San Francisco Employment Law Firm Blog

February 17, 2018

New Law On Piece Rate Compensation Requires Separate Pay For Rest Breaks

Effective January 1, 2016, employees compensated on a piece base basis have an additional important right – to be paid for their meal an rest breaks separately and in addition to any piece rate compensation they are otherwise entitled to. This law is codified in Labor Code 226.2.

What is Piece-Rate Compensation?

Per Labor Code 226.2 defines piece rate compensation as work paid for according to the number of units turned out. Here are some of the common examples of piece-rate plans: automobile mechanics paid a “book rate” per job; nurses paid on the basis of the number of procedures performed; carpet layers paid by the yard of carpet laid; technicians paid by the number of telephones installed; factory workers paid by the widget competed; and carpenters paid by the linear foot on framing jobs. A piece-rate plan may include a group of employee who share in the wage earned for completing the task of making the product. This law does not apply to employees who work on a commission basis.

January 30, 2018

Protected Leave For New Parents Under The New Parent Leave Act

by Arkady Itkin

Until now, the main law in California that afforded parents to take time off for babying bonding, adoption or foster care placement has been California Family Rights Act (CFRA / Government Code 12945.2). That protection, however, only applied to employers of 50 or more employees within a 75 mile radius to provide up to 12 workweeks of job protected leave.

Titled the New Parent Leave Act, State Bill (SB 63) / section 12945.6, which went into effect as of January 1, 2018, requires employers within 2o to 49 employees within a 75 mile radius to provide up to 12 workweeks of job protected leave for an employee to bond with a new child within one year of the child’s birth, adoption or foster care placement. As with CFRA and FMLA, an employee will need t have worked more than 12 months and at least 1250 hours for the employer during preceding 12 month period to qualify for leave under New Parent Leave Act. Like with CFRA, employers must guarantee reinstatement. This law also authorized an employee to use accrued vacation pay, paid sick time, other accrued paid time off, or other paid or unpaid time off negotiated with the employer during parental leave. Employers must also maintain and pay for an eligible employee’s medical coverage under a group health plan for the duration of parental leave.

This new law has similar anti-discrimination provisions to those found in CFRA and FMLA. The New Parent Leave Act prohibits employers from refusing to hire, discharging, suspending, or discriminating against an individual for either exercising the right to parental leave or for testifying about his or another employee’s parental leave in an investigation or legal proceeding, or for interfering with, restraining, or denying any rights provided by this law.

January 21, 2018

Two Antitrust Violations HR Professionals and Recruiters Should Avoid

by Arkady Itkin

There are two main hiring and recruiting practices that companies and their HR professional and recruiters should avoid, because they are prohibited by law and lead to severe penalties, including fines and even criminal prosecution, enforced by Department of Justice:

1. Agreements Not To Recruit Certain Employees

An HR professional should avoid entering into agreements regarding terms of employment with other companies that compete to hire the same employees. It does not matter whether the agreement is formal or informal, written or oral, or even spoken or unspoken. This is because anti-trust violation can often be established through evidence of discussions and hiring patterns of companies.

January 3, 2018

A Mechanic Wins Racial Harassment Case in Orange County

by Arkady Itkin

On October 24, 2017, an Orange County jury returned a verdict in the amount of $176 for a mechanic who sued his employer for racial harassment, racial discrimination, and disability discrimination. The defendant in that case was a heavy equipment rental company. They hired a plaintiff to perform maintenance on their machines. After walking off the job, Plaintiff claimed that may of the conversations, text messages and e-mails between him and the defendants were racially offensive and created a hostile work environment. The manager (Caucasian) claimed that he developed a friendship with the plaintiff (African American) and their allegedly offensive exchanges were jokes that the plaintiff never complained about or said were bothersome to him in anyway. The jury was not convince and found for the plaintiff on the racial harassment claim, in large part because of the extensive use of “N” word in those exchange. However, the jury also found that plaintiff was not an employee but an independent contractor and found for the employer on the remaining claims of racial and disability discrimination.

This case is a reminder of a significant difference between harassment and discrimination claims. A discrimination claim can only be made by an employee, while a harassment claim can be made by any worker, whether he or she is an employee or an independent contractor. Evidence of racial slur in a written form, i.e. e-mails, text messages, and social media messages is one of the most compelling types of evidence to prove a harassment case. Both employers and employee should be aware that what might be an innocent joke at one point, can be used a powerful evidence in the future, and proving that it was a joke might be an uphill battle, especially when it comes to racially charged comments.

December 10, 2017

Wrongful Termination To Avoid Paying Bonuses or Commissions Due

by Arkady Itkin

Many employers, especially in the tech / start-up world often fire an employee right before his bonus or commissions in order to avoid paying that bonus. Of course this is more likely to happen if the bonus due is significant. If there is sufficient evidence that avoiding to pay bonus was the reason or one of the reasons for termination, this can support a claim for wrongful termination in violation of public policy. This type of claim is particularly strong if (1) the employee to be terminated was a high performer (2) he was terminated for a petty reason and/or (3) the company didn’t follow its normal disciplinary, investigation and termination procedures that are in place; and (4) the termination took place right before the bonus would have been due or paid.

Many employers do not realize that bonuses earned (as opposed to discretionary bonuses) are to be treated as wages as per California Labor Code Section 200. Neisendorf v. Levi Strauss 13 & Co. (2006) 143 Cal.App.4th 509. It is also established that an employer cannot terminate an employee and refuse to pay that employee the bonus he or she earned simply because the involuntarily terminated employee was not employed on the date bonuses were paid. McCollum v. Xcare.net, Inc.,212 F.Supp.2d 1142 (N.D. Cal 2002) (employee was terminated two weeks before she would have been entitled to $75,000 in commissions); Ellis v. McKinnon Broadcasting Co. (1993) 18 Cal.App.4th 1796.

Many comp plans provide employers with discretionary power to forfeit a bonus otherwise due. California law is clear, however, that “where a contract confers one party with discretionary power affecting the rights of the other, a duty is imposed to exercise that discretion in good faith and in accordance with fair dealing.” Locke v. Warner Brothers, Inc., 57 Cal.App.4th 354 (1997). Therefore, if one party exercises its discretionary authority in bad faith for the purpose of frustrating the other party’s legitimate expectations, it has breached the implied covenant. Commercial Union Assurance Cos. v. Safeway Stores, Inc., 26 Cal.3d 912 (1980). In other words, an employer must have a good reason for bonuses forfeiture, if so allowed by the comp plan, and it can’t just be any reason.

December 1, 2017

Legal Protections for Workers with Cancer Under ADA Disability Laws

by Arkady Itkin

The ADA and FEHA (Fair Employment and Housing Act) prohibit discrimination on the basis of an employee’s disability in all phases of employment process – from application, medical exams, hiring decisions, promotions, and of course terminations. Under ADA, disability is defined as a physical or mental impairment that substantially limits a major life activity. These activities include caring for oneself, walking, talking, breathing or working.

An employee may also qualify for disability protection under ADA if he is “regarded as” having an impairment. This protection is especially important for employees who have history of cancer but do not currently have an impairment that substantially limits a major life activity. Employers often incorrectly assume that an employee is unable to continue performing his job after being diagnosed with cancer even if that employee doesn’t (yet) have any limitations at that time. “Regarded as” element of the ADA can be used to provide protections to employees with cancer who do not have a current disability within ADA definition, but still face discrimination based on their diagnosis.

In addition, the ADA Amendments Act (ADAAA) expanded the list of major life activities to include sleeping, concentrating, thinking, communicating, and the operation of major bodily functions. Employees who undergo cancer treatment often have issues with these activities. For instance, typical side effect of chemotherapy are inability to concentrate and memory issues. If these symptoms substantially limit an employee’s ability to think or concentrate, then the employee may have a disability under ADA.

November 17, 2017

Waiting Periods Before Vacation Begins Accruing Are Legal

by Arkady Itkin

An interesting case on the vacation policy issue has been ruled earlier this year by the court of appeal. Employees brought a class action suit against their employer claiming that the vacation policy that required them to work for at least one year before their right to vacation vested was illegal. The appellate court affirmed the dismissal of this case holding that the employer’s policy was not illegal, because it specifically provided that vacation pay was not earned during the first year of employment. The employees in this case claimed that the employer intentionally withheld their vested vacation pay.

The appellate court rejected Plaintiff’s argument finding that it was neither illegal not inconsistent with the existing law to impose a waiting period before entitlement to vacation pay vests. Minnick v Automotive Creations, Inc. 13 Cal.App.5th 2000 (2017). The court further emphasized that imposing a waiting time period before allowing vacation to accrue is not the same as taking away vacation which has already been earned / vested (the latter would indeed be illegal). The Minnick case also makes it clear that the language of the vacation policy is critical, and it must clearly state that vacation is not accrued until a certain period passes in order to be legal.

October 18, 2017

Kaiser Settles Class Action for Unpaid Wages With Call Center Nurses

by Arkady Itkin

California nurses will get roughly $6 million from health care giant Kaiser Permanente for time spent doing unpaid work.The payout settles a class action filed last year on behalf of 1,397 advice nurses who take calls from patients at three of the Permanente Medical Group’s call centers in Sacramento, Vallejo and San Jose. Debra Brown, Sandra Morton and Barbara Labuszewski sued in September 2016, claiming Kaiser didn’t pay them for time they spent logging in and out of call center computers before and after their shifts. Kaiser doesn’t consider call center nurses clocked in until after the log-in process is complete. Although this might sound like a minor issue, under the law these couples of minutes are compensable. A few minutes a day turn into 30 minutes a week and 26 hours a year that person is being not paid for per year. Each nurse will receive anywhere from $3,000 to $9,500 as part of the settlement. U.S. District Judge Vincent Chhabria also awarded the class’ attorneys fees in the amount of $1.8 million.

This case reminds me of a class action that ATT and other similar providers were for not paying their telephone customers service reps for the few minutes they show up early to start their computers.

October 7, 2017

At-Will Employment And Misclassifying Employees As Contractors

by Arkady Itkin

Misclassifying an employee as an independent contractor is an easier mistake to make than many employers believe. The recent case Linton v DeSoto Cab Company, Inc., illustrates this very well. In that case, the first appellate district found that the plaintiff cab-driver was an employee despite having lots of control over how he performed his work, and despite signing the agreement expressing stating that there was no employment relationship of any kind between DeSoto and their drivers. There are a few key, critical, and often overlooked points in the court’s analysis in that case:

First, the court noted that strong evidence of employment relationship exist, when the company reserves the right to discharge at will, without cause. This means that if an “independent contractor” agreement contains language that states in so many words that the so-called contractor can be terminated at any time, for any reason or no reason, a strong presumption of employment will arise. Thus, employers who want to avoid this misclassification issue are advised to make sure that their independent contractor agreements do not contain this at-will language. Of course, not having that language has its downsides and every business should consider the unique and specific circumstances of their workforce needs before deciding whether to include the at-will language or not.

Secondly, the court noted that “liability to discharge for disobedience or misconduct is a strong evidence of control.” This means that if there is a policy that states that a “contractor” can be terminated for not following management’s directives or for some type of violation, this also creates a strong presumption of employment relationship between the parties. This presumption is especially strong if a “contractor” has no opportunity to dispute allegations against him before being terminated.

August 24, 2017

EEOC Files Disability Discrimination Lawsuit Against UPS Freight

by Arkady Itkin

On August 8, 2017, EEOC announced filing a lawsuit against UPS Freight, alleging violations of the Americans with Disabilities Act (ADA). “Employers must treat employees with disabilities the same as those without disabilities when issuing workplace benefits,” said EEOC St. Louis District director James R. Neely Jr. According to EEOC, Thomas Diebold began working at UPS Freight in 2006. Diebold suffered a minor stroke in 2013 and disclosed it to the employers during an annual driver physical examination. He was unable to renew his Department of Transportation (DOT) medical examiner’s certificate until December 2014. During the intervening period, Diebold allegedly was discriminated against.

The company, according to EEOC, had a policy of paying drivers who are reassigned to non-driving work due to a disability 10 percent less than drivers who are reassigned for non-medical reasons. Apparently, this was allowed under the union bargaining agreement. However, EEOC argues that this is not a valid justification for this pay difference. “Employers cannot seek refuge from the reach of the ADA by relying on a union agreement when the agreement itself requires discrimination based on disability,” said Andrea G. Baran, the EEOC’s regional attorney in St. Louis.

The agency seeks monetary compensation for Diebold, as well as injunctive relief requiring the company to change its policies and make sure that it does not treat its employees differently in terms of compensation because of their disabilities. This is a good example of how various policies and agreements cannot supersede the law.