ACC - San Diego 2007 Wage-Hour Update

Transcription

1 ACC - San Diego 2007 Wage-Hour Update Laura K. Licht PWSP LLP

2 Any Breaks for Employers? U.S. Supreme Court Cases Murphy v. Kenneth Cole Exempt Classification Update Wage-Hour Litigation Trends What s Ahead?

3 Wage-Hour Cases in the U.S. Supreme Court Long Island Care v. Coke (June 11, 2007) FLSA Companionship Services exemption Review denied: Aberdeen v. Senger (8 th Circuit): Is overtime owed when substitutes cover shifts? No FLSA cases on docket

4 Meal/Rest Rules: Labor Code 512 Meal Periods: Employer must provide 30 minutes unpaid Employer must keep records 5 hour rule Second meal period if employee works 10 hours Rest Periods: Net ten minutes every four hours Employer must authorize and permit No documentation requirement White v. Starbucks (N.D. Cal. July 2007, J. Walker) provide means to offer, not to ensure No claim unless forced to forego Outcome may differ in other courts

5 Consequences of Violation Labor Code sanction one hour of additional pay for each workday that the meal or rest period is not provided Open questions (prior to Kenneth Cole) One year or three year statute of limitations (penalty v. wage)? One hour pay maximum per day? any employee

6 Murphy v. Kenneth Cole Plaintiff was a retail store manager Filed DLSE claim seeking overtime and waiting time penalties Employer appealed to Superior Court, which conducted de novo trial Superior Court awarded judgment to plaintiff on all (even new) claims, applying 3 year statute to meal/rest claim Court of Appeal reversed in part Held that meal/rest sanctions were penalties subject to one year statute of limitations Held that claims could not be raised for the first time at de novo appeal from Labor Commissioner ruling

7 Murphy v. Kenneth Cole (cont.) California Supreme Court issued opinion in April 2007 Prior split in California Appellate Districts Holding: Sanction payments are wages (3 year statute) Affirmative duty to pay for violation De novo trials may include additional related wage claims DLSE Manual Revision: Payments for violation not included in the regular rate of pay (8)

8 Best Practices re Meal/Rest Breaks Review Policies/Postings Are stated meal/rest policies consistent with California law? Are meal/rest requirements clearly stated in handbook? Are requirements discussed with new hires? Is appropriate IWC Order properly posted? Are employee acknowledgements used as part of timekeeping procedures? Is a lock-out system appropriate?

9 Best Practices re Meal/Rest Breaks Review Payroll System Are meal periods being recorded? When a meal period is not recorded, is sanction payment self-effectuating? How many automatic sanction payments per day? Are the sanction payments being identified and treated as wages? Is sanction paid at the regular rate Are sanction payments included in final pay? Does payroll system have rounding practices? Does payroll system count sanction payment as hours worked

10 Best Practices re Meal/Rest Breaks Training Train supervisors and managers on legal requirements Monitor performance for compliance Vigilance Follow up on any complaints/rumors that proper meal/rest breaks are not afforded Monitor claims brought against competitors or neighboring businesses Consider using Kenneth Cole decision as a rationale for broader classification review

11 Exemption Hotspots Executive Exemption Claims by Retail General Managers gaining traction in class actions Administrative Exemption Expect more cases regarding the production/administrative dichotomy (Eicher) Carefully review high-salaried employees IT Employees Are there alternatives to the computer professionals exemption?

12 The Production/Administrative Dichotomy Revisited First Bell v. Farmers Insurance Exchange, 87 Cal. App. 4th 805 (2001). Now Eicher,151 Cal. App. 4 th 1363 (June 12, 2007) Employer s product was computer software Plaintiff was Implementation Specialist ; he implemented software at customer venues and provided high-level technical support Court found that employee did not have the capacity to personally affect company policy, and his contribution was part of employer s product Court found that plaintiff was not an exempt administrative employee

13 Any Classification Alternatives for IT Personnel? California s Computer Professionals Exemption does not cover many: $49.77 for every hour worked ($103,521 annually, if 40 hour workweek) Limited to software employees Requires high-level work involving exercise of significant discretion and independent judgment Routine system maintenance, upgrades and troubleshooting does not qualify Administrative Exemption may be useful for employers not in the business of software development Professional Exemption: A new (relaxed) standard? Executive Exemption requires >50% supervisory work

14 What To Do? Regularly evaluate jobs Maintain/distribute accurate job descriptions Clearly define job duties and expectations Consider acknowledgment procedures Properly classify new-hires Reclassify? (Was held to be a factor supporting class certification in Sav-on) Identify triggering event Change and reissue job descriptions with restructured duties Separate exempt and non-exempt functions Concentrate exempt duties in positions likely to be exempt Use promotions as opportunity to reclassify

15 Current Trends in Wage-Hour Litigation Arias case may increase PAGA claims Class action filings have not slowed Exemption litigation continues, and more highly paid professionals are being targeted Litigation on technical violations increasing Bar for certification lower after Sav-on Wage-hour issues are frequently raised in individual termination disputes Questions: Can an employee waive the right to bring a wage-hour class action? Is insurance coverage available for wage-hour class actions?

16 Remember PAGA? Private Attorneys General Act (a.k.a. the Bounty Hunter Law) Codified in Labor Code Section 2698 et seq. (2004) Private recovery of penalties and attorneys fees for any Labor Code violation No requirement of harm or damage Default penalty of $100/employee/pay period (for initial violation); then $200 for subsequent violations Employee keeps 25%; State receives 75% 1 year statute of limitations for penalties (CCP 340(a))

17 PAGA (cont.) Administrative Exhaustion Requirement Pre-litigation written notice to both employer and L&WDA required L&WDA to notify employer within 30 days if it will not investigate Most cases (until recently) still being filed without administrative exhaustion

18 Arias v. Superior Court Court of Appeal (Third District), July 24, 2007 Representative claims under PAGA do not need to meet class action requirements Intent of PAGA was to penalize violators, not provide restitution to aggrieved employees Representative claims under Unfair Competition Law ( 17200) must be brought under class action provisions of CCP Proposition 64 (2004) But watch: Amalgamated Transit Union (review granted)

19 Sav-on Aftermath Several trial court judges have used discretion to deny certification in wage-hour cases, including: Domino s Pizza (J. Selna, C.D. Cal.) Islands Restaurants (J. Sundvold, OC Superior) Pottery Barn Kids (J. Sabraw, Alameda Superior) Cedant (M. James, N.D. Cal.) KB Homes (J. Snyder, C.D. Cal.)

20 Class Action Trends Appellate Courts are beginning to rein-in overbroad certification rulings, and affirm denials Walsh v. IKON (1 st DCA) Dunbar v. Albertsons (1 st DCA) But many of these opinions are unpublished Coburn v. Albertsons (2 nd DCA) Lin v. Bell Gardens (2 nd DCA) Hobbs v. Roth Staffing (4 th DCA) Diaz v. Mayer Roofing (4 th DCA)

21 Class Action Trends But other trial courts are using discretion to certify expansive overtime classes E.g., all of Defendant s exempt employees Kinkos (N.D. Cal.) Rite Aid (N.D. Cal) And some appellate courts are taking discretion away from the trial court by reversing certification denials Aguiar v. Cintas (2 nd DCA) Barboza v. West Coast Digital (2 nd DCA) Stevenson v. Cal. Security (3 rd DCA) Clymer v. Candle Acquisition (2 nd DCA) Parris v. Lowe s (2 nd DCA)

22 Class Action Outlook At trial court level, luck of the draw Know your judge Decide early what venue options are Some employer victories are emerging But are increasingly reversed on appeal Large judgments and settlements are still big news, fueling new cases Wal-Mart: over $172 million (punitives of $115 million and premium payments of $57 million in meal/rest case) UPS Settlement: $87 million (meal/rest) IBM Settlement: $65 million (IT workers)

23 Additional Class Action Issues Pre-certification discovery: Belaire-West 2nd DCA, April 2007 Request for names and contact information for all current and former employees Proposed notice with opt-out option Privacy rights protected; disclosure ordered Settlement Approval: Kakani v. Oracle N.D. Cal., June 2007 (J. Alsup) Settlement approval denied where new class, broad release, and claims-made settlement proposed

24 Wage-Hour Class Action Waivers Koenig v. U-Haul (2 nd DCA 2006) Upheld a mandatory employment arbitration agreement and class action waiver Gentry v. Superior Court (Circuit City Stores) (2 nd DCA 2006), review granted. Employer sought to compel arbitration of Store Manager s wage-hour class action Arbitration agreement contained class action Employee given 30-day opt-out right Appellate court: agreement enforceable Supreme Court ruling expected within several weeks

25 Insurance Coverage For California Wage-Hour Litigation Insurers routinely deny coverage, citing FLSA exclusion No published decisions Pillsbury attorneys have obtained coverage in several cases Mimi s Café v. Select Insurance (4th DCA; unpublished opinion) Del Taco v. National Union (AAA Decision, 2006) Lesson: Carefully evaluate policies and consider pursuing denied claims

26 Looking Ahead Minimum wage will increase again on January 1, 2008 No end in sight for wage-hour class actions Watch for important California Supreme Court decisions (expected in September): Profit-based bonus plans (Ralph s) Class action waivers (Gentry) Will confessing problems to the Labor Commissioner become the best way to obtain absolution?

27 ACC - San Diego 2007 Wage-Hour Update Laura K. Licht PWSP LLP