As we are in the midst of the holiday season, employers need to be mindful about the parameters that may apply when granting employees time off to volunteer, paying employees to volunteer to support a cause, and other potential issues involving volunteer time.  This topic was raised as a suggestion from a regular reader of the blog, and if you have any topics you would like to see covered, please let me know.  This Friday’s Five covers five issues employers need to be aware of regarding time off and pay issues for volunteer time:

1. When does an employer need to pay for employee’s volunteer time?

The California Division of Labor Standards Enforcement (DLSE) issued some guidance for California employers in an opinion letter addressing whether workers for religious organizations are employees or volunteers.  The DLSE took the position that “the intent of the parties is the controlling factor.  If the person intends to volunteer his or her services for public service, religious, or humanitarian objectives, not and an employee and without contemplation of pay, the individual is not an employee….”  The DLSE continued explaining that employees of the religious, charitable, or non-profit organization can donate services as a volunteer, but these services cannot be of the “usual services of that employees’ job.”

The United States Department of Labor issued an opinion letter on the issue under federal law similar to California’s DLSE.  The DOL maintained that “time spent in work for public or charitable purposes at the employer’s request, or under his direction or control, or while the employee is required to be on the premises, is working time. However, time spent voluntarily in such activities outside of the employee’s normal working hours is not hours worked.”

The DOL explained:

Therefore, the employer need not compensate an employee for time spent volunteering for charitable purposes if the work is performed outside of normal working hours and the employee is truly volunteering, not performing the volunteer work as a result of coercion or pressure by the employer.

The DOL’s opinion letter sets forth that under federal law, an employer who encourage employees to volunteer for “public or charitable purposes” outside of normal working hours is not obligated to pay wages to the employee as long as participation is optional.  If the employee does not participate in the volunteer activity, this “will not adversely affect working conditions or employment prospects.”

2. Volunteer firefighters, reserve peace officers or emergency rescue personnel are provided with protected time off under California law. 

California’s Labor Code, Sections 230.3 and 230.4 provide leave protections to employees who volunteer as a firefighter, reserve peace officer, and emergency rescue personnel.  An employer cannot not discharge or discriminate against an employee for taking time off to perform emergency duty as a volunteer firefighter, a reserve peace officer, or emergency rescue personnel.  In addition, employers with 50 or more employees must allow employees to take temporary leaves of absence, not to exceed an aggregate of 14 days per calendar year, for the purpose of engaging in fire, law enforcement, or emergency rescue training.

3. Civil Air Patrol members are provided protected time off under California law. 

Labor Code sections 1501 and 1503 provide that employers are required to allow employees no less than 10 days per calendar year of unpaid Civil Air Patrol leave to an employee who responds to an emergency operational mission of the California Wing of the Civil Air Patrol.

4. Employers need to be careful in permitting volunteer time for certain limited causes. 

If employers do allow employees unpaid time off to volunteer for certain causes, the employer should be careful that the causes supported by the company are not viewed as supporting one political view or cause.  For example, Labor Code section 1101 prohibits employers from forbidding or preventing employees from engaging or participating in politics or from becoming candidates for public office.  The law also prohibits employers from “controlling or directing, or tending to control or direct the political activities or affiliations of employees.”  Section 1102 prohibits employers from coercing or influencing employees through the threat of discharge or loss of employee to “adopt or follow or refrain from adopting or following any particular course or line of political action or political activity.”  Employers developing a volunteer time off policy must keep these requirements in mind in order to avoid any potential claims that the policy violates this labor code section.

5. Approach unpaid internships with caution. 

Sometimes workers that are young or are looking to break into a new industry will volunteer as an intern without pay for a company or individual to learn the industry and develop contacts.  In April 2010, the DLSE issued an opinion letter setting for the analysis it would conduct in making a determination regarding whether an intern is properly classified.  In its opinion letter, the DLSE set forth that it would examine the following factors:

  1. The training, even though it includes actual operation of the employer’s facilities, is similar to that which would be given in a vocational school;
  2. The training is for the benefit of the trainees or students;
  3. The trainees or students do not displace regular employees, but work under their close observations;
  4. The employer derives no immediate advantage from the activities of trainees or students, and on occasion the employer’s operations may actually be impeded;
  5. The trainees or students are not necessarily entitled to a job at the conclusion of the training period; and
  6. The employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training.

While these factors are a fairly loose test, an intern attempting to challenge the classification as an intern would probably have at least a few good facts to support their position. This is why California employers need to approach the intern classification with caution.

A new decision was published this week on when commute time is required to be paid by employers. Plaintiffs represented current and former employees of defendant Pacific Bell Telephone Company who install and repair video and internet services in customers’ homes.

Plaintiffs alleged they were owed for the time they spent traveling in an employer-provided vehicle that carried equipment and tools between their homes and a customer’s residence under an optional and voluntary Home Dispatch Program established by the employer.

Key Facts

The Plaintiff technicians were paid on an hourly basis and installed equipment at customer’s homes.  The technicians could not use their own vehicles while on the job, were required to use a company vehicle. They were also required to carry all necessary equipment and tools to perform their job in the company vehicle.  Their work day schedule started at 8:00 a.m. and lasted eight hours.

There were two options made available to the technicians for travel with the company vehicle.  The first option was the Home Dispatch Program (HDP), under which the technicians were allowed to take a company vehicle home each night instead of returning all vehicles to the Pacific Bell garage. The HDP was optional, and the techs were permitted drive the company vehicles, containing tools and equipment, to and from home each day. Technicians were not paid for any time before 8:00 spent driving from their homes to the first worksite. The technicians were not paid for the time spent driving home with the equipment and tools after their last appointment. If the technicians had to drive to the employer’s warehouse to restock equipment, they were paid for this time.

The second option available to the technicians was to pick their company vehicle up at the company garage prior to going to the first customer visit.  Under this option, they were compensated for time spent traveling to and from the garage.

Plaintiffs alleged three causes of action: failure to pay the minimum wage, failure to pay wages timely, and unfair business practices.  All causes of action were based on the failure to pay for the transporting time. Here are five key issues regarding the new decision in Hernandez v. Pacific Bell Telephone Company.

1. The Control Test

The court explained that the wage order defined “hours worked” as: the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.

The court noted that the California Supreme Court rejected an argument that to constitute “hours worked” the time must be spent actually working. Instead, the court held that as long as the employee is “subject to the control of an employer,” the time is considered compensable “hours worked.” Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575, 582-584.

In Morillion, although the employees could read or sleep on the bus, they could not use the time for their own purposes; they “were foreclosed from numerous activities in which they might otherwise engage if they were permitted to travel to the fields by their own transportation.” The court in Morillion noted that during the bus ride employees could not drop off their children, stop for food, or run other errands.  Therefore, the Supreme Court concluded, “When an employer requires its employees to meet at designated places to take its buses to work and prohibits them from taking their own transportation, these employees are ‘subject to the control of an employer,’ and their time spent traveling on the buses is compensable as ‘hours worked.’ ”  Therefore, under these facts, the employer controlled the employees within the meaning of “hours worked.”

In Morillion, the Court, however, made it clear that

“employers do not risk paying employees for their travel time merely by providing them transportation. Time employees spend traveling on transportation that an employer provides but does not require its employees to use may not be compensable as ‘hours worked.’ [Citation.] Instead, by requiring employees to take certain transportation to a work site, employers thereby subject those employees to [their] control by determining when, where, and how they are to travel. Under the definition of ‘hours worked,’ that travel time is compensable.” (Morillion, supra, 22 Cal.4th at p. 588.)

The court in this case noted: “The rule of Morillion applies only where use of the employer-provided transportation is compulsory.”  Plaintiffs relied on the case of Rutti v. Lojack Corp. (9th Cir. 2010) for support that the employees should be paid for this commute time.  The court rejected this argument in finding that the employees in Rutti were “required to use the company vehicle; here, plaintiffs were not.”

2. Time spent commuting in a company provided vehicle is only compensable when it is compulsory.

The court explained that employers are only required to pay for employee’s commute time in company provided vehicles if it is required.  The court examined the case of Overton v. Walt Disney Co. (2006) where Disneyland employees sued seeking compensation for the time riding the company provided shuttle from the employee parking lot one mile away from the theme park.  Because Disney did not require the employees to take the shuttle, and they were free to walk, bike, or could have been dropped off at the employee entrance, the court held that this was not considered work time.

3. Suffer or Permit to Work Test

Plaintiffs also argued that the drive time was compensable as “hours worked” under the “suffered or permitted to work” definition. They argue they were working while driving to and from home because they were transporting tools and equipment that were necessary for them to do their job.

The court explained that the phrase “suffered or permitted to work, whether or not required to do so” “encompasses a meaning distinct from merely ‘working.’ ”  The court explained: “Our high court explained an employee is “suffered or permitted to work” when the employee is working, but not subject to the employer’s control, such as unauthorized overtime when an employee voluntarily continues to work at the end of a shift with the employer’s knowledge.”

Here, the court explained that “the standard of ‘suffered or permitted to work’ is met when an employee is engaged in certain tasks or exertion that a manager would recognize as work. Mere transportation of tools, which does not add time or exertion to a commute, does not meet this standard.”  Therefore the court held that under the suffer or permit to work test, the employee’s time was not compensable.

4. Court rejected Plaintiffs’ reliance on workers compensation cases

Plaintiffs attempted to rely on two workers compensation cases, Joyner v. Workmen’s Compensation Appeals Board (1968) 266 Cal.App.2d 470 and Lane v. Industrial Acc. Com. (1958) 164 Cal.App.2d 523.  These cases held that where an employee is injured in a traffic accident on his commute home, while carrying equipment for his job, the employer relationship continued such that the employee’s injuries were compensable and not subject to the coming and going rule.  In rejecting these holdings as binding in this case, the court noted, “These cases address a different issue than the one before us and therefore we find them inapposite. Further, we note that in both of these cases, the employee was not being paid by his employer for his commute time when the accident happened.”

5. Simply carrying tools does not necessarily make employee commute time compensable.

Defendant made that because the employees were carrying tools in the vehicle during the commute, this made the time compensable work time.  The court rejected this argument in noting defendant’s argument that “if carrying equipment necessary for the job were always compensable, every employee who carries a briefcase of work documents or an electronic device to access work emails to and from work would need to be compensated for commute time.”

The court agreed with a federal district court’s decision in Dooley v. Liberty Mut. Ins. Co. that:  “To the extent that some of these cases state broadly that travel time is compensable if employees are transporting equipment without which their jobs could not be done, e.g., Crenshaw, 798 F.2d at 1350, I read these statements as implying that the transportation involves some degree of effort. Otherwise, as observed earlier, the commutes of police officers who carry guns, or indeed, employees who carry badges, would always be compensable.”  There is a difference in effort between transporting heavy equipment for servicing oil wells as compared to the “incidental” transportation of cable TV equipment and tools in the case at hand.  Therefore, the fact that employees carried tools from and from work in this case did not make the time compensable.

The case, Hernandez v. Pacific Bell Telephone Company (November 15, 2018) can be downloaded here.

Parties involved in litigation should always keep an open mind about mediation at every stage of litigation.  Cases that resolve without having to go through a trial or arbitration can potentially save the parties a lot of time and money in litigation.  This article touches on five items parties need to understand about mediation.

1. Mediation is non-binding.
Mediation is a voluntary process in which litigants (or even parties prior to litigation) agree to use a private third-party to help settle the case. People sometimes confuse mediation with arbitration. Arbitration is when parties agree to use a private third-party to hear their case, much like a judge, to make decisions about the case, and eventually decide the case. Arbitration can be binding on the parties, and the arbitrator actually decides who is right and wrong as a matter of law. On the other hand, a mediator is not deciding any issues about the case, but is simply hearing both sides’ positions, and then works with the parties to see if there is a potential resolution that the parties would both agree to. The mediator has no ability to decide issues of the case, or make any binding rulings about the case. The mediator is only an unbiased third-party attempting to get the parties to consider a possible resolution to the case.

2. Mediation takes place with a private mediator –usually not the court.
The parties voluntarily agree upon the selection of a mediator. Usually the mediator has expertise in the area of the law that the case involves so that he or she can move quicker into the substance of the parties’ disagreement. There are many retired judges or lawyers that work as mediators. Some mediators are active practicing lawyers that also have a mediation service established.
The mediation usually takes place at the mediator’s office. Normally the mediator has the parties in separate rooms, and the mediator walks between the two rooms. There are many mediations during which the parties will not see other side the entire day.

3. Negotiations during the mediation are privileged and cannot be used against either party during litigation.
California law prevents any of the negotiations or potential admissions made during mediation from being brought up in court or during litigation. The rationale for this rule is that the courts want people to be able to negotiate during mediation, this involves some give and take. Therefore, in order to assist the mediation process, any of the discussions or negotiations during mediation are prevented from being used against the other party. This allows parties to discuss items more freely during mediation in hopes of having a better chance at resolving the case. However, it should be noted that if a party makes an admission during mediation, the other party can still conduct discovery after the mediation and bring that admission into the case through the standard discovery process. So parties should follow their counsel’s advice about which facts to share during the mediation process. But rest assured, the fact that one party agreed to offer a certain amount to settle the case during mediation, this offer to settle cannot be brought up to the jury later in the case as a way to establish liability.

4. The mediator’s only role is to get the case settled.
The mediator is not there to make friends, tell you if he believes you more than the other side, or make a value judgment about the case or people involved. His or her role is simply to get the case resolved. This usually means that for a successful mediator both sides don’t like the mediator. This is because the mediator was able to move two opponents to agree to a resolution of the case, and to get to this point usually means that both sides are unhappy with the resolution.

5. Even if the case does not settle at mediation, it could still be a successful mediation.
The parties need to understand that mediation is a process and it is hard to settle cases in one day – even a long day – of mediation. Sometimes it is clear during the mediation that the parties cannot settle the case. Sometimes it takes the mediator working with the parities for weeks after the mediation to arrive at a settlement. If the case does not settle, it is also beneficial for the parties that during the course of a mediation to realize that maybe they are still too far apart to agree to a settlement and there needs to be further discovery and motions filed to narrow down the issues that are being litigated.

Regular readers of the blog probably know about my YouTube channel for the Employment Law Report.  This Friday’s Five focuses on recent popular videos I’ve published covering employment law updates, best practices, and an interview with a restaurant consultant.  Hope you enjoy the videos, and please subscribe to the channel to make sure you don’t miss any future updates.

1. 5 Huge Misconceptions About California Employment Law

2. California’s Paid Sick Leave – Quick Update

3.California’s New ABC Test For Independent Contractors

4. My Five Free Resources for California Employers

5. My interview with Salar Sheik from Savory Hospitality

How is it Friday already, and summer is coming to a close quickly?  Time for another Friday’s Five, and this week I cover five reminders about meal break waivers in California:

1. Meal break timing obligations.

An employer may not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than thirty minutes.  A second meal period of not less than thirty minutes is required if an employee works more than ten hours per day. Labor Code Section 512.

The California Supreme Court held in Brinker Restaurant Corp. v. Superior Court, that:

We conclude that, absent waiver, section 512 requires a first meal period no later than the end of an employee’s fifth hour of work, and a second meal period no later than the end of an employee’s 10th hour of work.

See my previous post on when employers must authorize employees to take meal breaks.

2. Employer’s duty to authorize meal breaks.

As long as employers effectively allow an employee to take a full 30-minute meal break, the employee can voluntarily choose not to take the break, and the employer would not owe the employee the additional hour of pay in the form of premium pay for a violation. The Supreme Court explained in Brinker:

The employer that refuses to relinquish control over employees during an owed meal period violates the duty to provide the meal period and owes compensation [and premium pay] for hours worked. The employer that relinquishes control but nonetheless knows or has reason to know that the employee is performing work during the meal period, has not violated its meal period obligations [and owes no premium pay], but nonetheless owes regular compensation to its employees for time worked.

While employees may voluntarily work through meal breaks, if the employer knows or should have known that the employee working during this time, the employer must ensure that the employee is paid for the time working.

3. Employees may waive meal breaks for shifts less than 6 hours or shifts less than 12 hours.

If the total work period per day for an employee is no more than six hours, the meal period may be waived by mutual consent of both the employer and employee.  Likewise, if the if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and employee only if the first meal period was not waived.  Labor Code Section 512.

 4. Meal break waivers for shifts less than six hours and less than 12 hours are not required to be in writing, but should be.

Labor Code section 512 does not require an employee’s waiver of their meal breaks for shifts less than six hours or shifts less than 12 hours to be in writing.  However, in order to avoid any potential disputes and to be able to defend against any potential claims by disgruntled employees, it is always a good practice to have the voluntary waivers documented and signed by employees.

5. Don’t confuse “on-duty” meal agreements with meal period waivers.

On-duty meal period agreements are different than meal period waivers.  The Wage Orders provide for an “on duty” meal period that is an exception to the required meal break if the following requirements are met:

An “on duty” meal period shall be permitted only when the nature of the work prevents an employee from being relieved of all duty and when by written agreement between the parties an on-the-job paid meal period is agreed to. The written agreement shall state that the employee may, in writing, revoke the agreement at any time.

Wage Order No. 4-2001(a)(emphasis added). Unfortunately, the definition of the “nature of the work” is not clear, and has been construed very narrowly against employers.  For example, the Department of Labor Standards Enforcement (“DLSE”) has issued an opinion letter addressing whether a shift manager in a fast food restaurant working the night shift would be allowed to take a “on duty” meal period.  The DLSE concluded that based on the facts presented in the situation of the fast food restaurant, the nature of the work in the restaurant should not prevent the shift manager from being relieved of all duties for 30 minutes, and therefore the on-duty meal period would not be valid in this context. Click here to download the opinion letter.

Click here for more information about on-duty meal period agreements. Implementing an on-duty meal period agreement in California needs to be approached with caution, and should only be done with assistance from knowledgeable counsel.

[Update: AB 3080 was vetoed by the Governor on September 30, 2018, and will not become law.  Click here to see other bills that were approved by the Governor and will become law for California employers in 2019.]

California legislature passed AB 3080 which prohibits employers from entering into arbitration agreements with employees and now is waiting for Governor Brown’s signature.  It is uncertain whether the Governor will sign the bill into law, as in 2015 the Governor vetoed AB 465 that contained a similar prohibition on arbitration agreements in the workplace.  This Friday’s Five covers five aspects of the bill that California employers need to understand:

1. Bill bars confidential agreements regarding harassment.

AB 3080, if passed, would add Section 432.4 to the Labor Code, which would:

…prohibit any applicant for employment, employee, or independent contractor from disclosing to any person an instance of sexual harassment that the employee or independent contractor suffers, witnesses, or discovers in the workplace or in the performance of the contract, or otherwise opposing any unlawful practice, or from exercising any right or obligation or participating in any investigation or proceeding with respect to unlawful harassment or discrimination.

There is some question about whether this language would prohibit employers from entering into settlement agreements with employees that require confidentiality of its terms.  This practice is prevalent in employment litigation, not only in harassment claims, but in all aspects of employment litigation, such as when settling wage claims.  One rational for keeping a settlement agreement confidential is to be able to settle a claim and stop litigation without admitting liability.  If the amount of settlements are known, it may be viewed as an admission by other third-parties, which could increase the amount of litigation filed against the employer.  The ability to keep settlements confidential aids in settling cases, and if employers cannot confidentially resolve claims it could lead to longer and harder fought litigation.

2. Prohibits arbitration agreements for wage and hour claims, discrimination, harassment, and retaliation.

The bill would also add Section 432.6 to the Labor Code, prohibiting employers from entering into arbitration agreements with employees.  The bill provides that “a person shall not…require any applicant for employment or any employee to waive any right, forum, or procedure for a violation of any provision of the California Fair Employment and Housing Act” or the Labor Code.  This would bar arbitration agreements for claims of harassment, discrimination, or retaliation under the Fair Employment and Housing Act, in addition to barring arbitration agreements that cover wage and hour claims under the Labor Code.

3. Prohibits employers from taking any employment action against employees who refuse to enter into arbitration agreements.

The bill would make it illegal for an employer to:

…threaten, retaliate or discriminate against, or terminate any applicant for employment or any employee because of the refusal to consent to the waiver of any right, forum, or procedure for a violation of the California Fair Employment and Housing Act or [the Labor Code], including the right to file and pursue a civil action or a complaint with, or otherwise notify, any state agency, other public prosecutor, law enforcement agency, or any court or other governmental entity of any alleged violation.

4. Creates personal liability for violations.

The bill designates that “a person” shall not take the actions prohibited in the bill, opening the possibility for individual liability for anyone violating the requirements of the bill.

5. Likely legal challenges to AB 3080 if it is eventually signed into law.

In May 2018, the U.S. Supreme Court ruled in Epic Systems Corp. v. Lewis, that employment arbitration agreements that bar class actions are enforceable.  The vote was 5 to 4 in upholding the use of arbitration agreements in the workplace.  If the bill is signed into law the by the Governor, it will likely be challenged on the grounds that is preempted by the Federal Arbitration Act.

Employers need to keep a close eye on this bill, and even if the bill is passed, there will likely be a lengthy legal challenge on its validity.  Employers should review whether arbitration agreements are appropriate for their workforce with counsel, and need to keep in contact with their attorneys regarding the use of confidentiality agreements and arbitration agreements in the workplace.

California employers need to routinely need to review their policies and practices to make sure they are complying with intricacies that may arise in their work place.  In law school, attorneys-to-be are taught to “issue spot,” and the unfortunate litigation landscape that faces California employers, business owners and their supervisors must also “issue spot” and make sure the unique aspects of California employment law are being complied with to avoid liability.  This Friday’s Five covers five issues employers should issue spot on a routine basis to help ensure compliance and reduce liability:

1. Reporting time pay

Reporting time pay is triggered when an employee is required to report for work, but is not put to work or is furnished less than half their usual or scheduled day’s work.  If this occurs, the employee needs to be paid for half the usual or scheduled day’s work, but in no event for less than two (2) hours nor more than four (4) hours, at the employee’s regular rate of pay, which cannot not be less than the minimum wage.

It is important for employers to train managers and supervisors about this requirement, so that they understand the need to pay reporting time pay, or report the instance to HR to ensure the employee receives reporting time pay if they are sent home before one-half of their shift is worked.

2. Split shift pay

A split shift is a work schedule that is interrupted by a non-paid, non-working period established by the employer that is other than a meal or rest break.  So if the employee is required to work a shift, but then asked to report to a second shift over later in the same day, the employer may be obligated to pay a split shift premium.  Again, this issue is one that front-line managers and supervisors need to be trained on to ensure that split shifts are being reported to HR or other appropriate management in the company to ensure any split shift pay obligations are being paid.

3. Expense reimbursement issues

Under Labor Code section 2802, employers need to reimburse employees for any business expenses they incur in the course of completing their work for the employer.  This basic concept sounds easy in principle, but given the technology used in today’s workplaces, there can be many areas that expose employers to liability.  For example, if employees are required to work at home, have access to the internet, print reports, or send and receive faxes, the costs for completing this work should be reimbursed by the employer.  Other areas that are often litigated are cell phone reimbursement, mileage reimbursement, and reimbursement for the costs of uniforms and safety equipment.

4. Off-the-clock claims

Employers can be held liable for unpaid wages if they knew or should have known that employees were working and not being paid for the work.  Employers should establish and regularly communicate a time keeping policy to employees and supervisors.  The policy should set forth that employees always have an open door to complain to their supervisors and other managers or human resources about missed meal and rest breaks, unpaid wages, or unpaid wages.  If employees routinely acknowledge that they understand the time keeping policy and are agreeing to record their time through the employer’s system, this can go a long way in defending any off-the-clock claims.

5. On-Call time

Even though employees are traveling to a work site or even sleeping, if the employee is under the control of the employer, the employer may have to pay them for being on-call.  For example, the California Supreme Court held that security guards who were required to reside in a trailer provided by the employer at construction worksites would still need to be paid for the time they slept while on-call.  In that case, during weekdays the guards were on patrol for eight hours, on call for eight hours, and off duty for eight hours.  On weekends, the guards were on patrol for 16 hours and on call for eight hours.  The Court held that the employer was not permitted to exclude the time guards spent sleeping from the compensable hours worked in 24-hour shifts.  See Mendiola v. CPS Security Solutions, Inc.

Likewise, in Morillion v. Royal Packing Co., the California Supreme Court held that, “we conclude the time agricultural employees are required to spend traveling on their employer’s buses is compensable under Wage Order No. 14-80 because they are ‘subject to the control of an employer’ and do not also have to be ‘suffered or permitted to work’ during this travel period.”  Generally, travel time is considered compensable work hours where the employer requires its employees to meet at a designated place and use the employer’s designated transportation to and from the work site.

This week’s Friday’s Five covers five huge misconceptions about California employment law that can land employers into huge legal trouble:

1. Meal and rest breaks seem so trivial.

The topic may seem trivial for companies that have not faced this litigation before, or for out of state employers who wrongly believe California cannot be much different than federal requirements.  However, with the penalty owed to employees of one hour of pay for each missed meal or rest break (i.e., up to two hours of penalty pay per day) these violations add up to significant amounts of liability very quickly.  A verdict against Wal-Mart for $172 million is a good example of the liability that even small employers face in this regard.

2. My payroll company understands the laws about wages and itemized pay statements.

Payroll companies are not law firms and they will not notify you if you are not paying your employees properly, calculating overtime correctly, tracking and reporting paid sick leave appropriately, or even ensure that the paystubs they generate for your employees comply with the law.  It is the employer’s responsibility to ensure the employment laws are being complied with, and it is wise to have an experienced employment lawyer review these practices and audit the practices of the payroll company.

3. The employee’s title determines if they are owed overtime.

An employee’s title is not determinative of whether they qualify as an exempt employee and do not need to receive overtime pay.  See my previous article on the various exemptions that employees may qualify for, and the requirements necessary for employees to meet those exemptions.

4. Employees can be provided “comp time” instead of paid overtime.

While it is true employers may provide employee’s comp time in lieu of overtime, there are many technical restrictions that must be met in order for comp time plans to be legal under California law.  Labor Code section 204.3 only authorizes employers to provide nonexempt employees with compensated time off instead of paying for overtime if the following requirements are met:

  • Payment for comp time must be at the overtime rate of pay (i.e., not less than one and one-half hours for each hour of employment, or double time if applicable)
  • Must be in writing before work begins
  • Employees cannot accrue more than 240 hours of compensation time off
  • Employee has to make a written request for comp time in lieu of overtime
  • Employee must be scheduled to work at least 40 hours a week
  • Employee must be paid at rate of pay in effect at time of payment
  • Payment at termination must be at high of current or three-year average rate of pay
  • Employee must be permitted to use comp time within reasonable period
  • Employer must keep records of comp time accrued and used

5. My company does not need employment counsel to review our polices on a regular basis, we have it under control.

If you have been a reader of this blog for any time period, you understand that every employer in California needs to understand their legal duties when it comes to employing workers.  And with competent employment law counsel [:)] it is not hard to comply with the law, but it is difficult to keep current with the law and ensure all legal obligations are being met.  California employment law is regularly changing.  In addition, employers need to make sure they are complying with intricacies that may arise in their work place, such as:

 

Also, in case you missed it, my Podcast is live:

Youtube: https://www.youtube.com/watch?v=WUbLzjwuUao&t=2s

iTunes: https://itunes.apple.com/us/podcast/zaller-talk/id1405859405?mt=2

Spotify: https://open.spotify.com/show/6zpZovQKMeZ5l2DYL0nh3q?si=KggpsQ6pSIGf1-PCMdM8dw

Have a great weekend.

Douglas Troester filed suit alleging that Starbucks violated the California Labor Code by failing to pay him for short periods of time he spent closing the store.  He alleged that Starbucks failed to pay him for time spent walking out of the store after activating the security alarm, for the time he spent turning the lock on the store’s front door, and for the time he spent occasionally reopening the door so that a co-worker could retrieve a coat.  Based on these allegations, Troester filed a class action under the California Labor Code for failure to pay minimum and overtime wages, failure to provide accurate written wage statements, and failure to timely pay all final wages.  Over the 17-month period of his employment, Troester’s unpaid time totaled approximately 12 hours and 50 minutes. At the then-applicable minimum wage of $8 per hour, this unpaid time added up to $102.67, not including any penalties or other remedies.

In the lower court, Starbucks filed a motion for summary judgment asking the court to dismiss Plaintiff’s case based upon the de minimis doctrine.  The trial court agreed with Starbucks and dismissed the case, assuming that the additional time would be administratively difficult to capture.  However, this ruling was appealed to the California Supreme Court for review based on Plaintiff’s argument that the de minimis doctrine is not applicable under California law.  The Supreme Court’s decision has major ramifications for California employers.  For this week’s Friday’s Five, here are five issues about the Troester v. Starbucks Corp. holding and the de minimis doctrine employers must understand:

1. The de minimis doctrine: What is it?

The trial court, in granting Starbucks motion for summary judgment, explained the de minimis doctrine as follows:

Under this doctrine, alleged working time need not be paid if it is trivially small: “[A] few seconds or minutes of work beyond the scheduled working hours … may be disregarded.” Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 692, 66 S.Ct. 1187, 90 L.Ed. 1515 (1946), superseded by statute on other grounds as stated in IBP, Inc. v. Alvarez, 546 U.S. 21, 25–26, 126 S.Ct. 514, 163 L.Ed.2d 288 (2005).

The California Supreme Court explained the concept as follows:

The de minimis doctrine is an application of the maxim de minimis non curat lex, which means “[t]he law does not concern itself with trifles.” (Black’s Law Dict. (10th ed. 2014) p. 524.) Federal courts have applied the doctrine in some circumstances to excuse the payment of wages for small amounts of otherwise compensable time upon a showing that the bits of time are administratively difficult to record.

2. What factors do courts look to in determining whether time is de minimis?

The factors some other courts have look to in determining whether time is de minimis include (1) the practical administrative difficulty of recording the additional time; (2) the aggregate amount of compensable time; and (3) the regularity of the additional work.  The trial court in the Starbucks case noted that numerous courts have concluded that daily periods of about 10 minutes are de minimis.

3. Does the de minimum doctrine apply to California law?

The California Supreme Court held that the de minimis doctrine adopted under the federal Fair Labor Standards Act (FLSA) does not apply to California employers.  However, the Court left open the possibility of some narrower version of the doctrine to apply in wage and hour cases:

In other words, although California has not adopted the federal de minimis doctrine, does some version of the doctrine nonetheless apply to wage and hour claims as a matter of state law? We hold that the relevant wage order and statutes do not permit application of the de minimis rule on the facts given to us by the Ninth Circuit, where the employer required the employee to work “off the clock” several minutes per shift. We do not decide whether there are circumstances where compensable time is so minute or irregular that it is unreasonable to expect the time to be recorded.

We decline to decide whether a de minimis principle may ever apply to wage and hour claims given the wide range of scenarios in which this issue arises.

4. Legal and technical advances have limited the need for a de minimis doctrine in California.

The California Supreme Court refused to adopt the FLSA de minimis doctrine for a number of reasons, but specifically stated that the “modern availability of class action lawsuits undermines to some extent the rational behind a de minimis rule with respect to wage and hour actions.”  The Court explained that individual recoveries which are too small to be worth the individual’s or the court’s time can be aggregated to “vindicate an important public policy.”  “In this age of the consumer class action this maxim [de minimis non curat lex] usually has little value.”

Second, the California Supreme Court relied upon the “technical advances that enable employees to track and register their work time via smartphones, tablets, or other devices” that have made it easier to record employee’s time worked as an additional reason not to adopt the federal de minimis doctrine under California law.

Therefore, the Court held, “[a]n employer that requires its employees to work minutes off the clock on a regular basis or as a regular feature of the job may not evade the obligation to compensate the employee for that time by invoking the de minimis doctrine. As the facts here demonstrate, a few extra minutes of work each day can add up.”

5. The Supreme Court recognized some practical steps employers can take to address the “practical administrative difficulty of recording small amounts of time for payroll purposes.”

The Court held that employers are in a better position than employee to “devise alternatives that would permit the tracking of small amount of regularly occurring work time.”  The Court described some alternatives employers could implement include:

  • structuring work so that employees would not have to work before or after clocking out
  • using technology to have time tracking tools to more accurately record employee’s time
  • estimating the time it takes employees to perform work and to compensate employees for that time

The California Supreme Court’s decision, Troester v. Starbucks Corp., No. S234969, 2018 WL 3582702, at *2 (Cal. July 26, 2018) can be read here.  

The experience of litigation is foreign to a lot of people, and the different stages of litigation can require different strategies and points of reference from the parties.  Mediation is one of the aspects of litigation that can be confusing for parties in a lawsuit, but there are few ground rules to understand about the process that can make it a lot less daunting.  Mediation is a non-binding meeting where the parties in a lawsuit hire an independent third party (a retired judge or lawyer) to try to reach a settlement.  Here are five concepts all parties should understand about the mediation process:

1. The mediator’s role is to make you uncomfortable (but in a good way).

As I wrote in a prior post, a mediator’s only role is to get the case settled.  He or she is not there to be your friend, not to tell you what they feel the case is worth, or to protect your opponent’s position.  Their role is to get a settlement.  Put yourself in the mediator’s shoes, and you have two adversarial parties who hate each other and believe they will win if their case goes to trial.  How, as a mediator, do you get the parties to move off their respective beliefs?  You must attack both sides’ theory of the case by pointing out the weaknesses of each position.

So don’t take the attacks personally, or think that the mediator is only attacking your position.  If the mediator is persuasive about how weak your case is, she is equally persuasive to other side.  Understand also, that the attacks are not personal, it is not about you as a person, but instead about the facts of the case and weaknesses of the case.

2. Understand when being cooperative will help you get a better deal.

A party involved in a mediation must understand that there are two parts to a mediation: (1) the process and (2) the content.  The process is how you interact with the other party being negotiating against.  Are you cordial?  Do you make small talk?  The content is the subject being negotiated, such as the dollar amounts.  A party that is cooperative about the process and competitive about the content will do better overall in a mediation than compared to a party that is competitive on both the process and content.

Think about how you interact with someone that is simply being a jerk to you on ever little issue, even issues that do not impact the subject being negotiated.  When dealing with the hyper-competitive negotiator, your guard goes up and the negotiation turns more personal.  This is a bad combination for attempting to reach a reasonable settlement.

3. If you make a last, best and final offer, make it your last best and final offer.

Parties’ statements made during a mediation must have credibility.  If you make a “last, best and final offer” during a mediation, and the other side rejects the offer, but you continue to negotiate, you have lost credibility with the other party and the mediator.  As a result, even if you continue to negotiate and truly reach your last, best and final offer, the other side (and the mediator) will not believe that is your final number and will continue to push you beyond this number.  There are occasions to make a last, best and final offer, but if you qualify your offer as such, be ready to walk out of the mediation if the offer is rejected.

4. Bracketing.

Ralph Williams, a mediator with ADR Services, explains bracketing as follows:

Negotiation “bracketing” is the process of making a conditional offer linked to an expected response from the other side.  For example, plaintiff states, “I will demand $500,000 if the defendant offers $200,000.”  Defendant responds by accepting the bracket or proposing a different bracket (Defendant will offer $100,000 if plaintiff demands $400,000) or offering an absolute number.  Plaintiff then replies with one of the same three options.  Using negotiation “bracketing,” the parties send clear signals about their expectations, save time and avoid the stress of the negotiating dance that starts with a $1 million demand and a $10,000 offer.

In addition, brackets are conditional offers.  Therefore, unless the other side accepts the proposed bracket, the party making the offer is not committed to those numbers.  This allows parties to potentially make larger moves without the fear of having those moves held against them later in the mediation or in the case.

The use of bracketing during negotiations can add another layer of complexity to the settlement negotiations.  However, with advice from counsel about how to negotiate using brackets, they are an effective tool in resolving cases.  Understanding the concept of bracketing before a mediation – even at a very basic level – will help save time during a mediation and allow you keep your focus on the negotiation.

5. Enter the mediation prepared with a bottom walk-away number, but also a number that represents a goal.

It is important to know what your last best and final number is prior to going into the mediation.  Steve Pearl, a mediator with ADR Services, explains:

Experienced negotiators will set not only the walkaway numbers beyond which they will not move, but also goals that are better than those walkaway numbers. Parties who set “shoot for” numbers as their reference points typically do better than those who only formulate walkaway numbers.

However, just like almost every negotiation “rule” there are drawbacks in setting a walk-away numbers.  Pearl explains that sometimes parties may have to shift their reference points to resolve the case.  So, parties should have clear numbers set going into the mediation, but must also have a mechanism to reevaluate these goals if the case will not settle within these predetermined numbers.