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

 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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