Labor & Employment Law Blog

On February 8, 2021, the United States Ninth Circuit Court of Appeals issued a decision clarifying the circumstances under which a per diem benefit must be included in the regular rate of pay for overtime purposes under the Fair Labor Standards Act (FLSA).  The court held that since per diem benefits functioned as compensation for work rather than as reimbursement for expenses incurred by traveling healthcare clinicians, they were improperly excluded from the clinicians’ regular rates of pay for purposes of calculating overtime pay under federal law. Clarke v. AMN Servs., LLC (9th Cir., 2021) No. 19-55784, 2021 WL 419473.

On May 19, 2020, the United States District Court for the Central District of California rejected a challenge to a provision of Assembly Bill 5 (“AB 5”) applicable to construction trucking companies. (Western States Trucking Ass’n v. Becerra, et al., 5:19-CV-02447-CAS (KKx) (5-18-2020)).

On January 8, a trial court judge in Los Angeles issued an order finding the ABC Test—now used to determine independent contractor status in California—could not be applied to independent contractor truck drivers (“owner-operators”) due to federal pre-emption concerns.  While the decision represents a major victory for trucking companies, it will be subject to challenge.

In Melendez v. San Francisco Baseball Associates LLC (2019) S245607, the California Supreme Court recently held that a security guard’s state law claim for unpaid wages and “waiting time” penalties could proceed over his employer’s objections that they had to be resolved under his union’s agreement.  Because the employee’s claim was founded on a right existing in state law, and not the agreement, he was permitted to proceed with his claim in court even though the agreement was relevant to the claim and would have to be “consulted” and determining it.

George Melendez worked as a security guard at AT&T Park in San Francisco, and filed a lawsuit when he was not paid his final wages immediately after the end of each San Francisco Giant’s home stand, concert, or other event at the stadium that he worked at.  He primarily claimed that the Giants’ failure to pay him wages due at the time of termination entitled him to “waiting time” penalties of up to 30 days’ additional pay after the completion of each assignment.  He principally relied on a 2006 Supreme Court Case, Smith v. Superior Court (2006) 39 Cal.4th 77, which held that a hair dresser who was hired to work for only a single day was required to be paid at the end of that job. 

The Giants argued that there were numerous provisions in its collective bargaining agreement with the Service Employees International Union, Melendez’s collective bargaining representative, which showed that security guards were employed on a continuous year-round basis and were not terminated after single job assignments. These included provisions that classified employees based on the number of hours worked per year, provided for probationary period of 500 hours of work, and required drug screening for new hires. Because of these provisions, the Giants argued that Melendez’s claim was preempted by Section 301 of the Labor Management Relations Act,  because it required “interpretation and application” of the union agreement.

Relying on past cases, including the Ninth Circuit Court of Appeal’s 2000 decision in Balcorta v. Twentieth Century-Fox Film Corp. (9th Cir. 2000) 208 F.3d 1102, the Supreme Court rejected the Giants’ federal preemption defense.  The Court stated that not every claim that requires resort to the language in a labor-management agreement is necessarily preempted, and that this is particularly the case when the meaning of the contract is not in dispute.  The case at hand did not involve a dispute over the terms of the agreement that required a court to interpret them, and preemption could not be found based only on the fact that interpretation of the contract terms was required to determine the validity of the employer’s defense. Instead, because the legal character of the claim relied on a state law right that was not substantially dependent on the contract’s terms, the employee was permitted to proceed in court with his unpaid wages and waiting time penalty claim.

The Melendez case confirms the important principle that unless a claim under a statutory law is expressly made the subject of an agreement to arbitrate under a union agreement, or is clearly and unmistakably provided for in the arbitration clause of the agreement, such a claim may proceed even though the employer’s factual and legal defenses to the claim are based on the provisions of the agreement.

Clients with questions regarding this case or arbitration and grievance procedures in collective bargaining agreements may contact the author or their usual labor law counsel at Atkinson, Andelson, Loya, Ruud & Romo.

With the passage of AB 2605 earlier this year, employees covered by specific Collective Bargaining Agreements (“CBAs”) who hold a “safety-sensitive” position at a petroleum facility are now exempt from certain California rest and recovery period requirements. This bill is a legislative response to the highly criticized Augustus v. ABM Security Services, Inc. 2 Cal.5th 257 (December 22, 2016) decision. In Augustus, ABM Security required its security guards to keep their radios on during their rest and recovery periods in case of an emergency. The plaintiffs argued that this “on-call policy” required them to not be relieved of all duty, and therefore unlawfully denied their right to a rest period. The California Supreme Court agreed, holding that being “on call” requires employees to remain “at the ready” and therefore unable to fully engage in personal activities.

The DFEH recently released its Sample Equal Opportunity Policy. The Sample Policy is available in PDF and Word form on the DFEH’s employment resources page at https://www.dfeh.ca.gov/resources/posters-and-brochures-and-fact-sheets/poster-and-brochure-tab-list/?target=employment.

On June 25, 2018, a California court of appeal offered employers who use rounding systems to calculate employee payroll a reassuring ruling, approving a policy that rounded employee’s time to the nearest quarter hour. In AHMC Healthcare, Inc. v Superior Court (2018) No. B285655, the issue arose out of AHMC Healthcare’s use of a payroll system that automatically rounded employee hours up or down to the nearest quarter hour prior to calculating wages and issuing paychecks (instead of using the employee’s exact check-in and check-out times). Emilio Letona and Jacquelyn Abeyta, both employees of AHMC Healthcare, brought a class-action suit against AHMC Healthcare, Inc. for failure to pay wages and failure to furnish timely and accurate wage statements. The plaintiffs claimed this rounding system was in direct violation of the Labor Code, and presented evidence of time records from San Gabriel Valley Medical Center L.P. (where Letona was employed) and AHMC Anaheim Regional Medical Center L.P. (where Abeyta was employed).

The following cities and counties in California are scheduled to increase minimum wage rates on July 1, 2018.

Recently, both the Internal Revenue Service (IRS) and California Franchise Tax Board (FTB) have issued news releases encouraging taxpayers to plan ahead and to withhold the correct amount of taxes from their paychecks in 2018 to account for recent changes in federal tax law.

On September 15, 2017, the 2017 California legislative session ended, with several employment-related bills being sent to the Governor’s desk.  The Governor has until October 15, 2017 to sign or veto bills passed by the Legislature.  Below is a quick summary of key bills that may be signed and become effective in the upcoming year: