ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht Pillsbury Winthrop Shaw...
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Transcript of ACC-A San Diego 2006 Wage-Hour Update George S. Howard, Jr. Laura K. Licht 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
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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?
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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
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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
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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
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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."
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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
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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
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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
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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
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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?
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DLSE Regulations
First Issued: December 2004
Withdrawn: January 13, 2006
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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
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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”
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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
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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
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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
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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”
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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
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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”
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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
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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
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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?
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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
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