

This week, the Ninth Circuit Court of Appeals, one of the highest courts in the nation and generally considered one of the fairer United States Circuit Courts for employees, issued two momentous decisions which will drastically curtail employees' ability to certify wage/hour class actions in Federal court. These decisions were wrongly decided by three Ninth Circuit judges, but I hope the plaintiffs will seek en banc review from the entire Circuit. Otherwise, I fear, these precedents will become routine fodder for defendants opposing and courts denying class certification.

In Mevorah v. Wells Fargo Home Mortgage, No. 08-15355 (9th Circuit July 7, 2009), and Vinole v. Countrywide Home Loans, No. 08-55223 (9th Circuit July 7, 2009), the defendants had uniformly classified all of their loan officers as exempt from being paid overtime, saying they were all outside salespeople. Plaintiffs argued that, in fact, these loan officers were inside salespeople, who spent the majority of their time working from their desks at home or at defendants' facilities. The truth is, in today's workplace, there are few, true "outside salespeople," like the door-to-door vacuum or encyclopedia salesperson of old, whose office was his or her car and who worked wherever and whenever he or she pleased. Certainly, these mortgage loan officers were not of that ilk - the vast majority of their sales are typically completed on the phone and on the computer. The Northern District of California (Judge Patel) rightly concluded that it was "manifestly disingenuous for a company to treat a class of employees as a homogenous group for the purposes of internal policies and compensation, and then assert that the same group is too diverse for class treatment in overtime litigation." The Southern District of California (Judge Sabraw) concluded, on the contrary, that “no common scheme or policy that would diminish the need for individual inquiry.”

The corporations were able to scare the Circuit into siding with the Southern District decision, with the prospect of "several hundred mini-trials" for class members to determine whether each was properly classified as exempt from overtime. Defendants' reasoning was that individual issues would predominate, and hence, class certification was inappropriate, because the fact-finder would have to consider each class member separately to determine how many hours he/she spent at a desk and how many hours he/she spent doing outside sales. In the interest of justice and of vindicating the remedial purpose of the wage laws, the Circuit Court should have followed the model of the California Supreme Court on the same question.

In Ramirez v. Yosemite Water Co., Inc., 20 Cal. 4th 785, 802 (1999), California's Supreme Court noted the importance of considering "first and foremost, how the employee actually spends his or her time" in determining whether an employee is an outside salesperson. Though employers seized upon this language to say that no class could be certified because of the need for hundreds of mini-trials, i.e, that common issues would not predominate and that class certification was not the superior method for handling such wage claims, the California Supreme Court followed up Ramirez with Sav-On Drug Stores, Inc. v. Superior Court, 34 Cal.4th 319, 335-336 (2004). There, California's Supreme Court explained, "Defendant mistakenly suggests that our decision in Ramirez, supra, 20 Cal.4th 785…, bars class certification in this matter…. Ramirez is no authority for constraining trial courts' ‘great discretion in granting or denying certification.’” Id. The Sav-On court observed that defendants wanted courts to extend Ramirez to shield employers from an action challenging a type of illegality that Ramirez was actually designed to prevent. Sav-On, 34 Cal.4th at 337. Unfortunately, the Ninth Circuit has now accepted the employers' invitation.

The Sav-On decision explained that “the need for individualized proof of damages is not per se an obstacle to class treatment,” and held that, “neither variation in the mix of actual work activities undertaken during the class period by individual [putative class members], nor differences in the total unpaid overtime compensation owed each class member, bars class certification as a matter of law.” Id. at 334-335. The Supreme Court explained, “Contrary to defendant's implication, our observation in Ramirez that whether the employee is an outside salesperson depends ‘first and foremost, [on] how the employee actually spends his or her time’ (Ramirez, supra, at p. 802…) did not create or imply a requirement that courts assess an employer's affirmative exemption defense against every class member's claim before certifying an overtime class action.” Sav-On, 34 Cal.4th at 337.

The Ninth Circuit should have decided - and should still decide, after a re-hearing en banc - that issues regarding defendants' policies and practices and operational standardization are likely to predominate in a class proceeding over any individualized calculations of actual overtime hours that might ultimately prove necessary. Id. at 331.

The Sav-On court ultimately upheld the trial court, which held, like in the Mevorah v. Wells Fargo case, that certification was warranted because “defendant classified its [putative class members] ‘exempt without any exception, and rel[ied] exclusively on these titles alone in redefining who is exempt and who is not exempt. The predominance of the defendant's class-wide exemption is evidenced by the fact that there is no compliance program that's ever existed, and no single class member has ever received overtime compensation. The class-wide policy does not vary from store to store, or employee to employee.’” Sav-On, 34 Cal.4th at 332.

As in Sav-On, the Ninth Circuit should also have considered that decisions whether certain tasks performed universally by class members - and whether those are really outside sales activities, or whether, in the Sav-On context, the tasks are managerial or non-managerial for the purpose of applying the executive exemption - lend themselves to class treatment. Id. at 330-331. In the loan officer context, if promotional activities at trade shows, at realtor open houses, and networking at organizational meetings are determined to be outside sales activities, rather than activities generally directed toward marketing the company, then this would impact all class members' classification. As in Sav-On, regardless of who is correct, the issues which must be determined for liability (irrespective of individual differences in damages) “comprise a reasonably definite and finite list.” Id. at pp. 330-331.

In Sav-On, 34 Cal.4th at 331, 337 – as in Ramirez, 20 Cal.4th at 802 – at issue was, in part, the employer’s communicated expectations of their employees as a whole. Plaintiffs in outside sales exemption cases should be able to argue – applicable to the entire class – that, because defendants have communicated to the employees no finite expectations regarding outside sales activities, and the actual requirements of the job can and are generally accomplished from behind a desk in a company facility or the employees' homes, their classification as exempt outside salespeople is improper as a matter of law.

The Ninth Circuit's decisions of July 7, 2009 are disturbing, too, because they are dismissive of the ability to use pattern and practice evidence, statistical evidence, sampling evidence, expert testimony, and other indicators of a defendant's centralized practices, which Sav-On and many federal courts have embraced. Without allowing plaintiff classes to rely upon such evidence to prove class liability, the net result will be a massive windfall for employers cheating their employees of wages. Only those few who personally step forward to seek relief of even small wage claims, and risk retaliation and blackballing in the industry, and who have the wherewithal to endure lengthy litigation, will find any relief under federal and state wage laws.

On the contrary - as the California Supreme Court has recognized, and as the entire Ninth Circuit should recognize, the wage protections are intended to be broadly enforced, which can only be accomplished by class litigation.

Civil Rights for Mentally Ill Inmates

2009-06-01T09:31:00.000-07:00

Bryan Schwartz (Bryan@BryanSchwartzLaw.com) wrote the following op-ed piece for the San Francisco Chronicle which appeared in today's newspaper:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/06/01/EDP717SP0M.DTL

How we killed Berkeley's 'Naked Guy'
Bryan Schwartz
Monday, June 1, 2009

In her May 24 column, Chronicle columnist Debra J. Saunders called the million-dollar settlement following the death of the "Naked Guy" a "jackpot for mom." Esther Krenn's son, Andrew Martinez, a.k.a. Berkeley's Naked Guy, took his own life in Santa Clara County jail after suffering for years with mental illness. Krenn had settled with the county after filing a wrongful-death suit.

Saunders does not know Krenn, but I do. Krenn, like any loving mother, would trade any amount of money to have her son back.

The primary offense is not Saunders' mean-spirited column: It is the dehumanization of a mother's son. This is what happens when we lock up our mentally ill citizens and throw away the key. In a larger sense, we killed Martinez because we let him, like so many others with mental illness, drift so far from our consciousness.

I knew Martinez for 10 years before he was the Naked Guy - when he was just a top student, football and wrestling star, and a self-assured presence who defied stereotypes. For those of us who were his friends, we knew that the Naked Guy rebellion should have been but the first act of a lifetime of changing the world. We all lost the day that Martinez died.

No one is to blame for mental illness, but we should all think about how we can do a better job helping people with such challenges. How could someone of such indomitable spirit been driven so low that he would take his own life?

It is because Martinez's excruciating insanity was criminalized. He was subjected to solitary confinement instead of being given appropriate care. He should have been in a hospital, not in a jail.

Saunders' column implies that Martinez fought needed treatment - but this mischaracterizes the record. Martinez did not refuse treatment in the days before his suicide. Even if he had, he should not have been able to: He was a known suicide risk under the county's care and authority, and thus legally not in a position to refuse medication.

Martinez's mother tried to get the county to pay attention to her son's deteriorating condition - to no avail. Although Martinez repeatedly expressed suicidal thoughts and once attempted suicide, the county assured Krenn that her son was doing well. Martinez would improve in the hospital but then be returned to jail, where the staff was untrained to deal with his illness. He would again lose competency to stand trial for criminal charges that never should have been brought because it was known he was mentally ill when he assaulted a staff member at a halfway house where he lived.

The state must repair the broken procedures regarding those incompetent to stand trial. By confining Martinez without proper treatment while he was trying to kill himself, the county sealed his fate.

The county will not admit its failings, but it has paid $1 million and agreed to revise its system. As an attorney, I know that a government defendant in civil litigation does not pay $1 million to an individual plaintiff as a "nuisance value" settlement, i.e, to avoid further litigation. The settlement is an acknowledgement of neglect, and of Martinez's wasted potential. Governments, like corporations, sometimes need litigation that impacts the bottom line to jar them from their complacency.

Among other changes to avoid other mothers' sons dying in vain, the notice provision portion of the settlement - ensuring that next of kin be alerted if an inmate attempts suicide - should be a part of California's penal code, not just Santa Clara County's new standards.

The state should also seek to redirect some budgeted prison funding to community-based, alternative placements for mentally ill/incompetent inmates to receive treatment.

Let us hope it does not take another tragedy, and another big settlement, to wake up this bureaucracy.

Bryan Schwartz, a childhood friend of Andrew Martinez, is an Oakland-based civil rights attorney.

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/06/01/EDP717SP0M.DTL

This article appeared on page A - 13 of the San Francisco Chronicle

The First Amendment Protects Public Employees’ Right to Run for Office – Or At Least, It Should!

2009-05-21T18:00:00.000-07:00

Public employees’ constitutional rights are important. Recent figures suggest that sixteen million Americans — more than 10 percent of the nation’s workforce — are employed by a state or local government, with another two million, approximately, employed by the federal government. With the economic downturn, even more workers are moving from the private sector to typically more secure public sector jobs. See, e.g., “Despite Downturn, Federal Workforce Grows; Stimulus Plan Expected to Increase the Ranks at State, Local Levels,” MSNBC News Report, January 31, 2009 (http://www.msnbc.msn.com/id/28952802/). Simply put, public employees are a major and growing part of our workforce. However, public employees’ rights are now vulnerable, after the recent decision in Greenwell v. Parsley, 541 F.3d 401 (6th Cir. 2008).

In Greenwell, a deputy sheriff was fired because he ran for sheriff against the incumbent. The Sixth Circuit in Kentucky held that such a firing does not implicate the First Amendment, relying on an earlier precedent from that court which said that “[t]he First Amendment does not require that an official in [an employer's] situation nourish a viper in the nest.” Id. at 404 (citing Carver v. Dennis, 104 F.3d 847, 850-53 (6th Cir. 1997)). [1] Other circuits disagree, and rightly conclude that a public employee’s candidacy for office should be protected to at least the same degree as a public employee’s political speech. See, e.g., James v. Texas Collin County, 535 F.3d 365 (5th Cir. 2008); Finkelstein v. Bergna, 924 F.2d 1449 (9th Cir. 1991); Flinn v. Gordon, 775 F.2d 1551 (11th Cir. 1985); Washington v. Finlay, 664 F.2d 913 (4th Cir. 1981); Newcomb v. Brennan, 558 F.2d 825 (7th Cir. 1977); and Magill v. Lynch, 560 F.2d 22 (1st Cir. 1977).

The Greenwell plaintiff recently petitioned for the Supreme Court to overturn the 6th Circuit, in light of the 6th Circuit’s clear split with other Circuits on this issue. See Petition for Certiorari, 77 USLW 3619 (Apr 27, 2009) (No. 08-1328). The Supreme Court should grant review (certiorari) because “citizens are not deprived of fundamental rights by virtue of working for the government.” Connick v. Myers, 461 U.S. 138, 147 (1983). Running for office is a fundamental right.

The Supreme Court’s seminal decision in Pickering v. Bd. of Educ., 391 U.S. 563, 573, 88 S.Ct. 1731 (1968), set forth a balancing test for public employees’ First Amendment rights in the workplace. More recently, in 2006, the Supreme Court acknowledged, in Garcetti v. Ceballos, 547 U.S. 410, 126 S.Ct. 1951 (2006), “Many citizens do much of their talking inside their respective workplaces, and it would not serve the goal of treating public employees ‘like any member of the general public,’ [citing Pickering], to hold that all speech within the office is automatically exposed to restriction.” Garcetti, 126 S.Ct. at 1959. Greenwell seemingly eliminates the Pickering balance, reiterated recently in Garcetti.

There are four issues that warrant Supreme Court review of the Greenwell decision’s divergent holding: 1) whether a public employee may be prevented from speaking on a matter of public concern without balancing the interests of the employee, as a citizen, in commenting upon matters of public concern; 2) whether a public employee who communicates an intent to run for office has engaged in protected First Amendment speech; 3) whether a public employee can be fired based on the employee’s political affiliation even when that affiliation is irrelevant to the performance of the employee’s job; and 4) the depth of public employees’ First Amendment protections generally.

1. Public employees’ interests – as citizens - must be given weight.

Greenwell’s reactionary result – that the employer’s interest is all-encompassing and that the employees’ rights need not enter into the balance at all – erodes Pickering and its progeny to the point of meaninglessness. Certainly, the Supreme Court will undoubtedly find, an employee whose hostility to his employer (a public officeholder) reaches the level of insubordination, can be properly removed. See, e.g., Curran v. Cousins, 509 F.3d 36, 49 (1st Cir. 2007) (citing Stanley v. City of Dalton, Ga., 219 F.3d 1280, 1290 (11th Cir.2000)) (speech done in a vulgar, insulting, and defiant manner is entitled to less weight in the Pickering balance). But there still must be some balancing in this analysis.

2. The Court should not construe narrowly what kinds of public employees’ communications engender constitutional protection.

Contrary to Greenwell’s result, “speech on public issues occupies the ‘highest rung of the hierarchy of First Amendment values,’ and is entitled to special protection.” Connick, 461 U.S. at 145. After Greenwell and the 2006 Garcetti decision, a public employee cannot expect protection if he/she responsibly disagrees with the employer regarding a matter of public concern within the scope of his/her duties, nor if he/she tries to shift policy by dislodging the public officeholder. Essentially, this would leave a public employee devoid of the protection envisioned by Connick – unable to change a bad regime and stuck in it, without recourse, unless he/she is willing to sacrifice secure employment and the ability to provide for his/her family.

3. The right to run for office is encompassed in the right to political association.

The Supreme Court has previously held that “[t]he First Amendment protects political association as well as political expression,” and that “[t]he right to associate with the political party of one’s choice is an integral part of this basic constitutional freedom” of association. Elrod v. Burns, 427 U.S. 347, 357 (1976) (plurality opinion) (quoting Buckley v. Valeo, 424 U.S. 1, 15 (1976) (per curiam). Those who devote their life to public service should not be deprived, contrary to Connick, the basic rights provided other citizens.

4. The Supreme Court should reaffirm the breadth of public employees’ constitutional protections.

Greenwell is particularly important because, despite the favorable language in Garcetti about treating public employees like members of the general public with respect to First Amendment expression, that 2006 Supreme Court decision may have raised doubts about the depth of public employees’ constitutional rights. In Garcetti, the Supreme Court held that “when public employees make statements pursuant to their official duties, the employees are not speaking as citizens for First Amendment purposes, and the Constitution does not insulate their communications from employer discipline.” Garcetti, 126 S.Ct. at 1960. Public employees need the Court, in reviewing Greenwell, to reestablish the strong First Amendment protections they still have on the job. See, e.g., Givhan v. Western Line Consol. School Dist., 439 U.S. 410, 414, 99 S.Ct. 693, 58 L.Ed.2d 619 (1979).

If you are a public employee whose constitutional rights have been compromised, contact Bryan Schwartz Law, www.BryanSchwartzLaw.com.

[1] The concurrence in Greenwell by Circuit Judge Boyce Martin invites Supreme Court review of both Greenwell and Carver. Judge Boyce’s strong language in his concurrence is compelling (rivaling Carver’s viper imagery): he described Carver, upon which Greenwell relied, as “a stray cat that hangs around the door and infests the house with fleas,” stating that Carver “continues to plague this Court's jurisprudence. As such, we are bound by its conclusion.” Greenwell, 541 F.3d at 405-406.