Labor Employment Law Blog

On April 16, 2008, a California Appellate Court decided Bradstreet v. Wong, holding that the shareholders, officers, or managing agents of the Employers could not be held personally liable for violations of the Labor Code arising out of the Employers' failure to pay wages.  The Court also held that individual defendants were not required to pay earned but unpaid wages as restitution under California's Unfair Competition Law.

On December 3, 2007, we reported that the California Supreme Court granted Sheppard Mullin Richter & Hampton's Petition for Review on behalf of Defendants Liberty Mutual Insurance Company and Golden Eagle Insurance Corporation in one of the biggest employment class action cases pending in California today.  When considering the Liberty Mutual case, the California Supreme Court may address several significant legal issues relating to the interpretation of the California Wage Orders, in particular the "administrative exemption" to California's overtime requirements.

On December 5, 2007, the United States District Court, Central District of California, granted Sheppard, Mullin, Richter & Hampton, LLP's Motion for Summary Judgment filed on behalf of Defendant Pomona Valley Hospital Medical Center ("PVHMC") in one of the most significant wage and hour class action lawsuits currently pending before any federal or California state court.  In Parth v. Pomona Valley Hospital Medical Center, the healthcare industry received a major victory against plaintiffs' counsel who have challenged 12-hour shift overtime pay practices.  The Parth decision is likely to be widely cited in other cases against California hospitals and should greatly benefit the entire healthcare industry.

On November 28, 2007, the California Supreme Court granted Sheppard Mullin Richter & Hampton's Petition for Review on behalf of Defendants Liberty Mutual Insurance Company and Golden Eagle Insurance Corporation in one of the biggest employment class action cases pending in California today.   In Harris v. Superior Court, the California Supreme Court may address several significant legal issues relating to the interpretation of the California Wage Orders that would be important to all California employers.  This could be one of the most significant employment cases addressed by the California Supreme Court in some time.

A California Court of Appeal has declared that Industrial Welfare Commission (IWC) Wage Order 16-2001 ("Wage Order 16"), regulating wages, hours and working conditions for employees in the on-site construction and mining industries, is valid.   If they have not already done so, employers in the construction industry should promptly ensure their practices comply with all of the requirements of Wage Order 16, including whether a new alternative workweek schedule election is necessary.  See Small v. Superior Court, 55 Cal. Rptr. 3d 410 (2007).

Earlier this year, the California Supreme Court allowed a plaintiff in a product defect class action access to prospective class members' contact information (addresses and telephone numbers) absent an affirmative request by the prospective class members to keep the information private.  (see our discussion of Pioneer Electronics(USA), Inc. v. Superior Court at http://www.laboremploymentlawblog.com/privacy-california-supreme-court-grants-preclass-certification-access-to-class-member-contact-information.html).  Recently, the Second District Court of Appeals applied the same standard to an employment class action.  In Belaire-West Landscape, Inc. v. Superior Court, the Court allowed a former employee plaintiff pre-certification access to contract information of other current and former employees absent an affirmative request by the individual employees to keep the information private.

Today, the California Supreme Court unanimously decided Murphy v. Kenneth Cole Productions, Inc. S140308, and held that the "one additional hour of pay" in Labor Code section 226.7 constitutes a wage and not a penalty.  This decision is significant because a wage is subject to a three year statute of limitations (Code of Civ. Proc. Section 338), while a penalty is only subject to a one year statute of limitations (Code Civ Proc. Section 340).  Moreover, the ramifications of this decision may have broader wage hour implications.  Sheppard Mullin's Labor and Employment attorneys are evaluating the impact of this new decision on employers and will provide a more detailed analysis in the next issue of the California Labor and Employment ALERT.

In the past year, a new trend has emerged in wage and hour class action litigation that targets pharmaceutical and health products companies.  Several class actions have been filed in courts nationwide alleging that pharmaceutical and health products firms violated federal and state wage and hour laws by misclassifying sales representatives as exempt and denying them overtime pay, as well as meal and rest periods.

In California, once a bonus has been promised to an employee, and the employee performs all of the conditions necessary to receive the bonus, the bonus is considered wages that must be paid. Eligibility for a bonus payment is determined by the terms of the bonus plan. A recent Court of Appeal case, Neisendorf v. Levi Strauss & Co., has confirmed that employers are free to establish bonus plans which condition bonus payment on the employee's continued employment with the company as of the payout date.

In Koehl v. Verio, Inc., the California Court of Appeal, First District, reaffirmed two basic propositions under California law: (1) advances against commissions are not “wages” under Labor Code Section 200; and (2) chargebacks against excess advanced commissions are permissible when employees expressly agree, in writing, to a chargeback arrangement.

In Dunlap v. Superior Court (Bank of America, N.A.), the California Court of Appeal, Second District, held that an employee need not exhaust the administrative prerequisites of the Labor Code's Private Attorneys General Act of 2004 (Labor Code section 2698 et seq. or "PAGA") before bringing a civil action against an employer for certain Labor Code violations that already allowed for an employee to sue directly prior to PAGA's enactment. It marks the first published application of the "civil" penalty vs. "statutory" penalty dichotomy articulated in Caliber Bodyworks v. Superior Court, 134 Cal. App. 4th 365 (2005).

Governor Arnold Schwarzenegger and Democratic leaders in the California State Senate reached a compromise Monday that will increase California's Minimum Wage to $8 over the next two years, making California's minimum wage the highest in the nation. 

The California Supreme Court decision in Sav-On Drugstores v. Superior Court, 34 Cal. 4th 319 (2004), concerned many employers who feared that post-Sav-On courts would simply rubber-stamp class certification motions and employers would have no appellate recourse. However, the recent Court of Appeal decision in Dunbar v. Albertson's may alleviate some of these concerns. In Dunbar, the trial court denied class certification and the Court of Appeal upheld this denial. Consequently, Dunbar is a significant decision because it shows that even in the wake of Sav-On, trial courts may still deny class certification decisions and such denials may still be upheld.

On July 10, 2006, the California Supreme Court issued its long-awaited decision in Smith v. L'Oreal. The Court found that an employee is "discharged" for purposes of Labor Code Section 201 (requiring immediate payment at discharge) and Section 203 (waiting time penalties) not just when an employee is involuntarily terminated from an ongoing employment relationship, but also when an employee is released after completing a job assignment or time duration for which the employee was hired. 

On June 6, 2006, The California Court of Appeal addressed a question of first impression and ruled that section 3(B)(8) of Wage Order 5 regulates overtime pay for health care employees on a 3/12 alternative workweek schedule. For healthcare employers this ruling confirms that employees working under a 3/12 alternative workweek schedule are not entitled to weekly overtime under the law until after 40 hours of work. The appellate court’s ruling in Singh v. Superior Court, No. B187797, (2^nd Dist. Cal. June 6, 2006), followed the position advanced in an amicus brief submitted and argued by Richard J. Simmons and Derek R. Havel of Sheppard Mullin Richter & Hampton on behalf of the California Hospital Association.

In a case of first impression, the Court of Appeal in Violante v. Communities Southwest Development and Construction Co. held that employees on public works projects may only sue their own employer for alleged prevailing wage violations.

On February 1, 2006, a California Court of Appeal issued a published decision in Overton v. Walt Disney Company. The Court of Appeal held that Disney did not need to compensate its employees for the time they spent riding on a shuttle from the employee parking lot to the employee entrance because the employees were not required to park in the employee parking lot.

On November 23, 2005, a California Court of Appeal issued the first appellate court decision regarding application of the Labor Code Private Attorney General Act of 2004 ("PAGA"), Cal. Labor Code §§ 2698 et. seq., in Caliber Bodyworks, Inc. v. Superior Court, Case No. B184120, ___ Cal.App.4th ____. PAGA, also not so fondly known by employers as the "Sue Your Boss Law," permits a current or former employee to initiate private civil actions on behalf of himself or herself and other current or former employees to recover civil penalties.

In the recent unanimous decision of IBP, Inc. v. Alvarez (November 8, 2005), the U.S. Supreme Court clarified what constitutes compensable time under the Fair Labor Standards Act ("FLSA"). Specifically, the United States Supreme Court addressed a split between the circuits as to whether time spent walking to the worksite after donning special protective equipment is compensable. The Supreme Court affirmed a Ninth Circuit opinion holding that such time is compensable.

On September 8, 2005, Governor Schwarzenegger signed Assembly Bill No. 1093 into law, making it easier for employers to remit payment of final wages to employees upon discharge or termination, and also expanding one of the exemption requirements for employees in the computer software field. AB 1093 will take effect on January 1, 2006.

In 2004, the U.S. Department of Labor ("DOL") issued new regulations regarding the federal overtime exemptions applicable to "white collar employees," such as executive, administrative and professional employees (29 C.F.R. Part 541). Many observers questioned the significance of the updated federal regulations in California because of the differences between federal and California regulations. In an August 2, 2005 opinion to Attorney Richard J. Simmons of Sheppard, Mullin, Richter & Hampton LLP, the DOL confirmed that several critical provisions of the 2004 regulations were clarifications and not substantive changes, thereby making them pertinent to an analysis of California's white collar overtime exemptions.

In a key victory for employers and their corporate officers, directors, and management, on August 11, 2005, the California Supreme Court ruled in Steven Reynolds v. Christian Bement that corporate directors and officers cannot be held personally liable for the Company's failure to pay wages to its employees. Plaintiff Steven Reynolds sued his former employer and eight officers and directors alleging that he and other "shop managers" and "assistant shop managers" of the Earl Scheib automotive painting chain were improperly classified as exempt from overtime. Plaintiff also alleged a number of other wage-related claims under the Labor Code and wage orders.

Q. Should I look at paying my computer professionals hourly?

In Steinhebel v. Los Angeles Times Communications, a California Court of Appeal recently held that an employer may legally charge back advanced commissions in the event agreed upon conditions are not satisfied.

Q. What are some of the business culture/organizational behavior issues about which I need to be aware when implementing an exempt/nonexempt (salary/hourly wage) reclassification and how can I deal with them?