Bryan Schwartz wrote the following op-ed piece for the San Francisco Chronicle which appeared in today's newspaper:
How we killed Berkeley's 'Naked Guy'
San Francisco Chronicle
Monday, June 1, 2009
Bryan Schwartz
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
Monday, June 1, 2009
Thursday, May 21, 2009
The First Amendment Protects Public Employees’ Right to Run for Office – Or At Least, It Should!
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.
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.
Wednesday, April 29, 2009
Who Is Getting Your Tip Money? It Is Time to Put Limits on Tip-Pooling.
Please see the attached letter, which I drafted to send today to the California Supreme Court on behalf of the California Employment Lawyers' Association.
Via First-Class Mail
April 29, 2009
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))
Lu v. Hawaiian Gardens Casino, Inc. (2009) 170 Cal.App.4th 466, 88 Cal.Rptr.3d 345
California Court of Appeal, Second District, Division 3, No. B194209, Petition No. 171442
Dear Chief Justice and Associate Justices:
This is a letter under Rule 8.500(g) of the 2009 California Rules of Court in support of the petition for review by the Plaintiff/Appellant in Lu v. Hawaiian Gardens Casino, Inc. (2009) 170 Cal.App.4th 466, 88 Cal.Rptr.3d 345, California Court of Appeal, Second District, Division 3, No. B194209 (hereafter, Lu). This letter, on behalf of the California Employment Lawyers Association (CELA), seeks to have this Court define the scope of permissible tip pooling. The Court of Appeal’s decision in Lu is just one of several recent decisions by Courts of Appeal attempting to define the parameters of permissible tip pooling without Supreme Court guidance.[1] Though this Court has discussed Cal. Lab. Code §351, the basis for the instant dispute (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), this Court has never weighed in on the extent to which employers may appropriate money given by customers to service employees as gratuities and distribute it to other non-supervisory employees.
California Courts of Appeal have long followed Leighton v. Old Heidelberg, Ltd. (1990) 219 Cal.App.3d 1062, 268 Cal.Rptr. 647 (decided closely on the heels of Henning), which ruled that enforced tip pooling between servers and bussers at a restaurant is permissible under §351. Leighton emphasized that the regulation states that a gratuity is “hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for.” (Ital. added to emphasize the plural.) However, recent decisions have begun to extend the tip pooling concept beyond merely multiple service employees assisting a single customer at a restaurant table. Lu stretches the tip pool to sharing tips between a casino dealer (who directly received the tip from the customer for his/her service) and chip runners, hostesses, poker tournament and poker rotation coordinators, customer services representatives or “floormen,” and concierges. Lu, 170 Cal.App.4th at 471. CELA believes that the better-reasoned view is that tip pooling can only be proper, under the plain language of §351, between non-supervisory employees[2] for whom the gratuities in question were “paid, given, or left for.” Under §351, tip income must not be used by an employer to subsidize the wages of other non-supervisory employees who were not responsible for the service which caused the customer to provide a gratuity.[3]
I. Interest of Amicus
The undersigned writes on behalf of CELA, a “person” within the meaning of Rule 8.500(g), seeking to support the petition for review. 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 employees’ property interest in their gratuities, guaranteed by Labor Code §351, 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 hopes that this Court will not permit an interpretation, like that applied in Lu, which results or could result in tips given directly to millions of California non-supervisory workers being misappropriated to defray employers’ labor costs with respect to other workers.
II. Review is Warranted
In Henning, 46 Cal.3d at 1279-1281, and Industrial Welfare Com’n, 27 Cal.3d at 729-731, the Court applied §351 to eliminate the practice of tip crediting, which had been used to pay service employees receiving gratuities less than the minimum wage, or a lower minimum wage than non-tipped employees. Part of the rationale for these decisions eliminating tip crediting and the two-tiered minimum wage was that “a lower minimum (which in itself is to provide an adequate) wage is only possible because tips are used to subsidize it” (see Henning, 46 Cal.3d at 1278, citing Industrial Welfare Com’n) – and employers should not be able to use tips (the property of the employees who received them) to subsidize otherwise inadequate wages. This Court discussed the legislative history behind §351, noting that the section, in its current form, was designed to prevent employers from “obtain[ing] the benefit (as, in effect, the payment of wages) of tips and other gratuities received by their employees,” and “from taking any tip given by a patron to his employee.” Henning, 46 Cal.3d at 1279.
The Leighton court discussed some practical difficulties behind this public policy, and held, pragmatically, that tip pooling cannot be prohibited in all circumstances, such as where servers and bussers are together working at a restaurant table. The Court of Appeal explained, in language cited by the Lu court and others:
"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. This, and the near impossibility of being able to determine the intent of departed diners in leaving a tip, in our view, account for the Legislature's use of the term 'employees' in declaring that 'every such gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for.' (Lab.Code, § 351, italics added.) It is clear that the Legislature intended by this section to cover just such a situation." Leighton, 219 Cal.App.3d at 1069.
However, the Lu court disingenuously extends this language to the present situation. CELA hopes this Court will recognize the difference between leaving a gratuity in a tip cup at a coffee shop counter or on a table at a restaurant, where it may be pooled between all the non-supervisory employees providing the service the customers received, and a tip given directly to (for example) a casino dealer working at a table alone, apparently to recognize him/her. In the latter situation, there is no need to divine the customer’s intentions – he/she is tipping the dealer. There is no reason to believe that the customer intended also to recognize chip runners, or hostesses (who are separately tipped), etc. This is not a scenario in which rejection of tip pooling would create counter-productive incentives for employees and workplace strife, as in Leighton, 219 Cal.App.3d at 1070. There, the rejection of tip pooling between servers and bussers might lead to tips being commandeered by the first person to grab them off the table, and infighting as a result. Id. Here, the dealer need not fight for the tips he/she is given or swipe them before other employees notice – the tips are given to or left for him/her directly, and no one else.
The casino simply wants to subsidize the wages of its chip runners and others who do not receive tips by giving them part of the tips earned by dealers. According to Henning, this is against the legislative intent of §351, because it is taking money out of the dealers’ hands and using it to keep down the employers’ labor costs. While CELA would certainly condone an effort to ensure greater pay for chip runners and other non-tipped employees, and they will need to receive greater wages to attract their labor, if they are not receiving portions of dealers’ gratuities, their pay should not come out of the pockets of the tipped employees – but from the casinos.
The plain language of the statute is that the gratuities become the property of the non-supervisory employees for whom they are left. “Every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for.” Cal. Lab. Code §351. Courts do not need to get into case-by-case findings regarding customers’ intent, which, as Leighton explained, can be vague. But it is safe to hold that, where tips are left in a tip cup or at a restaurant table, they are the property of all non-supervisors involved in providing the customer with good service – whereas, when tips are handed to a casino dealer or left at a casino table where a dealer is still sitting and where he/she is the only person working, the tips are the sole property of that dealer.
III. Conclusion
For the foregoing reasons, CELA hopes this Court will not permit courts to follow Lu, allowing the spreading to non-tipped employees of gratuities earned by and owned by particular employees, designed only to avoid payment of competitive wages in the labor market. Please grant the petition for review.
Thank you for your consideration.
CALIFORNIA EMPLOYMENT LAWYERS’ ASSOCIATION
BRYAN SCHWARTZ LAW
/s/Bryan J. Schwartz
___________________________
Bryan J. Schwartz, SBN 209903
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] See also, e.g., Budrow v. Dave & Buster’s of California, Inc. (2009) 171 Cal.App.4th 875, 90 Cal.Rptr.3d 239; Etheridge v. Reins International California, Inc. (2009) 172 Cal.App.4th 908, 91 Cal.Rptr.3d 816.
[2] All courts agree that supervisory employees must be strictly excluded from tip pools, and CELA does not challenge the portion of Lu addressing this issue. See Cal.Lab. 350(a) and (d); Lu, 170 Cal.App.4th at 485-486 (citing Jameson v. Five Feet Restaurant (2003) 107 Cal.App.4th 138, 141-143, 131 Cal.Rptr.2d 771).
[3] See 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.”) (emph. in original). See generally id., 172 Cal.App.4th 908 (Klein, P.J., concurring and dissenting) (“The majority opinion here eviscerates section 351 's guarantee that a gratuity belongs to the employee or employees for whom it was left. The majority opinion authorizes the employer to confiscate a portion of the gratuities left for servers and to redistribute those monies to other employees, so as to subsidize the wages of non-tipped employees, in accordance with the employer's self-interest and priorities. For these reasons, the propriety and parameters of employer-mandated tip pooling warrant the prompt attention of the California Supreme Court or the Legislature.”) (emph. in original).
Via First-Class Mail
April 29, 2009
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))
Lu v. Hawaiian Gardens Casino, Inc. (2009) 170 Cal.App.4th 466, 88 Cal.Rptr.3d 345
California Court of Appeal, Second District, Division 3, No. B194209, Petition No. 171442
Dear Chief Justice and Associate Justices:
This is a letter under Rule 8.500(g) of the 2009 California Rules of Court in support of the petition for review by the Plaintiff/Appellant in Lu v. Hawaiian Gardens Casino, Inc. (2009) 170 Cal.App.4th 466, 88 Cal.Rptr.3d 345, California Court of Appeal, Second District, Division 3, No. B194209 (hereafter, Lu). This letter, on behalf of the California Employment Lawyers Association (CELA), seeks to have this Court define the scope of permissible tip pooling. The Court of Appeal’s decision in Lu is just one of several recent decisions by Courts of Appeal attempting to define the parameters of permissible tip pooling without Supreme Court guidance.[1] Though this Court has discussed Cal. Lab. Code §351, the basis for the instant dispute (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), this Court has never weighed in on the extent to which employers may appropriate money given by customers to service employees as gratuities and distribute it to other non-supervisory employees.
California Courts of Appeal have long followed Leighton v. Old Heidelberg, Ltd. (1990) 219 Cal.App.3d 1062, 268 Cal.Rptr. 647 (decided closely on the heels of Henning), which ruled that enforced tip pooling between servers and bussers at a restaurant is permissible under §351. Leighton emphasized that the regulation states that a gratuity is “hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for.” (Ital. added to emphasize the plural.) However, recent decisions have begun to extend the tip pooling concept beyond merely multiple service employees assisting a single customer at a restaurant table. Lu stretches the tip pool to sharing tips between a casino dealer (who directly received the tip from the customer for his/her service) and chip runners, hostesses, poker tournament and poker rotation coordinators, customer services representatives or “floormen,” and concierges. Lu, 170 Cal.App.4th at 471. CELA believes that the better-reasoned view is that tip pooling can only be proper, under the plain language of §351, between non-supervisory employees[2] for whom the gratuities in question were “paid, given, or left for.” Under §351, tip income must not be used by an employer to subsidize the wages of other non-supervisory employees who were not responsible for the service which caused the customer to provide a gratuity.[3]
I. Interest of Amicus
The undersigned writes on behalf of CELA, a “person” within the meaning of Rule 8.500(g), seeking to support the petition for review. 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 employees’ property interest in their gratuities, guaranteed by Labor Code §351, 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 hopes that this Court will not permit an interpretation, like that applied in Lu, which results or could result in tips given directly to millions of California non-supervisory workers being misappropriated to defray employers’ labor costs with respect to other workers.
II. Review is Warranted
In Henning, 46 Cal.3d at 1279-1281, and Industrial Welfare Com’n, 27 Cal.3d at 729-731, the Court applied §351 to eliminate the practice of tip crediting, which had been used to pay service employees receiving gratuities less than the minimum wage, or a lower minimum wage than non-tipped employees. Part of the rationale for these decisions eliminating tip crediting and the two-tiered minimum wage was that “a lower minimum (which in itself is to provide an adequate) wage is only possible because tips are used to subsidize it” (see Henning, 46 Cal.3d at 1278, citing Industrial Welfare Com’n) – and employers should not be able to use tips (the property of the employees who received them) to subsidize otherwise inadequate wages. This Court discussed the legislative history behind §351, noting that the section, in its current form, was designed to prevent employers from “obtain[ing] the benefit (as, in effect, the payment of wages) of tips and other gratuities received by their employees,” and “from taking any tip given by a patron to his employee.” Henning, 46 Cal.3d at 1279.
The Leighton court discussed some practical difficulties behind this public policy, and held, pragmatically, that tip pooling cannot be prohibited in all circumstances, such as where servers and bussers are together working at a restaurant table. The Court of Appeal explained, in language cited by the Lu court and others:
"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. This, and the near impossibility of being able to determine the intent of departed diners in leaving a tip, in our view, account for the Legislature's use of the term 'employees' in declaring that 'every such gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for.' (Lab.Code, § 351, italics added.) It is clear that the Legislature intended by this section to cover just such a situation." Leighton, 219 Cal.App.3d at 1069.
However, the Lu court disingenuously extends this language to the present situation. CELA hopes this Court will recognize the difference between leaving a gratuity in a tip cup at a coffee shop counter or on a table at a restaurant, where it may be pooled between all the non-supervisory employees providing the service the customers received, and a tip given directly to (for example) a casino dealer working at a table alone, apparently to recognize him/her. In the latter situation, there is no need to divine the customer’s intentions – he/she is tipping the dealer. There is no reason to believe that the customer intended also to recognize chip runners, or hostesses (who are separately tipped), etc. This is not a scenario in which rejection of tip pooling would create counter-productive incentives for employees and workplace strife, as in Leighton, 219 Cal.App.3d at 1070. There, the rejection of tip pooling between servers and bussers might lead to tips being commandeered by the first person to grab them off the table, and infighting as a result. Id. Here, the dealer need not fight for the tips he/she is given or swipe them before other employees notice – the tips are given to or left for him/her directly, and no one else.
The casino simply wants to subsidize the wages of its chip runners and others who do not receive tips by giving them part of the tips earned by dealers. According to Henning, this is against the legislative intent of §351, because it is taking money out of the dealers’ hands and using it to keep down the employers’ labor costs. While CELA would certainly condone an effort to ensure greater pay for chip runners and other non-tipped employees, and they will need to receive greater wages to attract their labor, if they are not receiving portions of dealers’ gratuities, their pay should not come out of the pockets of the tipped employees – but from the casinos.
The plain language of the statute is that the gratuities become the property of the non-supervisory employees for whom they are left. “Every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for.” Cal. Lab. Code §351. Courts do not need to get into case-by-case findings regarding customers’ intent, which, as Leighton explained, can be vague. But it is safe to hold that, where tips are left in a tip cup or at a restaurant table, they are the property of all non-supervisors involved in providing the customer with good service – whereas, when tips are handed to a casino dealer or left at a casino table where a dealer is still sitting and where he/she is the only person working, the tips are the sole property of that dealer.
III. Conclusion
For the foregoing reasons, CELA hopes this Court will not permit courts to follow Lu, allowing the spreading to non-tipped employees of gratuities earned by and owned by particular employees, designed only to avoid payment of competitive wages in the labor market. Please grant the petition for review.
Thank you for your consideration.
CALIFORNIA EMPLOYMENT LAWYERS’ ASSOCIATION
BRYAN SCHWARTZ LAW
/s/Bryan J. Schwartz
___________________________
Bryan J. Schwartz, SBN 209903
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] See also, e.g., Budrow v. Dave & Buster’s of California, Inc. (2009) 171 Cal.App.4th 875, 90 Cal.Rptr.3d 239; Etheridge v. Reins International California, Inc. (2009) 172 Cal.App.4th 908, 91 Cal.Rptr.3d 816.
[2] All courts agree that supervisory employees must be strictly excluded from tip pools, and CELA does not challenge the portion of Lu addressing this issue. See Cal.Lab. 350(a) and (d); Lu, 170 Cal.App.4th at 485-486 (citing Jameson v. Five Feet Restaurant (2003) 107 Cal.App.4th 138, 141-143, 131 Cal.Rptr.2d 771).
[3] See 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.”) (emph. in original). See generally id., 172 Cal.App.4th 908 (Klein, P.J., concurring and dissenting) (“The majority opinion here eviscerates section 351 's guarantee that a gratuity belongs to the employee or employees for whom it was left. The majority opinion authorizes the employer to confiscate a portion of the gratuities left for servers and to redistribute those monies to other employees, so as to subsidize the wages of non-tipped employees, in accordance with the employer's self-interest and priorities. For these reasons, the propriety and parameters of employer-mandated tip pooling warrant the prompt attention of the California Supreme Court or the Legislature.”) (emph. in original).
Wednesday, April 22, 2009
Using Company Email to Communicate with Your Employment Lawyer
The sanctity of the attorney-client relationship is a fundamental pillar of our legal system, recognized throughout the public and private sector. “[T]he attorney-client privilege is the oldest privilege recognized for confidential communications at common law and is intended ‘to encourage full and frank communications between attorneys and their clients and thereby promote broader public interests in the observance of law and the administration of justice.’” Grimes v. Dept. of Navy, 99 M.S.P.R. 7, 11 (2005) (quoting Upjohn Co. v. United States, 449 U.S. 383, 389, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981)). “The attorney-client privilege protects confidential disclosures made by a client to an attorney in order to obtain legal advice,...as well as an attorney's advice in response to such disclosures.” United States v. Chen, 99 F.3d 1495, 1501 (9th Cir. 1996) (quotation omitted), cert. denied, 520 U.S. 1167, 117 S.Ct. 1429, 137 L.Ed.2d 538 (1997). The attorney-client privilege falls into the class of absolute privileges. Swidler & Berlin v. United States, 524 U.S. 399, 409, 118 S.Ct. 2081, 141 L.Ed.2d 379 (1998). If you are engaged in an attorney-client relationship with counsel at the time of particular communications, then an absolute privilege should apply to those communications.
However, what if you learn that your employer, either intentionally or inadvertently, has come into possession of attorney-client emails sent through a work email account? First, if you learn that attorney-client communications or attorney work product documents are in the employer’s possession, you should immediately seek return of such communications. You should advise the employer that you consider the documents to be attorney-client privileged communications (and possibly attorney work product privileged as well). You should be clear that it is not your intention to waive any attorney-client, work product, or other privileges that apply to these documents.
You can also remind your employer that, under Fed.R.Civ.P. 26(b)(5)(B), after being notified of an inadvertent disclosure of privileged information, “a party must promptly return, sequester, or destroy the specified information and any copies it has; must not use or disclose the information until the claim is resolved; must take reasonable steps to retrieve the information if the party disclosed it before being notified; and may promptly present the information to the court under seal for a determination of the claim.” “Once a party claims the attorney-client privilege, the communication sought to be suppressed is presumed confidential.” La Jolla Cove Motel and Hotel Apartments, Inc., v. Superior Court, 121 Cal.App.4th 773, 791 (2004) (citing Cal.Evid.Code, § 917).
Generally, you can put your employer on notice that the ethical canons of the legal profession preclude the employer from searching intentionally to discover privileged information in an employee’s email account, knowing that such information is subject to an asserted or very likely attorney-client or work-product privilege. Such would include all communications between an employee and his/her employment lawyer. The American Bar Association’s Standing Committee on Ethics and Professional Responsibility, “Formal Opinion 92-368: Inadvertent Disclosure of Confidential Materials (1992),” makes clear that counsel should not seek to review information it has reason to believe was inadvertently disclosed.
If the employer is trying to hold against you something you discussed with your employment attorney on a company email system, you should also remind the employer that privileged communications do not lose their privileged character because they are communicated electronically. See California's Evidence Code § 917(b). See also, e.g., 18 U.S.C. § 2517(4) (wiretap law recognizing that electronic communications may have privileged character); Kintera, Inc. v. Convio, Inc., 219 F.R.D. 503, 514 (S.D. Cal. 2003) (applying attorney-client privilege to email communications). However, attorney-client privilege can be waived, and if the privilege is waived, then those communications may be fair game for employers to use.
The “sacred” attorney-client privilege can be waived “implicitly” only under rare, defined circumstances (see Bittaker v. Woodford, 331 F.3d 715, 718-721 (9th Cir. 2003)), such as (for example) in a legal malpractice action, where the attorney-client communications are directly placed at issue in the litigation. On the other hand, an “express waiver occurs when a party discloses privileged information to a third party who is not bound by the privilege, or otherwise shows disregard for the privilege by making the information public.” Id. at 719. By communicating to the employer seeking return of disclosed information immediately after learning of its disclosure, you convey a strong desire to maintain the privilege. On the other hand, if you forward your attorney’s email to someone else not involved in the attorney-client relationship, you have likely implicitly waived the privilege as to that particular communication.
It is the present policy of Bryan Schwartz Law (www.BryanSchwartzLaw.com) to communicate as little as possible, or not at all, with clients on their work email, because, at the very least, it creates a headache in subsequent litigation when an employer inadvertently discovers attorney-client communications and tries to use them in the case. However, I believe strongly that privileges between employees and their attorneys – not to mention, prisoners emailing their attorneys, and other attorney-client email relationships – would be of little value if, by disclaimer, “Big Brother” could simply deem all communications via particular media as non-confidential, such that privilege would be waived inherently and broadly. Many employees in the workforce do not have private email apart from their work email accounts, and thus would not be able to email their attorneys at all. Perhaps all work email (not only that of the employer against whom a party is litigating) – by virtue of the fact that a non-attorney administrator can access it – would be unprivileged, including all emails sent by attorneys to clients from the attorneys’ own law firms’ email accounts. By this rule, all of the emails between the employer and the employer’s own attorneys regarding your case would also be unprivileged, because privilege was waived when they utilized the company’s email system. Perhaps all email sent via Gmail, Yahoo, Comcast, SBC, and Hotmail would also be unprivileged, since there are no doubt skilled individuals who can access our emails sent via these services as well.[1]
In sum, while the danger of inadvertent disclosure during discovery makes attorney-client communications by work email not a “best practice,” it does not mean that all attorneys and all clients who communicate via a work email have waived their sacred rights. In practice, many or most employers tolerate usage of work email for some personal uses. If the employer demonstrated a widespread enforcement of a “no personal use” policy, such that you and individuals known to you were being routinely counseled and disciplined for using their email to send greetings to spouses or friends, or, if the employer’s email system generally prevented outside emails all together, then perhaps you would be on clear notice that your emails were being monitored and would have a reasonable belief they were non-confidential. However, just because we are aware in the abstract that someone (like a forensic software examiner or technology specialist) could figure out how to probe our email accounts, is not the same as knowing that each of our emails is being actively monitored. By way of contrast, when one calls a credit card company, the phone system indicates on every call that you are “being monitored and recorded for quality and training purposes” – which might defeat an expectation of privacy/confidentiality. See also Cal. Evid. Code. §917(b). In many cases, there is no indication that employees know that each of their emails are being individually monitored. An employee of an employer with hundreds or thousands of employees worldwide need not assume that every communication he/she has with anyone about anything is being read by individuals who are not the intended recipients of the communication.[2]
Even if you could ever have reasonably expected the employer to learn that you did exchange some emails with your attorney while at work (i.e., the identities of your addressees), you would have no reason to believe that the employer at the direction of legal counsel would overtly violate legal ethical obligations by seeking to review the substance of communications known to be between a client and his/her counsel.
Your communications with counsel via work email arguably maintain their privileged character, and should not be employed by the employer against you.
[1] It is no doubt possible for technologically-gifted individuals to listen to attorney-client communications via telephone, too, and yet courts have found that individuals have a reasonable expectation of privacy in their phone conversations. Quon v. Arch Wireless Operating Co., Inc., 529 F.3d 892, 904 (9th Cir. 2008) (citing Katz v. United States, 389 U.S. 347, 353, 88 S.Ct. 507, 19 L.Ed.2d 576 (1967) (“One who occupies [a phone booth], shuts the door behind him, and pays the toll that permits him to place a call is surely entitled to assume that the words he utters into the mouthpiece will not be broadcast to the world. To read the Constitution more narrowly is to ignore the vital role that the public telephone has come to play in private communication.”). Before Katz, courts had found that communications by United States mail could also be entitled to confidentiality/an expectation of privacy. Quon, 529 F.3d at 905 (citing United States v. Jacobsen, 466 U.S. 109, 114, 104 S.Ct. 1652, 80 L.Ed.2d 85 (1984)). Email (and text message) plays a role today like the phone booth and the U.S. mail have played in the past, and the content of messages transmitted via these media can have a reasonable expectation of privacy and confidentiality. Quon, 529 F.3d at 905-906 (citing United States v. Forrester, 512 F.3d 500, 510 (9th Cir. 2008)).
[2] Without having statistical or expert data on point, my experience suggests that virtually every client, co-worker, and friend whose work email permits sending to and receiving from outside parties does have personal communications from time to time on this email system, which he or she does not expect to be read by non-addressees at the employer.
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.
Tuesday, March 31, 2009
Just Because It's a Layoff, Doesn't Mean You're Out of Options
In this down economy, many employers are undergoing layoffs of workers. Certainly, it can be harder to prove that your termination was discriminatory or retaliatory when many others are suffering the same fate as you are. But ask yourself this: was the layoff legitimately based upon financial reasons, and if so, why were you chosen?
As the California Supreme Court has explained, “Invocation of a right to downsize does not resolve whether the employer had a discriminatory motive for cutting back its work force, or engaged in intentional discrimination when deciding which individual workers to retain and release.” Guz v. Bechtel National, Inc., 24 Cal.4th 317, 358, 100 Cal.Rptr.2d 352 (2000). See also, e.g., Miller v. Fairchild Industries, Inc., 885 F.2d 498, 506 (9th Cir. 1989) (jury could find retaliation in layoff which employer claimed was based on decline in workload, where employee provided contrary testimony and where other employees were not similarly laid off); Cones v. Shalala, 199 F.3d 512, 519-520 (D.C.Cir. 2000) (holding that a jury could have concluded that the agency's explanation for not promoting the African-American plaintiff, downsizing, was inconsistent with its decision to promote three white co-workers, and hence a pretext for discrimination); Cichewicz v. UNOVA Indus. Automotive Systems, Inc., 92 Fed.Appx. 215, at **5 (6th Cir. 2004) (downsizing explanation insufficient to warrant summary judgment where there was evidence of pretext). If you were chosen for layoff over someone not of your protected classification who was less qualified, then you may still have a viable claim regarding your termination.
In a case in which I argued this last month against a summary judgment and summary adjudication motion, the employer - a relatively small company - laid off five workers, including my client, who was 50 at the time. My client was the only worker of his classification laid off, and a number were retained - including some who were similar in age to my client, and some who were ten or more years younger. I was able to distinguish my client from several workers of similar ages because they worked in different regions (geographically) than he did. Yet, the company was at first unable to present a legitimate, non-discriminatory reason for retaining the younger workers instead of my client. When the company did present reasons other than age, they were only vague and non-specific ones (e.g., management felt that my client would be "less missed"), which (to the extent they meant anything at all) my client could readily refute.
Moreover, there were numerous instances in which a key decision-maker in the layoff had told my client that he felt the company needed to "get younger," and that older workers cost the company more in benefits and wages, among other statements. This evidence suggests that the company's weak reasons stated for choosing my client for layoff were just a pretext (or phony reason to cover up) for age discrimination. “With direct evidence of pretext, a triable issue as to the actual motivation of the employer is created even if the evidence is not substantial. The plaintiff is required to produce very little direct evidence of the employer's discriminatory intent to move past summary judgment.” Morgan v. Regents of University of Cal. (2000) 88 Cal.App.4th 52, 68, 105 Cal.Rptr.2d 652 (citing Chuang v. University of California Davis, Bd. of Trustees (9th Cir. 2000) 225 F.3d 1115, 1127.
Based on the evidence I presented, Bryan Schwartz Law (http://www.bryanschwartzlaw.com/) and my co-counsel learned that the Court intends to deny the company's effort to defeat the age discrimination claim arising from the layoff, allowing my client to proceed to trial to overturn his termination.
If you are notified of a layoff, think twice before assuming that you are out of options.
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.
Monday, February 23, 2009
Why the Supreme Court Should Define "Bonus" - An Amicus Letter to the California Supreme Court
Today, Bryan Schwartz Law sent the following letter to the California Supreme Court on behalf of the California Employment Lawyers Association, hoping the Court will accept review of the Court of Appeal decision in Marin v. Costco. Simply put, the issue is whether employers can avoid paying the full rate of overtime required under California law - time-and-a-half - just by designating some of the an employee's wages earned for hours worked as a "bonus." Understand that I am not talking here about a true production bonus, i.e., a discretionary bonus for extraordinary performance, but about deferred wages for time spent on the job. The "bonus" in question was not a measure of Costco's generosity, but wages promised to employees which induced them to take the jobs in question - they were basically told their "real" hourly rate of pay was the rate including the "bonus."
--
February 23, 2009
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))
Marin, et al. v. Costco Wholesale Corp. (2009) 169 Cal.App.4th 804, 87 Cal.Rptr.3d 161
California Court of Appeal, First District, Division 1, No. RG04150447
Dear Chief Justice and Associate Justices:
This is a letter under Rule 8.500(g) of the 2009 California Rules of Court in support of the petition for review by Plaintiffs/Respondents/Cross-Appellants in Marin, et al., v. Costco Wholesale Corp. (2009) 169 Cal.App.4th 804, 87 Cal.Rptr.3d 161, California Court of Appeal, First District, Division 1, No. RG04150447 (hereafter, Marin). This letter, on behalf of the California Employment Lawyers Association (CELA), asserts that the Court of Appeal’s decision in Marin dangerously defines the term “bonus” in a manner that would lead employers where this Court did not intend them to go, when discussing incentive compensation in Prachasaisoradej v. Ralphs Grocery Co., Inc. (2007) 42 Cal.4th 217, 64 Cal.Rptr.3d 407. Broadly, the Court of Appeal allows employers to construe as a “bonus” promised compensation for time worked, as opposed to extra compensation for superior performance, i.e., for “extraordinary work,” as bonus is defined by the Department of Labor Standards Enforcement (“DLSE”) in, inter alia, the DLSE Enforcement Manual §2.5.5.
The result of the Court of Appeal’s expansive use of the “bonus” concept is that employers can construe much of employees’ non-discretionary wages as “bonuses,” and thereby avoid including such wages in employees’ regular rate of pay, for overtime compensation purposes. In Prachasaisoradej, this Court specifically refrained from deciding whether amounts paid out under the employer’s incentive compensation plan qualified for exclusion from employees’ regular pay. Id., 42 Cal.4th at 242 n. 14. Here, because the Court of Appeal has allowed Costco to pay only half-time overtime compensation on the non-discretionary, so-called “bonus” wages, rather than time-and-a-half, this Court should define what sorts of bonuses fall outside Labor Code §510. Though the Marin decision professes to be couched in DLSE guidance, the DLSE’s guidance is confused, and this Court should outline a clear test of what is, and is not, true bonus compensation upon which full overtime wages need not be paid.
I. Interest of Amicus
The undersigned writes on behalf of CELA, a “person” within the meaning of Rule 8.500(g), seeking to support the petition for review. 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, and in Gentry v. Superior Court (2007) 42 Cal.4th 443, 64 Cal.Rptr.3d 773.
CELA’s members have an abiding interest in the definition of workers’ “bonuses,” directly at issue in this case, and in the application of the DLSE’s Enforcement Manual. In particular, CELA seeks to ensure that the term “bonus” is not abused so as to undermine the guarantee of overtime pay in Labor Code §510, and that the State’s wage and hour laws are “liberally construed with an eye to promoting [worker] protection,” as this Court required in Prachasaisoradej, 42 Cal.4th at 246. This Court should not permit an interpretation, like that applied in Marin, which results or could result in denied time-and-a-half overtime pay for millions of California hourly workers.
II. Review is Warranted
It is a basic principle of California employment law that a promised bonus amounts to a unilateral contract which cannot be revoked after performance by the employee has begun. Lucien v. Allstate Trucking (1981) 116 Cal.App.3d 972, 171 Cal.Rptr. 262. By contrast, in Prachasaisoradej, this Court distinguished Truelove v. Northeast Capital & Advisory, Inc. (2000) 95 N.Y.2d 220, 715 N.Y.S.2d 366, 738 N.E.2d 770, in which the New York Court of Appeals held to be non-wages a bonus offered, in addition to the employee's regular remuneration, as a “[d]iscretionary...share in a reward to all employees for the success of the employer's entrepreneurship.” Prachasaisoradej, 42 Cal.4th at 244 n. 15. The Truelove scenario is opposite from that in the instant case, which is like Lucien, since Costco has stipulated that the compensation at issue is wages, Costco’s “bonus” wages are non-discretionary, and they have no relationship whatsoever to the employee’s or the employer’s success.[1]
Under Costco’s plan, any employee who worked the requisite number of hours for the store receives a “bonus” every six months, irrespective of performance.[2] Nonetheless, at the conclusion of each six-month period, Costco’s scheme upheld by the Court of Appeal pays only 0.5 times the bonus pay rate for the overtime hours worked – instead of the 1.5 times the rate of pay, as required for wages under Labor Code §510.[3] Costco’s fancy formulas should not conceal what is happening here: guaranteed pay for overtime hours worked is being short-changed.[4]
As this Court explained in Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 572-573, 59 Cal.Rptr.2d 186, while disapproving on other grounds Skyline Homes, Inc., v. Dept. of Industrial Relns. (1985) 165 Cal.App.3d 239, 211 Cal.Rptr. 792, California law does not recognize the Federal fluctuating workweek method, which allows payment of 0.5 times the regular rate of pay for overtime under certain circumstances. Tidewater, 14 Cal.4th at 572-573 (discussing Skyline Homes, 165 Cal.App.3d at 253). Yet, while paying lip service to Skyline Homes (Marin, 169 Cal.App.4th at 807), the Court of Appeal here seems to permit overtime calculations in California essentially based on the fluctuating workweek, by permitting a 0.5 multiplier for overtime premiums on the non-discretionary bonus. Id. 165 Cal.App.3d at 808 (using 0.5 multiplier). See also id., 169 Cal.App.4th at 820 (seemingly allowing application of the fluctuating workweek here). The Court of Appeal admitted, but at the same time disregarded, that California law in this area provides more protection to employees than the Federal law. Id. at 807 (citing Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575, 592, 94 Cal.Rptr.2d 3, 995 P.2d 139; 29 U.S.C. § 218(a)). This Court should reject the erosion of California’s stronger standards.
It is time for the Supreme Court to clarify the definition of a bonus falling outside the overtime requirements of Labor Code §510, since the DLSE’s Enforcement Manual’s guidance has apparently led to confusion. There are no fewer than 25 sections of the Enforcement Manual relating to the definition of a bonus required to address this case. See, e.g., DLSE Enforcement Manual 2.5.5, 2.5.5.1, 2.5.5.2, 34.1.3, 35.1, 35.2, 35.3, 35.4 35.4.2, 35.4.3, 35.4.4, 35.5, 35.6, 35.7, 49.1.1, 49.1.2, 49.1.2.1, 49.1.2.3, 49.1.2.4, 49.2.1.2, 49.2.1.3, 49.2.1.4, 49.2.4, 49.2.4.1, 49.2.4.2, 49.2.4.3.
Indeed, the Court of Appeal apparently became so tangled in the myriad examples and rules of the Enforcement Manual that it missed the basic definition of a bonus – “An addition to salary or wages normally paid for extraordinary work.” (emph. added) DLSE Enforcement Manual 35.1 (citing Duffy Bros. v. Bing & Bing, 217 App.Div. 10, 215 N.Y.S. 755, 758 (1926)). Costco’s bonus, which the Court of Appeal excluded from Labor Code §510’s time-and-one-half computations, has nothing to do with “extraordinary work” at all – it is simply deferred compensation paid for hours worked, and as such, should be included in calculating the regular rate, as describe in DLSE Enforcement Manual 49.1.2.3. Marin’s description of Costco’s “bonus” as primarily a “production bonus” (id., 169 Cal.App.4th at 816) is simply wrong – the employees’ time, not productivity, is the only thing measured by the “bonus,” and as such, they must be treated like all other hourly wages.
III. Conclusion
This Court should not permit courts to follow Marin and to begin allowing employers to characterize non-discretionary wages as production bonuses, so as to avoid payment of overtime wages as defined under Labor Code §510. The petition for review should be granted.
Thank you for your consideration.
CALIFORNIA EMPLOYMENT LAWYERS’ ASSOCIATION
BRYAN SCHWARTZ LAW
/s/ Bryan J. Schwartz
___________________________
Bryan J. Schwartz, SBN 209903
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] See Marin, 169 Cal.App.4th at 817 (discussing the requirement to pay overtime on the wages at issue). As the Court of Appeal acknowledged: “Because the nondiscretionary bonus at issue here increases the regular rate of pay, employees who worked overtime during the bonus period and were paid at 1.5 times their hourly rate (unaugmented by the bonus) during that time are entitled to additional overtime pay once the bonus is awarded.” Id. at 807.
[2] The Court of Appeal explained: “Costco pays a formulaic bonus, based on paid hours, to long-term hourly employees. To be eligible for the bonus, paid in April and October, these employees must: (1) have been paid a specified number of hours for continuous service-8,000 hours (approximately four years) for those hired before March 15, 2004, and 9,200 hours (approximately 4.6 years) for those hired after that date; (2) generally be at the top of their pay scale; and (3) have been employed by defendant on April 1 for the April bonus and October 1 for the October bonus. The maximum semi-annual base bonus amount is $2,000 for those with less than 10 years of service, $2,500 for those with 10 to 14 years of service, $3,000 for those with 15 to 19 years of service, and $3,500 for those with 20 or more years of service. To qualify for the maximum base bonus, the employee must have been paid for at least 1,000 hours in the six-month period preceding April 1 and October 1. Bonuses are prorated for those paid for less than 1,000 hours; the formula for the base bonus is thus: hours paid up to 1,000 / 1,000 x maximum bonus amount.” Marin, 169 Cal.App.4th at 806.
[3] According to the Court of Appeal: “For example, under defendant's formula, an employee who achieves a maximum base bonus of $2,500 by virtue of being paid for 840 straight time hours, 100 overtime hours, and 100 vacation hours during the bonus period is entitled to $125 of overtime pay on the bonus, calculated as follows: $2,500 (maximum base bonus) / 1,000 (paid hours required for maximum base bonus) = $2.50 (regular hourly bonus rate) x 100 (overtime hours) x 0.5 = $125. Under plaintiffs' formula, the same employee would receive $477 overtime on the bonus: $2,500 (base bonus earned) / 840 (straight time hours worked) = $2.98 (regular bonus rate) x 100 (overtime hours) x 1.5 = $447.” Marin, 169 Cal.App.4th at 808.
[4] Costco was not entitled to pay a fixed amount less than the statutory time-and-one-half rate for overtime hours worked. Alcala v. Western Ag Enterprises (1986) 182 Cal.App.3d 546, 550-551, 227 Cal.Rptr. 453.
Wednesday, January 21, 2009
Constitutional Claims on Behalf of Government Employees
Government employees are often highly-talented people who could work for a lot more money in the private sector. Apart from a desire to perform public service, what motivates people to Government employment? Frequently, the answer is job security.
Unlike most “at will” jobs, many Government employees’ jobs become a form of property. Portman v. County of Santa Clara, 995 F.2d 898, 904 (9th Cir. 1993) (“A government employee has a constitutionally protected property interest in continued employment when the employee has a legitimate claim of entitlement to the job.”). Certainly, the Government may be justified when it kicks an employee out of a particular job, or even out of the Government all together, for non-performance or misconduct – in the same way the Government can take a piece of private land when justified, i.e., when needed to, for example, preserve an endangered species. However, the Government cannot act arbitrarily. This is the essence of Due Process, which protects not only Government employees, but all of us. The Civil Service exists so that elected officials and partisans cannot arbitrarily fill the Government’s ranks with their own lackeys – but rather, must respect the rights of those who do their jobs well and who have committed themselves to lives of public service.
There are two types of constitutional Due Process at issue here – procedural Due Process, and Due Process liberty interests. Though it is not always an easy argument, under certain circumstances, some Courts recognize that both can be applied where Government employees’ jobs are taken unlawfully.
Procedural Due Process means that Government employees cannot be deprived of their employment without notice of the proposed action and a meaningful opportunity to respond. See generally Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 542-45, 105 S.Ct. 1487, 84 L.Ed.2d 494 (1985). The Federal Government, for example, has developed procedures by which many employees are given notice of the charges and specifications against them, with thirty days to respond, orally and in writing, before an action can be finalized.
A Due Process liberty interest relates to a situation in which the Government’s action has not only deprived someone of a particular job, but of the ability to practice in a whole profession. For example, if someone were specially trained in a narrow field, and his/her whole career was in that field, and the Government’s removal action lacked Due Process and effectively prevented him/her of ever working again in that field, then he/she may have been deprived of a Liberty Interest. See generally Wisconsin v. Constantineau, 400 U.S. 433, 437, 91 S.Ct. 507, 27 L.Ed.2d 515 (1971).
These constitutional theories admittedly have limited application. First of all, Equal Employment Opportunity matters are not constitutional – they are governed by specific statutory provisions. However, an employee who was discriminated against, who was also removed without Due Process (i.e., without notice and an opportunity to respond), may have both EEO and constitutional claims. See, e.g., Ethnic Employees of the Library of Congress v. Boorstin, 751 F.2d 1405, 1415 (D.C. Cir. 1985); White v. Gen. Servs. Admin., 652 F.2d 913, 917 (9th Cir. 1981).
The most significant limitation on constitutional claims by Government employees is the existence of statutory mechanisms, applicable to many (but not all), which Courts have found take the place of constitutional remedies. So, for example, if a Federal employee has been working more than one year, in most cases, he or she is outside the probationary period, and therefore, his/her relief is not through constitutional claims, but through the Civil Service Reform Act, which created the Merit Systems Protection Board (MSPB) to hear Federal employees’ claims. On the other hand, Federal employees without MSPB rights can still, some courts have held, assert constitutional claims. See, e.g., Spagnola v. Mathis, 859 F.2d 223, 229-230 (D.C. Cir. 1988) (per curiam); American Federation of Government Employees Local 1 v. Stone, 502 F.3d 1027 (9th Cir. 2007).
For example, in a case that Bryan Schwartz Law is currently handling, the Court recognized that a non-management Postal employee who lacks veterans’ preference can raise constitutional claims in addition to EEO claims. Ulloa v. Potter (USPS), No. CV 07-1567-PHX-SMM (D.Ariz. June 24, 2008). In the case in question, the Postal Service removed my client discriminatorily, and also without notice and an opportunity to respond to the proposed removal. In particular, after being sexually harassed, while my client was out on worker’s compensation, the Government simply terminated her, without giving her any formal opportunity to reply. The Court has held that we can assert constitutional claims.
Note that, when arguing a Federal employee’s constitutional employment claim, one cannot, typically, hope for legal damages (based on Bivens v. Six Unknown Federal Agents, 403 U.S. 388 (1971)), but rather, must seek equitable relief. In other words, constitutional claims can be used to put an employee into the job (with back pay and lost benefits), get a clean record, or get an injunction -- but cannot, for example, get compensatory damages for emotional distress. Clark v. Library of Congress, 750 F.2d 89, 104-105 (D.C. Cir. 1984).
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.
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