In an opinion last month that did not receive much attention on the employment-law front was the case Lobo v. Tamco, which has huge ramifications for California employers. At issue was if the employer, Tamco, could legally be held liable for one of its’ employee’s negligent driving while he was on his way home. The court found that the employer could be held liable under an exemption to the “going-and-coming” rule.

This case was filed by Daniel Lobo’s wife and minor child. Mr. Lobo was a deputy sheriff who was killed by the allegedly negligent driving of Luis Duay Del Rosario who had just left work and was driving home. The officer was on a motorcycle, and was apparently responding to a call with his lights and sirens on, when the two collided. The family members sued Mr. Rosario’s employer (most likely because Mr. Rosario does not have any assets). The employer argued that because Mr. Rosario was going home, there could be no liability on its part. The court disagreed.

The “going-and-coming” rule and its exception

The court explained that normally employers are not liable for employee’s acts when they are not in the “course and scope of employment”:

Under the theory of respondeat superior, employers are vicariously liable for tortious acts committed by employees during the course and scope of their employment. [citation] However, under the “going and coming” rule, employers are generally exempt from liability for tortious acts committed by employees while on their way to and from work because employees are said to be outside of the course and scope of employment during their daily commute. (Huntsinger v. Glass Containers Corp. (1972) 22 Cal.App.3d 803, 807 [Fourth Dist., Div. Two] (Huntsinger).)

The court, however, also explained that there is an exception to the general rule:

“A well-known exception to the going-and-coming rule arises where the use of the car gives some incidental benefit to the employer. Thus, the key inquiry is whether there is an incidental benefit derived by the employer. [Citation.]” (State Farm Mut. Auto. Ins. Co. v. Haight (1988) 205 Cal.App.3d 223, 241.) This exception to the going and coming rule, carved out by this court in Huntsinger, supra, 22 Cal.App.3d 803, has been referred to as the “required-vehicle” exception. (Tryer v. Ojai Valley School (1992) 9 Cal.App.4th 1476, 1481.) The exception can apply if the use of a personally owned vehicle is either an express or implied condition of employment (Hinojosa v. Workmen’s Comp. Appeals Bd. (1972) 8 Cal.3d 150, 152), or if the employee has agreed, expressly or implicitly, to make the vehicle available as an accommodation to the employer and the employer has “reasonably come to rely upon its use and [to] expect the employee to make the vehicle available on a regular basis while still not requiring it as a condition of employment.” (County of Tulare v. Workers’ Comp. Appeals Bd. (1985) 170 Cal.App.3d 1247, 1253.)

But what if the employee rarely uses their car for company business?

It does not matter how frequently or infrequently the employee uses their car for company purposes to establish the exception.  Here, the employer argued that the exemption to the going-and-coming rule did not apply because Mr. Rosario rarely used his care for company purposes. The evidence was that he only used his car 10 times or fewer during the 16 years he worked for Tamco. The court was not persuaded by this argument, and noted that there was not case law to support the argument. The fact that Mr. Rosario sometimes needed to use his car for company purposes was sufficient to establish the exception to the going-and-coming rule.

This case should be a call to employers to review if they require their employees to use their personal cars for work, and if this could create potential liability for the employer even though the employee is driving to or from work. 

With the summer shortly upon us, employers will no doubt be faced with students looking for internship opportunities.  Employers need to be very careful in characterizing students as interns, and not paying them minimum wage and following California’s other numerous Labor Code provisions that protect employees.  

In April 2010, the Department of Labor Standards Enforcement (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 o 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 be actually 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.

We are nearly at the point were everything we do is recorded.  Think no one knows where you are?  Wrong, your phone’s GPS can be used to track your location without you knowing about it. 

Parties to lawsuits have not realized this new phenomenon either.  In almost every case I have litigated in over the last two years the parties’ emails have played a critical role.  Why is that?  First, almost all communications are done through email.  Email drafted three years ago, and produced in the course of litigation has a lot of credibility because it recorded the facts as they existed at the time the writer sent the email.  It is is very hard to dispute those facts. 

Is This Good Or Bad?

It is good because it is that much easier to catch a lair these days.  It is also bad, because if you do not take the time to accurately draft an email – and your words could have two meanings – it could come back to bite you.  Seth Godin had some good advice today, and provided 8 tips that are well worth a review:

1. Change your settings so that email from you has a name, your name, not a blank or some unusual characters, in the from field. (ask a geek or IT person for help if you don’t know how).
2. Change your settings so that the bottom of every email includes a signature (often called a sig) that includes your name and your organization.
3. Change your settings so that when you reply to a note, the note you’re replying to is included below what you write (this is called quoting).
4. Don’t hit reply all. Just don’t. Okay, you can, but read this first.
5. You can’t recall an email you didn’t mean to send. Some software makes you think you can, but you can’t. Not reliably.
6. Email lives forever, is easy to spread and can easily show up in discovery for a lawsuit.
7. Please don’t ask me to save a tree by not printing your email. It doesn’t work, it just annoys the trees.
8. Send yourself some email at a friend’s computer. Read it. Are the fonts too big or too small? Does it look like a standard email? If it doesn’t look like a standard, does this deviation help you or hurt you? Sometimes, fitting in makes sense, no?

It is also worth remembering how useful email can be as a tool to record facts as they exist on a certain day and time.  It is very easy to send yourself an email to record a discussion that took place – and this email will have a lot of credibility should that discussion ever be the center of lawsuit.

The Department of Labor issued its first “interpretation” letter (a change in policy by the DOL that replaces its opinion letters previously issued) by examining whether or not mortgage loan officers meet the administrative exemption of the Fair Labor Standards Act (FLSA). The DOL concluded that mortgage loan officer do not meet the exemption, and therefore are owed overtime wages. 

The DOL notes:

The financial services industry assigns a variety of job titles to employees who perform the typical job duties of a mortgage loan officer. Those job titles include mortgage loan representative, mortgage loan consultant, and mortgage loan originator.

The interpretation letter found that the typical mortgage loan officer’s duties begin with obtaining clients, collecting information about the clients (such as income, employment history, investments, and so forth), and then inputting this information into a computer program. The program sets forth appropriate loan products for the clients. The officer would then discuss the different pros and cons for each product with the client in order to match the client’s needs with one of the offered products.

The DOL noted that for the loan officer to qualify as exempt, their primary duty must be “the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers.” Work directly related to management or general business operations consists of work in areas such as accounting, budgeting, quality control, and human resources – not actually producing the product sold by the company or selling the product made by the company.

The DOL interpretation concluded:

Thus, a careful examination of the law as applied to the mortgage loan officers’ duties demonstrates that their primary duty is making sales and, therefore, mortgage loan officers perform the production work of their employers. Work such as collecting financial information from customers, entering it into the computer program to determine what particular loan products might be available to that customer, and explaining the terms of the available options and the pros and cons of each option, so that a sale can be made, constitutes the production work of an employer engaged in selling or brokering mortgage loan products.

This new guidance from the DOL establishes that employers in the financial industry with employees – in particular loan officers – must review this new interpretation and evaluate whether certain employees can simply be paid a salary, or if the employees must be reclassified as non-exempt and receive overtime. The DOL letter can be read here (PDF).

I came across an article recently by Design by Gravity (via Lifehacker) – Methods of Work: It Didn’t Happen If You Didn’t Write It Down – reminding designers and programmers to record their thoughts in some manner, or else lose it forever.  The lesson does not apply just to designers and programmers, but also to HR professionals or anyone else involved in managing employees. 

I have yet to complain about a client involved in an employment lawsuit that the client took too many notes.  The employment lawyer’s mantra is document, document, document.  Why?  Just as the article suggests, if you have a conversation, but do not record the conversation in some manner, it never happened. 

The author suggests a lot different technologies that can help with recording events.  However, I prefer the pen and paper – but I force myself to PDF my notes as soon as possible so that I will never misplace them.  Just had a conversation while you are driving and have another 30 minutes of rush hour traffic to contend with?  In this case, I’ve been using Dragon, a free iPhone app, that transcribes your speech into text that you can either text or email to yourself.  This is a great way to create a time stamped document reflecting what was said.  

Photo by e walk. 

It may come as a surprise to many employers that employees cannot waive, or enter into contracts contrary to many of California’s Labor Code requirements. The rationale for this is pretty basic: if employees could waive the rights given to them under the Labor Code, every employer would simply require the employee to waive the rights on the first day of work, rendering the Labor Code meaningless.

A general rule for Courts is found in Civil Code section 3513, which provides: “Any one may waive the advantage of a law intended solely for his benefit. But a law established for a public reason cannot be contravened by a private agreement.” California courts have found that many of the Labor Code provisions are for the public good, and therefore cannot be waived by an employee.  

Labor Code Provisions An Employee Cannot Waive:

  • Minimum Wage & Overtime

Labor Code Section 1194 provides a private right of action to enforce violations of minimum wage and overtime laws. That statute clearly voids any agreement between an employer and employee to work for less than minimum wage or not to receive overtime:

Notwithstanding any agreement to work for a lesser wage, any employee receiving less than the legal minimum wage or the legal overtime compensation applicable to the employee is entitled to recover in a civil action the unpaid balance of the full amount of this minimum wage or overtime compensation, including interest thereon, reasonable attorney’s fees, and costs of suit.

In Gentry v. Superior Court, the Supreme Court further explained:

[Labor Code] Section 510 provides that nonexempt employees will be paid one and one-half their wages for hours worked in excess of eight per day and 40 per week and twice their wages for work in excess of 12 hours a day or eight hours on the seventh day of work. Section 1194 provides a private right of action to enforce violations of minimum wage and overtime laws.
…
By its terms, the rights to the legal minimum wage and legal overtime compensation conferred by the statute are unwaivable. “Labor Code section 1194 confirms ‘a clear public policy . . . that is specifically directed at the enforcement of California’s minimum wage and overtime laws for the benefit of workers.’”

  • Expense Reimbursement

Labor Code section 2802 requires employers to reimburse its employees for “necessary expenditures or losses incurred by the employee” while performing his or her job duties. Labor Code section 2804, clearly provides that an employee cannot waive this right to be reimbursed for or liable for the cost of doing business. Section 2804 provides, “Any contract or agreement, express or implied, made by any employee to waive the benefits of this article or any part thereof, is null and void….”

Labor Code Provisions An Employee May Be Able To Waive:

While it is unclear, the following items could possibly be waived by an employee. However, these areas are very unsettled, and employers should approach with caution when seeking waivers from employees on these issues.

  • Meal Breaks

The California Supreme Court is currently reviewing the case Brinker v. Superior Court, that should address, among other issues, the standard regarding how employers need to provide meals breaks. At issue is whether employers need to simply “provide” employees with meal breaks, or on the other hand, “ensure” that employees take meal breaks. If the Supreme Court rules that employers only need to provide meal breaks, then if the employee chooses not to take the meal break, then arguably there would be no violation. The Supreme Court will hopefully issue a ruling on this case in 2010.

  • Waiver To Participate In A Class Action

Given the increase in wage and hour class actions, employers began seeking agreements from their employees that if a dispute would arise about any wage and hour issue, the employee would agree to only seek remedies on an individual basis, not through a class action. The California Supreme Court reviewed the issue if an employee could enter into such an agreement and found that, “at least in some cases, the prohibition of classwide relief would undermine the vindication of the employees’ unwaivable statutory rights and would pose a serious obstacle to the enforcement of the state’s overtime laws.” The Court therefore set out a number of factors that a trial court must look at to determine whether the class action waiver is enforceable or not. As of February 2010, there has not been a class action waiver that has been upheld by an appellate court in California. So while there is the possibility of enforcing such waivers, this possibility is very slight.
 

The case Pellegrino v. Robert Half International, Inc. (RHI) was brought by recruiters alleging that RHI failed to comply with Labor Code provisions pertaining to overtime compensation, commissions, meal periods, itemized wage statements, and unfair competition (under Business and Professions Code section 17200). 

As defenses, RHI argued that Plaintiffs’ claims were barred because they all entered into agreements that shortened their statute of limitations down from four years to six months. RHI also argued that the Plaintiffs were exempt from wage and hour laws because the employees qualified for the administrative exemption. The appellate court, in agreeing with the lower trial court, dismissed RHI’s defense that the Plaintiffs’ agreed to a shorter statute of limitation on the grounds that this agreement violated public policy and is unenforceable.

The Administrative Exemption

Employers bear the burden to prove that the employee does not qualify for overtime of one and a half times the employee’s regular hourly rate for all work performed over eight hours in one day and/or all hours over 40 in one week. Employees can qualify for a number of different exemptions, and in this case RHI argued that the Plaintiffs were administrative employees.

In order to qualify for the administrative exemption, the court noted that the employer must prove that the employee must:

(1) perform office or non manual work directly related to management policies or general business operations’ of the employer or its customers,

(2) customarily and regularly exercise discretion and independent judgment,

(3) perform under only general supervision work along specialized or technical lines requiring special training or execute under only general supervision special assignments and tasks,

(4) be engaged in the activities meeting the test for the exemption at least 50 percent of the time, and

(5) earn twice the state’s minimum wage.

The employee must meet all five elements in order to be an exempt administrative employee.

The court explained, by quoting the applicable regulations, that:

“The phrase ‘directly related to management policies or general business operations of his employer or his employer’s customers’ describes those types of activities relating to the administrative operations of a business as distinguished from ‘production’ or, in a retail or service establishment, ‘sales’ work. In addition to describing the types of activities, the phrase limits the exemption to persons who perform work of substantial importance to the management or operation of the business of his employer or his employer’s customers.”

The court found that the evidence did not support RHI’s argument that the Plaintiffs were administrative employees. The court explained that the account executives were trained in sales and evaluated on how well they met sales production numbers – which are not exempt duties. The account executives were also primarily responsible for selling the services of RHI’s temporary employees to its clients. And when they were not selling, they were recruiting more candidates for RHI’s “inventory.” The account executives also followed a “recipe” established by the company which required the employees to rotate their duties ever week between a “sales week,” “desk week,” and recruiting week.” The employees did not develop any policy, but simply followed the company’s system of performing their job. The court finally noted that the Division of Labor Standards Enforcement (DLSE) previously opined that recruiters who worked in a recruiting company did not qualify for the administrative exemption (which can be read at the DLSE’s website here (PDF)). All of these facts supported the trial court’s finding that the employer failed to meet its burden that the account executives were administrative employees.

This case is a good reminder to employers that they must be careful about how employees are classified. Simply because the employee has a high-level title, or every employer in the particular industry has always treated this type of employee as an exempt employee does not mean that the employees are properly classified. Courts will strictly apply the applicable exemption element-by-element to determine whether or not the employer must pay the employee overtime and provide meal and rest breaks. Finally, employers must remember that they will bear the burden of proof when asserting in court that the employee is properly classified as an exempt employee.

The case, Pellegrino v. Robert Half International, Inc. can be downloaded here (PDF).

Despite your teachers, friends, boss, colleagues and family members telling you otherwise, you are a linchpin. You are a genius that can succeed in the new economy. Seth Godin’s new book, Linchpin, sets out to challenge you to unlearn what school and society has rewarded in the past, and to let us all know that we are linchpins (if we make the choice to be).

I just finished reading an advance copy of Linchpin, and have to recommend the book to anyone who either manages people at work or for anyone who has to work for a living. I have read many of Seth’s other books which provide prophetic insight how the Internet and technology have changed marketing and business forever. Linchpin similarly argues that technology is changing the business world dramatically, but the book focuses more on what these changes mean for individuals, and the new opportunities and rewards for those who chose to be linchpins.

What is a linchpin?

The term is defined by the Merriam Webster dictionary as: “(1) a locking pin inserted crosswise (as through the end of an axle or shaft); (2) one that serves to hold together parts or elements that exist or function as a unit <the linchpin in the defense’s case>.” Seth’s theme throughout the book is that a linchpin is an artist who challenges the status quo, and in doing so creates value, and in doing this become indispensible. An artist is not necessarily someone who creates a painting, but Seth says a lawyer, engineer, salesman, politician or a mid-level manager in a large company can all create art. Seth argues that “art is the ability to change people with your work, to see thing as they are and then create stories, images, and interactions that change the marketplace.”

Is it hard to be a linchpin?

Definitely. As Seth observes, “Nothing about becoming indispensable is easy. If it’s easy, it’s already been done and it’s no longer valuable.” But as Seth argues, in today’s world to be “successful” you have no choice but to be a linchpin. Not being a linchpin relegates a worker’s work into a commodity, which makes the worker easily replaceable by the next person who will do the work cheaper.

The book covers the shift in economics that the Internet has developed, which has opened up so much more opportunity. In the past, the bourgeoisie controlled the capital to invest in factories. The proletariat workers had little leverage in the equation because they do not possess the capital to create their own factories. Today, however, “the proletariat own the means of production.”   With the new economy, we have to unlearn the factory mind-set that we have been programmed to live by over the last 100 years – which rewarded showing up for work and following the rules. The Internet has changed this.

While technology has changed the rules of the game, individuals need to make a choice. Society does not reward blind rule-following, but instead requires linchpins who do not have maps telling them what to do next. This is difficult, as we are conditioned by society to follow the status quo and to fit in. Linchpins understand this, and must continually fight off the tendency to give-up, conform and to take the easy path by simply following the rules (Seth refers to this tendency as the resistance).

What does this have to do with employment law?

Well, as a blogger, I have read Seth’s blog for a couple of years.  Before I read the book, I thought it would have no relationship to employment law what-so-ever.  But, only a few pages into the book I realized that this book is a must read for managers and human resource professionals. Companies need to realize they now need linchpins within their organizations, and they need to allow employees room to be linchpins, instead of drowning out these productive individuals by forcing them to conform. Seth notes that “Great bosses and world-class organizations hire motivated people, set high expectations, and give their people room to become remarkable.”  This book is not only a wake-up call to managers about what type of employee is needed in today’s workplace.

Yes, the California Employment Law Report was recognized as a top 100 employment law blog in 2009.  The Delaware Employment Law Blog published its top 100 employment law blogs, and the California Employment Law Report is honored to be recognized in such a distinguished list.   

If you routinely deal with employment law issues across the country, the list of the 100 (plus 10) blogs is a great resource, and you should check the list out here and add a few of the blogs to your RSS reader.

Now all is needed is more time to publish posts to keep this standing in 2010.