[headline]Who owes me money if my company goes Bankrupt?[/headline]

The battle lines have been drawn over the question of how the term “EMPLOYER” should be defined. Should the term “EMPLOYER” simply mean only the company that hired the employee which is the old common law definition or should the term “EMPLOYER” take into account broader principles of California Labor Law.

A major case was just decided by the California Supreme Court that established who can be held liable for failure to pay wages. A number of cases were previously heard in which only the company who was the direct employer could be held responsible for any unpaid wages.

There are New Laws that state the real property can be seized to pay employees as well.

There were a number of cases including Reynolds v. Bement (2005) 36 Cal.4th 1075, in which the Court “looked to the common law rather than the applicable wage order to define employment in an action under section 1194 seeking to hold a corporation’s directors and officers personally liable for its employees’ unpaid overtime compensation.” Labor Code section 1194 gives employees the right to recover “the legal minimum wage or the legal overtime compensation.”

The California Supreme Court has ruled on one of the most important wage and hour cases and that is Martinez v. Combs 49 Cal.4th 35 (2010). This case explains who is and who is not an “EMPLOYER” under California wage law and it includes a number of important rulings that will shape California wage and hour practice for years to come as well as California Labor Law in general.
By way of background, the question of who must pay minimum wage or overtime under section 1194 has been addressed only once since 1913, when California passed its minimum wage law. That one decision was Reynolds v. Bement (2005) 36 Cal.4th 1075, in which the Court “looked to the common law rather than the applicable wage order to define employment in an action under section 1194 seeking to hold a corporation’s directors and officers personally liable for its employees’ unpaid overtime compensation.”
The main argument that was put forth in Martinez v. Combs was that the history of section 1194 showed that the legislature intended to give the Industrial Welfare Commission (IWC) the power to define various terms used in the regulations that the IWC had the power promulgate. Within the definition of employer the regulation under Wage Order No. 14, Cal. Code Regs., tit. 8, § 11140, subd. 2(C) use the term defining employer as one who “suffered or permitted an individual to work”. Wage Order No. 14, Cal. Code Regs., tit. 8, § 11140, subd. 2(F) describes employer as one who “exercises control over wages, hours, or working conditions”.
The power of the Industrial Welfare Commission (IWC) to define employment is not expressly granted in the act creating the IWC but merely implied, and thus extends only so far as necessary to permit the IWC effectively to exercise its expressly granted powers to regulate wages, hours, and working conditions. West’s Ann.Cal.Labor Code § 1173 et seq. Therefore regulations issued by an administrative agency such as the Industrial Welfare Commission (IWC) under a delegation of legislative power must be reasonably necessary to effectuate the purposes of the statute. West’s Ann.Cal.Labor Code § 1173 et seq. and therefore has the force and effect of law.
The California Supreme Court stated that in actions under section 1194 to recover unpaid minimum wages, the IWC’s wage orders do generally define the employment relationship, and thus who may be liable. An examination of the wage orders’ language, history and place in the context of California wage law, moreover, makes clear that those orders do not incorporate the federal definition of employment. Applying these conclusions to the facts of the case, the Supreme Court affirmed the Court of Appeal’s judgment.
As set forth in the Supreme Court’s ruling it stated that the Wage Orders set forth a multi-pronged, disjunctive definition of employment: an employer is one who, directly or indirectly, or through an agent or any other person, engages, suffers, or permits any person to work, or exercises control over the wages, hours, or working conditions of any person. The “engage, suffer, or permit” component of the definition does not require a common law “master and servant” relationship, but is broad enough to cover “irregular working arrangements the proprietor of a business might otherwise disavow with impunity.” Phrased as it is in the alternative (i.e., “wages, hours, or working conditions”), the language of the IWC’s ’employer’ definition has the obvious utility of reaching situations in which multiple entities control different aspects of the employment relationship, as when one entity, which hires and pays workers, places them with other entities that supervise the work. Finally, the IWC’s “employer” definition is intended to distinguish state law from the federal FLSA and is therefore controlling.
This case becomes extraordinarily significant in light of the fact that individual company owners cannot hide behind their corporations to shield them from personal liability. The law clearly states that anyone who directly or indirectly permits a person to work or exercises control over that person’s wages, hours or working conditions shall be held personally responsible for the payment of all wages due. This helps to stop those who abuse the labor laws and attempt to deny wages that have been earned. The California Supreme Court has spoken and has upheld the rulings By the California Industrial Welfare Commission which broadly defines who shall be treated as the employer.
If you have any questions with regard to your rights is important that you seek the help of a San Jose Labor Law Attorneys that your rights will be fully protected.

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It’s easy to imagine that we can’t keep track of the codes and regulations today, and just hope that our employer is doing the right thing, but what if they don’t. You have to arm yourself with knowledge and sometimes a GREAT LAWYER.

In Pulli v. Pony International, LLC, the California appellate court passed judgment clarifying and bolstering employee’s rights under labor code section 206.5.

Labor code 206.5 was put in place to help prevent employee abuse by withholding pay.  No employer can withhold wages they owe to an employee as means of forcing the employee to give up their right to a jury trial, this is seen quite often in a contract as an arbitration agreement. Such arbitration agreements often require that the parties settle without a trial commonly using mediation rather than having the case heard by a judge. There are contradictions in the ruling as it stands though, for instance; you can be required to sign the arbitration agreement to get your final paycheck, but the court can still through it out and grant you a jury trial if the judge deems the case worthy of trial.
Pulli filed suit against his former employer, Pony International for “fraudulent inducement to enter into an arbitration agreement”, as well as wrongful termination. The claim stated the defendant was coerced and threatened so that he would sign the arbitration agreement or be denied the final pay and wages which were already earned. Pony International’s motion for arbitration was denied by the courts base on code 206.5, stating they could not force arbitration if the Pulli was unwilling.

We must note, however, that the California court of appeals saw it differently. The appellate court claimed, the “existence of an invalid release of a wage claim pursuant to Section 206.5 in an agreement does not provide a defense to the enforcement of an arbitration provision contained in the same agreement.” And so the debate goes on and cases are left to the judge to decide whether the case is valid and deserves to be heard in court by a jury.

California Labor Law is a very intricate maze of codes and case law, at UELG we have over 35 years experience that helps us navigate this maze and create the best outcomes for our clients.

Call United Employees Law Group Today for your private case review, free of cost. 408-648-4248

Photo Credit: Shutterstock/Vlad Teodor

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(a) An employer shall not require the execution of a release of a claim or right on account of wages due, or to become due, or made as an advance on wages to be earned, unless payment of those wages has been made. A release required or executed in violation of the provisions of this section shall be null and void as between the employer and the employee. Violation of this section by the employer is a misdemeanor.

(b) For purposes of this section, “execution of a release “includes requiring an employee, as a condition of being paid, to execute a statement of the hours he or she worked during a pay period which the employer knows to be false.

This labor code is meant to prevent an employer from withholding wages due to the employee in order to force an employee to waive his/her right to a jury trial, most commonly seen as an arbitration agreement. The arbitration agreement will usually forgo a trial with a jury and in some instances even require mediation with a mediator as opposed to an actual judge. While the court’s opinion did allow such a transaction to occur, it did not speak to the validity of the arbitration agreement itself, meaning the court found that the employer could force the employee to sign an arbitration agreement in change for wages due the employee, but this did not guarantee that the arbitration agreement would later hold up in court, nor was it an automatic disqualifier.
Pulli’s claim against Pony International was for fraudulent inducement to enter into an arbitration agreement and for wrongful termination. Pulli asserted that he was threatened and forced into signing an arbitration agreement in order to receive his final pay and wages that were already earned. Pony International filed a motion to compel arbitration, but the trial courts denied the motion to compel arbitration because the court found that the employment agreement as a whole was unenforceable under section 206.5.
However, the court of appeals felt differently, stating the “existence of an invalid release of a wage claim pursuant to Section 206.5 in an agreement does not provide a defense to the enforcement of an arbitration provision contained in the same agreement.” In other words, applying the doctrine of severability, the court held that, even if the employment agreement had an invalid (and unenforceable) release of wage claims under Section 206.5 (an issue that the court refused to address at this time), only the release portion of the agreement would be invalidated. Consequently, neither the entire agreement nor the arbitration provision would be automatically invalidated.
California Labor law can be confusing; if you have any questions regarding your employment you should contact a California labor law attorney who can help you understand your rights and in many cases will review your situation without charge.

If you have any questions about this article or our blog, feel free to call us at:

408-648-4248

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In the modern society, when you have a group of people working together, disputes are bound to arise, and there must be a way to solve the disputes if an organization is going to stay together. One of the methods that a firm uses is through an arbitration agreement. Most companies use arbitration as an alternative dispute resolution. For many years, we have had commercial disputes solved using voluntary agreements but nowadays we have employers using forced arbitration.

Arbitration agreements occur where the parties in a dispute agree to have their differences or disagreements resolved outside the court system. There is always a third party who is a private arbitrator and takes no sides when arbitrating the matter brought before him. The arbitrator will get paid by both the parties or at times by one of the parties involved in the dispute. It’s not a requirement for an arbitrator to be a judge or a lawyer though we have those who’re experts in the field.

At United Employees Law Group, we help the parties in disputes to come up with arbitration agreements to have their issues resolved. Most of the questions we help arbitrate are those involving employees and their employers. There are various reasons why we always recommend the use of arbitration agreements.

Benefits of arbitration:
1. It takes less time and is a speedy way of resolving disputes.
2. Arbitration is flexible in that the parties can set their rules of engagement.
3. The cost of the process is cheap compared to the court process.
4. You will have a pool of professionals who have the expertise in arbitration matters.
5. Arbitration is usually a private procedure and hence confidentiality of the matter gets upheld.

With forced arbitration, arbitration is imposed as a condition of obtaining employment or as a requirement for receiving some benefits related to employment. However, it has no legal backing for an employee to agree to arbitration if he feels that the dispute should land in a court.

If you, or someone you know, are facing legal issues in the workplace United Employees Law Group has the answers. Call Today for your free and confidential case review. Please feel free to CONTACT US with any questions about this blog or your exact situation.

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