NLRB Issues A Complaint Against Another Employer Over Employee Facebook Postings

By Christopher S. Andre and Thomas A. Lenz

As we previously reported here, the National Labor Relations Board (NLRB)  issued on May 18, 2011, a press release announcing the NLRB issued a complaint against a non-profit employer for allegedly violating the National Labor Relations Act (NLRA) by terminating five employees who posted on a co-worker's Facebook page comments critical of their working conditions.  According to the NLRB's press release, "The complaint alleges that the Facebook discussion was protected concerted activity within the meaning of Section 7 of the National Labor Relations Act, because it involved a conversation among coworkers about their terms and conditions of employment, including their job performance and staffing levels."  Click here to download and read the press release.  

Today, the NLRB issued another press release stating it issued a complaint against a Chicago car dealership alleging the dealership violated Section 7 of the National Labor Relations Act when it terminated an employee for posting on his Facebook page photographs and comments criticizing the dealership for serving only hot dogs and water to customers at a dealership sales event promoting a new model.  Salespersons complained that serving only hot dogs and water could negatively impact their sales commissions.  According to the NLRB's press release, "[t]he complaint alleges that the employee’s Facebook posting was protected concerted activity within the meaning of Section 7 of the National Labor Relations Act, because it involved a discussion among employees about their terms and conditions of employment, and did not lose protection based on the nature of the comments."  Click here to download and read the press release.

Employers should be aware that both the NLRA and the California Labor Code generally prohibit discipline of or discrimination against employees for disclosing to others the amount of their wages or information about the employees' working conditions.  In light of those prohibitions and in light of the recent enforcement activity by the NLRB over employee Facebook postings, employers should consult with experienced employment and labor law counsel when considering discipline of employees for postings on social media websites, such as Facebook.

California Supreme Court Grants Review Of Another Meal Period Decision Favorable To Employers

By Christopher S. Andre and Scott K. Dauscher

As many of our readers know, the California Court of Appeals decided in Brinker Restaurant Corporation v. Superior Court that an employer's obligation to "provide" to non-exempt employees meal periods required by the Labor Code and the applicable Industrial Welfare Commission Wage Orders is to make those meal periods available and not to ensure that employees take the meal periods provided to them.  

On October 22, 2008, the California Supreme Court granted review of the Court of Appeal's decision in Brinker to decide "the proper interpretation of California's statutes and regulations governing an employer's duty to provide meal and rest breaks to hourly workers."  Over two years later, the case still has not been scheduled for oral argument, and it remains to be seen when the California Supreme Court will decide the case.

Meanwhile, the California Supreme Court has repeatedly granted review of subsequent Court of Appeal decisions holding as in Brinker that an employer's obligation to "provide" meal periods to non-exempt employees is to make the required meal periods available and not to ensure that non-exempt employees take the meal periods provided to them: Brinkley v. Public Storage, Faulkinbury v. Boyd & Associates, Brooker v. Radioshack Corporation, Hermandez v. Chipotle Mexican Grill, and, most recently, on May 18, 2011, Tien v. Tenet Healthcare.  As a result, those favorable decisions can no longer be cited to and are no longer binding precedent, and employers' obligations regarding meal periods for non-exempt employees remain uncertain as it is difficult to predict how the California Supreme Court will decide the issue.  We will continue to monitor these issues and will report on further developments when they occur.

NLRB Issues Complaint Against Non-Profit Employer For Disciplining Employees For Facebook Posts Critical Of The Employees' Working Conditions

By Christopher S. Andre, Scott K. Dauscher and Thomas A. Lenz

The National Labor Relations Board (NLRB)  issued today a press release announcing the NLRB issued a complaint against a non-profit employer for allegedly violating the National Labor Relations Act (NLRA) by terminating five employees who posted on a co-worker's Facebook page comments critical of their working conditions.  According to the NLRB's press release, "The complaint alleges that the Facebook discussion was protected concerted activity within the meaning of Section 7 of the National Labor Relations Act, because it involved a conversation among coworkers about their terms and conditions of employment, including their job performance and staffing levels."  Click here to download and read the press release. 

Employers should be aware that both the NLRA and the California Labor Code generally prohibit discipline of or discrimination against employees for disclosing to others the amount of their wages or information about the employees' working conditions.

California Supreme Court Declines To Review Or Depublish Court of Appeal Decision Upholding Explicit Mutual Wage Agreement Doctrine Permitting Non-Exempt Employees To Be Paid A "Salary" If Certain Requirements Are Met

By Christopher S. Andre and Andres C. Hurwitz

As we previously reported here, on February 7, 2011, in Arechiga v. Dolores Press, Inc., the California Court of Appeal upheld California’s “explicit mutual wage agreement” doctrine.  “Under that doctrine,” said the court, “an employer and [non-exempt] employee may lawfully agree to a guaranteed fixed salary so long as the employer pays the employee for all overtime at least one and one-half times the employee’s basic rate” so long as the employer and the employee enter into an agreement specifying: (1) the days the employee will work each workweek, (2) the number of hours the employee will work each workday, (3) the specific amount of the salary the employee is guaranteed to be paid, (4) the employee is informed and agrees to the basic hourly rate of pay upon which the salary will be based, (5) the employee is informed and agrees the agreed-upon salary covers the employees straight-time hours and overtime hours, and (6) the agreement is reached before the work is performed. 

Last week, the California Supreme Court denied requests to review and to depublish the Court of Appeal's decision.  This means the Court of Appeal's decision stands and explicit mutual wage agreements meeting the six requirements stated above and otherwise complying with the court's holding in Arechiga v. Kores Press, Inc., remain lawful.  We recommend that employers wishing to maintain or adopt such mutual explicit wage agreements consult with experienced employment law counsel. 

Department of Labor Rolls Out Smart Phone Application That Enables Employees To Track Hours Worked And Submit Complaints

By Christopher S. Andre, Scott K. Dauscher, and Thomas A. Lenz

The United States Department of Labor ("DOL") recently announced the release of a free smart phone application available in English and Spanish that will enable employees to "independently track the hours they work and determine the wages they are owed."  According to the DOL, "users conveniently can track regular work hours, break time and any overtime hours for one or more employers."  The DOL goes on to state, "[t]his new technology is significant because, instead of relying on their employers’ records, workers now can keep their own records. This information could prove invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records."  In addition, the application "includes easy-to-understand information about workers’ rights and how to file a wage violation complaint." Click here to learn more.  Click here to download the iPhone version of the application. 

Whether the DOL's new smart phone application will become widely used by employees remains to be seen.  However, the release of the application reflects what we believe is a more aggressive enforcement posture by the DOL and underscores the need for employers to keep accurate, contemporaneous records of hours worked by employees. 

California Supreme Court Declines To Review Helpful Court of Appeal Decision Regarding Penalties For Wage Statement Violations

By Scott K. Dauscher and Christopher S. Andre

As we previously reported here, in in Drake Price v. Starbucks Corporation,, the Court of Appeal held, among other things, that a plaintiff does not state a viable claim for Labor Code Section 226.7 penalties merely because a wage statement does not contain all of the required information. 

 Labor Code Section 226(a)  requires employers to provide to employees with their paychecks a wage statement (sometimes referred to as a check stub) accurately stating the following nine items of information:  (1) gross wages earned, (2) total hours worked by the employee (except exempt salaried employees), (3) the number of piece-rate units earned and any applicable piece-rate(s) if the employee is paid on a piece-rate basis, (4) all deductions, (5) net wages earned, (6) inclusive dates of the pay period, (7) the name of the employee and the last four digits of the employee's social security number or the employee's identification number other than the social security number, (8) the name and address of the legal entity that is the employer, and (9) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate.

When an employee suffers injury as a result of an employer's knowing and intentional failure to provide a compliant wage statement, the employee can recover the greater of either the employee's actual damages or $50.00 "for the initial pay period in which a violation occurs" and $100 "per employee for each violation in a subsequent pay period, not exceeding an aggregate penalty of four thousand dollars, and is entitled to an award of costs and reasonable attorney's fees."  See Labor Code section 226(e).

Drake Price, who was employed by Starbucks for a total of 13 shifts before he was fired after failing to report to work for a scheduled shift, alleged, among other things, that Starbucks was liable to him and to each member of the purported class for Labor Code section 226.1 damages because, according to Mr. Price, the wage statements Starbucks issued do not list total hours worked, net wages earned, and all applicable hourly rates."  Mr. Price contended "'total' means grand total, the sum of the regular and overtime rates."  Price contended Starbucks' use of the words "'amount paid' following gross pay and deductions does not comply with the requirement to show 'net wages.'"  Mr. Price contended, also, that the wage statements "lists the regular rate of pay, but fails to list the overtime rate of pay, requiring him to ensure that the overtime rate is one and one-half his regular rate of pay."  

Recognizing that a non-compliant wage statement is not actionable without injury, Mr. Price contended he was injured because, according to him, "[t]his lack of information 'caused confusion and possible underpayment of wages due,' required the putative class to file [suit], and forced the putative class to attempt to reconstruct their time and pay records."

Notably, the Court of Appeal distinguished a troublesome decision of the United States District Court for the Central District of California in Wang v. Chinese Daily News, Inc. (C.D. Cal. 2006) 435 F.Supp.2d 1042 essentially holding that injury occurs if the employee must perform mathematical calculations to determine whether he or she was paid correctly.  Distinguishing Wang v. Chinese Daily News, the court explained: "Price alleged a 'mathematical injury,' that required him to add up his overtime and regular hours and to ensure his overtime rate of pay is correct, but the allegedly missing information from Price's wage statement is not the type of mathematical injury that requires 'computations to analyze whether the wages paid in fact compensated [him] for all hours worked.'"  Simply put, "[t]he injury requirement in section 226, subdivision (e), cannot be satisfied simply if one of the nine itemized requirements in section 226, subdivision (a) is missing from a wage statement."

On May 12, 2011, the California Supreme Court denied the plaintiff's petition for review of the Court of Appeal's helpful decision.  This means the Court of Appeal's decision stands, and it means the District Court's troublesome decision in Wang v. Chinese Daily News now has even less persuasive value than it previously had.

Although the Court of Appeal's decision makes California employers less vulnerable to claims for Labor Code section 226.7 penalties based on essentially non-material violations of the requirements of Labor Code section 226.7, the best defense to claims for such penalties is to make certain wage statements are fully compliant with all of the requirements of Labor Code section 226.7. 

DFEH Clinic Partners With UC Irvine Law School To Combat Workplace Discrimination

By Thomas A. Lenz

In a memo dated May 3, 2011, it was announced that the Department of Fair Employment and Housing ("DFEH") would begin a new collaborative effort with the University of California at Irvine Law School to combat allegations of systemic discrimination.  DFEH and UC Irvine have established a clinic in which law students will assist DFEH agents on tasks which include evaluation, investigation, and prosecution of discrimination claims.  The clinic is prompted by a $6+ million class action settlement of discrimination claims against Verizon and can expand into other cases.  In this time of tightened public budgets and a difficult hiring market for new law graduates, we are likely to see additional efforts by public agencies and law schools to enhance training and future employment opportunities in government service.  Employers facing DFEH or other administrative claims arising in the workplace may well see heightened activity on their cases through this partnership and law students the DFEH describes as the "civil rights leaders of the future."

Landmark Supreme Court Decision Likely Permits Employers To Require Employees To Pursue Claims Individually And Not By Way Of Class Action Lawsuits

By Christopher S. Andre, and Scott K. Dauscher

As we previously reported here,  a report issued by the Judicial Council of California, Administrative Office of the Courts, Office of Court Research, shows that employment cases were the most frequently filed class actions, representing 29.3% of the class actions filed, and that over half of the employment cases filed alleged violations of Labor Code provisions governing payment of wages, rest and meal periods, and related claims.  This is consistent with our experience representing numerous employers against such class action lawsuits.

Many employers have attempted to require current and former employees to pursue claims individually and not by way of class action lawsuits by requiring employees to agree to arbitrate individually whatever claims they might have.  California courts repeatedly struck down such arbitration agreements in whole or in part by finding such agreements to be "unconscionable" or "contrary to public policy."  Those courts have declined to apply the Federal Arbitration Act ("FAA") to such arbitration agreements.  Among other things, the FAA states:  

A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. 

However, a recent decision by the Supreme Court of the United States has the real potential to change all that for many if not most California employers.  In AT&T Mobility LLC v. Vincent Concepcion, the Supreme Court  reversed a decision of the United States Court of Appeals for the Ninth Circuit holding (1) that an arbitration agreement between AT&T and its cell phone customers requiring customers to bring claims in their "'individual capacity, and not as a plaintiff or class member in any purported class or representative proceeding'" is unconscionable and therefore unenforceable because,"AT&T had not shown that . . . arbitration adequately substituted for the deterrent effect of class actions" and (2) that the basis for the finding of unconscionability "was not preempted by the [FAA]."  In other words, the Supreme Court rejected lower courts' analyses of the issue and held that arbitration agreements are generally enforceable according to their terms under the FAA, and neither California courts nor other courts can evade the FAA merely by declaring an arbitration agreement to be "unconcionable" in whole or in part.  The Court explained "the judicial hostility towards arbitration that prompted the FAA had manifested itself in 'a great variety' of devices and formulas' declaring arbitration against public policy."

Although the Supreme Court's landmark ruling concerned an arbitration provision of a consumer contract and not an arbitration agreement between and employer and an employee, we think the holding and the reasoning of the decision applies with equal or nearly equal force to arbitration agreements between employers and employees. In Southland Corp., v. Keating, the Supreme Court held the FAA applies to state courts and is intended to preempt state anti-arbitration laws to the contrary, and in Circuit City Stores, Inc., v. Saint Clair Adams, the Supreme Court held the FAA generally applies to employment contracts. 

Unfortunately, not all employers will be able to take advantage of this landmark decision.  The FAA expressly exempts from its reach "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce," which the Supreme Court held in Circuit City Stores, Inc., v. Saint Clair Adams applies to and is limited to "transportation workers, defined, for instance, as those workers 'actually engaged in the movement of goods in interstate commerce," such as truck drivers.  In other words, the FAA cannot be used as a basis for requiring such employees to arbitrate employment claims on an individual basis and not by way of a class action lawsuit.

Also, and predictably, there are already moves afoot to unwind legislatively the effect of Supreme Court's ruling..  The day the decision came down, United States Senators Al Franken (D-Minn.), (of  Saturday Night Live fame) and Richard Blumenthal (D-Conn.), and Representative Hank Johnson (D-Ga.) announced they will introduce legislation called the "Arbitration Fairness Act," which would eliminate "forced arbitration clauses in employment, consumer, and civil rights cases. . . ."  Click here to see the press release.  Whether such moves will prove to be successful given the present constitution of the Congress and the present political and economic climate remain to be seen.  

In any event, based on this landmark ruling and its potential to effectively immunize many employers against class action lawsuits by current or former employees, we think employers should promptly consult competent employment law counsel about either revising existing employer-employee arbitration agreements to require arbitration of employment claims on an individual basis and not on a class basis or about requesting or requiring employees to now enter into such arbitration agreements.

We are continuing to study this important decision and what other impact it might have on California employers and will likely post further commentary.