Articles Posted in Wage & Hour Law

For years, the battle over arbitration clauses and agreements has raged on in courts and legislatures throughout the country. The latest development in arbitration in employment in California came on Thursday in California when Governor Newsom signed AB 51. The governor’s approval of AB 51 is a victory employees throughout California- it effectively prohibits employers from forcing employees into mandatory arbitration agreements starting January 1, 2020.

It is common practice throughout California to have an employee sign an arbitration agreement at the time she is hired. These agreements are generally non-negotiable, buried in a pile of new hire paperwork, and require the employee to arbitrate any claims arising out of employment. While valid arbitration agreements provide some of the safeguards that are afforded to litigants in court, it often takes away basic protections and rights including a trial by jury, and class or collective action. Arbitration is also a private process so it allows an employer to keep their wrongdoing under wraps.

The United States Supreme Court has said, repeatedly, that arbitration agreements are valid in the employment context. Recognizing the inherent imbalance in power between employers and employees, several states have tried to stop employers from forcing employees into arbitration. However, given the Supreme Court’s rulings, it is impossible to ban arbitration in employment altogether.  The hope is that in California, AB 51 will even the playing field before an employee signs an arbitration agreement; requiring that an employee can only enter such an agreement voluntarily. The law also prohibits an employer from retaliating against an employee who declines to enter into an arbitration agreement, which provides additional protection.

May 1 is International Workers’ Day, or May Day, and is a day to celebrate laborers and workers. It also commemorates workers who were killed while on strike protesting for an eight-hour work day in Chicago during what is known as the Haymarket affair. Just in time for May Day, yesterday the California Supreme Court adopted a new test for determining whether a worker is an independent contract or an employee.

The distinction in being classified as an independent contractor or an employee is an important one. Numerous laws protect the rights of employees, but do not protect independent contractors. For example, California’s minimum wage, overtime, meal period, and rest break laws apply to employees, but do not apply to independent contractors. Many employers misclassify their workers as independent contractors instead of employees to avoid having to comply with the many laws and regulations that protect employees – usually to shift costs onto the worker and off of the company.

Although the employee vs. independent contractor debate has raged on for many years, it has been in the spotlight with the explosion of the so-called “gig economy.” A number of decisions have come down through the courts and through the regulatory agencies, and depending on which law applies, different tests apply for how an employee is classified. However, the California Supreme Court has now definitively adopted a new test for determining whether a worker is an employee or an independent contractor under the California Wage Orders in Dynamex Operations West, Inc. v. Superior Court (Lee).

Wage disparities between men and women continue to be a significant problem even today. In 2016, the Bureau of Labor Statistics found that female full-time wage and salary workers only made 88% of what their male counterparts made. (  So, for every $100 a man earns, his female counterpart only earns $88. Recently, two tech giants have been in the news because female employees filed lawsuits for gender-pay discrimination.

 In recent years there have been several legislative changes strengthening the equal pay law in California. The California Equal Pay Act prohibits an employer for paying a male employee more than a female employee “for substantially similar work.” Cal. Labor Code § 1197.5. The California Equal Pay Act applies to all California employers, regardless of the size of the employer.  The California Equal Pay Act also prohibits employers from discriminating or retaliating against an employee for invoking rights provided by the law or helping another person invoke her rights under the law.

 On January 1, 2017, the Fair Pay Act was expanded to address compensation disparities between members of one race or ethnicity and those of another race or ethnicity. For example, women of color are often paid less than white women, and the changes to the law allow women of color to make a claim where this occurs. See Cal. Labor Code § 1197.5(b)

In 2012, the Supreme Court gave employers and employees alike clear rules about meal and rest breaks in California. The Court held that employers were required to provide employees with a full, thirty minute, uninterrupted meal period if an employee works five or more hours in a shift. In the alternative, employees may agree – in writing – to waive their meal period. If the employer does not abide by those rules, it is liable to the employees for premium pay. The Court also warned employers that they were not allowed to pressure employees into working through their meal break.

But what about rest breaks? In California, employees who work a typical eight-hour shift are entitled to two paid ten minute breaks. The California Supreme Court just clarified that the rest breaks must be duty free and employers cannot require their employees to remain “on-call” during their rest breaks.

In Augustus v. ABM Security Services, Inc. (2016), 2 Cal.5th 257, the plaintiffs were security guards who worked for a security company. The employer required its employees to keep their pagers and radio phones on at all times, including during rest breaks. The employees were also required to remain vigilant and respond to calls when needs arose. The Court held that the employees were entitled to duty-free rest breaks – that employers “must relieve employees of all duties and relinquish control over how employees spend their time.” The Court also held that employers could not require their employees to remain “on-call” during their rest breaks because if an employee is on call, they do not have the freedom to use their rest break for their own purposes.

The tension between an employee’s simple right to receive his wages for work he performed and the U.S. Supreme Court’s favoritism towards employers, is almost palpable in the tortured history of Sonic-Calabasas A, Inc. v. Moreno (Sonic II) ___ Ca.4th ___ (Oct. 17, 2013).

Here the employer imposed an arbitration agreement upon Mr. Moreno. When Mr. Moreno filed a simple Labor Commission claim to collect his vacation pay, the employer refused to attend the Labor Commission (Berman) hearing, and instead moved to arbitrate the claim. I suspect the move was a ploy to make it so expensive and time consuming for poor Mr. Moreno to collect what wasn’t a large amount of money to begin with, that he’d just give up. Lucky for Mr. Moreno, the Labor Commissioner realized the negative implications for all employees just trying to get paid for the work they do, if they can’t go to the Labor Commission.

In 2011 the California Supreme Court held that Mr. Moreno was entitled to his Labor Commission hearing, and that if the employer was dissatisfied with the results of the Berman hearing, it could then move to arbitrate. This was a fairly benign and logical holding.

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.

The conservative US Supreme Court’s activist agenda is in full throttle in the mandatory arbitration arena. In the AT&T v. Concepcion case (see prior blog of July 6, 2011), the US Supreme Court planted its thumb squarely on the employer’s side of the scales of justice by overturning past law and holding that there is no per se invalidation of class action arbitration provisions (Concepcion is a consumer class action case). Now the US Supreme Court apparently wishes to tip the scales at the opposite end of the spectrum: by applying this class action holding to individual Berman hearings brought by California workers for the payment of wages. The US Supreme Court has reached out and vacated (as well as remanded) the California Supreme Court’s holding in Sonic-Calabasas v. Moreno (2011) 51 Cal.4th 659. Why can’t the US Supreme Court stay out of our backyard?

The holding which the US Supreme Court vacated was quite modest. It simply upheld an employee’s right to a “Berman hearing” before the California Labor Commissioner, pursuant to California Labor Code, section 98, for the payment of unpaid wages. Berman hearings are a streamlined administrative procedure for employees to recover unpaid wages–including overtime, meal and rest period pay, and waiting time penalties–without having to go to court, allowing many employees who cannot afford a lawyer the ability to stand up for their workplace rights. The right to a Berman hearing protected by the California Supreme Court in Sonic-Calabasas was limited to the first instance only; the California Supreme Court permitted the employer to enforce a mandatory arbitration of the employee’s next step appeal, which would have otherwise taken place in the superior court.

The US Supreme Court vacated this opinion in light of Concepcion. See, Sonic-Calabasas, Inc. v Moreno (October 31, 2011) No. 10-1450. Does the US Supreme Court really believe that this minor right to an administrative hearing in the first instance should be wiped out? Does it really believe that an employer has a right to hijack a benign administrative process to entitle an employee to obtain his or her basic wages?

Mr. Kasten was fired by Saint-Gobain because he complained that the company prevented its workers from being paid for the time they spent “donning and doffing” (putting on required protective gear). He claimed that the location of the company’s time clocks caused this problem. Kasten v. Saint-Gobain Performance Plastic Corp., __ U.S. __ (March 22, 2011).

The Fair Labor Standards Act prohibits employers from discharging “any employee because such employee has filed any complaint” asserting a violation of the Act. 29 U.S.C. Section 215(a)(3). This case turned solely upon the Supreme Court’s holding that the phrase “filed any complaint” includes the making of an oral complaint, here to Saint-Gobain’s officials.

The Court held that the “purpose and context” of the anti-retaliation provision led it to this interpretation. It noted that very real problems could occur if the provision did not protect those who complained orally: it could prevent government agencies from using hotlines; it could discourage the use of informal workplace grievance procedures; and it could make it difficult for workers who are less educated to complain. This led the Court to adopt a broad interpretation of the statute.

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