June and July 2017 employment law decisions

Employee during pendency of work visa approval

June 13, 2017, California Court of Appeal, First Appellate District, Ming-Hsiang Kao v. Joy Holiday et al.: Mr. Kao was entitled to overtime pay, penalties for Joy Holiday’s failure to provide wage statements, and a waiting time penalty for the company’s failure to pay all wages due at termination. Mr. Kao was an employee, not a “guest” pending approval of a work visa, because Joy Holiday paid Mr. Kao substantial salary and Mr. Kao performed tasks beneficial to the company. Mr. Kao was also a non-exempt employee (i.e., entitled to overtime pay) because while he was an office manager he was paid less than the equivalent of two times the minimum wage for 40 hours per week and then was demoted to non-manager status.

Age discrimination covers political subdivisions with fewer than 20 employees

June 19, 2017, Ninth Circuit Court of Appeals, John Guido and Dennis Rankin v. Mount Lemmon Fire District: the federal Age Discrimination in Employment Act applies to a political subdivision of a state that employs fewer than 20 employees. The ADEA defines three distinct categories of covered employers: (1) a “person” that employs 20 or more employees, where “person” does not include a political subdivision; (2) an agent of a “person;” and (3) States and political subdivisions of States. The Sixth, Seventh, Eighth, and Tenth Circuits previously decided otherwise.

Anti-gay statements outside of the termination decision enough to get case to trial

June 21, 2017, California Court of Appeal, Second Appellate District, Joseph Husman v. Toyota Motor Credit Corporation: Mr. Husman had sufficient evidence that a substantial motivating factor for his termination was stereotyping related to his sexual orientation. There was a perception he was “too gay” as shown by statements made outside the termination decision: second-line supervisor observed at various times that Mr. Husman had made “a very clear statement” about his sexual orientation and should cut his hair, as well as ridiculing him for wearing a scarf as an accessory when it was not cold outside.

Individuals liable for retaliation under Fair Labor Standards Act

June 22, 2017, Ninth Circuit Court of Appeals, Jose Arnulfo Arias v. Anthony Raimondo: the Fair Labor Standards Act retaliation provision applies to any person, including an individual who is not an employer. In this case, after Mr. Arias filed a case against his employer for overtime and meal and rest break violation, the employer’s attorney enlisted the services of U.S. Immigration and Customs Enforcement (“ICE”) to take Mr. Arias into custody at a scheduled deposition and then to remove him from the United States; and attempted to block Mr. Arias’s California Rural Legal Assistance attorney from representing him. The attorney could be liable because the FLSA makes it unlawful for any “person,” which includes a legal representative, to terminate or discriminate against an employee who files a FLSA complaint; and defines “employer” to include “persons” who act in the interest of the employer in relation to an employee.

Attorney’s fees for unpaid wage claims must be requested at the initiation of the case

June 29, 2017, California Court of Appeal, Second Appellate District, Michael Shames v. Utility Consumers’ Action Network: employee could not recover attorney’s fees after prevailing at trial on an unpaid wages claim because he did not request the fees at the initiation of the case. California Labor Code 218.5 provides for attorney’s fees to the prevailing party if she “requests attorney’s fees and costs upon the initiation of the action.” Such a request was not included in either Mr. Shames’s initial complaint (first court filing) or an amended complaint.

Mortgage underwriters are non-exempt employees entitled to overtime

July 5, 2017, Ninth Circuit Court of Appeals, Gina McKeen-Chaplin v. Provident Savings Bank, FSB: Mortgage underwriters are entitled to overtime pay. The administrative employee exemption under federal law did not apply because the underwriters’ primary job duty did not relate to their employer bank’s management or general business operations. The Ninth Circuit followed the Sixth Circuit’s analysis (the underwriters do not decide if the bank should take on risk, but instead assess whether, given the guidelines provided to them from above, the particular loan at issue falls within the range of risk the Bank has determined it is willing to take), and rejected the Second Circuit (which decided that underwriters perform administrative work because they assist in the running and servicing of the bank’s business by making decisions about when the Bank should take on certain kinds of credit risk).

Right to obtain other employees’ contact information in representative action

July 13, 2017, California Supreme Court, Michael Williams v. The Superior Court of Los Angeles County: Employee with a representative case (Labor Code Private Attorneys General Act) was entitled to contact information of other employees that he sought to have represented in the case. The standard established for class actions—contact information is discoverable without any showing of good cause—applies to PAGA cases.

Posted by deanroyerlaw in Employment

Rest periods commissioned employees

Rest period pay for commissioned employees?

The Second District Court of Appeal recently decided two questions regarding rest periods and commissioned employees. In Vaquero v. Stoneledge Furniture, LLC (Feb. 28, 2017, No. B269657) ___Cal.App.4th___ [2017 Cal. App. LEXIS 165], the issues were (1) whether employees paid on commission are entitled to separate compensation for rest periods, and (2) whether employers who keep track of hours worked, including rest periods, violate the law by paying employees a guaranteed minimum hourly rate as an advance on commissions earned in later pay periods.

In this case, Mr. Vaquero worked as a Sales Associate for Stoneledge Furniture, a retail furniture company. He served as a lead plaintiff in a class action lawsuit against Stoneledge alleging violations of California’s rest period law.

Stoneledge paid Sales Associates on a commission basis. According to its commission agreement, if a Sales Associate did not earn the equivalent of at least $12.01 per hour in commissions, Stoneledge paid the associate a “draw” against future commissions. The agreement did not provide for compensation for rest periods. Stoneledge allowed its Sales Associates to take rest periods, and claimed that it paid them for rest periods at the same rate as other compensated time.

The trial court found that Stoneledge’s payment system accounted for all hours worked and guaranteed that Sales Associates would be paid more than $12 an hour for those hours. It dismissed the case after concluding that there was no possibility that the employees’ rest period time would not be captured in the total amount paid each pay period.

On appeal, the appellate court began with a review of the rest period law. Employers must permit 10-minute periods during which its non-exempt employees, who work at least 3.5 hour shifts, are not required to work. Employers must pay their employees for the rest periods.

The court of appeal then addressed the first question: whether California law required Stoneledge to separately compensate its Sales Associates for rest periods. A Wage Order requires employers to count “rest period time” as “hours worked for which there shall be no deduction from wages.” A previous decision concerning employees paid by the job or unit (piece-work) established a rule of separate compensation for rest periods where the employer uses an “activity based compensation system” that does not directly compensate for rest periods. The employer could not comply with the law by purportedly negotiating a higher piece rate. The Second District concluded that the Wage Order applies equally to commissioned employees, employees paid by piece rate, or any other compensation system that does not provide compensation for rest breaks and other nonproductive time.

Next, the appellate court considered the second question: whether Stoneledge’s commission plan complied with California law by “counting as hours worked” the time Sales Associates spent taking rest breaks. Although Stoneledge kept track of hours worked and rest periods and treated both identically, the formula it used for determining commissions did not include any component that directly compensated Sales Associates for rest periods. When Stoneledge paid an employee only a commission, the commission agreement did not compensate for rest periods. And for Sales Associates who did not earn the minimum rate in commissions, the compensation was hourly pay along with a “draw” (advance) against future commissions. In that case, there was no compensation for rest periods because Stoneledge took it back in later pay periods.

The Second District reversed the trial court’s dismissal of the case.

Posted by deanroyerlaw in Employment

First Amendment and media statements

First Amendment protection for statements to media?

Last month, the Ninth Circuit Court of Appeals decided whether the First Amendment protected an attorney when she spoke to a reporter about a case she worked on. If protected, a jury verdict that Maricopa County’s termination of her was retaliatory would be affirmed.

In this case, Brandon v. Maricopa County (9th Cir. Feb. 23, 2017, No. 14-16910) 2017 U.S. App. LEXIS 3259, Ms. Brandon was working as an attorney representing the county when she spoke with an Arizona Republic reporter about a lawsuit alleging the sheriff’s department acted with brutality towards protesters. In an article resulting from the interview, the newspaper suggested that the county made an overly generous settlement offer to prevent embarrassing certain county officials who might have been required to answer questions in depositions. The article quoted Ms. Brandon as saying: “I don’t know why they did what they did, and I’m sure they have their reasons.” Later, Ms. Brandon was terminated ostensibly because of an altercation she had with another staff member. Ms. Brandon sued the county for, among other claims, retaliation in violation of her First Amendment right to free speech.

After the jury found in Ms. Brandon’s favor, the county appealed. The Ninth Circuit began with a review of First Amendment employment retaliation law. Speech made by public employees in their official capacity (i.e., as part of their job duties) is not protected; speech made in their private capacity as a citizen is. The Ninth Circuit has developed three principles to help determine whether the speech is made as a public employee or a private citizen. First, if the employee speaks outside of the chain of command, it is unlikely that she is speaking as part of her job duties. Second, if the substance of the speech is a routine report as part of normal department procedure about a particular incident, the speech is typically within the employee’s job duties. But if an employee raises concerns about corruption or systematic abuse, it is unlikely to be within the employee’s job duties. Third, if the employee speaks in contradiction to a supervisor’s orders, the speech often falls outside of the employee’s job duties.

The Ninth Circuit applied these principles to the case by first noting that Ms. Brandon had a broad fiduciary duty to her client, the county. Also, the rules of professional conduct recognize attorneys’ statements to media outlets to be part of their duties representing their clients. The court of appeals concluded that while Ms. Brandon spoke outside the chain of command, she was speaking as an attorney representing the county. It determined that Ms. Brandon did not raise any allegation of corruption or other serious misconduct, only a disagreement with the settlement authorized by the county. Finally, the Ninth Circuit found that Ms. Brandon’s communication with the newspaper did not violate any county policy.

Based on this analysis, the appellate court decided that Ms. Brandon’s speech was part of her official duties she owed to the county as its attorney. Consequently, the First Amendment did not protect her.

Posted by deanroyerlaw in Employment

Hugging as unlawful harassment

Can hugging be unlawful harassment?

The Ninth Circuit Court of Appeals recently addressed the question of whether frequent unwanted hugging and one unwanted kiss in the workplace can constitute unlawful sexual harassment. In Zetwick v. Cnty. of Yolo (9th Cir. Feb. 23, 2017, No. 14-17341) 2017 U.S. App. LEXIS 3260, Ms. Zetwick alleged that her supervisor hugged her over one hundred times over a 13-year period, and kissed her partially on the lips on one occasion.

The trial court dismissed the case before trial after concluding that hugs and kisses on the cheek can never be unlawful harassment. On appeal, the Ninth Circuit found that the trial court failed to rely on any precedent that supported its conclusion. To the contrary, some of the precedent stood for the proposition that hugs and kisses, when unwelcome and pervasive, can constitute unlawful harassment. The appellate court also found that the trial court committed a second legal error by incorrectly stating that the standard for harassment is severe and pervasive conduct (as opposed to severe or pervasive). While the trial court correctly stated the standard elsewhere in its opinion, the Ninth Circuit found the incorrect reference to be significant because it occurred where the trial court found that Ms. Zetwick had not met the standard.

The appellate court turned next to whether there was sufficient evidence for a reasonable conclusion that unlawful harassment occurred. The Ninth Circuit reviewed federal harassment law, which requires a sexually offensive environment that both a reasonable person would find hostile or abusive, and one that the victim perceived to be so. It concluded that the evidence could satisfy this standard based on Ms. Zetwick’s testimony that her supervisor hugged her more than one hundred times during the period 1999 to 2012, and that he hugged female employees exclusively.

The Ninth Circuit faulted the trial court for viewing the evidence in a mathematically precise manner (seven to eight hugs per year on average, each lasting a few seconds) rather than considering the cumulative effect of the conduct. The court of appeals also determined that the trial court erred by failing to consider precedent that the conduct has greater impact when carried out by a supervisor, overlooking Ms. Zetwick’s testimony about the emotional impact of her supervisor’s behavior, and disregarding her testimony about her supervisor’s conduct toward other female employees.

Ultimately, the Ninth Circuit reversed the trial court’s dismissal of the case.

Posted by deanroyerlaw in Employment

Sex discrimination evidence

Enough evidence of sex discrimination?

Last month, the Ninth Circuit Court of Appeals decided whether an employee had enough evidence of sex discrimination to go to trial. In Mayes v. WinCo Holdings, Inc. (9th Cir. 2017) 846 F.3d 1274, Ms. Mayes challenged her termination under the federal employment discrimination law, Title VII.

In this case, Ms. Mayes worked for WinCo, a grocery store. During her final years at WinCo, Ms. Mayes supervised employees on the night-shift freight crew. In 2011, WinCo terminated Ms. Mayes, allegedly for taking a stale cake from the store bakery to the break room to share with fellow employees and telling a loss prevention investigator that management had given her permission to do so. WinCo claimed these actions were theft and dishonesty. WinCo replaced Ms. Mayes with a male who had only one month of freight crew experience and no supervisory experience at WinCo.

After Ms. Mayes sued WinCo for sex discrimination, WinCo moved the trial court to dismiss the case (summary judgment). The court granted the motion on grounds Ms. Mayes did not have evidence to dispute WinCo’s alleged reason for terminating her.

On appeal, the Ninth Circuit began with a review of the standard for disputing an employer’s reason for a termination (pretext). An employee can prove pretext either directly by showing that unlawful discrimination more likely motivated the employer, or indirectly by showing that the employer’s explanation is unworthy of credence because it is internally inconsistent or otherwise not believable.

Most cases do not include direct evidence. But the appellate court found that Ms. Mayes had multiple examples of direct evidence of sex discrimination: the general manager of the store made the alleged comments that (1) a man “would be better” to lead the safety committee instead of Ms. Mayes; (2) she did not like “a girl” (Ms. Mayes) running the freight crew; and (3) criticized Ms. Mayes, but not a male co-worker, for leaving work early to care for her children. These comments directly concerned Ms. Mayes and the decision-making process for retaining and promoting employees.

WinCo contended that this evidence was not relevant because the general manager did not terminate Ms. Mayes. The Ninth Circuit disagreed because there was evidence suggesting the contrary: WinCo admitted in writing (interrogatory) that the general manager was involved in the termination, the general manager testified in an unemployment benefits hearing that she was involved, and the general manager testified that she was in contact with the person who notified Ms. Mayes that she was terminated. Furthermore, the general manager admitted that she contacted loss prevention after reviewing a video-recording of Ms. Mayes taking the stale cake. Finally, no one at WinCo admitted to making the termination decision. Taken as a whole, the evidence supported an inference that the general manager’s bias influenced or contributed to the termination decision.

WinCo also asserted that the general manager’s comments were “stray remarks” that could not establish discrimination. But the court of appeals concluded that a reasonable jury could decide that the general manager’s comments demonstrated her overt hostility to having women in leadership roles. The Ninth Circuit also reaffirmed precedent that the decision-maker may engage in unlawful discrimination, even when she is the same sex as the employee.

Although there was enough direct evidence for Ms. Mayes to go to trial, the Ninth Circuit also reviewed the circumstantial evidence. Multiple employees testified that it was a common, accepted practice—rather than an offense punished by termination—for supervisors like Ms. Mayes to take cakes to the break room. Also, WinCo replaced Ms. Mayes with a less qualified male. This evidence was sufficient to establish pretext circumstantially.

Based on the direct and circumstantial evidence, the appellate court reversed the trial court’s dismissal of the case.

Posted by deanroyerlaw in Employment