Worker Misclassified as Independent Contractors Sues Google

Jacob McPherson, former Google Play unit site merchandiser out of New York, sued Google and the online staffing company Elance-oDesk. He alleges that he and others in similar positions were misclassified as independent contractors by the online search engine giant. He is demanding unpaid wages, including wages that should have been paid for overtime hours. He also seeks damages and attorneys’ fees.

The plaintiff, McPherson, worked for Google from January 2013 through December 2013 as contracted. McPherson claims that he (and many others) worked up to 45 hours/week, but that Google never provided them with payment for more than 30 hours/week. While at Google, McPherson worked through oDesk who released a statement regarding the lawsuit. In their statement about the overtime suit, oDesk stated that they were committed to operating in a “lawful and ethical manner.” They researched the claims and are confident that they have no merit.

McPherson was offered employment at $35/hour for a maximum of 15 hours per week (the maximum hours per week was later raised to 30 hours, according to the suit filed against Google). McPherson was required to register at oDesk in order to receive their employment offer and he would be considered a freelancer paid only through oDesk.

McPherson claims in the lawsuit that he performed work similar to that of (and alongside at the same offices as) W-2 employees. He was assigned to teams that included W-2 employees. He was required to be in attendance for mandatory meetings and training alongside W-2 employees. He was even issued a Google owned cell phone, tablet and laptop just like the W-2 employees of the massive online search engine giant. “Freelancers” were also required to use an email signature that designated them as representatives of Google and offering the office address, follow a Google-approved method for completing assigned tasks, adhere to dress codes and the Google blogging policies, etc.

This case could be a stepping-stone for others and could mean drastic changes for online staffing and freelance sites regarding the risk associated with managing independent contractors.

If you have questions regarding your employer/worker relationship and whether or not the classification of independent contractor is appropriate according to federal regulations, contact the southern California employment law experts at Blumenthal, Nordrehaug & Bhowmik. 

Californians Voting for Minimum Wage Increases

On Election Day, voters in four different states passed minimum wage increases. This builds on the momentum already created by more than a dozen other states that have done the same throughout the past two years. According to opinion polls, a significant number of Americans are in support of increasing the federal minimum wage – currently set at $7.25.

Here in California, three cities voted on minimum wage hikes: Oakland, San Francisco and Eureka. San Francisco and Oakland will see approximately 190,000 workers receive pay increases as a result of the minimum wage hike. Eureka workers, on the other hand, shouldn’t expect the same. Eureka rejected the measure. Over the past two years, 10 other cities and counties have done the same throughout California.

San Francisco currently has a minimum wage of $10.74. Voters passed an incremental wage increase that will reach $15 per hour by 2018. (76% voted yes and 24% voted no). An estimated 142,000 San Francisco workers should see a raise. Incremental wage increases will occur according to the following timeline: Increased to $12.25 in May 2015. Increased to $13.00 in July 2016. Increased to $14.00 in July 2017. Increased to $15.00 in July 2018.  Seattle passed a similar incremental wage increase in June, making them the two municipalities with the highest minimum wage.

Oakland currently has a minimum wage of $9.00 and voted for a wage increase that will reach $12 by 2015. (79% voted yes and 21% voted no). Approximately 40,000-48,000 workers should receive a raise as a result of the vote. The wage increase will occur in March of 2015 and will jump minimum wage from the current $9.00 to $12.25.

Eureka, California has a population of 27,000. It is reportedly the only place in the country that rejected a proposed minimum wage hike at the polls on Tuesday.

It is suspected that the changing landscape that leaves us seeing so much local support for wage increases is a result of the increasingly loud and powerful movement of low-wage workers who are calling attention to the struggles created by their low paying jobs. The last couple years have seen a number of fast food and retail workers step into the spotlight to go on strike to demand wage increases to $15/hour. These individuals and their stories are the likely reason behind much of the impetus felt for wage increases at a state and local level. A full-time worker that earns the federal minimum wage will earn a little over $15,000 per year. This is below the poverty line for any family of two or more.

If you would like to discuss federal, state and local regulations regarding minimum wage requirements, contact the experts at Blumenthal, Nordrehaug & Bhowmik.

Exempt and Non-Exempt California Employees Affected by Increase in California’s Minimum Wage

On July 1, 2014, California raised its minimum wage from $8/hour to $9/hour. Both non-exempt and exempt salaried employees will be affected. An additional increase to $10/hour will take effect on January 1, 2016. Some employers view the change as inconsequential as they already have to meet local minimum wage requirements for their non-exempt employees, but there will in fact be a noticeable impact because the change applies to exempt status employees and commissioned inside sales employees.

To understand the potential changes the increase in minimum wage could have for exempt employees you must first consider the requirements for the exempt status. In order to be classified as exempt, an employee must meet certain requirements regarding the type of work they are performing. In addition, they must meet the minimum salary test. California law requires that all employees classified as exempt earn a monthly salary that is at least twice the minimum required by the state for a full time employee (working 40 hours per week). ) Prior to the increase in California’s minimum wage, this left the minimum monthly salary for a full time, exempt employee at $33,280. The change that took effect on July 1, 2014 bumps it up to $37,440. By 2016, this number will be even higher, bringing exempt employees’ minimum salary to $41,600 per year in order to meet the minimum salary test. 

In regard to commissioned inside sales employees, the new California minimum wage applies to overtime pay. California law dictates that an inside salesperson is exempt from overtime pay if they earn more than 1.5 times the state minimum wage and more than half of their income is commission pay. After July 1, 2014, an inside sales person must earn at least $13.51 per hour in order to be exempt from overtime pay. With the arrival of 2016, these employees will need to be making at least $15.01 per hour in order to retain exempt status.

Employers who disregard of delay the necessary adjustment of applicable employee pay rates and exemption statuses could face costly penalties and interest on back pay due employees, possible overtime premium pay (as a result of the loss of exempt status for some workers) and more. If you have questions regarding how the change to minimum wage law may apply to you, get in touch with Blumenthal, Nordrehaug & Bhowmik today. 

Commission Wage Allocation Limited by California Supreme Court Ruling

The California Supreme Court ruling on June 14, 2014, limited commission wage allocation by holding that employers could not satisfy the California compensation requirements for commission sales exemptions by assigning commission wages paid in one pay period to alternate pay periods. The decision could have a notable impact on employers who regularly pay their employees on a commission basis. It could have a particularly significant impact on those who pay commission sales employees a base salary that falls near the minimum wage requirement.

California’s commissioned employee exemption requires (among other things) employee’s earnings to exceed one and a half times minimum wage. It also requires that more than half of the employee’s compensation be commissions.

In Peabody v. Time Warner Cable, Inc. Case No. S204804, the employer (Time Warner) argued that their former account executive wasn’t entitled to overtime pay due to the fact that she was a “commissioned employee” and was therefore exempt. As noted above, there are limitations as to which employees can fall under the commissioned employee exemption. In the case of Time Warner, Peabody was paid an hourly wage of $9.61. This did not fulfill the one and half times minimum wage minimum pay requirement. The wages were paid every other week. Total compensation of the plaintiff did exceed the minimum one and a half times minimum wage requirement when the hourly was combined with the commissions paid to the employee. Commissions were paid only once/month. The commissions paid were earned throughout the previous month.

Due to the pay structure set up by Time Warner, the employee’s compensation fell short of the one and a half times minimum wage requirement during some pay periods. It is also notable that there was no dispute regarding the fact that the employee worked 45 hours per week and was not paid any overtime. In an attempt to meet requirements set down in the commission employee exemption, Time Warner suggested that employee commissions should be reallocated to be paid during earlier pay periods (in which they were earned) rather than the bi-weekly pay periods that were in place. They felt that satisfying the exemption’s minimum wage earnings requirement in this manner should free them from the obligation to pay commission employees overtime. The California Supreme Court rejected their argument. It was concluded that the Time Warner’s attribution of commission wages to meet minimum requirements was impermissible.

If you need to discuss implications of the recent ruling and how it could affect you as a commission employee, contact Blumenthal, Nordrehaug & Bhowmik, the Southern California employment law experts. 

Accusations from Workers Indicate Costco Stiffs Workers on Meal Breaks and Ignores Sexual Harassment Charges

A proposed class action in California court alleges that Costco Wholesale Corp. doesn’t provide compensation for rest or meal breaks. The former employee making the allegations further claims that the discount retail giant retaliated against him when he reported sexual harassment to supervisors. Lead plaintiff is Micah Ornelas. Micah claims that warehouse employees were not provided with rest and meal periods and were not compensated for breaks as mandated in California law. Micah also claims that he was fired when he reported instances of both sexual harassment and unsafe working conditions to his direct supervisor.

The plaintiff claims that as a result of Costco’s labor law violations, he has suffered and will continue to suffer:

• Economic damages
• Emotional distress
• Humiliation
• Mental anguish/embarrassment
• Manifestation of physical symptoms related to the case

In addition to his own personal experience with a failure to respond to reports of sexual harassment, Ornelas claims that a female employee was harassed and physically threatened by the supervisor and told to “keep quiet” about the incident after reporting the problem. When the warehouse manager was approached about the problem, Ornelas claims that he was told the direct supervisor would be fired. Instead he was promoted. When Ornelas went back to the warehouse manager with concerns over this “resolution” he also informed him of unsafe working conditions (that had been discussed in pre-shift meetings previously with not action taken to remedy the situation by management). He was told that the harassment complaint was none of his business. Ornelas was suspended for three days. Upon returning from his suspension, Ornelas was subjected to sexual harassment as well.

Ornelas complained one last time about instances of sexual harassment, which resulted in his immediate termination without explanation. Ornelas claims that he was not paid all his wages upon termination.

If you have unfair wage and hour practices in force at your place of employment, contact Blumenthal, Nordrehaug & Bhowmik to quickly remedy the situation. 

Workers Sue Crabtree and Evelyn Over Missing Meal Break Pay

California courts recently heard accusations against a luxury skin care product manufacturing company, Crabtree & Evelyn Ltd. The Connecticut based company was founded in 1972. They have grown to include several hundred retail locations all selling a range of products: fragrances, soaps, lotions, home spa products, etc. Former employees claim that they were denied mandated meal breaks and rest periods. Three plaintiffs filed suit in Los Angeles Superior Court: Irina Eremina, Fernando Hernandez and Lillian Zamora. The plaintiffs indicated that they believed Crabtree & Evelyn was in violation of California Labor Law when they failed to provide duty-free meal and rest periods. They also claim that the company manipulated pay stubs/time sheets to make it look as if breaks and meal breaks had been provided and used. In addition to not receiving their required break times, workers were not compensated for overtime accumulated by working through said breaks and meal breaks.

Proposed class is seeking a jury trial and financial restitution (for unpaid wages, attorney costs, etc.), but potential class members have not yet been defined. The three plaintiffs filed a grievance with California’s Labor and Workforce Development Agency in February in an effort to settle the matter, but didn’t hear back within the 33-day period required prior to filing suit under California state law. This fulfilled the requirement (under California’s Private Attorney General Act) to exhaust all administrative remedies prior to presenting claims to the court.

If you fear you may need to talk to someone about potential violations of the Fair Labor Standard Act (FLSA) in your workplace, contact the experts at Blumenthal, Nordrehaug & Bhowmik today. 

Work Off the Clock: Nurses Allege Wage and Hour Violations at Houston Methodist Hospital

Allegations have been made that the Houston Methodist Hospital requires nursing staff to work off the clock due to a payroll system that automatically deducts a 30 minute lunch break. A former nurse named Joy Corcione is seeking permission from a local federal court for collective action on behalf of over 5,000 workers from the facility. The lawsuit Corcione filed alleges that as a result of the automatic lunch break deductions the hospital owes back wages to the nurses, nursing assistants, patient care assistants, etc. Corcione explains that workers are required to respond to patient calls as well as meet with doctors and perform other duties as necessary during their so called “lunch breaks.” The lawsuit also alleges that sometimes nurses and other hospital employed caregivers don’t get to eat lunch at all, they are too busy.

The hospital has responded to the allegations made in the suit saying:

1. They make sure to pay workers appropriately even if their lunch is interrupted.

2. Hospital administration makes a great effort to ensure a fair compensation process as well as a fair work place environment.

3. The hospital will address claims otherwise during the process of litigation.

According to the Federal Labor Law, employers don’t have to pay employees during their lunch breaks if they are not working, but it’s been specified that if workers are still on duty (answering calls, going through emails, performing other work-related activities) during their lunch break then this time is considered work time even if they are eating, making personal calls or texts etc. while performing said duties.

It will be interesting to see what U.S. District Judge Gregg Costa has to say about the payroll system that automatically deducts the 30-minute break and the alleged discouragement of employees to manually correct the deduction of meal time and break time on their time sheets. The judge will need to decide whether or not to certify it as a collective action, but if he does, other nurses and patient care employees from the hospital can expect to receive notices regarding their chance to opt in – only employees who opt in can share in any eventual settlement.

If you have any questions about class action lawsuits or meal break violations, please get in touch with the experts at Blumenthal, Nordrehaug & Bhowmik.