Employer With Out Notice of Off-the-Clock Work NOT Liable for Unpaid Wages!

May 27, 2014

Last week a California court issued a favorable decision for the employer in an off-the-clock case, holding that the employer was not liable to the plaintiff for work the plaintiff performed off-the-clock because there was no evidence that the employer knew about the off-the-clock work. The case is useful in illustrating the types of evidence that courts consider in analyzing whether the employer had “knowledge” of off-the-clock work being performed.

In Jong v. Kaiser Foundation Plan, the plaintiffs were three outpatient pharmacy managers for Kaiser. Their position previously was classified as exempt but Kaiser reclassified the position to non-exempt in connection with the settlement of a prior class action challenging the exempt classification of this position. Following the reclassification of the position to non-exempt, the plaintiffs filed a putative class action against Kaiser, alleging that Kaiser had a policy and practice of requiring its outpatient pharmacy managers to perform work off-the-clock and without pay. Kaiser filed a motion for summary judgment as to each of the three named plaintiffs’ off-the-clock claims. The trial court granted Kaiser’s motion as to Plaintiff Jong (holding that Kaiser was not liable to Jong and ending Jong’s claim against Kaiser), but denied the motion as to the other two named plaintiffs, allowing their claims to proceed. Jong appealed the adverse ruling against him.

The Court of Appeal upheld the trial court’s order summarily adjudicating Jong’s off-the-clock claim in Kaiser’s favor. The court explained that in order for an employer to be liable for unpaid wages for work performed off-the-clock, there must be evidence that the employer had actual or constructive knowledge that the employee was performing work off-the-clock. The court held that Jong had failed to present evidence from which it could be concluded that Kaiser had knowledge that he performed any work off-the-clock. The court’s holding was based on several admissions that Jong made in the case, including that (1) he knew Kaiser had a policy prohibiting off-the-clock work; (2) no manager or supervisor ever told him that he should perform work off-the-clock; (3) he was specifically told that he was eligible to work and be paid for overtime hours; (4) there was never an occasion when he requested approval to work overtime that was denied; (5) that he was paid for all work hours he recorded, including overtime hours, even when he did not seek pre-approval for the overtime work; and (6) he signed an attestation form agreeing not to perform work off-the-clock in accordance with Kaiser policy.

Notwithstanding these fatal admissions by Jong, Jong argued that Kaiser nevertheless still had constructive knowledge that he was performing work off-the-clock based on the fact that store alarm records revealed that Jong disarmed the alarm prior to the time he recorded beginning work and that Kaiser could have compared the alarm records to his time keeping records to discern that he was performing work off-the-clock prior to the start of his shifts. The court rejected this argument, suggesting that the standard for constructive knowledge is not whether the employer “could have known” that off-the-clock work was being performed, but rather whether the employer “should” have known about it. Moreover, the court held that the records did not establish that Jong was actually performing any work during any gap between disarming the alarm and signing in for the start of his shift.
Jong also argued that Kaiser was on notice that outpatient pharmacy managers must be performing work off-the-clock based on depositions in the misclassification class action revealing that employees in this position testified to working an average of 48 hours per week. The court rejected Jong’s argument, reasoning that this evidence related to work habits prior to the reclassification of the position from exempt to non-exempt and, in any event, the evidence did not establish that Kaiser had knowledge that Jong was performing work off-the-clock. For these reasons, the court entered judgment in favor of Kaiser on Jong’s claims.

While Kaiser was successful in defending Jong’s claims, it did not have the same success in getting the other two named plaintiffs’ claims thrown out. The trial court denied Kaiser summary judgment of their claims, based on testimony by those plaintiffs that they had conversations with their supervisors about performing work off-the-clock. Based on that testimony, the trial court concluded that there was a triable issue of fact regarding whether Kaiser had sufficient notice of those plaintiffs’ off-the-clock work to be liable for unpaid wages and that this issue would have to be tried.

The Jong v. Kaiser case is a good reminder of the importance of well-drafted and communicated policies prohibiting off-the-clock work and how documentation of those policies is effective evidence in defeating off-the-clock claims. The opinion also has useful language for employers to use in emphasizing the individualized nature of the liability inquiry on an off-the-clock claim, for purposes of opposing class certification when such claims are brought as putative class actions.

Travel Time Compensation: A Clarification

May 19, 2014

Travel time compensation is an issue that continues to plague employers. It’s not that complicated. Travel time is considered compensable work hours where the employer requires its employees to meet at a designated place, use the employer’s transportation to and from work site and prohibits employees from using their own transportation.

Compulsory travel time longer than the employee’s normal commute is considered compensable time. Travel time to a job site within reasonable proximity of the employee’s regular work is not compensable. If an employee has no regular job site, travel time to the new job site each day is not compensable. If an employee has a temporary work location change, the employee must be compensated for any additional time required to the new job site in excess of the employee’s normal commute.

The definition of hours worked can be found in your respective Industrial Welfare Commission Order (IWC) that is required to be posted at your work site. Just keep in mind that work hours are simply means the time during which an employee is subject to the control of the employer, and includes all time the employee is permitted to work, whether or not required to do so. It should be noted, state law does not distinguish between hours worked during “normal” working hours, nor does it distinguish between hours worked in connection with overnight out-of-town assignments.

Under California law, if an employer requires an employee to attend out-of-town business meetings, training, or any other event, the employer cannot disclaim an obligation to pay for the employee’s time in getting to and from the location of that event. Time spent driving, or as a passenger on an airplane, train, bus, taxi, car, or other mode of transportation, in traveling to and from this out-of-town event, and time spent waiting to purchase a ticket, check baggage, or get on board is, under such circumstances, time spent carrying out the employer’s directive, and thus, is characterized as time in which the employee is subject to the employer’s control. On the other hand, time spent taking a break from traveling in order to eat a meal, sleep or to engage in purely personal activities not connected with traveling or making necessary travel connections (as an example, spending an extra day to sightsee) is not compensable.

Now, let’s talk about compensation. The rate at which the travel must be paid depends upon the nature of the compensation agreement. If the employer has agreed to pay a fixed hourly rate of pay for any work performed, then travel time must be paid at that hourly rate, or if applicable, the required overtime rate. An employer may establish a separate rate of pay for travel before the work is performed for hourly employees, provided that the rate does not fall below minimum wage. Salary non-exempt employees must be paid at the appropriate overtime rate for any hours worked in excess of 8 hours in a day or 40 in a week, computed by converting the weekly salary to an hour rate. Exempt employees are paid their normal compensation.

Finally, keep in mind, all necessary expenses incurred in connection with employer-required travel must be reimbursed to the employee (California Labor Code Section 2802).

Employee Caught Sunbathing in the Nude on the Roof Sues for Retaliation!

May 12, 2014

Every once in a while I really like to take the opportunity of sharing just how ridiculous workplace allegations can be. A long-time custodian for a school district was caught on the roof of the elementary school at which he worked, sunbathing, in the nude. Instead of firing him, the school board suspended him for 30 days without pay and demoted him. Over the next five years, he applied for seven different head custodian jobs with the district. Each job went to a different applicant. As a result of not being given the opportunities presented, the employee filed three different charges with the EEOC stemming from those rejections, first for race discrimination, and later for retaliation. The court dismissed the claims.

In a nutshell, the key issue was whether a common purpose to retaliate against the employee was inferred from the sheer volume of his promotion denials. The court, when it considered the fact that seven different decision makers were involved over the years, did not buy into the employee’s argument.

Some employees are unworthy of protection by the anti-retaliation laws. Yes, here, the employee filed many EEOC charges claiming discrimination resulting from his employer’s failure to promote him. But, he was also caught sunbathing, nude, on the roof of the elementary school at which he worked. One decision maker would be justified in concluding that the employee was unworthy of a promotion. Seven different decision makers reached the same conclusion. Thus, barring evidence of a grand conspiracy against the employee because he had filed some EEOC charges, he did not prevail on his retaliation claim.

The moral of the story: not all protected activity is protected!

Employees Could File Liens Against The Employer’s Property? Really??

May 4, 2014

Just when you think that California cannot get any more employer-unfriendly, the California Legislature reminds us that it actually can. The latest reminder is legislation that was recently introduced by Democratic Assemblyman Mark Stone (AB 2416) to allow employees to record liens against their employers’ property for alleged unpaid wages. That’s right—alleged. In order to record a lien, the employee does not need to have proven his entitlement to unpaid wages in a court action or Labor Commissioner proceeding or otherwise. It is only after the lien is recorded that the employee must prove up the lien by demonstrating that he is actually owed the unpaid wages. If the employee succeeds, he is also entitled to recover attorneys’ fees and costs. A lien can also be recorded and enforced by a group of employees or by a government agency (e.g. the DLSE). The only way the employer can avoid the lien is by obtaining a surety bond (similar to that required to stay a money judgment pending appeal), which is itself a costly procedure.

At least there’s some faint protective relief built in to the legislation for employers–well, sort of. If an employer defeats an action to enforce a lien, the employer can, in very limited circumstances, recover its attorneys’ fees and costs IF the employer can prove that the employee’s action was brought unreasonably and in bad faith. (Conversely, the employee of course automatically gets awarded his attorneys’ fees and costs if he proves entitlement to unpaid wages, regardless of whether the wage withholding was in good faith.)

The proposed legislation has exclusions for employees covered by collective bargaining agreements if certain specified conditions are met, and also excludes employees who are exempt administrative, professional or executive employees (of course, the employee can challenge his exempt status and thereby avoid this exclusion, and the legislation specifically states that it is the employer’s burden to prove, as an affirmative defense, that the employee meets the test for exemption).

Employers should voice their opposition to this unnecessary legislation, which has already passed one labor committee and, if enacted, will provide one more tool for the plaintiffs’ employment bar to use to pressure employers to settle wage and hour claims, particularly those brought on behalf of a class of employees.

During the interim, make sure you are following all state and federal guidelines regarding the payment of wages. Have an HR Audit done to ensure compliance. Do not take it for granted that everything is being done properly!