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

Pepsi Bottling Group recently paid out $3.13 million in racial discrimination case for its practice of criminal background checks. Pepsi was simply not hiring anyone with a criminal record, or anyone that currently had a criminal case pending, regardless of conviction. While having a criminal record is not a protected class and cannot be considered discrimination in and of its self. The EEOC did find that the incidence of African American applicants and some other minorities with criminal records was much higher than Caucasians, therefore finding this hiring policy to be racially disproportionate.

When the company applied across-the-board criminal background checks, the EEOC found that over 300 African-American people were adversely affected. "Under Pepsi's former policy, job applicants who had been arrested pending prosecution were not hired for a permanent job even if they had never been convicted of any offense," according to the EEOC. In a press release the EEOC reported that the policy violated Title VII of the Civil Rights Act of 1964.

Acting Director of the EEOC's Minneapolis Area Office, Julie Schmid said, “When employers contemplate instituting a background check policy, the EEOC recommends that they take into consideration the nature and gravity of the offense, the time that has passed since the conviction and/or completion of the sentence, and the nature of the job sought in order to be sure that the exclusion is important for the particular position. Such exclusions can create an adverse impact based on race in violation of Title VII." Schmid also stated, "We hope that employers with unnecessarily broad criminal background check policies take note of this agreement and reassess their policies to ensure compliance with Title VII."

Later a Pepsi spokesperson, announced a new policy that takes a more "individualized approach" in considering an applicant's criminal history relative to the job being sought in an effort to "...create a workplace that is as diverse and inclusive as possible." The Pepsi has also decided to provide the EEOC with regular reports on its hiring practices and to provide nondiscrimination training to its hiring personnel and managers.

Labor law is complex and if you have any questions regarding your employment it is recommended that you contact a California labor law attorney who can help you understand your rights and in many cases will review your situation without charge.

If you have any questions about this article or information on our blog, feel free to call us at:

Long Beach – (562) 256-1047
Los Angeles – (213) 261-0229
San Francisco – (415) 200-0012 or (415) 230-2755
San Diego – (619) 342-1242 or (619) 272-2193

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Typically, arbitration agreements are given to employees to sign when they are hired. These agreements usually state that both parties, employee and employer, agree to resolve their issues out of court should legal issues arise. Often time an arbitration agreement can require that this process take place in a specific jurisdiction/ particular geographic area and can also redefine or restrict some statutory issues.
 

However, there has been much debate over if these statutory restrictions are legal in California. One provision some companies have tried to include in their arbitration agreements was to take away the right for employees to be able to file a class action for any employment issues that might affect them and all of their similarly situated colleagues. This waiver is also commonly referred to as a class action waiver.

A recent ruling by The National Labor Relations Board (NLRB), In D.R. Horton, Inc. and Michael Cuda, concluded that as a condition of employment employers cannot require that employees sign arbitration agreements that give up their right to file a class action in any forum.
The NLRB did not apply the United States' Supreme Court's holding in AT&T Mobility v. Concepcion. This case had previously set president that class action waivers could be included in consumer arbitration agreements then to workplace arbitration agreements.
 

The NLRB held that: "employers may not compel employees to waive their [National Labor Relations Act (NLRA)] right to collectively pursue litigation of employment claims in all forums, arbital and judicial." The NLRB also stated that "[s]o long as the employer leaves open a judicial forum for class and collective claims, employee's NLRA rights are preserved without requiring the availability of classwide arbitration." Therefore, "[e]mployers remain free to insist that arbitral proceedings be conducted on an individual basis.”
 

Because this topic is being contested by both employees and employers it’s important to seek legal advice from an experienced California class action attorney. Labor law is complex and if you have any questions regarding your employment it is recommended that you contact a California labor law attorney who can help you understand your rights and in many cases will review your situation without charge.

If you have any questions about this article or information on our blog, feel free to call us at:

Long Beach – (562) 256-1047
Los Angeles – (213) 261-0229
San Francisco – (415) 200-0012 or (415) 230-2755
San Diego – (619) 342-1242 or (619) 272-2193

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Starting January 1st all employers must comply with the California new wage theft protection act, Labor Code Section 2810.5. . Theft protection act sets out to clearly define how, when, and what employees shall be paid. The idea is alleviate any confusion or misunderstandings about the type of employment and benefits the employee will receive. Effective immediately all California employers regardless of company size and industry are required to give the following information to all of their employees regardless of full time part time or seasonal status.

1. Classification: exempt, non-exempt, commission, piece rate. In other words, how the employee will be paid, hourly, salary, commission only, days wage, piece rate. It’s important to note that if the employer is claiming that employee is exempt from overtime they must also cite the exemption that they feel the employee falls under.
2. How much the employee will earn: by the hour, overtime rates, annual salary, piece rate day rate.
3. When the employee will be paid: weekly, biweekly, bimonthly, monthly etc.
4. If applicable, allowances claimed as part of the wage, meals, housing etc.
5. Name of the employer or the DBA (doing business as) or any other names the employer uses to conduct business.
6. Mailing and Physical address of the employer main place of business.
7. Phone number to the main office
8. Workers compensation information: Name of insurance carrier, phone number, address

Moving forward Employers must give written notice to all newly hired employees as well. Also if any of the information above changes the employer has 7 days to furnish notice of change in writing to the employee, California Labor Code §226. Notice need not be provided to non-exempt employees who are both covered by a collective bargaining agreement and who earn at least 30% more than the California minimum wage per hour.

The Labor Commissioner will be publishing a notice template later this month for employers to use.

With new laws come new penalties, the Wage Theft Protection Act adds or increases existing civil and criminal penalties, in some instances allowing liquidated damages and attorneys' fees, and extends the applicable statute of limitation to three years.

Labor law is complex if you have any questions regarding your employment it is recommended that you contact a California labor law attorney who can help you understand your rights and in many cases will review your situation without charge.

If you have any questions about this article or our blog, feel free to call us at:

Long Beach – (562) 256-1047
Los Angeles – (213) 261-0229
San Francisco – (415) 200-0012 or (415) 230-2755
San Diego – (619) 342-1242 or (619) 272-2193

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Does your employer offer a 401k, profit sharing, or a money market account? Were you given specific details about this plan prior to signing up; such as past performance, fees and expenses? Do you get monthly or quarterly statements on your investment?

Until recently none of this was required by law. The US Dept of Labor (DOL) has better defined what is required to be shared with participants and beneficiaries prior to investing and throughout the term of the investment. In general all of these new requirements will go into effect as early as May 31, 2012.

Under the Employee Retirement Income Security Act (ERISA) the following information must be shared with potential employee investors and existing employee investors as well as their beneficiaries.

1.     Initial & Annual Notice
Before the investor begins making contributions and every year after the investor should be notified of the following information.

a. Investment-Related Information
Investment related information can be complex and very detailed so the employer is required to provide the following: performance data, benchmark information, fee and expense information, Internet website address to obtain more specific or current information, and a glossary of terms. As well as a side by side comparison of each of the plans that are offered.

b. Plan-Related Information.

i. General Plan Information
Information regarding the operation of the investment including when and how to invest, if there are any limitation to the times amounts that can be invested, a description of “brokerage windows”, reference to any applicable voting rights and identification of investment managers.
ii. Administrative Expenses Information.
Administrative expenses are expenses that are typically related to cost of managing the fund such as monthly, quarterly or annual record keeping. If multiple accounts exist this information must be provided for each individual account and be specific that account.
iii. Individual Expenses Information
These are expenses that may be charged against a participant's or beneficiary's individual account for services provided on an individual basis (e.g., fees to process loans or qualified domestic relations orders (QDROs), or sales charges).

2.     Updating Notice
Any changes to the plan information previously disclosed must but updated and disclosed within at least 30 days but not more than 90 days prior to the effective date of the change. It’s important to note that updating notices do not apply to investment related information
3.     Quarterly Notice
Quarterly notices occur every 3 months and usually align with the fiscal year. Investor and beneficiaries must receive notice of the dollar amount of the plan related fees and expenses, both administrative and individual and description of services for all fees and expenses. It’s important to note that if notices of the account were made and outside of the regularly scheduled notices then those notices do not need to be reiterated at the regularly scheduled time.
4.     Disclosures Subsequent to Investment.
Not only do potential employee investors and beneficiaries need to be informed of the above mentioned investment-related information and the plan-related information prior to investing but they also need to be informed of the final regulations. Final regulations should provide information such as: voting rights, management rights and how these rights will and can be passed or shared with the beneficiaries.
5.     Information Provided Upon Request
Investors and beneficiaries can are any time request copies of any plan or investment related information including: financial statements, prospectus, reports, non-registered investment alternatives, share value information, dividend disbursement, list of assets comprising the portfolio.

Labor law is complex if you have any questions regarding your employment it is recommended that you contact a California labor law attorney who can help you understand your rights and in many cases will review your situation without charge.

If you have any questions about this article or our blog, feel free to call us at:

Long Beach – (562) 256-1047
Los Angeles – (213) 261-0229
San Francisco – (415) 200-0012 or (415) 230-2755
San Diego – (619) 342-1242 or (619) 272-2193

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Wage Theft Prevention Act of 2011

According to Section 2810.5 of AB 469, at the time of hire all employer must now inform, in writing, employees of rate of pay and the of how wages will be calculated. In other words: hourly, daily, piece rate, salary, commission or by some other method. If applicable the employees must also be informed of their overtime rate, allowances, the regular pay date, the name of the business or any other names the business operates under as well as the physical mailing address for the business. AB 469 also requires that any changes made to this information be given to the employees in writing within 7 days of the change. Not only does the existing law require employers to pay penalties and back wages for violating minimum wages laws it now criminalizes certain wage violations by providing that any employer who willfully violates specified wage orders, willfully fails to pay wages due, if convicted is guilty of a misdemeanor. It important to note that, the statute of limitation for collecting penalties under the Division of Labor Standards Enforcement ("DLSE") has increased from one to three years.

Commission Contracts will be required by 2013

By January 1, 2013 AB1396 will amend the labor code to require employers to have written contracts with all employees who will receive wages from commissions. This contract must also define how these commissions will be calculated and when they will be paid. This does not include bonuses or short term incentives. This should alleviate the guess work and should allow the employees the ability to track and determine, in advance, what their commission pay will be. AB1396 will be particularly helpful to employees that are classified as inside sales or outside sales people.

Wage Garnishment : Medical Debts are now Exempt

Currently the law requires employers to garnish employee’s wages up to the portion of the earnings the debtor proves is necessary to support himself or his family, for things like Child support payments, back taxes, credit card debt, and other debts can all be subjected to wage garnishment. AB 1388 adds an exemption for debt that is incurred "for the common necessaries of life furnished to the judgment debtor" or his or her family, including, e.g., hospital services and other medical debts.

Even though most of these new laws will take effect January of 2012 it is recommended you speak with an experience California labor law attorney as soon as possible if you have any questions or concerns about your employment situation.

If you have any questions about this article or our blog, feel free to call us at:

Long Beach – (562) 256-1047
Los Angeles – (213) 261-0229
San Francisco – (415) 200-0012 or (415) 230-2755
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Recently Governor Brown has signed over 20 new bills effecting California labor laws. Employers and employees alike will see several changes in the coming months, some changes will be beneficial and or costly and some help to better define existing a laws. Here is an over view of a few notable changes.

Gender Discrimination: Identity and Expression

Bill 887 redefines or better defines the term gender to aid in how gender discrimination cases will be assessed, specifically in regards to the terms gender identity and gender expression. The idea is that a person should not be discriminated against based on their gender. Previously this was described as one’s sex, male or female. Now it will include how one perceives themselves or chooses to express their self; often displayed through appearances such as clothing, hair styles, makeup and even behavior. Assembly bill 887 instructs employers that they must to allow employees to appear or express themselves as whichever gender they choose to identify with.

Discrimination: Domestic Partners

Bill 757 relates specifically to medical insurance offered by employers. the Knox-Keene Health Care Service Plan Act of 1975 does not allow discrimination in coverage between spouses or domestic partners of a different sex and those of the same-sex marriages. Senate Bill 757 takes it a step further and makes it a crime to willfully violate the Knox-Keene Health Care Service Plan Act. There is an exception for a policy issued outside of California to an employer with a majority of its business and employees located outside of California.

Discrimination based on your Credit Report

…Sounds ridiculous to begin with and with our countries current economic issues even more so. Assembly Bill No. 22 says what we are all thinking. Previously Employers were allowed to access an employee or potential employees credit report (with the employee’s permission) regardless of the employee's position or the position the applicant is seeking to fill. Bill 22 recognizes that there are some instances when a credit report is necessary to the employer and has restricted access to the following types of employment positions:

• person is or would be named signatory on the employer's bank or credit card account, or authorized to transfer money or enter into financial contracts on the employer's behalf
• person will have access to confidential or proprietary information
• person will have regular access to $10,000 or more
• a position in the state Department of Justice, that of a sworn peace officer or other law enforcement position
• a managerial position as defined by the stringent exempt status definition
• a position for which the information contained the report is required by law to be disclosed or obtained;
• a position that involves regular access to specified personal information for any purpose other than the that the routine solicitation and processing of credit card applications in a retail establishment;

Labor law id complex if you have any questions regarding your employment it is recommended that you contact a California labor law attorney who can help you understand your rights and in many cases will review your situation without charge.

If you have any questions about this article or our blog, feel free to call us at:

Long Beach – (562) 256-1047
Los Angeles – (213) 261-0229
San Francisco – (415) 200-0012 or (415) 230-2755
San Diego – (619) 342-1242 or (619) 272-2193
 

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Effective Jan. 1, 2012 The bills – A.B. 592 and S.B. 299, signed by California Gov. Jerry Brown will attempt fill coverage and enforcement gaps between the state and federal leave laws. SB 299 and AB 592, as well as SB 222 and AB 210, propose pregnant employees will maintain their insurance benefits while on pregnancy-related leaves. These new laws will have a significant financial impact on employers big and small, but will also give pregnant employees a little piece of mind.

The federal Family Medical Leave Act only required the same level insurance coverage to pregnant employees as they had previous to going out on leave. But it only applied to employees who were employed at a company with 50+ employees and if they had worked there over 1 year or more than 1,250 hours. Often pregnant employees working for companies with less than 50 people were unprotected

The California Family Rights Act (CFRA) allows leave for bonding with an employee’s newborn, newly-adopted or foster child. But again only applies to employee with a company of 50 or more employees. However, pregnancy itself is not a condition covered under CFRA. Pregnancy and related medical complications are covered under the PDL law.

California Pregnancy Disability Leave, (PDL); under the California Fair Employment and Housing Act, employers with 5 or more employees must give up to 4 months of unpaid disability leave to women facing time off work because of pregnancy, childbirth, or a related illness. Prior to Jan. 1, 2012 employers with less than 50 employees have right to discontinue health insurance or other benefits if this is their policy for disability leave.

A.B. 592 and S.B. 299 will change how medical insurance coverage will be maintained during PDL. Not only must the employer with 5 or more employees maintain medical insurance for their employees while out on leave. California Insurance Code mandates that all individual health insurance policies must provide coverage for maternity services for all insured’s covered under the policy. Under existing law, if a health insurer provides maternity coverage, it may not restrict inpatient hospital benefits. The change in law, however, actually mandates that the maternity coverage be provided.

If you are going out on maternity leave and your employer has put restrictions on your time off or has not given you the option of selecting maternity medical coverage it is recommended that you contact a California employment law attorney to fully understand your rights and options. Many labor law attorneys offer free or low cost preliminary consultations and in certain cases may represent you on a contingency fee basis.

If you have any questions about this article or our blog, feel free to call us at:

Long Beach – (562) 256-1047
Los Angeles – (213) 261-0229
San Francisco – (415) 200-0012 or (415) 230-2755
San Diego – (619) 342-1242 or (619) 272-2193

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Employers are often concerned with how employees conduct themselves on social networking sites as they are, in a sense, representatives of the company. However employers should be cautious of disciplining employees when it comes to the content of the employee’s posts. More specifically if the post is related to the working conditions the employer should be wary of how they choose to react.

In New York an employee was recently fired from a nonprofit organization for posting a comment about the working conditions. Later an administrative judge ruled this to be a wrongful termination.

Judge Arthur Amchan of the National Labor Relations Board ("NLRB") reviewed statements of five employees of Hispanics United of Buffalo, an entity providing social services to low-income clients. One of the employees created a post on facebook in which she describes the organizations failure to adequately serve their clients. This was followed by other employee’s posts in which they defended their performance. All five employees that participated in this discussion were terminated. According to the employer they were terminated for harassing of the employee of the original post.

Judge Amchan, concluded that these discussions were protected under Section 7 of the National Labor Relations Act, because it was regarding communications among employees about their terms and conditions of employment. As such this ruling set new president for the NLRB. The judge then ordered reinstatement and back pay for the five employees.

There have been other cases in which employers have faced adverse decisions regarding comments made on social media sites. In Connecticut an employee called their supervisor a "scumbag" and derogatory term for male genitalia. The NLRB found a violation of Section 8(a) as the basis of the employee's complaint regarding his supervisor was being denied union representation in connection with filing an incident report. An employee can lose protection under the National Labor Relations Act if they engage in outrageously disgraceful conduct during the course of the protected activity, but the NLRB did not find the employee's conduct to rise to this level.

Employees and employers alike are treading in new waters with regards social media and free speech laws on social media sites. It is important to note the decision in the Hispanics United case and National Labor Relations Act protects both organized and non-organized employees, as well as protects the rights of all employees (unionized or not unionized) to discuss and engage in other concerted activity relating to their working conditions.

If you feel you have been wrongfully terminated due to comments made on a social media Site you should contact an experience labor law attorney to review your case.

If you have any questions about this article or our blog, feel free to call us at:

Long Beach – (562) 256-1047
Los Angeles – (213) 261-0229
San Francisco – (415) 200-0012 or (415) 230-2755
San Diego – (619) 342-1242 or (619) 272-2193

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Due to the expanded definition of the term “disability” under the Americans with Disabilities Act Amendments Act of 2008 employers have been receiving an increasing number of requests for reasonable accommodations under the ADA. Most commonly of these requests are leaves of absence or changes to the employees schedule. The Equal Employment Opportunity Commission ("EEOC") and courts recognize that use of accrued paid leave or additional, unpaid time off from work may be a reasonable accommodation under the ADA.

Employers have several ways to accommodate employee requests for time away from work. For example, they can allow the employee to use accrued paid-time-off benefits like paid vacation or sick time. The employee can use the unpaid Family and Medical Leave Act during while also using accrued paid-time-off benefits or receive payments to a disability or workers' compensation benefits plan at the same time. Or the employer can also provide paid or unpaid leave according to company policy. All of these efforts are usually viewed as a form of reasonable accommodation under the ADA.

Often, employers mistakenly believe that their accommodation obligation ends once these efforts have been exhausted. Recently, this mistaken belief has been challenged by the EEOC, and at a very high cost to employers.

In 2009 a retailer settled for $6.2 million after the EEOC challenged the company policy to terminate all employees that had not returned to work after 12 months of being out on disability due to workers compensation claims.

A national communications company also settled for $20million after the EEOC alleged they had violated the ADA by holding the employees accountable for all their absences due to their disabilities. The company would fire the employees for excessive absences even though those absences were directly related to their disability.

Recently a Grocery Store Chain also settled at $3.2million after the EEOC disputed the employer's policy to terminating employees at the end of a fixed medical leave period instead of allowing the employees to return to work with reasonable accommodations.

Lastly, the EEOC Challenged a national airline company regarding it's company policy to not issue reduced work schedules for any of the employees. Instead the company required employees to either take a leave of absence or to take early retirement. The company eventually settled as well.

In short, regardless of what your company policy is you may be entitled to further accommodation of your disability. If you have been terminated or being asked to resign due to your disability you should contact an experienced labor law attorney to examine your case.
 

If you have any questions about this article or our blog, feel free to call us at:

Long Beach – (562) 256-1047
Los Angeles – (213) 261-0229
San Francisco – (415) 200-0012 or (415) 230-2755
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After the decision for Wal-Mart v Dukes was announced many believed that it was significantly change class action litigation, specifically what was needed to certify a class action. The case also alleged Sexual Discrimination and much of the language seemed to apply to other kinds of class actions, those outside of the employment context entirely.

Particularly; will Dukes apply to collective actions under FLSA section 16(b)? 16(b) is what allows wage and hour claims to be filed collectively if the class members are “similarly situated”. In the past, most courts find this to mean that the class members must be able to show that they were subject to "a common policy or plan that violated the law." The best example of this was written by district court judge Sonia Sotomayor , Iglesias-Mendoza v. La Belle Farm, Inc., 239 F.R.D. 363, 367-68 (S.D.N.Y.1967).  However the Dukes Decision was related specifically to Rule 23(a)(2), which necessitates a commonality. In other words: Are the facts of the case common to the class?

In California Cruz v Dollar Tree, Case No. 3:07-04012-SC (N.D. Cal. July 8, 2011), demonstrates that Dukes will apply to wage and hour suits as well. Cruz represented all current and former Store managers of the Dollar Tree Stores in California. Cruz filled in Northern California courts alleging that they were misclassified as exempt from overtime but were in fact entitled to overtime pay as well as meal and rest breaks. The court certified the class in 2009.

In both of these cases the plaintiff won the first round, but this did not last. After the cases were certified the Ninth Circuit render it’s decision in Wells Fargo Home Mortgage Overtime Pay Litigation, 571 F.3d 953 (9th Cir. 2009), and Vinole v. Countrywide Home Loans, Inc.,571 F.3d 935 (9th Cir 2009), rendering the class partially decertified. Then later The Ninth Circuit decertified a class of truck loading dock supervisors it had previously certified in Marlo v UPS, Case No. 09-56196 (9th Cir. 2011).

After Cruz v Dollar tree and Marlo v UPS were decertified the court felt obligated to reexamine Dukes v Wal-Mart, stating, "a forceful affirmation of a class action plaintiff's obligation to produce common proof of class-wide liability in order to justify class certification." The court’s interpretation of this requirement was "common proof to serve as the 'glue' that would allow a class-wide determination of how class members spent their time on a weekly basis." The end result, decertification of the class.

The bottom line is that no matter what you think the current labor law says about your employment rights, the laws are always changing. It can never hurt to reach out to an experienced California labor law attorney to evaluate your current situation.

If you have any questions about this article or our blog, feel free to call us at:

Long Beach – (562) 256-1047
Los Angeles – (213) 261-0229
San Francisco – (415) 200-0012 or (415) 230-2755
San Diego – (619) 342-1242 or (619) 272-2193

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The nation has been anxiously awaiting the, the California Supreme Court opinion of California’s employment laws regarding non-resident employees who perform work in California. While the decision will likely force many employers to reevaluate their non exempt payment policies, specifically overtime. Presumably, a large number of lawsuits will follow, including class actions, demanding back pay of overtime.

Sullivan v. Oracle has been settled and appealed several times. The premise of the case was that several Arizona and Colorado residents were employed by Oracle as instructors; they argued that they were entitled to overtime under California law when they had preformed work in California. However, Oracle had classified the instructors as exempt employees and as such they were not paid overtime. This case required the interpretation of two labor laws principals; first whether or not the nonresidents were covered under California labor laws and second if they were classified properly as exempt employees. The federal Ninth Circuit Court of Appeal certified these issues for the California State Supreme Court to decide.

Most companies in California are aware that California law has several striking differences from the federal Fair Labor Standards Act (“FLSA”). Specifically exemptions from overtime under California labor law are examined differently than under the FLSA, specifically focusing on not what an individual’s “primary” duties are, but on the duties in which they are “primarily” engaged. Furthermore, California labor law requires that overtime be paid at time and half for hours 8-12 in a day and for double time for work performed beyond 12 hours in a day. Meal and rest breaks to non-exempt employees are also a requirement under California labor laws.

The California Supreme Court found that California’s overtime laws do apply to non-resident employees who perform work in California. The Court went a step further to conclude that the state overtime laws did not make a distinction between residents and non-residents, and clarified that it would defeat the purpose of those laws if employers could simply “import unprotected workers from other states.”

While the decision is limited to “California-based” employers; the court did not provide a definition for this term. As such, employers based outside California should not ignore Sullivan. There is every reason to believe that non-resident workers of employers based outside California will contend that they, too, should be covered by California’s wage-hour laws when working in the state. And, based on the broad language in Sullivan, there is every reason to believe the California Supreme Court might agree.

What Employee Should Do now when traveling to California to work

• Keep accurate records of your work hours and all breaks.
• Make a list of all the job duties you are expected to perform while in California.
• Keep accurate records of your travel time and all travel expenses, including mileage.

If you are not paid for all hours worked or have been classified as exempt from overtime contact an experienced California labor law attorney to examine your records. You might be owed back pay for your overtime, meal and rest breaks as well as travel time and expenses.

If you have any questions about this article or our blog, feel free to call us at:

Long Beach – (562) 256-1047
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San Francisco – (415) 200-0012 or (415) 230-2755
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California Ninth Circuit's courts have issued another recent decision regarding the California Learned Professional Exemption. The appellate court establish a law clerk as exempt from state and federal overtime. This law clerk graduated from law school but had not passed the California Bar Exam. Zelasko-Barrett v. Brayton-Purcell, LLP, 2011 Cal. App. LEXIS 1080 (Cal. App. 1st Dist. Aug. 17, 2011).

On June 15, 2011, the Ninth Circuit revisited the California Learned Professional Exemption when it determined Campbell v. PricewaterhouseCoopers LLP, 9th Cir., No. 09-16370, 6/15/11. See blog entry, "Licensed or Unlicensed? Exempt from Overtime or Not?”

Generally in past cases, the use of the Learned Professional Exemption has typically revolved around employment positions, such as engineering or more recently accounting. More recently, on August 17, 2011, the First Appellate District reviewed and denied the dispute to the use of the California Labor Code’s Learned Professional Exemption in the legal industry. Zelasko-Barrett v. Brayton-Purcell, LLP, 2011 Cal. App. LEXIS 1080 (Cal. App. 1st Dist. Aug. 17, 2011).

In Zelasko, Brayton-Purcell, LLP hired law students and law graduates who had not yet passed the bar exam as “Law Clerk I” and “Law Clerk II”, respectively. The plaintiff had the Law Clerk II position before to his entrance to the bar for roughly 2 years, then was promoted to Associate Attorney. The Marin County Superior Court found that the plaintiff was correctly classified as exempt when he held the position of Law Clerk II.

The court held:
“Federal regulations after which [the California learned professional exemption] was explicitly patterned . . . condition the learned professions exemption under federal law upon completion of an advanced course of education, not upon licensure,”

Ultimately the court ruled that possession of the degree, along with Defendant’s undisputed evidence that a Law Clerk II was required to perform all the same duties as a junior attorney, satisfied the exemption’s requirements.

The Zelasko case may not have been a success for the plaintiff and certainly lends doubt to how similar proceedings will fair. But since there are still California courts now applying the principals set forth in the Ninth Circuit's decision in Campbell v. Pricewaterhouse Coopers LLP, it is likely employers will take a second look at how they classify their employees.

If you have been classified as a salary or exempt employee it can never hurt to have a California Employment Attorney examine your job duties to be certain you have been classified properly. If you haven’t been paid properly you are likely owed a substantial amount in overtime and possibly even meal and rest break violation.

If you have any questions about this article or our blog, feel free to call us at:

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Most people are not paid to drive to work they are paid once they arrive and begin their work. Mike Ritti sued Lojack for his commute time and originally lost. However, Rutti v Lojack, March of 2010, the 9th circuit court of appeal found that Rutti and all other technicians at Lojack were owed their commute time from home to their first stop.

Mike Rutti worked for Lojack as an installation technician. As such he would drive a company vehicle from his home to the client’s location each morning to in install alarm systems. Lojack had several company policies regarding the work vehicle. Rutti was not allowed to: run personal errands in the vehicle, have any passengers other than co workers, use his cell phone while driving and he was required to go directly to the job in the morning and directly home at the end of his last appointment.

Rutti Sued Lojack on behalf of himself and all other technician for his commute time and for the time he spent performing “preliminary” activities, such as, mapping, receiving, prioritizing tasks/jobs, routing before leaving his home every morning. As well as the time he spent at the end of his day when he returned home to wrap up all of the necessary documentation from that day’s work.

Originally the court found that Rutti’s commute time and pre/post work activities were not compensable under the Employee Commuting Flexibility Act (ECFA). Then new case law presented its self: Morillion v Royal Packing Company, where the California Supreme Court found that employees must be compensated during time when an employee is subject to the control of the employer. Rutti filed an appeal and will receive back pay for the time he spend working off the clock during his commute. However, the court determined that the time he spent at home before and after his commute was not compensable based on the language found in the ECFA.

The ECFA states that employers are not required to compensate employees for activities which are preliminary to or postliminary to the employees principal activities. It further designates that even if the activities are related to the employees principal activity the time is still not compensable if it is de minimis.

In determining if an activity is de minimis the court considered:

• The practical administrative difficulty of recording the additional time
• The aggregate amount of compensable time
• The regularity of the additional work

The court found that Rutti’s pre and post activities were not integral to his principal activities and so they are not compensable.

In conclusion, if you have any restrictions placed on you by your employer during your commute to and from work you should have an experience California employment attorney review your case.

If you have any questions about this article or our blog, feel free to call us at:

Long Beach – (562) 256-1047
Los Angeles – (213) 261-0229
San Francisco – (415) 200-0012 or (415) 230-2755
San Diego – (619) 342-1242 or (619) 272-2193

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Answer: Department of Labor, the Internal Revenue Service, and Congress

Our budget deficit has all three of these entities working towards a common goal: tax revenue. They are putting pressure on employers, big and small, to make sure they are properly classifying their workers. As an independent contractor you would be responsible for paying your own taxes and you wouldn’t be covered under the company’s worker compensation insurance or unemployment insurance; making it near impossible to get worker compensation if you are hurt or unemployment benefits if you are fired. Essentially all of the financial responsibility is on the independent contractor. The employer is relieved of a substantial amount of taxes and insurance costs by hiring independent contractors. The issue is that companies can’t just decide that you will be an independent contractor. There are specific laws dictating who can and cannot be classified as such. An independent contractor should be independent enough from the company to have control over the following:

• Scheduling; the freedom to create and maintain their own schedule so long as major deadlines are met.
• Equipment; should be able to chose what type of their own equipment they will use to complete the work including vehicles.
• Uniforms; should not be forced to wear the hiring company’s logo/ uniforms as if they are an employee.
• How the task is completed; should not be told in detail how to perform the work. End goals are really all the hiring company should be imposing.

"We Can Help" - The Department of Labor:

Independent contractors are not protected under the Fair Labor Standards Act protections for issues like minimum wage and overtime or other benefits, so often wrongly classified independent contractors do not receive legal protections they are entitled to. The "We Can Help" campaign encourages employees to seek aid from the DOL if they believe they are not being paid correctly or are misclassified. The DOL intends to further focus on fixing worker-classification issues in 2011 by adding 90 new enforcement personnel and an additional $12 million to the Wage and Hour Division's budget.

Even More "Help"- The Internal Revenue Service:

Employee-classification is a front runner with the IRS because employers are not required to pay social security, Medicaid, unemployment, or other payroll taxes on independent contractors. In an attempt to rectify these improper misclassifications the IRS will be adding 100 new enforcement agents and allocating $25 million to investigating misclassification of employees as independent contractors. IRS audits may also impose penalties and require payment of back pay and taxes for workers previously misclassified. The Treasury Department estimates an increase of by $7 billion over the next ten years.

Congress: Proposed Legislation Affects Even Small Employers

Congress offered up new legislation regarding worker classification; The Fair Playing Field Act of 2010. This bill is intended to amend Section 530 of the Revenue Act of 1978, which currently provides a safe harbor for Companies to treat employees as independent contractors for tax purposes if the company has a logical basis for treating them as independent contractors and has consistently reported their income on Form 1099s. If passed this bill would eliminate that safe harbor and employers would be open to larger penalties for worker misclassification, even good faith mistakes.

Employee Misclassification Prevention Act, is another bill that has recently been proposed. It focuses on classification for purposes of compliance with the Fair Labor Standards Act. That Act was introduced in April 2010 and would create a new FLSA violation: misclassification of an employee as an independent contractor. The Act would also:

• Impose notice and record-keeping requirements on businesses with independent contractors,
• Impose fines on businesses for each employee misclassification,
• Expand FLSA's anti-retaliation provisions to cover independent contractors, and
• Award triple damages for violations of minimum wage or overtime laws for employees wrongfully    classified.

The Fair Playing Field Act and the Employee Misclassification Prevention Act are both intended to correct perceived abuse of the independent contractor label, the acts contain different tests for determining who is an independent contractor and who is an employee, which may lead to even more confusion surrounding the issue.

To be safe you should contact a California labor Law attorney to examine your job duties and work conditions to determine your worker classification status. If you have been improperly classified as an independent contractor a California employment attorney could help you recover back pay for minimum wage, overtime, and benefits.

If you have any questions about this article or our blog, feel free to call us at:
          Long Beach – (562) 256-1047
          Los Angeles – (213) 261-0229
          San Francisco – (415) 200-0012 or (415) 230-2755
          San Diego – (619) 342-1242 or (619) 272-2193 

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Protection Against Retaliation

This rule sets out to prohibit retaliation and prevent interference with a whistleblower's report, as well as by intimidating to impose a confidentiality agreement. It’s important for whistle blowers to know that these rules still apply even if no compensation is awarded to the whistleblower.  The SEC has noted that these protections to not exempt the whistleblower from ethic responsibility.  If a whistleblower is found to break company or legal policy the anti-retaliation protection will not apply. The SEC also commented that the anti-retaliation protection is designed to strike the "appropriate balance between encouraging individuals to provide us with high-quality tips without fear of retaliation, on the one hand, while not encouraging bad faith or frivolous reports, or permitting abuse of the anti-retaliation protections, on the other." Specifically, "[t]he 'reasonable belief' standard requires that the employee hold a subjectively genuine belief that the information demonstrates a possible violation, and that this belief is one that a similarly situated employee might reasonably possess." 

Related Change at the SEC: The Cooperation Initiative

"The Cooperation Initiative," was presented earlier this year by the SEC as a departure from prior SEC practice in three ways:

1. Individuals are now presented credit for cooperation. Credit is offered to individuals based on a a fairly simple list of factors: "the timeliness of the individual's cooperation, including whether the individual was first to report the misconduct to the Commission or to offer his or her cooperation in the Investigation, and whether the cooperation was provided before he or she had any knowledge of a pending investigation or related action."
2. The 2010 Enforcement Manual does not override the Seaboard Report, but it does list factors signifying an entity has cooperated. Removed is a long list of factors, which some practitioners read as suggesting that cooperation would never be rewarded when the underlying conduct was serious or when some procedural step was skipped. Among the factors considered in assessing an entity's cooperation is "self-reporting of misconduct when it is discovered, including conducting a thorough review of the nature, extent, origins and consequences of the misconduct, and promptly, completely and effectively disclosing the misconduct to the public, to regulatory agencies, and to self-regulatory organizations."
3. January 13, 2010 Enforcement Manual offers a list of rewards available for cooperation. Many of these tools have never been available before; others have been used so infrequently they were considered of limited utility.

These new tools used to compensate companies for their cooperation have only been used twice since the their announcement earlier this year. First was Carter's, Inc; involved the SEC entering into a Non-Prosecution Agreement ("NPA"), related to its restatement of financials in late 2009. In the fall of 2009, Carter's discovered issues with its accounting for sales paid to wholesale customers. The company's audit committee hired a private securities law firm to conduct an internal investigation, and upon learning of issues, the company made a timely and thorough report of the matters to the SEC ahead of any public announcement and the eventual restatement of financials. The SEC rewarded the self report and follow-on extensive cooperation in the SEC's investigation by agreeing in the NPA to refrain from bringing any enforcement action against the company, though the SEC sued a former Carter's EVP for fraud related to the restatement. In the second case, the SEC entered a Deferred Prosecution Agreement ("DPA") with Tenaris related to alleged FCPA violations. Tenaris conducted a worldwide internal evaluation of FCPA matters and found that bribes had been paid in Uzbekistan. The company self reported the violations and cooperated with the SEC and DOJ in their investigations. Under the DPA, the SEC agreed not to file an enforcement action against the company in return for the company agreeing to certain actions related to future due diligence, training and compliance activities, as well as paying almost $10 million to the SEC and DOJ for disgorgement of profits and fines.

If you have any questions about this article or our blog, feel free to call us at:

Long Beach – (562) 256-1047
Los Angeles – (213) 261-0229
San Francisco – (415) 200-0012 or (415) 230-2755

San Diego – (619) 342-1242 or (619) 272-2193

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California labor law attorneys have recently received an extended explanation of “commission wages” from the opinion given by the California Second Appellate District court. This explanation related directly to employees that are classified as exempt from overtime under the commissioned salesperson exemption. In the case Areso v. CarMax, Inc., it was decided that CarMax’s commission plan of a flat rate per sale would be considered commission wages.

Essentially the plaintiff Areso was unsuccessful in the class action in which he was claiming misclassification as exempt from overtime under the commissioned salesperson exemption and owed overtime. California labor law attorneys for Areso argued that overtime was owed because CarMax’s commission plan did not meet the requirements as “commission wages” under Labor Code Section 204.1, which necessitates commissions to be “based proportionately on the amount or value” of the sale of the employer’s property or services.

California labor law attorneys for CarMax were pleased to hear the court found CarMax’s commission structure is a “performance-based incentive system and thus fairly understood to be a commission structure” due to the language that commissions can be founded on the “amount” rather than “value” of cars sold, interpreting “amount” to mean the number of cars sold. Furthermore, the court agreed with labor law attorneys for CarMax’s argument that prior decisions necessitate commissions to be base on “a percentage of the price of the product or service” (as first articulated in Keyes Motors, Inc. v. DLSE, 197 Cal.App.3d 557, 563 (1987)) as dicta as it related only to the part of the statutory language in Labor Code § 204.1 interpreting the “value” of the product or service.

In order for someone to be considered exempt under the commissioned salesperson exemption, Labor Code Section 204.1, the employee:
• must be involved principally in selling a product or service (not making a product or rendering a service)
• The amount of their compensation must be based proportionately on the amount or value of the product or service.

The Court opinion also interpret the word “amount” in the statute, and found that a flat payment for each car sold satisfies the statutory stipulation because the commissions are compensated based on the “amount” or number of cars sold. Further, paying a flat amount for each car is “proportionate” because it is a one-to-one proportion where the “compensation will rise and fall in direct proportion to the number of vehicles sold.”

Flat fees and proportionate percentages can be a little confusing if you are unsure whether or not you are classified as exempt correctly you should contact a California labor law attorney to examine your exemption status and determine if you are entitled to any back pay for overtime you may have worked.
 

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The Department of Labor recently released a Smartphone application called DOL-Timesheet to help employees hold their employers accountable for proper payment of overtime wages. This app allows employees calculate regular work hours, break time and overtime pay to generate their own wage records. Department officials say the information could prove valuable in a dispute over pay or during a government investigation when an employer has not kept an accurate account of hours worked. The Labor Department is already planning future updates for the app that will include support for other smartphone platforms, such as Android and BlackBerry. New features being considered for future versions will have the ability to input forms of pay other than hourly, such as tips, commissions, bonuses, and holiday pay.

Labor Secretary Hilda Solis said."This app will help empower workers to understand and stand up for their rights when employers have denied their hard-earned pay,"

According to the Department of Labor, suits filed by employees have increased dramatically. About 6,800 such suits were filed in 2010, about 700 more than the previous year. Most were collective or class actions. Totaling $176 million in back pay and in the last five years, they gave 1.2 million employees more than $925 million in back pay and overtime.

The Wage and Hour Division of the Department of Labor receives more than 35,000 inquires a year for assistance and is not always able to handle every claim. For those they are unable help, they now refer them to the toll-free hot line, where they can get a referral to an attorney who specializes in wage and hour disputes.

Nancy Leppink, acting Wage and Hour Administrator, says the department is just doing what it is supposed to do, which is going after employers who take advantage of employees by shorting them of their hard-earned wages. Leppink said."To the extent we have employers who are not complying with the law, we have an obligation to look for all of the opportunities we can to change that behavior,"

If you are experiencing issues with your employer regarding overtime pay, improper time keeping, reimbursable expenses you should contact a California labor law attorney to seek assistance in claiming all of your back pay and any other penalties you may be entitled to.
 

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This California class action originating in San Francisco has been in court for over a decade. Labor law attorneys for the plaintiffs assert that Wal-Mart has discriminated against millions of woman in over 170 separate job classifications, in terms of pay and promotions.

This would be the first class actions of its size that sets out to prove discrimination through the broader use of statistical models rather than direct evidence. If the Plaintiffs are successful this could mean a slew of similarly litigated discrimination class actions will flood the courts. Naturally corporations are holding their breath and watching closely to see the outcome as it could mean millions in liability.

There are some concerns with such a wide range of subclasses and situations. Wal-Mart argues that the plaintiff’s discrimination claims are too diverse to be banded together in a single action. They also try to point out that with so many different situations there is bound to be a few rogue managers that might have discriminated against woman in terms of pay or promotions, but that doesn’t necessarily mean that all women were treated similarly.

On the other hand the attorneys for the plaintiffs would argue Wal-Mart provided to its managers unchecked discretion … that was used to pay men more than women. Furthermore, that if there is a pattern of discrimination and Wal-Mart knew about it then shouldn’t they be held responsible.

Because of these concerns the justices could choose to remand the case to the lower court under a revised set of guidelines; rather than a divided court issuing an opinion and setting a precedent in such a case.
 

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California labor law attorneys fought to prove that it should be illegal to change the beginning and end days of the work week in order to evade 7th day payment of overtime. The California Supreme Court upheld this reasoning and the court also found that all on-call time where employees were required to sleep aboard the employment vessel will be paid as hours worked.

In Seymore v. Metson Marine, Inc., the employees were scheduled to work 14days on then 14 days off. Their primary job function was to attend to marine oil spills. However the Metson Marine designed the work week to begin and end in such a way that they would not have to pay the 7th day overtime pay on the second week (day 14). In other words the employees would be paid for overtime on the 7th consecutive day of work but they would not get paid for the last day of their 14 days. While the court recognized that employers do have the ability to choose the work week for payroll purposes the court noted that Metson Marine designed their work week simply to avoid payment of overtime on the 14th day, due to Metson’s lack of evidence proving anything to the contrary.

California labor law attorneys for the plaintiff were also successful in proving that the employees were not properly compensated for being on call or off duty stand by. Metson Marine would allow the employees to sometimes leave the ship, unpaid, for personal reasons however they required that the employees carry a phone, be within 45 minutes of the ship and they were not to drink alcohol. The court found that Metson Marine should have paid the employees during the on-call times as hours worked because of the restrictions that were placed on the employees during this time.

The California labor law attorneys for the plaintiff asked for payment of the 8 hours during which the employees were sleeping on the ship. Metson Marine did have one victory in this suit; the court held that the sleep time of the employees was subject to payment as time worked.
If you are concerned that you have not been paid properly for being placed on call or standby and or overtime, please contact an experienced California labor law attorney to review your situation.

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Have you worked in California for Wells Fargo any time after August 20, 2008 as a “telephone banker” or in a similar position at a Wells Fargo call center?

Our investigation reveals that call center personnel described as Telephone Bankers were not fully paid for work performed on their shifts.

We believe there are substantial unpaid wages and penalties due to this group of California employees and we would like to speak with you regarding your employment with Wells Fargo in this capacity for any time you may have worked after August 20, 2008.

The class action lawsuit that we are pursuing is entitled Mists Herrick, et al. v. Wells Fargo Bank, N.A.
U.S. District Court, Central District of CA, Case No. CV11-1646 GAF (Ex).

You can help, so please contact us immediately either by phone at (888) 474-7242, email at info@uelglaw.com , or contact us through our website at www.collectmyovertime.com.

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 If you ordered a cell phone from a retailer and the phone was to be mailed to you, have you been charged for service before receiving the phone?  Sprint (S), among others, is one company that has elected to sell their phone through third party retailers.

It is not uncommon for some third party retailers to sell a cellular phone to a customer, and before the customer actually receives the cell phone, activate the service.  This violation is most common with third party retailers who sell phones for cellular companies but have the inability to activate the cellular services at the time of purchase. While this may seem like a small issue and only cost the cellular phone user a few days of service charges prior to receiving the phone. Nevertheless, it is wrong. Moreover, when you consider that this violation affects potentially thousands of consumers, the damages add up quickly. 

When a single individual has common damages of many other individuals, class action treatment may be the most efficient to prosecute the company or companies committing these violations.  It would not be cost effective or efficient for the courts for hundreds or thousands of claims to be litigated. This is the reason why California class action cases are filed in many instances.

If you have purchased a phone through a third party retailer, you should speak to a California class action attorney to determine if your rights have been violated.

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If you are a working family member of a military service member or a member of an airline flight crew, proposed regulations to the Family and Medical Leave Act (FMLA) may provide you with several additional employment benefits. The FMLA was originally designed to help employees take leave from work for family and medical reasons without risk of losing their job or health benefits. The Act applies to public agencies, public and private elementary schools, and companies with 50 or more employees. An employee that has worked for any of the aforementioned employers for at least 12 months or at least 1,250 hours over the course of 12 months is entitled to up to to 12 weeks of unpaid leave per year.  In 2009, President Barack Obama signed into law the National Defense Authorization Act for Fiscal Year 2010 and the Airline Flight Crew Technical Corrections Act. These acts extended FMLA benefits to both military service members and airline flight crews who had previously been disqualified. Now it is expected that the Department of Labor (DOL) will propose amendments to these Acts to further expand their coverage. 

The National Defense Authorization Act provides that certain family members of soldiers on active duty may be allowed to take extended leave from their jobs for reasons including, but not limited to, preparing for deployment, making child care and financial arrangements, attending pre-employment and post-employment activities, and caring for an injured active duty service member or previously injured veteran. On May 28, 2010, the House of Representatives approved a bill that would amend the Act to allow the spouse, children and parents of a deployed service member to take at least two weeks of unpaid leave, even if they are not covered under the FMLA. 

The Airline Flight Crew Technical Corrections Act extends FMLA benefits to pilots, flight attendants, and other flight crew workers. Normally, most flight crew members would not qualify for FMLA benefits because they are paid for only “in-flight” time and not for the hours they are on duty between flights or on layovers. The Act provides that flight employees quality for FLMA if they are paid 60 percent of the airline’s monthly work schedule or for at least 504 hours. 

New regulations to both of the aforementioned Acts are expected to take place before November. There may also be revisions to other aspects of the Act previously enacted by the Bush administration. Although the exact changes have not been specified, the DOL has indicated that it will conduct a study next year to evaluate how families are using the FMLA. 

When applying for FMLA, be sure that you use the most current DOL-issued forms. If you take the proper steps and believe your employer has improperly denied you leave, do not hesitate to contact a knowledgable California labor law attorney for a thorough evaluation of your case.

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On July 1, the first day of the new fiscal year, Governor Arnold Schwarzenegger issued a wage order reducing the salary of 200,000 state workers to the federal minimum wage of $7.25 an hour.  Despite State Controller John Chiang’s refusal to comply with the order, the California 3^rd District Court of Appeals ruled that the state Department of Personnel Administration (DPA)  “has the authority to direct the controller to defer salary payments in excess of federally mandated minimum wages when appropriations for the salaries are lacking due to a budget impasse.”  California remains without a budget for the coming year as lawmakers continue to debate the best way to close the state’s $19.1 billion deficit. 

The governor’s motive for the minimum wage plan appears to be two-fold.  First, it places pressure on state legislatures to take swift action on establishing a budget.  According to Schwarzenegger spokesperson Aaron McLear, “Every day the Legislature fails to deliver a budget costs the state $50 million.” The major conflict concerns the democrats’ goal of increasing taxes and spending billions on schools and the governor’s proposed tax cuts. Secondly, the governor hopes that the threat of a minimum wage would encourage unions to negotiate new contracts with the administration.  To date, six of the state’s 12 unions, which represent approximately 40,000 workers, have signed contracts involving pay cuts and pension revisions. As for the remaining union workers, the wage order poses a large financial threat.  The DPA has indicated that the average state employee makes $65,000 annually.  A minimum wage cut would reduce this figure to $15,000 per year.  The fact that reimbursements will be issued after a budget is signed is little solace for workers who need to make ends meet until then.  The controller’s office has sated that it would take at least six months after a budget is passed to reinstate workers’ full rate of pay.

The only good news for affected workers is that the minimum wage order may never take effect.  Controller Chiang had indicated that he believes the wage order to be illegal and plans to appeal the district court’s ruling to the Supreme Court before he complies with the order. He further contends that implementing the order is practically infeasible due to the state’s outdated computerized payroll system.  Specifically, the system cannot issue some checks at full salary and other checks at minimum wage.  The Legislature approved $130 million in upgrades to the system in 2004, but the project has been repeatedly postponed by the controller’s office.  According to Chiang, a final “fix” to the system will not be ready until October 2010.

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On July 6, 2010, the Second U.S. Circuit Court of Appeals held that sales representatives for Novartis Pharmaceuticals Corporation  are entitled to overtime pay under the Fair Labor Standards Act (FLSA).  Many California employees of Novartis claimed that they were wrongfully denied overtime pay between March 23, 2000 and April 7, 2007. The representatives, who worked nine-hour days, made routine calls and visits to physicians inquiring as to whether they would prescribe the company’s products to patients. Under the FLSA, employees must be paid overtime for more than 40 hours worked per week, but there are exemptions for “outside” salespersons  and “administrative” personnel.

The Court ruled that neither exemption applies to pharmaceutical reps because

(1) representatives only promote a product and do not make “sales”
(2) their activities are so tightly controlled by the company that they are not allowed to exercise independent judgment.

According to Secretary of Labor Hilda L. Solis,  an employee who can merely promote a drug and provide samples, has not in fact made a “sale.” Judge Kearse  agreed, stating that an employee who cannot “even obtain from the physician a binding agreement to prescribe it” has not made a sale.  
Novartis contended that its representatives are exempt from overtime under the “administrative” exemption, because they are free to determine when they will visit a particular doctor and how best to earn their support, whether it be dinner, a sporting event, or some other activity. The Court rejected this argument because it failed to establish a freedom of discretion. It particularly noted that Novartis representatives have no control over the company’s marketing strategy. Furthermore, the company determines the physicians to be visited, the drugs to be recommended, and the promotional events to be held. 

The ruling in this case is important because it is the first federal appellate decision addressing the outside sales and administrative exemptions as it applies to the pharmaceutical industry.  
It also underlines the main purpose of California overtime law, which is to evenly divide work among employees. 
If you are a pharmaceutical representative and have questions regarding your entitlement to California overtime pay, take action and call a knowledgeable California labor law attorney.

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On June 17, 2010, the United States Supreme Court issued a unanimous ruling in the case of City of Ontario v. Quon  holding that a California Ontario police department did not violate the Fourth Amendment when it searched an officer’s text messages made on a department-issued pager. The case arose when respondent, Jeff Quon, a police officer with the City of Ontario’s SWAT Team, exceeded his monthly messaging limit on a city-issued pager thereby causing the city to incur overage charges. After at least two other officers exceeded their monthly character allotment, the department audited two months worth of text messages to determine whether the department’s monthly plan was adequate. During the course of the audit, it was discovered that many of the messages sent by Quon were not work-related and some were of a sexual nature. Quon filed suit against the City of Ontario alleging violation of the Fourth Amendment and the Stored Communications Act (SCA). 

The case presented the Court with an opportunity to address the issue of whether employees have a reasonable expectation of privacy in electronic communications made on employer-issued devices. However, the Court refused to make such a broad ruling stating that “the judiciary risks error by elaborating too fully on the Fourth Amendment implications of emerging technology before its role in society has become clear.” It assumed that the principles governing the search of an employee’s physical office space also apply to the search of electronic communications. As such, a search conducted for a non-investigatory, work-related purpose is reasonable where the search is “justified at its inception” and “not excessively intrusive.” The Court concluded that the city’s search in Quon was reasonable, because the city had legitimate work-related purposes for the search (i.e., to determine whether the monthly messaging limit was sufficient and whether the department was paying for excessive personal messaging). Moreover, the scope of the search was not excessively intrusive, because it was restricted to two months worth of work-hour messages.

Although Quon only applies in a public employment context, there are lessons to be learned for employees in both the public and private sector. Here are a few precautions all employees should consider:

• Request a copy of your employer’s electronic communications policy and become familiar with its terms
• Assume that electronic communications on an employer-issued device are not private and may be reviewed
• Restrict your electronic communications to work-related activities

If you do fall subject to a search, remember that your employer must have a work-related purpose and the search must be limited in scope. Should you have any questions regarding the legality of a search, do not hesitate to contact an experienced California labor law attorney for an unbiased evaluation of your situation.

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An arbitration ruling has recently been handed down from the U.S. Supreme Court in a case entitled Stolt-Nielsen v. Animal Feeds Int'l Corp. 

Arbitrators, over the past several years, have followed U.S. and California Supreme Court rulings which have consistently held that if an arbitration agreement does not allow for class action treatment, then such class action treatment must be allowed.

In stark contradiction, the recent U.S. Supreme Court decision in Stolt-Nielsen v. Animal Feeds case, states "[A] party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so." This essentially means that unless the arbitration agreement specifically permits class wide arbitration, none shall be allowed.

This holding is in direct contradiction to the California Supreme Court case entitled Gentry v. Superior Court which held that any arbitration agreement that does not permit class certification is an unenforceable and voidable “exculpatory clause.”

Without a doubt many defense firms in California will attempt to use the recent decision to reshape California law, however this will likely not be successful since Gentry v. Superior Court does not conflict with the Federal Arbitration Act (“FAA”)  since it applies to all class waiver “exculpatory clauses” whether or not they happen to appear in arbitration agreements.

In addition, the Stolt-Nielsen decision simply holds that, without specifically an express agreement by the parties, class arbitrations cannot be ordered "under the FAA."   The decision does not state, however, that the FAA preempts California courts from compelling class-wide arbitration under state law, such as the California Arbitration Act or the anti-exculpatory rule discussed in the Gentry case.     

 It is likely that California courts will still be bound by the Gentry decision and judges are likely to reject any attempt to enforce an exculpatory class-waiver clause since such would conflict with Gentry. 

 The likely outcome is that defense firms and their clients will not be able to avoid class actions altogether but rather will need to choose between class wide litigation or class wide arbitration.

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