Offshoring Industry Trends Affecting California Employment Law

Offshoring Industry Trends Affecting California Employment Law

By Steve Danz

Businesses around the world are expected to spend nearly $1 trillion dollars on outside IT labor services in 2017. Perhaps this figure does not seem overwhelming on a global scale, but, the implications for employers and employees, on a micro-level, can be jarring and disruptive. Take, for example, the case of the IT department at the University of California at San Francisco (UCSF). Earlier this year, UCSF completed the transition to offshore their entire clinical IT team to an India-based company named HCL, resulting in the displacement of approximately 80 employees. A mere seven months ago, these individuals were gainfully employed. Next thing they know, they are being asked to train their replacements, ultimately culminating in the termination of their employment in favor of their new, ostensibly less expensive, counterparts.

What is striking is how pernicious this trend has become. In this case, this “organizational solution” was implemented at UCSF, a public nonprofit educational institution, who could not reasonably defend such a decision by borrowing the tired line used by for-profit companies that the move was in the “best interests of the shareholder and the bottom line.”  According to UCSF, the move will save nearly $30 million annually and will curb clinical-side IT costs that have nearly tripled between 2011 and 2016. In reality, the $50 million dollar contract would send the majority of the work to India and bring foreign IT staff to the UCSF campus on H-1B Visas.

Aside from the privacy and security concerns resulting from offshoring IT services, there are numerous business and employment law related concerns.  For instance, many large corporations are merely “shells” and offshore every job that does not interface with customers.  This makes it more difficult to bring a breaching or harmful company to court, and may even curtail enforcement from certain agencies such as the California Labor and Workforce Development Agency and the U.S. Department of Labor.  Our court system and laws have a storied history of protecting California workers.  Permitting companies to contract their labor with the ability to simply terminate a contract, or to instantly disappear altogether, is unacceptable.

When the lines are blurred between employment and contract labor, it not only affects our American tax system by giving reprieve to unscrupulous corporations, it also destabilizes and disenfranchises the American workforce.

The legislature must ensure that these companies are held accountable for how they pay and treat their workers.  This may mean creating new laws to govern these types of contracting industries.  We could look north of the border for an example where Canadian laws permit a third, legally recognized category known as “dependent contractor.”  This worker is economically dependent on, and subject to the control of, one principal employer, but uses his or her own tools and may expect a profit from the services provided. In return, an employer must give the dependent contractor reasonable notice of termination and the dependent contractor can sue the principal similar to how an employee may sue the employer.

The Protect and Grow American Jobs Act, introduced by Darrell Issa, a California Republican, and Scott Peters, a California Democrat, aims to curb the outsourcing of American jobs by reforming the nation’s high-skilled immigration program and helping to adjust the requirements in the issuance of H1-B Visas.  One way that the bill may encourage U.S. based companies to hire American workers is by increasing the minimum salary for foreign workers under the H-1B visa program from $60,000 to $100,000.  This will unquestionably help when companies are considering hiring an American worker versus a foreign worker.

There may still be time to save American jobs.  California’s legislature, as it usually does, should take the lead in protecting our local economy by introducing similar legislation and fighting for the employees, before it is too late.

Steve Danz is senior partner and chief trial attorney at Stephen Danz & Associates. He represents plaintiffs in wrongful termination, discrimination, disability, wage and hour class actions, and false claims act whistleblower litigation in partnership with the Department of Justice.

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The Top Five Wins for Workers’ Rights in 2014

The Top Five Wins for Workers' Rights in 2014

By Sharon Vinick

2014

As the year comes to a close, it’s time for a “Top Five” list.  Interest in “Top Ten” or “Top Five” lists is so immense that psychologists have even coined the term the “Top Ten Effect,” to describe the “bump” that items on such a list receive in terms of sales.  A list of the top developments in employment law may not cause a run on any stores, but policy makers and working people should take note (drum roll please) as we now count down the list of five developments that will change the landscape of employee rights as we enter the new year.

  • No. 5:  New California Law Says Proof of Sexual Desire is Not Required to Win Sexual Harassment Claim

 The California Legislature deserves recognition for a new law that strengthens protection against sexual harassment on the job. For years, employers have tried to defend against sexual harassment claims by arguing that the harassment, although boorish, was not illegal because it was not based upon sexual desire.  This “defense” goes something like this — The boss who “joked” with his female subordinate about hopping over to a motel for the night wasn’t actually attracted to her, so that couldn’t be sexual harassment.  Or as the employer claimed in one infamous case, the ironworkers who hazed a new guy on the crew with threats of sexual violence couldn’t have perpetrated sexual harassment since they were all straight.  Earlier this year, the California legislature took away this excuse when it amended the Fair Employment and Housing Act to specifically provide that “sexually harassing conduct need not be motivated by sexual desire.”  These few short words will provide powerful protection for victims of workplace sexual harassment.  As important, the change reminds employers and the courts that sexual harassment is about abuse of power, not sex.

The California Supreme Court took aim at the hypocrisy of employers who hire and exploit undocumented workers. It has often been noted that low wage workers, regardless of their immigration status, are frequent victims of workplace violations. Undocumented workers, fearful that any complaint regarding a violation of these rights might result in their deportation, are a particularly vulnerable group, which should be supported by providing assistance in dealing with any kind of legal documentation – up to the living will management (learn more at Legal Zebra).  This year, in Salas v. Sierra Chemical Company, the California Supreme Court ruled that an employer who discriminates or retaliates against an undocumented worker can be held liable. While the case limits the damages available to these employees, it does provide that employers who violate the workplace rights of undocumented employees will be held accountable for their actions.

While the phrase “wage theft” has been around for years to describe employers who fail to pay overtime or other wages earned by their employees, a number of cases in 2014 have raised public awareness and built public outrage regarding the all-too-common practice of employers forcing employees to work without pay.  Studies suggest that employers are ripping their workers off to the tune of more than $50 billion annually.

The year began with a high profile wage-theft story from an unlikely quarter with the filing of a class action lawsuit against the Oakland Raiders by one of their cheerleaders, Oakland Raiderette Lacy T. The lawsuit sparked similar lawsuits at four other NFL franchises and, as important, a national conversation about wage theft.   In March, seven class action lawsuits were filed across the country against MacDonald’s on behalf of workers in the fast food franchise restaurants alleging its franchises did not pay employees for all hours worked and forced them to work through breaks. Challenges to wage theft kept rolling throughout the year.  In November, employees of Yank Sing, a high end San Francisco dim sum restaurant recovered a landmark settlement — $4 million in back pay and benefits for “blatant” wage theft in settlement of complaints before the California Labor Commissioner. These high profile lawsuits have increased public awareness of wage theft and their examples serve as a deterrent to future wage theft.

  • No. 2:  National Labor Relations Board Opens the Door for Retail Workers to Organize by Department

The federal administrative agency that oversees labor-management relations also took steps to level the playing field for workers in 2014.  In July, the NLRB issued a decision that makes it far easier for unions to get a foothold in large retailers, including Walmart.  In a case involving Macy’s department store, the NLRB ruled that the United Food and Commercial Workers could organize a subgroup of 41 cosmetic workers at a 150-employee store.  Before this change, unions faced huge challenges because they were required to win storewide votes.  As of 2013, only 4.6% of workers in the retail industry were members of unions, as reported by the Wall Street Journal.   That’s down from more than 6% in 2003.  The UFCW is campaigning to organize retail workers at stores like Bloomingdales, Macy’s, Target and, of course, Walmart.

  • No. 1:  Increases in Minimum Wage for Workers 

Without question, the movement that gained the most momentum this year for workers was the campaign to increase the minimum wage.    President Obama called upon Congress to raise the minimum wage from $7.25 an hour to $10.10 an hour, and signed an Executive Order to raise the minimum wage to $10.10 an hour for new federal contract workers.  Unfortunately, the gridlocked Congress did not act to increase the minimum wage that applies to all workers around the nation. However,  eleven states (California, Connecticut, Delaware, Hawaii, Maryland, Massachusetts, Michigan, Minnesota, Rhode Island, Vermont, and West Virginia) and the District of Columbia did raise their minimum wage.

As of January 1, 2015, twenty-nine states and the District of Columbia will have minimum wages that exceed the paltry $7.25 per hour that workers earn under the federal minimum wage.  The highest minimum wage in the nation is in the District of Columbia, where the minimum wage is $9.50 an hour.  And, by January 1st, six other states (California, Connecticut, Massachusetts, Rhode Island, Vermont and Washington) will have legally mandated minimum wages of at least $9.00 an hour. While significantly more work remains to be done in this area, increases in the minimum wages are a meaningful development for millions of low-wage workers in this country.

So, as the year 2014 comes to a close, let’s toast these advancements for workers and rededicate ourselves to improving the working lives of all employees in the new year.

Sharon Vinick

About Sharon Vinick

Sharon Vinick is the Managing Partner of Levy Vinick Burrell Hyam LLP, the largest women-owned law firm in the state that specializes in representing plaintiffs in employment cases. In more than two decades of representing employees, Sharon has enjoyed great success, securing numerous six and seven figure settlements and judgments for her clients. Sharon has been named by Northern California Super Lawyers for the past five years. Sharon is a graduate of Harvard Law School and UC Berkeley. In addition to being a talented attorney, Sharon is an darn good cook.

More Episodes of Clueless in Silicon Valley:  What does the reaction say about us?

More Episodes of Clueless in Silicon Valley:  What does the reaction say about us?

By Supreeta Sampath

The spotlight shined again this month on employer cluelessness in Silicon Valley, first with Microsoft’s new CEO telling women they’re better off waiting for karma than pushing for raises and then with the news that one multi-million dollar tech company was paying workers in Rupees.

Early this month came the disturbing comment about women and pay raises by Microsoft CEO, Satya Nadella, speaking (ironically) at the Grace Hopper Celebration of Women in Computing Conference.  Nadella’s mind-boggling advice to young women seeking advice on how to ask for a raise was to keep quiet – “knowing and having faith that the system will give you the right raises as you go along.”  He further opined that it’s “good karma” not to ask for a raise.  Immediately after the talk, Nadella recanted in a tweet –

Nadella tweet

That same day he issued a letter of apology to Microsoft workers telling them if they think they deserve a raise, just ask.

Then last week, EFI, a publicly-traded digital technology company was caught by the U.S. Department of Labor paying eight employees in Rupees.  That’s right, Rupees, the currency of India.  Apparently, the Fremont-based multi-million-dollar company believed that because it had flown the Indian employees from India to California for a project, it was allowed to pay the employees in Rupees, at a rate equivalent to $1.21 per hour and make them work 120 hours per week.  The consequence for this travesty?  Other than paying $40,000 in wages owed, EFI was fined a mere $3,500 by the DOL. What was the company’s response?  Let’s just say there were no apologies, simply feigned ignorance of the law.

The reaction to these events reveals a ‘sign of the times’ and the power of media to focus (or not) on work place equality.

The public and media decry of Nadella’s comments are ubiquitous.  If one types in any combination of “Nadella”, “Pay” and “Women” into any search engine, the results are prolific. Ranging from tweets of dismay and disgust, to thoughtful editorial pieces criticizing Nadella in major news magazines, the country passionately leaped into its discussion about gender equality in the work place. Perhaps most notable is the equal abundance of pieces (including in the New York Times) spinning Nadella’s blunder into a positive and needed opportunity to continue discussions about the gender divide.

In stark contrast to the national reaction over the Nadella debacle, you will be hard pressed to find any significant media coverage over EFI’s unlawful conduct.  Media attention was short-lived and confined to local stations.  I found only one article condemning the behavior and guffawing at the paltry DOL fine.  So where are the bloggers, tweeters and national media commentators decrying wage theft and worker exploitation?  Why is there a lack of any meaningful response expressing shame and disgust over this blatant example of corporate greed? And has anyone asked whether EFI would have paid British workers in Pounds (with a $1.61 exchange rate) if they had been slogging away in California for the company?  Why is no one furious that a company reporting close to $200 million in revenue in its last financial quarter got away with a $3500 fine?

Perhaps with recent political victories like the Lily Ledbetter Fair Pay Act and Cheryl Sanberg exhorting women to “Lean In” – it is more socially acceptable and sexy to debate the merits of fair pay and gender equality in the work place than to focus on the unrelenting reality of labor exploitation.  Perhaps Microsoft is cleverer and has a better Communications Department assisting in rehabilitating Nadella and Microsoft’s reputation through widespread “positive spin” pieces?  Perhaps it is all of this.

Don’t get me wrong, as a woman and a workers’ rights advocate, I am thrilled that Nadella’s comments have put needed attention on pay and gender equality in the workplace.  But as a woman and worker’s rights advocate, it’s clear to me that the bigger lesson can be learned from the different ways these two employer “mishaps” have been reported by the media and digested by the masses.

Minimum wage, wage theft and worker exploitation may not be as alluring as gender equality in the year 2014, but they are equally vital to our national economy and collective moral conscience.

 

Supreeta Sampath

About Supreeta Sampath

Supreeta Sampath is the founder of The Sampath Law Firm located in San Francisco, California. For over a decade, her legal career has been dedicated to serving the needs of those who have been denied justice. Ms. Sampath has extensive experience representing workers in employment discrimination cases on account of race, national origin, religion, gender, disability, age, sexual harassment, retaliation as well as cases involving labor code violations. From 2011-2014 she has been named a Rising Star in the field of Labor and Employment by Super Lawyers Magazine.

No free pass to discriminate against immigrant workers:  Salas v. Sierra Chemical Co.

No free pass to discriminate against immigrant workers:  Salas v. Sierra Chemical Co.

By Megan Beaman and Kevin Kish

Low-wage workers—regardless of immigration status—shoulder more than their fair share of workplace violations, including unpaid wages, unsafe working conditions, and discrimination and harassment.  Immigrant low-wage workers are particularly vulnerable—working under constant fear that if they exercise basic workplace rights, they will suffer retaliation that could result in the separation of their families; loss of homes and property; or return to violence or extreme poverty in their home countries.

New Image93 blurredThis fear of retaliation is based in fact.  We as advocates have seen it happen time and time again—and it overwhelmingly leads to workers staying silent, leaving employers without even a slap on the wrist when they break the law.

Scofflaw employers do not and will not stop violating the law if they are not held accountable for their violations to all workers.  Any other type of piecemeal enforcement, or lack of enforcement, encourages employers to hire vulnerable undocumented workers, disregard labor laws as basic as the minimum wage, and then fire them when they complain – all to the economic disadvantage of employers who do follow the law.

Earlier this summer, the California Supreme Court in the Salas v. Sierra Chemical Company case agreed, deciding that companies that hire undocumented workers (knowingly or not) do not get a free pass to discriminate against them.

In that case, Mr. Salas sued his former employer, Sierra Chemical Company, for failing to bring him back to work after he injured himself and claimed workers’ compensation benefits. Mr. Salas alleged the company retaliated against him for filing his claim and discriminated against him because of his injury. But a jury never got the chance to decide whether he was right. The company claimed that because Mr. Salas was not authorized to work in the U.S. in the first place, the company shouldn’t be liable for failing to hire him back. A lower court agreed and dismissed the case (giving the company a free pass to discriminate in the bargain).

The California Supreme Court said not so fast. On the one hand, the law says that people without work authorization shouldn’t be working. But on the other hand, the law says that all workers should be protected from discrimination.

In a careful decision, the California Supreme court balanced these two concerns.  It allowed Mr. Salas to take his case to a jury, finding that a company can be liable for discrimination even against undocumented employees.  At the same time, the court held that undocumented employees cannot seek a court to be hired back by the company that has discriminated against them.

This decision demonstrates an understanding of the reality of the California workplace, which is  increasingly made up of workers of all immigration statuses, including green card holders and naturalized U.S. citizens.  It also includes 1.85 million undocumented workers, who constitute nearly 10% of the total workforce.

Against this backdrop, the Supreme Court confirmed that employers cannot violate the law—by discriminating or otherwise—and then later be immunized from liability for those violations. The court recognized that leaving undocumented workers without the protection of the law would actually give employers a strong incentive to “look the other way” when hiring and then turn around and use their immigration status to ultimately exploit them.  That would be bad news for employers who actually honor their obligations to treat workers fairly and legally when it comes to hiring, pay, and non-discrimination in the workforce.

Mr. Salas will now have the chance to take his case to a jury, who will decide whether he wins or loses.  But the Salas decision is a solid win for all law-abiding Californians – employees and employers alike.

 

Megan Beaman

About Megan Beaman

Megan Beaman is a community-based attorney who roots her work in the notion that all people deserve access to justice, and who understands the larger struggles for immigrant and worker justice in California and nationwide. Beaman’s practice is founded on her years of advocacy and activism in working class and immigrant communities, and tends to reflect the predominate needs of those communities, including many cases of discrimination, harassment, unpaid wages, immigration, substandard housing, and other civil rights violations. The client communities Beaman most often represents are overwhelmingly Latino and Spanish-speaking. Beaman also works and volunteers in a number of other community capacities, including as a coordinator for the Eastern Coachella Valley Neighborhoods Action Team.

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