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Wednesday, July 27, 2011

NLRB Finds Employer Acted Unlawfully When It Terminated Employees Who Disparaged Employer During Newscast

By Thomas A. Lenz, Jonathan Judge, and Christopher S. Andre

As we previously reported here and here, in May, the National Labor Relations Board filed complaints against at least two employers alleging the employers violated the National Labor Relations Act ("NLRA") by disciplining employees on account of disparaging statements the employees posted on Facebook statements criticizing their employers.   In one of those cases, the employer 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. The NLRB alleges in both both of the cases that the employees statements posted on Facebook are protected concerted activity within the meaning of Section 7 of the NLRA because the statements involved a discussion among employees about their terms and conditions of their employment.
Consistent with the enforcement policy it adopted in the two cases the NLRB brought in May involving Facebook postings, on July 21, in MasTec Advanced Technologies, a division of Mas-Tech, Inc. and Joseph Guest and Direct TV, Inc. and Joseph Guest, Cases 12-CA-24979 and 12-CA-25055, the NLRB ruled that MasTec violated the NLRA when it terminated employees who appeared on a television newscast wearing their uniforms and made disparaging statements about MasTec.  The NLRB ruled that employees who make disparaging statements about their employer are engaging in protected activity when the statements are related to a work-dispute and the statements are not disloyal, reckless or maliciously untrue.
   
According to the NLRB's decision: MasTec installs and maintains satellite television equipment for DirecTV.  MasTec service technicians were encouraged to persuade customers to permit the DirectTV satellite receivers to be connected to the customers' telephone line, which provides customers additional features and provides DirectTV with a record of what customers are viewing, which assists DirecTV in making programming decisions.  Many customers resist having the connection completed for various reasons. 
 
In 2006, DirecTV reportedly informed MasTec that MasTec would be penalized if MasTec did not  increase the percentage of telephone line connections.  In turn, MasTec reportedly informed its service technicians they would be back-charged $5 for every non-phone-line-connected receiver installed if they failed to achieve a telephone line connection rate of at least 50 percent.  The service technicians voiced opposition to the new policy at several employee meetings.  MasTec supervisors reportedly suggested ways around customers’ reluctance to agree to connected receivers, with one manager reportedly telling them to do “whatever you have to tell them” and “whatever it takes” to make the connection. 
 
After a number of service technicians were reportedly back charged in accordance with the new policy, one of the service technicians contacted a local television station, and a group of service technicians drove from the MasTec facility to the television station in their company vans.  A reporter met with the workers and interviewed them on film as a group.  The station broadcast a story concerning the technicians, in which the technicians recounted MasTec’s new policy and what their supervisors reportedly told them to tell customers to persuade customers to connect their DirectTV receivers to their telephone lines, insinuating they were asked to lie to customers.
 
After the story aired, MasTec terminated the employees who appeared on the broadcast.  The employees filed an unfair labor practice charge with the NLRB.  After the NLRB investigated the charge, the case went to hearing, and an administrative law judge ruled in favor of MasTec, finding MasTech did not violate the NLRA when it terminated the employees.  The employees appealed the decision to the NLRB Panel in Washington, D.C.

The NLRB Panel began its analysis by citing Section 7 of the Act, which provides, in part, that employees “shall have the right … to engage in … concerted activities for the purpose of … mutual aid or protection.”  The NLRB Panel noted that under Section 7, “employee communications to third parties in an effort to obtain their support are protected where the communication indicated it is related to an ongoing dispute between the employees and the employers and the communication is not so disloyal, reckless or maliciously untrue as to lose the Act’s protection.”  Based on this standard, the NLRB Panel stated that it has held that the mere fact that statements are false, misleading or inaccurate is insufficient to demonstrate that they are maliciously untrue.  Under this standard the NLRB Panel found that none of the technicians’ statements made during the newscast were maliciously untrue.  The NLRB also found that the statements were not disloyal or reckless, reasoning, “[w]hile the technicians may have been aware that some consumers might cancel [DirecTV’s] services after listening to the newscast, there is no evidence that they intended to inflict such harm on [DirecTV], or that they acted recklessly without regard for the financial consequences to [DirectTV’s] businesses.”

These recent actions by the NLRB provide two important takeaways for employers: 

First, the NLRA's reach is not confined to unionized workplaces.  When communications by non-unionized employees are related to a work dispute, the communications may still qualify as protected activity under the NLRA even if the communications are false, misleading, inaccurate, or highly objectionable to management.

Second, these recent actions may signal a more aggressive enforcement posture by the NLRB, particularly given the rise of various forms of social media, such as Facebook and Twitter.

As we previously observed, 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, employers should consult with experienced employment and labor law counsel when considering discipline of employees on  account of  communications related to or potentially related to employees' wages, hours, and/or working conditions.

Governor Brown's Nomination Of Goodwin Liu May Bring The California Supreme Court One Step Closer To Deciding The Long Pending Brinker Meal Period Decision

By Christopher S. Andre and Scott K. Dauscher

As we previously reported here, 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.  Since that time, the California Supreme Court has granted review thereby rendering unciteable six 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, Tien v. Tenet Healthcare, and, most recently, Lamps Plus Overtime Cases.
During a recent interview reported by the Daily Journal, the recently appointed Chief Justice of the California Supreme Court, Tani Cantil-Sakauye, "declined to say when the court would hear argument, which is the only way to tell that a decision is forthcoming."  The Daily Journal reported further that some commentators believe Justice Cantil-Sakauye will not schedule Brinker for oral argument until after Governor Jerry Brown appoints replacement for Justice Carlos R. Moreno, who stepped down to take a position in private practice in order to ensure that the deciding vote in Brinker is not made by a temporary justice.  
Yesterday, Governor Brown may have brought the court one step closer to deciding the long pending Brinker meal period decision by nominating UC Berkeley law professor Goodwin Liu to fill the seat vacated by former Justice Moreno.  Although Mr. Liu's nomination to the United States Ninth Circuit Court of Appeals by President Barrack Obama was effectively blocked by Senate Republicans who criticized Mr. Liu on various grounds, it is generally expected that his nomination to the California Supreme Court will be swiftly confirmed by the California Commission on Judicial Appointments, consisting of three members:  California Supreme Court Presiding Justice Tani Cantil-Sakauye (appointed by former Governor Arnold Schwarzenegger), California Attorney General Kamala Harris (a Democrat elected in 2010 after serving as the District Attorney for the City and County of San Francisco), and Senior Presiding Justice of the California Court of Appeal  Joan Dempsey Klein (appointed by Governor Brown during his first term as Governor of California).
Although it remains difficult to predict when the California Supreme Court will decide Brinker and difficult to predict how the California Supreme Court will rule on the case, we think Governor Brown's appointment of Mr. Liu increases the likelihood the Supreme Court will decide the case adversely to California employers.

Wednesday, July 20, 2011

California Supreme Court Gives No Clues About When It Will Decide The Long Pending Brinker Meal Period Case

By Christopher S. Andre and Scott K. Dauscher

As we previously reported here, 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.
During a recent interview reported by the Daily Journal, the recently appointed Chief Justice of the California Supreme Court, Tani Cantil-Sakauye, "declined to say when the court would hear argument, which is the only way to tell that a decision is forthcoming."  The Daily Journal reports further that some commentators believe Justice Cantil-Sakauye will not schedule Brinker for oral argument until after Governor Jerry Brown appoints replacement for Judice Carlos R. Moreno, who stepped down to take a position in private practice in order to ensure that the deciding vote in Brinker is not made by a temporary justice. 
Currently, the court appears to be more focused on a pending Proposition 8 case in which the court is called upon to decide whether proponents of the Proposition 8 same-sex marriage ban have standing to defend that ballot initiative in federal court.  When asked about that case, Justice Cantil-Sakauye reiterated her decision to conduct oral argument of that case in early September, stating, '"It needs to get going.  It needs to move forward.'"
Meanwhile, as we previously reported here, also, 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.

Friday, July 15, 2011

Court Of Appeal Decision Gives Employers Basis For Resisting Fishing Expeditions Seeking Records Of Non-Party Current And Former Employees

By Christopher S. Andre and Scott K. Dauscher

Employment litigation often gives rise to discovery demands by the plaintiff(s) seeking information about the employer's other current and former employees who are not parties to the litigation and, often, employment records of such non-party employees.  This occurs in both class action cases and in non-class action cases. In many cases, such discovery demands are little more than thinly disguised fishing expeditions at the employer's expense.  Although existing case law recognizes the privacy rights of non-party current and former employees and generally requires courts to balance those privacy rights against the legitimate discovery needs of plaintiffs in employment cases and to employ certain safeguards, those laws are not always consistently applied by trial courts.
Yesterday, in Life Technologies Corporation v. Superior Court, the California Court of Appeal issued a decision reversing a trial court order requiring the defendant employer to provide to the plaintiff alleging he was discriminated against because of his age detailed information about the employer's current and former employees and set forth steps trial courts must take to protect the privacy rights of current and former employees who are not parties to the lawsuit.  
In the decision, the Court of Appeal first recognized and reiterated current and former employees have a recognizable privacy interest in their personal contact information and, to an even greater degree, in their employment records.  Although in some circumstances a plaintiff's legitimate need to obtain certain information will outweigh the recognized rights to privacy, "the balance will favor privacy for confidential information in third party personnel files unless the litigant can show a compelling need for the particular documents and that the information cannot reasonably be obtained through depositions or from nonconfidential sources."  Emphasis in original.  Further, "Even when the balance does weigh in favor of disclosure, the scope of disclosure must be narrowly circumscribed."  Emphasis in original.
The court went on to articulate the steps trial courts must take to determine whether information about non-party current and former employees must be disclosed or not and, if so, what safe guards should be used.
Trial courts must first balance the privacy rights of non-party current and former employees against, again, the legitimate discovery needs of the plaintiff(s).  Each separate category of documents or information sought must be separately analyzed.  For example, with respect to personal contact information of current and former employees, the court noted that such information is not always discoverable, particularly when the party seeking that information does not show that the persons whose personal contact information is being sought are percipient witnesses to relevant events.  
When a trial court determines that information about non-party current or former employees is discoverable, the trial court must then provide such non-parties the opportunity to object to the disclosure of documents or information before the documents or information is released.  The Court of Appeal explained that such safeguards exist when such documents and information is sought by way of a subpoena and states: "We do not believe a nonparty employee/former employee should be deprived of such protections simply because the discovery vehicle used is a set of special interrogatories, rather than a subpoena. . . ."
When a trial court determines that information about non-party current or former employees is discoverable, the trial court must also take steps "for maintaining the confidentiality of any disclosed information, by sealing it and/or limiting its use and dissemination."  
We are pleased by today's decision.  We think it likely provides employers a much needed basis for resisting the sort of fishing expeditions that have become all too common in employment litigation in California. 

Thursday, July 14, 2011

Court Of Appeal Holds Employer-Employee Arbitration Agreement Is Unconscionable And Therefore Unenforceable

By Christopher S. Andre and Scott K. Dauscher

In Zullo v. Superior Court, the California Court of Appeal once again struck down an employer-employee arbitration agreement based on the court's conclusion that the arbitration agreement was both procedurally and substantively unconscionable and therefore unenforceable.  The decision serves as a reminder to employers that arbitration provisions considered to be overly one-sided in favor of the employer are likely to be struck down by California courts.
The arbitration agreement at issue contained terms providing: (1) that employment related claims by employees must be resolved by binding arbitration (excepting only certain claims) but permitted the employer to bring claims against employees in court,  (2) that claims by employees would be arbitrated according to American Arbitration Association Employment Dispute Resolution rules, which were apparently not provided to employees, (3) that employees must request arbitration within one year of the date a dispute occurred or the claim(s) are waived, and (4) that employees must respond within ten calendar days to communications regarding selection of an arbitrator and scheduling the arbitration hearing or the claim(s) are waived.
Relying heavily on the California Supreme Court's decision in Armendariz v. Foundation Health Psyschcare Services, Inc. (2000) 24 Cal.4th 83, the Court of Appeal held the arbitration agreement at issue is both procedurally and substantively unconscionable.  In that case, the California Supreme Court held, among other things, that the agreements at issue impermissibly required employees to submit claims to arbitration while permitting the employer to bring suit in court and impermissibly limited the damages available to aggrieved employees.
Taking its guidance from the Supreme Court's decision and from subsequent decisions applying it, the court in Zullo concluded the arbitration agreement at issue "is a contract of adhesion, fails to give adequate notice of the arbitration rules that will apply, and allows [the employer] the full range of remedies and forums for resolution of whatever claims it might have against [its employees] while limiting [its employees] to binding arbitration of [their] claims against [the employer].  It also imposes strict time limits within which petitioner must respond to any arbitration-related communication without imposing similar requirements on [the employer]."
The court in Zullo held, also, that the arbitration agreement at issue was so "permeated by unconscionability" that the provisions of the arbitration agreement the court found unconscionable could not be stricken ,and the remainder of the agreement could not be enforced according to the remaining permissible terms.  The court states: "The illegality cannot be excised here.  Striking the forfeiture provision would not cure the other problem, which is that the agreement applies only to the [employee].  There is no single provision we can strike in order to remove that unconscionable taint."

Wednesday, July 13, 2011

Two AALRR Attorneys Named To The Daily Journal Annual List Of Leading California Labor And Employment Law Attorneys

The Daily Journal issued today its annual list of leading California Labor and Employment Law attorneys. We are pleased to report that two AALRR attorneys were recognized on this year's list, Nate J. Kowolski, a partner in the Firm's Employer Services Practice Group, and Howard A. Sagaser, also a partner in the Firm's Employer Services Practice Group.  Click here to read more. 

Tuesday, July 12, 2011

California Court of Appeal Holds Arbitration Agreements Waiving Right To Pursue California Labor Code Private Attorneys General Act Claims Are Unenforceable

By Christopher S. Andre and Scott K. Dauscher

Today, the California Court of Appeal held in Brown v. Ralph's Grocery Company that the decision of the trial court denying enforcement of a class action waiver contained in an arbitration agreement between Ralph's Grocery Company and its employees was not supported by substantial evidence but held, also, that a provision of that arbitration agreement barring employees from pursuing claims under the California Labor Code Private Attorneys General Act of 2004 ("PAGA") is unenforceable because, according to that court, the recent decision of  Supreme Court of the United States in AT&T Mobility v. Concepcion, previously discussed here, does not apply to representative actions brought under PAGA.  Further, the Court of Appeal remanded the case back to the trial court for a determination of whether the arbitration agreement is enforceable except for the PAGA waiver or is unenforceable in its entirety because of the PAGA waiver.  
Notably, one member of the three justice panel that decided the case dissented from that part of the decision holding that that waiver of the right to file a representative action under PAGA is unenforceable and expressed the view that "[t]he preemptive effect of the Federal Arbitration Act (FAA) requires enforcement of the PAGA waiver in the employment arbitration agreement [at issue in the case] under the holding of AT&T v. Concepcion."  That dissenting opinion suggests reasons why a higher court might later disagree with the Court of Appeal and hold that PAGA waivers are enforceable under the FAA despite contrary state law.
Today's decision if left undisturbed by higher courts is a significant setback for California employers.  Plaintiffs bringing class action wage and hour lawsuits now routinely include allegations that their claims fall under PAGA, which provides for awards of very sizable penalties for violations of many provisions of the California Labor Code when aggregated to account for hundreds or even thousands of class members.  PAGA provides for penalties of $100 per employee per pay period for each initial violation and of $200 per employee per pay period for each subsequent violation.  Further, as we previously reported here and here, California courts hold that PAGA penalties apply, also, to violations of Industrial Welfare Commission Wage Orders.  
Given the significance of the issues involved in today's decision, we anticipate further developments, regarding those issues, which we will report on here.  
In the meantime, in light of today's decision, we think employers that have in place or are considering implementing arbitration agreements containing PAGA waivers should promptly consult competent employment law counsel.

Monday, July 11, 2011

Court Of Appeal Affirms Denial Of Class Certification In Wage And Hour Case Brought By Accountants

In another of several recent decisions in class action cases issued by California appellate courts, the Second District Court of Appeal last week upheld the denial of class certification in a case brought on behalf of accountants for unpaid overtime. (Soderstedt v. CBIZ, July 7, 2011).  The court found that because the responsibilities of each of the alleged class members differed with their levels of experience, the particular engagements they worked on, the clients and clients’ industries, and the other accountants they worked with, common questions of law and fact did not predominate and the proposed class could not be certified.
The plaintiffs who brought the suit were employed by an accounting and financial services firm that provided tax, attest, and litigation support in the greater Southern California area.   The firm maintained an office with 55 accountants in Los Angeles who mainly performed audits for public companies, a Bakersfield office of 43 accountants who served a diverse client base including non-profits and government clients, and an Oxnard office of 21 accountants who mainly performed services for construction industry clients.  The firm submitted 38 declarations establishing that each assignment was different and required the accountants to utilize their accounting knowledge and judgment in performing the services required for the engagement.    Evidence was also submitted demonstrating how the level of client contact differed based on the accountants’ ability and experience, and establishing that their level of supervision normally decreased with each further engagement.
The firm relied upon the administrative exemption to justify the non-payment of overtime, based on the assertion that they performed “under only general supervision work along specialized or technical lines requiring special training, experience, or knowledge.”  The appeals court stated that if the issues presented by this defense predominated over common issues, class certification could be defeated on this basis. Finding that the evidence presented on the motion for class certification showed a wide degree of variance in the amount of independent judgment and discretion exercised by the accountants on any given assignment, the court held that class treatment was not appropriate because of the individualized inquiries that would be required to determine if the exemption applied on a case-by-case basis.
Although not essential to its decision, the court also found that class certification was properly denied because the plaintiffs had submitted absolutely no evidence as to how numerous the class was or how they qualified as adequate class representatives.  As to the latter point, the court noted that there was no statement by the plaintiffs that they understood the obligations of being a class representative, or any recognition of the “substantial burden that they would be undertaking” to represent absent class members.  These findings will also likely prove helpful to employers in defending future class certification motions in wage and hour cases.

AALRR Named To The National Law Journal 2011 Midsize Hot List

By Christopher S. Andre and Scott K. Dauscher

The National Law Journal announced today it named Atkinson, Andelson, Loya, Ruud & Romo to The National Law Journal's 2011 Midsize Hot List.  The National Law Journal reports it "settled on 20 firms that demonstrated excellence in the courtroom or boardroom; that spotted a niche that eluded their competitors or that excelled on many fronts . . . firms that clearly stand apart from your everyday law firm."