California Employee Rights Advocate : California Labor Attorney & Lawyer : Southern CA Employment Law : Los Angeles, Orange County : United Employees Law Group

California labor law defines a discretionary bonus as follows:

“Discretionary bonuses or sums paid as gifts at a holiday or other special occasions, such as a reward for good service, which are not measured by or dependent upon hours worked, production or efficiency, are not included for purposes of determining the regular rate of pay.”

This seems pretty straight forward; right? However, the term discretionary is misleading because neither party ever truly has absolute discretion due to "implied covenant of good faith and fair dealing". All California employment situations are subject to "implied covenant of good faith and fair dealing", whether you have an actual employment contract outlining the terms of your employment or if you are an at will employee. This doctrine monitors parties in contracts where one party has the right to exercise broad discretion that affects the other party's rights. California labor law states when that party exercises their discretion it generally must be done "fairly".

For instance, let’s say that there is an investment banker that is usually paid an annual bonus of around $100,000. Then one year the employer decides to give the employee a bonus of only $20,000 even though the employee had one of his most productive years and was out performing his peers. Come to find out, the employer was going to lay off this employee in a few weeks and had decided to distribute the remainder of his bonus to the other employees.

This is a perfect example of where the implied covenant applies to California employment law cases. If an employee performs satisfactory work during the year with the anticipation that he would be given a bonus similar to his coworkers and to what he traditionally received in previous years, the employer does not exercise discretion in "good faith" by paying him thousands of dollars less than they do to similar employees.

This might be an extreme case for most employees, but the same concepts can be applied to any bonus and even Christmas bonuses in certain circumstances. If you feel you have not received a fair bonus please contact a California labor law attorney to review your case.
 

• Email This
• Print
• Comments
• Trackbacks

Recently in San Francisco’s 9th Circuit Court of Appeals Oral arguments were heard on Campbell v PricewaterhouseCoopers. This a is a wage and hour case in which the employees, unlicensed audit associates, are claiming that they have been misclassified as exempt and are owed overtime. If the plaintiffs are successful at recovering their overtime it will open the door for more class actions brought by similarly situated employees.

The counsel for the plaintiffs presented their argument to a panel of three judges. The briefs read as follows:

“PwC argues that Attest Associates satisfy the Professional Exemption because—notwithstanding the routine and nondiscretionary nature of their work—PwC claims that they are functionally indistinguishable from fully licensed accountants, doctors, lawyers, and engineers. As a matter of law, however, the text, structure, and drafting history of the Professional Exemption limit its application to licensed accountants, and Associates are not licensed. Second, PwC argues that Attest Associates satisfy the Wage Order’s Administrative Exemption because they work “under only general supervision” despite up to six layers of managers who are responsible for Associates’ work. That argument fails, however, because PwC has not pointed to sufficient evidence to create a triable issue of fact that Associates “work along specialized or technical lines”—much less that they do so “under only general supervision”—as required by the Administrative Exemption.”

PricewaterhouseCoopers counsel argument was as follows:

“Put simply, nothing in the Wage Order precludes unlicensed accountants from being shown to be exempt under subsection (b) of the Professional Exemption. Plaintiffs’ argument that the “drafting history” of the wage order at issue shows an intention on the part of the [Industrial Welfare Commission] to prohibit unlicensed accountants from being professionally exempt should be rejected, because the language and structure of the Professional Exemption are not ambiguous, and contain no such prohibition. Even the District Court did not accept Plaintiffs’ tortured reading of the text of the Professional Exemption, or claim to find unambiguous intent on the part of the [Industrial Welfare Commission] to exclude from eligibility for the Professional Exemption all unlicensed members of the accounting profession — and inevitably by extension, all unlicensed lawyers, doctors, dentists, optometrists, architects, engineers, and teachers. Doing so is flatly contrary to the overriding principle governing application of exemptions from overtime provisions, which is to consider individual employees’ work duties.”

The employees’ position essentially is that they are not exempt under either the professional exemption or administrative exemption because they argue that they are neither working in a specialized or technical role nor are they given the requisite discretion over how they may carry out their work to qualify as exempt from overtime.

PricewaterhouseCoopers argues that the tasks that auditors perform are not that different from the tasks a licensed accountant performs. Licensed accountants do fall under the professional exemption therefore auditors should as well. They further argue that the exemption status should be based on the job duties or tasks that the employees perform and not on whether or not they are licensed.

The court has not given its ruling but clearly has a lot to consider.

If you hold a position in accounting and are currently being paid a salary you may be owed overtime. If you have any questions it is advisable to contact a California labor law attorney to discuss your situation.

• Email This
• Print
• Comments
• Trackbacks

The cat's paw theory for proving employment discrimination was solidified in a recent ruling by the United States Supreme Court. Under this theory a plaintiff will be allowed to demonstrate discrimination even though there is no evidence that the acting offender had any discriminatory intentions. The theory hinges on whether there is proof that another employee’s (other than the acting offender) discriminatory intentions influenced the "innocent" “acting offender)” thereby causing the unfavorable employment action to occur.

In Staub v. Proctor, the plaintiff was a medical technician for Proctor while in the Army Reserves. He was required to be present at weekend drill meeting once a month as well as trainings two or three weeks a year. Proctor fired the plaintiff in accordance with a decision by Human Resources. The plaintiff filed a discrimination suit under the USERRA, which forbids discrimination based on military service. Although the plaintiff did not have any proof that Human Resources had a motive to discriminate, the evidence showed that the decision to terminate was not made based on discriminatory reasons. However, Plaintiff disputes that his immediate supervisors were motivated by discriminatory intentions which eventually resulted in Staub’s termination. The basis for the court’s finding was based on the fact that the company had given Staub a false written warning that carried weight in the decision to terminate his employment. The lower courts had originally granted the defendant's summary judgment. The Seventh Circuit held that Proctor was granted summary judgment based on the evidence presented, that the final termination conclusion was made by someone with no discriminatory animus who autonomously examined the facts and that the choice wasn't entirely dependent on the write up issued by Plaintiff's supervisor.

The decision was reversed by the United States Supreme Court, stating the evidence was adequate to uphold a finding that the choice for termination was proximately caused by the write up, and that there was some substantiation that the written warning was discriminatorily motivated. In addition, the Court held that an employer cannot protect itself from liability simply by suggesting that the ultimate decision maker or acting offender did not discriminate. If there is evidence that the definitive decision maker or acting offender was predisposed by other supervisors who had a discriminatory motive, a plaintiff can demonstrate discrimination based on such a theory.

The Staub judgment is a USERRA case and its interpretation will relate similarly to discrimination suits brought on under cat's paw theory, Title VII, and alike federal and state statutes prohibiting employment discrimination. Summary judgment in discrimination cases will be much more difficult for employers to obtain since the Staub judgment.

If you believe you may have been discriminated against, inadvertently or otherwise, it’s advisable to consult with a California labor law attorney for review of your situation.
 

• Email This
• Print
• Comments
• Trackbacks