Is VW a Joint Employer Alongside California Independent Franchised Dealerships?

The Ninth Circuit is looking at joint employer claims in connection to California salespeople at independent franchised dealerships and the German automaker, Volkswagen. VW claims salespeople are overreaching with their claims, but if the Ninth Circuit finds that they are a joint employer, they could be liable for the commissions lost during the 2015 emissions-cheating scandal.

Details of the Case: Robert Saavedra et al. v. Volkswagen Group of America Inc. et al.

Court: U.S. Court of Appeals for the Ninth Circuit

Case No.: 20-17327

VW Asks Ninth Circuit to Affirm October Decision:

In October, U.S. District Judge Charles R. Breyer’s decision closed out the consolidated wage and hour action. Volkswagen AG and Volkswagen Group of America asked the Ninth Circuit to affirm the decision they cited as “carefully reasoned.”

The Plaintiffs: Robert Saavedra et al. v. Volkswagen Group of America Inc. et al.

Plaintiffs in the case are former salespeople Robert Saavedra, Armando Rodriguez and Mickey Gaines. The plaintiffs allege that due to the 2015 "clean diesel" emissions-cheating scandal Volkswagen sales experienced a significant drop that dramatically hurt their overall income. The sales people, employed by independent franchised dealerships, argued that Volkswagen AG and Volkswagen Group of America Inc. worked with the franchise dealers to provide the employment opportunity and provide compensation to the plaintiffs. If the court finds for the plaintiffs on the joint employer argument, the cited Volkswagen entities would be liable for ensuring salespeople’s wages and hours were compliant with California state law.

The Defendant: Robert Saavedra et al. v. Volkswagen Group of America Inc. et al.

Volkswagen claimed that the plaintiffs continue to attempt to create an employment relationship where none exists. Volkswagern further argues that offering training, certifications and incentives does not constitute the amount of control necessary to indicate control over pay or working conditions that make them a joint employer according to the law. VW entities insist that plaintiffs in the case created the employment relationship in order to keep the suit alive after it was dismissed twice by Judge Breyer (first in September 2019, and again in June 2020).

Overview of the Case: Robert Saavedra et al. v. Volkswagen Group of America Inc. et al.

After amendments were made to the suit, the salespeople claimed Volkswagen violated California Labor Code and Unfair Competition Law with fraudulent omissions and their lack of disclosure regarding emissions-cheating. The October ruling dismissed these claims, but the plaintiffs appealed to the Ninth Circuit to reverse Judge Breyer’s dismissal. Volkswagen expects the Ninth Circuit to reject the appeal.

If you have questions regarding employment law and how it protects California employees from wage and hour violations, get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

7-Eleven Touts Franchisee Suit Regarding Flexible Work Hours In California

In recent news, 7-Eleven faces allegations from California franchisees claiming employment law violations related to flexible work hours in California.

Details of the Case: Serge Haitayan et al. v. 7-Eleven Inc.

Court: U.S. District Court for the Central District of California

Case No.: 2:17-cv-07454

Serge Haitayan et al. v. 7-Eleven Inc.: The Plaintiff

Serge Haitayan, is one of 4 plaintiffs in the case that claimed 7-Eleven exerts unreasonable control over their business decisions, and as such, they should actually be considered employees under state law. However, Plaintiff “Paul” Lobana, another plaintiff in the case, owns three stores throughout the LA area. Under cross examination aimed at undercutting the plaintiffs’ claims that 7-Eleven exerts stringent control over franchise owners, Lobana admitted he grossed more than $200,000 in profits in 2019 while he was deducting business expenses on income taxes, and that he has the freedom to come and go from the 7-Eleven store whenever he wants. He was the 3rd plaintiff to offer similar testimony.

Serge Haitayan et al. v. 7-Eleven Inc.: The Defendant

7-Eleven Inc. claims that the arguments presented by the plaintiffs in the Serge Haitayan et al. v. 7-Eleven Inc. case threatens the stability of California’s entire franchise system if the owners prove the company owes them more than $11 million for business expenses.

Allegations Plaintiffs Made in the Suit:

Plaintiffs in the suit claim that 7-Eleven allegedly misclassified them as independent contractors, but treated them as if they were store managers.

Serge Haitayan et al. v. 7-Eleven Inc.: An Overview

Four California franchise owners sued 7-Eleven in 2017 on behalf of approximately 1,000 franchisee owners in California, but they were later denied class certification. In February 2021, Judge Fischer ruled that the plaintiffs’ claims fall under the older California Borello employment test rather than the newer ABC test. The Borello test was established by the California high court’s 1989 ruling on S.G. Borello & Sons Inc. v. Department of Industrial Relations and creates a looser standard (in comparison to the ABC test) that weights numerous factors with an emphasis on the control an employer exerts over workers. . On the second day of a video conference California federal bench trial in March 2021, Haitayan (plaintiff in the case), conceded that when working at the 7-Eleven franchise, he did set his own work schedule, take vacations whenever he wanted, and worked only 10-15 hours each week.

If you have questions about California labor law violations or how employment law protects you against labor law violations, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

Does California Law Apply to Employment Activity on Indian Reservations?

Former Senior Vice President and General Manager of Harrah’s Resort Southern California, Darrell Pilant, sued Caesars Enterprise Services and Caesars Entertainment Inc. on wrongful termination claims. The claims were based on Pilant’s allegation that he was fired for opposing the resort’s plan to reopen because he feared for the health and safety of the resort’s employees. The case presents more than the obvious question of whether or not the company was within their rights to fire their GM, but it also brings up the question of whether or not California labor law applies on the Indian reservation.

Details of the Case: Pilant v. Caesars Enterprise Services, LLC et al

Court: California Southern

Case No.: 3:20-cv-02043

In Response to Pilant’s Wrongful Termination Lawsuit:

In November, the resort argued that the lawsuit should be dismissed due to lack of jurisdiction and for excluding an essential party in the suit due to its sovereign immunity, the Rincon Band. But their arguments did not convince the judge. This was in early December. By late December, the Rincon Band was attempting to intervene in the suit as a means of bolstering Caesars' arguments to dismiss, but in February 2021, the judge denied their arguments; refusing to let the tribe join the lawsuit. In March, the tribe appealed to the Ninth Circuit requesting the court pause the suit until a decision is made. Pilant claims it’s all part of a plan to prevent his wrongful termination lawsuit from proceeding as planned. It’s also notable that for decades, the Rincon tribe has strongly resisted the application of state jurisdiction on the reservation - especially in connection to the Indian Gaming Regulatory Act.

The Question of Applying California State Law on the Indian Reservation:

The most concerning aspect of the case from the perspective of the Rincon Band’s legal counsel is whether or not state law can regulate business on Native American land. The court will have to decide if California law applies to employment activity on the Indian reservation or not, and that affects the tribe’s interests, and ultimately, according to the tribe’s legal counsel, lends credence to the request to pause the wrongful termination lawsuit.

Pilant’s Response to the Request to Pause Wrongful Termination Lawsuit:

In his response to the request to pause the wrongful termination lawsuit, Pilant claimed that the Rincon Band’s filing was simply to delay his lawsuit. Pilant filed the complaint in San Diego county court in August 2020, but the case was transferred to the California federal court in October 2020 for jurisdictional reasons.

The History of the Case: Pilant v. Caesars Enterprise Services, LLC et al

According to Pilant’s complaint, in late May 2020, California Gov. Gavin Newsom urged the San Diego-area tribal leaders not to reopen casinos. Just days after the letter from the governor, Pilant took a similar stand urging his supervisors and Caesars legal counsel not to reopen the resort. However, according to the plaintiff, the resort went ahead and reopened in May, within one week of the governor’s letter urging the opposite action. This dismissal of obvious safety recommendations urged Pilant to resign before the resort reopened, and sue the company for wrongful termination after they violated public policy.

If you have questions about California labor law violations or how employment law protects you against labor law violations, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

United Airlines California Workers File Suit Due to Wage Statement Violations

Many workers, particularly those who work in the transportation industry, must travel for their job. For example, airline employees often travel and work for their employer in various states. What happens when one state’s employment laws are far more burdensome than the rest? 

The Details of the Case: Ward v. United Airlines, Inc. 

Case No. 16-16415 (9th Cir., Feb. 2, 2021)

United Airlines Granted Summary Judgement by District Court: 

After the District Court granted summary judgment to United Airlines for two consolidated actions brought by certified classes of United pilots and flight attendants that live in California, the Ninth Circuit reversed the summary judgment. The pilots and flight attendants allege that their wage statements from United Airlines violate California Labor Code 226.

Does California Labor Code 226 Apply? 

The panel put the question before the California Supreme Court: does California Labor Code 226 apply? After considering the facts of the cases, the California Supreme Court held that California Labor Code 226 applies if the “employee’s principal place of work is in California.” The California Supreme Court set forth the “Ward test” as a set of principles to define Section 226’s permissible reach. 

Applying Section 226 Under the Ward Test: 

According to the Ward test, Section 226 didn’t fall into either of the “invalid” categories. The panel also did not find merit in the Defendant’s argument that applying the Ward test directly regulates interstate commerce. The panel also rejected United Airlines’ argument that applying Section 226 to plaintiffs under the Ward test violated the dormant Commerce Clause. Instead, the panel held that the Airline Deregulation Act of 1978 and the Railway Labor Act did not preempt the application of Section 226. 

Did United Airlines Comply with Section 226? 

While the California Supreme Court decided Section 226 applied in this case, they did not determine whether United Airlines complied with Section 226. The case was directed to district court to modify the class definitions, conform to the California Supreme Court’s definition of Section 226’s permissible reach, modify the class period in the Ward case to extend the date of judgment, determine if the Defendant complied with Section 226, and if not, determine what relief should be awarded to the Plaintiffs. 

In conclusion, transportation companies with employees based in California are bound by Section 226’s wage statement requirements unless they can prove that complying would pose a significant burden with substantial financial costs.

If you need help with employment law violations in the workplace, get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP today. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

Faulty Pay Stubs Result in Over $100M Award to Employees

The Ninth Circuit heard a California employer's appeal of a $102 million damages award for a class action suit alleging California Labor Code violations. Over $48 million of the award was designated for violations of the California Labor Code's itemized wage statement requirement. The additional $48 million covered penalties under PAGA (Private Attorneys General Act). Additional penalties were assessed against the employer due to PAGA penalties for violating the Labor Code's final wage statement provisions and PAGA penalties for violations of meal period mandates. 

Details of the Case: Robert Magadia v. Wal-Mart Associates, Inc.

Court: United States District Court, N.D. Cal.

Case No.: 5:17-cv-00062

Does Proposition 22 Apply in this Situation? 

Currently, Proposition 22 is limited to app-based rideshare app and delivery companies. However, this legislation's passage could spur activists in other industries to bring serious arguments for independent contractors classification to California voters. 

Summary of the Case: Robert Magadia v. Wal-Mart Associates, Inc.

The plaintiff in the case had no monetary loss from the technical pay stub violation. The argument in the case focused primarily on whether the plaintiff suffered any injury sufficient enough to confer standing to sue under PAGA. The only alleged harm the plaintiff suffered was the inability to confirm he was paid fair compensation for his work as agreed. However, according to the plaintiff in the case, his injury was not the main issue. He argued that under PAGA, he was entitled to enforce state law and pursue relief on behalf of workers in similar situations (the class of aggrieved workers in the case was approximately 50,000). The violation claim occurred after the company failed to identify how bonuses were calculated into their workers' hourly rate for overtime calculations. 

Was the Labor Law Violation Intentional? 

Another question that came up during the case was whether or not the pay stub violation was intentional, which is required by statute before assessing damages. The ruling of the Ninth Circuit could narrow the trial courts' ability to impose PAGA penalties on California employers in cases where the plaintiff has not suffered financial harm. However, inadvertent violations that seem harmless can lead to significant penalties for California employers, particularly in situations where wage statements are not fully compliant with California Labor Code. 

If you have questions about California labor law violations or how employment law protects you against labor law violations, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

2020 Chipotle Case Could Have Fundamentally Changed How FLSA Cases are Litigated

One of the most significant cases in class and collective litigation in 2020 was Chipotle Mexican Grill v. Scott. 

Details on the Case: Chipotle Mexican Grill v. Scott

Case No.: 17-2208, 2nd Circuit

The U.S. Supreme Court weighed in on a critical issue connected to collective action under the FLSA in 2020. The court was asked to consider what it means for a putative class of workers to be “similarly situated” for purposes of being considered a collective under FLSA. 

Who is “Similarly Situated” for FLSA Collective Actions? 

During Chipotle Mexican Grill v. Scott, parties involved claimed there was an “intractable conflict” among the federal courts on the issue of determining who is “similarly situated” for FLSA collective actions. This question and the resulting litigation could have had ground-shifting implications. However, after the parties involved signaled their intent to settle on December 31, 2020, the court did not take up the case even though it could have fundamentally reshaped how FLSA cases, in general, are handled and litigated. Even though this particular case wasn’t litigated, 2020 saw a steady shift in the courts on the issue of defining “similarly situated” for FLSA collective actions. 

The Plaintiffs: Chipotle Mexican Grill v. Scott

In Chipotle Mexican Grill v. Scott, seven named plaintiffs represented six putative classes (under Federal Rule of Civil Proc. 23(b)(3)). The plaintiffs also filed suit on their own behalf and on behalf of 516 additional individuals that opted in on a conditionally certified collective action under the FLSA (Fair Labor Standards Act). The plaintiffs alleged that the company misclassified workers as exempt in violation of state labor laws. Collective plaintiffs alleged that the company misclassified them as exempt in violation of the FLSA. 

The “Similarly Situated” Issue: Chipotle Mexican Grill v. Scott

After the district court denied class certification, the Second Circuit affirmed the order denying class certification based on a lack of predominance and superiority. According to the record, the court could not find that the district court’s conclusion was outside the range of permissible decisions. However, the court did vacate the district’s court order to decertify the collective action based on a legal error. The Second Circuit Court found that the district court improperly analogized the standard for maintaining a collective action (under the FLSA to Rule 23 procedure). As the district court’s decision was based on the inaccurate analogy when they determined that the named plaintiffs and opt-in plaintiffs were not “similarly situated,” the 2nd Circuit Court vacated the order. The improper application of the “sliding scale” analogy to Rule 23 in this case improperly conflated section 216(b) with Rule 23 and the latter rule’s stricter requirements.

If you have questions about California labor law violations or how employment law protects you against labor law violations, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.

Did California Farm Retaliate Against Cannabis Workers that Voiced Virus Concerns?

Three sisters (Rachel, Alejandra, and Andrea Montelongo) allege that Valley Harvest LLC and Nug Farms, fired them because they raised concerns about working conditions at the cannabis farm. 

All the Details on the Case: Montelongo et al. v. Valley Harvest LLC et al.

Case Number: 5:21-cv-00235

Court: U.S. District Court for the Northern District of California

Date Filed: Jan. 11, 2021

The Plaintiffs in the Case: Rachel Montelongo, Alejandra Montelongo, and Andrea Montelongo

Defendant: Valley Harvest LLC

The Plaintiffs in the Case: The Three Montelongo Sisters

The Plaintiffs in the case, the Montelongo sisters, are former marijuana farm workers who allege their former employer fired them for voicing complaints about working conditions during the coronavirus pandemic. 

Background of the Case: Montelongo et al. v. Valley Harvest LLC et al

The sisters claim they voiced their concerns to a company executive during their short time on working on the farm. According to court documents, Rachel Montelongo needed to leave work one day citing mental health reasons, and her two sisters accompanied her. One day later, the three women were fired. Based on the sisters’ claims that the complaints they made to the Nug Farms executive concerned violations of health and safety laws, minimum wage laws, family rights protections, and disability accommodations, responding by firing the workers who complained violates employment law. 

The Montelongo Sisters Work History at Nug Farms: 

Valley Harvest LLC, farm labor contractor, hired the Montelongo sisters, and they started work at Nug Farms in June 2020. During their time employed on the cannabis farm, the sisters raised concerns to a company executive about the lack of compensation for time spent waiting in line for mandatory temperature checks before shifts started, and a lack of social distancing in the workplace. According to the complaint, dozens of people were required to work in cramped conditions at Nug Farms. The plaintiffs also allege that they were not provided with appropriate personal protective equipment when instructed to directly handle bleach on the job. According to the complaint, later that month Rachel Montelongo left work to obtain treatment for her postpartum depression. Her sisters left work with her. The next day, human resources called to advise one of the sisters that all three of the Montelongo sisters were fired. The company claimed that Andrea and Rachel were fired for working too slowly and tardiness. The company claimed Alejandra was fired for overwatering certain plants. 

Additional Claims Made by the Plaintiffs in Montelongo et al. v. Valley Harvest LLC et al.

In the lawsuit, the Plaintiffs also brought employment discrimination claims under the Americans with Disabilities Act, multiple retaliation claims, as well as Califonia labor law violations. The Plaintiffs seek damages to compensate lost wages (both back pay and front pay), and additional lost benefits. 

If you have questions regarding employment law and how it protects California employees from workplace retaliation, get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in any one of various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.