I previously mentioned the surprising appellate court opinion in Huff v. Securitas Security Services USA (May 23, 2018). When it was issued, I was certain that review would be requested, and I would not have been surprised if review had been granted. However, I missed the fairly quick denial of review and depublication. That denial issued on August 8, 2018. Sorry I missed that; this is a noteworthy opinion.
The California Supreme Court denied the Petition for Rehearing in Troester v. Starbucks, making a tiny change to the Opinion. Here is the change, which was made to the last paragraph:
We hold that the relevant California statutes and wage order have not incorporated the de minimis doctrine found in the FLSA. We further conclude that although California has a de minimis rule that is a background principle of state law, the rule is not applicable here. The relevant statutes and wage order do not allow employers **834 to require employees to routinely work for minutes off-the-clock without compensation. We leave open whether there are wage claims involving employee activities that are so irregular or brief in duration that it would not be reasonable to require employers to compensate employees for the time spent on them.
We hold that the relevant California statutes and wage order have not incorporated the de minimis doctrine found in the FLSA. We further conclude that although California has a de minimis rule that is a background principle of state law, the rule is not applicable to the regularly reoccurring activities that are principally at issue here. The relevant statutes and wage order do not allow employers to require employees to routinely work for minutes off the clock without compensation. We leave open whether there are wage claims involving employee activities that are so irregular or brief in duration that employers may not be reasonably required to compensate employees for the time spent on them.
So that makes this Opinion final final. Can't wait until its final final final. Or even final final final final.
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.
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 California Supreme Court has agreed to weigh in on the issue of whether time spent on security searches is compensable. Here is the Court's description of the issue:
Frlekin v. Apple, Inc., S243805. (9th Cir. No. 15-17382; ___ F.3d ___, 2017 WL 3723235; Northern District of California; Nos. C 13-03451 WHA, No. C 13-03775 WHA, C 13-04727 WHA.) Request under California Rules of Court rule 8.548, that this court decide a question of California law presented in a matter pending in the United States Court of Appeals for the Ninth Circuit. The question presented is: “Is time spent on the employer’s premises waiting for, and undergoing, required exit searches of packages or bags voluntarily brought to work purely for personal convenience by employees compensable as ‘hours worked’ within the meaning of California Industrial Welfare Commission Wage Order No. 7?”
Justice Chin was recused and did not participate in the decision. Between this and other issues currently before the California Supreme Court, we will see more changes in wage and hour litigation in the next few years.
The California Supreme Court dropped a pretty big opinion in the wage and hour world today, reversing the Court of Appeal in Augustus v. ABM Security Services, Inc. (Dec. 22, 2016). The Supreme Court specifically waded into the topic of rest breaks, and, specifically, whether an "on call" or "on duty" rest break is ever sufficient. Here's the summary:
We granted review to address two related issues: whether employers are required to permit their employees to take off-duty rest periods under Labor Code section 226.7 and Industrial Welfare Commission (IWC) wage order No. 4-2001 (Cal. Code Regs., tit. 8, § 11040 (Wage Order 4)), and whether employers may require their employees to remain "on call" during rest periods. What we conclude is that state law prohibits on-duty and on-call rest periods. During required rest periods, employers must relieve their employees of all duties and relinquish any control over how employees spend their break time. (See Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1038-1039 (Brinker).)
Slip op., at 1. While this decision won't directly impact most wage and hour cases, given that it is fairly specific to the sort of job circumstances encountered by employees like security guards, it will put a little bit of weight on the scale when rest break claims are up for settlement or certification.
If I can, I will write more about this decision later, but, for now, the first paragraph pretty much summarizes the result.
Roxborough, Pomerance, Nye & Adreani, Drew E. Pomerance, Michael B Adreani, Marina N. Vitek; The Ehrlich Law Firm, Jeffrey Isaac Ehrlich; Initiative Legal Group, Monica Balderrama, G. Arthur Meneses; Scott Cole & Associates, Scott Edward Cole, Matthew R. Bainer; Law Offices of Alvin L Pittman and Alvin L. Pittman were listed as counsel for Plaintiffs and Respondents. Mr. Pomerance argued for Plaintiff. Well done, Drew!
I take this opportunity to say I told you so. "We clarify today that when an attorney fee is awarded out of a common fund preserved or recovered by means of litigation (see Serrano III, supra, at p. 35), the award is not per se unreasonable merely because it is calculated as a percentage of the common fund." Laffitte, et al. v. Robert Half International, Inc., et al., at p. 2 (August 11, 2016). See the rest if you have the time, but this should put an end to the spreading nonsense that lodestar is the method for calculating fees in common fund class action settlements.
I can still remember when the first suitable seating cases were filed. I reckon' it happened right about the time that the wage & hour landscape became unsettled in the meal period and rest break areas, class certification decisions were all over the place prior to Brinker, and PAGA claims were getting a long look as an alternative and supplemental approach to class claims. The suitable seating cases went through an initial wave of appellate court analysis, but, without California Supreme Court guidance on the issue, federal courts were left to speculate about what the California Supreme Court would say on the matter. The Ninth Circuit addressed that lack of clarity by certifying questions to the California Supreme Court. In Kilby v. CVS Pharmacy, Inc. (April 4, 2016), the California Supreme Court answered those questions.
The questions, as posed by the Ninth Circuit were:
(1) Does the phrase “nature of the work” refer to individual tasks performed throughout the workday, or to the entire range of an employee’s duties performed during a given day or shift?
(2) When determining whether the nature of the work “reasonably permits” use of a seat, what factors should courts consider? Specifically, are an employer’s business judgment, the physical layout of the workplace, and the characteristics of a specific employee relevant factors?
(3) If an employer has not provided any seat, must a plaintiff prove a suitable seat is available in order to show the employer has violated the seating provision?
Slip op., at 2. The short answers (which were followed by an extensive discussion) are:
(1) The “nature of the work” refers to an employee’s tasks performed at a given location for which a right to a suitable seat is claimed, rather than a “holistic” consideration of the entire range of an employee’s duties anywhere on the jobsite during a complete shift. If the tasks being performed at a given location reasonably permit sitting, and provision of a seat would not interfere with performance of any other tasks that may require standing, a seat is called for.
(2) Whether the nature of the work reasonably permits sitting is a question to be determined objectively based on the totality of the circumstances. An employer’s business judgment and the physical layout of the workplace are relevant but not dispositive factors. The inquiry focuses on the nature of the work, not an individual employee’s characteristics.
(3) The nature of the work aside, if an employer argues there is no suitable seat available, the burden is on the employer to prove unavailability.
Slip op., at 2. Before looking at any of the more interesting parts of the Court's discussion, we now know with certainty that suitable seating is a task-based, not a position-based, requirement. And I immediately concluded after reading this opinion that I wanted to start a business that specializes in making narrow and light barstool-style swivel chairs for cashiers in the retail and grocery sectors. That's where the real money is going to be found.
Anyhow, chair empire plans aside, the Court began by explaining the history of the IWC and the suitable seating provision in the various wage orders. Next, the Court looked at pronouncements on the most recent standard by the IWC and DLSE. For instance, the Court took note of a DLSE amicus curiae brief filed in a federal action:
[T]he DLSE filed an amicus curiae brief in Garvey v. Kmart Corp. (N.D.Cal. Dec. 18, 2012, No. CV 11-02575 WHA) 2012 WL 6599534 (Garvey), a federal class action suit claiming Kmart cashiers were entitled, under section 14(A), to seats while working. The DLSE emphasized reasonableness as the guiding standard: “If called upon to enforce Section 14, DLSE would apply a reasonableness standard that would fully consider all existing conditions regarding the nature of the work performed by employees. Upon an examination of the nature of the work, DLSE would determine whether the work reasonably permits the use of seats for working employees under subsection (A) of Section 14, and whether proximate seating has been provided for employees not engaged in active duties when such employees are otherwise required to stand under subsection (B).”
Slip op., at 11. After reviewing the DLSE and IWC commentary on the suitable seating requirement, the Court then set about the task of examining the IWC wage order language. After reviewing the language, the Court rejected the defendants' position that jobs should be classified as "sitting" jobs or "standing" jobs:
Defendants’ argument sweeps too broadly and is inconsistent with the purpose of the seating requirement. As discussed, the IWC’s wage orders were promulgated to provide a minimum level of protection for workers. The requirement’s history reflects a determination by the IWC that “humane consideration for the welfare of employees requires that they be allowed to sit at their work or between operations when it is feasible for them to do so.” (IWC, Statement of Findings by the Industrial Welfare Commission of the State of Cal. in Connection with the Revision in 1976 of its Orders Regulating Wages, Hours, and Working Conditions (Aug. 13, 1976) p. 15.) Defendants’ proposed consideration of all tasks included in an employee’s job description ignores the duration of those tasks, as well as where, and how often, they are performed. This all-or-nothing approach could deprive an employee of a seat because most of his job duties are classified as “standing” tasks, even though the duration, frequency, and location of the employee’s most common tasks would make seated work feasible while performing them. There is no principled reason for denying an employee a seat when he spends a substantial part of his workday at a single location performing tasks that could reasonably be done while seated, merely because his job duties include other tasks that must be done standing.
Slip op., at 14. The Court expressed concern that the all-or-nothing approach could result in a situation where two employees performing the same task could have different seating rights, based on the overall classification of their job. Yet, the Court also found the plaintiffs' position too narrow, focusing on a single task to determine if that one task could be performed seated. The Court found that focusing on the work done and the tasks performed in a location alleviated the problems created by both the defendants' approach and the plaintiffs' approach.
The Court then examined the "reasonably permits" portion of the seating requirements. The Court found that the employer's assessment of overall job performance (its business judgment) was a factor that could be considered, as was the physical layout of the workplace . These factors, however, must be considered "in light of the overall aims of the regulatory scheme, which has always been employee protection." The Court disagreed that differences between employees was a factor, since the regulation focused on the "work," and not the "worker."
Finally, the Court swiftly rejected the idea that a plaintiff must prove that a suitable seat is available, after showing that the nature of the work would reasonably permit the use of a seat.
The Court concluded by saying, "Sit on that." No, not really. But the Court was unanimous.
You thought you could figure this one out all by yourself, right? You can read Code of Civil Procedure section 1032. It's written in English (sort of). You know what a "prevailing party" is without some Supreme Court telling you what it means. But this is law, and when we are talking about the law, you can guarantee that somebody figures out how to find that exception that threads the needle. Thus, we have DeSaulles v. Community Hospital of the Monterey Peninsula (March 10, 2016), in which the Supreme Court had to determine whether a plaintiff who voluntarily dismisses an action after obtaining a monetary settlement on a few of the claims remaining in the case is the "prevailing party" for purposes of section 1032.
The Court of Appeal held that the plaintiff was a prevailing party because he received a net monetary recovery as consideration for his dismissal. In so holding, the Court of Appeal disapproved of Chinn v. KMR Property Management, 166 Cal. App. 4th 17 (2008), which held that settlements were not net monetary recoveries. The Supreme Court affirmed. In affirming, the Supreme Court also did everyone a favor by saying that the presumption of section 1032 could be altered by agreement of the settling parties. Regardless, it's a good thing the Supreme Court held as it did; given the sorry state of our court funding, we don't need more issues complicating settlement discussions.
As I fill the backlog, we have yet another big decision from the California Supreme Court. In Ayala v. Antelope Valley Newspapers, 59 Cal. 4th 522 (June 30, 2014), the Supreme Court examined how the question of certification should be answered in the context of misclassification of independent contractors. Newspaper carriers, classified as independent contractors, filed suit to obtain remedies available to employees under California’s wage & hour laws. Plaintiffs moved for class certification. The trial court concluded the case could not proceed as a class action, holding that on the critical question whether plaintiffs and the class were employees, plaintiffs had not shown common questions predominate. The trial court held that to determine employee status for the class would necessitate numerous unmanageable individual inquiries into the extent to which each carrier was afforded discretion in his or her work. The Court of Appeal disagreed in part, holding that the trial court had misunderstood the nature of the inquiries called for, and remanded for reconsideration of the class certification motion as to five of the complaint’s claims.
The Supreme Court affirmed the Court of Appeal. Beginning with the test for employee status as the key issue for evaluating the commonality issue, the Court said:
We begin by identifying the principal legal issues and examining the substantive law that will govern. In doing so, we do not seek to resolve those issues. Rather, the question at this stage is whether the operative legal principles, as applied to the facts of the case, render the claims susceptible to resolution on a common basis. (Brinker, supra, 53 Cal.4th at pp. 1023–1025, 139 Cal.Rptr.3d 315, 273 P.3d 513; Sav–On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 327, 17 Cal.Rptr.3d 906, 96 P.3d 194 [the focus “is on what type of questions—common or individual—are likely to arise in the action, rather than on the merits of the case”].)
The trial court and Court of Appeal correctly recognized as the central legal issue whether putative class members are employees for purposes of the provisions under which they sue. If they are employees, Antelope Valley owes them various duties that it may not have fulfilled; if they are not, no liability can attach. In turn, whether putative class members' employee status can be commonly resolved hinges on the governing test for employment.
Ayala v. Antelope Valley Newspapers, Inc., 59 Cal. 4th 522, 530 (2014). The Court observed that the test relied upon in the Courts below was the Borello common law test. After considering the need to examine other employment tests, the Court concluded that the case could be resolved by focusing on the common law test exclusively. The Court then restated the essentials of the common law test for employment:
Under the common law, “ ‘[t]he principal test of an employment relationship is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired.’ ” (Borello, supra, 48 Cal.3d at p. 350, 256 Cal.Rptr. 543, 769 P.2d 399, quoting Tieberg v. Unemployment Ins. App. Bd. (1970) 2 Cal.3d 943, 946, 88 Cal.Rptr. 175, 471 P.2d 975; accord, Empire Star Mines Co. v. Cal. Emp. Com. (1946) 28 Cal.2d 33, 43, 168 P.2d 686.) What matters is whether the hirer “retains all necessary control” over its operations. (Borello, at p. 357, 256 Cal.Rptr. 543, 769 P.2d 399.) “ ‘[T]he fact that a certain amount of freedom of action is inherent in the nature of the work does not change the character of the employment where the employer has general supervision and control over it.’ ” (Burlingham v. Gray (1943) 22 Cal.2d 87, 100, 137 P.2d 9; see Toyota Motor Sales U.S.A., Inc. v. Superior Court (1990) 220 Cal.App.3d 864, 876, 269 Cal.Rptr. 647; Grant v. Woods (1977) 71 Cal.App.3d 647, 653, 139 Cal.Rptr. 533.) Perhaps the strongest evidence of the right to control is whether the hirer can discharge the worker without cause, because “[t]he power of the principal to terminate the services of the agent gives him the means of controlling the agent's activities.” (Malloy v. Fong (1951) 37 Cal.2d 356, 370, 232 P.2d 241; see Borello, at p. 350, 256 Cal.Rptr. 543, 769 P.2d 399; Kowalski v. Shell Oil Co. (1979) 23 Cal.3d 168, 177, 151 Cal.Rptr. 671, 588 P.2d 811; Isenberg v. California Emp. Stab. Com. (1947) 30 Cal.2d 34, 39, 180 P.2d 11; Burlingham, at pp. 99–100, 137 P.2d 9.)
Ayala, 59 Cal. 4th at 531. The Court added an additional, significant observation to this formulation, observing, “The worker's corresponding right to leave is similarly relevant: “ ‘An employee may quit, but an independent contractor is legally obligated to complete his contract.’ ” (Perguica v. Ind. Acc. Com. (1947) 29 Cal.2d 857, 860, 179 P.2d 812.)” Ayala, 59 Cal. 4th at 531 n. 2. The Court then listed the secondary factors that a court may consider, including: (a) whether the one performing services is engaged in a distinct occupation or business; (b) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision; (c) the skill required in the particular occupation; (d) whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work; (e) the length of time for which the services are to be performed; (f) the method of payment, whether by the time or by the job; (g) whether or not the work is a part of the regular business of the principal; and (h) whether or not the parties believe they are creating the relationship of employer-employee.
Next the Court turned to the question of whether certification should have been granted in this matter. Before doing so, however, the Court framed the core question, right to control, at issue in the case:
Significantly, what matters under the common law is not how much control a hirer exercises, but how much control the hirer retains the right to exercise. (Perguica v. Ind. Acc. Com., supra, 29 Cal.2d at pp. 859–860, 179 P.2d 812 [“The existence of such right of control, and not the extent of its exercise, gives rise to the employer-employee relationship.”]; Empire Star Mines Co. v. Cal. Emp. Com., supra, 28 Cal.2d at p. 43, 168 P.2d 686 [“If the employer has the authority to exercise complete control, whether or not that right is exercised with respect to all details, an employer-employee relationship exists.”]; Industrial Ind. Exch. v. Ind. Acc. Com. (1945) 26 Cal.2d 130, 135, 156 P.2d 926 [“The right to control and direct the activities of the alleged employee or the manner and method in which the work is performed, whether exercised or not, gives rise to the employment relationship.”]; S.A. Gerrard Co. v. Industrial Acc. Com. (1941) 17 Cal.2d 411, 414, 110 P.2d 377 [“the right to control, rather than the amount of control which was exercised, is the determinative factor”]; Hillen v. Industrial Acc. Com. (1926) 199 Cal. 577, 581–582, 250 P. 570 [“It is not a question of interference, or non-interference, not a question of whether there have been suggestions, or even orders, as to the conduct of the work; but a question of the right to act, as distinguished from the act itself or the failure to act.”].) Whether a right of control exists may be measured by asking “ ‘ “whether or not, if instructions were given, they would have to be obeyed” ’ ” on pain of at-will “ ‘ “discharge[ ] for disobedience.” ’ ” (Toyota Motor Sales U.S.A., Inc. v. Superior Court, supra, 220 Cal.App.3d at p. 875, 269 Cal.Rptr. 647.)
Ayala, 59 Cal. 4th at 533. Applying this test to the case before it, the Court observed that:
at the certification stage, the relevant inquiry is not what degree of control Antelope Valley retained over the manner and means of its papers' delivery. It is, instead, a question one step further removed: Is Antelope Valley's right of control over its carriers, whether great or small, sufficiently uniform to permit classwide assessment? That is, is there a common way to show Antelope Valley possessed essentially the same legal right of control with respect to each of its carriers? Alternatively, did its rights vary substantially, such that it might subject some carriers to extensive control as to how they delivered, subject to firing at will, while as to others it had few rights and could not have directed their manner of delivery even had it wanted, with no common proof able to capture these differences?
Ayala, 59 Cal. 4th at 533-34. The Court concluded that the trial court lost sight of these questions in its analysis:
The trial court lost sight of this question. Its order reveals the denial of certification ultimately rested on two related determinations: (1) the record reflected considerable variation in the degree to which Antelope Valley exercised control over its carriers; and (2) the putative class as a whole was not subject to pervasive control as to the manner and means of delivering papers. Neither of these considerations resolves the relevant inquiry. Whether Antelope Valley varied in how it exercised control does not answer whether there were variations in its underlying right to exercise that control that could not be managed by the trial court. Likewise, the scope of Antelope Valley's right to control the work does not in itself determine whether that right is amenable to common proof.
Ayala, 59 Cal. 4th at 534. The Court discussed briefly the evidence available to the Court, focusing heavily on the contract between the newspaper carriers and the defendant. The Court found that even variations in the actual degree of control over different carriers was likely irrelevant if the right to control them all was effectively identical:
[T]he existence of variations in the extent to which a hirer exercises control does not necessarily show variation in the extent to which the hirer possesses a right of control, or that the trial court would find any such variation unmanageable. That a hirer may monitor one hiree closely and another less so, or enforce unevenly a contractual right to dictate the containers in which its product is delivered, does not necessarily demonstrate that the hirer could not, if it chose, monitor or control the work of all its hirees equally. (See Estrada v. FedEx Ground Package System, Inc. (2007) 154 Cal.App.4th 1, 13–14, 64 Cal.Rptr.3d 327 [recognizing that how a hirer exercised control over a particular hiree might show, not the hirer's differential control of that hiree, but the extent of its common right to control all its hirees].) For class certification under the common law test, the key question is whether there is evidence a hirer possessed different rights to control with regard to its various hirees, such that individual mini-trials would be required. Did Antelope Valley, notwithstanding the form contract it entered with all carriers, actually have different rights with respect to each that would necessitate mini-trials?
Ayala, 59 Cal. 4th at 535-36. The Court then explained the frequent error made in the certification analysis of claims based on independent contractor misclassification:
Certification of class claims based on the misclassification of common law employees as independent contractors generally does not depend upon deciding the actual scope of a hirer's right of control over its hirees. The relevant question is whether the scope of the right of control, whatever it might be, is susceptible to classwide proof. Bypassing that question, the trial court instead proceeded to the merits. In so doing, the court made the same mistake others have when deciding whether to certify claims predicated on common law employee status, “focus[ing] too much on the substantive issue of the defendant's right to control its newspaper deliverers, instead of whether that question could be decided using common proof.” (Dalton v. Lee Publications, supra, 270 F.R.D. at p. 564.) Moreover, by purporting to resolve on a classwide basis the scope of Antelope Valley's right to control its carriers, the trial court contradicted its own conclusion, that classwide assessment of Antelope Valley's right to control is infeasible.
Ayala, 59 Cal. 4th at 537. The Court concluded by noting that many of the secondary factors must also be evaluated correctly to determine if common proof will adequately determine the secondary factor in question:
Preliminarily, we caution that courts assessing these secondary factors should take care to correctly identify the relevant considerations. Here, for example, the trial court noted variation in the “place of work.” The inquiry that sheds light on a hiree's common law employee status, however, is into who provides the place of work, the hirer or hiree (Borello, supra, 48 Cal.3d at p. 351, 256 Cal.Rptr. 543, 769 P.2d 399; Rest.3d Agency, § 7.07, com. f, p. 211; Rest.2d Agency, § 220, subd. (2)(e)), and thus the relevant inquiry is whether there is variation in who provides facilities. That carriers could pick up papers at any of several Antelope Valley warehouses or drop locations, as Antelope Valley argued, does not show variation in the underlying secondary factor.
Ayala, 59 Cal. 4th at 538.
The Court remanded with instructions to consider the certification question in light of the Court’s guidance.