California Labor Defense Lawyer & Attorney : Van Vleck Turner & Zaller Law Firm : Employment Litigators : Serving Los Angeles, San Diego, San Jose

CNN Money.com reports that many companies across the U.S. are encountering wage and hour issues that California companies are all too familiar with.  The article reports:

Rod Cotner, owner of Jericho Mortgage in Lancaster, Ohio, was shocked when the U.S. Department of Labor showed up at his door to investigate a wage-and-hour lawsuit filed on behalf of his 54 loan officers and sales managers.

His company was growing - sales exceeded $4 million that year - and his employees were profiting: "Some of the staffers named in the lawsuit were making over $150,000," he says. "After working in the industry for years, I'd never heard of this happening. Everyone pays their officers on a commission basis. How can someone who makes six figures a year demand back wages for his time?"

In 2006 the U.S. Department of Labor collected $172 million in back wages from employers, which is reported to be 3.6 percent higher than 2005.

Also, the article illustrates that while these laws were intended to protect employees, the laws often times have the opposite effect.  This is especially true in California where the meal and rest break laws are so rigid that the employees cannot enter into agreements with their employer to skip meal breaks when needed for family issues.  The article quotes Don Turner, the owner of the Golden Bear Inn in Berkeley:

"I had an employee who wanted to watch his child's Little League game at four, but he was scheduled to get off at 4:30," he says. "He asked me if he could work through his lunch break instead, and I had to refuse him - the overtime law just wouldn't let me."

The article concludes with a very appropriate caution to employers:

For now, the best that a small-business owner can do to avoid overtime lawsuits is keep painstaking payroll records for nonexempt employees and consult an employment lawyer to verify workers' status. And make sure to keep a sharp eye out for the kind of dedicated worker who might be tempted to skip lunch.

As a final warning, California employers need the advice of an attorney well versed in California labor and employment law - California law is more restrictive than federal law in almost every aspect.  Courts apply the law that provides employees with the most protection, which means that California law applies in almost every case.

• Print
• Comments
• Trackbacks

The Fourth Appellate District today issued its much-anticipated decision in Brinker Restaurant v. Superior Court (Hohnbaum). The case had come to the appellate court via a grant of writ review following the trial court’s certification of a class of approximately 60,000 employees who were seeking compensation for “missed” meal and rest breaks.

Meal Periods
The big issue in Brinker was how to interpret the word “provide” when construing Labor Code section 512’s directive to “provide” a 30-minute meal period to employees. Does an employer meet its obligation by simply allowing its employees to take the statutory meal period if they wish to? Or must the employer effectively “force” its workers to take the unpaid break and be strictly liable for penalties if they refuse? Or is there perhaps some middle ground between a completely optional meal period and one that is completely mandatory?

For those who wanted a definitive resolution, Brinker was definitely a disappointment. First, the decision is unpublished, and hence un-citable as precedent. Second, the appellate court ducked the main issue and sent the case back to the trial court with directions to make a determination of its own regarding the scope of the duty. (The trial court had also ducked the issue by certifying the class without deciding exactly what elements the plaintiffs would have to prove).

Rest Breaks
The Brinker opinion does, however, contain a useful discussion of the separate statutory duty to “authorize and permit” rest breaks, which all parties agreed are generally waivable by employees. The court first disposed of some rather strained statutory interpretations by the plaintiffs as to when rest breaks must be provided during a shift. The Court then determined that – given that rest periods are waivable – it was necessarily an abuse of discretion for the trial court to have certified a rest period class. As the Court explained:

[B]ecause (as the parties acknowledge) Brinker’s hourly employees may waive their rest breaks, and thus Brinker is not obligated to ensure that that its employees take those breaks, any showing on a class basis that plaintiffs or other members of the proposed class missed rest breaks or took shortened rest breaks would not necessarily establish, without further individualized proof, that Brinker violated the provisions of [Labor Code] section 226.7, subdivision (a) and IWC Wage Order No. 5 as plaintiffs allege in the complaint.

The interesting part of this holding is that it reversed certification despite recognizing that the trial court’s decision is entitled to “great deference on appeal.”

This aspect of the ruling also illustrates why the stakes are so high in construing the duty to “provide” meal periods. If the duty is only to provide an optional, waivable meal break it would follow that the same result should apply – and meal period claims would likewise be un-certifiable as a matter of law in most cases.

Petitions to publish the opinion will presumably be filed shortly and we’ll post again if there is any change in the opinion’s current status as non-citable authority.

• Print
• Comments
• Trackbacks

Daniel Schwartz over at the Connecticut Employment Law Blog, notes that Business Week's cover story on "Wage Wars" is not exactly breaking news (or at least should not be) for HR professionals and companies. 

He offers a few suggestions for readers in response to the article:

• Audit your exempt employees.  Go over job descriptions and compare that with actual duties.  Sometimes "managers" are just glorified sales workers.
• Take seriously any complaints by employees about their overtime.  If there is a problem, odds are the complaining employee isn't the only one with the problem.  And that means the potential for a class action case. 
  

California has been "leading" the wage and hour class action trend mentioned  in the Business Week article.  These cases have arguably been the leading types of lawsuits filed in California for over the last five years.  This is primarily due to California's unique wage and hour laws.  Employers not familiar with California law mistakenly believe that because their policies comply with the FLSA, they are in compliance with California law.  This is a costly mistake, as California's labor code is very unique, and out-of-state employers should always seek a California employment attorney's advice regarding whether the complies with California law.  For example, the following are issues that illustrate how unique California law is compared to the rest of the country:

Meal and Rest Period Penalties

This is the current favorite claim of plaintiff’s class action attorneys in California. A 2001 statute imposes substantial penalties on employers who do not comply with very technical regulations concerning the timing and duration of employee lunch and rest breaks. In general, employees must receive a 30-minute meal break (during which they must be relieved of all duty and be free to leave the premises) before they complete 5 hours of work if their shift will be longer than 6 hours for the day. Employees are entitled to a second meal break whenever their shift will be longer than twelve hours. And employees are also entitled to take paid rest periods of at least 10-minutes for every four hours of work, taken as close to the middle of each work period as possible. The aggregate liability that can result over time was apply demonstrated by a 2005 jury verdict in a meal and rest break class action against Wal-Mart that awarded over $192 million in penalties and punitive damages.

California Overtime Exemptions Are Based on “Counting Hours” Test

Like the FLSA, California law provides that various job categories are exempt from overtime, including outside salespeople, commissioned salespeople and “white collar” employees.  Employers have often defined positions on a nation-wide basis as salaried or hourly based on the definitions of exempt duties provided by the FLSA and its implementing regulations.  California law, however, frequently rejects these federal rules in favor of its own, narrower definition of exempt duties.  For example, under federal law, a position may be exempt from overtime where its “primary,” or most important job functions are exempt. In California, by contrast, the duties test is strictly quantitative — i.e., “does the employee spend more than 50% of his or her time performing exempt duties?”  If not, the position may be misclassified and substantial back overtime may be due.

Daily Overtime and Double-Time

Virtually all employers know that the FLSA requires payment of “time-and-one-half” premium pay for all hours worked beyond 40 hours in one workweek. But a surprisingly large number of employers who set up shop in California are ignorant of the fact that California also requires “time-and-a-half” overtime for all hours worked beyond eight in a single workday and for the first eight hours worked on the seventh consecutive day worked in a workweek. Unlike, the FLSA, California also requires overtime at a double-time rate for all hours worked beyond 12 hours in a single workday and for hours worked beyond eight on the seventh consecutive day worked in a single week.

Mandatory Sexual Harassment Training for Supervisors

California law requires employers with 50 or more employees to provide two hours of sexual harassment training to all supervisors once every two years. Regulations are currently being proposed to clarify the extent to which this obligation applies to supervisors who are located outside California, but supervise California employees and other issues raised by the requirement.

No “Use-It-Or-Lose-It” Vacation Policy

California treats earned, but unused vacation time, as a form of vested compensation, which cannot be forfeited and must be paid out in full at the termination of employment. So-called “use-it-or-lose-it” vacation plans, which are permissible in most other states, are therefore illegal in California.

• Print
• Comments (1)
• Trackbacks

Appellate arguments were made recently in the case Brinker v. Superior Court (Hohnbaum). One issue that is being closely watched by all wage and hour attorneys raised in the appeal is whether the term “provide” in Labor Code § 512 requires employers to force employees to take meal breaks or whether employers only need to offer meal breaks to employees (similar to the "authorize and permit" requirement for rest breaks).

California Labor Code § 512(a) states:

An employer may not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes, except that if the total work period per day of the employee is no more than six hours, the meal period may be waived by mutual consent of both the employer and employee. An employer may not employ an employee for a work period of more than 10 hours per day without providing the employee with a second meal period of not less than 30 minutes, except that if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and the employee only if the first meal period was not waived.

This distinction argued in Brinker is critical in meal and rest break class actions. If the appellate court holds that Labor Code § 512 imputes a requirement on employers to force employees to take their meal and rest breaks, plaintiffs will have an easier argument that meal and rest break cases are subject to class certification. On the other hand, if the court holds that employers only need to make meal breaks available for employees, then class certification would be much harder to achieve because the court would have to make an individual inquiry into whether each employee could have taken a meal break and voluntarily waived it, or if the employee was forced to forego the break.

Courts that have reviewed this issue have reached differing conclusions about the meaning of the term “provide” in § 512. One court, in Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949, held that “employers have ‘an affirmative obligation to ensure that workers are actually relieved of all duty.’” Id. at 962 - 963 (citing Dept. of Industrial Relations, DLSE, Opinion Letter 2002.01.28, p. 1.). However, another California federal district court held employers are only required to offer meal breaks. White v. Starbucks, Corp., (N. D. Cal. July 2, 2007) 497 F.Supp.2d 1080, 2007 WL 1952975. The court refused to follow the DLSE opinion letter relied upon in Cicairos, and stated:

In the absence of controlling California Supreme Court precedent, the court is Erie-bound to apply the law as it believes that court would do under the circumstances. See Wyler Summit Partnership v. Turner Broadcasting System, Inc., 135 F.3d 658, 663 (9th Cir.1998). The interpretation that White advances-making employers ensurers of meal breaks-would be impossible to implement for significant sectors of the mercantile industry (and other industries) in which large employers may have hundreds or thousands of employees working multiple shifts. Accordingly, the court concludes that the California Supreme Court, if faced with this issue, would require only that an employer offer meal breaks, without forcing employers actively to ensure that workers are taking these breaks. In short, the employee must show that he was forced to forego his meal breaks as opposed to merely showing that he did not take them regardless of the reason.

The California Labor & Employment Defense Blog will post about the appellate court’s ruling in Brinker v. Superior Court once it is issued.

• Print
• Comments
• Trackbacks

Rush Nigut is a general business and corporate attorney in Iowa and writes a great blog, Rush on Business.  Recently he wrote about his top seven items to prevent employment lawsuits.  Here is a summary of his top seven tips (his entire post "Seven Ways To Avoid Employee Lawsuits" can be read here):

Employment lawsuits are continually on the rise. Here are seven things that may help you avoid employee lawsuits:

1. Treat Employees with Respect
2. Communicate with Your Employees
3. Implement an Effective Unlawful Discrimination and Harassment Policy
4. Document, Document, Document
5. Conduct Honest Employee Evaluations on a Regular Basis
6. Do Not Retaliate
7. Take Action and Investigate Promptly

These simple steps will go a long ways to reducing employee lawsuits. To ensure that your company has done everything it can to avoid employee lawsuits, you should have your employment policies, training and practices reviewed by your employment lawyer.

Rush's top seven tips are great reminders about what employers need to continually remind themselves to do.  I also thought that it is interesting that Rush's top tip - treat your employees with respect - cannot be found in any of the 50 U.S. state laws, federal law, or any case law.  Even though there is no "legal" requirement to treat employees with respect, I wholeheartedly agree that this is the single best step employers can take to prevent litigation (in addition to having a satisfied and productive workforce). 

I also wanted to add three more tips to round out a "top ten" list for California employers:

8.  Develop and strictly enforce a meal and rest break policy
9.  Ensure your exempt employees (i.e., salaried employees) are properly classified as exempt under California law; and
10.  Review and update your employee handbook and/or policies once a year to incorporate any changes in the law.

• Print
• Comments
• Trackbacks

With July beginning, now is a perfect time for employers to review their meal and rest break policies. While readers may feel like they understand these regulations better than most non-employment attorneys, given the high penalties associated with violations, and the California Supreme Court’s ruling in April that the payments for violations are “wages,” increasing the statute of limitations periods up to four years, it is well worth it for employers to revisit these issues periodically to ensure compliance.

Below are excerpts from the DLSE’s website providing answers to frequently asked questions about employer’s obligations to provide meal and rest breaks.

Meal Breaks:
Q. What are the basic requirements for meal periods under California law?

A. Under California law (IWC Orders and Labor Code Section 512), employees must be provided with no less than a thirty-minute meal period when the work period is more than five hours (more than six hours for employees in the motion picture industry covered by IWC Order 12-2001).
Unless the employee is relieved of all duty during the entire thirty-minute meal period and is free to leave the employer's premises, the meal period shall be considered "on duty," counted as hours worked, and paid for at the employee's regular rate of pay. An "on duty" meal period will be permitted only when the nature of the work prevents the employee from being relieved of all duty and when by written agreement between the employer and employee an on-the-job meal period is agreed to. The test of whether the nature of the work prevents an employee from being relieved of all duty is an objective one. An employer and employee may not agree to an on-duty meal period unless, based on objective criteria, any employee would be prevented from being relieved of all duty based on the necessary job duties. Some examples of jobs that fit this category are a sole worker in a coffee kiosk, a sole worker in an all-night convenience store, and a security guard stationed alone at a remote site.

Q. Is it permissible if I choose to work through my meal period so that I can leave my job 30 minutes early?

A. No, working through your meal period does not entitle you to leave work early prior to your scheduled quitting time. In order for an "on duty" meal period to be permitted under the Industrial Welfare Commission Wage Orders, the nature of the work must actually prevent the employee from being relieved of all duty, and there must be a written agreement that an on-the-job paid meal period is agreed to. Additionally, the written agreement must also state that the employee may, in writing, revoke the agreement at any time.

Q. Can my employer require that I stay on its premises during my meal period?

A. Yes, your employer can require that you remain on its premises during your meal period, even if you are relieved of all work duties. However if that occurs, you are being denied your time for your own purposes and in effect remain under the employer's control and thus, the meal period must be paid. Minor exceptions to this general rule exist under IWC Order 5-2001 regarding healthcare workers. Pursuant to the Industrial Welfare Commission Wage Orders, if you are required to eat on the premises, a suitable place for that purpose must be designated. "Suitable" means a sheltered place with facilities available for securing hot food and drink or for heating food or drink, and for consuming such food and drink.

Rest Breaks:

Q. What are the basic requirements for rest periods under California law?

A. California employees covered by the rest period provisions of the Industrial Welfare Commission Wage Orders must be provided with a net 10-minute paid rest period for every four hours worked or major fraction thereof. Insofar as is practicable, the rest period should be in the middle of the work period. If an employer fails to provide an employee a rest period, the employer shall pay the employee one hour of pay at the employee’s regular rate of pay for each workday that the rest period is not provided.

Q. Must the rest periods always be in the middle of each four-hour work period?

A. Rest breaks must be given as close to the middle of the four-hour work period as is practicable. If the nature or circumstances of the work prevent the employer from giving the break at the preferred time, the employee must still receive the required break, but may take it at another point in the work period.

Q. Is it permissible if I choose to work through both of my rest periods so that I can leave my job 20 minutes early?

A. No, working through your rest period does not entitle you to leave work early or arrive late.

Q. Can my employer require that I stay on the work premises during my rest period?

A. Yes, your employer can require that you stay on the premises during your rest break. Since you are being compensated for the time during your rest period, your employer can require that you remain on its premises. And under most situations, the employer is required to provide suitable resting facilities that shall be available for employees during working hours in an area separate from the toilet rooms.

Q. Can I have additional rest breaks if I am a smoker?

A. No, under California law rest period time is based on the total hours worked daily, and only one ten-minute rest period need be authorized for every four hours of work or major fraction thereof.

Q. When I need to use the toilet facilities during my work period does that count as my ten minute rest break?

No, the 10-minute rest period is not designed to be exclusively for use of toilet facilities as evidenced by the fact that the Industrial Welfare Commission requires suitable resting facilities be in an area "separate from toilet rooms." The intent of the Industrial Welfare Commission regarding rest periods is clear: the rest period is not to be confused with or limited to breaks taken by employees to use toilet facilities. This conclusion is required by a reading of the provisions of IWC Orders, Section 12, Rest Periods, in conjunction with the provisions of Section 13(B), Change Rooms And Resting Facilities, which requires that "Suitable resting facilities shall be provided in an area separate from the toilet rooms and shall be available to employees during work hours."

Allowing employees to use toilet facilities during working hours does not meet the employer’s obligation to provide rest periods as required by the IWC Orders. This is not to say, of course, that employers do not have the right to reasonably limit the amount of time an employee may be absent from his or her work station; and, it does not indicate that an employee who chooses to use the toilet facilities while on an authorized break may extend the break time by doing so. DLSE policy simply prohibits an employer from requiring that employees count any separate use of toilet facilities as a rest period.

• Print
• Comments
• Trackbacks

The U. S. Department of Labor’s Wage and Hour Division website provides a self assessment tool for restaurants that employ minors. The assessment covers common violations of the Fair Labor Standards Act (FLSA ). Restaurant owners should note that this assessment does not cover California state law items. The assessment covers items that the DOL found in the past to be some of the most common problems encountered in restaurants, and therefore, are likely issues a DOL investigator will look for in a restaurant.

Here is a list of a few of the items covered in the assessment:

Do any workers under 18 years of age do the following:
1. Operate or clean power-driven meat slicers or other meat processing machines?

2. Operate or clean any power-driven dough mixer or other bakery machines?

3. Operate, load, or unload scrap papers baler or paper box compactors?

4. Drive a motor-vehicle on the job?

Do any workers under 16 years of age do the following:
5. Cook?

6. Bake?

7. Clean cooking equipment or handle hot oil or grease?

8. Load or unload goods from a truck or conveyor?

9. Work inside a freezer or meat cooler?

10. Operate power-driven bread slicers or bagel slicers?

11. Operate any power-driven equipment?

12. Work from ladders?

13. Work during school hours?

14. Work before 7:00 a.m. on any day?

15. Work past 7:00 p.m. between Labor Day and June 1?

16. Work past 9:00 p.m. between June 1 and Labor Day?

17. Work more than 3 hours on a school day, including Fridays?

18. Work more than 8 hours on any day?

19. Work more than 18 hours in any week when school was in session?

20. Work more than 40 hours in any week when school was not in session?

21. Do you employ any workers who are less than 14 years of age?

22. Do you fail to maintain in your records a date of birth for every employee under 19 years of age?

Click here to take the entire assessment. At the end of the assessment, there is a rules summary that explains an employer’s responsibility under the FLSA for the issues on the assessment.

• Print
• Comments
• Trackbacks