Meal and Rest Periods -- We're Still Waiting on the Supreme Court

In California employers must comply with many rules not found in other states, including rules related to meal and rest periods.  Several years ago the law was modified so that employers who did not provide a meal or rest period to employees were penalized.  The penalty, known euphemistically as a "premium" is calculated at one hour of the employee's wage.  In addition, the courts concluded that failing to pay the premium by the time the worker's employment terminated gave rise to wating period penalties -- calculated at the employee's daily rate of pay -- for up to 30 days.  Failure to pay the "premium" also gave rise to a claim for attorneys' fees. 

In 2008 in Brinker v. Superior Court (Hohnbaum), a Court of Appeal concluded that the employer's responsibility was not to ensure meal and rest periods were taken, but simply to provide them.  If an employee chose not to take a meal or rest period, the employee could not later sue his/her employer for failing to provide the meal or rest period.  Of course, the court said that if the employer interfered with the employee's right to take a meal or rest period then the employer would be subject to the "premium." 
In October of 2008, the California Supreme Court granted review of the Court of Appeal decision.  This means that the appellate decision in Brinker is not controlling law, nor can it be cited as legal authority.  Of course, this has complicated the situation in California.  For example, the Division of Labor Standards Enforcement ("DLSE") has taken the position that although Brinker has been decertified, it will still enforce the law in accordance with Brinker -- but do it according to other legal authorities.  Many employers are still wary, however, because they fear the Supreme Court will reverse the decision of the Court of Appeal and impose the penalties for situations where employees, of their own choosing, did not take a meal or rest period. 

On May 10, 2011, another Court of Appeal ruled in the Lamps Plus Overtime Cases that employers must allow workers to take rest periods, but employers are not required to ensure that workers take them.  In other words, Lamps Plus agrees with the Court of Appeal in the Brinker case. 

The impact of these rulings is also substantial in another area -- attorneys' fees.  Attorneys love to file class action wage and hour cases.  If rest and meal periods are mandatory, it doesn't matter why the worker didn't take the rest or meal period.  The employer is liable under any circumstance.  This gives rise to a class action lawsuit since the predominant question will be whether workers missed meal or rest periods.  However, if a worker must prove why (s)he did not take a rest or meal period, the predominant question is why the employee missed it.  Every case is different.  It will depend on the particular circumstances of the case.  As a result, this type of case is not appropriate for class action status.  The poor lawyer doesn't get enough money.  Yes, I am sad too. 

Let's hope the Supreme Court issues an opinion soon in the Brinker case and puts this issue to rest.  Let's also hope the Court affirms the ruling of the Court of Appeal, which is well-reasoned.  If the employer interferes with the employee's right, it should pay the consequence.  However, if the employee chooses to skip a meal period, the employer should not be held to pay. 

A Pregnant Employee's "Secret" Emails Sinks Her Case

Consider the case of Gina Holmes, who sued her employer, Petrovich Development Company, asserting causes of action for sexual harassment, retaliation, wrongful termination, violation of privacy and intentional infliction of emotional distress.  (Holmes v. Petrovich Dev. Co., LLC 2011 DAR 671.)  Gina interviewed and was hired in June 2004.  In July 2004 she announced her pregnancy, her December 7th due date, and her intention to work until the due date, and take only six weeks of leave. 

The following month, the boss sent her an email discussing the need for qualified person to assist during her leave of absence.  Sh responded by stating she would be leaving about November 15th and possibly be gone four months, the maximum allowed in California. 

Understandably, the boss was confused and upset.  He asked Gina when she decided to leave earlier and be gone so much longer.  He felt that Gina was not honest with him.  Gina responded by explaining the difficulties she has had with pregnancies, and that she did not want to announce her pregnancy before she confirmed all was well -- also understandable. 

They appeared to settle the issue, with Gina expressing how much she enjoyed her job and wanted to stay, and the boss telling her he wanted her to stay.  However, later that day Gina sent an email to her lawyer complaining that she felt like an outcast and that the boss had forwarded her emails to others (with HR responsibilities) in the company.  She also set up a meeting with her lawyer.  After that meeting, Gina wrote another email to her boss telling him that she could not put the matter behind her and that she had no choice but to resign.  A few weeks later the lawyer filed a lawsuit on Gina's behalf. 

Gina lost the lawsuit and she appealed.  She claimed that the emails between she and her lawyer, made with the company computer, were protected by the attorney-client privilege and could not be used in the case.  The court disagreed with this claim.  The handbook notified employees that they do not have any right of privacy in the use of company computers, and that emails or other messages could be accessed by the company.  Gina waived any attorney-client privilege by communicating with her lawyer knowing that the communications could be reviewed by the company.  Such behavior is similar to consulting a lawyer in the employer's conference room, with the door wide open and speaking with a loud voice.  Gina's failure to communicate in confidence negated the attorney-client privilege. 

This is an important case for employers for a couple of reasons.  First, this case shows employers the importance of establishing policies and informing employees that their use of electronics, such as computers, can be monitored.  A password does not guarantee privacy.  The company can review anything an employee does on his/her computer. 

Another important lesson is for employers to watch what they say and do when an employee announces a pregnancy.  I have had the situation arise with multiple clients where an applicant is hired to fill a position just to announce, within weeks or even days, that she is pregnant and will need time off.  The law allows for this, whether or not it may be considered fair for an employer.  Address the issue of time off in an appropriate way.  If a substitute will be needed to fill in, try and determine when the leave might commence so you can take appropriate action to find and train the substitute. 

Will it be inconvenient to do this?  Yes.  Will it be more expensive?  Probably.  However, the bother and the cost is insignificant compared to a lawsuit.  Even if the employer wins, the employer spends a lot of time, money and energy to defend a lawsuit. 

Nevertheless, this is a great victory for employers.  A court has concluded that under the circumstances of this case, the employer's review and use of emails between the employee and her attorney were not privileged.  And the use of those emails greatly helped the employer prevail in this case. 

Waiting Period Penalties Can Come Back To Haunt An Employer

In California, failing to pay an employee all of his/her wages at the time of termination (or within three days in certain circumstances) results in waiting period penalties pursuant to Labor Code section 203.  This penalty, calculated at the employee's daily wage, grows each day the employee is not paid all wages, up to a maximum of 30 days. 

It is not uncommon to find an employer who fails to pay all wages at the time of termination.  For example, an employee might say, "I am leaving Tuesday but I will come back in on Friday to pick up my check."  Or an employer may fail to pay all accrued, but unused vacation.  Another common example is if the employer misclassified an employee as exempt and did not pay him/her overtime compensation.  In each of these examples, liability for waiting period penalties arises.  

Labor Code section 203(a) states that "the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid ...."  The Code of Civil Procedure, section 340(a) provides a one year statute for the recover of penalties. 

Labor Code section 203(b) states that an employee may sue for "penalties at any time before the expiration of the statute of limitations on an action for the wages from which the penalties arise."  Code of Civil Procedure section 338(a) contains a separate three-year statute of limitations for "an action upon a liability created by statue" such as unpaid wages.  

This is where it gets interesting.  Mr. Pineda was not paid until four days after termination of employment.  However, he was paid all wages due.  Those final wages were just late, by four days.  Therefore, Bank of America owed him four days of waiting period penalties.  Assuming Mr. Pineda earned $20 per hour and worked eight hours per day, the penalties totalled $640.  ($20 x 8 hrs) x 4 days = $640. 

Mr. Pineda could have gone to the Labor Commissioner and asked for his $640.  But he didn't.  He went to a lawyer who no doubt suggested filing a class action lawsuit.  Filing a class action lawsuit would not result in more money for Mr. Pineda; however, the lawyer was likely to get a lot more money.  Mr. Pineda's lawyer filed the lawsuit 18 months after the termination of Mr. Pineda's lawsuit. 

Here's the legal issue:  Does Mr. Pineda have three years in which to file a lawsuit, pursuant to Labor Code section 203(b), or because he is seeking a penalty only, must the lawsuit be filed within one year under 203(a)?  Unfortunately, the Supreme Court ruled that the three-year statute applies to all claims for waiting period penalties, whether or not the employee is also seeking unpaid wages.  (Yes, you noticed -- a $640 case made it all the way to the California Supreme Court.) 

What does this mean to employers?  It means that an employee can come back after you three years later for unpaid waiting period penalties.  It may also mean that the employer could face a class-action challenge.  Whether or not ultimately successful, the assertion of a class action lawsuit substantially increases the costs of litigation. 

Employers must scrutinize their pay practices.  Have you properly classified employees?  Do you pay overtime correctly?  Do you make rest and meal periods available?  Do you make seating available to employees who could reasonably sit and perform their duties?  Do your paycheck stubs include all of the required information?  Any small error in any of these areas could result in a claim against you.  Could you pay $640?  Of course.  But could you pay that cost multiplied by the number of employees in a similar situation?  And could you pay the attorneys' fees associated with the lawsuit?  That's a more difficult question. 

It Can Happen Anywhere -- Employees Claiming Hostile Work Environment

Perhaps it's karma or even justice.  The LA Daily Journal (a legal newspaper) reported on December 20, 2010, that an investigator who worked for a plaintiff's law firm filed a lawsuit alleging a hostile work environment.  She claims partners made derogatory comments about women, discussed porn at work, and even took some employees to a strip club after the firm's holiday party.  Allegedly, at the strip club, a partner purchased a lap dance for a co-worker about whom the plaintiff had complained.  The partner told him to imaging the dancer was the plaintiff. 

Of course, the law firm's counsel refuses to litigate the case in the media.  That's a great sound bite!  I'm sure, however, that the case will return to the media's spotlight, absent a settlement with a confidentiality clause. 

So what is important about this case?  A few things.  First, I think this case shows that allegations can be made against any employer.  No one is immune.  Perhaps, in fact, the businesses most likely to be sued are those who think they are above the fray. 

Second, employers must stop the stray comments from taking place at work.  In this case, if the allegations are true, the comments were more than "stray."  Hopefully, most businesses don't have employees with such loose lips.  However, any comment can get an employer in trouble. 

Consider the following scenario:  A supervisor tells a racy joke.  It's not too offensive and no one seems to take offense.  Perhaps over time employees are a little glib with one another and occasionally a racy or dirty joke is shared.  Again, no one seems bothered or offended by the joke.  But then an employee suffers some form of discipline or is otherwise dissatisfied with the job.  What happens then?  (S)he sues, claiming hostile work environment. 

As part of the discovery process in litigation, questions will be asked of both sides regarding sexual banter.  Typically, employer representatives can't remember specific jokes; although they remember occasional racy jokes.  In depositions they say, "Yes, I recall racy jokes in the workplace, but don't have any specific recollection about any of them." 

In contrast, a plaintiff can remember every joke with great detail.  (S)he will claim the jokes are made often and that she was offended.  (S)he never complained, however, because (s)he did not want to risk losing her job. 

Who will the jury believe?  The employees who don't have a recollection of the jokes, other than to admit they occurred, or the plaintiff who describes the jokes and other comments in great detail? 

Third, separate work from personal associations.  In this case, the plaintiff alleges law firm members hit the strip joint after the holiday party.  If true, can the firm argue the activities at the strip joint were unrelated to work?  It will be interesting to see how the facts play out.  But it's not smart to mingle work and personal associations if the activities pursued might lead to a claim of harassment or hostile work environment. 

I know, that kind of stuff doesn't happen at your workplace.  Ha!  It happens all of the time.  I can give you lots of examples of it happening right here in rural, conservative, staid Fresno.  Teach your supervisors and management team to separate personal lives, particularly if it includes strip bars, drinking or other questionable activities, from work. 

E-Discovery, The Stray Remarks Doctrine and Reid v. Google

Those of you who attended this morning's Legal Beagle Bagel Breakfast ("LBBB") enjoyed a great training course on the stray remarks doctrine and it's limited use in California courts.  Travis Stokes also discussed the California E-Discovery Rules, and how, between these rules and the court's ruling in Reid v. Google employers must be cautious with e-communications, and also routinely and in good faith destroy email communications. 

Participants of the LBBB wanted Travis to post some materials on this blog that will allow them to provide training to their employees regarding:  (1) The stray remarks in emails; (2) the discovery of electronic information; and (3) what an employer must do to avoid the affects of the court's decision in Reid v. Google.  Travis will comment to this blog with those training materials. 

If you are interested in attending our LBBB training courses, let me know and I will add you to our invitation list.  These are great training opportunities for anyone working in California HR. 

Just when you thought it couldn't get any more strange in CA -- Getting sued for not providing a chair!

Eugina Bright was a cashier at the 99 Cent Only Store.  Turns out she was upset the company did not provide her with a chair.  She claims that the nature of the work reasonably permitted the use of seats.  She complained to the State and notified the employer (undoubtably with the help of a lawyer or union) that a seat should be provided.  The company disagreed and refused to provide that seat. 

So Eugina sued under the CA Private Attorneys General Act of 2004 because she had to stand up at work.  This Act allows employees to seek penalties and attorneys' fees (that's the big kicker!) for violations of the Labor Code.  It sets forth a penalty schedule in certain cases of $100 for each employee per pay period for the initial violation and $200 for each aggrieved employee per pay period for each subsequent violation. 

The Court of Appeal ruled that a violation of "suitable seating" requirement of the Wage Order is a violation of Labor Code section 1198.  This code section states that the the maximum hours of work "and the standard conditions of labor" are established by the Industrial Welfare Commission.  Any employment not in accordance with those standards is unlawful. 

So now Eugina and her lawyers get to move forward with the lawsuit in an effort to show that her position as a cashier reasonably permitted the use of seats.  If she wins, Eugina gets some money and her lawyers will get a lot more.  Under the Act, attorneys' fees appear to be mandatory. 

Yes, it's another typical day in California employment law.  I wonder if an employer has an obligation to construct its facilities, such as the cashier stand, in a way that a cashier could work while sitting.  I also wonder how many customers would be enthusiastic to shop at stores where cashiers were sitting ... and waiting ... for the next in line.  That just doesn't seem to me to be customer friendly.  Perhaps Eugina worked at a store where she was so busy, she never needed to assist customers in any way but to scan their UPC labels. 

Still, I would think the employees had a fairly low interest in me if I found them sitting on the job.  I told my kids growing up to keep their hands out of their pockets while at work.  I told them that they can't do any work with their hands in their pockets, and that even if they could, the boss or customers wouldn't think they were interested in helping out.  I see the sitting thing the same way.  Absent a reason to be sitting (such as an individual with a disability), I'm thinking that the person sitting is lazy and just interested in taking my money before I walk out the door. 

But then, this type of law is what makes CA great for lawyers!  You gotta love it. 

When criticizing the boss makes you a protected class

Hand it to a government agency for pursuing an employee's case after she criticized her boss online.  An ambulance service in Connecticut fired an employee after she ridiculed her boss on her Facebook page.  Included in her online rant were vulgarities and a reference to the boss being a psychiatric patient.  The company allegedly fired her for depicting the company in any way on social media.  (The company claims it fired her for a variety of reasons.) 

The National Labor Relations Board ("NLRB") contends that the case is simple and straightforward.  The employee was communicating with others about working conditions.  The employee was upset her boss did not allow a union representative assist her with responding to a customer complaint.  According to the NLRB, this was concerted protected activity, protected under the National Labor Relations Act ("NLRA"). 

This should send a chill up the spine of all employers, public and private.  Employers need to review their social media policies to determine if prohibitions preclude employees from exercising their rights, under the NRLA or California law, to discuss workplace conditions.  Employers also need to examine closely whether they want to terminate an employment relationship due to an employee's online comments. 

My concern is that when employees choose to rant online, it is not necessarily to debate and to discuss working conditions in good faith, but to primarily to punish and ridicule the company.  Does this case mean that employees can say things online that they could not get away with saying to the boss directly or in a room with other employees?  I think most of us would consider such "live" ranting to be insubordinate and unprofessional.  Why should the same ranting and belittling online be protected? 

I hope this case has a positive outcome for employers.  If not, this case could signal a new era in employee relations, and unfairly prevent an employer from maintaining appropriate rules of behavior. 

The case goes to trial on January 25, 2011.