California Supreme Court: An Employee May Not Seek Unpaid Wages in a PAGA-Only Action

Today, the California Supreme Court issued its long-anticipated decision in ZB N.A. v. Superior Court (Lawson), resolving a split among California Courts of Appeal on the issue of application of an arbitration agreement to a PAGA claim seeking both civil penalties AND unpaid wages (pursuant to Labor Code section 558).  By way of background, several years ago, the California Supreme Court held in Iskanian v. CLS Transportation that a PAGA claim is not subject to an employment arbitration agreement because a PAGA claim seeking civil penalties (the majority of which are paid to the state, not to affected employees) is really a claim between the state and the employer, and the state is not a party to any arbitration agreement with the employer. However, after Iskanian, plaintiffs’ attorneys began to seek more than just civil penalties in their PAGA actions. They began to also seek unpaid wages under Labor Code 558, which is a statute providing that employers who violate certain wage and hour laws may be sued for civil penalties “in addition to an amount sufficient to recover unpaid wages.”  In other words, under this section, employees may recover not only penalties but also individualized monetary relief that is more akin to traditional damages.  Because this relief is employee-specific and payable directly to affected employees (as opposed to being payable to the state), employers facing such claims sought to compel arbitration of the unpaid wage portion of the PAGA claims, arguing that employees who agreed to arbitrate disputes must be compelled to arbitrate the portion of the PAGA claim seeking unpaid wages and that the civil penalty portion of the claim should be stayed pending completion... read more

Five reminders about sexual harassment prevention training requirements for California employers

Five reminders about sexual harassment prevention training requirements for California employers Employers should review their sexual harassment training obligations and ensure compliance, especially with the new law requiring sexual harassment prevention training for all employees by January 1, 2020 for employers with five or more employees.  Existing law already requires employers in California with 50 or more workers to provide at least two hours of sexual harassment prevention training to all supervisors.  The regulations regarding the training are becoming more and more detailed.  Here are five reminders about sexual harassment training and required anti-harassment polices: Employers with 5 or more employees must provide sexual harassment prevention training to all employees (even nonsupervisory employees) by January 1, 2020.  SB 1343 passed in 2018 and requires employers with 5 or more employees, including temporary or seasonal employees, to provide at least 2 hours of sexual harassment training to all supervisors. In addition, at least one hour of sexual harassment training is required for all nonsupervisory employees by January 1, 2020, and once every 2 years thereafter. The bill does require that the Department of Fair Employment and Housing (“DFEH”) is to develop or obtain 1-hour and 2-hour online training courses on the prevention of sexual harassment in the workplace and to post the courses on the DFEH’s website. The bill requires the DFEH to make existing informational posters and fact sheets, as well as the online training courses regarding sexual harassment prevention, available to employers and to members of the public in specified alternate languages on the DFEH website.  At this point, the DFEH has not indicated when the training and... read more

Supreme Court Gives Employers Another Tool to Fend Off Class Actions

Supreme Court Gives Employers Another Tool to Fend Off Class Actions Earlier this week, the U.S. Supreme Court held that an arbitration agreement cannot be read as permitting class arbitration unless the agreement clearly and explicitly so provides; it is not enough that the agreement is susceptible to the interpretation that it permits class arbitration. This holding gives employers another tool to fend off class actions and compel alleged class claims to individual arbitration. The Facts In 2016, an employee of lighting retailer Lamps Plus allegedly fell victim to a phishing scheme and unwittingly disclosed the tax information of over 1,000 of the company’s employees to the perpetrator of the scheme. The plaintiff in the underlying lawsuit, Frank Varela (“Varela”), was one of numerous employees who had a fraudulent tax return filed in his name in the wake of the incident. Although Varela had signed an arbitration agreement as part of his employment, he nevertheless filed suit against his employer in federal court in California, seeking to represent a putative class of other Lamps Plus employees. Lamps Plus moved to compel individual arbitration and to dismiss the lawsuit; the district court agreed to compel arbitration, but did so on a classwide basis. The Ninth Circuit affirmed, finding that the arbitration agreement was ambiguous on the permissibility of classwide arbitration, and applied California’s general rule of contra proferentem to construe contractual ambiguities against the drafter. The Supreme Court granted the employer’s petition for certiorari. The Decision In a 5-4 decision, the Supreme Court reversed and held that: “[c]ourts may not infer from an ambiguous agreement that parties have consented to arbitrate on... read more

Employees who are required to stay “on call” before the start of a possible work shift, phoning their employer two hours before the shift to learn whether they are needed, are entitled to be paid for that two hour period regardless of whether they’re called in to work.

In February 2019, the Second District Court of Appeal in Los Angeles said on-call employees are protected by the Industrial Welfare Commission’s (IWC) wage orders, that entitle employees to “reporting time pay” as soon as they are required to report to work. The employer, Tilly’s, a clothing store in Torrance, California, argued that the law mandates payment only for the hours an employee actually works. But the Court of Appeal said the law also protects workers who are required to report by phone because they are committing their time to the employer. The court went on to say that workers facing on call shifts, “cannot commit to other jobs or schedule classes during those shifts,” must make child care arrangements and have to give up time from recreation or socializing. By contrast, the court said, “unpaid on-call shifts are enormously beneficial to employers,” who can maintain a “large pool of contingent workers” and pay them only if they need them. In this case, Tilly’s required their employees with on-call shifts to call two hours before the shift would start and disciplined those workers who called in late or not at all by terminating them after three violations. The court agreed with employees that when the IWC orders were written, employees reported to work by showing up at the workplace. But the court said the law was not drafted narrowly and must be interpreted in light of changing realities and technology. The court also held that employers are requiring their employees to “report to work” when they mandate call-ins two hours before the start of a possible work shift. Requiring... read more

Fast-food chain Chipotle Mexican Grill, Inc. has found itself at the center of the ongoing debate over mandatory arbitration provisions in employment agreements. That debate has always assumed that arbitration clauses favor employers. However, the most recent developments in a wage-and-hour case against Chipotle have called that assumption into question.

Fast-food chain Chipotle Mexican Grill, Inc. has found itself at the center of the ongoing debate over mandatory arbitration provisions in employment agreements. That debate has always assumed that arbitration clauses favor employers. However, the most recent developments in a wage-and-hour case against Chipotle have called that assumption into question. This article was originally printed in the Recorder on January 22, 2019 By Gina M. Roccanova of Meyers Nave Riback Silver & Wilson. Fast-food chain Chipotle Mexican Grill, Inc. has found itself at the center of the ongoing debate over mandatory arbitration provisions in employment agreements. That debate has always assumed that arbitration clauses favor employers. However, the most recent developments in a wage-and-hour case against Chipotle have called that assumption into question. A federal district court judge in Colorado recently dismissed more than 2800 plaintiffs from a wage-and-hour collective action against Chipotle brought under the Fair Labor Standards Act. (Turner v. Chipotle Mexican Grill, Inc., Case No. 1:14-cv-02612-JLK). The court in that case had initially certified a class of approximately 10,000 Chipotle employees on a claim that the company required them to work off the clock and clocked them out automatically at certain times. While the case was pending, the United States Supreme Court issued its decision in Epic Systems Corp. v. Lewis, which upheld the legality of arbitration clauses that prohibited collective actions. As a result of that decision, the court in the Chipotle case ruled that the 2,814 class members who had signed similar arbitration agreements could not proceed as class members, but would have to pursue their claims individually in arbitration. Chipotle then sought to disqualify counsel from... read more

Winery ignores evidence against manager who sexually harassed female employees. The Los Angeles County Superior Court awards the two Plaintiffs $11 Million Dollars.

Winery ignores evidence against manager who sexually harassed female employees. The Los Angeles County Superior Court awards the two Plaintiffs $11 Million Dollars. Jury Verdict Alert.com California announced today that a Los Angeles County Winery was ordered to pay $11 Million to two female Plaintiffs who were sexually harassed by their manager. Facts and Background: Plaintiff Amber Brown worked for Keyways Vineyard and Winery for about nine months when Carlos Pineiro was hired as the new General Manager. Megan Meadowcroft was hired shortly after Mr. Pineiro started working for Keyways. Ms. Brown and Ms. Meadowcroft complained about Mr. Pineiro to Silverton Partners and Essence Business Group, the owners and managers of Keyways. After having worked at Keyways for about two weeks, Mr. Pineiro was fired. After her complaints about Mr. Pineiro, Ms. Meadowcroft was not added onto new work schedules. After he was fired, Mr. Pineiro reached out to Silverton and Essence about being re-hired, promising additional sales, connections, and better behavior. Only two months after being fired, Mr. Pineiro was re-hired as the general manager.  When Ms. Brown learned Mr. Pineiro was re-hired, she again complained to Silverton and Essence. When her complaints were ignored Ms. Brown sought and obtained a temporary restraining order.  Thereafter, Ms. Brown was put on leave and Mr. Pineiro was permitted to continue working pending the final restraining order hearing. After the restraining order was granted, Ms. Brown was never put back on the schedule despite following up with defendants multiple times. Plaintiff’s Contentions: Plaintiff Brown contended that Mr. Pineiro made numerous sexually inappropriate, unwelcome comments to Ms. Brown. He would attempt to flirt... read more

California Narrows Workers Who Will Qualify as Independent Contractors for Wage-Hour Purposes

Reprinted from an article that appeared in the Labor & Employment Blog by Robin E. Largent Yesterday, the California Supreme Court issued its decision in Dynamex Operations West, Inc. v. Superior Court (Lee), adopting a very broad view of the workers who will be deemed “employees” as opposed to “independent contractors” for purposes of claims alleging violations of California’s Wage Orders.  This is a surprising decision that magnifies the risk of classifying workers as independent contractors in California and is likely to lead to increased claims challenging such classifications in this state.  This is particularly true because the Court’s decision makes it easier for plaintiffs to succeed in getting a class certified in an independent contractor misclassification case. Background Dynamex is a delivery company that provides delivery services for retail stores and for consumers.  Dynamex historically classified its delivery drivers as employees but then reclassified them as independent contractors because it was more economical.  [Note to employers: this is generally a bad idea, particularly where improving the bottom line is the stated purpose for the reclassification.]  The drivers basically performed the same work but were permitted to provide services for other companies and were permitted to hire other workers to assist them. They also had some control over the details of their delivery schedules and routes. A driver who worked for Dynamex for 15 days filed this class action lawsuit (which is now in its 13th year of litigation) alleging various wage and hour violations stemming from the independent contractor classification.  Some of the claims alleged violations of the California wage order applicable to transportation industry employees, such as... read more

Ninth Circuit Reverses Its Own Precedent and Newly Holds That Prior Salary History Cannot Justify a Pay Disparity Between Men and Women

You may recall that last year, we reported on a Ninth Circuit case, Rizo v. Yovino, wherein the Court of Appeal held that an applicant’s prior salary history is a “factor other than sex” that an employer may rely on, either alone or in combination with other factors, in setting pay rates–even though the use of that factor may result in men and women being paid different rates of pay for similar work. In so holding, the Court of Appeal relied on its own prior precedent (dating back to 1982), Kouba v. Allstate, wherein the Court expressly held that this was permissible and could not support a federal Equal Pay Act violation. Well, after issuing its decision in Rizo v. Yovino last year, the Ninth Circuit granted a petition for en banc review, and yesterday the Court issued a new decision reversing itself and overruling its own prior precedent in Kouba. Now, the Ninth Circuit has newly ruled that an applicant’s prior salary history is not a “factor other than sex” that an employer may rely on, either alone or in combination with other factors (e.g. experience, education), to justify paying an employee differently than an employee of the opposite sex for similar work. Under the new generalized rule announced by the Court, an employer may not rely on prior salary history as a factor in setting a newly hired employee’s wages. If an employer does so, and this results in a pay disparity along gender lines, the affected employees may have a valid Equal Pay Act claim against the employer. The Ninth Circuit reasoned: “Prior salary . .... read more

San Francisco Passes Ordinance Banning Salary History Inquiries

San Francisco’s Board of Supervisors has passed an ordinance that will ban employers from inquiring about an applicant’s prior salary history.  The Parity in Pay Ordinance, which is expected to be signed into law shortly by the City’s Mayor, will become operative July 1, 2018. The stated purpose of the Ordinance is to narrow the wage gap between men and women, by eliminating the practice of setting current pay rates based on prior pay rates that reflect historical gender pay differentials. The Ordinance will apply to any person applying for employment where the work will be performed within the geographic boundaries of San Francisco (including temporary or seasonal work, part-time work, contracted work, and work through a temp agency) and whose application, in whole or in part, will be solicited, received, processed, or considered in San Francisco. The Ordinance will prohibit employers from (1) directly or indirectly asking an applicant about his or her salary history, (2) considering an applicant’s salary history in making hiring decisions, or (3) considering an applicant’s salary history in deciding what salary to offer the applicant. However, if the applicant voluntarily and without prompting discloses his or her salary history, the employer may consider that information in setting the applicant’s salary (recognizing, of course, that under California’s Equal Pay Act, salary history by itself cannot be used to justify paying an applicant less than employees of another gender or race for doing substantially similar work). There will of course be monetary penalties for non-compliance and the threat of civil litigation.  The City’s Office of Labor Standards Enforcement will enforce the Ordinance, and will publish Notices... read more

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