ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw...

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ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw Pittman LLP

Transcript of ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw...

Page 1: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

ACC-A San Diego2006 Wage-Hour Update

George S. Howard, Jr.

Laura K. Licht

Pillsbury Winthrop Shaw Pittman LLP

619.234.5000© 2006 Pillsbury Winthrop Shaw Pittman LLP

Page 2: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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Overview

Trends in wage-hour litigation

The Meal/Rest Period Litigation Explosion

Section 226.7 Payments:  Are they penalties or “wages”?

“Donning and Doffing”: The IBP Case

Bearden: Are the IWC Orders Invalid?

Why many IT employees are misclassified

Permissible commission “chargebacks”

Vacation-docking in in less than full-day increments?

Page 3: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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Current Trends in Wage-Hour Litigation

Exemption litigation continues

Litigation on technical violations increasing

Bar for certification lower after SavOn

Relatively few PAGA claims

Wage-hour claims are commonplace in individual termination disputes

Acting Labor Commissioner Bob Jones

Page 4: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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Exemption Hotspots

Executive Exemption Claims by Retail General Managers increasing Continuing claims by Assistant Managers

Administrative Exemption Highly paid professionals in production-type jobs

(stockbrokers, etc.)

IT Employees Nationwide class claims filed against IBM Case against Siebel certified $14.9 million settlement in Electronic Arts case

Page 5: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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Sav-On: 34 Cal. 4th 319 (2004)

At trial court Numerous declarations filed by Sav-On showing wide variation

in duties of store managers and assistant managers Trial court granted class certification

On appeal Certification reversed Individual fact questions predominated Plaintiff’s evidence “insubstantial, conclusory or incredible”

Supreme Court Certification ruling upheld; no abuse of discretion Different job duties did not preclude certification Use of “aggregate proof” to establish “common issues” at

certification stage

Page 6: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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Sav-On Aftermath

Several trial court judges have used discretion to deny certification, including: Albertsons (J. Edmon, LA Superior) United Parcel Service (J. Henderson, N.D. Cal.) Wal-Mart (J. Fischer, C.D. Cal.) Kragen Auto Parts (J. Enright, SD Superior)

Others use discretion to certify expansive overtime classes E.g., “all of a Defendant’s employees who were

improperly classified as exempt." 

Page 7: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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Sav-On Aftermath (Cont.)

Appellate Courts are beginning to reign-in overbroad certification rulings, and affirm denials

Unfortunately, most are unpublished In re Home Depot

– Due process right to raise affirmative defense of individual overtime exemptions

Nguyen v. Dollar Financial Group– No uniform policy of meal/rest break violations

– Some employees signed revocable waivers

– Time cards showed some compliance

– Individual issues predominated

Page 8: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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Sav-On Aftermath (Cont.)

Dunbar v. Albertsons (certified for publication on August 10, 2006) Plaintiffs submitted pro-forma declarations Defendants showed inconsistencies in declarations Proof of varying times in varying tasks Trial court judge (R. Sabraw) found that common

issues did not predominate Appellate court found that trial court had properly

weighed the evidence to reach its conclusion

Page 9: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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Smith v. L’Oreal

California Supreme Court, July 10, 2006

When is an employee “discharged” under Section 201? Section 201 requires immediate payment at discharge Section 203 waiting time penalties for untimely payment

Plaintiff invoked 30 day penalty provision, but was only employed for one day

Holding: “Discharge” includes when employee is released after completing the job assignment/duration for which the employee was hired

Lessons: Pay immediately Any delay can result in waiting time penalties Review employment practices to ensure compliance

Page 10: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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Meal/Rest

Labor Code § 512 – five hour rule for meal period

Employee must keep records

Second meal period if employee works 10 hours

Rest Periods: “Net” ten minutes every four hours

Page 11: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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Meal/Rest

Labor Code § 226.7 requirements

One hour’s pay for missed meal or rest period

IWC order Sections 11, 12

One year or three year statute of limitations?

One hour pay maximum per day?

Page 12: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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DLSE Regulations

First Issued: December 2004

Withdrawn: January 13, 2006

Page 13: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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Meal/Rest Period Litigation(Labor Code Section 226.7)

One or three year statute of limitations

Courts of Appeal find it a penalty, 3 to 1

San Diego Appellate Court applies three-year statute

Three cases already before California Supreme Court

Page 14: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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“Donning/Doffing” (IBP v. Alvarez)

United States Supreme Court

Specialized protective gear: Donning is “hours worked”

Safety goggles, lab coat, etc. Not hours worked (de minimis)

Walking Time – Compensable if “integral and indispensable” to job duties

Time wait for gear – not “hours worked”

Page 15: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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Bearden v. Borax:Validation of IWC Orders

IWC Order 16 (Construction, Logging)

IWC created collective bargaining exception to meal rules

No authority in Labor Code for IWC to do so

Other provisions in doubt? On duty meal period Section 20 penalties

Page 16: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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Classification Challenges for IT Personnel

Employees presumed to be non-exempt

Employer has burden of proving an exemption

High salary, alone, not sufficient for any California exemption (cf. DOL Regulations)

Technical knowledge and expertise, alone, not sufficient for any exemption

Employee’s preference for being exempt is not a defense

Page 17: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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Dangerous Exempt Classifications for IT Employees

“Managers” of very small IT departments Often perform substantial amount of computer

installation/maintenance

“Working foremen” who work on same type of projects as subordinates 50% rule not met

“Managers” with no subordinates

Help Desk personnel

Page 18: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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Administratively Exempt Computer Professionals

Where exemption found, duties generally include: Problem analysis and resolution; Research and System Design; Project Management; Budgeting Work with outside vendors and department heads Training; Planning, scheduling and coordination duties

In CA, must satisfy “50% Rule”

Page 19: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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What To Do?

Regularly evaluate jobs

Maintain/distribute accurate job descriptions Clearly define job duties and expectations Consider acknowledgment procedures

Properly classify new-hires

Reclassify? (Was held to be a factor supporting class certification in SavOn) Identify “triggering” event Change and reissue job descriptions with restructured duties Separate exempt and non-exempt functions Concentrate exempt duties in positions likely to be exempt Use promotions as opportunity to reclassify

Page 20: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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Commission Chargebacks

Steinhebel v. LA Times (CA Court of Appeal, Feb. 2005) Rare victory for employers

Court upheld LA Times’ commission chargeback plan for telemarketers Subscriptions cancelled before 28 days were not

“commissionable” LA Times advanced commissions prior to expiration of 28

day period If order cancelled, deduction made from future commission

advances (not hourly wage)

Harris v. Investors Business Daily (March 2006) No signed commission plan Issue when commission “earned”

Page 21: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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Lessons from Steinhebel and Harris

Write commission plans in simplest terms possible

Define when commission is “earned”

Have employees sign plan prior to sales activity Acknowledge understanding of terms Authorize chargeback deduction

Chargeback against advances, not wages

Make qualifying conditions reasonable and fair

Ensure full minimum wage received regardless of net level of sales

Page 22: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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Vacation Docking

Conley: OK to dock exempt employee’s PTO or vacation in less than full-day increments

Improper salary or vacation docking can destroy exempt status

Conley applies where employee requests partial day off

Does not apply to shut-downs, furloughs

Labor Commissioner 5/31/05 memo

Page 23: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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Travel Time

California rule – “Under the Control”

Commuting time not compensable

Travel within a day – compensable

Out of town travel (overnight)

Pay travel time at lower rate?

Page 24: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

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Looking Ahead

Class Actions Likely to Continue

Focus on Higher-Paid Employee Groups

Do Not Count on Help From Administrative Agencies

Bonuses Challenges to profit-based plans (Ralph’s case); California

Supreme Court to decide

Page 25: ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw Pittman LLP 619.234.5000 © 2006 Pillsbury Winthrop Shaw.

ACC-A San Diego2006 Wage-Hour Update

George S. Howard, Jr.

Laura K. Licht

Pillsbury Winthrop Shaw Pittman LLP

619.234.5000© 2005 Pillsbury Winthrop Shaw Pittman LLP