We 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
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Sticking up for Their Rights: Employers Taking the Offensive
By 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
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Mendoza v. Nordstrom: Court to Define “Day of Rest”
“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 Mendoza v. Nordstrom: Court to Define “Day of Rest”
SF Formula Retail Labor Protections Update: OLSE Holds Meeting to Give Overview of Ordinances
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
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Calling All Employers Who Use An Outside Salesforce
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 [um… sneezing] away here, comes back to us dressed up like a nickel!”
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Ninth Circuit Jeopardizes Broad “No Re-Hire” Clauses
By 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?
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California Legislative Update: 2015 Employment Legislation To Watch
By 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:
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Not an April Fool’s Joke! Possible Legislative Clarification to CA Paid Sick Leave Law To Come: Proposed Amendments Introduced
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.
Continue Reading Not an April Fool’s Joke! Possible Legislative Clarification to CA Paid Sick Leave Law To Come: Proposed Amendments Introduced
New Law Delights California Employers
By 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
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Fasten Your Seatbelts and Enjoy the Ride: the 2015 Edition of Cal-Peculiarities is Coming Soon!
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
Continue Reading Fasten Your Seatbelts and Enjoy the Ride: the 2015 Edition of Cal-Peculiarities is Coming Soon!