Hospitality Labor and Employment Law Blog : Hotel, Restaurant, Resort & Spa Lawyers & Attorneys: Epstein Becker & Green Law Firm: Hospitality Law

By Michael Kun

We have written previously in this blog about California’s obscure “suitable seating” law, which requires that some employers provide “suitable seating” to some employees.

In short, the plaintiffs’ bar recently discovered a provision buried in California’s Wage Orders requiring employers to provide “suitable seating” to employees when the nature of their jobs would reasonably permit it. The provision was not designed to cover employees in the hospitality industry who often stand to show that they are ready to assist customers. Instead, it was written to cover employees who normally worked in a seated position with equipment, machinery or other tools. Nonetheless, employers in a variety of industries have been hit with class actions alleging that they have violated those provisions – and those cases are typically brought by a single plaintiff who was well aware that the employer expected him or her to be standing while performing the job at the time he or she applied. Just as typically, those employees have not even requested a seat before filing suit.

Now, reversing a district court decision that dismissed a “suitable seating” class action on the grounds that there had been no request for a seat, the Ninth Circuit has held that an employee need not request a seat to be entitled to one.

The Ninth Circuit explained that the district court had read into the Wage Orders something that was not there – a requirement that employees affirmatively request seats. Importantly, the Ninth Circuit expressly declined to comment on whether the nature of the work would reasonably permit seats in the case at issue. As before, it appears that will be the dispute in most “suitable seating” cases.
 

by Maxine H. Neuhauser and Amy E. Hatcher

On January 7, 2013, the New Jersey Department of Labor and Workforce Development (the “Department”) published in the New Jersey Register proposed new rules and notification language to implement a recently enacted law intended to fight gender inequity and bias in the workplace. The notice of proposal is available for downloading here.

The law, which became effective on November 19, 2012, requires every employer in New Jersey with 50 or more employees to post a notice advising employees of their right to be free from gender inequity or bias in pay, compensation, benefits, or other terms or conditions of employment under particular state and federal laws.

New Jersey employers are also required to distribute a copy of the notice:

·                     In English and Spanish and any other language that the employer reasonably believes is the first language of a significant number of the employer’s workforce, provided a notice has been issued in that language by the Department;

·                     To all employees no later than 30 days after the notice is issued by the Department;

·                     At the time of an employee's hiring;

·                     To all employees annually, on or before December 31 of each year (and the employer must obtain a written acknowledgement of receipt); and

·                     At any time upon the first request of an employee.

The notice may be transmitted electronically to employees via e-mail, or via an internet or intranet site, so long as it is accessible and the employer provides notice to employees that the notice has been posted electronically.

Importantly, the notification requirements of the law are not triggered until the New Jersey Commissioner of Labor and Workforce Development issues the form of notification by regulation, which will likely take at least a few months. Employers will have 30 days from the date of the notice of adoption in the New Jersey Register, containing the final form of the notification, to comply with the notification and posting requirements.

A public hearing on the proposed amendments and new rules is scheduled to take place on February 13, 2013, and the due date for public comments is March 23, 2013. The Department’s forthcoming January 22 notice, which provides notice of these dates (and also corrects an error in the January 7 proposal), is available for downloading here.

For further information on other New Jersey employer posting requirements, see EBG’s Act Now Advisory entitled “Employer Posting Requirements Under New Jersey Law.”

By Michael Kun and Aaron Olsen

Agreeing with the recent federal district court opinion in our case Alonzo v. MAXIMUS, Inc., 832 F.Supp.2d 1122, 1126 (2011), the California Court of Appeals has confirmed in a case against See’s Candy that California employers may round employees’ time entries so long as the employer’s rounding policy does not consistently result in a failure to pay employees for time worked.

In Alonzo, a federal district court granted summary judgment in favor of our client MAXIMUS, Inc. on the plaintiffs’ time rounding claims. The Alonzo Court explained that the federal standards regarding time rounding apply to employees’ time rounding challenges brought under California law. In the case against See’s Candy, the plaintiff urged the California Court of Appeals to reject the federal court’s analysis in Alonzo. The California Court of Appeal, however, stated, “We agree with the Alonzo court. In the absence of controlling or conflicting California law, California courts generally look to federal regulations under the FLSA for guidance…. Assuming a rounding-over-time policy is neutral, both facially and as applied, the practice is proper under California law because its net effect is to permit employers to efficiently calculate hours worked without imposing any burden on employees.”

Given the number of employers throughout California that have time-rounding policies, the California Court of Appeal’s decision to adopt the reasoning from the federal court in Alonzo is another welcome development for employers. Indeed, plaintiffs’ counsel likely had a number of time rounding class actions lined up to file in the event the Court of Appeal held that time rounding policies were unlawful. Those class action complaints have likely found their way to the recycling bin.

By Michael Kun

On Monday, June 25, 2011, the California Supreme Court issued its long-awaited decision in Coito v. Superior Court, addressing the issue of whether a party in litigation could rely upon the work product doctrine to withhold witness statements obtained by its attorneys or the identities of persons who had given such statements. 

In short, while parties in California have long relied upon dicta in the Court of Appeal decision known as  Nacht v. Lewis for the proposition that such information is protected from disclosure by the work product doctrine, case-by-case determinations will now be required to determine whether a party must provide such information to its opponent in discovery in California state court cases. 

In its decision, the Court rejected the dicta in Nacht that provided for an absolute privilege for such witness statements, holding instead that witness statements may be entitled to an absolute privilege under some circumstances. 

The Court explained, “In light of the legislatively declared policy and the legislative history of the work product privilege, we hold that the recorded witness statements are entitled as a matter of law to at least qualified work product protection. The witness statements may be entitled to absolute protection if defendant can show that disclosure would reveal its ‘attorney’s impressions, conclusions, opinions, or legal research or theories.’ (§ 2018.030, subd. (a).)  If not, then the items may be subject to discovery if plaintiff can show that ‘denial of discovery will unfairly prejudice [her] in preparing [her] claim . . . or will result in an injustice.’ (§ 2018.030, subd. (b).)” (Emphasis added.)

As for the identities of persons who provided witness statements to counsel, those will now be easier to obtain in California state court cases.  The Court explained, “As to the identity of witnesses from whom defendant’s counsel has obtained statements, we hold that such information is not automatically entitled as a matter of law to absolute or qualified work product protection. In order to invoke the privilege, defendant must persuade the trial court that disclosure would reveal the attorney’s tactics, impressions, or evaluation of the case (absolute privilege) or would result in opposing counsel taking undue advantage of the attorney’s industry or efforts (qualified privilege).” (Emphasis added.)

This decision will have a great impact on the manner in which cases are litigated in California, particularly as they relate to litigation strategy.  The decisions whether to require a party to turn over witness statements obtained by its attorneys, or disclose the identities of persons who provided statements, will generally be left to the discretion of the judge.  Of course, all judges differ.  Some judges may be more inclined to require the production of this information than others.  Accordingly, parties will have to give considerable thought to when they wish to obtain written statements, mindful that they may have to disclose them to the opposing party. 

This will be an especially important strategic decision in class actions and collective actions, where defendants often obtain a great many written statements from putative class members early in the case for use later.  A defendant must now be concerned that it may be required to turn over all of those statements early in the case, educating the plaintiff’s counsel about the defendant’s strategy in the process and, perhaps, encouraging them to contact those putative class members to try to get them to recant their statements or to try to stop other putative class members from speaking with defendant’s counsel.  It will also be an important strategic decision in those cases where attorneys seek to have witnesses sign statements early to “lock in” their testimony, with no intention of using those statements in the case unless the witness later changes his or her testimony. 

By Kara Maciel and Aaron Olsen

After five years of litigation, a Los Angeles Superior Court has denied class certification of a class action against Joe’s Crab Shack Restaurants on claims that its managers were misclassified as exempt and denied meal and rest periods in violation of California law.  The court found that the plaintiffs had not established adequacy of class representatives, typicality, commonality or superiority, and emphasized a defendant’s due process right to provide individualized defenses to class members’ claims.

Because the case was handled by our colleagues in our Los Angeles office, we think it best not to comment on the decision other than to say that it highlights the need for creative strategies in defending against wage-hour class actions.   

By:  Forrest G. Read, IV

Arbitration agreements can be an effective way for employers in the hospitality industry to streamline and isolate an employee’s potential claims on an individual basis and protect themselves from a proliferation of lawsuits with many plaintiffs or claimants. But the National Labor Relations Board’s (“Board”) January 6, 2012 decision in D.R. Horton, Inc. and Michael Cuda, notably finalized by two Board Members on departing Member Craig Becker’s final day, has caused significant confusion as to how employers can enforce such arbitration agreements with their employees over employment claims, including wage and hour disputes. 

In D.R. Horton, the Board concluded that an employer commits an unfair labor practice under the National Labor Relations Act (“NLRA”) when it requires, as a condition of employment, its employees to sign an arbitration agreement that precludes them from filing, in any forum, any class or collective claims addressing their wages, hours or other working conditions against the employer. However, the Board’s decision in D.R. Horton appears to be inconsistent with, if not directly contradicts, a recent U.S. Supreme Court decision upholding the validity of class action waiver provisions in consumer arbitration agreements under the Federal Arbitration Act, which many employers and members of the labor and employment bar interpreted as extending to waiver provisions in employment-related agreements.

Notwithstanding the Supreme Court’s unmistakable and consistent pro-arbitration stance, the Board in D.R. Horton directly concluded that Supreme Court precedent regarding arbitration agreements did not apply to the employment context.  The Board’s decision is controversial because it was issued by two Members leaving employers left to question its validity and confused as to which precedent to follow.  In addition, it represents another example of the Board’s willingness to insert itself into matters outside the traditional unionized workplace and find NLRA violations outside the labor-management realm.

D.R. Horton is also controversial because it places courts at an intersection of whether to follow and apply Board or Supreme Court precedent.  Indeed, since the Board’s ruling in D.R. Horton, at least one court in New York weighed in on the issue and, in following Supreme Court precedent, tentatively ruled that D.R. Horton does not apply in the wage-hour context where the employee had voluntarily entered into an arbitration agreement not as a condition of employment. But the court noted that D.R. Horton may have applied and led to a different conclusion if the argument had been made that the arbitration agreement had been presented to the employee in a confusing fashion or had operated through compulsion by the employer (even if presented voluntarily).

In short, the question of whether employment-related arbitration agreements are enforceable will remain a murky one until D.R. Horton, currently a hindrance to hospitality employers that seek to compel individual arbitration of wage and hour claims with their employees, is appealed and decided upon by an appellate court. In the meantime, employers should be cautious about the application of such agreements. Any current arbitration agreements (particularly those that include class action waivers) should be reviewed for enforceability, and perhaps suspended depending on how the waiver provisions were worded and the circumstances under which they were agreed to. In addition, hospitality employers should carefully consider whether and how to present new arbitration agreements to employees and scrutinize the agreement’s waiver provisions before they are executed.

By Michael Kun

               Understandably, employers have celebrated the U.S. Supreme Court decisions in Wal-Mart Stores, Inc. v. Dukes and AT&T Mobility v. Concepcion.  At the very least, those cases would seem to suggest that the wage-hour class actions and collective actions that have besieged employers might be curtailed significantly, along with the costly settlements triggered by the in terrorem effect of such lawsuits.

               California employers can stop celebrating, or at least tone down those celebrations.

               Unlike other states, California law provides for a mechanism by which employees can file suit on behalf of other employees without bringing such claims as class actions – the Private Attorneys General Act (“PAGA”).  PAGA, often referred to as “The Bounty Hunter Law,” generally allows an employee to file suit against an employer on behalf of all “aggrieved employees” for alleged violations of the California Labor Code.  The potential recovery in a PAGA claim can be staggering – while the limitations period is only one year, each “aggrieved employee” can recover up to $100 for the first pay period in which a violation occurs, and up to $200 for each subsequent pay period in which a violation occurs.  PAGA also provides for the recovery of costs and attorney’s fees.

               Because claims brought under PAGA are considered representative actions, not class actions, the California Supreme Court has held in Arias v. Superior Court that a PAGA plaintiff need not have a class certified to proceed.  As such, it is not surprising that plaintiffs in California are already arguing that the tougher class certification standards set forth in Wal-Mart are inapplicable to PAGA claims.  Given Arias, it is expected that California courts will agree.

               As for Concepcion, which held that arbitration provisions with class action waivers may be enforceable, plaintiff’s counsel have already begun arguing that Concepcion is inapplicable to PAGA claims.  In Brown v. Ralphs Grocery Co., a California Court of Appeal has agreed with that argument.  While that decision may well be challenged before the California Supreme Court, it only underscores how California employees have an avenue to try to avoid the impact of United States Supreme Court decisions regarding class actions – PAGA claims.

by Michael Kun and Doug Weiner

It is no secret that employers have been beseiged by wage-hour litigation, including wage-hour class actions and collective actions.   These lawsuits have hit the hospitality industry as hard as any other industry, perhaps harder.

It is also no secret that the persons who benefit most from these actions are often plaintiffs' counsel, who frequently receive one-third or more of any recovery.  

Now, as a result of an unprecedented new program initiated by the the Department of Labor's Wage and Hour Division ("WHD"), the WHD will be practically delivering potential plaintiffs to the doors of plaintiffs' counsel -- and the WHD has invited plaintiffs' counsel to let it know if it wants a piece of the action. 

Despite the fact that the WHD has an increased enforcement budget and has hired 350 new investigators over the last two years, the WHD has said that it is unable to handle all of the claims it receives.  Rather than seek more funding or implement new procedures to handle the claims, the WHD has made a stunning announcement that can only lead to an increase in wage-hour litigation across the country.  It has announced that it will begin referring employees directly to attorneys to assist them with their claims under the Fair Labor Standards Act ("FLSA") and the Family and Medical Leave Act ("FMLA").   The WHD's new program, which is referred to as the "Bridge to Justice," is part of collaboration with the American Bar Association. 

The Department of Labor's guidance on the "Bridge to Justice" program may be found here.  Under the new initiative, employees will be given a toll-free number to obtain referrals to attorneys in their area.  And attorneys who wish to be included on the referral list are invited to submit their names. 

For employers  -- and hospitality employers in particular --  the "Bridge to Justice" is likely to be seen as little more than the latest effort by the WHD to encourage employees to sue their employers, rather than to raise any concerns with their employers and try to resolve them amicably.  

For plaintiffs' counsel, the "Bridge to Justice" is likely to be seen as an early holiday gift from the WHD, one that they will reap the benefits of for years to come