On May 30, the California Assembly passed AB 10, a bill that would increase California’s hourly minimum wage from $8 to $9.25 in three separate increments over the next three years. Thereafter, the bill would require the minimum wage to adjust annually for inflation.
The bill passed 45-27 with a vote along party lines.
Assemblyman Luis Alejo (D-Salinas) authored the bill in an effort to address the widening income gap. According to Alejo, minimum wages have not kept pace with the cost of living and has equated to a decrease in purchasing power. “We have created a system where we pay workers less but need them to spend more,” says Alejo. “That causes middle class families to fall down the economic ladder. It’s the reason our middle class is shrinking and the reason we are facing the largest gap between upper- and lower-income Californians in at least 30 years.”
The California Chamber of Commerce (Chamber) along with a coalition of business groups, opposes the bill, labeling it a “job killer.” The Chamber states that California’s economic recovery is still in the infancy stage and that an increase in the minimum wage in 2014 will negatively impact any economic recovery by either limiting available jobs, or worse, creating further job loss.
The measure now goes to the Senate for consideration. Stay tuned for further developments.
In Heyen v. Safeway, Inc., an action to recover unpaid overtime pay by a former assistant manager, the Court of Appeal affirmed the trial court’s award of overtime pay to Heyen, even though she was classified as an exempt employee while she was employed by Safeway. Heyen claimed that Safeway should have classified her as “non-exempt” because she regularly spent a majority of her time performing checking and bagging duties. Safeway claimed that Heyen was simultaneously managing the store while also performing checking and bagging duties, and therefore her activities should be considered exempt.
Relying on Federal regulations incorporated into Wage Order 7 and the California Supreme Court case Ramirez v. Yosemite Water Co., the Court held that the jury was properly instructed by the trial court that when a party claims an employee is engaged in concurrent performance of exempt and non-exempt work, the jury must consider the time to either be exempt or non-exempt, depending on the “primary purpose” for which the employee undertook the task. Essentially, there is no hybrid category. If the tasks or activities were conducted to supervise employees or ensure smooth functioning of the store, then those activities would be exempt work. However, if the tasks were undertaken for other reasons such as in Heyen, where the employee devoted the majority of her time to non-exempt work so as not to exceed the number of hours budgeted for the store, then those activities are non-exempt.
Heyen reiterates that the burden of proof of showing an employee’s exempt status rests on the employer. To meet its burden, Heyen requires employers to show that the primary purpose of tasks performed by their store managers relate to employee supervision and/or management of the store.
On May 10, 2013, the California Court of Appeals in Faulkinbury v. Boyd & Associates reversed its denial of class certification as to meal period and rest period violations in light of the California Supreme Court’s decision in Brinker Restaurant Corp. v. Superior Court. (Recall, Brinker granted class certification to determine the lawfulness of a uniform rest break policy that allegedly violated the applicable wage order requirements by failing to include the “major fraction” language as directed in the wage order, discussed here.)
With respect to the meal period violations, plaintiffs alleged that the employer had an unlawful, uniform policy that required employees to sign an on-duty meal period agreement and take on-duty meal periods. In light of Brinker, the Court held that the claim for meal period violations was amenable to class treatment because the employer’s “on-duty meal policy was uniformly and consistently applied to all . . . employees.” Faulkinbury at 13. The Court explained that “the employer’s liability arises by adopting a uniform policy that violates the wage and hour laws. Whether or not the employee was able to take the required break goes to damages, and ‘[t]he fact that individual [employees] may have different damages does not require denial of the class certification motion.’” Faulkinbury at 15-16 (emphasis added). This decision arguably runs counter to the Supreme Court’s recent decision in Comcast Corp. v. Behrend, in which the Supreme Court rejected class certification based on plaintiffs’ damages model, as discussed here.
With respect to rest period violations, plaintiffs alleged that the employer had no formal rest break policy and had an express policy requiring employees “to remain at their posts at all times.” Faulkinbury at 16-17. Consistent with its decision as to meal period violations, the Court held that “the lawfulness of [the employer's] lack of rest break policy and requirement that all security guard employees remain at their posts can be determined on a classwide basis.” Id. at 18. Employees’ individualized rest break practices would “at most” establish “individual issues of damages, which would not preclude class certification.” Id. at 18-19. The employer’s liability, if any, “would arise upon a finding that its uniform rest break policy, or lack of policy, was unlawful.” Id. at 19.
Recently, the U.S. Equal Employment Opportunity Commission (“EEOC”) updated its informal guidance on how the Americans with Disabilities Act (“ADA”) applies to job applicants or employees with cancer, diabetes, epilepsy, and intellectual disabilities. Since Congress passed the ADA Amendments Act (“ADAAA”) in 2008, the EEOC has received frequent questions from employers regarding how the ADA applies to these conditions. As discussed in our 2013 Emerging Employment Law Seminar, while the ADAAA did not change the definition of disability, it expanded how the definition should be interpreted to make it easier for an individual to establish that he or she has a disability. To clarify the implications of this broadened definition, the EEOC revised its question and answer guidance to indicate that employees with cancer, diabetes, epilepsy, and intellectual disabilities “should easily be found to have a disability.”
As anticipated, Senate Bill 1193 went into effect on April 1, 2013, requiring a broad range of businesses in the transportation, hospitality, and health care sectors to post public notices regarding slavery and human trafficking. The Bill is an effort to combat the $32 billion human trafficking industry.
The following businesses are required to post the notice: general alcohol retailers, adult/sexually oriented businesses, primary airports, intercity passenger rail or light rail stations, bus stations, truck stops, emergency rooms with acute care hospitals, urgent care centers, farm labor contractors, privately operated job recruitment centers, roadside rest areas, and massage/bodywork businesses.
The 8.5” x 11” notice is required to provide important information on how to report suspected human trafficking and where victims of human trafficking may obtain help.
We provided an overview of Senate Bill 1193, along with other regulatory changes, in our 2013 Employment Issues Seminar. A copy of the presentation is available here.
For more information and a “model notice,” visit the Attorney General of California’s website.
As we reported in August 27, 2012, in Banner Health System* the National Labor Relations Board (NLRB) ruled that an employer violates Section 7 of the National Labor Relations Act (NLRA) when it maintains a blanket policy that prohibits employees from discussing workplace investigations.
On April 16, 2013, the NLRB’s Division of Advice released a memorandum of advise providing further guidance to employers regarding the confidentiality of investigations. The Division found the following policy from Verso Paper’s Code of Conduct in violation of Section 7 of the NLRA:
Verso has a compelling interest in protecting the integrity of its investigations. In every investigation, Verso has a strong desire to protect witnesses from harassment, intimidation and retaliation, to keep evidence from being destroyed, to ensure that testimony is not fabricated, and to prevent a cover-up. To assist Verso in achieving these objectives, we must maintain the investigation and our role in it in strict confidence. If we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.
However, the Division also stated that the policy would be lawful if the last two sentences were deleted and replaced with:
Verso may decide in some circumstances that in order to achieve these objectives, we must maintain the investigation and our role in it in strict confidence. If Verso reasonably imposes such a requirement and we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.
Accordingly, to be compliant with the NLRB’s current position, employers must establish in each investigation that there are case specific reasons/facts that justify maintaining an investigation as confidential.
*Banner Health System is currently on appeal to the U.S. Court of Appeals for the District of Columbia Circuit. Stay tuned for updates on this issue.
In Comcast v. Behrend, a class action case involving how much Comcast charged cable TV subscribers, the United States Supreme Court held that as a prerequisite for certification of a class action, a plaintiff must introduce admissible evidence to show that the case is susceptible to awarding damages on a class-wide basis. Justice Antonin Scalia wrote for the majority that Comcast’s subscribers fell “far short of establishing that damages are capable of measurement on a class wide basis,” he continued. “There is no question that the model failed to measure damages resulting from the particular antitrust injury on which (Comcast’s) liability in this action is premised.”
Comcast requires that plaintiffs not only show they could prove their claims through common evidence, but also puts an affirmative burden on plaintiffs to establish, prior to certification, that there is reliable and admissible evidence of common injury and damages on a class-wide basis. Thus, in holding that a plaintiff seeking certification of a damages class under Rule 23(b)(3) must establish, through evidentiary proof, that damages can be measured on a class wide (and not individual) basis, Comcast raises the bar for class-action plaintiffs to obtain class action certification. Comcast also makes it clear that the trial court must probe the merits of the claim at the certification stage to ensure that the method for measuring damages fits the underlying substantive legal theories remaining in the case and is not arbitrary.
Although this decision related to consumers, it can be applied to and will significantly impact the future of employment-related class action lawsuits.
As we recently reported to you at our 2013 Emerging Employment Law Seminar, the California Fair Employment and Housing Commission (FEHC) implemented new and amended regulations governing disability discrimination, reasonable accommodation, and the interactive process under the California Fair Employment and Housing Act (FEHA) (2 Cal. Code Reg. Sections 7293.5 et seq.). The regulations emphasize that employers must engage in a prompt, good faith interactive process in order to reduce the risk of liability. Key provisions of FEHC’s new disability regulations include:
- The regulations assume that individuals have a disability
- Dogs will join the workforce
- Employers must keep job descriptions up to date
- Performance reviews can help establish essential job functions
- Employees must show that leaves likely will be effective in allowing the employee to return to work within a reasonable time period
- Making a light duty position permanent is not a reasonable accommodation
- Lowering quality or quantity standards is not a reasonable accommodation
- Employers must exclude leave time for productivity and bonus purposes
- The employee must establish the effectiveness of the accommodation sought
- The employer can assert safety and health defenses only if the employer has engaged in the interactive process
- Employers may not ask about the specific underlying medical condition
- Medical marijuana use is not protected
- Employers must implement an interactive process
- Notice to engage in interactive process
- The employer need not implement the employee’s preferred accommodation
- The employer must separate and keep confidential interactive process medical information
B sure to update your employee handbook and policies and procedures to reflect these recent changes.
As we recently reported to you at our 2013 Emerging Employment Law Seminar, the California Fair Employment and Housing Commission (FEHC) implemented new and amended regulations addressing employers’ obligations and employees’ rights and responsibilities regarding pregnancy under the California Fair Employment and Housing Act (FEHA) (Title 2, California Code of Regulations, Sections 7291.2 et seq.). Employers should become familiar with the pregnancy regulations because they make substantial changes in the areas of leave, benefits, and reinstatement. Some of the key changes employers need to know include:
- Definition of “disabled by pregnancy”
- Amount of available leave
- Measuring intermittent/reduced schedule leave
- Right to reinstatement to the same position or comparable position after leave or transfer
- Maintenance of health insurance coverage for up to seven months if an employee takes pregnancy and CFRA leave
- Providing more leave as a reasonable accommodation once PDL is exhausted
- Transfers as a reasonable accommodation
- Other reasonable accommodation in addition to transfers and leave
- Providing advance written notice to employees of rights and responsibilities
- Medical certification
Be sure to update your employee handbook and policies and procedures to reflect these recent changes.
The United States Supreme Court ruled unanimously in Standard Fire Ins. Co. v. Knowles that plaintiffs bringing class actions cannot avoid federal jurisdiction by representing that the class will seek less than $5 million in damages — the threshold beyond which defendants can remove a lawsuit initially filed in state court to federal court pursuant to the Class Action Fairness Act of 2005 (CAFA).
The Court held that a stipulation by the named plaintiff limiting damages “cannot legally bind members of the proposed class before the class is certified,” and therefore cannot defeat the $5 million federal jurisdiction requirement under CAFA.
The ruling clarified that a named plaintiff’s precertification stipulation as to damages “does not bind anyone but himself” and is an “artificial cap” on the class’ recovery. The named plaintiff lacks authority to concede the amount in controversy for absent class members. A federal district court cannot value the amount in controversy on the basis of a stipulation from a named plaintiff, but rather must follow the approach in cases with no stipulation: aggregate the individual class members’ claims without relying on a nonbinding stipulation.
Overall, the decision in Knowles is a victory for class action defendants desiring a federal venue, as the decision makes it harder for plaintiffs to escape federal jurisdiction. The decision also follows CAFA’s goal of ensuring broad federal jurisdiction for high-dollar multistate class actions of national importance. Class plaintiffs with an amount-in-controversy greater than $5 million (provided the other CAFA requirements are met) now will have to litigate in federal court regardless of any damages stipulations.
The Supreme Court decision in Knowles reinforces the court’s recent trend, begun in Wal-Mart v. Dukes, of holding that class actions must be managed based on individualized determinations concerning each class member, not based on facts plaintiffs allege to be characteristic of the class as a whole.