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A class action can be a powerful force for change, but not all claims can be brought as a class action. Even if your claim can be brought as a class action, you may be better off bringing an individual action. The way Quest Law Firm works, we analyze the alternatives and advise you which way is best for you and your goals. If we can handle it ourselves we will. If we need to bring in another law firm, we are experienced with that too.

These are some ways employment claims are brought:

• Individual Action (or Lawsuit) – Your employer has violated the law and harmed you.
• Joint Action – Your employer has violated the law and harmed you and one or more of your co-workers, and you all want to join together to hold the employer accountable.
• Representative Action – When an employer violates some laws, those laws allow one employee to pursue his or her claims for compensation and to hold the employer accountable for other employees who have been harmed, even if the other employees do not join in the lawsuit.
• Class Action – When an employer breaks the law and harms a group or class of employees, one or just a few of those employees can pursue the claims for the other employees. This differs from a representative action because there are more kinds of laws that can be enforced this way and there are more remedies available to the employees.
• If your case is appropriate to bring as a class action, Quest Law Firm works with specialized class action law firms. Quest Law Firm does not just refer you on; we are actively involved from beginning to end. We make sure you are fully informed at every stage and that you are well represented.
• Should I Opt-Out or Opt In? – Have you received a notice of a class action asking if you want to opt-in (i.e., participate), or opt-out (not participate)? We can help there too. In most cases, it is better to participate. But the more money your employer has failed to pay you, the more closely you need to look at the option of not participating in the class action, but pursuing your own claim. For example, see Pellegrino v. Robert Half International, Inc., where Quest Law Firm teamed up with another law firm to obtain a judgment from a court for six employees who opted out of a class action.

Generally, all amounts you are able to recover from employment claims (other than through worker’s compensation and claims for physical injuries) are subject to state and federal income tax.

Since October 22, 2004, the amounts you pay for attorneys’ fees and costs in the year of recovery are fully deductible from your recovery.  Before then, depending on the circumstances of the case, attorneys’ fees and costs, if includable in your award or settlement, may have been only partially deductible.  This often resulted in the same money being taxed twice – once on the client, and once on the attorney.

The Civil Rights Tax Relief Act, effective October 22, 2004, permits an above-the-line deduction of attorneys’ fees and costs.  This means it is not subject to the Alternative Minimum Tax or the 2% floor on miscellaneous deductions.  The deductions can be taken whether you itemize other deductions.  (26 U.S.C. § 62(a)(ii)(20) and § 62(e).)

Each individual’s tax obligations are different.  Quest Law Firm does not specialize in taxes, so it will be up to you and your tax advisor to properly treat any recovery and attorneys’ fees for tax purposes.  You should keep in mind that tax considerations can still be very important to your net recovery and decisions along the way.

Many personnel placement companies consider their recruiters as exempt from overtime as “administrative employees.”  Others consider them exempt as sales representatives if more than half their compensation qualifies as commissions.  For example, Robert Half International, which claims to be the largest personnel placement firm in the world, was found by a trial court and an appeal court to have violated California’s overtime laws by not paying six of its recruiters for overtime worked.  In Pellegrino v. Robert Half International, Inc., Robert Half claimed its recruiters or “account executives” were exempt as “administrators.”  However, the six former employees showed how they were trained as salespeople, entered qualified candidates in a data base, considered temporary employees as “inventory,” work the phones like a boiler room call center making hundreds of calls per week, and operated within the well defined policies of the company with close supervision.  The court agreed they were not exempt and ordered Robert Half to pay them $615,000 plus interest and attorneys’ fees.

Whether you are exempt depends on the details of what you do and how you get paid.  Many employers get this wrong, especially in California.  Employers may have expensive lawyers, but they frequently do not see things objectively.  It is in their own interests to have employees work long hours and skip breaks, and not pay extra for it.  So when they look at the law and the facts, they often wrongly conclude their recruiters are exempt.  We can help hold employers accountable and make them follow the law.  We can advise you whether you are more likely exempt or non-exempt from overtime laws.

Introduction

This memorandum provides some basic information about employment laws in California including termination of employment, discrimination and sexual harassment, family leave, privacy rights of employees, and performance appraisals.

Termination of Employment

What rights does an employee have when he or she is laid off, fired, or otherwise terminated from employment?

Under California law, employment is presumed to be at-will. At-will employment means the employee or the employer can end the employment relationship at any time, with or without a good reason. However, the employer and the employee can agree to a relationship that is not at-will and that does require a good reason to end the relationship.

Many people believe that at least two weeks notice has to be given before an employee resigns or is terminated. California law does not require any notice period by either the employer or the employee. It may be a company policy or practice to give two weeks’ notice, and it may be considerate to do so, but the law does not require it unless there is an express or implied promise to such notice. However, there are government regulations requiring some large employers to provide a certain amount of notice before plant or location shut downs. In many government jobs and union jobs there are policies or collective bargaining agreements limiting the employer’s right to terminate the employee except under certain conditions and following certain procedures.

Discrimination

Sometimes an employer can terminate an employee only for a good reason, and sometimes without any reason, but an employer cannot terminate an employee for certain prohibited reasons, such as discrimination based on certain classifications. Discrimination based on an employee’s race, religion, nationality, sex, sexual orientation, age, or disability is generally prohibited. Under the federal Family

and Medical Leave Act and the California Family Rights Act, many employees have the right to take leave to prepare for the birth or the adoption of a child, to care for a sick relative, or to care for the employee’s own serious health condition. An employee may not be terminated for legitimately exercising his or her rights under such laws. An employee cannot be fired in retaliation for complaining about an employer’s violations of certain laws or for participating in an investigation into a complaint about discrimination in the workplace.

Privacy Rights of Employees

All individuals in the State of California are guaranteed the right to privacy by the Constitution of the State of California. In the workplace, an employer may not interfere with the employee’s right to privacy unless it is justified by a compelling business interest. That means the employer has to have a very good reason for interfering with the rights of its employees. An employee’s right to privacy limits an employer’s ability to do background checks on the employee before hiring, to investigate the employee’s character before or after hiring, to test the employee for use of drugs or alcohol, to investigate claims of employee misconduct, and to regulate employee life styles.  The employer is also limited in information it can provide to others about the employee.

Performance Appraisals

There is no set of laws that applies to performance appraisals.  Indeed, the law does not require employers to make performance appraisals.  The policies and procedures for conducting performance appraisals and for seeking a review of performance appraisals are usually set forth in an employee handbook, or in some other written form.  If an employee feels that his or her performance appraisal was unfair, then the employee should first consider seeking review using the employer’s procedures for internal review.  If the employee believes his or her performance appraisal was unfair because of discrimination or some other illegal purpose, it may be a case for legal action.  If it is really just a difference of opinion, then there may not be any basis for legal action.

This memorandum provides some basic information about legal procedures. We hope it will assist you in making better and more informed decisions about your legal rights. This handout is not intended to be comprehensive. There are volumes and volumes of statutes, court rules, court decisions, and other materials about legal procedures!

Internal Procedures

Many larger companies have procedures and designated personnel, a Human Resource department or person, to try to resolve employee complaints. You may have complained to someone within your company already. It is important to tell your lawyer what procedures are in place and what has been done, if anything.

Attorney’s Informal Efforts

If you decide to retain an attorney to represent you in claims against an employer or former employer, often the attorney will try to resolve your dispute informally. The attorney may help you pursue internal complaint procedures, work with you to get the company to comply with its own obligations to investigate and try to resolve your complaint, or make a few telephone calls to the company or its attorney to see if something can be worked out. Sometimes it will be appropriate for the attorney to prepare a letter notifying the company of the fact that the client is represented, identify the legal issues and make a proposal on how to resolve the matter. These approaches should be tailored to the client’s situation. Company politics and individual personality styles are important considerations. Sometimes these informal efforts will be very brief, but other times they will involve extensive consultation with the client or lead to detailed negotiations. When these informal efforts are successful, they can result in an early resolution before any litigation is commenced. In many cases, however, litigation or some other formal process cannot be avoided.

Legal Deadlines

Whatever you decide, it is important to act promptly. Some legal deadlines are very short. Other deadlines can be several years. However, we emphasize that if you decide to pursue legal remedies against your employer or former employer, it is best to retain counsel immediately so you can be advised specifically on how and what deadlines apply to your case. This often cannot be analyzed properly until a thorough consultation with an attorney.

Filing With State or Federal Agencies in Discrimination and Harassment Cases

State and federal discrimination laws generally require that you file something with them before going to court. Generally, this involves filing a claim with either the California Department of Fair Employment and Housing (“DFEH”) or with the federal Equal Employment Opportunity Commission (“EEOC”), or both.

With either the DFEH or the EEOC, the complaining party can file a complaint or charge of discrimination or harassment and ask the DFEH or EEOC to investigate and try to resolve the complaint, or the employee can forego agency involvement and request the agency to issue a “right to sue” letter. An attorney can help advise an employee of the advantages and disadvantages of each course of action in the context of his or her case. In most cases, the EEOC and the DFEH offers a type of one stop shopping, allowing the employee to file a dual charge that satisfies the requirements of both the EEOC and DFEH.

Whether to file with the DFEH or the EEOC, or both, is an important decision. It depends in part on whether you will be proceeding under state laws, federal laws, or both. This is a decision that you might want to make after consulting with an attorney.

The DFEH claim form must be filed within one year of the act of discrimination, harassment, or retaliation, or in cases of a continuing pattern of wrongful conduct, within one year of the last act. Once a right to sue letter is issued, which can be within just a few days, the employee has one year to file a lawsuit. Usually there is no reason to wait that long and the lawsuit is pursued immediately. It cannot be overemphasized, however, that how the deadlines are applied to your case should be reviewed carefully and thoroughly with your attorney.

By obtaining a right to sue letter from the DFEH, California law allows an employee to pursue a claim under California’s Fair Employment and Housing Act. If the employee establishes a case, the employee may seek damages for back pay and benefits lost, prospective loss of pay and benefits, general damages for such things as emotional distress, in some cases punitive damages, and an award of reasonable attorneys’ fees and costs. The right to sue letter is not any indication of whether the claimant will be successful, or that the claim is even a valid claim. It is, in a sense, a ticket allowing entrance into court. The employee still has to prove his or her case.

Federal law remedies are generally more limited than state law remedies in the areas of emotional distress and punitive damages. Both allow for economic damages such as wage and benefit loss and for the award of reasonable attorneys’ fees and costs if the employee prevails in the lawsuit. Nevertheless, there may be reasons in individual cases to pursue a claim under federal law instead of state law, and sometimes under both sets of laws.

For more information about the DFEH, visit http://www.dfeh.ca.gov/

For more information regarding the EEOC, visit http://www.eeoc.gov/

Filing Claims with the California Labor Commissioner

Where the employee’s claims amount to wages or benefits owed without any other claims such as discrimination or wrongful termination, pursuing a claim through the California Labor Commissioner often can be the most efficient route. With surprising frequency, employers violate California wage and hour laws, fail to pay accrued vacation pay upon termination, or fail to pay overtime earned. Filing a claim with the Labor Commissioner can be a good first step. However, whoever loses in the process has the right to request a trial on the matter in state court. Sometimes, if an employee prevails at the Labor Commission level, the employer will give in and pay the amount owed without the need for court action. However, one cannot count on this. If the employer requests a trial in state court, the Labor Commissioner’s ruling is not given any weight. You would have to prove your case all over, even if it means presenting the same witnesses and documents.

A party who wins at the Labor Commissioner hearing and then wins again in state court is entitled to be reimbursed for his, her, or its reasonable attorneys’ fees and costs for the court proceeding. This is important for employees to consider when proceeding with a Labor Commissioner complaint on their own. If an employee loses at the Labor Commissioner and then appeals to court, the employee may lose his or her opportunity to be reimbursed reasonable attorneys’ fees and costs for the court proceeding, and could be liable for substantial fees and costs incurred by the employer if the employer wins at court as well.

The Labor Commissioner also has the power to assess certain fines and penalties against employers in certain cases

In cases where there are substantial sums owed and disputed, as in the case of commissioned employees, the Labor Commissioner route can prove to be a waste of time. The Labor Commissioner’s office handles a large volume of cases and may not have the resources to hear lengthy presentations on issues involving disputed commissions. If a claim is first processed by the Labor Commissioner, and then a new trial is sought by either side in court, the proceeding could take twice as long as going straight to court.

Wage related disputes are handled by the California Labor Commissioner’s Department of Industrial Relations, Division of Labor Standards Enforcement. For more information, visit www.dir.ca.gov/dlse .

Court Action

Claims for discrimination, harassment, retaliation, and wrongful termination often must be pursued in court. There are many factors that go into deciding between state and federal court, and it can even depend on the county or district in which a court action would lie. There are important procedural differences between state and federal court.

Court action involves substantial resources. In addition to the efforts of attorneys, there are many out of pocket expenses associated with the court action. There are filing fees, motion fees, jury fees (state court), fees for transcripts of hearings, court reporters, exhibit preparation, traveling and lodging, and sometimes expert witness fees and expenses. These out of pocket expenses can be just a few hundred dollars on the low side, but in many cases, they can amount to tens of thousands of dollars.

The attorneys’ fees involved in getting an employment case through a jury trial will almost always exceed $50,000. Cases with any degree of complexity are likely to involve attorneys’ fees of $100,000 or more to take a case through a jury trial, and can be multiples of that. That’s before appeals and possible retrials.

It usually takes about one to two years from the time a court action is started to the time trial is completed. In addition, there are post trial hearings and appeals that can easily add two or three years. If the appeal court decides there were mistakes made, the case may need to be tried again and subject to another appeal.

Before trial, a client can expect to be involved in depositions of potential witnesses. A deposition is where the attorneys for each party involved in the case meet with a particular witness to ask questions in front of a certified reporter who takes down the questions and answers under oath. A full day deposition typically costs about $1,200 just for the court reporter’s fees. The employee is almost always deposed. Some depositions will last several days. In some cases, there may only be two or three short depositions throughout the case. Other cases may involve twenty, thirty, or more days of depositions for various witnesses, sometimes in various locations throughout the country.

If a court action is initiated by an employee, the employee files a complaint to start it and is referred to as the “plaintiff.” The employer files an answer and is referred to as a “defendant.”

Alternative Dispute Resolution

This term covers a number of ways of resolving disputes outside of the court system. The two most common types of alternative dispute resolution are binding arbitration and nonbinding mediation. Both parties must consent to binding arbitration. If that procedure is elected, it involves no jury, limited rights of appeal, and all parties are bound by the decision of either a single arbitrator or the majority of a panel of arbitrators. Sometimes employees will sign agreements requiring them to submit any claims to arbitration. These agreements should be reviewed carefully with an attorney, because they are not always enforceable.

Mediation is a formal settlement process where the parties agree to a mediator and set aside at least one full day to discuss the case in detail and try to hammer out a compromise. However, settlement cannot be reached at mediation unless all parties agree.

Conclusion

Employees with claims to assert face a number of emotions that may affect their decisions whether to pursue specific courses of action. They may feel a desire for vindication and a means of venting their anger at their former employer. Others look at it as more of a business decision. Still others can feel intimidated and overwhelmed by the process. You should look to your attorney for a frank, objective assessment of your case and be open to a realistic appraisal of what you might expect.

We hope that this description of legal procedures helps you to rationally consider and understand the various procedural alternatives you will discuss with your attorney.