Wage Law

Wage Wars

Check out the cover story for the current issue of Business Week, entitled: "Wage Wars — Workers from truck drivers to stockbrokers are winning huge overtime lawsuits." Related articles include "Labor Law Time Warp - America's New Deal-era overtime laws need updating, but the political will is lacking" (which we couldn't disagree with more), a snippet about settlements and pending cases entitled "No Industry is Immune" and a graphic entitled "The Rules Reflect Old Assumptions." The article is accompanied by a podcast that you can download and listen to when you have the time:
http://www.businessweek.com/mediacenter/qt/podcasts/cover_stories/covercast_09_20_07.mp3

(How many of you thought we would post a link about this weekend's 80th Annual State Bar Convention?)

ACI Wage & Hour Seminar

ACI is having its 5th National Forum on Wage & Hour Litigation next week.

We've attended this program in the past and found it worthwhile. For more information, go to www.AmericanConference.com/wageandhour.

CELA Seminar This Weekend

CELA'S 20th Annual Employment Law Conference is this weekend at the Fairmont Hotel in San Jose. If you are interested, check out the conference agenda. If you are a employees' lawyer in California and you haven't joined CELA yet, you should look into it.

CALIFORNIA EMPLOYMENT LAWYERS ASSOCIATION

FIGHTING FOR JUSTICE CELA'S 20th ANNUAL EMPLOYMENT LAW CONFERENCE SEPTEMBER 28 & 29, 2007 THE FAIRMONT HOTEL, SAN JOSE, CALIFORNIA Plus a September 27 Full Day Skills Seminar: Disability Discrimination Cases: From Intake Through Trial

COMPLETE CONFERENCE AGENDA

KEYNOTE SPEAKER Justice Cruz Reynoso Former Justice, California Supreme Court

CONFERENCE REGISTRATION FORM

Wage & Hour Litigation Conference San Francisco, September 27-28, 2007

Bridgeport Continuing Education is presenting a 9.5 hour two-day seminar on Wage & Hour litigation this week at the Stanford Court Hotel located at 905 California Street in San Francisco. The program is designed for attorneys and corporate counsel as well as risk and claims managers and will incorporate both plaintiff and defense perspectives.

Topics include: Wage & Hour Case Update, Class Action & Individual Wage & Hour Actions, Preparing for and Excelling in Mediations, Insurance Coverage in Wage & Hour and Class Actions, Class Certification, Dual filed Actions, Claims Administration, The Intricacies of Wage & Hour Cases in California, Discovery in Wage & Hour Actions, Meal & Break Period Case Analysis, Overtime Case Analysis, Mandatory Class-wide Arbitration Agreements.

PROGRAM AGENDA

Day One: 8:30  9:00  Registration & Continental Breakfast

9:00  9:05  Introduction and Program Overview

9:05  10:00 Case Law Update and Recent Developments
Timothy Long of Orrick

10:00 11:00 Class Certification Arguments: for and against
Andrew Livngston of Heller Ehrman - defense
Peter Rukin of Rukin, Hyland Doria & Tindall - plaintiff

11:10  12:15 Discovery Issues and Arguements
Paula Weber of Pillsbury Winthrop Shaw Pitman
Daniel J. McCoy of Fenwick and West

1:15 2:15 Overtime and Misclassification
Jim Finberg of Altshuler Berzon

2:30 3:30 Missed Meal and Rest Breaks
Brian Dixon of Littler Mendelson

3:30 4:30 The Wage & Hour Trial
Edward Wynne of the Wynne Law Firm
Matthew Righetti of the Righetti Law Firm

Day Two: 9:00  10:00 Does Insurance Cover Wage & Hour Claims?
Kirk Pasich of Dickstein Shapiro

10:00  11:00 Mediation and Settlement - Overcoming Pitfalls and Land Mines
Jeffrey Wohl of Paul Hastings Janofsky and Walker
Scott Cole of Scott Cole & Associates

11:15 - 12:15 Attorneys Fees in Wage and Hour Cases
Gerald G. Knapton of Ropers Majeski Kohn & Bentley

Seminar Details
Location: The Stanford Court Hotel, 905 California Street in San Francisco.
Time: (day 1) 9:00 a.m. to 4:30 p.m. (day 2) 9:00 - 12:15
MCLE: approved for 9.5 hrs of MCLE.
Register online at: http://www.reconferences.com
Register by phone at: 818-783-7156
Register by fax or mail: (818) 827-3338 or 13636 Ventura Blvd. #215 Sherman Oaks, CA 91423

If you aren't going to be at the CELA conference this weekend, this is another good choice.

Court Rules That County Can Force Use of Sheriffs' Accrued Vacation Time

A California appeals court has ruled that the County of Los Angeles (County) can force peace officer employees to use excess deferred vacation time in order to avoid a year end cash payout for that time. In Association for LA Deputy Sheriffs v. County of Los Angeles (2007) __ Cal.App.4th __, construed the relevant provisions of the Los Angeles County Code and a memoranda of understanding (MOU’s) between the County and the bargaining unit for the sheriffs, and affirmed a trial court determination that the County does have the managerial power to force the use of deferred vacation time.

The trial court held that the County has “the management right to set the terms and conditions of its employees, including, but not limited to, the management right to require plaintiffs and petitioners herein to take off accrued vacation under the California Constitution, applicable California laws, and the charter of the County of Los Angeles . . . .” The employees argue that the County’s forced vacation policy violates their right under the County Code to receive a cash payout for excess deferred vacation hours and impermissibly divests them of a valuable employment benefit under Bonn v. California State University, Chico (1979) 88 Cal.App.3d 985 (Bonn) and Kistler v. Redwoods Community College Dist. (1993) 15 Cal.App.4th 1326 (Kistler). We disagree. The employees interpret both their rights and the prevailing cases too broadly. The cases on which the employees rely are inapposite because they concern vacation benefits already vested, while the benefits at issue here are prospective. Furthermore, we agree with the court’s characterization in Los Angeles County Prof. Peace Officers’ Assn. v. County of Los Angeles (2004) 115 Cal.App.4th 866, 872 (Los Angeles County Prof. Peace Officers) of the County’s excess vacation buy-back policy as not granting any rights to employees, but rather limiting the amount of vacation time that can be accrued.

For a time, you will be able to download the full opinion in Association for LA Deputy Sheriffs v. County of Los Angeles here in pdf or word format.

Flight Attendants Wage Claims Governed by Railway Labor Act

A flight attendant's claims under California labor law regarding minimum wages, overtime and meal/rest breaks are preempted by the Railway Labor Act (45 U.S.C. § 151 et seq.), according to an opinion published this week by the Second District Court of Appeal in Fitz-Gerald v. SkyWest Airlines, Inc. Accordingly, a summary judgment in favor of SkyWest on the employee's class action for such wage claims was upheld.

The case arose, at least in part, from a practice under which flight attendants are paid a per diem to cover all work performed other than "gate-to-gate" flight time. This "block time pay" averages $1.60 per hour, but only reduces the flight attendants' overall compensation rate to $23.13 an hour (flight time plus block time, averaged over a month). The employees, citing Armenta v. Osmose, Inc. (2005) 135 Cal.App.4th 314, contended that that wage averaging under the FLSA could not trump state minimum wage law. However, the court distinguished Armenta on several grounds: it did not involve an interstate air carrier, it not involve the RLA or a CBA sanctioned under the RLA, and it did not involve a state wage order that contained a RLA exemption.

The RLA regulates labor relations between common interstate air carriers and their employees. In United Air Lines, Inc. v. Industrial Welfare Com. (1963) 211 Cal.App.2d 729, the court held that a California IWC order requiring employers to pay for flight attendant uniforms did not apply to an interstate airline because the collective bargaining agreement provided that the cost of uniforms was to be paid in part by the employee. The court concluded that the IWC order was preempted by the RLA and that enforcement of the IWC order would burden interstate commerce.

Similarly, here, the court found that there was a CBA (even though SkyWest is a non-union employer), and that although the RLA contains no specific language with respect to state minimum wage law and meals/rest breaks, the RLA preempts all state law causes of action that depend upon interpretation of a CBA, including claims for state minimum wages, meal/break time damages and overtime wages. Because the first, second, and third causes of action were preempted by the RLA, the trial court properly ruled that the fourth cause of action for waiting time penalties (Labor Code § 203) and fifth cause of action for violation of the Unfair Business Practices Act were also barred.

Alternatively, the trial court ruled that the complaint was barred by the Airline Deregulation Act of 1978. The ADA provides that a state "may not enact or enforce a law, regulation or other provision having the force and effect of law related to a price, route, or service" of an air carrier. The United States Supreme Court has held that claims under a state unfair business practices statute are preempted by the Airline Deregulation Act because the state claims would impose economic regulation on airlines. Based on those federal cases, the court concluded that the ADA separately bars the fifth cause of action for relief under the California Unfair Business Practices Act.

You can download the opinion in Fitz-Gerald v. SkyWest Airlines, Inc. here in pdf or word format.

Brinker Could Clarify Further the Meaning of "Providing" a Meal Period

The Fourth District has heard oral argument in Brinker Restaurant Corp. v. Hohnbaum (4th Dist. No. D049331), noted as one of the first five large meal period class actions to be certified. Among other things, the case casts a second look at what it means to provide a meal period, as is required under the IWC wage orders, perhaps with an eye toward revisiting another appellate district's 2005 ruling in Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949. The earlier case affirmatively required employers to ensure that workers are actually relieved of all duty during meal periods. Employers argue for "provide" to mean something more synonymous with the rest period duties to "permit and authorize." They also argue that the difference substantially affects the likelihood that a case could be suitable for class action treatment.

The case was ably argued on both sides, but none of the observers we've chatted, texted, IMd or emailed with had any strong opinions as to whether or where the court will end up on the certification issues. If you saw the arguments and have an opinion, please leave a comment. The one and only unanimous view we've heard is that Miles Locker argued well for the amici and that the justices seemed very interested in what he had to say about the DLSE regulations and practices. Aside from that, defense lawyers seemed to believe the employer's side was better presented, and employees' lawyers thought the opposite.

You can track the progress of Brinker here.

Bill Lerach To Plead Guilty, Go To Prison

The Washington Post has reported that prominent class action attorney Williams S. Lerach has agreed to pay the government $8 million in fines and penalties and to plead guilty to a charge of obstructing justice. Lerach’s plea stems from charges that he and his former law firm provided kickbacks to plaintiffs in class action cases. Prior reports alleged that the kickbacks were millions of dollars. Under the terms of the plea, which is not yet approved by the judge, Lerach will serve at least one year, and no more than two years, in a federal penitentiary.

Trial Court Rejects “Short Shift Bonus” As Overtime Avoidance Scheme

Los Angeles Superior Court Judge William MacLaughlin has ruled that Huntington Memorial Hospital violated California Labor Code § 510 by paying its nurses and other employees a lower, hourly, rate-of-pay when they worked overtime shifts of 10 hours or more in a day. Huntington Memorial Hospital set up a pay scheme under which received a “short shift bonus” of 16.66667% whenever they worked less than 10 hours per day. Virtually all nurses worked either 8-hour shifts or 12-hour shifts. The mechanics of the practice were such that employees working 8 hours, with their "short shift bonus" earned the same hourly rate as they did when they worked a 12 hour shift without the
short shift bonus." The hospital, represented by Littler Mendelson, argued that the “short shift bonus” plan was really designed to confer an "extra benefit" upon employees when they were not afforded the wonderful opportunity to work a 12-hour shift with overtime pay. Attorneys for the class argued that the true purpose and effect of the plan was to reduce employees' pay on long shifts so as to negate the overtime rate required under California law.

The case was certified in 2004, and the issue was tried in the first part of a bifurcated trial that wrapped up in July. Judge MacLaughlin's memorandum of decision can be read in the attachment found here. The findings and determinations were as follows:

• (1) Defendant's pay system during the class period is an artifice or subterfuge which evaded and failed to comply with the overtime laws;
• (2) the regular rate of pay for 12-hour employees does not need to be computed in a "wholly unrealistic and artificial mannet' in the circumstances of this case to prove a violation of the wage laws; in this instance, Defendant's failure to include the SSP in the calculation of the regular rate violated the law and its purposes;
• (3) the amounts paid to the Class after the 8th and 12th hour of the work day, or 80 hours in a pay period, did constitute payment for overtime (although not based on the correct regular rate) and do not have to be included in the calculation of the regular rate;
• (4) the short shift premium was remuneration based on the hours worked and any other reason for its payment does not exclude it from calculation of the regular rate; and
• (5) the evidence produced by Plaintiffs established that the short shift premium must be included in the calculation of the regular rate of pay for 12 hour employees who worked 10 or more hours in a scheduled 12-hour shift during the class period.

On the legal issues, the Court found that the evidence produced establishes by a preponderance of the evidence that Defendant's pay system during the class period violated California Labor Code Section 510 and that such violation warrants restitution to members of the Class of the amounts representing the difference between what was actually paid and the amount that should have been paid as overtime to 12-hour employees who worked 10 or more hours in a shift.

The decision is not binding on any other court, and cannot be cited, but it is an interesting read nonetheless. Short shift bonuses are not common, but not unheard of in California, either. Absent a settlement, this case could result in a published opinion sometime in 2008 or 2009.

2008 Calendar

The Supreme Court has released its 2008 oral argument and petition conference calendar.