In Lu v. Hawaiian Gardens Casino, the California Supreme Court decided yesterday on August 9, 2010 the issue of whether Section 351 contains a private cause of action for misappropriated gratuities paid to a casino employee. In Lu, a card dealer brought a class action against his casino employer based on its mandatory tip pooling policy. The casino’s policy required dealers to contribute 15 to 20 percent of their tips to a tip pool to be shared with other employees who provided service to casino patrons. The dealer alleged that this policy constituted a conversion of his tips and violated, among other provisions, section 351 of the Labor Code.

As a threshold issue, the trial court concluded that section 351 did not provide a private cause of action for employees to recover any misappropriated tips from employers. The Court of Appeal agreed that section 351 does not itself contain a private right to sue. Less than two months later, a different Court of Appeal expressly disagreed with the holding on section 351 of the appellate court below. (See Grodensky v. Artichoke Joe’s Casino (2009) 171 Cal.App.4th 1399, review granted June 24, 2009, S172237).

The California Supreme Court in Lu resolved the conflict between the appellate courts by holding that Section 351 does not contain a private right to sue. The court observed that although an aggrieved employee does not possess a statutory cause of action for lost tips, the employee might have a common law claim for conversion of property.

For any questions or comments regarding this Labor Law Update please contact attorney Michael Daly of the Daly Law Firm at 619-525-7000 or daly@mdalylaw.com.

However, the Ninth Circuit reversed the lower court ruling in favor of EGL, holding that plaintiffs’ wage and hour claims were subject to California law – not Texas – under the state Labor Code and broad regulatory policy defining the employer-employee relationship, irrespective of the contractual Texas choice of law clause agreed to by the parties. The appellate court further held that the express independent contractor acknowledgment made by the drivers “is simply not significant under California’s test of employment.” “The labels placed by the parties on their relationship is not dispositive and subterfuges are not countenanced.”

For any questions or comments regarding this Labor Law Update please contact attorney Michael Daly of the Daly Law Firm at 619-525-7000 or daly@mdalylaw.com.

For any questions or comments regarding this Labor Law Update please contact attorney Michael Daly of the Daly Law Firm at 619-525-7000 or daly@mdalylaw.com.

Following the filing of a complaint by a covered employee, the penalties for noncompliance with this posting requirement may include the cancellation, termination or suspension of the government contract.

For any questions or comments regarding this Labor Law Update please contact attorney Michael Daly of the Daly Law Firm at 619-525-7000 or daly@mdalylaw.com.

To warrant an award pursuant to section 132a, the employee must establish, by a preponderance of the evidence, at least a prima facie case of lost wages and benefits caused by the employer’s discriminatory acts. If a claimant makes such a showing, the legal burden shifts to the employer to establish an affirmative defense.

The courts and WCAB have traditionally interpreted Section 132a liberally to achieve the goal of preventing discrimination against workers injured on the job. However, this does not mean that any action by an employer that is detrimental to an employee injured at work violates the statute.

The California Supreme Court in the landmark case of Department of Rehabilitation v. WCAB (Laurer), (2003) 30 Cal.4th 1281, articulated the current legal standard for establishing a prima facie case of discrimination prohibited by Section 132a. The claimant must show that he suffered an industrial injury and that the employer caused him to suffer some detrimental consequences as a result. The injured worker must also show that the employer “singled out” the industrially injured worker for detrimental treatment because of the industrial nature of his injury and treated the worker differently by making him suffer discriminatory treatment not visited on other employees because the employee was industrially injured or had made a workers compensation claim.

In Gelson’s Market v. Worker’s Comp. Appeals Board, (2009) 179 Cal.App.4th 201, the WCAB determined that the employer violated Section 132a by failing to reinstate an injured employee after being presented with a return-to-work release (which the employer believed was ambiguous) from the employee’s physician. However the Court of Appeal annulled the award under Laurer because the injured worker made no showing that his employer treated him differently from non-industrially injured workers. The injured claimant made no showing that his employer would have reinstated a non-industrially injured worker who’s provided the same medical release.

In defending against a retaliation or discrimination claim under Section 132a claim, the best defense for an employer is to treat all injured employees in the same manner. Avoid adopting different and more restrictive personnel policies and practices for on-the-job injuries.

For any questions or comments regarding this Labor Law Update please contact attorney Michael Daly of the Daly Law Firm at 619-525-7000 or daly@mdalylaw.com.

Occasionally, employees may be absent for significant hours of work due to personal or health reasons (other than disability). At first glance, the logical and seemingly fair resolution to this situation may appear to be that the employee should not be compensated for the hours which he or she didn’t work. However, because exempt employees are not paid on an hourly basis, failure to fully compensate such an employee due to absence equates to a reduction in salary. It is here where employers must tread lightly.

In California, an exempt employee’s salary may not be reduced for partial day absences, however, an employee’s paid-leave benefits may lawfully be reduced in partial-day increments. An impermissible deduction in salary could lead to the conclusion that an employee is not being paid on a salary basis, which may inadvertently destroy the employee’s exempt status. That employee can then seek to recover unpaid wages for meal, rest breaks or overtime. Thus, an employer may expose itself to more financial liability than if it had simply allowed the employee to take time off without consequence.

A November 28, 2009 opinion by California’s Division of Labor Standards Enforcement provides much needed guidance to employers as to how they should pay exempt employees who have not worked a full workweek. While the administrative opinion letter is not controlling legal authority, courts often treat DLSE opinions as persuasive authority in wage and hour cases.

The DLSE opinion set out answers to eight different examples that are meant to illustrate California’s exceptions to the general rule prohibiting deductions from a salaried employee’s wages. Notably, the DLSE made clear that an employer may deduct from an exempt employee’s vacation or sick leave time to account for partial or full day absences without tampering with the employee’s exempt status. Under certain circumstances, (full day absence and no vacation leave available) an employer may even deduct from the exempt employee’s salary.

According to the DLSE an exempt employee’s salary can not be deducted in less than full-day increments, although deductions from paid leave benefits are permissible for partial day absences. In other words, if an employee is absent for fewer than 8 hours, his or her salary cannot be reduced, but accrued vacation benefits maybe deducted. In the event an employee misses a full-day (the equivalent of 8 hours), the salary may be reduced if there is insufficient balance remaining in the employee’s sick and personal leave banks, and if the absence falls into one of the enumerated exceptions.

If you would like a free copy of the DLSE opinion letter or have any questions or comments regarding this Labor Law Update please contact attorney Michael Daly of the Daly Law Firm at 619-525-7000 or daly@mdalylaw.com.

The effect which employer control has on whether an employee must be compensated for commute time is illustrated in the following California decisions. In one case, the Court held that employees must be paid for commute time when their employers required workers to take employer-supplied transportation to a work site. Morillion v. Royal Packing Co., 22 Cal. 4th 575, 588 (2000). However, in another California appellate decision, the Court ruled that employees are not entitled to compensation when the employer simply offered optional transportation. Overton v. Walt Disney Co., 136 Cal. App. 4th 263, 268 (2006). The distinguishing factor between these decisions was the amount of control which the employers exercised over their employees’ commute time.

Similarly, the restrictions which employers place on an employee who is on call will affect whether or not that employee must be compensated for the on call time. When an employee is on call, he or she is able to exercise free time, but must be prepared to respond to work related issues. Employers may set conditions on response times or place geographical and other constraints on employees while they are on call. However, the more the employer’s requirements impede/limit the employees’ ability to enjoy their otherwise free time, the more likely the on call time will amount to hours worked.

Another gray area occurs when employees perform work-related duties before or after the official workday. The Ninth Circuit has recently held that if the work performed outside of the workday is related to the employee’s principal work activities and is not de minimus, then it constitutes hours worked. In the Rutti decision, the small amount of time which a service technician spent completing paperwork before the start of a shift was deemed de minimus; whereas the time he spent uploading data at the end of the day was ruled compensable because it was considered a principal work activity which could take several minutes. The Court failed to establish a bright line rule for what constitutes de minimus; however, the decision gives employers an idea of when they may have to pay employees for incidental work performed outside of the workday.

Under state wage and hour law, time spent traveling during a shift is work time for which a non-exempt employee must be compensated. Travel between work sites during the day is considered hours worked. Employers may reduce wage rates for travel time; however, employers should also be aware that employees may be entitled to overtime compensation for overnight travel.

The rules which apply to exempt employees, who are usually paid salary, are substantially different than those discussed above, which apply to non-exempt employees, who are typically paid hourly. Exempt workers are not entitled to reimbursement for time spent commuting and performing work at home or elsewhere. The rationale is that their salary compensates them for any additional work time.

For any questions or comments regarding this Labor Law Update please contact attorney Michael Daly of the Daly Law Firm at 619-525-7000 or daly@mdalylaw.com.

Individual employee back pay varied widely, depending on the job performed and the amount of time worked during the back pay period, from April 1991 through June 1998. The largest single payment to an individual employee was $282,000. All five distributors are still in business.

The five employers entered into an illegal “mutual aid pact” for negotiations with Teamsters Local 1038. Each employer declared impasse after a period of fruitless bargaining and imposed a new contract, which resulted in substantially lower income and reduced benefits for employees, particularly the drivers.

Teamsters Local 1038 filed charges of bad faith bargaining, and the illegal arrangement surfaced during the subsequent investigation and hearing. After the NLRB Regional Director issued a consolidated complaint based on his finding that there was reasonable cause to believe that the beer distributors committed unfair labor practices, an administrative law judge found that such violations had occurred, as did the Board and the Sixth Circuit Court of Appeals. The employers appealed to the Supreme Court, which declined to hear the matter in 1999.

During the ensuing years, thorough investigations were conducted to determine what the workers would have earned if not for the unfair labor practices which stemmed from the illegal arrangement. Four employers – Don Lee Distributor, Inc., Powers Distributing Co., Inc., Eastown Distributors Co., and Oak Distributing Co. – agreed to the settlement terms by 2003. However, Hubert Distributors, Inc. continued to litigate, and unsuccessfully appealed the methodology and amount of the compliance determination to the Sixth Circuit. When the appeal failed in August 2006, the NLRB conducted an exhaustive search for the remaining 300 affected workers (and their heirs, where appropriate), which recently concluded this fall.

“We hope this sends a message that the NLRB takes violations of the National Labor Relations Act seriously, and we will pursue justice no matter how long it takes,” said Stephen Glasser, Regional Director of the NLRB Detroit office.

The National Labor Relations Board is an independent federal agency created by Congress in 1935 to administer the National Labor Relations Act, the primary law governing relations between unions and employers in the private sector. The statute guarantees the right of employees to organize and to bargain collectively with their employers, and to engage in other protected concerted activity with or without a union, or to refrain from all such activity.

For any questions or comments regarding this Labor Law Update please contact attorney Michael Daly of the Daly Law Firm at (619) 525-7000 or daly@mdalylaw.com.

This case could have a significant impact on companies who contract out various human resource functions to third party contractors, such as a PEO or staffing agencies.

Employers that use an independent contractor to conduct interviews and assist in hiring should become familiar with this case, and must recognize that the ADEA’s reach extends to a company that use independent intermediaries to conduct activities related to employees or applicants. Potential ADEA liability for an employer does not depend on whether the individual acting for the company is an actual employee or an independent contractor. An individual can act as an authorized agent of the employer regardless of his or her employment status.

Whether the Ninth Circuit Court of Appeals will follow the holding in the Halpert case extending liability of an employer under the ADEA remains to be seen.

For any questions or comments regarding this Labor Law Update please contact attorney Michael Daly of the Daly Law Firm at (619) 525-7000 or daly@mdalylaw.com.

Last month, in Chau v. Starbucks, the California Court of Appeals in San Diego reversed a trial court award requiring the coffee giant to pay more than $100 million in restitution to its workers for allowing shift supervisors to share baristas’ tips. The appellate court ruled that the supervisors, which essentially perform the same job functions as baristas 95% of the time, may share in tips left behind in collective tip jars. Because Starbuck’s shift supervisors do not have the managerial power to hire, fire or promote, and spend the vast majority of their time servicing customers, the court ruled that Labor Code Section 351 does not prohibit Starbucks from allowing supervisors to share in tips left for baristas.

The class action attorneys representing the plaintiffs promised to appeal the decision to the California Supreme Court.

For any questions or comments regarding this Labor Law Update please contact attorney Michael Daly of the Daly Law Firm at (619) 525-7000 or daly@mdalylaw.com.