COVID-19 Alert   We have changed our procedures for COVID-19.   Learn More
What to consider when laying off employees due to COVID-19. Learn More

  • Recent Article Reveals Long Delays at State Labor Commissioner’s Office

    A recent article from the Los Angeles Daily Journal (Vol. 125 No. 057, March 23, 2012) reports “Wage claims get uneven treatment, records show.”  According to the article, data obtained through a Public Records Act request and interviews with lawyers representing business and workers reveals significant delays.

    State law requires the Labor Commissioner to conduct its hearings within 120 days after filing.  The Daily Journal’s analysis shows that 11 of the 16 regional offices did not meet that obligation in 2011.  Different offices report different average waiting periods, with Oakland showing the worst results: over 400 days to get to a hearing.  Santa Rosa, on the other hand, gets its cases to hearing within 85 days.  San Francisco heard its cases within 301 days on average.  San Jose averaged approximately 275 days to get to a hearing.

    The study did not discuss how long it takes for a decision to get mailed after the hearing.  By law, the decision is supposed to be written within 15 days after the hearing.  In my experience, however, it often takes several months to receive the actual decision.  This sometimes means a case can take between one to two years to resolve if filed with the Labor Commissioner.  Cases take even longer if they are then appealed to superior court for a trial de novo.

    Budget cutbacks and state-mandated furloughs as well as an increase in claims filed are main causes of the long delays.  In some cases, the state assigns hearing officers from other jurisdictions to help carry some of the load, and I’ve seen an improvement in the speed with which cases proceed in the last few months, but there are still significant delays.  In many instances, a case can move more quickly through court than through the Labor Commissioner.

    The Daily Journal article also discusses perceived inconsistent rulings reported by several practitioners.

    When deciding whether to proceed with a Labor Commissioner claim, claimants should consider the length of time it will take to receive a decision.  Employers should realize that they may need to maintain records for a longer period than required by law so they can ensure they have appropriate evidence and witnesses by the time a hearing comes around.

    If you are contemplating filing a claim with the Labor Commissioner, or if you’ve recently been notified that a claim has been filed, I highly recommend speaking with competent counsel familiar with the Labor Commissioner and wage and hour issues.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     
    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
     
    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

    , San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • Court Clarifies Commission Case

    By the end of this year all commission agreements in California must be in writing.  When drafting or reviewing your commission agreement it is a good idea to keep in mind several issues; one of which is whether the commissioned employee is exempt from California’s overtime laws.  A recent court decision (Muldrow v. Surrex Solutions) addresses the basic requirements of the inside salesperson exemption.

    Let me start off by reminding you that there are two different possible sales-related exemptions under California’s overtime laws: inside sales persons and outside salespersons.  Outside salespersons are exempt under most, if not all, wage orders.  Inside salespersons are only exempt if the employment is governed by Wage Order 4 (professional, technical, clerical mechanical and similar occupations) or Wage Order 7 (mercantile industry).  If some other wage order applies then the inside salesperson exemption is not available.  There are several different distinctions between the inside salesperson and the outside salesperson exemptions that I hope to address in a subsequent article.  For now, I want to focus on a couple of key points discussed in the Muldrow case.

    Surrex Solutions Corporation locates and provides qualified candidates for employment to other companies.  Sometimes the candidates are hired directly by the customer and other times Surrex “rents” the candidate to the customer for a specified billing rate.  Surrex employees review open positions, research and locate qualified candidates, negotiate terms of employment/hiring with candidates and customers, and obtain orders from customers for the candidates.  The Surrex employees are paid a percentage of any placement/hiring fees when the customer hires the candidate directly, and a percentage of the adjusted gross profit for candidates retained on a consultant basis.  Tyrone Muldrow, on behalf of himself and other similarly situated employees, filed a class action against Surrex claiming he was entitled to overtime.  The trial court and the appellate court rejected the claim and determined Muldrow was exempt from California’s overtime laws under the inside salesperson exemption.

    The court emphasized several earlier cases distilling the necessary criteria for the inside salesperson exemption:  “First, the employees must be involved principally in selling a product or service, not making the product or rendering the services.  Second, the amount of their compensation must be a percentage of the price of the product or service.” (quoting Ramirez v. Yosemite Water Co (1990) 20 Cal.4th785)

    In addressing the first issue (i.e, was the employee involved principally in selling a product or service), the court reduced Muldrow’s job to its essence: Surrex employees would offer a candidate’s services to a client in exchange for a payment of money from the client to Surrex.  Although there was some discussion regarding duties leading up to the consummation of the sale, all of those duties were part of the selling process and therefore the employees were “involved principally in selling a product or service.”

    As to the second issue, the employees conceded that they were paid a percentage of the price of the product for the direct hires, but claimed that since the amounts paid on the non-direct hire cases was not based on the gross price of the product or service, it was not a commission.  The court had no trouble rejecting this argument.  Nothing indicates the percentage must be based on the gross price versus an adjusted gross or net price.  The court similarly rejected the employees’ argument that the commission plan should be rejected because it was “too complex.”

    An interesting issue that was not addressed by the court (and possibly not raised by either side) was the fact that the commissions are calculated by taking the gross profit then deducting ordinary costs of doing business in order to calculate the commission.  There has been discussion for some time regarding the extent to which an employer can use the ordinary costs of doing business in the calculation of bonuses, commissions and profit-sharing agreements.  The California Supreme Court has flip-flopped on the issue at least once.  The latest rule is that, at least with respect to managerial profit sharing plans, an employer can calculate a profit sharing plan using profitability which necessarily includes the ordinary costs of doing business.  Under Muldrow, it would appear an employer can also calculate a commission based on the ordinary costs of doing business (e.g., overhead, employee costs, benefit costs, etc.)

    Commission plans can be simple or they can be complicated.  Even simple commission agreements need to carefully consider a number of factors.  Now that California law will require all commission agreements to be in writing and provided to the employee, it is extremely important for you to review and understand your commission arrangement.  If your plan is not in writing, now is the time to start working on it with a knowledgeable professional.  And don’t forget to consider any possible overtime ramifications!

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     
    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
     
    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • Can I Get My Fees, Please?

    The Ninth Circuit Court of Appeals says the answer may be up to the trial judge.  In  a Fair Housing Act suit, the Ninth Circuit held that the district court properly relied on its own knowledge of customary rates charged by attorneys and its own experience concerning reasonable and proper fees in making an award of attorney fees.

    After the plaintiff won a similar state case, the parties settled their federal dispute.  The plaintiff asked the court to grant its motion for attorneys’ fees.  The court awarded fees, but substantially less than the amount sought.  The trial judge believed the plaintiff should have settled the case earlier and wasted time and money with unnecessary arguments.  The plaintiff appealed.

    The Ninth Circuit concluded that under Lohman v. Duryea Borough, 574 F.3d 163 (3d Cir. 2009), the district court properly considered settlement discussions for the purpose of deciding a litigant’s “success,” and therefore what would constitute a reasonable award.  The Ninth Circuit believed the trial court was in the best position to discern what work was unnecessary and could not find any abuse of discretion in deducting the hours spent on unnecessary motions and arguments.

    Many lawyers and clients want to make every conceivable argument to increase the chance of prevailing.  This is often a wise decision, but lawyers need to be mindful that if a court determines a particular argument or motion was unnecessary or a waste of time, the client may end up footing the bill without hope of recouping those costs from the other side.  I’m a firm believer in ensuring my clients are an integral part of putting together the strategy for the case.  Ingram v. Oroudjian is a good reminder that attorneys and clients need to pick their battles carefully, or at least be mindful of the resources that are being spent.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     
    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
     
    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • Exceptional Performance May Mean Higher Attorneys’ Fees Award

    An April 21, 2010 U.S. Supreme Court decision can increase employer exposure to enhanced attorneys’ fees in contingency cases filed in Federal Court. The decision, Perdue v. Kenny A., 08-C.D.O.S. 4896, held that the plaintiffs’ lawyer’s performance, a key factor once used only to set the amount of the attorney’s fees, may now also be used to enhance or multiply those fees.

    Prior to this decision, certain factors such as attorney performance, risk, and expense advancement, were used by Courts to calculate reasonable attorney’s fees in contingency cases. Those fees are referred to as Lodestar fees. Under the Lodestar method, the Court multiplied the number of hours a lawyer worked by the prevailing hourly rates in the lawyer’s area, to determine the reasonable attorneys’ fees. However, in extraordinary circumstances, a Court could then use other factors to enhance the attorneys’ fee, for example, multiplying the fee by two.

    In this case, however, the Court held that attorney performance, a factor previously limited to calculating the Lodestar fee, could also be used in enhancing that fee. The Court reasoned that in extraordinary circumstances, Lodestar calculation factors might not adequately take into account the justification for enhanced fees, and should not, therefore, be per se subsumed in fee calculation only.

    This case opens up the possibility that numerous other factors, such as an extraordinary result, advancement of expenses, or delay caused by defendants, could be used to increase the size of the plaintiff’s attorneys fees beyond the ordinary Lodestar calculation.

    Employment related legal issues can present significant exposure to employers.  Employees and employers should consult with an attorney to ascertain their rights.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Rutger J. Heymann, former associate of The Law Office of Phillip J. Griego.
     

    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.

    Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.