Orange County Employment Lawyer Blog

My Orange County Employment Law Firm has recently handled two rental offset cases, one in Orange County and one in Los Angeles County. Generally, rent may not be credited against minimum wage without a voluntary written agreement between the employee and the employer. Both clients were property managers, one at a Hotel and the other at a large apartment complex. They earned low hourly wages, and had their rent offset from their wages. This is legal, however, there are strict guidelines as to what the employer can deduct as a rental credit.

Regardless if there is a written agreement or not, the amount of the rental credit must not be more than the following: (1) $37.63 per week for rooms occupied alone; (2) $31.06 per week for shared rooms; (3) Two-thirds of the ordinary rental value but never more than $451.89 per month for apartments; (4) Where a couple are both employed by the employer, two-thirds of the ordinary value but never more than $668.46 per month. (All listed amounts effective as of January 1, 2008.)

Any employer who has failed to abide by these limitations or who has otherwise failed to implement a voluntary written agreement as required, may be liable to the affected employee for not only the amount of wages unpaid as a result of the unlawful offset, but also for penalties, interest, and reimbursement of reasonable attorney fees and costs.

RELATED RESOURCES

Industrial Welfare Commission Wage Order 5-2001, 10(c)

In the recent California Court of Appeals decision Jeewarat v. Warner Brothers Entertainment, the Court relied on what is known as the "special errand doctrine". This doctrine provides an exception to the "going and coming rule" which means that an employee who has an accident during travel time to and from home to work is solely responsible for the accident, not the employer.

My Orange County Employment Law Firm has handled many cases regarding travel time. However, those cases usually center on whether or not an employee is entitled to wages while traveling for his or her employer. In the Jeewarat case, the employee was driving home from the airport after a three day business trip when he struck three pedestrians, killing one of them and injuring the others. Those pedestrians then sued the employee and his employer, Warner Brothers.

The Court held that the "special errand doctrine" provided an exception to the going and coming rule. Because Warner Brothers paid for its employee's airfare, hotel, and other travel expenses, the entire trip was not concluded until the employee reached his home. Consequently, the Court found Warner Brothers to be vicariously liable (responsible) for its employee's actions, and thus liable for damages to the pedestrians.

Any California employee who feels they were discriminated against at work due to a disability falls under the auspice of the EEOC (Equal Employment Opportunity Commission). As discussed in my prior blog post, disabilities used to be defined as "conditions that affect one or more of the body systems, such as the musculoskeletal and neurological systems, and that limit an individual's ability to participate in a major life activity." On September 23, 2009, the new Amendments to the ADA (Americans with Disabilities Act) were published, which included some of the following items:

• The definition of "disability" was broadened, making it easier for an employee to establish that she has a disability. Specifically, where it once said "substantially limiting a major life activity", the new amendment does not require the disability to be significant or severely restricting a major life activity.
• The definition of "major life activities" was significantly broadened.
• If a disability is in remission but would substantially limit a major activity when "active" it still would be considered a disability.

RELATED RESOURCES

EEOC Notice Concerning the ADA Amendments Act of 2008

A Riverside County Superior Court jury awarded $25 million in punitive damages to the nearly $1 million in compensatory damages they had awarded the previous day to a former Kmart manager for age discrimination. In the case of Harkins v. Kmart, the plaintiff alleged that Kmart's unlawful conduct was part of a sequence of events designed to get him to retire. Plaintiff had provided exceptional service to Kmart for 20 years, and claimed he was being terminated solely due to his age (64). He alleged that in the months before his termination, he was unlawfully demoted and disciplined in veiled attempts to "work on him" to quit or retire. When he did not "retire" or quit, he was fired. This firing, plaintiff alleged, was retaliatory due to his refusal to quit and due to his age.

My Orange County Employment Law Firm was recently retained on a case where age discrimination was the primary claim. In assessing such cases, it is sometimes difficult to distinguish between a company's need to reduce its work force due to budgetary concerns and a company using that reason as a pretext for its true motive, ridding itself of an "old" employee. Factors that tend to sway the scales in one direction or the other tend to be things like whether other job positions were eliminated, if other employees lost their jobs (and their ages in comparison to the rest of the workforce) and if the company intends on hiring (or has hired) new employees to replace or fill the holes left by the dismissed employees.

In California, vacation pay is not required. However, many employers have chosen to implement various vacation pay policies for their employees. Those that have must then comply with California law pertaining to vacation pay.

With the state of today's economy, more and more employees are suddenly out of work. My Orange County Employment Law Firm has received a large increase in calls regarding vacation pay, specifically that employees have either been let go or terminated without getting all their vacation pay. So, what is the law? In California accrued (already earned) vacation days are just like wages, meaning once they have been earned, they become the property of that employee.

Many employers have a policy in place that states something to the effect of "Use it or Lose It", meaning that employees who have earned a certain amount of vacation days will lose those accrued vacation days if they are not used in a specific period of time. Such a policy is absolutely against the law! Employees are given two options with regard to accrued vacation:

1. They must be permitted to carry-over the accrued vacation days; or
2. The remaining accrued vacation days must be paid out to the employee at whatever rate the employee is earning at the time of the payout.

If an employee separates from an employer without receiving as pay all accrued vacation days, the employee may also then be entitled to waiting time penalties, which I detailed in a previous blog post, interest, and reimbursement of attorneys fees and costs from the employer.

However, having said all that, employers do have the right to determine the other criteria of their vacation policy, specifically which employees are entitled to receive paid vacation, at what rate or frequency vacation days accrue, and how much can be accrued at one time.

Almost all California employees are "at will" employees, meaning they can be terminated for any reason, so long as it is not an unlawful reason. So, if most employees are at will employees, what separates a termination from a wrongful termination?

California employees can essentially be terminated for any reason, so long as the reason is not an unlawful reason. Here are some of the more common unlawful reasons that would make a termination a wrongful termination:

1. An employee may not be terminated for lawfully reporting sexual harassment to a supervisor or to Human Resources;
2. Similar to above, an employee cannot be terminated for participating in an investigation of someone else's claims of sexual harassment or unlawful discrimination;
3. For exposing certain unlawful wrongdoings by the company or by a higher ranking employee of the company, commonly known as whistle-blowing;
4. For submitting a worker's compensation claim from injuries suffered at work;
5. For complaining to management or Human Resources about not receiving proper wages, overtime compensation, lunch breaks or rest breaks;
6. For filing a complaint with a governmental or administrative agency such as the DFEH or the Labor Board; and
7. Lastly, an employee is not at will if that employee has an employment contract designating a specific period of time.

As I have detailed in previous blog posts about labor code penalties, California has by far the strictest labor laws in the nation. Consequently, employers need to take all steps necessary to insulate themselves from employee lawsuits. One of the most important ways to do that is to have a properly drafted Employee Handbook. Having a properly drafted Employee Handbook may reduce an employer's exposure and liability in a lawsuit filed by an employee against the employer.

My Orange County Employment Law Firm has defended many employers and businesses in lawsuits filed by employees. The severity of many of those lawsuits could have been minimized if that company had an effective Employee Handbook in place. Additionally, some of those lawsuits may not even have been filed if the employees had a handbook advising them of their rights and obligations.

At a minimum, employers in California are required to provide to its employees certain workplace policies in writing. However, a properly drafted Employee Handbook suited to a company's specific business needs may also include items such as vacation pay or lunch breaks, which, though not legally required, will lessen the employer's exposure to lawsuits concerning those topics.

Examples of Employee Handbooks or Manuals can be found everywhere. However, one size does not fit all. I cannot urge employers enough to retain legal counsel who are well versed in employment law to properly assist in the formation of a handbook suitable to the employer's specific company.

In California, tips are the sole property of the employee for whom it is left. However, tip-pools that share all the tips with non-supervisory employees is acceptable ONLY if those receiving a share of an employee's tips provided direct service to the customer. As an example, a lawful tip-pool at a restaurant could be for waiters/waitresses, hostesses, and bus boys. However, this pool could not include cooks or dishwashers, as they did not provide any direct service to the patron. Owners, managers, and supervisors can NEVER share in the tip pool.

Employees are entitled to recover all tips unlawfully pooled or taken from them, and also may be entitled to recover penalties. If an employee complains to their employer about an unlawful tip-pooling policy and is in turn treated adversely, the employee may also have a separate claim for retaliation.

Employers cannot require employees to waive their rights to tips. As such, any documents that employees have signed wherein they agreed or consented to sharing a portion of their tips with management or other supervisors, as well as employees who do not provide a direct service to the patron, is invalid.

RELATED LINKS

Division of Labor Standards Enforcement (DLSE)

California law prohibits employers with at least five or more employees from discriminating against an employee on the basis of pregnancy, childbirth or pregnancy-related medical condition.

The Family and Medical Leave Act (FMLA) generally provides that an employee who is disabled on account of pregnancy is entitled to up to four months of leave from work. All time off needed for routine prenatal care, such as doctor's visits, as well as, time off for medically-ordered bed rest, severe morning sickness, childbirth, recovery from childbirth or other pregnancy-related condition may be counted against the leave time. Furthermore, if the employee does not exceed the leave time, she is guaranteed the right to return to work at the same position or a comparable position.

Like any physical disability, an employee disabled on account of pregnancy or a pregnancy-related medical condition has the right to request a medically-advisable reasonable accommodation, such as a request for less strenuous or less hazardous duties. The request needs to be based upon the recommendation of your doctor. Whether the accommodation must be provided is generally based upon whether the accommodation is reasonable and whether the requested accommodation unduly burdens the employer.

Any violation of the rights described above may give rise to a claim of sex (pregnancy) discrimination against your employer.

RELATED RESOURCES

Family and Medical Leave Act (FMLA)

I cursorily discussed Labor Code Penalties in a previous post. However, as it applies to lunch breaks and rest breaks, recent California case law has significantly impacted these issues. In this post I will discuss in greater detail the current state of lunch break penalties and rest break penalties.

Clients frequently contact my Orange County Employment Law Firm inquiring about lunch break issues. The law states that if lunch breaks or rest breaks are not provided as required by California law, claimants are entitled to more than just the unpaid wage for working through the lunch or rest break, they are also entitled to one hour or pay for each workday that a lawful meal break or rest break was not provided.

However, California Courts have recently directed its focus on the differences between ensure and provide. Previously, employers had a duty to ensure that its employees were taking a duty free lunch (duty free means just that, not working. So, sitting at your desk and eating lunch while answering the phone occasionally when it rings is not duty free). Thus, if employers did not ensure an employee was taking a duty free lunch, they were subject to the above described penalty if an employee failed to take a duty free lunch.

Recent case law has altered the definition, changing an employer's duty from ensure its employees were taking a lunch to simply that they provide the employees with the opportunity to take a duty free lunch. Thus, if an employer has a policy that all employees take a duty free lunch, and an employee does not do so, the employer is not liable for any of the above damages if the employer does not know the employee failed to take a lunch. So, recent case law has taken much of the bite of lunch break penalties away from employees.

I previously discussed California's more common wage and hour penalties and their respective remedies in a previous Labor Code Penalties post. In this post, I will discuss in greater detail what is commonly referred to as an "Itemized Wage Statement Penalty" or IWS penalty.

While working for any employer, every employee must receive wage statements that are properly itemized, which means the pay stub must contain certain specific items of information, consisting of the following nine items:

• gross wages earned,


• total hours worked by the employee,


• the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis,


• all deductions,


• net wages earned,


• the inclusive dates of the period for which the employee is paid,


• the name of the employee and the last four digits of his or her social security number,


• the name and address of the legal entity that is the employer, and


• all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee.

An employer's failure to provide pay check with stubs containing this information may be liable for an itemized wage statement penalty. Such a penalty results in a penalty of $50 for the first violation, $100 for each subsequent violation - up to $4000 per employee.

I summarily discussed Labor Code Penalties in a previous post describing several of California's more common wage and hour penalties and their respective remedies. Here, I will discuss in greater detail what is commonly referred to as a "waiting time penalty."

When potential clients contact my Orange County Employment Law Firm, they usually just want what they are owed (in the form of unpaid wages, unpaid overtime, etc.) However, most clients never knew that when an employee separates from an employer, whether by termination or resignation, he/she must be paid all wages that are owed at the time of separation. This is true both in the case of termination or resignation, but the time frame for each to be paid in full is slightly different.

If being fired, the employee is entitled to all wages owed at the time of his or her termination. If the employee is resigning, he or she must be paid all wages due within 72 hours of resigning. If all wages are not paid within these time constraints, the employee, in addition to being able to recover all wages he or she is owed, is also entitled to a waiting time penalty. California's waiting time penalty entitles the employee to receive up to 30 days of wages, which means just that - thirty days of wages, not one month's pay!

In one of the largest single employee verdicts in United States history, the Superior Court of California, County of Orange, entered judgment of approximately $8.4 million in favor of Joovy, LLC, against Baby Trend, Inc., and its founder Denny Tsai. The judgment in favor of Robert Gardner, founder and CEO of Joovy, for claims of wrongful termination, failure to reimburse, breach of contract, and fraud was in the amount of $6,909,991 jointly against Baby Trend and Denny Tsai, and for an additional $1,495,917 against just Baby Trend.

"Wrongful termination" is one of the most mis-used and mis-understood terms in California employment law. Many clients who have called my Orange County Law Firm have been terminated from employment feel they have been wrongfully terminated. However, what these people typically fail to realize is that California is an "at will" state. "At will" means that you can be terminated with or without cause, with or without any prior notice. Similarly, the employee may also resign from their employment with or without cause or without giving any prior notice. Simply put, you can be terminated for any reason, so long as it is not an unlawful reason (race, gender, or legally protected conduct, etc.).

Some forms of "legally protected conduct" include reporting sexual harassment, reporting or complaining about not receiving overtime, meal breaks, or proper wages. If you are terminated for reporting or complaining about any of these legally protected issues, you then have a claim for wrongful termination in violation of public policy.

Case information for Gardner vs. Baby Trend, Case No. 05CC11681

Surprisingly, California does not have an actual definition establishing what an independent contractor is. As a result, when clients inquire of my Orange County employment law firm whether they are independent contractors or employees, an analysis of their specific job duties as they relate to past court cases must be performed.

However, before doing that, it is important to understand why the determination is so important. Only employees are protected by the strict California wage and hour laws which include issues of overtime, meal periods, break periods and minimum wage, etc. Independent contractors are not subject to these laws. I have seen many scenarios where employers classify their employees as independent contractors to avoid paying overtime wages, among other things. These employers usually make their employees sign a document stating that the employee "acknowledges" that he is an independent contractor. In addition, the employee receives a Form 1099 instead of a W-2. However, just as I mentioned in a prior blog post about misclassifying employees, an employer's classification (or misclassification) of an employee as an independent contractor is not determinative as to what that employee's proper employment status truly is. Instead, the duties actually performed by the employee dictate his/her employment status.

The California Supreme Court case of S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations (1989) 48 Cal.3d 341 is the definitive case in interpreting whether an individual is an employee or independent contractor. Borello set forth several critical factors that are considered, some of which are:

• Whether the person performing the services is engaged in an occupation or business distinct from that of the principal;
• Whether the principal or the worker supplies the instrumentalities, tools and the place for the person doing the work;
• The length of time for which the services are to be performed;
• The degree of permanence of the working relationship; and
• The method of payment, whether by time or by the job.

All Borello factors aside, an individual will likely be classified as an independent contractor only when:

1. the individual has the right to control and discretion as to the manner of performance of the contract for services in that the result of the work and not the means by which it is accomplished is the primary factor bargained for;


2. the individual is customarily engaged in an independently established business; and


3. the individual's independent contractor status is bona fide and not a subterfuge to avoid employee status.

RELATED RESOURCES

Division of Labor Standards Enforcement (DLSE)

Most wage and hour matters in California provide remedies in addition to the actual unpaid wage or damage in the form of Labor Code penalties. I will describe some of the more common penalties below.

WAITING TIME PENALTY

When an employee separates from an employer, whether by termination or resignation, he/she must be paid all wages that are owed at the time of separation. If fired, the employee is entitled to all wages owed at the time of his or her termination. If resigning, he or she must be paid all wages due within 72 hours of resigning. If all wages are not paid within these time constraints, the employee, in addition to being able to recover all wages he or she is owed, is also entitled to a waiting time penalty. California's waiting time penalty entitles the employee to receive up to 30 days of wages, which means just that - thirty days of wages, not just one month's pay.

ITEMIZED WAGE STATEMENT PENALTY

While working for any employer, every employee must receive wage statements that are properly itemized, which means the pay stub must contain certain specific items of information, most commonly the employee's gross wages, net wages, total hours worked, commission rate, piece-rate, pay periods covered by the check, and all deductions withheld, among other items. An employer's failure to provide pay checks with stubs containing this information may be liable for an itemized wage statement penalty. Such a penalty results in a penalty of $50 for the first violation, $100 for each subsequent violation - up to $4000 per employee.

MEAL AND REST BREAKS

If lunch breaks or rest breaks are not provided as required by California law, claimants are entitled to more than just the unpaid wage for working through the lunch or rest break, they are also entitled to one hour of pay for each workday that a lawful meal break or rest break was not provided.

MINIMUM WAGE PENALTIES

If an employer fails to pay an employee the California mandated minimum wage rate (currently $8 per hour), the penalty is $100 to each underpaid employee for the first violation, $250 to each employee for each pay period thereafter when there is a violation or underpayment.

UNLAWFUL DEDUCTIONS

When an employer unlawfully collects or deducts monies from an employee's wages, either in the form of a penalty or other such deduction, the unlawful deduction penalty is $100 to each underpaid employee for the first violation and $200 to each employee for each pay period thereafter where this is such a deduction, plus 25% of the amount underpaid.

There are of course other Labor Code penalties, but I have found these to be among the most common.