Labor Employment Law Blog

In Maria Pellegrino, et al. v. Robert Half International, Inc., the plaintiffs were former employees who sued for unpaid overtime, violation of meal and rest period rules, failure to pay commissions, and failure to provide accurate pay stubs. Each of the employees had signed an employment agreement providing that no claims against the company shall be valid if asserted more than six months after the employee’s termination. The employment agreement also provided that each employee expressly waived any statute of limitation to the contrary. The company asserted that the employees’ claims were time barred because they filed their lawsuit more than six months after termination. The employees argued that the contractual provision truncating the time frame in which to sue was invalid.

This week, a California Court of Appeal found that the plaintiff employee was entitled to a full trial on his wrongful termination claim, concluding that California public policy in favor of the employer's duty to pay overtime wages protects an employee from termination for a mistaken but good faith claim to overtime wages.

On November 2, 2009, the California Supreme Court handed down its decision in Schachter v. Citigroup, Inc.  At issue was Citigroup's voluntary employee incentive compensation plan that provided employees with shares of restricted company stock at a reduced price in lieu of a portion of the employee's annual cash compensation. Under the Plan, the employees voluntarily agreed that, should they resign or be terminated for cause before their restricted shares of stock vest, they would forfeit the stock and the portion of cash compensation they directed be paid in the form of the restricted stock.

Sheppard Mullin partner Douglas Hart achieved a major victory for employers everywhere when the U.S. Court of Appeal for the Ninth Circuit issued its long-awaited decision in the class action lawsuit entitled Parth v. Pomona Valley Hospital Medical Center on October 22, 2009. The Ninth Circuit ruled as a matter of first impression that it is permissible for an employer to reduce pay rates to achieve cost neutrality under the Fair Labor Standards Act ("FLSA") in conjunction with the implementation of a 12-hour shift program. This decision, issued in one of the most significant wage and hour cases to reach the U.S. Court of Appeal in years, is likely to be widely cited in other cases against California hospitals and should greatly benefit the entire health care industry.

Beginning on Friday, July 24, 2009, employees who are covered by the Fair Labor Standards Act must be paid a minimum of $7.25 per hour. This increase is the last of the three increases to the Federal minimum wage provided by the Fair Minimum Wage Act of 2007. The Department of Labor has announced that a new poster reflecting this increase will be available on its website.

On June 2, 2009, the California Court of Appeal in San Diego issued a decision clarifying California's rules regarding tip-sharing among employees. In doing so, the Court of Appeal reversed the trial court which had awarded the plaintiff class $86 million in restitution.

The Ninth Circuit Court of Appeals recently vacated its prior ruling in Sullivan v. Oracle Corp., which had held that the California Labor Code applies to work performed in California by non-residents of California. The Ninth Circuit has now decided to withhold any ruling pending the California Supreme Court’s decision on three questions.

In Ghazaryan v. Diva Limousine, the California Court of Appeal reversed a trial court's denial of a class certification motion in a wage and hour class action. The Court of appeal ordered the trial court to certify two subclasses.

In Sullivan v. Oracle Corp., the Ninth Circuit Court of Appeals recently ruled that the California Labor Code applies to work performed in California by non-residents of California.

On October 28, 2008, only six days after the California Supreme Court's decision to review Brinker Restaurant v. Superior Court of San Diego, a different California Court of Appeal reached the same conclusions about an employer's obligation to provide meal and rest periods.  In Brinkley v. Public Storage, Inc., a class of plaintiffs sued their employer alleging, among other things, that the company had failed to provide adequate meal and rest periods.

On October 22, 2008, the California Supreme Court agreed to review the closely followed case of Brinker Restaurant v. Superior Court of San Diego.  Brinker addressed compliance issues under California law relating to meal periods, rest periods, and off-the-clock work, as well as procedural issues raised in class action lawsuits based on these type of claims.

On July 21, 2008, Justice Carol Robinson Edmead of the New York County Supreme Court denied a motion to dismiss a claim for unequal compensation brought against the owners, operators and several individual employees of Cipriani restaurant in Manhattan by a female server.  Torres v. Vittoria Corp., 114667-07 (N.Y. Sup., July 21, 2008).  The Torres decision is particularly notable because the basis for plaintiff’s unequal compensation claim was that she and other female servers were consistently assigned to the breakfast shift, which generated lower tips, while male servers were given the more lucrative lunch and dinner shifts.

Last week, a California appellate court decided Advanced-Tech Security Services, holding that the Labor Code does not require an employer to compensate an employee at a rate higher than one and one-half times the regular rate of pay for overtime hours worked on a work day when an employee already receives a premium pay rate.

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).

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).

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?