Did You Sign an Arbitration Agreement?

Did you know that millions of US workers are currently “barred” from the court system? Did you know that you may be one of them and not even realize it? Approximately 60 million American workers have signed arbitration agreements or arbitration clauses and they may not have even realized they were doing so.

Close to 50% of all non-unionized workers employed at companies in the United States are subject to arbitration agreements (according to the Economic Policy Institute). This number has more than doubled since the early 2000s. Major employers across the nation have adopted them as standard, including: Uber, Google, McDonald’s, Starbucks, Walmart, Macy’s, and more.

The increase in the use of mandatory arbitration agreements is making it increasingly difficult/impossible for employees to seek justice when they are victims of wage theft, discrimination in the workplace, retaliation, harassment, overtime violations, etc. The recent Supreme Court ruling allowing employers to prohibit class-action claims from workers in arbitration only increased the incentive for companies to include arbitration clauses right in their employment contracts for new hires.

The practice was once limited to business to business contract disputes, but it is now extending to legal disputes with employees and consumers. This change occurred after a significant Supreme Court ruling in 2001 related to sexual harassment. In Circuit City Stores Inc. v. Adams, an associate working at a Circuit City store in California sued the company for sexual harassment. The associate’s name was Saint Clair Adams. He said he was harassed by his co-workers because he was gay. He, like all the other employees of Circuit City, had signed an arbitration agreement stating that all disputes with the company must be resolved through private arbitration. The company argued their case in federal court, insisting that Adams was required to move his claim to arbitration due to the agreement.

The judge on the case sided with the plaintiff, Adams, and cited the Federal Arbitration Act. The Federal Arbitration Act allows companies to resolve contract disputes through arbitration but includes a provision that excludes employment contracts. The judge’s ruling was later upheld by the Ninth Circuit Court of Appeals.

The argument didn’t die with the appellate court though. Circuit City took the case to the Supreme Court where the lower court’s ruling was overturned – extending the reach of arbitration clauses to nearly all employment contracts. The justices based their decision on a close reading of the employment exclusion in the Federal Arbitration Act, which reads, “but nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in interstate or foreign commerce.” The justices interpreted this to mean that “transportation workers” were exempt from mandatory agreements; and that non-transportation workers would be required to take their claims to arbitration.

Another Supreme Court ruling in May 2018 made it even more difficult for workers to seek justice or force a company to change working conditions. The case was Epic Systems Corp. v. Lewis and the court decided that it is legal for employers in the United States to prohibit employees from joining together to file suit against the company claiming discrimination, wage theft, or other common workplace violations.

Do you have questions about how to deal with workplace violations when there is an arbitration agreement in place? Call one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

New Bill Could Protect the Rights of US Workers to Access the Court System

On Oct. 30th, 2018, House Democrats introduced the Restoring Justice for Workers Act, a bill intended to protect the rights of millions of US workers to access the court system. The Act would ban companies from requiring workers to sign arbitration clauses and would impact millions of workers across the nation.

The policy of requiring that employees and applicants sign arbitration agreements is now common practice. In fact, most sign one before they are ever officially hired. By signing the arbitration agreement, workers are essentially waiving their right to sue the company for potential violations of labor law (i.e. sexual harassment, racial discrimination, age discrimination, wage theft, wrongful termination, etc.) According to the terms of an arbitration agreement, employees with legal claims would need to take those claims to private arbitration; a forum without a judge or jury and with almost no government oversight. A fairly secretive process, private arbitration means that workers are significantly less likely to win their cases. If they do prevail in their case, they generally receive far lower settlements than if the case had been handled in the court system.

The new bill is fairly simple – employers would not be allowed to require that workers sign arbitration agreements and would also be prohibited from retaliating against anyone who chooses not to sign. It would be illegal to require employees to waive their right to join a class action lawsuit or file legal claims in arbitration as a group or class.

Supporters of the bill see it as a great stride in the right direction as forced arbitration is stripping American workers of their day in court; their chance to hold employers responsible for employment law violations (i.e. wage theft, overtime violations, discrimination, workplace retaliation, wrongful termination, harassment, etc.)

To make it through both chambers of Congress, the bill would need bipartisan support, but supporters do not expect Republican leaders to show much interest as they haven’t been interested in other legislation aimed at limiting mandatory arbitration in the past. Whether the bill is passed or not, controversy over mandatory arbitration agreements continues to escalate.

If you have questions about mandatory arbitration agreements or how to join a class action lawsuit, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Temecula Nail Salon Faces $1.2M Fine for California Wage Violations

Employees of a Temecula, California nail salon called Young’s Nail Spa were listed as “independent contractors” so the salon owners could avoid payment of overtime or required meal and rest breaks during longer shifts. The salon faces a file of over $1.2 million for misclassification of workers, violation of wage and hour law, failure to pay overtime and provide required meal and rest breaks.

The salon is located on Margarita Road in Temecula and was under investigation by the California Department of Industrial Relations due to complaints about wage theft and other unlawful practices. In the course of the investigation, numerous irregularities were discovered. One of the most problematic was the shifts that Young’s Nail Spa employees were required to complete. Workers were spending 9 ½ to 10-hour days on the job. They were not provided meal or rest breaks. The Labor Commissioner said this was an attempt to get around overtime obligations through misclassification of employees as independent contractors.

In addition to denying workers their rightful pay, misclassification also gives employers an unfair advantage over competing, law-abiding businesses. According to California law, employers who provide their workers with less than minimum wage will be held responsible for paying the wages owed plus an equivalent amount in liquidated damages and interest when they are caught.

During the course of the investigation, auditors from the state went through 40 months of business records before determining that the salon engaged in misclassification and additional forms of wage theft. Citations totaled $670,040 for worker reimbursement and $572,187 in civil penalties.

If you have questions about wage and hour law or if you feel that you have been misclassified on the job, please get in touch with one of the experienced employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

California Contractor Fined $1.9M in Response to Wage Theft Claims

Fullerton Pacific Interiors Inc., a California drywall contractor, was filed $1.9 million by California’s Division of Labor Standards Enforcement for failing to allow rest periods for workers (and other wage violations). The violations allegedly occurred on 26 different construction projects in different locations throughout Southern California.

The fine was handed down from California’s Division of Labor Standards Enforcement, a.k.a. the Labor Commissioner’s Office – a part of the California Department of Industrial Relations. The fine was processed because the California drywall company failed to properly compensate almost 500 workers for rest periods as required by state and federal labor law. During the course of investigation, the division also found that almost 300 workers were not paid for overtime hours and almost 30 workers were paid less than minimum wage.

From the summer of 2014 through the summer of 2016, Fullerton Pacific Interiors Inc. was under contract to perform drywall work at a number of recreation centers: hotels, casinos, etc. All were located in three California counties: Los Angeles, Orange and San Bernardino. The Labor Commissioner noted that many contractors who embrace unscrupulous methods may try to obscure wage theft by providing workers with pay on a flat rate basis rather than an hourly rate. Yet a daily or any other flat rate system of pay does not override minimum wage and overtime requirements as defined by law.

According to the findings of the investigation, Fullerton workers were completing taping and drywall installation at the work sites. They were paid a daily rate that did not consider their overtime hours on the job. They were offered a 30-minute meal period, but no rest breaks throughout the day.

The fine accounts for:

·      $1,892,279 payable to workers (with $798,664 for rest period violations, $386,685 for unpaid overtime, and $692,500 for wage statement violations)

·      $72,400 civil penalty

·      Workers that were not paid minimum age were owed a total of $14,431 unpaid wages, liquidated damages, and waiting time penalties

If you have questions about unpaid overtime or if you are not receiving meal and rest breaks on the job in accordance with state and federal labor law, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

Multiple Class Action Suits Filed Against McDonald’s by Fast Food Workers

Earlier this month, multiple class actions were filed in California, Michigan and New York against McDonald’s alleging that the fast-food giant is systematically stealing employee wages. Fast food workers filed the class action lawsuits against McDonald’s and some its franchisees claiming widespread wage theft that was accomplished by forcing employees to work off the clock, shave hours off time cards, and refusing to pay overtime.

McDonald’s executives are currently reviewing the allegations made in the lawsuits. The company claims that they (and their franchisees) are committed to fully investigating the claims and providing appropriate actions in response to any problems discovered.

These class action lawsuits are one more in a string of actions taken by fast-food workers protesting their pay. Many are paid minimum wage.

As recently as December, workers protesting minimum wage staged an extensive protest throughout the US. They were demanding that the federal minimum hourly wage be raised from the current $7.25 to $15.00. McDonald’s responded to protests by pointing out that their jobs provide workers with opportunities for advancement, competitive pay and benefits. A McDonald’s spokesperson also indicated that the company invests in training and professional development in order to aid workers in learning skills that are practical and transferable in business.

Experts agree that this string of actions being taken by fast-food employees upset with their wages, lack of overtime pay, etc. will continue.

If you feel your employer may be paying you unfair wages please get in touch with Blumenthall, Nordrehaug & Bhowmik to discuss potential resolutions to the issue.