Join us on Episode 19 for a lively discussion of potential implications from the recent Troester v. Starbucks decision from the California Supreme Court. Listen as I attempt to control the crowd cheering for me.
The California Supreme Court just posted Troester v. Starbucks (July 26, 2018), and it is a bomb blast. There is no federal de minimis defense to California wage and hour laws, and, on the facts of this case at least, no state de minimis defense either:
Upon a request by the United States Court of Appeals for the Ninth Circuit (Cal. Rules of Court, rule 8.548), we agreed to answer the following question: Does the federal Fair Labor Standards Act’s de minimis doctrine, as stated in Anderson v. Mt. Clemens Pottery Co. (1946) 328 U.S. 680, 692, and Lindow v. United States (9th Cir. 1984) 738 F.2d 1057, 1063, apply to claims for unpaid wages under California Labor Code sections 510, 1194, and 1197?
The de minimis doctrine is an application of the maxim de minimis non curat lex, which means “[t]he law does not concern itself with trifles.” (Black’s Law Dict. (10th ed. 2014) p. 524.) Federal courts have applied the doctrine in some circumstances to excuse the payment of wages for small amounts of otherwise compensable time upon a showing that the bits of time are administratively difficult to record.
We approach the question presented in two parts: First, have California’s wage and hour statutes or regulations adopted the de minimis doctrine found in the federal Fair Labor Standards Act (FLSA)? We conclude they have not. There is no indication in the text or history of the relevant statutes and Industrial Welfare Commission (IWC) wage orders of such adoption.
Second, does the de minimis principle, which has operated in California in various contexts, apply to wage and hour claims? In other words, although California has not adopted the federal de minimis doctrine, does some version of the doctrine nonetheless apply to wage and hour claims as a matter of state law? We hold that the relevant wage order and statutes do not permit application of the de minimis rule on the facts given to us by the Ninth Circuit, where the employer required the employee to work “off the clock” several minutes per shift. We do not decide whether there are circumstances where compensable time is so minute or irregular that it is unreasonable to expect the time to be recorded.
Slip op., at 1-2. "So minute or or irregular." Looks like even small amounts of time that can be recorded and occur regularly must be captured and paid.
I will be back in a few after I take a victory lap. Thanks to everyone who helped me to polish my briefing to a shine, including Kimberly Kralowec, among others.
H. Scott Leviant, Shaun Setareh, and Thomas Segal of Setareh Law Group, David Spivak of The Spivak Law Firm, Lous Benowitz of the Law Offices of Louis Benowitz, and Stanley D. Satlzman of Marlin & Saltzman represented the prevailing Plaintiff and Appellant.
Hot off the notification presses, the California Supreme Court will release its opinion in Troester v. Starbucks tomorrow, at about 10:00 a.m.
Wagers on whether California will adopt the Lindow rule for de minimis time? Comments?
The United States District Court for the Eastern District of California carries one of the heaviest caseload in the country. According to the District, the population served has grown 220% in the last four decades. But no new judgeships have been created in the Eastern District in that time. Now, the Eastern District is asking for help to address what it warns will be the "catastrophic consequences" of inaction. Read the letter from the Judges of the Eastern District of California to members of the Senate and House of Representatives here.
At both the state and federal levels in California we demand too much from our courts and provide too little support. If you happen to have the ear of a member of the Congress or Senate, put in a good word for the Eastern District. I restate my long-standing position that inadequate support and funding of the judicial branch is an unconstitutional infringement on a co-equal branch of government.
By the way, however bad you imagine the situation is in the Districts with the worst loads, it's worse. The Eastern District has 1,229 pending cases per judge as of March 31, 2018. See, Federal Court Management Statistics. (For a real horror show, imagine being one of the 5 Judges in Indiana - Southern, with over 1,400 cases each, and it is only the third worst in the country.) And the Eastern District is about to be hit with a one-two punch of judicial retirements and a marked increase in federal prosecutions now that the U.S. Attorney's office has increased staff.
Note: the statistics cited in the Eastern District's letter vary slightly from the officially reported data, but the difference seems insignificant.
Following the Epic decision by the Supreme Court, today the Ninth Circuit formally vacated Morris v. Ernst & Young, LLP in a per curiam Opinion. And I bet you were wondering if they would Resist! They did not.
This post was stuck and didn’t publish. Fixed.
I won't hit you with too much analysis of a case right before the 4th of July holiday, but in Juarez v. Wash Depot Holdings, Inc. (July 3, 2018), the Court of Appeal (Second Appellate District, Division Six), upheld a trial court order declining to enforce an arbitration agreement. The peculiarity that led to the result is pretty simple:
A company provides its employees with a handbook setting forth its employment policies. The handbook is written in English and Spanish. The handbook requires arbitration of employment disputes and denies an employee's right to bring an action under the California Private Attorneys General Act (PAGA). The English version states that the denial of the right to bring a PAGA action is severable if such denial is found by a court to be unenforceable. The Spanish version provides that the PAGA denial is not severable.
Slip op., at 1. The Court concluded that this was potentially deceitful and declined to sever the provision regarding PAGA, agreeing that the entire agreement was unenforceable.
Jack Bazerkanian of Shin Ryu Bazerkanian, LLP, and James M. Lee, Caleb H. Liang of LTL Attorneys LLP, represented the successful Plaintiff and Respondent.
Set aside, for a brief moment, the legal arguments about rounding in the context of California law (I know...it's a legal blog, but I can digress because I say so). Here's what I don't get in the class context: how does it pass the smell test to say to some employees, who lost some wages from rounding, that it's cool because their money basically went to some other employees. Using the rationale of rounding jurisprudence, I think I could make wage system that randomly takes money from half a workforce and gives it to the other half. It's neutral as applied by definition. It's random so it's "fair" on its face. What's wrong with that? And if it's not okay, why is rounding okay.
Anyhow, in AHMC Healthcare, Inc. v. Superior Court (June 25, 2018), the Court of Appeal (Second Appellate District, Division Four) held that rounding was proper in a system the Court characterized as "neutral on its face and as applied." Slip op., at 2. On undisputed facts, it was shown that slightly more employees lost time than gained time, but the gainers did slightly better in aggregate. Slip op., at 4-5.
After discussing federal decisions that approved of rounding in the aggregate, the Court said this:
Because California’s wage laws are patterned on federal statutes, in determining employee wage claims, California courts may look to federal authorities for guidance in interpreting state labor provisions.
Slip op. at 11. I don't think that's right, at least not as stated. California extensively diverges from federal wage and hour law in many areas. The California Supreme Court has issued a number of decisions rejecting application of federal law in a variety of contexts, noting in several cases that Wage Orders must basically state express incorporation of a federal standard before it will be read into a Wage Order. Notably, and I think relevant to rounding, California's definition of what constitutes compensable time differs from the federal standard. What no Court has yet attempted to explain is why rounding is not analyzed in the way other wage and hour obligations are analyzed when comparing California law to federal law. Given the undeniably employee-centric nature of California wage and hour law, I find this at least peculiar.
This issue will receive more attention before it is settled I predict.
Jeffrey P. Fuchsman and Zareh A. Jaltorossian of Ballard Rosenberg Golper & Savitt represented the successful petitioner.
Episode 18 is here, discussing how Epic (and its utter termination with extreme prejudice of the NLRA theory that class waivers impair concerted employee activity) will drive PAGA litigation. And then we turn to Huff, which makes that prospect of more PAGA litigation significantly more daunting for employers.
Maybe this podcast thing will catch on one day...
American Pipe, we had some good time. Sniff. But now you're dead to me. Pack your stuff and get out. The Unites States Supreme Court, in China Agritech, Inc. v. Resh, et al. (June 11, 2018), answered a question that, as far as I have observed, wasn't being asked with any stridency for years. That question was whether American Pipe equitable tolling applied to a subsequent class action (as opposed to individual action) when the plaintiff bringing the second action (a putative class member from the first) would have a time-barred claim absent the equitable tolling.
Top-filers, start your engines!