Brinker Case Settles for $56 Million

California Restaurant Workers Settle High Profile
Wage and Hour Class Action Lawsuit

The Library of Congress Women workers employed as wipers in the roundhouse having lunch in their rest room, C. & N.W. R.R., Clinton, Iowa  April 1943

Women workers employed as wipers in the roundhouse having lunch in their rest room, C. & N.W. R.R., Clinton, (The Library of Congress April 1943)

After waging a 10-year legal battle, Brinker Restaurant Corp., the parent company for Chili’s and Maggiano’s restaurant chains, has settled its wage and hour class action lawsuit. On August 6, 2014, the parties reached a preliminary agreement to resolve all 120,000 class members’ claims in exchange for a maximum settlement payment of $56.5 million. The settlement terms remain subject to court approval.

This highly publicized case, which wound its way up to the California Supreme Court two years ago, affects all California employers. In its much-anticipated 2012 ruling, the high court held businesses must provide uninterrupted 30-minute meal breaks to their workers but are not obligated to ensure that no work is done during any such break. The Court cautioned that employers must not “impede or discourage” employees from taking that uninterrupted time off.

The Court also clarified California’s workplace rest period laws, ruling that employers must provide their hourly employees with one paid 10-minute rest break for every four hours worked or every “major fraction thereof.”

Brinker’s $56 million settlement serves as an important reminder for management to revisit meal and rest break policies. Among other things, workplace policy should clearly specify:

  • the minimum daily working hours that trigger one or more unpaid 30 minute meal breaks;
  • the minimum working shift hours that trigger each paid 10 minute rest period;
  • employee obligations to accurately record working periods, including the entries that will frame unpaid, off-work meal breaks;
  • management’s commitment to scheduling meal and rest break periods and to fielding any employee concerns over such matters;
  • procedure for employee complaints over meal and rest break practices or incidents and their resolution; and
  • forms for employees to periodically confirm (or contest) that any and all skipped breaks in a given recent period have been voluntary.

Of course, employers must always pay employees for all time worked including any meal breaks skipped at a worker’s option.

We’ve covered earlier rulings in past blogs, “Brinkers New Rules for Meal and Rest breaks”, “Brinker: Employees May Skip Breaks”, “Brinker: Clocking In on Employee Timekeeping”, “Brinker Decision and Rest Periods” and “Brinker: California’s Meal Break Breathrough“. For information concerning meal and rest periods and related workplace practices, as well as model employee policies and forms, contact one of our attorneys Tim Bowles, Cindy Bamforth or Helena Kobrin.

What Is Intellectual Property?

Image from page 611 of Collection of United States patents granted to Thomas A. Edison, 1869-1884 (1869)

Image from page 611 of Collection of United States patents granted to Thomas A. Edison, 1869-1884 (1869)

Have you ever created anything? Invented something? Designed something? Created a logo or a name that identifies your products or services? Written a song? Painted a picture? Taken a photograph? Perhaps you are a sculptor or a songwriter or you write blogs or screenplays. If you’ve done any of these things, then you have owned intellectual property.

Okay, so what, then, is intellectual property? It consists of things that you create through use of your intellect – your mind. There are several kinds of intellectual property. You may not be aware of all of them or you may have some of them confused with others. The most common ones are copyrights, trademarks (or service marks), patents, and trade secrets. They are different from one another, but they sometimes provide overlapping protections for various different rights that you claim in your own personal products or services or those of your company. For example, the Walt Disney Company claims both trademark and copyright protection for its numerous animated characters.

In many instances, your company’s intellectual properties are its most valuable asset, and it is penny wise and pound foolish not to hire an attorney to help you protect those properties.

We will be doing more blogs on these subjects. If there is anything you particularly would like to hear about, we welcome your feedback. If you need help with your intellectual property, please contact our Of Counsel attorney, Helena Kobrin.


Banned Box and Beyond

San Francisco Employers Must Give
Former Convicts a Fighting Chance

Alice Caush arrested for Larceny 1903 - Tyne & Wear Archives & Museums

Alice Caush arrested for Larceny 1903 – Tyne & Wear Archives & Museums

Joining a growing movement of 12 states and more than 60 cities with “ban the box” laws, i.e., deleting the typical criminal history check box often seen on employment applications, San Francisco’s Fair Chance Ordinance (FCO) goes into effect August 13, 2014.

Arguably the strictest “ban the box” legislation in the nation, the FCO requires covered private employers, city contractors, and housing providers to limit timing and use of criminal background checks and take the following steps:

• State in all job postings – and to conspicuously display an FCO notice — that qualified applicants with arrest and conviction records will be considered for the position in accordance with the FCO;
• Refrain from asking about an applicant’s conviction history or unresolved arrests at the start of the hiring process, such as on a job application form or through informal conversation;
• Wait until after conducting a live interview or making a conditional employment offer before asking about unresolved (i.e., pending) arrests and conviction history (except for any off-limits matters, such as arrests that did not lead to a conviction, misdemeanors, or convictions more than seven years old);
• Consider only those convictions and unresolved arrests that directly relate to the applicant’s ability to do the job (for example, an embezzlement conviction is likely relevant for a finance position); and
• Before denying an applicant a job due to a conviction, give the individual an opportunity to establish that the criminal background information obtained is inaccurate, he/she has been rehabilitated, or other mitigating factors such as physical or emotional abuse, coercion, or untreated abuse/mental illness that led to the conviction.

The FCO applies to employers located in or doing business in the city and county of San Francisco who have 20 or more employees (regardless of the employees’ location). It covers job applicants and employees who would be or are performing work in whole or substantial part in the city of San Francisco. Affected employers should promptly review and comply with the FCO in its entirety, including appropriate changes to job postings, employee applications, and interviewing protocol. All other employers should consider reviewing their hiring forms and policies to ensure lawful inquiry into an applicant’s criminal history, particularly if located in another “ban the box” jurisdiction.

For more information, contact one of our attorneys, Timothy Bowles, Cindy Bamforth or Helena Kobrin.

Wake-Up Call on Inside Salespersons

California Supreme Court Narrows Eligibility

for the Commissioned Salesperson Exemption

Phone orders section in T. C. Beirne's deparment store, 1952

Phone orders section in T. C. Beirne’s department store, 1952

California employers may qualify commissioned inside salespersons as exempt from overtime if they earn at least 1.5 times the state minimum wage for each hour worked with more than fifty percent of that total from commissions.  Some employers have considered an employee eligible if he or she met these requirements on average over several pay periods.  However, the California Supreme Court has recently ruled that the calculation must be made – and qualification determined – on what is earned and paid during each pay period.  Peabody v. Time Warner Cable, Inc. (July 14, 2014).  This may significantly lower the number of employers claiming this exemption for their workers.

Time Warner Cable classified its account executive Susan Peabody as an exempt commissioned inside salesperson.  For her sales of TV advertising, Time Warner paid Peabody regular wages on a biweekly basis (calculated per hour on a presumed 40 hour week).  The company also paid her monthly on commissions earned.  This meant that Peabody received at least one check per month for hourly pay only and at less than 1.5 times the minimum wage for all hours worked.

On Peabody’s lawsuit for unpaid overtime (including the claim that she usually worked 45 hours weekly), Time Warner argued the exemption applied by averaging her compensation over a month or more, i.e., that it should be permitted to apply portions of the monthly commission payments back to earlier pay periods where Peabody had originally received lower than the minimums required to qualify.

The California Supreme Court disagreed, unanimously ruling: “[A]n employer satisfies the minimum earnings prong of the commissioned employee exemption only in those pay periods in which it actually pays the required minimum earnings. An employer may not satisfy the prong by reassigning wages from a different pay period.”  Peabody v. Time Warner Cable, Inc.

The Court explained: “Making employees actually pay the required minimum amount of wages in each pay period mitigates the burden imposed by exempting employees from receiving overtime.  The purpose would be defeated if an employer could simply pay the minimum wage for all work performed, including excess labor, and then reassign commission wages paid weeks or months later in order to satisfy the exemption’s minimum earnings prong.” Peabody v. Time Warner Cable, Inc.

Two important lessons arise from the decision:

• Qualification for California’s inside sales exemption requires employee receipt of at least 1.5x minimum wage for every hour worked in the pay period.  With the July 1, 2014 increase of minimum wage to $9.00/hour, the minimum qualifying rate is thus currently $13.50 per hour; and

• To qualify a worker for the exemption, an employer may not attribute commissions paid in one period to other pay periods.

For more information, contact one of our attorneys, Timothy Bowles, Cindy Bamforth or Helena Kobrin.

Federal Agency Weighs in on Pregnancy Discrimination

EEOC Publishes Controversial Enforcement Guidelines

baby on a scale

On July 14, 2014, the U.S. Equal Employment Opportunity Commission (EEOC) published its first “guidance” on pregnancy discrimination since 1983.  EEOC enforcement guidances are the agency’s interpretations of law.  This set offers EEOC views on what constitutes unlawful pregnancy-based discrimination under the federal Civil Rights Act of 1964 (“Title VII”), as amended by the Pregnancy Discrimination Act of 1978 (PDA). The guidance also covers how the Americans with Disabilities Act (ADA) — as amended in 2008 to broaden the definition of disability — applies to pregnancy-related impairments.  These guidelines include covered employer obligations to provide pregnant employees equal access to employment benefits, such as leave, light duty, and health coverage.

The EEOC also published a “Fact Sheet for Small Business” for covered employers (essentially those with 15 or more persons on payroll), explaining when and how PDA and ADA requirements apply.

EEOC commissioner Victoria Lipnic has criticized the updated guidance for directing employers to modify job requirements for pregnant and lactating workers experiencing no complications and thus not disabled under the ADA.  Ms. Lipnic contends the guidance embraces “the novel position that under the language of the PDA, [any] pregnant worker is, as a practical matter, entitled to ‘reasonable accommodation’…. No federal Court of Appeals has adopted this position; indeed, those which have addressed the question have rejected it.”

Ms. Lipnic also questioned the timing of the EEOC’s publication: “The most significant questions addressed in the Pregnancy Guidance are pending before … the U.S. Supreme Court for review and decision.  See Young v. United Parcel Services, Inc…. (U.S. July 1, 2014)…. the credibility of the Commission is done no favor by issuing any guidance on these points while these critical questions are pending – particularly if the Court adopts a position which directly contravenes that taken in the Guidance….”

As always, employers should proceed deliberately in assessing how to accommodate workers with pregnancy-related limitations, including under possibly more stringent state laws such as California’s.

For more information, contact one of our attorneys, Timothy Bowles, Cindy Bamforth or Helena Kobrin.

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