Wage Law

Carrying a Briefcase Does Not Translate into a Compensable Commute under the FLSA

Under the Fair Labor Standards Act, time spent commuting to and from the workplace is generally not compensable. Under the Portal-to-Portal Act, the FLSA excludes from compensable time all of the time spent "traveling to and from the actual place of performance of the principal activity" of employment. There are various exceptions, generally arising when an employee's commute is substantially changed for the benefit of the employer. However, the fact that an employee carries its employer's documents to and from work does not invoke such an exception, and employees who carry a briefcase during their commute are not entitled to be paid a wage for their commute time, even if that means lugging 20 pounds worth of documents home each night, according to a recent Second Circuit opinion.

Plaintiffs-appellants Rajkumar Singh, Thomas S. Matthews, Vivek N. Patil, Trushant Shah, Faramarz Robeny and Fredo Joseph (collectively the "plaintiffs") appeal from a June 2, 2006 judgment of the United States District Court for the Southern District of New York (Castel, J.), granting summary judgment to defendant-appellee City of New York (the "City") and denying the plaintiffs' cross-motion for summary judgment. The plaintiffs are fire alarm inspectors employed by the City who assert that they must be compensated under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., for their commuting time because the City requires them to carry inspection documents during their commutes. We hold that carrying inspection documents while commuting is not work under the FLSA except to the extent that it increases the duration of a commute. Because the record shows that such an increase in commuting time is de minimis as a matter of law, we AFFIRM the district court’s judgment that none of the plaintiffs’ commuting time is compensable under the FLSA.
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In the commuting context, we believe that the appropriate application of the predominant benefit test is whether an employer's restrictions hinder the employees' ability to use their commuting time as they otherwise would have had there been no work-related restrictions.

Singh v. City of New York (2nd Cir. 2008) __ F.3d __ (Case No. 06-2960-cv).

Paperboys Are Employees, not Contractors

The paperboy is an employee, not an independent contractor, according to an unpublished opinion issued in February that was ordered published last week by the Second District Court of Appeal. Antelope Valley Press v. Poizner (2008) __ Cal.App.4th __ poses the specific question whether, for purposes of worker’s compensation insurance, persons who make deliveries of newspapers for the Antelope Valley Press are independent contractors or employees. The issue arises not out of a claim for worker’s compensation benefits, but a dispute over insurance premiums. The court expressly noted that its ruling was limited to this context.

Our review of the facts of this case and relevant law convinces us that the trial court correctly ruled that the administrative record supports the conclusion that the carriers are employees for purposes of workers’ compensation law, not independent contractors. Therefore, we will affirm the trial court’s judgment.

As usual, the court addressed a laundry list of relevant factors that tilted toward employment:

• Home deliveries are made by the carriers, who are paid according to the number of copies of the Press they are given to deliver.
• the per copy rate paid to the carriers varies.
• There are written contracts
• they provide that papers must be delivered in a safe and dry condition.
• If a carrier chooses to wrap the Press in a plastic bag to keep it from getting wet or otherwise harmed, the bag must be yellow or white.
• The carriers also receive approximately 20 complementary copies of the Press each day.
• These free samples, called the “C’s,” are dropped off by the carriers at homes of nonsubscribers.
• The carriers are paid 3 cents for delivering each C. They are required to put the C’s in orange plastic bags, which are provided by AVP
• The routes are checked once a week.
• Carriers also deliver AVP’s magazine-type publication called “Lifestyles.”
• Carriers are required to put Lifestyles in the white plastic bags that AVP provides, and they receive 5 cents per copy they deliver.
• AVP also publishes a free “TMC” (total market coverage) advertisement paper which is called the A.V. As with the C’s, the carriers are required to place the A.V. Express in colored plastic bags (red) that are provided by AVP, and management checks the routes to verify that deliveries of the A.V. Express are made.
• The carriers receive 3 cents per copy of the A.V. Express they deliver, and are charged 23 cents for each copy they do not actually deliver.
• Deliveries by the carriers are made according to AVP’s time schedules.
• The carriers are expected to pick up their bundles of newspapers by a specific time from a specific location.
• If a carrier is late, he or she is charged $35 per hour ($0.58333 per minute) to cover AVP’s cost of having someone oversee the pick-up location until the carrier arrives.
• Additionally, personnel of AVP may begin folding and bagging the tardy carrier’s newspapers after the deadline for pickup so as to facilitate prompt delivery of papers to the customers, and the carrier is charged for the bags even though carriers are not required to put the Press in bags.
• For the pick up location that is not manned by AVP personnel, the carrier runs the risk that the newspapers will be stolen if the carrier is not on site when they are dropped off, and stolen papers are the financial responsibility of the carrier.
• On weekdays, carriers are required to finish their deliveries by 5:00 a.m. on in town routes and 6:00 a.m. on out-of-town routes. On weekends, the delivery deadlines are 6:00 a.m. and 7:00 a.m., respectively.
• The A.V. Express is to be delivered by noon on Saturday.
• Home delivery subscribers pay their subscription fees to AVP, not to the carriers.
• If a home delivery subscriber fails to pay his or her bill, the carrier is not docked unless and until a written stop delivery notice for that customer is given to the carrier.
• The carriers are charged a $2.50 complaint recording fee if a customer does not receive his or her copy of the Press, does not receive it in a timely manner, or it is damaged.
• If there are more than 2 complaints per one thousand paid deliveries and the carrier has elected to have AVP redeliver the Press, the carrier is also charged a $2.50 redelivery fee per complaint. If the carrier has elected to correct subscriber complaints by himself or herself but does not make the correction within one hour of being notified of the problem, or cannot be reached to receive such notification, then if AVP corrects the complaint the carrier is charged $35 per hour and $.31 per mile driven by an AVP employee to correct the problem.
• Invoices are issued to them every two weeks. The invoices list credits and charges.
• The only information the manager seeks from the prospective carrier is whether he or she has a California driver’s license, proof of vehicle insurance, and a social security number.
• The form contract is for a term of one year. Either party can terminate the contract without cause with 30 days written notice. Either party can terminate the contract, effective immediately with written notice, if the other party commits a material breach.
• there was an extreme disparity in bargaining position between the Carriers and AVP.
• "the Carriers wanted work, and they signed what they needed to in order to get it.”
• the lengthy, small print contract was “drafted by sophisticated lawyers and is in no sense the product of arm’s length negotiations, as might occur, for example, in hiring an independent contractor, specialized and sophisticated in the costs of his business, and able to garner trade from other actual and potential customers.”
• There was no evidence that any of AVP’s carriers hold themselves out as being an independent delivery service that happens to have AVP as one of its customers.
• Further, AVP does not cite evidence showing that the carriers have a substantial investment in their AVP delivery duties other than their time and the vehicles they use; and their vehicles are not shown to be other than the vehicles they use for their own personal activities.
• there was no evidence that any of the carriers have a delivery business through which they can distribute that risk and cost.
• Delivering papers requires no particular skill. A carrier’s remuneration is in very large part dependent on nonnegotiated financial terms in the contract rather than on the carrier’s initiative, judgment or managerial abilities.

The court was not concerned about the parties' written arrangements characterizing the relationship as one involving contractors.

The Borello and JKH Enterprises courts also determined that the workers in those cases were employees despite their having signed agreements (migrant farm workers in Borello) or other writings (delivery service drivers in JKH Enterprises) that stated they are independent contractors.

Even though the case arose out of an insurance premium dispute, because the contractor/employee issue arises frequently with wage and hour implications, the opinion is a worthwhile read. You can download the full text of Antelope Valley Press v. Poizner here in pdf or word format.

Friendly Cab Drivers Found to be Employees, Not Independent Contractors

A dispute over whether a group of workers were properly organized by a union lead to an interesting Ninth Circuit opinion earlier this year, discussing how Friendly Cab Co.'s cab drivers were employees, not independent contractors, and therefore were properly organized by the union. NLRB v. Friendly Cab Co. (9th Cir. 2008) 512 F.3d 1090 thoroughly discusses the federal test for determining independent contractor status. In spite of cab lease agreements and several other factors that appeared to favor the employer, the court found the workers to be employees after considering the economic realities of the relationship. We'd have mentioned it sooner, but this was another post we never got around to sharing while Mike was out on medical leave.

Ralphs Arbitration Agreement Struck Down

The Fourth District Court of Appeal has invalidated the arbitration agreement used by Ralphs Grocery Co. in California. In Metters v. Ralphs Grocery Co. (2008) __ Cal.App.4th __ (originally issued as an unpublished opinion, and but ordered published in April), the trial court found evidence that the employee had not been aware that he was agreeing to mandatory arbitration, and thus could not be bound by a "dispute form" used by Ralphs Grocery for its dispute resolution process.

The company's policy provides an agreement to arbitrate as part of the request for dispute resolution. The form is entitled "Notice of Dispute and Request for Resolution Form." Among other things, the court noted, the form does not resemble a contract, and its title does not alert employees to the nature of the document; it does not clearly warn employees to pay special attention to the arbitration provisions; no one tells employees they are signing an arbitration agreement. For these and other reasons, the trial court found no meeting of the minds, and therefore no contract to arbitration.

The court was not persuaded by language in the form which clearly stated that employees were not required to sign do so in order for their complaints to be investigated. "A transactional attorney sitting in an office somewhere…[could] figure out what it meant," but it wasn't likely that an employee would.

The court observed, “It could be that a transactional attorney sitting in an office somewhere could have this form, start kind of pulling on the string and follow it back somehow and maybe figure out what it meant, if that is possible. . . . [¶] . . . [¶] [I]t does appear to be an attempt to sort of backdoor . . . this employee through this kind of ambiguous, nebulous form and say, well, if you want your . . . complaint investigated, just sign this and life will be good. [¶] I don’t think I can find there is . . . in the real world a meeting of the minds between Mr. Metters and Ralphs based on this.”

Thus,

The record contains substantial evidence to support the trial court’s finding that there was no valid agreement to arbitrate Metters’ discrimination claim. The order denying the motion to compel arbitration is affirmed.

You can download the full opinion of Metters v. Ralphs Grocery Co. here in pdf or word format.

Wrongful Termination Case Preempted by NLRA

Another case that came down during our January downtime involved the enforceability of California Labor Code §§ 232 and 232.5, which protect the rights of employees to discuss their compensation and working conditions with coworkers without fearing retaliation from an employer. Labor Code § 232 provides:

No employer may do any of the following:

(a) Require, as a condition of employment, that an employee refrain from disclosing the amount of his or her wages.
(b) Require an employee to sign a waiver or other document that purports to deny the employee the right to disclose the amount of his or her wages.
(c) Discharge, formally discipline, or otherwise discriminate against an employee who discloses the amount of his or her wages.

Labor Code § 232 provides:

No employer may do any of the following:

(a) Require, as a condition of employment, that an employee refrain from disclosing information about the employer's working conditions.
(b) Require an employee to sign a waiver or other document that purports to deny the employee the right to disclose information about the employer's working conditions.
(c) Discharge, formally discipline, or otherwise discriminate against an employee who discloses information about the employer's working conditions.
(d) This section is not intended to permit an employee to disclose proprietary information, trade secret information, or information that is otherwise subject to a legal privilege without the consent of his or her employer.

In Luke v. Collotype Labels USA, Inc. (2008) __ Cal.App.4th __, the Court of Appeal held that an employee's wrongful termination claim under section 232.5 was preempted by the National Labor Relations Act (NLRA), 29 U.S.C. §§ 151 et seq. The employee had been fired after soliciting signatures for a letter denouncing management, telling his supervisor's boss that there were troubles brewing, encouraging others to record the problems they encountered and express their concerns to management, and offering help and support to other employees who complained about working conditions. The defendant moved for summary judgment, claiming that these activities were protected "concerted activity" under 29 U.S.C. § 157, such that the claim was therefore preempted.  See Linn v. Plant Guard Workers (1966) 383 U.S. 53, 60 (The NLRA impliedly preempts state regulation of activity which is arguably protected by section 7). On these facts, the Court agreed. If the conduct is protected by section 301 of the LMRA (29 U.S.C. section 185) and there is a collective bargaining agreement which governs, the wrongful termination action is preempted.

The opinion was issued in January, and ordered published a month later. No review was sought and a remittitur has been issued. You can download the full text of Luke v. Collotype Labels USA, Inc. here in pdf or word format.

Court Reverses Denial of Large Fee Award on $11,500 Verdict

As a general rule, under Code of Civil Procedure § 1033(a), the trial court has the discretion to deny attorney's fees as an element of costs of suit under Code of Civil Procedure § 1033.5(a)(10)(B) if the plaintiff recovers less than the minimum jurisdictional amount of the court. Thus, for example, if a plaintiff sues in unlimited civil court and recovers only $25,000, and not a penny more, the case could have been brought in the limited  civil division and therefore, some costs may be denied. In Chavez v. City of Los Angeles (2008) __ Cal.App.4th __,

a jury awarded appellant Robert Chavez $11,500 in a statutory retaliation action brought against his employer and a supervisor. Chavez then filed a motion seeking approximately $871,000 in attorney fees under the fee provisions of the Fair Employment and Housing Act (FEHA), Government Code section 12965, subdivision (b). Ignoring that statute, and instead exercising its discretion under Code of Civil Procedure section 1033, subdivision (a) to deny costs because Chavez’s recovery was below its jurisdictional minimum, the trial court denied the motion. Chavez appeals from the denial of the motion, contending the court applied the wrong statutory standard and abused its discretion by denying him fees. We agree and reverse the order.

The opinion contains a lengthy discussion regarding the court's proper exercise of discretion, the conflicting purposes of  Code of Civil Procedure § 1033(a) and Government Code § 12965, and the language in the latter which limits the exercise of discretion in a FEHA case. In certain important respects, the holding can be distinguished in a wage case, but significant elements of the opinion apply as clearly to a Labor Code case as to a FEHA case.

You can download Chavez v. City of Los Angeles here in pdf and word format.

The Thin Body of Law Regarding Class Action Objections

...became slightly less thin with the publication of Chavez v. Netflix, Inc. (2008) __ Cal.App.4th __.

Frank Chavez sued Netflix, Inc. (Netflix) over its practice of advertising that it would send customers " 'unlimited' " DVD rentals with "1 Day Delivery" for a flat monthly fee. Alleging that both selling points were false, Chavez sought injunctive relief and damages on behalf of himself and a class of current and former Netflix subscribers. Before the class was certified, Netflix agreed to settle the class action by providing one month of free DVD rental services or upgrades to class members who claimed the benefit. The trial court approved the settlement and awarded attorney fees of $2,040,000 to be paid by Netflix to class counsel. The appellants in these consolidated appeals objected to the class action settlement and fee award in the trial court. They contend that the trial court abused its discretion in approving the settlement, affording notice to class members, and determining the amount of fees. Finding no abuse of discretion, we affirm the orders in issue.

The case is full of interesting language supporting settling parties. A detailed analysis has been posted over at the UCL Practitioner. We're in trial, so we'll just point you in that direction. You can download the case here in pdf or word format.

Court Orders Production of Costco's Attorney-Client Communication in Overtime Class Action

In an unusual opinion, the Second District Court of Appeal ordered Costco Wholesale Corp. to turn over some of its attorney-client communications during discovery in a putative class action alleging misclassification of Costco managers. In Costco Wholesale Corp. v. Superior Court (2008) __ Cal.App.4th __, the Court of Appeal held that the trial court was correct to order Costco to produce portions of a pre-litigation attorney-client memo prepared for Costco by its outside counsel. The memo analyzed whether Costco's department managers qualified for exempt status. Counsel took interviews, reviewed job descriptions, and prepared a detailed and lengthy memo analyzing the status of the managers. The trial court ordered an in-camera review by a referee, who determined that portions of the memorandum regarding the managers’ job duties were not privileged and should be produced.

Costco petitioned for a writ of mandate. After some odd procedural quirks, the Court of Appeal denied the writ, holding that Costco had not shown "irreparable harm” because the portions to be produced came from job descriptions and interviews with two managers; it was “inconsequential; and it did not “infringe on the attorney-client relationship.” The Court found that these were not work product, and that disclosure would cause no harm because the information would be readily available from other sources.

You can download the full text of Costco Wholesale Corp. v. Superior Court here in pdf or word format. A modification order was issued yesterday, which did not change the judgment. We read the whole thing, twice, and we might be incorporating a request for in camera review of much more from the privilege logs than ever before.

Supreme Court Depublishes Bell v Superior Court (HF Cox, Inc.)

The Supreme Court has denied a petition for review, but granted a request for depublication in Bell v. Superior Court (H.F. Cox, Inc.) (2007) 158 Cal.App.4th 147, a class certification opinion involving truck drivers with overtime, off-the-clock, meal/rest period and vacation pay claims.

The petition for review is denied. The requests for an order directing depublication of the opinion are granted. The Reporter of Decisions is directed not to publish in the Official Appellate Reports the opinion in the above-entitled appeal filed November 21, 2007, which appears at 158 Cal.App.4th 147. (Cal. Const., art. VI, section 14; rule 8.1125(c)(1), Cal. Rules of Court.) George, C.J., was absent and did not participate. Kennard J., is of the opinion the petition should be granted.

The Court of Appeal had affirmed in part and reversed in part a multiple-issue certification ruling by the Superior Court.

Four employees of a petroleum transportation company sought to bring a wage and hour class action against their employer, alleging: (1) the failure to pay overtime; (2) the requirement of off-the-clock work; (3) the failure to provide meal and rest breaks; (4) the incorrect calculation of vacation pay; and (5) the failure to pay pro rata vacation pay upon termination of employment. The plaintiffs filed a motion for class certification. The trial court granted the motion in part, certifying only a class with respect to the claim for failure to pay vacation pay upon termination of employment. In all other respects, the motion was denied. Plaintiffs sought review by means of a petition for writ of mandate. We issued an order to show cause why relief should not be granted and stayed further proceedings. We now conclude the trial court erred in failing to certify a class with respect to the overtime pay and vacation pay claims. We therefore grant the writ petition and direct the trial court to vacate its order, and enter a new and different order granting certification of a class with respect to those claims.

While on its face, the opinion had seemed to favor the plaintiff (who was the petitioner seeking Supreme Court review) the Court of Appeal's endorsement of the denial of certification in the off-the-clock and meal period causes of action had been embraced by the employers' bar, who will lament the depublication of the case.

We previously discussed the publication of and holding in Bell in a post here.

Tax Credits Do Not Trigger Prevailing Wage on Low Income Housing Construction Projects

Employers engaged on public works projects must pay prevailing wages to their workers if the project is “paid for in whole or in part out of public funds.” Until now, it was unclear whether tax credits provided by the state to facilitate construction of low-income housing comes within this definition. In State Bldg. & Const. Trades Council v. Duncan (2008) __ Cal.App.4th __, the trial court determined that it does. The Court of Appeal reversed.

we conclude otherwise—that however worthy the policy goals of encouraging the construction of low-cost housing and ensuring compliance with the prevailing wage requirements, the statutory language in its present form cannot be construed to command that result. Tax credits are, at best, intangible inducements offered from government, but they are not actual or de facto expenditures by government. As such, they do not qualify as either the “payment of . . . the equivalent of money by the state” (subd. (b)(1), or as a “transfer by the state . . . of an asset for less than fair market price” (subd. (b)(3)), the portions of the definition of “paid for in whole or in part out of public funds” considered here. We thus reverse.

You can download the full text here in pdf or word format.