Articles Posted in California Employment Law

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Since 2004, PAGA has been a concern for California employers. The Private Attorneys General Act enabled workers to sue their employers for all Labor Code violations. This is normally the realm of the state’s Attorney General. However, lawmakers knew that they had a problem with underground businesses avoiding taxes and licenses. They hoped that empowering employees to sue their employers as if they were representing an agency would uncover unsafe working conditions.

1504001-Gavel-Money-3As many laws do, PAGA had unintended effects. Soon potential plaintiffs, and the attorneys representing them, discovered that they could sue for every violation under the sun. What’s more, the process was extremely profitable for everyone involved, except for business owners.

Suddenly, employers were being sued for minor, non-monetary violations. As an example, consider the case of the 99 Cents Only Stores. Cashiers sued for the right to have chairs at their workstations. The employees won, and the decision was upheld by the California Court of Appeal. This early case demonstrated how profitable such litigation could be.

Under PAGA, employees have the right to recover monetary penalties for an employer’s violation of any Labor Code. Prior to passage of the law, these civil matters would have to be brought by the State Labor Commissioner. PAGA also made it possible for fines to be imposed against employers for virtually every provision of the Labor Code.

Moreover, plaintiffs may recover 100 percent of their attorney’s fees. This meant that employees could address any perceived shortcomings in their working conditions, and that plaintiff’s lawyers were motivated to help them.

The California Business & Industrial Alliance is now suing California Attorney General, Xavier Becerra claiming that PAGA is unconstitutional. The plaintiff’s say that the state’s powers have been turned over to attorneys who are focused on personal gain. They claim that attorneys are using the law to avoid mediation and to extort millions of dollars from employers.

This lawsuit is new and nowhere near a resolution. However, it’s a reminder that employers should do their utmost to ensure compliance with Labor Codes, and it underscores the importance of working with a qualified business attorney.

If you are an California employer or business owner with questions about PAGA or any legal issue feel free to contact me, attorney Richard Oppenheim at 818-461-8500 or via the Contact form on this page.

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A decision in the California Court of Appeals serves as a reminder that compliance with wage and hour laws should be a primary concern for all employers.

The case is Atempa v. Pedrazzani. Arguing that their former employer did not pay them in accordance with the law, two former co-workers from a restaurant filed a suit against the company. They sued not only their former employer Pama, Inc. but also the owner of the company, Paolo Pedrazzani.

clock-overtime-110616811-001The plaintiffs alleged that Pama and Pedrazzani violated several wage and hour laws. Among these were California Labor Code Section 558 regarding unpaid overtime and California Labor Code Section 1197.1 regarding unpaid minimum wages. The plaintiffs used the Private Attorney General Act of 2004, or PAGA, as the basis for their suit. In a bench trial, the plaintiffs prevailed. According to the court’s decision, Pedrazzani and Pama were jointly and severally responsible for any civil penalties that were based on wage and hour violations. Using PAGA, the court also declared that Pedrazzani was liable for the plaintiffs’ attorney fees.

Pedrazzani and Pama appealed the decision, and when Pama filed for bankruptcy, Pedrazzani became the only party to be held responsible for paying the attorneys’ fees and civil penalties.

In his appeal, Pedrazzani argued that an individual could not be held legally responsible for the wage and hour violations of an employer unless plaintiffs showed that the employer was an alter ego of the individual. However, the appeals court denied this argument and decided that Pedrazzani was personally liable for all civil penalties.

The court stated that an employer and an “other person” could be held liable for failing to follow wage and hour laws and that the employer’s business structure is irrelevant. Pedrazzani, so the court argued, was the “other person” under the definition of Labor Code Sections 558 and 1197.1.

With this decision, the court says that an employer and its owners and officers may be held personally liable for civil penalties arising from wage and hour violations. Clearly, vigilance with regard to wage and hour compliance is more critical than ever.

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Facebook is facing legal woes as a group of plaintiffs charges the tech giant with making it possible for companies to post employment advertisements in a discriminatory manner. The plaintiffs include the American Civil Liberties Union, a coalition for workers and three women who were seeking employment.

Smart-Phone-with-Apps-48915227-001In addition to Facebook, 10 employers are named as defendants in the complaint. Plaintiffs say that Facebook’s ad-targeting technology made it possible for these employers to direct their help-wanted ads exclusively to men. The jobs on offer included truck drivers, law enforcement officers and sales clerks at sporting goods retailers.

The Equal Employment Opportunity Commission received the complaint, which argues that since an increasing number of job and housing applicants are conducting their searches online, it has been increasingly easy for employers and landlords to engage in discriminatory practices. Under federal law, it is illegal for employers and landlords to discriminate against people based on their race, religion, gender, national origin, disability status or other protected categories.

However, in the online world, it is routine for tech companies to use algorithms that fast-track certain ads to specific users. Facebook excels at “microtargeting” users for certain advertisements. Additionally, the social media platform allows users to click on a link that says “Why am I seeing this?” This feature is actually what prompted lawyers with the ACLU to file the complaint.

Outten & Golden, a Washington, D.C. law firm, performed an experiment in which people used Facebook to search for a job or otherwise indicate that they were engaged in a job hunt. Employment ads for the 10 employers named in the suit were displayed for the male job candidates but not for the female ones. The Facebook users then clicked on the “Why am I seeing this?” link, where it was stated that their gender played a role in the targeting of that particular ad to that user.

This is not the first such complaint that has been lodged against Facebook. An earlier EEOC complaint alleged that Facebook employment ads were targeted to unfairly exclude older employees. Both of these cases are pending.

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Electric car company Tesla has filed a lawsuit against a former employee over what it claims are stolen secrets. Martin Tripp is named as the defendant.

System-Failure-51347065-001Tripp began working for Tesla in October 2017. His job was at the organization’s Nevada battery factory. As a process technician, Tripp was required to sign a non-disclosure agreement like other employees. Supervisors at Tesla began noticing problems with Tripp’s employment after a few months. They allege that Tripp was combative with colleagues and caused disruptions. In May 2018, he was reassigned to another department. The company also claims that this prevented Tripp from getting a promotion that he felt he deserved.

In the complaint, Tesla alleges that Tripp’s reassignment and the denied promotion are what sparked the employee to retaliate. Tripp admitted to internal investigators at Tesla that he wrote a software program that was capable of transferring gigabytes of data to computers outside the company. The data included photographs and videos, and Tesla claims that all of the data was privileged. Tripp is alleged to have placed the hacking software on the computer systems of three other employees so that he could continue to receive data even after he left the company. Additionally, this measure would implicate the other employees in the data theft.

According to the complaint, Tripp then leaked some of the stolen data to the media, combining it with falsehoods such as a claim that punctured battery cells were used in Tesla’s Model 3 car. The company further alleges that Tripp falsified data regarding the amount and value of scrap metal that is generated in the organization’s production processes.

Tesla CEO Elon Musk warned employees in an email about the hacking and the falsehoods that were leaked to the media. He noted that many other entities, like oil and gas companies, “want Tesla to die,” and that this is leading them to investigate whether or not Tripp acted alone.

It is not known if any criminal investigation has been launched, but this situation serves as a reminder of the importance of protecting intellectual property using all legal means available.

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A California law firm is being sued by three of its female associates. The plaintiffs, identified only as “Jane Does,” allege that Morrison & Foerster systematically discriminates against female employees, particularly those who are pregnant or have children.

Gender-Discrimination-105366239-001Representatives for the plaintiffs say they believe the case will become a class action lawsuit once other female associates at Morrison become aware of it. Plaintiffs are seeking approximately $100 million in damages, arguing that the firm pays them less and provides them with fewer promotions when compared with male peers.

The allegations came as a surprise to partners at Morrison & Foerster, a firm that provides several options for accommodating the needs of new parents. Some of these programs include flexible work options, reduced hours, parental transition time and 20 weeks of paid time off for primary caregivers.

However, the plaintiffs say that associates who take advantage of these programs are “set up to fail.” In January 2018, each learned that their peers who were in the same class year had been promoted ahead of them. Additionally, their salaries were no longer the same as their promoted peers. Their external billing rates had been raised, an error that management corrected when they were alerted to the issue.

One plaintiff described her performance review, which occurred during the same month. The plaintiff says that the partner conducting the review essentially informed her that she had not been promoted because she became a mother. She also revealed that her request for flexible scheduling, which would have allowed her to work full time with some of the hours being logged at home, was denied.

Another plaintiff was told that she was required to work more billable hours upon her return from maternity leave. However, when she requested additional work to meet this new standard, the partners were not forthcoming.

It’s unlikely that the management at Morrison intended to discriminate against any of their associates. However, sometimes even the appearance of gender and pregnancy bias is enough to cause legal problems. Working closely with an employment attorney is the best way to avoid these situations.

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The Ninth Circuit Court has acted to further eliminate the wage gap. In fact, it reversed a decision that the judge now views as unjust. The ruling sets precedent for female employees who allege that they are paid less than similarly qualified male counterparts for the same work.

Compensation-134182432-001The case in question is Rizo v. Yovino. Aileen Rizo is a math consultant employed with Fresno County Public Schools. When she learned that male colleagues in her department were being paid significantly more than she was, Rizo began investigating. What she learned eventually led her to sue her employer. Basically, Rizo was earning less because she had been paid less in her previous positions with other employers. Fresno County Public Schools used her wage history as justification for paying her less than male counterparts with similar experience.

The Ninth Circuit agreed with this pay history reasoning last year, aligning themselves with the defendant because the pay differential was based on “a factor other than sex.” The recent reversal of this finding means that a worker’s pay history cannot be construed as “a factor other than sex” under the auspices of the Equal Pay Act. This decision effectively wipes out 30 years of precedent, and activists say that it strikes a major blow to the wage gap situation.

In the decision, Judge Reinhardt wrote that “‘any factor other than sex’ is limited to legitimate, job-related factors such as a prospective employee’s experience, educational background, ability, or prior job performance.” The judge went on to argue that using the Equal Pay Act to perpetuate the gender wage gap runs contrary to the very purpose of the Act.

The decision is an echo of several state-level decisions that are prohibiting employers from gathering data relating to the salary history of prospective employees. Accordingly, it is critical for employers to update their hiring processes to reflect these changes. It also is sensible to review current salary data for all existing employees to ensure that any pay disparities between male and female colleagues with similar qualifications are supported by the provisions of the Equal Pay Act.

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When a corporation hires a coach for an executive, that executive probably expects to hone skills that enable her to take on a more advanced role. However, that was not the experience had by Denise Stilwell, a former executive at Twentieth Century Fox.

Gender-Discrimination-105366239-001Stilwell began her employment with Fox in 1999. By 2013, she had been promoted to a vice president position in enterprise rights management. The position came with a four-year contract, which included a promise of promotion to a senior vice president position within the first two years.

Her immediate supervisor accepted a voluntary retirement package in 2016, which meant that she began reporting to Fox CFO Dean Hallett. Shortly after the change, Stilwell was summoned to Hallett’s office. She expected to be given a promotion. Instead, Hallett informed her that she “smiled too much,” and that an executive coach was going to begin working with her.

That coach was Jack Zwissig from Zwissig and Associates. Zwissig allegedly told Stilwell that her “smile is fake,” that she laughed too much and that people generally didn’t like her. Most troubling of all is Stilwell’s assertion that Zwissig told her that she should “lift her skirt.”

Stilwell reported Zwissig’s comments to Hallett, calling them sexist and improper. Almost immediately, she was reassigned to another executive vice president, Joanie Wallace, who refused to meet with her for months. Abruptly in January 2017, Stilwell was fired because her department wasn’t moving in the right direction.

Recently, Stilwell filed a lawsuit naming her former employer, Zwissig and Zwissig’s firm as defendants. The complaint levels charges of gender discrimination, retaliation and hostile work environment, among others. If she prevails, the plaintiff hopes to collect unspecified damages for loss of future earnings and benefits as well as emotional distress.

This situation acts as a vital reminder that all complaints regarding possible harassment and discrimination must be followed up on swiftly and thoroughly. Failing to do so often exacerbates the situation to a point that is difficult to control. Working closely with a qualified employment attorney is the best way to prevent these circumstances from occurring.

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It is vital for employers to understand any physical limitations that their employees have. Not responding appropriately can lead to serious legal trouble.

ADA-138029727-001It’s a situation that happened recently in Union City, Georgia where a police detective sued her former employer. Jacqueline Lewis is an African-American woman who had been employed by the department for 10 years when her career stumbled. Lewis suffered a heart attack in 2009 and was diagnosed with a chronic heart condition.

This condition didn’t render her unfit, so Lewis continued in her role until the department decided to require all employees to carry a Taser. As a part of the training, each employee was expected to submit to a five-second shock. Participants had to seek the consent of their physician prior to the training, but Lewis’ doctor refused permission because of her heart condition.

Lewis’ superiors placed her on administrative leave, and a series of mishaps appears to have worsened relations between Lewis’ doctor and the police department. By day 21 of her leave, Lewis had been terminated, with her employer arguing that she had exhausted her leave time.

Lewis promptly filed a discrimination lawsuit, citing disability, race and gender as the grounds. The complaint detailed the stories of two white, male officers who had been given considerably more time before they were terminated for not meeting the physical ability requirements.

A district court didn’t agree that Lewis had demonstrated her status as a qualified individual under ADA. Additionally, they said that the male employees she compared herself to were not “similarly situated.” Lewis appealed this decision, and the Eleventh Circuit found that Lewis’ heart problems did not make her disabled. However, the department’s decision to treat her as if she was gave her protection under ADA. The circuit court also argued that there may be evidence of gender and race discrimination. They ruled that the case should be decided by a jury.

This case illustrates how crucial it is for employers to treat their employees with care. That treatment may grant them some protection under the law to which they wouldn’t otherwise be entitled.

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James Damore, a former Google employee who made headlines last year after his written diatribe regarding why women are barred biologically from being successful at engineering, is making headlines again for suing the company.

Gender-Discrimination-105366239-001In his long and considerably detailed complaint, Damore alleges that the tech giant discriminates in its hiring policies against white, conservative men. He accuses the company of having hiring quotas for workers who are female or belong to an ethnic minority. Citing meetings in which department managers are singled out and chastised for not having reached their quota of female or minority workers, Damore says that it is difficult for a white man who does not hold liberal views to get ahead at Google.

Among the charges, Damore says that Google actively discriminates against white male employees who have “perceived conservative views by Google.” The complaint goes on to state that Google has a practice of disciplinary action against employees who “expressed views deviating from the majority view at Google on political subjects raised in the workplace ….”

Google’s own diversity reporting makes Damore’s claims seem at least partially spurious. The company’s latest reports say that their workforce is 69 percent male and 56 percent white. What is more, their technical employees are 80 percent male and 53 percent of these workers are white. This may make it difficult for Damore to support his claims in court.

At the same time, Google is being sued by four female former employees who say that the company openly discriminates against women, paying them less than male counterparts and making it more difficult for them to advance to more responsible positions. In fact, the government is already investigating Google for suspected discriminatory practices against females and minorities.

Google seems to be embattled on all sides thanks to these lawsuits. Their position is a stark reminder of how important it is to develop hiring, promotional, disciplinary and firing practices that are in strict accordance with the law. Working closely with a business and employment attorney is an excellent way to ensure that your company does not run afoul of the law.

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Sexual harassment and abuse in a wide range of industries has made major headlines in recent months. Heavyweights in Hollywood and the media, along with CEOs of major corporations, are all losing their reputations as allegations come to light. With more people being aware than ever before about the dangers of sexual impropriety in the workplace, now is an excellent time to introduce more stringent policies and to implement comprehensive training at all levels of any organization.

bribery4The recently passed federal tax law adds another layer of complication to the settlement of sexual harassment and abuse claims in the workplace. Previously, employers could deduct the cost of settlement payments made to the victims of sexual harassment. It also was possible to deduct the cost of severance packages that were given to at-fault employees. The new tax legislation appears to put an end to this practice.

This new tax law adds § 162(q) to the Internal Revenue Code as follows:

“(q) PAYMENTS RELATED TO SEXUAL HARASSMENT AND SEXUAL ABUSE.—No deduction shall be allowed under this chapter for—

(1) any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement, or
(2) attorney’s fees related to such a settlement or payment.”

In other words, when the settlement of the sexual harassment claim involves a non-disclosure agreement, the employer will no longer be able to deduct the cost of those proceedings on their federal taxes.

As straightforward as the law’s wording is, its application promises to be complex. What happens if the plaintiff alleges other forms of harassment or discrimination in the same proceedings? Is the cost of settlement for those claims still deductible? If the employer disagrees that the payments should not be deductible, what means do they have to fight it? Going to court would all-but guarantee the publication of information that is subject to the non-disclosure agreement.

The new federal tax law gives employers one more excellent reason to train all employees regarding the dangers of sexual harassment and abuse in the workplace. Preventing these incidents before they happen is the best way to avoid complicated tax questions and litigation.

Feel free to contact me, Richard Oppenheim with your related legal questions. I may be reached at 818-461-8500 or by using the “Contact Us” box in the right column.