A little tip on Tip Pooling

In certain industries and occupations, tips are incredibly important to employees. Some business incorporate tip pools, where employees are required to contribute a certain portion of their tips into a tip pool that is distributed among various employees. In a recent California Supreme Court case, Lu v. Hawaiian Gardens Casino, the plaintiff argued that the Casino’s tip pooling requirement violated Labor Code section 351, which states that the tips are the property of the employee for whom they are left.

The California Superior court held that Labor Code section 351 did not provide private litigants a direct right to sue for the alleged taking of their tips by their employer. The Court looked at the express language of the statute and the legislative history in reaching its decision. The Court noted that in certain circumstances, an employee could pursue a civil tort claim for conversion, and that the Legislature could change the Labor Code to allow a private right of action.

Finally, the Court was clear that its ruling was limited solely to the issue of whether a private right of action exists for employees under Labor Code section 351. The Court did not give an opinion on whether tip pooling itself is lawful, nor did it give any parameters for tip pooling plans. As such, the Lu opinion should not be construed as to eliminating the ability of employees to sue for violations of tip pooling plans. Employees could still bring a claim under California’s conversion or unfair competition laws. If your business incorporates tip pooling, be sure that the process is handled fairly and administered accurately. Also, be on the lookout for further clarification from the courts on tip pooling in the near future.

The Curse of the Blackberry

Blackberries and take-home laptops are all too common in the workplace today. Studies have shown that 50% of workplace email users check work-related email on the weekends; 34% say they check email on vacation. Many employers expect and even require their employees to read and respond to work-related emails when not at work. Problem arise when these policies are applied to hourly employees – salaried employees are generally expected work as long as the job requires.

There are of course two schools of thought on the issue. Employees feel like employers are getting a free ride by not paying for this off-hour activity. Employers respond by arguing that employees cannot be expected to be paid around-the-clock, 24 hours a day, simply because they have a cell phone.

Regardless of the viewpoint, the problem appears to be getting worse. In today’s job market, employers require fewer employees to do more, and attempt to squeeze maximum productivity from a minimum number of workers. Also, workers remain less likely to complain about after-hours work so they can keep their hard-to-come-by jobs.

That hasn’t stopped some workers from challenging the practice in the courts. Recent lawsuits against T-Mobile and CB Richard Ellis Group involve legal claims that hourly workers should be paid for time spent responding to work emails during off hours. The outcome of these cases will provide much needed guidance for employers and employees alike. This issue has shown that the wage and hour laws are getting behind the times – thus, it might be time for the Legislature to get involved to clarify the issue. Because, as we all know, the Blackberries aren’t going anywhere.

Getting Meal and Rest Breaks Right

Virtually all employers understand that their employees are entitled to breaks throughout the day. However, California’s regulations regarding meal and rest breaks are more involved than would appear. Penalties can be stiff for violations of these rules, so it behooves all employers to understand them.

Employers in California must provide non-exempt employees rest breaks of at least 10 minutes for each four hours worked. An employer must also provide a meal break of at least one half-hour for every work period more than five hours. During the meal break the employee must be relieved of duty and free to leave the premises. A second meal break is required if the employee’s work day is longer than 10 hours. Yet if an employee’s shift is six hours or less, the employee can choose to forego the meal break.

California Labor Code section 226.7 provides that if an employer fails to provide employees with these meal and rest breaks, the employee is owed “one hour of pay” for each missed break.

With respect to the penalty, rest breaks and meal breaks are different. With rest breaks, the employer is required to authorize and permit all employees to take the rest periods. An employer is not required to pay for the missed rest break if the employee, who was truly allowed and authorized to take the rest break, freely chooses to forgo it. Meal breaks are different, however. The employer has an affirmative obligation to ensure that workers are actually relieved of all duty during lunch breaks. Thus, it is the employer’s duty to allow employees to take rest breaks, and to ensure that employees take meal breaks.

Commuting and Compensation: Federal law vs. California law

Commuting in a company vehicle is required for many employees in California. An important question is whether or not that commuting time is compensable for the employee. California and federal law differ, however, in regards to such commutes. A recent Ninth Circuit federal case highlights this sharp distinction.

In Rutti v. LoJack, the plaintiff was a technician who installed LoJack anti-theft units in cars. He was dispatched each day directly from his home to the homes of customers, where he would install the units. During these trips he was required by the employer to use a company vehicle, and he was prohibited from making any personal stops or detours. Mr. Rutti was paid on an hourly basis; however, he was only paid from the time he arrived at the first customer’s house until he finished the last installation of the day.

The federal court found that the time Mr. Rutti spent “commuting” was not compensable time under the Fair Labor Standards Act (FLSA). Therefore, he was not entitled to FLSA pay for the time he spent traveling to and from his first and last jobs of the day.

California law operates differently. In California, the law requires compensation for all time “during which an employee is subject to the control of an employer.” Thus, the requirement to use a company vehicle and to refrain from any personal detours would be sufficient “control” to trigger the employer’s duty to compensate the employee under the Labor Code. Because California’s law regarding commuting and compensation is more favorable to employees, employers need to be mindful of it.

Drafting a proper termination letter

Terminating the employment relationship with an employee is never easy. Yet when the time has come to let an employee go, it is important to do it the right way. Oftentimes employers get into trouble for how a termination occurred, not why. Drafting a proper termination letter can help avoid such problems.

Employers may wish to include the following in a termination letter: (1) Notice that the action was a termination; (2) The date of the termination; (3) The reasons for the termination ­– avoid being too vague or too specific; (4) The dates and subject matter of prior warnings – this is especially useful when documentary evidence supports prior discipline; (5) Benefits to which the employee is entitled; (6) Circumstances under which the employee had access to a second review or appeal of the termination – here is where an employer may agree to characterize the employee's departure as a layoff, resignation, or retirement; (7) The employee's last day of work and what company property must be returned by that date; and (8) The date, time, and place for an "exit interview" – at the exit interview, the employer should notify the employee that a paycheck for final wages, including accrued unused vacation time, will be provided.

At the termination meeting, the employee should be given the original letter. Employers would be wise to also give a copy of the letter to the employee’s immediate supervisor and place an additional copy in the employee’s personnel file.
While there are no guarantees that a terminated employee will not seek redress after a termination, a properly drafted termination letter goes a long way to prevent problems down the road.

Simple safeguards to prevent workplace violence

It goes without saying that workplace violence is a serious thing. Violence at work is often sudden. It strikes fear into the heart of employees and can create severe liability for employers.

Employers can be liable for workplace violence under the following legal theories: (1) negligent hiring or retention of an employee with violent tendencies; (2) when the violence occurs within the course and scope of employment, or when the employer could reasonably have foreseen the violence; (3) an employer's failure to warn, when the employer has actual knowledge of a known danger; and (4) premises liability, as the owner of the property on which the violent act occurred.

There are, however, safeguards that employers can implement to reduce the likelihood of workplace violence. Some preventative measures include: (1) good lighting; (2) adequate security in parking and common areas; (3) limiting access to work areas; (4) alarms and surveillance cameras, where appropriate; (5) discouraging visits from former employees; (6) educating supervisors about characteristics associated with potentially violent employees; (7) training supervisors in conflict resolution; (8) Periodically surveying employee perceptions about working conditions and problems with the work environment; (9) implementing policies concerning violence and harassment that encourage reporting of incidents; (10) after investigating an incident, taking appropriate action to promptly counsel, discipline, or terminate the violent employee.

While these measures cannot eliminate the risk of workplace violence, they can go a long way in preventing it. To learn more about how to prevent workplace violence, attend the Workplace Violence Seminar, at the International Agri Center in Tulare on May 11, 2010, call (559) 622-8889 for more information.

The Dangers of the Daily Commute

California courts have long recognized the “coming and going rule,” which is that employees are outside the scope of their employment during their daily commute. However, a recent case is re-examining the rule. In Lobo v. Tamco, an employee collided with a police officer on the employee’s commute home. The officer died, and the officer’s family brought a wrongful death suit against the employer, arguing that the employee was acting in the course and scope of his employment when the accident occurred. At the trial court level, the employer successfully argued the “coming and going rule.”

However, on appeal the family argued that the employer was liable under the “required vehicle” exception – which is that a personally-owned vehicle is a condition of employment. The family argued that the employee, a Quality Control Manager, was required to visit customer sites, and thus having a vehicle was a condition of his employment.

The appellate court sided with the family, finding that the employee’s commute was within the course and scope of his employment because the employer “relies upon the employee to make his personal vehicle available…for the employer’s benefit and the employer derives a benefit from the…vehicle.” The Court noted that, “the fact that the employer only rarely makes use of the employee’s personal vehicle should not…defeat the plaintiff’s case.”

This case puts employers on notice that if they require employees to use their personal vehicles to perform aspects of their job, an employer may be vicariously liable for conduct occurring outside of work hours. Thus, it may be wise to re-examine positions that require even infrequent use of an employee’s personal vehicle.