Practice Areas:
Employment and Labor
Construction
Business
Civil Litigation
Published on:

1385675_dices.jpgIn Lu v. Hawaiian Gardens (2010), the California Supreme Court determined that employees do not have a private cause of action to recover their gratuities (tips) under Labor Code Section 351. The decision creates some uncertainty about enforcement of tips under the Labor Code.

Lu, the employee who brought the lawsuit, was a dealer in a casino. He objected to the casino requiring him to share 15-20% of his tips with fellow employees like hosts, customer service representatives, “floormen,” and concierges. Lu sued under Labor Code Section 351 contending that the tip pooling was depriving him of the tips he earned. He also contended that his employer violated the Unfair Competition Law, Business and Professions Code 17200, by requiring the tip pooling among people who might qualify as agents of management.

The Supreme Court focused on whether the employee had a right to sue to recover the tips, commonly referred to as a private right of action. It examined the Legislative history of Labor Code Section 351 and noted that an employer is subject to a criminal penalty (a misdemeanor) and fines for taking an employee’s tips under that section. It noted that the Department of Industrial Relations has the authority to enforce Labor Code Section 351. The Court determined that it did not provide Lu with a private cause of action.
Continue reading →

Published on:

592612_interior_design_shots.jpgThe case of Chau v. Starbucks (2009) 17 C.A.4th 688 brought some clarity to tip pooling and who is entitled to share in gratuities (tips). In Starbucks, an employee brought a class action, alleging that his employer illegally required him to share his tips with management.

Chau was a barista, which is an entry-level, part time job serving coffee. Next to the cash register at many Starbucks is a tip “cube.” A gratuity is placed in the tip cube non-specifically for the customer service “team.” At the end of the shift, a shift supervisor (but not a manager) tallies the tips and apportions them equally to baristas and shift-supervisors that worked during the shift.

A shift supervisor does the same job as a barista 90% of the time, but also has some management-like responsibilities such as supervising employees, opening and closing the store, and making deposits into the safe. The next higher level of responsibility is a store manager, who has the authority to hire and fire. Starbucks wisely had a policy prohibiting its managers from sharing in tips.
Continue reading →

Published on:

1084673_doubt-1.jpgThe question of whether a worker is an employee of an independent contractor is an important one. Beginning in 2008, governmental agencies stepped up their enforcement of workplace laws in an effort to unearth independent contractor misclassifications. The Department of Labor (DOL), Internal Revenue Service (IRS), Employment Development Department (EDD), and Division of Labor Standards Enforcement (DLSE) have all increased their investigation of businesses to specifically identify employee misclassification. The cost of misclassification can be steep, including back wages, penalties, and interest.

The DOL estimates that almost one-third of employers misclassify employees. Since 2010, the DOL and IRS have targeted construction, home health care, transportation, and warehousing industries.

California State Law

In California, the principle test for determining if someone is an employee or an independent contractor is whether “the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired.” Borello & Sons, Inc. v. DIR (1989) 48 Cal.3d 341, 350.

The DLSE starts with the presumption that the worker is an employee. This is a rebuttable presumption that the employer must overcome. Labor Code Section 3357. The actual determination of whether a worker is an employee or independent contractor depends upon a number of factors, none of which is controlling by itself.
Continue reading →

Published on:

875413_balance, out of.jpgIn California, an employee has a few options for filing a work related grievance. When it is a wage and hour matter, the employee can sue in court or file a complaint with California’s Labor Commissioner. The Labor Commissioner is the Chief of the Division of Labor Standards Enforcement (DLSE), which is part of California’s Department of Industrial Relations.

The mission of the DLSE is, in part, to vigorously enforce minimum labor standards in order to ensure employees are not required or permitted to work under substandard unlawful conditions. The DLSE has jurisdiction to resolve employee complaints about wage and hour matters, among other things. Wage and hour matters include an employee’s claims for unpaid wages, unpaid overtime, missed meals and rest periods, waiting time penalties, minimum wage violations, and other related matters.

DLSE claims are handled administratively, meaning the process takes place in a less formal setting than the Superior Court. However, the informality should not make the employer let its guard down. On the contrary, employers that attend DLSE hearings without an attorney often are unprepared to defend themselves and regularly wind up with a result they did not expect.
Continue reading →

Published on:

blue shield.jpgThe California Supreme Court issued an important decision about the duty to indemnify and defend arising out of a construction contract. In Crawford v. Weather Shield, (decided 7/2008) Weather Shield (WS) manufactured and supplied windows on a large residential construction project to developer / general contractor, J.M. Peters (JMP).

The subcontract between WS and JMP provided two important and distinct rights, indemnity and defense. WS owed JMP indemnity that obligated it to repay JMP if WS’s work was defective. WS also owed JMP a defense against lawsuits “founded upon…[a] claim of such damage…growing out of the execution of [WS’s] work.”

The homeowners in a large residential project sued JMP, alleging among other things, defects in the design, manufacture, and installation of the windows. Thus, as the window manufacturer and supplier, WS’s work was directly implicated in the homeowners’ complaint. JMP cross-complained against and tendered its defense and indemnity to WS.

WS refused to defend or indemnify JMP. WS contended that its windows were not defective and therefore it did not owe JMP a duty to defend it in the underlying lawsuit. After some of the parties settled, the remainder of the case went to trial.
Continue reading →

Published on:

1314902_medical_doctor.jpgMany employees and employers are surprised to learn there is a California statute allowing employees to use up to one-half of their annual sick leave for the care of an immediate family member. The statute, Labor Code § 233, is informally referred to as Kin Care because it applies to the care of an employee’s immediate family. Under Labor Code § 233, an employer must allow the employee to use sick leave to attend to his or her child, parent, spouse, or domestic partner. The amount of sick leave that can be used for this purpose is equal to the sick leave the employee earns in the six preceding months.

An employer violates this statute when it denies the employee the right to use his or her leave this way, terminates the employee, or discriminates against an employee that wants to or uses sick leave in this manner. When a violation is proven, the employee is entitled to reinstatement and actual damages, among other remedies.

The California Supreme Court took up the issue of Kin Care in McCarther v. Pacific Telesis Group in 2010. However, the major holding of that case is unlikely to affect most California employers. The employer in that matter had a sick leave policy that allowed for an indefinite number of paid sick days, in contrast to a traditional sick leave policy of a defined number of days per year. Because of that distinction, the employer did not violate the Kin Care provision of Labor Code § 233.

Published on:

1229466_dollar_sign.jpgOne of the major concerns in defending an employment lawsuit is the financial cost of doing so. Aside from the very real ‘business’ cost of having to focus management’s attention on the case, an employer must pay its own attorney to defend the company. The employer will also be liable for the employee’s statutory attorney’s fees if the employee obtains a judgment. The attorney’s fee statute is one-sided, favoring the employee. This often forces an employer to consider if it should settle a case with minimal damages to avoid its exposure to a larger award of attorney’s fees.

In a rare piece of good news for California employers, the California Supreme Court upheld a trial court’s decision that denied attorney’s fees under the Fair Employment and Housing Act (FEHA) to an employee, even though the employee prevailed in the lawsuit. The case of Chavez v. City of Los Angeles broke tradition with the practice under the FEHA that a prevailing employee automatically receives an attorney’s fees award.
Continue reading →

Published on:

1402599_untitled.jpgWhen a construction contractor (including subcontractors, material suppliers, etc.) is not paid for its work, the contractor is entitled to record a mechanic’s lien against the private property where the work was performed. The mechanic’s lien secures the contractor’s right to payment against the real property that was improved by its labor. This greatly improves the contractor’s ability to collect payment for its work.

Beginning January 1, 2011, construction contractors that are entitled to record a mechanic’s lien must follow a few new procedures. In addition to the former requirements of recording a mechanic’s lien and timely filing a lawsuit to foreclose the lien, contractors must now give a statutory Notice of Mechanic’s Lien to the owner of the property. They must also complete a proof of service proving that they served the Notice. Additionally, once a foreclosure suit is filed with the court, the contractor must record a Notice of Pendency of the Proceedings with the County Recorder within twenty days.
Continue reading →