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

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.

---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

[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.

Get Paid What You are Owed!

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

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

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. 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 she 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.

---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

[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

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

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!

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.