July 30, 2017

Key California Employment Law Cases: February 2017

The key California employment law cases from February 2017 involve collective bargaining/union and wage-and-hour issues.

Collective Bargaining/Union Issues – Vasserman v. Henry Mayo Newhall Memorial Hospital, 8 Cal. App. 5th 236, 213 Cal. Rptr. 3d 480 (2017)

Summary: Arbitration provision in collective bargaining agreement did not compel employee to arbitrate individual statutory claims where provision did not include express, clear and unmistakable waiver of right to judicial forum.  

Facts: Plaintiff, a registered nurse, brought a putative class action against her hospital employer alleging violations of the California Labor Code for missed meal and rest periods, unpaid wages, and unpaid overtime. The hospital argued that plaintiff was required to arbitrate her claims pursuant to an arbitration clause in the collective bargaining agreement. The trial court denied the hospital’s motion, holding that the agreement did not include a clear and unmistakable waiver of the right to a judicial forum for statutory claims.

Court’s Decision: The California Court of Appeal court affirmed, holding that the arbitration clause did not include an express, clear and unmistakable waiver of the right to a judicial forum for such individual claims. The collective bargaining agreement covered only contract-related claims, not statutory claims. With alleged statutory violations, the presumption of arbitrability arising out of a collective bargaining agreement is not applicable. In addition, a union may not prospectively waive an employee’s right to a judicial forum to hear his or her statutory claims.

Practical Implications: Collective bargaining agreements are not subject to a presumption of arbitrability for statutory claims arising outside of the agreement. If an employer wants to compel arbitration of statutory claims through a collective bargaining agreement, the arbitration clause must expressly, clearly and unmistakably mandate arbitration and waive a judicial forum.


Wage and Hour – Vaquero v. Stoneledge Furniture LLC, 9 Cal. App. 5th 98, 214 Cal. Rptr. 3d 661 (2017)

Summary: Employers must separately compensate employees for rest periods if commission compensation plan does not already include minimum hourly wage for such time.

Facts: Plaintiffs, former sales associates for a furniture company, brought a class action lawsuit alleging that defendant’s commission pay plan did not properly compensate them for rest periods under California law. The plan paid sales associates based on commissions earned. Sales associates who did not earn commissions in excess of at least $12.01 for every hour received a draw that would bring them up to $12.01 for every hour worked, but the draw could be deducted from future commissions. The plan did not provide separate compensation for non-selling time, such as time spent in meetings or rest periods. Although defendant allowed employees to take a ten minute rest period for every four hours worked or major fraction thereof, there was no method in place to track or separately compensate rest periods. The trial court granted defendant’s motion for summary judgment, finding that the plan accounted for all hours worked and guaranteed that sales associates would be paid more than $12 an hour for those hours. Thus, rest period time was captured in the total amount paid each pay period.

Court’s Decision: The California Court of Appeal reversed, holding that the plain language of Wage Order No. 7 requires employers to count rest period time as hours worked for which there shall be no deduction from wages. The plan violated these requirements because it did not separately compensate employees for rest periods.

Practical Implications: Employers should evaluate commission-only plans to ensure they are separately paying for rest periods. An alternative would be to explore a plan that provides guaranteed base pay in addition to commissions. Outside sales representatives who are properly classified as exempt are not subject to the holding of this case.