1. What is a class action? To understand what a class action is, it is better to start with the basic individual litigation concept. Normally, parties bring their own disputes to court and litigate the case against the other parties who have been officially designated a parties and served with process and understand that they are parties to the lawsuit. Class actions, on the other hand, are brought against a defendant, but the claims are being asserted on behalf of parties who are not actually in the courtroom or named as individual plaintiffs. In the employment context, the plaintiffs are usually represented by at least one named plaintiff who is bringing claims that he or she has an individual on behalf of any other worker to is similar to the named plaintiff. The named plaintiff has to prove to the court that there is a clear class definition that can be arrived at, and the individuals who meet that definition can be ascertained in some manner. This proof is required to be presented when plaintiff brings their motion for class certification as described below. Class actions were developed for a number of reasons. One is to address the problem of  “negative value claims” as described by the court in Baker v. Microsoft:

In particular, class actions are an important way of resolving so-called “negative value claims”; that is, claims that are legitimate, but cost too much to litigate individually. Thus, denying class certification to claims that can be treated in the aggregate is equivalent to denying those claims on the merits.

In addition, because class actions can resolve claims for many individuals in one case, it can potentially save the parties as well as the courts time and costs when compared to requiring multiple cases for individuals involving the same facts and legal issues.

2. Who can bring a class action in the employment context? Any employee or worker who believes that they have suffered an injury while working for an employer could bring a class action on behalf other workers or employees. The complaint filed by the named plaintiff will set for the allegations that they believe make the case suited to be a class action, but the case will not become a class action until the Plaintiffs file a motion with the court asking for the case to be certified as a class action. There are certain requirements that the Plaintiff must prove to the court in order to have the case certified as a class action, and this determination is usually not made early in litigation. The parties will conduct discovery into the allegations and the issues of the case in order to develop the arguments supporting their position of whether or not the case can be certified as a class action. The determination of class certification has a large impact on the case, as the Court in the Microsoft case described:

As the Supreme Court has recognized, the decision whether or not the class is certified is usually the most important ruling in such a case; once a class is certified, plaintiffs who brought claims of even dubious validity can extract an “in terrorem” settlement from innocent defendants who fear the massive losses they face upon an adverse jury verdict. See, e.g., AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740, 1752 (2011) (“Faced with even a small chance of a devastating loss, defendants will be pressured into settling questionable claims.”).

3. How many employees does there need to be for a class action? In California, there is no set rule for how many individuals need to be in the putative class in order to meet the requirement of “numerosity.” Under Federal law, generally the numerosity element is met if the number of potential class members exceeds 40 people.

4. If the employer can prove it did not violate the law, is this a defense to having a class certified? No. As set forth above, usually before the court is asked to determine the merits of plaintiff’s allegations, the court requires the plaintiff to bring a motion for class certification. The motion for class certification only deals with the requirements regarding whether the case should be certified as a class action, and the court is not allowed to make a ruling on class certification based on the merits of the case. Courts have noted, however, that sometimes when conducting this analysis that there will sometimes be overlap with the merits of plaintiff’s underlying claim.

5. If class certification is denied, can another class action be filed on the same claims? It depends on the facts. Court have recently grappled with this issue, and as noted by the court in the Microsoft case, this has been an issue for courts:

Thus, plaintiff’s counsel need not present meritorious claims to achieve victory; they need obtain only a favorable class certification ruling. In light of the minimal costs of filing a class complaint, an obvious strategy suggests itself: keep filing the class action complaint with different named plaintiffs until some judge, somewhere, grants the motion to certify. So long as such a decision is reached while the plaintiffs who have not yet filed are numerous enough to justify class treatment, the plaintiffs will have a certified class that they can use to extract an in terrorem settlement. … If in terrorem settlements are bad, duplicative lawsuits employed to extract such a settlement are worse. It is no surprise, then, that appellate courts have long been trying to solve this problem.

For example, in California the case Alvarez v. May Dept. Stores Co. (2006) 143 Cal.App.4th 1223, held that two cases filed against May Department Stores prior to the Alvarez case precluded the Alvarez case from proceeding as a class action. The court, in applying the collateral estoppel doctrine, found that the two prior cases sought to certify the same class of employees, concerned the same policies, concerned the same time period, and one of the prior cases had the same attorneys and therefore did not allow the third filed class action to proceed. The principle behind the collateral estoppel doctrine is to prevent re-litigation of issues previous argued and resolved in an earlier proceeding. As the court set out, in order for the doctrine to apply, the issues must be identical to an issue that was actually litigated and decided to be final on the merits. Photo courtesy of Phil Roeder

Uber and Lyft have been sued in separate class action lawsuits in California by drivers challenging

Picture via Mic V

the two companies’ classification of the drivers as independent contractors. The plaintiffs in the two cases argue that the drivers should be classified and paid as employees, which triggers many additional Labor Code provisions for the drivers than if they are classified as independent contractors.

The cases are good reminders to California employers, and start-ups especially, about how difficult the analysis can be in some cases. For example, in early March 2015, the judge denied Uber’s motion for summary judgment on the issue (the opinion is embedded below). Employers should take the following five lessons from this pending litigation:

1. The independent contractor analysis is becoming extremely difficult to apply in technology companies or “sharing economy” companies.
Part of the difficulty arises from the fact that the test to determine whether a worker is properly classified was developed before these new business models existed, and as the judge noted in the Uber case, “many of the factors in that test appear outmoded in this context.” With this ambiguity in the existing law, employers should approach with caution.

2. The burden is on the employer to prove that the workers are properly classified as independent contractors.
If the putative employee establishes a prima facie case (i.e., shows they provided services to the putative employer), the burden then shifts to the employer to prove, if it can, that the “presumed employee was an independent contractor.” Narayan v. EGL, Inc., 616 F.3d 895, 900 (9th Cir. 2010). Employers need to be ready to rebut this burden of proof.

3. The primary factor of the analysis is the control over the worker.
The “most significant consideration” is the putative employer’s “right to control work details.” S.G. Borello & Sons, Inc. v. Dep’t of Indus. Relations (Borello), 48 Cal. 3d 341, 350 (1989). The Supreme Court has further emphasized that the pertinent question is “not how much control a hirer exercises, but how much control the hirer retains the right to exercise.” Ayala v Antelope Valley Newspapers Inc., 59 Cal. 4th 522, 533 (2014). In addition, it does not matter if the worker agreed that he was an independent contractor, the determination is made based on the factors of the test.

4. The secondary part of the analysis is an evaluation of 13 factors.
In Borello, the California Supreme Court set out the secondary indications relevant to the analysis of whether a worker is an independent contractor or employee:

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

As the court in Uber noted, the Borello case also “approvingly cited” five additional factors:

  1. the alleged employee’s opportunity for profit or loss depending on his managerial skill;
  2. the alleged employee’s investment in equipment or materials required for his task, or his employment of helpers;
  3. whether the service rendered requires a special skill;
  4. the degree of permanence of the working relationship; and
  5. whether the service rendered is an integral part of the alleged employer’s business.

5. The analysis usually does not turn on one factor.
As the court noted in Uber’s case:

…rarely does any one factor dictate the determination of whether a relationship is one of employment or independent contract. Here, numerous factors point in opposing directions. As to many, there are disputed facts, including those pertaining to Uber’s level of control over the “manner and means” of Plaintiffs’ performance.

While the Uber and Lyft cases are relatively in the early stages of litigation and the Plaintiffs still have to move for class certification, the cases are a good reminder of the difficulties surrounding the classification of independent contractors and how important to conduct this analysis of independent contractors early on in the relationship. For start-ups without the financial backing that Uber and Lyft have, just the initiation of this type of litigation would severely injure the company’s chances of success due to the monetary and time resources that litigation sucks up, in addition to having to shift focus on the primary business goals, and large potential liability if the workers were misclassified.

O'Connor v Uber Technologies – Order Denying Uber's Motion for Summary Judgment

Colin Cochran brought a putative class action against his employers, Schwan’s Home Service, on behalf of 1,500 customer service managers who were not reimbursed for expenses pertaining to the work-related use of their personal cell phones. He alleged causes of action for violation of Labor Code section 2802; unfair business practices under Business and Professions Code section 17200 et seq.; declaratory relief; and statutory penalties under Labor Code section 2699, the Private Attorneys General Act of 2004.

The trial court denied class certification on the grounds that there would be too many individualized questions about each employee’s cell phone expenses incurred for work purpose. In Cochran v. Schwan’s Home Service, the appellate court reversed trial court’s denial of class certification. Below are five lessons employers should learn from this ruling.

1. Employers have an obligation to reimburse business expenses incurred by employees.

Labor Code section 2802, subdivision (a) requires: "[a]n employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer…." This Labor Code section requires employers to reimburse employees for all out-of-pocket expenses the employee incurs (and not just cell phone usage) during the performance of their job.

2. Expenses must be necessary in order to require employer reimbursement.

"In calculating the reimbursement amount due under section 2802, the employer may consider not only the actual expenses that the employee incurred, but also whether each of those expenses was `necessary,’ which in turn depends on the reasonableness of the employee’s choices. [Citation.]"

Cochran at 1144.  What is necessary or not could vary from case to case. Apparently, in this case, the employer had a clear policy requiring the service representatives to use their personal cell phones, so there was no need for the court to conduct any analysis about whether the putative class members’ use of their personal cell phones was a necessary expense.

3. Employers must always reimburse employee for expense of cell phone use even though the employee did not pay additional cell phone fees for using their cell phone for work purposes.

This is the essential holding of the Cochran case. The court explains:

The threshold question in this case is this: Does an employer always have to reimburse an employee for the reasonable expense of the mandatory use of a personal cell phone, or is the reimbursement obligation limited to the situation in which the employee incurred an extra expense that he or she would not have otherwise incurred absent the job? The answer is that reimbursement is always required.

Cochran at 1144.  The employer argued that the case could not be certified as a class action because there are too many individualized questions surrounding each employee’s cell phone plan, and if the employee actually incurred any more expenses as a result of using their cell phone for work. Many people now have unlimited data plans, and if so, the employee would not incurred any additional expenses when using the phone for work.

The court explained that any time a cell phone is required for work, the employer must reimburse the employee. The court stated that to hold otherwise would provide a “windfall” to the employer.

4. The court held that the details about each employee’s cell phone plan do not determine liability.

Not only does our interpretation prevent employers from passing on operating expenses, it also prevents them from digging into the private lives of their employees to unearth how they handle their finances vis-a-vis family, friends and creditors. To show liability under section 2802, an employee need only show that he or she was required to use a personal cell phone to make work-related calls, and he or she was not reimbursed.

Cochran at 1145.

5. The court did not explain how to calculate a reasonable reimbursement for employee’s cell phone use when the employee has an unlimited data plan.

The court passed in explaining how an employer and employee would go about figuring out the amount of reimbursement for personal cell phone use given the different data plans available for cell phones. The court stated that section 2802 requires that the employer should pay some “reasonable percentage” of the employees’ cell phone plans when the cell phone is required for work. Cochran at 1144.

This ambiguity is a blessing and a curse for employers. It is a blessing in that it leaves many options available to employers and employees to structure a reasonable reimbursement plan, but it is a curse because the ambiguity could still lead to future challenges to the agreed upon reimbursement plan. 

The Ninth Circuit Court of Appeals has asked the California Supreme Court to clarify three questions pertaining to California’s little known, and very rarely litigated, laws regarding a day of rest every seven days. The case is Mendoza v. Nordstrom. The California Supreme Court’s clarification could result in a new-found focus on these laws, and it is worth it for California employers to follow the issues raised in this case. Below are five issues employers ought to pay attention to:

1. Is the requirement to provide one day of rest every seven days based on a rolling seven days or on the workweek?
The first issue the Appellate Court seeks clarification on is California Labor Code section 551. This section states that “[e]very person employed in any occupation of labor is entitled to one day’s rest therefrom in seven.” Section 552 further states that “[n]o employer of labor shall cause his employees to work more than six days in seven.” The issue is whether these Labor Code sections apply to seven consecutive days on a rolling basis or only apply to each workweek. The difference in how the days are counted can have a significant impact. The court provides the following example to illustrate its point:

 

 

Sun.

Mon.

Tues.

Wed.

Thurs.

Fri.

Sat.

Week 1

Off

Work

Work

Work

Work

Work

Work

Week 2

Work

Work

Work

Work

Work

Work

Off

If the workweek begins each Sunday, if the statute is read to apply to consecutive seven days, then the employer in this example has violated sections 551 and 552. Alternatively, if the statute applies to each workweek, then the employer has not violated these provisions. The appellate court could not find any support to both plausible interpretations of these Labor Code sections, and therefore is asking the California Supreme Court to clarify.

2. When is an employer exempt from the seven day rule?
The second issue the Appellate Court seeks clarification on pertains to California Labor Code section 556. The section exempts employers from the day-of-rest requirement “when the total hours [worked by an employee] do not exceed 30 hours in any week or six hours in any one day thereof.” The court provides the following example of hours worked each day: 8-9-5-8-8-8-9. Would this work schedule exempt the employer from providing a day of rest on the seventh day? The court explained that the interpretation of the word “any” in section 556 could easily mean one (as in “Pick any card from the deck.”) or it could mean all (as in “Any child knows the answer to that simple question.”).

3. What does it mean to cause employees to work seven days?
The next question the Appellate Court proposed to the California Supreme Court is for clarification of Labor Code section 552. This section provides that employers may not “cause” its employees to work more than six days in seven. The court asks the Supreme Court to clarify the term “cause.” The court states:
To “cause” can mean to “induce,” so is it enough for an employer to encourage or reward an employee who agrees to work additional consecutive days? In another context, causation is defined in terms of the “natural and probable consequence” of one’s action. Is it enough for an employer to permit employees to trade shifts voluntarily, when a natural and probable consequence may be that an employee works more than the day-of-rest statutes allow?

4. Definition of workday.
While this case did not address the issue of overtime, it is a good reminder to review the definition of workday and workweek under California law.
The DLSE defines workday as:

A workday is a consecutive 24-hour period beginning at the same time each calendar day, but it may begin at any time of day. The beginning of an employee’s workday need not coincide with the beginning of that employee’s shift, and an employer may establish different workdays for different shifts. However, once a workday is established it may be changed only if the change is intended to be permanent and the change is not designed to evade overtime obligations.

5. Definition of workweek.
The DLSE defines the workweek as:

Any seven consecutive days, starting with the same calendar day each week beginning at any hour on any day, so long as it is fixed and regularly occurring. "Workweek" is a fixed and regularly recurring period of 168 hours, seven consecutive 24-hour periods. An employer may establish different workweeks for different employees, but once an employee’s workweek is established, it remains fixed regardless of his or her working schedule. An employee’s workweek may be changed only if the change is intended to be permanent and is not designed to evade the employer’s overtime obligation.

If an employer does not set a designated workweek, the DLSE will presume the employer uses the calendar week, from 12:01 a.m. Sunday to midnight Saturday, with each workday ending at midnight.

The Wage Theft Protection act of 2011 added Labor Code section 2810.5 requiring all private California employers to provide a written notice containing specific information to non-exempt employees upon hire. Below are five indispensable items employers should understand about the Notice to Employee (“Notice”) required under the law.

1. All private employers, regardless of size, must provide the Notice to employee with some limited exceptions.
The DLSE explains that the Notice is not required for employees “directly employed by the state or any political subdivision, including any city, county, city and county, or special district; an employee who is exempt from the payment of overtime wages by statute or the wage orders of the Industrial Welfare Commission; or for an employee who is covered by a valid collective bargaining agreement if it meets specified conditions.” So for private employers, no matter how small, must provide the Notice to an employee unless the employee is an exempt employee.

2. DLSE publishes a template Notice to Employee, but it is not required.
It is recommended that employers use the DLSE’s template to avoid any potential challenges (the most current template published as of January 2015 is embedded below). If the template is not used, the employer is still required to provide all of the information required by the law on one form to the employee. It is not compliant to provide the information piecemeal to the employee on various forms. As explained in number 4 below, the DLSE’s webpage regarding the Wage Theft Protection Act has not been updated to reflect the new template published by the DLSE to address the new paid sick leave requirement in 2015. The current Notices for 2015 can be found on the DLSE’s website at its Publications webpage (or embedded below). Hopefully the DLSE will update its website to avoid any potential employer confusion in this regard.

3. Electronic delivery is acceptable under certain conditions.
Electronic delivery of the Notice is fine as long as there is a process for the employee to acknowledge receipt of the Notice and print a copy of the Notice.

4. Notices must be in the language usually used to communicate employment policies with the employee.
The DLSE has published previous templates in various languages, such as Chinese, Spanish and Korean on its Wage Theft Protection Act page. However, the DLSE has not updated many of these translations since it has published the new Notice to Employee effective January 1, 2015 to address California’s paid sick leave requirement. In fact, the DLSE’s own page on the Wage Theft Protection Act still contains the old Notice to Employee. The current templates for 2015 are only found on the DLSE’s Publications page which contains the updated 2015 Notice in English, Spanish and Vietnamese.

5. If any information listed on the Notice changes, the notice does not have to be reissued as long as the information is listed on the employee’s next pay stub.
Employers must notify the employee in writing of any changes to the information set forth in the Notice within seven calendar days after the time of the changes, unless one of the following applies:

  1. All changes are reflected on a timely wage statement furnished in accordance with Labor Code section 226, or
  2. Notice of all changes is provided in another writing require by law within seven days of the changes.

LC_2810.5_Notice_(Revised-11_2014).pdf by anthonyzaller

https://www.scribd.com/embeds/248859089/content?start_page=1&view_mode=scroll&access_key=key-4lE9ENPjaZ1Zp4iCYVVc&show_recommendations=true

Happy New Year.  I started the Friday’s Five articles at the beginning of last summer, and the interest in the articles has been astounding, so I appreciate everyone who has read them and provided comments and feedback. If you have any topics you would like me to address, please let me know. With that said, here is a list of five resolutions for California employers in 2015:

1. Relax–make sure your employees are taking their meal and rest breaks.

2. Train – your supervisors to comply with California’s required sexual harassment prevention training for employers with 50 or more employees.

As of 2015 this training now must also discuss bullying in the workplace to be legally compliant.

3. Read – and update employment handbook policies on a yearly basis.

2015 has a few new laws that should be addressed the employee handbook and new hire packets.

4. Run. Sorry, no play on words with this one, you just need to get outside and run a bit.

5. Organize – and keep employment files, time records and wage information for at least the length of any applicable statute of limitations.

Employers should review their systems to ensure there is a process in place on how to organize and maintain employment information for the required time periods, it is required under the law and can help defend the company should litigation ensue.

Ok – one more bonus resolution:
Learn – more by attending my webinars on California employment laws to stay up to date.

In February, I will be presenting on what documents should be in new hire packets to employees. Date is still to be determined, but drop me an email if you are interested and I will forward you information as we set the date.

Let me start with the lawyer’s disclaimer up-front: this Friday’s Five list has no scientific or statistical backing whatsoever, I generated it based on the cases I’ve been litigating in 2014. My experience may be (and probably is) skewed a bit, but nevertheless California employers should pay attention to the following areas of potential litigation.

1. Meal and rest break litigation.

Meal and rest break class action litigation is still very prevalent in California. While employers are becoming more sophisticated in ensuring compliance with their obligations, the litigation has turned to more nuanced issues, such as the employer’s failure to record meal breaks or provide a full 30 minutes for the meal break. Meal and rest break policies and procedures should always been under review by employers to ensure compliance.

2. Rounding policies.

There have been a number of cases I’ve litigated this year involving time rounding policies. It is important for employers to simply no use the default settings provided by their time keeping software, but instead ensure that the rounding complies with California law.
The Division of Labor Standards Enforcement (DLSE) provides the following guidance for California employers in regard to time rounding:

…the federal regulations allow rounding of hours to five minute segments. There has been practice in industry for many years to follow this practice, recording the employees’ starting time and stopping time to the nearest 5 minute s, or to the nearest one-tenth or quarter of an hour. Presumably, this arrangement averages out so that the employees are fully compensated for all the time they actually work. For enforcement purposes this practice of computing working time will be accepted by DLSE, provided that it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked. (See also, 29 CFR § 785.4 8(b))

3. Private Attorneys General Act claims.

In 2014, the California Supreme Court held that class action waivers in arbitration agreements are enforceable. Click here to read more about the holding, Iskanian v. CLS Transportation Los Angeles, LLC. This holding provided a tool for employers to reduce their class action liability by entering into arbitration agreements with their employees. However, Plaintiffs continually challenge class action waivers on numerous grounds, and it is critical employers’ arbitration agreements are properly drafted and up-to-date. In addition, while courts will uphold class action waivers, the California Supreme Court held that employee may still bring representative actions under the Private Attorneys General Act (PAGA). PAGA claims are limited to specific penalties under the law, and have a much shorter one year statute of limitations compared to potentially a four year statute of limitations for most class actions. Given that the California Supreme Court found that the arbitration agreements could not have employees waive their rights to bring “representative actions” under PAGA, the PAGA claims are more prevalent and being litigated harder by both plaintiffs and defendants.

Click here to read more about PAGA and what do to in response to receiving a Private Attorney Generals Act notice.

4. Required information on pay stubs/itemized wage statements.

Employers are cautioned to rely on their payroll companies for compliant itemized wage statements, as these companies often times do not understand the legal requirements. Ensuring the required information is properly listed on the itemized wage statements is an item that employers should review at least twice a year for compliance.

Labor Code Section 226(a) requires the following information to be listed on employees’ pay stubs:

1. Gross wages earned
2. Total hours worked (not required for salaried exempt employees)
3. The number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece rate basis
4. All deductions (all deductions made on written orders of the employee may be aggregated and shown as one item)
5. Net wages earned
6. The inclusive dates of the period for which the employee is paid
7. The name of the employee and the last four digits of his or her social security number or an employee identification number other than a social security number
8. The name and address of the legal entity that is the employer
9. All applicable hourly rates in effect during the pay period, and the corresponding number of hours worked at each hourly rate by the employee

Here is an example of an itemized wage statement published by the DLSE:

Also, do not forget that with California’s paid sick leave law taking effect July 1, 2015, employers will have additional reporting information regarding employees’ accrued paid sick leave and usage. Employers must show how many days of sick leave an employee has available on the employee’s pay stub or a document issued the same day as a paycheck.

5. Off the clock claims.

Litigation alleging that employees were not paid for all time worked was continuing strong in 2014. This claim arises in various scenarios. The basic claim is that the employee clock out from work and was required to or voluntarily continued to work. This type of claim is usually very difficult to have certified as a class action because the employer’s liability for not paying for off the clock work is whether the employer knew or should have known that the work was being performed and that the employee was not compensated for the work. Anther common scenario given rise to an off the clock claim is when employees have to do some task before or after clocking or out for their work. While the U.S. Supreme Court recently held that security screenings of employees at the end of their shifts to ensure they were not stealing product was not compensable time, employers need to review their practices to avoid these types of situations in their workplace.

The laws passed in 2014 added some new posting requirements and resulted in the need to
revise some of the notices California employers are required to provide to employees. This Friday’s Five Best Practices article sets out five items California employers should review before the start of 2015:

1. Review newly published frequently asked questions about California’s new paid sick leave law (AB 1522).
The Division of Labor Standards Enforcement (DLSE) published a much awaited frequently asked questions on its website explaining how it interprets the new paid sick leave law taking effect in 2015 (click here to view the FAQ’s). Employers should review the questions and answers to have a full understanding their expectations under the new law. As a reminder, this law applies to every employer in California, even if the employer only has one employee.

2. Post the new paid sick leave poster.
As previous written about, the DLSE published the required poster employers must post in a conspicuous place for employees to see. This should be posted by January 1, 2015. Here is a link to download a PDF version of the poster: http://elr.io/pdfsickleaveposter

3. Start using updated Notice to Employee by at least January 1, 2015.
Also written about previously, employers must start using the new Notice to Employee on January 1, 2015. See my previous post for a discussion about how the notice has been revised. Here is a link to download a PDF version of the revised Notice to Employee: http://elr.io/noticetoemployee12-2014

4. Obtain and provide updated sexual harassment pamphlet to new hires.
The DFEH will be releasing revised pamphlets (Sexual Harassment: The facts about sexual harassment DFEH-185) employers are required to provide to new hires. Ensure you company obtains the revised pamphlets and provides the updated pamphlets to new hires.

5. Obtain and provide updated Discrimination and Harassment poster.
Like the sexual harassment pamphlet, the DFEH will be revising the poster entitled “California Law Prohibits Workplace Discrimination and Harassment” (DFEH -162). Employers are required to post this poster in the workplace. This revised noticed should be published by the DFEH within the next week or two, but as of December 5, 2014 the DFEH’s website does not contain the new poster. The poster will reflect the changes in California law that expanded protection against harassment to unpaid interns and volunteers. Click here for a list of the DFEH pamphlets and posters that are available for download. Presumably, once the revised materials are created by the DFEH they will be posted at the DFEH’s website as well.

Next week, I’ll discuss some other areas that employers should review as part of a yearly audit of their employment and wage and hour issues.

An appellate court upheld a trial court’s denial of class certification in a case brought against Walgreens. The appellate court’s decision provides a few good lessons for employers defending class action allegations.

1. Meal break cases are harder to certify as class actions after the Brinker decision.
The California Supreme Court held in Brinker Restaurant Corp. v. Superior Court that employers had to make meal breaks available to employees, and had no obligation to ensure that employees took the meal break. The court in Walgreens acknowledged this, and explained by the make available standard set forth in Brinker makes it hard to certify meal break claims as a class action:

One important difference between the make available standard and the ensure standard has to do with ease of proof. The ensure standard can make it easier for plaintiffs to prove employer meal break violations, while the make available standard can make it harder. Here is why. Employers generally require employees to record hours worked by clocking in and clocking out, a process that typically generates centralized and computerized time records. It is simple to use computer records to determine if each employee checked out on time for a full 30-minute meal break. Meal break classes thus are relatively easy to certify under the ensure test: each missed break automatically equals an employer violation. Meal break classes are harder to certify under a make available test because the fact of a missed break does not dictate the conclusion of a violation (and thus employer liability). Rather, under the make available standard you additionally must ask why the worker missed the break before you can determine whether the employer is liable. If the worker was free to take the break and simply chose to skip or delay it, there is no violation and no employer liability. This make available test thus can make analysis of break violations more complex than under the ensure standard.

2. There is not a presumption against the employer if the employer’s records show no meal period was taken.
Plaintiff argued that because Walgreens’s records did not show that meal breaks were being taken, or taken on a timely basis, that there was a rebuttable presumption created against Walgreens that the breaks had not been taken. Plaintiff argued that Justice Werdegar’s concurring opinion in Brinker supported this analysis. However, in this case, the court did not find this was binding analysis, as a majority of the justices did not agree with this rebuttable presumption and because “concurring opinions are not binding precedent.”

3. After Brinker, an expert witness’ job becomes much more difficult.
The plaintiff utilized an expert witness in the case to attempt to prove that the case was suitable for class certification. However, Plaintiff’s expert witness “incorrectly assumed there was a Labor Code violation every time a worker did not take a timely break. [The expert] thus incorrectly assumed Walgreens must ensure employees took their breaks. This assumption is legally unsound under Brinker’s holding….”

4. It is a good idea to test the truthfulness of the declarations submitted by Plaintiff’s counsel of current or former employees.
In this case, it does not appear that the employees made up facts about their breaks, but instead the plaintiff’s counsel took some liberties with the facts. Usually, plaintiff’s counsel will submit written declarations from current and former employees to support their theories for class certification.  In this case, it appears that the declarations were all very similar, and when the employees who signed the declarations were deposed by the defendant, the employees recanted their declarations and stated that the declaration drafted by plaintiff’s counsel included statements that they never made during the interview by plaintiff’s counsel.  The appellate court noted:

The trial judge repeatedly said these declarations “appalled” him, and he told [plaintiff’s] counsel, “You know better.”
The trial court was “especially troubled” that, once deposed, so many witnesses recanted their declarations.
Form declarations present a problem. When witnesses speak exactly the same words, one wonders who put those words there, and how accurate and reliable those words are.
There is nothing attractive about submitting form declarations contrary to the witnesses’ actual testimony. This practice corrupts the pursuit of truth.
It was not error for the trial court to give these unreliable declarations no weight.

Defendants should take the opportunity to depose the individuals who submitted declarations drafted by plaintiff’s counsel.  You never know what may turn up. 

5. Emails and other documentation reminding managers to provide meal breaks will help the company’s defense against class certification.

In the Walgreens case, plaintiff counsel argued that the following email (and apparently similar emails) by Walgreens to its managers established meal break violations:

Just an FYI . . . if anyone is on this list, they did not receive a lunch. Please, you must talk to the assistant managers and find out why. . . . please make a big deal about this . . . remind employees that it is their job to ask for a break or lunch if they did not receive it, but also remind the Managers on duty that they must have a break schedule created for every shift . . . there is no negotiation about this . . . there is no excuse not to give a break or lunch . . . look at your schedule and make sure you have the right people at the right time. Two of the people received a lunch, but it was after the 5 hour mark and both did not take a 30 minute lunch. Please. . . Please address in every store. . . . This is one day in the district . . . but this is occur[r]ing in every store! Thank you for your complete follow through on this. If you have any questions, please let me know. I will be sending out some guidelines to help you succeed on making sure everyone gets a 30 minute break within 5 hours of their shift. Thank you.

Contrary to plaintiff’s argument however, the court found that this email instead showed Walgreens’s efforts to provide its employees with meal breaks. The emails showed the company pressuring store managers to ensure that employees took meal breaks. Takeaway for employers: document the emphasis on the company’s actions to make meal breaks available for employees and routinely remind managers of the obligations to make breaks available.

The decision, In re Walgreen Co. Overtime Cases and be read here

AB 2053 was signed into law by Governor Brown, and as of January 1, 2015, employers have to comply with new obligations regarding the sexual harassment training already required for some employers under California law.  Here are five issues employers should understand about AB 2053. 

1. What are employer’s current obligations to have supervisors attend sexual harassment prevention training before AB 2053 was passed?

In California, employers with 50 or more workers must provide at least two hours of sexual harassment prevention training to all supervisors. This training must be provided to supervisors within six months of the time they become a supervisor, and then at least once every two years. The training must cover federal and state statutory laws regarding prohibitions against sexual harassment, remedies available to victims, how to prevent and correct sexual harassment, discrimination, and retaliation. This requirement is set forth in California Government Code section 12950.1.

2. What new obligations does AB 2053 add to California’s sexual harassment training requirement?

AB 2053 amends Government Code section 12950.1, and takes effect January 1, 2015. The new law requires employers subject to the sexual harassment training requirement must continue with their obligations under Gov. Code section 12950.1, but to “also include prevention of abusive conduct as a component of the training and education….”

The law defines “abusive conduct” as follows:

For purposes of this section, “abusive conduct” means conduct of an employer or employee in the workplace, with malice, that a reasonable person would find hostile, offensive, and unrelated to an employer’s legitimate business interests. Abusive conduct may include repeated infliction of verbal abuse, such as the use of derogatory remarks, insults, and epithets, verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or undermining of a person’s work performance. A single act shall not constitute abusive conduct, unless especially severe and egregious.

Therefore, going forward, employers need to provide training that complies with this new requirement. Currently, there are no guidelines specifically setting forth details about how long the training should focus on this “abusive conduct” requirement. Employers are encouraged to take reasonable steps to implement a training that complies with this new requirement (I’m updating my training materials right now). Employers providing training by the end of 2014 should seek a training class that complies with the new requirements immediately.

3. Does it create a new cause of action for “abusive conduct” in the workplace?

No. While it may not good business practices, there is no law in California that makes workplace bullying or “abusive conduct” as defined in AB 2053 illegal. The policy reason behind not making such conduct illegal is that it would be difficult to determine what conduct is simply discipline, counseling, and day-to-day management actions versus actions taken with “malice” by a manager. Making such conduct actionable under the law would, in effect, make the court system the final decision maker in resolving normal day-to-day workplace disputes, which could stress the already overwhelmed court system.

4. If employers have already conducted sexual harassment training within the last few months, do they need to re-train their supervisors on January 1, 2015?

The law is unclear on this issue. I placed a call into Assemblywoman Lorena Gonzalez’ office, author of the bill, and was told by a spokesperson that the law would not require re-training of supervisors any sooner than when the two year deadline required them to receive their next training. However, employers should approach this issue with caution, as the law is not clear on the requirement regarding when supervisors must receive training compliant with this new requirement regarding “abusive conduct.” Also, if employers are conducting training of its supervisors between now and the end of 2014, it goes without saying that the training should cover this new requirement to avoid any issues.

5. Could this amendment eventually lead to a law making “abusive conduct” illegal?

Potentially. Even though there is no legal cause of action for “abusive conduct” as defined in the new law, this type of legislation could be amended to make this conduct illegal in the future.