California Peculiarities Employment Law Blog

Thanks to you, we’re Chambers USA’s Labor & Employment Team of the Year!

Posted in 2015 Cal-Peculiarities

Winners Logo 2We are thrilled to announce that thanks to the feedback of clients and friends like our loyal blog readers, Seyfarth’s Labor & Employment group has just been recognized for excellence with one of the most prestigious awards in the legal profession. Earlier this week, the team was named Labor & Employment Team of the Year at the 10th annual Chambers USA Awards for Excellence ceremony in New York. The Chambers Awards honor the achievements of leading law firms and lawyers across the country for pre-eminence in key practice areas and notable achievements during the past 12 months, including outstanding work, impressive strategic growth, and excellence in client service. Chambers described Seyfarth as “the market-leading labor & employment practice in the country with an expertise and track-record of successful, cutting-edge defenses to employment discrimination class actions, bet-the-company EEOC lawsuits, and complex, high-stakes  wage & hour litigation.”

What means the most to us are the quotes from our clients, which included: “Aside from being legal experts in their fields, the firm’s attorneys are incredibly responsive and provide pragmatic, value-add legal advice,” and “I’ve had several occasions when they’ve given advice contrary to that of other firms – in every instance the lawyers at Seyfarth have been correct.”

At the end of the day, what motivates each and every L&E lawyer at Seyfarth is the goal of providing our clients with the level of service they deserve. It’s the driver of everything we do, and that’s why this award means so much to us.

THANK YOU to all our loyal blog readers for coming along on this ride with us. We appreciate it more than we can say.

Sticking up for Their Rights: Employers Taking the Offensive

Posted in 2015 Cal-Peculiarities

Defense and attack .fatBy David Kadue

The traditional posture of California employers apprehensive about “gotcha” wage and hour claims is to hunker down and wait for the next lawsuit. But a few brave souls have taken the offensive. We celebrate two examples here. We cannot guarantee the success of their efforts, but we applaud their courage.

Declaratory relief action against California Labor Commissioner

One annoying peculiarity of California employment law is the Bluford doctrine, announced in a 2013 Court of Appeal decision called Bluford v. Safeway Inc. The Bluford case announced that truck drivers—already paid handsomely by mileage rates and by hourly rates for specified tasks and situations—were entitled to additional, separate pay for each rest period, under a notion that “employees must be compensated for each hour worked at either [1] the legal minimum wage or [2] the contractual hourly rate.” The court found it immaterial that the truck drivers earned, on an hourly average, far more than the minimum wage. Although Bluford was a controversial decision, the California Supreme Court declined to grant the employer’s petition for review.

OK. Fair (or unfair) enough. Then came the California Labor Commissioner and the Division of Labor Standards Enforcement, to rub salt in the Bluford wound. The DLSE determined that employers who pay on a piece-rate basis not only must separately pay for rest periods, but also must pay for those periods at a rate higher than the minimum wage or a contractual wage. According to the DLSE, an employer must pay piece-rate workers for rest periods at a rate equal to their average hourly piece-earning rate (which would vary on a continuous basis and which could greatly exceed the minimum wage). The DLSE announced this determination in a November 2013 internal memorandum, developed without the benefit of a rule-making process. The resulting “underground regulation” robs piece-rate paying employers of the certainty of paying rest periods at a fixed, pre-determined hourly rate.

Certain agricultural employers, heavily reliant on piece-rate labor, got mad as heck and decided not to take it anymore. In April 2015, in a case entitled Ventura County Agricultural Association v. Su, employer associations sued the government. They brought a petition for writ of mandate and a complaint for declaratory and injunctive relief in Sacramento County Superior Court. They argue that the DLSE has issued an unlawful regulation and one that is contrary to Bluford. We wish them well.

Making a federal case out of compelling a plaintiff to arbitrate PAGA claims Continue Reading

Mendoza v. Nordstrom: Court to Define “Day of Rest”

Posted in 2015 Cal-Peculiarities, Case Update

(Illustration) Shakespeare TypingBy Candace Bertoldi

“The rest is silence.” So spake Hamlet, as he expired on stage. Lawyers love wordplay. Webster defined it as the “playful or clever use of words.” Google defines wordplay as “the witty exploitation of the meanings and ambiguities of words, especially in puns.” Shakespeare was the king of wordplay; his exuberant punning, much like Hamlet’s famous last words, has kept literary critics debating for centuries over their meaning.

Lawyers especially enjoy the wordplay game of statutory interpretation, which many regard as the highest form of intellectual fodder. No one can deny that wage and hour litigation often arises out of the exploration (or exploitation) of seemingly innocuous words in California’s Labor Code. Perhaps the most litigated word in recent years was “provide”—until the California Supreme Court issued, in Brinker v. Superior Court, the final word on an employer’s duty to “provide” meal periods.

Currently in the hot seat are lesser-known words, contained in the Labor Code’s “day of rest” provisions:

  • Section 551 provides that “every person employed in any occupation of labor is entitled to one day’s rest therefrom in seven.”
  • Section 556 exempts employers from the duty to provide a day of rest “when the total hours of employment do not exceed 30 hours in any week or six hours in any one day thereof.”
  • Section 552 prohibits employers from “causing their employees to work more than six days in seven.”

Adding further to the confusion, the IWC Wage Orders acknowledge that an employee will sometimes work more than six consecutive days. They state that Sections 551 and 552 shall not be construed to prevent an accumulation of days of rest when “the nature of the employment reasonably requires the employee to work seven (7) or more consecutive days; provided, however, that in each calendar month, the employee shall receive the equivalent of one (1) day’s rest in seven (7).”

Employers have grappled with what it means to “cause” an employee to work six days in seven, what it means to provide “one day’s rest in seven,” and when the day of rest requirement is excused. Wage and hour litigation has exploited the ambiguity in these statutes. But the California Supreme Court now has an opportunity to provide some clarity.

Continue Reading

SF Formula Retail Labor Protections Update: OLSE Holds Meeting to Give Overview of Ordinances

Posted in 2015 Cal-Peculiarities, San Francisco Ordinances

(Photo) SF City HallBy Kristen Verrastro

Yesterday, we attended a meeting at San Francisco City Hall where the Office of Labor Standards Enforcement (OLSE) gave an overview of the San Francisco Retail Labor Protections ordinances.

As our loyal readers know, we have been writing about the comments and activities surrounding the San Francisco ordinances known as the “Retail Workers’ Bill of Rights” for a few months, with our most recent blog post here and our Management Alert here.

In March 2015, Supervisors Mark Farrell and Eric Mar proposed two amendments to the ordinances.  Those proposed amendments would: (1) redefine “Employer” under the ordinances to mean any person or entity that owns or operates a Formula Retail Establishment with 40 or more (rather than 20 or more) Employees in San Francisco; and (2) allow CBAs to include a clear and unambiguous provision where some or all Formula Retail Labor Protections are expressly waived.  We anticipate the Board of Supervisors, or a Sub-Committee of the Board, will address these proposed amendments at a meeting in May.

At yesterday’s meeting, the OLSE presented a slide deck reviewing the ordinances, and answered questions from attendees. The OLSE also released a fact sheet regarding the ordinances (available here) and, in the future, potentially may roll out other guidance around the ordinances’ implementation.

In the meantime, the OLSE will be conducting a webinar tomorrow, Wednesday, April 29th, at which the OLSE is anticipated to again take questions under submission. For more information and a link to sign up for the webinar, click here.

Do note that the webinar has limited reservation space. If you are unable to attend or have questions about which to inquire, contact your Seyfarth attorney.

Stay tuned for more information from the OLSE as it is released. We also will be posting information regarding the Formula Retail Labor Protections ordinances up to the July 3, 2015 operative date and thereafter as it becomes available.

Calling All Employers Who Use An Outside Salesforce

Posted in 2015 Cal-Peculiarities, Expense Reimbursement

imageBy John R. Giovannone

We feel your pain, and we have a prescription for you to consider: a non-accountable expense reimbursement plan.

First, let’s discuss your problem. If you have a salesforce, the force exists to sell stuff. So here’s an exercise:

  • First, think of your entire outside salesforce.
  • Then, mentally separate out those salespeople who are best at selling stuff.
  • With this most effective group in mind, ask yourself, what does each person need to maintain his or her success?

Many of you, if truth be told, have no idea. You just want your good salespeople to keep doing … whatever it is that they’re doing … because, well, it’s working.

Effective sales people come in all forms and use all manner of methods: some wine and dine; others live on the phone; others rely heavily on encyclopedic product knowledge; others employ advanced statistics and analytics; some value regular face time with customers; others blur the line between their business and social lives; some might superstitiously choose to meet customers only at a favorite coffee shop; still others have forged such reliable customer bonds that their book of business sells itself with minimal maintenance.

What’s clear is that not all effective sales people do the same things—or incur the same expenses. But the last thing you want is for your expense reimbursement policy to crimp sales by stifling effective sales activities.

The Labor Commissioner, discussed here, has recognized the futility in guessing why or how sales are made. Outside salespeople, by definition, tend to do their own thing out in field; they “set their own time, and they’re on the road, they call on their customers[, in fact,] rarely do you know what they are doing. . . .” DLSE Op. Ltr. (September 8, 1998).

And while we don’t know precisely how salespeople sell, we can tell whether they’re selling by looking at their bottom line. If it takes a $300 concert ticket to make a $100,000 sale, that’s typically an acceptable return on investment. The trite quote is that it takes money to make money. If the results justify the expenses, who can question the seller’s methods? F. Ross Johnson (as played by James Garner in Barbarians at the Gate) had his own reaction to the second-guessing of expenses: “Every penny you think I’m [umsneezing] away here, comes back to us dressed up like a nickel!” Continue Reading

Ninth Circuit Jeopardizes Broad “No Re-Hire” Clauses

Posted in 2015 Cal-Peculiarities, Case Update

(Illustration) No HiringBy Carrie Price and Robert Milligan

In Golden v. California Emergency Physicians Medical Group, a divided Ninth Circuit panel held that a “no re-hire” provision in a settlement agreement could, under certain circumstances, constitute an unlawful restraint of trade under California law.

The Facts

Dr. Golden, a physician, agreed to settle his discrimination claim against his employer, California Emergency Physicians Medical Group (“CEP”). Their oral settlement agreement, later reduced to writing, had Dr. Golden “waive any and all rights to employment with CEP or at any facility that CEP may own or with which it may contract in the future.” The district court enforced the parties’ settlement over Dr. Golden’s objection that this “no-rehire” clause violated Section 16600 of California’s Business & Professions Code, which provides that a contract is void if it restrains anyone from engaging in a lawful profession.

The Appellate Court Decision

On appeal, Dr. Golden argued that the “no re-hire” clause was unlawful and that, because it constituted a material term of the settlement, the entire agreement was void, permitting Dr. Golden to pursue his discrimination lawsuit.

The Ninth Circuit panel determined that Dr. Golden might prevail on this argument, and remanded the case to the district court for further proceedings. The panel first found that the validity of the “no re-hire” clause was ripe for determination. The dispute was ripe not because CEP was currently seeking to enforce the “no re-hire” clause against Dr. Golden (it was not), but because Dr. Golden sought to have the settlement agreement voided after his former attorney attempted to enforce the agreement in order to collect attorney’s fees. The panel reasoned that “when a litigant resists his adversary’s attempt to enforce a contract against him, the dispute has already completely materialized.”

The Ninth Circuit panel next addressed the validity of the “no re-hire” clause. Historically, this type of clause, which commonly appears in settlement agreements, has not been viewed as a non-compete clause, in that a “no re-hire” clause does not keep a former employee from working for a competitor—just for the former employer. The Golden court, however, took a wider view of Section 16600, reasoning that it applies to any contractual provision that “ ‘restrain[s anyone] from engaging in a lawful profession, trade, or business of any kind’ … extend[ing] to any ‘restraint of a substantial character,’ no matter its form or scope.”

To support this broad interpretation, the Ninth Circuit panel majority cited Section 16600’s language, statutory context, and case law to reason that Section 16600 applies to any contractual limitation that restricts the ability to practice a vocation. See, e.g., Edwards v. Arthur Andersen LLP, 189 P.3d 285 (Cal. 2008); City of Oakland v. Hassey, 163 Cal. App. 4th 1447 (2008). The panel majority noted that both Edwards and Hassey focused on the text of the law—whether the contested clause restrained someone from engaging in a trade, business, or profession—and not specifically whether the clause prevented competition with the former employer. The panel majority concluded that a clause creating a restraint of “substantial character” that could limit an employee’s opportunity to engage in a chosen line of work would fall under Section 16600’s “considerable breadth.”

Significantly, the Ninth Circuit panel did not rule that the clause was actually void. Instead, the panel majority concluded that the district court would need to do more fact-finding to see if the clause actually created a restraint of a “substantial character” on Golden’s pursuit of his profession.

It also is significant that the Ninth Circuit panel majority—mindful that the California Supreme Court itself has not ruled on whether Section 16600 extends beyond traditional non-compete clauses in employment agreements—was merely predicting how it thought the California Supreme Court would rule.

A sharp dissent by Judge Kozinski expressed skepticism that the California Supreme Court would reach the same result as the panel majority, and argued that the settlement agreement should be enforced because the provision put no limits on Dr. Golden’s current ability to pursue his profession.

What Is the Golden Rule for California Employers? Continue Reading

California Legislative Update: 2015 Employment Legislation To Watch

Posted in 2015 Cal-Peculiarities, 2015 Legislative Updates

California State FlagBy Kristina Launey and Christina Jackson

Having reconvened this past Monday from Spring Recess, the California Legislature will return its attention to the employment-related bills that were introduced for this 2015-16 Legislative Session. These bills—covering topics including paid leave rights, hours of work, and payment of wages—will now be heard in committees, as their authors attempt to carry them through the process to the Governor’s desk for approval. While it is too early to tell which bills will make the cut, those that do will be sure to affect employers doing business in California.

The proposed bills we’re watching most carefully are: Continue Reading

Not an April Fool’s Joke! Possible Legislative Clarification to CA Paid Sick Leave Law To Come: Proposed Amendments Introduced

Posted in 2015 Legislative Updates, Sick Leave Series

(Photo) Sick PhoneBy Kristina Launey

On March 26, 2015, Assembly Member Lorena Gonzalez - the author of California’s Paid Sick Leave law, the Healthy Workplaces, Healthy Families Act of 2014 (the “Act”) – introduced amendments to that law. The vehicle for those amendments, Assembly Bill 304, was re-referred to the Assembly Committee on Labor and Employment to be set for hearing.

The bill would amend Labor Code sections 245.5, 246, and 248.5, to make the following changes to the Act:

  • Require that an employee work for the same employer for 30 or more days within the previous 12 months to qualify for paid sick leave under the Act.
  • Regarding the definitions in the Act:
    • Exclude a retired annuitant of a public entity and a worker covered by the Railroad Unemployment Insurance Act, as specified, from the definition of employee.Remove the definition of health care provider.
    • Authorize an employer to provide for sick leave accrual on a basis other than one hour for each 30 hours worked, provided that the accrual is on a regular basis and the employee will have at least 24 hours of paid sick leave accrued by the 120th calendar day of employment.
  • Clarify that no accrual or carry over is required if employees receive the full amount of paid sick leave at the beginning of each calendar year, year of employment, or 12-month basis, rather than the previous ambiguous reference to simply “year.”
  • Permit an employer that provides unlimited sick leave to its employees to satisfy notice requirements by indicating “unlimited” on the employee’s itemized wage statement.
  • Delete the current rate of pay provision in Section 246(k), and instead provide that if the employee receives different hourly rates when the accrued sick leave is taken, then the rate of pay would be calculated in the same manner as the regular rate of pay for purposes of overtime.
  • Provide that an employer is not required to reinstate accrued paid time off to an employee who is rehired within one year of separation from employment, that was paid out at the time of termination, resignation, or separation.
  • From Section 248.5(e), remove “any person” with respect to enforcement of the Act’s provisions, which would likely remove concern that a private right of action exists.
  • Make other “technical and conforming changes.”

But the bill contains no urgency clause—which would be necessary for the amendments to take effect prior to the effective date of July 1, 2015 that applies to the bulk of the Act’s rights and obligations. Unless later amendments add an urgency clause (as they should), the contemplated amendments to the bill won’t take effect until January 1, 2016.

We’ll continue to follow this bill as it moves through the legislative process and keep you updated. For background on the Act, see our prior blog posts here and here.

New Law Delights California Employers

Posted in 2015 Cal-Peculiarities, 2015 Legislative Updates

April the first, Fool's day, on table calendarBy our source in Sacramento

Emergency legislation promises to revitalize the California economy and place our state in the forefront of jurisdictions promoting economic growth and employment opportunity.

The California’s Open for Business—Really!—Act (“COBRA”), AB 666, effective April 1, works the following reforms in California employment law.

PAGA repeal. Article I of COBRA repeals the Private Attorneys General Act of 2004. The legislative finding reports that PAGA, during its first ten years, did little more than enrich opportunistic plaintiffs’ counsel by creating collateral settlement leverage in wage and hour class actions.

Other wage and hour reform: Systematic Labor Code amendments advance a new general principle that pay practices that are lawful under federal law are also lawful in California, absent express statutory language stating a clear intent to deviate from the employment law followed in America generally. Under COBRA, judges no longer can invent special rules to burden California employers. The Legislature has thus restored California to the national fold with respect to a business’s use of piece rates, commission plans, temporary employment agencies, independent contractor relationships, and other traditional methods of securing services.

Litigation reform: Employees suing employers must now make a written monetary demand before they sue. Plaintiffs’ lawyers cannot recover attorney’s fees or costs unless the final outcome of the case is more favorable to the employee than the amount of the initial demand. And defendants filing summary judgment motions can now do so with 28 days’ notice (as is often the case in federal courts), rather than the excessive 75 days’ notice that California now requires.

Leave law reform: COBRA repeals California’s new mandatory paid sick leave act, and preempts municipal ordinances that require paid sick leave.

In his signing statement, Governor Jerry Brown praised the Legislature’s historic bipartisan accomplishment: “When we got to talking about this, everyone realized that we were tired of California being the laughing stock of the nation. No prudent business was even thinking about starting or expanding operations here with all the crazy labor laws we’ve created. They were just driving up costs and impairing efficiency while encouraging shake-down ‘gotcha’ lawsuits. Now we can truly welcome the businesses that create jobs for California families.”

Governor Brown continued: “We finally realized that our labor law has been prescriptive without being clear, mandatory without accounting for how working relationships vary, and onerous to employers while not producing significant benefits for workers. Enough already!”

If you would like to discuss this exciting new development, then please contact your favorite Seyfarth lawyer.

Or you might skip that step because you know that any news about California actually reducing burdens on employers would have to be an April Fool’s joke.

Edited by Chelsea Mesa

Fasten Your Seatbelts and Enjoy the Ride: the 2015 Edition of Cal-Peculiarities is Coming Soon!

Posted in 2015 Cal-Peculiarities

As loyal Cal Pecs Blog readers, you probably know of our signature book Cal-Peculiarities: How California Employment Law Is Different, which we update on an annual basis.  The 2015 edition will be ready for release by April 15.

This edition is the most comprehensive to date.  It highlights the most recent court decisions and legislative developments for private employers who do business in California.

The 2015 edition will be available in a convenient, searchable eBook format as well as paper.  Look for Seyfarth Shaw’s announcement in your Inbox on or before April 15.