Wage Theft ← CELA VOICE

Tis the season: Giving thanks for new employment protections

Dec

7

2015

In the spirit of the holidays, here’s a round-up of five legal developments that California workers and their advocates can be thankful for this year.

Fair Pay Act

In October 2015, Governor Brown signed the California Fair Pay Act to give our state the strongest equal pay protections in the nation. In 2014, a woman working full-time in California still earned an average of only 84 cents to every dollar a man earned – a wage gap that has remained unchanged for nearly a decade. The new law mandates equal pay for “substantially similar work,” instead of the old outdated language requiring equal pay only for “equal work on jobs” at the “same establishment.” Thus, male and female employees are now entitled to equal pay if they perform comparable work, even if they have different job titles or work in different offices at a company. The new law also requires that any legitimate, non-gender based factors that employers rely on to explain gender wage differences must be “applied reasonably” and “account for the entire wage differential.” The Fair Pay Act also prohibits retaliation against workers who seek to enforce the Act or who inquire about the wages of other employees. This new law empowers women to challenge unfair pay practices and gives advocates new tools to combat the gender wage gap that has persisted in this state for far too long.

Protecting Reasonable Accommodation Requests

AB 987 was passed in July 2015 to explicitly affirm that workers who request reasonable accommodation based on religion or disability are protected from retaliation under the Fair Employment and Housing Act (FEHA). The legislation was passed in response to a misguided California appellate court’s decision in Rope v. Auto-Chlor System of Washington, Inc. In that case, the employee was fired after requesting a work accommodation so that he could donate his kidney to his ailing sister. The court held that accommodation requests did not constitute a protected activity sufficient to support a FEHA retaliation claim. This decision threatened to overturn years of legal interpretation that protected workers’ rights to request accommodations. With the passage of AB 987, we can now be sure that workers have legal protection if they request an accommodation from their employer due to disability or religion.

Increased Wage Theft Protections

To help combat pervasive wage theft in this state, SB 588 was passed to authorize the California Labor Commissioner to file a lien or levy on an employer’s property to assist employees in collecting judgments for unpaid wages. According to a 2013 report by the National Employment Law Project and the UCLA Labor Center, only 17% of workers who prevailed in their wage claim at the Labor Commissioner’s office were able to receive any payment between 2008 and 2011. Workers who did receive payment were able to collect only 15% of what was owed. The new law also provides that any employer or any person acting on behalf of an employer who “violates, or causes to be violated,” regulations regarding minimum wages or hours and days of work, may be on the hook for wage theft. Workers and their advocates now have significantly stronger tools to go after employers who try to evade liability by shifting responsibility to other companies or by refusing to pay their judgments.

Scrutiny Of Misclassification In Shared Economy Companies

In June 2015, the California Labor Commissioner ruled that a driver for Uber was an employee, not an independent contractor, and ordered the company to pay her back for work-related expenses. In August, the California Employment Development Department determined that a former Uber driver was an employee and was entitled to receive unemployment benefits. Then in September, a federal judge in San Francisco ruled that Uber drivers could proceed as a class action in a lawsuit over whether the drivers should be classified as employees or independent contractors. The class action alleges that Uber failed to pass on tips left for drivers. Although the classification issue for Uber drivers and other similar workers is not yet settled in California, it reflects the willingness of the state’s legal authorities to scrutinize misclassification issues and enforce labor rights in the evolving world of shared economy businesses.

Cost-Shifting To Employees Only If FEHA Lawsuit Frivolous

Previously, employees who lost on their Fair Employment and Housing Act claims could be required to pay the employer’s legal costs. Since these costs could be substantial, workers could be discouraged from trying to vindicate their workplace civil rights out of fear of having to pay if they lost their lawsuit. However, now after the California Supreme Court’s decision in May 2015 in Williams v. Chino Valley Independent Fire District, an employee who loses his or her FEHA claims in a lawsuit will not have to pay the employer’s legal costs on those claims unless the employer shows the claims were frivolous. This new standard can help reduce some of the financial risk for employees seeking to enforce their rights.

These developments reflect our state’s continuing trend of protecting working people, low-wage workers in particular, from exploitation and unfair treatment. Although there’s always more advocacy to be done, we have these positive steps to celebrate for this year.

About Lisa Mak

Lisa Mak is an associate attorney in the Consumer & Employee Rights Group at Minami Tamaki LLP in San Francisco. She is passionate about representing employees and consumers on an individual and class basis to protect their rights. Her practice includes cases involving employment discrimination, harassment, retaliation, wrongful termination, labor violations, and severance negotiations. Ms. Mak is the Co-Chair of the CELA Diversity Committee, Co-Chair of the Asian American Bar Association’s Community Services Committee, and an active volunteer at the Asian Law Caucus Workers’ Rights Clinic. Ms. Mak is a graduate of UC Hastings School of Law and UC San Diego. She is fluent in Cantonese and conversant in French.

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The buck starts here: Living wages and sustainable employment

Mar

23

2015

By Anne Richardson

The massive push toward subcontracting and supply chains I wrote about in my prior post didn’t happen overnight, and it certainly won’t be fixed overnight either. There are many pieces to this puzzle, all in the service of one big overarching principle: Lead companies must take their fair share of responsibility for the pain and misery that is generated when they squeeze too much from their suppliers and subcontractors. Here are some of the pieces:

1. Challenge Payroll Fraud. What used to be called “misclassification” of employees as independent contractors is really the practice of defrauding employees out of social security, overtime, worker’s compensation, health and safety protections, family and medical leave, unemployment insurance, protections against discrimination, and the right to bargain collectively, among other things. In addition to losing these protections, employees who become “independent contractors” have to cover their own costs.

Cases challenging bogus “independent contractor” status have been multiplying as more and more businesses adopt this practice in order to cut their payroll costs. Last August, the Ninth Circuit held that thousands of FedEx truck drivers were employees, even though FedEx called them independent contractors. Recently, the judge in a misclassification case against Uber ruled that a jury should decide whether the drivers employees of the company, and noted that “many of the factors in that test appear outmoded” in the “context of the new economy.”

Former Secretary of Labor Robert Reich has proposed that, instead of waiting for the courts to decide these cases one-by-one, the IRS and Department of Labor adopt a new, simpler test: “Any corporation that accounts for at least 80 percent or more of the pay someone gets, or receives from that worker at least 20 percent of his or her earnings, should be presumed to be that person’s employer.”

2. Treat Lead Companies as Joint Employers. Every federal circuit and many state courts have their own version of the “joint employer” test to determine when one company should be liable for the wage and hour violations of another – including subcontractors or franchisees. Some of these tests are being re-examined to take into account the ways in which “lead companies” maintain control.

In December 2014 the National Labor Relations Board issued complaints naming McDonald’s Corp. as a joint employer of workers at its franchises. In another case, the NLRB has proposed a “totality of the circumstances” test that would impose joint employer status on any company that wields sufficient influence over the working conditions of the other company’s employees, to make meaningful bargaining impossible in its absence. A similar rule in state and federal courts would recognize the significant power and control that is exerted from the top.

3. Enforce Supply Chain Liability. Regulators and legislators are also coming to recognize the need to affix responsibility at the top of an industry. California Labor Code Section 2810.3, which became effective January 1, 2015, provides that an employer must share responsibility for wages, taxes, and workers compensation with the middlemen who provide the labor to the employer. In a similar vein, a provision of the Fair Labor Standards Act known as the “hot goods” provision, prohibits the selling or transporting in commerce any goods produced in violation of the FLSA’s wage and overtime provisions.

Decent wages and safe working conditions are not just an idealistic goal. The lack of a healthy middle class hurts all of us. Public health researcher Richard Wilkinson has reported that the average well-being of modern societies — including health, lifespan, literacy levels, crime levels, and so on — is no longer correlated with national income or economic growth, but with the extent of income inequality. The Center for American Progress has just issued an exhaustive report on “inclusive prosperity,” concluding that nations succeed when their middle class is secure in the expectation that those willing to work are able to work and that standards of living will increase.

Clearly, more work needs to be done. It is time to invest in living wages and sustainable employment, instead of pioneering ever more ways to create dead-end jobs that benefit only those at the very top.

About Anne Richardson

Anne Richardson is the Associate Director of Public Counsel Opportunity Under Law, a project aimed at eliminating economic injustice on behalf of underrepresented workers, students, and families throughout California and nationwide. Previously she was a partner at Hadsell Stormer Richardson & Renick representing plaintiffs in all varieties of employment discrimination and civil rights matters for over twenty years. A graduate of Stanford Law School, she has been named to the Top 100 Lawyers in Southern California and has received numerous honors for her work.

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Will the “real” employer please stand up? The consequences of the global shift to subcontracting, franchising, and outsourcing

Feb

20

2015

By Anne Richardson

A fundamental change has taken place in the American workplace, and we are only now beginning to realize just how monumental it is.

A new book, The Fissured Workplace: Why Work Became So Bad for So Many and What Can be Done About It, by David Weil, makes the case that in every corner of the employment world, companies are increasingly shedding their employees, while maintaining control over the ultimate product or services to be provided under the “lead” company’s logo and brand. Beginning with peripheral services such as janitorial and security, and gradually including ever more central services, such as receptionists, truckers, and even lawyers, large employers are deliberately subcontracting out their work.

Here’s how it works: A member of a loading dock crew is paid by one company, which is in turn compensated by another company, for the number of trucks loaded. That company, Schneider Logistics, manages distribution centers for Wal-Mart. Wal-Mart sets the price, time requirements, and performance standards that are followed by Schneider, which in turn uses those standards to structure its contracts with its subcontractors.

Why do they do it? Employers can reduce costs by pushing many of the responsibilities connected to being the employer of record down the chain to someone else. Yet by controlling the quality and price of their goods and services, they do not lose their reputations and the goodwill of their brands.

But should lead companies be allowed to have it both ways? Should they be permitted to control the production, delivery, and cost of goods and services, without sustaining any liability for the manner in which their contractors provide them? To take a real world example, if a company like Wal-Mart sets a price that is so low that the only way for suppliers to meet it is by underpaying their employees, isn’t that really Wal-Mart’s responsibility?

This new “fissuring” model has drastic consequences for employees who have been forced to trade in traditional jobs at a lead company, with benefits and a pension plan, for part-time temporary positions with no benefits. Pushing responsibilities down the chain often means that the direct employer is less well capitalized and less capable of maintaining wage and hour standards, or enforcing health and safety rules. Since the company on top sets the price, often as low as the market will possibly bear, the company on the bottom is forced to cut to the bone. Many of the subcontractors are small businesses that go under, and then reemerge as a different company, which results in there being no responsible party to foot the bill when legitimate claims are made.

Fissuring also negatively affects the health and safety of the broader public. Weil argues that a significant contributing factor of the devastating environmental oil spill caused by the BP Deepwater Horizon accident in 2009 was the extent of BP’s use of contractors. In order to shield itself from liability by maintaining less control over its subcontractors, BP did not sufficiently oversee the safety component of the operation. Other authors have similarly noted the increase of injuries and fatalities that have accompanied the rise of contracting in, for example, coal mining, construction, and trucking, among others.

To be sure, there are some who benefit from the practice. The third consequence of “fissuring” is to shift the surplus generated by businesses away from the workforce and to investors. This helps to explain why the operative trend in the American workforce is the widening income gap between the rich and the working poor. The gap between the wealthy and the poor is at a hundred year high. For example, in 1965, the average CEO made about 20 times what the average worker made at any given company. By 2013, the ratio had grown to approximately 331 to 1. What’s fascinating is that a recent study found that not only did people worldwide grossly underestimate the ratio of CEO to worker pay, but that people across all backgrounds preferred a smaller pay gap.

Weil, who was appointed the Administrator of the Wage and Hour Division of the United States Department of Labor in May 2014, argues that since “[t]he modern employment relationship bears little resemblance to that assumed in our core workplace regulations,” laws and judicial decisions need to adapt current rules about workplaces to the realities of the modern world.

In every corner of the American workforce, the pressures to cut costs and improve the investor’s return have resulted in a worsened standard for the middle-class worker, as well as a worsened standard of health and safety. What can be done about it? Stay tuned for my next post.

About Anne Richardson

Anne Richardson is the Associate Director of Public Counsel Opportunity Under Law, a project aimed at eliminating economic injustice on behalf of underrepresented workers, students, and families throughout California and nationwide. Previously she was a partner at Hadsell Stormer Richardson & Renick representing plaintiffs in all varieties of employment discrimination and civil rights matters for over twenty years. A graduate of Stanford Law School, she has been named to the Top 100 Lawyers in Southern California and has received numerous honors for her work.

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The Top Five Wins for Workers’ Rights in 2014

Dec

31

2014

By Sharon Vinick

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.

No. 4: California Supreme Court Guarantees that Undocumented Workers are Protected Against Discrimination

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.

No. 3: Public Awareness and Outrage Are Building Against Wage Theft As Employee Rights Are Vindicated in High Profile Cases

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 1^st, 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.

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.

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Wage theft still on the menu in the restaurant industry

Nov

21

2014

By Lisa Mak

Making the headlines this week was a landmark $4 million backpay and compliance settlement for 280 current and former workers at the popular Yank Sing restaurant in San Francisco. Last summer, a group of Yank Sing employees, with the help of the Chinese Progressive Association and the Asian Law Caucus, complained that the owners of Yank Sing engaged in a slew of labor violations, including theft of wages and tips, failure to pay minimum wages and overtime, and denying workers their meal and rest breaks. The violations, according to California Labor Commissioner Julie Su, were “pretty blatant.”

Unfortunately, employee wage theft and labor violations are very common in the restaurant industry. For example, workers brought claims last year against a Los Angeles restaurant, Izakaya Fu-ga, for wage theft, failure to provide breaks, and retaliation against workers who asserted their rights. An announcement is also expected soon regarding a settlement with restaurants in the El Mercadito complex in the Los Angeles Boyle Heights neighborhood that will pay $220,000 in back wages to workers and provide improved sick and vacation leave.

The Yank Sing crackdown is a good reminder that people serving us our food often make too little to put food on their own table. Aljazeera recently covered the issue in its “Fault Lines” series, highlighting the prevalence of wage theft in the restaurant industry.

About Lisa Mak

Lisa Mak is an associate attorney in the Consumer & Employee Rights Group at Minami Tamaki LLP in San Francisco. She is passionate about representing employees and consumers on an individual and class basis to protect their rights. Her practice includes cases involving employment discrimination, harassment, retaliation, wrongful termination, labor violations, and severance negotiations. Ms. Mak is the Co-Chair of the CELA Diversity Committee, Co-Chair of the Asian American Bar Association’s Community Services Committee, and an active volunteer at the Asian Law Caucus Workers’ Rights Clinic. Ms. Mak is a graduate of UC Hastings School of Law and UC San Diego. She is fluent in Cantonese and conversant in French.

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

Oct

28

2014

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 –

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.

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.

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

Oct

2

2014

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 blurred This 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.

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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If you’ve ever wondered how much California has received from PAGA settlements…wonder no more! 1

Sep

12

2014

The California Supreme Court’s June decision in Iskanian v. CLS Transportation has thrust the Private Attorneys General Act (PAGA) back into the foreground of wage-and-hour class actions. The court held that despite a murderers’ row of anti-consumer, anti-employee/pro-business, pro-forced-arbitration decisions by the United States Supreme Court, the Federal Arbitration Act (FAA) does not preempt California law that prohibits waiver of PAGA claims. In other words, PAGA lawsuits can still be brought on behalf of large groups of workers, despite the fact that they have signed a class action waiver.

PAGA was passed in 2004 in the face of blistering opposition from the Chamber of Commerce, which spun the legislation as the “sue your boss bill.” Before suing your boss, however, PAGA requires a plaintiff to exhaust administrative remedies by notifying the employer of the alleged violations of the Labor Code. Notably, PAGA also mandates that 75% of any recovery of penalties goes back into the state’s coffers through the Labor and Workforce Development Agency (LWDA). Essentially, PAGA deputizes private attorneys to collect the state’s money for it from employers that have violated the law.

In the years immediately following the bill’s passage, many lawyers did not even allege PAGA claims and questioned the value of adding them to their case. Government involvement in the case might be complicated, especially for just a 25% share of the recovery. Much has changed in the ten years since the bill’s enactment. With class claims vanishing, PAGA claims may well provide the most potent (or only) leverage for workers pursing impact litigation.

With a decade of experience behind us, perhaps it’s time we begin studying PAGA’s impact. To this end, I sent a Public Records Act request to the LWDA for information about PAGA payments made to the State. What came back was interesting.

Through April 2013, the LWDA had collected $24,532,690.57 in PAGA penalties from 1,255 cases. The payments range from small ($4.15) to large ($614,280).

I’m certain there are others out there with the skill and inclination to analyze this data in ways I have not imagined, and my hope is that this will begin a meaningful dialogue about PAGA and its future.

Next week I will post the updated numbers I have received from April 2013-August 2014.

About Christian Schreiber

Christian Schreiber is a partner at Chavez & Gertler, where he works primarily on class actions involving employment and consumer rights, civil rights, and financial services matters.

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NLRB decision – McDonald’s and other corporations, not lovin’ it

Aug

22

2014

By Alexis S. McKenna

For decades now, corporate franchisors have been able to have the best of both worlds with the franchise business model — exerting increasing control over their franchises’ operations in order to increase their own profits, while distancing themselves from the unlawful employment practices of the franchisees.

Take McDonald’s Corp. for example. McDonald’s exercises a great deal of control over its franchisees and their employees through their franchise contracts. This control includes partly setting wage levels, work rules and scheduling, requiring franchisees to use proprietary labor management software, and providing labor guidance to increase profitability. In fact, modern technology has made it easier over the years for corporations to increase its control and monitoring of the franchises, which in turn has increased profitability for the franchisees and the corporate franchisors. But, increasingly, corporate franchisors wish to reap the benefits of the franchise industry while disavowing any responsibility for labor practices inside the restaurants.

That may be about to change. Through a brief administrative decision on July 29, the National Labor Relations Board (NLRB)’s General Counsel, Richard Griffin, announced that McDonald’s could be treated as a “joint employer” (along with the franchisees) in labor cases. In other words, McDonald’s could be legally responsible if its franchisees engage in unlawful employment actions, such as improperly paying workers or terminating them for union organizing. In addition, treating McDonalds and its franchisees as “joint employers” would make it easier for fast food workers to unionize. Instead of the time-consuming and expensive process of unionizing workers at each franchise location, company-wide organization may be feasible. Perhaps more importantly, this decision could set a precedent not only for other franchisors, but for businesses that use temporary workers, subcontractors or so-called independent contractors as part of their business model.

The decision set off a firestorm in the industry, prompting a chicken-little-the-sky-is-falling response from franchisors and their proponents. For example, in a quote in the Wall Street Journal, the chief executive for the International Franchises association said this opinion will “threaten the sanctity of hundreds of thousands of contracts between franchisees and franchisors.” An editorial in the Chicago Tribune opined that “the new liability would invite a plague of lawsuits, while forcing corporations to drastically alter their operations.” Numerous corporate leaders, such as the CEO of CKE Restaurants, which includes Hardee’s and Carl’s Jr., claim this change to the system will “destroy” it.

The industry’s reaction is totally out of proportion to the potential impact of the decision. Virtually no one wants the franchise system to shut down. Yet, business proponents bombard us with rhetoric that contracts are downright holy and lawsuits are a disease. They lament that forcing corporations to take responsibility for the franchisees will kill the entire system.

We’ve heard this sort of fear-mongering from the business community before. Take, for example, the 40 hour work week, which union leaders pushed for and business owners fought against in the early 19^th Century. Study after study has since shown that a 40 hour work week has not destroyed our economy, but in fact made businesses more productive and profitable.

It is good to have corporations on the line for all it its franchise workers – it creates incentives for the corporations to keep the franchisees in line and treat their workers better. While corporate leaders fight to protect the status quo, joint responsibility will help ensure that workers in these jobs have their rights protected, and can collectively bargain for fair wages. A study by the National Employment Law Project shows that post-recession job market is weighted heavily toward work in the fast food industry. Over 8 million people work at fast food restaurants, amounting to 15 percent of all private sector jobs in the United States. Given the increase in these kinds of job in the modern economy, we must make sure these jobs can support the economy.

In the end, corporate liability for franchise misconduct will force corporations, who benefit significantly from their franchises, to take responsibility for working conditions that really are under their control. And that is a system that benefits everybody.

About Alexis McKenna

Alexis McKenna is a partner at Winer, McKenna & Burritt, LLP, where she specializes in harassment, discrimination, wrongful termination and other employment claims on behalf of plaintiffs. Alexis is the immediate Past President of the Alameda/Contra Costa Trial Lawyers Association (ACCTLA), is on the Board of Governors of Consumer Attorneys of California, and is also a member of the San Francisco Trial Lawyers Association and American Association for Justice. A former editor of The Verdict for ACCTLA, Alexis has also published several articles and been a frequent lecturer in the area of employment litigation.

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Pillage in private: Raiders try to punt cheerleader wage claims into arbitration

Apr

2

2014

Oakland Raiderettes Lacy T. and Sarah G. filed suit against the Oakland Raiders for various labor law violations.

Employee and consumer advocates have been screaming for years about the harsh realities of arbitration clauses. We’ve decried them for being secret; for being unfair; and unconscionable and unconstitutional. Like the frog in the slowly heated pot of water, the public has remained idle in the face of an unprecedented erosion of their rights. Traction in the media has been hard to come by, and it has been worse among Congressional leaders.

Turns out all we needed was a little pom-pom pizazz. The media has latched onto the allegations being made by Lacy T., a former Oakland Raider cheerleader and member of the team’s Raiderettes. Lacy T. has filed a class action lawsuit (check another example of class action trials – Xarelto lawsuits) against the Raiders for wholesale violations of the California Labor Code – failing to pay minimum wage for all required hours worked, failing to pay overtime, failing to provide mandated meal and rest breaks, making illegal deductions from wages for a laundry list of “infractions,” as well as for costs the employer is required to cover, and failing to pay wages on time.

The case has garnered an extraordinary amount of attention, considering the abuses alleged are endemic to low wage positions in many industries. Undoubtedly, the intense media interest is fueled by the NFL’s high profile, the fact that every story provides an opportunity to display pictures of the Raiderettes in uniform, and the prospect that this wage dispute may provide titillating details of the Raiders’ demeaning treatment of its cheerleaders. As the NFL knows, sex sells. Even if it doesn’t pay enough to buy gruel.

The latest Dickensian twist in Lacy T.’s case occurred last month when the NFL moved to have the minimum wage claims taken out of a public courtroom and put into a secret arbitration to be presided over by its $44 million man, NFL Commissioner Roger Goddell. The claims in the case, and the Raiders’ response, show just how much the team’s management has turned its back on a proud history at the cutting edge of employment civil rights. Al Davis was the first NFL owner to hire an African-American head coach (Art Shell), a Latino head coach (Tom Flores) and a female CEO (Amy Trask). But by invoking an arbitration clause unilaterally imposed on its Raiderettes, and pushing Lacy T.’s case into a secret arbitral forum, the Raiders have perverted another of the late Mr. Davis’ ends-means mottos: Just Win, Baby.

Arbitration was originally conceived by Congress in the 1920s as an alternative mechanism to resolve business disputes. In the years since, it has steadily been perverted into a means for businesses to steal from and cause injury to individuals without any real threat of liability or significant financial consequence.

It is no small irony that secret arbitration has been championed at the highest level by Supreme Court Justice Clarence Thomas. Twenty three years ago, during Thomas’ Supreme Court confirmation hearings, Anita Hill publicly accused Thomas of sexual harassment. Her testimony (and the appalling questioning by the Senate committee) riveted the country. Through her courageous actions, the entire country awoke to the existence of sexual harassment in the workplace.

Today, Professor Hill has been making the rounds publicizing “Anita,” a new documentary about the experience. Two decades after exposing an insidious workplace problem on the national stage, she is asking a new generation of workers – women and men – to consider the lessons of those hearings.

Which brings us back to Lacy T. Yes, the media is just as itchy today to publish salacious details about the Raiderettes as it was to report on Clarence Thomas’ crude statements in 1991. The difference today is that the media may not be given any such opportunity to cover the details of a modern scourge for low-wage workers: wage theft. And as long as workplace problems – of any kind – are denied public scrutiny and forced into secret star chambers, progress will be elusive. “Anita” reminds us that public testimony can be painful. But it’s often how change is made.

About Christian Schreiber

Christian Schreiber is a partner at Chavez & Gertler, where he works primarily on class actions involving employment and consumer rights, civil rights, and financial services matters.

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