Source: https://employerdefensereport.com/author/andrewjsommer/
Timestamp: 2019-04-25 09:19:13+00:00

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In California, generally an employer may not employ a non-exempt employee for a work period of more than five hours per day without providing the employee with a meal period that may be taken off the premises. Yet, in the restaurant industry employers often provide employees free or discounted meals to be eaten on the premises. Such perks are provided for countless reasons, including to allow employees to enjoy the dishes being offered to customers, to build morale and productivity, and to discourage theft.
In Rodriguez v. Taco Bell Corp., the United States Court of Appeals for the Ninth Circuit considered whether a restaurant violated California law by requiring employees purchasing meals from the restaurant at a discount to eat their meals on the premises.
In Rodriguez, a restaurant employee filed a class action lawsuit against Taco Bell claiming she was entitled to be paid a premium rate for the time she spent on the employer’s premises eating the discounted meal during her meal breaks. She argued that because the employer required the discounted meal to be eaten in the restaurant, that the employee was under sufficient employer control to render the time compensable.
At the time, the restaurant offered thirty-minute meal breaks that were fully compliant with California requirements, but with an offer that employees could purchase a meal from the restaurant at a discount. The catch? Employees were not required to purchase the discounted meal, but if they chose to they could only get the discount if they ate the meal in the restaurant. The policy was intended to prevent theft.
The court, applying the meal period standard set out by the California Supreme Court in Brinker Restaurant Corp. v. Superior Court, reasoned there was no violation of California law because the employer relieved employees of all duties during meal breaks and exercised no control over their activities. Employees were free to use the thirty minutes as they wanted, and the employer did not interfere with the employees’ use of the break time. Employees were not required to purchase any restaurant products.
The court in Rodriguez distinguished cases where employers exercised control over employees even though they were not performing work by, for example, requiring employees travel to work on employer provided transportation. Where employees were compelled to participate, compensation was required. On the other hand, where employers offered a benefit or service that employees could choose, compensation was not required. The court further distinguished cases where employers exercised control over employees during their breaks by, for example, subjecting them to “on-call” restrictions. In such cases employees were subject to performing duties for their employer during breaks and thus entitled to compensation for such time.
The court also rejected an additional claim by plaintiff that the discounted value of the meal should be added to her regular rate of pay for overtime purposes. Since the court held plaintiff was not entitled to be paid for her time eating the discounted meals, it likewise held she was not entitled to overtime pay for it either.
In general, non-exempt employees who work more than five hours in a day are entitled to an unpaid meal period of not less than 30 minutes. The meal period must begin no later than the fifth hour of work. Yet, if the total work period per day of the employee is no more than six hours, the meal period may be waived by mutual consent of both the employer and employee.
A second meal period of not less than 30 minutes is required if non-exempt employees work more than ten hours in a day. The meal period must begin no later than the end of the tenth hour of work. If the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and employee only if the first meal period was not waived.
Wage Order 5, which governs meal periods, rest periods and overtime in the restaurant industry, requires employees be relieved of “all duty” during the meal period. The failure to provide a required meal period can be a costly mistake for employers. Employees are entitled to premium wages of one additional hour of pay at the employee’s regular rate of pay for each workday that the meal period is not provided.
Prior to the decision in Brinker, there was uncertainty over what it meant for an employer to provide a meal period. Brinker clarified that an employer is obligated to relieve the employee of all duty for the designated period. Although employers are not required to police employees to ensure no work is performed, employers must relinquish control over employee’s activities, must permit them a reasonable opportunity to take an uninterrupted 30-minute break, and must not impede or discourage them from doing so. In discussing the history of meal periods, the Brinker Court agreed with the Division of Labor Standards Enforcement’s historic interpretation of the wage order that generally employees must be free to leave the premises during their meal period.
Rodriguez sanctions a common practice in the restaurant and food service industries to offer employees free or discounted meals eaten on the premises. It remains true that employees not falling within this exception must be permitted to leave the work place for a proper off-duty meal period. The key will be, as it was in Rodriguez, that the employee voluntarily chooses to purchase a discounted meal and the employer does not interfere with the employee’s activities while on break.
This case is a good reminder for businesses to ensure their meal period policy is up to date and that managers are adequately trained to ensure compliance. Care should be taken so that employees are not discouraged from taking their uninterrupted, duty-free meal periods.
Conn Maciel Carey is pleased to announce that Megan Stevens Shaked has joined the firm as a senior associate in its San Francisco, CA office. Ms. Shaked, an experienced employment litigator, will represent clients in a wide range of employment-related litigation, and counsel clients on a myriad of legal issues that California employers face in the workplace.
“Megan brings a depth of experience with employment litigation, counseling and training that will enhance the employment law services we provide to employers across all industries,” said Andrew J. Sommer, head of the firm’s California practice.
Historically, California has applied a multi-factor test for evaluating whether a worker is an employee or independent contractor. These factors – all of which must be considered with no single controlling factor – were developed almost 30 years ago by the California Supreme Court in S.G. Borello & Sons v. Department of Indus. Relations (Borello). Under this test, consideration was given to the business’ right of control over the manner and means of completing the work, the method of payment, duration of the relationship, and the kind of work being performed, among other factors. Although Borello examined these factors in the context of workers’ compensation laws, its multi-factor test has been applied to other types of legal claims.
In the new economy, businesses have considered arrangements outside of an employment relationship such as hiring freelancers or contract workers. Based on an individualized analysis with no bright line rule, Borello’s multi-factor test has afforded businesses flexibility in structuring positions to support an independent contractor relationship. Yet, the consequences of misclassification are severe, exposing businesses to liability for minimum and overtime wages, denied rest and meal breaks, unreimbursed work-related expenses and tax liability. While Uber and other gig economy companies have become embroiled in high-profile litigation over independent contractor issues, businesses across the spectrum are affected as well.
In Dynamex Operations West, Inc. v. Superior Court (Dynamex), the California Supreme Court has just upended Borello, by recognizing a different standard for determining whether workers should be classified as employees or independent contractor for purposes of California’s wage orders. These wage orders impose obligations relating to minimum and overtime wages, reporting time pay, uniforms and meal and rest periods.
In Dynamex, delivery drivers filed a class action against defendant claiming that Dynamex had misclassified its delivery drivers as independent contractors, rather than employees, in violation of the applicable wage order. Based on the definition of “employ” contained in the wage orders, the Court recognized that a worker is considered an employee of an entity that has “suffered or permitted” the worker to work in its business. The suffer or permit to work definition is broader and more inclusive than the traditional test adopted by Borello.
(3) that the worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed.
The first factor is similar to the control factor recognized as a primary consideration under Borello’s common law test. While businesses may structure the work arrangement in a manner to demonstrate an absence of control, the same is the not true under the second factor. Even if the worker has a specialized skill, works from home and does not perform work under the direction or control of the hiring entity (factors considered under Borello), the mere fact that the worker’s services are part of the entity’s usual course of business defeats independent contractor status. The Court cited as an example a bakery that hires cake decorators to work on a regular basis on its custom-designed cakes, which it found to be part of the hiring entity’s usual business operation. On the other extreme, the Court found that a plumber hired by a retail store to repair a bathroom leak would not be considered to perform services that are part of the store’s usual course of business. There are numerous consulting arrangements that are now vulnerable under this factor.
Similarly, the third factor places another significant hurdle to establishing independent contractor status because it requires the worker to independently decide to engage in this business relationship, as opposed to being designated as an independent contractor by the hiring entity. The Court found that an individual meeting this requirement “generally takes the usual steps to establish and promote his or her independent business – for example, through incorporation, licensure, advertisements, routine offerings to provide the services of the independent business to the public or to a number of potential business, and the like.” Accordingly, this factor suggests that the worker would need to establish some sort of independent business entity or identity.
The Supreme Court has recognized that its ruling marks a major departure from past cases and defies guidance by the California Labor Commissioner following the Borello multi-factor test. In adopting this broad standard for the employment relationship, the Court considered the economic consequences of classifying workers as independent contractors, with businesses avoiding payroll taxes and workers’ compensation obligations, and workers assuming financial burdens.
While this newly recognized standard provides greater clarity than the Borello multi-factor balancing test, it imposes a very high burden for employers seeking to classify workers as independent contractors. It should be noted that the Borello test for now will continue to apply in contexts outside of California’s wage orders and should be evaluated as well. Yet, Dynamex may effectively end up being the benchmark because it imposes a higher, more rigid standard applying to wage and hour violations that typically are the greatest source of exposure for businesses misclassifying workers as independent contractors.
Business owners and management should immediately, through the advice of employment counsel, review all current independent contractor arrangements to ensure proper classification under this new standard. Before classifying a worker as a “consultant,” i.e., independent contractor, businesses will need to consider primarily whether the worker has an independent business and whether the nature of worker’s services is similar to the business’. Decisions to treat a worker as a consultant motivated by financial reasons alone or because the individual works from home will now be suspect. Under appropriate circumstances, however, the California courts will likely continue to recognize independent contractor status for traditionally recognized independent contractors such as attorneys, accountants and construction trades who perform services independent of the hiring entity’s business.
An ergonomic hazard is a physical factor within the work environment that has the potential to cause a musculoskeletal disorder (MSD). MSDs are injuries and disorders that affect the human body’s movement or musculoskeletal system; i.e., muscles, tendons, ligaments, nerves, discs, blood vessels, etc. Common ergonomic hazards include repetitive movement, manual handling, workplace design, uncomfortable workstation height, and awkward body positioning. The most frequent ergonomic injuries (or musculoskeletal disorders) include muscle/tendon strains, sprains, and back pains, Carpal Tunnel Syndrome, Tendonitis, Degenerative Disc Disease, Ruptured / Herniated Disc, etc., caused by performing the same motion over and over again (such as vacuuming), overexertion of physical force (lifting heavy objects), or working while in an awkward position (twisting your body to reach up or down to perform a work task).
MSDs are the single most common type of work related injury. According to Bureau of Labor Statistics data, MSDs alone account for nearly 30% of all worker’s compensation costs. OSHA estimates that work-related MSDs in the U.S. alone account for over 600,000 injuries and illnesses (approx. 34% of all lost workdays reported to the BLS), and employers spend as much as $20 billion a year on direct costs for MSD-related injuries and up 5x that on indirect costs (e.g., lost productivity, hiring and training replacement workers, etc.).
Nevertheless, federal OSHA has been lost in the woods for years searching for a coherent ergonomics enforcement policy. In the final days of the Clinton Administration in November 2000, federal OSHA promulgated an extremely controversial midnight Ergonomics Standard, requiring employers to take measures to curb ergonomic injuries in the workplace. Days later, utilizing the Congressional Review Act (CRA), the Republican Congress voted to overturn the ergonomics regulation and newly elected President George W. Bush signed the resolution of disapproval, repealing the ergonomics standard. Because the CRA prevents the agency from promulgating a substantially similar regulation, ergonomic injuries have since gone unregulated, other than sparing use of the general duty clause.
Although employers in states subject to federal OSHA jurisdiction have thus been able to adopt a wait-and-see approach with respect to ergonomics enforcement generally, and specifically how the Trump Administration will roll-out its overall deregulation agenda to workplace safety matters, some states with their own OSH Programs are stepping in to fill the void.
To no one’s surprise, California is one state pushing progressive new worker safety regulatory requirements, even as federal OSHA retreats in that area. One significant new move by Cal-OSHA is the recently approved safety standard on Hotel Housekeeping Musculoskeletal Injury Prevention.
This standard, which focuses on ergonomic hazards associated with housekeeping positions, follows closely on the heels of a series of “panic button” ordinances enacted by several large cities across the country to protect housekeepers from sexual assault by hotel guests and/or visitors.
The standard, which will likely go into effect July 1st or possibly April 1st, applies to all lodging establishments that offer sleeping accommodations available to be rented by members of the public, from high-end hotels and resorts, to motels, inns and bed & breakfasts. The standard specifically excludes from this definition hospitals, nursing homes, residential communities, prisons, shelters, boarding schools and worker housing.
Covered establishments will be required, under the new standard, to develop, implement and maintain a written Musculoskeletal Injury Prevention Program (“MIPP”) that is tailored to hazards associated with housekeeping. Employers have the option of including the MIPP with their preexisting Injury & Illness Prevention Program (“IIPP”) or to create a standalone program specifically for housekeeping MSD risks.
Regardless of its form, the MIPP must be available to covered employees on any shift. Notably, employees must also be able to access the MIPP electronically — a requirement that may pose a challenge to smaller establishments.
Notably, covered employers must also complete an initial worksite assessment within three months of the effective date of the standard, which assessment is intended to identify and address a variety of potential ergonomic risk factors, ranging from unpredictable trauma occurrences such as slips, trips and falls, to more traditional repetitive stress MSD concerns such as regular and frequent reaching above shoulder height, lifting, bending, kneeling, squatting, pulling and/or pushing.
Perhaps most controversial about Cal/OSHA’s new Hotel Housekeeping Ergo rule, though, is the agency’s effort to wade into operational concerns by requiring employers to assess “excessive work rates” as well as “inadequate recovery time” between tasks.
Covered employers should act promptly so they are prepared once the standard goes into effect— whether that is in April or July of this year. Whether it is spring or summer, lodging establishments that wait to the last minute will be feeling the heat as they attempt to develop the required program and conduct the initial worksite assessment within three months of the standard’s effective date.
Employers procuring credit reports for applicants or current employees must navigate exacting disclosure and procedural requirements under the Fair Credit Reporting Act (FCRA). In a question of first impression in the federal courts of appeal, the U.S. Court of Appeals for the Ninth Circuit recently ruled in Syed v. M-I, LLC that a prospective employer violated the FCRA when it obtained a job applicant’s consumer report after including a liability waiver in the required disclosure document. The FCRA imposes procedures for procuring and using a “consumer report,” defined essentially as information procured by a consumer reporting agency bearing on an applicant’s “credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living,” for establishing eligibility for employment. These procedures include requiring that before obtaining the consumer report, the prospective employer disclose that it may obtain the applicant’s consumer report for employment purposes and provide the means for the applicant to withhold authorization.
The U.S. Supreme Court has agreed to review the validity of class action waiver clauses in employment arbitration agreements to resolve a conflict among the federal appellate courts. As our firm has explained in prior blog posts, the U.S. Court of Appeals for the Ninth Circuit – the federal appellate court for the Western United States – has concluded in Morris v. Ernst & Young, LLP that a company violates the National Labor Relations Act (NLRA) by requiring employees to sign agreements precluding them from bringing class actions or other collective actions regarding their wages, hours, or other terms and conditions of employment. The U.S. Court of Appeals for the Fifth Circuit in NLRB v. Murphy Oil USA, Inc. has concluded to the contrary that the NLRA does not invalidate collective action waivers in arbitration agreements, and the U.S. Court of Appeals for the Seventh Circuit in Epic Systems Corp v. Lewis has agreed with the Ninth Circuit’s position. The Supreme Court has granted review in all three cases and consolidated the appeals because they raise an identical issue.

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