The California Supreme Court’s ruling this morning in Alvarado v. Dart Containers may have many employers scrambling to verify their overtime pay calculations. The Court rejected Dart’s complicated overtime calculations, which utilized a multiplier of 0.5 instead of 1.5, and which, in calculating the “regular rate” of pay to determine overtime pay, used a divisor of the total hours worked, including overtime. According to the Supreme Court, to account for overtime premium associated with a flat sum bonus, the correct calculation is the amount of the bonus divided by the regular hours worked by the employee, multiplied by 1.5.

Thus, to correctly calculate the total overtime compensation due to the employee, the calculation is as follows:

(overtime hours x regular rate x 1.5) + (bonus/regular hours worked x overtime hours worked x 1.5) = total overtime compensation

Importantly, this rule applies retroactively, exposing any company that incorrectly calculated overtime rates to statutory penalties, whether or not the mistake was made in good faith.

The health care industry has long allowed employees to voluntarily waive one of the 2 meal periods on shifts greater than 12 hours. Plaintiffs in Gerard v. Orange Coast Memorial Medical Center argue, however, that such a waiver violates Labor Code section 512, which does not allow waivers on shifts longer than 12 hours. Defendants argue that section 11 of Wage Orders 4 and 5 control their meal period obligations, notwithstanding section 512. (Section 11 applies to union employees, but not the state and its political subdivisions). This case has already been decided twice by the Court of Appeal, with the last decision finding the waivers valid. The Supreme Court granted review.

The case is fully briefed and awaiting oral arguments before the California Supreme Court, after which time an opinion is due within 90 days.

The NLRB flip-flops again. After less than 3 months, the test as to whether the 2 or more entities will be deemed joint employers is back to the 2015 standard announced in the Board’s Browning-Ferris decision. Just in December 2017, the Board overruled Browning-Ferris in a 3-2 decision, Hy-Brand, which requires a showing that the company alleged to be a joint employer actually exercised some “direct and immediate control” over the essential employment terms of another company’s employees.

On February 26, 2018 though, the Board voted to vacate its Hy-Brand decision after an ethics investigation determined that member William Emanuel should have been disqualified from participating in the decision (his former law firm represented one of the companies in Browning-Ferris). Member Emanuel was in the majority of the 3-2 Hy-Brand decision.

For now, the Browning-Ferris standard applies; within the collective bargaining arena, joint employment can be established by showing “reserved contractual control”, even if not exercised, or indirect control, or control that is “limited and routine.”

A second Court of Appeal has ruled that discrimination against a person’s sexual orientation is a civil rights violation, in an unusual case where two federal bodies, the EEOC and the Justice Department, took opposite sides. In Zarda v. Altitude Express, Inc. et al, the federal appeals court in New York agreed with the EEOC that bias against sexual orientation necessarily discriminates on the basis of sex. While the employer, Altitude Express, Inc. is uncertain whether it will appeal the decision, it appears likely that this issue will ultimately head to the Supreme Court, because a third appellate court has, based on 1979 precedent, ruled that sexual orientation discrimination is not included in the Title VII anti-discrimination ban.

While still new enough that most employers don’t yet know what a “PAGA” claim is, a claim under PAGA (the four letter acronym for Private Attorney General Act) can indeed be a curse to those employers unlucky enough to have made its acquaintance. You see, under the Labor Code PAGA, aggrieved employees are allowed to file suit on behalf of the State of California Labor and Workforce Development Agency, themselves, and other employees to collect penalties for any violation of the California Labor Code.

If the Labor Code already specifies a civil penalty for violation of a specific provision, then an employee may attempt to collect that penalty for themselves and on behalf of other aggrieved employees. If the underlying Labor Code section does not specify the civil penalty, the PAGA penalty is equal to $100 for each employee per pay period for the initial violation, and $200 for each employee per pay period for each subsequent violation. Cal. Lab. Code §2699(f)(2).  Thus, given the breadth of the California Labor Code and the numerous opportunities for unintentional violations, the potential penalties are staggering. Even more, a successful employee will be awarded their attorney fees and costs.

Not only is there monetary incentive to assert PAGA claims (75% of the monies go to the State, and 25% to the employees), but plaintiff’s attorneys will often assert a PAGA claim as a backup in a class action because unlike class actions, a PAGA class does not have to be certified.  Additionally, PAGA claims are not waivable, whereas rights to assert class action are. Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014).

In July 2017, the PAGA claim became even more powerful.   In Williams v. Superior Court, 3 Cal.5th 531 (2017) the Supreme Court of California unanimously reaffirmed the broad scope of discovery in civil litigation, and held that plaintiff was entitled the name and contact information of all of the employer’s 16,500 employees, not just those of the workers in plaintiff’s store. In doing so, the Supreme Court rejected the notion that plaintiff must first show good cause or some likelihood of success on the merits before receiving such information. It reversed the trial court’s order that plaintiff must first answer deposition questions to establish some merit to plaintiff’s action before seeking that discovery.

The upshot of Williams is that a single employee, even on a weak or frivolous case, can force an employer to engage in extensive and costly discovery, and can expand the potential liabilities to such an extent that most employers cannot bear the risk of not settling.

With respect to PAGA, the saying “the best defense is a good offense” couldn’t be more true. Some Labor Code violations are considered “not serious” and are subject to a 33 day cure period before the employee may sue. Employers should contact their counsel immediately to ensure that the violations are properly corrected within that period. But even before a suit is filed, employers can mitigate their exposure to a PAGA suit by carefully examining their policies, procedures, and practices to preemptively spot any potential Labor Code violation and take corrective action.

Whether you have been sued under PAGA, or are simply looking to avoid a PAGA suit, we can help you.

Employers, it’s time to pull out the drafting pen and make an important change to your job application forms. Almost all job applications ask for basic information, including the applicant’s education and job history.  Under job history, application forms usually seek the names of prior employers, positions held, dates of employment, and salary history. But starting January 1, 2018, it will be illegal in California to ask, directly or indirectly, for an applicant’s salary history. Care must be taken to remove the salary history information requests from the application- even if the applicant does not fill out the information, the employer has improperly required the prohibited information. Care must also be taken to warn hiring managers and other job interviewers to avoid inquiry on past salaries in efforts to determine a salary offer. Further, an employer, upon reasonable request, is required to provide an applicant with the pay scale for the position. California employers should be prepared.

Finally, while the drafting pen is out, employers should also remove any questions regarding criminal convictions on their job applications.  This, too, has been prohibited.

The purpose behind this new law is to expand the equal pay protections of California’s pay equality mandates, including Labor Code Section 1197.5. Under section 1197.5, pay equality, on the basis of sex, race and ethnicity, is required for “substantially similar work, when viewed as a composite of skill, effort, and responsibility.” Use of salary history to set an employee’s wages is believed to perpetuate the pay gaps experienced by women and minorities, and therefore, has been banned. Further, although an employer may legally consider prior salary information disclosed voluntarily, without prompting, by an applicant in setting the compensation for that applicant, salary history alone may not justify any disparity in compensation; an employer still runs a risk of creating disparate pay for substantially similar work, and therefore, must tread carefully.

California employment rules are complex. Contact us if you need guidance in creating an equitable hiring and offer process, setting flexible and fair pay scales, drafting job descriptions, and/or updating your employment handbook or policies.

Under the New Parent Leave Act, employees who work for a company with 20 or more employees within a 75-mile radius may take up to 12 weeks of job-protected leave to bond with a new child within one year of the child’s birth, adoption, or foster care placement.  To qualify for leave,  employees must have worked for the employer for more than 12 months and worked at least 1,250 hours during the previous 12 months.  An employer employing both parents who are both entitled to leave for the same child does not have to give more than 12 weeks of leave total to the employees.  The employer may grant simultaneous leave to these parents if the employer chooses.  The law becomes effective January 1, 2018.

Please contact us if you need help updating your employee handbooks, or for assistance with your employee’s leave requests, including requests by employees to take baby bonding leave.

California employers who share or interchange employees with another employer should know about the joint employer doctrine and its potential impact on an employer’s status as a “joint employer” for leave of absence purposes under the California Family Rights Act (CFRA) and federal Family and Medical Leave Act (FMLA).

A private employer is covered under FMLA and CFRA if it is engaged in any business or enterprise in California and directly employs 50 or more employees in any US state, the District of Columbia or any US territory or possession to perform services for a wage or salary. (Cal. Govt. Code § 12945.2(c)(2)(A);Title 2 of the California Code of Regulations, § 11087(d); 29 U.S.C. § 2611(4)(A)(i) and Title 29 of the Code of Federal Regulations, § 825.104.)

Where two or more businesses exercise some control over the work or working conditions of an employee, the businesses may be considered joint employers of the shared employee under FMLA and CFRA. Under the joint employer test, an employer that does not otherwise meet the 50-employee threshold may still have to provide FMLA/CFRA leave to its eligible employees if it “employs” enough jointly-employed employees to put them over the 50-employee threshold.

The FMLA regulations state:

(a) Where two or more businesses exercise some control over the work or working conditions of the employee, the businesses may be joint employers under FMLA. Joint employers may be separate and distinct entities with separate owners, managers, and facilities. Where the employee performs work which simultaneously benefits two or more employers, or works for two or more employers at different times during the workweek, a joint employment relationship generally will be considered to exist in situations such as:

  1. Where there is an arrangement between employers to share an employee’s services or to interchange employees;
  2. Where one employer acts directly or indirectly in the interest of the other employer in relation to the employee; or,
  3. Where the employers are not completely disassociated with respect to the employee’s employment and may be deemed to share control of the employee, directly or indirectly, because one employer controls, is controlled by, or is under common control with the other employer.

29 C.F.R. § 825.106(a).

The CFRA regulation is identical to the FMLA regulation, except the California regulation adds the following sentence:

A determination of whether or not a joint employment relationship exists is not determined by the application of any single criterion, but rather the entire relationship is to be viewed in its totality based on the economic realities of the situation.” (Title 2 of the California Code of Regulations, § 11087(d)(3).)

Where a joint employment relationship is found, the joint employee is counted by both employers, whether or not maintained on one of the employer’s payroll, in determining whether the 50-employee minimum is met. (Title 29 of the Code of Federal Regulations, § 825.106(d); Title 2 of the California Code of Regulations, § 11087(e)(4)(B).) The net effect of this is that a smaller employer (less than 50 employees) may be covered under FMLA/CFRA and therefore have to provide FMLA/CFRA leave to eligible employees even if it has less than 50 employees on its payroll.

If you have questions about whether a joint employment relationship exists, feel free to contact me at 925.930.6600 or

There was a time when a work day ended at 5:00.  When the little hand reached 5 and the big hand found its way to 12 two things happened – workers headed home and bosses stopped paying their hourly employees.  How times have changed.   In the age of smart phones and constant e-mail connection a new issue arises – if an hourly employee is performing work from their personal phone does an employer have to chip in on the bill?

A large number of small businesses in California do not have any sort of employee cell phone policy in place and are unaware that they may be required to reimburse their employees for at least a portion of their personal cell phone bills.  As illustrated below, this is quickly becoming yet another issue California small business owners need to start thinking about.


In the recent decision¹, a California Court of Appeal held that when an employee uses their personal cell phone for work-related calls, Labor Code section 2802 requires the employer to reimburse them.  In reaching this conclusion, the Court of Appeal found that certain provisions of the Labor Code required reimbursement by employers for “all necessary expenditures or losses incurred by the employee in direct consequence” of their work, or in “obedience to the directions of the employer.”   This would be true despite the fact an employee is paying for an unlimited data package.  The Court held that despite the form of cell phone plan the employee selected or is paying for on their own, employers must pay some reasonable percentage of the employee’s cell phone bills – if not they would be receiving a windfall because it would pass on this business expense directly to the employee.

While the dust has yet to settle on the Cochran decision it appears that employers in California are required to compensate employees who use their personal phones for work purposes.  This is true even if they have unlimited data/minutes.

This decision creates the potential for new areas of litigation.  In an effort to avoid this, businesses should take a close look at their cell phone polices to ensure they are in compliance with the Labor Code (or, if you do not have a cell phone policy, prepare one!).  If an employee is expected to be accessible by phone or email outside of work – or if they are required to carry a cell phone as a part of the job – then it is necessary either to provide a work device or to pay a reasonable percentage of their bill.

¹Cochran v. Schwan’s Home Serv., Inc., 228 Cal. App. 4th 1137

California Labor Code § 925 went into effect on January 1, 2017, limiting an employer’s ability to require employees who “primarily reside and work in California” to enter into employment agreements that include out-of-state choice of law and/or forum selection clause.  The section effects employment contracts entered into on or after January 1, 2017.  This section, however, will not apply if the employee is represented by counsel in negotiating the terms of the employment contract.

image004Section 925 may have an immediate impact on employment contracts with covenants not to compete (“non-compete clauses”).  California Business & Professions Code § 16600 generally prohibits such clauses in employment contracts, favoring a public policy of a worker’s right to pursue any lawful trade or profession.  In the past, employers have utilized choice of law and/or forum clauses with selection of states that allow non-compete clauses to protect against competition by ex-employees based in California.

Labor Code section 925 will frustrate those efforts by employers to enforce choice of law and/or forum selection clauses by providing employees with the ability to preemptively challenge those clauses as unlawful.  There is some debate as to the enforceability of section 925 on a court in a different state, but Labor Code section 925 provides employees another tool to undermine an employer’s attempt to prevent competition by ex-employees.