Guest post by Charlie Nelson Keever:

Brace yourself.  Plaintiffs can now use representative PAGA actions as the basis for a statewide “fishing expedition” to discover alleged employer misconduct.

"Hello, I am suing you" nametag
Copyright: iqoncept / 123RF Stock Photo

Now, I’m a baby lawyer (or, more aptly, an almost baby lawyer) – I’m a Summer Associate trying to figure out what this means so I can tell you all about it. And while my brilliant and talented supervising attorney (Hey, Nancy Yaffe!) assures me that I’ve understood this correctly, this does not smell right to me.

First of all, there’s this thing called PAGA (The Private Attorneys General Act), that allows one employee to initiate a civil action against an employer on behalf of other allegedly aggrieved employees for Labor Code violations. Employees like representative PAGA actions because they don’t need to meet the rigorous requirements of traditional class actions. So basically, one employee having a problem at work – say, they’re not getting appropriate meal breaks – can use this super convenient tool to sue their employer. Not only that, they get to act the hero and say they’re suing on behalf of other “aggrieved” employees, even if they don’t know if anyone else is having the same problem. These lawsuits bring up a lot of questions like “Who is an ‘aggrieved employee’?” and “How much discovery should be allowed?” Conflicts over these issues make PAGA lawsuits particularly burdensome and expensive for defendant-employers to manage.

Last week, the CA Supreme Court answered one of those questions. In Williams v. Superior Court, Plaintiff-employee Michael Williams filed a representative PAGA action against Defendant-retailer Marshalls alleging that the company failed to provide him and other employees with proper meal and rest breaks, and that it failed to provide timely wage payments and accurate wage statements. To bolster his claims, Williams served interrogatories requesting contact information from 16,500 current and former non-exempt Marshalls’ employees throughout California – not just at the location where he worked. Marshalls objected on the grounds of relevance, scope, burden, and employee privacy. They essentially argued that Williams had no reason to believe that his issues at work were company-wide. So the trial court limited production of contact information to employees at the store where Williams worked.  The Court of Appeal agreed.

But the California Supreme Court disagreed, and found that nothing more than a mere allegation of a state-wide policy issue is necessary to compel preliminary discovery. So essentially, if one disgruntled employee says they have a problem, they’re entitled to contact information for employees all over the state to figure out if anyone else is having the same problem. While the Court held that this wasn’t an invasion of employee privacy, I’m willing to bet that a lot of employees would disagree. The Court also opposed the lower courts’ conclusions that discovery seeking statewide contact information was unduly burdensome to the defendant employer.

So What Can Employers Do?

While this might sound like all bad news for employers, the Court did shed some light on how employers might protect themselves and their employees by limiting the scope of discovery if they are unlucky enough to get sued in a PAGA action.

  • First, the Court noted that there might be “special reason[s] to limit or postpone” a PAGA plaintiff’s access to contact information (though the Court didn’t specify what those reasons might be). It will be up to employers to set forth specific facts that demonstrate undue burden and/or particular privacy concerns.
  • Second, the Court suggested that an employer might seek a protective order that would condition discovery on, for example, a confidentiality requirement or prohibition against using the information for purposes outside the confines of a specific lawsuit.
  • Finally, the Court indicated that an employer attempting to subvert such broad discovery might file a motion to “establish the sequence and timing of discovery,” although the mere availability of this measure may do more harm than good, as it tends to undermine the argument that the discovery is unduly burdensome.

Here’s my takeaway: even with these potential interventions, the best protection for employers is compliance with the Labor Code, and fixing any issues as soon as the PAGA notice is served. Now would be a good time for employers to review previous posts related to the PAGA from our blog.


Charlie Nelson Keever is a summer associate, based in the firm’s Los Angeles office.

Every year, the ABA Journal invites nominations for its Blawg 100 list, a compilation of staff and reader “favorites” within the legal blogosphere. The rigorous selection process for the 2017 list has begun, with the magazine calling for recommendations from “Blawg Amici” – regular readers who wish to support and spread the word about their favorite legal blogs.

Here’s a sampling of posts from the past year:

If you have enjoyed and valued our updates during the past year and believe the California Employment Law blog deserves a spot in the top 100, we invite you to take a few moments to nominate us. We’re happy to say that our audience numbers have increased significantly over the past year, to around 20,000 visitors/month, and we’re hoping that each visitor has left with new and valuable information on the California employment landscape. The online nomination process is very quick – it shouldn’t take more than a minute or so.

Blawg Amici nominations will be accepted until 11:59 p.m. CT on July 30, 2017. Thank you in advance for your support!

Guest blog post by Mikella Wickham:

They say location is everything in business.  How about classification of workers?

In certain industries, workers have a unique combination of specified skills and

Fit people working out
Copyright: wavebreakmediamicro / 123RF Stock Photo.

relative freedom to do their job.  As a result, small businesses are stuck between a rock and a hard place when deciding whether their workers are employees or independent contractors.  Of the many small businesses that want to pay their workers fairly and legally, it is becoming harder to do so without going out of business altogether.

Take fitness companies, for example.

Fitness instructors are not the average employees.  They may have input on their schedules (because they only want to work mornings or weekends).  They may work at several different studios, or work more than one job.  Often they teach in their own style, and even impact how many customers attend the classes.  Very often customers are loyal to a studio based on their rapport with a particular instructor.  Does the fitness company pay that person as an employee or as an independent contractor?

Let’s say the employer pays the instructor as an employee, on an hourly basis.  That worker becomes much more expensive for the business because she is covered by workers’ compensation insurance, gets paid sick leave, is paid at least the minimum wage (which keeps going up), and gets overtime, meal breaks and paid rest breaks.  Given all of that, how does the employer incentivize the instructor to bring more customers in the door to offset the additional costs incurred?

Alternatively, if a company pays a fitness instructor as an independent contractor (as many do), but still controls aspects of what the instructor does (such as what she wears, the music she plays, or the moves she teaches), it risks a misclassification claim.  Defending such lawsuits can mean death to a small business.

With no law designating a “dependent contractor” middle ground category, businesses are left to choose from a pick-your-poison set of options.

Standing next to larger brand name fitness companies, smaller fitness companies who can afford to pay employees well, or eat losses at smaller studios for the larger corporate good, can find themselves disadvantaged in a David and Goliath battle to simply have a place in the market.

As we have suggested, perhaps the law will carve out an exception for businesses in this category.  The future will tell.  In the meantime, small businesses have a tough decision to make: pay up now, or, perhaps, pay more later.


Mikella P. Wickham is a summer associate, based in the firm’s Los Angeles office.

A year ago, I wrote about a report from an EEOC Task Force on risk factors for workplace harassment. Well the Select Task Force on the Study of Harassment in the Workplace continues studying away and has issued some new materials. They consist of:

Takeaway No. 1: It’s a point I’ve been making for years and will keep making. If your company gets sued for harassment, the case will be less about what the harasser did than about what the company did to prevent and respond to the situation. As the law gets more exacting on what it expects from employers, it’s critical to have qualified legal counsel guide you through this process.

Takeaway No. 2: There is such a thing as researchers who evaluate organizations’ holistic workplace harassment prevention efforts!

There’s a saying that “Bad facts make bad law.” At least that’s the way I was taught it. A different version: “Hard cases make bad law” has its own Wikipedia entry. While the wording is different, the meaning is the same. When the facts are extreme, they serve as a poor basis for defining general legal principles.

Here are the bad facts:

A dairy hired an employee even though it knew he was not authorized to work in the US. When he told them after two years that he had a better offer from another dairy, his employer threatened that, if he left, it would report the other dairy to federal immigration authorities. So he stayed.

Nine years later, he sued his employer for a variety of workplace violations, including failure to pay overtime or to provide meal and rest breaks. Ten weeks before the case is going to trial, the employer’s lawyer schedules a deposition of the plaintiff but arranges to have US Immigration and Customs Enforcement (ICE) take him into custody and deport him. There’s even an e-mail from the lawyer to ICE letting them know the employee “will be attending a deposition next week. If there’s an interest in apprehending him, please let me know so that we can make the necessary arrangements…” Apparently, the employee got wind of the plan and agreed to settle his case. To make matters worse, the lawyer had used this ploy on at least five other plaintiffs who were suing his clients.

Copyright: cherezoff / 123RF Stock Photo

The plaintiff then sued the attorney for retaliation under the Fair Labor Standards Act. He chose that statute because it allows such claims against “any person acting directly or indirectly in the interest of an employer in relation to an employee.” The federal district court dismissed the claim because the lawyer did not exercise any control over the plaintiff’s employment. However, the 9th Circuit Court of Appeal reversed. In doing so, it rejected the need for any economic control. It said that, while only employers can be responsible for not paying employees correctly, anyone acting on behalf of the employer can be liable for retaliation.

What the lawyer did was wrong. There are ethical rules that state that an attorney in California “shall not threaten to present criminal, administrative, or disciplinary charges to obtain an advantage in a civil dispute.” Lawyers who violate that rule or otherwise abuse their power, can be sanctioned, suspended, and even disbarred. There are also civil claims available for abuse of process and malicious prosecution. So there are penalties for this type of behavior already. However, giving plaintiff’s the right to sue their employer’s lawyers for retaliation will lead to far more problems than it will solve. Litigation is inherently contentious. Parties tend to dislike the lawyer on the other side. But in every other situation I know of, courts have ruled that there’s no right to sue the other side’s lawyer and that allowing such suits will lead to a multiplicity of litigation. The Ninth Circuit, dealing with an extreme situation, held otherwise. Like the saying goes, bad facts make bad law.

The case is Arias v. Raimondo. You can read the opinion here.

Summer is the time for vacations, and with that comes the stress of balancing work pressures while out of the office. Many employees prefer not to take vacations when the alternative is trying to conduct work from a cell phone on the beach. Maybe California can learn from France, and the recently publicized “right to disconnect”.

Woman working on the beach on vacation
Copyright: haveseen / 123RF Stock Photo

The French Government has acknowledged the impact of persistent connectivity on both the economy and employee well-being. Since January 1st, French employees have a right to unplug. According to a report for the French Government covered in Time, “with this accumulation of emails, and these employees who return exhausted from the weekend because they have not disconnected, it is not the best way to be effective in companies.”

It is no surprise that work-related stress adds to healthcare costs. In fact, a group of Stanford business professors have estimated that workplace stress added between $125 and $190 billion dollars per year to America’s healthcare costs; overwork accounted for $48 billion of that, according to Fortune.

A never-ending connection to the workplace is certainly a significant source of stress, and the costs of stress are largely borne by employers. So France’s email restrictions could provide benefit to both workers and employers.

France’s “right to disconnect” does not necessarily mean that the employee must be completely unplugged while out of the office. Rather, the idea is to encourage employers to set up policies to address the flood of emails outside of work hours. For example, to establish more reasonable expectations for returning emails, or to avoid sending non-urgent emails outside working hours.

In fact, many French and even European companies have introduced guidelines prohibiting late afternoon staff meetings and emails outside working hours.

On the one hand, more regulation of work relationships is not welcome. But in France, news reports indicate that many companies have found increased productivity from employees returning to work refreshed and relaxed after important down time. And increased productivity, as well as less chance of off-the-clock claims by non-exempt employees answering emails after work, are both good things.

When was the last time you felt refreshed, relaxed, and reinvigorated at work? If it has been too long, maybe the French way is something for California employers to consider.

Many thanks to Natahaelle Gozlan for her contributions to this post.

We previously blogged about the numerous documents CA employers need to give new employees upon hire.  Well, add the “RIGHTS OF VICTIMS OF DOMESTIC VIOLENCE, SEXUAL ASSAULT AND STALKING” notice to the list. This notice has just been published for dissemination and became effective immediately. Companies with 25 or more employees must now provide new employees with written notice about the rights of victims of domestic violence, sexual assault and stalking to take protected time off for medical treatment or legal proceedings. 

As mandated by AB 2337 and blogged about by my colleague Nancy Yaffe, employers must provide reasonable accommodations for victims of domestic violence, sexual assault or stalking who request an accommodation for their safety while working and also permit employees to use accrued paid sick leave for this purpose.

 

 

Just because it’s logical doesn’t make it legal. And more often than not, what is logical in California is not necessarily legal.

Take the issue of “comp time.” Typically comp time is used to refer to an equitable idea, where someone works when she isn’t supposed to, and in turn is given different time off as “comp time.” Often such comp time is taken off the books, such as an “extra” vacation day that is not logged as such. That can mean the employer has time records that are purposely inconsistent with hours worked. And that’s a problem.

For exempt employees, comp time is really a misnomer. An exempt employee is paid a salary regardless of hours worked (or not worked) in a week. So an exempt employee who works hard one day still gets paid the same as one who doesn’t. Giving an exempt employee a “comp day” for working on a holiday or a 6th day is really just appropriately treating them as exempt. More often than not, the exempt employee is still checking in (i.e., “working” from home) anyway.

For non-exempt employees in California, such a practice is especially fraught with minefields. The key to paying non-exempt employees correctly is to make sure hours worked (and breaks taken) are accurately logged. So, if a non-exempt employee works on a day she typically is scheduled off, she must be paid for that time, even if it results in daily or weekly overtime. If she’s not paid, that’s illegal. Also, paying her for another day when she hasn’t worked, by putting fake hours on a timesheet, is also a problem, as it sets a precedent for falsifying time records.

Of course, the employer can log the day as a paid “comp day,” but in my experience, most employers don’t have that payroll code, and if they do, they don’t use it consistently. And treating employees inconsistently creates another set of issues.

I have experienced employers get sued for inconsistent comp day practices. It can be from exempt employees who claim they are owed a certain number of comp days for holidays worked (when they were supposed to get another day off but never did). That allegation typically comes with a claim for waiting time penalties for failure to pay all wages upon termination. Or, it can be from non-exempt employees who were given comp time instead of being paid overtime. Even if they agreed to it at the time (“don’t worry boss, I’ll take tomorrow off instead of getting the overtime“), it still doesn’t make it legal.

Back in May there was some press about the Working Families Flexibility Act of 2017 that passed the US House of Representatives, and was moving on to the US Senate for deliberations. But even if that passes and amends the FLSA to allow for comp time instead of overtime, it will not apply in California. Why?

32003831 – logical illogical road sign

Always remember that California is special, and when it comes to wage-and-hour law, what is logical is typically illegal.

A massive cyberattack was in the news again last week. This latest ransomware – dubbed “Petya” – crippled consumer product companies, transportation companies, law firms, and many other types of businesses worldwide. It is the second major ransomware attack in two months.

It appears that the Petya malware was delivered in a Microsoft Word document attached to an email. When the recipients opened the document, the malware encrypted their entire hard drive. It then looks for other unprotected computers in the same network and infects them.

Copyright: tonsnoei / 123RF Stock Photo

This problem isn’t going away on its own. Companies need to be proactive. They need to train their employees with computer access to understand the risks, how to identify potential malware, what to do if they see it, and what to do if their computers becomes infected.

Not surprisingly, there are also technological solutions. As we often do, we defer to our firm’s Chief Privacy Officer Mark G. McCreary, CIPP/US, to explain the techie stuff (which he has done in this Alert).

With the minimum wage increasing in cities across the state, I have been getting numerous calls and e-mails about those increases.  I blogged about the announcement of the LA Hotel Ordinance increase already, but there’s more.

In an effort to get everything in one place, I’ve compiled links to all the new minimum wage increases that take effect July 1, 2017. There are many more local ordinances that have January increases but we can worry about those in a few months!

County of Los Angeles (unincorporated)
City of Emeryville
City of Los Angeles
City of Malibu
City of Milpitas
City of Pasadena
City of San Francisco
City of San Jose
City of San Leandro
City of Santa Monica