San Francisco Minimum Wage Going UP

1/1/09 - the SF Minimum Wage increases to $9.79. And let's not forget that poster! Here's a free one. The $9.79 minimum applies to all private sector employers. But city government contractors have a higher minimum wage $11.54. And here is your poster, government contractor! Happy new year anyway.

Court of Appeal: Employer Must Disclose Classmember Info Even Over Their Objection?

The general trend has been that the courts do not mind -- at all -- if employees' names and addresses are disclosed to plaintiffs' attorneys in class action cases. The most an employer can hope for is the right to send out an "opt out" form before disclosure, where employees must affirmatively deny their consent to release the information.

Well Crab Addison (operator of Joe's Crab Shack) decided to go one better: send out the "opt-out" form to all employees before it was required to disclose the information in discovery, but without specifically discussing the lawsuit at issue. Here's the form:

From time to time, Joe’s Crab Shack (the “Company”) may be asked to provide your contact information, including your home address and telephone number, to third parties. The Company may be asked to provide such information in the context of legal proceedings, including class action lawsuits.

We understand that many employees may consider this information to be private and may not want it released. Accordingly, please indicate whether you consent to the disclosure of your contact information by marking the appropriate box.
__ No, I do not consent to the Company’s disclosure of my contact information to third parties.
__ Yes, I consent to the Company’s disclosure of my contact information to third parties.
__ I would like to be asked on a case-by-case basis whether I consent to the disclosure of my contact information to a particular third party, and my contact information should only be provided if I affirmatively consent in writing.

No sale, said the Court of Appeal, affirming the trial court:

to the extent the right to privacy is based on the release forms, there are strong reasons for not giving effect to those forms. Employees indicating that they did not want their contact information disclosed, or wanted disclosure on a case-by-case basis, were unaware at the time they signed the forms of the pending litigation to enforce their statutory wage and overtime rights through a class action lawsuit. We may presume that, had they known about the litigation, their response on the form would have been different. Additionally, the forms apprised them that their contact information could be disclosed if required by law, so they were aware of the limitation on privacy offered by the forms.

So, nice try. With a proper disclosure about any existing litigation, it's possible such a form could be given more deference by a court. But the courts seem unreceptive to efforts to preclude plaintiffs from contacting employees.

The case is Crab Addison, Inc. v. Superior Court and the opinion is here.

Court of Appeal: How to Calculate Overtime on a Bonus

The First District Court of Appeal held that Costco properly calculated overtime on a production bonus in Marin v. Costco, opinion here.

I am frequently asked how bonuses and commissions affect overtime calculations. Basically, the "half time" (or whole-time in the case of double-time overtime) is due on the bonus, once the bonus is allocated to the hours that were necessary to generate it. You worked 1000 total hours including 20 overtime hours during a bonus period. The bonus is $2000. The incremental hourly rate is $2000/1000 hours = $2.00 per hour. That is the amount of wages on which no overtime previously was paid. So, you owe: 1/2 * $2.00 per hour * 20 overtime hours worked = $20.00.

Get it? The court of appeal did. That's the federal formula, and the formula the DLSE endorses. The court did not mention that California law endorses the use of federal overtime calculation rules. But it does. The plaintiffs wanted the overtime to be calculated by dividing the bonus over the straight time hours and then paying time and one-half on that figure. That would have resulted in double counting. In addition, it would have ignored the simple fact that the employee had to work all hours to earn the bonus - straight plus overtime.

So, if your eyes are crossed, welcome to wage and hour law. The opinion is linked above. It's got a detailed explanation of the rule and the arguments in favor and against.

Enjoy your holiday!


New FMLA poster

Merry Christmas from the US DOL. Here's your new FMLA poster, necessary for complying
with the new regulations when they become effective next month.

Merry Christmas / Happy Chanukah / Happy Kwanzaa! Happy New Year, too.


Court of Appeal: No Defense Attorneys' Fees for Frivolous Claims?

The Court of Appeal agreed with the district court that Laura Young's FEHA claim for harassment against her former supervisor was frivolous, vexatious, etc. The trial court, however, awarded only one dollar in attorneys' fees against Young. The court's rationale was that since employer Exxon was going to pay the supervisor's fees, and since Exxon did not complain that the action against Exxon itself was frivolous, the court should not award fees that Exxon would ultimately recover.

Does that make a lot of sense? Yes, but only if you're gutting the attorneys' fees statute. Employers are responsible to pay for employees' defense costs under Labor Code section 2802, unless the employee is found to have engaged in actual unlawful harassment. So, a frivolous claim against an employee by implication is part of the claim against the employer, no? And given most claims against individual managers are barred as a matter of law, and given awards of attorneys' fees are as rare as hen's teeth anyway, one would think that a court would want to give effect to the Legislature's decision to permit an award of attorneys' fees when claims are frivolous. Right?

No. The court of appeal agreed with the trial court and held that where, as in this case, the employer is paying an individual employee's defense costs, the trial court need not award attorneys' fees if the claim against the employer is not frivolous. You don't believe me? Here's the quote:
In short, despite its finding that Young’s case against Lopez was frivolous and vexatious, the trial court had the discretion to deny attorney fees to Lopez. Because the award would benefit only Exxon, a defendant which was not otherwise entitled to an award and which did not show it incurred any significant fees on Lopez’s behalf that it would not have incurred in any event, we see no abuse of discretion in the trial court’s decision.

By the way, the attorneys' fees statute, Government Code section 12965(b) is very simple and says nothing about differing standards for employers and employees.
In actions brought under this section,the court, in its discretion, may award to the prevailing party reasonable attorney's fees and costs, including expert witness fees, except where the action is filed by a public agency or a public official, acting in an official capacity.
The statute says nothing about basing awards on who pays the fees. I know it says "discretion," but the courts have held that prevailing plaintiffs are generally entitled to fees as a matter of right, while prevailing defendants have a heavy burden to establish the claims were "frivolous, unreasonable, or without foundation." I think the courts may have lost sight of the plain language of the statute over the years.

While I'm complaining, the Court of Appeal also decided not to publish its analysis of Young's claims on the merits. That means the bar will not benefit from the court's detailed analysis of Young's claims for discrimination, harassment, retaliation, etc. The decision should be published if only because Young claimed a mental disability and that her outbursts and conduct in violation of policy were attributable to the disability. The Court distinguished Gambini v. Total Renal Care, discussed here, and held that Young's disability did not exempt her from termination for her misconduct.

Anyway, I'm sure Exxon is happy to have won the case. But there was a dark lining in a silver cloud that may affect employment litigation for the rest of us. The opinion in Young v. Exxon is here.

Court of Appeal: Summary Judgment Against Plaintiffs Challenging Starbucks' Application

California employers cannot ask applicants to disclose certain convictions for marijuana-related misdemeanors that are more than two years old. Starbucks knew that, and included a disclaimer on the back of its application, viz:

CALIFORNIA APPLICANTS ONLY: Applicant may omit any convictions for the possession of marijuana (except for convictions for the possessions of marijuana on school grounds or possession of concentrated cannabis) that are more than two (2) years old, and any information concerning a referral to, and participation in, any pretrial or post trial diversion program.”

Although that may read like a proper disclaimer, it was included in a larger paragraph of disclaimers located away from the general convictions question, which did not exclude such marijuana convictions. So, the California disclaimer did nothing to stop Erik Lords and his band of merry putative classmembers from filing suit, claiming the application form was defective. Erik and co. wanted about $26 million in penalties. Aggrieved applicants get a penalty of $200 or actual damages for faulty applications.

The court of appeal agreed with the trial court and the plaintiffs that the general disclaimer was improperly placed away from the general convictions question. Had the properly worded disclaimer been placed next to the conviction question, it would have been legally correct, the court said.

But the court of appeal detected a couple of problems with Lords' prayer. [I kill me]. First of all, none of the named plaintiffs had a marijuana conviction. Second, all had read the allegedly hidden language. Third, none was denied employment because of a wrongfully disclosed conviction.

So, the court said:

We see nothing in the statute to support plaintiffs’ claim that the Legislature ntended to protect the privacy interests of job applicants who had no marijuana convictions in their background. As we explain below, we decline to adopt an interpretation that would turn the statute into a veritable financial bonanza for litigants like plaintiffs who had no fear of stigmatizing marijuana convictions.
The case is Lords v. Starbucks and the opinion is here.

No Punitive Damages for Meal and Rest Period Violations

While the wage and hour world waits for the Walmart decision, in which the court awarded roughly $170 million in meal period premiums, penalties and punitive damages. the other courts are working away.

Wait no longer. Ms. Brewer is a waitress at Cottonwood golf resort's restaurant. She sued for meal and break violations among a smorgasbord of other employment claims. She lost on her age discrimination claims. But she won on some Labor Code violations. The jury also awarded her punitive damages, over and above the meal and break premiums, penalties for improper wage statements, etc. (I bet you thought I was going to make food puns throughout this post, didn't you?)

The court of appeal reversed on punitive damages. The court decided that the Labor Code creates new rights not available at common law. Therefore, their remedies are exclusive. The court also held that a claim for unpaid meal periods and other Labor Code violations "arise" out of contract - the employment relationship. As such, punitive damages are not available as a matter of law.

Here's a long quote from the opinion to prove I read it, or at least that I know how to cut and paste:

We agree with Cottonwood’s contention, which Brewer does not dispute on appeal, that the Labor Code statutes regulating pay stubs (§ 226) and minimum wages (§ 1197.1) create new rights and obligations not previously existing in the common law. Moreover, those same statutes provide express statutory remedies, including penalties for the violation of those statutes that are punitive in nature, that are available when an employer has violated those provisions. Section 226, subdivision (e), provides that any employee “suffering injury as a result of a knowing and intentional failure by an employer to comply with [the pay stub requirements] is entitled to recover the greater of all actual damages or fifty dollars ($50) for the initial pay period in which a violation occurs and one hundred dollars ($100) per employee for each violation in a subsequent pay period, not exceeding an aggregate penalty of four thousand dollars ($4,000), and is entitled to an award of costs and reasonable attorney’s fees.” Similarly, section 1197.1, subdivision (a) provides that any employer who pays or causes to be paid to any employee a wage less than the minimum wage “shall be subject to a civil penalty as follows: [¶] (1) For any initial
violation that is intentionally committed, one hundred dollars ($100) for each underpaid employee for each pay period for which the employee is underpaid[;]
[¶] (2) For each subsequent violation for the same specific offense, two hundred fifty dollars ($250) for each underpaid employee for each pay period for which the employee is underpaid regardless of whether the initial violation is intentionally committed.” Here, Brewer sought and recovered the maximum $4,000 penalty available for Cottonwood’s pay stub violations, and the judgment contained an additional penalty of $15,300 pursuant to section 1197.1 for the overtime violations. We are not persuaded by Brewer’s argument that the remedies set forth in the statutory scheme were not intended to be the exclusive remedy available for statutory violations, and Brewer does not articulate any basis for concluding those penalties are so inadequate that other remedies should be permitted. Similarly, the
regulations requiring employers to provide meal breaks (§ 512) and rest breaks
(Cal. Code Regs., tit. 8, § 11090, subd. 12(A)), and providing numerous forms of
remedies for their violation, also appear to have created new rights and obligations not previously existing in the common law, and the statutory scheme provides “a comprehensive and detailed remedial scheme for its enforcement.” (Rojo v. Kliger, supra, 52 Cal.3d at p. 79.) Those remedies include an award in the nature of liquidated damages under section 226.7 (cf. Murphy v. Kenneth Cole
Productions, Inc. (2007) 40 Cal.4th 1094, 1112 [because “damages [from missed
meal and rest breaks] are obscure and difficult to prove, the Legislature may
select an amount of compensation [for the violation] without converting that
remedy into a penalty” for statute of limitations purposes]), injunctive relief
(see generally § 1194.5), and potential statutory penalties (see § 558). We are convinced that, because the meal and rest break provisions of the Labor Code “established a new and comprehensive set of rights and remedies for [employees]… [and] [n]o such specialized rights and remedies existed at common law… the remedy provided in the statute ‘is exclusive of all others unless the statutory remedy is inadequate.’ [Quoting Turnbull, supra, 219 Cal.App.3d at p. 827.]” (De Anza Santa Cruz Mobile Estates Homeowners Assn. v. De Anza Santa Cruz Mobile Estates, supra, 94 Cal.App.4th at p. 916.)

* * *
We are also convinced that, even were the remedies provided by the statutory scheme not the exclusive remedies for the new rights, punitive damages would nevertheless be unavailable because punitive damages are ordinarily limited to actions “for the breach of an obligation not arising from contract” (Civ. Code, § 3294), and Brewer’s claims for unpaid wages and unprovided meal/rest breaks arise from rights based on her employment contract. Brewer argues, without citation to relevant authority, that Cottonwood’s breach of its statutory obligations under the Labor Code is a “breach of an obligation not arising from contract,” thereby supporting the award of punitive damages.

However, in analogous situations, the courts have recognized that, when a statute imposes additional obligations on an underlying contractual relationship, a breach of the statutory obligation is a breach of contract that will not support tort damages beyond those contained in the statute.(See, e.g., Kwan v. Mercedes-Benz of North America, Inc. (1994) 23 Cal.App.4th 174, 187–192 [breach of Consumer Warranty law obligations is breach of contract and does not support tort damages for emotional distress].) We apprehend the Labor Code provisions governing meal and rest breaks, minimum wages, and accurate pay stubs constitute statutory obligations imposed only when the parties have entered into an employment contract and are obligations arising from the employment contract. The breach of an obligation arising out of an
employment contract, even when the obligation is implied in law, permits contractual damages but does not support tort recoveries. (Cf. Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 700.) Although Brewer relies on language from Gould v. Maryland Sound Industries, Inc. (1995) 31 Cal.App.4th 1137, 1147 to assert prompt payment of wages involves sufficiently fundamental public polices that the willful failure to make such payments will support punitive damages, the court in Gould expressly recognized that, although a claim for wrongful discharge in violation of public policy would state a tort claim, a claim seeking tort recoveries based on the allegation the employer otherwise breached the employment contract agreement was barred by Foley. (Gould, at p. 1155.)

The case is Brewer v. Premier Golf Properties and the opinion is here.

IRS Standard Mileage Rate for 2009: $0.55 Per Mile

The IRS announced the standard mileage rates for 2009. Effective January 1, 2009, the reimbursement rate will be $0.55 for business use of a vehicle, $0.24 for moving and medical expenses, and $0.14 for service to charitable organizations. For the second half of 2008, the reimbursement rate actually was higher, at $0.585.

The IRS's announcement is here.