E-Blasts

A California Court of Appeal upheld a lower court’s refusal to grant class action certification in a lawsuit regarding on-duty meal periods and the propriety of the employer’s meal period waivers. Palacio v. Jan & Gail’s Care Homes, Inc. concerned a purported class of home care workers who were charged with operating a 24-hour residential care facility for developmentally disabled clients. Due to the nature of the work, it was difficult for employee to be completely relieved of all duty during the lunch period. Accordingly as permitted by IWC Wage Order 5, employees took on-duty meal periods where they ate with their clients. The meal period was compensated, and the meal itself was provided by the employer. All employees signed waivers of their rights to an off-duty meal period.

One employee filed suit after she was terminated. The plaintiff, Palacio, brought suit on behalf of 102 current and former employees, alleging class members were not provided with off-duty meal periods. Palacio also alleged that the employer should have informed employees of their right to revoke the meal period waivers, but this was quickly shot down by the Court, which held an employer is not required to notify employees of their ability to withdraw the meal period waiver.

Recently, the Eighth Circuit threw out two donning and doffing class action verdicts won by Nebraska workers against Tyson Foods Inc. (“Tyson”) totaling $24 million, ruling the claims under Nebraska’s payment and collection law were not properly supported and failed as a matter of law.

The two cases filed in 2008, Manuel Acosta, et al. v. Tyson Foods, Inc., and Jose A. Gomez et al. v. Tyson Foods, Inc., alleged Tyson’s compensation system paid employees for only the time they were present and working on the actual production assembly line. Although plaintiffs in both cases alleged similar causes of action, the facts were slightly different. Acosta worked at a pork plant where the number of minutes paid for non-productive time varied by job and changed over time. Gomez worked at a beef plant which was unionized and paid its workers a flat rate for four extra minutes for dressing and washing. Nonetheless, both cases alleged Tyson was not adequately compensating its employees for all non-productive time, including putting on and taking off protective gear.

The court ruled against both plaintiffs based on multiple theories. First, under the Fair Labor Standards Act (“FLSA”), no employee shall be a party plaintiff to a class action unless he gives his consent in writing and such consent is filed with the court. Both complaints were styled as a “Class Action and Collective Action Complaint” by themselves and on behalf of other similarly situated individuals. Neither plaintiff amended their complaint to assert an individual action. Despite their pleadings, none of the named plaintiffs ever filed the requisite consents nor moved for conditional certification. Therefore, the court dismissed the FLSA claims.
Second, the Nebraska Collection Act creates a cause of action to recover only those wages that an employer previously agreed to pay when all stipulated conditions have been met. The Acosta court ruled that the plaintiffs failed to present sufficient evidence of unpaid wages that Tyson had agreed to pay.

On November 25, 2015, a federal contractor argued in the United States Supreme Court that a California federal court should not be permitted to void an entire arbitration agreement just because that court deemed several provisions of the agreement to be flawed. The contractor, MHN Government Services, Inc. (“MHN”), provides counseling services to military personnel. MHN’s counselors had filed suit alleging they were misclassified as independent contractors instead of employees, thereby violating both state and federal labor laws.

MHN, citing an arbitration agreement all counselors signed before beginning work, filed a petition to compel the counselors’ claims to arbitration. The counselors opposed by arguing provisions of the arbitration agreement were unconscionable under California law. The district court ruled that several of the provisions were one-sided in favor of MHN and thus held that the entire arbitration agreement was invalid. The court found that, not only was the arbitration provision improperly buried in paragraph 20 of 23 in the contract, but that it was also unfair because the six-month statute of limitations was too short, only MHN could select the pool of potential arbitrators and discovery procedures were limited. The Ninth Circuit affirmed this ruling on appeal, and MHN sought review in the Supreme Court.

After last month’s Halloween e-blast highlighting all of the scary, anti-employer developments in 2015, it is understandable that employers might still feel shaken about how 2016 might shape up. However, as November quickly comes to a close, it is important to remember that employers also have some developments to be thankful for.

First, while the decision in Browning-Ferris broadly expanded the standard for who can be considered a joint employer, efforts in Congress have been gaining ground to legislatively carve-up and reverse that fruitcake of a decision. H.R. 3459 is co-sponsored by over a quarter of the House including three democrats who broke with tradition and made the pilgrimage across the aisle to gather at the Republican feasting table. Because of the bi-partisan support, statistics predict a 35% chance of enactment (compared to a 3% passage rate of bills overall). The bill would require that two or more employers are only joint employers if they share and exercise control over terms and conditions of employment in an actual, direct, and immediate way. The Senate version of the bill, S. 2015, has no support from Democrats yet, but is co-sponsored by all but six Republican Senators. Republicans still remain hopeful that this bill will force the NLRB to eat some humble (pumpkin) pie.

Over the course of 2015, the California Legislature enacted many new laws that have already begun affecting employers and many others which will take effect on January 1, 2016 and beyond. The most significant and impactful laws are summarized below.

Assembly Bill 1513 (“AB-1513”): New Formula For Piece-Rate Compensation And An Affirmative Defense For Past Non-Productive Time

AB-1513 is one of the most controversial bills enacted this year. This bill, codified as Labor Code section 226.2, introduces a new formula for compensating piece-rate employees for rest and recovery periods (“R+R”) and other nonproductive time. Employers are required to compensate piece-rate employees for R+R at the higher of: the average hourly rate as determined by a complex formula outlined in the statute; or, the applicable minimum wage. Other nonproductive time, such as travel, safety meeting or exercise, is to be compensated at the applicable minimum wage. Most importantly, all California employers who employ piece rate employees must be in compliance with this statute beginning on January 1, 2016.

The Associate General Counsel for the National Labor Relations Board (“NLRB”) released an internal advice memorandum on Monday, November 2, 2015 after recommending a dismissal of an employee’s unfair labor practice charge. The employee was a driver for Shore Point Distribution Co. Inc. (“Shore Point”) and alleged that Shore Point had a duty to bargain with the union over its use of a GPS tracker to investigate his timecard fraud. Shore Point first became suspicious when the driver’s timecard entries indicated that he was taking much more time than other employees to complete the same routes.

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