A recent California Court of Appeal ruling is a lesson learned regarding California Labor Code section 558.1 which allows an employee to bring a private right of action against “[a]ny employer or other person acting on behalf of an employer, who violates, or causes to be violated, any provision regulating minimum wages or hours and days of work in any order of the Industrial Welfare Commission….” (emphasis added). As defined by the statute, “the term “other person acting on behalf of an employer” is limited to a natural person who is an owner, director, officer, or managing agent of the employer…” who may be held liable as the employer.

Plaintiffs in the case of Seviour-Iloff v. LaPaille[i] claimed they were denied wages by their employer Bridgeville Properties, Inc. Under Labor Code section 558.1 Plaintiffs were allowed the discretion to claim the company’s CEO was personally liable for the wages owed. A lower court disagreed. However, on appeal, the Court found that Section 558.1 gives the employee – not the court – discretion in deciding whether to bring claims against the employer or a “person acting on behalf of an employer.”    

This is an impactful case and a stark reminder that liability for wage and hour claims can be personally leveled against anyone deemed “acting on behalf of an employer” as defined under the statute. To lower risk, employers should keep in mind the following best practices:

• Employers are required to pay all employees in compliance with state, federal and local wage and hour laws.
• Keep in mind that local minimum wage rates may exceed state minimums and that in all cases, employers are required to pay the higher of any applicable federal, state, or local minimum wage.
• Nonexempt workers are entitled to overtime or premium pay under federal, state, and local wage and hour laws for all hours worked over a specifically mandated number of workweeks or workdays.

All employers should take the time to become familiar with their specific state and local minimum wage rates, effective dates, and projected increase dates.

In an opinion with far reaching implications for employer handbook policies, the National Labor Relations Board’s (NLRB) latest decision (Tesla, Inc.) deals with the issue of “lawfulness of workplace rules or policies that restrict the display of union insignia.”

The Administrative Law Judge found that Tesla, Inc.’s dress code violated Section 7 of the National Labor Relations Act (NLRA) because it failed to establish that its ‘team-wear’ policy (i.e., requiring employees to wear shirts imprinted with Tesla’s logo and prohibiting substitution of any shirt with a logo/emblem, including shirts bearing a union insignia) is justified by “special circumstances” under prevailing administrative mandates.

The Tesla decision solidifies a 75-year-old administrative law decision known as Republic Aviation in firmly establishing what has come to be known as the ‘special circumstances test.’ This test requires that “when an employer interferes in any way with its employees’ right to display union insignia, the employer must prove special circumstances that justify its interference.” Because Tesla had on several occasions deviated from its company dress policy and allowed employees to wear plain black tee-shirts – but not those with Union insignia – it was deemed to have enforced a policy that restricted the display of union insignia. Tesla’s special circumstances (e.g., protecting car seats from damage by workers) were found not to have met Republic Aviation standards. What qualifies as a ‘special circumstance’ varies, but generally concern for safety or maintaining a branded public image will suffice.    

While it is easy to dismiss this case as a union matter, it is important to note that Section 7 of the NLRA also applies to non-union employers; protecting employees’ rights to engage in concerted activity and to discuss freely the terms and conditions of their employment. It is also important to note that the NLRB has a history of broadly construing Section 7 rights when it comes to evaluating employer handbooks making the Tesla Inc case, likely just the tip of the revisionist iceberg.

For now, employers may want to begin reviewing existing handbook policies to ensure that policies, on their face, do not impinge on Section 7 rights. For example, social media and cellphone use policies should contain Section 7 disclaimers that make it clear as to the types of conduct not prohibited by the specific policy. Language that makes clear the policy in question, “is not intended to preclude or dissuade employees from engaging in legally protected activities/activities protected by state or federal law, including the National Labor Relations Act, such as discussing wages, benefits, or terms and conditions of employment, forming, joining, or supporting labor unions, bargaining collectively through representatives of their choosing, raising complaints about working conditions for their and their fellow employees’ mutual aid or protection, or legally required activities.”