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May an adhesive, yet bilateral, employment arbitration clause that is not unduly harsh, oppressive or one-sided be found unconscionable and unenforceable?

In Sanchez v. CarMax Auto Superstores California, LLC (filed 2/6/14, publication ordered 3/4/14) B244772, plaintiff signed an arbitration agreement as a part of his employment application. He was hired as service manager and remained in that position until he was terminated about 4½ years later. In his lawsuit, plaintiff claimed the reason cited for his termination, unsatisfactory performance, was not the true reason; rather, he had been terminated because he raised safety issues about cars sold by CarMax. CarMax's motion to compel arbitration was denied by the trial court, which found the arbitration agreement to be unconscionable and thus unenforceable. CarMax appealed. The Court of Appeal, Second Appellate District, Division One, reversed, directing the matter to arbitration.

The appellate court, in its de novo review, did find the agreement evidenced some degree of procedural unconscionability due to its adhesive nature. However, continued the court, the arbitration agreement must also be substantively unconscionable to be unenforceable. That would require a contract term to be unduly harsh, oppressive, or one-sided. The trial court had found unenforceability here because it viewed the arbitration agreement as not sufficiently allowing discovery, as placing certain requirements on an employee that were not placed on employer, as not giving the arbitrator authority to require just cause for an employment termination, and as not allowing claims of multiple employee claimants to be adjudicated in a single arbitration. The appellate court disagreed on each of these points.

The arbitration agreement here limited each side to 20 interrogatories and 3 depositions; discovery could be expanded by the arbitrator if there is a showing of "substantial need" and additional discovery "is not unduly burdensome and will not unduly delay the conclusion of the arbitration." The trial court concluded the permitted amount of discovery is too low and the burden of showing a need for more discovery is so high as to thwart the ability to prove ones claims. The Court of Appeal disagreed because plaintiff here made no showing of any need for additional discovery. While a requesting party should not have to"demonstrate that a fair hearing would be impossible without additional discovery" (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 716), the standard here was merely a showing of substantial need.

Continue reading "May an adhesive, yet bilateral, employment arbitration clause that is not unduly harsh, oppressive or one-sided be found unconscionable and unenforceable?" »

Is employee's verdict finding employer retaliated in violation of public policy in terminating him reversible and subject to retrial based on jury's instruction that retaliation was "a motivating reason" rather than "a substantial motivating reason?"

hammer-to-fall-673264-m.jpgIn Mendoza v. Western Medical Center Santa Ana (filed 1/14/14) G047394, plaintiff served as a staff nurse at defendants' hospital for more than 20 years. At times, he was supervised by fellow employee Del Erdmann, a per diem house supervisor since April 2010. Both men are gay. Mendoza complained to defendant's human resource department that Erdmann had harassed him with inappropriate comments, physical contact, and lewd displays starting in August 2010. Mendoza denied he had consented to this activity, Erdmann claimed he had. Defendants investigated and determined that both should be terminated; with respect to Mendoza, defendant cited him for "unprofessional conduct" in that he was complicit with Erdmann in engaging in inappropriate sexual behavior while on duty.

Plaintiff prevailed at trial on his claim of retaliation in violation of public policy; he was awarded $238,328. The trial court had instructed the jury with the 2012 version of CACI No. 2430 that the plaintiff must prove that his report of sexual harassment was "a motivation reason," for plaintiff's termination. Defendants had objected to this instruction. As the California Supreme Court later determined in Harris v. City of Santa Monica Target="_blank" (2013) 56 Cal.4th 203, the correct instruction is that plaintiff needed to prove that such was "a substantial motivating reason." Defendants appealed claiming the instruction constituted prejudicial error, and that because no substantial evidence supported the verdict, they were entitled to a defense verdict as a matter of law. The Court of Appeal, Fourth Appellate District, Division Three, reversed for prejudicial error, but denied the request for a defense judgment, remanding for retrial.

The appellate court focused on the causation requirement as the crux of the case. That concept gets a bit slippery here. Plaintiff claimed his report of sexual harassment caused defendants to fire him. Defendants cited their belief that he had willingly participated in sexual misconduct on the job as their motivation reason for termination. What gets tricky is that even under defendants'stated motivation, Mendoza's report did cause the firing in the indirect sense that he alerted them to what they ultimately determined was misconduct on plaintiff's part.

So defendants not only claimed that Harris disapproved of the instruction given by the trial court, but also that the instruction given, and its corresponding special verdict form, may have made the verdict inevitable because it allowed the jury to infer retaliatory intent based on a causal finding that Mendoza's report of sexual harassment even though their concern was misconduct revealed to them by this triggering report. They suggest that a more appropriate instruction would be plaintiff must prove that defendant acted based on the prohibited motivating reason and not the permitted motivating reason.

Continue reading "Is employee's verdict finding employer retaliated in violation of public policy in terminating him reversible and subject to retrial based on jury's instruction that retaliation was "a motivating reason" rather than "a substantial motivating reason?"" »

Can allegation of employer's failure to reimburse for extensive vehicle use support constructive discharge or emotional distress claims?

In Vasquez v. Franklin Management Real Estate Fund, Inc. (pub. ordered 12/31/13) B245735, the Court of Appeal, Second Appellate District, Division Four, answered "yes" to the constructive discharge claim, and "no" to the emotional distress claim.

Defendant employed plaintiff as a maintenance technician at $10 per hour for a 40-hour week. Plaintiff's duties included driving his own vehicle to a hardware store and performing other errands in obtaining items needed in maintaining defendant's apartments. Plaintiff alleged in his lawsuit against defendant that he could not afford these vehicle costs which were incurred based on a minimum of 30 miles of travel per day; his requests for reimbursement were denied. He claimed he had no choice but to resign after his repeated requests were denied after 15 months on the job. His suit alleged violation of Labor Code section 2802 and that the denial of reimbursement effectively left him with less than minimum wage during his tenure. His claims included constructive discharge in violation of public policy, and intentional infliction of emotional distress.

Defendant demurrer to the first amended complaint was sustained without leave to amend. The trial court found that the failure to pay $15 per day for mileage expenses was "not conduct that was so intolerable or aggravated that a reasonable person in the employee's position would have felt no choice but to resign." Plaintiff appealed.

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Review granted of opinion on sleep-time compensation for round-the-clock security guards.

December 18, 2013

The blog dated July 12, 2013, discussed the Second District opinion of Mendiola v. CPS Security Solutions (2013) 217 Cal.App. 4th 851. As I stated then, the Court of Appeal decision appeared to be a split decision that (1) permitted employers so situated to deduct eight hours from an employee's pay for sleep time when the employee guard was on duty for 24 hours, yet (2) found that on-call time that did not fall within a truly uninterrupted sleep time feel within "hours worked" requiring compensation. The critical question was whether the employee was under the control of the employer and not free to pursue personal matters.

On October 16, 2013, the California Supreme Court granted review of that opinion. Other than the fact that the Court of Appeal opinion is no longer citable, what conclusions, if any, should one draw from this grant? In the first place, it is always dangerous to assume that when the Supreme Court grants review that it will reverse the appellate court. Often times, the state high court will determine that it is time that it speak to a particular issue, and that pronouncement might well be totally in lock-step with the lower court opinion. Trying to read the "tea leaves" in this instance is even more difficult because there may be portions of the opinion the court will agree with, and other portions that it takes issue with.

So how should similarly-situated parties conduct their business in the meantime (which can be a long time)? It would seem that parties need to expressly provide in employment contracts the circumstances under which compensation will be paid including precise statements of employee freedom during those times the employee will not be paid. But even then, an employer runs the risk that the Supreme Court may rule that contractual exclusions from "hours worked" violate public policy. So there really is no safe haven and we will await the Supreme Court's ruling for a clearer definition. Whether a "brighter line" will be drawn remains to be seen.

The information contained in this blog is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients, clients or otherwise, should act or refrain from acting on the basis of any content included in this blog without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient's state. The content of this blog contains general information and may not reflect current legal developments, verdicts or settlements. The Firm expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents of this blog.

Is there a triable issue of fact concerning company lawyer as a cause of termination of employee when company lawyer co-represents employer and employee?

November 13, 2013

lawyers-140579-m.jpgIn Yanez v. Plummer (filed & published 11/5/13) C070726, Plaintiff Yanez sued his former employer, Union Pacific, for wrongful discharge and its in-house counsel, Plummer for legal malpractice, breach of fiduciary duty and fraud. Yanez had witnessed the injury of a co-worker who filed a personal injury lawsuit under the Federal Employers Liability Act (FELA) against Union Pacific. Yanez was twice asked to give the employer written statements about the accident, to which he complied (the employer request the second statement because the first statement "lacked details.") In the second statement, Yanez wrote that he saw the employee slip and fall on the greasy floor where they were working; the first statement merely observed the greasy condition of the floor and that the co-worker had slipped and fell on that floor. Plummer represented both Union Pacific and Yanez at Yanez's deposition, at which Yanez admitted he did not actually see the co-worker slip--that the second statement was a miswording on his part. Based on these circumstances, Union Pacific fired Yanez for dishonesty.

Plummer's motion for summary judgment in Yanez's lawsuit was granted by the trial court. Plummer convinced the court that Yanez could not prove that any conduct on Plummer's part could have caused the termination. The Court of Appeal, Third Appellate District, disagreed, finding that Yanez had raised a triable issue of material fact that but for Plummer's conduct, Union Pacific would not have fired Yanez. The judgment was reversed, and Yanez's claims against Plummer were reinstated.

The appellate court found particular significance in facts set forth by Yanez concerning the pre-deposition meeting he had with Plummer. Plummer instructed Yanez to meet with him shortly before Yanez's deposition. Plummer confirmed with Yanez that he had not actually seen the co-worker fall down and asked about the work-site conditions at the time of the accident. There was no discussion about the two written statement. When Yanez expressed concern as to who would protect him during the deposition, and that he felt his job might be in jeopardy because his testimony would likely be unfavorable to Union Pacific, Plummer responded that Plummer was his attorney for the deposition and so long as he told the truth his job would not be affected. Plummer never advised Yanez about counsel's conflict of interest.

At the deposition, the attorney for the injured co-worker elicited testimony from Yanez that he did not witness the accident, but he did observe the unsafe, slippery conditions at the accident site. Plummer's questioning of Yanez essentially aimed at highlighting Union Pacific's safety culture and discrediting Yanez; Yanez offered that the second written statement was "worded wrong." Attending the deposition was a supervisor of Yanez, Magures, who obtained a transcript of the deposition. On the basis of the deposition testimony, Magures brought disciplinary charges against Yanez, leading to his termination.

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What is the effect of the U.S. Supreme Court's invalidation of a California rule imposed to refuse enforcement of arbitration provisions upon similar cases?

u-s--supreme-court-1-1038827-m.jpgThe U.S. Supreme Court found in At&t Mobility LLC v. Concepcion (2011) 563 U.S. ___ [131 S.Ct. 1740] that a California Supreme Court rule stated in that case, which found the arbitration clause agreed upon between the parties was invalid due to unconscionability, was preempted by the Federal Arbitration Act. Shortly before Concepcion, the state high court held in Sonic-Calabasas A, Inc. v. Moreno (2011) 51 Cal. 4th 659 (Sonic I), as a categorical rule, that it was contrary to public policy and unconscionable for an employer to require as part of an arbitration clause that employee waive the right to a "Berman" hearing, which had been provided by the state legislature to assist employees in recovering wages claimed owed by the employer. Very predictably, the U.S. Supreme Court granted certiorari in Sonic I, vacated the judgment and remanded the case back to the California Supreme Court for reconsideration in light of Concepcion.

Given this directive, the state supreme court majority, in Sonic-Calabasas A Inc. v. Moreno (filed 10/17/13) S174475 (Sonic II), concluded that "because compelling the parties to undergo a Berman hearing would impose significant delays in the commencement of arbitration, we now hold, that the FAA pre-empts our state-law rule categorically prohibiting waiver of a Berman hearing in a predispute arbitration agreement imposed on an employee as a condition of employment." (Slip opinion, page 2.) However, the court went on to say that state courts may continue to enforce unconscionablity rules that don't interfere with the "fundamental attributes of arbitration", and remanded this matter back to the trial court to allow further development of the unconscionability claim to determine whether this arbitration agreement is unconscionable.

Predictably again, the majority opinion drew very lively concurring and dissenting/concurring opinions. In spite of the 70 pages of discussion found in the majority opinion, a concurring justice astutely notes that the majority failed to clearly state what standards of unconscionability it is talking about. The majority stated that the trial court on remand should weigh the Berman advantages waived against its benefits to determine if the agreement is "unreasonably one-sided." But as the concurring justice and the two concurring/dissenting justices agreed, the agreement would have to be "so one-sided as to shock the conscience."

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May an employer who requires employee to use her vehicle be liable for employee's negligence en route to personal business in the course of driving home?

September 30, 2013

In Moradi v. Marsh USA, Inc. (filed 9/17/13) 2013 DJDAR 12540, Judy Bamberger worked as a salesperson-marketer for Marsh, an insurance broker. She was required to use her personal vehicle under a "car allowance" program; two to five times a week she would use it primarily for off-site appointments, meetings, and transporting Marsh executives and clients. On April 15, 2010, Bamberger drove herself and other employees to a company-sponsored program at a middle school. She returned to the office to end her work day. From the office she planned to stop on her way home at a yogurt shop to get a bite to eat and then go to a yoga class. As she made a left turn into the yogurt shop, she collided with a motorcyclist, Moradi.

Moradi sued both Bamberger and employer Marsh. On the ground that employee Bamberger was not acting within the scope and course of her employment, the Los Angeles County trial court granted summary judgment in favor of Marsh. Moradi appealed. The Court of Appeal, Second Appellate District, Division One, reversed, finding that because the employer required employee to use her personal vehicle, the employer could be liable for this act committed while she was commuting home from work; her planned stops did not change the incidental benefit to the employer, nor were the planned stops unforeseeable, substantial departures from the employee's commute.

The court here had no problem finding a required use, and suggested that even an implied requirement may suffice. The focus here is on foreseeability, which, as a test for an employer's vicarious liability, merely means that the particular enterprise is not so unusual or startling that it would seem unfair to include the resulting loss from the costs of the employer's business. (Lazar v. Thermal Equipment Corp. (1983) 148 Cal.App3d, 458, 463-467.)

In its argument to the appellate court, Marsh apparently relied on the "special errand" exception cases to claim that because this case did not fall within that exception, the "going and coming" rule would preclude liability. The court did not buy the argument, stating that exception is "different from and more narrow than the required-vehicle exception." In other words, plaintiff did not need to show that employee was preforming a special errand for the employer. Once it was established that employee was required to use her vehicle, plaintiff need only demonstrate that employee's after-work activities planned as a part of her drive home were foreseeable as defined above.

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Does employee's statutory right to indemnity for attorney fees in defending action obligate employer to pay for attorney who duplicates work of employer-provided attorney?

September 16, 2013

employee.jpgLabor Code section 2802, subdivision (a), requires an employer to indemnify its employee for "necessary" expenditures or losses incurred as a direct consequence of the employee carrying out his employment duties.

In Carter v. Entercom Sacramento, LLC (filed 9/3/13) 2013 DJDAR 11886, Carter, as an employee of defendant's radio station, helped conduct an ill-conceived water-drinking contest that resulted in the death of a woman. The woman's family sued the station and employee Carter, among others. Carter tendered defense of the action to defendant station's insurer. The insurer accepted the tender and appointed conflict-free counsel to represent Carter rather than the attorney of Carter's choice. Carter declined the appointed attorney and insisted on utilizing the services of separate counsel. When the insurer refused to pay for that separate attorney, Carter brought this action seeking indemnity under section 2802. The trial court found that none of the fees and costs Carter incurred after the insurer appointed the attorney to represent him were necessary expenditures, thus found in favor of Entercom.

On appeal, Carter claims he had an absolute right to choose his own attorney at the employer's expense. This, he stated, was especially so because he faced potential liability for punitive damages and potential criminal charges. The Court of Appeal, Third Appellate District, disagreed, finding the question of whether the fees and costs claimed were necessary, and thereby subject to the duty of indemnity under section 2802, is a factual one; Carter failed to show the trial court's determination lacked substantial evidence to support it.

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May employer who served alcohol at company party be vicariously liable for intoxicated employee's tortious conduct after he had reached his home?

employee Party.jpgIt has long been black-letter law that an employer may be held vicariously liable for torts committed by an employee acting within the scope of employment. (Mary M. v. City of Los Angeles (1991) 54 Cal.3d 202, 208.) But in the context of an employee consuming alcohol during an employer party, must the act of negligent driving occur while the employee is still within the scope of employment? Or is the fact that employee's consumption of alcohol occurred during an employment event sufficient to cause employer liability for employee's driving beyond the scope of employment while still under the influence of the alcohol earlier consumed? In Purton v. Marriott International, Inc. (filed 7/31/13) 2013 DJDAR 10154, the Court of Appeal, Fourth Appellate District, Division One, held that an employer may be found liable for its employee's torts as long as the proximate cause of the injury (in the court's view, alcohol consumption) occurred within the scope of employment.

In Purton, employee Landri, himself a Marriott bartender, consumed alcohol at an employer-hosted party and became intoxicated. Another employee drove him to the party and evidently drove him to his home afterwards along with yet another coworker. Without consuming any more alcohol, Landri then left his home to drive that coworker home. He struck another car, killing the driver. In the wrongful death action asserting vicarious liability against employer Marriott, the trial court granted summary judgment for Marriott on the ground the employer's potential liability under the doctrine of respondeat superior ended when the employee arrived home. The Court of Appeal reversed, holding as stated above.

The appellate court acknowledged that the plaintiff bears the burden of proving the employee's tortious act was committed within the scope of employment. But this form of liability is not dependent on any act of the employer for which it may be at fault. Rather, it is based on the tort being an outgrowth of the employee's employment. And while the employer is not normally responsible for the employee's "going and coming" from a workplace event, if the tortious act itself occurred at the workplace event, the employer is responsible for foreseeable events that occur thereafter. Foreseeability in the context of respondeat superior merely means the "employee's conduct is not so unusual that it would not be unfair to include the loss as among other costs of the employer's business." (Farmers Ins. Group v. County of Santa Clara (1995) 1 Cal.4th 992, 1004.)

On the question of whether the accident itself must occur within the scope of employment, the Court of Appeal looked to six other jurisdictions, finding those states equally divided on the question. It additionally explored analogous situations in California that found that driving from the event was essentially foreseeable, thus within the scope of employment where sufficient facts supported intoxication occurring during employer's business-related event. In particular, the court in Childers v. Shasta Livestock Auction Yard, Inc. (1987) 190 Cal.App.3d 792, 805, 806 found an employer liable for actions of off-duty employees, when the employer provided alcohol and permitted drinking at the workplace "even where the danger may manifest itself at times and locations remote from the ordinary workplace."

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Employee or independent contractor?--State doesn't get do-over on new claim of wage statement violations.

Contract1.jpgThe California Employment Development Department (EDD) and the state's Division of Labor Standards Enforcement (DLSE) are two state agencies that enforce the law concerning what each finds to be "employment" by issuing assessments and penalties respectively against employers. In each instance, the state agency's determination is subject to administrative review including the determination of whether a working party is an employee or an independent contractor in providing services to another party. In the latter instance, the working party is not employed by a claimed employer and thus the claimed employer is not subject to such assessments or penalties.

In Happy Nails & Spa of Fashion Valley, L.P. v. Julie A. Su, as Labor Commissioner (filed 7/19/13) D060621, Happy Nails sought to set aside an administrative decision assessing civil penalties in a DLSE matter for its failure to provide cosmetologists who work in its salon in Fashion Valley and Mira Mesa with employee wage statements that itemize deductions. Previously, in an EDD matter, the Unemployment Insurance Appeals Board (UIAB) rendered a final opinion overruling assessments imposed there against Happy Nails finding the cosmetologists so situated were independent contractors. In the instant matter, the trial court (San Diego Superior Court) denied Happy Nails' request for relief, entering judgment in favor of the Labor Commissioner. However, the Court of Appeal, Fourth Appellate District, Division One, agreed with Happy Nails; a final decision of the UIAB that the cosmetologists are not employees collaterally estops the Commissioner from assessing penalties in this DLSE case. The judgment was reversed, and remanded to allow Happy Nails to be heard on its requests for a permanent injunction and attorney fees.

The appellate court focused on the requirements that were met here for application of collateral estoppel or issue preclusion; that the prior case involved: (1) the identical issue, (2) actual litigation, (3) necessary decision, (4) determination that was final and on the merits, and (5) the party there was in privity with the present party against whom preclusion is sought.

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Must on-call, 24-hour, live-in employees be compensated by their employer for hourly wages for the full 24-hour shift including sleep time?

allcenter.jpgIn Mendiola v. CPS Security Solutions, Inc. (filed 7/3/13) B240519, the Court of Appeal, Second Appellate District, Division Four, gives a Solomon-like answer. In this class action, the plaintiffs are trailer guards employed by defendant to provide around-the-clock security at construction sites. During the nighttime periods, defendant considered the trailer guards "on call" and generally compensated them only for the time spent actively conducting investigations. Individual employment contracts provided that employees working 24-hour weekend shifts would not be paid for the time period of 9 p.m. to 5 a.m. with exceptions The trial court granted a preliminary injunction requiring defendant to compensate plaintiffs for all on-call time spent in live-in trailers.

The appellate court's disposition lays out the split-the-baby response, partially reversing the injunctive order: "On those days (24-hour weekend shifts), the guards must be compensated for 16 hours; eight hours may be excluded for sleep time, provided the guards are afforded a comfortable place to sleep, the time is not interrupted, the guards are compensated for any period of interruption, and on any day they do not receive at least five consecutive hours of uninterrupted sleep time, they are compensated for the entire eight hours."

The primary focus of the appellate court's discussion is California Industrial Welfare Commission (IWC) Wage Order No.4, which defines hours worked as "the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so." First, the defendant-employer claimed that plaintiffs were free to engage in personal activities while "on call," thus not actively engaged in work unless prompted otherwise. Second, defendant argued the time period from 9 p.m. to 5 a.m. constituted excludable "sleep time," whether or not the employee actually slept during all or part of this time period.

The first issue (on-call time) caused the court to recite seven factors in determining degree to which employees are free to pursue private matters: (1) on-premise living requirements, (2) geographic restrictions, (3) frequency of calls, (4) time limits to respond, (5) ability of employee to trade on-call times with others, (6) whether use of paging could ease restrictions, and (7) actual engagement in personal activities. (Gomez v. Lincare, Inc. (2009) 173 Cal.App.4th 508, 523.) Applying these factors to this case, the court found the employer exercised a high degree of control: employees were required to live at the jobsite and respond immediately in uniform to suspicious activity, they were very limited in being relieved of duties or being any distance from the worksite, and they were forbidden from normal freedoms (children, pets, alcohol and entertaining others). Thus on-call time, except for weekend around-the -clock "sleep time," fell within "hours worked."

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May City avoid, based on policymaking powers, collectively bargained MOU arbitration regarding grievance over mandatory employee furloughs?

City.jpgIn City of Los Angeles v. Superior Court ( filed 6/21/13) S192828, City, after declaring a fiscal emergency, placed civilian employees on a mandatory unpaid furlough requiring one less 8-hour work day during each 80-hour work period. Employees filed grievances. Wage and hour provisions of the collectively bargained MOU provided that employees would be compensated for 40 hours per week based on 52 weeks per year. Contractually, MOU grievances were to be submitted to arbitration. City refused to arbitrate the grievances because arbitration here would constitute an unlawful delegation to the arbitrator of discretionary policymaking powers.

Employees through their union petitioned the Superior Court to compel arbitration. The court granted the petition. City then petitioned the Court of Appeal, which agreed with City that it could not be compelled to arbitrate. In its 4-3 majority opinion, the California Supreme Court reversed the Court of Appeal, finding arbitration of this dispute does not constitute an unlawful delegation of discretionary authority, and City is contractually obligated to arbitrate.

The City argued its right to unilaterally impose furloughs is found in the MOU provision that City could "relieve City employees from duty because of . . . lack of funds;" that a grievance can only be brought as to the practical consequence of a furlough decision. The Union countered that the quoted provision authorized layoffs, not furloughs and does not override the MOUs' wage and workweek provisions. While saying the contractual language is not free of ambiguities, the Supreme Court majority agreed with the Union. It found that, by ratifying the MOU, City made discretionary choices regarding salaries and the overall budget; what was being determined in these grievances is a matter of contractual interpretation typically vested in the courts, or in this case an arbitratorial tribunal; the arbitrator would not be exercising any discretionary policymaking authority as complained of by City.

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Can pay, based on hours worked with no guaranteed minimum, be deemed a "salary," making employee exempt from overtime?

overtime.jpgCalifornia Labor Code section 515, subdivision (a), sets forth the requirements for determining whether an employee may be classified as exempt from pay requirements including those with respect to overtime: (1) the primary job duties are executive, administrative or professional), (2) the work involves the regular exercise of discretion and independent duties, and (3) the "salary" must exceed twice the minimum wage for full-time employment. More particulars are found in Industrial Welfare Commission (IWC) Wage Order 4.

The issue in the recent case of Negri v. Koning & Associates (published opinion filed 5/16/13) H037804 was whether a payment schedule for plaintiff insurance-claims-adjuster, that allowed him to determine his scheduling/number of hours and compensated him at the fixed rate of $29 per hour regardless of the number of weekly hours (whether below, equal to, or in excess of 40) but did not guarantee a minimum amount of pay per pay-period, qualified as a "salary" within the meaning of requirement (3) above.

The trial court (Santa Clara Superior Court), while factually finding that plaintiff had worked "20 hours of overtime a week," had concluded he was an exempt employee, thus not entitled to overtime pay for those hours exceeding 40 per week. The Court of Appeal, Sixth Appellate District reversed.

The appellate court looked to the "federal salary-basis test" found in the Fair Labor Standards Act as the IWC has construed this test to apply and state requirements need to be at least as protective to the employee as federal standards. Federal law requires that the employee would have to have been paid a predetermined amount that is not subject to reduction based upon the number of hours worked in order to meet the salary basis test. So even though insurance adjuster duties qualify for the administrative exemption, the employee must have received compensation on a "salary" basis as specified.

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Does California law require employers to compensate piece-rate employees a separate hourly minimum wage for non-piece-rate-producing required hours?

Wage.jpgThe situation: wage and hour class action brought by automotive technicians against their employer who compensates repair work employees on a piece-rate basis; while total compensation would not drop below the "minimum wage floor" (total compensation for total number of hours), employees were not otherwise compensated anything for those specific hours they were required to be at the workplace either performing non-repair tasks or simply waiting for customers to show up. In Gonzalez v. Downtown LA Motors LP (filed 3/6/13; pub. order 4/2/13) B235292, the Los Angeles County trial court had found the above method of compensation violated the minimum wage law in that the law does not allow an employer to average total compensation over total hours worked in a pay period. Defendant-employer appealed. The Court of Appeal, Second Appellate District, Division Two, affirmed.

At issue in this case were California's minimum wage requirements promulgated by the Industrial Welfare Commission (IWC). Wage Order No. 4 requires an employer to pay to each employee for each pay period not less than the applicable minimum wage for all hours worked, defined as the time during which the employee is subject to the control of the employer. Plaintiffs' contention, adopted by both the trial and appellate court, was that the plain meaning of "all hours worked" is "each and every hour" worked.

Defendant argued that there should be no distinction between waiting and productive time when employees are paid as here on a piece-rate basis; that payment to employee for the productive time for which employee receives a premium flag rate for expected hours to complete task (but does not necessarily require that much time if employee is efficient) is blended with uncompensated hours during a pay period to determine satisfaction of minimum wage requirements. If there is then a shortfall, argues defendant, to be in compliance with the law, it need only supplement the technician's piece-rate wages to meet the minimum wage floor for the entire pay period.

While not specifically a case on piece-rate compensation, Armenta v. Osmose Inc. (2005) 135 Cal.App.4th 314 was found to be persuasive on this issue. The plaintiffs there were employed by a company that maintained utility poles in remote areas. Employees were paid only for "productive" time, time actually spent doing pole maintenance work. So-called "non-productive" time (travel and vehicle maintenance time, and time attending safety meetings) was not included. The employees there made the same "each and every hour" argument concerning minimum wage and prevailed.

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May an employer fire a pregnancy-disabled employee after she has exhausted maximum leave provided by Pregnancy Disability Leave Law?

943933_baby.jpgCalifornia Government Code section 12945, subdivision (a) (1), requires an employer to permit a pregnancy-disabled employee to take leave "not to exceed four months and thereafter return to work . . . ." In Sanchez v. Swissport, Inc. (filed February 21, 2013) 2013 DJDAR 2400, employer Swissport claimed that the specificity of this language found in the Pregnancy Disability Leave Law (PDLL) necessarily defines the limits of an employer's obligation. The trial court (Los Angeles Superior Court) agreed, dismissing plaintiff Sanchez's action for wrongful termination upon sustaining defendant's demurrer without leave. The Court of Appeal, Second Appellate District, Division Four, reversed.

Sanchez initiated her leave request nearly eight months before her due date upon her diagnosis of a high risk pregnancy that required bed rest. While she was still disabled, and still three months shy of her due date, she was terminated by Swissport from her position of cleaning agent. She claimed she would have been willing to return to work soon after the birth of her child with need of only minimal accommodations. She further alleged that she was fired because of her pregnancy-related disability and/or her requests for accommodations, and that Swissport failed to engage her in a timely, good faith interactive process.

The appellate court disagreed with defendant and the trial court, finding that the PDLL merely defines the employer's obligations under that statute; the PDLL provisions are in addition to those provided elsewhere in the FEHA law, and may not be construed "in any way to diminish" coverage of a pregnancy-related medical condition "under any other provision" of FEHA. (Quoted portion comes from subdivision (b) of section 12945.) Thus contrary to defendant's contention, the PDLL is not the employee's sole remedy; it is augmented by broader provisions of FEHA that require an employer to provide reasonable accommodations for an employee's known disability, unless the employer shows that such accommodation would cause it undue hardship.

A potentially reasonable accommodation here would have been to give plaintiff an extended leave time. The findings of the trial court do not preclude this: the finding that at the time of her termination plaintiff was unable to perform her job is merely a finding of disability. The trial court did not find that she was unable to perform her essential duties even with reasonable accommodations.

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