Jones v. Torrey Pines Supreme Court Opinion Forthcoming Monday

The California Supreme Court announced today that on Monday, March 3, 2008, it will issue an opinion in Jones (Scott) v. The Lodge At Torrey Pines Partnership. 

The issue in this case is whether an individual be held personally liable for retaliation under the California Fair Employment and Housing Act (Gov. Code, § 12900 et seq.).  We will post the opinion and hopefully have some time to include some analysis about the case on Monday.

Court Strikes Down Plaintiff's Attempt to Recover $46,000 In Attorney's Fees For $45 (rounded up) In Unpaid Wages

In Harrington v. Payroll Entertainment Services, Inc. (2008) __ Cal.App.4th __, Plaintiff brought suit against his employer for $44.63 in unpaid overtime, which was eventually settled for $10,500. After the settlement, the plaintiff (read the plaintiff’s lawyer) asked the trial court for about $46,000 for his attorneys’ fees. According to plaintiff, five lawyers and one paralegal worked on this case, with one lawyer billing 55.6 hours at $525 per hour, and another billing 67.15 hours at $275 per hour. The trial court denied the motion, and the plaintiff (read the plaintiff’s lawyer) appealed on the ground that he has a statutory right to recover his reasonable fees. The appellate court agreed, but in a scathing opinion only provided plaintiff $500 for his “reasonable” fees.

The appellate court stated:
It is as plain to us as it was to the trial court that, from the outset, this was a dispute about $44.63 and that it was not viable as a class action. It is equally plain that Harrington was underpaid as the result of an honest mistake made in reliance on a formula provided by his union, not based on any willful or knowingly wrongful conduct by PESI. (Cf. § 203.) At the risk of understatement, there is no way on earth this case justified the hours purportedly billed by Harrington’s lawyers.

We decline Harrington’s invitation to remand the matter to the trial court for its determination of a fee. The record is sufficient to allow us to make that determination, thereby saving the parties the additional fees and costs they would incur in refreshing the trial court’s recollection about this case, and avoiding any further expenditure of judicial resources. Given the nature of the dispute, the amount of the settlement, and the record on appeal, we are satisfied that the trial court could not reasonably award an amount in excess of $500, and thus fix the fee at that amount. (See PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1096; compare Chavez v. City of Los Angeles (2008) ___ Cal.App.4th ___ (Feb. 22, 2008, B192375).)
The opinion can be read here.

California Legislature Proposes Paid Sick Leave Law To Cover Every Employee In California

Assemblywoman Fiona Ma (D-San Francisco) introduced bill AB 2716 last week.  If passed, would provide paid sick leave to any employee who works for seven or more days each year - the only such law in the United States.  Employees would accrue sick time at the rate of one hour for every 30 hours worked.  Sick time would carry over from year to year. 

There are no exemptions for small businesses, which are defined in the bill as an employer who employs 10 or fewer employees during 20 or more calendar workweeks in the current or preceding calendar year.  So this means if you have one employee - a housekeeper for example - you would need to provide sick leave. 

The bill proposes that an employee would be entitled to use accrued sick time beginning on the 90th calendar day of employment.   Also, medium-to-large employers could limit annual paid sick days to nine days and small employers to five days. 

The sick leave would be available for use to care for a sick family member or to recover from domestic violence or sexual assault. Employers violating the law could face fines of up to $250 per incident.

What is the penalty for violations?  The bill proposes:
 [T]he payment of an additional sum as liquidated damages in the amount of fifty dollars ($50) to each employee or person whose rights under this article were violated for each day or portion thereof that the violation occurred or continued, plus, if the employer has unlawfully withheld paid sick leave to an employee, the dollar amount of paid sick leave withheld from the employee multiplied by three; or two hundred fifty dollars ($250), whichever amount is greater; and reinstatement in employment or injunctive relief; and further shall be awarded reasonable attorney's fees and costs.
So let's assume you employ 100 people.  For whatever reason there is a mistake and for 30 days it goes unnoticed and your company does not provide accrue sick leave as required under the bill.  This means you are on the hook for $150,000 ($50 x 100 employees x 30 days) and if you are deemed to have "unlawfully withheld" paid sick leave you owe another minimum $25,000 ($250 x 100 employees) for a grand total of $175,000.  Don't forget you would also be required to pay the plaintiff's attorney's fees and costs for bringing the lawsuit too. 

I am often asked, "What is the biggest area of liability facing California employers?"  The answer has easily been meal and rest and related wage and hour class actions.  However, if this bill becomes law, plaintiff's lawyers will have their next lawsuit of choice. 

Teleconference On Using Facebook, MySpace, and Other Websites to Scope Out New Hires

I would like to thank everyone who participated in the BLR teleconference this morning.  It was a pleasure speaking to everyone. 

Due to the great interest in this topic, we will be conducting the seminar again on at least one one occasion, maybe two.  We will also provide a seminar specifically addressing liability under California state law when using social networking sites and the Internet in conducting background checks.  Please check back within the next week or two for the dates on these teleconferences, or send me an email and I can notify you when we finalize the dates.

To download today's PowerPoint slides, click here

Also, I've had a lot of requests to repeat the five general guidelines employers should keep in mind to avoid liability when conducting background checks on applicants on the Internet.  Under Federal law, employers may utilize social networking sites to conduct background checks on employees if:
  1. The employer and/or its agents conduct the background check themselves (i.e., does not use a third party to conduct the search);
  2. The site is readily accessible to the public;
  3. The employer does not need to create a false alias to access the site;
  4. The employer does not have to provide any false information to gain access to the site; and
  5. The employer does not use the information learned from the site in a discriminatory manner or as otherwise prohibited by law.

US Supreme Court Tackles Employment Law Cases This Week

Today, the Court will hear argument in Gomez-Perez v. Potter, on whether the Age Discrimination in Employment Act bars retaliation by public employers for the filing of age discrimination complaints.  For more information about the facts of the case, click here.

On Wednesday, the Court is scheduled to hear oral argument in CBOCS West v. Humphries, on whether a race retaliation claim can be brought under 42 U.S.C. § 1981 (Section 1981).  Section 1981 provides that any “person within the jurisdiction of the United States” has the same right to “make and enforce” contracts, regardless of their skin color.  Section 1981 protects parties to a contract (both at the time of formation and post-formation).  The argument arises that Section 1981 applies to aspects of the employment relationship because that relationship is considered contractual, but courts have not defined to what extent this protection exists in the employment context.  Employees who have not filed a lawsuits within the time limits proscribed by Title VII (which allows for retaliation claims), often revert to Section 1981 in order to keep their claim alive. 


Why Every Client Should Want A Lawyer Who Blogs

Teri Rasmussen posted an article recently on her blog that has received a lot of attention on the Internet recently. She explains why a client should want their lawyer to blog. In summary, her reasons are:
1.Knowledge Entrepreneur.
The blogging/blawgging attorney is just going to know MORE about more issues because they have a concrete personal stake and commitment beyond the needs of any particular client to find stuff out. And if I already know something, you the client won’t have to pay me to go find out.

2.Communication 101.
If you are able to “connect” with what I write in my blog/blawg, then at least you know you’ll get something of value when I communicate with you in writing, and hopefully face to face as well.

3.Authenticity and “Real Voice”.
So, when you read my blog/blawg, you as client get at bit of a “sneak preview” of what I’m really like. And if, as is likely, you’re going to be spending some time with me once you ask me to represent you, that’s got to be useful info.

4.Quality and Competence.
Those of us who blog/blawg are “out there”. You can take what we’ve written and ask your favorite friend attorney (who you don’t want to hire because you don’t want to mix personal and business or for some other reason), CPA, financial advisor, etc., what they think – or even research us on the web by seeing what other folks have to say about the same topic, or even about we’ve said about particular subjects.

5.Commitment to “the Law” Made Practical.
Blogging/blawging is fundamentally more practical and pragmatic than traditional legal scholarship in the form of footnoted articles in law reviews and journals.
Blogs definitely should be a tool used by clients looking for a lawyer. Just a few years ago, to find a lawyer, clients relied on their network, the yellow pages, or a lawyer rating company (which was paid by the lawyers it rated).  I strongly believe that one’s network is still the best source for a lawyer referral, and this will probably never be replaced (there is no better review than from someone that has recently work with the lawyer).  Today, however, every client should be able to do some background research on the lawyer they are considering to hire. And this research should include more than where the lawyer went to school and if he or she was on law review. The client should be able to read the lawyer’s opinion about the recent case law in the particular legal area, and also get a sense for the lawyer’s judgment (that is after all what the client will be paying for).

Can Internet User Protect His Or Her Identity Under The First Amendment?

As employment litigators, we are finding ourselves dealing more and more with Internet related issues, such as an employer’s right to monitor employees’ computer usage, and an employee’s privacy rights to information posted on the Internet. A recent case, Krinsky v. Doe 6, __ Cal.App.4th ___ (Feb. 6, 2008), (click here for the opinion) dealt with the issue whether someone who posts anonymously on the Internet can protect his or her identity under the First Amendment. While not directly related to employment law, the ruling's effects could be felt by companies and should be read by anyone dealing with human resource issues in California.

Lisa Krinsky, a corporate officer of a Florida company, SFBC International, Inc., filed a lawsuit against 10 unknown individuals for defamation and intentional interference of contractual relations. She claimed the 10 unknown individuals (sued as Does 1-10) posted scathing attacks about her and her company on Yahoo!’s message board. Krinsky attempted to discover the identity of 10 of the pseudonymous posters by serving a subpoena on the custodian of records of the message-board host, Yahoo!, Inc. (Yahoo!) in Sunnyvale, California.

Yahoo! notified Defendant “Doe 6” that it would comply with the subpoena in 15 days unless a motion to quash or other legal objection was filed. Doe 6 then moved in California superior court to quash the subpoena on the grounds that (1) plaintiff had failed to state a claim sufficient to overcome his First Amendment rights for either defamation or interference with a contractual or business relationship, and (2) plaintiff's request for injunctive relief was an invalid prior restraint. Doe 6 moved to quash the subpoena in California in an attempt to hide his identity, but the trial court denied the motion. Doe 6 appealed this decision, contending that he had a First Amendment right to speak anonymously on the Internet.

The appellate court discussed the fact that there is never really true anonymity on the Internet. Moreover, Yahoo! warns users that their identities can be traced, and that it will reveal their identities if legally required to do so. The parties in the case agreed that the enforceability of the subpoena should be determined by weighing Doe 6's First Amendment right to speak anonymously against plaintiff's interest in discovering Doe 6’s identity in order to pursue her claim.

The appellate court’s decision ultimately turned on the issue whether the statements posted by the defendant were in fact defamatory. The analysis begins with examining whether plaintiff can establish with supporting evidence that a libelous statement has been made. If plaintiff can establish this, then the writer’s message has no First Amendment protections.

The California appeals court, in applying Florida defamation legal standards due to the fact that this is where the Plaintiff filed the underlying case, stated:
A publication is libelous per se in Florida "if, when considered alone without innuendo: (1) it charges that a person has committed an infamous crime; (2) it charges a person with having an infectious disease; (3) it tends to subject one to hatred, distrust, ridicule, contempt, or disgrace; or (4) it tends to injure one in his trade or profession. Plaintiff maintains that Doe 6 implied that she was dishonest by calling her a "crook" and asserted that she had a "fake medical degree," thereby accusing plaintiff of being dishonest or at least of engaging in conduct incompatible with her employment. He also subjected her to ridicule and disgrace and damaged her reputation by stating that she had "poor feminine hygiene."
(citations and footnote omitted)
After examining the statements posted on the Yahoo! message board, the court found that the statements were not defamatory:
We likewise conclude that the language of Doe 6's posts, together with the surrounding circumstances -- including the recent public attention to SFBC's practices and the entire "SFCC" message-board discussion over a two-month period -- compels the conclusion that the statements of which plaintiff complains are not actionable. Rather, they fall into the category of crude, satirical hyperbole which, while reflecting the immaturity of the speaker, constitute protected opinion under the First Amendment.
As to plaintiff’s interference with contractual/business relationships claim, the appellate court held that this also failed:
As to Doe 6, it is clear from the pleading that the business tort alleged in the interference cause of action is based entirely on the "defamatory remarks" that were protected speech under the First Amendment. Casting the defamation claim in terms of interference with a business relationship does not save plaintiff's cause of action.
The appellate court concluded:
We thus conclude that Doe 6's online messages, while unquestionably offensive and demeaning to plaintiff, did not constitute assertions of actual fact and therefore were not actionable under Florida's defamation law. Because plaintiff stated no viable cause of action that overcame Doe 6's First Amendment right to speak anonymously, the subpoena to discover his identity should have been quashed. (fn. Omitted)

Vick's Case Is A Good Reminder About Treatment of Bonuses Under CA Law

Jailed quarterback Michael Vick can keep nearly $20 million in bonus money he received from the Atlanta Falcons following a ruling today by a federal judge. While Vick’s case involved interpretation of the NFL collective bargaining agreement, how bonuses are treated is often a sticky area of the law for California employers. Vick's win today is a good reminder to California employers to review how they should be treating bonuses. Below is a general overview of California’s DLSE’s opinion regarding how California employers must treat bonuses (with some commentary added).

DLSE’s Definition of Bonus:

The DLSE opines that a bonus is money promised to an employee in addition to the salary, commission or hourly rate usually due as compensation. The word has been variously defined as “An addition to salary or wages normally paid for extraordinary work. An inducement to employees to procure efficient and faithful service.” Duffy Bros. v. Bing & Bing, 217 App.Div. 10, 215 N.Y.S. 755, 758 (1926). Bonuses may be in the form of a gratuity where there is no promise for their payment; or they may be required payment where a promise is made that a bonus will be paid in return for a specific result.

An employee forfeits bonus if the employee voluntarily terminates employment before bonus vests, and employer states that bonus is contingent on continued employment.

An employee who voluntarily leaves his employment before the bonus calculation date is not entitled to receive it if the employer has expressly qualified its promise of a bonus on a requirement of continued employment. Lucien v. All States Trucking (1981) 116 Cal.App.3d 972, 975. This has been the rule ever since Peterson v. California Shipbuilding Corp. (1947) 80 Cal.App.2d 827, 831, 183 P.2d 56. The California rule is in accord with the prevailing view that where a definite bonus or profit-sharing plan has been established and forms part of the employment contract, the employee is not entitled to share in the proceeds where he leaves the employment voluntarily prior to vesting. (See DLSE Opinion Letter 1993.01.19)

If employer has not conditioned bonus on employment at time of payment then the employee may be entitled to receive bonus.

Where the promise of a bonus is not expressly conditioned on continued employment an employee who voluntarily leaves employment may be entitled to the bonus if other applicable conditions have been satisfied. Thus, in Hill v. Kaiser Aetna (1982) 130 Cal.App.3d 188, an employee who resigned on January 3, 1978, was held to be vested in his right to a bonus for calendar year 1977 where: (1) the bonus plan did not expressly require continued employment, and (2) the bonus was an inducement for continued employment. Id., at 196.

Caution: implied contract for bonus could be created by employer’s actions.

The regular payment of the bonus in past years may ripen into an implied contract for compensation in the absence of a specific contract. (D.L.S.E. v. Transpacific Transportation Co.(1979) 88 Cal.App.3d 823; cf. Simon v. Riblet Tramway Co., 8 Wash.App. 289, 505 P.2d 1291, 66 A.L.R.3d 1069, cert. den. 414 U.S. 975, 94 S.Ct. 28 9, 38 L.E d.2d 218 ). However, in order to be actionable, there must be some objective criteria upon which the bonus is based.

There is an exception to this general rule if bonuses which are completely discretionary, based on no objective criteria and are not routine, would not give rise to an implied bonus contract.

Termination of the employment by the employer could create obligation to pay bonus to the employee.

Common law contract theories will not allow one party to the contract to prevent the other party from completing the contract. If the employee is discharged before completion of all of the terms of the bonus agreement, and there is not valid cause, based on conduct of the employee, for the discharge, the employee may be entitled to recover at least a pro-rata share of the promised bonus. (DLSE Opinion Letter 1987.06.03) Again, if a bonus is discretionary, this general rule would not apply.