California Court Rejects Unconscionable Arbitration Agreement

Martha Carbajal sued her former employer, CW Painting, for unpaid wages.  The employer moved to compel arbitration pursuant to the employment agreement Carvajal signed.  The trial court denied the motion and refused to enforce the unconscionable arbitration agreement. CW appealed, but the Fourth Appellate District agreed with the trial court.  You can read the full opinion here.

Procedurally Unconscionable Arbitration Agreement

The appellate court held the arbitration agreement was procedurally unconscionable because it was part of an adhesion contract CW Painting imposed on Carbajal as a term of her employment.  The court took particular issue with the fact that, although the arbitration provision required the parties to arbitrate their disputes under the American Arbitration Association’s (AAA) rules, the agreement did not identify which of AAA’s many different rules would apply, CW Painting did not provide Carbajal with a copy of the rules it believed applied, and CW Painting required Carbajal to sign the agreement without telling her where she could find the governing rules or giving her an opportunity to determine which rules would apply.

Substantively Unconscionable Arbitration Agreement

The court went on to find the arbitration agreement substantively unconscionable because it allowed CW Painting to obtain injunctive relief in court while requiring Carbajal to seek relief through arbitration.  The agreement also waived the statutory requirement that CW Painting post a bond or undertaking to obtain injunctive relief, and it effectively waived Carbajal’s statutory right to recover her attorney fees if she prevailed on her Labor Code claims.

The court refused to sever these unconscionable terms and enforce the remainder of the arbitration provision,and instead declared the whole contract void because multiple unconscionable terms permeated the entire agreement.

The court rejected CW Painting’s contention the Federal Arbitration Act (9 U.S.C. § 1 et seq.; FAA) governed the dispute because CW Painting failed to timely present  evidence that the contract with the arbitration provision had a substantial relationship to interstate commerce.

Although many courts will enforce arbitration agreements, California courts will not rubber-stamp an employer-mandated arbitration clause.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted to this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

Nuclear Power Plant Supervisor Not a Whistleblower

Energy Northwest operates a nuclear power plant in Richland, Washington. Sanders, a maintenance manager, administered temporary staffing contracts for Energy. After nineteen years of employment, Energy terminated Sanders’ employment because he  improperly approved temporary staffing per diem and travel payments to the father of his daughter’s child. Sanders claimed he was a whistleblower, and Energy terminated him because he objected to the severity level designation of an internal “condition report,” in violation of  42 U.S.C. § 5851. A “condition report” is a report generated by employees when safety procedures may have been violated.

The whistleblower retaliation provision of the Act, 42 U.S.C. § 5851,FN:1 protects energy workers who report or otherwise act upon safety concerns. The statute specifically prohibits employers from discharging or otherwise discriminating against employees for several enumerated acts, including notifying an employer of a violation, initiating an enforcement proceeding, or testifying in a safety or enforcement proceeding. See 42 U.S.C. § 5851(a)(1)(A–E). The statute also includes a catch-all provision protecting employees “in any other action to carry out the purposes of this chapter . . . .” Id. at § 5851(a)(1)(F).

Sanders had no independent knowledge of possible safety violations prior to the creation of the internal condition reports at issue. Sanders did not generate the condition reports and Energy was already aware of the potential safety violations, and its internal process for remediation was underway. According to the majority opinion, the safety problems Sanders identified were not “overlooked, neglected, or concealed by management” and were not “concrete [and] ongoing” issues. The court found that Sanders’ conduct fell outside the scope of the Act’s protection, and the district court properly granted summary judgment. Sanders tried to amend his complaint to include state-law disability and retaliation claims, but the court denied the motion, in part, because it was made less than three weeks before the close of discovery and a year after filing the complaint.

Did He Really Say That? Better Workplace Communication

I recently interviewed Suzanne Wertheim of Worthwhile Research and Consulting regarding the ways people communicate in the workplace, and how employers, employees and attorneys can use linquistic anthropology to improve workplace communication and interpret what people are saying and not saying.

Workplace Communication

Suzanne Wertheim explains how people from different backgrounds and cultures–including people raised in different parts of the same country–use words differently.  She discusses what happens when we misinterpret someone’s communication style as an intentional act.  Dr. Wertheim explains how she helps people understand more effective ways to communicate, and how managers and co-workers can create a more harmonious workplace by understanding the diverse nature of workplace communication.

Worthwhile Research & Consulting is a boutique firm applying social science to real-world problems. We provide customized diversity training and communication workshops, legal consulting and continuing legal education, and communication coaching.

Listen to the interview here, and look for Suzanne’s article in the upcoming ACBA Labor & Employment Law section e-newsletter.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted to this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

Reporting Your Hours Worked If You Want to Get Paid

An employee is entitled to compensation for any hours the employer “suffers or permits” the employee to work. But what happens if the employer does not know, and does not have reason to know, that the employee was working additional unreported hours?  The following cases emphasize the importance of reporting your hours worked if you want to get paid.

Reporting Hours Worked

The words “suffer” and “permit,” as used in the FLSA and California’s Labor Code statutes, means “with the employer’s knowledge.” Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575, 585; White v. Starbucks Corp. (N.D.Cal. 2007) 497 F.Supp.2d 1080, 1083; Jong v. Kaiser Foundation Health Plan, Inc. (2014) 226 Cal.App.4th 391, 395. “[W]here the acts of an employee prevent an employer from acquiring knowledge, here of alleged uncompensated overtime hours, the employer cannot be said to have suffered or permitted the employee to work in violation of [the FLSA].” Forrester v. Roth’s I.G.A. Foodliner, Inc. (9th Cir. 1981) 646 F.2d 413, 41-415.

In Jong v. Kaiser Foundation Health Plan, Inc. (2014) 226 Cal.app.4th 391, the plaintiff knew it was Kaiser’s policy to pay for all hours worked and to pay for all overtime hours employees recorded.  The plaintiff knew how to report his hours worked, and was paid for all overtime hours he reported.  Jong did not tell his employer that he had unreported hours worked, but allegedly worked off-the-clock in order to comply with the company’s budget requirements.  When Jong sued his employer for unpaid overtime under the FLSA and California’s wage and hour laws, the court granted Kaiser’s motion for summary judgment, denying Jong any relief, because an employer cannot be held liable for failing to pay for hours the employee never reported.

In Forrester v. Roth’s I.G.A. Foodliner, Inc. (9th Cir. 1981) 646 F.2d 413, 414, the employer’s officials stated in their affidavits that they had no knowledge that Forrester worked uncompensated overtime hours.  The plaintiff testified that he did not mention any unpaid overtime work to any store official prior to leaving his employment.  Forrester knew that overtime was supposed to be reported on time sheets and the store regularly paid for reported overtime.  When the plaintiff reported overtime, the company paid the overtime.  The court granted the store’s motion for summary judgment, concluding:

 “[W]here an employer has no knowledge that an employee is engaging in overtime work and that employee fails to notify the employer or deliberately prevents the employer from acquiring knowledge of the overtime work, the employer’s failure to pay for the overtime hours is not a violation of [the FLSA].”  Forrester v. Roth’s I.G.A. Foodliner, Inc. (9th Cir. 1981) 646 F.2d 413, 414.

In White v. Starbucks Corp. (N.D.Cal. 2007) 497 F.Supp.2d 1080, the employee never told his employer that he was working off-the-clock. White and other employees recorded overtime and were paid for overtime work.  White argued that the employer knew or should have known that he and other store managers could not perform the work in the time allotted, but could not identify any specific managerial employee that he told he was working off-the-clock.  The court held that while the plaintiff “may be able to show a material dispute whether Starbucks had actual or constructive knowledge that some store manages sometimes worked off-the-clock, plaintiff has not submitted evidence that Starbucks had actual or constructive knowledge that [the plaintiff] worked off-the-clock.”  Id. at 1084.  The court granted Starbucks’s motion for summary judgment because “no reasonable jury could conclude that Starbucks knew about White’s alleged unpaid overtime.”  Id. at 1085.

In Newton v. City of Henderson (5th Cir. 1995) 47 F.3d 746, Newton worked for the City as a police officer.  He was assigned to work with the USDEA in East Texas.  He remained a City employee and was paid by the City, but the DEA had the right to control Newton’s day-to-day functions and duties.  The City’s personnel policy required employees to obtain approval prior to working overtime.  Newton admitted he was only authorized to work a certain amount of overtime.  When Newton submitted requests for additional overtime to the City, the City denied the request because the City could not afford to pay the additional overtime.  Newton submitted time reports to the City and was paid for all of the hours claimed on those time reports.  Newton never made a demand for unauthorized overtime hours until he resigned.  Newton prepared separate DEA forms reflecting the overtime hours he later claimed, but he never presented the forms to the City until he resigned.  Newton claimed the City knew about the additional overtime hours because he made daily oral reports of the work he was performing, but he never actually specified the number of hours he was working overtime.

The court was unwilling to hold the employer responsible for unreported overtime hours because Newton failed to follow the company’s policies to obtain approval for and to report the overtime hours worked.  “In light of the fact that [the employer] explicitly ordered Newton not to work overtime and in light of the fact that Newton admits that he never demanded payment for overtime already worked, it is clear that access to information regarding the Task Force’s activities standing alone, is insufficient to support the conclusion that the City should have known that Newton was working overtime.” Id. at 749.

These cases demonstrate some of the issues employees face when bringing a wage and hour claim.  Employers cannot turn a “blind eye” and force employees to work off-the-clock, but employees cannot take advantage of secretly working without the employers knowledge.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted to this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

EDD and Labor Commission Provide Guidance: Employee Versus Independent Contractor

The EDD and the DLSE (Labor Commissioner) are hosting on a free seminar throughout California regarding how to classify a worker as an employee versus independent contractor.  In the San Francisco Bay Area, the next one is in Dublin on February 11th.  For other dates and times, you can check the EDD’s website.

Employee Versus Independent Contractor

There are many benefits to using independent contractors, but is it worth the risk?  Classifying someone as an employee versus independent contractor has the potential to create significant exposure for companies that misclassify independent contractors due to a lack of understanding of what constitutes an employee versus independent contractor.  California Labor Code section 226.8 has significant monetary penalties for employers or persons who willfully misclassify employees as independent contractors.  “‘Willful misclassification’ means avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor.”

Since 2012, the Department of Labor, the IRS, and several state agencies have been sharing information about worker misclassification.

 

When: Thursday, February 11, 2016
Time: 9:00 a.m. to 3:30 p.m.
Where: Dublin Civic Center
100 Civic Center Plaza, Council Chambers
Dublin, CA 94568

The Employee versus Independent Contractor Tax Seminar will cover:

  • Common misconceptions about independent contractors.
  • Ways to combat payroll tax fraud.
  • How to distinguish between employees and independent contractors.
  • Statutory and exempt employment.
  • Resources to help classify workers.

EDD & Labor Commissioner

To register for the event, go to: http://www.edd.ca.gov/Payroll_Tax_Seminars/

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted to this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

Court Reduces $7.1million Jury Verdict to Zero

Long-time sports columnist, TJ Simers, sued his employer, the LA Times, alleging disability and age discrimination.  Simers claimed that in 2013, after 23 years working for the LA Times, he collapsed due to a mini-stroke.  According to JuryVerdictAlert.com, Simers claimed  he continued to produce his popular column despite his health concerns, but his column was later taken away and he was made a regular reporter at the same salary.  He later resigned and accepted a position with the Orange County Register at a lesser salary.  The LA Times contended that Simers violated ethics polices in pursuing a possible TV deal about his career, which created a conflict of interest that he failed to disclose. The Los Angeles Times denied demoting plaintiff and argued that  plaintiff voluntarily resigned.  After a jury found in his favor, the court reduced the jury verdict to zero.

Judge reduces $7.1million jury verdict to zero

A jury found in Simers’ favor (9 to 3) awarding $7.1million, including $5million in emotional distress damages.  The judge later overturned the award on a judgment notwithstanding the verdict. The court reduced the $7.1million jury verdict to zero.  The trial took about two years to get to trial and was in trial for 6 weeks. The jury deliberated for a day and a half. So, why did the court overturn the jury’s award? Because, according to the court, Simers quit his job and was not constructively terminated.

Clients often ask me whether it is better to quit or be fired.  My answer depends on what the client is trying to accomplish.  In terms of maintaining a wrongful termination action, it is almost always easier to prove the case if the employee is fired.  However, it may be easier to get a new job if the employee leaves on her own terms, and it is almost always better to have a job than a lawsuit.  This particular plaintiff spent two years of his life fighting his employer, only to end up with nothing.  Perhaps his attorneys handled the case on a contingency basis, but his attorneys likely spent hundreds of hours and they ended up with nothing.  The employer, no doubt, paid its attorneys a healthy amount, and although they won at the trial level I am sure the plaintiff will appeal.

I try to counsel my clients–employer or employee–to make smart business decisions.  What may look like a good investment at the beginning, can oftentimes turn sour as the case progresses.  Any time parties litigate a case, they are spinning the wheel of destiny with little control over the eventual outcome.  Sometimes it makes sense to spin that wheel.  Other times it doesn’t.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted to this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.