California Labor & Employment Law Blog

By Kent Sprinkle

After witnessing the birth and maturation of the wage and hour class action industry, now entering its late teens, California employers justifiably wonder whether these enormously costly lawsuits will ever slow down.  The answer is probably no, since the question of whether a class should be certified remains an unpredictable matter, and the current law does not provide any assurance that a trial court will decide the issue in a particular way.  Under the current state of the law, trial courts have enormous discretion in whether to certify a class.  Because of this, inconsistent results abound, notwithstanding almost identical factual and legal issues in cases with conflicting certification results.  Employers frequently feel compelled to pay out large settlements just to avoid the risky unknowns of class certification, since settlement demands often skyrocket once a class has been certified and the plaintiffs' attorneys can assert the claims of an entire class, rather than just threaten the possibility of a certified class.  Because so few class actions ever go to trial, judges remain free to declare class actions to be "manageable" even based on passing references to methodologies that are, as a practical matter, unproven, untried and often amount to pure speculation as to whether such methods would properly or effectively manage the issues in the case at trial.  However, absent a clear set of rules to apply, employers are left to roll the dice on each trial court's view of the certification question under a highly discretionary standard. Presumably, only a change in the law - either legislatively or by groundbreaking precedent - can provide the much-needed clarification and predictability for such cases.

On February 10, 2010, California Assemblywoman Audra Strickland introduced a bill, ABX8 38, that proposes substantial revisions to California's class action procedures.  Specifically, the bill "would create a comprehensive set of procedures to be followed in all class actions," and, among other things, "would establish the prerequisites for a class action and would prohibit the maintenance of a class action unless other criteria are met."  The proposed statutory language states that "the lack of clear standards for certifying and managing class actions in California has led to abuses of the class action device," and that "these abuses have undermined public respect for our judicial system."  The bill therefore proposes the implementation of "a uniform set of standards for the certification and management of all class actions in California that is modeled on Rule 23 of the Federal Rules of Civil Procedure and that will provide judges with adequate guidelines and tools for the fair and efficient oversight of class actions."  Perhaps most significantly, the bill proposes that the legislature explicitly "eliminate any presumption or policy in favor of class certification and allow class certification only when all requirements set forth in this act are satisfied."  On a practical level, the bill urges that its purpose is to rectify the economic harm caused by frivolous class action lawsuits, noting its purpose in seeking to "create jobs and promote a more robust economy by creating some guidelines for class action litigation." The proposed text asserts that "too often, frivolous lawsuits clog courts, harming businesses and consumers and draining California's economy" and that "the growing number of abusive cases has cost businesses millions of dollars."  In an attempt to prevent such costly abuses, the bill endeavors to "provide a balanced and fair set of standards and rules for class action lawsuits."

Were this proposed bill enacted, California employers would surely be relieved even at the possibility of increased predictability and clarity with respect to class certification rulings.  However, employers can expect aggressive opposition from trial lawyers' organizations and similarly interested groups who profit in the current climate of unpredictability and conflicting results.  We will continue to monitor the status of this proposed legislation and will report on any developments.

By Robin E. Weideman

The EEOC recently issued a proposed rule explaining the “reasonable factors other than age” (RFOA) defense under the Age Discrimination in Employment Act (ADEA).  The RFOA defense shields an employer from liability in a disparate impact age discrimination case where the employer establishes that the challenged practice, even though shown to have a disparate impact on older workers, was facially neutral and based on reasonable factors other than age.

Under the EEOC’s proposed rule, for the RFOA defense to apply, the challenged practice must be found to be objectively reasonable in the eyes of a reasonable employer in similar circumstances. The proposed rule lists several factors to be considered in evaluating whether the employer relied on reasonable factors other than age, including (1) the commonality of the business practice used by the employer; (2) the manner in which the practice was administered; (3) the employer’s awareness of the possible adverse impact of the decision on older workers; (4) steps the employer took to assess and mitigate the impact of the decision on older workers; (5) the existence of less discriminatory alternatives; (6) the extent to which management engaged in age-related stereotyping; and (7) the extent to which the employer trained management on how to avoid discrimination.

The EEOC is accepting public comment on the proposed rule until April 19, 2010.  To access the proposed rule, click here.
 

By Harley Bjelland

Here we go again.  The 65% government subsidy provided to individuals who lost their jobs between September 1, 2008 and February 28, 2010 has again been extended to March 31, 2010.  Under the Temporary Extension Act of 2010 employees who lose their jobs through March 31, 2010 may be eligible for the COBRA subsidy.  The Act  further provides that persons who experience a reduction in hours during the period from September 1, 2008 through March 31, 2010 may qualify for the subsidy.  This change will require a new notice to those experiencing a reduction of hours.  Stay tuned for safe harbor notices.  Guidance is not yet out.

By Alison Tsao

The Ninth Circuit recently revisited its prior decision in Rutti v. Lojack Corp., regarding compensability of commute time and preliminary and postliminary work.  The Ninth Circuit altered its prior decision in some respects.  Our prior post on the Rutti case is here.  On rehearing, the Ninth Circuit ruled that an employee may seek wages for time spent commuting to and from work in a company car he is required to use when he is “effectively subject to the control of the employer,” as well as time spent on the “postliminary” activity of transmitting required daily portable data transmissions to his employer from home.

Specifically, the Ninth Circuit considered Rutti’s claims for compensation for commuting in a car which use was mandated by his employer, and for certain “off-the-clock” work he performed both prior to and after his commuting time.  Rutti brought a putative class action for unpaid wages on behalf of all technicians employed by Lojack to install and repair alarms in customers’ cars.  Most, if not all of the installations and repairs are done at the clients’ locations. The technicians were required to travel to the job sites in a company-owned vehicle.  Rutti was paid on an hourly basis for the time period beginning when he arrived at his first job location and ending when he completed his final job installation of the day.  In addition to the time spent commuting to his first job assignment and from his last assignment to home, Rutti also sought compensation for “off-the-clock” activities he performed before he left the house and after he returned home.  Rutti alleged he spent time in the morning receiving assignments for the day, mapping his routes to assignments, prioritizing jobs for the day, and minimal paperwork.  Rutti further alleged that he spent time after he returned home in the evenings to upload data to his company from a portable data terminal (“PDT”) from which his work activities were recorded during the day.

Although Rutti filed a motion for class certification at the same time Lojack filed a motion for partial summary judgment, the district court only ruled on the summary judgment motion in disposing of Rutti’s federal claims and state law claim for commuting compensation, and later dismissed the remaining state law claims for lack of subject matter jurisdiction.

The Ninth Circuit affirmed the district court’s ruling that Rutti’s commute time was not compensable under federal law pursuant to the Employee Commuter Flexibility Act (“ECFA,” 29 U.S.C. § 254(a)(2)).  ECFA provides that the use of an employer’s vehicle that is subject to an agreement between the employer and employee and is not part of the employee’s principal activities is not compensable.  This interpretation is consistent with federal authorities that the cost of commuting is not compensable unless employees “perform additional legally cognizable work while driving to their workplace.”  However, the Court ruled that Rutti is entitled to seek compensation for his commute time under California law as compulsory travel time.  Rutti asserts that Lojack restricts him from using the vehicle for personal pursuits and transporting passengers, requires that he drive directly from home to work and from work to home, and requires that he keep his cell phone on during the commute.  The Ninth Circuit, relying on the California Supreme Court’s decision in Morillion v. Royal Packing Co., 22 Cal.4th 575, 578 (2000), held that Rutti was entitled to seek compensation because he was subject to his employer’s control during his commute because he was foreclosed from engaging in personal pursuits that he would otherwise have been able to undertake if he was permitted to travel to the field using his own transportation.

The Court held that Rutti’s preliminary activities (those that take place before he leaves home) of “receiving, mapping, and prioritizing jobs and routes for assignment” are related to his commute and not related to his principal activities.  Moreover, even if they are related to his principal work activities, appear to be de minimis.  As a result, they are not compensable.  In contrast, Rutti’s postliminary activities in performing the PDT transmissions were a regular part of his work duties and necessary to Lojack’s business.  The Court ruled that upon remand, Lojack might still be entitled to summary judgment if the time spent performing such tasks was de minimis.  However, the factual record did not compel this conclusion because, although it may take only five to ten minutes to initiate the transmission, employees were required to come back to see if the transmission was successful and, if not, to send it again.  There was evidence of frequent transmission failures.  In so holding, the Court stated there was no bright-line rule that activities requiring less than ten minutes’ time was per se de minimis.  Rather, courts are to employ a three-prong test as established in Lindow v. U.S., 738 F.2d 1057, 1063 (9th Cir. 1984) and consider:  (1) the practical administrative difficulty of recording the additional time; (2) the aggregate amount of compensable time; and (3) the regularity of the additional work.  Because there was evidence that Lojack paid one technician 15 minutes a day to cover PDT transmission time, and Rutti testified that he spent about 15 minutes a day performing such tasks (which, over the course of one week was substantial enough to warrant compensation), the Court reversed the grant of summary judgment and remanded for reconsideration in light of these factors.

Employers who require employees to use company vehicles for commuting purposes should carefully review their policies to see whether they are exerting sufficient “control” over the time and manner in which employees are commuting to determine whether that time needs to be compensated.  Employers should also determine whether employees’ preliminary and postliminary activities are integral to the employees’ principal job duties and, if so, whether that work required more than de minimis time to determine whether additional compensation should be paid.

The Ninth Circuit's new opinion in Rutti v. Lojack Corp. is here.

CDF LLP has expanded its practice to include advising employers on immigration issues and employment based visas.  We will be hosting a complimentary immigration seminar at our Sacramento office on March 11, 2010 from 11:30 a.m. to 1:00 p.m., and at our Los Angeles office on April 7, 2010 from 11:30 a.m. to 1:00 p.m.  These seminars will cover recent immigration developments and employment-related basics including the following:  Compliance With New I-9 Regulations, E-Verify, ICE Enforcement, and Visa basics for employers.  For more detailed information and to register, please click here for Sacramento registration and here for Los Angeles registration.
 

By Suzanne Brummett

For employers sponsoring a foreign national employee for a green card, the process can take years, even for top talent.  Holding onto these key employees, particularly in the area of research and development, is a priority for companies seeking to maintain their competitive edge.  So what are the alternatives?  For researchers, there is the outstanding researcher category.

So what do you need to prove up such a case to U.S. Citizenship & Immigration Services?  An employer can sponsor an individual who is recognized internationally in a specific academic field, has three years experience in research, and the private employer has at least 3 full-time employees engaged in research activities in the department.

What evidence must be submitted?  The regulations outline specific criteria to be submitted which include at last two of the following (but more is better):  (1) receipt of major prizes or awards for academic achievement; (2) membership in associations requiring outstanding achievements of their members; (3) published material in professional publications written by others about the applicant’s work in the academic field; (4) participation as the judge of the work of others in the same or an allied academic field; (5) original scientific or scholarly research contributions; (6) authorship of scholarly books or articles in scholarly journals with international circulation in the academic field.

Individuals who may qualify for this category include researchers, scientists, or others who conduct research.  For more information, contact Suzanne Brummett, Senior Counsel within the Immigration Practice Group, at sbrummett@cdflaborlaw.com.
 

By John Anthony

In Cumbie v. Woody Woo, Inc., the Ninth Circuit recently ruled on whether a restaurant violates the Fair Labor Standards Act when, despite paying a cash wage greater than the minimum wage, it requires its wait staff to participate in a "tip pool" that redistributes some of their tips to kitchen staff.

In the Cumbie case, the Plaintiff worked as a waitress in a restaurant.  The restaurant paid its servers a cash wage exceeding the federal minimum wage.  In addition to this cash wage, the servers received a portion of their daily tips.  The restaurant required its servers to contribute their tips to a "tip pool" that was redistributed to all restaurant employees including kitchen staff that did not wait on customers.  Neither the owners nor management participated in the tip pool.

The Court held that the restaurant's tip pooling policy did not violate the FLSA because the FLSA only restricts tip pools to employees who are customarily tipped when the employer takes a tip credit.  A tip credit occurs when an employer pays a cash wage below the minimum wage and then supplements the minimum wage with tips.

Notwithstanding the Ninth Circuit's decision upholding a tip pooling practice in these circumstances, California employers must be mindful that such a tip pooling practice would not be lawful under California law.  California does not allow payment of subminimum wage, and generally does not allow tip pooling participation by employees who do not provide direct table service to customers.

By Greg Berk

Employers that are sued by an employee sometimes find out during the course of the litigation that the employee is not authorized to work or be in the U.S.  Such discovery will require the employer to terminate the employee.  However, the terminated employee will still have the right to recover on any meritorious claims arising prior to the discovery, subject to certain limitations.

At the federal level, the leading case is the U.S. Supreme Court decision in Hoffman Plastics v. NLRB.  The Court held that federal immigration law trumps any National Labor Relations Act (NLRA) claims for wrongful termination for alleged union activities, since the plaintiff had no legal right to work or be in the U.S. to begin with.

A corollary to Hoffman is that employers can and should terminate employees who have no legal right to work in the U.S.  Any other result would place the employer at odds with federal I-9 rules regarding liability for knowingly hiring or retaining unauthorized workers.  Hoffman Plastics shields employers from wrongful termination claims in this circumstance.  The employer may still be liable for any wage/hour or other meritorious employment claims arising prior to termination.

In California, the leading case is Rodriguez v. Kline, which held that immigration status can only be introduced at trial in regards to the plaintiff's future earnings since the plaintiff has no legal right to be in the U.S.  Immigration status is irrelevant as to any other meritorious claim covering the period while the plaintiff was actually employed.  And as to future earnings, that would be calculated based on the plaintiff's home country wage standards, not California wages. 

Employers are wise to consult with counsel prior to termination of an allegedly undocumented worker in order to thoroughly review the I-9 and to accurately confirm that the employee is in fact not authorized to work in the U.S.

For assistance with employment-related immigration needs, please contact the chair of Carlton DiSante & Freudenberger's immigration practice group, Greg Berk.

By Sarah Drechsler

Lobo v. Tamco, a California Court of Appeal decision that came out this week, involves an employee of a steel manufacturer who, as he was leaving the premises of the employer to commute home in his own vehicle, collided with a motorcycle police officer, resulting in the officer’s death.  The officer’s family filed a wrongful death suit against the employer, alleging vicarious liability under the respondent superior theory because the employee was acting in the course and scope of his employment when the accident occurred.  The employer argued that it could not be liable for the accident under the “going and coming” rule which establishes that employees are outside the course and scope of their employment while on their daily commute. Based on this rule, the trial court granted summary judgment in the employer’s favor, exempting the employer from liability.

On appeal, the plaintiffs argued that the employer could be liable under the “required-vehicle” exception to the going and coming rule.  This exception applies where a personally-owned vehicle is either an express or implied condition of employment.  In this case, as part of the employee’s position as a quality control manager, the employee was required to visit customer sites along with a sales engineer when a customer reported a problem with the product.  The employee testified that he did not have to make these trips often, and when he did, he usually went in the engineer’s car. In fact, the employee testified that in the 16 years that he worked for the employer, he used his own car to drive to a customer’s location 10 times or fewer.  The employer argued that, while the employee’s presence was essential when customers had quality complaints, driving was not an integral part of the employee’s job.  The Court of Appeal sided with the plaintiffs, finding that the employee’s commute was within the course and scope of his employment because the employer “requires or reasonably relies upon the employee to make his personal vehicle available to use for the employer’s benefit and the employer derives a benefit from the availability of the vehicle.”  The Court noted that, “the fact that the employer only rarely makes use of the employee’s personal vehicle should not, in and of itself, defeat the plaintiff’s case.”  The Court reversed the trial court's entry of summary judgment for the employer.

This ruling puts employers on notice that by requiring employees to utilize their personal vehicles to perform any aspect of their job, an employer may be opening itself up to potential vicarious liability for conduct occurring outside of work hours.  Employers may want to re-examine positions that require infrequent use of the employee’s personal vehicle to determine if the position can be restructured to eliminate any need for personal vehicle use.
 

By Cindy Caplan

In  McCarther v. Pacific Telesis Group, the California Supreme Court ruled that Labor Code Section 233 does not apply where the employer's sick leave policy provides for an uncapped number of paid sick days.

Pursuant to a collective bargaining agreement, Pacific Telesis provided up to five consecutive days of paid "sickness absence" in any seven-day period for an employee's own illness or injury. The company did not cap the amount of sick leave that may be taken by employees.  Two employees filed suit against Pacific Telesis, alleging that its policy violated Labor Code Section 233 because employees were not compensated for kin care time off under the sickness absence policy.

Labor Code Section 233 provides that “[a]ny employer who provides sick leave for employees shall permit an employee to use in any calendar year the employee’s accrued and available sick leave entitlement, in an amount not less than the sick leave that would be accrued during six months at the employee’s then current rate of entitlement, to attend to an illness of a child, parent, spouse, or domestic employee of the employee.”  The statute defines "sick leave" as "accrued increments of compensated leave."

The Court concluded that, under Pacific Telesis's plan, sick leave was not "accrued" within the meaning of Section 233.  The Court further reasoned that it would be impossible to determine "the sick leave that would be accrued during six months at the employee's current rate fo entitlement" given the nature of the Company's plan.  The Court concluded that Section 233 does not apply to policies in which the employer provides uncapped compensated sick leave.  Thus, where a policy allows for unlimited or uncapped sick leave, the employer is not obligated to provide paid "kin care" leave.  Employers who provide for a specific number of sick leave days per year remain obligated to allow employees to use half of their yearly allowance of paid sick leave to attend to a family member's illness.