New Prime Inc. v. Oliveira

The beginning of 2019 brought substantial employment case settlements and verdicts.  This Friday’s Five reviews the settlements and verdicts that should catch the attention of all employers, as well as a review of the U.S. Supreme Court’s new ruling on arbitration agreements for transportation workers:

1. Restaurant settles claim with Labor Commissioner for $4 million covering approximately 300 employees.

The restaurant chain in the San Francisco bay area, Rangoon Ruby, settled a Labor Commissioner claim involving more than 300 employees for $4 million.  The damages included payments for unpaid overtime wages, minimum wages, split shift premiums, liquidated damages, waiting time penalties, and failure to provide accurate itemized wage statements.

2. ABM Industries settles class action lawsuit for $5.4 million for required used of cell phones.

In the case, Castro v. ABM Industries, Inc., plaintiffs alleged that the employer required its employees to use their cell phones for business purposes and were not reimbursed for the costs associated with the cell phone use as required under Labor Code section 2802.  Plaintiffs contended they were required to use their cell phones to clock in and out for work and to communicate with their supervisors.

Employers need to be careful regarding requiring employees to use certain apps or their cell phones for work purposes.  As new work-related apps find their way into the workplace, employers need to be careful of claims that the use of their personal cell phone for work purposes was required.  Apps used in the workplace for timekeeping, scheduling, and reporting complaints to employers could be susceptible to these types of allegations.

Indeed, it is a good reminder for employers that employers are still required to reimburse employees for the expense of cell phone use even though the employee did not pay additional cell phone fees for using their cell phone for work purposes.  See prior post on holding in Cochran v. Schwan’s Home Service here.

Plaintiff’s motion for preliminary approval of the class action settlement can be found here.

3. Virgin America flight attendants awarded $77 million in wage and hour class action.

A federal judge awarded a class of flight attendants the money after entering summary judgment against the airline for California flight attendants that were not paid for all hours worked, overtime premiums, missed meal and rest breaks, and inaccurate wage statements.  The court also found the airline liable for waiting time penalties under Labor Code section 203 and awarded derivative penalties under California’s Private Attorney General Act (“PAGA”).  The case is Bernstein v. Virgin America Inc.

4. California Senate settles harassment claim for $350,000.

The Senate settled the lawsuit in November 2018, but was recently reported by the Los Angeles Times.  The lawsuit alleged that a former staffer was terminated in retaliation for reporting being raped by an Assembly legislative aide in December 2016.  On a similar note, the California legislature passed many new #metoo laws in 2018.

5. Supreme Court narrows enforceability of arbitration agreements for transportation workers.

Plaintiff filed a wage and hour class action against New Prime, a trucking company.  New Prime filed a motion to compel arbitration under the Federal Arbitration Act.  Plaintiff countered that the employer could not enforce its arbitration agreement with him because §1 of the FAA exempts from arbitration disputes involving “contracts of employment” of certain transportation workers.  New Prime argued that the question of §1’s applicability in this case is for the arbitrator to decide, and even if the court could decide the issue, plaintiff in this case was an independent contractor.  Therefore, §1’s exclusion from arbitration would not apply in this case.

The Supreme Court framed the two issues as follows:

When a contract delegates questions of arbitrability to an arbitrator, must a court leave disputes over the application of §1’s exception for the arbitrator to resolve? And does the term “contracts of employment” refer only to contracts between employers and employees, or does it also reach contracts with independent contractors?”

The Supreme Court answered the first issue in explaining that “a court should decide for itself whether §1’s ‘contracts of employment’ exclusion applied before ordering arbitration.”  The Supreme Court answered the second issue in explaining that the Federal Arbitration Act’s term “contracts of employment” referred to agreements to perform work, which would also include agreements with independent contractors.  Therefore, the Court held that §1 of the FAA precluded New Prime from compelling arbitration of the plaintiff’s claims in this case.  The case is New Prime Inc. v. Oliveira.