Wage Law

Dastmalchi Wage and Hour Class Action Settlement Not Approved

We often hear critics of class action litigation complain that judges just "rubber stamp" settlements that often benefit only the lawyers, and not the class members whom the class action laws are intended to protect. Those critics must not be collecting their empirical data from Orange County. In the Orange County Superior Court's complex litigation program, the judges closely scrutinize settlements, even if the defendants and plaintiffs agree that everything is good and fair.

For example, last week, Judge Stephen Sundvold denied certification and preliminary approval of a wage and hour class action settlement in Alvarez v. Dastmalchi. In so doing, the court began by observing that "in general terms the Settlement is satisfactory," but there are some areas which need to be resolved, including:

Paragraph 12(c)(v) of the settlement agreement, which provides that enhancements for the Class Representatives are conditioned upon a general release being given by the Class Representatives. The court noted that "enhancements come out of class funds and can only be based upon efforts and risks undertaken by the representatives in performance of their duties. The enhancement cannot be consideration for a release." (He's right.)

Paragraph 12(j) of the settlement agreement probably provided for the parties to agree upon a charity for residual funds to be donated to. The judge said no. "This Court must approve the charity for any residual, even if nominated by the Parties. It is a better practice, particularly in wage cases, for any uncashed checks to be forwarded to the California State Controller's Office to be held for the Class Member's benefit and ultimately the funds can escheat to the State if unclaimed. Withholding will be taken from the funds and it is unfair to subject the Class Member to tax liability if they do not get the check, or at least have it held for their benefit for an extended period of time." (He's right.)

Paragraph 17 of the settlement agreement and paragraph II(D) of the notice to class members, the court notes, contained an overbroad release. "The only claims that can be released by the Settlement are the claims identified in the Complaint," says the Court. (Right again.)

The settlement can still be approved if the parties go back and make sure everything complies with both the letter and spirit of the law. That is as it should be.

Advocates for lawbreaking corporations who want to avoid liability by restricting class action remedies claim that frivolous class action settlements are making greedy lawyers rich while the courts rubber stamp their back room deals. It just isn't happening. The courts review these deals carefully, not just at the "big picture" issues, but the finer details, too.

DLSE Issues Precedent Decision on Wage/Penalty Issue

The Schwarzenegger Administration has put an end to letting its Deputy Labor Commissioners follow Tomlinson v. Indymac Bank, F.S.B. (2005 WL 469291) 359 F.Supp.2d 891. The following memo has been circulated at the DLSE:

DIVISION OF LABOR STANDARDS ENFORCEMENT MEMORANDUM
DATE: June 17, 2005
TO: DLSE Staff
FROM: Donna M. Dell Labor Commissioner
SUBJECT: Precedent Decision – Case No. 12-56901RB

Section 11425.60 of the California Government Code allows for the designation as a “precedent decision” any decision that contains a significant legal or policy determination of general application that is likely to recur. The Division’s authority to designate a decision as a precedent is not subject to judicial review and is not viewed as an underground regulation. Precedent decisions are binding on any case before the Division’s Deputy Labor Commissioners and Hearing Officers to the extent that they include the same legal or policy issues determined in the precedent.

In response to the continuing confusion and frustration expressed to me regarding the lack of interpretive authority available to the Division on the issue of meal and rest breaks, I am designating the attached Order, Decision or Award (ODA) in the matter of Hartwig v. Orchard Commercial, Inc., Case No. 12-56901RB as a Division of Labor Standards Enforcement (DLSE) Precedent Decision until such time as applicable regulations are in effect.

Pursuant to Section 11425.60 this Precedent Decision shall be indexed, made available to the public and publicized annually in the California Regulatory Notice Register.

I hope that this determination will help to alleviate any confusion you may have and provide consistency going forward. As always, please do not hesitate to call if you have any questions.

Sincerely,
/s/
Donna M. Dell

The important part of the decision attached to this memo is quoted here:

The purpose, therefore, of the initial provision relating to the one hour of pay, was to enforce the requirements and to deter non-compliance clearly indicating intent to create a penalty.  Labor Code § 226.7 was based on the IWC Order language and its purpose is to deter employers from violating IWC imposed rules for meal breaks.  Determination is that the payment for missed meal periods is a penalty.

The logic of this decision escapes me. If the purpose (as if there is just one purpose) is to enforce the law and deter violations, rather than to compensate overworked employees, why is it that a minimum wage worker only gets $6.75, while a worker who makes $27 per hour gets four times as much pay for the same violation? There are a great many other reasons why the hour of pay should be considered a wage under Labor Code § 200, but rather than belabor the point in this already-long post, we'll wait and see what the Supreme Court eventually does with the issue.

We debated whether to mention this DLSE memo, since it has no precedential value in the Superior Court, and, although well-informed defense firms will be using this as an argument to persuade the trial courts to change their minds about Section 226.7 wages, not all defense firms are so informed. But we see now that the dark side blogs are talking about it, so we might as well weigh in.

Meanwhile, back in the trenches, the Orange County Superior Court complex litigation panel continues to rule consistently that the hour of pay is a wage. See, e.g., Judge Sunvold's decision of June 23, 2005 in Rubio v. New Century Mortgage:

"Defendant is incorrect in its assertion that there was no private right to pursue the remedies under Labor Code Section 226.7 prior to the enactment of the Private Attorney General Act. This Court has consistently found in prior cases that the sums due under Section 226.7 are wages, not penalties and an employee has a private right to seek his or her wages. The statute is clear on its face that the amounts due are wages and not penalties."

If you know of any appellate cases making their way toward a published opinion on this issue, please let us know.

Red Lobster and Olive Garden Employees Settle Meal and Rest Break Class Action For $9.5 Million

Our Press Release of this date, celebrating the settlement of our most significant case:

More than 20,000 current and former food servers, bussers, hosts and hostesses, bartenders and kitchen workers at California Red Lobster and Olive Garden restaurants will share $9.5 million as part of a settlement involving claims that they were prevented from taking breaks, and that they were required to purchase and maintain their own employee uniforms. Red Lobster workers from more than 40 locations in California who worked there from February 21, 1998 to the present will share $5.5 million, while Olive Garden employees who worked from March 24, 1999 to the present will share another $4 million.

Two food servers at the Brea Red Lobster restaurant filed the first class action complaint in February 2002, alleging that Red Lobster refused to allow breaks to its non-exempt workers throughout the State of California. The complaint was subsequently amended to include damages and restitution for Red Lobster’s former policy of charging workers for uniforms, and for making the employees maintain their own uniforms. In March 2003, an Olive Garden employee filed a similar complaint, seeking certification of all GMRI workers, including both the Red Lobster and Olive Garden chains. Then, in May 2004, while the first case was on appeal from an Orange County Superior Court ruling denying the defendant’s motions for summary judgment and to compel arbitration, a third lawsuit was filed in Sacramento, California.

Under California Labor Code § 226.7 and Industrial Welfare Commission Wage Order 5, employees are entitled to a paid ten-minute break for every four hours of work, or major fraction thereof. Employees working at least 3½ hours are entitled to one paid break, and earn a second paid break after six hours. Furthermore, employees who work more than five hour shifts are entitled to a 30 minute break which need not be paid. Under California Labor Code § 450 and Industrial Welfare Commission Wage Order 5, employers are required to pay for the cost of purchasing and maintaining employee uniforms and may not require employees to purchase anything of value, including uniforms, from the company.

This is one of the largest rest period class actions ever certified in California. This case was hard fought for three years, in two counties, the Court of Appeal and the California Supreme Court. The Red Lobster case was settled more than two years after the first mediation session. A second mediation session was scheduled after the California Supreme Court denied review of a 4th District Court of Appeal ruling preventing Red Lobster from compelling the employees to arbitrate the Red Lobster class claims. Several weeks after the second mediation, before respected mediator Mark S. Rudy of San Francisco, the parties reached a tentative settlement agreement. The Olive Garden case settled shortly thereafter, and an integrated and final settlement of the three lawsuits was signed on June 25, 2005.

The settlement requires the company to mail claim forms to all eligible employees. Workers must submit these forms in order to be eligible to receive their payments under the settlement. Employees can visit www.lobsterlawsuit.com for an update on the status of these legal actions.

GRMI, Inc., a subsidiary of Darden Restaurants, Inc. (stock symbol DRI), which operates the Red Lobster and Olive Garden restaurant chains in California, did not admit liability in the settlement. The settlement does not dictate any change in the restaurant chain’s practices. However, attorneys for the class do not foresee any ongoing problems with GMRI’s policies. Since 2002, the reports of employees missing their meal and rest breaks have been few, and we have seen instances in which restaurant managers who did not permit employees to take breaks have been subject to discipline by the company. Employees are no longer required to purchase uniforms.

Fact Sheet:
Class Representatives: For Red Lobster: Michelle Whalen-Camacho, Miguel Perez, Jason Nash and Torrey Hughes. For Olive Garden: Kelly Mancuso and Jessica Springer. · Defendant: GMRI, Inc., a subsidiary of Darden Restaurants, Inc. (DRI), a publicly traded corporation headquartered in Orlando, Florida.
Courts: The initial lawsuit was filed by Perez and Whalen-Camacho on February 21, 2002 in the Superior Court of the State of California, for the County of Orange, Case No. 02CC00038. The Mancuso action was filed March 24, 2003 in the Superior Court of the State of California, for the County of Orange, Case No. 03CC00098. The Nash case was filed on May 11, 2004, in the Superior Court of the State of California, for the County of Sacramento, Case No. 04AS01949. Whalen-Camacho, Perez, Mancuso and Springer intervened in the Nash case in April 2005. That case is currently assigned to the Honorable Loren E. McMaster.
Claims alleged: Violations of California Labor Code § 226.7 and Industrial Welfare Commission Wage Order No. 5, for failure to provide 30 minute meal periods and 10 minute rest periods; violations of California Labor Code § 450 and Industrial Welfare Commission Wage Order No. 5, for compelling employees to purchase and maintain uniforms. The class also alleges that the meal and rest break violations, uniform violations and equipment sales constitute violations of California Business & Professions Code § 17200 et seq. California’s Unfair Competition Law.
Primary factual allegations: Until 2002, GMRI, Inc.’s Red Lobster and Olive Garden chains prevented employees from taking breaks at their restaurants throughout California, and failed to pay employees an extra hour of pay when such breaks could not be taken. From 2002 to the present, although the restaurants had systems in place to provide for breaks in most instances, on the occasions when breaks were missed, employees were still not paid the extra hour of pay. In addition, for a portion of the relevant time period, Red Lobster required employees to purchase, launder and press their employee uniforms at the employee’s sole expense. The court did not rule upon the merits of these allegations, which GMRI has continued to dispute.
Relief sought: Payment of up to one hour of pay per day for each meal period violation, and one hour of pay per day for each rest period violation, for employees who worked during the relevant time periods of February 1998 to June 2005; restitution for all hourly California employees who were denied paid rest breaks, or who were required to purchase uniforms or equipment, from February 1998 to June 2005.
Plaintiffs' attorneys: The employees were represented by Walsh & Walsh, P.C. (Michael J. Walsh and Mark A. Walsh) of Irvine, California, Langford & Langford, APLC (Michael S. Langford and Karin A. Langford) of Santa Ana, California, Kingsley & Kingsley (Eric B. Kingsley) of Encino, California, the Law Offices of Michael L. Carver (Michael L. Carver), of Chico, California, and the Law Offices of Robert S. Skripko, Jr. (Robert S. Skripko, Jr.) of Santa Ana, California.
Defendant’s attorneys: The employer was formerly represented by Littler Mendelson LLP, but at the time of the settlement, was represented by Jackson Lewis LLP (Mia Farber, David S. Bradshaw and Cary Palmer), Sacramento, California.
Source/Contact: Walsh & Walsh, P.C. Michael J. Walsh, Esq. 420 Exchange, Suite 270 Irvine, CA 92602 Tel: (714) 544-6609 Fax: (714) 544-6621 E-mail: [email protected] Website: http://www.lobsterlawsuit.com

California Supreme Court Decision in Discover Bank Affirms Employees' Right To Bring Class Action Litigation

A long awaited California Supreme Court decision involving consumer class actions was handed down this morning, and in a complicated decision with several opinions, California has made clear that a contractual provision barring consumers from filing class action lawsuits can be struck down as unconscionable, and that the FAA does not pre-empt state law in this area, even post-Green Tree Financial Corp. v. Bazzle (2003) 539 U.S. 444.

Discover Bank v. Superior Court (2005) --- Cal.4th ---, concerns the validity of a provision in an arbitration agreement, between Discover Bank and a credit cardholder, forbidding classwide arbitration. The cardholder, a California resident, filed a class action lawsuit pertaining to unlawful or unfair late charge practices. Discover Bank successfully moved to compel arbitration and argued that the arbitration could not include class action claims because the arbitration agreement has a clause forbidding classwide arbitration. The agreement also has a Delaware choice-of-law provision, and, under Delaware law, a waiver of class action remedies does not violate public policy.

Applying California law, the trial court ruled that the class arbitration waiver was unconscionable and enforced the arbitration agreement with the proviso that plaintiff could seek classwide arbitration. The Court of Appeal reversed, holding (without addressing any choice-of-law issues) that the Federal Arbitration Act (FAA) preempts the state law rule that class arbitration waivers are unconscionable.

The Supreme Court reversed and remanded, holding that: (i) under certain circumstances, California law dictates that class action waivers in consumer contracts of adhesion are unenforceable, whether the waiver applies to class action litigation or classwide arbitration; and (ii) the FAA does not preempt California law in this respect. The case was remand to the Court of Appeal to decide whether the facts in this case require the court to apply California or Delaware law.

On the choice of law issue, the standard reads like a flow-chart.

1.  If the trial court finds that the claims at issue fall within the scope of a choice-of-law clause, it must evaluate the clause’s enforceability pursuant to the analytical approach reflected in section 187, subdivision (2) of the Restatement Second of Conflict of Laws (Restatement). Under that approach, the court must first determine:

A.  if the chosen state has a substantial relationship to the parties or their transaction, or
B.  whether there is any other reasonable basis for the parties’ choice of law.

2.  If neither of these tests is met, that is the end of the inquiry, and the court need not enforce the parties’ choice of law. If, however, either test is met, the court must

3.  Determine whether the chosen state’s law is contrary to a fundamental policy of California. If there is no such conflict, the court shall enforce the parties’ choice of law. If, however, there is a fundamental conflict with California law, the court must

4.  Determine whether California has a ‘materially greater interest than the chosen state in the determination of the particular issue . . . .’ (Rest., § 187, subd. (2).) If California has a materially greater interest than the chosen state, the choice of law shall not be enforced, for the obvious reason that in such circumstance we will decline to enforce a law contrary to this state’s fundamental policy.

In that regard, the Supreme Court seems to have adopted the two-pronged test described in America Online, Inc. v. Superior Court (2001) 90 Cal.App.4th 1, which provides that an agreement designating another state law as the controlling law will not be given effect if:

(i) it would violate a strong California public policy; or

(ii) it would result in an evasion of a statute of the forum protecting its citizens.

For California employees, and, in particular, employees asserting class action claims arising from either wage and working condition violations, unless the class action pursues claims on behalf of employees nationwide, this test will virtually always result in California law being applied, rather than the law of the employer's home state.

"Public policy has long favored the full and prompt payment of wages due an employee. “Wages are not ordinary debts.... [B]ecause of the economic position of the average worker and, in particular, his dependence on wages for the necessities of life for himself and his family, it is essential to the public welfare that he receive his pay promptly." Pressler v. Donald L. Bren Co. (1982) 32 Cal.3d 831, 837.

"It is the policy of this state to vigorously enforce minimum labor standards in order to ensure employees are not required or permitted to work under substandard unlawful conditions, and to protect employers who comply with the law from those who attempt to gain competitive advantage at the expense of their workers by failing to comply with minimum labor standards." Labor Code § 90.5(a).

The opinion includes this gem of a quote:

The clause is not only harsh and unfair to Discover customers who might be owed a relatively small sum of money, but it also serves as a disincentive for Discover to avoid the type of conduct that might lead to class action litigation in the first place. By imposing this clause on its customers, Discover has essentially granted itself a license to push the boundaries of good business practices to their furthest limits, fully aware that relatively few, if any, customers will seek legal remedies, and that any remedies obtained will only pertain to that single customer without collateral estoppel effect. The potential for millions of customers to be overcharged small amounts without an effective method of redress cannot be ignored. Therefore, the provision violates fundamental notions of fairness. This is not only substantively unconscionable, it violates public policy by granting Discover a "get out of jail free" card while compromising important consumer rights.

The opinion also includes this gem of a quote taken from the U.S. Supreme Court in Amchem Products, Inc. v. Windsor (1997) 521 U.S. 591, 617, which explains why class action litigation is such as important right for the general public:

"The policy at the very core of the class action mechanism is to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights. A class action solves this problem by aggregating the relatively paltry potential recoveries into something worth someone’s (usually an attorney’s) labor."

Many of our wage and hour class action cases would never see the light of day as individual cases. When an employer breaks the law regarding, for example, employee uniforms, and cheats its workers out of $20 at a time, five or six times over the course of a year or two, the only remedy the affected workers can pursue with any effectiveness at all is the class action remedy. No one wants to waste a day, or maybe several days, pursuing $40 or $60 or even $100. But if you can combine 1,000 or 10,000 employees' claims, you can afford to hire an attorney to pursue the claim on behalf of everyone and still find justice, even as the company fights back with its own $450 per hour defense lawyers.

You can download the full text of the Discover Bank opinion in pdf or MS Word format.

It's Nice To See Them Admit It

John E. Lattin, IV, a partner in the employment defense firm Fisher & Phillips, was quoted in the Daily Journal recently, saying this:

"The employers who have prepared and implemented lawful employment practices and policies, as well as a plan in case of class litigation, need not fear. After all, who would sue an employer that is not violating the law?"

He's absolutely right. So often, I read about and hear defense lawyers explaining how their client "admits no wrongdoing," but will be paying $1 million, $2 million, even $20 million "to avoid the uncertainties of litigation." It's a lie. The case had merit, and lots of it.

No lawyer wants to sues an employer, especially in class action litigation, unless they are confident that they can prove the employer violated the law. Sure, there might be a few nuts filing meritless lawsuits here and there for nuisance value settlements, but nobody pays $20 million dollars to pay off a shakedown artist (Except maybe Michael Jackson. Allegedly), and the shakedown artists eventually get what is coming to them. Just ask Harpreet Brar and the Trevor Law Group.

A good wage and hour class action plaintiff will find a willing attorney quickly. But we file about one class action for every ten cases that we initially think might contain a viable class claim. We've turned down class action prospects from restaurant chains and franchises, retailers, manufacturers, contractors, a beverage seller with over 1,000 stores, and a few dozen small to medium-sized businesses. We've turned down some cases because the claims were speculative. Others were good claims that applied only to a small number of workers. Still others involved claims that turned out to lack supporting facts or evidence.

We are not interested in class action litigation that lacks merit. No successful plaintiff's attorney is. Anyone who says otherwise is either dishonest or uninformed.

Exxon Case Bestows Federal Jurisdiction If Any One Class Claimant Exceeds Minimum Value Threshhold

The U.S. Supreme Court issued an opinion today in Exxon Mobil Corp. v. Allapattah Services, Inc., holding that federal courts have supplemental jurisdiction over class claims as long as at least one plaintiff's claim exceeds the minimum jurisdictional limit (currently $75,000, but in 1991, when this case was filed, it was $50,000). Kennedy authored the opinion for the 5-4 majority. Ginsberg, Stevens, Breyer and O'Connor dissented (one of the few cases in which O'Conner has been in the minority.) The case arose from an Eleventh Circuit case involving Exxon's "Discount for Cash" class action. The ruling means that class members with claims under $75,000 may still participate in the verdict against Exxon, which, with prejudgment interest, exceeds $1.3 billion.

The decision answers a question that once had a clear answer, but which became less clear in the wake of the "supplemental jurisdiction" doctrine. In class actions brought in federal court under diversity jurisdiction, complete diversity must exist between the named class representative and the named defendant. Snyder v. Harris (1969) 394 U.S. 332, 356. As long as complete diversity exists as to those parties, federal courts can exercise supplemental jurisdiction over third parties joined by the defendant on claims arising out of the same occurrences. 28 USCA § 1367(a); American Nat'l Bank & Trust Co. v. Bailey (7th Cir. 1984) 750 F.2d 577, 582. But whether that applied to parties joined by the plaintiff, as a class representative, was unclear.

At one time, it was clear that separate claims by class members could not be aggregated for jurisdictional determinations. In fact, in Snyder v. Harris (1969) 394 U.S. 332 and In Zahn v. International Paper Co. (1973) 414 U.S. 291, the Supreme Court held that the fact that the plaintiff class representative's claim exceeded diversity limits was immaterial. Unless all claims exceeded that limited, the case would not proceed as a diversity class action. In response to Zahn and its progeny, Congress enacted the "supplemental jurisdiction" doctrine in 28 USCA § 1367, granting the Federal judiciary jurisdiction over other claims that are sufficiently related to the original claim such that they can be considered part of the same case or controversy. . Therefore, it became unclear whether diversity jurisdiction could apply if one plaintiff exceeded the minimum limit of $75,000, and other class members asserted lesser claims. Several circuit court cases had held that the Federal courts did have such jurisdiction.

Exxon has left no doubt. Diversity jurisdiction applies as long as one named plaintiff in the class action steps forward with a sufficient claim. Once one named plaintiff asserts a claim upon which diversity jurisdiction may be based, the other named plaintiffs and the unnamed putatave class members can, by virtue of the supplemental jurisdiction under 28 USCA § 1367, "piggyback" on that plaintiff's claim.

For wage and hour class actions, this case will have little effect. Few individual claims in class actions are worth more than $75,000, and for most of those, the aggregate amount of claims will exceed $5 million, thus separately triggering the jurisdictional criteria under the Class Action Fairness Act of 2005, if there is diversity. However, there may be a few case, such as store manager overtime cases, that could be sent to the U.S. District Court under this ruling, if, for example, there are only 50-100 managers whose claims ranged as high as $75,000 each.

Car Washes So Dirty That The DLSE Makes Them Post Bonds For Wage Violations

How filthy are the wage and hour practices of car wash operators? So dirty that the legislature enacted Labor Code §§ 2050 to 2065 to the Labor Code to regulate these employers and establish the Car Wash Worker Restitution Fund. Many car wash employees are not paid a wage by their employers, but receive only the tips given by customers. Often, these employees are Spanish speaking immigrants who are paid below the minimum wage and never receive overtime pay while working extremely long hours without breaks.

In passing such measures, the legislature expressly noted that a number of employees have been harassed, intimidated, and mistreated by their employers because of their immigration status, that some employees work in substandard working conditions, and that existing labor laws and enforcement efforts had failed to remedy these problems.

To address and remedy these and other problems that plague the car washing and polishing industry, the legislature determined it would be in the interests of the public’s welfare, prosperity, health, safety, and peace to regulate the industry by requiring employers to register with the Labor Commissioner and pay a registration fee, and to procure a surety bond for the benefit of any employee damaged by the employer’s failure to pay wages or fringe benefits. This established the Car Wash Worker Restitution Fund as a source of compensation for persons damaged by an employer’s failure to pay wages, penalties, and other related damages.

Fifty dollars of each registrant’s annual registration fee is deposited into this fund, and half of the fines collected pursuant to Labor Code § 2064, for failure to register, are deposited into the fund. The new procedures for obtaining damages from the Car Wash Worker Restitution Fund are set forth in section 13694 of regulations proposed in recently concluded hearings before the DLSE.

The car wash industry is not the only industry in which employers must post a bond to secure payment to wages to their employees. For example, virtually every public works prime contractor must post a payment bond to secure the payment of their employees' wages. However, we aren't aware of other industries which must register and fund a worker's recovery fund specifically because of a history of wage and hour law abuses.

Home Depot Assistant Manager Class Actions Consolidated

Last week, Riverside County Superior Court judge Roger Luebs (who also approved our J. Jill class action settlement) consolidated three lawsuits brought against The Home Depot on behalf of its assistant managers in California, and ruled that the employees can sue the company for unpaid overtime on a classwide basis.

The lawsuits allege that Home Depot made merchandising assistant store managers work 55 hours per week or more, even though they normally performed the same tasks as hourly workers, such as selling to customers, stocking shelves, and going to other stores to get merchandise . The class includes as many as 2,000 assistant managers from Home Depot's 186 California stores from July 30, 1997 forward.

These cases very often settle for more than $10,000 per claimant, which could make this a $20 million case or better. If you ask the plaintiffs' attorneys, they'll tell you the case is worth $100 million, which will be interesting to compare to their remarks when the case settles for less than that, and their fee application discusses how difficult and uncertain the case was....

The Employee Free Choice Act of 2009?

It wasn't passed by the last Congress. It isn't likely to be passed by this Congress. But if you would like to follow the progress of the Employee Free Choice Act (S. 842 and HR 1696), the AFL-CIO has a page devoted to the status of this bill.

California Supreme Court Reigns in Punitive Damage Liability

In the two cases we most recently mentioned, the California Supreme Court has applied the principles of State Farm Mut. Auto. Ins. Co. v. Campbell (2003) 538 U.S. 408 ("State Farm") to pending California punitive damage cases.

In Simon v. San Paolo, the Supreme Court held that an award of $1.7 million in punitive damages is excessive when compared to $5,000 in compensatory damages.

In an action arising from plaintiff’s failed attempt to purchase an office building from defendant, the jury found that the parties had no binding and enforceable agreement but that defendant had committed promissory fraud. On his fraud cause of action, plaintiff was awarded $5,000 in economic compensatory damages and $1.7 million in punitive damages. Considering all the relevant circumstances, we conclude this award of punitive damages exceeds the federal due process limitations outlined in recent United States Supreme Court decisions. We further conclude the maximum award constitutionally permissible in the circumstances of this case is $50,000. The central issue presented is whether, in addition to the $5,000 in compensatory damages awarded, the punitive damages award should be measured against the $400,000 in profit plaintiff claims he would have achieved had defendant sold the property to him at the agreed price. Plaintiff argues this amount represents either the uncompensated harm he suffered from defendant’s conduct or the potential harm that conduct could have caused him. On this issue, we conclude that while uncompensated or potential harm may in some circumstances be properly considered in assessing the constitutionality of a punitive damages award, here defendant’s fraud neither caused nor foreseeably threatened to cause $400,000 in harm to plaintiff. Under these circumstances, the $1.7 million punitive damages award must be measured against the $5,000 compensatory award, and so measured it is grossly excessive.

In Johnson v. Ford Motor Company, the Supreme Court held that the Court of Appeal erred in reducing a $10 million punitive damage award to $53,435 on a compensatory damage award of $17,811.60.

Plaintiffs, purchasers of a used automobile, sued the manufacturer, Ford Motor Company (Ford), for concealing the automobile’s history of transmission repairs and replacements when reselling the car. Plaintiffs presented evidence of corporate practices by Ford identical or closely similar to the fraud inflicted on them, practices they maintain earned Ford millions of dollars in profit in California every year. The jury found in plaintiffs’ favor and awarded them $17,811.60 in compensatory damages and $10 million in punitive damages. The Court of Appeal, holding Ford could constitutionally be punished in this case only for its fraud on plaintiffs and not for its overall course of conduct, reduced the punitive damages award to $53,435, approximately three times the compensatory damages. We agree with the Court of Appeal that the $10 million punitive damages award may not, under the circumstances of this case, constitutionally be justified on the basis of disgorgement of profits earned by Ford through its entire course of wrongful conduct toward other consumers. In reducing the punitives to a small multiple of the relatively modest compensatory damages award, however, the Court of Appeal apparently failed to adequately consider that Ford’s fraud was more reprehensible because it was part of a repeated corporate practice rather than an isolated incident. For this reason, we reverse the Court of Appeal’s judgment and remand for that court to conduct again the independent due process review required under State Farm Mut. Auto Ins. Co. v. Campbell (2003) 538 U.S. 408 (State Farm) and BMW of North America v. Gore (1996) 517 U.S. 559 (BMW).

I think it is safe to say there will never be another Bender v. Darden Restaurants, Inc. If Bender was decided today, the most the plaintiffs would have recovered would have been about $100,000 in punitives for one plaintiff, and $60,000 in punitives for the other. Those would still be significant awards, however, for individual meal and rest break violation claims.

Punitive Damage Ruling Expected Today

Later this morning, the California Supreme Court will be publishing rulings in three cases, two of which pertain to constitution issues arising from punitive damage liability.

The first punitive damage case is Simon v. San Paolo, S121933 (B121917; Los Angeles County Superior Court – BC152431), argued in Los Angeles April 7, 2005. This case includes two primary issues: (i) in determining whether an award of punitive damages is constitutionally excessive under the principles of State Farm Mut. Auto. Ins. Co. v. Campbell (2003) 538 U.S. 408 ("State Farm"), should uncompensated or potential harm to the plaintiff be considered? and (ii) whether an award of $1.7 million in punitive damages is excessive when compared to $5,000 in compensatory damages.

The second case is Johnson v. Ford Motor Company, S121723 (F040188; Fresno County Superior Court – 647076-9), also argued in Los Angeles on April 7. This case includes two related issues: (i) whether State Farm leave the court with discretion to base punitive damages upon principles of general deterrence of wrongful conduct in this state and/or disgorgement of profits obtained by wrongful acts in this state, or whether the punitive damages must be limited to the amount sufficient to punish the tortfeasor for the harm caused the individual plaintiff; and (ii) whether the Court of Appeal erred in reducing a $10 million punitive damage award to $53, 435.

From what I've heard, the plaintiffs shouldn't go out and start spending their money just yet.

These rulings are of interest to wage and hour experts because punitive damages in the wage and hour field are uncommon, because most prudent employers settle wage claims without going to trial, but they can be quite large when you get them, as in Bender v. Darden Restaurants, Inc. (2002) 26 Fed.Appx. 726 (compensatory damages in the sum of $9,860 and punitive damages in the sum of $943,000 for one plaintiff, and compensatory damages in the sum of $5,970 and punitive damages in the sum of $890,000 for the other plaintiff, all based upon denied meal and rest periods.)

Pre-Cert Disclosure of Class Names To Be Opt-In

In the coming months, we'll be paying close attention to how the courts regulate communications with putative class members, after the recent ruling in Pioneer Electronics (USA), Inc. v. Superior Court (2005) 128 Cal.App.4th 246.

Pioneer Electronics dealt with the requisite notice and opportunity to assert a consumer's privacy right accompanying a precertification communication to members of a putative class in a consumer case. The court of appeal held that a trial court must take reasonable steps to assure that the consumer receives actual notice of his or her right to grant or withhold consent of the release of personal information, and that consent for such release be by the consumer's positive act, rather than by mere failure to respond.

Plaintiff Olmstead bought a defective DVD player from Pioneer Electronics (USA), Inc., claiming that some DVDs would not play on the machine. (Pioneer responds by claiming that all but about 60 of the 60,000 available titles play fine.) He filed suit on behalf of all other consumers who bought similarly defective players. In discovery, he demanded documents relating to Pioneer's complaints from consumers, including identifying information about those consumers. Pioneer objected, claiming that its customers had a right of privacy that allowed them to be left alone by the plaintiff and his attorneys, pursuant to the 1974 amendment to the California Constitution.

The issue was whether consumers who disclosed such information have the right to decide whether personal information, such as names, addresses, telephone numbers and e-mail addresses, should be released to attorneys in such lawsuits, and, if so, how their consent would be confirmed. The trial court made the privacy notice an "opt out" procedure. In other words, consumers who got the notice and wanted to be left alone would be required, by sending in an enclosed postcard, to notify the administrator that they wanted their names and information kept confidential. At the March 2004, hearing, the court stated that "the names are probably protected unless there's a Colonial Life [Colonial Life & Accident Ins. Co. v. Superior Court (1982) 31 Cal.3d 785] letter that goes out." The court then authorized the following letter to be sent:

Dear Consumer:  In August, 2001, litigation was filed in California in which the plaintiff alleges that Pioneer DVD Players are not compatible with the DVD Video Standard and as such, are incapable of playing all DVD discs. As part of the litigation, Pioneer was required to provide the plaintiff's counsel with a copy of the record that it made of information or complaints you provided some time ago when you contacted Pioneer's customer service department about your Pioneer DVD Player. Before doing so, however, Pioneer removed all identifying information regarding your name, address and telephone number. The court has now directed that Pioneer send you this notice so that you can decide whether to authorize Pioneer to disclose your personal information to the plaintiff's counsel so they may contact you. " 'If you agree to the disclosure of this information to the plaintiff's counsel, please check the box on the enclosed form and return it to the address shown on the form. Not responding to this letter will be treated as declining contact from Plaintiff's counsel.

Through a strange set of procedural events, the court ended up changing the text of the letter so that it stated that identifying information for the purpose of contact would be released unless the addressed consumer objected to the release.

Pioneer argued that the default should be to keep the information private unless the consumer actively responded with consent for such a disclosure. After aksing for and obtaining a stay of the order pending appeal, Pioneer sought appellate review. The court of appeal agreed with Pioneer, holding that consumers potentially affected by California consumer class actions must provide explicit consent before companies can disclose their names, addresses, telephone numbers or other personal information to class-action attorneys.

The court of appeal adopted the reasoning that consumers had provided their personal information to Pioneer for the specific and limited purpose of complaining about a defective product, which could not be construed as a waiver of the constitutional right of privacy. The trial court, therefore, was required to fashion a notification plan that provides for "a specific, signed, positive response" for any consent to release personal information.

The court noted that, under the Privacy Amendment to the California Constitution, "the definition of the right of privacy is simply the 'right to be left alone.'" The court went on to mention that "a person's right of privacy as to his or her home includes the right to allow or prevent disclosure of the address of that home for the purpose of contact by mail." Strangely, although the court didn't consider the notice asking for permission to release their names to be an imposition, the court apparently considered a letter from the attorneys representing their interests in the lawsuit to be an impermissible imposition.

Of great interest to wage and hour class action attorneys will be the courts' collective application of this standard to employment class actions. Pioneer Electronics was a putative class action under the Consumers Legal Remedies Act (Civil Code § 1750 et seq.) Under the Code of Civil Procedures "Notice to Consumer" statutes, employees are considered "consumers."

However, if the court's holding is broadly applied, it could end the long standing rule that a party is entitled to learn the identities of witnesses with relevant information about a case. At a minimum, the names and identities of people who could have knowledge about the class representatives' claims should be outside this ruling, but the dicta was so strong, it could arguably justify a witness refusing to obey a subpoena, claiming that it violates his constitutional right to be left alone. I doubt that anywhere near so broad a view was intended.

It will be interesting to see how broadly trial courts apply Pioneer to wage and hour cases.

Quoted in the Post-Gazette

We have been interviewed and quoted several times this year, particularly on meal and rest period class actions and on wardrobing laws and practices. I found out this morning that I was quoted last weekend in the Pittsburgh Post-Gazette in an article about the growing nationwide trend to stop retail apparel firms from forcing employees to spend their first few paychecks buying their employer's merchandise.

Eventually, most of the retailers, their employees and the bar will find out about the laws against compelled brand wardrobing in the retail industry, and the practices will stop. Until then, we will continue to surprise reporters who had no idea how illegal and widespread the practice of brand wardrobing is in the industry.

More Strange Conduct From the DIR

While the DLSE is fighting to pass regulations "clarifying" that the hour of pay due under Labor Code 226.7 is a penalty, rather than a wage, the individual hearing officers handling Berman Hearings that involve meal period and rest period claims are apparently split. Some are following the proposed regulations, while others are following the U.S. District Court decision in Tomlinson. Reportedly, this discretion has been permitted after various internal meetings at the DIR. Thus, whether you get one year of claims, or three years of claims, depends entirely upon the luck of the draw when your claim is assigned.

The peculiar thing is that, whether you get one year (if it's a penalty), or three years (if it's a wage) the employees' awards are being reported on a W-2, and they are having payroll taxes and other withholdings deducted.

Judges Sympathetic To Employees Will Have To Wait Another Three Years Before Hoping To Be Elevated

Not surprisingly, there isn't a single nominee from the Bush administration which NELA (the National Employment Lawyers' Association) endorses. It will be a long time before the U.S. Supreme Court or any Circuit Court gets a candidate known for supporting employee rights. But at least there are three candidates whom employee rights advocates can merely oppose, rather than "strongly oppose."

Fears of Frivolous Lawsuits Clogging the Courts are Unfounded.

A survey by the Federal Judicial Center of 278 U.S. District Court judges found that most do not see frivolous litigation as a big problem in the federal court system. Seven of ten judges said frivolous litigation was either a "small problem" or a "very small problem," while 15% actually said it was not a problem at all. Just one percent called it a "very large problem," two percent called it a "large problem" and the remaining twelve percent called it a "moderate problem."

The Federal Judicial Center is the research agency of the U.S. court system. The findings, set forth in a document entitled "Report of a Survey of United States District Judges' Experiences and Views Concerning Rule 11, Federal Rules of Civil Procedure" can be downloaded here.

Wal-Mart: Where The Lawbreakers Are In Charge of Policing Themselves

The Bush administration loves Wal-Mart more than it lovesn the little children who have to work for a living.

I'm late coming to this discussion, but I just saw the memo Nathan Newman posted on his employment law blog, and I couldn't believe my eyes. Four months ago, Wal-Mart agreed to pay $135,540 to settle claims arising from child labor law violations in Connecticut, Arkansas and New Hampshire, including claims that minors were operating dangerous machinery like forklifts, cardboard bailers and chainsaws. Wal-Mart admitted no wrongdoing, but paid the fine and, as part of the deal, got the Labor Department to agree to give Wal-Mart 15 days advance notice before it investigates any other wage and hour accusations, including failure to pay minimum wage and failure to pay overtime! Wal-Mart even got the privilege of approving DOL press releases, so as to cleanse them of unpleasant details, such as

"The department's Wage and Hour Division found that Wal-Mart allowed teenage workers to operate hazardous equipment resulting in one teenager being injured while operating a chain saw."

California Congressman George Miller wonders why the lawbreakers seem to be running the show. "I don't know if the Department of Labor threw in the towel or whether Wal-Mart put enough political pressure on them that they ended up with a sweetheart deal," he said. "I don't know if there's anything in Wal-Mart's background with regards to allegations of violations of labor laws that would make any suggestion Wal-Mart has earned the right for this kind of treatment."

To the contrary, Miller points out, "Wal-Mart imposes a huge, often hidden, cost on its workers, our communities, and U.S. taxpayers ... and Wal-Mart is in the driver’s seat in the global race to the bottom, suppressing wage levels, workplace protections, and labor laws."

I just noticed this, of course, because I have several Wal-Mart clients who want me to file a class action against the retailer for a variety of wage and hour law violations. We'll be watching Wal-Mart more closely from now on, and I'll report in with what we find.

Meal Break Claims Not Pre-Empted by NLRA Even If Employees Are Bound By Collective Bargaining Agreement

Yesterday, the Ninth Circuit published an opinion in Valles v. Ivy Hill Corp., case no. 03-55440 (9th Cir. June 06, 2005), holding that employees' claims for failure to provide adequate meal periods and rest breaks is not subject to NLRA preemption if the claims are based upon the protections of California state law, without any reference to any collective bargaining agreement. The court's rationale included the observation that Section 301 did not apply because meal and rest periods are non-negotiable, and Labor Code section 219 makes it plainly clear that such rights cannot be waived by agreement, written, oral or implied. Various dicta throughout the opinion make for outstanding quotes for the wage and hour law practitioner representing employees, and I would recommend this as required reading for any competent employee's counsel dealing with meal period or rest period claims.

You can download a copy of of the opinion here in pdf format.

Meal Period "Penalty or Wage" Issues Still Not Settled Even at DLSE Level

The latest round of comments to the latest round of changes by the Division of Labor Standards Enforcement (“DLSE”) to proposed regulation section 13700 relating to Meal and Rest Periods closed on May 25, 2005.

The proposed regulation was the subject of a Notice of Proposed Rulemaking published in the California Regulatory Notice Register (Register 2005, No. 2-Z) on January 14, 2005, and public hearings conducted in Los Angeles on February 4, 2005, San Francisco on February 8, 2005, and Fresno on March 2, 2005. The proposed modifications were in response to comments received during the 15-day public comment period, which ended on April 22, 2005.

The modifications clarified some provisions, but mostly watered down the employee's rights even further. The DLSE has not announced any new modifications since the most recent comment period closed. This subject might make for an interesting ballot measure, because the general desires of the voting work force is quite the opposite of the administration's intentions.

The full text of the proposed regulation, as modified, is:

§13700.  Meal and Rest Periods

(a) Definitions.  As used in this section,:

(1)       “Meal period” means the a period of not less than 30 minutes as provided in Labor Code section 512(a). time during which an employee is relieved of all work duties and not subject to the control of the employer.  In all places of employment where employees are required to eat on the premises, a suitable place for that purpose shall be designated.

NOTE:  This regulation does not address on-duty meal periods.

(2)  “Provide” means to make a the meal period available to the employee and afford the employee the opportunity to take the meal period.

(3)  "Workday" and "Dday" means any consecutive 24-hour period beginning at the same time each calendar day.

(4)  “wWork period” means that period of time during the day in which an employee is subject to the control of the employed by an employer.  A work period begins at the time an employee begins commences work and ends at the time the employee either takes a meal period or stops work for the day.  A new work period begins each time an employee resumes work after taking a meal period. 

(b) Requirement to Provide Meal Periods

(1)           Pursuant to Labor Code Sections 554(a) and 512(c), the provisions of this regulation do not apply to:  (Aa) a person employed in an agricultural occupation, as defined in Industrial Welfare Commission Wage Order 14; and (Bb) a person employed in the wholesale baking industry who is subject to an Industrial Welfare Commission Wage Order and who is covered by a valid collective bargaining agreement that provides for a 35-hour workweek consisting of five seven-hour days, payment of 1 and 1/2 the regular rate of pay for time worked in excess of seven hours per day, and a rest period of not less than 10 minutes every two hours.

(2)  An employer shall be deemed to have provided a meal period to an employee in accordance with Labor Code Section 512 if the employer:

a.  Makes the meal period available to the employee and affords the opportunity to take it; and

Aab.  Informs the employee, either orally or in writing, of his/her right to take a meal period and the fact that he/she will suffer no retaliation for exercising this right Posts the applicable order of the Industrial Welfare Commission; and and 

Bb.  Affords the employee the opportunity to take the meal period; and

Cc.  Maintains accurate time records for covered employees, as required by Labor Code section 1174(d) and section 7, Records, of the Industrial Welfare Commission wage orders (with the exception of Wage Order 16 in which the Records provision is contained in section 6 and Wage Order 17, which does not have a provision for records) the posted order or otherwise establishes by a preponderance of evidence that the meal period was in fact actually provided to the employee;.  NOTE:  While an employer may prove by a preponderance of evidence that a meal period was in fact actually provided to an employee, this regulatory section does not relieve an employer of any existing obligations to maintain accurate time records under Labor Code section 1174(d) and applicable sections of the Industrial Welfare Commission wage orders.

 

(2)   As a further precaution beyond the criteria required under (b)(1), an employer may inform an employee in writing of the circumstances under which he or she is entitled to a meal period in a way that permits the employee to acknowledge in writing that he or she understands those rights.

(3)  Notwithstanding the criteria set out in subsections (b)(2)(A), (B), and (C), an employer may establish by a preponderance of evidence that a meal period was in fact actually made available to the employee and the employee was in fact actually afforded the opportunity to take the meal period. 

NOTE:  While an employer may prove by a preponderance of evidence that a meal period was in fact actually made available to an employee and the employee was in fact actually afforded the opportunity to take the meal period, this regulatory section does not relieve an employer of any existing obligations to maintain accurate time records under Labor Code section 1174(d) and applicable sections of the Industrial Welfare Commission wage orders.

(c)  Illustrative table Regarding Meal Periods

Beginning of a Meal Period

[table omitted due to WageLaw formatting]

(d)  Beginning of a Meal Period

(1)  Work period Employment of less more than 5 hours, but no more than 6 hours per day

:

An employer may not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes. If the total work hours period per day of the employee are is no more than six hours, the meal period may be waived by mutual consent of both the employer and employee.

(2)  Work period Employment of more than 6 hours, but less no more than ten hours, per day. :

Unless provided otherwise by an applicable law order of the Industrial Welfare Commission, a meal period as required by Labor Code Section 512(a) must be provided may begin before the work period exceeds six hours  the end of the sixth hour of the work period.

a.  An employer may not require an employee to begin a meal period after the end of the sixth hour of work, except as provided in Labor Code sections 512 (b) or (c).   

b.  If an employee requests a meal period to begin after the end of the sixth hour of work, an employer is not in violation of Labor Code 512 so long as the employee was provided the availability and opportunity to take a meal period before the end of the sixth hour of work.

(3)  Work period Employment of more than ten hours but less no more than twelve hours per day:

An employer may not employ an employee for more than 10 hours per day without providing a second meal period of not less than 30 minutes, except that if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and the employee only if the first meal period was not waived.

(4)  Examples

Example 1:  A non-exempt employee begins work at 8:00 a.m. and works without a meal period until 1:300 p.m.  The employer is required to provide a meal period to the employee at this point, as the employee will has worked more than 5 hours.  However, if the employee’s work period will end no later than 2:00 p.m., the meal period may be waived by mutual consent of the employer and the employee.

Example 2: A non-exempt employee begins work at 8:00 a.m. and works without a meal period until noon 1:10 p.m.  The employee has not worked over 5 hours and is not entitled to a meal period.  The employee has not requested the meal period to begin after the end of the sixth hour of work.  Without the employee’s request, the employer may not require the meal period to begin after 2 p.m. as this would beafter the end of the sixth hour.

Example 3:  A non-exempt employee begins work at 8:00 a.m. and is provided a meal period, which begins at 10:30 a.m.  The beginning of the meal period ends the initial work period of that employee’s work.  Upon returning to work at 11:00 a.m., the employee commences a new work period.  The employee then works until 4:00 p.m.  If the employee continues work beyond this point, the employer is required to provide another meal period to the employee, as the work period will exceed five hours.  However, if the employee’s work will end by 5:00 p.m., the second meal period may be waived by mutual consent of the employer and the employee.

Example 4:  A non-exempt employee begins work at 8:00 a.m. and works without a meal period until 1:00 p.m.  After taking a half-hour meal period, the employee returns to work at 1:30 p.m. and works until 6:30 p.m.  If the employee works beyond this time, the employer is required to provide a second meal period to the employee.  However, because the total hours worked by the employee in the day exceeds 10 hours, but not more than twelve, the second meal period may be waived by mutual consent of the employer and the employee as the first meal period was not waived.

(d e)  Penalty for Failure to Provide Meal or Rest Period.  Any amount paid or owed by an employer to an employee under Labor Code section 226.7, subdivision (b), for failing to provide the employee a meal period or rest period, in accordance with an where applicable, order of the Industrial Welfare Commission is a penalty payable to the employee, without abatement or reduction, and not a wage. 

NOTE: 

Pursuant to Labor Code section 98.6, an employer cannot retaliate against an employee for exercising his/her right to take a meal or rest period.

(e f) Severability.  If the application of any provision of this regulation, or any section, subsection, subdivision, sentence, clause, phrase, word or portion thereof should be held invalid or unconstitutional or unauthorized or prohibited by statute, the remaining provisions thereof shall not be affected thereby, but shall continue to be given full force and effect as if the part so held invalid or unconstitutional had not been included herein. 

Authority:         Sections 53, 54, 55, 59, 95, 98, 98.8, 516, 1193.5, and 1198.4, Labor Code.

Reference:      Sections 226.7 and 512, Labor Code.

Are You Really in Outside Sales?

Outside salespeople in California are like the last of the bareback riders when it comes to legal protections from hard employment practices. The outside salesperson has almost no protection under any California Industrial Welfare Commission wage order. Outside salespersons are entitled to virtually no wage protections. They need not be guaranteed overtime pay, breaks, or minimum wage. You can almost literally work an outside salesperson to death and guarantee them nothing more than taste of his or her own productivity.

Who is an outside salesperson? Each wage order (8 Cal. Code Reg. §§ 10110 et seq.) defines an outside salesperson with the same language:

"any person, 18 years of age or over, who customarily and regularly works more than half the working time away from the employer’s place of business selling tangible or intangible items or obtaining orders or contracts for products, services or use of facilities."

However....

Many employers routinely misclassify their employees as outside sales staff. Common examples include commissioned employees who spend time delivering product, even if on a regular "sales route." For example, in Ramirez v. Yosemite Water Co., Inc. (1999) 20 Cal.4th 785, 796, the court found it to be a factual question whether "route sales representatives" for a bottled water company spent more than half of their time in sales as opposed to delivery activities. The actual activities here control. The employer's job description was not controlling. The important analysis is that of "the realistic requirements of the job." In other words, "how the employee actually spends his or her time" and "whether the employee's practice diverges from the employer's realistic expectations."

If you spend more of your time performing customer service, delivering product, making repairs and other activities that are not part of the sales and marketing of the goods or services sold by the employer, you probably are not an outside sales representative, no matter what your business card calls you.

Likewise, if you spend a significant amount of time at your employer's place of business, you are not in "outside" sales. For example, if you spend 75% of your time engaged in sales activity, and 25% of your time doing customer service, you are primarily engaged in sales activities. But if half of that sales activity is performed in your office at the company, you spend only 37.5% of your time in "outside sales." That makes you an inside saleperson, and, with the exception of mercantile, professional, technical, clerical, mechanical and similar industries, you are non-exempt from almost all wage order protections.

But, if you are under 18, it doesn't matter what you do. You are not an outside salesperson. You are entitled to overtime, when applicable. You must make at least minimum wage. And you are entitled to breaks and other protections provided by the wage order applicable to your industry.

These cases often qualify for class action status. We have represented employees misclassified as outside sales in the automotive industry, water and other delivery businesses, the paint and auto body industry and the construction industry. If you would like to have your situation reviewed to see if you have a claim, drop us an email and we would be happy to give you an evaluation.

Northrop Class Action Settled

We have settled our class action on behalf of a group of manufacturing workers at Northrop Grumman Corporation's El Segundo plant. If you worked at that facility from 2001 to April 2004, you are probably covered. We will post details once we have received preliminary approval of the settlement. If you are a class member, please submit your inquiries at the "Join Us" page on northroplawsuit.com.

Judge Stotler To Be New Chief Judge of U.S. District Court

U.S. District Court Judge Alicemarie Stotler shall be the next Chief Judge of the U.S. District Court, Central District of California. We like Judge Stotler, because, although she is a painstaking stickler for the rules, she imposes the same serious standards on both plaintiff and defense. She also presided over my first jury trial in Federal Court, a small Fair Debt Collection Practices Act case in which we won an $18,000 verdict after we offered to settle for $12,000 and the defense offered only to remind us that we had no case whatsoever. The firm in that case is currently defending one of our wage and hour class actions, and we are whipping them again. But I digress.

On Thursday, October 6th, there will be a reception to honor Judge Alicemarie Stotler at the Sutton Place Hotel in Newport Beach. Contact the Orange County Bar Association if you are interested in further details.