Wage & Hour News
Best Buy Motion to Dismiss Denied in California Labor Lawsuit
The lawsuit (case number SACV 12-1377 AG [ANx], in the U.S. District Court, Central District of California) alleged plaintiffs Kurt Swanson and Tawny Perez were assistant managers at Best Buy and were classified as exempt from overtime pay, according to court documents. The lawsuit alleges that although the plaintiffs were involved in managerial activities, they were also regularly involved in non-managerial activities including, “selling product, organizing shelves, and unloading inventory from trucks alongside other employees.”
Best Buy filed a motion to dismiss the lawsuit, arguing that the plaintiffs’ testimony established their exemption from overtime pay requirements. The judge rejected the motion to dismiss, however, noting that “a reasonable juror could find that both Swanson and Perez were not ‘primarily engaged’ in duties exempt from the overtime requirements.”
Under California law, a person is exempt from overtime pay if he or she meets administrative or executive requirements. Included in those are managing a “customarily recognized department or subdivision,” regularly directing the work of two or more other employees, having the authority to hire or fire employees, and primarily performing duties that meet the exemption test. Such exempt duties include training employees, directing employees, handling employee complaints and planning work.
According to Swanson’s testimony, he spent approximately 70 percent of his time in managerial duties, which would exempt him from overtime pay. But the judge found that there was some overlap between Swanson’s time working in exempt and non-exempt activities, such as when as a sales floor leader he would organize shelves or sell merchandise. The judge further noted that although Best Buy recognized the time Swanson spent selling merchandise as a non-exempt activity, it did not record his time in other non-exempt activities.
For employees to be exempt from overtime pay, they must meet the administrative or executive requirements. It is not enough that they be given a managerial job title or even that they spend some time involved in managerial activities. To be exempt, they must spend more than half their time involved in managerial or executive activities.
Correctional Officer Forced to Work California Overtime
Alan says they were paid overtime according to the California labor laws and they had a choice: work overtime or lose your job and walk away from retirement benefits. He says there are many unhappy employees in the nation’s prisons.
Alan, who retired in 2008, worked in state prisons anywhere from level 1-4, where the more dangerous inmates are placed in level 4 with minimum security being level 1. “In the last decade or so, the prison population increased to such an extent that building new facilities couldn’t keep up,” he says. “As a consequence, there weren’t enough officers to cover the new housing units.” According to “the general rule of thumb,” at least two officers must be allocated per 100 inmates, but Alan says most units contained hundreds of inmates with only two officers.
“Judging from the amount of complaints going around I believe that hundreds of officers didn’t want to work so much overtime,” he says. “One former co-worker retired last year after working 26 years. He had seniority but said it was unfair to those starting out, especially officers with families.”
With seniority you can choose to work overtime or not. Seniority also means that officers with the least seniority can wind up working 16-hour days, five days a week. “Sure the money is great but those hours are brutal and it’s dangerous,” Alan explains. “It’s not fair to your co-workers because you cannot be alert when you are exhausted. We even had a few officers who fell asleep at the wheel because of fatigue: It is a serious problem.
“We were forced to work a minimum of three overtime shifts per week (we would work our regular 8-hour shift and then we were held over: They needed us to work another eight hours. So 16-hour days, sometimes 3 or 4 days per week were common and often we were required to work 16 hours five days a week. We were paid time and a half over eight hours and double time was paid weekends and holidays.”
Before talking to LawyersandSettlements, Alan wasn’t aware that he is owed a lot of overtime pay: if he adds up all those 16-hour days, Alan is owed a big chunk of change because he should have been paid double time after 12 hours. The California overtime law states the following:
• One and one-half times the employee’s regular rate of pay for all hours worked in excess of eight hours up to and including 12 hours in any workday, and for the first eight hours worked on the seventh consecutive day of work in a workweek;
and
• Double the employee’s regular rate of pay for all hours worked in excess of 12 hours in any workday and for all hours worked in excess of eight on the seventh consecutive day of work in a workweek.
Alan has another complaint regarding overtime. His salary averaged about $110,000 due to working so much overtime but he had to take an early retirement five years ago at the age of 55 due to a work-related injury. “They calculated my salary on my hourly rate working eight hours per day and didn’t include overtime pay,” he says. “What is most unfair is that if you refused to work overtime, that was grounds for dismissal. They wanted it both ways.”
Alan has filed an overtime complaint against the California Correctional Institute.
Furniture Distributor Compensates Workers for California Labor Law Violations
According to a PR Newswire release (10/28/13), Labor Commissioner Julie A. Su launched the investigation following a complaint by an employee of Coppel Corporation, a distributor and warehouse in the state. The employee, according to the report, contacted the Division of Labor Standards Enforcement (DLSE) within the Department of Industrial Relations (DIR) with regard to potential violations of California labor employment law.
Following the filing of a formal California labor code complaint with the DLSE’s Bureau of Field Enforcement (BOFE), it was determined by investigators following a review of payroll documents that employees had worked about two or three hours of overtime each week but were paid at their regular hourly rate - a violation of California and labor law.
Labor Commissioner Su was quick to point out that Coppel Corporation co-operated fully once the allegations came to light, undertaking a self-audit that eventually revealed the overtime wages discrepancy.
California prevailing wage law mirrors federal statues under the Fair Labor Standards Act (FLSA) that requires a rate of pay calculated at one and one-half times the regular hourly rate of pay for any hours worked beyond a standard 40-hour week, or any hours worked beyond the 5th consecutive day.
As a result of the California employee labor law investigation, Coppel will be paying $88,109 to 60 current employees, in addition to $33,613 destined for 83 former employees of the firm.
“This is an example of how effective labor law enforcement benefits everyone,” said Labor Commissioner Su, in a statement. “We encourage employers to cooperate during investigations, come into compliance, and make workers whole.”
A favorite ploy amongst employers attempting to cut expenses and improve their bottom line is to force employees to perform job-related tasks off the clock or incorrectly classify employees as exempt from qualifying for overtime - all tactics that flaunt California state labor laws.
This doesn’t appear to be the case here.
“We appreciate the employer for responsibly working with our investigators to bring a speedy resolution for these workers,” said Christine Baker, Director of the Department of Industrial Relations.
Under the leadership of Su, the Office of the California Labor Commissioner has been aggressively pursuing alleged violations to California labor law, with numerous investigations culminating in a California labor lawsuit and ultimate compensation for workers.
In the end, however, it starts with an employee or group of employees keeping aware of the goings-on at their place of employ, and having the courage to speak up or lay a formal complaint in the face of an alleged violation to the California labor code.
The warehouse operated by Coppel Corporation is located in Calexico.
Bank of America Loses Arbitration Bid in Overtime Lawsuit
The lawsuit (case 1:13-cv-01531-HB, Southern District of New York) alleges Bank of America and Merrill Lynch violated the Fair Labor Standards Act and New York Labor Law by failing to pay employees designated as “Financial Solutions Advisors” for their overtime work. The plaintiffs - from New York and California - filed a lawsuit against Bank of America and Merrill Lynch seeking class-action status on behalf of current and former Financial Solutions Advisors who were not paid for their overtime hours.
As Financial Solutions Advisors, the employees were registered with the Financial Industry Regulatory Authority (FINRA) and signed a “Form U-4,” which contains an arbitration clause. That arbitration clause, which states “I agree to arbitrate any dispute, claim or controversy that may arise between me and my firm, or a customer, or any person, that is required to be arbitrated under the rules…”, means that the employee agrees to settle any dispute between him or herself and the company through FINRA arbitration, rather than through the courts.
As such, Bank of America and Merrill Lynch filed a motion to force the employees’ claims to arbitration, dismissing the lawsuit.
But Judge Harold Baer, Jr., found that FINRA rules prohibit the enforcement of arbitration agreements against a member of a class action until class-action certification has been denied or decertified. In other words, arbitration cannot be forced until the judge has refused to certify a class-action lawsuit or until the class has been decertified. Only at that point can arbitration be enforced.
This means that the plaintiffs can continue their claims in court rather than through the arbitration system.
Bank of America and Merrill Lynch maintain that the employees were properly exempted from overtime pay under the Fair Labor Standards Act. Under the Fair Labor Standards Act, employees can be exempt from overtime pay if they meet certain administrative criteria. Lawsuits have been filed against various employers alleging employees were improperly classified as exempt from overtime pay.
Upscale Sushi Restaurant Hit with California Labor Code Allegations
Urasawa is both the name of the restaurant and the owner, Hiroyuki Urasawa. The chef has created a brand for himself and is popular amongst well-heeled clientele who regularly visit his establishment in an alcove above Rodeo Drive. According to the Honolulu Star-Advertiser (7/21/13), the pristine sushi bar - described as one of the most renowned sushi restaurants in the US - serves dishes that include caviar and 24-karat gold flakes “for iron.” Patrons spend lavishly and Urasawa is said to spare no expense for his valued guests.
However, it is alleged that his kitchen staff is denied overtime under California labor law, working for the same pay over a 12-hour shift. An investigation by the California Labor Department, according to the Star-Advertiser, found that workers are also denied rest breaks.
Former employee Heriberto Zamora has filed a California labor lawsuit in an effort to secure back wages. The Mexican immigrant worked at Urasawa for a period of five years, starting as a dishwasher and eventually worked his way to food preparation. At his peak, he was making $11.50 per hour.
However, in comments to the Star-Advertiser, Zamora claimed he would routinely put in 60-hour weeks for that rate of pay, without provision for overtime, or meal or rest periods as required under the California labor code. Zamora also describes having to urinate in a sink designed to rinse floor mops after Urasawa allegedly forbade him to use customer restrooms during business hours.
Previously, when Zamora was promoted to food preparation and granted a raise in pay to $9 per hour, he was also allegedly required to buy his own set of knives, costing $700.
“It was always about the customers, making sure that they were happy,” said Zamora, 26, in comments published in the Star-Advertiser. “None of the employees were treated very well. We knew people were paying a lot to eat there, but for us, it was no different.”
One day, after he had been at his station for about nine hours, Zamora began coughing and felt like he was running a fever. He asked to book off sick and return home. The owner, Zamora said, fired him on the spot.
California labor employment law is designed to protect workers’ rights. “There are countless examples in which workers are taking home less than they’ve earned,” said Julie Su, the state labor commissioner. Investigators are said to wait outside, watching workers come and go, comparing what they see to the time records kept on employers’ books. “It’s a perversion of the concept of minimum wage - it goes from being some kind of floor to instead being some kind of ceiling,” Su said.
Urasawa appealed a ruling issued in June, hitting him with a fine of $55,000 for failure to pay overtime under California and labor law, and to provide breaks to Zamora and three others.
When Is a Supervisor Exempt under California Labor Law?
Navigating your way through the FLSA (Wages and Fair Labor Standards Act) guidelines to determine whether you are exempt is not a clear path. For instance, Claudia’s “primary duty” as a supervisor must consist of work that meets the criteria for exemption, such as managing employees. But those responsibilities can also include other duties that those employees she manages are also doing. Claudia believes that the only reason her employer classified her as exempt and pays salary instead of hourly is so that he doesn’t have to pay her California overtime.
“I complained to my boss about being misclassified as exempt and working more than 50 hours a week and he gave me two options: accept my position or quit,” says Claudia, who questions whether her employer has violated the California labor code.
Claudia understands that salaried employees can legally work more than a 40-hour week. But does she have a choice - is she legally entitled to be classified as non-exempt, get paid an hourly wage and overtime compensation? Claudia has done the math and even at minimum wage, with 10 hours a week in overtime compensation (at 1.5 times her hourly rate), she would be better off financially as non-exempt.
“I want to consult a lawyer and see if I am within my rights to get non-exempt status,” she says. “I only ‘manage’ two employees, and only when the boss is away. Everything else I do takes up about 80 percent of my time, such as helping customers and taking stock. There are so many gray areas in the California labor law. I personally feel that I don’t have any clarification of the labor law code and neither does my employer; I think I can only get answers from an employment attorney.”
Supervisors can question their exempt status if most of their time is spent performing non-exempt duties, but that amount of time is tricky to determine because a supervisor arguably can direct the work of an employee while serving a customer or stocking shelves.
Federal regulations recognize the concept of multi-tasking or “concurrent duties” and that supervisors can manage employees while performing other tasks, but this management must consist of more than occasionally directing others. For instance, Claudia manages employees only when her boss is away and therefore spends most of her time performing non-exempt work. Her exempt status likely does not apply.
A recent California labor lawsuit (Heyen v. Safeway, Inc.) involved an assistant store manager who claimed she was entitled to overtime because she spent most of her time bagging groceries and stocking shelves and bookkeeping. To be exempt, California law stipulates that more than half the working time be spent performing exempt work. Safeway claimed that she concurrently managed others while engaged in other tasks and therefore met the requirement. The state appeals court, however, rejected that argument.
Although the “concurrent duties” (like multi-tasking) rule was added to federal law in 2004, it was not added to the California labor code. In the Safeway case, the court determined that the supervisor’s mundane work was not “helpful in supervising employees” and did not meet the exemption criteria, so the employee was entitled to overtime.
In California, a percentage of time must be spent performing exempt work, which may raise the burden for proving an exemption even if the concurrent duties concept is recognized in the state.
Alleged Violations to California Labor Law No Holiday for Affected Workers
Regardless of the motivating factors, it often takes an official investigation and a California labor lawsuit to right those wrongs.
While it appears as if a lawsuit has not materialized so far in the case of alleged lapses of California labor code on a construction site for a new Holiday Inn Express, the California Labor Commissioner’s Office has nonetheless filed a lien against the property in question, located in Eureka, in an effort to recover almost a quarter of a million dollars in unpaid wages.
According to the Eureka Times Standard (8/13/13), the mechanic’s lien was filed earlier this month against the property located at 815 West Wabash Ave. and pertains to wages that were to have been paid, according to California and labor law, from January through May of this year.
According to the report, Carpenters Local 751 filed a complaint alleging various California labor employment law violations. That complaint led to an investigation launched March 27 under the auspices of the California Labor Commissioner’s Office together with the California Occupational Safety and Health Administration and California’s Labor Enforcement Task Force.
The investigation, it is reported, revealed that some paychecks issued to employees were returned NSF, with the unpaid wages also extending to meal and rest period violations. The investigation also found 13 workplace safety violations, including unsafe ladders, failure to provide fall protection and scaffolding, inadequate training to recognize fall hazards, and unguarded saws.
“It’s like any other illegal activity,” said Peter Melton, a spokesperson with the Department of Industrial Relations, in comments published in the Eureka Times Standard. “Supposedly, there’s a financial gain which causes people to cut corners and not obey the law, but the downside is if you get caught, you have to pay the penalty.”
According to the report, the total amount of unpaid wages in question added up to more than $247,600 owed to 31 workers who toiled on the Holiday Inn Express new build, a facility that was slated to open in the spring but now has been delayed until the fall. The property is reported to be owned by Shailesh Patel and Jayshree Patel Revocable Trust, with Jansen Construction and PacWest Contracting identified as the contractors. It is not known if the mechanic’s lien, brought according to allegations of wrongdoing under California employee labor law, has been appealed.
California Labor Law Allows Citizens to Sue for Violations
The Private Attorney General Act (PAGA) was created because the California Labor and Workforce Development Agency did not have the resources to investigate all labor code complaints. As a result, PAGA was developed to give private citizens the right to sue for such violations of the code and recover civil penalties on behalf of the state. If the plaintiff is successful in his lawsuit, he and any injured employees are given 25 percent of the penalties along with any money owed by their employer and attorneys’ fees, while the California Labor and Workforce Development Agency keeps 75 percent of the fines.
There are rules for a person to file a lawsuit under PAGA. First, a complaint must be filed with the Labor and Workforce Development Agency. If the agency declines to investigate the complaint, or if it fails to respond to the employee within 33 days, a PAGA lawsuit can be filed, provided it falls within the statute of limitations of one year.
If an employee were to sue for unpaid wages, for example, he could file a suit under the Private Attorney General Act. If he won, he and fellow employees would recover his unpaid wages, which he would keep, plus he and any other harmed employees would receive 25 percent of any civil penalties awarded by the court.
Currently, lawsuits against a variety of plaintiffs filed under PAGA are working their way through the courts. One such lawsuit was filed against Orkin, alleging employees were not properly paid for meal breaks or overtime. According to Courthouse News Service (8/13/13), Orkin argued that the lawsuit should be moved to federal court, but the 9th Circuit found that because the lawsuit was filed under PAGA, which is unique to California, the lawsuit belonged in state court.
The Urbino lawsuit is Urbino v. Orkin Servs. Of California, Inc., No. 11-56944.
Fast Food Joints Sizzling with California Labor Law Violations
Employees at Five Guys Burgers are flipping more than burgers. Both former and current workers have sifted through pages of legal documents and filed a class-action lawsuit against the burger company, claiming California overtime and meal break violations on behalf of the company’s non-exempt, hourly California employees. Originally filed last November 2012, Gutierrez v. Five Guys Operations (Case No. 37-2012-000-86185-CU-OE-CTL) is currently pending in San Diego County Superior Court for the State of California.
Besides claiming non-payment of overtime and meal breaks, the class-action complaint also alleges that Five Guys Burgers failed to provide the proper amount of overtime wages and also failed to provide to their non-exempt, hourly employees in California all legally required thirty (30) minute uninterrupted meal breaks.
The California Labor Code dictates that non-exempt hourly employees must be paid overtime for any hours worked in excess of eight in a workday, and 40 in a workweek must be paid at 1.5 times the employees’ regular rate of pay.
Over at Taco Bell, plaintiffs in several class-action lawsuits filed between 2007 and 2010 were finally granted certification in January 2013 with respect to the late meal break class. YUM! Brands, Inc., the world’s largest quick-service restaurant company with over 39,000 units in more than 125 countries and territories (that are primarily made up by its KFC, Pizza Hut and Taco Bell), continues to defend itself against a consolidated wage and hour litigation in California, according to the Company’s April 29, 2013, Form 10-Q filing with the U.S. Securities and Exchange Commission.
Taco Bell Corp. was named defendant in the class-action suits alleging violations of California labor laws, including unpaid overtime, failure to timely pay wages on termination, failure to pay accrued vacation wages, failure to pay minimum wage, denial of meal and rest breaks, improper wage statements, unpaid business expenses, wrongful termination, discrimination, and conversion and unfair or unlawful business practices in violation of California Business & Professions Code Section 17200.
Furthermore, a number of former Taco Bell employees are also seeking penalties for alleged violations of California’s Labor Code under California’s Private Attorneys General Act as well as statutory “waiting time” penalties and alleged violations of California’s Unfair Business Practices Act. The Plaintiffs seek to represent a California statewide class of hourly employees.
According to calculations by the Federal Judicial Center, US employers have seen an increase in the number of wage and hour lawsuits filed against them in federal court, and California is no exception. A recent article in Corporate Counsel said in 2003 that the number of federal cases nearly doubled, from 2,035 to 4,055. By 2007, they had increased to 6,786.
Meanwhile, fast food franchiser Alia Corporation (which has more than 20 outlets in California) agreed to pay $100,000 to settle a disability discrimination lawsuit filed by the Equal Employment Opportunity Commission (EEOC). The lawsuit was filed in 2011 on behalf of a former floor supervisor with an intellectual disability who was demoted to janitor when Alia took over. The EEOC alleged that Alia cut his hours and reduced his hourly wages, thereby forcing him to find other employment and resign by June 2009. The EEOC argued that Alia had engaged in disability discrimination that violated the Americans with Disabilities Act (ADA).
California Overtime and Home Healthcare Workers
In December 2011, the Obama administration proposed regulations to give the nation’s nearly two million homecare workers minimum wage and overtime protections - workers who have been exempt from both protections. (A decision is expected within the next few months.)
In California, about 360,000 largely unionized homecare workers are employed by In-Home Supportive Services, a state program subsidizing homecare services for around 450,000 elderly, blind and disabled residents. But many workers, such as “personal attendants” and those employed directly by private households such as babysitters, are not paid overtime.
Under the California labor law, home healthcare workers are protected by the state’s minimum wage and overtime laws, but revising the FLSA would mean new overtime rules on California. Some people - including California Governor Jerry Brown - opposing this proposal estimate it will cost $150 million per year. The Los Angeles Times reported that Governor Brown would likely respond to the new rule by limiting the hours state homecare workers may work, effectively cutting the amount of care beneficiaries receive and pitting advocates for the disabled against labor.
California is one of 16 states that already extends minimum wage and overtime protection to home healthcare workers. The general rule in California is that all employees are entitled to overtime for work past eight hours in a day. In the healthcare field, however, many employers implement what is known as an “alternative workweek.” (Visit the state of California Division of Labor Standards Enforcement for more information on overtime laws regarding alternative workweek.)
Most of the home healthcare industry is also opposing this new rule. Industry officials argue that changing labor laws, particularly overtime laws, would result in decreased home healthcare workers’ hours and that, in turn, could force the elderly into nursing homes. On the other hand, the CSS and other proponents of the proposed rule say that these workers should have the same rights and protections, including California overtime laws, as other workers, and that increased wages and overtime pay will result in lower turnover rates.
The main reason that Congress proposes this rule change is to exempt “companions for the elderly” from FLSA protections, and thereby encourage friends and neighbors to help out the elderly in their neighborhoods and communities. It isn’t their intent to keep two million home healthcare workers from earning fair wages.
Meanwhile, industry groups are hopeful that the new rule will contain modifications to address their concerns. If it doesn’t, they will likely seek legal help.
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