California Employment Law Update : Labor and Employment Lawyers & Attorneys : Proskauer Rose Law Firm : Wage & Hour Laws, Disability, Workplace Safety

Solis v. State of Washington, 656 F.3d 1079 (9th Cir. 2011)

The U.S. Secretary of Labor filed a complaint against the State of Washington's Department of Social and Health Services ("DSHS"), alleging a violation of the Fair Labor Standards Act of 1938 ("FLSA") based upon the DSHS's classification of its social workers as "learned professionals" exempt from the FLSA's overtime pay requirements. The district court granted DSHS's motion for summary judgment, but the Ninth Circuit reversed. In order to satisfy the "learned professional" exemption, an employer must show that a position requires advanced knowledge customarily acquired by a prolonged course of specialized intellectual instruction. The Ninth Circuit held that because the social worker positions at issue in this case require only a degree in one of several diverse academic disciplines or sufficient coursework in any of those disciplines, DSHS had failed to meet its burden of showing the social work positions "plainly and unmistakably" met the regulatory requirement. See also Kairy v. SuperShuttle Int'l, 2011 WL 5222891 (9th Cir. 2011) (federal district court has subject matter jurisdiction to determine whether passenger stage corporation drivers are employees or independent contractors under California law).

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In Sullivan v. Oracle, No. S170577 (Cal. June 30, 2011) (pdf), the California Supreme Court today resolved three important questions posed by the federal Court of Appeals for the Ninth Circuit regarding California law:

(1) Does the California Labor Code apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs, such that overtime pay is required for work in excess of eight hours per day or in excess of forty hours per week?

(2) Does California’s unfair competition law (UCL), Business and Professions Code section 17200, apply to the overtime work described in question one?

(3) Does section 17200 apply to overtime work performed outside California for a California-based employer by out-of-state plaintiffs in the circumstances of this case if the employer failed to comply with the overtime provisions of the federal Fair Labor Standards Act (FLSA)?

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As the federal government wades deeper into the realm of mobile "apps" (among the most useful, of course, the Smithsonian Institution’s “MEanderthal” app, which enables users to morph personal photos into prehistoric images of themselves), various U.S. agencies are promoting new apps that allow the public to access official information from “the palm of [one's] hand.”

Not to be left behind, the U.S. Department of Labor (DOL) recently rolled out a smartphone app to help employees independently track the hours they work. The “DOL-Timesheet,” as the app has been dubbed, is currently available in English and Spanish for use on the iPhone, iPod Touch, and iPad. The app is designed to assist employees in recording their hours worked and calculating the wages – including overtime – that they're owed. (Overtime pay is computed at a rate of one and one-half times the employee’s regular rate for all hours worked each week in excess of 40 – though California also has a daily overtime requirement for hours worked in excess of eight.) Users are currently able to view and email summaries of their logged hours and gross pay, and additional features have been promised, including the ability to track tips, commissions, bonuses, deductions, holiday and weekend pay, shift differentials, and paid time off.

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 The U.S. Supreme Court decided today that the anti-retaliation provision of the Fair Labor Standards Act, which prohibits employers from “discharging . . . any employee because such employee has filed any complaint” alleging a violation of the Act, protects oral, as well as written, complaints by employees.  

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On November 3, 2010, the Ninth Circuit Court of Appeals refused to hear an appeal brought by a Harrah’s Las Vegas casino dealer challenging the District Court’s ruling that her proposed state wage-and-hour class action was preempted by the Fair Labor Standards Act (FLSA).  In so doing, the Ninth Circuit chose not to revisit the District Court's ruling that the plaintiff could not assert parallel federal and state wage-and-hour class actions.  This ruling provides welcome relief to employers threatened by such a multiplicity of claims.

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Cumbie v. Woody Woo, Inc., 2010 WL 610603 (9th Cir. 2010)

Misty Cumbie worked as a waitress at the Vita Café (owned and operated by Woody Woo, Inc.). Woo required its servers to contribute their tips to a “tip pool” that was redistributed to all restaurant employees, including the kitchen staff (dishwashers and cooks). Cumbie filed this putative collective and class action against Woo, alleging that its tip-pooling arrangement violated the minimum wage provisions of the federal Fair Labor Standards Act (“FLSA”). The district court dismissed Cumbie’s complaint for failure to state a claim, and the Ninth Circuit affirmed, holding that “nothing in the text of the FLSA purports to restrict employee tip-pooling arrangements when no tip credit is taken” by the employer.

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Haro v. City of Rosemead, 174 Cal. App. 4th 1067 (2009)

Randy Haro and Robert Ballin filed an action against the city of Rosemead alleging a violation of the federal Fair Labor Standards Act (“FLSA”). The trial court denied plaintiffs’ motion to have the class certified pursuant to Cal. Code Civ. Proc. § 382 (the California class action statute) on the ground that an FLSA collective action (which requires members of the collective action to affirmatively opt-in) cannot be prosecuted as a class action under California law (which requires class members to opt-out). The Court of Appeal dismissed the appeal from the trial court’s orders denying class certification and denying leave to amend the complaint, holding that “an FLSA action has to be litigated according to rules that are specifically applicable to these actions and if litigants do not like these rules, they should not file under the FLSA.” Cf. Smith v. T-Mobile USA Inc., 2009 WL 1651531 (9th Cir. 2009) (plaintiffs who had voluntarily settled their FLSA claims before appeal was filed could not continue to prosecute action, rendering appeal moot).

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Haro v. City of Rosemead, 174 Cal. App. 4th 1067 (2009)

Randy Haro and Robert Ballin filed an action against the city of Rosemead alleging a violation of the federal Fair Labor Standards Act (“FLSA”). The trial court denied plaintiffs’ motion to have the class certified pursuant to Cal. Code Civ. Proc. § 382 (the California class action statute) on the ground that an FLSA collective action (which requires members of the collective action to affirmatively opt-in) cannot be prosecuted as a class action under California law (which requires class members to opt-out). The Court of Appeal dismissed the appeal from the trial court’s orders denying class certification and denying leave to amend the complaint, holding that “an FLSA action has to be litigated according to rules that are specifically applicable to these actions and if litigants do not like these rules, they should not file under the FLSA.” Cf. Smith v. T-Mobile USA Inc., 2009 WL 1651531 (9th Cir. 2009) (plaintiffs who had voluntarily settled their FLSA claims before appeal was filed could not continue to prosecute action, rendering appeal moot).
 

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The U.S. Department of Labor’s (the “DOL”) Wage and Hour Division recently issued a Wage and Hour Opinion Letter, FLSA 2009-3, addressing how a company can compute overtime payments retroactively for salaried employees it had mistakenly classified as exempt (not overtime-eligible) under the Fair Labor Standards Act (“FLSA” or the “Act”). The DOL reiterated its support for the half-time methodology in calculating back overtime due, endorsing the so-called “fluctuating workweek” model on a retroactive basis for remedying the misclassification of salaried employees. This is a significant development and, in so deciding, the DOL has “weighed in” on an issue that remains a source of lively debate in the federal courts.

Generally, the FLSA requires that overtime pay be calculated weekly (notwithstanding that an employer’s payroll period might be semi-monthly or bi-weekly) and that employees receive one and one-half times their regular hourly rate of pay for each hour worked in excess of 40 hours in a workweek. Here, the employer paid a guaranteed salary bi-weekly and expected the employees to work a minimum of 50 hours per week. The employer’s payroll software even converted the bi-weekly salary to an hourly rate by dividing the salary by 100, without regard to whether the employees worked more or less than 100 hours in the payroll period. When the employer concluded that it had mistakenly classified certain salaried employees as exempt, it wished to pay them back overtime retroactively, using a half-time methodology, reasoning that the employees had already been compensated straight-time for each hour over 40 worked in the workweek.

The DOL agreed. Since the fixed salary covered all the hours the employees worked in a workweek, straighttime already was included in the salary covering the hours worked over 40 and, as a result, the employees needed only to be paid an additional one-half of their actual regular rate for each overtime hour. Important to the DOL’s decision was the fact that the fixed salary was paid to the employees even when they worked less than 100 hours in the bi-weekly payroll period.

The Opinion Letter is particularly noteworthy for its generous interpretation of the fluctuating workweek’s “clear mutual understanding” requirement which, heretofore, many had understood meant that there had to be a “clear and mutual understanding” at the outset of how salary and overtime would be calculated and paid for hours worked. According to this Opinion Letter, the “clear and mutual understanding” criterion does not need to be set forth in writing and intent can be inferred from the parties’ conduct that the fixed salary was compensation for all hours actually worked by the employee in a given week, rather than for a fixed number of hours per week – a stance that adopts the minority view among judicial decisions that have considered the issue.

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Nigg v. United States Postal Serv., 2009 WL 251950 (9th Cir. 2009)

Robert Nigg, a postal inspector currently employed by the United States Postal Service (“USPS”), and Keith Lewis, a retired postal inspector, sued the USPS alleging postal inspectors are entitled to overtime pay under the Fair Labor Standards Act (“FLSA”). The district court granted summary judgment to the USPS after concluding that another federal statute (39 U.S.C. § 1003(c)) governs the pay of postal inspectors. The Court of Appeals for the Ninth Circuit reversed the judgment, holding that the FLSA and § 1003(c) are not in “irreconcilable conflict” and ordering the district court to further analyze the two statutes. The Ninth Circuit also ordered the district court to determine on remand whether postal inspectors are administratively exempt from the requirements of the FLSA. Cf. Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241 (9th Cir. 2009) (Railway Labor Act did not completely preempt Oregon state-law claims for failure to pay all wages due to customer service agent and other members of the class).

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Sullivan v. Oracle Corp., 2008 WL 4811911 (9th Cir. 2008)

Three Oracle instructors (all non-residents of California) filed this class action to recover allegedly unpaid overtime under California law for work they performed while in California. Two of the instructors were residents of Colorado and one was a resident of Arizona; all of them worked in their home states and, from time to time, in California. The district court granted Oracle’s motion for summary judgment, but the Ninth Circuit reversed in part, holding that the California overtime requirements (which are stricter than the overtime requirements of Arizona and Colorado) apply to work performed in California by residents of other states. However, the Court of Appeals affirmed dismissal of the claim made by two of the plaintiffs who asserted a violation of California’s Unfair Competition Law (Bus. & Prof. Code § 17200) for alleged violations of the federal Fair Labor Standards Act (“FLSA”) outside California on the ground that Section 17200 does not have extraterritorial application.
 

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Advanced-Tech Sec. Services, Inc. v. Superior Court, 163 Cal. App. 4th 700 (2008)

Ester Roman, who was employed as a security guard for Advanced-Tech, worked 12 hours on Labor Day 2006 and eight hours on Memorial Day 2007. Advanced-Tech’s employee handbook stated that employees who worked on designated holidays, including Labor Day and Memorial Day, would be paid 1.5 times their regular rate of pay for all hours worked on such holidays. Roman contended that on holidays, the premium rate (1.5 times her regular rate) was in fact her regular rate and that any overtime she was owed for work on such days should be paid at 1.5 times the higher rate. Relying on the Fair Labor Standards Act, which specifically exempts premium holiday pay from inclusion in the calculation of the regular rate, the Court of Appeal issued a writ of mandate directing the superior court to set aside its order denying Advanced-Tech’s motion for summary adjudication and to enter a new order granting the motion in favor of the employer.
 

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