On October 5, 2013, Governor Brown signed SB 666 (Steinberg) into law. SB 666 does the following:

It overturns MacDonald v. State of California (discussed here), in which the Court of Appeal held that an employee must exhaust the administrative remedy set forth in Labor Code section 98.7 before pursuing a civil claim for retaliatory discharge or wrongful termination in violation of Labor Code section 1102.5 and retaliatory and discriminatory discharge in violation of Labor Code section 6310.


Significantly, the new law also makes it clear that an employer who retaliates or takes adverse action against any employee or applicant for employment because he or she has engaged in protected conduct may be subject to a civil penalty of up to $10,000 per violation.


The law also subjects attorneys to discipline for reporting or threatening to report the suspected immigration status of a witness or party to a civil or administrative action or his or her family member, to a federal, state, or local agency because the witness or party exercises or has exercised a right related to his or her employment. It also subjects certain licensed professionals and businesses to license suspension or revocation if the Labor Commissioner or a court determines that they have violated certain provisions of California law.

Further information on SB 666, including the text of the bill, is available here.

California has fee-shifting provision in place for claimants seeking unpaid minimum wages and unpaid overtime pay, by which the prevailing employee is entitled to attorney’s fees. Many employer defendants have sought to scare away a former employee plaintiff by “reminding” them that if the employee loses, the employer will go after them for their fees and costs. Many employees have considered the risk and opted not to pursue legitimate claims based on that fear.

Good news….

Effective January 1, 2014, Labor Code § 218.5 will provide that a prevailing employer can recover its defense costs only if it proves to the court that the employee brought the action “in bad faith.” “In bad faith” is not defined in the statute, but it will probably require that the employer prove that the employee knowingly filed a false claim purely withy the intent to harm their former employer.
The history behind the change reveals California’s long-established “pro-employee” position. Governor Brown signed the legislation, SB 462, making this change on August 26, 2013. The bill’s author, Sen. Bill Monning, D-Carmel, stated that this amendment corrects “an historic injustice” and “brings California into conformity with the overwhelming majority of states in the country.
The amendment was prompted by a 2012 California Supreme Court ruling holding that a prevailing employer in a meal-rest penalties case could not recover attorneys’ fees because such penalties are not “wages” and the Labor Code statutes permit fee recovery only in actions involving wages. Kirby v. Immoos Fire Protection, 53 Cal. 4th 1244 (2012).

Although there was no applicable fee-shifting statute in Kirby, the case implied that if the claims had involved wages instead of penalties, an award of attorneys’ fees to the prevailing employer could have been appropriate. The reaction from SB 462′s sponsor — the California Employment Lawyers Association — was to try to protect plaintiff employees from that eventuality by requiring successful employers to prove bad faith. A true win for employee plaintiffs!

Why Does it Matter?

Many employers ask (or require) employees to sign arbitration agreements. Once signed, the employee gives up their right to sue their employer in court over job-related issues such as wrongful termination, breach of contract, and discrimination. An employee who signs an arbitration agreement promises to pursue legal claims against the employer through arbitration, rather than through a lawsuit. It might not sound like a big deal when you’re starting a new job and settling into a new routine or making friends with the people you work with, but if your rights are later violated at work, that arbitration agreement might come back to haunt you.

So, What are the Pros and Cons of Arbitration?

First, the Cons

You may wonder why you should care where your claims get heard, as long as they are heard somewhere, whether in an arbitration proceeding or a court of law. An arbitration differs from a court case in several ways, and many of these differences work against employees.

Most important, an arbitration is heard and decided by an “arbitrator” — a private citizen (often a retired judge) who is paid by one or both sides to listen to the evidence and witnesses. That means you won’t have a jury hear your story — and juries often decide cases based on sympathy and relate better to an employee than an employer.

In addition, the arbitration process limits the amount of information each side can get from the other (a process called discovery). In employment cases, this generally hurts the employee, because the employer is usually the one in possession of most of the documents and information relating to the employee’s case.

Finally, an arbitration usually cannot be appealed, which makes arbitration awards more final than court verdicts. If you think the arbitrator’s decision is unfair or wrong, you won’t get a second chance to argue your case before a higher court — a second chance that you might have gotten had you gone to a court trial.

The Pros

An arbitration does have some advantages over a court trial. Arbitrations are less formal than court trials, and this informality can make the process easier for all involved, especially employees who are not used to litigation. Also, cases in arbitration are heard and decided much more quickly than court cases, which can take several years from start to finish.

What Should You Do if Asked to Sign an Arbitration Agreement?

Read ALL of the Documents Carefully, or Have them Reviewed

Employees often sign arbitration agreements unintentionally. How can this happen? Some employers give new employees piles of paperwork to fill out on their first day, and some employees, in turn, sign documents without reading them. Although many employers are straightforward and present the arbitration agreement to employees openly in a separate contract, others bury arbitration agreements in other documents, such as an employment contract, a hiring letter, or an employee handbook.


When you sign a contract, letter, handbook acknowledgment form, or any other document from your employer, you agree to all the terms of the document — even the ones that you may not have read. This is a particular problem with handbooks, which might be very long. To protect yourself from unwittingly giving up your rights, don’t sign any document acknowledging you’ve read something unless you actually have read it and understood it completely. And don’t sign any document that says you agree to the terms unless you have read all of the terms and do in fact agree to them.

What if You Do Not Want to Sign the Arbitration Agreement?

If your employer asks you to sign an arbitration agreement, you can refuse, but that may put your job in jeopardy. Usually, an employer can rescind an employment offer if a prospective employee refuses to sign the arbitration agreement. And an employer can fire an at-will employee who refuses to sign one. Therefore, declining to sign the agreement could jeopardize your job.

Some employers will negotiate this point, however, especially if they are more excited about you than they are about arbitration. If you are a highly sought after prospect, or if you are a valued employee in your company, your employer may allow you to refuse to sign rather than give you up.

Another option is to agree to sign, but only if you can negotiate an agreement that is fair to you, as described below.

How Can You Make the Agreement Fair?

If your employer won’t let you refuse to sign, it may allow you to negotiate certain terms of the agreement to make it at least balanced. You may have to consult with an attorney for help negotiating the fairest agreement possible. Here are some provisions that can help create a more balanced arbitration process.

•Choice of arbitrator. You should get as much say in choosing the arbitrator as the employer. Given the power of the arbitrator, and given the fact that you probably won’t get to appeal the arbitration decision, you will want to have rights equal to those of your employer in selecting the arbitrator. You and the employer should have the right to reject at least one arbitrator without having to give a reason.

•Disclosure of information. A potential arbitrator should have to disclose information about his or her business and personal interests so you can make sure that the arbitrator is not biased in favor of the employer. For example, the arbitrator should not be someone who is a stockholder in the company. You and the employer should have the right to reject any arbitrator who has a conflict of interest.

•Costs of arbitration. Because the employer is the one who wants to use arbitration — something that costs money — the employer should have to pay for it.

•Remedies available. Make sure that you can receive through arbitration all of the remedies that you would have gotten if you had filed your claim in a court of law. For example, the agreement should not prohibit you from seeking punitive damages or damages for emotional distress.

•Attorney representation. You should have the right to be represented by an attorney throughout the arbitration process.

Piece-rate employees must be paid separately for work that does not fall within the scope of the work that is the subject of the piece rate.

So, if you’re a brake mechanic and are paid by the brake job (or other repair), but also clean the shop, make appointments, open/close the shop or any other duties that are not related to the brake jobs themselves, you must be compensated for the extra work. The hours spent working on non-piece rate tasks must be paid at least at minimum wage.

For example, in one case, an auto dealership compensated its auto mechanics based on a “piece rate” system. For repairs, the company would pay the employees based on a standard period of time allowed for a repair (flag hours).  The pay rate was significantly higher than minimum wage.  So, if the job took longer than standard hours, there was enough wages to ensure the mechanic earned more than minimum wage.

But the mechanics spent significant time at work NOT performing repairs, such as in training, cleaning, etc.  The dealership would calculate the total hours worked vs. the compensation it would pay for flag hours.  If the pay rate fell below minimum wage, the dealership would make up the difference.  The dealership did not pay a separate hourly rate for non-repair time that would not have been covered under the piece rate.

The court held that policy was illegal. The main issue is whether the applicable wage order (here Wage Order (Wage Order 4-2001)), requires payment of at least minimum wage for each hour worked, or an average of minimum wage for all hours worked in the work week.  The trial court and Court of Appeal, relying on an earlier case, Armenta v. Osmose, Inc. (2005) 135 Cal.App.4th 314 agreed with the plaintiffs that the former interpretation was correct.
If you earn a piece rate for tasks completed, but also perform unrelated duties and wonder if you are being paid correctly under California labor law, give us a call. If you would like to read the entire case summarized above, you can find it here.

Employee Rights Law Firm Proudly Serving Santa Barbara, San Luis Obispo, Ventura, Santa Maria, Paso Robles, Arroyo Grande & Pismo. © 2018 Adams Law, Santa Barbara, California