$140M ERISA Class Case Filed Against Home Depot: Over 200,000 Retirement Plan Beneficiaries Represented

In an ERISA suit filed in April 2018, plaintiffs Jaime H. Pizarro and Craig Smith allege that The Home Depot places employees in poorly performing funds and also causes plan participants to overpay for Robo Investment Advice. The class complaint was filed on behalf of the plaintiffs and close to 200,000 current and former plan participants in the U.S. District Court of the Northern District of Georgia. The complaint was filed against The Home Depot, the 401(k) plan’s investment and administrative committees, and investment advisors from two different companies, Alight Financial Advisors, LLC and Financial Engines Advisors, LLC. The complaint alleged that the Home Depot committed two major violations:

1.     Violated their basic fiduciary duties under ERISA

2.     Abused their employees’ trust through mismanagement of participants’ 401(k) retirement plan

Allegations state that the Home Depot chose a number of funds for the employee 4019(k) that performed poorly and allowed investment advisers to charge their plan participants exorbitant fees. It is also alleged that the company completely disregarded a kickback scheme that was occurring between a plan investment adviser and the plan’s bookkeeper. Estimated losses for employees affected are significant. One respected financial information and technology organization concluded that the average plan participant earned $100,000 less in retirement savings than employees in top-rated retirement plans similar in size. This $100,000 loss is the equivalent of about 18 additional years on the job for each Home Depot plan participant. The plaintiffs seek $140 million in damages.

Home Depot has over $6 billion in assets and is one of the largest 401(k) plans in the country. Counsel for the plaintiffs argue that ERISA fiduciary standards are clear and that while Home Depot should be held to the highest standard, they fall below the lowest standard in this particular case. According to information presented in the complaint, Home Depot’s plan investment options appear to consistently underperform their own benchmarks and those of comparable investment opportunities. Plaintiffs claim this is largely due to the company’s practice to select investment options without due diligence and fail to appropriately monitor performance.

If you need information about ERISA fiduciary standards or if you seek class action status for violations in the workplace, please get in touch with one of the experienced employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

ERISA Litigation Finds Another Collegiate Target in Georgetown University

The allegations are familiar, but this time they are being aimed at Georgetown University. The latest example of defined contribution litigation to target a well-known U.S. university, the Employee Retirement Income Security Act (ERISA) fiduciary breach lawsuit was filed in the U.S. District Court for the District of Columbia. The suit names Georgetown University and several university officials tasked with overseeing defined contribution (DC) retirement plans as defendants.

The charges filed match almost verbatim previous suits filed with similar allegations made against other large universities’ 403(b) retirement plans. Plaintiffs allege that the university and officials in charge of oversight did not leverage the university’s plans’ substantial bargaining power to benefit plan participants and beneficiaries, failed to appropriately monitor and evaluate plan expenses and allowed the plans to pay exorbitant fees for both administrative and investment services.

The complaint includes claims that the defendants breached their fiduciary duty by failing to select one single, suitable service provider providing administrative and recordkeeping services for the retirement plans in exchange for reasonable compensation for the service provided. Instead, the defendants apparently retained three different service providers consistently – all with separate fees: TIAA, Vanguard and Fidelity. Each supplied the plans with a separate menu of investment options including mutual fund share classes charging higher fees than other alternatives with the same strategies and/or less expensive share classes of the exact same investment fund. According to plaintiffs, the situation caused plan participants to pay asset-based fees for admin services that increased with the value of the accounts even though no additional services were provided.

The three providers resulted in three investing segments for each of the plans. TIAA offered a guaranteed interest annuity. Vanguard offered close to ninety mutual funds. Fidelity offered nearly two hundred mutual funds. Plaintiffs claim that the volume of choices indicates that the defendants were not adequately fulfilling their fiduciary duties for retirement investors by monitoring and evaluating the historical performance and expense of each of the funds in order to compare past performance the options to each other or a peer group of funds to maximize success. Many of the options should have been excluded based on their past performance, etc.

If you have questions about ERISA or if you have knowledge of a fiduciary breach, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Exotic Dancers Wage Row Results in $8.5M Deal

A number of former Spearmint Rhino exotic dancers urged a California federal judge to give final approval to a $8.5 million deal in order to settle their suit alleging that the chain of nightclubs limited their compensation to tips.  Lead plaintiffs in the case, Lauren Byrne, Bambie Bedford, and Jennifer Disla, claimed that the nightclub didn’t pay them overtime wages, provide them with minimum wage or provide them with required meal and rest breaks during their time dancing in the establishment.

Final settlement approval in the class and collective action would resolve the allegations of tip misappropriation. Out of 8,000 class members, 50 chose to opt out and only a few others in the group objected to the settlement proposed as a resolution to the matter.

Dancers included in the suit were located throughout the country. Counsel for the class spoke to them regarding the allegations and disputed facts of the case and considered information pertaining to the case provided by defendants’ counsel including business structure, agreements in place, locations of the club, number of clubs involved in the case, number of dancers and other entertainers working at the various locations, applicable statute of limitations, and the number of days each dancer worked at the establishments. All this research and analyses was completed prior to engaging in settlement discussions.

According to the motion, the final approval of the proposed settlement would end litigation over all claims against the Spearmint Rhino nightclubs brought by the plaintiffs in regard to state wage and hour law violations, and the Federal Fair Labor Standards Act (FLSA). According to the dancers, the deal amount specified was $8.5 million, but could increase to $11 million if certain conditions were met.

A group of exotic dancers currently working the defendants’ clubs came forward the same day that the final settlement approval was requested to ask the court to find that they are not employees. They stated that they could have chosen to work as “employees,” but did not because they wanted to avoid the level of control the nightclubs had over actual employees. They argued that the plaintiffs are all former entertainers who no longer need to consider this aspect of the issue. They have no further interest in preserving their choice to perform without being subject to the rules, regulation, control and scrutiny of an employee.

If you have questions about wage and hour violations or if you are not being paid overtime you are due, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

California Judge’s Common Sense Ruling Grants Disney Summary Judgment on FCRA Class Claim

In a class action lawsuit against Disney under the Fair Credit Reporting Act (FCRA), the Culbersons alleged that Disney was in violation due to obtaining a background check prior to providing the plaintiff with proper disclosure as well as by taking adverse action without adhering to the proper adverse action process. While the Culbersons were able to obtain class certification, Disney prevailed at summary judgment.

The Los Angeles Division of the Superior Court of California granted summary judgment to Disney on February 9th, 2018 on both claims presented by the Culbersons. The court ruled that while the Culbersons may be able to state a claim for the existence of a technical FCRA violation on Disney’s part, there was no willful violation of FCRA.

The Court disagreed with the Culbersons interpretation of FCRA in connection to the adverse action claim. According to FCRA, if an employer intends to take any adverse action against a potential employee due to information obtained in a background check, they must first adhere to pre-adverse action protocol requiring the employer to give the applicant a copy of the background check and a summary of rights before taking the adverse action.

According to the Culbersons, Disney followed their own coding system for applicants including a category for “no hire” that constitutes adverse action. The categorizing of applicants in the Disney hiring system occurs prior to the submission of a copy of the background check and summary of rights to applicants. The Culbersons argued that this procedure constituted Disney actively and willfully failing to follow an appropriate pre-adverse action process.

The Court disagreed. They found that Disney’s “no hire” code did not actually constitute adverse action because it was only an internal decision. Employers are allowed to make internal decisions regarding potential employees without it constituting adverse action. According to the Court’s line of reasoning, Disney was not in violation of FCRA simply because they used an internal coding system for new applicants including a “no hire” category prior to sending out pre-adverse action letters.

Similarly, the Court held that Disney’s background check disclosure did not willfully violate FCRA. It was not determined whether or not the document included “extraneous” information as the Culbersons claimed. The Court declined to address the technical adherence to FCRA’s rule that the background check disclosure be a separate document solely dedicated to this purpose.

If you were not notified prior to adverse action taken by a potential employer, or if you were not properly notified of a background check being used during a pre-screening employment process, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Grub-Hub Drivers Officially Ruled Contractors and The Gig-Economy is Taking Notice

A recent ruling declared Grub-Hub drivers independent contractors officially and the gig-economy is taking notice. The ruling has the potential to affect Uber litigation as it is also hinging on employment status questions. The significant court decision was handed down by a federal judge asked to rule whether drivers for GrubHub Inc. are actually independent contractors or employees. Since Uber Technologies Inc. has a similar business model that depends on pairing customers with products/services through a smart phone app, it’s not surprising that employment law litigation facing both parties includes similar issues.

The first of its kind ruling was delivered by U.S. Magistrate Judge Jacqueline Scott Corley in San Francisco. According to the ruling, a gig-economy driver does not qualify for employee protections under California law. Her ruling was based on her interpretation of California law on the matter. She did note that the law, as it stands, is an all-or-nothing proposition and the advent of the gig economy’s low wage workforce engaging in low skill, high flexibility, episodic jobs may mean the legislature will need to readdress the issue. 

The GrubHub suit was filed by Raif Lawson. Lawson worked as a food-delivery driver for less than six months while he pursued an acting/writing career. He claimed GrubHub violated California labor laws by not reimbursing him for expenses, failing to pay minimum wage and failing to pay overtime pay for hours worked in excess of either per day or 40/week.

Determining whether Lawson was an independent contractor or an employee hinged on pinning down how much control GrubHub exerts over their drivers’ work lives. GrubHub argued that Lawson held the reins as he decided when, where and how frequently he performed deliveries. Lawson’s attorney contended that GrubHub exerted control over drivers by expecting them to be available to accept assignments during shifts they sign up for and to remain in prescribed geographical regions.

GrubHub is happy with the ruling, as are many other gig-economy front runners facing similar litigation and questions of misclassification. They feel the ruling validates the freedom that GrubHub drivers enjoy. They also stated that the would make sure drivers would retain the advantage of flexibility that made working with GrubHub advantageous.

If you have questions about misclassification in the work place or if you need the help of an experienced California employment lawyer, get in touch with Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Whistleblower Retaliation Lawsuit Filed Against Aurora Santa Rosa Hospital

According to a lawsuit filed recently by the former Aurora Santa Rosa Hospital Chief of Nursing Officer, Teresa Brooke, Aurora Behavioral Healthcare fired her for advocating for safety measures. Defendants listed in the suit are Aurora Behavioral Healthcare – Santa Rosa, LLC and Signature Healthcare Services, LLC in Sonoma County Superior Court. The facility where Brooke was employed is an acute psychiatric facility in Sonoma County that is operated by the two companies.

In Brooke’s complaint, she provides details for numerous examples of dangerous conditions that existed at the facility. One such dangerous conditions Brooke attempted to bring to light were severe staff shortages resulting in injuries to both patients and staff. Brooke maintains that Aurora wrongfully terminated Brooke in response to her complaints both internally and to a government agency about the matter. 

Brooke has 30 years of experience in her field of nursing and hospital management. She states that the conditions that were evident at Aurora were dangerous and unlike anything she had previously seen or experienced. The constant staff shortages were brought on by the meager budget that was provided by Aurora’s corporate leadership at Signature Healthcare Services, LLC. Brooke saw the obvious result of such shortages – injuries – frequent injuries among both patients and Aurora staff.

Other allegations included in Brooke’s complaint as a result of the staff shortages:

·       Staff and patients were subjected to consistent punching, kicking, chocking, etc.

·       A full-blown patient riot.

·       High rates of patient self-harm.

·       Multiple occurrences of sexual violence in connection to patients (some minors).

Brooke’s alleges that both Aurora and Signature prioritize their bottom line over patient care and safety – as well as prizing a profit more than respecting the rights of patients and/or staff at the Santa Rosa location where patients receive inpatient care, partial hospitalization and outpatient mental health care for patients aged teen through adult. Other facility locations are currently in operation in California, Illinois, Arizona, Massachusetts, Texas and Nevada.

If you are experiencing retaliation in the workplace or if you have been wrongfully terminated, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Home Depot Faces Former Employee's Allegations of Overtime Violations

Marco A. Batani, out of San Diego, recently filed suit against Home Depot, alleging unlawful business practices and failure to pay overtime. The complaint was filed January 2018 in U.S. District Court for the Southern District of California. In Batani’s complaint, it states that he was employed at Home Depot between 2016 and 2017 as a sales consultant, but that he was misclassified as an outside salesperson. Yet his duties while on the job consisted of mainly non-exempt tasks.

In promotional materials describing potential careers with The Home Depot, the one-stop shop for customers building a home, the company describes a warm workplace culture. The company website states that they couldn’t have “done it without the culture and feeling of home and family among the associates in our stores, distribution centers and corporate office.” Yet the claims made by Batani in the recent California overtime lawsuit paint a far different picture of the situation.

In Batani’s suit, he claims that during his employment he consistently worked over eight hours per day and more than 40 hours per week – without being provided with the legally required overtime compensation. (According the FLSA, employers are required to provide overtime pay for any hours worked beyond “full time.” The law also defines full time as 8 hours per day and/or 40 hours/week.) 

Batani also alleges that he was not provided with the legally required meal periods and was not reimbursed for all job expenses.

In addition to the above allegations, Batani claims that Home Depot USA failed to provide employees with wages due at separation, failed to provide timely and accurate wage statements, and failed to reimburse business expenses. All of the allegations are in vio0lation of state law.

Batani seeks a trial by jury. He filed suit to seek damages of $100, an aggregate penalty up to $4,000, compensatory and liquidated damages, nominal damages, restitution and disgorgement, punitive and exemplary damages and attorneys’ fees. He also seeks any additional relief the court may deem just in the situation.

If you have questions about overtime pay or if your employer is refusing to provide you with required meal and rest breaks, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.