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Employment Law Office of Ward Henrichs Blog

 

Posted on July 13, 2917 by S. Ward Heinrichs

The Hospitality Industry and Employment Laws

 

 

 

 

Posted on November 30, 2016 by S. Ward Heinrichs

2017 LABOR LAW CHANGES

http://bestemploymentattorneysandiego.com/2017-labor-law-changes

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Posted on May 11, 2016 by S. Ward Heinrichs

MANAGERS ARE NOT EXAMPT UNLESS THEY MAKE $41,600!

http://bestemploymentattorneysandiego.com/managers-are-not-exampt-unless-they-make-41600

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Posted on February 18, 2016 by S. Ward Heinrichs

NEW CALIFORNIA LABOR LAWS IN 2016

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Posted on February 18, 2016 by S. Ward Heinrichs

Potential Liability of Independent Contractors

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Posted on November 19, 2015 by S. Ward Heinrichs

Holiday Parties and the Law

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Posted on November 2, 2015 by S. Ward Heinrichs

Restaurants and Bar Labor Issues 2015

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Posted on October 13, 2015 by S. Ward Heinrichs
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Paid Sick Leave  in California 2015

California’s new sick leave law went into effect on July 1 of this year. It applies to all employers, no matter how many employees an employer has. There are very few exceptions, so all California employers need to know the law. The limited exceptions to the new sick leave law are: (1) Certain union employees, (2) State in home care workers, (3) Some air carrier employees.

Employers must give sick leave to employees who have worked at least 30 days within the employment year. The sick leave accrues at the rate of 1 hour for every 30 hours worked. Employers may provide only 24 hours (3 days) of sick leave per year if the employer offers its employees three sick days at the beginning of the employment year. Barring that, an employer must allow its employees to accumulate up to 6 days of sick leave per year. Nevertheless, an employer may still limit sick leave to just 3 days per year. In that case, unused leave must be carried over to the next year. After 90 days of employment, employees may begin to use accrued sick.

Employers must track sick leave accumulation either on employee wage statements or on separate sick leave statements. An employer can avoid the tracking headache by creating a policy in which employees receive at least 24 hours of sick leave at the beginning of each year. In that case, the only thing to track is the amount that the employee uses during the year. Employers must maintain records that track the accumulation and use of sick leave for a period of 3 years.

If tracked separately from vacation or PTO, California will not consider sick leave as a wage. In that case, an employer will not need to pay remaining balances to a terminated employee at the time of termination. However, if an employer includes sick leave with either vacation or PTO, then the sick leave will become a wage and will need to be paid out as wages at the time of termination.

Sick leave may be used for an employee’s health condition or for the health condition of a family member of an employee. The code defines “family” very broadly: Child, Parent, Spouse or registered domestic partner, Grandparent, Grandchild, and Sibling. An employee can also use sick leave for preventive care, domestic violence, sexual assault, and stalking.

No employer may retaliate against an employee for requesting sick time off or for attempting to enforce sick leave rights. The employer may require employees to us a minimum amount of sick leave, but that minimum amount may not be greater than 2 hours. Nevertheless, employees have the right to determine how much sick leave to use as long as they use at least the minimum amount. An employer must display a poster describing the requirements of the law.

The associated fines are very stiff. An employee can collect up to $250 for each withheld sick day, up to a maximum of $4,000. If the employee suffers other related harm, such as a wrongful termination, then the employer can suffer civil penalties of $50 for each day the violation remains uncorrected, up to $4,000. In addition, if an employer does not promptly comply with the law after receiving notice of its violations, then the state can collect a daily penalty of $50 with no limit. The Private Attorney General Act will allow collective penalties to accumulate. The prosecuting party can get fines, special damages for the employee(s), costs of suit, and attorneys’ fees.

Employers must be aware of this law. Ignoring it, or the rights conferred, can come at a hefty price.

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)

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Posted on August 12, 2014 by S. Ward Heinrichs
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Does America Love Walmart Or Hate It?

Undoubtedly, some Americans love WalMart while others have a strong dislike for it.  Many shoppers love the low prices WalMart offers.  On the other hand, labor unions have attacked WalMart repeatedly for fighting efforts to unionize it.  In fact, many employees have sued WalMart because of claimed unfair treatment.  Some of those cases are described below.

Recently in the news, Saturday Night Live actor, Tracy Morgan, sued WalMart because one of its trucks had hit Morgan’s limousine.  The crash killed fellow comedian James McNair.  Morgan suffered serious bodily injury.  Apparently, the WalMart driver, Kevin Roper, had been driving for more than 24 hours consecutively.  Morgan claimed that driving for such a long period of time was negligent and that WalMart knew of that negligent behavior.

Although not an accident case, WalMart settled, in 2009, a case filed by potential driver applicants for $17.5 Million.  (Nelson v. WalMart.)  The applicants claimed that WalMart had denied them positions in the company because they were African-American.  They, and the other applicants, had been required to provide credit ratings.  Apparently, those ratings denied African-Americans positions as  drivers more routinely than non-African-Americans.

In California, twenty-thousand WalMart cashiers claimed that they should have been provided seats to sit on during their shifts.  WalMart appealed after a federal judge certified the case. The parties are now waiting for the Ninth Circuit to decide whether the law in California requires WalMart to provide those seats.  That pending case is: Brown v. Wal-Mart Stores, Inc.

Another California case, and probably the most significant case involving WalMart, is WalMart v. Dukes.  The Plaintiff, Dukes, was a female employee.  She said that WalMart had wrongfully denied her promotions because of her gender.  She alleged that WalMart had an institutional bias against women.  Statistically, WalMart’s labor force was made up of approximately 70% women, while only about 30% of its managers were women.  Regardless, the United States Supreme Court ruled that the case could not proceed as a class action on behalf of 1.5 million women.  According to the Supreme Court, WalMart store managers had much discretion in determining the amount of money each employee could earn and the criterion used to promote employees.  Because of that discretion, the managers had likely decided to promote or not to promote  women employees for many various reasons, depending on the circumstances.  Thus, no single reason for not promoting women could be consistently applied throughout all the WalMart stores, and, according to the Court, the case could not be certified as a class action because the reasons for not promoting women would vary too much.

Later, the potential California class members tried to certify a much small class that was only made up of female employees in California, rather than employees from across the country.  The federal judge denied certification again and cited the Supreme Court holding in Dukes to support his decision.  Essentially, the Court said that the class, even though smaller, still suffered from the same problem.  There was no common reason for denying women promotions amongst all the stores in California.  The Court denied certification even though it said that the employees “had amassed substantial evidence of discrimination against women that occurred at Wal-Mart stores”.  Regardless, that was not enough to allow Dukes to represent the entire class against WalMart.  Presumably, the female employees would need to file each of their cases separately.

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)

Employment law san diego

Posted on June 22, 2014 by S. Ward Heinrichs
http://backstromandheinrichsblog.wordpress.com

Unbelievable Sexual Harassment Cases!

Supervisors are allowed to date subordinate employees.  But if they do, they should be careful to avoid situations where they use their power to get dates and give favors to the employees they date:

Miller, the suing employee, learned that the chief deputy warden was having sex with three of Miller’s piers.  (In Miller v. Department of Corrections, (2005) 36 Cal.4th 446)  During the ensuing years, each got promotions, favorable transfers, and perks that other employees did not get.  Miller lost coveted job opportunities to the warden’s favored few even though they were not as qualified for the jobs as Miller.  After Miller sued, the court dismissed Miller’s claims because, according to the court,  she was not harassed directly.  The California Supreme Court corrected the situation by saying: . . . “although an isolated instance of favoritism on the part of a supervisor toward a female employee with whom the supervisor is conducting a consensual sexual affair ordinarily would not constitute sexual harassment, when such sexual favoritism in a workplace is sufficiently widespread it may create an actionable hostile work environment ”.  The Supreme Court said that Miller had faced widespread favoritism and could sue for harassment.

 Harassing language can support a law suit in some situations, but not in all situations.  If the harassing language is part of a creative work environment, the suing employee may not have a claim.  (Lyle v. Warner Bros. Television Productions, 38 Cal4th 264.)  Lyle took a job on the cast of the hit show “Friends”.  She was warned that the writers creatively used vulgar, sex based language to help them write scripts.  It was not directed toward Lyle and she did not complain about it.  The writers did the following: discussed oral sex, described the types of women they liked to have sex with, drew pictures of naked women, simulated masturbation, described how they would have sex with female cast members, etc.  Regardless, the California Supreme Court said employee Lyle had no claim for sexual harassment.

Of course, some of the same language Lyle faced on the “Friends” set can support a lawsuit. For instance, Reeves was the only women on the sales floor of the shipping company C.H. Robinson Worldwide, Inc.  (Reeves v. C.H. Robinson Worldwide, Inc., (11th Cir. 2010) 594 F.3d 798.)  The men constantly talked vulgarly.  They regularly called women very foul names and described the female anatomy in foul ways.  They discussed the size of women’s breasts and aberrant sexuality practices.  There was computer porn in the work place.  Reeves heard and saw these things daily and complained often.  The trial court dismissed Reeves’ case because it was not directed at her, but the appellate court said that it was a very harassing atmosphere and that Reeves could pursue a claim for Sexual Harassment.

If a supervisor directs an employee to terminate someone for a reason that discriminates and the employee refuses to do so and gets fired as a result, that employee has a claim for retaliation.  (Yanowitz v. L’Oreal USA, Inc., 36 Cal.4th 1028.)  Yanowitz’s male boss told her to fire a female sales associate who the boss claimed was “not good looking enough”.  She was to replace the associate with “somebody hot”.  Yanowitz refused.  She eventually quit after being harassed for not firing the associate.  The court allowed Yanowitz to sue for retaliation.

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)

Employment law san diego

Posted on May 6, 2015 by S. Ward Heinrichs
http://backstromandheinrichsblog.wordpress.com

Paid Sick Leave

Last year was the year of the minimum wage. This year is the year of paid sick leave. Connecticut is the only state that has an active sick leave law presently, but both California and Massachusetts have passed sick leave laws that will be going into effect on July 1, 2015.  Additionally, 18 cities and towns have paid sick leave laws that are either in effect now or soon will be.  Those cities are: San Francisco, Washington D.C., Seattle, Portland, New York City, Jersey City, Newark, Passaic, East Orange, Paterson, Irvington, Trenton, Montclair, Bloomfield, Eugene, Oakland, Tacoma, and Philadelphia.  The cities of Jersey City, Newark, Passaic, East Orange, Paterson, Irvington, Trenton, Montclair, and Bloomfield are all in New Jersey.  The other nine cities are scattered on both the East and West coasts.  California is the only state that has a sick leave law in which cities, San Francisco and Oakland, have more employee friendly laws.  Additionally, San Diego has a city wide referendum slated for a vote in June of 2016 in which the voters will decide whether the city will have greater sick leave protections for its employees than California will begin to provide on July 1 of this year.

Connecticut’s law is very limited: only hourly employees in a limited number of service occupations can receive paid sick leave, and, only if, those workers are employed by a business with 50 or more employees.  The workers earn one hour of sick leave for every 40 hours worked.  Massachusetts’ law covers more employees, but if the employer has fewer than 11 employees, the sick time is unpaid.  Employees of cities and towns in Massachusetts are only covered if each municipality independently approves of the state law.  The employees earn one hour of sick leave for every 30 hours worked.  In contrast, the California law applies to all workers with almost no restrictions.  Because I practice law in California, I have provided more details of the California law below.

All employers must give employees who work for them in California at least 3 days paid sick leave, if the employee has worked at least 30 days within the employment year.  The sick leave accrues at the rate of 1 hour for every 30 hours worked.  The employer may provide only 24 hours (3 days) of sick leave per year if the employer offers its employees three sick days at the beginning of the employment year.  Otherwise, the employer must allow its employees to accumulate up to 6 days of sick leave per year, but may still limit each employee to the use of only 3 days per year.  In that case, any unused balance may be carried over to the next year.  Employees can begin to use accrued sick leave after 90 days of employment.  Very few employees are not covered under this new law.  The following are not covered: (1) Certain union employees, (2) State in home care workers, (3) Some air carrier employees.

Employers will need to track accumulated sick leave on employee wage statements or on separate sick leave statements.  However, an employer can avoid the tracking headache by creating a policy in which employees receive at least 24 hours of sick leave at the beginning of each year.  In that case, the only thing to track is the amount that the employee uses during the year.  An employer must keep the records that track the accumulation and use of sick leave for a period of 3 years.

Generally, sick leave is not considered a wage and an employer need not pay out any remaining balance to a terminated employee, unless sick leave is lumped together with PTO or vacation.  If they are lumped together, then the sick leave will become a wage and will need to be paid out as wages at the time of termination.

Sick leave may be used for an employee’s health condition or for the health condition of a family member of an employee.  An employee may also use it for preventative care.  Family is defined very broadly: Child, Parent, Spouse or registered domestic partner, Grandparent, Grandchild, and Sibling.  An employee can also use sick leave for domestic violence, sexual assault, or stalking.

An employer must display a poster describing the requirements of the law.  The employer may not retaliate against the employee for requesting sick time off and for taking action to enforce the employee’s right to take paid sick leave.  The employee has the right to determine how much sick leave he or she needs.  The employer may require a minimum amount of sick leave that must be used, but that minimum amount may not be greater than 2 hours.

This new law has stiff fines associated with it.  An employee can collect up to $250 for each withheld sick day, up to a maximum of $4,000.  In addition, if the employee suffers other related harm, such as a wrongful termination because of the sick leave policy, then the state can assess civil penalties of $50 for each day the violation remains uncorrected, with the maximum penalty capped at $4,000.  Further, if an employer does not promptly comply with the law after receiving notice of its violations, then the Labor Commissioner can collect a daily penalty of $50 with no limit.  The Private Attorney General Act will allow collective penalties to accumulate.  The prosecuting party can get special damages for the employee(s), costs of suit, and attorneys’ fees.  All the remedies described accumulate and do not cancel each other out.

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)

Employment law san diego

Posted on May 14, 2014 by S. Ward Heinrichs
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Negotiating Severance at the End of Employment

In today’s very mobile economy, most employees work for several employers during their careers.  As one job ends, often employers are open to paying a severance to the departing employee.  The primary reason an employer will offer severance is to thank the departing employee for his or her dedicated service to the business.  In some of those cases, the severance package will be offered at the beginning of employment.  Those types of severance packages may be individual agreements or part of a company written policy.  In other cases, the employer has neither a written nor an unwritten policy but is still willing to offer severance.

Another reason employers offer severance is to buy peace.  Every employer who gives severance will require the employee to sign a release.  In other words, in exchange for the severance money, the employee signs away his or her rights to sue for violations of the law.  Very often in a work place that has no severance policy, an employer will not offer severance.  In those situations, the employee will often need to aggressively demand it.

Our firm regularly negotiates severance packages.  Sometimes, we help employers put together a sensible package and an effective release.  Other times, we negotiate severance for the employee.  In the latter case, our goal is to increase the value of the severance as much as possible.
When negotiating severance for employees, we vary our approach depending on the situation.  In some cases, after discussing the situation with the employee, we take a very aggressive approach.  Some employers may not want to litigate with a good employee who has been recently laid off, and the employer may be willing to increase the value of a severance package to avoid litigation.

In other situations, we decide not to even let the employer know we are involved in a severance negotiation.  If the employee agrees with that approach, we simply advise the employee how to most effectively negotiate a severance package.

Often we take a middle approach.  We advise the employee on how to negotiate a severance, but, later, we enter the negotiations.  Usually the best time to do that is after the employer offers a written release.  Most releases have a paragraph advising the employee to seek legal counsel to review the agreement.  Often in that situation, we review the release and then craft a letter demanding changes to the release.  Many times, one of the changes is a request for more money.

In contrast to employee negotiation concerns, employers often have concerns that are not directly related to a given severance negotiation.  In those cases, we try to subtly steer the course of the severance discussions toward accommodating that concern.

Severance serves many purposes.  It is a way for employers to say thank you, and it can be a way for the employer to buy peace.  At the same time, it can validate an employee’s work and dedication, and it can help ease an employee’s transition from an old job to a new one.  There are many approaches to negotiating severance packages, and each side needs to consider the ramifications of misunderstanding the other sides attitude and posture and pick an approach that will yield the best result under the circumstances

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)

Employment law san diego

Posted on April 29, 2014 by S. Ward Heinrichs
http://backstromandheinrichsblog.wordpress.com

Discrimination in the Work Place

Work place discrimination is illegal under both federal and California law.  Congress passed Title VII in 1964.  About 20 years later, the California legislature passed the Fair Employment and Housing Act (FEHA).  It actually combined previous California anti-discrimination laws that predated Title VII.  They both make adverse employment actions (termination, demotion, failure to hire, etc.) illegal when an employer takes the adverse action because the employee is a member of a protected class.       In most cases Title VII and FEHA work together.  In fact, very often an employee can sue under either law.

For the majority of California employees, FEHA provides greater protection than Title VII.  For instance, Title VII only protects the following classes: race, color, national origin, religion, and sex.  In contrast, FEHA has a far greater list of protected classes: Age, Ancestry, Color, Religion, Denial of Family and Medical Care Leave, Disability, Marital Status, Medical Condition, Genetic Information, Military and Veteran Status, National Origin, Race, Sex, Gender, Gender Identity, and Gender Expression, Sexual Orientation.  To be fair, other federal laws protect some of the FEHA classes.  For instance, the ADA is the federal law that protects disabled persons.

Another advantage of FEHA is it does not restrict damages.  Under FEHA, compensatory and punitive damages are unlimited.  Depending on the size of the business, federal law limits them to amounts between $50,000 and $300,000.

FEHA also requires more employers to follow its requirements than does Title VII.  FEHA applies to employers who only have 5 employees.  Harassment laws apply to all employers, even if they only have one employee.  In contrast, Title VII only applies to employers who have 15 or more employees.

Courts decisions cause work place discrimination laws to constantly evolve.  For instance, a series of court cases over the past few decades have broadened and strengthened employer liability for third party discrimination.  Both federal and state laws clearly require employers to protect employees from supervisors and co-workers who discriminate.  On the other hand, over the years, case law has employers must protect its employees from discrimination at the hands of non-employees who interact with employees during the work day.  The cases say that because the employer controls the conditions of work, employers have a duty to protect employees from unwanted discrimination by non-employees.

In other instances, the law has become more restrictive.  For instance, in California the courts have made it harder for employees to sue when an employer may have had a mixed motive for firing an employee.  A mixed motive case is one where the employer has more than one potential reason for terminating, demoting, or taking other adverse action against an employee.  At least one of the reasons is based on discrimination, and at least one is a legitimate business reason for taking the action.  Typically, the employee claims that the employer discriminated against him or her under FEHA, and the employer claims that it had a legitimate, non-discriminatory reason for punishing the employee.  In the past, lawyers who represented employees said that an employee only needed to show that the discriminatory reason was a factor that could have motivated the action.  Now, the California Supreme Court has made clear that the discriminatory reason must be a “substantial” factor that caused the employer to act.  Further, even if the employee proves that discrimination was a substantial factor, the law allows the employer to present facts to show that it still terminated the employee for a non-discriminatory reason.  If an employer can convince a judge or a jury of that, then the employee will not be able to collect compensatory or punitive damages under FEHA.  Injunctive relief and attorneys’ fees are still available though.

Work place discrimination laws are very complicated to apply.  Employers should make sure they have expertise at their disposal to help analyze each situation as it arises.  Employees often need help analyzing the law to understand whether they have suffered discrimination or harassment as those terms are defined under the law.

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)

Employment law san diego

Posted on April 4, 2014 by S. Ward Heinrichs
http://backstromandheinrichsblog.wordpress.com

Employer Required Tip Pools: Are they Legal?  How are they taxed?

Are tip pools legal when required by an employer?  The quick answer to that question is yes.  But under both California law and federal law, the pool must meet certain legal requirements.

As a general rule tips are optional, freely given payments for service above and beyond the cost of the products being sold.  The customer has the complete right to set the amount of the tip and may choose not to tip at all.  The employer should have no say in the amount of the gratuity.

California Labor Code §§350-56 lays the legal foundation for tip pool requirements in California.  The law forbids the employer from taking or sharing in tips (Labor Code §351), and employers must track all tips that they collect for employees (Labor Code §353).  Employer mandated tip pooling is legal, but the house cannot share in the pooling arrangement.  The tip pool must be fair and reasonable.  Only those who are in the chain of service can be in the pool.  For instance, an employer cannot require servers to include cooks and dishwashers in the pool.

Tips are taxable income.  When tips are shared, who must pay the tax?

Technically, all persons who receive tips or a share of the tips must report it as income.  However, a common practice is for the employer to allocate the entire tip to the server who waits on the table.  In that case, even when the server shares the tip, the server is the only person who pays tax on the entire tip.  The employers records do not show any other employees in the service chain as persons who receive tips, even though they actually do in tip pooling arrangements.  Presumably, those employees who share the server’s tip as part of the chain of service escape tax liability because the employer’s records do not show them collecting any tips.  In that case, the server unfairly pays tax on the portion of the tip that he or she did not actually take home.

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)

Employment law san diego

Posted on March 20, 2014 by S. Ward Heinrichs
http://backstromandheinrichsblog.wordpress.com

What Employees Can Demand; What Employers Need to Keep

Three code sections deal with general employment document retention.  They are: Labor Code §§ 226, 432, and 1198.5.  Code section 1198.5 was most recently amended and those amendments give employees more access to documents and require employers to retain more documents.

Labor Code § 432 requires an employer to give to an employee any document about obtaining or holding employment signed by the employee whenever an employee asks for a copy.  Most employers rather not worry about what documents concern “obtaining or holding employment”, and, consequently, they retain all signed documents.  Because the code section does not set a retention time limit, most employers retain those documents indefinitely and turn them over when an employee request all the documents he or she has signed.

Labor Code § 226 requires an employer to maintain wage statements for three years.  (Labor Code § 226(a).)  When an employee makes either a written or oral request to inspect and/or copy employment records, an employer must allow the employee to inspect and copy those records no later than 21 days after the request.  (Labor Code § 226(b and c).)  However, an employer has a duty to allow inspection and copying more quickly if that can be accomplished practically.  (Labor Code § 226(c).)  If the employer fails to respond in a timely manner, then it may be required to pay a $750 fine, costs, and attorneys’ fees.  (Labor Code § 226(f and g).)  If the employer provides copies, then it may charge the employee for the cost of copying the records.

Labor Code § 226(b) allows a current or former employee to “inspect or copy records pertaining to their employment”.  Apparently, under that subsection, an employee has the right to inspect and copy more records than just the wage statements described in Labor Code § 226(a).

Labor Code § 1198.5 requires an employer to keep personnel records for at least three years.  (Labor Code § 1198.5(c)(1).)  The employee must demand to inspect and/or copy in writing.  (Labor Code § 1198.5(b)(2)(A)(i and ii).)  The employee may also demand that the employer provide copies, but the employer can ask to be reimbursed for copying costs.  (Labor Code § 1198.5(b)(1).)  The employer must comply within 30 days.  (Labor Code § 1198.5(b)(1).)  An employer must comply with only one request per year from a former employee.  (Labor Code § 1198.5(d).)  An employer is not required to comply with more than 50 requests per month.  (Labor Code § 1198.5(p).)  Employers with union represented workers may be exempt.  (Labor Code § 1198.5(q).)  Personnel records are broadly defined as records “relating to the employee’s performance or to any grievance concerning the employee.”  (Labor Code § 1198.5(a).)  Certain records are specifically excluded.  (Labor Code § 1198.5(h).)  If the employer fails to respond in a timely manner, then it may be required to pay a $750 fine, costs, and attorneys’ fees.  (Labor Code § 1198.5(k and l).)

Under Labor Code § 1198.5, an employer has fairly broad discretion to determine what to keep in a personnel file.  However, Labor Code §226(b) appears to allow an employee to have access to any records “pertaining to” his or her employment.  Does 226 require an employer to maintain additional records beyond wage statements (Labor Code § 226(a)), signed documents ((Labor Code § 432), and personnel records (Labor Code § 1198.5(a))?  Arguably, it does.  On the other hand, an employer can argue that Labor Code § 226(b) only requires those records that it kept as part of its effort to reasonably comply with Labor Code §§ 226(a)), 432, and 1198.5.

Similarly, if an employee orally requests records under Labor Code § 226(b), will the employer be required to provide all retained documents within 21 days, even personnel documents governed by Labor Code § 1198.5?  Again, the answer is arguably yes.

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)

Employment law san diego

On February 26, 2014, I gave a radio interview about the legal and practical issues of working from home.  Please click this link to listen: http://www.bigblendnetwork.com/success-express-radio-february-26-2014.html  The related article was posted on this blog.  Feel free to add comments about the article or the radio show.

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)

Employment law san diego

 

Posted on February  25, 2014 by S. Ward Heinrichs
http://backstromandheinrichsblog.wordpress.com

Telecommuting, Work-at-home

As a society, Americans are finding more opportunities to work from home.  In fact, the work-at-home trend has been growing steadily over the past two decades.  While this trend creates opportunities, it also creates problems for both employees and employers.

Have you seen emails claiming to offer work opportunities that provide thousands of dollars of monthly income in your spare time while working from home?  Many of those emails are scams.  Employees should watch out for offers that make unrealistic claims.  Those offers may simply be trying to get personal information to use in identity theft.  More likely, the email is simply a disguised sales pitch.  Regardless, neither are offers most job hunters welcome.

Some websites try to sift through the at-home work offers to present only the most reliable ones.  One of those websites is: http://www.flexjobs.com Flexjobs makes the top one hundred list of companies who offer the best quality telecommuting jobs.  According to the list, some of the top telecommuting industries are: healthcare, sales, marketing, information technology, and education.

Working from home can test how we apply our employment law regulations.  For instance, can at-home workers be classified as independent contractors, or are they employees?  Generally, employers want to pay workers as independent contractors because employers need not pay for workers’ compensation insurance, withhold taxes, pay overtime, and adhere to break regulations, etc. for independent contractors.  The tests that determine whether a worker is an independent contractor or an employee are fairly complicated and fact intensive.  Please review our blog post to get a better idea of how those tests work: http://backstromandheinrichsblog.wordpress.com/2013/11/13/independent-contractor-or-employee/  

Essentially, an independent contractor controls the manner and method of completing a job.  On the other hand, an employer controls how, when, where, etc. an employee does the work.  For example, an attorney who has his or her own clients works as an independent contractor.  In that case, an attorney can elect to work from home and the client will have no say about that.  In addition, the client does not need to worry about whether the attorney is working overtime hours or is taking meal and rest periods.  In contrast, an hourly worker who works from home sorting through and organizing emails for several managers of a business is probably a non-exempt employee.  In that case, the employer will need to abide by applicable labor laws, such as: break times, minimum wage, overtime premium pay, wage withholding, etc.

Employers, who have work-at-home employees, lose some control over work product because no manager is on site to make sure that the work is getting done.  In those cases, a wise employer will have systems in place to monitor work efficiency.  In our example above, the employer might require the employee to read and organize 30 emails an hour.  Depending on the situation, many other methods of employee monitoring can apply.

Monitoring work schedules and work hours may also be a very important issue.  If an hourly employee works more than 8 hours in a day, the employer must pay overtime in California.  That same California employee will be entitled to at least two rest periods and a meal period during that shift.  If the employee works through those break times, the employer will be liable for additional penalties and wages.  One way of helping to ensure compliance with overtime, rest period, and meal period regulations is to have an online time clock.  Again, without a manager present, ensuring that an employee is actually working the hours that are tallied in the online program may be a challenge.

Working from home is not the norm, but it is becoming increasingly popular.  Commonly, we see good at-home work opportunities, but workers seeking those jobs must be careful of scams.  Likewise, employers need to carefully navigate the world of employment regulations after adding at home workers to its roles.  Employers need to decide whether those workers are independent contractors or employees.  If they are employees, then the employer must put into place systems and policies that will check work efficiency and monitor adherence to employment regulations.

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 874-8850 (fax)

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Posted on February  13, 2014 by S. Ward Heinrichs
http://backstromandheinrichsblog.wordpress.com

Employers, Don’t Mess with Minimum Wage!

Why do some employers cut corners with employee wages, reimbursement of costs to employees, and, especially, minimum wage?  In a recent case, one employer appeared to do all three of those things and paid a big price on appeal.  (Vasquez v. Franklin Management Real Estate Fund, Inc., (2013) 222 Cal.App.4th 819.)

Mr. Vasquez worked as a maintenance technician for his employer Franklin.  Franklin required Vasquez to drive an average of thirty miles a day to pick up materials and go to various job locations during Vasquez’s work shift.  Vasquez claimed that Franklin refused to reimburse him for his mileage.  Vasquez only made $10 per hour.  After subtracting the mileage reimbursement from his daily gross pay, Vasquez said that he only made about $7.94 per hour, less than minimum wage.  Vasquez said that under those circumstances, he had to quit.  In his lawsuit, Vasquez sued for the unreimbursed driving expenses and for wrongful discharge, among other things.

The Court found that Vasquez had alleged a supportable claim for wrongful constructive discharge because the unreimbursed expenses reduce his effective hourly rate below minimum wage.  The Court also said that a simple claim for unreimbursed expenses that did not cause an employee’s wages to dip below minimum wage would normally not provide a foundation for wrongful constructive discharge.  However, since Vasquez could claim that his employer did not pay him minimum wage, the fact that he quit was a wrongful constructive discharge in violation of fundamental public policy, namely, the failure to pay at least minimum wage.

Assuming Vasquez can prove he was not reimbursed for his driving expenses, he would be entitled to get them reimbursed in his lawsuit under Labor Code § 2802.  That code section requires employers to reimburse employees for out of pocket expenses that benefit the employer.  However, according to the Court, the failure to reimburse appears not to be a violation of a public policy that would allow for a wrongful constructive discharge.  Vasquez’s minimum wage claim provided an adequate public policy violation to allow him to quit and claim a wrongful discharge.

Employers should always reimburse employee expenses.  The law requires it.  However, the penalties can be much greater if a failure to reimburse an employee for out of pocket business expenses drives that employee’s wages below minimum wage.  The take home point: DON’T MESS WITH MINIMUM WAGE!

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)

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Posted on February  7, 2014 by S. Ward Heinrichs
http://backstromandheinrichsblog.wordpress.com

Motor Carriers do not Need to Provide Drivers with California Meal and Rest Periods, for Now.

California meal and rest period laws do not apply to drivers who work for motor carriers, according to two Federal District Courts which found that the Federal Aviation Administration Authorization Act (FAAAA) exempts drivers from that type of regulation.  (Dilts v. Penske Logistics, LLC, 2011 U.S. Dist. LEXIS 122421, *26 (S.D. Cal. Oct. 19, 2011); Esquivel et al. v. Vistar Corp. et al., Case No. 2:11-cv-07284 (C.D. Cal. Feb. 8, 2012).)  That means, motor carries do not need to give their drivers breaks to eat or rest, other than what Department of Transportation regulations require.  Essentially, California law cannot require employers to give drivers 30 minute, duty free meal periods or 10 minute, duty free breaks.

Exemption from California meal and break regulations gives employers greater flexibility and can lower costs significantly.  Drivers who do not need to stop their trucks to eat or rest can work more efficiently for the company, unhindered by detailed California regulations.  Frequent stops while driving routes can make administering those routes very difficult.  The increased time and attention required almost always increases the cost of doing business.  In addition, if an employer mistakenly violates California meal and rest period laws, the owed wages and penalties can add up to large sums of money, especially if the violations lead to a class action  where many drivers claim owed wages for similar violations.

Drivers may also prefer the flexibility provided by the FAAAA exemption.  Some employers have employees who drive routes that typically take about 10 or 11 hours to complete.  Unfortunately for those drivers, sometimes traffic jams prevent them from getting back to their designated places of origin before 12 hours.  They get paid for the entire time even if traffic extends their driving time, but California law requires a second meal period when the work day extends beyond 12 hours.  The FAAAA exemption saves them from being required to pull over to take an unpaid meal period at the end  of the day when they would rather be sitting at home.

What about driver comfort and humane treatment?  Both the Dilts court and the Esquivel court say that the FAAAA requires the market place to care for those considerations.  They use identical reasoning to support that conclusion and the conclusion that the FAAAA preempts California’s meal and rest period laws.  In fact, Esquivel simply quoted large portions of the Dilts order.

The Dilts Court said that the FAAAA defines “motor carrier” broadly: “Plaintiffs, as Penske drivers/installers, operated commercial motor vehicles which transported property and conducted services related to that movement. That they performed other services in addition to the transportation of property, such as installing appliances, is not enough to exempt them from regulation under the FAAA Act.”  It then said that the FAAAA exempts the motor carriers from providing meal and rest periods to drivers because it has a significant, indirect effect on route management, something the FAAAA language arguably prohibits: “Thus, the Court finds state regulation of details significantly impacting the routes or services of the carrier’s transportation itself preempted by the FAAA Act.”   The Court also found that the Congress intended the FAAAA to preempt state laws even in cases where the state law only has an indirect regulatory effect on motor carriers, such as meal and rest period laws.

Both of the above cited cases are being appealed to the Ninth Circuit Federal Court of Appeal.  The Ninth Circuit could overturn the lower court rulings.  Regardless, for the time being, the FAAA appears to exempt many truck drivers from breaks and meals required by California law.

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)

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On January 20, 2014, I gave an interview about the newly passed and newly proposed minimum wage laws in California and throughout the nation.  Please click this link to listen: http://www.bigblendnetwork.com/california-labor-law.html
This link also has the related article I posted with the radio show.

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)

Employment law san diego

 

Posted on January 16, 2014 by S. Ward Heinrichs
http://backstromandheinrichsblog.wordpress.com


2014: “The Year of the Minimum Wage!”

For the past several months, my blog, emails, Big Blend Magazine articles, radio interviews, Facebook posts, and other modes of communication I use to discuss legal issues have been filled with news about minimum wage.  Of all the hot Employment Law topics, I think minimum wage is the biggest topic now and will remain so throughout 2014.

The big news for Californians is that the state minimum wage will increase from $8 an hour to $9 an hour starting on July 1, 2014.  After that, it will increase another dollar to $10 per hour on January 1, 2016.

Most recently in the news, Los Angeles is poised to pass a minimum wage increase to $15.37 per hour for hotel workers who work in a business zone around the airport (LAX).  (http://www.huffingtonpost.com/2014/01/14/la-highest-minimum-wage-hotel_n_4590136.html)  In fact, the Los Angeles City Council wants to make that minimum wage the law for the entire city.  It argues that the present minimum wage does not provide enough income for a wage earner to cover the expenses of a typical family.  Of course, Los Angeles businesses are lobbying against it saying that such a large minimum wage increase will lead to significant unemployment because the cost to do business will be too great.

Many in the Federal Government have been pushing a federal minimum wage increase too.  Democrats have proposed to increase the national minimum wage to $10.10 per hour.  It is now $7.25 per hour.   Because of our divided government, the new proposal has very little chance of passing.  If it were to pass, then the federal minimum wage would be greater than the minimum wage in all 50 states.  That means employers in every state would need to pay at least $10.10 an hour.  In contrast, some cities have minimum wages higher than $10.10 per hour.  For instance, San Francisco now has a minimum wage of $10.74 per hour.  Parts of Seattle have a minimum wage of $15.

Thirteen states have recently increased their minimum wage rates.  At the present time, twenty-one states and Washington D.C. have minimum wage rates that are greater than the federal minimum wage, which is now $7.25 per hour.  The other 29 states have wage rates that either mirror or are less than the federal minimum wage.  Employers in those 29 states must pay at least $7.25 per hour.  The state with highest minimum wage is Washington at $9.32 per hour.

Employers must pay the highest minimum wage that applies to them.  So, employers in San Francisco must pay the $11.74 per hour rate mandated by the city.  If the employer does business just outside of San Francisco, then it must pay the present California minimum wage of $8 per hour.  If the employer moves its business to Wyoming, which has a minimum wage of $5.15 per hour, then it must pay its employees the federal minimum of $7.25 per hour.

Some minimum wage laws allow for certain types of businesses to either be exempt from the minimum wage rate or provide for a lower rate than the standard minimum hourly rate.  Typically, high city rates have exemptions and limitations built into them.

If you want more news about the national push to increase the minimum wage, keep an eye out for articles I post on Facebook (https://www.facebook.com/BackstromandHeinrichs) and for future blog posts here.

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)

Employment law san diego

Posted on December 23, 2013 by S. Ward Heinrichs
http://backstromandheinrichsblog.wordpress.com

Much Harder Now for Employers to Win Attorneys’ Fees in Wage Cases

Starting January 1, 2014, employers will have a much more difficult time convincing a Court to give them attorneys’ fees after winning a wage and hour lawsuit.  Before the change in the law, when an employee sued the employer for not paying wages, other than for overtime and minimum wage, the employer could ask the Court to award it the cost of hiring an attorney to defend the case when the employee lost his or her wage claim.  Now, even when an employer successfully defends an employee’s claim for unpaid wages, the employer can only win its attorneys’ fees if the employee brought the lawsuit in bad faith.  Bad faith is a hard standard to prove.

The law protects suing employees even more than before.  As indicated, an employee never faced the penalty of needing to pay for an employer’s attorneys’ fees when the employee claimed that the employer failed to pay overtime wages or minimum wage.  However, when an employee claimed that the employer failed to pay regular straight time wages that met the minimum wage standards, an employer had a right to recover its attorneys’ fees if the employee failed to win.  Now, the employer only has that right when the employee brought the claim in bad faith.  Further, the new rule applies to “any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions”. . . so virtually any claim made for compensation earned by the employee requires the employer to prove bad faith before it can recover the money it paid to its attorneys when it wins a wage lawsuit.

Employers continue to carry the cost burden of litigation.  The new law amends Labor Code §218.5 and places even more of the litigation cost burden on employers.  The California courts and legislature have supported that policy for many years and continue to do so.

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)

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E-RADIO INTERVIEW ABOUT NEW 2014 EMPLOYMENT LAWS

On December 4, 2013, I gave an interview about the new employment laws of 2014.

Please click this link to listen: http://www.bigblendnetwork.com/new-2015-california-labor-laws.html

 

Employment law san diego

 

 

Posted on December 6, 2013 by S. Ward Heinrichs
http://backstromandheinrichsblog.wordpress.com

New 2014 Employment Laws

On December 4, I was a guest on the “Happy Hour” show of the Big Blend Radio program (www.BigBlendRadio.com).  We discussed the topics posted below.  The program directors will soon post on their website the live radio chat and the article I submitted.  The following are the essentials discussed on the show and posted in the article.

Increase in the minimum wage

The biggest news about new labor laws is the California minimum wage increase.  This will affect most, if not all, employers and will raise the wages for many workers, even those who make more than minimum wage.

The new minimum wage law provides for an increase to $9 per hour starting on July 1, 2014 and an increase to $10 per hour on January 1, 2016.  Obviously, those who make minimum wage will see their wages increase.  In addition, those who make the minimum salary to qualify as an exempt employee will also see their salaries increase.  Those minimum salaries are equal to two times the minimum wage, so when the minimum wage increases, those salaries also increase.  Further, other wage earners making more than the minimum hourly rate and the minimum salary may also see their wages increase because of the general upward pressure in wages from the increase in the minimum wage.

Cool down rest periods

Soon, when the temperature exceeds 85 degrees, outdoor workers will be entitled to at least five minutes of rest on an “as needed” basis.  The law does not provide the employer with a way of denying the employee the break, so, apparently, when the employee claims the need for a break, the employer cannot object.  Most lawyers believe that the subjective nature of determining when someone needs a break will cause many problems with implementing the requirements of this new law.  The law will probably spawn much litigation.

Domestic Workers

Nannies, home health care providers, and maids used to be exempt from the overtime premium pay requirements.  Now they are entitled to overtime.  If they work more than 9 hours per day or 45 hours per week, then the new law requires employers to pay time-and-a-half for all hours worked beyond those thresholds.  They also will be entitled to rest and meal periods

Veterans and active duty military are now protected by the California Fair Employment and Housing Act.

Before the change in the law, employers could discriminate against employees because they were either veterans or active duty personnel and not face discrimination lawsuits based on violations of California law.  Now, employers could face discrimination lawsuits if they pick on employees because they are veterans or active duty military.

Grandparents, grandchildren, siblings, and in-law parents are now eligible for Paid Family Leave

The legislature extended Paid Family Leave benefits to grandparents, grandchildren, siblings, and in-law parents.  Those groups of people will soon be eligible to receive paid leave to care for grandparents, grandkids, brothers and sisters, and in-laws.

Increased protections for immigrant workers

When immigrant employees assert employment rights, their employers could face retaliation lawsuits if they treat those employees in a way that adversely effects their employment because the immigrant asserted a work place right.

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)

Employment law san diego

 

 

Posted on November 22, 2013 by S. Ward Heinrichs
http://backstromandheinrichsblog.wordpress.com

Can California Employees Who Work on Military Bases Sue Their Contractor Employers?

Can employees who work on military bases sue their contractor employers?  The answer is probably yes, but problems arise if Congress still has “exclusive legislation” over the base, a type of Federal Enclave.

Article I, Section 8, Clause 17 of the United States Constitution creates Federal Enclaves and gives Congress “exclusive Legislation in all Cases whatsoever” over Washington D.C. and over “all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, doc-Yards and other needful Buildings.”  Accordingly, when a State sells land to the United States so the federal government can build a military base, Congress has “exclusive legislation” over that property, assuming that the selling State has consented to grant such jurisdiction.  (James v. Dravo Contracting, (1937)  302 U.S. 134; Fort Leavenworth R. Co. v. Lowe, 114 U.S. 525, 531.)

Unfortunately, Congress has passed no civil laws that directly apply to Enclaves.  By default, some federal civil law applies, for instance the Fair Labor Standards Act.  In addition, Congress has authorized certain types of state law to apply on Enclaves: personal injury and wrongful death; state taxes on income, sales, use and fuel; state worker’s compensation laws; and state unemployment compensation laws.  However, Congress has not addressed many areas of civil law, such as: probate, motor vehicle registration, family law, etc.

If state family law does not apply to Enclaves, how can Enclave citizens get a divorce?  The Supreme Court recognized that problem and has addressed it over the years.

First, it found that the law of the state, at the time the state gave the land to the federal government, was incorporated into the federal enclave except for conflicting state law.  (James Stewart & Co. v. Sadrakula (1940) 309 U.S. 94, 99-100.)  Later the Supreme Court said that state laws enacted after the state ceded the land applied to Federal Enclaves if “the basic state law authorizing such control has been in effect since the time of acquisition.”  (Paul v. United States (1963) 371 U.S. 245, 269.)

Second, still later, the Supreme Court appeared to proclaim that all state law applies to Enclaves unless the state law conflicts with federal law.  “[F]riction, not fiction” determines whether or not state law applies on federal enclaves.  (Howard v. Commissioners (1953) 344 U.S. 624, 626.)  Later, it reaffirmed Howard holding that Howard specifically  rejected the “fiction of a state within a state” and that state law can apply on federal enclaves even if not specifically authorized by Congress.  (Evans v. Cornman (1970) 398 U.S. 419, 421-22, 24.)

Still, confusion abounds concerning what state laws should apply on Enclaves.  Later court holdings appear to conflict with the “Friction, not fiction” concept.  Notably, in California, one appellate court said: “in the area of the rights of federal enclave residents to state benefits, there has been a trend . . . to hold that the exclusive jurisdiction of Congress does not deprive enclave residents of benefits which would otherwise be theirs.” But later it says: “[T]he ability to bring a civil action [for wrongful termination] against one’s employer under state law is not a “benefit” in the same sense as voting, public school attendance, or eligibility for welfare payments.”  (Taylor v. Lockheed Martin Corp. (2000) 78 Cal.App.4th 472, 481-82.)  The Taylor court appeared to hold that three types of law apply on enclaves: (1) state law that existed at the time the Enclave was created, (2) congressionally authorized state law, and, (3) state law that qualified as a “benefit” in the sense referred to above.

The analysis in Taylor leaves gaps in the law and creates uncertainty.  Further, arguably, the Supreme Court of the United States has authorized all state law that does not directly conflict with federal law to apply on Enclaves.  Because of the uncertainties and complications of Enclave law, employers should probably assume that state law applies to its employees who work for it on a base.

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)

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Posted on November 13, 2013 by S. Ward Heinrichs
http://backstromandheinrichsblog.wordpress.com

Independent Contractor or Employee?

Am I an independent contractor or an employee?  How should my business classify its workers, as independent contractors or employees?

Both workers and businesses struggle with these questions at times.  Most of the time, the answers are pretty clear.  However, in a significant minority of employment relationships, the answers are not clear.  Unfortunately for those who struggle with questions about their employment relationships, the tests used to answer these questions are often hard to apply.

The first thing to consider when trying to determine whether a worker is an employee or independent contractor is whether the person receiving the service controls the details of the work.  (Empire State Mines Co. v. Cal. Emp. Com., (1946) 28 Cal.2d 33, 43.)  However, control is not the only consideration.  “[T]he ‘control’ test, applied rigidly and in isolation, is often of little use in evaluating the infinite variety of service arrangements.”  (Borello & Sons, Inc. v. Dept. of Industrial Relations, (1989) 48 Cal.3d 341, 350.)  In other words, if control does not clearly show an employment relationship, then the person analyzing the relationship should apply “economic reality test” factors, similar to those listed below, to further evaluate the relationship:

(a) Whether the one performing services is engaged in a distinct occupation or business;

(b) The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;

(c) The skill required in the particular occupation;

(d) Whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work;

(e) The length of time for which the services are to be performed;

(f) The method of payment, whether by the time or by the job;

(g) Whether or not the work is a part of the regular business of the principal;

(h) Whether or not the parties believe they are creating the relationship of employer-employee.

(i) The worker’s opportunity for profit or loss depending on managerial skill;

(j) The permanence of the working relationship;

(k) Whether the service rendered is an integral part of the employer’s business.  (Borello, at 351, 354-355.)

Employers have argued that in some situations, only the control test should be applied.  That test arguably will more often find an independent contractor relationship than the economic realities test.  Employers usually want to have independent contractors working for them rather than employees.  However, the trend is to find an employment relationship, at least where employee rights and benefits are concerned or where the state has an enforcement interest.  (Air Couriers Internat. v. Employment Development Dept., (2007)150 Cal.App.4th 923, 935-37.)

The federal cases analyzing employer-employee relationships under the Fair Labor Standards Act also apply economic realities test factors.  (Real v. Driscoll Strawberry Associates, (9th Cir. 1979) 603 F.2d 748, 754.)  Regardless, some state or federal agencies may still apply some form of the control test.

As an employer, to be on the safe side, you should analyze your workers under the arguably more liberal economic realities test.  Similarly, in most cases, workers will not be wrong if they analyze their work relationship by applying the broader economic realities test.  However, depending on what agency is analyzing the issue or the state in which the worker is performing the work, a control test may be the correct test to apply.

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)

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Posted on October 31, 2013 by S. Ward Heinrichs
http://backstromandheinrichsblog.wordpress.com

Labor Commissioner Wage Hearing Appeals are New (De Novo) Trials in Superior Court

Recently, our firm represented an employee in a trial de novo appeal of a Labor Commissioner wage hearing which had been held under the rules of Labor Code §98.[1]  The hearing officer had awarded our client a sizable amount of unpaid wages.  The employer decided to appeal the award.  It properly sent notice as provided under Labor Code §98.2.

Labor Code §98.2 provides that “. . . the parties may seek review by filing an appeal to the superior court, where the appeal shall be heard de novo.”[2]  The term de novo is a Latin phrase that means “over again” or “anew”.  The Courts perceive it to mean that the record, findings, and award of the Labor Commissioner are void and the superior court hears the case as if for the first time:

The statutory trial de novo (see § 98.2) “is neither a conventional appeal nor review of the Labor Commissioner’s decision, but is rather a de novo trial of the wage dispute” (Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1116), and the court ” ‘hears the matter, not as an appellate court, but as a court of original jurisdiction, with full power to hear and determine it as if it had never been before the labor commissioner’ ” (id., at pp. 1116-1117, quoting Collier & Wallis, Ltd. v. Astor (1937) 9 Cal.2d 202, 205, italics added.[3]

Although denoted an “appeal,” unlike a conventional appeal in a civil action, hearing under the Labor Code is de novo. (Lab. Code, § 98.2, subd.  ” ‘A hearing de novo [under Labor Code section 98.2] literally means a new hearing,’ that is, a new trial.” (Pressler v. Donald L. Bren Co., supra, 32 Cal.3d at p. 835.) The decision of the commissioner is “entitled to no weight whatsoever, and the proceedings are truly ‘a trial anew in the fullest sense.’ ” (Sales Dimensions v. Superior Court (1979) 90 Cal.App.3d 757, 763 [153 Cal.Rptr. 690].) The decision of the trial court, after de novo hearing, is subject to a conventional appeal to an appropriate appellate court. (1 Wilcox, Cal. Employment Law, supra, § 5.18[2] [a], p. 5-46.) Review is of the facts presented to the trial court, which may include entirely new evidence. (See Nordquist v. McGraw-Hill Broadcasting Co. (1995) 32 Cal.App.4th 555, 561 [38 Cal.Rptr.2d 221]; 1 Wilcox, Cal. Employment Law, supra, § 5.18[3], p. 5-49.)[4]

Another reason the Labor Commissioner’s record cannot be used at a trial de novo is that the Labor Commissioner allows almost all hearsay into evidence.  In contrast, California Superior Courts do not, unless the evidence falls within an exception.

Additionally, pre-trial motions should generally not be allowed in de novo appeals from a Labor Commissioner hearing.  The legislature provided the Labor Commissioner hearing process to help employees quickly recover wages they are owed.  The de novo appeals process was also devised with quick resolution in mind.  Motions, discovery, and pre-trial hearings delay the process and make it much more expensive.  Accordingly, the Superior Court should hear the trial de novo soon after the request for appeal is filed.  That would support the policy to resolve wage issues quickly.

Regardless, the employer’s attorneys convinced the Superior Court judge to hear a Motion for Summary Judgment.  Their goal was to convince the Court to dismiss the Labor Commissioner’s wage award without a new trial.  They had convinced the judge to do that before our client had contacted us.

We were forced to oppose the employer’s motion and argued that the employer did not have the right to file a Summary Judgment Motion based on the Labor Commissioner’s record and findings.  We also argued that our client should win for other reasons.  The Court denied the employer’s motion.  The Court declined to say whether or not the employer was entitled to bring the motion, rather, it said that the employer could not win because the facts in the Labor Commissioner’s record did not support dismissal of our claim.

Despite the Court’s ruling, we feel confident that the party who chooses to appeal a Labor Code §98 Labor Commissioner ruling cannot use the Labor Commissioner’s hearing record to support its case.[5]


[1] All references to the Labor Code are to the California Labor Code.

[2] Labor Code §98.2(a).

[3] Martinez v. Combs, (2010) 49 Cal.4th 35, 65-66.

[4] Post v. Palo/Haklar & Associates (2000) 23 Cal.4th 942 , 947-48.

[5] Possibly, statements in the record could be used to impeach statements later made in Court at the Trial de novo.

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
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Posted on October 22, 2013 by S. Ward Heinrichs
http://backstromandheinrichsblog.wordpress.com

Unemployment Hearings at the EDD

Recently, unemployment appeal hearings have become an increasingly large part of our litigation work load. One reason for that increase is Congress has extended the amount of time an unemployed person may receive unemployment benefits. As a result, the recently unemployed are more willing to pay a lawyer to appear at the Employment Development Department (EDD) appeal hearings. On the one hand, if the EDD initially denies the former employee unemployment, those former employees have an incentive to pay a lawyer to fight for their right to win unemployment benefits that may last for four years. On the other hand, if an employer appeals the EDD’s initial eligibility finding, the former employee may want the help of a lawyer to convince the EDD Administrative Law Judge to affirm the initial grant of eligibility.

In our experience, employers have always been willing to retain attorneys to appear at EDD unemployment appeal hearings, and we have represented many of our employer clients at those hearings. However, because of the increased stakes, we are now representing more former employees who are willing to pay for legal services. In turn, an increasing number of employer clients have turned to us for representation before the EDD.

Unemployment appeal hearings are not nearly as formal as hearings in Court. First, the EDD holds them in conference rooms or in the administrative law judge’s office. Second, the judge records the hearing but does not have a court reporter present to make a stenographic record. Third, all hearsay evidence is allowed into evidence, so all declarations and documents are made a part of the record. However, the parties may attack the credibility of the hearsay evidence with the goal of showing that it is not reliable enough to support a determination. Fourth, administrative law judge’s tend to take a more active role in evidence presentation. In fact, the judge may even take it upon him or herself to cross-examine a witness.

Even though the rules of evidence are more relaxed in unemployment hearings, credible evidence is still very important. In most cases, the main issues are: one, did the employee quit for good cause, and , two, was the employee discharged for misconduct? At a recent hearing appealed by our client, the employee, the employer tried to prove that our client stole a telephone by submitting reports written by other employees who were eye witnesses to the alleged misconduct. In part, the employer lost the hearing because it elected not to have those eye witnesses testify. We were able to cast doubt on the credibility of the statements. Because the witnesses were not there to contradict our statements and were not available for the administrative law judge to evaluate, the testimony in the written statements lacked credibility.

Do not take unemployment appeal hearings lightly. The stakes are greater than they ever were. Consider speaking to an experienced lawyer before appearing at your hearing unrepresented.

S. Ward Heinrichs
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792

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Posted on October 9, 2013 by S. Ward Heinrichs
http://backstromandheinrichsblog.wordpress.com

How will the California New Minimum Wage Effect Employees and Employers?

Governor Jerry Brown recently signed a new minimum wage law. It will increase minimum wage to $9 per hour on July 1, 2014 and to $10 per hour January 1, 2016.  This will have both positive and negative effects.

The obvious positive effect is minimum wage earners will see an increase in their paychecks, assuming the employer continues to employ them for the same number of hours.

Increases in minimum wage usually have some “trickle up” effect too.  In other words, hourly employees who make more than minimum wage are more likely to see some increase in their hourly wage.  The theory is if their services are worth more to the employer than the services of minimum wage employees, then the employer should still be willing to pay more for those services even after an increase in the minimum wage.

Even salaried employees should get an increase in their wages.  In California, the state requires an employer to set minimum salaries by using minimum wage as part of the equation.  For instance, exempt managers must make at least twice minimum wage multiplied by 2080 hours.  (2080 hours is 40 hours per week times 52 weeks per year.)  So, by 2016, the minimum salary for exempt managers will be $41,600 (2080 hours x $20 per hour).

Of course, increases in labor costs will increase the costs of producing goods and services.  The market will force employers to elect one or more methods to combat the increased costs.

Usually, employers will attempt to pass along the increased cost to the purchaser.  To the degree the market allows that, we all will pay more for goods and services.  However, not all markets allow for much, if any, increase in the costs of goods and services.  Some businesses will undoubtedly not be able to pass enough of the cost along to survive and will go out of business.  Other businesses will pass along some cost to the purchaser but will also need to reduce other costs.  As a result, some businesses will actually fire some of the employees who just received increased wages because of the increase in the minimum wage.  Other businesses may elect not to hire workers that they had planned to hire or may elect to reduce the number of working hours it offers to its employees.  Still others will cut costs by reducing the quality of the goods or services they provide.  Of course, certain employers may be able to deal with increased labor costs by using one or all of the above strategies.

Clearly, minimum wage employees, who keep their jobs and maintain the same number of working hours after a minimum wage increase, will benefit.  Similarly, minimum salaried employees who retain their jobs will benefit too.  Other employees may well receive more wages because of the general upward pressure on wages.  However, other members of the public, such as, consumers, terminated workers, employers, etc. will feel economic pain as a result of the increase in minimum wage, but they may feel good about that because their pain will help others receive a more decent living wage.

S. Ward Heinrichs
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792

Employment law san diego

 

 

Posted on October 4, 2013 by S. Ward Heinrichs
http://backstromandheinrichsblog.wordpress.com

AT&T Mobility v. Concepcion

AT&T Mobility v. Concepcion, (2011) 131 S.Ct. 1740 established that arbitration agreements may contain enforceable class action waiver provisions. More recently, the United States Supreme Court extended that doctrine. (American Express Co. v. Italian Colors Restaurant, (2013) 133 S.CT. 2304.)

In American Express, plaintiff Italian Colors Restaurant (ICR) filed an antitrust class action on behalf of a class of merchants whom American Express was allegedly overcharging for the use of its credit cards. ICR claimed that it could not pursue the claim for its own damages alone because the cost would exceed $1,000,000 and the potential recovery was capped at $40,000. Thus, ICR further claimed that the only economically feasible way of proceeding was as a class action. That would allow it to multiply the $40,000 potential damages by the number of class participants. The Supreme Court said that ICR had no right that would trump the class action waiver even though its individual claim was not economically feasible.

On a different note, the United States Supreme Court ruled that class action arbitration can be enforceable under the right circumstances. (Oxford Health Plans, LLC v. Sutter, (2013) 133 S.Ct. 2064.) A class of doctors alleged in a lawsuit that Oxford Health violated its contract by refusing to pay the prescribed fees for services performed. The agreement had an arbitration provision that did not waive class actions. The parties both agreed to have an arbitrator decide whether the class actions claims could be pursued in arbitration. The arbitrator ruled that the class claims could proceed in arbitration. The insurer Oxford Health appealed. The Supreme Court said that the insurer was stuck with arbitrator’s decision because it had agreed to arbitrate the issue of class action waiver. Had Oxford Health insisted on having a Court rule on the issue, the Supreme Court might have ruled differently.

Labor Code §2699 Private Attorney General Act claims are not necessarily waived by a class action waiver in an arbitration agreement. (Brown v. Superior Court, (2013) 216 Cal.App. 4th 1302.) The Court ruled that PAGA claims can only survive as representative claims, i.e., where one aggrieved employee may seek to claim Labor Code penalties for the state of California on behalf of all employees who suffered the same violations that allow for such penalties. The named plaintiffs had signed an arbitration agreement with a class action waiver. Despite that, the Court found that the waiver did not prevent plaintiffs from seeking PAGA penalties because those claims are not waivable.

The ruling in Brown may not stand because the issue is now before the California Supreme Court in a different case: Iskanian v. CLS Transportation of Los Angeles, (2011) 206 Cal.App.4th 949, review granted, (2012) 147 Cal.Rptr.3d 324.

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EMPLOYEE’S RIGHT TO INSPECT EMPLOYMENT RECORDS KEPT BY EMPLOYER

By Backstrom & Heinrichs, APC on Thursday, January 19, 2012

Posted on January 19, 2012 by Alison Dearden

PAYROLL RECORDS

Employers are required to keep records of all itemized wage statement information required by Labor Code §226(a).This information includes: (1) gross wages earned, (2) total hours worked by the employee, (3) the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis, (4) all deductions,(5) net wages earned, (6) the dates of the period for which the employee is paid, (7) the name of the employee and the last four digits of his/her social security number,(8) the name and address of the employer, and (9) the employee’s hourly rate. Employers are also required by §226 to keep a record of all deductions made from payments of wages. All this information must be kept for 3 years.

Employees have the right to inspect and/or copy these records.[1] The employee may make an oral or written request to inspect and/or copy these records. Then, the employer has 21 days to comply with the request.[2] The employer may choose to copy the payroll records for the employee and the cost of reproduction may be charged to the employee. An employer who fails to comply with the employee’s request within 21 days may be required to pay a $750 penalty to the employee.[3]

PERSONNEL FILES

Employees have the right to inspect the personnel records related to their performance.[4] Employers can require an employee to inspect his/her personnel records on his/her own time provided the records are kept or brought to the workplace. The employer must allow this within a reasonable time of the employee’s request to do so. However, if the records are stored off-site and the employee must travel to the location, the inspection must be during work hours and the employer must compensate the employee for his/her time.

The employer does not have to provide the employee with copies of his/her entire personnel file, however, he must provide the employee with copies of all documents the employee has signed that relates to obtaining or holding employment.[5] This includes signed employment applications, employment contracts, signed discipline documents, etc.

There are some documents that the employer can withhold from inspection. Employers are not required to release: letters of reference, records relating to the investigation of a possible criminal offense, records that were obtained before the employee’s employment, records prepared by an examination committee, or records obtained in connection with a promotional exam.[6]


[1] Labor Code §226(b).

[2] Labor Code §226(c).

[3] Labor Code §226(f).

[4] Labor Code §1198.5.

[5] Labor Code §432.

[6] Labor Code §1198.5(d).

Tags: payroll records, personnel files; time cards

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Itemized Wage Statements

By Backstrom & Heinrichs, APC on Thursday, January 19, 2012

Posted on January 19, 2012 by Alison Dearden

Employers are required to provide itemized wage statements to employees, containing specified information, all as set forth in section Labor Code section 226(a)1. The requirement is mandatory and an employer’s failure to comply constitutes a statutory violation. A proper itemized wage statement for an hourly employee will contain the following information:

•· Employer’s name and address;

•· Employee’s name and social security number (last four digits only);

•· Dates of the pay period;

•· Gross wages earned;

•· Employee’s hourly rate;

•· Total hours worked;

•· Deductions;

•· Net wages earned.

Section 226(a) violations can lead to expensive litigation and costly penalties for employers. If the violation is “knowing and intentional,” employees may obtain the greater of all actual damages or $50 for the initial pay period in which a violation occurs and $100 per employee for each violation in a subsequent pay period, not exceeding $4,000.

This means, if an employer has a practice of utilizing improper pay statements or no pay statements at all, and this practice has been going on for some time, he could potentially be required to pay $4,000 to all hourly employees he has employed in the past 4 years. However, whether an employee suffers “injury” from improper pay statements and what constitutes “knowing and intentional,” are presently before the California Supreme Court in Brinkley v. Public Storage, Inc., Case No. S168806 (rev.grntd. 1/14/09).


[1] Section 226(a) reads in full as follows: “Every employer shall, semimonthly or at the time of each payment of wages, furnish each of his or her employees, either as a detachable part of the check, draft, or voucher paying the employee’s wages, or separately when wages are paid by personal check or cash, an accurate itemized statement in writing showing (1) gross wages earned, (2) total hours worked by the employee, except for any employee whose compensation is solely based on a salary and who is exempt from payment of overtime under subdivision (a) of Section 515 or any applicable order of the Industrial Welfare Commission, (3) the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis, (4) all deductions, provided that all deductions made on written orders of the employee may be aggregated and shown as one item, (5) net wages earned, (6) the inclusive dates of the period for which the employee is paid, (7) the name of the employee and his or her social security number, except that by January 1, 2008, only the last four digits of his or her social security number or an employee identification number other than a social security number may be shown on the itemized statement, (8) the name and address of the legal entity that is the employer, and (9) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee. The deductions made from payments of wages shall be recorded in ink or other indelible form, properly dated, showing the month, day, and year, and a copy of the statement or a record of the deductions shall be kept on file by the employer for at least three years at the place of employment or at a central location within the State of California.”

[2] Labor Code section 226(e), (g).

Tags: Brinkley, Itemized wage statement, Labor Code section 226, knowing and intentional, wages

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Using Discovery from Previous Case in a New Case

By Backstrom & Heinrichs, APC on Tuesday, January 10, 2012

The law in California does not always allow discovery responses in a completed case to be used in a newly filed case.

An adverse party may “use for any purpose, a deposition of a party to the action, or of anyone who at the time of taking the deposition was an officer, director, managing agent, employee, agent, or designee under Section 2025.230 of a party.”  (Code of Civil Procedure Sec. 2025.620.)  Read literally, one can conclude that deposition testimony from a previous case can be used against a party in a new case.  Certainly, exceptions to the California hearsay rule would allow it: Admission of Party (Evidence Code Sec. 1220), Declaration Against Interest (Evidence Code Sec. 1230), and Former Testimony (Evidence Code Sec. 1290).

Responses to written discovery in a previous case are another matter.  Clearly, responses to Requests for Admissions may only be used in the case in which the responses were given.  (Code of Civil Procedure Sec. 2033.410(b).)  However, at least arguably, responses to Interrogatories drafted in a closed case may be used in a newly filed case.

In regard to the use of responses to Interrogatories, Code of Civil Procedure Sec. 2030.410 states: “At the trial or any other hearing in the action, so far as admissible under the rules of evidence, the propounding party or any party other than the responding party may use any answer or part of an answer to an interrogatory only against the responding party.”  Do the words “the trial or any other hearing in the action” mean that the responses to interrogatories can only be used in that action?  If the legislature did not intend for those responses to be used in a new action, why did it not have a complete prohibition similar to the one for Requests for Admissions?  If the responses to interrogatories from a closed case may be used in cases filed after that case then a “party” may use the responses against the responding party only.

The best practice is to not rely on discovery gathered in an old case as evidence in a new case.  Arguably, even deposition testimony from an old case cannot be as freely used in a new case as it could have been used in the case in which the deposition was taken.

Tags: depositions, discovery, interrogatories, request for admissions

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Certification of a Class Action: the Predominance Factor.

By Backstrom & Heinrichs, APC on Monday, January 2, 2012

In determining whether common questions of law or fact predominate as required by Federal Rule of Civil Procedure 23(b)(3), the Ninth Circuit Court of Appeals recently clarified that the manifestation of a product defect is not required to certify a class action, but merely the existence of a common defect. Requiring proof of a manifestation of the defect is actually a question relating to whether class members will win on the merits at trial, which is not required at the class certification stage.

In Wolin v. Jaguar Land Rover North America LLC, the plaintiffs contended that an alignment geometry defect caused the tires on their Land Rover LR3s to wear prematurely in violation of state consumer protection laws. The district court had denied class certification because the plaintiffs could not demonstrate that other prospective class members had experienced the same manifestation of the defect, i.e. premature tire wear. The appellate court reversed the district court even though individualized factors might affect tire wear, because proof of a defect in the alignment geometry was susceptible to generalized evidence.

Plaintiffs further argued that Land Rover’s failure to repair the defect and replace the tires was a breach of its limited factory warranty and its separate tire warranty. As to the limited warranty, the court found that all class members were covered by the warranty, they all alleged that their vehicles suffered from the same alignment defect, and that the warranty provides for the repair or replacement of all defects. Certification of the breach of warranty claim was therefore appropriate as to the limited factory warranty.

The cause of action alleging breach of the tire warranty, on the other hand, was not certified as a class action because the warranty only provided for the replacement of tires if the premature wear was due to a defect in the vehicles. The individual issues predominated over the common issues because the tires could have worn prematurely due to the alignment defect or based on factors such as where and how they were driven.

Note: The Ninth Circuit appeared to use an analysis similar to the one used by the California Second Appellate District, Division One in Jaimez v. Daiohs USA, Inc. (2010) 181 Cal.App.4th 1286. In Jaimez the court said in order to properly analyze predominance Courts must look to the theory of recovery advanced by the plaintiff. Mere factual disputes about the validity of the claims were merit disputes.

Tags: class action, class certification, employment law,federal rules of civil procedure, rule 23

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Unconscionable Commercial Contracts?

By Backstrom & Heinrichs, APC on Monday, January 2, 2012

On August 16, 2001, the California Court of Appeals unequivocally held that commercial contracts are subject to the same unconscionability analysis as other contracts. In light of that holding, the court examined a class action waiver in a commercial contract for unconscionability.

In applying the doctrine of unconscionability to commercial contracts, the appellate court in Walnut Producers of California v. Diamond Foods, Inc. stated that the deference afforded to commercial contracts arose from the facts surrounding the making of the contract and not from their character as a commercial contract. In practice, commercial contracts are subject to the same standard for determining unconscionability as all other contracts.

The present case involved a walnut producing Co-op that entered into an agreement with Diamond Foods in which the Co-op members agreed to supply Diamond Foods with walnuts. The agreement included a dispute resolution provision that required all disputes to be resolved by binding arbitration and precluded the use of class actions. The Co-op later attempted to bring a class action against Diamond for failure to pay Co-op members a reasonable price for their walnuts and argued that the class action waiver in the agreement was unconscionable.

The court concluded that the specific class action waiver in this case was enforceable. Among the things that it examined were whether the plaintiffs were surprised by the waiver, whether the plaintiffs had other business alternatives available, whether the agreement was so one-sided as to shock the conscience, and whether the class action waiver effectively operated as an exculpatory contract. Because the plaintiffs’ claims were sufficiently large to seek individual legal remedies, the class action waiver was not an exculpatory clause. Further, the Court did not find that the waiver was unconscionable under any other theory.

Tags: class action waiver, class actions, commercial contracts, unconscionability

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Wage and Hour Claims Well Suited for Class Actions

By Backstrom & Heinrichs, APC on Monday, January 2, 2012

In cases involving wage and hour claims, “class suitability should not be determined by demurrer.” So said California’s Courts of Appeal for the Second District after reversing a trial court decision in Gutierrez v. California Commerce Club, Inc. (2010). Wage and hour cases are routinely tried as class actions because they usually involve a single set of facts and one question of law applicable to all members. In these cases, the lead plaintiff must only allege that institutional practices affected all potential class members in the same manner and that liability issues can be determined on a class-wide basis.

In the case cited above, Gutierrez was lead plaintiff in a class action against California Commerce Club, Inc., alleging that his employer had denied meal and rest breaks to certain hourly, non-union employees. The trial court sustained a demurrer against Gutierrez’s third amended complaint on the ground that Gutierrez had failed to notify the court in the pleading who was in the class, what they do, how they are related, and why the plaintiff was the proper person to represent the class.

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Service Charges Must be Paid to LA Hotel Employees

By Backstrom & Heinrichs, APC on Monday, January 2, 2012

The California Courts of Appeal recently upheld a Los Angeles city ordinance that required hotels to pass along “service charges” charged to guests to their employees who performed the services. The ordinance originated out of a concern expressed by the city council that hotel guests were no longer leaving gratuities for hotel employees because the guests believed that the mandatory service charges were being paid to the employees. In actuality, only a few hotels gave any portion of the service charges to their employees. The low wages paid by the hotels to their employees combined with the lack of any separate income from tips meant that the employees were not earning a livable wage. The ordinance in question only affected a small number of hotels along a business corridor near Los Angeles International Airport. Despite opposition from the hotels, the court found that the hotels were benefitting from the corridor’s business designation, and the regulation was rationally related to improving the welfare of workers in that area. The holding can be found in Garcia v. Four Points Sharaton LAX (2010).

Tags: gratuity, service charges, tips

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Class Action Fairness Act of 2005

By Backstrom & Heinrichs, APC on Monday, January 2, 2012

The Eighth Circuit Court of Appeals recently interpreted a provision of the Class Action FairnessAct of 2005 (“CAFA”) that excluded local controversies from federal court jurisdiction while also clarifying the burdens of those seeking removal to or remand from federal court using that statute. In Westerfeld v. Independent Processing, LLC, the plaintiff Marlene Westerfeld brought a class action in Missouri state court against Missouri based Independent Processing, LLC (“Independent”) and California based Provident Funding Associates, LP (“Provident”). Independent processed residential mortgage documents and Provident provided residential mortgages. Westerfeld alleged on behalf of two separate plaintiff classes that Independent and Provident engaged in the unauthorized practice of law and violated the Missouri Merchandising Practices Act by charging Missouri residents illegal fees called “broker processing” fees and “administrative” fees. Plaintiff class 1 was certified as to all claims against Independent and plaintiff class 2 was certified as to all claims against Provident.

The court clarified that the party seeking removal to federal court must establish federal jurisdiction; then once CAFA jurisdiction has been established, “the burden shifts to the party seeking remand to establish that one of CAFA’s express jurisdictional exceptions applies.” In the case, Provident had successfully removed the case to federal court under CAFA. Later the district court remanded the case to state court. The district court held that any doubts about whether a case should be remanded or not based on one of CAFA’s exclusions should be resolved in favor of remand. In light of Congress’s stated objective that CAFA should grant broad jurisdiction, the appellate court held that the party seeking remand had the burden to prove that an exception to CAFA jurisdiction existed and that any doubt as to the applicability of an exception would be resolved in favor of the party that had successfully removed the case to federal court.

With regard to the local controversy exception to CAFA jurisdiction, the court held that the significance of an in-state defendant’s conduct must be compared with the conduct of all the defendants. The local controversy exception to CAFA allows state courts to hear a class action when an in-state defendant’s actions formed a significant basis of the claims being asserted. Westerfeld argued that the local controversy exception should be applied because Independent’s actions were the only actions being considered to resolve the claims of plaintiff class 1, and Independent’s actions were thus significant to the claims being asserted. The claims against Independent, though, involved only 1.5% of the total loans at issue and less than six tenths of one percent of the fees at issue in the entire class action. The claims asserted against Provident by plaintiff class 2 were far more significant to the class action as a whole. The court refused to let CAFA jurisdiction be defeated by a plaintiff creatively pleading claims against an in-state defendant on behalf of a separate class.

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PAGA Claims Survive Arbitration Waivers

By Backstrom & Heinrichs, APC on January 2, 2012

Private Attorney General claims may not be waived by arbitration agreements. However, the California Courts may be allowed to uphold arbitration agreements that seek to waive employment class action claims, even if they otherwise appear to be invalid under Gentry v. Superior Court (2007) 42 Cal.4th 443.

The Court of Appeal in Brown v. Ralphs Grocery Co., California Court of Appeals (Dist. 2) No. B222689, 2011, declined to extend the United States Supreme Court ruling in AT&T Mobility, LLC v. Concepcion, U.S.S.S. No. 09-893, 2011 to bar claims made by employees who are Private Attorney Generals under PAGA. The Court found that the U.S. Supreme Court did not even address whether arbitration waivers barred private attorney general claims. Consequently, the Appellate Court declined to extend the waiver of class actions under Concepcion to bar PAGA claims.

The Court did not address whether the waiver of consumer class actions in arbitration agreements that the U.S. Supreme Court found to be valid in Concepcion would also apply to waivers of employment class action claims. Instead, it found that Plaintiff Brown did not produce evidence upon which the lower court could find that the class action waiver was invalid. Thus, for the time being, the Courts may find employment class action waivers are invalid under a Gentry analysis. We will need to wait to see if, instead, the California Courts will apply the more employer friendly Concepcion analysis to arbitration agreements seeking to waive employment class actions.

Tags: Concepcion, Gentry, PAGA, arbitration, class action, class action waiver, waiver

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When Can Employers Pay Commission Wages?

Posted on October 5, 2011 By Alison Dearden

California Labor Code section 204.1 sets up two a two-prong test for determining whether commission wages may be paid to an employee. First, the employee must be principally involved in selling a product or service, not making the product or rendering the service. Second, the commission must be based proportionately upon the amount or value thereof.

First, selling a product or service means that the commissioned employee’s main job is to sell. Whether the employee is selling products such as cars, furniture, or refrigerators or selling services such as cable TV subscriptions or home security contract, he or she must be primarily involved in sales. For example, an employee who sells cars must also be required to fill out paperwork, check the car for cleanliness, and schedule meetings, but his principal job is to sell cars. Thus, he is principally involved in selling a product. On the other hand, a mechanic who works for an auto dealership may be an integral part of the sales force, but he is not principally involved in selling a product, he is principally involved in performing labor. Thus, he cannot be a commissioned employee.

Second, the commission must be proportionally based upon the amount of sales or the value of sales. This means an employer can pay a commissioned employee 20% of all sales. This is proportionally based because whether the employee sells a $2,000 sofa or a $20 lamp, she is earns 20% of the value regarless. An employer can also base the commission on the number of sales. For instance, an employer can pay a commissioned employee $250 for each car sold. This is proportionally based because whether the employee sells 5 or 50 cars, he makes $250 per car sold. A one-to-one proportion.

Finally, what happens when employees are performing both selling and non-selling tasks? Non-exempt sales employees must be paid at least minimum wage for time spent on non-selling tasks. An employer cannot average the wages to fulfill the obligation to pay minimum wage. An employer must keep track of and pay, at least minimum wage, for all time spent on non-sales activities such as meetings, cleaning, trainings, etc. The safest and easiest way for employers to avoid violations is to pay non-exempt sales employees at least minimum wage as a base salary in addition to commissions.

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