Since organized labor couldn’t eliminate union elections altogether via the Employee Free Choice Act, the Obama administration now offers big labor the next best thing: 1). “Quickie elections” from the Labor Board and 2). Onerous reporting requirements to be mandated for employers and their labor consultants by the U.S. Department of Labor.

EVISCERATING THE EMPLOYER’S RIGHT TO FREE SPEECH

Each agency has announced these new rules and regulations, which are all likely to take effect shortly after the period for public comment ends on August, 22, 2011. No approval from Congress is necessary. Both the National Labor Relations Board as well as the U.S. Department of Labor already have full statutory authority to implement these new-revised rules and regulations. It clearly appears to be a gift by the Obama administration to unions, presumably in the hope that organized labor will return the favor with its support in the 2012 election.

The National Labor Relations Board will soon institute “quickie elections,” where an election conducted by the NLRB to determine a question of union representation will occur within 7-21 days after a union files a petition to request an election. Most employers will have little time to oppose unionization of their business. The employer’s exercise of its right to free speech, to oppose unionization, will be eviscerated.

Other anti-employer rules will be instituted as well: The Labor Board will require unions to serve Petitions on employers, putting employers at the union’s mercy from the very outset of the case. A Statement of Position form, requiring mandatory disclosures patterned after Federal Rule of Civil Procedure, Rule 26(a), will replace the Commerce Questionnaire. Only employer issues identified in the Position Statement will be adjudicated. In the Position Statement, the employer must disclose or waive any basis to contest the election. All challenges to voter eligibility will now only be resolved post-election, if at all. Only genuine issues of material fact will be adjudicated, and offers of proof will be required before a hearing is even granted. Stipulated election agreements will now defer all disputes first to the regional director, with Board review subsequent to the regional director’s decision, if at all. Employers must now provide voter eligibility lists containing the name, address, telephone number and email address for all eligible employees, along with each employee’s work location, shift and classification. Many of these documents must be filed and served within 48 hours.

The obvious solution is to be pro-active. Planning and preparation must begin now. If employers wait until the Notice of Election is received, it may be too late to act.

CHILLING THE EMPLOYER’S RIGHT TO FREE SPEECH

For those employers with the courage and financial resources to resist and speak out against the union, the U.S. Department of Labor has decided to re-write the reporting rules, to intimidate employers, their labor attorneys and labor consultants who attempt to assist them.

Sometime after August 22, 2011, the US Dept. of Labor will issue new reporting forms for use by employers (Form LM-10) and persuaders (Form LM-20). The stated purpose of the rewrite is to strictly limit the “advice” exemption to reporting of persuader activities. However, it would be easy to conclude that the real purpose seems to be state-sponsored intimidation of employers who oppose the union’s organizing agenda.

Under new regulations, if either an attorney or a consultant engages in any of the following activities, with the direct or indirect purpose of persuading employees to avoid unionization, then the terms and conditions of their agreement, all financial consideration for the same, together with the persuader activities themselves, must be identified, disclosed and made part of the public record for use by the union and its supporters:

• Disseminating written materials for employee use;
• Preparing a speech for presentation to employees;
• Providing audiovisual or multimedia presentations to employees;
• Preparing website content for employees;
• Planning or conducting individual or group employee meetings;
• Developing-administering employee attitude surveys concerning union awareness, sympathy, or proneness;
• Supervisor training for employee individual or group meetings;
• Coordinating or directing the activities of supervisors or employee representatives;
• Establishing or facilitating employee committees;
• Developing personnel policies or practices;
• Deciding which employees to target for persuader activity or disciplinary activity;
• Conducting seminars for supervisors or employer representatives.

In addition, reporting is also required if the attorney-consultant so much as simply supplies information to an employer in connection to a labor dispute, whether that information is obtained from research concerning the employees or labor organization, or any other source.

What is truly intimidating is that the U.S. Dept. of Labor’s reporting requirements are so broad as to be triggered by events totally unrelated to and disconnected from any actual, union organizing campaign. So, for example, if an outside consultant helps re-write an employee handbook, to include language stating the employer’s preference to remain union-free, under these new rules, the reporting requirements are triggered. If an employer hires a consultant to provide union avoidance training to management, or to simply perform a workforce assessment, the reporting requirements are triggered.

There is really no labor relations activity not included within these new reporting rules. In short, no employer may retain an outside third party to oppose unionization at any time, in any way, without telling the whole world about the intimate details of such an arrangement. Given the penalties for failure to make these reports, it is essential that the employer and persuader coordinate and plan for such activities in anticipation that such reports will be required.

For any employer who values its union-free work environment, this is a bonafide alert, not a false alarm. Now that EFCA (Employee Free Choice Act) is DOA (dead on arrival) in Congress, the Obama Labor Board has decided to just bypass Congress entirely. The NLRB will soon implement its new rules and regulations to shorten the election cycle, limit employer legal challenges to elections, and increase union victories in elections conducted by the National Labor Relations Board. Why is the Labor Board doing this? That’s simple – because it can. For its authority, the Board majority cites Section 6 (29 U.S.C. 156) of the National Labor Relations Act. It states, in part, that the Board has authority to make, amend, or rescind such rules and regulations as may be necessary to carry out the provisions of the Act. Who gave the Board such absolute authority?…..That’s right, you guessed it, Congress.

Exercising this statutory authority, on June 22, 2011, the National Labor Relations Board proposed changes to its rules and regulations. Public comment on these rules expires on August 22, 2011. These rules will likely be enacted, without substantial change, early in the 4th quarter of 2011. These rule changes have the purpose and effect of giving unions greatly increased odds of winning elections. But don’t take my word for it, let me share two quotes from the lone dissenter on the National Labor Relations Board, member Brian E. Hayes:

“Today, my colleagues undertake an expedited rulemaking process in order to implement an expedited representation election process. Neither process is appropriate or necessary. Both processes, however, share a common purpose: To stifle full debate on matters that demand it, in furtherance of a belief that employers should have little, or no involvement in the resolution of questions concerning [union] representation. I can and do dissent.”

“…[t]he proposed rules will (1) substantially shorten the time between the filing of the petition and the election date, and (2) substantially limit the opportunity for full evidentiary hearing or Board review on contested issues involving, among other things, appropriate unit, voter eligibility, and election misconduct.. Thus, by administrative fiat in lieu of Congressional action, the Board will impose organized labor’s much sought-after “quickie election” option, a procedure under which elections will be held in 10-21 days from the filing of a petition. Make no mistake, the principal purpose for this radical manipulation of our election process is to minimize, or rather, to effectively eviscerate an employer’s legitimate opportunity to express its views about collective bargaining.”

All Employers Will be Targeted: Expect a new wave of union organizing activity immediately after these new Labor Board rules are enacted. Under these new rules, once a union files a petition to represent employees, employers will have little or no time to mount a campaign in opposition to union representation. A ten-day to twenty-one day election cycle offers an employer little opportunity to counter the union’s empty, campaign promises and rhetoric. Without advance preparation, the employer’s exercise of free speech will be stifled. Many employers will have no real opportunity to be heard. Small employers, without necessary contacts and financial resources to react quickly, may be overwhelmed.

A Rapid Response is Necessary to Preserve Your Union-Free Work Environment: What can be done? Employers must anticipate and respond to a future campaign by acting now. Initial steps need to be completed. A workplace assessment, by a labor-relations professional, can help any employer address areas of concern in order to reduce the risk of unionization. Union avoidance training will empower management to recognize and lawfully respond to union organizing activity from the very outset. Employee training is also essential so that employees are not misled by the union’s empty campaign rhetoric. Employees must understand the legal significance of a union authorization card, before they inadvertently sign a document that could lead to a union election. And, if there is any indication that union organizing activity is already underway, then time is of the essence. With a shortened, 10-21 day election cycle, the employer that hesitates or delays will be unionized. Professional assistance, timely preparation and training will be your best defense to preserve your union-free work environment.

If your Corporation has out-of-state employees working in California, and your Corporation has not complied with California’s daily/weekly overtime pay requirements for non-exempt employees (California Labor Code §§ 510, 1194), this article will likely cause you a great deal of indigestion:

Responding to certified questions from the US Ninth Circuit Court of Appeals, the California Supreme Court has affirmatively stated that California’s overtime laws apply to all employees who work in the State of California, regardless whether these employees reside in state or out-of-state. [Sullivan v. Oracle Corporation (9th Cir. 2009) 557 F.3d 979, 983 (Sullivan III) - CA. Supreme Court: S170577, CRC Rule 8.548]

Of equal significance, is the Court’s reminder that the same violates California’s Unfair Competition Law [UCL], Business & Professions Code § 17200, citing the Court’s previous ruling in Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal. 4th 163, 177. Accordingly, out-of-state Plaintiff-employees who work in California may utilize a (4) four-year statute of limitations when attempting to address violations of the State’s overtime laws.

More Class Action Litigation: Expect more class-action lawsuits filed in California by out-of-state employees who work in California, for unpaid overtime claims against their employers. Using the UCL, these plaintiffs may allege that the proposed class period includes a four year period that precedes the date that the lawsuit is filed. The math is easy – the potential financial exposure for any employer could be in the millions of dollars.

What Remedial Action Should Employers Take?

• Remember, the employer’s location (as well as the employee’s residence) has no bearing on liability for unpaid overtime. Rather, whenever the employee performs work within the state of California, whether it is for a day, a week or longer, your Company may be subject to California’s overtime laws.

• Misclassification of your employees as exempt, in violation of California’s Wage Orders, risks the financial exposure described in this article. You must be certain that your “exempt employees” meet California’s standards. Your classification system should be subject to a compliance review.

• If your Company “fits the description” and has potential exposure for unpaid overtime, it is important that you immediately develop a comprehensive plan that addresses the violation(s), in order to close this window of exposure.

• One part of this plan would likely include calculation and voluntary payment of unpaid overtime to attempt to forestall litigation.

• Be Careful – Any approach has to be thoughtfully evaluated and developed. Even inadvertent mistakes could result in more California Labor Code violations. As but one example, California’s labor laws prohibit a release signed by an employee in exchange for payment of wages that are owed by the employer. California Labor Code § 206.5.

• Your Company’s Employee Handbook should be re-evaluated, to determine the extent to which the language contained in the Handbook conforms with California employment laws to which your Corporation is subject.

• Changes to policies, procedures, with appropriate team training and communication, should also be incorporated as part of any transition plan, to facilitate the changes that are needed.

For all of these reasons, it may be a wise choice to utilize a Human Resources professional and/or an employer defense attorney as part of your team, to help guide you through the critical phases of this transition, especially when the end objective is to lessen the likelihood of class-action litigation and your Company’s financial exposure.

Case Summary: Plaintiff, Steve Camuti, requested class certification of all persons employed in the position of “Genius” for Apple, Inc., from September 15, 2005 to the time of trial, allegedly for missed rest periods, as well as for derivative claims arising from the alleged, missed rest periods. Apple brought its own Motion to Strike the Class Allegations/Deny Certification of the proposed Class. The Superior Court for the County of San Francisco denied Plaintiff’s Motion for Class Certification and granted Apple’s Motion to Deny Class Certification. (Steve Camuti v. Apple, Inc., et. al., San Francisco Superior Court Case No: CGC-09-492590, Order filed June 21, 2011).

Apple’s Rest Break Policy: Apple’s written rest break policy for Geniuses provides a paid, 15-minute rest break every four hours, exceeding the 10-minute per 4 hours worked minimum mandated by California wage and hour laws. The policy is posted, is available to employees, and Apple trained its Geniuses in the policy.

Plaintiff, Camuti’s Theory: Camuti asserted that Apple’s rest period policy was a policy in name only. Advancing alternative theories, Camuti asserted that Apple’s use of Concierge scheduling software and Apple’s overall policy to provide first-class customer service, became an unwritten policy to discourage if not prevent breaks by Geniuses. Specifically, Camuti alleged that 1). this unwritten, Company-wide policy allegedly forced Geniuses to miss breaks entirely, or 2). This unwritten company-wide policy allegedly required Geniuses to take breaks at a time other than scheduled. Camuti never offered any legal authority for the proposition that an employer must authorize and permit rest breaks on a specific schedule, nor is that mandated by the California Labor Code.

Plaintiff, Camuti’s Testimony: As a Genius, Plaintiff Camuti admitted that he knew about the policy; knew that he was obligated to follow the policy and that, as “Genius Captain,” he was even responsible for scheduling meal periods and rest periods for other Geniuses. Camuti admitted that he concluded on his own that Apple’s commitment to customer service was more important than taking his daily rest periods. In fact, he admitted that he knew of no policy that required him to miss breaks and that no manager ever instructed him to miss breaks in favor of customer service.

The Court’s Ruling: In granting Apple’s motion to deny class certification, the Court found that Apple presented “substantial” evidence that no company-wide policy contradicted the official rest break policy and that the administration of rest breaks by store management varied from location to location and over time. Finding that common questions of law and fact did not predominate as to any cause of action, the Court granted Apple’s motion to deny class certification.

Insights for California Employers: Apple had a written policy on rest periods that complied with California labor laws. It published that policy by posting that policy at all of its stores. It communicated that policy to all Apple employees. It trained managers to follow that policy. It trained employees to follow that policy. In other words, at all times, Apple exercised due diligence to ensure, as an employer doing business in this state, that it complied with the rest period requirements of the California Labor Code and the California Wage Orders. What return on investment (ROI) did Apple receive for this investment of its time and money? A multi-million dollar class action lawsuit, the type that would financially devastate any business, was defeated. Clearly, legal structure, employee communication and training laid the foundation for a successful outcome in litigation. For any employer, this would be considered a positive outcome. What steps has YOUR business taken to protect ITS interests and prevent this type of financial exposure?

File this one under the category, “No Good Deed Goes Unpunished.” The Case: Louise Parth v. Pomona Valley Hospital Medical Center (12/13/2010, as amended) US 9TH Circuit Court of Appeals No. 08-55022. A case of first impression, the Ninth Circuit Court has just ruled that employers, when offering an alternative workweek schedule that their employees desire, may artificially reduce their employees’ regular rate of pay, to control the employers’ labor costs, without violating the Fair Labor Standards Act. This case should be of interest to any employer who has ever considered the option of an alternative workweek schedule.

Prior to 1990, Pomona Valley Hospital Medical Center (PVHMC) scheduled its Nurses to work (8) eight-hour shifts. But, many nurses preferred (12) twelve-hour shifts, so that they would have more free days away from the hospital. The nurses requested that the Hospital change their shifts from (8) eight hours to (12) twelve hours. In response, the Hospital implemented an optional 12-hour shift schedule in 1989-1990. (Note: Fair Labor Standards Act § 207(j) offers hospitals and certain other institutions to agree with their employees to calculate weekly overtime over a 14 day period. Overtime is then paid over 8 hours in a day or 80 hours in a week-“the 8/80 plan”)

The plan’s features: Nurses who worked more than (8) eight hours in a day, or more than 80 hours in a (14) fourteen day period, received overtime at 1.5 times the employee’s regular rate of pay. Nurses who volunteered to work more than (12) twelve hours in a day, would be paid at (2) twice their hourly rate of pay. Absent a medical emergency, the Hospital could not require nurses to work additional shifts. in 1993, the nurses in the Emergency Room of PHVHMC, including the Plaintiff in this case, Louise Parth, voted to implement these 12-hour shifts.

The tradeoff: As consideration and in exchange for the (12) hour shifts, which gave nurses more free time and flexibility in their personal schedules, the Hospital reduced the regular, hourly rate so that nurses working the (12) twelve-hour shift would earn about the same amount of money as nurses who worked an (8) eight-hour shift. Obviously, the Hospital had an understandable interest in controlling and balancing its labor costs.

Approximately ten years later, in 2003, the nurses voted to unionize. As a result of collective bargaining and following the ratification vote in 2004, all nurses received a 20% pay increase over the next (3) three years. The collective bargaining agreement (CBA) also reaffirmed the lower base rate for nurses working the 12-hour schedule. It’s worth noting that the CBA set hourly rates for plaintiff’s position as follows: $34.644 – base rate, $39.84 – weeknight base rate, $46.929 – the weekend night base rate. For anyone who cares to do the math, it is evident that nurses such as Plaintiff, who worked full-time, were likely receiving yearly earnings of approximately $80,000 – $100,000.00, or more, plus benefits under the union contract-not too shabby. But, that still wasn’t enough for this Plaintiff. In her collective action, Plaintiff, Louis Parth accused the Hospital of violating the Fair Labor Standards Act by paying nurses an artificially reduced hourly rate under the (12) twelve-hour schedule.

In affirming the validity of the pay plan, the Ninth Circuit Court of Appeals soundly rejected Parth’s argument. The Court noted that, under the FLSA, “employers and employees are generally free to establish the regular, non-overtime rate at any point and in any manner they see fit,” so long as the FLSA’s minimum hourly rate requirements are respected. The Court concluded that the Hospital could alter the employees’ regular rate of pay to provide the employees with the schedule that they desired. The Court held that nothing in the FLSA bars an employer from contracting with employees to pay them the same wages that they received previously so long as the new rate equals or exceeds the minimum rates established by the Fair Labor Standards Act. In reaching the conclusion that the plan did not violate the Fair Labor Standards Act, the Court considered these factors:

• The 12-hour schedule was first initiated at the nurses request for greater flexibility;
• The 12-hour schedule became part of the collective bargaining agreement executed between the hospital and the nurses union;
• The wages paid under the plan are more than minimum wages under federal law;
• Nurses are paid overtime for more than (8) hours daily or (80) hours every 14 days;
• Nurses who volunteer to work more than (12) twelve hours per shift, are paid double time;
• The Hospital may not force a nurse to work an extra shift, absent a medical emergency;
• The overall wages paid to a nurse who works the (12) hour schedule are approximately equal to nurses who work the (8) eight hour schedule.

The Ninth Circuit concluded that the Plaintiff failed to produce “any evidence or authority to support her claim that PVHMC’s plan violates the FLSA.” In fact, the Court concluded that PVHMC was “justified” in responding to its employees’ requests for an alternative workweek schedule. In fact, it seems that much of Parth’s legal argument centered around her contention about the proper method for the calculation of overtime wages: The Hospital used the “weighted average method” of determining the regular pay rate-overtime rate of pay vs. Parth’s preference for the “average blended method” for pay rate-overtime rate calculation. Parth tried to argue that the Hospital’s method for pay rate calculation violated the FLSA. The Court also resolved these arguments in the Hospital’s favor. Absent Supreme Court review, this appears to be a clear win for the Hospital. Perhaps the real question here is why this lawsuit was ever initiated.

The significance for all employers is that, so long as they conform to state and federal law, (including the FLSA and California’s Labor Code § 511-Alternative Work Week Schedules), employers may offer greater workplace flexibility in the form of alternative work schedules, perhaps at reduced hourly rates to their employees, so as to manage and control labor costs. That’s a real win-win proposition for both management and employees, and especially when both sides are searching for greater workplace flexibility.

Historic Settlement: California’s Department of Fair Employment and Housing (DFEH) has just announced what could become the largest settlement in the history of the DFEH if approved by the Court. To put this in perspective, the DFEH reports that the proposed settlement amount of $6 million dollars against Verizon, is an amount equivalent to an entire year of settlements by DFEH’s Enforcement Division.

Summary: On November 30, 2010, California’s Department of Fair Employment and Housing announced that Verizon has agreed to pay as much as $6,011,190 to its current and former California employees to settle a class-action lawsuit filed by California’s Department of Fair Employment and Housing (DFEH), challenging the company’s family medical leave practices. DFEH reported that Verizon “cooperated fully” with the DFEH’s investigation and also did not admit to any wrongdoing in settling the lawsuit. This proposed settlement is still subject to final approval by the Court. It should be self-evident that this proposed settlement figure exceeds reported gross earnings for many employers. When Verizon’s cost of defense is added to the proposed settlement figure, the total cost to Verizon will likely be far in excess of 6 million dollars. But, if the settlement is approved by the Court, then the consequences to Verizon are far more than just financial loss.

State Oversight: As part of the proposed settlement, Verizon reportedly agreed to also review its leave policies and procedures; to continue an existing internal review process that employees can invoke to appeal denials of leave; to train all of its California officers, managers, supervisors and human resource personnel in family leave procedures; and to also submit “regular updates” to the DFEH regarding the Company’s compliance with California’s Family Rights Act. In other words, as part of the settlement, DFEH is now engaged in on-going oversight and control of Verizon’s family leave practices. The intrusiveness of this on-going oversight by the state into Verizon’s employment practices should be self-evident and, by itself, should cause any employer to reconsider its current leave policies, practices and procedures.

Two-Year Investigation: Most employers would be mortified to have any state or federal agency conducting an on-going investigation of their employment practices for even a few days, or a week, or a month. DFEH reports that its “Special Investigations Unit” conducted a “two-year investigation” into Verizon’s practices under the California Family Rights Act (CFRA), which is California’s version of the federal Family Medical Leave Act (FMLA). As is often the case, employers that do business in California are generally subject to the requirements of both the state (CFRA) and federal (FMLA), family medical leave laws, if they have (50) fifty or more employees within 75 miles of their worksite(s).

Class-Action Covered 3-Year Period: DFEH’s class-action lawsuit against Verizon covered a three-year period, from 2007 to 2010, alleging that Verizon denied or failed to timely approve class members’ requests for leave for their own serious health condition, or to care for a family member with a serious health condition, or to bond with a new child. The class-action lawsuit also contained allegations of wrongful termination/retaliation. DFEH alleged that Verizon fired some class members for reportedly violating Verizon’s attendance policy for a CFRA-qualifying reason.

DFEH Reports that Such Enforcement Actions Will Continue: When announcing the proposed settlement, DFEH proudly reported that “[T]he DFEH will continue to pursue high-impact group and class actions to more effectively enforce California’s civil rights laws and to eliminate systemic discrimination.” (Source: DFEH News Brief, November 30, 2010).

General CFRA-FMLA Coverage Provisions: Under both federal (FMLA) and state (CFRA) family medical leave, an eligible employee may receive up to 12 weeks of unpaid leave for an employee’s own serious health condition; or to care for a family member with a serious health condition; or for the birth of/care for a newborn child; or for the adoption or foster care placement of a child with an employee. Recent amendments also include 12 weeks of military exigency leave for an employee when a family member-reservist is called to active duty; as well as 26 weeks (6 months) of leave (less leave already taken) to care for an injured service member during rehabilitation. Finally, family medical leave is just one of a myriad of state and federal leave laws with which an employer must comply.

What You Can Do: Let’s acknowledge the obvious – Many employers will never survive a multi-million dollar settlement described here. As an employer, you cannot underestimate the potential, financial liability that awaits you if you ignore California’s employment laws. In this state, multi-million dollar, class-action lawsuits have become the norm to address violations of wage and hour laws, or as in this case, leave laws. If you wait until the first lawsuit is filed, it may already be too late. The time to act is now. A timely, top-down compliance review of your Company’s current leave policies, practices and procedures should be completed. If you need professional assistance, then you should retain that resource.

As always, it is critical that your management team has the tools, especially the essential training, that it needs to insure that it is capable of acting consistent with both state and federal leave requirements. Finally, when it comes to your employees, you cannot play “hide the ball” with your leave policy. Your leave policies, practices and procedures must be transparent. You must communicate your leave policies, practices and procedures to your employees. Employees must understand their rights and responsibilities when requesting or receiving a leave of absence. Your internal procedures should also include an internal oversight process to insure that employee challenges to leave denials are timely considered and properly addressed. To protect your Company’s interests, it is also absolutely essential that you keep thorough records of all leaves taken as well as all requests for the same. Failure to act could have serious repercussions that you may wish to avoid at all costs.

(This general information is not intended, nor should it be relied upon, as legal advice. All employers are urged to consult with an attorney before taking any action in response to this

On November 12, 2010, the Court of Appeals for the 2d Appellate District reinstated a class-action lawsuit previously filed in Los Angeles Superior Court, predicated upon the employer’s alleged failure to provide suitable seating for its employees, in alleged violation of California’s Wage Orders and the Labor Code. Bright v. 99 Cent Only Stores (11/12/10) B 22016 (Los Angeles County Super. Ct. BC 415 527). The whole premise of this lawsuit, that an employer may be sued by ALL of its employees for an alleged failure to provide seats on the job is simply outrageous. Yet, according to the interpretation of this Appellate Court, it is at least arguably an obligation that is specifically required by both California’s Labor Code and its Wage Orders, which govern employee wages, hours and working conditions in California.

What You Need to Know: As an employer, to begin to understand the importance of this ruling, you need a basic legal framework for a point of reference. Here’s that framework: 1). California’s Labor Code authorizes the Industrial Welfare Commission (the “IWC”) to establish rules governing wages, hours and working conditions for California employees. 2). Pursuant to its authority, the IWC established Wage Orders, which specifically spell out what employers must do with respect to employees’ wages, hours and working conditions. There are specific Wage Orders that apply to each industry and they are numbered. In total, there are (17) seventeen different Wage Orders. (Employers – You are required to have YOUR Wage Orders posted at your place(s) of business). While these Wage Orders are NOT identical, they are very similar. Each Wage Order is divided into numerous sections. As you would expect, each Wage Order outlines the employer’s obligations with respect to overtime obligations, meal period – rest period obligations, etc. (PS: In terms of what you are required to do, these Orders do not provide all the answers. If you rely on the “plain language” of these Wage Orders, you do so at your legal and financial peril.) What you might not expect is that these same Wage Orders include a “suitable seating” obligation. This obligation is described below:

Here is what section (14) fourteen of most of these Wage Orders provides: (A) All working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of such seats. (B) When employees are not engaged in the active duties of their employment and the nature of their work requires standing, an adequate number of suitable seats shall be placed in reasonable proximity to the work area and employees shall be permitted to use such seats when it does not interfere with the performance of their duties. (emphasis added).

Are you surprised? I assure you that counsel for 99 Cent Stores were surprised when they received this class-action lawsuit, which may actually be the first of its kind in California. What is represents is yet another “point of attack” for ambitious plaintiffs’ attorneys who seek to exploit and victimize unsuspecting employers doing business in this state.

What Happened Here: In this case, Eugina Bright complained that her employer, 99 Cent Stores, did not provide its cashiers with seats, in alleged violation of IWC Wage Order 7, § 14, cited previously. Ms. Bright’s counsel made her the proposed, class action representative, in a class action complaint for violation of the Private Attorneys General Act of 2004 (PAGA) California Labor Code § 2698, et.seq. If violation of this Act sounds serious, it’s because it is. It literally allows one of your employees to step into the shoes of the Attorney General of California, and collect statutory penalties from your business on behalf of ALL of your current employees, as well as for ALL of your former employees who might have worked for you for at least a year prior to the date that the lawsuit is filed. As for your financial exposure, think of a random number followed by lots of zeros. Anyone can do the basic math here and see that this can translate into phenomenal amounts of money.

To simplify what happened next: 99 Cents’ Stores attorneys argued that this type of lawsuit is not a Labor Code violation and a PAGA suit doesn’t provide penalties for this type of violation. The trial court agreed with defense counsel. The Appellate Court agreed with plaintiffs’ counsel, reversed the judgment of the trial court, reinstated the lawsuit and ordered 99 Cents Stores to pay Bright’s costs of appeal. As of now, the lawsuit continues at great expense to 99 Cents Stores. The potential, financial exposure is far greater if Bright prevails.

What You Need to Do: A California class action lawsuit, predicated on any wage and hour violations (including this example), is the Weapon of Mass Destruction for any employer. Do Not Underestimate the magnitude of the threat. Insuring that you are in compliance with the Wage Orders for your business is NOT an intuitive exercise. In fact, it is counter-intuitive. If you try to “wing it,” you are going to get it wrong, it will likely cost you unbelievable amounts of money, and it could even put you out of business.

This case is another example why, if you do business in California, you MUST insure that you are in compliance with its employment laws. At a minimum, I suggest that you consider these three remedial measures: 1). Establish access to Human Resource professionals. If you do not have this function in-house, then locate and retain the outside expertise to help you protect your business. 2). I strongly recommend that you make a periodic, business investment in a comprehensive review of your employment policies, procedures and practices. You may discover that the cost of the “course correction” is far less than the heavy price you will pay for blithe ignorance. Do not let your business wander blindly into the minefield that is California’s labor laws. 3). Invest in your management team. Your managers must be properly trained and have the skill set(s) to insure that you act in compliance with these laws. If you have managers who are unable or unwilling to meet these standards, then maybe it’s time to look for new managers. If you at least take these three steps, I guarantee that you will sleep better at night, knowing that you are being pro-active and protecting your business.

On September 15, 2009, Senator Arlen Specter reportedly announced to a group of union leaders at an AFL-CIO convention that the Senate now has an employee free choice bill that will meet labor’s objectives, which presumably means a bill that will curtail the rights of an employer to manage the operation of its enterprise.  The House and Senate versions of the Employee Free Choice Act were introduced in March, 2009.  But, each bill remains bottled up in committees.  Supposedly, some Senate Democrats are predicting passage of a compromise bill this year.   Richard Trumka, incoming AFL-CIO President, has reportedly indicated that no final deal in place….yet.  However, the rumored changes to the EFCA appear significant:  1). Shortened Elections: In place of card check recognition, elections will be shortened to as few as 5-10 days, which will still give employers no meaningful opportunity to respond to the union challenge; 2).  Final, Best Offer Arbitration: Reportedly, there is a compromise on this aspect of the legislation in which the arbitrator would choose the entire final, best offer proposed by either the empl0yer or the union.  For employers, this proposed alternative is even worse than the initial, binding arbitration provision proposed in the bill.  Such a provision would encourage the union to present extreme proposals in collective bargaining, in the hope that they could persuade an arbitrator to adopt the same;  3).  Union Access to the Workplace:  As if a shortened election weren’t bad enough,  this alternative would give the union the legal right to actually interfere with and chill the employer’s exercise of free speech in the workplace.  By substantially interfering with the employer’s right to manage the operation of its enterprise, the reported compromise would allow the union actual access to employer meetings on unionization and also allow the union to have individual meetings with employees.  This portion of the compromise bill would also reportedly give a union access to the employer’s communication systems during an election campaign.   4).  Penalties-Treble Damages:  Predictably, there is no change as to the proposed penalties and money damages to be imposed on any employer found to be in violation of the Act.  Any employer courageous enough to challenge the union’s campaign statements, or its empty campaign promises,  may also face the financial risk of responding to unfair labor practice charges filed by employees or a union with the National Labor Relations Board.  If the Senate or House Bill contains these changes, it is certainly bad news for our nation’s employers.

I am pleased to announce that CE Smith Law Firm has opened another office  in Carlsbad, CA.  The office is in a scenic location, adjacent to La Costa, at the intersection of El Camino Real and Aviara Parkway, in North San Diego County.  The office address is 6994 El Camino Real, Suite 204, Carlsbad, CA 92009.  The office address and google map also appear on the Contact tab of my website.  You are welcome to visit and I encourage you to call to schedule a meeting.  I look forward to seeing you and serving your legal needs.

On June 16, 2009, the California Fair Employment & Housing Commission issued its decision in the case of DFEH vs. ACOSTA TACOS, Case No. E200708 T-0097-00se.  

A Los Angeles employer who owned a chain of taquerias selling tacos and other Mexican food, hired a hispanic female, and employed her as a cashier.  She worked there for approximately three years, from 2004 until 2007, when she was fired.  Her offense?  She dared to return from a pregnancy leave.   That’s right, this employer advised its employee not to return to work until she ceased lactation.  The employee explained that she could not postpone her return to work until she ceased breastfeeding-she needed this minimum wage job in order to support her family.  The employer’s manager advised her that, with that “attitude,” she could look for employment opportunities elsewhere.

Instead, Ms. Chavez filed a complaint against Acosta Tacos with the California Department of Fair Employment & Housing, which then issued an accusation against the employer.  After a full hearing, the Fair Employment & Housing Commission issued its decision, finding the employer liable for discrimination based on sex and pregnancy, in violation of the Fair Employment and Housing Act.  Within 60 days of its decision, the Commission ordered Acosta Tacos to pay Chavez $21,645.00 in backpay and accrued vacation with interest; another $20,000.00 in compensatory damages for emotional distress, with interest; an administrative fine of $5,000.00 to the State’s General Fund, with interest; develop and implement a policy prohibiting sex and pregnancy discrimination in the workplace;  train supervisors to effectively implement that policy; post official Notices and return a signed statement of compliance to the Commission within 100 days after the effective date of the decision.

Well, what do you think?  Did this employer’s bad behavior constitute a cost-effective decision that advanced the interests of the business?  This is a perfect example of how NOT to manage your employees.  Wouldn’t it have been much more cost-effective to simply reinstate Ms. Chavez?  This decision clearly answers that question.