Articles Posted in Class Actions

Can one even imagine that FedEx would so boldly claim that its drivers are independent contractors rather than employees because it lacks sufficient control over the drivers’ work? Really? Walk the streets anywhere and you’ll see the ubiquitous FedEx driver, in the exact same trucks, wearing identical uniforms and delivering packages in the exact same manner.

It is hard to even dream that FedEx would claim these folks aren’t entitled to the protections of employment status. But they did. In order to save a buck, FedEx came up with an elaborate justification to claim their employees aren’t employees.

FedEx claimed and claims that because they make these drivers buy their own trucks and scanners, pay for their own uniforms, and work whatever hours are necessary to get FedEx’s work done, the drivers aren’t employees. They claim that because they require their drivers to sign contracts saying they are independent contractors, that they are independent contractors. They claim just because they say FedEx can’t control the “manner or means” of getting the job done, regardless of what they do, that these drivers are independent contractors.

In the Iskanian v.CLS Transportation Los Angeles, LLC decision, the California Supreme Court addressed the enforceability of employer-employee arbitration agreements in various circumstances. Iskanian v.CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014). The case delivered some good news – but mostly bad news – for employees and attorneys who represent employees.

First, as to the bad news: Boxed in by the United States Supreme Court’s decisions on the enforceability of arbitration agreements, including in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2001), the California Supreme Court upheld the validity of class action waivers in employment arbitration agreements. The California Supreme Court overruled its previous decision in Gentry v. The Superior Court of Los Angeles, 42 Cal.4th 443 (2007) as preempted by the Federal Arbitration Act (“FAA”).

The California Supreme Court also addressed the recently developed and powerful argument that class action arbitration waivers are invalid under the National Labor Relations Act (“NLRA”), which provides workers with a right to collective organize and advocate for their rights as a group. That argument gained traction with the National Labor Relations Board (“NLRB”) in its recent decision in D.R. Horton. Inc., 357 NLRB No. 184 (2012), but unfortunately the California Supreme Court sided with the Fifth Circuit’s contrary opinion in D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013). The California Supreme Court held that the NLRA was no obstacle to the applicability of the FAA to support the enforcement of class action waivers in arbitration agreements.

Alright – enough already! The courts really give employers every unfair opportunity to require their employees to “agree” to arbitrate their disputes. But even the courts agree that employers can’t be allowed to hide what they are doing! Take Empire Today LLC (also known as Flooring Install). Their management should be ashamed of themselves.

Empire employs lots of carpet installers, and lots of them are not well educated (at least in terms of reading 11 pages of single-spaced legalese) and for many, the English in which their employment agreements are written is not their first language.

So you probably get the drift here. Empire tells its non-English speaking employees that they must sign an 11 page, single-spaced, complicated and obtuse legalese document, in order to get the job. And, they must sign pretty much all of their rights away, and it was made clear to them that there was no room for other options or changes to the contract. Oh – and this arbitration provision was buried in paragraph 36!

On May 16, 2012, the California Supreme Court granted review of Duran v. U.S. National Bank (USB) (2012) 203 Cal. App 4th 212. In that case, a class of bank employees won an award of $15 million for unpaid overtime. The award was based on a variety of evidence which included a random sample of employees, and statistical analysis from an expert.

The Court of Appeals reversed the award, holding that the statistical sampling violated the bank’s due process rights.

Now the California Supreme Court has granted review of the case, presenting some hope to the class of bank employees that the Court will take a fresh look at the evidence presented at trial. In addition, all class action employees and lawyers will keep their eyes peeled for a potentially important ruling on the use of statistical evidence in a class action wage and hour case. Stay tuned!

The California Supreme Court has laid clear, after much confusion, the proper standard by which employers must provide their employees with meal periods, imposing an affirmative burden to completely relieve their employees from duty so that the employees may take full, thirty-minute, uninterrupted meal periods. If the employer fails to meet its obligation to do so, the damaged employee is eligible for a meal period premium of an hour’s worth of wages. In addition, the Court has clarified the standard by which meal period and rest break class actions may be certified and laid forth the appropriate standard for the timing of meal and rest periods.

In Brinker, the Court points out that, if an employee works five or more hours in a shift, the employer must do one of three things: (1) afford the employee an off duty meal period; (2) reach a voluntary agreement with an employee on a meal period waiver if one hour or less will end the shift; or (3) obtain written agreement to an on-duty meal period if circumstances permit. If it does none of the three, it is liable for premium pay.

In addition, the Court makes it clear that employers may not skirt their obligations, emphasizing that “an employer may not undermine a formal policy of providing meal breaks by pressuring employees to perform their duties in ways that omit breaks.” The only steps an employer need not take are to “police” breaks and affirmatively ensure that no work is done.

I’m not so sure why so much attention has been paid to Sullivan v. Oracle, other than the case has been up and down and all around the court system. See, e.g., Sullivan v. Oracle, 51 Cal.4th 1191 (2011); Sullivan v. Oracle, 662 F.3d 1265 (9th Cir. 2011). The recent holdings (by the Ninth Circuit and California Supreme Court) that – if you work in the great State of California – you are entitled to the protections of California law including overtime and the prohibition against unfair business practices, seems rather ho-hum when you think about it.

I’m not sure what Oracle was thinking when it invited employees from other states to enjoy the sunshine in California, but then left them out in the cold when it came to the basic rights of our overtime law while working on our turf. If the courts permitted that type of conduct, wouldn’t we just be encouraging employers to import cheap labor from Montana and Utah to do our work here in California? Talk about creating sweatshops right here in the golden state.

Let’s look at Oracle’s bold practices and inability to learn a lesson. Year after year, Oracle hired “instructors” to train customers on its products. Some of these instructors lived and worked in California; some lived and worked in other states; and some lived in other states but worked part of the time in California. Oracle classified these employees as “teachers,” to make sure that these folks were exempt from overtime laws. Voila -employees worked overtime for no extra pay.

On January 3, 2012, the National Labor Relations Board (“NLRB”) ruled that an employer cannot prohibit its employees from vindicating their rights through a class action. D.R. Horton, 357 NLRB No. 184 (2012).

Employer D.R. Horton required that its employees enter into an arbitration agreement as a condition of employment. The agreement not only mandated that employees resolve their disputes with their employer through the arbitration process, but that they do so on an individual basis, directly banishing class actions of any kind or nature, with one swoop of the pen.

An employee of D.R. Horton claimed that D.R. misclassified its employees as exempt under the Fair Labor Standards Act (“FLSA”) and sought to right this wrong through a class action. When D.R. Horton objected to the class action on the basis of its mandatory arbitration agreement, the employee filed an unfair labor practice charge with the NLRB, claiming that D.R. Horton’s agreement violated employees’ right to engage in concerted action pursuant to Section 7 of the National Labor Relations Act (“NLRA”). D.R. Horton responded that the Federal Arbitration Act’s (“FAA”) protection of the arbitration process basically trumped the NLRA’s protection of the employee’s right to organize.

The US Supreme Court’s April 27, 2011 decision in AT&T Mobility LLC v. Concepcion (2011) 563 U.S. _ is just the latest in a disturbing slide of the high court away from individual rights and liberties towards ever increasing corporate impunity. 

With its Concepcion decision, the Court further rolls back one of the lasting achievements of the civil rights and environmental movements, class actions.

Class arbitration waivers are at the heart of the US Supreme Court’s decision in Concepcion. At issue in the case was a rule,