California Supreme Court Decides When Independent Newspaper Carriers May Challenge Their Classification as a Class

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:

● whether the one performing the services is engaged in a distinct occupation or business;
● the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the hiring party (principal) or by a specialist without supervision;
● the skill required in the particular occupation;
● whether the principal or worker supplies the instrumentalities, tools, and the place of work for the person doing the work;
● the length of time for which the services are to be performed;
● the method of payment, whether by the time or by the job;
● whether or not the work is a part of the regular business of the principal; and
● whether or not the parties believe they are creating the relationship of employer-employee.

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”

California Supreme Court Decides When Independent Newspaper Carriers May Challenge Their Classification as a Class

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:

● whether the one performing the services is engaged in a distinct occupation or business;
● the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the hiring party (principal) or by a specialist without supervision;
● the skill required in the particular occupation;
● whether the principal or worker supplies the instrumentalities, tools, and the place of work for the person doing the work;
● the length of time for which the services are to be performed;
● the method of payment, whether by the time or by the job;
● whether or not the work is a part of the regular business of the principal; and
● whether or not the parties believe they are creating the relationship of employer-employee.

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”

An Employer is Not Responsible to Pay Off-the-Clock Work Time about Which It Knows Nothing

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:

● He “knew of Kaiser’s written policy that OPMs should be clocked in whenever they were working”;
● Jong was always paid for time he recorded on Kaiser’s recording system, including overtime hours;
● He was instructed that Kaiser would pay him for overtime hours and that Kaiser never declined approval of his requests to work overtime;
● Kaiser paid Jong for documented overtime even when he did not seek pre-approval;
● No Kaiser management personnel ever told Jong that he should perform work before he clocked in, after he clocked out or otherwise work off-the-clock; and
● Jong signed the above attestation form and understood it was an attestation that he would not work off-the clock.

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

An Employer is Not Responsible to Pay Off-the-Clock Work Time about Which It Knows Nothing

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:

● He “knew of Kaiser’s written policy that OPMs should be clocked in whenever they were working”;
● Jong was always paid for time he recorded on Kaiser’s recording system, including overtime hours;
● He was instructed that Kaiser would pay him for overtime hours and that Kaiser never declined approval of his requests to work overtime;
● Kaiser paid Jong for documented overtime even when he did not seek pre-approval;
● No Kaiser management personnel ever told Jong that he should perform work before he clocked in, after he clocked out or otherwise work off-the-clock; and
● Jong signed the above attestation form and understood it was an attestation that he would not work off-the clock.

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

An Employer’s Lesson In Thorough Documentation

In Los Angeles County, it is not uncommon to see 100 lawsuits filed weekly against employers for alleged unlawful discrimination or retaliation, often both in the same complaint. One could say that unless a business knows and applies the important basics in preventing such expensive and time-consuming claims, it is only a matter of time before that company is hit with one.

Illegal discrimination is essentially an employment decision – for example, hiring, promotion, pay level, or termination — based improperly on an individual’s physical, cultural or other personal characteristics that are or should be irrelevant to his or her ability to perform. For example, a person’s gender or religion should make no difference when he or she is able to competently perform a job position. See, e.g.,Accommodating Religion in the Workplace and Proving Workplace Discrimination is Now More Difficult in California.

Illegal retaliation is an employment decision – for example, lowering pay, demotion, termination – based improperly on an individual’s sincerely complaining about an allegedly improper workplace practice, including, for example, a safety, health, or discrimination issue. See, e.g., Barbosa v. IMPCO – Terminating an Employee for Mistakenly Falsifying Time Card Violates Public Policy.

The critical battle line in such cases is very often whether the employer can demonstrate that it actually and sincerely made the adverse decision for a legitimate business reason, not the supposed discriminatory or retaliatory one. A recent California appeals court case illustrates the importance of employers fully documenting the valid reasons for such adverse decisions, lest they are drawn into prolonged, costly and distracting litigation for lack of clear, thorough paperwork. Cheal v. El Camino Hospital (2014) 223 California Appellate Reports, fourth series (Cal.App.4^th) 736

Plaintiff Carol Cheal had worked in El Camino Hospital’s Nutrition Services Department for over 20 years when the hospital fired her in October 2008 at age 61. Her jobs had been preparing menus for patient meals and making sure the correct foods reached the correct patients. Up to and including her performance evaluation in August 2007, plaintiff always received the highest ratings possible. Things changed when the hospital hired Kim Bandelier to supervise all “DietTechs,” including Cheal. Over the ensuing months, Bandelier accused Cheal of numerous errors, issuing two write-ups, including a “final warning” in June, 2008. After several more claimed incidents – none documented in writing – the hospital terminated her on October 10, 2008.

Cheal sued, claiming her performance was up to standards and that the actual reasons for the firing were her supervisor’s hostility towards her age and her complaining to management about alleged improper practices in the hospital. The hospital won an early dismissal of the case when it convinced a Superior Court judge that the hospital could have only fired Cheal for her misconduct. However, in a strong statement that employees must be given the chance to have a jury decide the case if the business’s documentation is not thorough, the Court of Appeal decided in Cheal’s favor and sent the case back for a trial.

The appeals court’s analysis of the hospital’s spotty documentation was extensive. One example underscored the trouble employers can create for themselves for incomplete recordkeeping on work performance. The hospital claimed it was justified in firing Cheal for her failures to enter the first names of patients and to mark dates of birth with a highlighter on progress charts. Cheal admitted she made some mistakes here but declared that she had personal knowledge that other diet staff more frequently failed to follow these procedures but were not warned, written-up or fired. Supervisor Bandelier in turn acknowledged that Cheal had commented on the pervasiveness of these errors by other workers, but asserted she told Cheal that it was up to Cheal to report these mistakes.

The Court of Appeal observed that Bandelier might be creating an “interesting discrepancy” by going out of her way to hunt down “Cheal’s errors on her own initiative, while leaving the errors of younger workers to be discovered and reported, if at all, by others.” The court also pointed out that more importantly the hospital was obviously slack in tracking just what was the acceptable norm of performance for diet techs on filling out patient charts and thus could not present any sort of verified data base to show that Cheal was better or worse than any of her co-workers who were not disciplined for such infractions. 223 Cal.App.4^th at 748-749.

The irony is that a company’s asserted legitimate reasons for firing an employee just have to be sincere, they “need not necessarily have been wise or correct,” so long as they were not discriminatory. 223 Cal.App.4^th at 755. The problem – and second irony – sits with inadequate documentation. Since the hospital had not kept thorough records to show that Cheal was undoubtedly failing at her job relative to younger co-workers, this raised the possibility that the hospital was lying about the reasons it fired her. Thus, the appeals court gave Cheal the chance to present her whole case to a jury. 223 Cal.App.4^th at 754-755, 760-761. Any business that is willing to confidently confer upon an American jury the job of objectively evaluating conflicting evidence in a case such as this is courageous in the extreme.

For attorney assistance on proper and necessary documentation of personnel management matters, please contact attorneys Tim Bowles, Cindy Bamforth, or Helena Kobrin.

May 28, 2014

An Employer’s Lesson In Thorough Documentation

In Los Angeles County, it is not uncommon to see 100 lawsuits filed weekly against employers for alleged unlawful discrimination or retaliation, often both in the same complaint. One could say that unless a business knows and applies the important basics in preventing such expensive and time-consuming claims, it is only a matter of time before that company is hit with one.

Illegal discrimination is essentially an employment decision – for example, hiring, promotion, pay level, or termination — based improperly on an individual’s physical, cultural or other personal characteristics that are or should be irrelevant to his or her ability to perform. For example, a person’s gender or religion should make no difference when he or she is able to competently perform a job position. See, e.g.,Accommodating Religion in the Workplace and Proving Workplace Discrimination is Now More Difficult in California.

Illegal retaliation is an employment decision – for example, lowering pay, demotion, termination – based improperly on an individual’s sincerely complaining about an allegedly improper workplace practice, including, for example, a safety, health, or discrimination issue. See, e.g., Barbosa v. IMPCO – Terminating an Employee for Mistakenly Falsifying Time Card Violates Public Policy.

The critical battle line in such cases is very often whether the employer can demonstrate that it actually and sincerely made the adverse decision for a legitimate business reason, not the supposed discriminatory or retaliatory one. A recent California appeals court case illustrates the importance of employers fully documenting the valid reasons for such adverse decisions, lest they are drawn into prolonged, costly and distracting litigation for lack of clear, thorough paperwork. Cheal v. El Camino Hospital (2014) 223 California Appellate Reports, fourth series (Cal.App.4^th) 736

Plaintiff Carol Cheal had worked in El Camino Hospital’s Nutrition Services Department for over 20 years when the hospital fired her in October 2008 at age 61. Her jobs had been preparing menus for patient meals and making sure the correct foods reached the correct patients. Up to and including her performance evaluation in August 2007, plaintiff always received the highest ratings possible. Things changed when the hospital hired Kim Bandelier to supervise all “DietTechs,” including Cheal. Over the ensuing months, Bandelier accused Cheal of numerous errors, issuing two write-ups, including a “final warning” in June, 2008. After several more claimed incidents – none documented in writing – the hospital terminated her on October 10, 2008.

Cheal sued, claiming her performance was up to standards and that the actual reasons for the firing were her supervisor’s hostility towards her age and her complaining to management about alleged improper practices in the hospital. The hospital won an early dismissal of the case when it convinced a Superior Court judge that the hospital could have only fired Cheal for her misconduct. However, in a strong statement that employees must be given the chance to have a jury decide the case if the business’s documentation is not thorough, the Court of Appeal decided in Cheal’s favor and sent the case back for a trial.

The appeals court’s analysis of the hospital’s spotty documentation was extensive. One example underscored the trouble employers can create for themselves for incomplete recordkeeping on work performance. The hospital claimed it was justified in firing Cheal for her failures to enter the first names of patients and to mark dates of birth with a highlighter on progress charts. Cheal admitted she made some mistakes here but declared that she had personal knowledge that other diet staff more frequently failed to follow these procedures but were not warned, written-up or fired. Supervisor Bandelier in turn acknowledged that Cheal had commented on the pervasiveness of these errors by other workers, but asserted she told Cheal that it was up to Cheal to report these mistakes.

The Court of Appeal observed that Bandelier might be creating an “interesting discrepancy” by going out of her way to hunt down “Cheal’s errors on her own initiative, while leaving the errors of younger workers to be discovered and reported, if at all, by others.” The court also pointed out that more importantly the hospital was obviously slack in tracking just what was the acceptable norm of performance for diet techs on filling out patient charts and thus could not present any sort of verified data base to show that Cheal was better or worse than any of her co-workers who were not disciplined for such infractions. 223 Cal.App.4^th at 748-749.

The irony is that a company’s asserted legitimate reasons for firing an employee just have to be sincere, they “need not necessarily have been wise or correct,” so long as they were not discriminatory. 223 Cal.App.4^th at 755. The problem – and second irony – sits with inadequate documentation. Since the hospital had not kept thorough records to show that Cheal was undoubtedly failing at her job relative to younger co-workers, this raised the possibility that the hospital was lying about the reasons it fired her. Thus, the appeals court gave Cheal the chance to present her whole case to a jury. 223 Cal.App.4^th at 754-755, 760-761. Any business that is willing to confidently confer upon an American jury the job of objectively evaluating conflicting evidence in a case such as this is courageous in the extreme.

For attorney assistance on proper and necessary documentation of personnel management matters, please contact attorneys Tim Bowles, Cindy Bamforth, or Helena Kobrin.

May 28, 2014

Assembly Bill 2416 Would Permit Employees to Impose Liens on All Employer Property for Alleged (but Unproven) Wage Claims

California’s controversial Assembly Bill (AB) 2416, the “Wage Theft Recovery Act” continues to make progress through the Legislature. Patterned on a unique Wisconsin law, the Act, if passed, would enable an employee to create a lien upon an employer’s real and personal property for the full amount of any unpaid wages, penalties and interest allegedly owed to that employee. The Assembly passed the bill on May 23, 2014. It was also recently approved, with various proposed revisions, by the Senate Judiciary and is now under consideration by other committees on that side.

Proponents of the bill cite a 2010 “wage theft” study from UCLA that estimated nearly 656,000 workers in Los Angeles County experience at least one pay-based violation of the law every week, supposedly totaling some $26,200,000 weekly. Characterizing even inadvertent underpayments of straight or overtime pay as “theft,” the study concludes the shortfall “robs local communities of … spending and ultimately limits economic growth.” Another 2013 UCLA study concludes that current government lines and procedures are ineffective, with only an estimated 17% of California workers successful in collecting on claims, thus leaving 83% of claimants unpaid.”

AB 2416’s sponsors point to Wisconsin’s reported example. The above 2013 UCLA study asserts that since implementing a lien procedure for workers alleging underpayment of wages, 80% of claimants have been paid in part or in full through the collection process. That UCLA study also notes that only a small number of liens are actually filed in Wisconsin every year (about 3,300), suggesting that merely the prospect of liens provides a deterrent to such wage underpayments there.

The opponents to AB 2416 – including the California Chamber of Commerce and at least 60 other state and local commercial associations – obviously do not condone violation of wage laws. They assert the proposal goes too far, harming business’s ability to operate (and thus provide jobs) as liens for alleged, but unproven, wages can cripple the ability to finance and thus grow an enterprise. The opponents also point out that AB 2416 allows wage liens against third party commercial property owners who had no actual control over the employee. They also claim the new law would place significant burdens on the court system and that there are already sufficient protections in place for failure to pay wages.

With the California Chamber taking the lead and terming it a “job killer,” an earlier version of the proposal, AB 1164, died in the Assembly for lack of support this past January. Now over to the Senate, AB 2416 obviously has greater momentum. Its provisions are detailed and of course subject to change as it moves along through committees. We will be tracking the measure along with advocates on both sides of the debate.

Underpayment of Minimum Wage and Overtime Is Foul Play

Thirty-three former minor league ball players seek to pull back the curtain on alleged system-wide violations of minimum wage or overtime. Their federal class action suit challenges Commissioner Bud Selig, the Office of the Commissioner, and, in effect, every baseball team in the country to remedy such practices. If the court agrees, the suit will include thousands of current and former minor league players. See, Senne v. Office of the Commissioner of Baseball, Case No. 3:14-cv-00608-JCS (United States District Court, Northern District of California, San Francisco Division); and “Most minor league ballplayers earn less than half as much money as fast-food workers” U.S.A. Today, March 6, 2014.

The federal Fair Labor Standards Act and the laws of every state require the payment of minimum wage and overtime to the vast majority of workers, including many professional athletes. According to these minor league plaintiffs, the Major League Baseball “cartel” has considered itself above such mundane requirements as employment laws for many years.

The players allege that in concert with the team owners the Commissioner establishes salary amounts that all teams pay their minor league players. Shocking if true, the players assert that while the unionized major leaguers earn a minimum of $500,000 per season (and some, of course, many times that amount), minor leaguers earn an average total of $3,000 to $7,500 for the entire five-month “championship season,” and nothing for spring and post-season training, while working 50-70 hours a week.

If the few players who brought this suit can win court approval to include the many other minor leaguers potentially affected by unlawful labor practices, the teams may have to pay millions in unpaid minimum wage and overtime. For those teams employing players in California, it could be even worse with this state’s stringent laws for penalties and other damages arising from underpayment of wages. These include (but are not limited to):

• California Labor Code 203, providing for up to 30 days of wages as a penalty for not paying what is owed when the person leaves employment;
• Labor Code 210, providing for civil penalty of $100 for each initial failure to pay an employee on time and $200 for each subsequent violation;
• Labor Code 226(e), providing for civil penalty of $50 for each initial inaccurate or incomplete paystub violation and $100 for each subsequent violation, up to $4,000 per employee;
• Labor Code 558, providing for civil penalty of $50 for each initial violation of wage regulations and $100 for each subsequent violation;
• Labor Code 1194.2, providing for liquidated damages for failure to pay minimum wage;
• Labor Code 1197.1, for underpayment of wages, providing a penalty per employee for each pay period of $100 on an initial violation and $200 for each subsequent violation; and
• Labor Code 2698, permitting an aggrieved employee, as a “private attorney general,” to collect on behalf of all damaged workers civil penalties per employee for each pay period of $100 on an initial violation and $200 for subsequent violations.

This suit again points up the vital importance of employer attention to the details of timekeeping, pay and records maintenance practices. Significant, business-breaking consequences can be involved for a company’s alleged “little” errors that affect a large number of employees. See, The Devil Is In The Details: Employment Class Action Suits Can Hinge On A Court’s Choice of Definitions. There is even greater urgency for California employers with this state’s minimum wage increase to $9.00/hour on July 1, 2014. See, California Minimum Wage Increasing.

For further information and assistance on such critical matters, please contact attorneys Tim Bowles, Cindy Bamforth or Helena Kobrin.

May 22, 2014

Underpayment of Minimum Wage and Overtime Is Foul Play

Thirty-three former minor league ball players seek to pull back the curtain on alleged system-wide violations of minimum wage or overtime. Their federal class action suit challenges Commissioner Bud Selig, the Office of the Commissioner, and, in effect, every baseball team in the country to remedy such practices. If the court agrees, the suit will include thousands of current and former minor league players. See, Senne v. Office of the Commissioner of Baseball, Case No. 3:14-cv-00608-JCS (United States District Court, Northern District of California, San Francisco Division); and “Most minor league ballplayers earn less than half as much money as fast-food workers” U.S.A. Today, March 6, 2014.

The federal Fair Labor Standards Act and the laws of every state require the payment of minimum wage and overtime to the vast majority of workers, including many professional athletes. According to these minor league plaintiffs, the Major League Baseball “cartel” has considered itself above such mundane requirements as employment laws for many years.

The players allege that in concert with the team owners the Commissioner establishes salary amounts that all teams pay their minor league players. Shocking if true, the players assert that while the unionized major leaguers earn a minimum of $500,000 per season (and some, of course, many times that amount), minor leaguers earn an average total of $3,000 to $7,500 for the entire five-month “championship season,” and nothing for spring and post-season training, while working 50-70 hours a week.

If the few players who brought this suit can win court approval to include the many other minor leaguers potentially affected by unlawful labor practices, the teams may have to pay millions in unpaid minimum wage and overtime. For those teams employing players in California, it could be even worse with this state’s stringent laws for penalties and other damages arising from underpayment of wages. These include (but are not limited to):

• California Labor Code 203, providing for up to 30 days of wages as a penalty for not paying what is owed when the person leaves employment;
• Labor Code 210, providing for civil penalty of $100 for each initial failure to pay an employee on time and $200 for each subsequent violation;
• Labor Code 226(e), providing for civil penalty of $50 for each initial inaccurate or incomplete paystub violation and $100 for each subsequent violation, up to $4,000 per employee;
• Labor Code 558, providing for civil penalty of $50 for each initial violation of wage regulations and $100 for each subsequent violation;
• Labor Code 1194.2, providing for liquidated damages for failure to pay minimum wage;
• Labor Code 1197.1, for underpayment of wages, providing a penalty per employee for each pay period of $100 on an initial violation and $200 for each subsequent violation; and
• Labor Code 2698, permitting an aggrieved employee, as a “private attorney general,” to collect on behalf of all damaged workers civil penalties per employee for each pay period of $100 on an initial violation and $200 for subsequent violations.

This suit again points up the vital importance of employer attention to the details of timekeeping, pay and records maintenance practices. Significant, business-breaking consequences can be involved for a company’s alleged “little” errors that affect a large number of employees. See, The Devil Is In The Details: Employment Class Action Suits Can Hinge On A Court’s Choice of Definitions. There is even greater urgency for California employers with this state’s minimum wage increase to $9.00/hour on July 1, 2014. See, California Minimum Wage Increasing.

For further information and assistance on such critical matters, please contact attorneys Tim Bowles, Cindy Bamforth or Helena Kobrin.

May 22, 2014