Court Decides Missed Lunches Are Not Enough to Establish Liability

February 28, 2011

Another California court has followed the logic of Brinker, in holding that employers need only provide their employees the opportunity to take a lunch break and need not ensure that such breaks are taken.  In Tien v. Tenet Healthcare, class certification was denied in a case alleging claims for failure to provide meal and rest breaks.  The court held that individual issues predominated over common issues because the evidence demonstrated there could be numerous individualized reasons why a meal or rest break was not taken on a given day, and the mere fact that time records revealed missed breaks was not enough to establish liability.  Even though the Brinker and Brinkley cases are pending review by the California Supreme Court on the issue of what it means to “provide” a meal period, the Court of Appeal held that the trial court was permitted to follow the logic and reasoning of these cases in determining the propriety of class certification. 

The Tien case is another in the line of recent cases showing a trend of courts in following the logic of Brinker/Brinkley, two cases that are still pending before the California Supreme Court. These case should be heard this year and hopefully the high court will uphold the lower court’s ruling.

Two Hours Maximum Premium Pay per Day for Missed Breaks

The California Labor Code generally requires employers to provide non-exempt employees with the opportunity to take a rest break for every four hours of work, as well as a lunch break for shifts in excess of five hours.  The Labor Code further provides that if a meal or rest break is improperly denied, the employee may recover one hour of pay as a “premium” (in plain English, known as a penalty).  What is unsettled in California is how many hours of premium pay an employee may recover in one day–one hour regardless of how many breaks are missed, one hour per missed meal break and one hour per missed rest break, or one hour for all meal breaks and one hour for all rest breaks?  One court decided last week that an employee may recover up to one hour of pay per day for missed meal breaks and one hour of pay per day for missed rest breaks.  The court relied on its interpretation of the plain language of the IWC Wage Orders and the administrative/legislative history behind them.  The case is United Parcel Service, Inc. v. Superior Court (Allen).

Ok, Ok, I don’t want you guys going crazy with these articles! Remember, we still want to monitor breaks and lunches in the event the California Supreme Court rules against the employer. But for now at least we have some breathing room.

Explicit Mutual Wage Agreement Defeated An Overtime Claim

February 21, 2011

A recent decision by the Second Appellate District ruled that an employer and employee can explicitly agree to a compensation arrangement whereby a non-exempt employee can receive a fixed salary for all work (including overtime hours) if the agreement properly provided for the payment of overtime wages at the correct premium rate. In Arechiga v. Dolores Press, the former employee sued his employer for additional overtime wage.  Arechiga worked as a janitor for Dolores Press, and agreed to work eleven hours a day and six days a week, or a total of 66 hours weekly.  The parties’ written agreement stated “Employee shall be paid a salary/wage of $880.00” weekly.  After Arechiga’s employment was terminated, he sued Dolores Press for unpaid overtime, asserting that his salary of $880 compensated him only for a regular 40-hour workweek at an imputed base pay of $22 per hour, and that he was entitled to unpaid overtime of 26 hours at the overtime premium rate each week during the statutory period.

Arechiga premised his claim on Labor Code § 515, which states that “[f]or the purpose of computing the overtime rate of compensation required to be paid to a nonexempt full-time salaried employee, the employee’s regular hourly rate shall be 1/40th of the employee’s weekly salary.”  The employer disagreed, asserting that under California’s “explicit mutual wage agreement” doctrine, the parties may agree to a guaranteed fixed salary so long as the employer pays the employee for all overtime at least one and one-half times the employee’s base rate of pay.  The trial court entered judgment for Dolores Press, which was upheld on appeal.  In doing so, the Court of Appeal rejected Arechiga’s assertion that Labor Code § 515 outlawed explicit mutual wage agreements.  Although the judicial opinions validating the use of mutual wage agreements predated the passage of Section 515 in 2000, no case law supports Arechiga’s position.  The Court of Appeal expressly rejected a provision from the Department of Labor Standards Enforcement Policies and Interpretations Manual that purported to interpret Section 515 as rejecting explicit mutual wage agreements.  Because there was sufficient evidence in the record to establish the employer’s contention that the parties agreed to a base rate of $11.14 per hour and the $880 weekly salary fully compensated Arechiga for all hours of overtime worked, judgment for the employer was upheld.

This is really good news for employers but I am not trying to open up the flood gates. Employers should be careful when entering into mutual wage agreements to make sure they comply with the legal requirements, such as:  (1) specifying the basic hourly rate of compensation upon which the guaranteed salary is based before the work is performed; (2) specifying that the employee will be paid at least one and one-half times the agreed-upon rate for hours in excess of 8 in a day and 40 in a week; and (3) informing the employee that the salary would cover both his regular and overtime hours.  If the employee works a set number of hours each week and the compensation reflects he or she was paid at the correct premium rate, this case validates the use of mutual wage agreements for non-exempt employees in California.

Warning: Unions Are Organizing Technicians at Car Dealerships

February 14, 2011
As many of you know, Art Silbergeld, Attorney-at-Law, has focused his thirty-five year practice representing employers. Recently we had a discussion regarding Union Organizing which has reared its ugly head. You have to be extremely careful in your interaction with employees if any union activity comes to your place of business. Art wrote the article below. 
The Machinists Union filed a petition with the National Labor Relations Board in June, 2010 seeking to organize technicians at a car dealership in San Diego.  An election was held on August 31, 2010 and the majority of technicians voted in favor of union representation.  The dealership challenged the eligibility of certain voters — roadside assistance technicians, the technician/shop foreman and PDI technicians.  The NLRB held that persons in these positions were eligible to vote, their challenged votes were counted, and the union held onto its majority vote.  The results of the election have been challenged and the matter is pending before the NLRB in Washington, D.C.  It is very likely that the Machinists victory will be upheld, the Union will be certified as the representative of the dealership’s technicians, and the dealer will have to engage in collective bargaining negotiations.
In the meantime, within the last few days another petition has been filed against another dealership in Anaheim, California.  The Union’s petition seeks to represent technicians at that location.
A critical moment in the history of many companies is the struggle to defeat a union organizing drive.  At stake is management’s freedom to manage its own employees and optimize the productivity and efficiency of its work force, unencumbered by collective bargaining contacts and intrusive union business agents.  Unionization typically increases labor costs by 25%, but much of this money never benefits the employees.  Unions only represent 6.9% of the workforce in the U.S., but are hungry for union dues and pension fund contributions. 
Union organizing campaigns are complicated events.  Employers need to know how to campaign against a union in compliance with the law.  Supervisors need to be trained on how to spot union organizing before it formally surfaces and how to avoid committing unfair labor practices and objectionable conduct that undermine the employer’s ability to persuade employees to vote against representation.
We have trained numerous managers and supervisors on how to spot organizing and how to avoid communications and conduct that are unfair labor practices.  A training, which includes handout materials and a question and answer session, typically takes no more than 2 hours.  Training supervisors is an ounce of prevention that may help defeat a union organizing campaign.  Let Jim Potts or me know if your employer is interested in our doing a training for you.
Art Silbergeld
(310) 255-9077

Two Short Articles-$15 Million Dollar Settlement & Another Way Employees Can Collect Unemployment

February 7, 2011

Unemployment Insurance Eligibility Expanded For Domestic Violence Victims

As many of you already know, an employee who resigns from employment is not entitled to receive unemployment insurance benefits, unless he or she can establish “good cause.” Now, Assembly Bill 2364 has expanded the “good cause” exception for victims of domestic violence. Prior to this Bill being passed an employee who resigned from employment to protect themselves or their children were not eligible to receive benefits. That’s been changed. According to the new law, the protection has been expanded to include other family members, such as registered domestic partners, siblings, grandparents, grandchildren, son or daughter-in-law, step children, foster children, and any guardian or person with whom the claimant has assumed reciprocal rights, duties, and liabilities of a parent child relationship or grandparent-grandchild relationship.

Here’s the kicker. Since the passage of this bill has brought California’s Unemployment Insurance Code into compliance with Federal eligibility guidelines, California is now eligible to receive $559 million dollars under the American Recovery and Reinvestment Act.

Gee, I wonder why California passed this law??

$15 Million Dollar Settlement-Wage & Hour

Dick’s Sporting Goods has agreed to settle a federal and state lawsuits claiming the company violated wage and labor laws affecting 190,000 current and former workers. The settlement resolves a class action lawsuit that was filed in 2005. The settlement involved employees in 22 states. The CEO was also named a defendant.

The original lawsuit was filed by 68 hourly employees of Dick’s. The basic claims were the same type that we have been encouraging employers to abide by, working through lunch hours, interrupted lunch breaks, and supervisors permitting employees to work overtime and giving them compensatory time off but not at the rate of time and a half.

Once again, please tighten up your wage and hour policies, practices, and procedures. Don’t assume the managers are doing it all the right way. Check and re-check to enforce these mandatory laws.