Recently in Employment Law Category

May an employer attribute commission wages to a different pay period than when paid to satisfy state's compensation requirements?

employer.jpgThe fact that commissions earned by employees can both be delayed in payment and distributed in uneven increments creates some challenges. Under Federal law, an employer may attribute commissions to when they are earned (rather than when paid), or to other pay periods, so long as an employee is paid minimum wage in each pay period. But, unlike California law, federal law does not require employees to be paid semimonthly, and the rules also differ as they impact whether an employee is exempt.

When confronted with the above question under California state law, the federal Ninth Circuit punted: it asked the California Supreme Court to consider this question, which it did in Peabody v. Time Warner Cable, Inc. (filed 7/14/14) S204804. The California high court answered that a California employer may not attribute commissions to a different pay period than when actually paid to the employee.

Peabody received biweekly paychecks, which included hourly wages in every pay period and commission wages approximately every other pay period. In her class action, Peabody's allegations included that she never received overtime though working 45+ hours per week; when she occasionally worked more than 48 hours per week, she earned less than minimum wage when only paid hourly wages. She also sought statutory penalties for late payment of wages and for itemized wage statement violations.

The action was removed by employer's motion to the United States District Court, where employer's summary judgment motion was granted because the court found employer Time Warner could attribute commission wages paid in one biweekly pay period to other pay periods for the purposes of satisfying California's compensation requirements. Because it found California law was complied with, and this allocation met minimum wage requirements, the district court rejected the overtime and minimum wage and other claims. When Peabody appealed, the Ninth Circuit asked for the state high court's guidance.

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Cal Supreme Court: Arbitration agreement waiver of right to class procedure approved; but right to bring PAGA representative action cannot be waived.

Arbitration.jpgIn Iskanian v. CLS Transportation Los Angeles, LLC (filed 6/23/14) S20432, the California Supreme Court majority has delivered a split decision on the question of whether an arbitration agreement that waives a party's right to bring a representative action on behalf of others is enforceable. Representative actions in the form of class actions brought to enforce the private rights of similarly situated parties (in Iskanian, fellow employees with wage-and hour claims) are enforceable in light of preemption by the Federal Arbitration Act (FAA) of a state law rule to the contrary. However, the right of a party to prosecute claims for the public benefit as a representative party for others under the California Private Attorneys General Act (PAGA), is neither preempted nor inconsistent with the FAA's goal of promoting arbitration--to say it is would be contrary to the strong public policy encouraging private parties to publicly enforce laws, such as wage and hour laws, that might otherwise go unenforced due to scant public prosecution resources.

Iskanian was employed as a driver for defendant CLS. He had signed an agreement that any and all claims arising out of his employment would be submitted to binding arbitration and that the parties would only submit individual claims; that no class action or representative action would be asserted. Iskanian sued CLS; CLS asserted the binding arbitration agreement, and the trial court granted its motion to compel arbitration, based in part on the concept that a state's refusal to enforce an arbitration clause because of a class waiver making it against public policy or unconscionable is preempted by the FAA . Shortly thereafter, the California Supreme decided Gentry v. Superior Court (2007) 42 Cal. 4th 443 which concluded to the contrary. The Court of Appeal in Iskanian then directed the trial court to reconsider its ruling in light of Gentry. CLS withdrew its motion to compel arbitration and the parties proceeded to litigate the case. Iskanian amended his complaint to include PAGA claims, also in a representative capacity of others. Iskanian's motion to certify his class and PAGA claims was granted.

After the Iskanian case was ordered certified, the U.S. Supreme Court issued its opinion in AT&T Mobility LLC v. Concepcion (2011) 563 U.S. ___, finding that requiring class-wide arbitration interfered with the FAA . CLS then renewed its motion to compel arbitration arguing that Gentry had been abrogated by U.S. Supreme Court authority. The trial court agreed, as did the Court of Appeal. Iskanian's petition for review to the California Supreme Court, asserting that Gentry was still viable, was granted, and the state high court ruled as stated above.

I will not endeavor to analyze the lengthy opinion in Iskanian, but several points stand out to me. One of Iskanian's arguments was that that CLS had waived arbitration by failing to diligently pursue it. Not so, said the court. Waivers are not to be lightly inferred and are questions of fact based on the circumstances. These circumstances certainly indicated CLS desired arbitration but state court rulings blocked their pursuit causing them to acquiesce temporarily, until higher authority supported its pursuit of arbitration.

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Must a wage-and-hour misclassification class action judgment be reversed because the trial court denied defendant employer the opportunity to impeach plaintiffs' statistical model where the sampling belied consistency in class member work habits?

worker-adjusts-watch-1365362-m.jpgIn the much-awaited California Supreme Court opinion of Duran v. U.S. Bank National Association (filed 5/29/14) S200923, the state high court answered affirmatively, reversing the judgment. There, loan officers sued for unpaid overtime, claiming they had been misclassified as exempt employees under the outside salesperson exemption, exempting from overtime pay entitlement employees who spend more than 50% of the workday engaged in sales activities outside the office. (Labor Code section 1171.) A class of 260 plaintiffs had been certified under a trial plan to determine the extent of defendant's liability to all class members by extrapolating from a purportedly random sample. The first phase of the trial concerned the work habits of 21 plaintiffs, while defendant was not permitted by the court to introduce evidence of work habits of those outside the small sample group; the court nonetheless found the entire class had been misclassified. The second phase focused on statistical expert testimony from which the court extrapolated the average amount of the sample group's overtime entitlement to that of the class as a whole. The resulting verdict was $15 million--$57,000 per class member.

The Supreme Court's discussion of the reasons for this reversal of the trial court certainly does not say that this class was not certifiable. On remand, the trial court will be allowed to recertify the class if done properly, with a sufficiently manageable and fair trial plan. The key point is that "once the issues common to the class have been tried, and assuming some individual issues remain, each plaintiff must still prove up his or her claim, allowing the defendant an opportunity to contest each individual claim on any ground not resolved in the common issues." (Johnson v. Ford Motor Co. (2005) 35 Cal.4th 1191, 1210.) So, yes, there can be a case certified even if individual issues as to liability and damages remain; but trial courts have the obligation to decertify a class action if individual issues prove unmanageable. Nor can a trial judge simply certify a case and then categorically deny the admission of any individualized evidence; the fact the matter proceeds as a class action does not mean that all evidence must be of a common nature. That is essentially what happened in Duran.

In Duran, the trial court did not manage individual issues arising from defendant's defense. There was no preliminary assessment here of the variability of the class. In the view of the high court, the trial court forged through the trial with a flawed statistical plan that, instead of managing individualized issues of how employees were expected to and did spend their work day, totally ignored individual issues. The key issue in a misclassification case is the employee's individual circumstances, not the employer's intent. To deny defense individualized evidence under these circumstances amounts to a denial of a parties' substantive rights.

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Does order for a medical reevaluation of an employee after she has returned to work following Family Medical Leave Act leave violate her FMLA rights?

evaluation.jpgIn White v. County of Los Angeles (filed 4/15/14) 2014 DJDAR 4726, White took FMLA leave from her position of district attorney's office investigator as a result of emotional/medication difficulties she experienced. Her psychiatrist certified her condition, which was expected to hospitalize her for 2 weeks, followed by 2 weeks of outpatient care plus possibly more time before she would be able to return to work. FMLA entitles an employee to a total of 12 workweeks of unpaid leave because of a serious health condition. The 12 weeks expired at a time when White was still being treated, causing her psychiatrist to request an additional 4 and 1/2 weeks. White then returned to work with the approval of her examining psychiatrist; 4 months later, the County ordered her to appear to be reevaluated by a County doctor. She failed to appear, believing that such an examination violated her rights under FMLA. She was disciplined for insubordination. She sought injunctive relief to prevent the medical reevaluation.

The trial court issued a writ of mandate permanently enjoining the County from requiring a medical examination based on White's conduct prior to her return to work. While an employer would be legally permitted to order a medical reevaluation after her return to work, reasoned the court, it could not challenge her doctor's certification that she was fit to return from FMLA leave. The Court of Appeal, Second Appellate District, Division Three, disagreed, finding that, once an employee is restored to work, an employer may seek, at its own cost, evaluation of the employee's fitness for duty.

Key to the ruling of the appellate court are the 2008 comments of the United States Department of Labor clarifying the interplay between the FMLA and American's with Disabilities Act (ADA): "[I]f an employer is concerned with the health care provider's fitness for duty certification, the employer may, consistent with the ADA, require a medical exam at the employer's expense after the employee has returned to work from FMLA leave. . ." (73 Fed. Reg. 67934-01, 68033.)

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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.

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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.

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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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