California Supreme Court De-Publishes Administrative Exemption Case

I posted about the Court of Appeal's opinion in Harris v. Superior Court here.  That decision, on remand from the California Supreme Court, would have severely limited the administrative exemption.  Fortunately, the California Supreme Court has now de-published the decision (here), so it is no longer good law.  The bad news is that the Supreme Court's guidance on the administrative exemption is rather vague and remains open to lower courts' interpretations.

NLRB: Lawful "At Will" Policies

Here's a long post on employment at will and the NLRB.  But it's worth it!

The NLRB announced on October 31, 2012, that the Office of General Counsel issued advice memoranda regarding "at will" employment policies.  Both employed the same analysis. The General Counsel in both cases determined that the employers' at will language did not violate the NLRA.

The first memo (here) addressed the at-will policy in a Mimi's Cafe's handbook, taken from a restaurant in Arizona.  The policy language was:

AT-WILL EMPLOYMENT

The relationship between you and Mimi's Cafe is referred to as  "employment at will." This means that your employment can be  terminated at any time for any reason, with or without cause, with or without notice, by you or the Company. No representative of the Company has authority to enter into any agreement contrary to the foregoing "employment at will" relationship. Nothing contained in this handbook creates an express or implied contract of employment.

The second memo (here) addressed the at will disclaimer in the handbook of Rocha Transportation, a Modesto, California employer.   The policy at issue read:

Employment with Rocha Transportation is employment at-will. Employment at-will may be terminated with or without cause and with or without notice at any time by the employee or the Company. Nothing in this Handbook or in any document or statement shall limit the right to terminate employment at-will. No manager, supervisor, or employee of Rocha Transportation has any authority to enter into an agreement for employment for any specified period of time or to make an agreement for employment other than at-will. Only the president of the Company has the authority to make any such agreement and then only in writing.

The General Counsel analyzed whether the above "bolded" language in the respective handbooks was unlawful under the NLRA.  Why?  Because the NLRA protects employees rights to organize or engage in concerted activities for their mutual aid and protection.  These are called "Section 7 rights." Even neutral policies that infringe on those rights can be held illegal.

The General Counsel analyzed the policies in a similar way.  This language is quoted from the Rocha memorandum:

An employer violates Section 8(a)(1) of the Act through the maintenance of a work rule or policy if the rule would "reasonably tend to chill employees in the exercise of their Section 7 rights." The Board has developed a two-step inquiry to determine if a work rule would have such an effect. First, a rule is unlawful if it explicitly restricts Section 7 activities. Second, if the rule does not explicitly restrict protected activities, it will nonetheless be found to violate the Act upon a showing that: (1) employees would reasonably construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule has been applied to restrict the exercise of Section 7 rights . . .
(footnotes omitted).

The General Counsel decided the policies did not explicitly restrict Section 7 rights. Neither business issued the policies in response to union activity, and there was no evidence that the policy was applied to restrict Section 7 rights.  

That left the issue of whether employees "would reasonably construe" the at will policies to prohibit Section 7 activity.  The General Counsel decided this policy language would not: 

The provision does not require employees to refrain from seeking to change their at-will status or to agree that their at-will status cannot be changed in any way. Instead, the provision simply prohibits the Employer's own representatives from entering into employment agreements that provide for other than at-will employment.10 Indeed, the provision explicitly permits the Employer's president to enter into written employment agreements that modify the employment at-will relationship, and thus encompasses
the possibility of a potential modification of the at-will relationship through a collective -bargaining agreement that is ratified by the Company president. Accordingly, we conclude that employees would not reasonably construe this provision to restrict their Section 7 right to select a collective -bargaining representative and bargain collectively for a contract.

Here is the General Counsel's analysis of the Mimi's Cafe policy:

We conclude that the contested handbook provision would not reasonably be interpreted to restrict an employee's Section 7 right to engage in concerted attempts to change his or her employment at-will status. First, the provision does not require employees to refrain from seeking to change their at-will status or to agree that their at-will status cannot be changed in any way. Instead, the provision  simply highlights the Employer's policy that its own representatives are not authorized to modify an employee's at-will status. Moreover, the clear meaning of the provision at issue is to reinforce the Employer's unambiguously- stated purpose of its at-will policy: it explicitly states 'Jnjothing contained in this handbook creates an express or implied contract of employment." It is commonplace for employers to rely on policy provisions such as those at issue here as a defense against potential tolegal actions by employees asserting that the employee handbook creates an enforceable employment contract.10 Accordingly, we conclude that employees would not reasonably construe this provision to restrict their Section 7 right to select a collective -bargaining representative and bargain collectively for a contract when considered in context.11 The Region should therefore dismiss, absent withdrawal, the Charging Party's allegation that the Employer's employment at-will policy violates Section 8(a)(1).

(footnotes and citations omitted). 

You may have read that the NLRB was waging war against at will employment policies.  In fact, an administrative law judge previously held that an acknowledgment of employment at will --- "I further agree that the at-will employment relationship cannot be amended, modified or altered in any way." -- was unlawful.  However, the General Counsel noted that the parties settled before the Board could review the ALJ's decision.  The General Counsel stated the law in this area is "unsettled" and that the NLRB offices should submit all cases for review before proceeding.

So, "at will" gets a bit of a reprieve.  It may be wise to have your policy language reviewed for compliance with the NLRA, at least once this area of the law is settled.

DGV

Rounding Hours Worked Is OK if Done Correctly

This post is brought to you by.... See's Candies.  Mmmmm nuts and chews.And their workers still give out those free samples. 

It turns out that See's also can deliver a tasty precedent! From the Court of Appeal.

See's Candy uses a timekeeping software system, known as Kronos, to record its employee work hours. Employees are required to "punch" into the system (located in the back room of each See's Candy store) at the beginning and end of their shifts, as well as for lunch breaks. A Kronos punch shows the actual time (to the minute) when the employee punched into the system. During the relevant times, See's Candy calculated an employee's pay based on his or her Kronos punch times, subject to adjustment under two policies: (1) the nearest-tenth rounding policy; and (2) the grace period policy.

Under the nearest-tenth rounding policy, in and out punches are rounded (up or down) to the nearest tenth of an hour (every six minutes beginning with the hour mark). The Kronos time punches are thus rounded to the nearest three-minute mark. For example, if an employee clocks in at 7:58 a.m., the system rounds up the time to 8:00 a.m. If the employee clocks in at 8:02 a.m., the system rounds down the entry to 8:00 a.m.

So, those are the relevant facts. The trial court held that rounding is not allowed in California, given that California requires payment for all hours worked.  See's argued that the federal rules on rounding should apply, and that they were adopted by the California DLSE.

The Court of Appeal agreed with See's:

In the absence of controlling or conflicting California law, California courts generally look to federal regulations under the FLSA for guidance. (Huntington Memorial Hospital v. Superior Court (2005) 131 Cal.App.4th 893, 903.) The policies underlying the federal regulation — recognizing that time-rounding is a practical method for calculating work time and can be a neutral calculation tool for providing full payment to employees — apply equally to the employee-protective policies embodied in California labor law. Assuming a rounding-over-time policy is neutral, both facially and as applied, the practice is proper under California law because its net effect is to permit employers to efficiently calculate hours worked without imposing any burden on employees. (See Gillings v. Time Warner Cable, LLC, supra, 2012 WL 1656937, at *5.

* * *

Relying on the DOL rounding standard, we have concluded that the rule in California is that an employer is entitled to use the nearest-tenth rounding policy if the rounding policy is fair and neutral on its face and "it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked." (29 C.F.R. § 785.48; see DLSE Manual, supra, §§ 47.1, 47.2.)

To emphasize - the employer will be responsible for ensuring the rounding policy does not unfairly favor the employer.  Over time, "rounding" should come out about even.  If not, the court left open the possibility that the payment system will be found to be illegal.

The case is See's v. Superior Court (Silva) and the opinion is here.
 

California Supreme Court to Decide If Insubordination is Misconduct

Remember when the Court of Appeal decided that "refusing to sign" a document was insubordination, disqualifying a terminated employee from unemployment insurance benefits?  See this post.  That was awesome.

Anyway, the California Supreme Court granted review of the decision, so it's off the books for now.

Stay tuned!

Greg

School

Lovelies,

RUTH!

I was in my AP Art History Class when Ruth (a dedicated follower ;) ) suggested that I post a picture of my outfit. To be honest, I can't remember the last time I blogged about school attire... I feel like walking around and asking fellow classmates to 'take my picture!' every day would seem entirely narcissistic. Plus, our campus doesn't exactly serve as a gorgeous backdrop for photos. Stained concrete? Totally classy. However, I'm really glad I took these photos (Photo credits to Natalia), mainly because it's an excellent example of what I wear on a normal day of high school. 

Personally, I don't necessarily consider my 'school style' different from my regular style. I find that the better I dress, the more confident I feel and the more I can actually focus in class. (If you've wondered why you never see me in a sweatshirt around campus, there's your answer!) The rainy season is significantly easier for me to create outfits as opposed to the summertime, simply because layering jackets, scarves, heavier pants and boots creates interesting outfits rather quickly.

On a side note, I struck pure gold in the backpack department this fall! I had read about the Herschel company in years prior, but never considered purchasing one of their backpacks. When I saw that Madewell was collaborating to create a collection of limited edition packs, however, I knew it was time to test one out. I have been SO happy with it, and still continue to receive compliments on a daily basis. It's smart, functional and stylish. What more could a girl want? :) 

XOXO,

Em

Shirt- Juicy Couture

Skirt- Forever 21

Necklace- J. Crew

Shoes- Marc by Marc Jacobs

 Backpack- Herschel

Court of Appeal on Reporting Time (Redux)

We first blogged about Aleman v. Airtouch Cellular here.  I was pretty excited because I'm a dork. Oh, and because the Court of Appeal addressed two issues that come up all the time for clients, but never in court:  "reporting time" and the "split shift" premium. You remember.  

Anyway, as I predicted, the Supreme Court granted review and held the case, which meant it had no precedential value and pretty much disappeared.  But it's back.  And if it stays on the books this time, it may result in a big change to advice that employment lawyers give their employer clients.

Here are the facts as explained by the Court:

Krofta was required to attend occasional work-related meetings. Most of these were ―store meetings, which would be held once or twice a month on Saturday or Sunday morning, before the store opened, and which would last an hour to an hour and a half. The meetings were scheduled in advance and listed on employees‘ work schedules, and they were recorded in AirTouch‘s electronic timekeeping system.

Krofta‘s timesheets from AirTouch showed that there were five occasions on which he was scheduled to work, and did work, less than four hours (possibly to attend meetings). Separately, the AirTouch timesheets showed there were five times when Krofta worked a split shift—described by the parties for purposes of this litigation as a short shift (generally a meeting) in the morning followed by a longer shift later the same day.

*** Krofta contended, however, that he was owed additional compensation as reporting time pay for the five instances he worked less than four hours, and split shift premiums for the five times he worked a split shift.

REPORTING TIME PAY

Here's how the court analyzed the reporting time pay provision contained in the Wage Orders.  This will result in a big change to advice employment lawyers give to employers:

To simplify, the issue may be framed by the following question: If an employee‘s only scheduled work for the day is a mandatory meeting of one and a half hours, and the employee works a total of one hour because the meeting ends a half hour early, is the employer required to pay reporting time pay pursuant to subdivision 5(A) of Wage Order 4 in addition to the one hour of wages? The answer to this question is no, because the employee was furnished work for more than half the scheduled time. The employee would be entitled to receive one hour of wages for the actual time worked, but would not be entitled to receive additional compensation as reporting time pay. . . . [W]hen an employee is scheduled to work, the minimum two-hour pay requirement applies only if the employee is furnished work for less than half the scheduled time

SPLIT SHIFTS

The court's treatment of split shift pay clarified ambiguity in the law regarding whether split shift premiums are due for workers who make a certain amount more than minimum wage:

Krofta contends that he was owed additional compensation for working split shifts under subdivision 4(C) of Wage Order 4. Subdivision 4(C) is located under the section \4. Minimum Wages. heading of the wage order. It states: \When an employee works a split shift, one (1) houres pay at the minimum wage shall be paid in addition to the minimum wage for that workday, except when the employee resides at the place of employment.. (Cal. Code Regs., tit. 8, ˜ 11040, subd. 4(C).) * * *

*** While subdivision 4(C) applied to Krofta, the provision did not provide him with any tangible benefit, since the total amount of his regular pay was significantly higher than the minimum amount required by subdivision 4(C).

No published California case has previously addressed this direct issue. However, although obviously not binding, a well-respected treatise (Chin et al., Cal. Practice Guide: Employment Litigation (The Rutter Group 2011)) has embraced the same interpretation of subdivision 4(C). The Rutter guide explains the provision thusly: ―[A]n employee earning the minimum wage who works eight hours on a split shift is entitled to receive nine times the minimum hourly wage.‖ (Id. at ¶ 11:682, p. 11-68.) ―This provision also applies to employees paid more than the minimum wage. However, such employees are only entitled to the difference between what they actually earned and what they would have earned had they been paid the minimum wage for their entire shift plus an extra hour.‖ (Id. at ¶ 11:683, p. 11-69.) ***

So, this means that an employee is not required to earn a split shift premium of one hour at minimum wage, unless he or she earns < (minimum wage * hours worked + (minimum wage * 1 hour)).

OTHER ISSUES

If the above weren't enough, this case keeps on giving. The Court held that a release of claims will lawfully include disputed claims for unpaid wages, despite Labor Code Section 206.5, a California statute prohibiting releases of wage claims.

The Court also clarified that on the reporting time claim, either party may seek attorney's fees under Section 218.5, which means that the employer won its fees against the plaintiffs.

So, happy Friday!  Monday won't be so bad either.

The case is Aleman v. Airtouch Cellular and the opinion is here.

California Supreme Court Takes Up Arbitration Again

I posted in detail about Iskanian v. CLS Transportation here.  (This is one of the post-Concepcion cases that address arbitration. )  The California Supreme Court just granted review here.  The Court eventually will explain how Concepcion affects California arbitration law.  But that could take some time... Unfortunately for employers, the Court's grant of review means the Iskanian decision is uncitable going forward.
DGV