DLSE Holds First of Two Public Meetings

On August 2, 2007, California's newly-appointed Labor Commissioner, Angela Bradstreet, held a public hearing to obtain comments regarding meal and rest break laws and regulations in California. This public hearing was sparked by recent court decisions concerning the standard for meal and rest breaks, including Murphy v. Kenneth Cole Productions, Inc., 40 Cal.4th 1094 (2007), White v. Starbucks Corp., 2007 WL 1952975 (N. D. Cal. July 2, 2007), and Brinker Restaurant Corporation et al. v. Hohnbaum et al. which is currently pending before the Fourth District Court of Appeal. At the hearing, this topic proved to still be a sensitive issue between employers and employees.

Employees from various industries voiced their concern that any modification of current law regarding meal and rest breaks would provide employers with the opportunity to essentially take away employees' rights to meal and/or rest breaks. Employees alleged that any leniency in this area would allow employers to pressure them to forego their breaks by praising others who did so and setting higher standards of enforcement. Moreover, employees claimed that reducing or eliminating the mandatory nature of breaks would reduce productivity and increase work-related injuries.

Employers, on the other hand, testified that they had no interest in eliminating breaks for employees; rather, they simply want some flexibility in this area. Employers complained that the current laws are too confusing, unrealistic, and overly burdensome on employers. For example, employers in the transportation and trucking industry testified that it is impossible to ensure that their drivers who are out on the road are taking a thirty minute meal period at or before five hours of work, as the law currently requires them to do. Additionally, employers in the restaurant industry stated that the unpredictable nature of their business makes scheduling breaks for employees impossible.Moreover,employees in this industry may resent their employers for forcing them to take meal breaks as it reduces their tip income and extends their workday. The employers who attended this hearing also referenced the recent increase in litigation for alleged meal and rest break violations, including class actions, which are financially crippling businesses.

The Department of Labor Standards Enforcement is holding another public hearing in Southern California to obtain additional comments regarding meal and rest break laws and regulations on August 9, 2007, from 9:00 to 2:00 p.m. at California State University Northridge. The DLSE is also accepting written comments and legal briefs on this issue until August 31, 2007.

DLSE to Hold Public Forums Regarding Meal and Rest Period Enforcement Practices

The Division of Labor Standards Enforcement ("DLSE") has announced that it will be holding two forums to allow members of the public to address newly-appointed California State Labor Commissioner Angela Bradstreet and raise concerns regarding recent changes to meal and rest period enforcement practices in California.

The first forum will be held on August 2, 2007, from 9:00 a.m. to 2:00 p.m. at the Sacramento State Alumni Center located in Sacramento; the second forum will take place on August 9, 2007, from 9:00 a.m. to 2:00 p.m. at theCalifornia State University Northridge Student Union. Specific information can be obtained by clicking here.

Additionally, the public may submit written comments to the DLSE regarding these issues on or before August 31, 2007.

New Poster Reflects Increased Federal Minimum Wage

The U.S. Department of Labor has issued a new poster reflecting the increased federal minimum wage, which goes into effect today. All employers subject to the federal Fair Labor Standards Act's minimum wage provisions must post this updated notice, available here.

As previously reported, the Fair Minimum Wage Act of 2007 increases the federal minimum wage in three increments over the next two years, with the first increase of $5.15 to $5.85 per hour taking place today (the federal minimum wage will then increase to $6.55 per hour beginning July 24, 2008, and to $7.25 per hour effective July 24, 2009). California employers should note, however, that this increase in the federal minimum wage will not affect the wages earned by California employees, who are currently entitled to the higher minimum wage of $7.50 per hour ($8.00 per hour effective January 1, 2008). Additionally, San Francisco employers must pay their employees the city's current minimum wage of $9.14 per hour.

For specific questions regarding the obligation to post the updated notice, please contact us directly.

United States District Court Ruling Could Help Limit Employer Liability for Missed Meal Periods

Employers have reason to hope that their liability for missed meal periods may be less than somefirst thought when the California Supreme Court issued its much-publicized ruling in Murphy v. Kenneth Cole Productions, Inc.Murphy held that that fines arising from meal and rest break violations in California constitute "wages," for which there is a three-year statute of limitations, rather than a "penalty," which would have carried only a one-year statute of limitations.In White v. Starbucks, _ F. Supp. 2d _, 2007 WL 1952975, at *7-*8 (N. D. Cal. July 2, 2007), a federal district court held that California Labor Code § 226 and the IWC Wage Orders' requirements that employers "provide" employees with meal periods means simply that the employer must offer the employees meal periods; the employer is not required to ensure that the meal periods are taken.

In White, the court further held that in order to prevail on a meal period claim, a plaintiff would have to show that he or she was "forced to forego" a meal period by the employer.The court reasoned as follows:"The interpretation that [plaintiff] advances -- making employers ensurers of meal breaks -- would be impossible to implement [in industries] in which large employers may have hundreds or thousands of employees working multiple shifts.Accordingly, the court concludes that the California Supreme Court, if faced with this issue, would require only that an employer offer meal breaks, without forcing employers actively to ensure that workers are taking these breaks. In short, the employee must show that he was forced to forego his meal breaks as opposed to merely showing that he did not take them regardless of the reason. . . .[Otherwise,] employees would be able to manipulate the process and manufacture claims by skipping breaks or taking breaks of fewer than 30 minutes, entitling them to compensation of one hour of pay for each violation.This cannot have been the intent of the California Legislature, and the court declines to find a rule that would create such perverse and incoherent incentives."

The plaintiff admitted that any meal periods he missed were as a result of his own decision to skip the meal periods.There was no evidence that Starbucks had "forced [plaintiff] to forego" meal periods.On these facts, the court held that Plaintiff could not succeed on his meal period claim and summary judgment was appropriate.

The district court's ruling in White is significant because it does not place the burden on the employer to force employees to take meal breaks.Rather, it simply requires that the employer provide the opportunity to take the meal break.One cautionary note: in reading White, employers must be mindful the ruling was issued by a federal district court.Although the opinion of a federal district court can be used to persuade other state and federalcourts to decide the meal break issue similarly, neither the Ninth Circuit nor California state courts arebound by the district court's ruling.

Sexual Harassment Prevention Training Regulations Approved

On July 18, 2007, the Office of Administrative Law approved the Fair Employment and Housing Commission's oft-submitted regulations implementing AB 1825. The newly-titled "Sexual Harassment Training and Education" regulations (California Code of Regulations §7288.0) become effective on August 17, 2007 and are available online by clicking here. Briefly, the adopted regulations require:

  • Effective, interactive training, via either classroom, interactive computer programming, internet based seminar, or a combined use of audio, video or computer technology in conjunction with any of these three methods.Importantly, the training must be interactive; if a trainer is not present, one must be available to answer questions within two business days after the question is asked.
  • Tracking -- The biennial two-hour training can be tracked either by the individual, or by a "training year" method in which the employer designates training years for all supervisors, e.g. 2007, 2009, 2011, etc. Note, however, that new employees must be trained within six months of hire, so those hired in non-training years will actually be retrained sooner than required by the regulations. A record of who received the training, when, what type and from whom must be maintained for two years.
  • Covered Employers are those with 50 or more employees, regardless of the employee locations. However, only supervisors located in California are required to receive training.
  • Trainers must be highly qualified. For example, attorneys can be trainers, but only two or more years after their admission to a state bar, and if their practice includes employment law.

In addition, the adopted regulations contain a detailed, but not exhaustive, list of 11 topics mandated by the training.

Up until August 17, 2007, employers who make a good faith effort to follow the AB 1825 requirements without benefit of final regulations will bedeemed to be compliant. Toward that end, the finalized regulations are not retroactive. After August 17, 2007,however, "good faith efforts"will not suffice, such thatemployers are urged to take a hard look at their sexual harassment prevention training programs to ensure that the specific requirements of California Code of Regulations §7288.0 are met.

Appellate Opinion Could Limit Labor Commissioner’s Ability to Harmonize Rulings on Employee Claims.

The California Labor Commissioner may not harmonize divergent rulings by local labor commissioners concerningemployee claims made under Labor Code § 98 by issuing "precedent decisions."In Corrales v. Bradstreet(2007) ____ Cal. App. 4th ____, the Court ruled that then Labor Commissioner Donna Dell, overstepped her bounds by issuing a precedent decision declaring money paid on account ofLabor Code § 226.7 violations for missed meal or rest periods a penaltyrather than wages.If money paid for Labor Code § 226.7 violations constituted a penalty, then employees could recover for violations going back one year. If the money paid constituted wages, then employees could recover for violationsfor the preceding three years.

Despite the fact that the California Supreme Court had earlier ruled that Labor Code § 226.7 payments were wages and not penalties, thus rendering the issue in Corrales v. Bradstreet effectively moot, the Corrales court issued an opinion anyway.The Corrales court held that an opinion was necessary becausethe question of whether the Labor Commissioner could issue a precedent decision harmonizing inconsistent rulings of local Labor Commissioners' Offices under Labor Code § 98 was of general public interest and likely to recur.

On the merits,the court ruled that the Labor Commissioner's precedent decision violated the Administrative Procedures Act.The APA allows the designation of a precedent decision if "an evidentiary hearing for the determination of facts is required for formulation and issuance of the decision."Gov. Code § 11410.10. Although the court noted that certain precedent decisions were consistent with the requirements of the APA, the court concluded that a precedent decision regarding an employee claim made pursuant to Labor Code § 98 was not consistent with the APA because no evidentiary hearing was required under that section.In doing so, the court rejected the Labor Commissioner's argument that it could only render a formal decision (ODA) after holding an evidentiary hearing for section 98 claims.The court noted that, in evaluating a section 98 employee claim, the Labor Commissioner may, without an evidentiary hearing, decide to file a court action against the employee or simply to do nothing about the claim. Thus, in the court's view, an evidentiary hearing was not required because the Labor Commissioner could simply decide not to pursue the matter in the first place.

The practical impact of this decision is significant.Given the several local enforcement offices with decision making authority throughout the state, the court's holding makes it more difficult for the state to maintain a uniform enforcement position. The decision couldforce the Labor Commissioner to resort to either more informal guidance or, alternatively, promulgate regulations concerning the inconsistent decisions.

Court Ruling Could Effect Employers’ Ability to Obtain Employee Waivers of Right to Sue Under FMLA

The United States Court of Appeal for the Fourth Circuit recently ruled that the right to assert a claim based upon a past violation of the Family and Medical Rights Act of 1993 ("FMLA") may not be waived.In a divided opinion, a panel for the Fourth Circuit rejected the Department of Labor's interpretation of its own regulation, which would have allowed parties to waive the right to assert a claim based upon a past violation of the FMLA.Taylor v. Progress Energy Inc., ___ F.3d ___ (4th Cir. 2007).The regulation stated that "employees cannot waive, nor may employers induce employees to waive their rights under FMLA."29 C.F.R. 825.220(d).

The Fourth Circuit found the Department of Labor's interpretation of its own regulation was plainly erroneous because the DOL had previously presented differing interpretations of the regulation and because the regulation did not specifically exclude remedial rights --such as the right to assert a claim-- from the scope of the regulation.Thus, the court found that, like proscriptive and substantive rights under the FMLA, remedial rights were not able to be waived.

While this ruling of the Fourth Circuit, which covers West Virginia, Virginia, Maryland, North Carolina, and South Carolina is not controlling in the California-based Ninth Circuit, the decision reflects reasoning that may be considered in the Ninth Circuit should the issue arise.Were the Ninth Circuit to adopt the Fourth Circuit's reasoning,employers' ability to obtaineffective employee waivers of the right to sue under the FMLA in severance agreements and other settlement documents could be substantiallyhindered.For a link to the text of the Fourth Circuit's opinion in Taylor v. Progress Energy Inc., ___ F.3d ___ (4th Cir. 2007), click here.

Senate Blocks Passage of Employee Free Choice Act of 2007

Earlier today the Senate essentially thwarted the passage of the Employee Free Choice Act of 2007 (the "Act") with a final vote of 51 -- 48 against moving the Act to the Senate floor for debate (60 votes were needed to ensure that the Act could overcome a threatened filibuster by Republican senators).

As discussed in a previous entry on this blog, the Act -- which was largely opposed by business organizations and employers -- had three major components:The first would have outlawed secret ballot elections by employees who were deciding whether or not to be represented by a labor union, instead allowing unions to obtain signed authorization cards from employees through which they could simply agree to labor representation. The Act would also have instituted new mediation and arbitration processes for first-contract disputes. Additionally, the Act would have increased penalties against employers for various labor law violations, requiring payment of three times the amount of wages lost by employees and imposing civil fines of up to $20,000 per violation.

For specific questions regarding the implications of the Senate's vote, please contact us directly.

Employee Free Choice Act of 2007 Sent to Senate

The Employee Free Choice Act of 2007 (the "Act") is currently wielding its way through the Senate after having passed the House of Representatives. The Act's stated purpose is to "amend the National Labor Relations Act to establish an efficient system to enable employees to form, join, or assist labor organizations and to provide for mandatory injunctions for unfair labor practices during organizing efforts, and for other purposes." As is evident from this preamble, because of the subject areas touched on the Act will potentially affect the overwhelming majority of American employees who are not currently members of a union.

Specifically, the Act has three main components. The first would outlaw secret ballot elections by employees who are deciding whether or not to be represented by a labor union, instead allowing unions to obtain signed authorization cards from employees through which they could simply agree to labor representation. The Act would also institute new mediation and arbitration processes for first-contract disputes. Additionally, the Act would increase penalties against employers for various labor law violations, requiring payment of three times the amount of wages lost by employees and imposing civil fines of up to $20,000 per violation.

For specific questions regarding the Act's applicability to your workplace, please contact us directly.

Ninth Circuit refuses to enforce law-firm’s arbitration agreement with its employee.

The Ninth Circuit Court of Appeals recently refused to enforce an arbitration agreement between a paralegal and her law firm employer. In rejecting the firm's attempt to compel arbitration of the employee's claim for overtime compensation and denial of meal and rest periods, the court ruled that the arbitration agreement was both procedurally and substantively unconscionable, and thus unenforceable.

Specifically, the arbitration agreement at issue in Davis v. O'Melveny & Myers was deemed procedurally unconscionable because it was imposed on the employee as a condition of employment, with no opportunity to negotiate. The court also found that the agreement was substantively unconscionable because it:(1) shortened the statute of limitations applicable to the employee's claim; (2) contained an overbroad confidentiality provision which, among other things, limited the employee's ability to contact potential witnesses); (3) allowed the law firm, but not the employee, to seek certain injunctive relief in court; and, (4) prohibited the employee from filing claims with the federal Department of Labor or the California Labor Commissioner. Because these provisions could not be stricken without gutting the agreement, the entire agreement was deemed void and unenforceable.

For specific questions regarding the enforceability of arbitration agreements you may be using in the workplace, please contact us directly.

Editor
Cal Labor Law

Robin E. Largent is a Partner in CDF’s Sacramento office and may be reached at 916.361.0991 or rlargent@cdflaborlaw.com BIO »

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