Irvine Legal Blog

Impact of Recent California Supreme Court Case on Piece-Rate or Hourly-Plus-Production Pay

By: Kyle D. Kring and Kerri N. Polizzi

On March 5, 2018, the California Supreme Court issued its decision in Alvarado v. Dart Container Corp. of California, 2018 WL 1146645. The Court's discussion of the proper means of calculating an employee's "regular rate of pay" has raised questions among employers regarding the decision's effect on the regular rate of pay used in piece-rate or hourly-plus production bonus structures. This article provides a brief summary of the Alvarado case, discusses its limited holdings, and analyzes the impact, if any, it has on piece-rate or hourly-plus-production pay structures.

In short, the case has no present impact on either piece-rate or hourly-plus-production compensation structures. Instead, the Court went out of its way to exclude these non-hourly payments from its holding, which was limited to flat-sum bonuses alone.

Sessions Sues California Over State Laws Protecting Immigrant Workers (AB 450)

By: Kyle D. Kring

On March 6, 2018, the U.S. Department of Justice (DOJ) filed a complaint against the State of California over three state statutes it claims interfere with its ability to control immigration, thereby allowing California to be a "sanctuary state." The California statutes involved include: (1) Assembly Bill 450 "Immigrant Worker Protection Act," (2) Assembly Bill 103, and (3) Senate Bill 54. The complaint in The United States of America v. The State of California states that "[t]hese provisions are preempted by federal law and impermissibly discriminate against the United States, and therefore violate the Supremacy Clause of the United States Constitution."

McMillin Albany LLC v. Superior Court: California Supreme Court Holds SB 800 is the Exclusive Remedy for Construction Defect Claims in New Residential Construction

By: Kyle D. Kring

On January 18, 2018, the California Supreme Court issued an extremely important ruling for the residential construction industry in McMillin Albany LLC v. Superior Court, No. S229762 (Cal. Jan. 18, 2018). The state high court held that S.B. 800 (commonly known as the "Right to Repair Act") is the exclusive remedy not just for economic loss, but also for property damage, arising from construction defects in original construction, stand-alone homes. In so holding, the Court found that the Legislature clearly and unequivocally intended to reshape the rules governing construction defect actions when it enacted S.B. 800.

S.B. 800 requires parties to engage in an informal process that begins with written notice from the homeowner to the builder of the allegations that the construction falls shorts of the standards required by the Right to Repair Act. The builder then has a right to inspect, test, and cure the alleged defects or to pay the homeowner compensation in lieu of making repairs. If the homeowner goes outside of these procedures in bringing a civil action, the builder can move the court for a stay of that action until the homeowner has complied with these requirements. 

New 2018 U.S. Labor Department Guidelines for Unpaid Interns

By: Kyle D. Kring

The U.S. Labor Department's new guidelines for unpaid interns seek to make it easier for employers to use unpaid interns. The guidelines consist of a new "primary beneficiary test" using seven factors to determine whether the intern meets the standard for being unpaid. This standard is much more lenient for employers after the previous six factor test faced a great deal of criticism.

California employers should be aware of the new guidelines. California has yet to develop policy or case law of its own, making the FLSA guidelines applicable in California.

A Shield, Not a Sword: Insurance Carriers' Rights When Intervening on Behalf of a Suspended Corporation

By: Paul T. McBride

On November 7, 2017, Judge David Brown of the Sacramento County Superior Court ruled that an intervenor insurance carrier may not file a cross-complaint in a construction defect lawsuit. While this ruling is not binding precedent, if upheld on appeal it will affect the rights of intervening insurance carriers, and so merits discussion.

Background- Effect of Corporate Suspension

California Revenue & Taxation Code §23301 provides for suspension of a California corporation's "rights, powers, and privileges" for nonpayment of taxes. Once it is suspended, a corporation is prohibited from taking any actions; it can neither prosecute nor defend lawsuits. Gar-Lo, Inc. v. Prudential Sav. & Loan Assn. (1974) 41 Cal.App.3d 242. Since it cannot defend a lawsuit, it is a comparatively simple matter to take a default judgment against a suspended corporation, provided it is properly served. Once a default judgment is entered against a suspended corporation, it may be enforced, i.e. collected, against its insurance carrier, pursuant to California Insurance Code §11580(b)(2), assuming the judgment creditor can prove the damages encompassed by the judgment are covered by the policy of insurance.

Don't Lose Your Lease! (How to Properly Exercise Your Option to Extend)

By: Kenneth W. Chung

If your lease contains an option to extend the lease term and you intend to extend your lease, then you must properly and timely send your written option exercise notice. If your notice is even one day late, then the landlord may reject your request to extend the lease term. In such event, the landlord has the right to evict you from the premises, increase your rent to an amount higher than fair market value, or require other payments or terms as a condition to extending your lease. In order to avoid such potential consequences, the option exercise notice must be properly and timely sent.

Unless you have a form lease, no two leases are identical. Therefore, you should review your lease and option provisions carefully so that you may understand and satisfy all requirements. However, please note that most leases require the option exercise notice to be sent within a certain time period before the lease expiration date. The following is a sample provision:

Tenant may exercise the Option by first giving to Landlord a minimum of 6 months written notice, but not more than 12 months written notice of Tenant's intent to exercise the Option.

Local Minimum Wages Increasing Throughout California

By: Kyle D. Kring

While the California state minimum wage is set to increase on January 1, 2018, many cities and counties throughout the state will increase their minimum wage rates on July 1, 2017. Employers should be well aware of the changes and make sure they are in compliance with state, county and local ordinances.

California State Minimum Wage

The current California state minimum wage rate is set at $10.00/hour for employers with 25 employees or less and $10.50/hour for employers with 26 employees or more. Until January 1, 2022 the minimum wage will increase every year beginning January 1, 2018. The next increase will see the minimum wage for employers with 25 employees or less rise to $10.50/hour and $11.00/hour for employers with 26 employees or more.

For more details and to see a schedule for minimum wage rates in California from 2017-2023, visit the California Department of Industrial Relations page.

K&C Clothing Drive Benefitting WHW

During the month of March, Kring & Chung will be helping collect items for WHW's annual Suits for a Cause clothing drive. Participation supports unemployed or underemployed individuals in Orange County in need of assistance in making a great first impression on potential employers. As part of the Southern California legal community our new or gently used professional and casual clothing and accessories will assist men and women in being prepared to successfully enter the workforce. If you would like additional information on how you can contribute, please email ckring@kringandchung.com. To learn more about WHW's non-profit organization, you can view their website here.

K&C Associate Presents at DRI Product Liability Conference

On February 8, 2017, Kring & Chung associate Roland J. Amundsen presented at the DRI Product Liability Conference in Las Vegas, Nevada. Mr. Amundsen discussed how Bragg Crane & Rigging received a defense verdict following a three week jury trial. The plaintiff/construction worker was injured when a 108 foot long, 73,000 pound I-beam collapsed while being hoisted into position on a bridge construction project. The plaintiff was awarded $1.65 million against the other defendants in the case. Bragg was able to recover its costs as the prevailing party in the case.

Kyle D. Kring Speaks at Dale E. Fowler School of Law, Chapman Law Review Symposium

CJ3A4192.JPGFounding Partner, Kyle D. Kring spoke on a panel of attorneys at the Dale E. Fowler School of Law, Chapman Law Review Symposium regarding "The Future of the Legal Profession" on Friday February 10, 2017. The topic covered the future of the legal profession in the United States and addressed various issues such as the role of technology and whether it will make lawyers more CJ3A4186.JPGproductive or displace them. The keynote speaker was Samuel Alito, Associate Justice of the Supreme Court of the United States.

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