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Your Legal Corner - Client Alert Blog
8 New California Employment Laws for 2010
Written By: Melissa C. Marsh, Esq.
, California Attorney, January 2010
Meal Breaks. First it should be noted that the California Supreme Court has agreed to hear three cases regarding an employer’s obligation to provide meal breaks (Perez, Brinker and Brinkley). These decisions should be made by Summer of 2010.
Sexual Harassment. In Hughes v. Pair, 46 Cal. 4th 1035 (2009), the California Supreme Court clarified what does and does not constitute sexual harassment in a professional relationship, and by extension in the workplace. In Hughes, Suzan Hughes sued Christopher Pair, a trustee of her late husband’s estate, for sexual harassment under Civil Code § 51.9. Suzan alleged that Pair made vulgar and highly offensive sexual comments. Although Civil CodeSection 51.9 prohibits sexual harassment specifically with respect to certain business, service and professional relationships, the California Supreme Court noted that the definition should also apply to the employment setting. The California Supreme Court held that the Legislature intended Civil CodeSection 51.9 to be applied in a fashion consistent with the Fair Employment and Housing Act and Title VII, which requires the plaintiff to establish either quid pro quo sexual harassment, or conduct that is severe or pervasive. The Supreme Court found no "quid pro quo" because the plaintiff did not allege any connection between her rejection of the defendant's advances and any resulting financial harm, retaliatory conduct, or other injury. The California Supreme Court then held that the defendant's conduct ("vulgar and highly offensive statements" involving no assault or threat of an assault) was neither severe nor pervasive because his comments constituted merely an isolated incident made on a single day during a multi-year professional relationship. In light of this decision, it appears that isolated offensive and inappropriate comments (that do not threaten assault, or involve physical harm) do not constitute actionable sexual harassment.
Is your Worker An Independent Contractor? In Cristler v. Express Messenger Systems, Inc</u>., __ Cal.App.4th ___ (2009), the California Appellate Court affirmed a California jury’s finding that messengers were independent contractors, and not employees. The plaintiffs, James Cristler and others, sued Express Messenger, Inc., a delivery service, for illegally misclassifying its workers as independent contractors and not employees and in turn failing to pay proper wages and overtime, failing to reimburse its workers for business related expenses, and for failing to provide proper pay stubs. The jury determined that plaintiffs were independent contractors, and not employees, and the Appellate Court affirmed finding no defect in the jury instructions.
Sales Representatives May Not Be Entitled To Post-Termination Commissions. In Nein v. HostPro, Inc.</u>, 174 Cal. App. 4th 833 (2009),the California Appellate Court held that a sales representative (Nein) was not entitled to post-termination commissions. In this case, the sales representative approached AT&T with the prospect of hiring HostPro to provideweb hosting services to some of AT&T's customers. The AT&T deal was not completed till after Nein's termination. When HostPro refused to pay Nein his commission, Nein filed suit claiming breach of contract, breach of the implied covenant of good faith and fair dealing, violation of Labor Code Sections 2926 and 206, and Unfair Competition. The trial court found in favor of HostPro on the ground that the language of his written employment contract clearly provided that Neinwas only entitled to his commission "so long as [he] remains employed with the Company as a Sales Representative." The Appellate Court affirmed the trial court's decision and awarded HostPro its attorney's fees. In light of the ruling in HostPro and various other cases, employers should be careful when drafting employment agreements that contain commission provisions since various court cases have interpreted similar language as entitling the sales representative to his or her commission when the sale was ultimately consummated long after termination where the sale was found to have been partially the result of the former employee's efforts prior to his or her termination.
Tip Pooling May Include Shift Supervisors in Limited Circumstances. In Chau v. Starbucks Corp., 174 Cal. App. 4th 688 (2009), the California Appellate Court overturned an $86 Million dollar judgment awarded to Starbucks baristas. In Chau, Jou Chau brought a class action against Starbucks because the company allowed shift supervisors to share in tips that customers placed in a tip box. Chau alleged the policy violated California Labor Code Section 351 and California’s Unfair Competition Law. The trial court certified a class consisting of thousands of current and former Starbucks employees in California and, after finding liability, the jury awarded the class $86 million in restitution. The Court of Appeal reversed the judgment, holding that Starbucks did not violate Labor Code Section 351 because the shift supervisors spent over 90% of their time performing the same service tasks as the baristas, and in this fact specific case their limited supervisory duties should not therefore preclude the shift supervisors from sharing in the tip pool. Although this case appears to set forth a ruling allowing a manager, or supervisor, to share in a tip pool it is important to understand that this is a highly fact specific case and in most businesses the managers/supervisors do NOT spend 90% to 95% of their time performing the same service duties as their underlying employees as in this case).
Individual Managers May Be Liable For Unpaid Wages Under The FLSA. In Boucher v. Shaw, 572 F.3d 1087 (9th Cir. 2009), three former union employees who worked for Castaways Hotel, Casino and Bowling Center (which declared bankruptcy) sued their individual managers for unpaid wages under the federal Fair Labor Standards Act (the "FLSA") and Nevada state law. Although the Nevada Supreme Court determined that the managers could not be held individually liable under Nevada state law, the Ninth Circuit Court of Appeals held that the individual managers (the Chairman/CEO, the CFO, and the Labor Relations Manager, two of whom co-owned the Hotel/Casino) are subject to personal liability because under the FSLA, the term "employer" is to be construed broadly to include anyone who "exercises control over the nature and structure of the employment relationship," or "has economic control" over that relationship. The Ninth Circuit Court of Appeals concluded that the three executives, two of whom owned the casino, fall within the definition of "employer."
Employees' Right to Privacy and Company Surveillance. In Hernandez v. Hillsides, Inc., 47 Cal. 4th 272 (2009), the California Supreme Court held that although employees have a reasonable expectation of privacy in the workplace, that right must be balanced with the employer’s right to operate a business. In this case, the plaintiffs (Hernandez and Lopez) were day time office employees of Hillsides Children Center, a private nonprofit residential facility for neglected and abused children. The director of the facility discovered that late at night someone was using a computer in the office to access the Internet and view pornographic websites. Concerned that the culprit might be a staff member who worked with the children, the director installed a hidden camera in the office without notifying either Hernandez and Lopez. Since the culprit accessed the computer at night, the surveillance camera was never operated during business hours neither plaintiff was monitored by the camera. In this very fact specific case, the California Supreme Court held that although there may have been an intrusion into the zone of privacy, there was no privacy violation because: (1) the surveillance cameras were only operational after business hours, (2) the camera was installed with the sole purpose of catching a predator using the company’s computer to view pornographic web sites, and (3) the company in light of its purpose to protect abused children had a real concern to protect the children. As the Supreme Court noted that its ruling was based on the specific facts presented and acknowledged that employee’s do have a reasonable expectation of privacy in the workplace, California employers are well advised to use extreme caution before installing a surveillance system.
Employers May Be Required to Pay Their Employee’s For Time Spent On Their Smart Phones. In Rutti v. Lojack, Inc., (9th Cir. 2009), the plaintiff filed a class action lawsuit on behalf of all the Lojacktechnicians who installed car alarms for unpaid wages for time spent by the technicians in their homes bothbefore and after their shifts. In this case, the Ninth Circuit Court Of Appeals examined which employee off-the-clock activities must be counted as "hours worked" and which may be disregarded as non-compensable. First, the Court held that neither federal nor California law requires an employer to pay an employee for commuting time (travel time from home to the first place of employment for the day). See, California Labor Code Section 510(b). Second, the Court held that non-exempt hourly employees must be paid for time off-the-clock performing tasks "integral" to their primary work activities and which are more than "de minimis." Specifically, the Court noted that the time spent in the morning "receiving, mapping, and prioritizing jobs and routes for assignment" appears to be de minimis and non-compensable, but sending daily transmissions to the employer at the end of every day which can take up to 15 minutes a day may constitute time for which the employee is entitled to compensation.
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