ADR for Employment Disputes

ADR for Employment Disputes

What do you do if you have an employment dispute?

The California State Court System is faced with deeper and deeper budget cuts, staff reductions, and slow-moving dockets. An article titled “Court Funding and the Impact of Budget Cuts On Access to Justice” in the August 2012 issue of the Contra Costa Lawyer magazine complies some of the recent news articles about the dire situation. The August 2012 issue also contains several articles geared towards ADR – Alternative Dispute Resources.

I, along with a colleague, Michelle Regalia McGrath, wrote about ADR geared towards employment claims, including wage and hour, discrimination and harassment. We provide analysis of how employers and employees can avoid disputes in the first place, and some alternatives to Court, including the Labor Commissioner’s Office, the California Department of Fair Employment and Housing, and the U.S. Equal Employment Opportunity Commission. I invite you to read our article and let us know of other alternative dispute resources you or your employer have taken advantage of to avoid a lengthy court case.

CA Supreme Court Denies Attorney’s Fees For Meal And Rest Break Claims

CA Supreme Court Denies Attorney’s Fees For Meal And Rest Break Claims

On the last day of April, the California Supreme Court issued its second significant decision of the month concerning meal and rest break claims in California. Like the Brinker v. Superior Court decision, issued on April 12, 2012, the Kirby v. Immoos Fire Protection, Inc. case is favorable to California employers.

In Kirby, Plaintiffs alleged seven causes of action in their Amended Complaint, the sixth of which alleged the failure to provide rest breaks as required by California Labor Code Section 226.7. At the trial court level, in February 2009, Plaintiffs’ dismissed their rest break claim, and in April 2009, Defendant filed a motion to recover attorney’s fees under California Labor Code Section 218.5 for having prevailed on the rest break claim. The trial court eventually ordered Plaintiffs to pay nearly $50,000 in fees to Defendant. Plaintiffs appealed, but the Appellate Court sided with the trial court. The California Supreme Court, however, overturned the lower-court’s order and determined that no party is entitled to recover attorney’s fees even if that party prevailed on meal and rest break claims.

Though this particular Defendant lost an award of approximately $50,000, most defendants in any such future claims can view this case as very favorable. Essentially, this decision tells potential plaintiffs, and their lawyers, that even if they prevail on such claims, they will not be entitled to attorney’s fees on such claims. This decision reduces some of the leverage plaintiffs had regarding such claims during litigation and especially during settlement negotiations. Further, most defendants rarely pursued attorney’s fees even if they prevailed on such claims anyway since they were rarely awarded, and even if awarded, prevailing defendants knew it was unlikely they could collect any money from the typically asset-poor plaintiff(s) who bring such claims. Thus, while this Defendant may have lost this battle, it won the war on behalf of other defendants concerned about courts awarding attorney’s fees to plaintiffs who prevail on meal and rest break claims.

This case likely will also influence how plaintiffs pursue such claims in the future and will encourage plaintiffs to bring other claims where attorney’s fees can be awarded under the Labor Code. The decision may also drive more plaintiffs to pursue meal and rest break claims via the California Labor Commissioner’s office which is generally faster and cheaper than litigating in court.

For those of you who are interested in Court’s analysis of the competing Labor Code sections, a short summary is here: The Court pointed out that Labor Code Section 218.5 requires the awarding of attorney’s fees to the prevailing party “[i]n any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions.” The Court further noted that this provision awards fees to the prevailing party whether it is the employee or the employer; it is a two-way fee-shifting provision. However, Labor Code Section 218.5 “does not apply to any action for which attorney’s fees are recoverable under” California Labor Code Section 1194, which provides that employees who prevail in any action for any unpaid “legal minimum wage or . . . legal overtime compensation” are entitled to recover attorney’s fees; it is a one-way fee shifting provision.

According to the Court, the first question was whether attorney’s fees were recoverable under Labor Code Section 1194. Since rest breaks do not constitute a “minimum wage,” the Court found that attorney’s were not available under Labor Code Section 1194.

Next, the Court considered whether attorney’s fees were recoverable under Labor Code Section 218.5. The Court found that rest breaks do not constitute wages of any kind, and thus, Labor Code Section 218.5 was not applicable to the claim. In analyzing the various sections of the Labor Code, the Court also examined their legislative histories. And, while the Court found that no party is entitled to attorney’s fees for such claims, it noted that the legislature could easily broaden the Labor Code in such situations.

Image courtesy of BusinessInsider.com

DLSE Revises (Again) Wage Theft Prevention Act FAQs and Notice

DLSE Revises (Again) Wage Theft Prevention Act FAQs and Notice

What does the revised Wage Theft Prevention Act mean for employers and employees?

For most who keep up with California employment law/HR issues, Thursday, April 12, 2012 will be remembered as the day the CA Supreme Court published its long-awaited Brinker decision. That same day, however, the CA Division of Labor Standards Enforcement (DLSE) issued revised FAQs and Notice regarding the new CA Wage Theft Prevention Act – a law I previously wrote about in February (here).

The new FAQs provide additional information about how the DLSE contemplates employers should comply with the law and it contains many new questions/answers for guidance, including the following (the full text of the FAQs and the new Notice can be found here): (Update (4/25/2012): The Notice is available in many languages including English, Spanish, Vietnamese, Korean, Chinese, and Tagolog).

  • Importantly, the FAQs make clear that an employer need not issue a new Notice to the employees who were provided notices using the earlier templates provided by the DLSE. However, if there is a substantive change in the information previously provided on an old template, then the employer must use the new Notice to communicate such change within 7 calendar days of such change. And all new hires after April 11, 2012 should be provided notice via the newest Notice template. (FAQ #27).
  • The DLSE has clarified that, on the April 11, 2012 template, the Acknowledgment of Receipt is optional. I would recommend that the employer attempt to obtain the employee’s signature acknowledging receipt of the Notice. If the employee refuses to sign, the employer should still give notice to the employee and note the employee’s refusal to sign on its copy of the notice. (FAQ ## 10 and 23).
  • Employers must provide overtime rates on the Notice, and may not just simply state “the multiplier for overtime (e.g., 1.5 and/or double the regular rate)” since the multiplier does not specify the overtime rate. (FAQ #19).
  • For new hires, the Notice must be provided “at the time of hiring,” which is an ambiguous term. The DLSE provides that “the employer must provide the notice to new hires reasonably close in time to the inception of the employment relationship which may be a date determined by the employer and employee, however, in no event later than the first day services are performed by the employee.” (FAQ #20).
  • The new Notice has deleted the prior questions regarding at-will employment – questions that I recommended employers take unique steps in answering on the original notice. The FAQs make clear that the Notice “has nothing to do with ‘at will’ employment in California.” (FAQ #21).
  • The FAQs also explains why the statute requires that the Notice contain “the name of the employer, including other ‘doing business as’ names used by the employer.” (FAQ #26).
  • The FAQs also provide further information specific to an employer that is a “staffing agency or business.” (FAQ ##28, 29 & 30).

Employers are NOT required to use the template Notice provided by the DLSE, but it may be easier to do so in order to comply with the law, and it is nice to show the DLSE that the company relied on DLSE guidance and forms should any audits/claims arise.

CA Employers Need Not Force Employees To Take Meal Breaks

CA Employers Need Not Force Employees To Take Meal Breaks

You don’t need to force your employees to take meal breaks.

Generally, the news is good for employers. Just a few hours ago, in Brinker Restaurant Corp., v. Superior Court, the California Supreme Court provided long-awaited answers to some important and hotly litigated meal and rest break issues in California for non-exempt employees. Specifically, the Court clarified when meal and rest periods are required, and what an employer must do to provide meal periods (the Court also addressed class certification requirements as well). Here is some of the more important language from the opinion regarding meal and rest breaks:

Meal Breaks:

“An employer‟s duty with respect to meal breaks under both [Labor Code] section 512, subdivision (a) and Wage Order No. 5 is an obligation to provide a meal period to its employees. The employer satisfies this obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so.”

“On the other hand, the employer is not obligated to police meal breaks and ensure no work thereafter is performed. Bona fide relief from duty and the relinquishing of control satisfies the employer‟s obligations, and work by a relieved employee during a meal break does not thereby place the employer in violation of its obligations and create liability for premium pay under Wage Order No. 5, subdivision 11(B) and Labor Code section 226.7, subdivision (b).”

“Proof an employer had knowledge of employees working through meal periods will not alone subject the employer to liability for premium pay; employees cannot manipulate the flexibility granted them by employers to use their breaks as they see fit to generate such liability. On the other hand, an employer may not undermine a formal policy of providing meal breaks by pressuring employees to perform their duties in ways that omit breaks.”

WHAT THIS MEANS: Employers need not “ensure” employees take a meal break. Instead, employers should relieve workers of all duties, and not impede employee’s ability to enjoy an uninterrupted 30-minute meal period. If the employee voluntarily chooses to work during the meal period, the employer is not in violation of the law unless the employer pressured the employee to work during the meal period, or undermined a policy providing for such meal periods.

The Court also clarified that the law requires “a first meal period no later than the end of an employee‟s fifth hour of work, and a second meal period no later than the end of an employee‟s 10th hour of work.” The Court rejected the plaintiffs’ argument that the law imposed additional timing requirements.

Rest Periods:

“Employees are entitled to 10 minutes’ rest for shifts from three and one-half to six hours in length, 20 minutes for shifts of more than six hours up to 10 hours, 30 minutes for shifts of more than 10 hours up to 14 hours, and so on.”

“Construing the plain language of the operative wage order, we find no such requirement [that employers have a legal duty to permit their employees a rest period before any meal period] and agree with the Court of Appeal, which likewise rejected this contention.”

WHAT THIS MEANS: For example, if an employee works an 8-hour shift, the employee is entitled to two 10 minute rest periods. Generally, “one rest break should fall on either side of the meal break.” And, the rest periods should be provided in the middle of each work period “insofar as practicable.”


(1) Employers should make sure their Employee Handbooks and policies reflect that the company provides the requisite meal and rest periods to eligible employees, and the circumstances for, and timing of, each period.

(2) Employers should make sure that managers/supervisors are trained properly to deal with scheduling non-exempt employees’ work shifts and breaks. Managers/supervisors should also be trained to ensure that they are not violating company policies or otherwise making an employee believe that the employee should or must perform work during a meal period.

(3) Employers should also make sure, as always, to keep accurate and updated records of when each non-exempt employee clocks in/out for each shift, and clocks in/out for each rest and meal period. This step requires training managers/supervisors, and good communication with each non-exempt employee.

Small Firm Advantages – A Slam Dunk!

Small Firm Advantages – A Slam Dunk!

Small firm advantages are numerous.

Recently, former VP/Global Head of Legal at eHarmony, Antone Johnson, tackled the question: “Why Are Lawyers So Expensive Even With The Excess Supply Of Lawyers?” Mr. Johnson’s focus was on why large law firms charge their very high rates. Significantly, and not surprisingly, top-notch work quality, dedication, and responsiveness (three important aspects of my practice) were not listed.

Classic lose-lose situation. Mr. Johnson dissected how most large law firms are obsessed with rankings, have huge overhead, and grapple with other aspects of the legal industry that cause their fees to skyrocket. He also reflected that many companies are “fed up with large firms’ endlessly escalating billing rates and cost insensitivity.” As he pointed out, the result is that the legal services industry now has overpriced lawyers sitting around doing nothing, and clients not getting served because they can’t afford those rates. Classic “lose-lose” situation.”

Obvious win-win or slam dunk. Importantly, Mr. Johnson acknowledged that there are alternatives. He noted that “many talented, experienced lawyers hav[e] left big firms [], and technology mak[es] it easier than ever to set up shop as a new solo practice or small firm…” Indeed, business models like mine provide a better alternative for clients who no longer want to (or can no longer afford to) pay large firms for everything except top-notch work quality, dedication, and responsiveness. Mr. Johnson calls such business models “such an obvious win-win — or slam dunk.”

  • If your company still depends on large law firms for employment/HR related issues, I personally invite you to discuss with me how large law firm “escapees,” like me, are able to provide top-notch service without worrying about firm overhead, rankings on the AmLaw100, or carrying the dead-weight of an under-performing practice area.
  • If your company still believes great lawyers are too expensive, and thus, unaffordable, I personally invite you discuss with me how I can help your company at rates much lower than you might think.

Whatever situation your company is in, do not overpay for, or put-off getting, the legal services your company needs. For example, there is usually no good reason to pay (or to delay in fear of) large firm rates to have your company’s Handbooks, policies and employment/severance/confidentiality agreements updated and compliant. Do not overpay for, or put-off, getting advice on tricky employment/HR issues, getting and keeping your company in compliance with wage and hour laws, dealing with social media in employment issues, and getting mandated training done for your employees. And certainly, do not overpay, or go unrepresented, when your company must defend against claims brought before administrative agencies and courts. Indeed, I will be the first one to tell you if your matter would be better served by having a large law firm on your side (perhaps, for example, in defending class actions).

Mr. Johnson’s article in Forbes can be found here.