California Continues to Reject Non-Compete Clauses

You don’t have to be a legal expert to know that non-compete clauses are largely unenforceable in California. The law nullifying this type of clause, in which an employer tries to prevent terminated employees from working for competing businesses, has been on the books for years. And if you’re an advocate of employee rights, the law is a bright spot in California’s Business and Professions Code.

Over the years, California employers have tried to test the strength of California’s non-compete law, with little success. However, in July of 2018, an employee turned the tables and sought to test the law’s strength in a case that didn’t specifically involve a non-compete clause.

The United States Court of Appeals for the Ninth District ruled on the case, which involved a doctor whose former employer wanted him to sign a non-rehire agreement. The federal court looked to California’s non-compete law to rule in favor of the doctor. Continue reading to learn more about the court’s decision, non-compete clauses and related areas of employment law.

If you have questions about your own employment situation, don’t hesitate to contact our officeto learn how we can help.

Non Compete Clauses Unenforceable in California | Branigan Robertson

California’s Non-Compete Law

The Golden State’s non-compete law is found in Business and Professions Code §16600. It states:

“Every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”

Golden vs. California Emergency Physicians Medical Group

Physician Donald Golden was an emergency room surgeon employed by California Emergency Physicians Medical Group (CEP) at its Seton Coastside Medical Facility. He was fired in May 2008, and filed a discrimination suit against the company.

The case ended up in Federal District Court in 2010, but before the trial had a chance to begin, CEP offered to settle the case. In return for a large settlement, the company wanted Golden to waive any rights to future employment with the company.

This meant that Dr. Golden wouldn’t be rehired at any facility owned by the company, as well as any facility CEP might own in the future. Dr. Golden refused to sign the printed agreement. The court ruled that Dr. Golden should be compelled to sign the agreement, but the doctor appealed the decision, and the case moved to the appellate court.

During his appeal, Dr. Golden argued that the non-rehire provision of the settlement violated California’s law against non-compete clauses.

In its ruling, the Federal Court noted that California’s no compete law has been broadly interpreted over the years. The court further argued that the lower court had abused its discretion in narrowly interpreting the law.

The appellate court argued that the simple question at hand was whether or not the settlement agreement in Dr. Golden’s case restrained anyone from engaging in a lawful profession, trade, or business of any kind.

“We have no reason to believe that the State has drawn section 16600 simply to prohibit ‘covenants not to compete’ and not also other contractual restraints on professional practice,’” the court wrote in its decision.

Accordingly, the appellate court reversed the lower court’s judgment and remanded the case “for further proceedings not inconsistent with this opinion.”

What This Means for California Workers

This case once again reinforces the strength of California’s non-compete law and actually demonstrates that the law goes beyond non-compete clauses in protecting an employee’s right to earn a living.

To be clear, this doesn’t mean every employee who’s been unlawfully compelled to signed a non-compete clause has a shot at a million-dollar judgment. But it does mean that non-compete clauses, with few exceptions, are unenforceable.

Unfortunately, this doesn’t stop employers from asking workers to sign these agreements. In 2016, the Office of Economic Policy, a division of the US Treasury Department issued a report on the prevalence of non-compete contracts. According to the report, California workers were found to have signed these agreements at 19 percent higher than the national average. Acknowledging that such agreements are largely unenforceable in court, the report noted that the trend suggests “firms may be relying on a lack of worker knowledge.”

Employers and employees often sign non-compete clauses that include trade secret language. Employers are very much allowed to prohibit the theft/taking of valid trade secrets, and employers frequently sue former employees who steal customer lists or valuable and secretive manufacturing plans. When you have a mixed clause like this, contact a lawyer especially if you think your employer may try to enforce the provision.

When an Employee Blows the Whistle on Non-Compete Contracts

If an employee realizes that a company he or she works for is violating the law by requiring other workers to sign non-compete contracts, and that employee notifies the authorities (a state agency, the District Attorney, the police), it’s possible the company will retaliate against that employee (fire, demote, harass, etc.). It’s important to note that the employee in this situation is a whistleblower, and whistleblowing activities are protected by law. A worker who experiences retaliation as the result of whistleblowing activities could be entitled to monetary damages. For more information on whistleblowing, contact our office or visit our whistleblowing page.

When to Contact an Employment Attorney

If you work in California, and have been asked to sign a non-compete clause, chances are good your employer has violated state law. It could be worth your time and effort to discuss your situation with an employment attorney. Additionally, if you’ve received notice of legal action from a former employer stating you have violated the company’s non-compete clause, you’ll want to contact an attorney right away.

If you have questions about anything discussed in this article, or another employment law related question, contract the office of Branigan Robertson to learn more about your rights under the law.

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Supreme Court Issues Ruling on Off the Clock Work – The De Minimis Debate

Are you an employee who’s ever wondered about the value of the minor tasks you do at work? Perhaps you’re an hourly employee who frequently finds yourself doing seemingly insignificant chores after clocking out. This might include locking doors, setting alarms, carrying trash to an outside dumpster and so forth.

While a few minor assignments done after one shift might not seem significant, these moments spent in service of the company add up over a period of days, weeks and years. The California Supreme Court took up the question of this type of work after a Starbucks manager named Douglas Troester, along with a group of employees, sued the company claiming they were denied payment for after-shift work. The court specifically looked the legal doctrine of “de minimis” work, a Latin term referring to matters too small for the law to concern itself with.  In a boost for worker’s rights, the court sided with the employees.

This article was written to discuss the court’s decision, and how it might apply to workers statewide. If you feel you’ve been denied your rightful wages, or have been otherwise treated unlawfully by your employer, contact attorney Branigan Robertsonto schedule a consultation.

Douglas Troester v Starbucks Corporation, A Brief Recap

Starbuck’s store manager Doug Troester, along with several non-managerial employees, filed suit against the coffee giant Starbucks in August of 2012 in Los Angeles Superior Court. Troester’s complaint alleged that between mid 2009 and October 2010, he and his co-plaintiffs performed tasks after closing time for which they weren’t paid.

Troester was able to provide evidence of his activities at closing time thanks to Starbuck’s tracking software, which required him to clock out at the end of every shift. After clocking out, Troester would initiate a “close out” procedure on a separate terminal in the store’s back office. This procedure would transmit daily sales information to Starbuck’s corporate headquarters. After this, Troester would set the store’s alarm, exit the building and lock the door. On occasion, and in line with Starbuck’s company policy, he would walk other employees to their car for safety. He also submitted evidence that he occasionally let employees back inside the store to retrieve items they’d left behind. There were also times when the store had to be unlocked to retrieve patio furniture that had been left outside. It was determined that during this period, Troester’s unpaid wages added up to 12 hours and 50 minutes, which at the current rate of pay came out to $102.67.

Starbucks removed the case to federal court, and the court ruled in favor of the company. While the court agreed that Troester did in fact work hours for which he wasn’t paid, the court relied on a legal doctrine known as de minimis — a matter too small for the law to concern itself with. In other words, $102.67 wasn’t worth the court’s consideration.

Troester appealed the case, and the US Court of Appeals for the Ninth Circuit asked that the California Supreme Courtto consider the question of whether de minimis doctrine applies to unpaid wage claims under California’s Labor Code.

State Supreme Court Takes the Case, Rules in Favor of Workers

The State Supreme Court, which rendered its 7-0 decision in July 2018, based its ruling on provisions of the Labor Codeas well as the state’s 18 wage orders. In considering these two factors, Justice Goodwin Liu noted that the law’s purpose is “protection of employees — particularly given the extent of legislative concern about working conditions, wages and hours when the Legislature enacted key portions of the Labor Code.”

In examining Wage Order number 5, which encompasses the housekeeping industry, and includes Starbucks, the court noted that work hours are defined as the time during which the employer knew or should have known the employee was working on its behalf.

Citing the Wage Order’s wording which requires employees to be compensated for all time worked, the court concluded that the de minimis doctrine, “has no application under the circumstances presented.”

Some of Liu’s strongest wording focused on the idea that off-the-clock work was viewed as a trifle at all:

“As the facts here demonstrate, a few extra minutes of work each day can add up. According to the Ninth Circuit, Troester is seeking payment for 12 hours and 50 minutes of compensable work over a 17-month period, which amounts to $102.67 at a wage of $8 per hour. That’s enough to pay a utility bill, buy a week of groceries, or cover a month of bus fares. What Starbucks calls “de minimis” is not de minimis at all to many ordinary people who work for hourly wages.”

The court’s ruling stated that an employer may not evade its obligation to pay employees who work off the clock on a regular basis by “invoking the de minimis doctrine.”

What this Means for Workers

For California employees who have worked off the clock at regular intervals for an extended period of time, this ruling could potentially mean a chunk of back pay is owed them. While Federal courts are empowered to rely on de minimis doctrine in similar matters, in California, the Supreme Court has made it clear this doctrine doesn’t fly. Larger companies that encourage off clock work among many employees could potentially be exposed to liability via class action law suits.

At the very least, this is a ruling that all hourly employees should be aware of when calculating their weekly pay. While it’s not worth the strain and effort of filing a complaint over a couple minutes worked after shift, it might be worth discussing the situation with your employer, particularly if it happens with any regularity.

If You Have Questions About Wages, Contact an Employment Attorney

If you’ve read this article and wonder if perhaps your employer has failed to pay you your rightful wages, it’s important to remember that there are a number of different situations in which an employer might deny a worker his or her proper wages. Some of these might relate to discrimination, while others might involve blatant greed. An employment attorney can help you figure out which laws may have been violated. But it’s important to remember that the clock starts ticking the moment an employer violates the law. You usually have a limited amount of time to file a complaint. If you have questions, it could be well worth your time and effort to discuss your situation with a professional who understand the tricks that companies pull to deny workers their rightful compensation. Contact the office of Branigan Robertsonto discuss your situation and find out how he can help.

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Wage Theft Affects California Workers

One of the worst acts a company can commit against its employees is the act of wage theft. People work hard, spend a majority of their lives in the service of powerful companies, and sometimes the fruits of their labor are stolen from them.

California companies use a number of sneaky tactics when it comes wage theft. Sometimes they misclassify employees, other times it’s creative bookkeeping, sometimes management simply pleads ignorance. However it happens, it’s unlawful, and employees have the right to demand compensation.

This article was written to briefly discuss the issue of wage theft as it relates to California law, as well as a recent case in which workers were denied proper payment by their employer. If you feel you’ve been a victim of wage theft, give our office a call.

California Based Restaurant Makes Headlines for the Wrong Reasons

Thanks to its business dealings with a shady subcontractor providing janitorial services, the Cheesecake Factory could find itself paying millions of dollars in employee back pay. Once touted as the unhealthiest restaurant in the US,  the company can now add wage burglar to its resume.

According to a June 2018 New York Times article, which cited sources at the California Department of Industrial Relations, Cheesecake Factory hired janitorial workers through Americlean Janitorial Services, which subcontracted with Magic Touch Commercial Cleaning (later renamed Z’s Commercial Quality Cleaning). The janitors were hired to work in restaurant locations in Orange and San Diego Counties during graveyard shifts (midnight to morning).

Workers were denied meal and rest breaks and were prohibited from leaving until kitchen managers conducted walk-through inspections of their work. These time consuming walk-throughs led to each worker racking up as much as 10 hours of overtime each week (for which they weren’t paid).

The poor treatment of the janitors eventually came to the attention of state officials, and the ensuing investigation resulted in Magic Touch Cleaning being ordered to pay the workers $3.94 million in unpaid wages and damages. Additionally, the company was ordered to pay $632,750 in penalties. If Magic Touch doesn’t pay, Cheesecake Factory and Americlean Janitorial Services will be on the hook for paying $4.9 million.

One state official noted that Magic Touch’s decision to change its name was likely an attempt by the company to evade enforcement. It was also noted that the use of contractors and subcontractors serves to confuse the chain of liability. Sometimes, the chain of liability is so confusing, workers won’t even know who their employers are.

Wage Theft in California Cheesecake Factory | Branigan Robertson

Wage Theft is a Big Problem for California Workers

In 2010, the Institute for Research on Labor and Employment University of California Los Angelespublished a report on wage theft in California. The study, conducted in conjunction with studies in Chicago and New York, surveyed 1,815 workers in Los Angeles County. Key findings included:

  • Nearly 30 percent of surveyed workers were paid less than minimum wage in the week preceding the survey.
  • 21 percent worked more than 40 hours for one employer in the previous week. Of these, 79 percent were not paid the legally required overtime pay by their employers.
  • 45.3 percent of workers who experienced pay deductions were subject to illegal work-related deductions for uniforms, work tools or transportation.

The report noted that the prevalence of these wage violations was significantly higher in Los Angeles County than they were in other study areas.

Workers Have Rights

When it comes to overtime pay, rest breaks, and pay periods, California laws are in place to protect non-exempt workers.

-On the issue of overtime, Labor Code §510 states that a day’s work is eight hours. The law further states:

“Any work in excess of eight hours in one workday, and any work in excess of 40 hours in any one workweek…shall be compensated at the rate of no less than one and one-half times the regular rate of pay.”

Rest breaks, are covered by Labor Code §512 (among other regulations). This section states that an employee working for a period of more than five hours a day must be provided a meal break of at least 30 minutes. An employee working more than 10 hours in a shift, must be given a second 30-minute meal break.

Additionally, the law provides rest break for women who are breast feeding and need to express milk, as well as for workers who require a cool down period in hot temperatures. If an employer violates these laws, workers might be entitled to compensation.

What is an Employer Entitled to if Denied Wages, Rest Breaks or Overtime?

This is a question that can best be answered in an employment attorney’s office. However, there are certain types of compensation workers can be entitled to when they win claims against their employers.

For instance, an employee might be awarded back pay. This type of award covers the wages an employee is denied due to wage theft.

Another type of award might be lost wages. This differs from back pay and often applies in situations in which an employee is wrongfully terminated. In simple terms, a person who is wrongfully terminated (perhaps for blowing the whistle on wage theft practices) and is unable to find work for a number of years, might be awarded his or her typical salary amount for each year without work. For example, a wrongfully terminated employee who makes $30,000 annually and is unable to find work for three years, could be eligible for $90,000 in lost wages.

In some cases, an employee who experiences wage theft or denial of rest breaks might be eligible for pain and suffering damages, and less commonly, punitive damages.

Wage Theft? Contact an Employment Attorney

There may be as many different ways for a company to cheat workers as there are workers in the world. Sadly, companies get away with unlawful behavior every day. But if you believe you’ve been denied your rightful wages, or have suffered some other workplace injustice, you might be able to seek compensation with the help of a good employment attorney.

It’s important to remember that the clock starts ticking once a violation has occurred. Generally speaking, a worker has a limited time frame in which to file a claim against a company following a wage theft violation. For public employees, this time frame is shorter. Whatever your case, it’s better to contact an attorney sooner than later.

Regardless of whether you’re a janitorial worker, a waitress, or a computer programmer, we know you work hard, and that you deserve to be properly compensated. If your employer has denied you your proper wages, then your employer has violated state law. If you have questions about wage theft, or some other area of employment law, contact the office of Branigan Robertson, to see what he can do for you.

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Recent CA Supreme Court Ruling and the Future of the Gig Economy

The career landscape continues to evolve. As workers increasingly take freelance jobs and other gigs, questions swirl about the future of worker rights. In many cases, companies have found that it’s easier to classify hard workers as independent contractors, rather than employees, in order to increase their bottom line. In many cases, the independent contractor will work as hard, if not harder, than an employee.

Worker classification affects how a company pays a person overtime and offers rest breaks.  When one thinks of independent contract work, often the first companies to come to mind include ride sharing giants Uber and Lyft. However, other companies using contract workers include restaurant delivery services, and other app-based services.

A recent CA State Supreme Court case considered the issue of independent contractors and employee misclassification and issued a ruling that came down in favor of workers.  Continue reading to learn a little more about this case, the issues explored by the State Supreme Court, and how this ruling might affect workers in the gig economy. If you feel your employer has improperly classified you as a contract worker, or hasn’t paid you proper wages, contact our office to learn how we can help.

Charles Lee Vs. Dynamex

The court case in questioninvolves a nationwide package delivery company called Dynamex, which operates multiple business centers in California. The company classifies its drivers as independent contractors rather than employees. This means that while the drivers are free to set their own schedules, they also pay for their own delivery vehicles, gas, and insurance. They also aren’t subject to state and federal laws regarding overtime and rest breaks.

California Supreme Court on DynamexDynamex negotiates the rate paid to these drivers on an individual basis. Some workers receive a flat amount per delivery, some receive a percentage of the delivery fee. Prior to 2004, Dynamex classified its drivers as employees, but decided that there was significant savings to be had in classifying drivers as independent contractors.

In 2005, a driver named Charles Lee filed suit against Dynamex arguing that the independent contractors were essentially doing the same work as they did when classified as employees.

In his lawsuit, Lee argued that Dynamex violated the labor code, misclassified employees, and failed to pay overtime.

The case began in Los Angeles Superior Court, which considered many of the subtle nuances of state law. Other drivers joined the suit, and the trial court ultimately certified a class action suit against Dynamex. The company appealed the case to the State Supreme Court hoping to reverse the lower court’s decision to certify the class action against the company. Unfortunately for Dynamex, the court sided with the drivers allowing them to proceed with their class action.

The California Supreme Court’s Ruling

In its 85-page decision, the State Supreme Court considered a number of historic employment cases examining the employee/employer relationship. At the core of the Supreme Court’s analysis were questions about how much control a company exercises over workers, as well as the definition of the words “employ” and “employer.”

In terms of company control, the court looked at a landmark case from 1989, in which an agricultural company called Borello classified its cucumber harvesters as independent “sharefarmers.” The sharefarmers would work long hours to share in some of the profits (as well as potential losses) during the harvest season. The workers felt they were improperly classified given the amount of work they did for the company.  In that case, the court ruled that the company exercised a significant amount of control over the cucumber harvesters, and as such, improperly classified them as independent.

Continuing with its analysis, the Supreme Court examined the definitions of the terms ‘employ’ and ‘employer,’ which are found in the state’s work orders. The court accepted a definition of the term employ as meaning “suffer to work.” This phrase means that when a company permits a person to work, the worker is on the clock whether the workflow is heavy or light. This means that even if an employee is sitting at his or her desk waiting for an assignment, he or she is considered to be working.

The Supreme Court accepted a definition of the term ‘employer’ as someone who “employs or exercises control over the wages, hours, or working conditions of any person.”

Dynamex had hoped that the Supreme Court wouldn’t adopt the definitions of these terms, which had been accepted by a lower court. But the Supreme Court did accept these terms, and as a result, ruled in favor of the drivers. The court ruled that under these definitions, the drivers have a common interest in proceeding with their class action suit against Dynamex.

“We conclude that under a proper understanding of the suffer or permit to work standard there is, as a matter of law, a sufficient commonality of interest within the certified class to permit the question whether such drivers are employees or independent contractors for purposes of the wage order to be litigated on a class basis.

What this Means For Workers

In the simplest of terms, California’s recent Supreme Court ruling against Dynamex means that workers in that case can proceed with their class action suit. However, there are some in the legal profession that feel the ruling could have more immediate effects for California companies. A recent Los Angeles Timesarticle suggested that California employers could start questioning their employee classifications right away, even changing some classifications to avoid stiff fines. The Timesposed the question to Michael Chasalow, a professor at USC Gould School of Law.

“A huge number of businesses will be calling their lawyer saying ‘What should I do,’” Chasalow told the Times.

Are You a Worker Who’s Been Misclassified?

It’s important to note that the California Supreme Court did refer to some professions as properly classified independent contractors. The court specifically mentioned such workers as plumbing contractors and electricians. However, there are many workers out there who feel they aren’t getting the compensation they deserve because of their independent contractor status. Ride sharing companies are one area where this discussion has been heavily focused. Other app-based services might also raise some serious questions about worker classification.

If you believe you’ve been misclassified as an independent contractor, contact our office for a consultation. Many cases are taken on a contingency basis, which means the client doesn’t pay any up-front costs.

If you have questions about anything discussed on this page, or some other employment law issue, give us a call to learn how we can help you.

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US Supreme Court Delivers Blow to Workers’ Rights, But Not All is Lost

In May 2018, the United States Supreme Court ruled on a case involving arbitration clauses that heavily favors employers. The 5-4 decision delivered yet another blow to the rights of workers who are increasingly pinched between stale wages and ever-increasing living expenses.

While the case was damaging to worker’s rights, it doesn’t mean there isn’t hope if you’ve been mistreated by an employer wielding an arbitration contract. The Supreme Court might be unwilling to protect your rights as a worker, but a good employment attorney can still determine if you have a case, and fight on your behalf.

Continue reading to learn a little about the Supreme Court’s ruling on the Federal Arbitration Act, and what it means for workers forced to sign these agreements. If you feel you’ve been the victim of an employer’s unlawful behavior, contact our office to find out how we can help.

Epic Systems Corp. v. Lewis

The US Supreme Court considered this case, in which several workers argued their employers had underpaid them. As a condition of their employment, the workers had signed arbitration agreements, which allow companies to settle employee grievances in a private setting as opposed to a court of law.

The employees maintainedthat their right to file a class action suit was protected by the National Labor Relations Act (NLRA). They specifically cited a section of the Act, which guarantees employees:

“The right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection…”

The phrase “other concerted activities” is the passage that divided the court in this case.

Trump appointee Justice Neal Gorsuch, who wrote the decision for the majority, took a very narrow view of the text of the law and argued that the wording of the Act, which does protect union activity, does not specifically give workers the right to file class action lawsuits. Gorsuch also repeatedly referred to the Federal Arbitration Act (FAA), which was passed 10 years before the NLRA, and allows companies to divert court claims to an arbitration setting.

Justice Ruth Bader Ginsburg, who wrote the dissenting argument (and actually read it from the bench), suggested that the FAA is unlawful, and reminiscent of “yellow dog contracts” in which employers were once allowed to compel employees to sign agreements promising they wouldn’t join a union. She further argued that the FAA was not designed to settle disagreements between workers and companies, but rather was made to settle disputes between companies. Ginsburg eloquently argued that the NLRA was designed to protect workers who have little bargaining power when dealing with employers. She added that this protection extends to employees who wish to band together and collectively sue an employer (strength in numbers).

Alas, the court handed down its decision, which means that for now, employees who sign arbitration clauses as a condition of their employment, have little option but to abide by terms of the agreement.

What Exactly is an Arbitration Clause?

Oftentimes, when an employee is hired at a new job, he or she is handed a packet of documents, many of which require signatures. These packets frequently include a document in which the employee agrees to have any potential claim against the company heard in an arbitration proceeding.

Such a proceeding is heard by a “neutral” third party, known as an arbitrator. These folks are often retired judges and attorneys, who are paid by the company to render a decision on the claim. Unlike a court proceeding, there is no jury, and the hearing is not public. Employees may be able to request fewer evidentiary documents when making their case against the employer than they would in a court setting

Arbitration does provide certain benefits in that the costs of the proceeding are covered by the employer, and the case is often decided in a much speedier fashion than would happen in a court setting. However, there is generally no appeal process, and the final decision is legally binding.

Arbitration U.S. Supreme Court Decision Epic Systems

Arbitration is on the Rise

In 2015, the New York Timeswrote an article on the recent increase in arbitration cases nationwide, which stem from a series of Supreme Court decisions. While the article focused on arbitration clauses in cell phone and other product-related contracts, it noted that employee arbitration is also on the rise. In many cases, these contracts effectively ban class action law suits against already wealthy and powerful companies.

“Some state judges have called the class-action bans a ‘get out of jail free’ card,” the Timeswrote. “Because it is nearly impossible for one individual to take on a corporation with vast resources.

Can You Refuse to Sign an Arbitration Agreement?

Of course. However, in an at-will state like California, an employer can fire you or rescind the job offer if you refuse to sign. When deciding whether to refuse to sign an arbitration agreement, you must carefully consider your value to the company. Is the employer likely to cut ties with you and find another employee who will sign without question? Or are you irreplaceable?

Are Arbitration Agreements Bullet Proof?

Not always. It’s important to remember that every case is different. If you suspect that the agreement you signed wasn’t on the level, it might be worth your time to have the document reviewed by a qualified employment attorney. There are certain factors that can render an arbitration contract void. Was the contract signed under duress? Was it signed fraudulently? Were the agreement terms unconscionable? These things could affect the validity of an arbitration agreement.

Have Questions? Contact an Employment Lawyer

If you have questions about arbitration agreements or other employment issues, contact our office for more information. If our attorneys determine you have a case, and are able to proceed with a lawsuit, you might be able to pay our attorneys on a contingency basis. This means you don’t pay out-of-pocket legal fees.

If you successfully win a claim against an employer, you could be eligible for lost wages, pain and suffering, and back pay. Give our office a call to find out how we can help.

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New Supreme Court Formula for Calculating Hourly, Overtime, and Bonus Pay Favors Employees

Before delving into the meat of this post, a heads up: there will be some math-related concepts discussed. If you’re good at math, congratulations — you may be visiting this page because you’ve concluded your boss has incorrectly figured your hourly, bonus and overtime pay. If you’re not good at math, some of the calculations discussed in this post may be a little confusing. But take heart—you don’t have to be Einstein to suspect your employer of creative or shady accounting.

A Court Ruling Changes the Way Some Wages are Calculated

In defense of payroll accountants, there are times when calculating an hourly employee’s wages at the end of the work week can be deceptively difficult. This is particularly true when bonuses and overtime pay are involved and questions remain unclear as how to calculate the employee’s regular rate of pay. If an employee isn’t careful in double checking company arithmetic, it can be easy for the paycheck to come up short. And when checks come up short over a long period of time, the amount of back pay can add up.

This article discusses a recent state Supreme Court ruling, which examined differing guidelines (federal and state) regarding the calculation of hourly, bonus and overtime pay.

Happily, the California Supreme Court weighed in on this topic and issued a ruling slightly favoring non-exempt hourly employees. The court’s decision may even entitle some workers to back pay.

Continue reading to learn about the case in question: Alvarado v. Dart Container Corporation. If you believe you’re owed back pay in light of the ruling, or if you believe your employer has erred in some other way, contact our office for more information.

Alvarado v. Dart Container Corporation

The California Supreme Court ruled on this case on March 5, 2018. The case was filed by an hourly wage employee named Hector Alvarado, who worked in a factory producing food service products. A full-time employee, Alvarado, and other workers were offered a flat-sum $15 ”attendance” bonus (in addition to their hourly rate and overtime rate) as an incentive to work Saturday or Sunday shifts. The bonus was given when employees worked a full shift on Saturday or Sunday and was given regardless of whether the employee worked in excess of the normal work shift.

Calculating Overtime Bonus Pay Regular Rate | Alvarado v. Dart

Two Different Formulas, One Preferred by the Company, The Other by Employees

Alvarado claimed that the company improperly computed his overtime pay under California Labor Codes §510 and 1194.

The company had one calculation preference, Alvarado had another. The difference between the two calculations came down to whether or not the bonus was applied to all hours worked (overtime and regular), or only to non-overtime hours. The court explained the situation as follows:

“The attendance bonus must be factored into an employee’s regular rate of pay so that the employee’s overtime pay rate (generally, 1.5 times the regular rate of pay) reflects all the forms of regular compensation that the employee earned.”

The company preferred the following formula for calculating the employee base rate of pay:

  • The company would multiply the number of overtime hours the employee worked in the pay period by the employee’s normal hourly rate.
  • The employer would add the total hourly pay for non-overtime work as well as the non-hourly attendance bonus. (This calculation results in a figure the company considers to be the base rate of pay).
  • The Employer would then multiply the regular rate of pay by the total number of overtime hours, and then divide the amount in half. (This results in the overtime premium).
  • Employer would add base hourly pay to the overtime premium.

Alvarado, preferred a different calculation. His method involved the following:

  • Calculating overtime compensation in relation to the hourly wages.
  • Calculating the overtime compensation in relation to the bonus’s per hour rate, then multiplying that value by 1.5 and adding the number of overtime hours worked.
  • Combining the overtime amounts to obtain the total overtime compensation.

Alvarado’s calculation was slightly more favorable to workers than the company calculation.

How the Court Ruled

When arguing its case in front of the court, Dart Corporation maintained the court should look to a precedent-setting federal case which stated:

“Where a bonus payment is considered a part of the regular rate at which an employee is employed, it must be included in computing his regular hourly rate of pay and overtime compensation.”

Alvarado argued that a state case, relying on the California Division of Labor Standards Enforcement (DLSE) should guide the court’s opinion. The DLSE method factored “a flat sum bonus into overtime compensation.”

The Supreme Court, ultimately ruled in favor of Alvarado, and deemed the DLSE method of factoring the flat sum into overtime compensation to be appropriate. The court ruling was applied retroactively, which means employers could be on the hook for back pay.

Confused? Contact an Employment Attorney

If you’ve been confused by the calculations and legalese thrown around in this post, don’t despair. Even employment attorneys must focus intently while reading supreme court decisions to keep from going cross eyed. It’s important that you pay attention to your instincts, particularly if you have concerns about how your employer figures your rate of pay. If your employer has paid you hourly, overtime and bonus pay in the past, it could be worth your effort to discuss your case with a qualified attorney and find out if you might be eligible for back pay.

As an added incentive, many employment attorneys (including those at our office) don’t charge for an initial consultation. Often, cases are taken on a contingency basis, which means the client doesn’t pay out-of-pocket legal fees. Rather, the employment attorney is paid with a portion of the settlement or judgment at the conclusion of your case.

If you have questions about any of the topics discussed in this post, or any other employment- related issue, contact the office of Branigan Robertson for more information.



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When Employers Marginalize Workers and Break the Law

There are many reasons a disenchanted worker will walk into an employment attorney’s office for a consultation. They include religious discrimination, sexual harassment, wage theft, among others.

One common scenario we attorneys see are employees who have become marginalized in the workplace. People don’t come to us because the law was broken. They generally don’t know the law. They come to our office because they were treated like garbage. Marginalization can occur in a number of different forms and include physical isolation from coworkers, lack of recognition for an employee’s achievements, bullying, or a basic lack of respect. And while an employee can be marginalized for many different reasons, not all of them are unlawful.

In its most benign form, employee marginalization can be the result of poor management. As discussed in this Industry Week article, sometimes a manager mistakes a quiet employee for an employee lacking initiative. As a result, the employee isn’t engaged by management, or encouraged to advance within the company. While this type of treatment may be unfair, even wrong, it isn’t necessarily unlawful.

This article was written to discuss the plight of marginalized employees, as well as the legal line an employer walks when marginalizing a worker. If you believe that your employer has violated state or federal law in marginalizing you, contact our office to see how we can help.

Marginalized Worker Employment Law | Branigan Robertson

What is a Marginalized Employee?

Let’s look a hypothetical situation involving marginalization for purposes of illustration:

Picture a customer service representative named Bob, who works at a big box retailer. A friendly person, Bob’s laid-back approach to sales is appreciated by customers. While his individual sales numbers aren’t stellar, the department he works in has experienced a 15 percent boost in sales since his hiring. However, Bob’s supervisor frequently reminds him that the company doesn’t reward employees for ‘assists,’ and frequently demeans him in front of the other sales staff. One of the other sales reps, who’s numbers are slightly better than Bob’s, often gets overwhelming praise in front of staff for his performance.

When Bob complains to a store manager, his supervisor says he’s only trying to “toughen Bob up,” in order to make him better at his job. Unsatisfied with the company’s lack of response to his situation, Bob leaves the big box store for another job.

OK, so Bob has been marginalized, but did the employer break the law? Keep reading to find out.

The Effects of Marginalization on Morale

A person whose work is valued less by an employer while coworkers are praised and encouraged might experience a wide range of emotions, including discouragement, depression or hopelessness. In short, it’s not a good work situation.

The question that one often asks in this situation, is whether or not an employer who marginalizes a worker has violated the law. In Bob’s case, the answer is no. No laws were broken. Not all cases of employee marginalization are unlawful. It may be cruel, bad business, or just plain wrong, but an employee who’s experienced workplace marginalization may not have a strong case against the employer.

But your situation may be different. And this is what you need to pay close attention too. Keep reading to learn a little about what laws were designed to protect marginalized employees.

What the Law Says About Marginalized Workers

Both state and federal laws exist that are designed to protect workers. Even though California is an at-will employment state, which means an employer is usually free to terminate a worker for any reason, the law prohibits termination, discrimination, or marginalization in certain cases.

For instance, the Fair Employment and Housing Act §12940(a), which closely mirrors federal law, states that it is unlawful employment practice:

“For an employer, because of the race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status of any person, to refuse to hire or employ the person, or to refuse to select the person for a training program leading to employment, or to bar or discharge the person for employment or from a training program leading to employment, or to discriminate against the person in compensation or in terms, conditions, or privileges of employment.”

So, if we look at the example of our friend Bob from the previous section, an employment attorney would have to consider several factors to determine whether or not he had a strong case. For instance: was Bob’s employer marginalizing him because of his skin color, religious beliefs or sexual orientation? Any of these would be discrimination and we have detailed pages and videos on each.

Was Bob the openly gay employee in his department? Did straight employees receive advancements or bonuses while performing the same duties as Bob? Did Bob’s supervisor make slurs or use sexually inappropriate language when referring to Bob (hostile work environment)?

These and other issues would need to be explored in order to determine whether or not Bob’s marginalization was unlawful.

Whistleblowers Are Also Protected

A whistleblower is an employee who notifies the authorities of workplace violations of law. Under California Labor Code, it is unlawful for a company to retaliate against an employee who has called attention to such violations. Not surprisingly, a common company response to a whistleblower is to isolate and marginalize that employee, perhaps in the hope that the employee will simply quit.

Make no mistake, if a company uses marginalizing tactics to retaliate against an employee because he or she blew the whistle on illegal company activity, the retaliation is unlawful.

Do You Feel You Were Treated Unlawfully by an Employer?

It’s a sad fact of employment. Some companies tend to treat their workers abysmally. This can be for several reasons: misguided attempts to spur production, poor management skills, a lack of regard for workers, or something more nefarious (and unlawful) such as personal prejudice against protected classes.

If you’ve experienced marginalization at work, it could be well worth your time and effort to discuss the specifics of your case with an employment lawyer. While it’s true that many cases of employee marginalization are not unlawful, a good lawyer will be able to look at the facts of the case and decide whether or not legal action should be pursued.

Contacting a Lawyer

A person who successfully pursues a claim against an employer engaged in employee marginalization can potentially benefit financially. In California, marginalized employees may be entitled to:

  • Lost wages
  • Back pay
  • Pain and suffering
  • Punitive damages

Employment attorneys representing workers often take cases on a contingency basis. This means the client doesn’t pay up front fees, but rather the attorney is paid with proceeds from the judgment or settlement. If you have questions about any of the topics covered on this page, or other employment law issues, contact our employee rights office to schedule a consultation.

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Filed under Discrimination, Harassment