As a matter of law, Plaintiffs’ cannot recovery punitive damages for Labor Code violations. Brewer v. Premier Golf Properties (2008) 168 Cal.App.4th 1243, 1252. In Brewer, the court stated:

We are convinced, both by application of the “new right-exclusive remedy” doctrine and under more general principles that bar punitive damages awards absent breach of an obligation not arising from con-tract, punitive damages are not recoverable when liability is premised solely on the employer’s violation of the Labor Code statutes that regulate meal and rest breaks, pay stubs, and minimum wage laws.

Ibid. In Brewer, the plaintiff sought damages for pay stub violations, unpaid minimum wages, unpaid overtime, and meal and rest break wages. The court explained that Brewer’s claims for Labor Code violations arose from rights based on her employment contract, and therefore she was not entitled to recover punitive damages. Despite the clear holding in Brewer, I still routinely see punitive damages asked for in wage and hour cases.
 

California law has held that “employer” does not include an entity’s agents, and therefore there is no personal liability for Labor Code violations. Reynolds v. Bement (2005) 36 Cal.4th 1075, 1087-88; Jones v. Gregory (2006) 137 Cal.App.4th 798, 805. The California Supreme Court explained in Reynolds that under common law, corporate agents are not personally liable, and that the Labor Code does not provide a definition of employer that would warrant imposing personal liability on corporate officers for non-payment of wages.

The key quotes from the Reynolds court:

“This is true regardless of whether a corporation’s failure to pay such wages, in particular circumstances, breaches only its employment contract or also breaches a tort duty of care.”

“It is ‘well established that corporate agents and employees acting for and on behalf of a corporation cannot be held liable for inducing a breach of the corporation’s contract.’ ”

“And ‘[d]irectors or officers of a corporation do not incur personal liability for torts of the corporation merely by reason of their official position…’ ”
 

The WSJ recently reported, there is a trend that discrimination based lawsuits fair a lot worse than most other cases filed in federal court. A study found that discrimination cases lose at a higher rate and are more likely to be dismissed at early stages in the lawsuit. The article reports:

The odds against winning discrimination cases have some employee lawyers reluctant even to try. "We will no longer take individual employment-discrimination cases, because there’s such a high likelihood of losing," New York plaintiffs’ attorney Joe Whatley Jr. says. Job-discrimination case filings declined by 40% from 199Source: WSJ.com9 to 2007, federal court records show.

The article also points out that discrimination cases are dismissed more often at the summary judgment stage:

Even the federal courts have detected the pattern of more dismissals in discrimination cases, though they surmise different reasons for it than do plaintiffs’ lawyers. A report last year by the Federal Judicial Center, the research arm of the federal courts, found that judges nationwide terminated 12.5% of employment-discrimination cases through summary judgments, before the suits reached trial. In 90% of those cases, it was the employers who requested the summary judgment. In contrast, the study found, 3% of contract cases and 1.7% of personal-injury and property-damage suits were dismissed via summary judgments.

There can be a number of reasons for this as the article points out: employers settle bad cases before litigation and employers have implementing better policies and maintain better documentation to defend themselves against discrimination claims.

It is interesting to note that during this same time period that discrimination class are declining, there is a noticeable increased amount of wage and hour litigation. In fact, wage and hour lawsuits more than doubled in federal courts from 2001 to 2006.  No matter what the cause, discrimination cases are harder to bring, and harder to win. What replaced discrimination claims during this same time period? Wage and hour claims for violations of overtime pay, non-payment of wages, and not providing meal and rest breaks. 
 

While California employers anxiously wait for the California Supreme Court’s opinion in Brinker v. Superior Court (Hohnbaum) (and also Brinkley v. Public Storage, Inc.), what steps should they in regards to meal and rest break policies?

Record meal breaks.

This is already an obligation of California employers, and the Brinker decision does not change this obligation. Failure to do so creates a negative inference against the employer during litigation.

Employers should continue to have a strict written policy on providing meal and rest breaks.

Brinker’s policies, which were found to be valid by the appellate court, are a good example of policies California employers should have in place. For example, Brinker had a written policy titled “Break and Meal Period Policy for Employees in the State of California.” Brinker also required its employees to sign a form stating “I am entitled to a 30-minute meal period when I work a shift that is over five hours” and that “If I work over 3.5 hours during my shift, I understand that I am eligible for one [10-]minute rest break for each four hours that I work.” Brinker’s policy also stated that an employee’s failure to abide by the policy could result in termination. The court held that this ultimately was sufficient under California law to “provide” meal and rest breaks, only if the defendant has taken steps to establish and communicate the policy. Then if an employee fails to take a meal or rest break voluntarily, the employer is not liable for damages.

Continue to monitor that employees are actually taking meal breaks.

A good example of what not to do was shown by the defendant in Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949. There, the defendant, a trucking company, had computerized systems on each truck that allowed it to track the driver’s location, speed, starts and stops, and time. The drivers had to input factors that the computers could not monitor independently, such as road conditions and traffic. The court held that by requiring its drivers to keep track of these factors, the defendant trucking company regulated the drivers’ activity, but failed to schedule meal breaks, did not include an activity code for meal breaks that would be an acceptable delay for deliveries. The company also did not monitor compliance. The court also noted that:

[W]here the employer has failed to keep records required by statute, the consequences for such failure should fall on the employer, not the employee. In such a situation, imprecise evidence by the employee can provide a sufficient basis for damages.

(citing Hernandez v. Mendoza (1988) 199 Cal.App.3d 721, 727). As a result of Cicairos’ failures, “most drivers at their meals while driving or skipped a meal nearly every working day” and the pressure from management made drivers feel that they should not stop for lunch. The court held that these facts negated defendant’s argument that the meal breaks were provided.

Make sure management knows about and enforces these rules.

Employers should have discussions with their front-line managers about meal and rest breaks to ensure that the policy is being effectively administrated.

Policies should require employees to come forward to report if they have been forced to work through a meal break.

This would help to some degree when the employees claim that they were forced to work through their meal and rest breaks.
 

It appears that the California state politicians are close to finalizing a budget deal in Sacramento by this Friday. The Governor placed everything on the table during these negotiations, including attempting to bring some relief to businesses in regards to the meal and rest break laws and even revising California’s requirements that overtime is owed for all work performed over 8 hours in a day. However, by many reports it appears that there will be no change to the current meal and rest break laws, or the overtime requirements.

Many California businesses have been sued in wage and hour class actions alleging that they have not properly administered meal and rest breaks. Employers face large amounts of liability in these class actions in the form of premium pay of one hour of pay at the employee’s regular rate of pay for each violation for a period of four years.

The Press Democrat also reports that the deal will increase taxes:

Vehicle license fees would nearly double, going from the current rate of 0.65 percent to 1.15 percent of the value of a car or truck.
The sales tax would increase by 1 cent. Gas taxes would increase by 12 cents a gallon.
Californians would pay a new surcharge on their personal income taxes, amounting to 2.5 percent of their total tax bills. The state’s dependent credit would be cut in half, raising taxes for parents and those who take care of elders.
The new and increased taxes would remain in effect for at least two years.
 

As long as employers are given reasonable advance notice, employees are entitled to take time off to serve as a juror or as a witness if subpoenaed to appear at trial. Employers may not discriminate or otherwise punish an employee for taking time off to serve as a juror or a witness.

Pay During Jury Duty:

Unless a union agreement or contract provides otherwise, you are not required to pay non-exempt employees for time not worked due to jury service. However, due to the prohibition against discrimination against employees who are subpoenaed or called for jury service, employers should have a jury duty policy that is consistent with other policies for taking time off due to non-personal, non-voluntary reasons. In the case of an exempt employee, the employer must continue to pay the full weekly salary unless the jury service prevents the exempt employee from performing any work for a full week.

Many employers voluntarily pay full or half wages for a specified period of time, such as a maximum of two weeks, to employees who are selected to sit on a jury in an effort to raise the quality of juries by expanding the pool of people who are able to serve. As with all policies, whether employers choose to provide paid or unpaid leave, it is important to have a clear policy that is uniformly enforced.
 

Question: May I require my employees to wear a particular uniform?

California law allows employers to require employees to wear particular types of clothing or uniforms to work. If an employer requires non-exempt employees to wear a uniform, the employer must pay for and maintain it for the employee. What constitutes a "uniform" is not always clear.

According to the California Labor Commissioner, the term "uniform" includes any apparel and/or accessories of distinctive design or color. An employer may prescribe the weight, color, quality, texture, style, form, and make of a "uniform" required to be worn by employees. When an employer simply requires employees to wear "basic wardrobe items which are usual and generally usable in the occupation," the clothing is not a uniform. For example, specifying that employees wear white shirts, dark pants, and black shoes and belts, all of unspecified design, does not constitute a "uniform." The employer is not required to pay for that clothing or its maintenance. If the required clothing can double as street clothes, it is probably not a "uniform."

Some safety equipment or protective apparel must be worn by employees as a matter of law. Proper safety equipment such as goggles, gloves or other accessories or apparel must always be provided by the employer if they are required by a regulation of the Occupational Safety and Health Standards Board.

How is maintenance of a uniform handled?

In addition to the cost of the uniform, the employer must provide non-exempt employees with reasonable maintenance of the uniforms. The employee can either maintain the uniform itself, or pay the employee a weekly maintenance allowance of an hour’s pay at minimum wage, provided that an hour’s pay is a reasonable estimate of the time necessary to maintain uniform properly. It is reasonable to require employees to maintain uniforms requiring minimal care, such as washing and tumble drying, without reimbursement; however, special care, such as ironing, dry cleaning or separate laundering because of heavy soiling or special color, must be reimbursed to non-exempt employees.  Click here to read a Department of Labor opinion letter about when employers should bear the costs to maintain uniforms under the FLSA.  California’s DLSE also has an opinion letter on the topic, which is very similar to the DOL’s opinion. 

Employers need to remember that they can never impose a financial burden on employees, with respect to purchasing or maintaining clothing that reduces the employees’ wage rate below the minimum wage.

Other Concerns:

Employers must also be careful to pay employees for all time worked.  If putting on a uniform (or other equipment) takes a long time, it could be considered time worked, and therefore must be paid.  For more information, a DLSE opinion letters can be read here, here, and here. 

 

Google Latitude, a new Google application allows users to track the physical location of other people through a mobile phone or computer. While the GPS tracking technology is nothing new, the amazing aspect of this is how inexpensive tracking technology has become. Many employers have already implemented GPS tracking, but now with Google’s basically free service many more employers will look to this technology to help manage their workforce. However, there are already concerns about individual privacy rights being voiced about this technology, and employers should be aware of employee’s privacy rights before using this technology.

First off, in California, Article I, Section I of the California Constitution guarantees citizens a right of privacy:

All people are by nature free and independent and have inalienable rights. Among these are enjoying and defending life and liberty, acquiring, possessing, and protecting property, and pursuing and obtaining safety, happiness, and privacy.

This right to privacy carries over to the workplace. Furthermore, section 96(k) of the Labor Code provides that the California Labor Commissioner may assert on behalf of employees:

Claims for loss of wages as the result of demotion, suspension, or discharge from employment for lawful conduct occurring during nonworking hours away from the employer’s premises.

In Barbee v. Household Automotive Finance Corp. (2003), a court provided some guidance about the ramifications of section 96(k). Barbee was dating a subordinate at work, which violated the company’s policy and created a conflict of interest. The company gave Barbee and the employee with whom he was involved the option that one of them had to resign or to end the relationship. Barbee refused to resign, and they did not end the relationship, so the company terminated Barbee. Barbee sued, arguing that the company violated Labor Code section 96(k) in that his employer was regulating his lawful conduct during personal time. The court rejected Barbee’s argument in stating:

We conclude that Labor Code section 96, subdivision (k) does not set forth an independent public policy that provides employees with any substantive rights, but, rather, merely establishes a procedure by which the Labor Commissioner may assert, on behalf of employees, recognized constitutional rights. Therefore, in order to prevail on his wrongful termination claim, Barbee must establish that his employment was terminated because he asserted civil rights guaranteed by article I of the California Constitution. We conclude that Barbee cannot make this showing and therefore he cannot establish the first necessary element of his wrongful termination claim.

While the court held that the company’s actions in that case did not violate section 96(k), the facts were very favorable to the employer that are not applicable when dealing with privacy rights and GPS tracking.  Also and there are other arguments available to employees. For example, an employee may also argue violation of Labor Code Section 98.6 which states in part that “no person shall discharge any employee … because the employee … engaged in any conduct delineated in this chapter, including the conduct described in subdivision (k) of Section 96 ….”

Therefore, there are a few minimum steps employers should take when using tracking technology in the workplace:

  1. Develop a policy about how the company will use GPS tracking in the workplace.
  2. Disclose the policy in writing to the employees.
  3. Pay for the device or software that is required for the tracking (requiring employees to pay for business expenses violates Labor Code section 2802).
  4. Allow the employee to turn the GPS device off when not working during the day, such as during lunch breaks, on personal time, or after they have left for the day.
     

As difficult as it is to comply with California’s daily overtime rules, it is easy to forget the one form of flexibility provided to employers — makeup time. This provision allows employers to avoid paying overtime when employees want to take off an equivalent amount of time during the same work week. There are, however, a few requirements that must be met to ensure that the employer is not required to pay overtime for the makeup time:

  1. An employee may work no more than 11 hours on another workday, an not more than 40 hours in the workweek to make up for the time off;
  2. The time missed must be made up within the same workweek;
  3. The employee needs to provide a signed written request to the employer for each occasion that they want to makeup time (and if employers permit makeup time, they should have a carefully drafted policy on makeup time and a system to document employee requests); and
  4. Employers cannot solicit or encourage employees to request makeup time, but employers may inform employees of this option.

Remember, time and a half overtime is due for (1) time over eight hours in one day or (2) over 40 hours in one week or (3) the first eight hours worked on the seventh consecutive day worked in a single workweek; and double time is due for (1) time over 12 hours in one day and (2) hours worked beyond eight on the seventh consecutive day in a single workweek. For more information regarding overtime and related issues, the DLSE provides a good summary here.
 

California law treats “tips” (defined as any discretionary gratuity left by a customer for a server) as a strange kind of compensation — which may belong to the employee who initially received the tip, other employees involved or, for certain purposes, even the employer itself. Given the confused property rights involved, businesses are often unsure how tips should be handled.

The Legal Status of Tips.
The Labor Code states unequivocally that “Every gratuity is hereby declared to be the sole property of the employee or employees for whom it was paid, given or left for.” (Lab. Code § 350). Yet, California courts have also reached the seemingly contradictory conclusion that employers may lawfully require that this “sole property” of the employee must be shared with other employees. Moreover, the federal Fair Labor Standards Act (“FLSA”) and state and federal tax withholding rules treat tips not as direct payments from customers to servers, but rather as a form of “wages” paid by the employer.

California restaurateurs are currently experiencing a wave of class action lawsuits seeking damages for illegal “tip pooling.” These lawsuits usually allege that the employer has violated the law by permitting ineligible employees to participate in the tip pool. According to these lawsuits, employees are ineligible for tip pooling where they were either not directly involved in providing any service to the customer who left the tip or they are “agents” of the employer.

Labor Commissioner’s Position On Tip Pooling.
According to the most recent non-binding opinion letter issued by the California Labor Commissioner on the subject, a tip pooling arrangement is permissible so long as it is a “fair and equitable” system that has “a correlation with prevailing industry practice.” (September 8, 2005 Op. Letter of Donna M. Dell). But the Labor Commissioner further opines that any tip-pooling policy must also comply with the following requirements:

  1. The tip pool should include only “those employees who contribute in the chain of the service bargained by the patron;” and
  2. The tip pool should exclude any supervisory employee “with the authority to hire or discharge any employee or supervise, direct, or control the acts of employees.”

Although not legally controlling authority, the Labor Commissioner opinion constitutes good advice for any employer seeking to avoid lawsuits. For the California’s Division of Labor Standards Enforcement position on tip pooling, visit their website here.

Avoiding Liability From Tip Pooling Lawsuits.
Employers can take steps to prevent and/or minimize liability for tip pooling claims. Here are a few items that employers can consider in order to minimize the liability regarding tip pooling.

  • Employers should consider implementing a policy stating that all tips are the sole property of the waiters, and employees are free to enter into any voluntary tip pooling arrangements with co-workers on their own.
  • Employers should consider notifying patrons on the menu or on the receipt that any tip left may be distributed according to a tip pooling arrangement, unless the patron affirmatively indicates that his or her tip should only go to one person.
  • Regardless of the employer’s policy on tip pooling, the employer should implement and enforce a policy that the employer’s supervisory employees are always prohibited from sharing in tip pools. For purposes of this policy the operative definition of a supervisor is any “person other than the employer having the authority to hire or discharge any employee or supervise, direct, or control the acts of the employee.”

As a general caveat, however, each case has unique facts and may present issues not addressed in this article. As a result, employers should seek competent legal advice before implementing a new policy regarding tip pooling policies.