Stricter California Overtime Rules Spell More Lawsuits

Sacramento, CAA number of California overtime complaints that were filed last year may be a warning to employers: it doesn’t pay to not pay overtime.

Nurses overtime class action

The California Court of Appeal ruled last October that a class action brought by nurses against Aurora Behavioral Health Care in Southern California can be certified. Because the nurses were understaffed, they had to remain at their posts until relieved and had to finish work tasks before leaving at the end of their shift. The nurses claim they regularly skipped meal and rest breaks and worked off the clock.

Previously the lower court rejected certification, citing that the nurses’ decision to work off the clock was a personal choice. But the new overtime laws do not permit such a “choice,” and upon appeal, the judge adhered to that rule. The case is Alberts v Aurora Behavorial Health Care, 241 Cal.App.4th 388 (2015).

Realty management company overtime class action

A proposed class-action lawsuit, filed by Interstate Realty Management Company employees in December 2015, alleges their employer failed to pay proper overtime wages (they are paid hourly) and failed to provide meal and rest breaks. It is mandatory under the California Labor Code for employers to pay their employees overtime wages at 1.5 times the employees’ regular rate of pay when an employee works more than eight hours in a workday and/or in excess of 40 hours in a workweek. As well, employees must provide uninterrupted meal breaks prior to their fifth hour of work. The Interstate Realty Management Company class action is Case No. STK-CV-UOE-2015-0011942

Amazon delivery drivers

Echoing the Uber lawsuits, where on-demand, independent contractors argue they are regular employees and thereby misclassified, Amazon.com drivers last October sued the company in Los Angeles state court.

Companies like Amazon and Uber are likely saving enough money by not paying their drivers unemployment insurance, workers compensation and Social Security to more than cover overtime lawsuit settlements. Attorney Beth Ross said that several hundred Amazon drivers in California are making an average of $11 an hour, and out-of-pocket expenses may leave them with less than the $7.25 minimum wage. As of January 2016, minimum wage is $10 per hour, and more in some cities. For instance, San Francisco minimum wage is now $12.25 per hour, increasing to $13.00 per hour on July 1, 2016. San Jose is $10.30 per hour, Oakland is $12.55 per hour, and San Diego is $10.50 per hour.

As well, Amazon hired an intermediary service to likely avoid paying overtime. A courier service that manages Amazon’s Prime Now deliveries in Orange County required that drivers reported to their shift at the Amazon warehouse in Irvine, where they waited in line for assignments, then had to make deliveries in a specified order, according to the complaint. This process added up to two hours onto their shift, which they were not paid for.

If Amazon drivers prevail in their lawsuit, lawyers say it won’t be a big setback for the giant company, which has more than 200,000 employees worldwide and doesn’t rely so much on contract workers such as Uber does. But the California lawsuit is a threat because state laws make it easier for workers to prove they’ve been misclassified as contractors. They can also win reimbursement for business expenses that isn’t available under laws in other states.

And employers take note:

AB 970 - effective January 1, 2016 - provides the California Labor Commissioner’s Office with authority to investigate and at the request of the local government, to enforce local laws regarding overtime hours or minimum wage provisions. The California Labor Commissioner’s Office has authority to issue citations and penalties for violations, but cannot issue violations if the local entity has already issued a citation for the same violation. The bill also authorizes the California Labor Commissioner’s Office to enforce Labor Code section 2802, which requires employers to pay for business-related costs that the employee directly incurs in discharging their duties for the employer.