Employer Must Pay Portion of Employee’s Unlimited Data Plan for Work-Related Calls

The California Court of Appeal has ruled in favor of employee Colin Cochran on his class action lawsuit on behalf of 1,500 customer service managers against Schwan Home Service for reimbursement for work-related use of personal cell phones. Cochran v. Schwan’s Home Service, Inc. (August 12, 2014). Cochran alleged the company violated California Labor Code Section 2802, which provides:

“An employer shall indemnify [reimburse] his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer….”

Schwan’s Home Service had convinced the trial judge that class members had no claim for reimbursement under section 2802 if the workers had plans for their personal phones providing unlimited minutes for a flat rate or if someone other than the employee paid the bill. (In Mr. Cochran’s particular case, it was unclear whether he or his girl friend had actually paid the bill.)

The Court of Appeal disagreed, ruling that an employer must reimburse the reasonable expense of the mandatory use of a personal cell phone regardless of whether the employee actually incurred extra expense for such calls or not: “To show liability under section 2802, an employee need only show that he or she was required to use a personal cell phone to make work-related calls, and he or she was not reimbursed.” Otherwise, the court reasoned, the employer would receive a windfall from passing its operating expenses onto the employee.

Thus, to be in compliance with section 2802, the employer must pay some reasonable percentage of the employee’s cell phone bill for all types of cell phone plans and even if someone else pays the bill. The court did not discuss how to calculate that percentage.

California employers should promptly consult with competent legal counsel regarding their reimbursement obligations. For more information, contact one of our attorneys, Timothy Bowles, Cindy Bamforth or Helena Kobrin.

Employer Must Pay Portion of Employee’s Unlimited Data Plan for Work-Related Calls

The California Court of Appeal has ruled in favor of employee Colin Cochran on his class action lawsuit on behalf of 1,500 customer service managers against Schwan Home Service for reimbursement for work-related use of personal cell phones. Cochran v. Schwan’s Home Service, Inc. (August 12, 2014). Cochran alleged the company violated California Labor Code Section 2802, which provides:

“An employer shall indemnify [reimburse] his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer….”

Schwan’s Home Service had convinced the trial judge that class members had no claim for reimbursement under section 2802 if the workers had plans for their personal phones providing unlimited minutes for a flat rate or if someone other than the employee paid the bill. (In Mr. Cochran’s particular case, it was unclear whether he or his girl friend had actually paid the bill.)

The Court of Appeal disagreed, ruling that an employer must reimburse the reasonable expense of the mandatory use of a personal cell phone regardless of whether the employee actually incurred extra expense for such calls or not: “To show liability under section 2802, an employee need only show that he or she was required to use a personal cell phone to make work-related calls, and he or she was not reimbursed.” Otherwise, the court reasoned, the employer would receive a windfall from passing its operating expenses onto the employee.

Thus, to be in compliance with section 2802, the employer must pay some reasonable percentage of the employee’s cell phone bill for all types of cell phone plans and even if someone else pays the bill. The court did not discuss how to calculate that percentage.

California employers should promptly consult with competent legal counsel regarding their reimbursement obligations. For more information, contact one of our attorneys, Timothy Bowles, Cindy Bamforth or Helena Kobrin.

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

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 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.

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

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 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.

EEOC Publishes Controversial Enforcement Guidelines

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 Supreme Court Narrows Eligibility for the Commissioned Salesperson Exemption

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.

EEOC Publishes Controversial Enforcement Guidelines

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 Supreme Court Narrows Eligibility for the Commissioned Salesperson Exemption

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.

“Paid Family Leave” Program and Workers’ Comp Affected

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.