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More California Employment Law Pot Pourri (Non-COVID)

by D. Gregory Valenza | |

As promised, here are some more quick takes on California employment law (mostly).

US DOL Opinion Letters

Let’s first start out with the federal DOL’s four new opinion letters. Because some of them may apply in California; some probably do not have much applicability.

FLSA 2020-11 is of interest to California employers, because it expands the possible application of the “inside sales” commission exemption. The DOL analyzed whether drivers of certain oilfield waste removal trucks, paid on commission, could qualify for the “retail commission” exemption under section 7(i) of the FLSA.  California has a similar exemption, contained in some of its Wage Orders (like Wage Order 4 and 7), but not all.  The DOL recently rescinded lists of industries and businesses that presumptively would and would not qualify as the “retail service establishments” that qualify for the exemption.  These oil field service trucks used to be on the list of “not qualified.”.  However, the DOL in this opinion letter decided that provided certain additional facts were clarified, the drivers might be eligible for the exemption.

Note: California employers may be able to apply the DOL’s new flexibility regarding “retail concept” to allow more businesses to qualify for the exemption.  However, California law will not allow application of this opinion letter to truck drivers subject to Wage Order 9 (here). Wage Order 9 does not contain a retail commission exemption. So, the FLSA exemption alone would not help, because California law would be more generous to the employee.

FLSA 2020-12 concerns reimbursement of certain drivers’ business expenses.  Under the FLSA, unlike under California law, employers are not required to reimburse employees for business expenses. However, when employees must pay their own expenses, they must earn at least minimum wage “free and clear.”  So, to that extent, even employers outside California must be concerned with business expenses at times.  The DOL analyzed several alternatives to the IRS mileage reimbursement rate and refused to endorse any of them as definitively acceptable methods of ensuring adequate reimbursement.  The California Supreme Court has held that the IRS mileage reimbursement rate is presumptively adequate, but that employees can prove they are entitled to greater reimbursement. Similarly, employers can reimburse employees less, as long as they cover the actual costs. Employers in California seeking alternatives to the IRS mileage reimbursement rate should review the DOL’s analysis here. Given the high cost of operating vehicles in California and the potential liability under PAGA and Labor Code section 2802, be careful.

FLSA 2020-13 is interesting to California employers in part.  It concerns whether certain executive trainers could qualify as “learned professional” exempt workers.  The type of duties for the learned professional exemption are similar or the same under California and federal law. However, under California law, the employee must spend at least 50.0001% of his or her time on the exempt work.  In this opinion letter, the DOL decided that high-level executive trainers could satisfy the duties test for the exemption under the FLSA.  However, the agency also decided that even though these trainers earned up to $1500 per day for their work, they were not paid on a salary basis. Therefore, no matter their duties, they were not exempt under federal law (and they would not qualify under California law either, for the same reason).

FLSA 2020-14 concerns the “fluctuating workweek,” which is not applicable to California wage and hour law. The “fluctuating workweek” principle allows an employer to pay a non-exempt employee a fixed “salary” and calculate overtime pay on the salary based on the total hours worked under certain circumstances. In California, that’s a no-no, because “salaries” are based on 40-hour weeks by statute.  So, a non-exempt employee paid a “salary” must be paid overtime based on a “regular rate of pay” that is calculated based on the (salary / 40 hours), not total hours.  Anyway, in this opinion letter, the DOL opined that a “fluctuating workweek” means that the employee’s work hours fluctuate from week to week, but need not “fluctuate” below 40 hours per week in some weeks.

Summary Judgment Case Defense Lawyers Should Appreciate

The Court of Appeal in Arnold v. Dignity Health opinion here applied a common sense, rational approach in a race and age discrimination case and upheld summary judgment in favor of the employer.  These cases don’t come along often, so update those summary judgment form files.

The plaintiff was discharged for several clear policy violations, for which she previously had been warned.  The Court rejected her evidence of age-related comments because (1) they were benign in the context of her birthday and the plaintiff’s youthful appearance and, more importantly (2) the persons who made them had nothing to do with the plaintiff’s discharge.  The Court also carefully looked at the plaintiff’s burden of establishing “pretext” – evidence that the employer’s stated reasons not only were untrue, but also were untrue because they hid a discriminatory motivation.

PAGA Settlement Bars a Later Lawsuit (Again)

The plaintiff in Robinson v. Southern Counties Oil Co.(here)  “opted out” of a wage and hour class action to pursue his own lawsuit.  However, he filed a PAGA lawsuit, addressing the same PAGA claims that were settled as part of the class action.  Although the “opt out” left him free to pursue his own individual wage claims, the settlement of the PAGA claim terminated Robinson’s right to pursue a claim on behalf of the state. That’s the same lesson we learned in Starks v. Vortex Indus, which we covered in our previous post. (here).  This case is a little different from Starks because here the plaintiff opted out of the class action settlement, yet was still precluded from his own PAGA claim because the class action settlement included a settlement of the PAGA claim on behalf of the state in addition to the class claims.

Social Media and Discharge

The Court of Appeal upheld the discharge of a school counselor in Crawford v. Commission on Professional Competence of the Jurupa Unified School District (opinion here).  This case involved application of a special section of the Education Code, which permits removal of teachers and other school officials for “immoral conduct” or conduct establishing the employee is “evidently unfit for service.”  That vague test is analyzed under seven factors that courts have developed.

The conduct in this case involved a Facebook post critical of a school boycott.  The Facebook post received great notoriety and resulted in emails and letters, meetings, and protests.

Although the Court’s legal analysis concerns the Education Code, the decision is important for employers confronting “cancel culture”, i.e., backlash over employees asserting themselves on social media. Public sector employers outside of the Education Code context have different laws and standards to apply to disciplinary actions.  Private sector employers must consider contractual obligations, privacy rights, employees’ right to engage in political activity, the National Labor Relations Act, how employees’ speech affects other employees in the workplace; and other legal considerations. Almost lost in this analysis is the First Amendment, which has little to no applicability in the private sector, and some, but limited, applicability to public sector employees in the employment context.  Good times!

Happy Labor Day!

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