E-Blasts

Clarifying New California Overtime Requirements for Agricultural Employers with Employees Working In California and Arizona In The Same Week

As we previously reported, beginning January 1, 2019, an employee of an agricultural employer under Wage Order 14 with 26 or more employees, who works in California, will be entitled to overtime when working over 9.5 hours in a day or 55 hours in a week. See our previous eBlast here for more information regarding the new overtime requirements under AB 1066. It is common in the agricultural industry that an employer will have farmworkers who work in California and neighboring states such as Arizona within the same week. The question has been raised by some on how to comply with the new overtime obligations if an employer has workers in both California and Arizona in the same workweek. We offer some clarity on this. 

Beginning in January 2019, an employee of an employer with 26 or more employees who works in California for a day and works more than 9.5 hours that day, will be entitled to overtime for any hours worked in excess of 9.5 hours (regardless of whether they are an Arizona or a California resident). However, an employee who works more than 55 hours during the workweek - but less than 9.5 hours in California on any single day - will not be entitled to overtime unless they worked in excess of 55 hours in California during that workweek. In other words, the time worked in AZ does not count towards the 55 hour straight time limit under AB 1066.

This analysis is based on a 2011 ruling from the California Supreme Court. In that case the California Supreme Court ruled that Oracle, a California-based employer, is subject to California overtime law for work performed within the state. See Sullivan v. Oracle Corporation, 51 Cal.4th 1191 (2011). The Court analyzed the specific language of California’s overtime statute, finding that the express language of the statute does not distinguish between resident and non-resident employees and instead applies to all individuals. The Supreme Court in Sullivan stated “The California Labor Code does apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs.” As such, based on a literal interpretation of the Supreme Court’s language in Sullivan, overtime will be owed for hours worked IN California only, i.e., hours worked in excess of 9.5 hours in a day and/or in excess of 55 hours in a workweek. In other words, employers should not count hours worked in Arizona towards the over 55 hours workweek overtime threshold.

In sum:

  • If an employee performs work in California, then AB 1066 applies.
  • If an employee performs work in Arizona, then Arizona law controls and AB 1066 does not apply.  
  • Only work performed in California counts towards the over 55 hour straight workweek overtime limit under AB 1066.

COUNSEL TO MANAGEMENT:

As always, please review your company’s policies and practices to understand the implications of how these laws intersect and how they may affect your company. If you’re an employer and you have any questions or concerns on how AB 1066 and/or the proposed new Wage Order 14 will affect you or how to comply with their overtime requirements, please do not hesitate to contact the experts at the Saqui Law Group.

 

Employers Not Entitled To Fees and Costs Under FEHA Claims are “Frivolous”

In the case of Felix Huerta v. Kava Holdings, Inc., which was decided last month, the California Court of Appeal, Second Appellate District addressed the issue of whether a prevailing employer can collect attorneys’ fees for successfully defending itself against claims brought under the Fair Employment and Housing Act (“FEHA”). To collect attorneys’ fees in a FEHA action, the prevailing employer must show the case was “frivolous, unreasonable, or groundless when brought, or the [employee] continued to litigate after it clearly became so.” Be that as it may, there are other statues that give the prevailing employer the opportunity to recover an award of costs without a finding that the action was frivolous.

In the subject case, Felix Huerta (“Huerta”) was a server at Kava Holdings’ Hotel Bel-Air. An altercation between Huerta and another restaurant server, Atanas Kolev (“Kolev”), erupted as the restaurant staff was working and preparing for the next shift. Kolev felt that Huerta wasn’t pulling his weight and confronted Huerta about it. Huerta called Kolev a “[expletive] loser” which resulted in Kolev telling Huerta they should take the argument outside and then he pushed Huerta. Huerta claimed Kolev grabbed him by the throat and Huerta told Kolev “You’re done. I’m going to report you right now.” Other employees stepped in and ended the altercation.

The manager on duty was immediately notified by Huerta that an altercation took place. During his recount of the events, Huerta never alleged that that the confrontation was based on his race or national origin nor did he allege that Kolev had previously harassed him based on his race or national origin. Statements were obtained from both involved parties as well as witnesses. There was no indication that Kolev taunted Huerta because he is Hispanic or from Mexico. Ultimately, both employees were terminated for engaging in disorderly conduct. Following Huerta’s termination, three Hispanic employees brought forth complaints that Kolev had previously harassed Huerta and other Hispanic employees because of their race and national origin. A review of the department’s files by the HR Director found no previous complaints about Kolev. Additionally, the restaurant managers never observed any harassing behavior before Huerta was terminated.

Hotel Bel-Air offered to settle with Huerta for $375,000 before the case went to trial. Hotel Bel-Air made this offer under Section 998 of the Code of Civil Procedure. Under this section, referred to in the legal industry as a “998 Offer,” if Huerta rejects Hotel Bel-Air’s offer of settlement and falls short of getting a bigger verdict at trial, Huerta cannot recover his attorneys’ fees and costs and Huerta would have to pay Hotel Bel-Air’s post-998 Offer court costs and possibly even the expert witness fees that were incurred after making the 998 Offer. Huerta rejected this settlement offer and countered with a demand for $1.55 million.

Huerta later sued Hotel Bel-Air and several management employees individually, alleging 11 claims, including six claims under FEHA for discrimination, harassment, and retaliation based on his race and national origin. Before trial, the claims against the individual defendants were dismissed and, at trial, the court dismissed the retaliation claim. A verdict was returned by the jury finding in favor of Hotel Bel-Air on all of Huerta’s remaining claims. As the prevailing party, Hotel Bel-Air sought costs and fees due to its previous 998 Offer. Hotel Bel-Air reduced the request for cost and fees from over $1.3 million to $98,863 which is the amount that was incurred after Huerta rejected the 998 Offer. The trial court refused Hotel Bel-Air’s request for attorneys’ fees but awarded $50,000 in costs. Huerta appealed the decision.

The California Court of Appeal, while acknowledging that the prevailing party in civil cases is generally entitled to its costs, noted that under FEHA, a prevailing employer is not entitled to fees or costs unless the court finds the employee’s lawsuit was “frivolous, unreasonable, or groundless when brought, or the [employee] continued to litigate after it clearly became so.” Thus, the court was faced with the question of whether Section 998 applies in non-frivolous FEHA actions filed before the amendment. In the ruling against Hotel Bel-Air, the court referred to the public policies behind the heightened standard for a prevailing employer to obtain fees and costs in FEHA actions, specifically noting that shifting the litigation expenses to modest or low income earners may discourage them from brining legitimate claims. Therefore, the court ruled that Section 998 does not apply in non-frivolous FEHA actions that predate the amendment.

COUNSEL TO MANAGEMENT:

Beginning January 1, 2019, FEHA will be amended to make clear that 998 offers are no exception to the above-demonstrated rule regarding prevailing party’s entitlement to costs in FEHA matters. Even without a 998 offer, it is nearly impossible for prevailing employers to obtain an award of attorneys’ fees in FEHA cases anyways. While courts do occasionally awarded prevailing employer’s some of its costs, such as deposition transcripts, those instances are few and far between. Nonetheless, this case is a good demonstration on how 998 offers can be used by employers to combat frivolous lawsuits and to encourage plaintiffs to settle matters quickly. Contact the experts at The Saqui Law Group with any questions you may have regarding FEHA or other employment claims.

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