2016 Cal-Peculiarities

Seyfarth Synopsis: 2016 brought a wave of new protections for California employees and scant protection for employers. In this week’s post, we anticipate changes for 2017, in the ever-peculiar world of California employment law.

True to our tradition, we pause at the beginning of the New Year to reflect on last year’s California employment law changes, and consider possible trends. On the good ship Cal-Pecs, our contributors take turns keeping lookout in the crow’s nest. Where, we ask, is the wandering bark of employment law heading in California? What shoals loom ahead?

Despite the sea change that the election of Donald J. Trump represents, including expected changes favoring employers at the federal level, California remains (with apologies to Carey McWilliams) its own “island on the land.” An island of employees who know their rights. While lawmakers in Illinois, New York, New Jersey, and Massachusetts are doing whatever they can to catch up, all three branches of California’s government—legislative, executive, and judicial—continue to tack toward expanding employee rights.

To pick just a few examples: in 2016, California judges, legislators, and municipalities

  • extended the protections of pay equity laws beyond gender, to also prohibit unjustified disparities based on race and ethnicity,
  • shielded applicants from being haunted by juvenile conviction histories,
  • provided that all contracts with California employees will be governed by California law, unless the employee is represented by a lawyer,
  • increased the number of jurisdictions where minimum wage and paid sick time rights exceed state norms,
  • required employers, upon pain of penalty, to schedule work time for certain employees well in advance.

The above developments—which we’ve discussed in more detail here, here, and here—are part of a continuing trend in recent years that emphasizes equal pay, expansion of paid sick and small-necessity leave rights, prevention of ”wage theft,” and increasing work opportunities for historically underprivileged or disenfranchised groups such as immigrants and those with criminal histories.

Against this ever more employee-friendly backdrop, one can only wonder how California will grapple with the challenges of a modern economy, such as job eliminations (caused by more work automation), the increasingly “gig” nature of our state’s economy (resulting in more independent contractors and fewer employees), and the impact of legalization of recreational marijuana (employees can’t be impaired in the workplace, but attempts to limit non-work time use could implicate employee privacy, among other things). One particularly bold effort came in 2016: proposed bill AB 1727 would have given independent contractors the right to organize and negotiate with work providers through “group activities” such as withholding work, boycotting, or critiquing labor practices. That effort died in the Assembly Judiciary Committee. But hear this fearless prediction: we will hear of this again. And we can expect other bold efforts to empower the growing numbers of gig economy workers.

Meanwhile, we anticipate answers on the following workplace issues now pending before the California Supreme Court:

  • Which “employee” test determines whether a class should be certified to determine whether a group independent contractors was misclassified? The IWC definition of “employee” (as construed in Martinez v. Combs, 49 Cal. 4th 35 (2020), or the common law test set forth in S.G. Borello & Sons, Inc., 48 Cal. 3d 341 (1989)? [Dynamex Operations West, Inc., v. Superior Court, S222732]
  • What does it mean that a California employer is to provide “one’s day rest in seven”? [Mendoza v. Nordstrom, S224611]
  • Does the federal de minimis doctrine apply to claims for unpaid wages under California Labor Code Sections 510, 1194 and 1997 (minimum wage and overtime)? [Troester v. Starbucks Corp., S234969]
  • What is the correct way to calculate the rate of overtime pay when a non-exempt employee receives a flat sum bonus? [Alvarado v. Dart Container Corp of California, S232607].

If we can take any guidance from the Supreme Court’s latest wage-hour decision (Augustus v. ABM Security, rewriting the law on required rest breaks [see links to our OMM and prior post on the case here]), the results in the above cases will continue the tide of worker rights that will swamp more than a few employer boats, making management of California employees even more complicated, and increasing the risks of employers incurring inadvertent violations.

As in past years, we invite you to contact us with any comments, suggestions, or disagreements you may have regarding any of our posts, or if you would like to be a guest author.

We look forward to keeping you apprised of continuing ebbs and flows in California employment law during the year to come.

Dashing through this holiday week of 2016, we wish you all peace, joy, and a renewed spirit with which to face the challenges sure to arise during the coming year.

Next week in this space, we’ll take a look back at the most significant Cal-peculiar employment law developments of the past year, and assess the winter wonderland going into 2017.

Happy New Year!

Edited by Coby M. Turner.

Seyfarth Synopsis: In what many employers will see as a “break” from workplace reality, the Supreme Court, in Augustus v. ABM Security Services, Inc., announced that certain “on call” rest periods do not comply with the California Labor Code and Wage Orders. The decision presents significant practical challenges for employers in industries where employees must respond to exigent circumstances.

On December 23, 2016, the California Supreme Court issued its long-anticipated decision in Augustus v. ABM Security Services, Inc., affirming a $90 million judgment for the plaintiff class of security guards on their rest break claim. The Supreme Court found that the security guards’ rest breaks did not comply with the California Labor Code and Wage Orders, because the guards had to carry radios or pagers during their rest breaks and had to respond if required.

The Supreme Court took a very restrictive view of California’s rest break requirements, concluding that “one cannot square the practice of compelling employees to remain at the ready, tethered by time and policy to particular locations or communications devices, with the requirement to relieve employees of all work duties and employer control during 10-minute rest breaks.” Thus, in the Supreme Court’s view, an employers may not require employees to remain on call—“at the ready and capable of being summoned to action”—during rest breaks.

See our One Minute Memo for more details on the decision and thoughts on the implications of this case for California employers. The Augustus decision presents significant practical challenges for employers, especially in industries in which employees must be able to respond to exigent circumstances.

Workplace Solution:

The holding that “on call” rest periods are not legally permissible should prompt employers to evaluate their rest-break practices. In industries where employees must remain on call during rest periods, employers should consider seeking an exemption from the Division of Labor Standards Enforcement. Lawyers in the Seyfarth California Workplace Solutions group can assist with other suggestions for responding to this decision.

Seyfarth Synopsis: New legislation effective 2017 will expand California workers’ compensation coverage by requiring coverage for certain high-level individuals unless they affirmatively opt out and waive coverage, thereby reversing the prior rule by which those individuals, to get coverage, had to opt in. 

As a general rule, California employers must provide employees with workers’ compensation insurance coverage for work-related and industrial injuries and illnesses. Until now, the definition of “employee” has included paid corporate officers and directors, but has excluded corporate officers and directors who are the sole shareholders and has excluded working members of a partnership or limited liability company (“LLC”). These folks were not considered employees unless they “opted in” to workers’ compensation coverage.

Comes now AB 2883, signed into law by Gov. Jerry Brown on August 26, 2016, which will amend Labor Code sections 3351 and 3352 to alter the coverage rules for workers’ compensation coverage. As of January 1, 2017, certain officers, directors, and owners of companies will be covered by workers’ compensation unless they affirmatively “opt out.” Specifically, all officers and members of boards of directors who work for a corporation for pay will be covered under workers’ compensation unless the individual (1) owns at least 15% of the issued and outstanding stock of the corporation and (2) executes a sworn waiver of rights under the Labor Code stating that he or she is qualified for the exemption. In addition, working members of a partnership or LLC receiving partnership or LLC wages will be covered employees unless they qualify as (1) a general partner of a partnership or a managing member of a LLC and (2) sign a waiver of the type just mentioned.

These amendments aim to keep employers from giving their employees sham titles or small ownership shares to avoid covering them under workers’ compensation.

AB 2883 also amends Labor Code Section 3352 to provide that if a signed waiver is effective upon the date of receipt and acceptance by the insurance carrier. Note, the provisions of AB 2883 apply to all in-force policies as of January 1, 2017, and unless a signed waiver is received and accepted by the insurance carrier, any individual who had been exempted from coverage under the workers’ compensation policy will need to be added to the coverage until a waiver is received and accepted by the insurer.

Sample Waiver Forms prepared by the State of California Department of Insurance appear at: http://www.insurance.ca.gov/0250-insurers/0300-insurers/0200-bulletins/bulletin-notices-commiss-opinion/upload/NoticeAB2883.pdf

By “opting out,” any working owner waives rights to three particular benefits:

(a) Potential lifetime medical coverage for the industrial injury. This coverage can be significant if the person leaves the company by retirement or otherwise.

(b) Rights to permanent disability, which can be significant for a serious injury with residuals.

(c) Temporary disability to cover any wage loss. (Companies, in the alternative, may consider short and long-term disability benefits for injuries that may last longer than the time provided by state disability coverage.)

Workplace Solution: With new laws being enacted continuously in California, we understand the struggle to keep up with developments. We have a team of experts focusing exclusively on workers’ compensation issues and they are here to help.

Seyfarth Synopsis: On November 8, 2016, San Jose voters approved the most recent local effort to dictate employment scheduling practices. Beginning in March 2017, San Jose employers must offer existing part-time employees additional work hours before hiring any temporary, part-time, or new worker. Violations of the ordinance can trigger city fines and private law suits.

Temporary, part-time, and contract employees are important segments of the economy, particularly around the holidays. Retailers and logistics companies often rely on these workers to meet customers’ holiday wishes. And outside of the holidays, temporary and part-time employees provide important scheduling flexibility in an increasingly on-demand economy. The new year, however, will bring new restrictions on the ability of San Jose employers to use these important staffing tools.

Ok, so what do I need to know?  On November 8, 2016, San Jose voters approved Ballot Measure E, called the “Opportunity to Work Ordinance,” which requires an employer to offer part-time employees additional hours before the employer hires any new or temporary employees. Sponsored by a coalition of labor unions, the new ordinance limits employers’ ability to bring on new workers by forcing them to first offer existing “employees” the opportunity to work the additional hours. The ordinance also saddles employers with new record retention and notice requirements.

The restrictions will take effect on March 8, 2017 and, as covered here, continue a trend seen in other California cities, such as San Francisco, of local regulation of employers’ scheduling and hiring practices.

What if I employ only two people in San Jose? You still may be covered. The ordinance covers employers if they employ more than 35 employees and are subject to San Jose’s business tax. But employers can be covered even if they employ 35 or fewer employees in San Jose. For chain businesses, the ordinance counts every employee of the business, whether or not located in San Jose. For franchisees, the ordinance counts all employees of the franchisee, again, without regard for where the employees work.

The ordinance also broadly defines “employee.” Companies “employ” an individual if they exercise direct or indirect control over the individual’s wages, hours, or working conditions. For an employee to fall under the ordinance, the employee must have worked two hours within the last calendar week or be entitled to California’s minimum wage.

How can I comply? The short answer is that it is not entirely clear. We know that the ordinance:

  • requires employers to offer qualifying employees the extra hours before looking to temporary labor solutions (obviously),
  • requires employers to post notice to their employees about their rights under the new ordinance,
  • requires employers to “use a transparent and non-discriminatory processes” to distribute hours among existing employees,
  • only requires employers to offer additional hours to employees who “in the employer’s good faith and reasonable judgment, have the skills and experience to perform the work,” and
  • stops short of requiring employers to pay existing employees overtime.

Employers need not offer additional hours to employees if those hours would entitle the employee to a premium rate of pay.

Aside from these guidelines, however, the ordinance provides no additional detail on how employers must distribute hours among existing employees or when an employer can send work to a contractor or temporary staffing company. For more guidance, we must wait on the City or the courts. The ordinance grants the City authority to issue guidelines and rules, as well as to make non-substantive changes to the ordinance itself.

Is there anything else I need to do? Yes, and you may need another file cabinet. In addition to its scheduling component, the ordinance burdens employers with record retention and notice requirements. Employers must retain records for new hires that show the employer’s efforts to first offer the additional work to existing part-time employees. Employers must also preserve employee work schedules and “any other records the City requires for employers to demonstrate compliance with the ordinance.” All of these records must be maintained for four years. Failure to comply will create a presumption that the employee’s account as to scheduling practices is accurate.

Further, the ordinance requires employers to display a poster outlining the rights created by the ordinance.  The City’s Office of Equality Assurance will publish a bulletin outlining the required notice, but has not done so yet.

What are the consequences if I stick to my old scheduling practices? Ignoring the ordinance could result in significant liability. Although the ordinance exempts employers for their first violation, the ordinance authorizes the City to issue administrative fines up to $50 per violation and to seek civil penalties in court for noncompliance.

More alarming yet, the ordinance authorizes private actions. Any person not offered work under the ordinance can bring a private suit in court. If successful, the individual would be entitled to lost wages, penalties, and attorneys’ fees.

The ordinance also adopts the San Jose minimum wage law’s employee-friendly retaliation language.  Employees who claim they suffered an adverse employment action within 90 days of complaining about a violation of the ordinance will enjoy a rebuttable presumption that retaliation has occurred.

What if I have a collective bargaining agreement or just can’t comply? Perhaps as a nod to its sponsors, the ordinance provides a carve-out for CBA scheduling provisions. But to invoke the carve-out, the CBA must explicitly waive the ordinance in clear and unambiguous terms.

The City has the authority to exempt businesses from complying with the ordinance where the business works in good faith to comply but compliance is impracticable, impossible, or futile. The City has yet, however, to outline the procedures for requesting this exemption.

Stay tuned. The ordinance takes effect on March 8, 2017. Be sure to check this site in the coming weeks for updates on the City’s plans for rolling out the ordinance and any guidelines it might issue to help clarify the burden San Jose employers must bear in the new year.

Workplace Solutions. Compliance with new city ordinances can be tricky, especially since they are often unknown to employers. Knowledge is the first step. Compliance efforts are the next. If you would like assistance with ensuring compliance with this new ordinance, please contact the authors or another attorney from Seyfarth’s Labor and Employment Group.

Seyfarth Synopsis: Travel time pay is a nebulous area of the law that can leave many employers stalled on the starting blocks. Here are some guidelines to help ensure that employees get paid for all hours worked, including any compensable travel time.

Ready. Set. Not so fast.

It makes common sense to most people that commute time—the time an employee travels between home and work and back again—need not be paid. But at what point does an employee’s time on the road become compensable?

What travel time counts as hours worked?

The answer depends on whether travel time is “hours worked.” California Wage Orders define “hours worked” as the time during which an employee is (a) subject to the employer’s control or (b) the employee is suffered or permitted to work, whether or not required to do so. If travel time falls under either category, the employer must pay for the time spent traveling.

A few points of note:

  • A potential exception to the no-pay-for-commuting rule exists when employees carry business-related tools or materials in their car to a worksite or work meeting. A recent California court held that where employees can use a vehicle for personal purposes during the commute, and are not required to drive a particular route, they are not subject to control of the employer even if they are transporting tools. But the DLSE opines that if an employee must deliver equipment or goods to the worksite for the employer, the travel time is compensable.
  • Labor Code section 2802 requires employers to reimburse employees for automobile costs (mileage, wear and tear, etc.) the employee incurs when being required to use a car for work. So while normal commute expenses are not reimbursable, expenses required beyond the reasonable commute require reimbursement. The DLSE has stated that paying the IRS mileage rate (currently $0.54 per mile) is a “presumptively reasonable” reimbursement rate.
  • Check out our prior blog post on travel time issues here, for more detail regarding compensation for travel time during the workday versus overnight travel out of town.

Getting the Green Light.

So we’ve reached the finish line, right? Hold your horses. Determining what constitutes travel time is a fact-sensitive inquiry that may not be all that simple to analyze in all circumstances. Here are some scenarios where drive time has been found to be compensable:

  • If an employee must attend an offsite conference or meeting, the time spent traveling to and from the meeting in excess of the employee’s normal commute is compensable.
  • Any time spent in reaching the airport or train station that is over and above the time spent in the employee’s normal commute is compensable.
  • Travel to a remote work site from an employee’s home may be compensable if the time spent goes beyond the employee’s normal commute.
  • Once an employee reports to work, any work-related travel during the day is compensable. The same goes for time traveling for a special assignment or emergency outside of regular hours.

Finally, remember that California requires employers to record all hours worked, including travel time. And because any time spent traveling is compensable, all compensable travel time in California counts toward the number of hours worked in calculating any required overtime premium pay.

Keep in mind that employers may establish a separate rate for travel, as long as it does not fall below the minimum wage, and as long as the employee is notified of the travel rate in advance.

Workplace Solution:  California employers must implement a clear travel policy to ensure compliance with this tricky area of the law. If you have any questions or need assistance drafting such a policy, please feel free to contact any of our attorneys.

Edited by Coby M. Turner.

Seyfarth Synopsis: Governor Jerry Brown recently signed pay equity legislation to build on SB 358, a gender pay equity bill that he signed just last year.

Recent state pay equity initiatives (in Massachusetts, New Jersey, New York) have focused on gender. California is different. Leave it to the state that last year passed the nation’s strictest pay equity law as to gender to take it up another notch.  SB 1063, dubbed the “Wage Equality Act of 2016,” extends last year’s Fair Pay Act amendments to Labor Code section 1197.5 to cover unequal pay as to race and ethnicity. Thus, effective January 1, 2017, California employers must not pay employees a wage rate less than the rate paid to employees of a different race or ethnicity for substantially similar work. (Read our prior alert for a description of the Act’s requirements and prohibitions.) Meanwhile, newly enacted AB 1676 will prohibit employers from using an employee’s prior salary as the sole basis to justify a pay disparity. In the process, however, California has declined to follow the Massachusetts example of forbidding employer inquiries into an applicant’s prior salary.

SB 1063 was introduced in February 16, 2016, just four months after Governor Jerry Brown signed into law SB 358 (one of the nation’s most aggressive gender pay equity bills). The move to include race and ethnicity was foreshadowed last summer when the California National Organization of Women—sponsor of this year’s bill—opposed the Fair Pay Act (SB 358) for its failure to include pay equity protections for various additional categories protected by anti-discrimination laws (such as race, ethnicity, sexual orientation, gender identity, and disability status).

Senator Hall, who authored the Wage Equality Act of 2016, justified the opposition by saying that “the 65 year old California Equal Pay Act fails to include one of the largest factors for wage inequity—race and ethnicity.” Senator Hall cited a 2013 study by the American Association of University Women reporting that “Asian American women make 90 cents, African American women make 64 cents, and Hispanic or Latina women make just 54 cents for every dollar that a Caucasian man earns. The wage gap isn’t only between men and women, as African American men earn just 75% of the average salary of a Caucasian male worker.”

Opponents of SB 1063 objected that it would go too far, too fast: SB 358 is still in its infancy,with its standards likely to be tested over the next several years in litigation. Therefore, the opponents argued, “the legislature should allow time for employees, employers, and the courts to interpret and implement the new boundaries of the equal pay law before seeking to amend and expand it even further.” Opponents also noted that employees have other ways to challenge pay discrimination. The Fair Employment and Housing Act already prohibits discrimination against people in many classifications, including race and ethnicity.

AB 1676, which was passed concurrently with SB 1063, will amend Section 1197.5 (the same section SB 1063 amends) to prohibit employers from using prior salary as the sole justification for a pay disparity. In its original proposed form, AB 1676 would have prohibited employers from seeking an applicant’s salary history information, just as its vetoed predecessor, AB 1017, had attempted to do last year. In vetoing AB 1017, Governor Brown stated that further gender pay equity changes should wait until we see how SB 358 plays out. The removal of any ban on asking about salary history likely made AB 1676 palatable to the Governor, and kept California from matching the new Massachusetts law, which prohibits Massachusetts employers from requesting an applicant’s pay history, unless the applicant has voluntarily disclosed that information.

What’s an employer to do? First, self-assess where your company is on pay equity. If you’ve not analyzed the issue before, conducting a proactive pay equity analysis could be the first and best step to take to achieve fair pay and diminish legal risk. Through the use of statistical models and analyses (conducted by a labor economist), employers can test the extent to which permissible factors explain existing pay differentials. This “look under the hood” is especially important for companies considering making public proclamations about the company’s state of pay equity. With SB 1063 now looming on the horizon, companies should not limit these analyses to gender. Engaging legal counsel to direct and conduct this work under attorney-client privilege minimizes risk that this analysis and related deliberations might be discovered in litigation. Even companies that are well-versed in pay equity are wise to revisit the issue with an eye to race and ethnicity. And all companies should review their written policies, practices, and hiring, promotion, and compensation factors to ensure that all comply with the requirements of the California Fair Pay Act.

Join members of Seyfarth’s Pay Equity Group and top labor economists on November 30 for a robust discussion around strategies for navigating the complexities of “pay equity”.

(with apologies to the song artist)

Seyfarth Synopsis: The Ninth Circuit has suggested it might upset longstanding “on call” practices by making California employers liable for “reporting time” pay to employees who phone in ahead of their schedule, only to find that they are not needed for the day.

On October 5, 2016, a Ninth Circuit panel indicated that it might call on the California Supreme Court to answer whether “calling in” to work amounts to “reporting for work” under California’s Wage Order 7-2001. The panel, in Case No. 15-56162 (9th Cir.), considered an interlocutory appeal from a decision by federal district court judge George H. Wu in the case Casas v. Victoria’s Secret Stores, LLC, CV 14-6412 (C.D. Cal).

Casas involves an on-call scheduling practice common among retailers: “on-call” employees call in a few hours before the scheduled start time to see if they need to appear for work.  Plaintiffs argued that this required act of picking up the phone amounts to “reporting” for work under Wage Order 7’s Reporting Time Pay provision. To Plaintiffs, this means that employers who fail to use call-in employees must pay reporting-time pay (subject to some exceptions). The rules on reporting pay generally provide that an employee who reports for work, but who is not put to work or is furnished less than one-half the usual or scheduled day’s work, is entitled to at least two hours and up to four hours of reporting-time pay.

In December 2014, Judge Wu rejected this “call-in” claim. Judge Wu relied on both the common meaning of “report” and the legislative history of Wage Order 7 to hold that to “report for work” plainly means to physically appear at the work site. Thus, contrary to Plaintiffs, simply lifting a receiver or tapping a touchscreen does not require the employer to pay reporting time when the on-call employee never actually shows up for work.

The Plaintiffs took an interlocutory appeal to the Ninth Circuit.

Will the Ninth Circuit put the call on hold? At oral argument, a panel of Ninth Circuit judges indicated that the panel might, for all practical purposes, place Judge Wu’s decision on hold. Pregerson, Noonan, and Paez—the three circuit court judges who took the line from Judge Wu—expressed skepticism that federal court is the appropriate venue to decide the on-call issue. Both Judges Paez and Pregerson repeatedly suggested transferring the call to the California Supreme Court. Judge Paez went so far as to iterate the statutory certification standard—that federal courts should certify important questions of state law to the state supreme court—and concluded that “this in my view, it seems to me, like a very important question that affects a lot of people.” These statements suggest that it is possible, if not likely, that the panel will call on the California Supreme Court for its guidance as to what California law is on this topic.

But will the Supreme Court accept a transfer? As Judge Paez recognized, even though the Ninth Circuit might put in a call for help, nothing requires the California Supreme Court to answer. Nonetheless, Judge Paez seems confident the Supreme Court will take the call since it has accepted other related employment cases from the Ninth Circuit in the past (including, for example, Oracle and Kilby).

Legislatures, could you help them place the call? Regardless of the Ninth Circuit’s actions, the switchboards of legislative bodies could light up in the coming year with calls to regulate on-call scheduling. As reported in this blog, just last year San Francisco became the first jurisdiction to penalize employers for not using employees scheduled for “on-call” shifts. Under the so-called Workers Bill of Rights, when employers require employees to be available for work but do not actually engage the employee, employers must pay the employee between two and four hours of pay, depending on the duration of the on-call shift.

The California Legislature considered similar legislation in its most recent session. Like the San Francisco ordinance, subject to certain exceptions, it would have required employers to pay on-call employees who were not ultimately called in to work their shifts.  The legislation did not pass,  but it seems likely that the legislative initiatives—at both the municipal and state level—will not end the matter.

Call me (call me) on the line, Call me (call me) any, anytime. The bottom line is that at least for now, Judge Wu’s well-reasoned decision is good law. But be sure to dial up this blog in the coming months to see if that number remains in good working order. We’ll be holding on the line to monitor the messages that courts and legislative bodies leave for employers wishing to continue the time-honored tradition of on-call scheduling.

Seyfarth Synopsis: Does carrying a pager nullify a rest break? What about the possibility of being tapped on the shoulder by your boss? Or being called on your cell phone? The California Supreme Court considered these and other scenarios during an hour-long oral argument on September 29, as it asked, What does it mean to not “work” during a rest break? Although the question seems straightforward, the answer does not yet seem clear to the justices.

The case is called Augustus v. ABM Security Services Inc., S224853. We previously blogged about this important case here.

Though rest breaks are paid, Labor Code Section 226.7 prohibits employers from requiring “work” during those breaks. The trial court found that ABM owed damages—almost $90 million—to a class of 14,000 security guards, some of whom had to carry radios during rest breaks. The trial court’s broad rule—“if you are on call, you are not on break”—was reversed by the Court of Appeal, which said that “remaining available to work is not the same as performing work.” The consequence of not providing a rest break is an extra hour of pay for each day in which a break was not provided.

From the oral argument, it appears that the justices are struggling with how to craft a rule for what counts as “work” that would not, in Justice Goodwin H. Liu’s words, be a “recipe for litigation.” The justices actively questioned counsel for both sides, leaving it unclear whether a majority agreed with ABM’s position that simply being on call is not work, or with the plaintiffs’ position that any requirement (e.g., listen for your pager) would prevent an employee from putting on a “sleep mask” and headphones, and would nullify the entire rest break.

The justices explored whether there should be a distinction between (1) the mere potential of being called back to work during a break and (2) a requirement that employees be easily reachable during a break. And Justice Liu, who seemed most skeptical of ABM’s position, repeatedly asked whether employees could be disciplined for refusing to answer a summons to return from a break.

While it remains to be seen what rule the high court ultimately crafts, here are the main options raised in briefing and at oral argument:

  • Any possibility of “fetching” or “hailing” nullifies a break: this least employer-friendly position, adopted by the trial court, was met with skepticism by Justice Leondra L. Krueger and others. Justice Liu, however, asked both sides why there should not be a blanket prohibition of employers contacting employees during rest breaks. This rule would have the virtue of “simplicity.” ABM responded that this would be a “really bad rule,” and plaintiffs did not vigorously defend Justice Liu’s proposal either, acknowledging that employers may have emergency reasons for calling an employee back.
  • The Brinker rule: Plaintiffs proposed the standard set in Brinker for meal breaks: an employer provides a compliant break “if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted [10]-minute break, and does not impede or discourage them from doing so.” On-call time would not satisfy Brinker, Plaintiffs argued, because being “on call” is a “duty.”

It’s unclear whether this rule could garner a majority. Justice Werdegar (Brinker’s author) pointed out that the “relieved of all duty” requirement governing meal breaks is absent from the rest break statute, and that rest breaks are paid. At the same time, though, she and other justices asked ABM why the Brinker rule could not also apply to rest breaks.

  • Being on-call does not nullify a break: this employer-friendly position, adopted by the Court of Appeal, was advocated by ABM. The justices did not explicitly mention the appellate court’s opinion during oral argument. At one point, however, the Chief Justice did remark that being on call seems like “work,” to which ABM responded by explaining that “work” is the actual performance of duties, not being available to perform them.

When asked specifically what overarching rule the Court should craft, ABM advocated a hybrid of Brinker and Mendiola (which held that on-call time must be paid). Under ABM’s proposed rule, an on-call rest break would be valid if the employee was given a “reasonable opportunity for an uninterrupted break,” during which the employee could engage in personal activities. Carrying a pager could ease any restrictions on an employee’s mobility, ABM pointed out, and would thus satisfy its proposed rule.  This rule would have the merit of distinguishing true rest breaks from “sham breaks” that are frequently interrupted in practice.

  • The “Liu “presumption”: Justice Liu, after calling ABM’s rule something that “sounds reasonable” but that is hard to implement in practice, proposed a presumption that a break is compliant if there is no on-call policy, if employees are free to do what they want, and if there is a “policy and practice” of not interrupting breaks unless there is an emergency. The other justices did not pick up on Justice Liu’s proposal.

The Supreme Court’s decision is expected within the next 90 days (by December 27). We will share a full analysis of the decision as soon as it is issued.

Edited by Michael A. Wahlander.

We are delighted to announce that yours truly—Seyfarth’s beloved CalPeculiarities Employment Law Blog—has just won a place among the Top 100 Legal Blogs on the web.

We are humbled by this honor, and know we owe it to you: the readers who keep us on our toes!

We are extremely grateful for your continued support. Please continue to let us know how we can serve you best!

The CalPecs Blog Team