(Thanks to co-author and wage garnishment expert Kevin Pitre for his assistance with this blog entry.)

There are so many competing interests in this complex society of ours, it’s amazing anything gets accomplished in an orderly fashion. 

Take, for instance, the collection of a debt, like a court judgment, taxes, or child support order.  The creditor has an interest in getting paid what is owed … as soon as possible.  And if the debtor is employed, why not have that income stream diverted to the creditor until the debt is paid?  Seems reasonable.

On the other hand, the debtor might have an interest in delaying repayment of that debt – or avoiding it altogether – particularly if there are other things he might prefer to spend his money on…like food.  Plus, good luck convincing the debtor to continue working at a job if the entire salary is diverted to the creditor.  Not exactly slavery, buuut….

And what about the debtor’s family?  While the creditor is clamoring for his money, the debtor’s kids might like some shoes or school books, or a roof.  And society?  Aren’t we all better off if a debtor (and his family) are not left penniless and reliant on the public welfare to survive just because he got into a bit of trouble with a creditor?

Conflict seems inevitable.

Thankfully, we are a society of laws, those imprecise, mind-numbing rules created by ourselves in a valiant and laudable effort to find that delicate balance between conflicting interests that naturally arise in any complex social community.  Rules that seek to satisfy as many interests as possible as fairly as possible – all while avoiding the broken kneecaps of a self-help system.

Welcome to the world of wage garnishments – a mildly bureaucratic process, heavy on paperwork and minutiae, designed expressly to provide a little satisfaction for creditors, a little protection for debtors and their families, and a lot of headaches for employers.  (Well, the latter may not be part of the design, but it is a symptom nonetheless.)

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Maybe I should have titled this:  How I Learned to Stop Worrying and Love My Exorbitant Expert Fees.

Because as much as employers like to complain about the cost of employment litigation, including the often substantial expert fees, those very same expert fees might just be the ticket to discouraging future employment lawsuits. 

Or at least that’s one way to interpret the California appellate court’s opinion in Holman v. Altana Pharma Us, Inc., (June 30, 2010, Cal. App. Ct.). 

But to understand how this works, it helps to take a step back for a minute and look at how California’s legislature and courts have altered the fee-shifting landscape in two potentially-conflicting ways.

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It’s been a while since we’ve last posted here on Who’s The Boss, and to all our Faithful Followers (yes, Mom, I’m talking to you), we apologize.  It’s amazing how billable hours and sunny weekends at the beach can mess up an otherwise perfect day for blogging.  But I digress.  We’re back, we’re happy, and we have things to say.

Let’s start with California’s special take on trade secrets, one of our favorite subjects.  In particular, recall the state statute requiring plaintiffs to identify their trade secrets “with reasonable particularity” before discovery can be commenced.  (California Code of Civil Procedure Section 2019.210.)  We blogged about this earlier when Sylvester Stallone’s low carb chocolate pudding kindly added to our understanding of the parameters of the trade secret designation statute.  Well, the statute is in the legal news again.

This time, the question is whether CCP 2019.210 applies to trade secret cases in federal court.  One would think this would be a relatively easy issue – pick one, yes or no, and let’s get on with it.  But apparently that would take the fun out of it.  Instead, California’s district courts have had a tough time making up their minds on this one…and it’s causing we trade secret practitioners some consternation.

The latest to try his hand at this one is Judge Moskowitz in the Southern District of California, who believes he has sorted it all out for us in his recent opinion in Hilderman v. Enea Teksci, Inc. (USDC SD CA 2010) No. 05cv1049, 2010 WL 143440.

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We here at Who’s The Boss? just looove being right.

However, in this case, being right may not be good news for those California businesses who provide their employees with vehicles.  Being right may instead prove to be very costly to these otherwise generous employers.  (Sorry, we don't make the law, we just try to understand it.)

For those of you following the Commute Wars, you will remember last October's opinion by the 9th Circuit in Rutti v. Lojack, holding that commute time in a company vehicle was not a compensable event, even though the employer imposed certain restrictions on the employee’s use of the vehicle (such as no passengers, no personal errands, no use of cell phones other than calls from the office, must travel directly from home to first job and from last job to home without detours).  (I'm sure "no pizza" was in there too.)

This was good news to employers.  Who wants to pay their employees to sit in traffic for hours a day going to or from work?  Indeed, it could lead to Geographic Discrimination (don’t hire anyone from the ‘burbs who have longer commutes).  (Suburbanites, the new protected class?) 

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There are people out there who believe the rules are stacked in favor of employees when it comes to employment lawsuits here in the Generally Sunny State.  Why?  Look no further than the rules on the recovery of attorney’s fees.

Despite a very neutral sounding statute that allows for “the prevailing party” in FEHA cases to recover his, her, or its attorney’s fees from the non-prevailing party, the reality is (as interpreted by our Courts of Infinite Wisdom) that prevailing employees “ordinarily” recover their fees, whereas prevailing employers are only entitled to their fees if they can show the plaintiff’s case was frivolous or brought in bad faith.

In other words, prevailing employees get damages and their attorney’s fees; prevailing employers get ... nothing.

This has had quite an impact on how employment cases, especially small ones, are filed and litigated in the state.  The value of a $10,000 case becomes $10,000 plus attorney’s fees.  How much in attorney’s fees?  Well, that depends, does it not, on how much work the employee’s attorney puts into the case?  Do you see the incentives here?  If the attorney works the case up more and more and more, then the employee can recover more and more and more...even if the actual damages to the employee are pretty small.

Could you turn an $11,500 employee verdict into an attorney’s fee application for $870,000?   

The employee in Chavez v. City of Los Angeles thought so.  In fact, so did the appellate court, which ordered the trial court to grant the plaintiff’s fee application, thereby obligating the employer to pay over $1 million (if you count its own attorney’s fees) to cover an $11,500 verdict for the employee. 

In its infinite wisdom, the Supremes reversed.  (Here is the Supreme Court's decision.)  And in the process, the Court may have swung the Giant Employment Law Pendulum (the GELP for short) just a wee bit back in the employer’s direction. 

Here’s what happened....

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Part 5 (The Final Entry):  The California Courts In Action

This is where the action has been in 2009 employment law -- in the appellate courts.  From commuting to class actions, tip pools to trade secrets, California’s courts were busy.  In this, our final installment of the year in review, we look at just a few employment decisions we found particularly interesting.

On The Subject Of Commuting…: 

A few commuting technicalities were cleared up for employees and employers in 2009, including a clarification of exactly what constitutes the commute.  (And all this time I thought it was all that sitting in traffic I do twice a day, along with tens of thousands of my closest smog-spewing friends.)

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Part 4:  The Legislative And Executive Bodies

As we continue our journey through some of the more noteworthy employment developments in 2009, we note that Congress and the California legislature each had its hands in the works, as did the Executive branch who, judging by the 750 pages of regulations it propounded in interpreting the FMLA, clearly needs more to do.  While there were scores of new laws and regulations touching upon the minutiae of our daily worklife existence, a few stand out.

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Pausing on our trip down memory lane, we take a quick peek around the corner at what the California Supreme Court will be soon be waxing so eloquently about.  Here are this reporter’s favorites:

Shorten Those Pesky Statutes Of Limitations?:  Why can’t employers simply impose an Armendariz-compliant arbitration requirement on their employees as a condition of employment, and (while they are at it) include a provision whereby the parties “agree” that the statute of limitations will be shortened to something less than that permitted by FEHA?  Seems reasonable (if you are an employer), doesn’t it?  The Supreme Court will help us with this when it rules in Pearson Dental Supplies, Inc. v. Superior Court (No. S167169.)  The matter is fully briefed.  (Check here for latest court update or to request automatic email notifications about the case.)

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As promised, we continue our trip down memory lane by looking at some of the more significant California Supreme Court employment decisions in 2009.  Don’t bother putting on your shoes, it’s a really short trip.  In fact, in this reporter’s humble opinion, the 2010 journey will be much more interesting as there are a number of novel issues fully briefed just waiting for that splash of Supreme Court brilliance.  For now, we look at employer spying, supervisor harassment, punitive damages, and the infamous 17200 unfair competition law.

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A jury found the California Unemployment Insurance Appeals Board, one of the most notoriously employee-friendly governmental bodies in the State, liable under FEHA for unlawful retaliation against one of its employees. 

On appeal, the court affirmed the judgment, finding there to be sufficient evidence to support the jury's verdict.  [George v. Cal. Unempl. Ins. Appeals Bd. (CA5 F055385 12/9/09)]

Am I the only one who finds this incredibly ironic???

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Part 1:  The U.S. Supremes

We here at Alston & Bird’s Who’s The Boss? employment blog have taken a look in the rearview mirror to see what has happened in our insular world over the past 12 months or so.  We looked at court cases, legislative enactments, and regulatory developments, particularly those impacting California.  What we found was pretty interesting, even entertaining. 

While the developments seem more along the lines of moderate refinements than any earth-shattering alterations in the basic power balance between employers and employees, their impact will nonetheless be felt in various degrees as we head into the next decade. 

With no promises that these are the “most significant’ employment law developments of 2009, we nonetheless share what we think are some of the more interesting highlights of the year.

We’ll do this in stages. 

• Today, we’ll highlight four U.S. Supreme Court opinions impacting employers. 

• We’ll follow this with highlights from the California Supreme Court.  Don’t blink, there aren’t many.

• Next, we’ll look at some of the more interesting issues still on the California Supreme Court’s docket for next year.  There are a bunch.

• Then comes legislative and executive developments (were 750 pages of FMLA regulations really necessary?)

• Finally, we’ll take a look at some of the California appellate court employment opinions that made headlines or simply impacted employers, employees, or their attorneys.

[Our thanks to Employment Law 360, which ran a version of this article in two parts in its influential employment law publication.]

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Now what has the California Supreme Court done to employment law here in the Golden State?

In Roby v. McKesson (S149752), the latest masterpiece from the state’s top court, it looks as if both employees and employers can claim a modicum of victory. 

The employees will find it easier to assert and prove harassment claims against individual supervisors, which will make it easier to (a) defeat removal to federal court based on diversity jurisdiction; and (b) defeat summary judgment of harassment claims by individual supervisor defendants.

For the employers?  The Court may be signaling further disenchantment with high punitive damages, particularly in cases involving high non-economic (emotional distress) damages where there is little evidence that upper management knew about the bad conduct.

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If only I could be paid for my commute.  See, I live in the South Bay (the Southern California version) and commute to downtown Los Angeles along the 405, 105 and 110 freeways.  It's neither quick, nor particularly attractive.  (I save a little time in my Natural Gas Honda Civic, which gets me in the carpool lane, but not nearly as much as I did P.H. (pre-hybrid).  Now that those pesky Prius’ are allowed in the carpool lanes, I often go no faster than the carbon monoxide spewing Hummers two lanes over.)

So imagine if I could get paid for commuting.  I’d be rich!... and wouldn’t need to commute to work anymore.  Think of the incentives in car-happy California?  I might even want to drive in the slow lanes (which is redundant, especially during “rush hour,” which isn’t an hour and no one rushes.)

But getting paid to sit in morning gridlock listening to NPR (fine, Mark & Brian) would be wrong, wouldn’t it?

Mike Rutti decided to find out (or perhaps his attorney did).  Rutti v. Lojack Corp. is the result.

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Remember way back when, when we reported on the reversal of the $86 million Starbucks tip pool verdict?  You can read about it here.  At the time, we agreed with the court's decision, opining that:

It made no sense to deprive hard working baristas, who happen to also be shift supervisors, of tips they helped generate.  These folks steam the soy and press the espresso, standing shoulder to shoulder with their barista brethren, doling out caffeinated charm to an often charmless public, and deserve the tips just as much as those they supervise.

Not surprisingly, the winners of that $86 million windfall were not pleased to see their tip money evaporate like the steam off a freshly foamed decaf cappuccino, dusted with cinnamon (I'm telling you, with similes like this, I should have been a novelist!).  They did what anyone would do in their shoes, they pleaded with the Supreme Court to review the appellate ruling.

Alas, it was to no avail.  Yesterday, the Supremes in their infinite wisdom declined to hear the case (only Justice Werdegar voted in favor of review), thereby leaving the tip jar $86 million short, according to the plaintiffs. 

So now what?  It's not clear there is any more steam in this engine (I'm on a roll).  The appellate court ordered that judgment be entered in Starbuck's favor, and that's apparently the end of it.

Or is it?  According to the IWW Starbucks Workers Union, it is already gearing up for a new class action, this one (according to the Union's website) based on alleged use of "harsh police-style interrogation tactics" that has led to "numerous false confessions, which Starbucks has then used to terminate or extort 'restitution' from employees."

As I said before:  "I think I’ll grab my decaf cappuccino and watch the show."

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What does the California Supreme Court's recent decision in Hernandez v. Hillsides, Inc. mean to California employers who have legitimate needs for workplace video surveillance of its employees and work areas?  Plenty. 

Alston & Bird workplace privacy specialist Jesse Jauregui not only explains the case, but offers valuable insights and tips to California employers.  (Our thanks to Employment Law 360 for publishing the article in its August 13, 2009, edition.)

The two ends of the workplace privacy spectrum have been fairly well defined by prior California law.  On the one hand are those cases that have allowed covert videotaping in open and accessible workplace areas. 

On the other hand are those cases that find a violation of the right to privacy by videotaping areas reserved for personal acts such as employee restrooms and dressing areas. 

In Hernandez v. Hillsides, Inc., S147552 (August 3, 2009), the California Supreme Court was confronted with a scenario that falls between those extremes and further delineated the extent to which an employer may conduct workplace video surveillance of its employees without violating their right to privacy. 

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It had to happen, didn’t it?  The $86 million class action verdict against Starbucks had to be reversed, didn't it?

It made no sense to deprive hard working baristas, who happen to also be shift supervisors, of tips they helped generate.  These folks steam the soy and press the espresso, standing shoulder to shoulder with their barista brethren, doling out caffeinated charm to an often charmless public, and deserve the tips just as much as those they supervise.

So it was strange indeed when, in March of 2008, a San Diego superior court judge ordered Starbucks to pay its non-supervising baristas $86 million in restitution.  This was based on a state Labor Code statute (Calif. Labor Code Section 351) that stated:

"No employer or agent shall collect, take, or receive any gratuity or a part thereof that is paid, given to, or left for an employee by a patron.”

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Just how "unique" is California employment law?

We asked our panel of experts to come up with their TOP 10 list of uniquely California employment laws, rules, and regulations.  Here were the first ten to pop to mind:

1) VACATION PAY– Unlike virtually every other state, California does not allow employers to have “use it or lose it” vacation policies.  Instead, California requires employers to either cash out their employees’ accrued vacation at the end of the year or allow them to carry it over up to a “reasonable cap” on accrual.

^{[thanks to Alan Light for the photo
of the Top 10 King!]}

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_{[Our thanks to xaminmo and jeremias11 of Flickr}

_{for making this photo available!]}

Swine flu hit your office? 

If the recently introduced "Healthy Families Act" makes its way through Congress, employers will with more than 15 workers will be obligated to provide up to 56 hours of paid sick or health-related leave per year for all of its U.S. employees. 

The "Healthy Families Act," which had been introduced in the two previous sessions of Congress with little forward momentum, may find a more receptive audience this time around, with Senator Edward Kennedy sponsoring the bill in the Senate, and Congresswoman Rosa L. DeLauro sponsoring it in the House.  For those of you who were really paying attention, President Obama co-sponsored a similar 2007 bill and is likely to support this version.

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Can you deduct from an employee's paycheck a debt owed by the employee to the employer?  What about the cost of a computer the employee purchased from the employer?  Parking charges?  Personal mailing charges?  The dry cleaning bill to get the coffee stain out of the rug in the employee's office?

Beware!  Deducting anything but taxes and health insurance premiums from employees’ paychecks could set up a ready-made wage class action.

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Assume you were an Oregon employer who had hired hundreds of California workers; and let’s just say you had to be sued in a class action lawsuit over wage and hour issues.  Where would you prefer the lawsuit to be held, in California or in Oregon?  (Don’t answer that, it’s rhetorical.)

^{(Our thanks to dok1 for the photo)}

 

Now answer this question honestly:  What are the odds of being able to force California workers -- who have never worked outside the state and who have filed a California wage and hour class action in California Superior Court -- to travel up to Oregon in order to litigate their California employment rights?  Personally, I would have put my money on the Clippers winning the NBA title next year over that.

Good thing I’m not a betting man.  Oregon home design and decorating specialists, Custom Decorators, Inc., pulled it off.

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