Wage Law

The Fair Labor Standards Act (FLSA) requires that covered non-exempt employees receive at least the minimum wage and at least one and one-half times their regular rates of pay for hours worked over 40 in a workweek. In general, "hours worked" includes all time an employee must be on duty, or on the employer's premises or at any other prescribed place of work. Also included is any additional time the employee is allowed (i.e., suffered or permitted) to work. The amount employees should receive under the FLSA cannot be determined without knowing the number of hours worked. The materials listed below provide general information concerning what constitutes compensable time under the FLSA.

Authorizing Legislation
Fair Labor Standards Act

Field Operation Handbook
FOH Chapter 31: Hours Worked
FOH Chapter 32: Overtime

E-Laws Advisor
ELaws FLSA Hours Worked Advisor
ELaws FLSA Hours Worked Advisor

WHD Guides and Fact Sheets
Handy Reference Guide
Basic information sheet

Fact Sheet 1: Construction
Fact Sheet 2: Restaurants
Fact Sheet 3: Professional Offices
Fact Sheet 4: Security Guard/Maintenance Service Industry
Fact Sheet 6: Retail Industry
Fact Sheet 9: Manufacturing Establishments
Fact Sheet 10: Wholesale and warehouse industries
Fact Sheet 22: Hours Worked Under FLSA
Fact Sheet 23: Overtime Pay Requirements
Fact Sheet 24: Homeworkers under FLSA
Fact Sheet 31: Nursing Care Facilities
Fact Sheet 33: Residential Care Facilities
Fact Sheet 45: Hotel and Motel
Fact Sheet 46: Day Care
Fact Sheet 53: Health Care Industry and Hours Worked

Frequently Asked Questions
FAQs- Wages, Pay and Benefits

If your MCLE compliance group is coming due in February and you're still short on hours, Bridgeport Continuing Education is presenting a 9.5 hour two-day seminar on Wage & Hour litigation in December at the Sheraton Los Angeles Downtown Hotel. The program is designed for attorneys and corporate counsel as well as risk and claims managers and will incorporate both plaintiff and defense perspectives. We will be kicking off the presentation with an hour on recent developments, including the Gentry and Kenneth Cole cases, probably the Brinker case, and anything else interesting that comes our wage in the next 90 days.

Topics include: Wage & Hour Case Update, Class Action & Individual Wage & Hour Actions, Preparing for and Excelling in Mediations, Insurance Coverage in Wage & Hour and Class Actions, Class Certification, Dual filed Actions, Claims Administration, The Intricacies of Wage & Hour Cases in California, Discovery in Wage & Hour Actions, Meal & Break Period Case Analysis, Overtime Case Analysis, Mandatory Class-wide Arbitration Agreements.

Faculty: Susan Abitanta of the Quisenberry Law Firm, Kalley Aman of Buchalter Nemer, Arthur Silbergeld of Proskauer Rose , Robert Wallen of Pillsbury Winthrop Shaw Pittman, Phyllis W. Cheng of Littler Mendelson, Timothy M. Freudenberger of Carlton DiSante & Freudenberger, Michael Loeb of JAMS, Elizabeth Murphy of Buchalter Nemer, Keith Watts of Musick Peeler & Garrett, William A. Daniels of Schwartz Daniels & Bradley, Steven B. Katz of Thelen Reid Brown Raysman & Steiner, Katherine Odenbreit of the Class Action Litigation Group and Michael Walsh of Walsh & Walsh.

Seminar Details
Location: The Sheraton Los Angeles Downtown Hotel, 711 S. Hope Street
Time: (day 1) 9:00 a.m. to 4:30 p.m. (day 2) 9:00 - 12:30
MCLE: approved for 9.5 hrs of MCLE.
Register online at: http://www.reconferences.com
Register by phone at: 818-783-7156
Register by fax or mail: (818) 827-3338 or 13636 Ventura Blvd. #215 Sherman Oaks, CA 91423

Former Labor Commissioner Donna Dell has been popping up as a hired expert in wage and hour cases recently, for the purpose of testifying on behalf of defendants regarding the “standard of care” of classifying workers as exempt or non-exempt. If anyone has declarations signed by Donna Dell or any other former DLSE officials regarding such subject matters, we'd appreciate it if you would pass those along.

We are going to the USC - Notre Dame this weekend, so we aren't going to work particularly long or hard today, and that includes the blogging regimen. So, for your amusement, we offer you this, for when you care enough to tell the very honest truth. From Hallmark: Interview With an Honest Boss.

A recent article in the Wall Street Journal says that attorneys' hourly fees are crossing the $1,000 for the first time. New York's Simpson Thacher & Bartlett LLP was set to raise its top rate to more than $1,000 this month. New York's Cadwalader, Wickersham & Taft LLP did so earlier this year. Large firm billable rates have climbed an average of 6% to 7% annually since 2000. Recently, we have had judges in Los Angeles County Superior Court approving hourly rates on class action work in the $450-550 per hour range for 10-20 year attorneys. We have yet to see a base rate of $1,000 per hour sought or approved in the wage and hour class action context.

If anyone has a copy of the 1976 IWC Wage Orders, we would like to get our hands on one.

An opinion was issued today in Brinker Restaurant Corp. v. Superior Court (Hohnbaum) (4th Dist. No. D049331), regarding meal and rest period criteria and class certification. It isn't yet on the court's website, but here is the holding:

We conclude that the class certification order is erroneous and must be vacated because (1) the order rests on improper criteria and incorrect assumptions with respect to the rest break claims, and the court abused its discretion in finding that those claims are amenable to class treatment; (2) the court's "rolling five-hour" meal period ruling in its July 2005 order was erroneous, and thus the class certification order rests on improper criteria with respect to the rolling five-hour meal period claims; (3) the class certification order rests on an incorrect assumption with respect to the meal period claims to the extent those claims are based on the theory that Brinker had a duty to ensure that its hourly employees took the meal periods it provided to them, and thus the court abused its discretion in finding that these claims are amenable to class treatment; and (4) the court incorrectly assumed it did not have to examine the elements of plaintiffs' "off-the-clock" claims, and thus abused its discretion by finding without such an examination that those claims are amenable to class treatment. Accordingly, we order that a peremptory writ shall issue with directions that the superior court vacate its order granting class certification.
...
Let a peremptory writ of mandate issue directing the superior court to vacate its July 6, 2006 class certification order, enter a new order denying with prejudice certification of the proposed rest break subclass, and denying without prejudice certification of the proposed meal period and off the clock subclasses. The matter is remanded with directions that the court examine and consider the elements of plaintiffs' meal period and off the clock claims, including the issue of whether Brinker had a duty under section 512(a) and IWC Wage Order No. 5 to ensure that its hourly employees actually took the meal periods it provided to them. The stay issued on December 7, 2006, is vacated. Brinker is entitled to its own costs in this writ proceeding. This opinion is made final immediately as to this court.

The opinion is unpublished.

[Update: The opinion is on the website now in pdf and word format.]

A few months ago, we were beginning to come to the conclusion that nearly every class action certification was going to rise or fall based upon the rulings made in Superior Court. Since then, there have been a surprising number of reversals, not only of certification orders, but also denials of certification motions. A recent example can be found in Capitol People First v. Department of Developmental Services (2007) __ Cal.App.4th __, in which the First District Court of Appeal reversed an order by Alameda County Superior Court judge Ronald Sabraw denying certification of a class action, and remanded the case with directions to enter an order granting certification.

Trial courts have wide discretion with regard to class certification. Thus we will not overturn the lower court’s certification decision which is supported by substantial evidence unless it (1) used improper criteria; or (2) made erroneous legal assumptions. (Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470; Reese v. Wal-Mart Stores, Inc. (1999) 73 Cal.App.4th 1225, 1229, 1233.) We do not decide in the first instance whether the requested class is appropriate. Rather, our job is to decide whether the trial court abused its discretion in denying certification. (Reese, supra, 73 Cal.App.4th at p. 1233.) A certification ruling not supported by substantial evidence will not stand. (Lockheed Martin Corp. v. Superior Court, supra, 29 Cal.4th at p. 1106.) By the same token, even if the decision denying certification is supported by substantial evidence, we will reverse if it is based on improper criteria or incorrect assumptions. (Linder v. Thrifty Oil Co., supra, 23 Cal.4th at p. 436.)

Though not a wage and hour case, the holding in Capitol People First v. Department of Developmental Services certainly applies to most wage and hour class actions.

The decision is very interesting and definitely worth reading. Among other things, the Court of Appeal held that the trial court had improperly "restricted" the "use of sampling or statistical proof" at the class certification stage. Slip op. at 16.

The trial court delivered a ruling on the issue of commonality that was marked by contradictions and inconsistencies. While acknowledging that appellants were seeking only systemic relief, and not individual solutions to individual problems, it nonetheless insisted on defining the claims asserted in the litigation with respect to the “common discrete wrongs that affect individual class members.” Thus, instead of focusing on the similar but broader list of common legal and factual questions which appellants provided, and the proof offered for the same, the court seized instead on appellants’ examples of typicality to define discrete wrongs common to each individual which it concluded demanded individualized inquiries. ¶ Compounding this error, the trial court filtered the analysis and considerations required to address these issues solely through the lens of the individual ... rather than taking a broader, systemic view concentrating on respondents’ policies and practices.

The case is filled with language useful to litigants embroiled in a contested certification. Some quotes that we will be cutting and pasting for briefs we'll be filing in the next month include these:

Sav-On teaches that in resolving whether there is substantial evidence to support the trial court’s certification order, “we consider whether the theory of recovery advanced by the proponents of certification is, as an analytical matter, likely to prove amenable to class treatment.” (Sav-On, supra, 34 Cal.4th at p. 327.) As part of this process, we consistently look to the allegations in the complaint and the declarations of attorneys representing the class. (Ibid.)

...

The court misunderstood the nature of practice and pattern litigation and therefore based its determination that common factual and legal issues did not predominate on improper criteria and erroneous legal assumptions. These errors led the court to prejudge the merits of appellants’ case. Either sampling is valid and reliable, or it is not. Either statistical proof is compelling and convincing, or it is not. These inquiries go to the merits—the quantum of proof appellants are able to amass. It is not the trial court’s role to become enmeshed with the merits of the underlying action, or to concern itself with which side’s experts are more qualified. At the class certification stage, the concern is whether the evidence plaintiffs will offer is “sufficiently generalized in nature.” (In re Cipro Cases I & II (2004) 121 Cal.App.4th 402, 412-413.)

Judge Sabraw, for whatever it's worth, is also the judge whose order denying certification was upheld in Dunbar v. Albertson's, which is widely applauded by defendants as the antidote to Sav-On. He is now a JAMS arbitrator/mediator who lectures from time to time about class litigation and certification issues. If you litigate wage and hour class actions, you can and should download Capitol People First v. Department of Developmental Services, which for now can be found here in pdf or word format.

The Supreme Court has issued a grant-and-hold review order in Arias v. The Superior Court of San Joaquin County (Angelo Dairy). We discussed the case in a July 2007 post:

The Third District Court of Appeal has ruled that, under the Proposition 64 revisions to the Unfair Competition Law [UCL] (Business & Professions Code § 17203), a representative claim must be brought as a class action because the UCL now requires compliance with the class action provisions of Code of Civil Procedure § 382; however, the Private Attorneys General Act [PAGA] expressly allows a person to prosecute a representative claim without requiring that it be brought as a class action. In Arias v. The Superior Court of San Joaquin County (Angelo Dairy) (2007) __ Cal.App.4th __, plaintiff brought an action for overtime wages, and meal and rest period claims on behalf of a group of dairy workers. He did not style the complaint as a class action, but alleged claims under the UCLA and PAGA.

The petition, filed by Arias, did not seek review of the holding that authorized PAGA claims outside of class action litigation, but instead challenged only the portions of the holding addressing the pleading of UCL claims without meeting class action pleading requirements. The granting of review renders the entire opinion uncitable under Rules of Court 8.1105(e).

From the don't-try-this-at-home files, what happens when a group of bright lawyers for a defense firm wades into plaintiff's litigation once in a while? In some instances, they make bad law for the plaintiff's lawyers. In Nichols v City of Taft, the Fifth District Court of Appeal holds that the use of a fee multiplier to compensate for the higher hourly rates of out-of-town counsel requires a sufficient showing -- which the Nichols failed to make -- that hiring local counsel was "impracticable." Here's the opening paragraph:

While employed as a dispatcher for the City of Taft Police Department, plaintiff Aimee Nichols was allegedly subjected to physical and verbal sexual harassment on the job. She filed suit alleging claims of intentional tort and violation of the Fair Employment and Housing Act (FEHA). On the eve of trial, the parties settled. It was agreed in the settlement that defendant, City of Taft, would pay plaintiff $175,000 plus an award of attorney fees in an amount to be determined by the trial court. At the motion to fix attorney fees, plaintiff presented evidence of the reasonableness of her attorneys' customary rates of compensation. Her attorneys were members of a large out-of-town law firm with offices in Los Angeles and San Francisco, and their usual fees were considerably higher than would be charged in the local Kern County area. Defendant insisted that the fee award must be limited to the reasonable rate for comparable legal services in the local community. In an apparent compromise, the trial court applied local (Kern County) rates for purposes of reaching an initial lodestar figure, and then enhanced the lodestar by a multiplier of 1.33. When the math was done, plaintiff was awarded $471,374.24 in attorney fees. The court explained it was obligated to apply the multiplier based on its reading of this court's decision in Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359 (Horsford). Defendant appeals, contending the trial court applied the incorrect legal standard or otherwise abused its discretion when it (1) mistakenly presupposed it was required to apply a fee multiplier in this case, and (2) improperly considered out-of-town counsel's higher rates as the basis for a fee multiplier without an adequate evidentiary showing. We agree, and will remand to allow the trial court to exercise its discretion whether or not to apply a multiplier based on consideration of all the appropriate factors.

Some further details:

The 2005 hourly rates of the particular Morrison & Foerster attorneys that worked on plaintiff’s case were listed as follows: (1) Arturo Gonzalez (partner) -- $550 per hour; (2) Eric Tate (partner) -- $475 per hour; (3) Samantha Goodman (associate) -- $415 per hour; (4) Erika Drous (associate) -- $225 per hour; (5) Dara Tabesh (associate) -- $275 per hour; and (6) Steven Tang (associate) -- $275 per hour. ... In opposition to the motion, defendant presented declarations showing that the prevailing hourly rates for comparable attorney services in the local community, i.e., Kern County, would be at most $250 per hour for partners, and $160 per hour for associates. By plugging in these hourly rates, and making comparable reductions in the rates for paralegal services, the opposition argued that “[p]laintiff’s request should be reduced to $302,281.25, less any additional subtractions for excessive work performed.” Preliminarily, the court stated that plaintiff had failed to demonstrate, pursuant to Horsford, the impracticability of retaining local counsel to handle her case. Therefore, the court did not directly apply the rates from the higher fee market, but used the local rate of $250 per hour. However, based on its reading of the remainder of the Horsford case addressing “multiplier[s],” the trial court decided it was necessary to enhance the local rates by applying a multiplier of 33⅓ percent. Defense counsel objected that plaintiff had never requested a multiplier. In explaining its decision, the trial court specifically stated: “I’m still obligated, as I read the law, I would have to apply some kind of multiplier to the out-of-town lawyer that’s in a higher fee market.” Oral argument concluded on this issue with the judge’s stating he was “still of the opinion [he was] going to adopt the tentative.”

The Court of Appeal held that the trial court abused its discretion. Use of a fee multiplier to compensate for the higher rates of out-of-town counsel requires a sufficient showing that hiring local counsel was impracticable (Horsford 132 Cal.App.4th at pp. 398-399); otherwise, the rule tethering the lodestar to local rates would be effectively bypassed, since a trial court could always account for out-of-town rates through the “backdoor” by means of a multiplier, even when there was no showing that local attorneys were unavailable.

On remand, the trial court will have to reconsider the fee application, using its discretion to impose a multiplier, or not, based upon a consideration of the relevant lodestar adjustment factors, but without consideration of the out-of-town attorneys’ higher rates.We feel for them. Litigating in a small county from outside that small county is hard; litigating against a public entity is harder; trying to get a multiplier under those circumstances is practically impossible.

You can download the full text of Nichols v City of Taft here in pdf or word format.

We found a new and unique California wage and hour blog, calling itself "California's Division of Labor Standards Enforcement has no labor standards of their own!" The blog, found at http://nolaborstandards.blogspot.com, describes itself as follows:

An unofficial site highlighting inefficient & incompetent service that Californians receive as a result of DLSE decisions, actions, and service. The opinions here are the authors and should not be read by anyone, including the author.

We ignored the warning and amused ourselves for about five minutes.

We hope you are all enjoying your day off work, or at least out of court. This marks the fourth and final day of the year that reminds us that summer is over, the first three being the first day our kids go back to school, Labor Day, and the Vernal Equinox. Why does this day further mark the passing of summer? Traditionally, it is the day after which the U.S. National Park Service removes the hiking cables from Half Dome in Yosemite.

Circuit City has filed a petition for rehearing in Gentry v. Superior Court (Rehearing petition filed Circuit City Stores, Inc., real party in interest by Steven B. Katz, Thelen Reid Brown Raysman & Steiner, LLP CRC 8.25(b)). Almost immediately, the Supreme Court extended its time to consider modification or rehearing to and including November 28, 2007. Gentry filed an answer to the petition last week.

Three tests are relevant under the FLSA to determining whether an employee is properly exempt from overtime requirements: (i) the salary basis test, (ii) the duties test, (iii) the salary level test. Klem v. County of Santa Clara (9th Cir. 2000) 208 F.3d 1085. In Sumuel v. ADVO, Inc. only the “salary basis” test was at issue. Two plaintiffs sued ADVO, Inc. and one of its managers on behalf of a class of employees and former employees of ADVO, seeking unpaid overtime pay and related penalties. The plaintiffs contested ADVO’s disability policies and practices, claiming that they failed to satisfy the salary basis test in six respects:

• ADVO employees who returned to work after an illness were not paid their regular salary until payroll received the proper documentation confirming that the employees had returned to work;
• ADVO deducted improper amounts from the employees’ company-paid disability benefits based on imputed SDI benefits that the employees did not actually receive;
• ADVO did not pay a full week’s salary to employees who worked a partial week before going out on shortterm disability leave;
• ADVO’s plan did not qualify as a bona fide plan because it did not operate as described to its employees, it was not administered impartially, and it relied in part on state disability payments funded by its employees;
• ADVO’s plan was not operated under state disability law; and
• ADVO had no objective intent to pay its employees on a salary basis because it did not train and direct its responsible human resources employees to ensure that no improper deductions were made.

On cross-motions for summary judgment or summary adjudication, the trial court granted summary judgment to ADVO. The employees appealed, seeking a de novo review of the validity of ADVO's paid disability leave policy and practices as it pertained to the salary basis test under federal and state labor regulations to determine whether an employee is exempt from overtime pay requirements. The Court of Appeal affirmed the summary judgment in favor of ADVO:

In sum, the evidence shows, at most, a triable issue of material fact with respect to whether ADVO took salary deductions for full-day absences when employees went out on disability leave after working a partial week. However, we find no triable issue of material fact, under either federal or state law, with respect to whether such deductions were taken in accordance with a bona fide plan, policy, or practice of providing compensation for loss of salary caused by disability. Accordingly, the trial court properly granted summary judgment to ADVO.

If you have a salary basis test issue, you should read Sumuel v. ADVO, Inc. The full text is currently on the court's website here in pdf and word format.

More than 125,000 Wal-Mart workers involved in a wage and hour class action pending in Philadelphia will have $500 in waiting time penalties tacked on to their earlier collective award of $78.5 million. According to an Associated Press report:

Wal-Mart workers in Pennsylvania who previously won a $78.5 million class-action award for working off the clock will share an additional $62.3 million in damages, a judge ruled Wednesday.

About 125,000 people will receive $500 each in damages under a state law invoked when a company, without cause, withholds pay for more than 30 days.

A Philadelphia jury last year awarded the workers the exact amount they had sought, rejecting Wal-Mart's claim that some people chose to work through breaks or that a few minutes of extra work here and there was insignificant.

In his written opinion, Philadelphia Common Pleas Judge Mark Bernstein wrote "The law in its majesty applies equally to highly paid executives and minimum wage clerks." By this time next week, google searches for the phrase "the law in its majesty" will be leading you mostly to this Wal-Mart story, rather than the amusing old quip by Anatole France: “The law in its majesty equally forbids the rich as well as the poor to sleep under bridges."

A Wal-Mart spokesperson decried the award. "Many employees testified that they skipped rest breaks by choice. While we discourage that practice, employers should not be penalized when employees do that on their own," said the spokeswoman, Sharon Weber. That defense tactic failed in Wal-Mart's meal break class action in California last year, but it did help the retailer avoid certification of the rest period portion of the California class action.

A release of claims under the Fair Labor Standards Act, even issued under the supervision of the Secretary of Labor and on the DOL's approved form, does not serve to release all claims prior to the date of the release. Where the release pertains to specific payroll periods, and the affected employee asserts claims which are earlier than the dates within the scope of the release, those claims may brought in court despite the release and payment of wages for the later period. Dent v. Cox Communications Las Vegas, Inc. (9th Cir. 2007) __ F.3d __.

We began writing this blog on December 15, 2004. We got our 100,000th hit in 2006; our 150,000th hit on January 30, 2007. This morning, we crossed the 250,000 mark. Lately, we've been getting close to 1,000 page views a day. Frankly, we never thought that many people would be paying attention. It says a lot about how hot this area of law has become.

Wage and hour issues are often related to collective bargaining issues, though most wage and hour lawyers do not routinely handle NLRA matters. One of the cases on tomorrow's Supreme Court calendar is an interesting matter arising from a question posed in federal court. In Fashion Valley Mall, L.L.C. v. National Labor Relations Board, S144753, the issue is:

Request under California Rules of Court, rule 29.8, that this court decide a question of California law presented in a matter pending in the United States Court of Appeals for the District of Columbia Circuit. This case presents the following issue: Under California law may Fashion Valley maintain and enforce against the Union its Rule 5.6.2, which allows individuals and organizations to engage in expressive activities on its premises with a permit if they agree to abide by its rules and regulations that prohibit urging consumers to boycott any of the mall's tenants?

Because of the unusual Special Outreach Session this week, in which the Supreme Court is meeting in Santa Rosa, at the Jackson Theater, Sonoma Country Day School, there is a wealth of information on the court's website regarding this case, including:

If you've never sat in on a Supreme Court session, and you have the opportunity, we highly recommend trying it, even if you don't have a case on review.