Brinker: The Death Knell for Meal Period and

Transcription

Vol. 2013, No. 1 January 2013
Michael C. Sullivan, Editor-in-Chief
Brinker: The Death Knell for
Meal Period and Rest Break
Class Actions?
Inside This Issue
Brinker: The Death Knell for Meal Period and
Rest Break Class Actions?
M. MICHAEL COLE & WALTER M. STELLA .......... 1
2012 Federal Agency Rules, Regulations &
Other News
EMILY FOX .......................................................... 8
EYE ON THE SUPREME COURT
BRIAN M. RAGEN ............................................... 13
Time-Rounding in California: Unanswered
Questions in the Wake of See’s Candy Shops,
Inc. v. Superior Court
MATTHEW WROBLEWSKI ..................................... 15
DFEH Update
PHYLLIS W. CHENG ............................................ 19
CASE NOTES ................................................ 21
Arbitration .................................................. 21
ERISA.......................................................... 21
Jurisdiction ................................................. 22
Labor........................................................... 23
Medical Leave............................................. 26
Misclassification ......................................... 27
Preemption.................................................. 28
Wage and Hour........................................... 29
CALENDAR OF EVENTS ........................... 31
EDITORIAL BOARD AND AUTHOR
CONTACT INFORMATION....................... 32
By M. Michael Cole & Walter M. Stella
Introduction
Last spring, the California Supreme Court issued its
long-awaited decision in Brinker Restaurant Corporation v. Superior Court.1 The case resolved several
important legal issues with respect to the requirements
for providing meal periods and rest breaks. It also
provided guidance on class certification issues.
Shortly after deciding Brinker, the California Supreme
Court handed down Kirby v. Immoos Fire Protection,
Inc., 2 a decision that garnered less attention than
Brinker, but addressed a key issue: the right of a
prevailing party to recover attorneys’ fees in actions
for missed meal periods or rest breaks. Both Brinker
and Immoos were, rightly, welcomed by employers
as providing some long-awaited relief with respect
to California’s meal period and rest break requirements.
Moreover, for those employers facing expensive
and time-consuming class actions, these decisions
were also seen as potentially making it more difficult
for plaintiffs to obtain certification of these types
of claims.
Now that more than six months have passed since
these cases were handed down, this article explores
whether Brinker (and to a lesser extent Immoos) have,
in fact, helped employers, particularly in the class
action context. And while there have only been a
dozen or so decisions to date (both published and
unpublished), there is some basis for concluding that
employers should be cautiously optimistic.
1
53 Cal. 4th 1004 (2012).
2
53 Cal. 4th 1244 (2012).
(Continued on page 3)
CA Labor & Employment Bulletin
EDITORIAL BOARD
Matthew Jedreski, Executive Editor
Deborah J. Tibbetts, Associate Editor
Paul, Plevin, Sullivan & Connaughton LLP
San Diego
Nancy L. Abell
Paul Hastings LLP
Los Angeles
Ray Bertrand
Paul Hastings LLP
San Diego
Nicole A. Diller
Morgan, Lewis & Bockius LLP
San Francisco
Barbara A. Fitzgerald
Los Angeles
Lynn Matityahu Frank
Frank & Feder
San Diego
Joshua Henderson
Seyfarth Shaw LLP
San Francisco
Lynne C. Hermle
Orrick, Herrington & Sutcliffe LLP
Menlo Park
Tyler M. Paetkau
Hartnett, Smith & Paetkau
Redwood City
William B. Sailer
QUALCOMM Incorporated
San Diego
Charles D. Sakai
Renne, Sloan, Holtzman & Sakai
San Francisco
Arthur F. Silbergeld
Dickstein Shapiro LLP
Los Angeles
Walter Stella
Miller Law Group
San Francisco
Peder J. Thoreen
Altshuler Berzon LLP
San Francisco
Bill Whelan
Solomon Ward Seidenwurm & Smith, LLP
San Diego
M. Kirby Wilcox
Paul Hastings LLP
San Francisco
A NOTE ON CITATION: The correct citation form for
this publication is: 2013 Bender’s Calif. Lab. & Empl.
Bull. 1 (January 2013).
EBOOK ISBN 978-0-3271-6747-1
2
January 2013
REPORTERS
Travis Anderson
Sheppard Mullin Richter & Hampton LLP
San Diego
G. Samuel Cleaver
Proskauer Rose LLP
Los Angeles
Michael J. Etchepare
San Diego
Paul M. Huston
Paul Plevin Sullivan & Connaughton LLP
San Diego
Jolene Konnersman
Mitchell Silberberg & Knupp LLP
Los Angeles
Alan Levins
Littler Mendelson, P.C.
San Francisco
April Love
Houston
Bernadette M. O’Brien
Floyd, Skeren & Kelly, LLP
Calabasas
Brian M. Ragen
Seltzer Caplan McMahon Vitek
San Diego
Lena Ryan
San Francisco
Angela T. Mullins
San Diego
Brit K. Seifert
Paul Hastings LLP
San Diego
Donald P. Sullivan
Wilson Elser Moskowitz Edelman & Dicker LLP
San Francisco
COLUMNISTS
Brian M. Ragen
San Diego
Corrie J. Klekowski
San Diego
Phyllis W. Cheng
Director, Dept. of Fair Employment and Housing
This publication is designed to provide accurate and
authoritative information in regard to the subject matter
covered. It is provided with the understanding that the
publisher is not engaged in rendering legal, accounting,
or other professional service. If legal or other expert assistance is required, the services of a competent professional
should be sought.
From the Declaration of Principles jointly adopted by a
Committee of the American Bar Association and a
Committee of Publishers and Associations.
Copyright ß 2013 LexisNexis Matthew Bender. LexisNexis, the knowledge burst logo, and Michie are trademarks of Reed Elsevier Properties Inc., used under license.
Matthew Bender is a registered trademark of Matthew Bender Properties.
Note Regarding Reuse Rights: The subscriber to this publication in .pdf form may create a single printout from the delivered .pdf. For additional permissions, please see
www.lexisnexis.com/terms/copyright-permission-info.aspx. If you would like to purchase additional copies within your subscription, please contact Customer Support.
3
January 2013
Brinker: The Death Knell for Meal Period and Rest Break Class
Actions?
By M. Michael Cole & Walter M. Stella
(Continued from page 1)
The Brinker Decision
Some eight years after the case was first filed, the
California Supreme Court in Brinker finally resolved
several important issues with respect to meal periods
and rest breaks. Principally, Brinker resolved a split
among California appellate courts regarding whether
an employer must simply ‘‘provide’’ an uninterrupted
30-minute meal period to its employees, or whether
employers must ‘‘ensure’’ employees take their meal
periods. Despite what appeared to be disagreement
amongst the Justices during oral argument, the California Supreme Court held that an employer satisfies
its obligations to ‘‘provide’’ a meal period when it
relieves its employees of all duty, relinquishes control
over their activities, permits them a reasonable opportunity to take an uninterrupted 30-minute break, and
does not impede or discourage them from doing so.3
While the court left open the question of what will
suffice to meet this obligation - noting that it may
vary from industry to industry - it made clear that an
employer is not obligated to police meal periods and
ensure that no work is performed.4
In addition to addressing key substantive issues, the
court also answered some critical questions regarding
the requirements for certifying a class action. The court
3
4
Brinker, 53 Cal. 4th at 1034.
53 Cal. 4th at 1040-41. The Brinker Court also addressed
issues regarding the so-called ‘‘rolling five hour’’ meal period;
holding that the relevant Labor Code provision and Wage
Order only require an employer to provide a first meal
period no later than by the end of an employee’s fifth hour
of work and a second meal period no later than by the end of
an employee’s tenth hour of work. 53 Cal. 4th at 1041. In
addition, the court addressed an employer’s obligations
regarding rest breaks, holding that employees are entitled to
a ten minute rest break for shifts between three and one-half to
six hours in length, two ten minute rest breaks for shifts of
more than six hours up to ten hours, three ten minute rest
breaks for shifts of more than ten hours up to fourteen
hours, and so forth, and that rest breaks need not be provided
before a meal period (rather, they need only be provided in the
middle of the work period ‘‘insofar as practicable’’). 53 Cal.
4th at 1028-1032.
reaffirmed the principle that trial courts must resolve
legal or factual issues which are necessary to a determination of whether class certification is proper.5 Thus,
where there are legal issues that are relevant to both
certification and the merits of an issue, it is proper for
a court to evaluate them.
The Immoos Decision
Shortly after deciding Brinker, the California Supreme
Court decided Immoos, in which it resolved an interesting issue on the interplay between two fee-shifting
statutes. The first of these fee-shifting statutes, Labor
Code section 218.5, provides for the award of attorneys’
fees to a prevailing party in ‘‘any action brought for the
nonpayment of wages, fringe benefits, or health and
welfare or pension fund contributions.’’ This is a twoway fee-shifting provision (i.e., fees can be awarded
to a prevailing plaintiff or a prevailing defendant).
However, Section 218.5, by its terms, does not apply
to actions for which attorneys’ fees are recoverable
under Labor Code section 1194. Section 1194 provides
that employees who prevail in any action for unpaid
‘‘legal minimum wage or . . . legal overtime compensation’’ are entitled to recover their fees. Thus, Section
1194 contains a one-way fee-shifting provision (i.e.,
only a prevailing plaintiff may recover fees).
In a rather straightforward analysis, the Immoos Court
first concluded that an action under Section 226.7 for
missed rest breaks is not an action for unpaid legal
minimum wage or overtime compensation. Accordingly, the Section 1194 one-way fee-shifting provision
did not apply.6 As the court explained, a claim for legal
minimum wage is simply a claim that the employer
failed to pay the required minimum wage for all hours
worked.7 Reviewing the history of Section 1194 and
related statutes, the supreme court rejected the plaintiff’s argument that ‘‘legal minimum wage’’ should be
interpreted to mean any compensation requirement
for failure to meet minimum labor standards, e.g.,
5
53 Cal. 4th at 1025.
6
Immoos, 53 Cal. 4th at 1252-55.
7
53 Cal. 4th at 1252.
the premium pay owed for the failure to provide
rest breaks.8
The Immoos Court next addressed whether attorneys’
fees could be recovered under Section 218.5. Somewhat surprisingly, the court held that they could
not. As many employers are aware, the California
Supreme Court, in Murphy v. Kenneth Cole Productions, Inc.,9 held several years ago that the one hour of
premium pay due under Section 226.7 for the failure to
provide meal periods or rest breaks was akin to a
‘‘wage.’’10 In an attempt to reconcile Murphy with the
language of Section 218.5, the Immoos Court held that
an action for missed rest breaks is an action for ‘‘nonprovision’’ of the rest break.11 As the court explained,
although the remedy is one hour of premium pay, the
gravamen of the underlying action is not nonpayment of
wages (as required for recovery of fees under Section
218.5), but is simply for failure to provide the break.12
Thus, in a meal period and/or rest break action, neither
party is entitled to recover attorneys’ fees.
The Post Brinker and Immoos Landscape
Following these two recent California Supreme Court
decisions (and especially, Brinker) many have
wondered whether meal period and rest break class
actions were ‘‘dead’’ or on the wane in California.
Those predicting there would be little to no impact
have cited Justice Werdegar’s concurrence (joined by
one other Justice) in Brinker. In her concurrence,
Justice Werdegar emphasized that the Brinker Court
was not saying that questions about why a meal period
was missed rendered such claims ‘‘categorically
uncertifiable.’’13 The concurrence stressed that if an
‘‘employer’s records show no meal period for a given
shift over five hours, a rebuttable presumption arises
that the employee was not relieved of duty and no meal
period was provided.’’14 Similarly, the concurrence
observed, whether a meal period was waived is not an
element that a plaintiff must prove as part of his or her
claim – it is an affirmative defense.15 Likening the
4
January 2013
issue to one of damages, the concurrence also noted
cases in which the California Supreme Court had held
that individual issues as to damages will ‘‘rarely if ever
stand as a bar to certification,’’ and endorsed the use of
representative testimony, surveys, and statistical analysis
to manage the case.16
Indeed, there are some early indications that Werdegar’s
concurrence could prove persuasive. In Ricaldai v. US
Investigations Services, LLC,17 for example, the United
States District Court for the Central District of California, on a motion for summary judgment, cited
favorably to Werdegar’s concurrence that it is the
employer’s burden to rebut the presumption that meal
periods were not provided where records fail to disclose
meals being taken.18 As there were no records kept by
the employer, the Ricaldai Court found that there was
a disputed issue of fact, and denied the employer’s
motion for summary judgment on the employee’s meal
period claim.19
That said, Ricaldi was a summary judgment decision; it
did not address the issue of class certification. And since
Brinker, the weight of authority suggests that, at least
for employers who have facially compliant policies and
who take these types of claims seriously, plaintiffs will
face an uphill battle certifying meal period and rest
break claims as a class action. Indeed, of the dozen or
so decisions which have been issued since Brinker and
Immoos addressing the certifiability of these types of
claims, a majority of courts have either denied certification or decertified classes.
Hernandez v. Chipotle Mexican Grill, Inc.20 and In re
Lamps Plus Overtime Cases21 are both good examples
of such decisions. In Chipotle, the appellate court reissued a decision affirming the trial court’s denial of class
certification following remand in light of Brinker.22
16
Brinker, 53 Cal. 4th at 1053 (citing Sav-On Drug Stores,
Inc. v. Superior Court, 34 Cal. 4th 319, 334 (2004); EDD v.
Superior Court, 30 Cal. 3d 256, 266 (1981)).
17
No. CV 10–07388 DDP (PLAx), 2012 U.S. Dist. LEXIS
73279 (C.D. Cal. May 25, 2012).
8
9
53 Cal. 4th at 1252-55.
18
40 Cal. 4th 1094 (2007).
19
10
Immoos, 53 Cal. 4th at 1256-57 (citing Murphy, 40 Cal.
4th at 1099).
2012 U.S. Dist. LEXIS 73279, at *11-12.
2012 U.S. Dist. LEXIS 73279, at *11-12. The court
went on to conclude that even if there was no rebuttable
presumption, there would still be an issue of fact as to
whether the employee’s manager pressured her into skipping off-duty meal periods. 2012 U.S. Dist. LEXIS 73279, at
*14-15.
11
53 Cal. 4th at 1256-57.
12
53 Cal. 4th at 1257.
13
Brinker, 53 Cal. 4th at 1052 (Werdegar, J. concurring).
20
208 Cal. App 4th 1487 (2012).
21
209 Cal. App. 4th 35 (2012).
22
Chipotle, 208 Cal. App 4th at 1490.
14
15
Of note, Chipotle’s written policies required managers
to provide meal periods and rest breaks, prohibited employees from skipping breaks, and required
managers to determine when or if employees were
permitted to take breaks. 23 Employees were also
directed to record their time.24 Moreover, Chipotle
had a policy of paying employees for their breaks and
provided free food and drink, as well as comfortable
facilities, even though employees were relieved of all
duty during their breaks, in order to encourage the
taking of breaks.25 As a result, Chipotle employees
had little financial incentive to record breaks accurately
and sometimes would forget to record them or record
them inaccurately.26
With respect to certification, the trial court held, and
the court of appeal affirmed, that individual issues
predominated. In so concluding, the court noted that
an employer need only provide meal periods, not
ensure they were taken.27 The court also distinguished
cases where there was evidence that the employer’s
policy or practice itself provided a common issue that
could be resolved on a class-wide basis, i.e., autodeductions or practices making it difficult, if not impossible, for employees to take breaks.28 In contrast to
these cases, the evidence regarding Chipotle’s policy
and practices reflected that to determine whether
Chipotle violated the law would necessitate a restaurant-by-restaurant (and perhaps supervisor-bysupervisor) review.29 Indeed, the only evidence of a
company-wide policy or practice showed that Chipotle
complied with the substantive law in that it provided
meal periods and rest breaks.30 To the extent meal
periods and rest breaks were missed, putative class
members declared to a wide variety of practices and
with varying degrees: some said they always missed
meal periods, others said they received meal periods
but not rest breaks, and still others declared that their
breaks were delayed or interrupted.31
5
January 2013
unreliable because employees lacked an incentive to
clock out and in accurately and, in any event, a trier
of fact would still need to ascertain why a break
was missed or why a full break was not taken.32 Of
particular significance, the court refused to rely on
Werdegar’s concurrence in Brinker regarding the role
of record keeping, noting that it is not binding precedent
and, further, there was no evidence that Chipotle had
falsified records or purposely failed to keep records.33
Relatedly, the Chipotle Court also rejected the use of
sampling, noting that simply because the records
reflected a missed break did not determine the issue
of whether the break was not provided.34
As in Chipotle, the court of appeal in Lamps Plus also
affirmed denial of class certification of a meal period
and rest break class.35 Like the Chipotle Court, the
Lamps Plus Court found significant the fact that
Lamps Plus’s policy was facially compliant. Indeed,
employees had to sign acknowledgements regarding
the company’s policy, agreeing to comply with the
policy and to report any missed breaks.36 Lamps Plus
also took seriously disciplining employees who failed
to take their breaks.37 The evidence, including declarations, depositions and a questionnaire, all failed to
show a universal practice denying breaks.38 To the
extent there were ‘‘violations,’’ the court noted there
was considerable variability amongst putative class
members regarding their experiences, with some
saying they often missed breaks, others saying they
always received breaks, and employees declaring to
varying degrees of interruption to their breaks.39 Just
as in Chipotle, the Lamps Plus Court found problematic
plaintiff’s reliance on an expert and timekeeping
records, where the expert’s analysis did not consider
the reasons why an employee missed a break or took
an abbreviated break.40 Noting that all an employer had
32
The Chipotle Court also rejected the plaintiff’s reliance
on Chipotle’s time records, noting that they were
208 Cal. App 4th at 1502-03.
33
208 Cal. App 4th at 1503, n.7. In an unpublished decision, a Los Angeles Superior Court judge also declined to rely
on the Brinker concurrence in denying certification of a meal
period and rest break class. See Benton v. Tanintco Inc., No.
BC349267, Superior Court of the State of California, Los
Angeles County (May 3, 2012).
23
208 Cal. App 4th at 1490-91.
24
208 Cal. App 4th at 1491.
25
34
208 Cal. App 4th at 1503-04.
35
Lamps Plus, 209 Cal. App. 4th at 40.
209 Cal. App. 4th at 41.
26
27
208 Cal. App 4th at 1499-1500.
36
28
208 Cal. App 4th at 1500-01.
37
29
208 Cal. App 4th at 1501-02.
38
209 Cal. App. 4th at 53-54.
39
208 Cal. App 4th at 1501-02.
40
209 Cal. App. 4th at 54-55.
30
31
to do was provide breaks, the court concluded that
where a record simply showed that an employee did
not take a break, the reason for failing to do so
needed to still be ascertained.41
Taking Brinker and Immoos further, a federal district
court recently concluded that even a complete failure by
an employer to pay the premium pay for missed meal
periods is not, itself, sufficient to support certification
of a class. In Ugas v. H&R Block Enterprises, LLC,42
the district court granted defendant’s motion to decertify a meal period subclass following Brinker and
Immoos. Although H&R Block had a clear policy
providing its employees with an unpaid 30-minute
meal period, the court initially certified a class based
on the company’s admitted failure to pay the premium
for missed meal periods. In light of Brinker and
Immoos, however, the court concluded that the failure
to pay the premium could no longer support certification, noting that the crux of a violation is the failure to
provide the required break, not the failure to pay the
premium.43 Consistent with other courts, the court in
Ugas rejected plaintiff’s reliance on time entry audit
reports which showed that a meal break might have
been missed, noting that the reports did not consider
the reasons why an employee missed a break, i.e.,
because they were not hungry, simply forgot what
time it was, or for other reasons. 44 As the court
explained: ‘‘Brinker requires only that employers
give their employees the ‘opportunity’ to take a meal
break . . . .’’45 Because the evidence reflected the
individual nature of this inquiry, class treatment was
not appropriate.46
Considerations Going Forward
As these decisions and others reflect, the early signs
appear to be that Brinker and Immoos have been beneficial to employers, particularly when trying to defend
class actions. At the same time, these decisions also
highlight the importance of reviewing and updating
policies, procedures and practices to make sure they
comply with the Brinker decision.
41
42
6
January 2013
Indeed, where courts have certified classes post-Brinker
and Immoos, it has been due to evidence of a companywide policy that could potentially support common
liability. For example, in Rodriguez v. Lakin Tire
West, Inc.,47 the employer had a policy of combining
rest breaks into one 20-minute break. Likewise, in
Rosales v. El Rancho Farms,48 the court certified a
meal period class based on evidence that the employer’s
policy was to schedule meal breaks at noon regardless
of the time the employee started work (resulting in late
meal periods much of the time).
In short, as the decisions in Brinker and post-Brinker
cases suggest, there is a huge benefit in having compliant
policies, procedures and practices, particularly as a
defense to class action litigation. Furthermore, it is
important for employers to be aware that even though
Brinker is largely a ‘‘win’’ for employers, it should not be
seen as a license for employers to be lax about meal
period and rest break compliance.
Walter M. Stella is a Shareholder at Miller Law Group
in San Francisco, California where he represents
companies in all aspects of employment law and
related litigation, including wage and hour class
actions and suits involving trade secret theft, wrongful
termination, discrimination, retaliation, and harassment. He also routinely counsels clients on
employment law matters, provides advice on employment issues arising from complex business transactions,
and negotiates employee benefits and employment
agreements on behalf of companies and executives.
M. Michael Cole is an Associate with the Miller Law
Group, where his practice includes the full spectrum of
labor and employment law matters such as wage and
hour counseling and litigation, multi-plaintiff and
single-plaintiff employment litigation, and domestic
and international employment counseling. He has
focused his practice on complex litigation, including
wage and hour class and/or collective actions. In addition, Mr. Cole regularly advises clients with respect to
compliance with the overtime requirements of the
FLSA, state wage payment statutes and other wage
and hour requirements, and on reductions in force
and other decisions regarding adverse employment
actions.
No. 09-cv-6510, 2012 U.S. Dist. LEXIS 156359 (C.D.
Cal. July 9, 2012).
43
Ugas, 2012 U.S. Dist. LEXIS 156359, at *10.
44
2012 U.S. Dist. LEXIS 156359, at *11.
45
2012 U.S. Dist. LEXIS 156359, at *11 (internal citations omitted).
46
2012 U.S. Dist. LEXIS 156359, at *11.
47
No. B233537, 2012 2012 Cal. App. Unpub. LEXIS
6833 (Sept. 19, 2012) (unpublished).
48
No. 1:09-cv-00707, 2012 U.S. Dist. LEXIS 123033
(E.D. Cal. Aug. 29, 2012).
7
Martindale-Hubbell Connected Õ is an online, global network—designed
exclusively for legal professionals—leveraging the unsurpassed reach of the
Martindale-Hubbell database of more than one million lawyers and law firms.
Expand your professional network and share your knowledge with a global audience and benefit from the expertise of the community. Simply connect with the
people you know and the people who your connections know to build your
network quickly and easily.
From legal and risk management to IP, restructuring and employment law, you can
tackle today’s emerging issues, collaborate globally through online groups, blogs
and forums:
Groups: Join or start groups with co-workers or legal professionals who share
your interests or current practice area.
Blogs: Hear what thought leaders are saying and voice your opinion—even
write your own blog!
Forums: Keep up on legal issues when you want, where you want with those
who share your interests and practice area.
Get Connected today—it takes just a few minutes to get started! Go to
www.martindale.com/connected.
Also from Matthew Bender:
California Employers’ Guide to Employee Handbooks and Personnel Policy
Manuals, by Morrison & Foerster LLP
2011 Revisions by Paul Hastings LLP
This handy volume and accompanying CD offers an all-inclusive roadmap to
writing, revising and updating employee handbooks. More economical than
competing guidebooks, this volume is a vital reference that helps you draft appropriate content, speeding additional research with cross-references to the Wilcox
treatise, California Employment Law. Sample policies cover the following: technology use and security; blogging; cell phone use; company property, proprietary
and personal information; employment-at-will; anti-harassment policies; work
schedules and overtime; and much more. Order online at Lexis.com or by
calling 1-800-223-1940.
January 2013
8
January 2013
2012 Federal Agency Rules, Regulations & Other News
By Emily Fox
Introduction
EEOC Finalizes Rule Regarding Recordkeeping
Under GINA
Although very little occurred on the federal legislative
level that will affect employers in 2012, much occurred
on the federal agency level. Indeed, on the heels of a
request for an increase of $18 million in federal funding
from the fiscal year 2011 appropriations, and $13.7
from fiscal year 2012 appropriations, the Equal
Employment Opportunity Commission (‘‘EEOC’’) has
been extremely active. So too have other federal agencies, though to a lesser degree. Below are new agency
rules and regulations, as well as important agency
news, of which all employers should be aware of
going into 2013.
This EEOC rule incorporates the Genetic Information
and Non-Discrimination Act4 (‘‘GINA’’) into the
current Title VII and Americans with Disabilities Act5
(‘‘ADA’’) recordkeeping requirements.6 Title VII and
the ADA ‘‘require all covered entities to preserve all
employment and personnel records that they make or
keep for a specified period of time, and to preserve all
records relevant to a Title VII or ADA charge until the
charge is resolved.’’7 Under the new rule, these same
obligations are now applicable for GINA-related
charges.
The EEOC and Department of Labor’s OFCCP
Issue Memorandum of Understanding on Their
Prospective Cooperation
EEOC Issues Final Rule on Reasonable Factors
Other Than Age Defense in Disparate Impact
Age Discrimination Cases
The memorandum of understanding (‘‘MOU’’) between
the EEOC and Office of Federal Contract Compliance
Program (‘‘OFCCP’’) was updated ‘‘to promote greater
efficiency and coordination, and to eliminate conflict
and duplication of effort.’’1 In particular, the MOU
simplifies how discrimination complaints or charges
filed with one agency are to be processed if they
involve issues subject to the jurisdiction of the
other. The MOU also facilitates sharing information
between the agencies and discusses joint enforcement
efforts.
The EEOC amended its Age Discrimination in Employment Act 8 (‘‘ADEA’’) regulations to clarify the
reasonable factors other than age (‘‘RFOA’’) defense
in disparate impact age discrimination cases.9 A disparate impact case under the ADEA involves policies and
procedures that happen to have a substantially disproportionate impact on people over 40 years of age,
whether the employer intended such an impact or not.
Now, when a discrimination claim that falls in both
agency arenas is filed, the OFCCP is to act as the
EEOC’s agent ‘‘for the purposes of receiving the Title
VII component of all complaints/charges.’’2 This means
that all discrimination complaints filed with the OFCCP
that implicate Title VII of the Civil Rights Act3 (‘‘Title
VII’’) (charges of employment discrimination based on
race, color, religion, sex, national origin or retaliation)
are to be considered dually-filed with the EEOC. And
the date the complaint is filed with the OFCCP is
the date the charge is considered filed with the EEOC
for statute of limitations purposes.
These changes were prompted because of the United
States Supreme Court decision, Smith v. City of
Jackson, in which the Court held that disparate impact
claims are cognizable under the ADEA, and that an
employer could use RFOA as a defense against such
claims.10 And, under a subsequent case, Meacham v.
Knolls Atomic Power Laboratory, the Court held that
the employer bears the burden of production and
4
42 U.S.C. § 2000ff et seq.
5
42 U.S.C. § 12101 et seq.
6
29 C.F.R. pt. 1602.
7
29 C.F.R. pt. 1602.
8
29 U.S.C. § 621 et seq.
9
1
EEOC, Notice of MOU (Nov. 7, 2011), available at
http://www.eeoc.gov/laws/mous/eeoc_ofccp.cfm.
2
Notice of MOU, supra note 1.
3
42 U.S.C. § 2000e et seq.
Final Rule, Disparate Impact and Reasonable Factors
Other Than Age Under the Age Discrimination in Employment Act, 77 Fed. Reg. 19080 (Mar. 30, 2012), codified at
29 C.F.R. pt. 1625.7, available at https://federalregister.gov/
a/2012-5896.
10
544 U.S. 228 (2005).
persuasion when using a RFOA defense.11 The EEOC
final rule seeks to clarify the use of the RFOA defense.
First, the rule clarifies that the RFOA defense is
unavailable in disparate treatment cases. Second, the
rule emphasizes that the RFOA determination is a
fact-specific inquiry. A ‘‘reasonable factor other than
age’’ is a non-age factor that is objectively reasonable
when viewed from the position of a prudent employer
mindful of its responsibilities under the ADEA under
like circumstances.12 The phrase ‘‘non-age factor’’
recognizes that ‘‘other than age’’ is an express part of
the statutory RFOA defense.13 The final rule provides
a list of factors relevant to whether an employment
practice is reasonable, and whether a factor is ‘‘other
than age.’’14
These factors are ‘‘not required elements or duties, but
considerations that are manifestly relevant to determining whether an employer demonstrates the RFOA
defense.’’15 They include: (1) the extent to which the
factor is related to the employer’s stated business
purpose; (2) the extent to which the employer defined
the factor accurately and applied the factor fairly and
accurately, including the extent to which managers and
supervisors were given guidance or training about how
to apply the factor and avoid discrimination; (3) the
extent to which the employer limited supervisors’
discretion to assess employees subjectively, particularly
where the criteria that the supervisors were asked to
evaluate are known to be subject to negative agebased stereotypes; (4) the extent to which the employer
assessed the adverse impact of its employment practice
on older workers; and (5) the degree of the harm to
individuals within the protected age group, in terms of
both the extent of injury and the numbers of persons
adversely affected, and the extent to which the
employer took steps to reduce the harm, in light of
the burden of undertaking such steps.
An employer seeking to use the RFOA defense must
make more than a mere showing that its action was
neither irrational nor arbitrary.
Employers will now find it more difficult to defend
against disparate impact age discrimination claims
under the ADEA. To counter this potential difficulty,
employers should evaluate their policies and practices
11
554 U.S. 84 (2008).
12
29 C.F.R. pt. 1625.7(e).
13
29 C.F.R. pt. 1625.7(e).
14
29 C.F.R. pt. 1625.7(e).
15
Final Rule, supra note 9.
9
January 2013
to ensure that they do not disproportionately impact
individuals over 40 years of age.
EEOC Approves Enforcement Guidance on the
Use of Criminal Records in Employment
The EEOC has issued a new enforcement guidance
clarifying the agency’s longstanding policy regarding the use of arrest and conviction records in
employment.16 The EEOC states that the guidance
‘‘also updates relevant data, consolidates previous
EEOC policy statements on this issue into a single
document and illustrates how Title VII applies to
various scenarios that an employer might encounter
when considering the arrest or conviction history of a
current or prospective employee.’’17
Specifically, the new guidance discusses criminal
records in the context of disparate treatment and disparate impact analysis under Title VII. For example, a
violation may occur when an employer treats criminal
history information differently for different applicants
or employees, based on their race or national origin
(disparate treatment liability). Or, an employer’s
neutral policy (e.g., excluding applicants from employment based on certain criminal conduct) may
disproportionately impact some individuals protected
under Title VII, and may violate the law if not job
related and consistent with business necessity (disparate
impact liability).
Employers may still avail themselves of the business
necessity defense, but should do so with caution. In the
new guidance, the EEOC states that employers will
meet this defense under only two circumstances:
The employer validates the criminal conduct exclusion for the position in question in light of the
Uniform Guidelines on Employee Selection
Procedures18 (if there is data or analysis about
criminal conduct as related to subsequent work
performance or behaviors); or
The employer develops a targeted screen considering at least the nature of the crime, the time
16
EEOC Enforcement Guidance No. 915.002, Consideration of Arrest and Conviction Records in Employment
Decisions Under Title VII of the Civil Rights Act of 1964
(Apr. 25, 2012), available at http://www.eeoc.gov/laws/
guidance/arrest_conviction.cfm.
17
Press Release, EEOC Issues Enforcement Guidance
Commission Updates Guidance on Employer Use of Arrest
and Conviction Records (Apr. 25, 2012), available at http://
www.eeoc.gov/eeoc/newsroom/release/4-25-12.cfm.
18
29 C.F.R. pt. 1607.
elapsed since the crime, and the nature of the job
(i.e., the three factors identified by the court in
Green v. Missouri Pacific Railroad 19). The
employer’s policy should then provide an opportunity for an individualized assessment for those
people identified by the screen to determine if the
policy as applied is job related and consistent with
business necessity. Although Title VII does not
require individualized assessment in all circumstances, the use of a screen that does not include
individualized assessment is more likely to violate
Title VII.
Employers should take care when making decisions
about current and prospective employees based on
their arrest or conviction records, and should evaluate
existing policies in light of this new guidance. The
updated enforcement guidance and related Q&A document are available through the EEOC’s website. The
site also provides helpful real-life examples for
employers either evaluating their current policies or
creating new policies regarding the use of arrest and
conviction records.
EEOC Issues Fact Sheet on Application of Title VII
and the ADA to Victims of Domestic Violence,
Sexual Assault and Stalking
Victims of domestic violence, sexual assault and
stalking are not specifically protected under Title VII
or the ADA. Consequently, employers are not always
aware that their employment decisions relating to
victims of these crimes may run afoul of these federal
statutes. To remedy this, the EEOC released official
guidance involving the application of these statutes to
employees and applicants who happen to be victims of
such behavior.20 Included within the EEOC’s fact sheet
are examples of circumstances under which employeractions may implicate Title VII or the ADA.
10
January 2013
incurred to influence employees’ decisions to form
unions or engage in collective bargaining. Examples
of unallowable costs include: (1) preparing and distributing materials; (2) hiring or consulting legal counsel
or consultants; (3) meetings (including paying the
salaries of attendees at meetings); and (4) planning or
conducting activities by managers, supervisors or union
representatives during work hours.
In order to establish compliance with Executive Order
13494, DOD, GSA and NASA contractors should
maintain concise records regarding the cost of laborrelated activities.
The NLRB Indefinitely Delays Implementation
Date of Notice Posting Rule
On December 23, 2011, the National Labor Relations
Board (‘‘NLRB’’) agreed to postpone the effective date
of its employee rights notice-posting rule until April 30,
2012. The new mandatory posting delineates certain
worker rights under the National Labor Relations Act22
(‘‘NLRA’’), including the right to organize a union and to
bargain collectively. However, on April 17, 2012, the
D.C. Circuit Court of Appeals temporarily enjoined the
NLRB’s posting rule until all legal issues surrounding
the mandate are resolved.23 There is no new deadline for
the posting requirement at this time.
Federal Aviation Administration Issues Pilot
Rest Rules
The Department of Defense (‘‘DOD’’), along with the
General Services Administration (‘‘GSA’’) and
National Aeronautics and Space Administration
(‘‘NASA’’), issued a final rule implementing Executive
Order 13494.21 Executive Order 13494 precludes reimbursement to government contractors for expenses
The Federal Aviation Administration (‘‘FAA’’) recently
issued a new rule mandating that pilots work fewer
hours and be provided with longer breaks between
flights.24 Commercial passenger airline operators will
have two years to make potentially significant changes
to their pilots’ work schedules. The rule does not apply
to cargo-only flights. More specifically, and among
other provisions, the FAA’s rule requires the following:
(1) pilots must be given a 10-hour rest period between
flights - eight of which must be allocated for uninterrupted sleep - and must be free from duty for a period of
at least 30 consecutive hours per week; (2) new flight
duty periods range from 9-14 hours for single crew
operations, beginning when the pilot is required to
report for duty and ending when the plane is parked
after the final flight (this time period includes the
period of time before a flight or between flights that a
19
22
Department of Defense Issues Rule Implementing
Executive Order 13494
549 F.2d 1158 (8th Cir. 1977).
20
Available at http://www1.eeoc.gov/eeoc/publications/
upload/qa_domestic_violence.pdf.
23
21
24
75 Fed. Reg. 19345.
29 U.S.C. § 151 et seq.
See National Association of Manufacturers v. NLRB,
No. 12-5068, 2012 U.S. App. LEXIS 10768 (Apr. 17, 2012).
14 C.F.R. pts 117, 119, and 121.
pilot is working without an intervening rest period); and
(3) flight time is limited to eight or nine hours
(depending on start time), beginning and ending from
when the plane is moving on its own power.
DOT Issues Final Rule Revising Truck Driver
Hours of Service Regulations
Much like the pilot rest rule described above, the
Department of Transportation (‘‘DOT’’) revised truck
driver hours of service regulations to combat fatiguerelated accidents.25 The main changes to the previous
version of the rule are as follows:
Weekly maximum hours a driver is permitted to
work is down from 82 to 70.
This reduction in weekly hours is accomplished
by limiting a driver’s ‘‘34-hour restart’’ (34 consecutive hours off duty automatically restarts the
calculation of the 70-hour on-duty period) to once
every 168 hours (or seven days).
The rule mandates that the 34-hour restart period
must include at least two periods of time between
1:00 and 5:00 a.m. (measured by the driver’s home
terminal time) to increase the driver’s opportunity
to sleep.
The rule also requires that the drivers spend no
more than eight consecutive hours on duty
without taking a break lasting at least 30 minutes
before driving. This break time may include meal
breaks, time in the sleeper berth, or any other offduty period.
The rule revises the definition of ‘‘on-duty time.’’
Penalties are provided for driving, or allowing a drive,
for three or more hours beyond the 11-hour limit.
Employers will face a maximum penalty of up to
$11,000 per offense, and drivers up to $2,750
11
January 2013
per offense. This penalty provision also applies to
passenger-carrying vehicle drivers.
DOT Rule Regarding Cellular Phone Use by
Interstate Commercial and Bus Drivers
The DOT has banned the use of hand-held cell phones
by interstate truck and bus drivers to deter distracted
driving.26 Hands-free devices and mobile phones with
a speaker phone option and one-touch dialing are
permissible under certain circumstances.
The Consumer Financial Protection Bureau Issues
Changes to Notices Required by the Fair Credit
Reporting Act
The new Consumer Financial Protection Bureau is now
the chief enforcer of the Fair Credit Reporting Act27
(‘‘FCRA’’). As one of its first mandates, beginning on
January 1, 2013, employers that utilize background
checks must use new forms (most importantly, a
‘‘Summary of Rights’’ form) to notify job applicants
and employees of their rights under the FCRA.28
Employers that negligently or willfully fail to comply
with the FCRA’s requirements may be subject to
lawsuits by applicants or employees.29 Thus, before
January 1, 2013, employers should begin using the
new forms.
Emily Fox is an associate at the employment law firm of
Paul, Plevin, Sullivan & Connaughton in San Diego.
She represents private and public employers in all
aspects of labor and employment litigation, as well as
counseling employers on day-to-day employment
matters.
26
49 CFR pts. 383-384, 390-392.
27
15 U.S.C. § 1681 et seq.
28
16 C.F.R. pt. 698, available at http://www.ecfr.gov/cgibin/text-idx?c=ecfr&SID=eaa9f60ae0282e1d7fa7938a0fd2d
ffb&rgn=div5&view=text&node=16:1.0.1.6.81&idno=16
25
49 C.F.R. pts. 385, 386, 390, and 395.
29
15 U.S.C. §§ 616, 617.
12
SUBSCRIPTION QUESTIONS?
If you have any questions about the status of your
subscription, please call your Matthew Bender
representative, or call our Customer Service
line at 1-800-833-9844.
January 2013
13
January 2013
EYE ON THE SUPREME COURT
By Brian M. Ragen
Supreme Court to Decide Whether a Collective
Action Under FLSA Section 216(b) Is Rendered
Moot When a Defendant Makes an Offer of
Judgment to Named Plaintiff Only
an offer of judgment under Rule 68, requesting that
judgment be entered in Symczyk’s favor on all causes
of action.6 Symczyk did not respond to this offer and,
by its terms, it expired.7
Genesis HealthCare Corporation v. Symczyk, 2012
U.S. LEXIS 8712, 81 U.S.L.W. 3264 (June 25, 2012).
Symczyk’s failure to respond notwithstanding, Genesis
moved to dismiss for lack of subject matter jurisdiction,
claiming that its Rule 68 offer had robbed Symczyk of
Article III standing.8 The district court agreed and
dismissed the case with prejudice.9 The Third Circuit
Court of Appeals reversed, holding that an offer to the
named plaintiff in a collective action made before
collective certification or before other plaintiffs have
opted in does not moot a case.10
The United States Supreme Court has agreed to resolve
the question of whether a defendant can render moot
a collective action brought under section 216(b) of
the Fair Labor Standards Act1 (‘‘FLSA’’) by making
an offer of judgment that fully satisfies the named
plaintiff’s individual claims.
Background
Laura Symczyk (‘‘Symczyk’’) worked throughout 2007
as a Registered Nurse for Genesis HealthCare Corporation (‘‘Genesis’’).2 In December 2009, Symczyk
brought suit against Genesis alleging that she was regularly required to perform compensable work during
unpaid ‘‘meal breaks.’’3 More specifically, Symczyk
alleged that Genesis automatically deducted 30
minutes from each employee’s compensable work
day, regardless of whether the employee actually
received a 30-minute meal break.4
Legal Issues Before the Court
The Third Circuit’s unanimous decision started by
recognizing that ‘‘[a]n offer of complete relief will
generally moot the plaintiff’s claims, as at that point
the plaintiff retains no personal interest in the
outcome of the litigation.’’11 It further noted that Rule
68 was ‘‘designed to encourage settlement and avoid
litigation.’’12 The court pointed out, however, that
‘‘[i]n the representative action arena . . . Rule 68 can
be manipulated to frustrate rather than serve these
salutary ends.’’13 It explained:
Symczyk brought her suit as a collective action under
section 216(b) of the FLSA. Section 216(b) permits
litigants to bring actions on behalf of other similarly
situated individuals, but differs from Federal Rule of
Civil Procedure (‘‘Rule’’) 23 class actions in that each
potential plaintiff must affirmatively opt in to the
proceedings.5
Requiring multiple plaintiffs to bring separate
actions, which effectively could be ‘picked
off’ by a defendant’s tender of judgment
before an affirmative ruling on class certification could be obtained, obviously would
frustrate the objectives of class actions;
moreover it would invite waste of judicial
Two months after Symczyk filed her complaint - and
before any potential plaintiffs had been notified of the
action or given the opportunity to opt in - Genesis made
1
29 U.S.C. § 201 et seq.
2
Brief for Respondent Laura Symczyk, Genesis HealthCare Corp. v. Symczyk, Case No. 11-1059, United States
Supreme Court (Oct. 19, 2012) (‘‘Respondent’s Brief’’), at 3.
Respondent’s Brief, supra note 2, at 4.
7
8
9
10
3
4
5
6
See Brief for Petitioners Genesis HealthCare Corporation
et al., Genesis HealthCare Corp. v. Symczyk, Case No. 111059, United States Supreme Court (August 30, 2012) (‘‘Petitioners’ Brief’’), at 2; 29 U.S.C. 216(b).
See Genesis HealthCare Corporation v. Symczyk, 656
F.3d 189 (3d Cir. 2011).
11
656 F.3d at 195 (quoting Weiss v. Regal Collections,
385 F.3d 337, 340 (3d Cir. 2004)).
12
656 F.3d at 195.
13
656 F.3d at 195.
resources by stimulating successive suits
brought by others claiming aggrievement.14
In reaching this conclusion, the Third Circuit revisited
its decision in Weiss v. Regal Collections (which
involved a defendant ‘‘picking off’’ a named plaintiff
in a Rule 23 action) and approved of its use of the
‘‘relation back’’ doctrine to retain jurisdiction over
putative class members’ claims, even after the named
plaintiff’s claims had become moot15:
Absent undue delay in filing a motion for class
certification . . . where a defendant makes a
Rule 68 offer to an individual claim that has
the effect of mooting possible class relief
asserted in the complaint, the appropriate
course is to relate the certification motion
back to the filing of the class complaint.16
Here, the Third Circuit held that collective actions under
Section 216(b) should be handled the same way.17
14
January 2013
Genesis argues to the Court that Section 216(b) collective actions differ from Rule 23 class actions in that
a Section 216(b) plaintiff has no ability to bring
others into the case without any action on their part.18
Because Section 216(b) requires affirmative optin, Genesis claims that there truly is no case or
controversy when a plaintiff’s claims are mooted
before certification. Hypothetical future plaintiffs
should not be treated as ‘‘absent’’ class members
because they are not part of the collective action
whatsoever until they affirmatively opt-in.19
Oral arguments were heard on December 3, 2012.
Brian M. Ragen is an associate with Seltzer Caplan
McMahon Vitek in San Diego, California. He counsels
and defends clients in unfair competition and trade
secrets litigation.
On remand, Symczyk moved for certification, but the
district court stayed all proceedings in light of the
Supreme Court’s grant of certiorari.
14
656 F.3d at 195 (quoting Deposit Guar. Nat’l Bank v.
Roper, 445 U.S. 326, 339 (1980)).
15
656 F.3d at 195-196.
16
656 F.3d at 195 (quoting Weiss, 385 F.3d at 348).
18
Petitioner’s Brief, supra note 5, at 27.
656 F.3d at 195.
19
Petitioner’s Brief, supra note 5, at 27.
17
15
January 2013
Time-Rounding in California: Unanswered Questions in
the Wake of See’s Candy Shops, Inc. v. Superior Court
By Matthew Wroblewski
Introduction
When it comes to the validity of time-rounding, California employers have long relied on the Fair Labor
Standards Act1 (‘‘FLSA’’) and approval from the California Division of Labor Standards Enforcement
(‘‘DLSE’’). Recently, however, a California Superior
Court decision caused concern by granting summary
adjudication in favor of a former employee who
claimed that her employer’s time-rounding policy was
unlawful.
Fortunately for employers, in See’s Candy Shops, Inc. v.
Superior Court, the Fourth District Court of Appeal
ultimately reversed the trial court’s decision.2 The
critical issue was whether employers can round their
employees’ time entries to the nearest tenth of an
hour under California law. The federal standard under
the FLSA allows time-rounding ‘‘provided that it is
used in such a manner that it will not result, over a
period of time, in failure to compensate the employees
properly for all the time they have actually worked.’’3
The DLSE Enforcement Policies and Interpretations
Manual (‘‘DLSE Manual’’)4 also refers to the federal standard, but no California court had sanctioned
time-rounding prior to See’s Candy.
See’s Candy is an important decision that allows
California employers, like employers across the
nation, to round time to the nearest 5 minutes, onetenth or quarter of an hour, so long as time-rounding
is neutral. Although the See’s Candy ruling brings some
clarity for employers, it remains an open question
how courts will evaluate whether a time-rounding
system is considered neutral.
Factual Background
Pamela Silva was a former See’s Candy Shop, Inc.
(‘‘See’s Candy’’) non-exempt employee. Silva brought
a wage-and-hour class action complaint alleging that
1
29 U.S.C. § 201 et seq.
2
210 Cal. App. 4th 889 (2012).
3
29 C.F.R. § 785.48(b).
4
DLSE Manual, available at http://www.dir.ca.gov/dlse/
dlsemanual/dlse_enfcmanual.pdf.
See’s Candy failed to pay for all work performed and
failed to pay overtime. Her claims were based, in part,
on the company’s policy of rounding electronic time
punches up or down to the nearest tenth of an hour.
For example, if an employee clocked in at 7:58 a.m.,
the timekeeping system, Kronos, rounded up the time to
8:00 a.m. If the employee clocked in at 8:02 a.m., the
system rounded down the entry to 8:00 a.m.5 See’s
Candy also allowed employees to clock-in during a
‘‘grace period,’’ up to 10 minutes before or after their
scheduled start time, but they were not permitted to
work before the start of their scheduled shift.6
The San Diego Superior Court certified the class on
whether class members suffered a loss of compensation
when they clocked in and out on the time-rounding
system and during the grace period. See’s Candy
asserted affirmative defenses based, inter alia, on
assertions that any unpaid amounts were de minimis,
the nearest-tenth rounding policy is consistent
with federal and state law, and the grace period policy
is lawful. The superior court granted Silva’s motion
for summary adjudication, holding that the timerounding practice violated California Labor Code
section 204 because it resulted in ‘‘inaccurate’’ time
records and failed to pay some employees for ‘‘all
hours’’ worked.
See’s Candy filed a writ petition with the court of
appeal, which was initially denied. See’s Candy’s petitioned the California Supreme Court for review of
the writ denial, and the supreme court ordered the
appellate court to accept the writ.
On appeal, See’s Candy claimed that the federal standard should apply and that time-rounding to the nearest
tenth of an hour is lawful as long as it is a neutral timekeeping system. Silva, on the other hand, argued that
the federal standard and the opinion of the DLSE were
both inconsistent with California Labor Code section
204, which requires the timely payment of ‘‘all
wages’’ twice during each calendar month. The court
of appeal ultimately agreed with See’s Candy, and
5
See’s Candy, 210 Cal. App. 4th at 892.
6
reversed the trial court’s grant of summary adjudication
to Silva.7
The Appellate Court’s Holding
Before addressing the evidence and arguments
presented by the parties, the court of appeal had to
determine the correct legal standard for evaluating a
rounding claim under California law. The court
acknowledged that even though the Department of
Labor (‘‘DOL’’) adopted a regulation under the FLSA
permitting time-rounding approximately 50 years ago,
there had been no California statute or case law authorizing or prohibiting time-rounding. However, absent
binding California authority, the court relied on the
guidance of federal law and held that the federal/
DLSE standard was the correct one.
Specifically, the court of appeal, relying on the federal
standard, concluded that:
The rule in California is that an employer is
entitled to use the nearest-tenth rounding
policy if the rounding policy is fair and
neutral on its face and ‘‘it is used in such a
manner that it will not result, over a period
of time, in failure to compensate the
employees properly for all the time they have
actually worked.’’8
Thus, the court determined that time-rounding is
lawful in California, so long as it is facially neutral
and, ‘‘on average, favors neither overpayment nor
underpayment.’’9 The court then went on to cite
numerous federal cases that granted employers
summary judgment when the employer was able to
prove that the rounding system did not ‘‘systematically
undercompensate employees.’’10 The court observed
that a classic example of such an unlawful system is
7
Given the procedural posture, the court of appeal did not
decide whether See’s Candy’s specific time-rounding policy
was lawful, or opine on whether See’s Candy would be
successful on its own motion for summary judgment.
8
See’s Candy, 210 Cal. App. 4th at 907 (quoting 29 C.F.R.
§ 785.48(b); DLSE Manual, §§ 47.1, 47.2).
9
See’s Candy, 210 Cal. App. 4th at 901.
16
January 2013
where the employer’s time keeping system only
rounds down.11
In determining the appropriate standard to apply, the
court was mindful that if California were held to a
different standard, it would create a serious imposition
on California employers who have relied on the federal/
DLSE standard for 50 years. The court seems to have
agreed with the several amici curiae employer groups
warning that if the court departed from the federal standard, it would preclude California employers from
maintaining rounding practices that are available to
employers throughout the rest of the United States.12
In adopting the federal standard in California, the court
shot down Silva’s argument that Labor Code section 204,
which requires employers to pay ‘‘all wages’’ (with
certain exceptions) twice in each calendar month, was
inconsistent with time-rounding. In finding Silva’s argument ‘‘unpersuasive under the plain language of [S]ection
204,’’ the court observed that Section 204 imposes an
obligation of timely payment of wages, and ‘‘does not
address the measurement issue.’’13
The court went on to apply the adopted federal/DLSE to
the facts at issue in order to determine whether Silva
was entitled to summary adjudication on See’s Candy’s
affirmative defenses relating to time-rounding.
Battle of the Experts
See’s Candy’s expert, Dr. Ali Saad, analyzed the class
data and determined that the rounding policy was
‘‘both mathematically and empirically unbiased.’’14 In
fact, according to Dr. Saad, rounding resulted in a
net gain for the class members as a whole and ‘‘did not
negatively impact employees’ overtime compensation,’’
even when calculated under California’s overtime rules.15
Dr. Saad foud that 33 percent of the class members had a
net loss of time, while 59 percent had a net gain.
According to Dr. Saad, Silva herself was a perfect
example because she received a net benefit of five
seconds per shift due to the nearest-tenth rounding rule.
Silva also presented testimony from her expert, Dr.
Thompson, whose conclusions were worlds apart
from Dr. Saad’s. Dr. Thompson concluded that the
employees lost a total of $1.4 million over the class
period because of rounding.
10
210 Cal. App. 4th at 902 (citing Alonzo v. Maximus,
Inc., 832 F. Supp. 2d 1122, 1126–27 (C.D. Cal. 2011);
Eyles v. Uline, Inc. No. 4:08-CV-577-A, 2009 U.S. Dist.
LEXIS 81029 (N.D. Tex., Sept. 4, 2009); Austin v.
Amazon.Com, Inc., No. C09-1679JLR, 2010 U.S. Dist.
LEXIS 45623 (W.D. Wn., May 10, 2010); Chao v. Self
Pride, Inc., No. Civ. RDB 03-3409; 2005 U.S. Dist. LEXIS
11653 (D. Md., June 14, 2005)).
11
12
13
14
15
The critical difference between the expert’s conclusions
resulted from the way they treated the time during See’s
Candy’s grace period that allowed employees to voluntarily punch in up to 10 minutes before or 10 minutes
after their scheduled start time, but did not permit them
to work during the grace period before their shift
started. In other words, time-punches made during the
grace period showed when the employee punched in or
out, but they did not show the beginning or end of the
employee’s compensable work time. As the court
noted, ‘‘[w]ith respect to those time punches, the scheduled time - and not the punch time - determines the
employee’s pay because the employer assumes (based
on its formal policy) that the employee is not working
and not under its control during this time.’’16
Critically, See’s Candy presented evidence that its
grace period policy prohibited employees from
working during the grace period and, if an employee
did work, the manager made a time keeping adjustment. See’s Candy also submitted declarations from
employees stating that they engaged in personal activities during the grace period and did not work.
Meanwhile, Silva’s expert merely assumed that every
employee who punched in or out during the grace
period was working, but was not paid for that time.
The court found that this assumption was improper
and, therefore, Dr. Thompson’s data and conclusions
were ‘‘invalid.’’17
The court’s dismissal of Dr. Thompson’s conclusions
paralleled a recent decision of the United States District
Court of the Central District of California, Alonzo v.
Maximus, Inc., which was cited with approval by the
See’s Candy Court.18 Like Silva, the plaintiffs in Alonzo
presented statistical evidence that the rounding policy
resulted in more minutes being subtracted from
employees than added. However, the employees could
not avoid summary judgment because they wrongly
assumed that every minute spent at work was compensable working time. The Alonzo Court held that in the
absence of evidence showing that employees ‘‘were
engaged in work during any of the on-premises time,’’
the time-punch data was ‘‘simply immaterial to whether
[the employer’s] rounding policy systematically undercompensated Plaintiffs.’’19
16
17
18
210 Cal. App. 4th at 908 (citing Alonzo 832 F. Supp. 2d
at 1128).
19
Alonzo v. Maximus, Inc., 832 F. Supp. 2d 1122, 112629 (C.D. Cal. 2011).
17
January 2013
Based primarily on its review of the parties’ expert
analysis of the time-punch data, the court ultimately
found that Silva did not meet her burden of showing
that See’s Candy’s rounding policy failed to compensate
employees over time. Accordingly, the trial court’s
summary adjudication of those issues was inappropriate.
Practical Implications
The decision in See’s Candy is important for California
employers who use time-rounding procedures.
Employers need not worry about claims based on a
theory that time-rounding is per se unlawful in California. Therefore, time-rounding remains an efficient
approach to timekeeping if fairly administered. But
employers should remain cautious given the unanswered questions regarding how California courts will
determine if time-rounding is neutral in practice.
Although the See’s Candy Court did not address the
issue directly, it left open the possibility that a timerounding claim could survive for employees who lost
time during the class period, even if an employer can
show that its rounding policy is neutral over time. If
courts were to adopt this criteria, employees who did
not come out ahead during the class period could assert
claims even when a rounding policy resulted in a net
gain for the majority of employees.
Not only did the See’s Candy Court fail to address the
issue of class members who suffered a net loss during
the class period, the decision leaves unanswered the
time period under examination. Should courts focus
on individual shifts, pay periods, years, or perhaps the
entire class period? Does the total dollar amount gained
or lost matter? Or should courts look at the percentage
of time punches that round in the employee’s favor?
Depending on the time period and what aspect of
time-rounding one looks at, the data could reveal
either a neutral system or a biased one. All of these
questions will have to be worked out by the courts as
parties focus on different criteria to evidence a neutral
(or biased) timekeeping system.
So what are employers to do? First, timekeeping
systems that only round in one direction to the detriment of employees are unlawful and should be
replaced. Second, employers should perform their
own analysis through counsel to make sure that ‘‘over
a period of time’’ their timekeeping system is not
resulting in the underpayment of wages. Third,
employers should allow employees to review their
own time entries and request time edits if they feel
they are not being compensated for all of their
working time.
Additionally, employers can help decrease the likelihood that a time-rounding class will be certified in the
first place if they combine their rounding system with a
grace period policy that prohibits employees from
working before or after their scheduled shift without
the approval of a manager. During this grace period,
employees must be able to engage in personal activities
and leave the premises if they so choose. If an employee
performs work during the grace period, he or she must
be able to make a time edit so that they are paid for
their work.
Why is a grace period so important? In both Alonzo and
See’s Candy, the plaintiffs had to present evidence
addressing whether employees were working during
the grace period. Thus, courts must investigate the
‘‘actual facts’’ as to whether employees were working
or otherwise under the employer’s control during
the grace period. Under Alonzo, a plaintiff bears the
burden of bringing forth such facts.20
Moreover, two DLSE provisions allow employers
and, hence, courts, to ‘‘disregard’’ the alleged ‘‘lost
time’’ that plaintiffs often point to in support of their
rounding claims:
In recording working time, insubstantial or
insignificant periods of time beyond the scheduled, working hours which cannot as a
practical administrative matter be precisely
recorded for payroll purposes, may be
disregarded.21
***
Time clocks are not required but in those cases
where time clocks are used, employees who
18
January 2013
voluntarily come in before their regular
starting time or remain after their closing
time, do not have to be paid for such periods
provided, of course, that they do not engage in
any work. Actual facts must be investigated, of
course, however, unless the employee is either
performing work during the period or has been
directed by the employer to be on the premises,
the early or late clock punching may be
disregarded.22
Not only will the grace period make it more unlikely
that the rounding policy will lead to employees being
undercompensated, the need for a case-by-case investigation makes class certification more difficult from the
outset. Given the costs of defending such claims once a
class is certified, employers are well-advised to
combine their rounding policy with a well-drafted
grace period policy that instructs employees not
to work outside of their scheduled shift without prior
approval.
Matthew Wroblewski represents employers and managers against lawsuits and administrative claims
involving discrimination, wrongful termination, harassment, defamation, breach of contract and violations of
wage-and-hour laws. He also advises employers on
employment law updates and trains human resources
professionals and supervisors regarding employment
law. In addition, Mr. Wroblewski counsels employers
on a wide variety of matters, including employee discipline and termination, wage and hour issues, disability
accommodations, family and medical leave issues, and
investigations of harassment and discrimination.
20
See’s Candy also mentions this factual issue. See’s
Candy, 210 Cal. App. 4th at 909 (‘‘To the extent an employee
claims that he or she was not properly paid under this grace
period rule, this claim raises factual questions involving
whether the employee was in fact working and/or whether
the employee was under the employer’s control during the
grace period.’’).
21
DLSE Manual, supra note 4 at § 47.2.1.1.
22
DLSE Manual, supra note 4 at § 47.2.2.1.
19
January 2013
DFEH Update
By Phyllis W. Cheng
DFEH Cloud-Based Case Management System
Deployment
Employment Discrimination-Disability: $450,000 and
affirmative relief.
In June 2012, the Department of Fair Employment and
Housing (‘‘DFEH’’ or ‘‘Department’’) deployed its
cloud-based Case Management System, which is a customized version of HoudiniESQ, to maximize efficiency
and effectiveness in its operations. Several agencies are
interested in following the DFEH’s lead, including the
Division of Labor Standards Enforcement (‘‘DLSE’’),
Fair Political Practice Commission, United States Equal
Employment Opportunity Commission (‘‘EEOC’’), and
United States Department of Housing and Urban Development (‘‘HUD’’). The DFEH has trained its entire staff
and many stakeholders, and has made an instructional
video for anyone requiring a right-to-sue notice on the
system. In October 2012, DFEH Director Phyllis Cheng
appeared on a video chat on Google Hangout with
Government Technology Magazine regarding recent its
HoudinEsq and webinar innovations.1
DFEH v. Auburn Max Enterprises dba Garabees
(Navarro), DFEH Case No. E200910-H-0770-00-pe.
Employment- Disability: $136,809 plus front pay and
affirmative relief.
DFEH Class Action
DFEH v. Valley Christian Schools (O’Connell),
DFEH Case No. E-201011-G-0374-00-sev. Employment Discrimination-Pregnancy & Marital Status:
$51,730 and affirmative relief.
DFEH v. Law School Admission Council, No. 3:12cv-01830-EMC (N.D. Cal. Oct. 20, 2012).
On October 20, 2012, Judge Edward Chen, United
States District Court for the Northern District of California, granted a petition allowing the United States
Department of Justice (‘‘DOJ’’) and the Legal Aid
Society-Employment Law Center (LAS-ELC) to intervene in an accessibility in testing case brought under
the Unruh Civil Rights Act2 and the Americans with
Disabilities Act3 (‘‘ADA’’), making the DFEH’s case
a national class action beyond California. The Judge
expects the DFEH, DOJ and LAS-ELC to work together to keep the case efficient and avoid duplication.
The next appearance will be the case management
conference on December 7, 2012.
Recent DFEH Settlements
DFEH v. Penske Logistics, LLC (Walter), Fresno
County Superior Court, Case No. 10CEG03017.
1
Available at http://www.youtube.com/watch?v=df
Gjp1EFG6Q&feature=plcp.
2
Cal. Civ. Code, § 51(a).
3
42 U.S.C. § 12101 et seq.
DFEH v. House of Shalom (Miles, Housing Rights
Center), DFEH Case No. H-201011-W-0106-00/-01/
02/-03. Housing Discrimination-Religion: $122,881
and affirmative relief.
DFEH v. Steinberg (Cooney, Marriott), DFEH Case
Nos. H-201011-W-0057-00r, H-201011-W-0058-00r.
Housing Discrimination-Familial Status: $96,520 and
affirmative relief.
DFEH v. AT&T (Pacific Bell, Graves), Contra Costa
County Superior Court, Case No. CIVMSC11-02149.
affirmative relief.
DFEH v. Fresh Meat Market and Kenneth Siu (Lee),
San Francisco County Superior Court, Case No. CGC11-512631. Employment Discrimination-Sex Harassment: $40,000 and affirmative relief.
DFEH v. Cypress Meadows Assisted Living (Chavez),
DFEH Case No. E-2009-10-E-758-00e. Employment
Discrimination-Retaliation: $40,000 and affirmative
relief.
DFEH v. Pacific West Loan, Inc. (Valencia), Santa
Clara County Superior Court, Case No. 110CV175515.
affirmative relief.
DFEH Clinical Programs
The DFEH has established five clinical partnerships
with universities and colleges to train a new generation
of civil rights attorneys and investigators. Working
under DFEH supervision, law school and college
students are given hands-on experience in the prosecutions and investigation of civil rights complaints filed
by the public. The Department’s clinical partnerships
include the University of California, Irvine and Davis
Schools of Law, California State University at Bakersfield, and Rio Hondo College. The fifth and latest
DFEH-College of the Canyons Civil Rights Clinic
was launched in Valencia in October 2012. This is the
first completely rent-free campus-level clinical program
sufficient to support a DFEH District Office.
DFEH Civil Rights Graduate Fellows
Committed to a pipeline program for law students interested in public service, the DFEH launched its first class
of Civil Rights Graduate Fellows in Fall 2012. The
fellows are salaried State employees working for oneyear terms. Upon passage of the California Bar, they
can apply for State attorney vacancies. The six fellows
currently awaiting Bar results are graduates of U.C.
Irvine and Davis Schools of Law. They are presently
engaged in administrative and civil litigation, and
mediation under close DFEH supervision.
DFEH Webinars
After launching its twice monthly MCLE/HRCI
webinars in May 2012, the Department has quickly
quadrupled its webinar attendance to 300-400 participants.4 Revenues vary depending on the number of
government participants, who receive free training. To
date the Department estimates having trained over
10,000 State employees alone, saving the State over
$400,000 in training costs.
20
January 2013
New DFEH YouTube Video
The Department posted on YouTube a new instructional video entitled ‘‘DFEH Intake to Decision.’’
The seven-part video presents a typical sequence of
the Department’s administrative process for handling an employment discrimination complaint. Based
on a fact pattern fictionalized from an actual case
of perceived disability discrimination, the sevenpart series features: 1) initial contact; 2) intake interview; 3) investigation; 4) conciliation or mediation; 5)
accusation; 6) hearing; and 7) conclusion or decision.5
Phyllis Cheng is the Director of the Department of Fair
Employment and Housing, a role she has held since
2008. Prior to that, Ms. Cheng served as Of Counsel
for Littler Mendelson P.C., a research attorney for
Associate Justice Laurie D. Zelon, Deputy Attorney
General in the Civil Rights Enforcement Section of
the California Department of Justice, an arbitrator, a
mediator, a settlement officer, an appellate counsel,
Commissioner and Vice Chair of the Fair Employment
and Housing Commission, and a private practitioner,
among other roles. Ms. Cheng recently joined the
Editorial Board of the Bulletin.
4
Register for DFEH webinars at http://www.dfeh.ca.gov/
Webinar_Calendar.htm.
5
See http://www.youtube.com/user/CalifDFEH.
21
January 2013
CASE NOTES
ARBITRATION
Gorlach v. The Sports Club Company, et al., No.
B233672, Calif. App., 2nd Dist., Div. 4; 2012 Cal.
App. LEXIS 1074 (Oct. 16, 2012).
An arbitration agreement may not be enforced in a case
where the employee failed to sign the agreement, a
California appellate panel ruled Oct. 16, upholding a
trial court decision.
Susan Gorlach worked as the human resources director
for The Sports Club Co. Before 2010, there were no
arbitration agreements between Sports Club and its
employees. In 2010, Sports Club revised its ‘‘Team
Member Handbook’’ to include an arbitration agreement. Gorlach was tasked with presenting the new
handbook to all employees and collecting signatures
in which they agreed to the arbitration agreement.
On June 30, 2010, Gorlach told Chief Operating Officer
April Morgan that all corporate employees except four
had signed the arbitration agreement. However,
Gorlach allegedly did not identify herself as one of
the employees who had not signed, instead leading
Sports Club executives to believe that she had signed
the arbitration agreement.
On July 30, 2010, Gorlach sent an email to Sports Club
executives in which she stated that there was a need to
‘‘continue to think about how we’re going to proceed
when an active team member does not sign the Arbitration Agreement.’’ Gorlach resigned from her position
on Aug. 6, 2010. At the time of her resignation, she had
not signed the arbitration agreement.
Gorlach sued Sports Club and five of its officers on Jan.
7, 2011, in the Los Angeles County Superior Court. She
alleged causes of action for wrongful termination, retaliation, paramour sexual harassment, intentional
infliction of emotional distress, defamation, breach of
contract and negligence. Sports Club answered the
complaint on Feb. 23, 2011, denying the allegations
and asserting 26 affirmative defenses. On April 15,
2011, Sports Club moved to compel arbitration. It
argued that although Gorlach did not sign the arbitration
agreement, she assented to it by her continued employment with Sports Club.
The Superior Court denied the motion to compel on
June 1, 2011. Sports Club appealed.
The Second District Court of Appeal, Division Four,
panel affirmed. ‘‘In the present case, the trial court
concluded that there was no evidence that Sports Club
relied to its detriment on Gorlach’s implied representations that she had signed the arbitration agreement, and
we agree. All of the evidence before the trial court
suggested that when Gorlach resigned, Sports Club
was still ‘rolling out’ its new handbook and arbitration
agreement—that is, it had not yet completed the process
of having its employees sign the arbitration agreement.
Moreover, although Sports Club had advised its
employees, including Gorlach, that signing the arbitration agreement was a ‘condition of employment,’ there
is no evidence that, as of the date of Gorlach’s resignation, Sports Club had decided what it would do if an
employee refused to sign the arbitration agreement or
had terminated any employee for failing to sign the
agreement. Accordingly, there was no evidence from
which the trial court could have concluded that had
Sports Club known Gorlach had not signed the arbitration agreement, it would have terminated her prior to
August 6, 2010,’’ Justice Steven C. Suzukawa wrote for
the panel.1
In addition, the appellate panel rejected Sports Club’s
contention that there was an implied-in-fact agreement
to arbitrate. ‘‘[T]he employee handbook did not purport
unilaterally to impose an arbitration agreement on its
employees; instead, it urged employees to agree to
submit to arbitration and to sign a representation that
‘I have entered into the Agreement voluntarily.’ Under
these circumstances, the trial court properly inferred
from Gorlach’s election not to sign the arbitration
agreement that she did not intend to be bound by it,’’
Justice Suzukawa wrote.2
References. See, e.g., Wilcox, California Employment
Law, Ch. 90, ‘‘Arbitration of Employment Disputes’’
(Matthew Bender).
ERISA
David Day v. AT&T Disability Income Plan, No. 1016479, 9th Cir., 2012 U.S. App. LEXIS 22595 (Nov. 1,
2012).
1
209 Cal. App. 4th 1497, 1506.
2
209 Cal App. 4th 1497, 1511.
The Ninth Circuit affirmed a ruling that the administrator of an ERISA plan did not abuse its discretion
by deeming beneficiary’s rollover of his retirement
benefits into an IRA the equivalent of a distribution
and reducing his long-term disability benefits by the
amount of the rollover.
David Day, who began working for Pacific Bell Telephone Company in 2000, participated in the pension
benefit and disability income plans offered by its
parent company, AT&T. He became disabled in 2005
and began receiving long-term disability (LTD)
payments, and he left the company that same year.
That October, he elected to roll his pension benefits
into an IRA, so the plan’s administrator, Sedgwick
Claims Management, Inc., issued him a check payable
to the trustee of the IRA. Nearly three years later, the
administrator reduced Day’s LTD benefits based on the
plan documents, which provided that LTD benefits
would be ‘‘reduced by . . . pension benefits you may
receive from any [AT&T] company pension plan.’’
Day contested the reduction, arguing that he had not
‘‘received’’ or been ‘‘actually paid’’ the benefits.
Day sued the plan, but the district court held that it
must defer to Sedgwick, because ‘‘the Plan language
unambiguously imparts full discretionary authority
on the Plan Administrator to interpret the provisions
of the Plan and to make eligibility determinations as
needed.’’3 Because Sedgwick’s interpretation of the
plan was not unreasonable, the court reasoned, its decision should be sustained. Therefore, the district court
granted the plan’s motion for summary judgment.
Day appealed to the Ninth Circuit, which affirmed. It
rejected Day’s claims that Sedgwick was biased and
engaged in procedural misconduct, and that its
reasons for denying his claim were inconsistent.
Although those claims, if true, would warrant less
deference, the record belied Day’s contentions. As the
court noted, ‘‘[t]he Plan is funded by AT&T and not
Sedgwick, and administered by Sedgwick and not
AT&T.’’ Furthermore, ‘‘[j]ust because Sedgwick
consulted with AT&T in responding to Day’s concerns
about his . . . benefits . . . does not show that AT&T had
any influence over Sedgwick’s decision making process
in that regard.’’4 The so-called inconsistencies in Sedgwick’s reasoning were not inconsistent at all, the court
found. Instead, Sedgwick sent one letter to Day stating
that his benefits would be reduced, and sent a second
elaborating on the reasons it had initially cited because
3
2012 U.S. App. LEXIS 22595, at *5.
4
Id., at *7-8.
22
January 2013
he protested the reduction in benefits. Therefore, the
abuse of discretion standard of review was appropriate.
The Ninth Circuit also found that Sedgwick’s interpretation of the plan was reasonable. It looked at the
provisions of the plan language on which Sedgwick
had relied, and it ruled that, based on the applicable
case law, the election to roll the pension benefits into
an IRA did constitute a receipt of the funds. Although
they were deposited into an IRA, meaning Day had not
taken possession of them, he did have control over the
funds once they were in the IRA. Therefore, Sedgwick
was reasonable in concluding that the rollover was a
distribution of funds. The key to this ruling, the court
explained, was the fact that the plan language conferred
discretion on the administrator.
Law, § 41.67, ‘‘Retirement or Pension Plans and Benefits’’ (Matthew Bender).
JURISDICTION
Mary McCormack, et al. v. Safeway Stores, Inc., No.
12-4377, N.D. Calif., 2012 U.S. Dist. LEXIS 168965
(November 28, 2012).
A federal court granted a defendant’s motion to transfer
venue, but not its motion to dismiss, based on the factors
to be considered in choosing the proper forum for a
Title VII retaliation claim.
On August 20, 2012, Mary McCormack and her
daughter, Samantha Stabencheck, filed a complaint in
the U.S. District Court for the Northern District of California against their former employer, Safeway Stores,
Inc., alleging retaliation related to their employment in
violation of Title VII of the Civil Rights Act of 1964.
They both resigned from their positions as cashiers at
the Safeway store in Scottsdale, Arizona on April 13,
2011 based on accusations that they were permitting
customers to use the store’s discount card instead of
their own. The accusations were made two weeks
after McCormack reported that a Safeway manager
had sexually assaulted Stabencheck, who was 17. In
the complaint, McCormack alleged that Safeway threatened her with discipline in retaliation for the report,
and that Safeway retaliated against them both for participated in the store’s internal investigation of the report.
Safeway filed a motion to dismiss the complaint or, in
the alternative, to transfer venue. The arguments
offered to support each form of relief are similar—
Safeway and all potential witnesses and relevant
documents are located in Arizona, and all events relevant to the lawsuit, including plaintiffs’ resignation,
occurred there.
Plaintiffs countered that their residence and Safeway’s
corporate headquarters are both in Northern California,
and that records related to their claims, employees’ use
of the discount cards, and records of any prior allegations against the Safeway manager would also be
located there.
The court concluded that venue was improper in
Arizona. Although venue might be proper in California
under the general federal rules, 28 U.S.C. §§ 1391(b)(1)
and (2), ‘‘Title VII claims are governed by specialized
venue rules. Causes of action arising under Title VII are
subject to 42 U.S.C. § 2000e-5(f)(3),’’ which permits
the filing of lawsuits ‘‘‘in any judicial district in the
State in which the unlawful employment practice is
alleged to have been committed,’ as well as: in the
district where employment records are kept; in the
district where the plaintiff would have worked but for
the alleged unlawful practice; and if those provisions
fail to provide a forum, in the district where the defendant keeps its principal office.’’5 The plaintiffs failed
to cite sufficient facts to show a significant connection to California under this standard, so venue was
improper, the court explained.
This ruling, however, was not fatal to plaintiffs’ claims,
the court stated. ‘‘Upon conclusion that transfer is
improper, the Court has discretion to dismiss the case
or transfer the case in the interests of justice to an
appropriate jurisdiction,’’6 and ‘‘[t]he decision
between dismissal or transfer to a proper venue is a
matter within the sound discretion of the district
court.’’7 Based on its findings that all of the events
underlying the allegations occurred in Arizona and
most of the documentary evidence and witnesses
would be there, the court found that the District of
Arizona was the appropriate forum. It deemed that
forum the most convenient for the non-party witnesses
who would most likely be necessary, given Safeway’s
identification of at least 15 people it knew to have relevant information, including the man accused of
assaulting Stabencheck.
‘‘[A]lthough Plaintiffs’ choice of forum ‘should be
given weight when deciding whether to grant a
motion to change venue,’ a fundamental principle
underpinning the . . . analysis is that litigation should
5
2012 U.S. Dist. LEXIS 168965, at *6 (quoting 42 U.S.C.
§ 2000e-5(f)(3)) (citing Johnson v. Payless Drug Stores Nw.,
950 F.2d 586, 587 (9th Cir. 1991)).
6
7
23
January 2013
proceed ‘in that place where the case finds its center
of gravity.’ ’’8
Therefore, the court denied the motion to dismiss, but
granted the motion to transfer venue.
Law, § 40.20, ‘‘Title VII of Civil Rights Act of 1964’’
(Matthew Bender).
LABOR
Nasaky, Inc. D/B/A Yuba Skilled Nursing Center, et
al. and SEIU United Healthcare Workers-West, No.
20-CA-068854, NLRB (Sept. 19, 2012).
The National Labor Relations Board adopted the
recommendations of an administrative law judge
(ALJ) and ordered the owners of a California nursing
facility to recognize the SEIU United Healthcare
Workers-West as its employees’ union representative
and hire 50 employees they unlawfully failed to hire
after assuming operations of the facility in September
2011.
Prior to Sept. 1, 2011, the Yuba Skilled Nursing Center
in Yuba City, Calif., was owned by Nazareth Enterprises. Since at least 2006, the union represented a
large group of employees there. A collective bargaining
agreement (CBA) was established in 2006. Although
the CBA expired on June 30, 2009, its terms remained
in effect.
Preema Thekkek and her husband own Nasaky Inc.
They decided to buy the Yuba City facility, making it
the 11th nursing facility they owned. At the time of the
various acquisitions, four of the 11 facilities were
unionized. She collectively bargained with the
employees at three of them.
After agreeing to buy the facility in May 2011, Thekkek
advertised for new workers to staff it. About the same
time, she met with existing employees to let them know
that they would have to reapply to have a chance of
keeping their jobs under the new regime. Applications
were left for employees who wished to do so. Applicants did not officially learn of their acceptance or
rejection until Aug. 31. The next day, Nasaky
assumed control of the facility and the new staff of 90
employees, including 40 former employees, took over.
Prior to the changeover, the union sent a letter dated
July 18 demanding recognition and bargaining from
Nasaky. In a Sept. 1 letter, Nasaky informed the
Id., at *8 (citing 28 U.S.C. § 1406(a)).
Id. (citing Cook v. Fox, 537 F.2d 370, 371 (9th Cir.
1976)).
8
Id., at *11 (quoting Lewis v. ACB Bus. Servs., Inc., 135
F.3d 389, 413 (6th Cir. 1998)).
union that it would not honor the CBA, that it did not
accept any of the predecessor’s terms and conditions
of employment and that the union would not be
allowed on the premises. The union again demanded
recognition and bargaining in an Oct. 12 letter.
When there was no response to the second letter, the
union filed charges with the NLRB.
ALJ Gerald M. Etchingham noted in his recommendation, which was adopted by the NLRB, that there was ‘‘a
striking disparity between the qualifications of many
inside applicants who were rejected and the newly
hired outside applicants,’’ especially when it came to
experience.9 ‘‘Whereas twelve insider CNAs possessed
an average of roughly 8.5 years of experience, ten out
of twelve outside applicants had no experience
whatsoever. . . . Indeed, five of the outsiders had not
received their CNA certifications at the time they
were hired,’’ ALJ Etchingham noted.10
In addition, the ALJ noted that he placed very little
weight in testimony by Thekkek or her employee, Trilochan Singh. ‘‘At numerous points in her testimony, she
offered answers that were either extremely incredible or
demonstrably false,’’ the ALJ noted, adding that Singh
gave evasive testimony at least twice.11
‘‘If any employer is found to have discriminated in
hiring, the Board assumes that, but for the unlawful
discrimination, the successor would have hired the
predecessor employees in their unit positions. . . .
More to the point, it also assumes that the union
would have retained its majority status. . . . Consequently, if in the meantime the employer has refused
to recognize and bargain with the union, it will be held
to have violated Section 8(a)(5) and (1) of the Act.
Under these circumstances, the successor is also disqualified from setting initial terms and conditions of
employment,’’ ALJ Etchingham wrote.12
As a result of the NLRB’s order, Nasaky must immediately recognize and bargain with the union and
commence the process of hiring the dormer employees
and making them whole. According to the NLRB, the
amount of back pay and interest is expected to be
approximately $1.25 million.
References. See, e.g., Lareau, National Labor Relations Act: Law and Practice, § 12.05, ‘‘The Obligation
9
2012 NLRB Lexis 517, at *8.
10
Id.
11
Id. at 15.
12
Id. at 21.
24
January 2013
to Negotiate a Collective Bargaining Agreement’’
(Matthew Bender).
Joseph F. Frankl, Regional Director of Region 20 of
the National Labor Relations Board, for an on behalf
of the National Labor Relations Board, et al. v. HTH
Corporation, d/b/a Pacific Beach Hotel, et al., 693
F.3d 1051 (9th Cir. 2012), 2012 U.S. App. LEXIS
18744 (September 6, 2012).
On September 6, the Ninth Circuit affirmed, for the
second time, that a federal district court had properly
granted the National Labor Relations Board’s application for an injunction while it investigated unfair labor
practice charges against an employer that were filed
because that same employer had failed to comply with
the terms of an earlier injunction, forbidding it to
engage in specific conduct that constituted unfair
labor practice charges.
HTH Corporation operates the Pacific Beach Hotel in
Honolulu, and its employees are represented by the
International Longshore and Warehouse Union, Local
142. The National Labor Relations Board found in 2011
that the hotel had violated the National Labor Relations
Act (‘‘NLRA’’) by committing various unfair labor
practices between August 2005 and May 2008. Prior
to making that decision, the board had granted the
union’s request for an injunction directing the hotel to
cease committing those unfair labor practices pending
the board’s final decision. The hotel continued to
engage in the enjoined conduct, which prompted the
union to seek another injunction in the U.S. District
Court for the District of Hawaii, which was granted.
The hotel appealed the injunction to the U.S. Court of
Appeals for the 9th Circuit, and the board cross-filed for
enforcement of its 2011 order.
The union’s organizing campaign began over ten years
ago, and the first board election was held in July 2002.
After the board overturned the first election based on
findings that the hotel had unlawfully coerced
employees by interrogating them about union activity,
along with other objectionable conduct, and ordered a
second election in 2005. The board found that the hotel
had continued its coercive behavior, but ruled that if the
union won the election, the results would stand. The
union won by a single vote.
Beginning in 2006, the parties met 37 times to negotiate
a collective bargaining agreement (CBA) and tentatively agreed to 170 provisions, but the hotel
demanded a recognition clause that reserved to it the
exclusive, unilateral right to make arbitrary changes to
any condition of employment, a management’s rights
clause authorizing it to ‘‘manage its workforce at will,’’
with regard to hiring, firing, categorizing, and disciplining the employees, and a grievance and arbitration
procedure leaving the final determination of grievances
to management.13 The board determined that this would
leave the union with no ability to effectively represent
the bargaining unit.
In December 2006, HTH assigned the management of
the hotel to Pacific Beach Hotel Management (PBHM)
and told the union to bargain with PBHM, but did not
tell the union that any agreement longer than a year
would be rejected unless it authorized HTH to terminate
it with 30 days’ notice and would cost less than
$350,000. When PBHM and the union were close to
executing an agreement, PBHM asked HTH to disclose
that it had the final say and to approve the CBA, but
HTH fired PBHM. There were no further negotiations
and HTH withdrew recognition from the union on
December 1, 2007. It claimed the union lacked majority
support, and began unilaterally changing the terms and
conditions of employment by increasing the workload,
requiring employees to reapply for their jobs, and
denying the applications of seven employees who had
been on the union’s bargaining application.
The union increased its protest against the hotel’s
actions through boycotts and demonstrations and by
hiring one of the seven employees who had not been
rehired and employing him as a full-time organizer. The
hotel encouraged employees to report their dissatisfaction with the union and met with them to explain why
the union would be bad for them.
The union filed several unfair labor practice charges, and
the administrative law judge (ALJ) found for the union.
HTH appealed, and while the appeal was pending, the
board’s regional director applied for a preliminary
injunction under Section 10(j) of the NLRA in the
District Court, which was granted. The hotel was
enjoined from making any changes to the terms and
conditions of employment and ordered to meet the
union, resume negotiations, and rehire the seven terminated employees. The Ninth Circuit affirmed the
injunction and the board adopted the ALJ’s findings.
HTH disregarded the terms of the injunction, firing one
of the rehired employees after three months, continuing
to make unilateral changes to the term and conditions of
employment, and refusing to turn over information to
the union that was necessary for negotiations. Again,
the union filed unfair labor practice charges, and the
13
693 F.3d 1051, 1056.
25
January 2013
ALJ found for the union, ordering the same remedies.
The board upheld that order as well, and it is ‘‘materially similar to the 2009 ALJ order that the Board upheld
in 2011 that [the Ninth Circuit is] now asked by the
Board to enforce.’’
The regional director sought another injunction in the
District Court, which was granted, and the hotel
appealed to the Ninth Circuit, which consolidated the
two cases for purposes of resolution.
With regard to the board’s 2011 findings on the unfair
labor practice charges, the Ninth Circuit enforced the
Board’s order. It found that ‘‘substantial evidence
supports the Board’s finding that HTH adhere to
unreasonable positions on key issues during the
negotiations.’’14 Because HTH presented no evidence
to the contrary, the Ninth Circuit was required to uphold
the board’s ruling.
In addition, the Ninth Circuit rejected HTH’s contention that it had not committed any unfair labor practices
because it believed, as of October 2007, that the union
had lost majority support. The court explained, ‘‘[a]n
employer cannot refuse to recognize a union as the
elected representative of its employees on the basis of
a subjective belief the union has lost support. The last
time HTH was before this court, we expressly held that
an employer may withdraw recognition from a union
only when it has ‘objective evidence.’ ’’15 As the
company failed to present any such evidence, the
Ninth Circuit also upheld this portion of the board’s
order.
Finally, the court found that the record supported the
board’s finding of anti-union animus in its decision not
to ‘‘rehire’’ seven employees who had served on the
union’s negotiating committee.
As to the second injunction granted by the District
Court, the Ninth Circuit affirmed, holding that the
District Court had not abused its discretion by finding
that the board’s regional director was likely to succeed
on the merits in the underlying labor practice proceedings, or that the injunction was necessary to prevent
irreparable harm to union representation, that the
‘‘balance of hardships weighed in favor of granting an
injunction,’’ and that injunctive relief would serve the
public interest. ‘‘We have repeatedly held the public
interest is served by ensuring that an unfair labor practice will not continue while the Board takes time to
14
Id. at 1059.
15
Id. at 1060.
investigate and adjudicate the charge,’’ the court
explained.16
References. See, e.g., Lareau, National Labor Relations Act: Law and Practice, Ch. 5, ‘‘Interference
with, Restraint or Coercion of Employee Rights’’
(Matthew Bender).
MEDICAL LEAVE
Avery Richey v. AutoNation, Inc., et al., No. B234711,
Cal. App. 2nd, 2012 Cal App. LEXIS 1177 (November 13,
2012).
A California court of appeal held that an arbitrator
had committed clear error in accepting an employer’s
honest belief defense, where the employer had fired an
employee for abusing CFRA leave without conducting
an investigation and developing the facts to show that
the employee had actually engaged in misconduct.
Avery Richey was hired by Power Toyota of Cerritos in
2004 to sell cars, and was promoted to assistant sales
manager six months later based on his performance. In
2008, Richey opened a family seafood restaurant while
continuing to work full-time at the dealership. Although
other employees also had jobs or business ventures
outside the dealership, Richey was called in to a
meeting with management about ‘‘performance’’ and
‘‘attendance’’ issues. He filed a complaint as a result.
The following month, after Richey injured his back, his
doctor certified that he could not perform his duties at
the dealership, and he took leave under CFRA, which
was extended several times and scheduled to end on
May 28, 2008.
On April 11, 2008, a supervisor sent a letter to Richey
stating that company forbade employees from accepting
any kind of employment, even self-employment while
on CFRA leave. He ignored the letter, believing that the
policy did not apply to him because he owned the
restaurant. The dealership received information that
Richey was working at the restaurant, and several
supervisors visited the restaurant and reported that
they had seen Richey working there. He was fired on
May 1, 2008 for violating company policy.
Richey sued the dealership’s parent companies and
his direct supervisor (collectively, ‘‘AutoNation’’),
claiming that his rights under the CFRA had been
violated, but the dispute was diverted to arbitration
under the mandatory employment arbitration agreement
Richey had signed as a condition of his employment.
AutoNation moved to compel arbitration under the
16
Id. at 1066.
26
January 2013
mandatory employment arbitration agreement he had
signed as a condition of his employment. After an
eleven-day hearing, the arbitrator denied Richey’s
claims of racial discrimination, harassment, and
hostile work environment, and found that when an
employer ‘‘honestly believes’’ that an employee is
misusing leave, it ‘‘is not liable even if the employer
is mistaken.’’17
Although ‘‘‘the arbitrator readily concede[d] that the
company’s policy barring ‘employment with another
company’ was poorly written and accepted Richey’s
testimony he did not believe he was violating
company policy by managing his own restaurant,’’
accepted testimony from supervisors that ‘‘exceptions
to the rule had been made in the past,’’ and ‘‘acknowledged that ‘[r]easonable minds could differ as to
whether Richey’s duties at the restaurant were so ‘minimally physical’ they conformed with the doctor’s
certification of Richey’s bad back,’’ the issue was the
mindset of the supervisor who fired Richey, and an
‘‘honest belief’’ that he was abusing his leave was
sufficient to avoid liability.18
Richey appealed, arguing that the arbitrator’s ruling
constituted ‘‘an egregious error of law,’’ having improperly relied on federal law and disregarding California
case law providing that ‘‘a part-time job does not
conclusively establish an employee is ineligible
for CFRA leave.’’ He also argued that the arbitrator
had failed to make the proper factual findings to
support the decision. The trial court rejected these arguments, finding that the ‘‘good faith honest belief
defense’’ was appropriate. Richey appealed to the
Ninth Circuit.
On appeal, the court stated, ‘‘[a]lthough a court generally may not review an arbitrator’s decision for errors of
fact or law, an arbitrator exceeds his or her power
within the Code of Civil Procedure section 1286.2
and the award is appropriately vacated when it violates
an explicit legislative expression of public policy.’’19 In
addition, the court found that it could review the arbitrator’s decision de novo based on the allegation that
the arbitrator exceeded his or her powers in granting
relief. ‘‘To ensure full vindication of an employee’s
statutory rights in an arbitral forum, there must be
both a written decision and judicial review ‘sufficient
17
2012 Cal App. LEXIS 1177, at *7.
18
Id., at *8-9.
19
Id., at *15.
to ensure the arbitrators comply with the requirements
of the statute,’ ’’ the court explained.20
The ‘‘good faith honest belief defense’’ is incompatible
with this principle, according to the court. An employer
may not defend a lawsuit stemming from its discharge
of an employee for misuse of CFRA leave without
‘‘evidentiary facts sufficient to carry the burden of
proof imposed by CFRA.’’21 Moreover, ‘‘no California
case supports the arbitrator’s conclusion an employee
may rely solely on its subjective, albeit honest, belief an
employee has engaged in misconduct to justify its
denial of an employee’s CFRA rights.’’22 The arbitrator
improperly relied on a case in which ‘‘the employee
had, in fact, engage in activities incompatible with the
intended purpose for his leave . . . and had then lied
about his actions.’’23 In that case, facts were offered
to support the finding that the employee had abused
his leave and been properly terminated for doing so.
Based on Richey’s statutory rights under the CFRA
concerning the burden of proof, the court vacated the
award and remanded the case for further proceedings.
The arbitrator was required to resolve the dispute under
the governing law, and did not. ‘‘The arbitrator’s acceptance of the honest belief defense in this case had a . . .
preclusive effect on Richey’s ability to have his
nonwaivable CFRA claims heard on the merits.’’24
This defense ‘‘relieves the employer of any obligation
to establish its employee was, in fact, misusing authorized family leave and thus subverts the express statutory
guarantee of the right to reinstatement, as well as the
allocation of the burden of proof in an interference
case.’’ 25 The arbitrator also had an obligation to
consider Richey’s claim that the dealership had
applied its CFRA policies inconsistently.
Law, Ch. 8, ‘‘Leaves of Absence’’ (Matthew Bender).
MISCLASSIFICATION
Tracy Dawn Trauth, et al., v. Spearmint Rhino
Companies Worldwide, Inc., et al., No. 09-01316,
C.D. Calif.; 2012 U.S. Dist. LEXIS 144816 (October 5,
2012).
20
Id., at *16 (citing Pearson Dental Supplies, Inc. v.
Superior Court, 48 Cal. 4th 665 (2010)).
21
Id., at *43-44.
22
Id., at *44.
23
Id.
24
Id., at *50-51.
25
Id., at *51.
27
January 2013
A $12.97 million settlement of a lawsuit filed by exotic
dancers alleging that their employer misclassified them
as independent contractors received final approval Oct.
5 from a California federal judge.
Tracy Dawn Trauth and other dancers filed a class
action complaint in 2009 in the U.S. District Court for
the Central District of California against their
employer, Spearmint Rhino Companies Worldwide
Inc., and related parties, asserting that the defendants’
practice of misclassifying the dancers as independent
contractors deprived them of benefits that employees
are guaranteed under the Fair Labor Standards Act
(FLSA) and various state laws.
The dancers moved for final approval of a class action
settlement, attorney fees and incentive awards, which
Judge Virginia A. Phillips granted. The settlement
covers more than 11,000 dancers at adult entertainment
clubs operated by the defendants in California, Nevada,
Kentucky, Idaho, Texas and Florida.
Under the agreement, the defendants will pay a gross
settlement amount of $12.97 million to settle the plaintiffs’ claims. Also, within six months, the clubs will no
longer treat dancers as independent contractors or
lessees. Instead, the clubs will treat dancers as either
employees or owners, including shareholders, limited
partners and partners of any clubs in existence at the
time of the settlement. And in California, dancers will
no longer be charged stage fees for the privilege of
performing at a club.
After deducting from the gross settlement amount
the cost of administering the settlement, incentive
payments for class representatives and attorney fees
and costs, 50.14 percent of the remaining settlement
amount is allocated to California dancers, 42.69
percent to Nevada dancers and 7.16 percent to
Kentucky, Idaho, Texas and Florida dancers. Dancers
will have to submit claims in order to be paid from the
settlement, and if the entire settlement is not claimed,
the remainder reverts to the clubs, with the exception
of non-reversionary amount of $2,723,700.
Any portion of the non-reversionary amount remaining
after the payment of dancers’ claims will be used
toward incentive payments for most of the class representatives. If part of the non-reversionary amount still
remains, 10 percent of that amount will be distributed
on a pro-rata basis to dancers who submitted claims
against the settlement fund, and the rest will be distributed over five years to the Los Angeles County Bar
Association Foundation Domestic Violence Project,
Foundation for an Independent Tomorrow, Women at
Work Job Resource Center and the National Association of Working Women.
Judge Phillips found that the settlement class satisfies
Federal Rule of Civil Procedure 23(a)’s numerosity and
commonality requirements. The judge said that because
there are class representatives for each state subclass,
the typicality and adequacy requirements also are met.
‘‘The Court finds further that the Dancers’ choice
of charitable organizations to receive the otherwise
unallocated portion of the settlement fund’s non-reversionary amount satisfies the [Ninth Circuit U.S. Court
of Appeal’s] requirements for cy pres awards,’’ Judge
Phillips said.26 ‘‘Finally, the language of the Agreement
now makes clear that only those Dancers who file
claims will be deemed to have opted in to an FLSA
subclass, and thus that only those Dancers will release
their FLSA claims against the Clubs.’’27
The judge awarded the plaintiffs $2,301,024.50 in
attorney fees and $73,270.77 in costs. Judge Phillips
also awarded incentive payments to 14 named plaintiffs, ranging from $10,000 for Trauth to $1,000 for
three plaintiffs.
Law, § 1.04[1][a], ‘‘Employment and Related Terms
Defined’’ (Matthew Bender).
PREEMPTION
Robert Santiago v. Aramark Uniform and Career
Apparel, LLC, No. C 12-04462, 2012 U.S. Dist.
LEXIS 165211 (N.D. Calif. Nov. 19, 2012).
28
January 2013
Aramark denies them paid meal and rest breaks and
offers discounts and free services to customers after
sales are completed, which reduces CRSRs’ commissions.
All of Santiago’s allegations are on based on state law.
Santiago and his fellow putative class members are
members of the Teamsters Local Union Nos. 853,
624, and 315 (collectively, the union), with which
Aramark has negotiated a series of collective
bargaining agreements (CBAs). Aramark removed the
action to federal court, arguing that jurisdiction lies
there because the CBAs govern the CRSRs’ terms and
conditions of employment, such that Santiago’s overtime claims are preempted by Section 301 of the Labor
Management Relations Act (LMRA).
While the court recognized that under the well-pleaded
complaint rule, a plaintiff ‘‘may avoid federal jurisdiction
by exhaustive reliance on state law,’’29 it further recognized that ‘‘[u]nder the complete preemption doctrine, the
force of certain federal statutes is considered to be so
‘extraordinary’ that it ‘converts an ordinary state
common law complaint into one stating a federal claim
for purposes of the well-pleaded complaint rule.’’30
Section 301, the court explained, carries with it the
force of complete preemption with regard to overtime
claims. It also preempts any claim whose resolution
requires the court to interpret a CBA, even when the
plaintiff has not alleged that there has been any violation of the CBA. In order to determine whether the latter
type of preemption applied to Santiago’s claims, the
court looked at the two-part test it established in Burnside v. Kiewitt Pacific Corp.:31
First, a court inquires ‘whether the asserted
cause of action involves a right conferred
upon an employee by virtue of state law, not
by a CBA.’ When the answer to this question is
no, Section 301 preemption applies. If the
answer is yes, the Court proceeds to the
second part of the inquiry, whether the claim
is substantially dependent on analysis of a
collective-bargaining agreement. If the
answer to that question is no, the claim is
preempted and the plaintiff may proceed
under state law. If, however, the answer is
yes, the claim is preempted.
A federal court in California denied a motion for
remand filed by a plaintiff in a wages and overtime
case based on preemption by federal law.
Robert Santiago worked for Aramark Uniform and
Career Apparel as a Commission Route Sales Representative (CRSR) from 2003 to August 2010 at its depot
in Hayward, California. In a complaint filed in Alameda
County Superior Court on July 20, 2012 on behalf of
himself and all similarly situated CRSRs, Santiago
alleges that Aramark pays the CRSRs a ‘‘Weekly
Commission,’’ with a guaranteed weekly salary of at
least $675, but compensates them for overtime ‘‘only
if the guaranteed weekly salary plus the equivalent
[overtime] pay exceeds the Weekly Commission, but
this almost never happens.’’28 He also claims that
29
Id. at *5-6 (quoting Caterpillar, Inc. v. Williams, 482
U.S. 386, 392 (1987)).
30
26
2012 U.S. Dist. LEXIS 144816, at *19.
Id. at *6-7 (quoting Metro. Life Ins. Co. v. Taylor, 481
U.S. 58, 66 (1987)).
27
Id. at *19-20.
31
28
2012 U.S. Dist. LEXIS 165211, at *2.
491 F.3d 1053, 1059-1060 (9th Cir. 2007) (internal citations omitted).
In Santiago’s case, the court found, Section 510 of the
California Labor Code undisputedly involves a right to
overtime conferred by state law, but Section 510 does
‘‘not apply to an employee covered by a valid collective
bargaining agreement if the agreement expressly provides
for the wages, hours of work, and working conditions of
the employees, and if the agreement provides premium
wage rates for all overtime hours worked and a regular
hourly rate of pay for those employees of not less than 30
percent more than the state minimum wage.’’32
While Aramark argued the court would have to interpret
the CBA in order to decide whether Section 514 applies,
Santiago countered that the only issue before the court
was whether CRSRs were receiving premium pay for
overtime hours. He characterized the question as
whether the calculation of overtime rates under the
CBA resulted in an amount of overtime compensation
that complies with California law, and not whether the
method of calculating overtime rates was lawful.
After considering the arguments on both sides and
reviewing the applicable case law, the court found
that Santiago was not claiming that employees were
working more than forty hours per week and being
denied overtime pay. ‘‘Rather, Santiago argues that,
under California law, an amount of pay that does not
fluctuate based on the number of overtime hours
worked cannot be deemed to include ‘premium’ pay
for the overtime hours worked.’’ This, the court held,
was a question that could only be answered by
analyzing the CBA. Therefore, Section 301 preempted
the overtime claim, and the court could exercise supplemental jurisdiction over the remaining claims. On that
basis, it denied the motion for remand.
Law, § 5.02, ‘‘Jurisdiction of Labor Commissioner over
Administrative Claims’’ (Matthew Bender).
WAGE AND HOUR
ReadyLink HealthCare, Inc. v. Dave Jones, et al., No.
B234509, Cal. App. 2nd, 2012 Cal. App. LEXIS 1154
(November 6, 2012).
A California appeals court held that per diem payments
to a staffing agency’s traveling employees constituted
payroll, which justified the California Insurance
Commissioner’s ruling that the state properly assessed
an additional workers’ compensation policy premium.
ReadyLink HealthCare, Inc., a private staffing agency
that supplies traveling nurses to health care providers
throughout California, underwent its routine annual
32
Cal. Labor Code § 514.
29
January 2013
audit in 2007 by the California State Compensation Insurance Fund (SCIF) for purposes of determining the
appropriate premium for its 2005 workers’ compensation
insurance policy. After the SCIF decided that the per
diem payments ReadyLink was paying to its traveling
staff nurses constituted payroll, based on the size of the
payments in relation to wages and the company’s
inability to substantiate the payments with documentation, the SCIF assessed an additional insurance premium.
ReadyLink appealed the ruling to the California Insurance Commissioner, who upheld the SCIF’s assessment
based on a finding that the per diem payments were
unreasonable and intended to camouflage income. The
Superior Court of Los Angeles County denied ReadyLink’s petition for a peremptory writ of administrative
mandamus, and the staffing agency appealed to the
Court of Appeal of California, Second Appellate District.
The Court of Appeal affirmed. It found that under the
correct standard of review, which the Superior Court
had applied, there was substantial evidence that the
per diem payments were actually payroll. According
to the Court of Appeal, the independent judgment standard, for which ReadyLink had advocated before the
Superior Court, was inappropriate because the writ petition did not raise a claim that ReadyLink’s fundamental
rights had been violated.
The Court rejected ReadyLink’s argument that federal
law preempted the Commissioner’s decision because it
would frustrate federal law and interfere with employers’
ability to comply with both state and federal law in their
treatment of per diem allowances. ‘‘Specifically, ReadyLink argues that the Commissioner’s Decision creates
a ‘substantial obstacle’ for ReadyLink and other
employers to enjoy the benefits of the federal per diem
rules—under which certain per diem payments are
deemed substantiated—by imposing onerous documentation requirements on employers that federal law does not
require.’’33 ReadyLink pointed out that it had been
audited by the IRS, which had approved its per diem
practices. The Court explained, ‘‘[t]he problem with
ReadyLink’s argument is that it attempts to compare
two distinct areas of law. The IRS collects tax revenue
from employers and employees to fund a variety of
federal programs, whereas the purpose of the USRP is
to accurately recognize the amount of an employee’s real
wages to ensure that the SCIF has sufficient reserves to
pay a worker his or her wages if injured on the job.’’34 Not
only did the Court have to defer in large part to the
33
2012 Cal. App. LEXIS 1154, at *13.
34
Id., at *17-18.
Commissioner’s expertise and his interpretation of the law
in light of the purpose of the USRP, it reasoned, but his
decision did nothing to frustrate federal law or obstruct
employers’ compliance with state and federal law, nor
did it place an unreasonable burden on employers.
In addition, the Court rejected the argument that the
Commissioner’s decision impermissibly created a new
regulation without public notice and comment, finding,
rather, that it was a helpful interpretation of the subsistence payments rule of the Insurance Commissioner’s
California Workers’ Compensation Uniform Statistical
Reporting Plan—1995 (‘‘USRP’’), which exempts per
diem payments from inclusion in the payroll if the
‘‘amount is reasonable and the employer’s records show
that the employee worked at a job location that would
have required the employee to incur additional expenses
not normally assumed by the employee.’’35 The terms
‘‘reasonable’’ and ‘‘job location’’ are not defined in the
USRP, so the Commissioner defined them and applied
those definitions to the facts of this case, the Court said,
and ‘‘[i]t cannot reasonably by argued that such an interpretation creates a new rule.’’36 ReadyLink could not
produce any records to prove that the per diem payments
were being issued as reimbursement for actual living
expenses that arose as a result of its employees’ job
locations. Therefore, these payments were properly
treated as payroll, the Court ruled, and the assessment
of the additional premium was proper.
Baltazar Mendez v. H.J. Heinz Company, L.P., et al.,
No. 12-5652, C.D. Calif., 2012 U.S. Dist. LEXIS
170785 (November 13, 2012).
Based on the recent changes to the well-pleaded complaint
rule, a federal court dismissed a complaint alleging unpaid
wages and overtime for failure to state a claim.
Baltazar Mendez filed a lawsuit against H.J. Heinz
Company, L.P., H.J. Heinz Company, and H.J. Heinz
Operating Partnership (collectively, ‘‘H.J. Heinz’’ or
‘‘the company’’), his former employers, on June 29,
2012, claiming that they ‘‘utilized a policy and practice
of rounding Factory Employees’ time records while
also utilizing a policy and practice of penalizing and
disciplining Factory Employees for clocking in past
scheduled start times or clock out before scheduled
end times, disproportionately favoring the employer.’’
By way of example, Mendez explained that if he
clocked in 5 minutes before his 8-hour shift began
35
36
30
January 2013
and clocked out after his scheduled end time, he
would only be paid for 8 hours, because of the
‘‘rounding system’’ that the company used.37
Mendez claimed that this rounding policy, as well as the
policy of disciplining factory employees for clocking in
6 minutes late or more or clocking out at least 1 minute
early, applied to all factory employees. He sought to
represent a California Class and a Fair Labor Standards
Act (FLSA) Nationwide Class based on failure to pay
all wages, the minimum wage, overtime, and timely
wages, and to provide accurate wage statements.
The company filed a motion to dismiss for failure to
state a claim. The court identified Bell Atlantic Corp. v.
Twombly 38 and Ashcroft v. Iqbal39 as the cases
governing its analysis of H.J. Heinz’s arguments that
‘‘(1) Plaintiff fails to sufficiently allege the rounding
policy; (2) as to the FLSA claim, Plaintiffs fails to
sufficiently allege the hours for which wages were not
received; and (3) Plaintiff fails to sufficiently allege his
class allegations.’’40
Comparing the facts alleged in Mendez’s complaint to
those alleged in other cases concerning employers’
rounding policies, the court found that Mendez’s allegations fell short of the requirements under Twombly
and Iqbal. ‘‘Here, Plaintiff alleges only that Defendants
have an unspecified ‘rounding policy’ that, together
with Defendants’ disciplinary policy, results in the
nonpayment of wages for all hours worked, because
the disciplinary policy incentivizes employees to
arrive at work early. However, without more information about the rounding policy, Plaintiff has not
plausibly showed that the alleged policies result in a
systematic underpayment of wages’’41 like the plaintiffs
in similar cases had done.
Therefore, the court dismissed the complaint with leave
to amend.
Law, Ch. 1, ‘‘Overview of Wage and Hour Laws’’
(Matthew Bender).
37
2012 U.S. Dist. LEXIS 170785, at *2.
38
550 U.S. 544 (2007).
39
556 U.S. 662 (2009).
Id., at *7 (quoting USRP, appen. III, p. 215).
40
2012 U.S. Dist. LEXIS 170785, at *5-6.
Id., at *24.
41
Id., at 8-9.
31
January 2013
CALENDAR OF EVENTS
2013
Jan. 31
CALBAR Labor and Employment
Law Section: Cybercommuting:
Avoiding Legal Landmines While
Improving Work-Life Balance for
Employees
Webinar, 12:00-1:00
p.m. (PST) (415)
538-2590
Feb. 13
Law Section: Workplace Investigators
and the NLRB: What’s an Employer to
Do?
Webinar, 12:00-1:00
p.m. (PST) (415)
538-2590
Feb. 20
Law Section: Advanced Strategies for
Mediating the Employment Case
State Bar of California, 180 Howard
Street, San Francisco, CA.
Feb. 27
Law Section: Advanced Strategies for
Mediating the Employment Case
State Bar of California 1149 South
Hill Street Los
Angeles, CA
Apr. 4-5
NELI: ADA & FMLA Compliance
Update
Westin St. Francis
San Francisco, CA
May 2-3
NELI: Employment Law Conference Mid-Year
Westin St. Francis
San Francisco, CA
July 11-12
NELI: Employment Discrimination
Law Update
Westin St. Francis
San Francisco, CA
Aug. 22-23
NELI: Public Sector EEO and
Employment Law Conference
Westin St. Francis
San Francisco, CA
Oct. 9
NELI: Affirmative Action Workshop
Westin St. Francis
San Francisco, CA
Oct. 10-11
NELI: Affirmative Action Briefing
Westin St. Francis
San Francisco, CA
32
EDITORIAL BOARD
Contact Information
Matthew Jedreski, Executive Editor
Deborah J. Tibbetts, Associate Editor
San Diego
[email protected]
[email protected]
[email protected]
Nancy L. Abell
(Discrimination/Affirmative Action)
Paul Hastings LLP
Los Angeles
[email protected]
Ray Bertrand
Paul Hastings LLP
San Diego
[email protected]
Nicole A. Diller
(ERISA/Employee Benefits)
San Francisco
[email protected]
Barbara A. Fitzgerald
(Entertainment)
Los Angeles
[email protected]
Lynn Matityahu Frank
(Alternate Dispute Resolution)
Frank & Feder
San Diego
[email protected]
Joshua Henderson
Seyfarth Shaw LLP
San Francisco, CA 94105
[email protected]
Lynne C. Hermle
(Retaliation/Whistleblowers)
Menlo Park
[email protected]
Tyler Paetkau
(Unfair Competition/Trade Secrets)
Hartnett, Smith & Paetkau
Redwood City
[email protected]
William B. Sailer
(In-House)
V.P. & Senior Legal Counsel
QUALCOMM Inc.
San Diego
[email protected]
Charles D. Sakai
(Public Sector)
Renne, Sloan, Holtzman & Sakai
San Francisco
[email protected]
Arthur F. Silbergeld
(Class Actions)
Dickstein Shapiro LLP
Los Angeles
[email protected]
Walter Stella
Miller Law Group
San Francisco
[email protected]
Peder J. Thoreen
(Labor)
Altshuler Berzon LLP
San Francisco
[email protected]
Bill Whelan
(Wrongful termination)
Solomon Ward Seidenwurm & Smith,
LLP San Diego
[email protected]
M. Kirby Wilcox
(Wage and Hour)
Paul Hastings LLP
San Francisco
[email protected]
January 2013
33
January 2013
COLUMNISTS
Contact Information
Eye on the Supreme Court
Profile
DFEH Update
Brian M. Ragen
San Diego
[email protected]
Corrie J. Klekowski
Paul, Plevin, Sullivan &
Connaughton LLP
San Diego
[email protected]
Phyllis W. Cheng
Director, Dep’t of Fair
Employment & Housing
REPORTERS
Contact Information
Travis Anderson
(Discrimination)
Sheppard Mullin Richter & Hampton LLP
San Diego
G. Samuel Cleaver
(Privacy)
Proskauer Rose LLP
Los Angeles
[email protected]
Michael J. Etchepare
(Public Sector)
San Diego
[email protected]
Paul M. Huston
(OSHA/Cal OSHA)
Paul Plevin Sullivan & Connaughton LLP
San Diego
[email protected]
Jolene Konnersman
(Sexual Harassment)
Mitchell Silberberg & Knupp LLP
Los Angeles
[email protected]
Alan Levins
(Labor)
Littler Mendelson P.C.
San Francisco
[email protected]
April Love
(Labor)
Houston
[email protected]
Angela T. Mullins
(ADA/Disability)
San Diego
[email protected]
Bernadette O’Brien
(Arbitration/ADR)
Floyd, Skeren & Kelly, LLP
Calabasas
[email protected]
Brian M. Ragen
(Unfair Competition/Trades Secrets)
San Diego
[email protected]
Lena Ryan
(Wrongful Termination)
San Francisco
[email protected]
Brit K. Seifert
(Wage and Hour)
Paul Hastings LLP
San Diego
[email protected]
Donald P. Sullivan
(ERISA/Employee Benefits)
Wilson Elser Moskowitz Edelman & Dicker LLP
San Francisco
[email protected]
34
EDITORIAL STAFF
Eve Arnold
Director, Content Development
Mia Smith
Legal Editor
Howard Ross
Editor
GUEST AUTHORS
Emily Fox
Paul Plevin Sullivan & Connaughton
San Diego
[email protected]
M. Michael Cole
Miller Law Group
San Francisco
[email protected]
Matthew Wroblewski
Paul Plevin Sullivan & Connaughton
San Diego
mwroblewski @paulplevin.com
January 2013
35
Martindale-Hubbell Connected Õ is an online, global network—designed
exclusively for legal professionals—leveraging the unsurpassed reach of the
Martindale-Hubbell database of more than one million lawyers and law firms.
Expand your professional network and share your knowledge with a global audience and benefit from the expertise of the community. Simply connect with the
people you know and the people who your connections know to build your
network quickly and easily.
From legal and risk management to IP, restructuring and employment law, you can
tackle today’s emerging issues, collaborate globally through online groups, blogs
and forums:
Groups: Join or start groups with co-workers or legal professionals who share
your interests or current practice area.
Blogs: Hear what thought leaders are saying and voice your opinion—even
write your own blog!
Forums: Keep up on legal issues when you want, where you want with those
who share your interests and practice area.
Get Connected today—it takes just a few minutes to get started! Go to
www.martindale.com/connected.
Also from Matthew Bender:
California Employers’ Guide to Employee Handbooks and Personnel Policy
Manuals, by Morrison & Foerster LLP
2011 Revisions by Paul Hastings LLP
This handy volume and accompanying CD offers an all-inclusive roadmap to
writing, revising and updating employee handbooks. More economical than
competing guidebooks, this volume is a vital reference that helps you draft appropriate content, speeding additional research with cross-references to the Wilcox
treatise, California Employment Law. Sample policies cover the following: technology use and security; blogging; cell phone use; company property, proprietary
and personal information; employment-at-will; anti-harassment policies; work
schedules and overtime; and much more. Order online at Lexis.com or by
calling 1-800-223-1940.
January 2013
36
January 2013
Customer Service: 1.800.356.6548
For all your labor and employment research needs,
see the Labor & Employment Area of Law Page at
Legal > Area of Law - By Topic > Labor & Employment on lexis.com
®
LexisNexis, lexis.com and the Knowledge Burst logo are registered trademarks of Reed Elsevier Properties Inc., used under license. © 2010 LexisNexis, a division of Reed Elsevier Inc. All rights reserved. LBE15191-1 1010º

Brinker: The Death Knell for Meal Period and

Transcription

Similar documents

Marquart MA-s `Charger`

Conducting a Job Search

DEMANDE DE RELEVÉ D`EMPLOI

Sharon Holland Flyer2.pptx

MOBILESERVICE GIVE `EM A TASTE

fundraisers

How to write a CV

July 24, 2011 handbill.pub

SIHO Insurance Services