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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.
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:
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 Breakthrough“. 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.
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.
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.
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.
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:
July 1, 2014
On July 14, 2014, the U.S. Equal Employment Opportunity Commission (EEOC) published its first“guidance” on pregnancy discriminationsince 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 federalCivil Rights Act of 1964(“Title VII”), as amended by thePregnancy Discrimination Act of 1978(PDA). The guidance also covers how theAmericans with Disabilities Act(ADA) — as amended in
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.
California employers may qualify commissionedinside salespersonsas 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 pa
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:
For more information, contact one of our attorneys, Timothy Bowles, Cindy Bamforth or Helena Kobrin.
Employees covered under California’s Paid Family Leave (PFL) program may receive up to six weeks of state-funded disability benefits to take time off for baby-bonding or to care for a seriously ill child, spouse, parent or registered...
Employees covered under California’s Paid Family Leave (PFL) program may receive up to six weeks of state-funded disability benefits to take time off for baby-bonding or to care for a seriously ill child, spouse, parent or registered domestic partner. California’s Employment Development Department (EDD) administers this program which began in 2004.
Effective July 1, 2014, covered employees will also be eligible to receive PFL benefits to care for a seriously ill grandparent, grandchild, sibling, or parent-in-law.
By July 1, California employers must distribute updated PFL pamphlets containing the new family member definitions to all new hires as well as to those qualifying employees taking time out from work for baby-bonding or care-giving. The pamphlet describes the PFL program, outlines employee eligibility criteria, and explains how to apply for benefits.
Starting July 1, California employers must also distribute a revised workers’ compensation pamphlet to all new employees at time of hire. The pamphlet includes modified requirements for employees to pre-designate a personal physician or medical group in case of work-related injury or illness. The new pamphlet also contains two new pre-designation forms: a) for a personal physician; and b) for a chiropractor or acupuncturist. It also describes the workers’ compensation program, including types of available benefits, penalties for making fraudulent claims, and steps an employee should take in the event of a workplace injury or illness.
These updated PFL and workers’ compensation pamphlets may be purchased from the California Chamber of Commerce.
For more information concerning required workplace notices, contact one of our attorneys, Timothy Bowles, Cindy Bamforth or Helena Kobrin.
Class action suits challenging company-wide workplace practices and thus posing crippling damage amounts have become big business in California and across the country.
Class action suits challenging company-wide workplace practices and thus posing crippling damage amounts have become big business in California and across the country. See, e.g., our blogs “The Devil is in the Details: Employment Class Action Suits Can Hinge on a Court’s Choice of Definitions” and “Brinker Case Settles for $56 Million.”
One or a few workers suing for improper treatment can magnify the stakes of their claims dramatically if they can establish that their numerous fellow laborers should be included in the court action. Employment-related cases can become such “class actions” on the trial judge’s determination (“certification””) that including the group of persons subject to the alleged wrongdoing is more efficient than for one or more judges to separately handle each worker’s claims.
A finding of such “greater judicial efficiency” in handling employee claims as a group depends on numerous and often quite complicated factors. Among these are whether there are “predominant” common questions of law or fact between the employees purportedly affected, whether the named, proposed representative worker holds claims typical of the rest, and whether that representative worker can adequately represent the interests of the others.
A worker’s suit asserting a hiring company has erroneously labeled him or her as an independent contractor (as opposed to an employee) is common. A class action suit over the alleged improper classification of a larger group of workers as independent contractors would seem less likely since the higher courts have ruled the contractor-or-employee determination is a case-by-case proposition, dependent on numerous intersecting factors. Yet, the California Supreme Court has recently issued guidelines for certifying a class in such lawsuits. Ayala v. Antelope Valley Newspapers, 59 California Reports, fourth series (Cal.4th) 522 (June 30, 2014).
Defendant Antelope Valley publishes a daily. By standard form contract, it has retained independent carriers to deliver the paper to subscribers. Four of those carriers sued Antelope Valley in December, 2008, alleging the publisher should have classified them as employees and that it thus owed them overtime pay, reimbursement for expenses, and other standard California and federal benefits.
The four plaintiffs requested class certification, contending that form contracts and other factors made it more efficient to determine contractor or employee status all at once for the newspaper carriers Antelope Valley hired. Antelope Valley opposed certification, contending there were wide variations on how individual carriers performed their work, making a common decision for all such workers impossible.
The trial judge agreed with Antelope Valley and denied certification, concluding that resolving the carriers’ employee or contractor status would involve “highly individualized inquiries” and that the case-by-case issues predominated. 59 Cal.4th at 529.
The Supreme Court had a different view. California’s “common law” test focuses principally on “whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired.” Emphasis supplied. The key is “whether the hirer ’retains all necessary control’ over its operations,” not whether the hirer actually asserts that control. 59 Cal.4th at 531. The Supreme Court concluded that Antelope Valley’s use of form contracts for retaining its carriers could allow the trial judge to decide whether the publisher’s “right to control” – whether great or small – was sufficiently uniform to permit a class wide assessment.
The trial judge’s error, the Court found, was in asking the wrong questions: whether Antelope Valley’s actual assertion of the right to control was adequately uniform with its carriers and whether the carriers as a whole experienced an actual pervasive control on the manner and means of delivering papers. Although that judge found “considerable variation” in the degree the publisher actually asserted control and that there was no actual pervasive control, the Supreme Court declared both conclusions were irrelevant to the class certification issue. 59 Cal.4th at 534.
Common law determination of employee or independent contractor status does not depend solely on whether the hiring person or entity has a right to control. The Court pointed out (59 Cal.4th at 532) there are numerous secondary factors, including:
While a certification decision on employee or independent contractor status would involve evaluation of whether each of the many factors could be assessed on a class wide basis, the Supreme Court suggested the trial judge might short-cut the process since, in previously published decisions, “the hirer’s right of control, ‘together with the skill which is required in the occupation, is often of almost conclusive weight.’” 59 Cal.4th at 539.
It will ultimately remain in the trial judge’s discretion to determine certification in this case, on whether common or individual factors “predominate.” That decision may ultimately turn on the relative effectiveness of the lawyers arguing for their clients’ opposing positions. However, there would seem a significant prospect of certification here as Antelope Valley used form agreements for its carriers and as the level of skill to perform newspaper delivery is low.
For assistance on independent contractor and employee classification issues, contact one of our attorneys Tim Bowles, Cindy Bamforth or Helena Kobrin.
See also:
“Classifying Workers, Employees or Independent Contractors?”
“Independent Contractors and Employees” and
“Independent or Employed? Classifying Workers Correctly is a Case-by-Case Challenge”
A company normally must compensate an employee for any time put in service to that company even if such work was not authorized.
A company normally must compensate an employee for any time put in service to that company even if such work was not authorized. Thus, while an employer can issue policy barring overtime work or policy requiring advance approval for it, that employer must pay an employee for such time even when the policy is violated. However, a recent California appeals court case establishes an employer is not obligated to pay a worker for claimed time that worker did not report or of which the employer did not otherwise have notice. Jong v.Kaiser Foundation Health Plan, Inc., 2014 Westlaw (WL) 2094270 (filed May 20, 2014)
After Henry Jong worked for Kaiser Foundation Health Plan, Inc. and Kaiser Foundation Hospitals in 2009 and 2010 in the San Francisco Bay Area as an hourly (non-exempt from overtime) “Outpatient Pharmacy Manager” (OPM), he sued these Kaiser companies for alleged unpaid overtime. Jong asserted that he had been forced to work off-the-clock because he supposedly would have been disciplined or fired for reporting those supposed hours to payroll and thus causing this employer to go over-budget in its pharmacy operations. Jong explained that staying within budget was part of his job duties.
In the course of this lawsuit, Mr. Jong confirmed that he knew of Kaiser’s policy to pay for all hours worked and to pay for all overtime hours that employees record, even if an employee should or could have obtained pre-approval before working the overtime but failed to do so. He also testified that he was familiar with the applicable time keeping rules and that he knew how to use the timekeeping system. He also signed a document entitled “Attestation Form for Hourly Managers and Supervisors --Working Off–the–Clock Not Allowed.” Jong also candidly admitted that he did not know whether anyone in Kaiser management knew he was supposedly performing this off-the-clock work.
Jong brought his suit under Labor Code section 1194, which authorizes “any employee receiving less than the legal minimum wage or the legal overtime compensation applicable to the employee” to recover the unpaid amount due, plus interest, attorney fees and costs. While there had previously never been a California court decision directly addressing an employer’s obligation under section 1194 when that employer has no knowledge of claimed hours worked, a federal court, interpreting the parallel federal Fair Labor Standards Act (FLSA) in 1981, found that “where an employer has no knowledge that an employee is engaging in overtime work and that employee fails to notify the employer or deliberately prevents the employer from acquiring knowledge of the overtime work, the employer’s failure to pay for the overtime hours is not a violation of [law].”
While Jong was unable to support his claims with any particular records of his asserted off-the-clock time, he attempted to establish Kaiser’s supposed “knowledge” of his extra work time by the testimony of 18 other OPMs in another case that each of them needed more than 40 hours weekly to perform his or her job duties. The court was not persuaded, observing that overtime work performed by other employees could not be notice to Kaiser that Jong was performing off-the-clock work.
For the court, it was fatal to Jong’s case that he had acknowledged:
Thus, in order to obligate Kaiser to pay him wages for his supposed extra work time, it was Jong’s obligation to provide Kaiser with sufficient notice that he was working these claimed extra hours.
This case decision confirms the importance of thorough, well-drafted workplace policies requiring each hourly employee’s full “times-in” and “times-out” reporting as well as attestation forms that confirm each employee’s ongoing full and honest reporting of his or her work time. Where an employer has maintained such sound practices, it should be difficult at best for a worker to later claim additional wages are owing for time not indicated on such records. For assistance on such matters, please contact attorneys Tim Bowles, Cindy Bamforth, or Helena Kobrin.
A company normally must compensate an employee for any time he/she put in service to that company even if such work was not authorized. Thus, while an employer can issue policy barring overtime work or policy requiring advance approval for it, that employer must pay an employee for such time even when the policy is violated. However, a recent California appeals court case establishes an employer is not obligated to pay a worker for claimed time that worker did not report or of which the employe
A company normally must compensate an employee for any time he/she put in service to that company even if such work was not authorized. Thus, while an employer can issue policy barring overtime work or policy requiring advance approval for it, that employer must pay an employee for such time even when the policy is violated. However, a recent California appeals court case establishes an employer is not obligated to pay a worker for claimed time that worker did not report or of which the employer did not otherwise have notice. Jong v.Kaiser Foundation Health Plan, Inc., 2014 Westlaw (WL) 2094270 (filed May 20, 2014)
After Henry Jong worked for Kaiser Foundation Health Plan, Inc. and Kaiser Foundation Hospitals in 2009 and 2010 in the San Francisco Bay Area as an hourly (non-exempt from overtime) “Outpatient Pharmacy Manager” (OPM), he sued these Kaiser companies for alleged unpaid overtime. Jong asserted that he had been forced to work off-the-clock because he supposedly would have been disciplined or fired for reporting those supposed hours to payroll and thus causing this employer to go over-budget in its pharmacy operations. Jong explained that staying within budget was part of his job duties.
In the course of this lawsuit, Mr. Jong confirmed that he knew of Kaiser’s policy to pay for all hours worked and to pay for all overtime hours that employees record, even if an employee should or could have obtained pre-approval before working the overtime but failed to do so. He also testified that he was familiar with the applicable time keeping rules and that he knew how to use the timekeeping system. He also signed a document entitled “Attestation Form for Hourly Managers and Supervisors –Working Off–the–Clock Not Allowed.” Jong also candidly admitted that he did not know whether anyone in Kaiser management knew he was supposedly performing this off-the-clock work.
Jong brought his suit under Labor Code section 1194, which authorizes “any employee receiving less than the legal minimum wage or the legal overtime compensation applicable to the employee” to recover the unpaid amount due, plus interest, attorney fees and costs. While there had previously never been a California court decision directly addressing an employer’s obligation under section 1194 when that employer has no knowledge of claimed hours worked, a federal court, interpreting the parallel federal Fair Labor Standards Act (FLSA) in 1981, found that “where an employer has no knowledge that an employee is engaging in overtime work and that employee fails to notify the employer or deliberately prevents the employer from acquiring knowledge of the overtime work, the employer’s failure to pay for the overtime hours is not a violation of [law].”
While Jong was unable to support his claims with any particular records of his asserted off-the-clock time, he attempted to establish Kaiser’s supposed “knowledge” of his extra work time by the testimony of 18 other OPMs in another case that each of them needed more than 40 hours weekly to perform his or her job duties. The court was not persuaded, observing that overtime work performed by other employees could not be notice to Kaiser that Jong was performing off-the-clock work.
For the court, it was fatal to Jong’s case that he had acknowledged:
Thus, in order to obligate Kaiser to pay him wages for his supposed extra work time, it was Jong’s obligation to provide Kaiser with sufficient notice that he was working these claimed extra hours.
This case decision confirms the importance of thorough, well-drafted workplace policies requiring each hourly employee’s full “times-in” and “times-out” reporting as well as attestation forms that confirm each employee’s ongoing full and honest reporting of his or her work time. Where an employer has maintained such sound practices, it should be difficult at best for a worker to later claim additional wages are owing for time not indicated on such records. For assistance on such matters, please contact attorneys Tim Bowles, Cindy Bamforth, or Helena Kobrin.
May 29, 2014