California Employment Law : Employment Lawyer & Attorney : Fox Rothschild Law Firm : San Francisco, Oakland, Los Angeles, San Diego

Kmart won a trial this week in federal court over claims that it failed to provide seats for its cashiers. Still, there's no reason to think that this issue is going away.

As we've noted before, California's Wage Orders require that "all working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats . . . ."

In Garvey v. Kmart, cashiers brought a class action claiming that the company violated this requirement. A one-week bench trial concerning cashiers at one Kmart store concluded this week.The judge ruled two days ago that Kmart had legitimate grounds for requiring its cashiers to stand -- namely, "to project a ready-to-assist attitude to customers waiting in line, all of whom are already standing." Standing cashiers were also more mobile and efficient. 

But like all silver linings, this one has a big cloud in the middle. While rejecting the plaintiff's proposal that they be fully seated, the court wondered aloud (or rather, in writing) whether a different modification -- something called a lean-stool -- might be an acceptable alternative.

Never heard of a lean-stool? Me neither. According to the court, "rigid lean-stools allow an individual to place most of their weight on a supported seat, while remaining in a more upright, leaning position." Because the issue of lean-stools wasn't pursued by the plaintiffs, the court found for Kmart. But don't expect plaintiffs to overlook this argument in future cases. Here's a copy of the decision (pdf).

Two takeaways:

1. "Suitable seating" litigation isn't going away.
    
2. Rush out and buy stock in "lean-stool" manufacturers!

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This week brought some good news for employers seeking to enforce class and representative action waivers in arbitration agreements in California. In Iskanian v. CLS Transportation [pdf], the Court of Appeal applied the recent holding of the United States Supreme Court in AT&T Mobility v. Concepcion and upheld the dismissal of a pending wage-and-hour class action in state court. Congratulations to Fox Rothschild and the entire defense team for this winning decision.

There are a few key aspects of this case that will impact this area of the law going forward.

First, while California courts had previously followed the standards articulated by the California Supreme Court in Gentry v. Superior Court which essentially held that class action waivers in arbitration agreements were not viable in the employment context, this case held otherwise. In fact, the Court of Appeal specifically held that “the Concepcion decision conclusively invalidates the Gentry test.”

Second, the Court declined to follow a recent NLRB decision, D.R. Horton, holding that a class action waiver interfered with employees’ section 7 rights under the National Labor Relations Act to engage in collective activity, and therefore was unenforceable. Since the Federal Arbitration Act is not a statute the NLRB is charged with interpreting, the Court of Appeal held that it was under no obligation to defer to the NLRB’s analysis.

Third, as to the PAGA claim, the Court “respectfully disagreed” with another recent Court of Appeal case, Brown v. Ralphs Grocery Co. [pdf], which many of us believe should not be prevailing law. Instead, the Court held that Concepcion does apply to representative actions under PAGA, and that a waiver of PAGA representative actions is enforceable under California law.

What does this case mean to you? California attorneys now have published and binding authority to cite when supporting the enforceability of a class action waiver in an arbitration agreement. But there is also now conflicting authority on this issue in California, and plaintiff’s counsel in this case has indicated an intent to appeal to the California Supreme Court. So stay tuned for further developments. Even so, no matter what happens, if you have an arbitration agreement without a class action waiver, then it may be time to add one.
 

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It is starting to feel like summer, with graduation dates on the calendar, long daylight hours, and plenty of high school and college students and recent graduates looking for resume-building work experiences. However, before you bring on any unpaid interns this summer – beware. There has been a recent flurry of lawsuits by interns claiming to be misclassified and seeking unpaid wages.

Attached is a particularly good article by Josh Sanburn at Time summarizing two recent lawsuits by interns in the entertainment and publishing industries (pdf).

While counter-intuitive, interns aren’t supposed to really be helpful to your business; rather they are supposed to learn from you. As the Department of Labor puts it, an employer is not supposed to derive any immediate advantage from the intern, and they can’t displace your regular employees. Also, while California’s DLSE still suggests that an intern be part of some accredited school program, that one fact alone is certainly not sufficient to qualify someone for intern status.

By the way, nothing prevents an employer from calling someone an “intern,” hiring them for a limited period of time, and paying that person minimum wage. In fact, that is often a very viable option.

Bottomline, just because everyone else does it, and has done it for years without getting sued, doesn’t make it’s okay, and doesn’t protect your company from being the next class action headline.
 

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In the few weeks since the decision in Brinker v. Superior Court, two court decisions that we know of have invoked the elements of Brinker in their discussions.  In the first case, the court in Schulz v. Qualxserve, LLC granted class certification to a group of field technicians who service and repair computers and are paid on a piece-rate basis.  Plaintiffs had made a variety of wage and hour claims, including missed meal and rest periods.  The employer argued that there was no evidence that it deprived employees of meal and rest periods as a general policy, and therefore class certification of these claims should be denied because individual questions would predominate over a common issue. 

While acknowledging that the Brinker decision held that employers are not required to ensure that employees take meal and rest breaks,  the Court reiterated the holding that employers are required to ensure that employees are relieved of all duties.  Because the plaintiffs were challenging the employers common general policy of not relieving employees of all duties during rest and meal periods, they met the standard for showing that common issues would predominate for these claims, and the Court certified the class.  Importantly, the Court noted that in Brinker class certification for the rest period claims was upheld because plaintiffs had challenged a uniform policy, similar to this case. 

In the second case, Benton v. Taninco, the Court denied Plaintiffs' motion for class certification in a suit for misclassification and missed meal and rest periods.  The Court stated that Plaintiffs were unable to establish uniformity of policies or circumstances at the individual work locations, citing statements from the court in Brinker regarding the analysis of whether common issues predominate in determining liability.  Additionally, class certification was inappropriate in this case because, again citing Brinker, some of the employees had been provided all that was necessary in terms of proper meal and rest breaks: the chance to take them. 

So, what do these cases teach us about the effects of Brinker?  First, class certification of meal and rest periods will be difficult where the employer can show that some of the employees were provided their breaks as required under Brinker.  Second, it certainly seems that Brinker will be cited to support class certification of meal and rest period claims when there are common policies or practices that  interfere with employees being able to take a "bona fide" meal or rest period. 

While this has been said many times already since Brinker came out, employers should examine their policies and practices to be sure they mirror the requirements stated in that decision.  Scheduling practices should be re-evaluated if there is a possibility that they could be seen as preventing an employee from being relieved of all duties during the meal period.  Plaintiffs in missed meal and rest period claims will be more closely scrutinizing the workflow and scheduling to try to point out general issues that support class certification. 

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According to Shakespeare, “brevity is the soul of wit.” So perhaps the individuals drafting section 11(A) of the Industrial Welfare Commission Wage Orders thought they were being witty when they wrote that “No employer shall employ any person for a work period of more than five (5) hours without a meal period of not less than 30 minutes . . . .” But as the California Supreme Court pointed out in the week-old Brinker decision, “[t]he wage order employs no verb between 'without' and 'a meal period' (e.g., providing, requiring, offering, allowing, granting) to specify the nature of the employer’s duty.”

So that’s what it comes down to in the end. Three years of uncertainty, hundreds of class action lawsuits, and hundreds of millions in attorneys’ fees and settlements over a missing verb. Those drafters really knew how to [insert verb of your choice] things up.

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After more than three years and two rounds of briefing, the California Supreme Court has issued its long-awaited decision in Brinker Restaurant Corp. v. Superior Court. Overall, the decision is a significant win for employers. Here are the key points in the unanimous decision that the Court issued today:

• Employers do not have to police their employees to make sure that they’re taking their meal breaks. They're required to (1) relieve employees of all duty; (2) relinquish control over their activities; and (3) permit them a reasonable opportunity to take an uninterrupted 30-minute break.
   
• Employers still need a meal break policy and still need to record the time that employees begin and end their breaks. But if employers make the breaks available (as specified in the prior paragraph) and an employee cuts his or her break short (or doesn’t take one), the employer does not owe a penalty. The employer would, however, need to pay the employee for the time worked.
   
• As before, employers have to mean it when they say they’re making the meal breaks available. They can’t pressure employees or provide incentives for them to skip breaks.
   
• There is no rolling 5-hour rule. In other words, there’s no penalty if an employee works 5 consecutive hours without a meal period (as the plaintiffs in Brinker argued). This is a huge relief because, when the Court asked for post-hearing briefing on this issue, it raised the specter that almost every employer in the state had a policy that was wrong.
   
• So the rule for meal periods remains:
  
  o       Employees who work no more than 5 hours get no meal period.
  
  o       Employees who work over 5 but no more than 6 hours get a meal period, unless they’ve waived it in writing. If they don’t waive it, the meal period must begin by the end of the 5^th hour.
  
  o       Employees who work more than 6 but no more than 10 hours get a meal period regardless of whether there’s a waiver. The meal period must begin by the end of the 5^th hour.
  
  o       Employees who work more than 10 hours get a 2^nd meal period. If they work no more than 12 hours they can waive it. If they don’t waive it, the meal period must begin by the end of the 10^th hour.
   
• The rules for rest breaks remain the same.
  
  o       Employees who work no more than 3.5 hours get no rest period.
  
  o       Employees who work 3.5 to 6 hours get 1 rest period.
  
  o       Employees who work more than 6 and up to 10 hours get 2 rest periods.
  
  o       Employees who work more than 10 and up to 14 hours get 3 rest periods.

There will still be wage and hour class actions and, in some ways, the Court lowered the bar on the procedural requirements for getting a class certified. But overall, employers can breathe a collective sigh of relief.

Many thanks to Nancy Yaffe for helping to put this information together. If you'd like to read the full opinion, you can do so here (pdf).

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Patience is a virtue. I get that. It’s just not one of my virtues. That’s why I wrote here and here and here about wanting the California Supreme Court to hurry up and give us a decision in Brinker Restaurant Corp. v. Superior Court. We’ve been waiting more than 3 years for a decision from the court in a case that will define the scope of an employer’s obligation to provide meal periods to non-exempt employees (and thereby all but determine the outcome of hundreds of pending cases).

Well the latest word is that we’ll have a decision in April 2012. But I’m done stressing about it. California Supreme Court Justices take your time. I’m going to work on being in the moment. OOOOMMMMMMMMMM.

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We've been waiting (forever it seems) for the California Supreme Court to issue its decision in Brinker Restaurant Corp. v. Superior Court. Based on oral argument last month, things look relatively promising for employers who've taken the position that they're only required to make meal periods available to employees (as opposed to ensuring that they actually take them).

But another issue is lurking out there and, recognizing its significance, the Court has taken the unusual step of accepting briefing on an issue after the case was argued. The issue involves how to interpret the requirement in the wage orders that "no employer shall employ any person for a work period of more than five (5) hours without a meal break of not less than 30 minutes . . . ." [Let's ignore for now the exception for work that's completed in six hours.]

Most employers and their lawyers (and commentators and just about everyone else who's addressed the issue) interpret that to mean that employees who work more than 5 hours get a meal period and employees who work more than 10 hours get a second meal period.  But an issue arose at the Brinker argument about whether an employee can ever be required to work more than five consecutive hours without a meal period.

Take the example of an employee who works from 8:30 a.m. to 5 p.m. with a 30-minute meal period from 11:30 a.m. to noon. Let's assume that the employee occasionally works 10 minutes past 5 p.m., for which the employer properly pays overtime. The Brinker plaintiffs are arguing that the employee worked a period of over 5 hours (noon to 5:10 p.m.) and is therefore entitled to a second meal period.  If the employer, like the overwhelming majority, didn't provide a second meal period in that situation, the the employee would be entitled to a one-hour penalty for each occasion when that occurred.   

This so-called "rolling 5" interpretation is the subject of the post-hearing briefing in Brinker. As reported by Ben James in Employment Law 360, the California Employment Law Council sought and obtained permission to file a brief on the issue. In doing so, it warns that "a tsunami of massive class actions will descend on California's already hard-pressed employers" if the Court adopts such an interpretation and makes it retroactive. 

The plaintiffs will also get a chance to brief the issue. Eventually, in theory, we'll get a decision. But until then, the uncertainty that affects thousands of employers and hundreds of pending cases remains.

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We have already discussed the United States Supreme Court's decision in  AT&T Mobility v. Concepcion.  Earlier this week a Superior Court Judge applied the case and dismissed a pending class action in favor of individual arbitration.  We were impressed.  If you have had a similar result, please send us an email.

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Today, the Supreme Court decided AT&T Mobility v. Concepcion (pdf), a case we first reported on last June.  The plaintiffs in the underlying case filed a class action complaining about being charged sales tax on phones that AT&T advertised as "free" once you bought the service plan.   AT&T sought to enforce an arbitration provision in the sales contract and the plaintiffs countered that the provision was unconscionable because it required them to waive their right to proceed as a class action.  The 9th Circuit court of appeals held that the class action waiver was unconscionable under California law and that the Federal Arbitration Act did not preempt California law regarding unconscionability.

In an opinion issued today, the Supreme Court reversed in a 5 to 4 ruling that broke down along familiar ideological lines (Scalia, Roberts, Thomas, Alito, and Kennedy in the majority; Breyer, Ginsburg, Sotomayor, and Kagan dissenting). The majority argued that California’s rule disfavoring class action waivers in arbitration agreements (as articulated in Discover Bank v. Superior Court) was preempted by federal law encouraging arbitration. The dissent countered that this effectively left plaintiffs without a remedy since, as Justice Breyer phrased it, “What rational lawyer would have signed on to represent the [plaintiffs] in litigation for the possibility of fees stemming from a $30.22 claim?”

Most of the attacks on arbitration agreements in California involve the doctrine of unconscionability. The doctrine, which arises more from judicial decisions than legislative enactments, finds certain agreements unenforceable if they don’t meet specified requirements. Some of these, such as the requirement articulated in Armendariz v. Foundation Health Psychare Services that the agreements contain a "modicum of bilaterality," seem to reflect judicial suspicion (if not outright hostility) towards arbitration of employment claims.  This latest decision shows that the Supreme Court will not allow California unconscionability analysis to run amok. To that extent, it’s an encouraging development for employers.  And if class action waivers are now permissible in employment arbitration agreements, this provides a huge incentive for employers to have arbitration agreements with their employees.

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The holding of this case is as follows: “we conclude section 2699, subdivision (f)'s civil penalties are available for a violation of section 1198, based on failure to comply with Wage Order No. 7, subdivision 14.”  And what it means is not great news for many of our clients.  Section 2699(f) is the business end of the Private Attorneys General Act of 2004, which allows individuals to seek penalties for violations of the Labor Code. 

As our readers already know, Subdivision 14 of Wage Order 7 provides as follow:

All working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats.

When employees are not engaged in the active duties of their employment and the nature of the work requires standing, an adequate number of suitable seats shall be placed in reasonable proximity to the work area and employees shall be permitted to use such seats when it does not interfere with the performance of their duties.

So,  Bright holds that the PAGA can be used to enforce the seating provisions of the Wage Orders. This will require retailers, among others, to revisit their policies especially as they relate to cashiers.  Moreover, the Wage Order seating provisions apply to all employees—not just to employees needing a reasonable accommodation

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Last April, I wrote about the Ninth Circuit Court of Appeal ruling allowing a gigantic discrimination and harassment class action to proceed against Wal-Mart.  As of August 25, 2010, Wal-Mart has petitioned the Supreme Court to review the Ninth Circuit's ruling.  The petition introduces the issue as follows:

In a sharply divided 6-5 decision that conflicts with many decisions of this Court and other circuits, the en banc Ninth Circuit affirmed the certification of the largest employment class action in history.  This nationwide class includes every woman employed for any period of time over the past decade, in any of Wal-Mart’s approximately 3,400 separately managed stores, 41 regions, and 400 districts, and who held positions in any of approximately 53 departments and 170 different job classifications. The millions of class members collectively seek billions of dollars in monetary relief under Title VII of the Civil Rights Act of 1964, claiming that tens of thousands of Wal-Mart managers inflicted monetary injury on each and every individual class member in the same manner by intentionally discriminating against them because of their sex, in violation of the company’s express anti-discrimination policy.

Stay tuned for further developments.

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Sometimes cases from other areas of law can have a strong impact on employment law in California.  For example, Laster v. AT&T Mobility LLC involved class action waivers in consumer contracts.  Laster filed a class action complaining about being charged sales tax on phones that AT&T advertised as "free" once you bought the service plan.   AT&T sought to enforce an arbitration provision in the sales contract and Laster countered that the provision was unconscionable because it required him to waive his right to proceed as a class action.   The 9th Circuit court of appeals held that the class action waiver was unconscionable under California law and that the Federal Arbitration Act (FAA) did not preempt California law regarding unconscionability.

AT&T Mobility asked the Supreme Court to weigh in on the issue.  In doing so, it argued that class-wide arbitration is not necessary to protect the consumers' rights.  It further argued (pdf) that 

Class-wide arbitration affords none of the benefits of traditional, individual arbitration--it is at least as burdensome, expensive, and time-consuming as litigation--while multiplying the risks enormously because judicial review is so limited.

Finally, AT&T Mobility argued that the FAA preempts state law on this issue (including California law regarding unconscionability) as applied to arbitration agreements. 

Last week, the Supreme Court agreed to hear the matter (under the title AT&T Mobility v. Concepcion).  The decision, which is still many months away (oral argument has yet to be scheduled), could have a significant impact on California unconscionability analysis in the arbitration context.

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The Ninth Circuit Court of Appeal issued a decision today in Dukes v. Wal-Mart Stores. In that case, six women complain of sex discrimination in pay and promotion decisions, but seek to bring an action on behalf of the class of all women who have worked at Wal-Mart since December 26, 1998. After the district court determined that class treatment was appropriate, Wal-Mart appealed.

On appeal, Wal-Mart argued that a class that size was too unwieldy. By a margin of 6 to 5, the appellate court disagreed. The following are among the points raised in the strongly worded dissent:

"No court has ever certified a class like this one, until now.  And with good reason. In this case, six women who have worked in thirteen of Wal-Mart’s 3,400 stores seek to represent every woman who has worked in those stores over the course of the last decade—a class estimated in 2001 to include more than 1.5 million women." 

 

 

*          *          *

"Without evidence of a company-wide discriminatory policy implemented by managers through their discretionary decisions, or other evidence of a discriminatory company-wide practice, there is nothing to bind these purported 1.5 million claims together in a single action.

Then there is the problem of individual hearings. Under Title VII, Wal-Mart has the right to raise affirmative defenses as to each class member’s claim. This means the court must allow up to 1.5 million individual determinations of liability.  On its face, a class action of this sort makes no sense." 

 

 

*          *          *

Wal-Mart is the largest private employer in the world.  When the action was filed in 2001, it employed 930,000 retail employees in hundreds of different jobs in 3,400 different stores.  It divides its retail operations into 7 divisions, 41 regions, and approximately 400 districts.  Hiring and promotion decisions are made at the store manager level.  Store managers determine pay (within established guidelines) for hourly employees and district managers do so for salaried employees.  Wal-Mart argued (and the dissent agreed) that, given the large number of decision-makers involved, there was not sufficient "commonality" to justify class treatment.

*          *          *

"This principle is simple common sense. A female employee in a store in California, for example, may have a valid claim that her supervisor discriminated against her when making decisions regarding promotion opportunities. But this individual claim would not by itself entitle the California employee to bring the alleged discrimination claims of female employees in a store in Wyoming."

You can read the entire 137-page decision here.  Wal-Mart has issued statements that it may seek Supreme Court review. 

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On March 11, 2008, United States District Court Judge Lawrence K. Karlton issued a summary judgment Order finding, as a matter of law, that a class of unlicensed accounting professionals employed by PricewaterhouseCoopers LLP are precluded from exemption from California overtime requirements under the Professional Exemption and the Administrative Exemption set forth in California Wage Order 4-2001. Wow.

After the matter was certified and accepted for interlocutory appeal, I filed an Amicus Curiae Brief on behalf of the American Institute of Certified Public Accountants addressing some of the issues raised by Judge Karlton. The most interesting issue is the Court’s treatment of the Professional Exemption, Cal. Code Regs. tit 8 § 11040(1)(A)(3), which provides for exemption under two separate paths—i.e., the “Enumerated Professions Exemption” (which requires candidates to be licensed) and the “Learned Professions Exemption” (which requires no license).

The Court determined that these "paths" cannot intersect.  It held that unlicensed accountants cannot be exempt under the Learned Professions Exemption because “accounting” is one of the enumerated professions. The result of this finding is that no unlicensed person working in the fields of law, medicine, dentistry, optometry, architecture, engineering, teaching, or accounting can ever qualify under the Learned Professions Exemption.  Can this be right? I think even Judge Karlton has his doubts:

The court expresses no opinion on whether other specific employees engaged in the enumerated professions, such as law firm associates whose bar admissions are still pending, may be learned professionals. As Justice Holmes wrote, "the life of the law has not been logic; it has been experience." The Common Law, 1 (1881). The experience of those cases will be markedly different, both in terms of the history of the wage order's enforcement and the absence of administrative agencies' statements that such individuals are routinely wrongly classified.

Campbell v. Pricewaterhousecoopers, LLP, 602 F. Supp. 2d 1163, 1181 (E.D. Cal. 2009).

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