Author Archives: michael

Court of Appeal Upholds $1.2 million Fee Award

The First District Court of Appeal for the State of California has affirmed a decision of the Alameda County Superior Court to award attorney’s fees of approximately $1,162,000 to Strauss & Strauss, APC and co-counsel the Hathaway law firm of Ventura.

The case, Britto v. Zep Inc., began as a putative class action brought by Plaintiffs Keith Britto and Justin Cowan on behalf of themselves and other salespersons of Zep Inc. in California.  Plaintiffs sought reimbursement for job-related business expenses (such as mileage) and deductions from their wages.  Plaintiffs also sought civil penalties under the Private Attorneys General Act of 2004 (“PAGA”) for Zep’s violations of the California Labor Code.

After the trial court denied the plaintiffs’ motion for class certification, over fifty putative class members attempted to intervene in the Britto action.  Ultimately, the intervenors had to file their case separately, and Zep removed it to the United States District Court for the Northern District of California.  Zep also compelled eight of the intervenors into arbitration.  (Each of those cases ultimately resolved, with the plaintiffs prevailing in each of the eight arbitrations.)

Back in state court, the Britto case resolved after Zep unsuccessfully brought a motion for summary judgment. Zep made an offer of compromise pursuant to Code of Civil Procedure section 998, which offered to pay (2) Plaintiffs Britto and Cowan a certain amount each for their individual claims, (2) the State of California (Labor and Workforce Development Agency) penalties under PAGA in the amount of $275,000, and (3) Plaintiffs’ attorney’s fees and costs.

On motion by Plaintiffs for their attorney’s fees and costs, the Alameda County Superior Court awarded fees of approximately $1.16 million, which included a fee multiplier of 1.25.

Zep appealed the award of attorney’s fees on the basis that the trial court awarded too much. The Court of Appeal disagreed, holding that the trial court has broad discretion to award fees and that the record supported the trial court’s decision to come up with an appropriate fee award.

The appellate decision is below:

Ecolab Route Sales Managers Held to be Non-Exempt from Overtime and Meal Periods

On September 28, 2015, the United States District Court for the Northern District of California, in the case of Ross v. Ecolab Inc., held that Ecolab has violated California law by not paying overtime to the Route Sales Managers and Route Managers in its Institutional Division. The case, originally filed in December 2009 as Icard v. Ecolab, Inc., San Francisco County Superior Court case number CGC-09-495344. The case seeks unpaid overtime for Route Managers and/or Route Sales Managers who have worked in California, do not cross state lines in the performance of their duties, and have not received full and correct pay for all hours worked and have not received accurate paycheck stubs. Ecolab removed the case to the Northern District of California, where it has the case number 13-cv-5097-PJH.

In a 27-page decision, the Northern District of California held that Ecolab’s three California overtime exemptions (the outside salesperson exemption, the commissioned salesperson exemption, and the hazardous materials exemption) do not apply as a matter of law. The court further held that the case may continue as a class action.

The ruling constitutes a major victory for the California-based Route Managers and Route Sales Managers. Due to the fact that Ecolab’s overtime exemptions have been held not to apply, Ecolab must pay these individuals overtime, perhaps even so far back as December 2005. Ecolab may also be subject to various penalties sought by the plaintiffs in the Ross case, including but not limited to penalties for the willful failure to pay wages at termination or resignation and the failure to provide accurate paycheck stubs, as well as penalties for various California Labor Code provisions under the Private Attorneys General Act of 2005, Lab. Code § 2698 et seq.

Trial has not yet been set in this action. Strauss & Strauss provides updates about the case here. Please contact Strauss & Strauss with any questions.

The court’s decision is below.

Rent Credits for Resident Apartment Manager Wage Claims

Strauss & Strauss has a long history of representing California employees in resident apartment manager wage claims. This article is an update on this aspect of California law.

California law is very peculiar and confusing when it comes to the payment of wages to resident managers. Apartment owners and/or management companies (sometimes the owner is the manager and sometimes the apartment management company is a separate entity, but most of the time both can be liable for unpaid wages) can only credit a certain amount of “free” rent against any obligation to pay the minimum wage.

Have we confused you already?

Let’s start with the basics.

1) All hours worked by employees in California have to be paid at a rate of no less than the current minimum wage. There are only a few exceptions to this rule, and an apartment manager who receives free rent is probably not going to meet one of the exceptions. So every hour the apartment manager works must be paid at the minimum wage rate. The employee may bring a resident apartment manager wage claim to recover those minimum wages.

2) But an employer can use “free” or reduced rent as an offset (or “rent credit”) against any minimum wages it may owe a resident manager for work performed. The state of California sets a maximum amount of what the rent credit can be.

Currently, as of September 2015, the maximum rent credit is as follows:

  • For a single resident manager who occupies a single apartment: 2/3 of the ordinary rental value of the apartment or $508.38 per month, whichever is lower; and
  • For a couple both employed as resident managers who occupy a single apartment: 2/3 of the ordinary rental value of the apartment or $752.02 per month, whichever is lower.

On January 1, 2016, the maximum rent credit will increase as follows:

  • For a single resident manager who occupies a single apartment: 2/3 of the ordinary rental value of the apartment or $564.81 per month, whichever is lower; and
  • For a couple both employed as resident managers who occupy a single apartment: 2/3 of the ordinary rental value of the apartment or $835.49 per month, whichever is lower.

3) The employer can only use rent credit under certain circumstances.  The federal court case of Brock v. CarrionLtd. (2004) 332 F.Supp.2d 1320 held that in order to validly pay the resident apartment manager by offering free or reduced rent, there must be a voluntary written agreement between the employer and the resident manager, and that agreement must meet all of the following conditions: (1)The agreement must be in writing; (2) The agreement must specifically state how much money is to be credited against rent; (3) The agreement cannot credit more than the allowable amounts set forth above; and (4) The agreement must specifically say the credit is “being applied toward minimum wage. Failure to follow any steps will void the agreement.  (Id. at 1321.)  A later California case, Von Nothdurft v. Steck (2014) 227 Cal.App.4th 524 (2014) held that “all that is required” for the employer to be able to apply a rent credit “is that the employer and employee voluntarily agree to credit lodging against the employee’s wages.”  Hence, reading these cases together suggests that there needs to be a voluntary written agreement between the employer and the resident manager that states that the employer will credit lodging against the employee’s wages.

In other words, if there is no written agreement that provides that the employer will use a rent credit to cover some of the wages it would otherwise have to pay the employee, then the employer cannot use the rent credit.

4) If the employer cannot use the rent credit (because there is no written agreement, for example), the employer must pay the minimum wage for all of the hours worked by the resident apartment manager.  IF YOU DO NOT HAVE A WRITTEN AGREEMENT TO CREDIT LODGING AGAINST WAGES, THEN CONTACT US IMMEDIATELY, AS YOU MAY BE OWED BACK WAGES AND PENALTIES IN A RESIDENT APARTMENT MANAGER WAGE CLAIM.

For more information about resident managers and rent credits and resident apartment manager wage claims, read these additional articles we have posted on our website:

And feel free to contact Michael A. Strauss or Andrew C. Ellison with your questions about resident apartment manager wage claims.

Trucker Owner-Operator Misclassification Awards Piling Up

Palay Law Firm has long been representing the interests of California-based truckers in disputes with their employers.  The last few years have seen an increasing number of trucking companies reclassifying their employees as independent contracts.  Known as “owner-operators,” these individuals are for all intents and purposes employees.  For the most part, the intentional classification of drivers as independent owner-operators is a scam that is only meant to line the pockets of the trucking companies.  The drivers are still common-law employees, regardless of whether their employers make them sign independent contractor agreements.  The companies exert control over almost every aspect of the relationship, from the drivers’ hours worked to who can perform work on their trucks to where they can buy fuel to what logos must be on their trucks and uniforms.

Why does this matter?  Most labor laws in California do not apply to independent contractors.  That makes sense.  If Company A, which sells T-shirts, hires Company B, a marketing company, to design a website, the relationship between Company A and Company B would most likely be independent.  Company B can hire its own employees — as many as it needs to get the job done — and supervises them too.   In this independent contractor relationship, Company B has control over its employees, and it must comply with California labor laws.  Company A simply pays for Company B’s services and Company B produces a website for Company A.

In this example, Company B is a separate legal entity with its own employees, and it provides a service — web design — that is independent from Company A’s business — making T-shirts.  Company A has its own employees too.  The relationship is clearly independent.

But what if Company A were to take one of its own clothing designers and reclassify her as an independent contractor?  There are circumstances in which that would work.  Say, if the clothing designer used her own equipment, worked outside of Company A’s offices, could design clothes for other T-shirt companies, and had her own business, it is very likely that she could lawfully be classified as an independent contractor.

But what if the newly reclassified independent contractor still worked in Company A’s office, using Company A’s equipment, could only design clothes for Company A, and did not have her own business?  The chances are that she would be found to be an employee, regardless of the “independent contractor” title given to her.

As an employee, rather than an independent contractor, the clothing designer for Company A would have significant rights.  Company A would have to follow California labor laws, including paying overtime, if applicable, withhold employment taxes from her paychecks, and pay payroll taxes.  If the clothing designer were to leave Company A, she could receive unemployment (assuming that she was otherwise eligible), and, while employed, she could receive workers’ compensation benefits (again, if otherwise eligible).

By classifying an employee as an independent contractor, therefore, an employer can skirt these fundamental California labor laws and avoid paying significant amounts of payroll taxes.

Back to our trucker cases.  These owner-operators, who drive trucks with their company’s logo on them and cannot haul for any other company, are more than likely employees.  The companies they work for are avoiding California labor laws and not paying payroll taxes.  Employees and the taxing authorities alike are up in arms.  The recent strike at the Port of Los Angeles is evidence of the drivers’ dissatisfaction.

But the drivers are not without recourse.  Over the past few years, Palay Law Firm has been able to recover hundreds of thousands of dollars for misclassified owner-operators.  Their claims are typically for wrongful deductions from wages.  Their employers pay them on a per-mile or per-job basis, then deduct their pay for line items like insurance, fuel, maintenance, tolls, etc.  If the owner-operators were truly independent contractors, these deductions might be legal.  But since the owner-operators are truly employees, and California employers cannot make deductions from wages for typical business expenses, these owner operators can seek full reimbursement for these deducted expenses in a claim against their trucking company.

See the factors that courts and the Labor Commissioner use to determine whether a truck driver has been misclassified as an independent contractor.

Below are recent Labor Commissioner decisions that were rendered in favor of our clients in owner-operator misclassificaiton cases (the amount in parentheses is how much the Labor Commissioner awarded and the location is where the hearing took place).

In these cases, the amount awarded was nearly 100% of the amount claimed by our clients.

If you have been classified as an owner-operator, or it has happened to someone you care about, do not hesitate to contact Palay Law Firm at (805) 641-6600 or contact us through our online intake form.  We represent owner-operators throughout the state.  They just need to be based in California.


Federal Court Denies Request for New Trial and Awards Nearly $460,000 in Attorney Fees

The Central District of California just issued an order denying a request for a new trial and granting attorney fees in the amount of nearly $460,000.

In the case of Monagahan v. Telecom Italia Sparkle of North America, Inc. (TISNA), our client Kevin Monaghan alleged that he had been misclassified as an independent contractor and that TISNA had terminated his employment because he complained about the misclassification and failure of TISNA to pay earned wages. Plaintiff Monaghan sought damages for wrongful termination and the failure to pay wages, plus additional penalties recoverable under the Labor Code.

The jury agreed with Mr. Monaghan on most points, finding that TISNA had terminated his employment because of his complaints about misclassification as an independent contractor and the failure to pay wages. The jury awarded Mr. Monaghan over $1.2 million in damages and assorted penalties.

After trial, TISNA moved for judgment on the wages portion of Mr. Monaghan’s case, saying that the jury verdict wrongly awarded Mr. Monaghan various commission wages, and TISNA moved for a new trial on a similar basis.

Mr. Monaghan, for his part, moved for an award of attorney’s fees.

The court denied TISNA’s motions and granted Mr. Monaghan’s motion for attorney fees, awarding him everything but a requested “lodestar multiplier” on the base amount of his attorney fees. Each of the decisions is below.

Court Order on Motion for Attorney Fees

Court Order on Motion for Judgment as a Matter of Law and for New Trial

Contact Us

Your Name (required)

Your Email (required)

Your Phone Number (required)

Your Message

IMPORTANT: By clicking the "SEND" button below, you acknowledge that you are not initiating an attorney-client relationship with Strauss & Strauss, APC and are agreeing by our Terms of Use.