Professional Service News
Appeals Court Rules Insurance Adjusters Can Claim California Overtime
Courts--and the California labor law--have typically held that adjusters are professional employees and therefore exempt from overtime pay??"even if they worked 60 or 70 hours per week. But increasingly, claims personnel, including insurance adjusters, are saying that their duties are those of glorified administration clerks, mainly due to technology and micromanaging and that they are adjusters only in their title.
Insurers in the case, Frances Harris et al. v. Superior Court of Los Angeles and Liberty Mutual Insurance Co., argued that adjusters are exempt administrators because they do not produce the company's product. According to court documents, the product is the transference of risk, not claims adjusting, and therefore not entitled to overtime compensation.
The court, however, found that Liberty Mutual shows claims adjusting as "an important and essential part of transferring risk. If the employers never paid any claims, then they would not be transferring any risks." Further, the court found that the adjusters were misclassified and entitled to overtime pay because the are not primarily working in a management capacity. The court argued that, if adjusters are exempt, every office worker, including secretaries at a law firm, is exempt.
Just days later, a South Carolina judge granted a conditional class certification allowing property claims adjustors to sue Farmers Insurance Exchange for allegedly not paying overtime (MacGregor, et al. v. Farmers Insurance Exchange). In July 2001, a California jury awarded a class of Farmers Insurance Company adjusters $90 million in overtime pay, according to Claims Magazine (May 2011).
(In October 2006 a 9th Circuit ruling rejected a Farmer's Insurance Exchange Class Action, arguing that all Farmers' adjusters are exempt because they exercise discretion and make independent judgments.)
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Working at California Car Washes
Just two months prior to this overtime lawsuit, two other lawsuits were filed against three Los Angeles car wash businesses -- Rosecrans King Car Wash, Wilshire Car Wash and Vermont Auto Spa -- for California labor code violations, including failure to provide minimum wage, failure to provide meal and rest periods, and overtime pay to employees. The plaintiffs are seeking unpaid wages, penalties and damages totaling more than $2 million.
Because car wash employees, or “carwasheros”, are classified as non-exempt, they must be paid for all hours worked. If their hours exceed more than 8 hours per day, or 40 hours per week, they must be paid overtime at a rate of 1.5 their regular rate of pay. And in the state of California, they are entitled to a 30-minute lunch break and two 15-minute rest breaks during an 8-hour shift.
Furthermore, if a carwashero receives tips, those monies belong to the employee, not the manager. And tips cannot be deducted from the regular rate of pay, which would be contrary to the California labor law.
Aren’t car wash employers familiar with California labor laws? Do car wash owners weigh the odds and decide that it’s more cost effective to break the law than pay their workers minimum wage and overtime? Say the car wash employer??"or any employer for that matter---has a class action lawsuit filed against them.
“In many class actions your typical opt-in rate may be only 20 percent, so there is a big incentive for employers to break the law,” says attorney Allen Vaught. “Many employers take the risk, and if they get caught, it’s no big deal.” In other words, employers make more money by breaking the law and paying the penalty because not everyone is going to join the class action lawsuit. Workers typically don’t come forward because they are afraid of retaliation??"but retaliation is another violation of the California labor code."
However, the gamble may not pay off. “An employer has to pay double the amount due, unless they have a good faith basis for not having paid overtime to their employees,” adds Vaught. “And they must pay legal fees.”
Vaught wishes there were stiffer penalties for overtime violations. “There is no mechanism for punitive damages so economically it makes more sense to break the law.”
Meanwhile, lawsuits will continue. But conditions for car wash workers may be improving, given a recent overtime settlement.
In January 2012, a settlement of $800,000 was reached in favor of employees at eight car washes in California. The car wash owners were alleged to have not paid overtime, falsified payment records, and denied workers rest and meal breaks.
Late Paycheck: California Labor Law Violation?
Perry is one of about 580,000 people that work for the US Postal Service. Because he is the local steward for his post office, Perry has received a number of complaints regarding late paychecks.
“Frankly I am disturbed that this practice happens and I want it to stop,” Perry says, “and I have no hesitation using my name because I am opposed to my employer breaking the California labor law and the federal law.
“Since I became shop steward I notice this practice more frequently because I am now the ‘go to’ guy. Just a few months ago a co-worker told me that he and several other employees didn’t get their paychecks. I went immediately to management and said in no uncertain terms that they must pay their employees by a cash advance - they can issue money orders. Two employees were told earlier in the day that they couldn’t be paid and had to come back next week, regardless whether they are scheduled to work or not. Some of these people are part-time so they have to make an effort to return to the main office and possibly pay for transportation to pick up their checks.
“A more recent incident happened to a co-worker I know personally. He is in desperate need of income and must get paid on time. He had to wait eight days after the due payday, which is more than two weeks after the pay period. He had to live off his credit card so he was forced to pay late fees and overcharges incurred. This isn’t right.”
Perry is right in that he needs an experienced California employee labor law attorney to advise him. Although the California labor law requires that wages are to be paid on the regular pay day due, there is no automatic fine if the employer misses a day. (This is not to be confused with getting your final paycheck upon termination.) However, a lawsuit can be filed…
The latest incident happened to a part-time employee who asked Perry to file a grievance because his paycheck didn’t get electronically deposited in his account. He wasn’t scheduled to work the next week and it was difficult to return each day looking for his paycheck.
“During the grievance process (the first meeting discusses the case and we try to find a resolution process) I questioned the postmaster about the reasons why the cash advance was denied,” Perry explains. "She argued that the employee didn’t bother to come in the following week to get his money. She said it was his fault for not showing up the following week. They said there was nothing they could do about it. In other words, the postal service is blaming their employee for not coming in every day the following week to see if his check was available.
“But I know the postal service policy regulations state otherwise. The postal service has specific guidelines for the management to follow when a missing or lost paycheck occurs. When this employee asked for a cash advance - as stated in our company policy handbook - they still refused to accept accountability.”
Perry’s incident happened a few years ago, but it had to do with a pay error. “Again, I brought it to management’s attention, told them to correct it, but it took an exorbitant amount of time - about six weeks -before it was corrected,” Perry says. “They corrected a portion of it on the next pay check but I didn’t get my full pay until about three pay checks later.
“I was a shop steward a long time as a letter carrier - believe me, I can write a book about all the labor law violations. Now I am at a point in my life where I want to do something about it. If I don’t get involved now, I never will. This is what I need to give back to my union that has represented me well over the past 24 years.
“I checked with the Division of Labor Standards Enforcement and I have sent a number of emails to the California labor board. Even after the volumes of information I have read about California labor law, I still don’t know if the postal service is exempt. I heard that the postal service, a federal government agency, is exempt from many state laws.
“Then I found LawyersandSettlements. I was just contacted by your attorney and I’m hopeful that I will finally get some answers. With this practice happening to so many people, perhaps the postal service needs someone to file a class action lawsuit so they will stop violating the labor laws.”
Municipal Statute Does Not Violate California Labor Law: Ruling
At issue is 'Measure L,' a statute voted on in 2010 by the voters of Menlo Park which gave taxpayers a voice they might not of otherwise had in the debate over pension issues related to City employees. According to the Palo Alto Daily News (5/9/12), Measure L raises the retirement age of new City employees by five years from 55 to 60, and caps pension payouts to two percent of the highest base salary earned over three consecutive years, multiplied by years of service.
That's down from 2.7 percent, which grandfathered employees??"City staff hired prior to Measure L coming into effect??"are not affected by. Police officers are also not impacted to the new measures.
Unions representing affected Menlo Park employees cried foul, citing violations to California labor code. They responded with a California labor lawsuit, and on May 4 Superior Court Judge George Miram ruled in favor of the measure after hearing arguments from both sides.
The right to unencumbered collective bargaining is a right entrenched in California and labor law. To that end, two of the unions representing Menlo Park employees??"Service Employees International Union (SEIU) and American Federation of State, County and Municipal Employees (AFSCME)??"claimed Measure L compromises that right, suggesting the capacity for voters to impact issues related to employee compensation is illegal when, in the union's view, only City Council has the authority to do so.
In his nine-page opinion on the California Labor employment law issue, Judge Miram disagreed with the union's contention that Measure L constrained the ability for elected council officials to bargain with unions in good faith. "The city continues to have the duty to negotiate in good faith, albeit within the constraints provided by Measure L," he wrote.
The unions which launched the California employee labor lawsuit expressed disappointment in the ruling, stating: "SEIU and AFSCME stand by our opinion that workers rights that are protected by the state Constitution shouldn't be subject to the whims of political currents."
The State of California has suffered from numerous budget woes over the last several years, and has sought concessions from unions and state employees to help with the fiscal pressure. Presumably, municipalities also feel the pinch and look for ways to economize within the confines of the California labor code.
To this end, Measure L falls within the municipality's rights, according to the ruling, under California state labor laws. It is not known if the unions plan to appeal.
Sexual Harassment amongst Officers—California Labor Law Violation
In what seems like a "she sued, she sued" soap opera, Concord agreed to settle with its employee Wendy Schwartzenberger, a civilian community service officer, for $150,000, which will be paid from city funds. According to the lawsuit that was filed last year, Lt. Robin Heinemann made unwelcome sexual remarks and physical advances, including patting Schwartzenberger's behind, hugging and kissing her "at least 100 times."
In 2009, forty-six-year-old Heinemann, a 23-year department veteran and the highest-ranking woman in the Concord Police Department, filed a lawsuit against the city claiming that she was harassed and discriminated against because of her gender. Heinemann said she was the target of "trumped-up" internal-affairs investigations into whether she had been dishonest and disrespectful to superiors. According to the suit, male officers who were accused of wrongdoing went unpunished. Heinemann and her attorneys, Stan Casper and Toni Lisoni, settled with the city for $150,000.
It doesn't stop there. More than a decade ago, Heinemann and other female police officers cried sexual harassment within the department and settled for $1.25 million. Heinemann was promoted to lieutenant two years later.
According to The San Francisco Chronicle, last November, the city of Concord agreed to settle a sexual-harassment lawsuit for $750,000. Former police officer Lisa Capocci claimed that her bosses retaliated against her when she complained that a supervisor sent "I love you" messages to her on a police-cruiser computer.
In another totally separate lawsuit involving a probation officer, and this one in Alameda, a 30-year-old deputy probation officer accused Alameda County Chief Probation Officer David Muhammad of sexual harassment and assault in 2011, and that another employee filed a claim of harassment in 2009. The $1.5 million lawsuit, which has been filed against defendants Muhammad and Alameda County, claims the deputy probation officer suffered economic harm, mental distress and anguish.
According to Amy Blackstone, a sociologist at the University of Maine, as many as 70 percent of women and 45 percent of men have experienced some form of sexual harassment in the workplace.
Car Dealership's "RO System"—Violation of California Labor Law?
The dealership had this system in place when Percy was hired four years ago. He says it was a "new concept" and seemed to be OK at first. And he didn't have much choice??"in 2008, dealerships in California and nationwide were closing. Percy says about 500 mechanics found themselves unemployed when he was hired. "I was told to take it or leave it, so there was nothing I could do about it," he says.
"Everything was going well when we were busy; I was getting $32 an hour and worked 40 hours per week. But it went sideways when the economy slowed down, and to make it worse, we had a personnel change. Now I work 40 hours a week but get paid for about 18 hours."
Working as a mechanic under this RO system is like being paid for piece-work in the textile industry??"like getting a flat rate. Say a car comes into the shop (the dealership) for an oil change. The customer is told the job will take one hour but it takes the mechanic two hours. Or it may take the mechanic 30 minutes. Regardless, they will only get paid for one hour??"the time quoted by the service writer.
Needless to say, this system boosts profits for the owner, but it would seem to be a violation of the California labor code.
"We get weekly printouts, and if there are errors (and there usually are) that we don't catch, we don't get paid," says Percy. Let's go back to that oil change. Percy is supposed to get an hour's pay, but if the service writer inputs the repair order into the computer incorrectly and Percy doesn't catch the error, he is out of pocket.
"For instance, one hour has to be input as 1.0 hours," Percy explains, "but the service writer might type in '1.1' or '0' or he might even credit the work to another mechanic. The service writers are usually careless??"they aren't affected by their errors. So there is no incentive for them to be correct and some of them even treat this like a game, seeing if we can catch the error. This is so juvenile and this system is so frustrating…
"We have all talked to our employer but he just pleads ignorance and says this system is new and, as I said, we can 'take it or leave it.' Of course, we are taking it because the alternative is unemployment."
Percy adds that there are other problems that result from this system:
"A customer brought her car in and I worked on it," he explains. "Little did I know that she had made a deal with the service writer. She was quoted three hours of labor but she told the service writer that she was unemployed with a few kids and couldn't afford three hours of work. He felt sorry for her and only charged one hour; I was paid for one hour's work, meaning that I worked two hours for free. I was never consulted; the mechanics never have any say.
"As for breaks, with this flat rate system, do we take breaks on our own time, and is our employer supposed to pay us? Nobody seems to know, but if we are on the clock and take a break, we lose money.
"When I started working at this dealership, we were told there would be no overtime whatsoever, and if anyone works overtime, they will get written up. But we often work over eight hours off the clock because our manager insists. I believe that all these issues are California labor law violations."
The California labor law states that you must be paid for all time worked. An experienced wage and hour attorney can help Percy and others in similar situations.
Workin' at the Car Wash Blues
The car wash industry in California appears to chronically violate California labor code. To that end, the California Department of Industrial Relations (DIR) announced violations against the statutes of California labor employment law on the part of three car wash operators in the state.
The DIR is a division of Labor Enforcement Standards, an entity that operates within the jurisdiction of the Labor Commissioner's Office. To that end, California Labor Commissioner Julie A. Su is on a quest to ensure every single employee in California is paid fairly, with proper meal breaks and rest periods.
In two recent cases, breaches have been found. Su and her department have been busy filing the odd California labor lawsuit as a result.
According to US State News (3/6/12), two separate lawsuits were brought in Los Angeles Superior Court against three car wash operations. The three were identified as Rosecrans King Car Wash, Wilshire Car Wash and Vermont Auto Spa. The DIR conducted investigations and found evidence of unpaid wages, as well as other violations.
Rosecrans King Car Wash was found to have systematically failed to pay workers all wages earned for all hours worked beginning in January 2009??"a violation of California prevailing wage law. The California labor lawsuit in that case seeks lost wages, as well as damages and other costs to the tune of $1,698,732, according to the report in US State News.
A subsequent complaint is filed against two other car wash operations. V5 Car Wash LLC, doing business as Vermont Auto Spa, succeeded the Wilshire Car Wash run by B.B.L Investment Corporation at the same California location. That lawsuit seeks $348,732 in minimum wages, overtime, and penalties for meal and rest period violations according to California employee labor law.
"Wage theft is a serious problem that harms workers and employers who follow the laws as well as the state economy," said DIR Director Christine Baker.
Labor Commissioner Su echoed those comments.
"Our investigations found that employers knowingly and willfully failed to properly record accurate time records for each worker and failed to provide them with itemized wage deduction statements with their pay," added Su. "By not providing an itemized statement, workers had no way to verify if the pay they received covered all hours worked. This routine practice by the employers is nothing less than an act of wage theft."
Despite what you see in the movies, many employees find themselves having a case of working at the car wash blues. Su and her various departments are bent on upholding California state labor laws, for the benefit of employees, and holding employers accountable.
Iraq Veteran Claims Discrimination, California Labor Law Violation
Before Marcel could work as a security guard he was required to attend two orientations with hospital staff. The second class was cancelled; when Marcel phoned to verify the time and location, no one answered.
"I tried calling my supervisor then the district office and finally, two days later, I got a call from the district manager," says Marcel. "Now this part gets rather confusing: He made some inquires and apparently the hospital blew me off but this guy said I could get a security job with another company - he was like a sub-contractor."
Marcel was asked if he had any limitations and, again, honestly disclosed his brain injury. "I get migraines a few times a week, which limits my work and my eyes get light-sensitive," Marcel explains. "He asked if the supervisor at the hospital knew about my limitations and yes, the hospital was aware of my situation. I was hired to work the following Monday - I just had to sit in an office and watch the security cameras, and I could get someone to relieve me if I got a migraine."
Come Monday morning, Marcel got a call - he was pulled from the schedule due to his injury. This was devastating news - and why was Marcel promised work, only to be discriminated against - which goes against the California labor code?
Marcel does collect Veteran's disability benefits, which amounts to $3,200 per month - but he has a family to support; his wife is epileptic and unable to work, and his son is autistic. Marcel really needed this job.
He recently had a court hearing to apply for social security disability but was denied because he has a college education. "According to the Social Security Administration my disability is irrelevant to my education," Marcel explains, "but I just got a new evaluation from the VA, and due to nerve damage on my face and migraines, I am house-bound.
"I would like to make a California labor law discrimination claim against the security company. Why did they lead me on?" Why, indeed.
Summertime and Many Unpaid Interns Misclassified, according to the California Labor Law
Contrary to what some employers believe, an internship does not mean free labor; many people are exploited and misclassified, and therefore owed wages and possibly overtime pay.
Brittany wants to become a dog groomer. She couldn't afford to attend school so she searched Craigslist and accepted on-the-job training at a "doggie daycare" with a promise that she would learn the trade within a few months. Instead, she spends most of the day "cleaning up the premises, feeding the dogs and getting coffee for the owner." According to California labor law, if you are an unpaid intern, no work can be performed that is of any benefit at all to the company.
In other words, Brittany should only be grooming dogs. No coffee runs, no mopping the floor. Brittany must be paid at least minimum wage, California overtime (any time over 8 hours in a day and 40 in a week) as well as meal and rest breaks if her employer hasn't met the Department of Labor's (DOL's) six criteria, as follows:
• The training, even though it includes actual operation of the employer's facilities, is similar to that which would be given in a vocational school.
• The training is for the benefit of the trainees or students.
• The trainees or students do not displace regular employees, but work under their close observation.
• The employer derives no immediate advantage from the activities of the trainees or students, and, on occasion, the employer's operations actually may be impeded.
• The trainees or students are not necessarily entitled to a job at the conclusion of the training period.
• The employer and the trainees or students understand that the latter are not entitled to wages for the time spent in training.
Clearly, Brittany's employer is deriving "immediate advantage from the activities of the trainee(s)." In the US, internships are illegal in the "for profit" sector if the intern isn't there strictly to learn. Recently, an Oregon jury awarded two men who installed solar panels for their "internship" $3,350 each in pay, determining they were actually working rather than learning. And California isn't far behind: California labor law officials are now issuing warnings to companies with internship programs.
According to a 2008 survey by the National Association of Colleges and Employers, 50 percent of graduating students had participated in internships. And in 2010, Stanford University's job board had 643 unpaid internships posted by employers, which was more than triple that of two years ago. In 1992, however, a Northwestern University study reported 17 percent had interned. Possibly because of the recession??"employers are trying to keep costs down and jobs are scarce??"unpaid internships would appear to be on the upswing.
Unfortunately, many unpaid interns are not reporting this abuse; they are afraid of retaliation and possibly not getting the job they are promised. But retaliation is also a violation of the California labor code??"ask an experienced California labor law attorney.
Fees Charged to Background Actors Said to Contravene California Labor Law
The Los Angeles Times revealed on May 19 that a prominent casting enterprise - Central Casting of Burbank - was issued a cease-and-desist order by the Attorney General's Office of the City of Los Angeles in concert with the California state labor commissioner.
A California labor code investigation, launched after some background actors (known popularly as "extras") complained, found that Central Casting had been charging $25 for what was identified as a fee tied to photographic and/or electronic images. The fee, presumably, was to recover the cost of processing in order to produce images necessary to promote a prospective background actor for potential employment.
However, the LA Times notes that according to authorities such a fee is in violation of California labor law, which prohibits any talent services enterprise from charging up-front fees for such things as the processing of images (photographic or electronic) in exchange for finding employment for a prospective "extra."
The Krekorian Talent Scam Prevention Act has been in force since January of last year. Through the Act, criminal charges have been filed against a handful of talent services alleging breaches of California state labor laws.
Labor Commissioner for the state of California Julie Su noted that her office was committed to enforcing California labor employment law in the state, regardless of sector. "This includes ensuring actors are not required to pay a fee which the labor law prohibits," Su said in a statement.
The director, Background Actors Department, of the Screen Actor's Guild, echoed her words. "We're very pleased the city attorney and state labor commissioner have taken this action, and we support them wholly in this effort," said Terri Becherer, in comments published May 19 in the Los Angeles Times.
Central Casting was not the only company targeted. Communiqués noting the violation and the California labor employment law statute to which the violation applies were forwarded to 13 other casting enterprises in Los Angeles. Other entities have been known to charge anywhere from $15 to $80 to background actors for services not within their purview to charge, under California labor law.
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