Archives for Employment Law

Recent Developments in Wage and Hour Law – Employer Can Round Time To Nearest Tenth of An Hour

November 16, 2012

By: Christopher P. Wesierski and Christian C. H. Counts

See’s Candy Shops, Inc. v. Superior Court (Oct. 29, 2012) ___ Cal.Rptr.3d ___, 2012 WL 5305729, – Employer Can Round Time To Nearest Tenth of An Hour

Labor Code section 204 states (in part):

“(a)  All wages, … earned by any person in any employment are due and payable twice during each calendar month, on days designated in advance by the employer as the regular paydays.”

Facts

See’s Candy Shops, Inc. uses a timecard system that rounds employee time to the nearest tenth of an hour.  See’s rounding policy rounded time punches up or down to the nearest tenth of an hour so that an employee clocking in at 9:58 a.m. would be recorded as arriving at 10:00 a.m., and an employee clocking in at 8:02 a.m. would be rounded back to 8:00 a.m. See’s called an expert at trial who found that the up or down rounding was unbiased mathematically, and it actually resulted in a net gain for 60% of the class and a net loss for 33%. 

Question:  Does a rounding policy like See’s Candy Shops, Inc.’s (which can short an employee by 6 minutes per day) violate Labor Code § 204?

Holding:  An employer can implement a policy rounding employee clock-ins and –outs to the nearest tenth of an hour if the rounding policy is “fair and neutral on its face” and “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’s Candy Shops, Inc.’s rounding policy was fair and neutral on its face, and actually wound up benefitting employees generally (apparently employees are more often late to work than early).  Therefore, the policy was lawful.

On the other hand, if the rounding policy had been biased (perhaps, such as a policy that always rounded down), then the employer could be in violation of the Labor Code.  The determination would be based on the facts of the particular case.

In so holding, the court dismissed application of Labor Code § 204, finding that that statute only designated when employees would be paid – not how wages earned should be calculated.

Recent Developments in Wage and Hour Law – Commission Chargebacks Lawful

November 16, 2012

By:  Christopher P. Wesierski and Christian C. H. Counts

Deleon v. Verizon Wireless (2012) 207 Cal.App.4th 800 – Commission Chargebacks Lawful

Labor Code § 223 prohibits an employer from secretly taking back part of an employee’s wages so as to make it appear that the employee is being paid more than he actually is. That section provides:

“Where any statute or contract requires an employer to maintain the designated wage scale, it shall be unlawful to secretly pay a lower wagewhile purporting to pay the wage designated by statute or by contract.”

Similarly, Labor Code § 221 provides:

“It shall be unlawful for any employer to collect or receive from an employee any part of wages theretofore paid by said employer to said employee.”

 

Facts:

Deleon worked as a cell phone salesman for Verizon for about nine months.  He was paid a base hourly wage plus commissions on sales.  The commissions were advanced by Verizon before the sales chargeback dates passed.  Deleon’s commission agreements stated: “In the event a customer disconnects service during the commission chargeback period, your commission is subject to adjustment by the original amount advanced for the sale. Your commission advance will be adjusted to account for disconnects within the chargeback period….”  Another provisiion stated that if a customer disconnects service during the chargeback period, “the sale is not considered vested”.  The chargebacks were not taken out of base pay – they simply reduced future advanced commission payments.  Monthly commission statements described the payments as “commission advances”.

Question:  Are Commissions considered “wages”?

Labor Code § 200(a) states:

(a) “Wages” includes all amounts for labor performed by employees of every description, whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculation.

“Commissions” can be calculated with certainty on the basis on the underlying transaction. Thus, commissions are wages.  However, “advanced commissions” are not wages because the employer does not have any way of knowing whether the commission will be earned until a later date.  Per the agreement, Deleon did not earn the commissions until the chargeback period ended.  Therefore, the commission chargebacks were not “wages” and did not violate Labor Code § 221 or § 223.

(NOTE: Beginning in 2013, all commission plans must be in writing.  Labor Code § 2751.)

Recent Developments in Wage and Hour Law – No Reporting Time Pay for Scheduled Meetings

November 16, 2012

By:  Christopher P. Wesierski and Christian C. H. Counts

Aleman v. Airtouch Cellular (2012) 209 Cal.App.4th 556 – No Reporting Time Pay for Scheduled Meetings      

Reporting time pay is a pay requirement found in California Industrial Welfare Commission (“IWC”) Wage Orders. Section 5(A) of Wage Order 4 states:

“Each workday an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee’s usual or scheduled day’s work, the employee shall be paid for half the usual or scheduled day’s work, but in no event for less than two (2) hours nor more than four (4) hours, at the employee’s regular rate of pay, which shall not be less than the minimum wage.”

 

Facts:

Plaintiff worked at AirTouch stores for about a year.  AirTouch posted Plaintiff’s schedule for the next week at least 4 days in advance of the following week.  In his employment, Plaintiff was required to attend occasional one to one-and-a-half  hour store meetings before the store opened on weekend mornings.  The meetings were scheduled in advance and were listed on employees’ work schedules, and they were recorded on Plaintiff’s time cards.  Plaintiff was paid for attending these meetings at his regular rate (i.e., 1 – 1½ hours).  There were a few occasions when Plaintiff had to attend meetings on what would have otherwise been a day off.  Plaintiff filed a class action lawsuit alleging that he should have been paid a minimum of 2 hours pay for “reporting time” when appearing at meetings on his days off.   

Question: When an employee is called in for a meeting on an off day, does the employer owe her a minimum amount of pay for reporting time?

Holding:  Because the meetings were scheduled beforehand, the time spent at the meetings was scheduled work time.  Thus, the AirTouch would only be required to pay “reporting time” pay (a minimum of 2 hours) if AirTouch did not pay Plaintiff for at least half of the scheduled meeting time.  In fact, AirTouch paid Plaintiff for the time he spent at the store meetings. Therefore, no “reporting time” pay was due.

However, if the meeting were cancelled without prior notice, or if a meeting was cut-short and only lasted 20 minutes (i.e., less than half of what had been scheduled), then reporting time pay would be due.

Recent Developments in Wage and Hour Law – No Reporting Time Pay for Scheduled Meetings

November 16, 2012

By:  Christopher P. Wesierski and Christian C. H. Counts

Aleman v. Airtouch Cellular (2012) 209 Cal.App.4th 556 – No Reporting Time Pay for Scheduled Meetings     

Reporting time pay is a pay requirement found in California Industrial Welfare Commission (“IWC”) Wage Orders. Section 5(A) of Wage Order 4 states:

“Each workday an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee’s usual or scheduled day’s work, the employee shall be paid for half the usual or scheduled day’s work, but in no event for less than two (2) hours nor more than four (4) hours, at the employee’s regular rate of pay, which shall not be less than the minimum wage.”

 

Facts:

Plaintiff worked at AirTouch stores for about a year.  AirTouch posted Plaintiff’s schedule for the next week at least 4 days in advance of the following week.  In his employment, Plaintiff was required to attend occasional one to one-and-a-half  hour store meetings before the store opened on weekend mornings.  The meetings were scheduled in advance and were listed on employees’ work schedules, and they were recorded on Plaintiff’s time cards.  Plaintiff was paid for attending these meetings at his regular rate (i.e., 1 – 1½ hours).  There were a few occasions when Plaintiff had to attend meetings on what would have otherwise been a day off.  Plaintiff filed a class action lawsuit alleging that he should have been paid a minimum of 2 hours pay for “reporting time” when appearing at meetings on his days off.   

Question: When an employee is called in for a meeting on an off day, does the employer owe her a minimum amount of pay for reporting time?

Holding:  Because the meetings were scheduled beforehand, the time spent at the meetings was scheduled work time.  Thus, the AirTouch would only be required to pay “reporting time” pay (a minimum of 2 hours) if AirTouch did not pay Plaintiff for at least half of the scheduled meeting time.  In fact, AirTouch paid Plaintiff for the time he spent at the store meetings. Therefore, no “reporting time” pay was due.

However, if the meeting were cancelled without prior notice, or if a meeting was cut-short and only lasted 20 minutes (i.e., less than half of what had been scheduled), then reporting time pay would be due.

Court May Consider Merits of Claims for Purposes of Class Certification

November 14, 2012

By:  Christopher P. Wesierski and Ashley A. Reagan

In Crystal Morgan et al. v. Wet Seal, Inc. et al., Plaintiffs Crystal Morgan, Karla Sylvester and Janay Famous filed suit against their former employer, Defendant Wet Seal, Inc. alleging that Wet Seal’s requirement that employees purchase its clothing and its failure to reimburse mileage for travel between stores violated the California Labor Code. 

Dress Code Policy

As part of its dress code, Wet Seal required its employees to purchase clothing, shoes and accessories without reimbursement.  Plaintiffs argued that this was a necessary expense incurred in the discharge of work that fell within the Labor Code’s requirements for reimbursement.  Plaintiffs further contended that this dress code forced employees to patronize Wet Seal and to wear apparel of a distinctive color or design.  However, the Wet Seal dress code policy, itself,  did not state that employees were required to purchase company clothing as a condition of employment.

Mileage Reimbursement

Wet Seal additionally required its employees to use their personal vehicles to drive to other Wet Seal locations for mandatory meetings.  They were not reimbursed for mileage.  The Wet Seal reimbursement policy stated that it was company policy to reimburse employees for necessary and reasonable travel expenses.  There was a company expense report form which listed mileage as a reimbursable expense. 

The trial court denied Plaintiff’s class certification, finding common questions did not predominate. Given the fact that the policies themselves did not require employees to purchase Wet Seal clothing or fail to provide a method of mileage reimbursement, individualized inquiry was necessary to determine what employees were told and how employees interpreted that information.  Claims predicated on oral instructions rather than written policies evoke individualized inquiry as there is no class-wide method of proof for liability.  The evidence presented by Plaintiffs demonstrated that Wet Seal’s practices varied and that the trier of fact would need to look toward the practices of each manager.    

The court of appeal determined that it was not improper for the trial court to deny certification based on an evaluation of the merits of Plaintiffs’ claims.  A trial court is not precluded from scrutinizing a proper class cause of action to determine whether, assuming its merit, it is suitable for resolution on a class-wide basis.  Here, it was proper for the trial court to consider the merits of the case for the limited purpose of assessing whether substantially similar questions are common to the class.  The order denying class certification was affirmed.   

Facts and analysis based upon Crystal Morgan et al. v. Wet Seal, Inc. et al. decided November 7, 2012 by the California Court of Appeal, First District.

Recent Developments in Wage and Hour Law – Day of Rest Violations

November 16, 2012

By:  Christopher P. Wesierski and Christian C. H. Counts

Mendoza v. Nordstom, Inc. (Sept. 21, 2012, C.D. CA, Judge Cormac J. Carney) – Day of Rest Violations

In California, an employee is entitled to one day of rest each week.  Labor Code § 551 states:

“Every person employed in any occupation of labor is entitled to one day’s rest therefrom in seven.”

Labor Code § 552 similarly provides:

“No employer of labor shall cause his employees to work more than six days in seven.”

Violations result in civil penalties payable to the employee under Labor Code § 558.  ($50 to $100 per pay period.) 

Note that there are exceptions for jobs that by their nature require extended schedules (such as fishermen at sea) or for those working fewer than 30 hours in a week or no day in the week of more than 6 hours of work (Lab. Code § 556).

 

Facts:

Plaintiff was employed by Nordstom, Inc., working at a coffee cart, with a usual schedule of five days per week.  However, Plaintiff was eager for more work hours and let his supervisor know he was willing to work extra shifts.  Because of this, when extra shifts were available, his supervisor often offered them to Plaintiff, and Plaintiff willingly accepted.  On a few occasions during his employment, Plaintiff’s extra shifts resulted in him working more than six days in a row.  On each of these occasions, Plaintiff volunteered to work on his days off. Plaintiff eventually filed suit against his employer alleging that his working more than six consecutive days violated Labor Code sections 551 and 552.

Question:  Can the employee waive the day of rest voluntarily?

Holding:  Yes.  The trial court compared the day-of-rest requirement to meal periods inBrinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004.  In that case, the California Supreme Court held that employers must make duty-free meal periods available to employees, but they do not have to compel the employees’ compliance with the meal period rules.  Applying the same reasoning, the trial court held:

“The language of Sections 551 and 552 plainly require that an employer make a day of rest available to their employees, but do not require an employee to actually take a day off.  So long as the employer does not force an employee to work more than six consecutive days, an employee is free to waive his or her day of rest. 

Question:  Does this mean an employee is entitled to one day off per week?  For example, is there a violation if an employee works Tuesday through Saturday (i.e., 5 days) and the following week he or she works Sunday through Monday (i.e., two additional days)?

Holding:  The statute makes no references to workweeks.  Therefore, it means any consecutive seventh day must be offered as a day off, regardless of when the workweek ends.  In the above example, Monday would be a violation since that workday was preceded by six consecutive workdays.

Employers Are Permitted to Round Employee Punch In/Out Times to the Nearest Tenth

October 31, 2012

By:  Christopher P. Wesierski and Ashley A. Reagan

In See’s Candy Shops, Inc. v. The Superior Court of San Diego County, Pamela Silva (‘Silva”) brought a wage and hour class action complaint against her former employer, See’s Candy Shops, Inc. (“See’s”).   See’s uses a timekeeping software system, Kronos, to record employee hours.  Employees are required to punch in/out at the beginning and end of their shifts, as well as for lunch breaks.  The punch shows the actual time, to the minute, that the employee punches in/out.  However, See’s calculates an employee’s pay based on the Kronos punch times, subject to adjustment under two policies: (1) the nearest tenth rounding policy; and (2) the grace period policy.  According to See’s rounding policy, punch times are rounded up or down to the nearest tenth of an hour – or to the nearest three minute mark. The grace period policy was not at issue on appeal. 

Silva moved for summary adjudication as to four of See’s affirmative defenses.  See’s challenged the motion as to its two affirmative defenses addressing See’s timekeeping policy to round punch  in/out times to the nearest tenth, contending that this policy was consistent with federal and state law.  See’s expert argued that the rounding policy was mathematicallyand empirically unbiased and that the rounded times and actual times would even out.  In fact, the expert found that the rounding policy had resulted in a gain in hours for the class as a whole.  In response, Plaintiff argued that this was an admission that See’s time records were inaccurate.  The trial court granted summary adjudication as to these defenses, finding that See’s was required to retain accurate time records and that the rounding resulted in inaccurate records and unpaid wages. 

See’s filed a writ petition which was denied.  The California Supreme Court granted petition for review and ordered the court to vacate its order granting summary adjudication and issue an order to show cause in the matter.  The Court of Appeal determined that the trial court had erred in granting summary judgment as to the rounding affirmative defenses.  The court adopted the federal regulatory standard which allows rounding to the nearest tenth of an hour if employees are fully compensated over a period of time.  Rounding policies neutral over time do not violate California law since their net effect does not withhold wages. The court further noted that rounding policies are not inconsistent with Labor Code §204 and §510 because there is a fundamental difference between whether all wages have been paid and the method of calculating what wages are owed.  The rounding policy used by See’s was neutral and resulted in full compensation for every minute worked.  As a result, there was a question of fact for the jury as to See’s rounding policy and summary adjudication was improper. 

 

Facts and analysis based upon See’s Candy Shops, Inc. v. The Superior Court of San Diego County decided October 29, 2012 by the California Court of Appeal, Fourth District

Employee’s Continued Employment Not Acceptance of Arbitration Agreement

October 22, 2012

By:  Christopher P. Wesierski and Ashley A. Reagan

In Susan Gorlach v. The Sports Club Company, the court made a distinction between an employment contract which requires an employee to sign an arbitration agreement and an employment contract which unilaterally imposes an arbitration agreement.  According to theGorlach court, the latter creates a implied-in-fact contract with an employee whose continued employment constitutes acceptance of the arbitration agreement.  However, the former does not obligate the employee to the terms of the arbitration agreement, despite the employee’s continued employment, without the employees signature. 

In Gorlach, the plaintiff was the former human resources director for the defendant Sports Club Company (“Sports Club”).  At the time the plaintiff was hired at Sports Club, the employee handbook did not include an arbitration agreement.  In 2010, Sports Club added an arbitration agreement to its handbook which waived the right to a jury trial and required all employment disputes to be submitted to binding arbitration.  All employees were required to sign this arbitration agreement as a condition of their employment with Sports Club.  As human resources director, the plaintiff was responsible for distributing the new handbook and collecting the signed arbitration agreements from employees. 

The plaintiff never signed the arbitration agreement.  On August 6, 2010, the plaintiff resigned from her position at Sports Club.  She subsequently sued Sports Club and five of its officers for wrongful termination, sexual harassment and defamation.  Among its affirmative defenses, Sports Club asserted that the court lacked jurisdiction due to the arbitration agreement. Sports Club further contended that signing the arbitration agreement was a condition of employment, rendering it an implied-in-fact contract.   

Sports Club moved to compel arbitration.  The trial court denied this motion and the court of appeal affirmed this denial.  Critical in the court’s analysis was the fact that the signatures for the arbitration agreement were still being collected at the time the plaintiff resigned.  The agreement was still in its “rollout condition” and the plaintiff made a choice not to sign it.  The signature was key in rendering assent to the arbitration agreement a condition of employment.   A motion to compel arbitration is simply a suit seeking specific performance on a contract.  However, there was no such contract between the plaintiff and Sports Club because the plaintiff had never signed the agreement.  The arbitration agreement was not enforceable against the plaintiff. 

Facts and analysis based upon Susan Gorlach v. The Sports Club Company, et al., decided October 16, 2012 by the California Court of Appeal, Second District.

Commuting From Workers’ Compensation Appointment Is Not Act Within Scope of Employment

October 15, 2012

By:  Christopher P. Wesierski and Ashley A. Reagan

In Kenneth Fields v. State of California, the plaintiff filed suit against Linda Gadbois’ estate and Gadbois’ employer, the State of California, for personal injuries arising from a two car accident.  Gadbois was the driver of the other vehicle and she died as a result of the accident. 

Gadbois worked as a cook for Avenal State Prison.  Due to an on the job injury, she began treating with a physician through her employer’s workers’ compensation network.  On the day of the accident, the plaintiff took time off work to attend a follow-up appointment regarding her workers’ compensation injury.  After meeting with her doctor, Gadbois telephoned her supervisor to inform her that she was on her way to work.  The accident occurred while she was en route from the doctor’s office to work.  As a result of her death, Gadbois received her full salary through the prison’s death benefit policy. 

The plaintiff argued that because Gadbois was paid by the State for the accident, that Gadbois was acting within the scope of her employment and that the State was liable for her negligence.  The trial court entered a nonsuit in favor of the State, finding that Gadbois was not acting within the scope of her employment as an employee of the State at the time of the accident.

An employee is outside the scope of employment while engaged in the ordinary commute to and from the workplace.  As an exception to this rule, if an employee receives payment for accomplishing an errand that incidentally benefits the employer, this may be considered within the scope of employment.  However, the Court noted that the State’s payment of a death benefit to an employee for her death on a workday did not provide a benefit to the State.  The payment is unrelated to the employee’s travel or work duties.  None of Gadbois’ duties as a prison cook required her to drive a vehicle.  The accident was not a foreseeablerisk of Gadbois’ job as a cook.  As a result, the State could not be held responsible under arespondeat superior theory for Gadbois’ negligence.  The Court of Appeal affirmed the grant of nonsuit.

In the Aftermath of Brinker, Class Certification Becomes More Difficult

October 15, 2012

By:  Christopher P. Wesierski & Ashley A. Reagan

On October 4, 2012, the California court of appeal affirmed a ruling which denied certification of every class proposed by the plaintiffs in Kevin Tien v. Tenet Healthcare Corporation.  This denial was based primarily upon the decision of Brinker v. Superior Court, which found that employers were only required to provide employees with a break and were not required to ensure the break was taken.  The Tien court concluded that the proposed missed rest break class and the missed meal break class required individual inquiry as to why those breaks were not taken, thus rendering class certification improper.  

In Tien, the plaintiffs were hourly employees of defendant Tenet Health Care Corporation and its subsidiaries.  The plaintiffs sought certification of four classes: (1) Missed meal periods; (2) Missed rest breaks; (3) Waiting time penalties; and (4) Pay stub violations.  The trial court denied certification of all 4 classes.  The court of appeal affirmed this absolute denial. However, this decision was made prior to the Supreme Court’s ruling in Brinker.  

In April 2012, the California Supreme Court issued its decision in Brinker.  The Supreme Court directed the court of appeal to vacate its earlier decision in this case and to reconsider the cause in light of Brinker.  After considering Brinker, the court of appeal affirmed the denial of certification.  It determined that denying certification of the meal period and rest break classes was proper because the reasons the employees did not take breaks were predominately individualized questions.  Furthermore, whether employees suffered injury from noncomplying paystubs was an individual inquiry rendering the class mechanism impracticable.