Unpaid Wages

Top 5 Tips: So You Want to Sue Your Boss?

So you want to sue your employer for racial discrimination, sexual harassment, whistleblower retaliation, failure to pay you your last paycheck, what have you. Now what? Here are five tips all clients should keep in mind before they pick up the phone to call a lawyer.
Tip 1: Write it, don’t say it. People think it’s enough to complain, request or report things orally to their employer. They complain about discrimination to HR over the phone. Or they tell their supervisor about a health and safety code violation. Well, what are you going to do when HR or the supervisor denies you ever talked with them? Don’t believe it? Happens all the time. Avoid the “he said, she said” by communicating with your employer by emails or send letters (certified mail, return receipt requested). By doing this, you create a record.
Tip 2: Keep a journal. Don’t rely on memory, write everything down. The names of witnesses, dates, times, places, what was said, documents involved – the more detailed the better. And be professional about it. Don’t write that your boss is a %*&@! in the journal, because the journal could become evidence. Another thing, don’t leave the journal on your desk or in your desk drawer at work where your boss can find it. You might end up fired and your lawsuit dead.
Tip 3: Get witnesses. Emails, memos and letters are one form of key evidence in a lawsuit. Witnesses are the other. When your boss calls you a racial slur, pats you on the rear, or threatens to fire you because you reported him for illegal activity, talk to whoever witnessed it. Confirm whether they saw it. Try to get them on your side. Do this carefully and your case will have just gotten a lot stronger.
Tip 4: Don’t play lawyer. So you went to the internet and learned that “retaliation”, “hostile work environment” and “whistleblowing” are magic words. That doesn’t mean you should go waving those terms around in your emails and conversations at the workplace like your sword and shield. Don’t play lawyer. Chances are, your employer’s lawyer will be better at it than you are and if, as is likely, you get it all wrong, you’re the one who could come off looking like the bully, not the employer. Get a lawyer instead.
Tip 5: Don’t get mad, get even (or turn the other cheek). You’re being treated outrageously by your co-workers, your supervisors or the owners of your company, or maybe all of them. You’re depressed, scared and . . . spitting mad! To quote Al Pacino in Scent of a Woman, you want to take a flamethrower to the place! That’s fine if you want to end up in jail and without a lawsuit. Otherwise, take a deep breath, follow tips 1 to 4, and call an attorney. That momentary lapse where you curse your boss out like a sailor in front of your entire office could mean you no longer have a case.
More tips to come, but if you follow these five, you will be way ahead of the game. And your lawyer will thank you for it.

EXPENSE REIMBURSEMENT: YOUR EMPLOYEE RIGHTS

In our last post, the blog posed the question whether an employee must reimburse an employer for damage or loss during the course of employment (no).  This blog now examines the flip side of that question: must an employer reimburse you for expenses you incur as an incident to your employment?  That is, if you use your cell phone for company calls, dress in a required uniform, or use your car to travel or make deliveries are you entitled to be paid back for those expenses?  Here we have an unequivocal YES.

Labor Code section 2802 mandates that any employee expense incurred carrying out the employer’s duties shall be reimbursed to the employee.  In other words, any expense incurred by the employee that is necessary for the employee to carry out his or their duties for the employer. Labor Code § 2802 states that an employer must indemnify its employees “for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties … ” Lab.Code § 2802(a).The elements of a § 2802(a) cause of action are:

(1) the employee made expenditures or incurred losses;

(2) the expenditures or losses were incurred in direct consequence of the employee’s discharge of his or her duties, or obedience to the directions of the employer; and

(3) the expenditures or losses were necessary.” Cassady v. Morgan, Lewis & Bockius LLP (2006) 145 CA4th 220, 230.

An employer may satisfy this reimbursement requirement by paying an increased salary or commission but only if it is clearly defined what monies are being paid for labor performed and what amount is being paid as reimbursement for business expenses. Gattuso v. Harte–Hanks Shoppers, Inc. (2007) 42 C4th 554, 559.  Importantly, an employer may be required to pay for an employee’s defense as well as any settlement or judgment if the employee is sued for conduct arising within the course and scope of employment.  For example, an employee sued for discrimination may be entitled to a defense paid for by the employee.  On the other hand, an employee who punches somebody while “on the job” may not receive a defense.  See, Grissom v. Vons Cos., Inc. (1991) 1 CA4th 52, 55.; Freund v. Nycomed Amersham (9th Cir. 2003) 347 F3d 752, 765–760.  (Section 2802 allows indemnification for employees’ defense costs when sued for actions arising out of their employment). At least one case clearly states: “The statute requires the employer not only to pay any judgment entered against the employee for conduct arising out of his employment but also to defend an employee who is sued for such conduct.” Jacobus v. Krambo Corp. (2000) 78 CA4th 1096, 1100, 93 CR2d 425, 428.  Other cases have held that the employer need only reimburse the employee for legal expenses after a determination that the employee was in the course and scope of employment at the time of the incident being sued on. As a practical matter, an employer will invariable provide a defense for claims made against an employee.  If they do not, there are several options available to the employee.

Labor Code Section 2802 may also require an employer to indemnify employees for attorneys’ fees and costs incurred in successfully defending against criminal charges arising out of acts performed in the course and scope of employment. See Los Angeles Police Protective League v. City of Los Angeles (1994) 27 CA4th 168, 177, 32.  (Note:This is not well established by case law and remains something of an open question.)

WAGE DEDUCTION FOR BREAKAGE OR LOSS

It happens to everybody, you’re working away and you break something, or you come up short on your register, or, most commonly, you lose a tool or something of value that belongs to your employer.  The boss then tells you that he’s sorry but the cost of that damage or loss is going to come out of your paycheck. Can he do that?

In most cases the answer is “NO”.  Case law and orders of the Industrial Welfare Commission (IWC) make it clear that : Absent a showing of dishonesty, willful acts or gross negligence, an employer may not deduct for ordinary losses caused by an employee (e.g., for cash shortages, breakage or loss of equipment Kerr’s Catering Service v. Department of Industrial Relations (1962) 57 C2d 319. 326–330, Truck driver’s sales commissions not subject to reduction for cash shortages; see also Prachasaisoradej v. Ralphs Grocery Co., Inc.,(2007) 42 Cal. 4th 217. 229 “The law precludes the employer from using wages to shift business losses to employees, or to make employees the insurers of such losses … ” Prachasaisoradej . supra, 42 C4th at 238,  So if you lose that nice new power saw, crash the company truck, or drop a rack of dishes its on the employer’s dime, not yours.

The rationale for this principle is that losses due to an employee’s simple negligence, such as cash shortages and breakage or loss of equipment, “are inevitable in almost any business operation” and must be borne “as expenses of management.” The employer is better able to absorb the loss and can recoup the loss by passing the cost on to the customer or by lowering the wages of all employees. Kerr’s Catering Service, supra,, 57 C2d at 329.  Moreover, employees rely on the wage rate paid by the employer and “To subject that compensation to unanticipated or undetermined deductions is to impose a special hardship on the employee.” Id.

The term “deduction” means any action that deprives you of the full compensation promised: “The employer takes a ‘deduction’ … when it subtracts, withholds, sets off, or requires the employee to return, a portion of the compensation offered, promised, or paid … so that the employee, having performed the labor, actually receives or retains less than the paid, offered, or promised compensation, and effectively makes a forced ‘contribution’ of the difference.” [Prachasaisoradej, supra, at 227]

 If the employer does engage in self help and deduct wages for the loss, you are entitled to reimbursement and waiting time penalties as well as other damages depending on the circumstance.

These protections apply to rank and file workers.  Technically, they do not apply to management level employees.  At the management level, an employee may indirectly be responsible for loss.  For example, a manager who is paid partly on a commission based on store profits may have his commission effectively lowered when loss and breakage are offset against profits.  In such a circumstance the courts have found the wage reduction to be lawful. Ralphs Grocery Co. v. Sup.Ct. (Swanson) (2003) 112 CA4th 1090, 1106, 

Kirby v. Imoos Fire Protection case

In the wake of the seminal Brinker Restaurant Corp.v. Superior Court (2012) 53 Cal. 4th 1004, the Kirby case, a true jewel for the defense bar, has slipped by virtually unnoticed. This case, another gift from our local Supreme Court to the defense bar and to industry, has the potential to be just as deadly to actions for wage and hour violations as its more celebrated sibling. In short, the ruling in Kirby is that a Plaintiff who sues for meal and rest break violations under Labor Code Section 226.7 is not entitled to attorneys fees under any statute. The legislative purpose in awarding attorneys fees to a victorious Plaintiff suing for overtime is to make it economically viable to punish small violations that would uneconomical without the incentive of attorneys fees.

Labor Code Section 1194 expressly provides that a prevailing Plaintiff in an action for unpaid overtime is entitled to reasonable attorneys fees. Thus, a worker who has been ripped off for $2,000 in unpaid overtime may be able to persuade a lawyer to take his or her case, knowing that the fee award if Plaintiff wins will compensate him or her for the time expended, thereby deterring illegal behavior. One would logically think that the same statute would apply to unpaid meal and rest periods; violations that go hand in hand with overtime violations. The legislative principle is identical, the problem widespread, and the damages usually smaller than in an overtime case. The court labored hard in Kirby to find a reason why Section 1194 should not apply to meal and rest period violations. The reasoning is unsound and unpersuasive. The fact is, as Brinker illustrates very clearly, the California courts are legislating away compensation for meal and rest period violations.

This court though not only held fees unavailable under Labor Code Section 1194, it went further to deny fees to Plaintiff under any statute, including Labor Code Section 218.5. That section provides that in an action for unpaid wages except overtime, the prevailing party, be it Defendant or Plaintiff, may recover reasonable attorneys fees. Determined to shut off oxygen to suits for meal and break violations, the court held that each side bears their own fees, win, lose ,or draw. This is very bad news for the Plaintiff bar: attorneys will, we predict, only rarely take on a meal or break violation case. For now, such cases are effectively dead unless they are an adjunct to a case whose main focus is another legal theory.

The judiciary seems to have taken on the role of protector of business. The economy may be playing a role, along with political pressure to make California a “business friendly” state…….like Texas. The fact is that at the end of the day it is the little guy who pays. We are determined to fight even harder for your rights through the legal and political process. If we at Ainley Law can help you, we will. You can count on it.

Duran v. U.S. Bank National Association case

The Duran decision, preceding the Brinker case by 2 months is yet another milestone in the judicial effort to curtail or eliminate the right to recovery of unpaid overtime wages.  Duran was a class action case; the class plaintiffs followed the mechanism by which most class actions have been tried in this State for the past 50 years.  In brief, the Duran Plaintiffs were 260 employees of the Defendant bank who claimed that they were misclassified as exempt from the right to overtime.  At the trial court level, the judge selected 21 Plaintiffs as representative of the class of 260 plaintiffs and certified the class.  (By certifying the class the court in essence said that common issues of fact outweigh individual issues and that the most expeditious way to proceed was to “certify” a class of people who would be represented by the 21 chosen plaintiffs.  Liability would then be determined by the 21 witnesses as representative of the whole class.  In that fashion, the parties would avoid 260 separate trials).  USB challenged the Court’s certification on two grounds. First, USB argued that taking a statistical sampling to represent all of the people in the class was unfair because USB believed that at least a third of the people in the class were not misclassified; and, even if this were legitimate, the statistical methodology was unsound.  Second, USB argued that on the issue of liability, it had the right to present a defense to each and every claimant on hours worked and whether they were exempt.  In short, USB argued that determining liability in a class action could not be determined by use of a sample group.

The appellate court bought USB’s arguments with every bell and whistle attached.  While it did not have the nerve to say that there could be no wage and hour class action claims, it did hold that a defendant has the right to defend against every single claim in a class action.  In a decision stretching to 38 pages and 80 footnotes (a sure sign that a court thinks it is making new law) the court attacked the concept of trial by representative parties; i.e. the class action as it has been known for half a century.  To illustrate its point, the court noted that even if the trial were to take 520 days, as plaintiffs claimed, that was acceptable to protect the defendant.  Further, according to the court a class of 260 is really too small to worry about things like efficiency (“We also note that the class here is comprised of 260 members…it would not have been implausible …to conduct some type of individualized inquiries as to each plaintiff’s entitlement to damages.”).  This is a flat out re-writing of the law.  The whole point of class actions is judicial economy and protection of the class.  To eliminate the class action process with as many as 260 plaintiffs is unprecedented.

Plaintiffs in this case correctly stated that USB’s position, if upheld, would effectively kill off class actions, in wage and hour cases at least, in California.  That is most certainly true and the court does not really try to deny it.  The most it can say is that the “situation is not quite that dire.”  Ah, but it is that dire.  This decision must either be overturned or legislatively annulled; if not, there is a very small chance of any class action case surviving.  At a minimum, every plaintiff may look forward to an appeal.  It worked for UBS, precedent is now out there, and any like minded conservative judge can simply follow the lead.

This case is a true milestone; a de jure throw over of the legislature’s injunction in Code of Civil Procedure section 382 that cases with common issues may be tried as one if common issues prevail.  This decision is nothing more than an attempt to kill off what the big business lobby considers nuisance number 1.  While we are all in favor of job creation and a friendly business environment, we do not believe that extends to a carte blanche to deprive workers of their statutory rights.  Simply put, an individual case for overtime is, to the employer, not something to lose sleep over.  A class action is altogether different and encourages employers to respect the law because the damages can be very high indeed.  When, as here, the judiciary becomes a cheerleader for big business (banks, no less) the incentive to follow the law drops dramatically.  As a weatherman might say: “we are looking at unpaid overtime increasing in the near future.”

Labor code and your paycheck stub

LABOR CODE SECTION 226: THE INFORMATION THAT MUST BE INCLUDED ON YOUR PAYCHECK OR PAYSTUB

California law requires nine (9) specific pieces of information to be included on the paycheck or paystub of every employee. Failure to comply with each and every requirement of this code section (Labor code section 226) is a misdemeanor.  The employer is liable for $50 for the first violation, and $100 per pay period for each violation thereafter up to a total per employee of $4,000. Individually, the claim may not be large but collectively it can be very large indeed. (Note that if you have a claim for unpaid overtime or break time, you likely also have a claim for pay stub violations. For hourly employees, the overtime hours you worked but were not paid for almost always are missing from your pay record -i.e. you worked 55 hours but were told to put down 40 hours because the company doesn’t pay overtime, your overtime wasn’t approved etc.-  That is an inaccurate record and therefore a pay stub violation.)  Frequently, employers put the wrong address or no address.  Small businesses sometimes provide no information on the pay stub or pay out of a personal account with no record at all.  If you sue and win you get your damages plus attorneys fees and costs. If you lose your case, the employer does not get attorneys fees but can recover costs (filing fees etc.).  The following is the text of the statute(with minor changes)

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; [this is a critical requirement; if you worked 50 hours you deserve to be paid for 50 hours. False documentation of hours worked provides penalties in addition to the overtime monies owed].

(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 combined 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, [this is very important] 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.”

Be sure to check your paystub for compliance with California law.  Aside from the statutory damages it’s a good idea to know who your employer actually is and what type of business they are (corporation, partnership, and so forth). In addition, violations are potent tools to gain leverage in other disputes you may have with your employer.

Your employer MUST show you your payroll records within 21 days of your request. (Labor Code section 226 (c),(f),and (g). If the employer does not show you the records within that time you may sue to compel the employer to produce them to you.  Again, if you win, you get attorneys fees and costs.  If you lose the employer does not get attorneys’ fees. (Note: if your request is in writing and is dated, whether by certified mail or by an email, losing this claim if records are not produced would be almost impossible.) Cross refer: Right to inspection of personnel file.

HOW TO CALCULATE YOUR OVERTIME WAGES

Overtime is paid either for any hours worked over 8 on any given day during a week, or for all hours worked over 40 in one workweek which is defined as any consecutive 7 day period. You can receive overtime which is calculated per week for work in excess of 8 hours in any or all of the 7 days in a week, or the total number of hours worked over 40 in any 7 day period. It is usually to your advantage to calculate on a per day rather than a per week basis but not always. The following is how to calculate your overtime.

1. First, determine your hourly rate. If you are an hourly employee, that is obviously your hourly wage. If you are a salaried employee or are paid a combination of salary, commission, or piecework, Labor Code Section 515 provides a simple formula. Take your total pre-tax annual wages, divide that by 52 and divide again by 40. Because a workweek is by law 40 hours, the product of that equation is the hourly rate.

Example 1. Jack made a straight salary of $52,647.00 a year as an internet technician. Dividing by 52 gives a weekly salary of $1012.44. Divide again by 40 to get an hourly rate of $ 25.41. This is the baseline to use when multiplying for overtime.

Example 2. Jack is now working at inside sales. His total compensation is $59,563, $40,000 of this is his base draw, and $19,563 is the commission he earned selling internet services. Again, this figure is divided by 52 producing a weekly rate of $1145.44. Divided by 40, Jack’s hourly rate is now $28.63.

2. Next, calculate the total hours worked over the course of one work week which is defined by statute as 40 hours over any period of seven consecutive days regardless of the starting day. (Labor Code Section 515(d)). Subtract 40 from this amount and you have the overtime worked. Labor Code Section 510 requires that any hour worked over 40 in a week be compensated at a rate of not less than 1.5 times the ordinary hourly rate.

Example 1: Bob works 5 days in one week, putting in three 8 hour days and two 10 hour days. Bob has worked 44 hours and so is entitled to 4 hours of overtime at 1.5 times his hourly rate.

Example 2: Bob works 6 days in one week, putting in 7 hours each day. His total hours worked are 42. Although he did not work more than 8 hours in one day, Bob is still entitled to 2 hours of overtime.

If the number of hours left after subtracting 40 is greater than 0 then the only step left is to ensure that you have the proper hourly overtime multiplier. The first 4 hours of overtime per day (8-12 hours) must be paid at 1.5 times the hourly rate. After 12 hours, they are computed at 2 times the hourly rate.

Example 1: Jack puts in a 60 hour week. Subtract 40 hours to find Jack’s overtime of 20 hours. Jack’s hourly rate is $25.00 an hour. If Jack worked three 14 hour days and three 9 hour days he would be entitled to 6 hours at $50 an hour (double time) and 14 hours at $37.50 (time and a half). Jack’s base pay is $1,000. His overtime is $825. However, if Jack’s overtime were calculated on a weekly rather than a daily basis he would only have 20 hours of overtime for a total of $750.

3. If the number of hours worked in a workweek is less than 40 (> 0) you are still entitled to overtime on a daily basis.

Example 1: Work is slow for Sheila with the recession and she is only able to work one day during the week. Business is good that day and Sheila works 14 hours at $30.00 an hour. She has no work for the rest of the week. Sheila is entitled to 4 hours at $45 and 2 hours at $60 for a weekly total of $300.

Example 2 : Jeff earns $10 an hour and works 16 hours a day for 5 days for 80 hours total during the week. Jeff is entitled to 20 hours at 1.5 times his hourly rate and 20 hours at 2 times his hourly rate, $700. If Jeff’s overtime were computed on a weekly basis he would earn only $600.
If you have not been paid overtime you can demand payment according to either method. You cannot however add the two (this is called pyramiding and is effectively double counting). It is usually, but not always more profitable to add your time on a daily basis. Because the unit of calculation is the week you can choose the most profitable method for each week that you are owed overtime.

Joseph H Ainley on Overtime Benefits

The Law Offices of Joseph H. Ainley provide services to cover all of your employment-related legal needs. The bulk of our practice is devoted to litigation in cases, for example, where the employee has been wrongfully terminated, or an individual or a group of people have been denied overtime benefits. We also offer employment counsel. Frequently, employees face a situation at work which potentially has profound consequences for them, but they are unsure how best to act. In this context, one issue that is repeatedly of concern is where an employee is offered a severance package in exchange for a release of claims that they employee may have against his or her former employer. In this situation, legal counsel can be invaluable in maximizing the amount of any severance package.  Some of the specific areas in which we are pleased to offer services are the following:

Overtime Benefits

The right to overtime is fundamental in California. Many people erroneously believe that only hourly employees are entitled to overtime. This is not true. The presumption for all employees, whether salaried or hourly employees, is that they are entitled to overtime. Labor Code ß 510 guarantees every employee the right to overtime for hours worked in excess of eight per day or forty per week unless the employee falls into a special exemption from application of that right.

For hourly employees, the right to overtime, in all but a few circumstances (notably, certain highly paid computer professionals), hourly workers are entitled to overtime at the rate of 1.5 times their hourly rate for each hour of overtime worked. With salaried employees, the right to overtime is presumed to exist unless the employee falls within a specific exception. The three primary exceptions are known as the ìmanagerial,î ìadministrative,î and ìprofessionalî exemptions. For each of these exceptions, the law imposes multi-step tests. ____________ employee is exempt from the overtime requirements or is entitled to overtime benefits. The law is construed strongly in favor of the employee. It is the employerís burden to prove that a salaried employee is not entitled to overtime because he or she is exempt as an executive, administrative or professional person.

It is beyond the scope of this brief outline to describe in detail the exemptions. As a general rule, however, the less authority, independence and education you have, the more likely it is that you do not fall within an overtime exemption. Unlike federal law, California imposes a strict quantitative standard for determining the right to overtime. If an employee spends more than 51% of his her time engaged in activities which do not meet the test of exemption, then he or she is entitled to overtime. In all cases, a job description is irrelevant to the determination of overtime. What you do, not what your employer says you will do, determines your right to overtime. Ainley Law has a great deal of experience in this field and has had the good fortune to represent clients on the cutting edge of overtime issues. Overtime is an increasingly important issue in todayís workplace as companies attempt to leverage greater profits from a smaller workforce. As you may have noticed, publicly traded companies are reporting record profits, while the unemployment rate has increased. Healthy companies are laying off employees, and across the board, companies are trying to extract more labor from fewer workers. Inevitably, this has resulted in a dramatic increase in overtime violations. Many people are afraid to step forward and raise the issue for fear of losing their job. Any communication with our law firm, however, is in strictest confidence, and we encourage you to come forward if you believe that you may be entitled to overtime benefits and are not receiving them.

Joseph H. Ainley on Leave Violations and Illness/Injury

The Law Offices of Joseph H. Ainley provide services to cover all of your employment-related legal needs.  The bulk of our practice is devoted to litigation in cases, for example, where the employee has been wrongfully terminated, or an individual or a group of people have been denied overtime benefits.  We also offer employment counsel.  Frequently, employees face a situation at work which potentially has profound consequences for them, but they are unsure how best to act.  In this context, one issue that is repeatedly of concern is where an employee is offered a severance package in exchange for a release of claims that they employee may have against his or her former employer.  In this situation, legal counsel can be invaluable in maximizing the amount of any severance package.  Some of the specific areas in which we are pleased to offer services are the following:

Leave Violations and Illness/Injury

A complex set of federal and state laws and regulations control the leave that must be granted to employees when they or a loved one becomes ill. Most people are familiar with the Family Medical Leave Act (FMLA) and the California Family Relief Act (CFRA), each of which provides specific leave periods for particular events. The statutes are not identical, however, and employers often confuse rights under one or the other statutes. More problematic is the frequency with which adverse action is taken against those who exercise their rights under these statutory protections. (A good reference for the rights provided under each of these statutes is at www.dfeh.ca.gov/publications_StatLaws.htm. We are intimately familiar with the intricacies of these statutes and are very familiar with assisting those who have been discriminated against or retaliated against because they took leave under these statutes.

In addition to the two statutes referenced above, Government Code ß 12940 (prohibiting discrimination) also prohibits discrimination on the basis of disability. That means that an individual who has suffered an injury, illness, or is otherwise disabled must be accommodated if such accommodation can be provided without ìundue hardshipî being caused to the employer. All too often, employees suffer on-the-job injuries and are unable to return to work for an extended period of time. In such case, the employee is entitled to the protections of FEHA and/or CFRA for a twelve-week period of time. After that, the Government Code continues to require that the employer make a reasonable accommodation for the ill or injured employee. That reasonable accommodation includes, according to relevant California case law, affording the employee time to recover from the injury or illness. Unlike the CFRA or FEHA, the obligation to make reasonable accommodations for a disabled employee continues indefinitely; that is, there is no fixed time period after which the employer has the right to terminate the employee.

Once the employer is aware of an employeeís injury or disability, it is required to engage in an ìinteractive processî with the employee. The purpose of that ìinteractive processî is to discuss ways in which the employer might accommodate the disability of the employee. Failure to engage in this ìinteractive processî is itself an independent violation of the Government Code and is a separate and distinct cause of action from the discrimination or retaliation by the employer.

Attorney Joseph Ainley discusses UPS v. Superior Court

This case illustrates the importance of gauging correctly the zeitgeist of the times.  Here, the court illustrates a theme that is becoming more and more common: a hostile attitude towards overtime claims where the workers are relatively well paid and who do not perform manual labor.  We believe that the case is poorly decided and the court mis-applies the law in an almost willful way.  Nevertheless, it will stand as good law and this attitude must be considered when putting the pieces of a case together.  Attorney Joseph Ainley, like most good employment lawyers looks at the facts of each case but also to the subtext, the story within the story, that each case presents.

 United Parcel Service, Inc v. Superior Court (Allen), 192 Cal.App.4th 1043 (2011).

The question presented in this case was how many hours of pay should be awarded to employees who are unlawfully denied rest and meal periods during their shifts.  The relevant statute is Labor Code § 226.7, which provides:

“(a) No employer shall require any employee to work during any meal or rest period mandated by an applicable order of the Industrial Wage Commission.  (b) If an employer fails to provide an employee a meal period or rest period in accordance with an applicable order of the Industrial Welfare Commission, the employer shall pay the employee one additional hour of pay at the employee’s regular rate of compensation for each work day that the meal or rest period is not provided.”

The issue was whether the employee is entitled to one hour of pay where both the break and meal periods are missed or, whether the employee is entitled to one hour of pay for each of the breaks denied.  Relying on Marlo v. United Parcel Service, Inc. (CD Cal., May 5, 2009, CV03-04336 DDP (RZx) 209 U.S. Dist. Lexis 41948), the court held that an employee is entitled to one hour for each rest break and meal break, up to two hours per day.  (In its decision, the court noted an interesting historical fact that the Industrial Welfare Commission has mandated meal and rest periods since 1916, nearly 31 years before the federal government required such breaks to be given.)

A remaining ambiguity from this case is whether there is an upper limit of two hours of premium pay regardless of how many meal breaks and/or rest breaks are missed.  In the case of a 12-hour or longer shift, two meal breaks are required, along with at least three rest periods.  By the court’s analysis, Labor Code § 226.7 provides “up to” two premium payments per work day, and the language of the decision suggests that two hours of premium pay is the upper limit.  It reads:  “We believe it is more reasonable to construe the statute as permitting up to two premium payments per work day – one for failure to provide one or more meal periods, and another for failure to provide one or more rest periods.” Id. at 1053.  This language tends to suggest that the court views two hours of premium payment as the upper limit of the wage penalty.  This case should be read in conjunction with Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1103, which holds that the penalties of Labor Code § 226.7 that extend for three years backwards in time – as opposed to one year for an ordinary penalty – and that the wage to be paid by the employer is the employer’s “regular rate of pay” rather than time and a half or double time.

Mora v. Big Lots Stores, Inc.

This case illustrates well the requirements for certifying a class action in the context of overtime claims.  Class actions mean that one person represents a large group of people who have similar claims.  These actions can be complex and expensive.  When necessary, Attorney Joseph Ainley will partner with other law firms when handling class actions to ensure that maximum resources are available.  The great value of class actions is that the cost to the defendant can be high enough to force the employer to change its behavior and to stop violating the law.

Mora v. Big Lots Stores, Inc., 194 Cal.App. 4th 496 (2011)

The well-known firm, Rudy, Exelrod, Zieff & Lowe, represented plaintiffs in this class action certification case.  Plaintiffs were the managers of 178 close-out retail stores in California called “Big Lots Stores.”  Plaintiffs contended that they had been mis-classified as managers who, in fact, spent the majority of their time during each work week on non-exempt, non-managerial duties, and that they did not exercise discretion and independent judgment in the performance of the managerial duties that they did perform.

In support of class certification, plaintiffs submitted declarations from Big Lots’ managers who outlined the various duties that they performed, 75% of which were non-managerial.  Plaintiffs also offered the declaration of an expert in labor force behavior and survey research who declared that if he had access to appropriate personnel information and information on store operations, he would be able to accurately allocate what percentage of the managers’ overall work time was spent on exempt versus non-exempt tasks.

In opposition, Big Lots submitted 141 declarations from putative class members, 23 depositions, and declarations of individuals who claimed to have observed the 44 store managers whose declarations had been submitted in support of the motion for class certification.  The defense also offered the report of an expert who contended that approximately two-thirds of the managers whom he had observed spent more than 50% of their time performing non-exempt managerial tasks.  Another defense expert contended that the activities of the store managers varied greatly from store to store.

The court denied class certification on grounds that there was a lack of community of interest among the proposed class members.  According to the court, this “community of interest” required three factors:  (1) predominant questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who adequately represent the class.  According to the court, plaintiffs fell short on all three counts.

The court concluded that the actions of the managers varied substantially based on the size of the store, the type of merchandise carried, the number of employees supervised, the time of year, and the personality and judgment of the individual store manager.  The court also concluded that the wide variation of work performed by the managers from store to store and the “myriad of individualized factors” that affected each manager and the time they spent on particular tasks made it impossible for the putative class members to be “typical” of a proposed class.  Finally, the court found the proposed class members to have “checkered work histories” and therefore to be poor representatives of the class and not “adequate.”

On appeal, the court noted the deference that appellate courts apply to trial court determinations of class certifications.  The court cited to Fireside Bank v. Superior Court (2007) 40 Cal.4th 1069, 1089, for the proposition that “unless (1) improper criteria were used; or (2) erroneous legal assumptions were made … any valid pertinent reasons stated will be sufficient to uphold the order.”  See also Lockheed Martin Corp. v. Superior Court (2003) 29 Cal.4th 1096, 1106.

In its analysis, the court, in essence, resolved the issue to whether a uniform corporate policy existed to serve as the basis for a class action.  According to the court, “Job duties attributable to uniform corporate policies and practice (based on strict compliance with corporate manuals and action plans), as supervised by district managers and reinforced by standardized training” would provide the basis for a class.  In this case, however, the appellate court upheld the finding “that there exists no uniform corporate policy requiring store managers to engage in primarily non-managerial duties, that wide store-to-store variation exists in the type of work performed and the amounts of time per work week spent by managers on different activities, and that misclassification when it occurs is the exception, not the rule.”  The appellate court deferred to the finding in the trial court that Big Lots’ evidence “plainly and inescapably established … that it does not operate its stores or supervise its managers in a uniform or standardized manner.”  This, apparently, is sufficient to defeat class certification.  The court strongly suggests that where misclassification is a policy of the company and is uniformly applied, there is a basis for class certification.  Where there is no explicit policy or where that policy is not uniformly applied, then class certification may be avoided.

This case should be read in conjunction with Arenas v. El Torito Restaurants, Inc. (2010) 183 Cal.App.4th 723, 734-735; Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326; Jaimez v. Daiohs USA, Inc. (2010) 181 Cal.App.4th 1286, 1299; Dunbar v. Albertson’s, Inc. (2006) 141 Cal.App.4th 1422, 1431.

California overtime law

In this recent case, Attorney Joseph Ainley, finds a clear precedent set in California overtime law. This case summary describes issues for the interstate work force.

Sullivan v. Oracle Corp. (2011) 51 Cal.4th 1191.

The issue addressed by the California Supreme Court (at the request of the Ninth Circuit) is the applicability of California overtime law to non-resident employees who work both in Californi a and in other states for a California-based employer. The court concluded that the overtime provisions of Labor Code §§ 510, 1194 apply to plaintiffs’ claims for compensation for work performed in California, but not for work performed outside the state. The court also found thatthe violation of the overtime provisions of the Labor Code are predicate acts which give rise to claims under California’s unfair competition law. (B&P Code § 17200, et seq.) The court also noted that violation of the federal Fair Labor Standards Act (29 U.S.C. § 201, et seq.) for work performed in other states does not serve as predicates for claims under California’s unfair competition law. Plaintiffs in this case were three individuals who lived in Colorado and Arizona and who worked for Oracle as “instructors.” Over a three-year period from 2001 to 2004, they collectively worked approximately 200 days in California. The court noted that California’s broadly drafted overtime laws do not make any distinction between residents and non-residents. Rather, Labor Code

§ 1171.5 notes, in particular, that “our employment laws apply to ‘all individuals’employed in this state.” (Id. at 1198) The court unambiguously held that the Unfair Competition Law (UCL) applies to violations of the Labor Code that occur in California. In this regard, the court merely reaffirmed its earlier decision in Cortez v. Purolator Air Filtration Products Co. (2000) 23

Cal.4th 163, 177. As to acts which occur outside the state of California, the court held that the UCL did not apply. However, the court’s analysis was instructive. Plaintiffs contended that since Oracle made the decision in Redwood City not to pay overtime, that event should be considered to have arisen in California and therefore be subject to the UCL. The court rejected that argument, holding that the place of payment was dispositive for determining where the wrongful act took place. Accordingly, if these extra-territorial employees had been paid in California, presumably they would have been beneficiaries of California’s Unfair Competition Law. The only benefit, of course, arising from the UCL is that the statute of limitations is one year longer (four years) than the three-year statute applicable to violations of statute.

Ainley Law: Employment Law for the people

The touchstones of our practice are integrity and experience. We practice employment law exclusively on behalf of wrongfully treated employees. We never represent the employer. We are one of a very few firms to do so. Most firms dabble in employment law (on behalf of employees and employers) while practicing personal injury law and/or business law. In our judgment this is not a recipe for success. We are passionate about employee rights. Our job is to vindicate you; to right the wrong that has been done, and to make you whole again. Whatever the wrong to you may have been ( wrongful termination, non payment of overtime/ break time, age or gender discrimination, leave violation, retaliation, failure to accommodate, sexual harassment, etc.) we have the knowledge, experience, and proven ability to maximize your recovery. Employment law is complex; it is filled with pitfalls for the inexperienced and the unwary. For example, the differences between the Family Medical Leave Act (FMLA) and the California Family Rights Act (CFRA) are so great that one state Agency has published a matrix illustrating the differences that is 12 pages long. We will guide you through this maze (you won’t even know it‘s there) and resolve your case either through settlement or, in rare cases, trial. Although few cases actually go to trial, it is essential that your counsel have trial experience so that your claim is taken seriously at the negotiating table. We have such experience, having successfully litigated numerous trials and recovering substantial verdicts for our clients. Corporations and business associations spend literally billions of dollars to limit employee rights and reduce the recoveries available to a wronged employee.

Simply put: your best hope for a recovery is to retain high quality, experienced counsel who are specialists in the field of employment law and who know how to maximize the value your case. We are such counsel. While we do not guarantee success, you may be assured that no effort will be spared to obtain the best possible recovery for you.

EXPENSE REIMBURSEMENT: YOUR EMPLOYEE RIGHTS

In our last post, the blog posed the question whether an employee must reimburse an employer for damage or loss during the course of employment (no).  This blog now examines the flip side of that question: must an employer reimburse you for expenses you incur as an incident to your employment?  That is, if you use your cell phone for company calls, dress in a required uniform, or use your car to travel or make deliveries are you entitled to be paid back for those expenses?  Here we have an unequivocal YES.

Labor Code section 2802 mandates that any employee expense incurred carrying out the employer’s duties shall be reimbursed to the employee.  In other words, any expense incurred by the employee that is necessary for the employee to carry out his or their duties for the employer.   Labor Code § 2802 states that an employer must indemnify its employees “for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties … ” Lab.Code § 2802(a).The elements of a § 2802(a) cause of action are:

(1) the employee made expenditures or incurred losses;

(2) the expenditures or losses were incurred in direct consequence of the employee’s discharge of his or her duties, or obedience to the directions of the employer; and

(3) the expenditures or losses were necessary.” Cassady v. Morgan, Lewis & Bockius LLP (2006) 145 CA4th 220, 230.

An employer may satisfy this reimbursement requirement by paying an increased salary or commission but only if it is clearly defined what monies are being paid for labor performed and what amount is being paid as reimbursement for business expenses. Gattuso v. Harte–Hanks Shoppers, Inc. (2007) 42 C4th 554, 559.  Importantly, an employer may be required to pay for an employee’s defense as well as any settlement or judgment if the employee is sued for conduct arising within the course and scope of employment.  For example, an employee sued for discrimination may be entitled to a defense paid for by the employee.  On the other hand, an employee who punches somebody while “on the job” may not receive a defense.  See, Grissom v. Vons Cos., Inc. (1991) 1 CA4th 52, 55.; Freund v. Nycomed Amersham (9th Cir. 2003) 347 F3d 752, 765–760.  (Section 2802 allows indemnification for employees’ defense costs when sued for actions arising out of their employment). At least one case clearly states: “The statute requires the employer not only to pay any judgment entered against the employee for conduct arising out of his employment but also to defend an employee who is sued for such conduct.” Jacobus v. Krambo Corp. (2000) 78 CA4th 1096, 1100, 93 CR2d 425, 428.  Other cases have held that the employer need only reimburse the employee for legal expenses after a determination that the employee was in the course and scope of employment at the time of the incident being sued on. As a practical matter, an employer will invariable provide a defense for claims made against an employee.  If they do not, there are several options available to the employee.

Labor Code Section 2802 may also require an employer to indemnify employees for attorneys’ fees and costs incurred in successfully defending against criminal charges arising out of acts performed in the course and scope of employment. See Los Angeles Police Protective League v. City of Los Angeles (1994) 27 CA4th 168, 177, 32.  (Note:This is not well established by case law and remains something of an open question.)