Protecting the rights of individuals in the workplace under CA law
# (213) 381-6557
Contact Us Today for a
Free Consultation

Tag Archive for employer

CA Supreme Court Delivers Victory for Franchisors in Patterson v. Domino’s

In a long-awaited decision that came down last Thursday, the Supreme Court of California in Patterson v. Domino’s ruled that a franchisor is not the agent or employer of a franchisee’s employees for purposes of holding it vicariously liable for the workplace conduct of those employees if it did not control the employment policies of the franchisee.

The facts are as follows: In September of 2008, Sui Juris, LLC (“Sui Juris”) acquired a Domino’s Pizza (“Domino’s”) franchise in Southern California, employing Renee Miranda (“Miranda”) as assistant manager and Taylor Patterson (“Patterson”) as a server. Long story short, Miranda sexually harassed Patterson (allegedly), and Patterson sued both Sui Juris and Domino’s, claiming Domino’s was their employer and a joint venturer of Sui Juris.

Domino’s moved for summary judgment on the employer/joint venturer issue. The trial court granted Domino’s motion on all counts, determining the franchisor did not control the day-to-day operations or employment practices necessary to find that Sui Juris was its agent or Miranda its employee. The Court of Appeal reversed, finding that reasonable inferences could be drawn that Sui Juris lacked managerial independence based on the standards and procedures imposed by Domino’s.

The Supreme Court granted Domino’s petition for review. At the outset, the Court rejected Patterson’s argument that “the degree of control exercised by franchisors like Domino’s makes each franchisee the agent of the franchisor for all business purposes, and renders each employee of the franchisee an employee of the franchisor in vicarious liability terms.” Such a rule would, in the Court’s view, “turn business format franchising ‘on its head.’”

While ruling in Domino’s favor, the Court tempered the victory for franchisors by noting that a franchisor could, and would, face potential liability if it retained or assumed a general right of control over factors like hiring, direction, supervision, discipline, or discharge.

 

Von Nothdurft Decision a Game Changer for California Resident Managers

Residential apartment managers in California just can’t seem to catch a break. As licensees, they are not afforded the broad legal protections of tenants living at the same property. They are required to be on call 24/7 but are only entitled to compensation for actual hours worked. And they often work far more hours than they are paid for but lack the documentation to prove it.

Until recently, Industrial Wage Order No. 5-2001 (“IWO 5-2001), which regulates the wages, hours, and working conditions of resident managers, was their one saving grace. Under Section 10(C) of the order, an employer cannot credit the value of a resident manager’s apartment “against the minimum wage without a voluntary written agreement between the employer and the employee.”

On June 26, 2014, however, the California Court of Appeal in Von Nothdurft v. Steck, ___ Cal.App.4th ___, significantly weakened this protection. Von Nothdurft is the first state court case certified for publication that addresses what language needs to be included to qualify as a “voluntary written agreement” under IWO 5-2001. The court’s ruling? Far less than previously thought and less than the plain language of the order seems to require.

In Von Nothdurft, Plaintiff Brenda Leigh Von Nothdurft (“Ms. Von Nothdurft”), an apartment manager for a property owned by Defendant John Steck (“Mr. Steck”), signed a management agreement stating her compensation would include “free rent for her apartment.” At the time of the agreement, neither Ms. Von Nothdurft nor Mr. Steck was aware of the requirements of IWO 5-2001.

Ms. Von Nothdurft argued the agreement did not satisfy the requirements of IWO 5-2001 because it did not reference the minimum wage or any apartment rent credit. This interpretation of “voluntary written agreement” was adopted by the Department of Labor Standards and Enforcement (2002 Update of the DLSE Enforcement Policies and Interpretations Manual, at § 45.4.5) and a California federal district court in Brock v. Carrion, Ltd. (E.D. Cal. 2004) 332 F.Supp.2d 1320, 1330 (2004).

The Van Nothdurft court didn’t buy it:

Wage Order 5 does not define the phrase “voluntary written agreement” as used in subdivision 10(C) or otherwise specify that any particular terms must be included in such an agreement to permit a valid lodging credit – it requires only a “voluntary written agreement between the employer and the employee” without qualification. Under its plain terms, no express reference to a credit toward minimum wage, statement that the employee is entitled to minimum wage for every hour worked, or the precise amount to be credited, need be included as long as the parties understand and agree – as they did here by entering into the management agreement – that lodging is to be credited toward the employee’s compensation. Since the wage order’s language is clear, we apply it without further interpretation.

Interestingly, the court in Brock read the same “plain” language to reach the opposite conclusion: “Consistent with the statutory language, the DLSE requires that the written agreement explicitly reference that such credits are being applied toward the minimum wage obligation of the employer.” Brock v. Carrion, Ltd. (2004) 332 F. Supp. 2d 1320, 1330.

The interpretation adopted by the DLSE and the Brock court is the far more sensible one. Under IWO 5-2001, a voluntary written agreement is a condition precedent to validly crediting the employee’s lodging against the minimum wage (“…lodging may not be credited against the minimum wage without…”). This language clearly implies that the agreement must in some way relate to the employer’s minimum wage obligation.

Under Von Nothdurft, an agreement between employer and employee having nothing to do with the employment relationship would qualify as a “voluntary written agreement” as long as it was in writing and signed by the parties. The holding defies common sense and undermines the very purpose of the wage order—to inform the resident employee of her rights under the Labor Code and to protect those rights.