Wage and Hour Class Actions - By the numbers

I did some analysis of the wage and hour class actions filed in California in the month of March 2008. Basically, I looked at federal and state court filing summaries throughout California. I don't promise that this information is airtight or 100% accurate. Rather, I am trying to show the big picture. So here it is.
Number of Wage & Hour Class Actions Filed Or Removed In March 2008 - 101

Industries Primarily Targeted
Food (e.g., coffee shops, franchises, wineries) (14 wage/hour actions)
Financial Services (e.g., Prudential, JP Morgan, Countrywide) (9 wage/hour actions)
Entertainment (e.g., Casinos, Clubs, Theaters) - 6 wage/hour actions)

Busiest Plaintiffs' counsel -
George Kingsley of Kingsley & Kingsley. In March 2008, he filed four wage and hour class cases and had one more removed. The Defendants is his cases include Golden State Utility Company, Zumiez, Sbarro, Schering Corp., and Shore House Cafe.

Top Five Busiest Courts for wage and hour class actions (March 2008) -
LA Superior Court (39 wage/hour class cases);
Federal District Court, Central District (22 wage/hour class cases);
San Diego Superior (11 wage/hour class cases);
Alameda Superior (7 wage/hour class cases);
Orange County Superior (5 wage/hour class cases).

Most interesting March 2008 case -
Bissett v. Sutter Health, et. al (and I mean et al. - lots and lots of hospitals - throughout California).

The case apparently alleges that nurses have not been paid overtime or given meal breaks because of "intentional understaffing." I would guess that one purpose of this case is to change patient/nurse staffing ratios. I would also guess (and only guess) that the California Nurses Association is somehow involved.

Plaintiffs counsel is Robert Cantore of Gilbert Sackman. The firm's website (which prominently displays their representation of unions) is here.

What You Need To Know Today (About Leaves)

On April 7, the California Supreme Court issued its opinion in Lonicki v. Sutter Health Central. It was a split decision.

The Bottom Line. Under CFRA, an employer can contest an employee's doctor's claim that the employee has a serious health condition even if the employer does not seek a third opinion from a neutral doctor before doing so.

Also, if an employee takes another job while purportedly unable to work for the employer because of his or her "serious health condition," that's probably really good evidence for the employer if there's ever a trial. Don't think it's going to get the case dismissed on summary judgment, though.

Here is the thumbnail.

Facts. Lonicki gets a job with Sutter Health as a technician in the sterile processing unit. About 8 years later, the unit becomes a trauma center, and Lonicki gets a new boss who she really can't stand.

Lonicki gets doctors notes stating that she has the serious health condition of stress and depression and can't work. The employer's doctor examines her and renders a second opinion stating that's balony. Sutter Health leaves it at that and insists she come back to work. Sutter Health does not ask for a binding third opinion by a neutral doctor, as it could have under Government Code 12945.2(k)(3)(C) and (D).

In the meantime, Lonicki is working part-time at another hospital, basically doing the same job (though she claims it is slower and less stressful there). So, if Sutter Health were to allow CFRA leave, it would be paying Lonicki's benefits (pursuant to Government Code 12945.2(f)) while she spends her time working for someone else. Apparently, Sutter wasn't too in to that, and terminated her employment.

The Resolution.

The majority holds that an employer can contest in litgation a doctor's determination that an employee has a serious health condition even if it does not ask for a final and binding third opinion from a neutral doctor. This is because the statute states that an employer "may" get a third opinion, not "must" get a third opinion. More importantly, Lonicki will probably be read as holding that the employer does not even have to get a second opinion in order to contest the employee's doctor's determination. The majority cites a federal case in support of its reasoning, which states:

"The FMLA provides only that an employer 'may' seek a second, or third, opinion if it questions the validity of an employee's proffered medical certification. Because the term 'may' is permissive . . . an employer who questions the validity of a certification has the option of seeking a second or third opinion without being required to do so."

The majority also holds that if an employee cannot perform her specific job due to a serious health condition, then CFRA leave is appropriate, even if she could perform a comparable job someplace else. Of course, if the employee is performing the same job someplace else, that certain goes to the question of whether she really has a serious health condition, but this is a question of fact. An employee has a "serious health condition" under CFRA if she cannot perform the "essential functions" of her specific job at her specific employer, as opposed to the essential functions of the job in general. Finally, the majority concludes that, if this is a stupid law, people should blame the legistature. They're just doing their job.

The Main Dissent. The primary dissent (by Justice Chin) argues that the majority is stupidly interpreting the law with respect to allowing the employee to perform an identical job for one employer while taking CFRA leave from the other. He reasons:

The CFRA does not contemplate that an employee with an alleged 'serious health condition' would remain employed and receive health insurance benefits under a group health plan from one employer while on medical leave, at the same time that the employee is apparently working in a comparable position for a different employer. The lead opinion's belief that the CFRA did not intend to refer to the general functions of the job is simply unpersuasive in light of the legislative intent and common understanding of that term.

Justice Chin's dissent is not the law, of course. It's just for the record.

Labor Relations (The Illegal Kind)

While mob influences are probably not what they used to be in organized labor, there is apparently still plenty of corruption out there - especially in some construction trades, and especially in New Jersey. Recently, a business agent for an Operating Engineer's Local and the president of an erector contractor pled guilty to a bribery conspiracy. The case is United States v. Wask.

Why does this kind of bribery happen? Because, for an employer, paying a few thousand (or many thousand) bucks to a labor official is cheaper than a strike. It's also cheaper than complying with the sometimes difficult work rules, high wage rates, and expensive benefit costs set up in collective bargaining agreements. I mean, another recent case involving the same OE Local alleged that an employer paid a union official $750 just to avoid having a union guy man a backhoe.

The reason the government must be constantly diligent in prosecuting these cases is because it is almost always in the employer's economic self-interest to avoid union troubles and union mandates. And, with large enough suitcases or envelopes of money, it is in the individual union official's economic self-interest to do the employer a favor or two in this regard.

So who's ox gets gored? The working man's. The people with the least individual influence, who are paying the union for their services (through dues), and whose muscle (or refusal to use that muscle in the case of a strike), gives the union official so much power. They're being played for patsies, and often they don't know or have no choice. The government needs to keep this from happening. Aggressively prosecuting this kind of corruption is one way to do it.

How Employment Lawyers Think

How many uh oh words are they? Could I make a list, maybe, and provide it to clients?

Department of Fat Chance

Three bills are currently pending in the California legislature to curb missed break class actions. One basically shortens the statute of limitations to one year from four (SB 1192). Another states that an employer may "provide" an employee with a break merely by, well, providing one: Meaning make one available without interference. (SB 1539) (Note, this may be all the law currently requires). A third states that an employer may comply with the meal break requirement by ensuring the employee is provided with a break anytime within the first six hours. (AB 1034.)

I am confident that these bills will sail through California's democratic legislature.

Payroll Problems (All Of 2007)

Want to know what happened last year in wage and hour law? This is a good place to look.

What You Need To Know Today (About Illegal Immigration)

There have been a number of cases filed over the years alleging that employers who knowingly employ illegal immigrants commit RICO violations and depress the wages of legal workers. The validity of this legal theory is still a bit up in the air.

However, in a most recent case testing this theory, Hager v. ABX Air, a district court in Ohio held that, while a corporation could not be held liable as an illegal "enterprise" under RICO, individual executives could be held liable for conducting the affairs of an enterprise (i.e., the corporation) through a pattern of racketeering activity: The racketeering in this case being the knowing employment of 10 or more illegal immigrants.

Obvious note to executives: Do not knowingly employ illegal immigrants - especially on a wide scale.

Payroll Problems (Starbucks - Ouch)

We've all heard about the recent decision by a California Superior Court holding Starbucks liable for 100 plus million dollars because baristas had to share their tips with shift supervisors.

The positions of the parties (at least from a public relations standpoint) are pretty clear:

Starbucks: You've got to be kidding. 100 million dollars? Shift supervisors pour coffee just like baristas. Without a doubt, customers are sometimes tipping the shift supervisors for their service. You're telling us they can't share in the tips they've earned? You want us to screw our shift supervisors?

Plaintiffs: Why should supervisors be dipping their beak in our tip jar? And we're not screwing the shift supervisors. We're making sure you don't screw us. Just pay the shift supervisors more if you're so concerned about them. (100 million dollars over four years more, because that's how much they took from us.)

(A collection of quotes from the parties is here. Scroll down)

The Thumbnail: The genesis of the lawsuit is California Labor Code 351, which provides in part: "“No employer or agent shall collect, take, or receive any gratuity or a part thereof that is paid, given to or left by a patron . . . ."

So, are shift supervisors - who I understand serve coffee side-by-side with baristas - employers or agents?

Well, probably not employers. However, "agent" is defined as "every person other than the employer having the authority to hire or discharge any employee or supervise, direct, or control the acts of employees." California Labor Code 350. I believe that one of the big issues in the case is whether shift supervisors are "agents." The fact that agents are people who "supervise," and Starbucks calls these people "shift supervisors" probably doesn't help the Company too much.

But that might not end the analysis. Another section of Labor Code 351 states that "Every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for."

Do you see tension? The shift supervisors, in addition to maybe being agents, are definitely Starbuck employees. (Section 350 defines an "Employee" as "every person rendering actual service in any business for an employer.")

So, if the tip was left in part for the shift supervisors (and it surely was - customers don't distinguish between baristas and supervisors), then there's an argument that Starbucks had to give the shift supervisors their share in the tips. If it didn't, the supervisors could have brought a class action, claiming that Starbucks had taken from them a portion of their "sole property," i.e., the share of the gratuity that was left for them.

An employer can't possibly have an obligation to share and not share the same gratuity, yet that is what the statute seems to suggest with respect to supervisors who earn gratuities along with their co-workers and peers.

The appeal will be interesting. Plaintiffs (and their counsel) should not be counting their chickens just yet.

What You Need To Know Today (About Arbitration)

According to a new Supreme Court case, Hall Street Associates v. Mattel, an employer cannot build a "standard of review" into its arbitration agreements under federal law. Rather, the arbitration award must be reviewed under the very narrow final and binding standard set forth in the Federal Arbitration Act. This Supreme Court decision may effect the validity of arbitration agreements in California and other states. Among other things, some states require "meaningful" judicial review of arbitration awards as a condition to enforcing a pre-dispute, adhesive employment arbitration agreement. If such review is not possible, whither the arbitration agreement?

An analysis of the opinion is here.

How Employment Lawyers Think

1. Is there a law against familial status discrimination in Jamaica? Could this be a class action?

2. Michael may be harassing his lady friend. The conduct looks unwelcome, and subordinates can harass superiors.

3. False imprisonment?

Hmmmmm (Mucho Masturbation)

This just in. A judge who masturbates using a penis pump in Oklahoma, in the courtroom, in front of his staff, is not engaged in sexual harassment.

The district court's reasoning is thus:

Title VII is not a code of workplace conduct, nor was it “designed to bring about the magical transformation in the social mores of American workers.” (though, let's face it, it pretty much has.) Rather, Title VII targets discrimination based on gender, and “if the nature of an employee's environment, however unpleasant, is not due to her gender, she has not been the victim of sex discrimination as a result of that environment.”

In the instant case, Plaintiff is unable to demonstrate that Thompson's allegedly harassing behavior-namely, the fact that Thompson used the penis pump and had his penis exposed-was due to Plaintiff's gender. . . . Absent facts demonstrating that Thompson's conduct was motivated in some manner by Plaintiff's gender,Plaintiff's claim cannot survive summary judgment.

Hindman v. Thompson, 2008 WL 596106 (N.D. Okla 2008).

Note: Do not think this defense would necessarily fly in the Great State of California.

Note: Do not think that this decision means you can use a penis pump at work. If you do, and you are caught, you may get fired (heck, you will get fired), and you may go to jail, just like the good Judge Thompson did.