Employment Arbitration Agreements, Restaurant Tip Pooling Arrangements/Sexual Harassment Training, and Proposed Workers Comp.
The Goldstein Law Firm
June 2009 Newsletter
“Employment Arbitration Agreements, Restaurant Tip Pooling Arrangements/Sexual Harassment Training, and Proposed Workers Compensation Legislation pending in Sacramento”
By: Charles H. Goldstein, Esq.
The Goldstein Law Firm
All employers who have survived the first six (6) months of 2009 by force of will and hard work must keep their eyes focused on consistently running and protecting their businesses from economic uncertainty. Although some economists believe that “the worst is behind us” and that “the economy is in recovery mode”, other economists believe the opposite is true – and that “recovery will be gradual and take a long time.” Regardless of which group of economists is proven to be correct, all employers must make sure that they efficiently and profitably take on the second half of the year.
1. Some California Employers Still Resist Employment Arbitration Agreements – This is a “No Brainer” Why Would Anyone Want to Have a Jury Decide the Fate of their Business?
Surprisingly, some employers still resist requiring all new employees, employees who receive a promotion and/or a raise and/or employees who sign new employment agreements, to sign enforceable arbitration agreements. This makes no sense and places your decisions at the mercy of a judge and jury. Arbitrators, for all of their faults, rarely award mega dollar damages for employment cases that amount to legally examining employee’s “hurt feelings”. Juries do make such awards based on their emotional biases. By having well drafted legal arbitration agreements, employers will avoid having their decisions second guessed by employee friendly juries and/or unsympathetic/pro-employee judges. Arbitration agreements must be procedurally and substantively fair to both employees and employers and are used to shift the forum of the dispute from a court/jury to an arbitrator. In addition, these agreements do not alter and/or diminish the substantive legal right that employers and employees enjoy under federal and/or state law. Arbitration Agreements merely ensure that these substantive legal rights are decided in a more logical and efficient forum.
For the remainder of 2009, make it your top human resource priority to have the following types of employees sign a legally enforceable arbitration agreement: (a) all new employees, and (b) every employee who receives an increase in pay and/or who receives a promotion and/or who signs a new employment agreement. Employers should not rely on arbitration provisions contained in their Employee Handbook or rely on Arbitration Agreements drafted several years ago since they may not be enforceable.
2. Restaurant Tip Pooling Arrangements:
The California Court of Appeals, Fourth District recently made significant news in the case of Chau v. Starbucks Corporation when the Court reversed a March 2008 Judgment ordering Starbucks to pay $87.7 million plus interest to a class made up of current and former Starbucks employees.
Jou Chau, a college student and former barista, brought a class action complaint against Starbucks alleging that Starbucks violated California Business and Professions Code §17200 “Unfair Competition Law” and California Labor Code §351. Chau argued that “shift supervisors” are prohibited under §351 from receiving any proceeds from the collective tip box because a “shift supervisor” comes within the statutory definition of an employer’s “agent” and is therefore prohibited from sharing tips with baristas.
At Starbucks, each customer is served by a “customer service team” instead of an individual employee. The “customer service team” consists of one or more “baristas” (entry-level, part-time hourly employees responsible for customer service related tasks) and one or more “shift supervisors” (part-time hourly employees who perform all the duties of a barista, but who are also responsible for some additional tasks, including supervising and coordinating employees within the store, opening and closing the store, and depositing money into the safe)
Shift supervisors at Starbucks spend about 90% to 95% of their time performing the same service tasks as do the baristas. While Starbucks has occasional instances where customers leave tips for individual customer service team members, Starbucks uses a collective “tip box” for customers who choose to tip the customer service team. The trial court agreed with Chau and ordered Starbucks to pay $86.6 million plus 7% prejudgment interest.
The Court of Appeals disagreed with the trial court’s ruling and held that Starbucks did not violate §351 by requiring an equitable distribution of tips specifically left in a collective tip box for all of these employees. The Court placed significant emphasis on the fact that Starbucks’ customers left the money in the tip boxes for all of the employees who provided service to the customers, and the fact that the money left in the collective tip box was meant to provide a gratuity to the entire “team” of employees who were serving the customers, including the “shift supervisor” who performed virtually the same work as a “barista” and worked on the “customer service team.”
As a result of the Court of Appeals Opinion in Chau, restauranteurs should not be misled into believing that it is now permissible in California for restaurant supervisors to share tip pools with employees. It not permissible in California for restaurant supervisors to share tip pools with employees. Instead, the Chau case properly stands for the narrow proposition that when a restaurant has a communal tipping jar, and when restaurant supervisors spend between 90% and 95% of their time performing the same tasks as servers, equitably distributing the proceeds of the communal tipping jar to all servers including supervisors can, under this limited circumstance, be permissible.
3. Restaurants and Hotels/Motels and all California Employers With 50 or More Employees Must Complete Sexual Harassment Training:
California law requires that every California employer with 50 or more employees provide 2 hours of interactive training to their supervisors, concerning the prohibition against, and the prevention and correction of, sexual harassment and the remedies available to victims of sexual harassment in employment. The training is mandatory and must be conducted once every two (2) years.
Since 2006, The Goldstein Law Firm’s Sexual Harassment Training Program has been used by Employers to train over 6,000 managers and supervisors. We personally conduct and tailor each training program to the individual needs of the Employer. Our Training Materials are based on several decades’ worth of experience successfully litigating sexual harassment and gender based discrimination cases. At the conclusion of each training program, each program attendee receives a Certificate of Attendance personally signed by me.
4. Proposed Workers Compensation Legislation Could Lead to Higher Premiums:
The California Senate is currently considering Senate Bill, SB 773 which would adjust the amount of permanent partial disability benefits paid to employees in order to ensure that the benefits are “fair, adequate, and more favorably aligned when compared with permanent partial disability benefits paid to workers in other states.” This is another great idea from people who do not meet a bi weekly payroll, especially at a time when our State is hemorrhaging private sector jobs.
This bill, if passed, would provide for this increased benefit amount by revising the formula for computing permanent disability payments for injuries causing permanent disability that occur on or after January 1, 2010. It is reasonable to assume that if SB 773 becomes state law, workers compensation carriers could charge higher premiums in order to meet their financial obligation to fund greater permanent disability payments under an enhanced permanent disability payment formula. Hopefully, someone will decide that increasing workers compensation costs for employers in California at this time is not a good idea, but I would not count on it.
The Goldstein Law Firm
8912 Burton Way
Beverly Hills, California 90211
Telephone: (310) 553-4746
Facsimile: (310) 282-8070