Wage & Hour Counsel : Wage & Hour Lawyer & Attorney : Littler Mendelson Law Firm : Employment Law, Labor Relations

President Obama has signed his first piece of legislation, the Lilly Ledbetter Fair Pay Restoration Act, into law. The Act is likely to result in an increase in the number of discrimination claims against employers, as it effectively eliminates the statute of limitations in wage discrimination cases and significantly expands the class of protected employees, and thus, potential litigants. For a more in-depth analysis, see Littler's ASAP: Paycheck Rule Revived for Pay Discrimination Claims with Signing of the Lilly Ledbetter Fair Pay Act.

This blog update was authored by Andrea Hallier.
 

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Deleon v. Verizon Wireless concerns a case where the employer had been previously sued under various sections of the California Labor Code for charging back commissions to its salespeople. No claims under the California Labor Code Private Attorneys General Act (PAGA) were alleged in the original complaint. That case settled in 2006, and the court certified a class for purposes of settlement. Nothing in the settlement agreement made reference to the PAGA. Rather, the agreement defined "released claims" to include all liabilities and penalties arising out of "any conduct, events, or transactions occurring during the class period." After the settlement, the plaintiff in Deleon sued the same employer, purportedly on behalf of the same employees, based on the same violations of the Labor Code, but this time seeking only penalties pursuant to the PAGA. The employer demurred to the second complaint, and the court of appeal upheld the trial court's dismissal of the second complaint based on res judicata. The recent Deleon decision is significant for employers in at least the following three ways:

Settlement Agreements. Even if an employer is settling a class action that has no PAGA claims, provided the employees release all "liabilities and penalties" arising out of "any conduct, events, or transactions” occurring in the class period, Deleon provides that the employer should be protected against any subsequent tag-along PAGA actions. More importantly, the employer need not designate any part of the settlement amount as settling PAGA claims, and no part of the settlement amount need be paid to the State of California in order to release non-asserted PAGA claims. On the other hand, if PAGA claims are a part of the complaint, the parties will most likely be required to designate some portion of the settlement amount as settling PAGA claims, and 75 percent of that amount should be paid to the state.

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On January 21, 2009, the California Court of Appeals denied the plaintiffs' motion for rehearing in the Marin v. Costco Wholesale Corporation case which addressed how to calculate overtime on a bonus. The court modified its opinion to clarify that the only controlling California authority on the issue is the directive that overtime hours be compensated at a rate of no less than one and one-half times the regular rate of pay. The December 23, 2008 opinion, with the January 21, 2009 revisions, was certified for publication.  Marin v. Costco was discussed in further detail in our previous post.

This blog entry was authored by Sandra Dermody.

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On January 22, 2009, a California Court of Appeal, Second Appellate District, issued an opinion upholding casino employers' right to maintain mandatory tip-pooling arrangements with dealers, finding no principled distinction between tip-pooling arrangements in the more familiar restaurant industry and the casino industry. Lu v. Hawaiian Gardens Casino, Inc.,  __ Cal. App. 4th __, (B194209 1/22/09). However, in partially reversing the summary judgment for the casino employer, the court also held that a triable issue of material fact existed as to whether certain "customer service representatives" and "senior customer services representatives" were "agents" of the employer entitled to participate in the mandatory tip-pooling arrangement. Further, although the court agreed with the trial court that California Labor Code sections 351 and 450 do not provide for a private right of action, it held that these sections can provide the predicate violation for an action under the California Unfair Competition Law (UCL), Cal. Bus. & Prof. Code § 17200. The court also recognized that employees could use alleged violations of California Labor Code §§ 351 and 450 to bring an action under the California Labor Code Private Attorneys General Act, Lab. Code §§ 2698 et seq.

The court found that there was sufficient evidence from which a reasonable jury could conclude that the customer service representatives have the authority to, and do, "supervise, direct, or control the acts of" the dealers, making them ineligible to participate in mandatory tip-pooling arrangements.

As reported in our prior blog entry, California employers should ensure that supervisory employees, such as floor managers, do not participate in a tip-pooling arrangement.

This blog entry was authored by Tyler Paetkau.

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On January 14, 2009, the California Supreme Court granted review in Brinkley v. Public Storage, Inc. which, like Brinker Restaurant Corporation v. Superior Court, held that employers are only required to “provide” meal and rest breaks and, absent a policy or practice which discourages or prevents employees from taking their meal and rest breaks, claims for missed meal and rest breaks are not suitable for class treatment. As expected, the Supreme Court is holding the Brinkley case pending determination of the earlier Brinker Restaurant case. This means there will be no activity in Brinkley until Brinker Restaurant is decided.

The opening brief in Brinker Restaurant was filed on January 20, 2009. Respondent and amici (friends of the court) briefs will follow, as well as the final reply brief, a process that can take several months. At that point the case will be scheduled for oral argument. Check back on this blog for the progress of Brinker Restaurant.

This blog entry was authored by AnnaMary Gannon.
 

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In an opinion letter dated December 19, 2008 (FLSA2008-18), the DOL found that itamae-sushi chefs and teppanyaki chefs were tipped employees under the FLSA, eligible to participate in employer-mandated tip pools.

Section 3(t) of the FLSA defines tipped employees as “any employee engaged in an occupation in which he/she customarily and regularly receives more than $30 a month in tips.” 29 U.S.C. § 203(t). Section 3(m) allows tip-pooling among employees who customarily and regularly receives tips. 29 U.S.C. § 203(m); see also 29 C.F.R. § 531.54.

Itamae-sushi chefs and teppanyaki chefs have direct contact with customers, at the bar counter area (itamae-sushi chefs) and at customer tables (teppanyaki chefs). In support of its opinion, the DOL cited its “longstanding position that counter persons who serve customers may participate in tip pools. Citing FLSA Field Operations Handbook § 30d04(a); Wage and Hour Opinion Letter 1/25/83 (waiter chef who brings food order from kitchen to table and cooks it on hibachi grill in front of customers may share in tip pooling).
 

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The Wage and Hour Division of the Department of Labor (DOL) recently released to the public three December 2008 opinion letters that addressed inquiries regarding FLSA exemption issues.

The first letter (FLSA2008-11) concluded that Assistant Athletic Instructors at an institution of higher education are exempt from the minimum wage and overtime requirements of the Act as bona fide professionals, since their primary responsibility (occupying more than 50% of their time) is teaching student-athletes.

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In a December 18, 2008 opinion letter, the United States Department of Labor (DOL) determined that an employee’s on-call time did not count as hours worked under the Fair Labor Standards Act (FLSA). The opinion letter offers a helpful reminder of how on-call time works under the FLSA. 

Whether on-call time counts as paid time depends on the facts of the situation, but comes down to how much freedom an employee has while on call. If an employer imposes very few restrictions on an employee while on call, the time does not count as hours worked. But, if an employer imposes many restrictions, the time may count as paid time. Some relevant factors include geographic restrictions, how much time an employee has to report when called, how many calls an employee actually receives, the ability to trade on-call duties and whether on-call duties are part of an agreement with the employer.

The employee who wrote to the DOL said he had to be reachable at all times, could not drink alcohol while on call and had one hour to report after receiving a call. He did not receive call-backs often, but his employer limited how much overtime he worked when on call and disciplined employees who did not follow the on-call restrictions. Based on those facts, the DOL determined the restrictions were not enough to turn the on-call time into paid hours worked.

This blog entry was authored by Lara Strauss

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The Wage and Hour Division of the Department of Labor (DOL) recently released four new opinion letters concerning volunteering and the Fair Labor Standards Act.   

Different Public Agency

The Department opined that county-employed emergency medical technicians are able to volunteer to provide emergency medical services for a local volunteer emergency crew (the “Crew”) without violating the FLSA. Advice was sought about whether the county and the Crew would be considered the same public agency under the FLSA. Relying on factors considered by the Fourth Circuit in Benshoff v. City of Virginia Beach, 180 F.3d 136 (4th Cir. 1999), the DOL found the county and the Crew did not constitute the same public agency. Facts relevant to this determination included the following: (1) Crew members voted to elect officers; (2) the Crew had a board of trustees made of public citizens and maintained its own set of by-laws and policies; (3) the county did not control the Crew’s personnel decisions; and (4) the county only paid for 20 percent of the Crew’s operating expenses.  FLSA2008-13 (December 18, 1008)

Same Services

In a separate opinion letter, the DOL advised that a firefighter who is employed by a private, volunteer fire department may not provide firefighting services for his or her employer in exchange for compensation on some shifts and on an unpaid basis during other shifts.  FLSA2008-14 (December 18, 2008)

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Many employers do not know that paying a non-discretionary bonus to non-exempt employees will require the payment of additional overtime. The California Court of Appeal’s decision in Marin v. Costco Wholesale Corporation is a good reminder of the need to pay overtime on such bonuses and of the fact that the method for calculating overtime on a bonus depends upon whether it qualifies as a “production bonus” or a “flat rate bonus.”

As a general matter, the payment of a non-discretionary bonus (one that is not discretionary in either the fact that it will be paid or in the formula for calculating it) to non-exempt employees triggers an additional overtime obligation because it retroactively increases the regular rate of pay for the employee receiving the bonus for the time period covered by the bonus. A non-exempt employee is entitled to be paid overtime at 1.5 times (or double, in some cases) the regular rate of pay for each overtime hour worked. With some specific exceptions not relevant here, the regular rate of pay for overtime purposes includes all compensation earned during the workweek. Thus, an employee who is paid a quarterly bonus has received additional compensation that was not included in the regular rate of pay when he or she was paid overtime for hours worked during the quarter at issue. An employer is required to resolve this issue by calculating a “regular rate” of pay on the bonus itself and then paying some portion of that regular bonus rate for each overtime hour worked during the period in which the bonus was earned. The precise method for calculating the overtime due on a bonus depends upon whether the amount of an employee’s bonus increases with each hour worked (in which case it is a “production bonus”) or whether the amount of the bonus is fixed independent of the hours worked (in which case it is a “flat rate bonus”).

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While large insurance companies reportedly have paid over $100 million each to settle overtime claims brought by claims adjusters, insurance brokerage giant Aon rolled the dice and won a significant trial victory last week. Aon prevailed in an eleven-day trial against a certified class of 1,024 current and former claims adjusters employed by Aon’s wholly-owned subsidiary, Cambridge Integrated Services, Inc. As in most of these cases brought by claims adjusters, Aon’s adjusters sought overtime pay, and Aon successfully relied upon the administrative exemption to justify its failure to pay overtime in a bench trial before retired judge Ronald Sabraw. Since the California Court of Appeal previously rejected the applicability of the administrative exemption to insurance claims adjusters in Bell v. Farmers Ins. Exch. (2001) 87 Cal.App.4th 805, Aon’s adjusters here might have expected a cake walk. But little went their way this time.

Aon had four significant hurdles to overcome to avoid liability. To prove the adjusters were correctly classified exempt, Aon had to prove that: (1) the claims adjusters’ duties involved the performance of office or non-manual work directly related to management policies or general business operations of Aon or its customers; (2) the claims adjusters customarily and regularly exercised discretion and independent judgment; (3) the claims adjusters performed under only general supervision work requiring special training, experience or knowledge; and (4) the adjusters spend at least 50 percent of their time performing these exempt duties. Aon cleared every one of these hurdles.

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