Settlement with California’s Employment Development Department Requires Immediate Payments to Hundreds of Thousands of Unemployed Californians

EDD agrees to sweeping changes in how it handles continuing unemployment insurance claims

July 23, 2021 – In a groundbreaking settlement negotiated by Altshuler Berzon LLP on behalf of the Center for Workers’ Rights, California’s Employment Development Department has agreed to make significant changes in how it processes unemployment insurance claims and to immediately pay millions of dollars in conditional UI benefits to unemployed Californians, many of whom have been waiting months to receive those benefits. The affected claimants were previously approved to receive unemployment benefits, but had their payments suspended without explanation while EDD has been working through its huge backlog of eligibility determinations.

EDD’s announcement follows months of negotiations, which culminated in the filing of a class action complaint for injunctive relief and a settlement that now awaits court approval – although EDD agreed to begin implementation immediately, without waiting for further court order. The complaint alleges that EDD’s prolonged delays in providing payment to unemployment insurance claimants in continuing claims status violate the Social Security Act, which requires state unemployment insurance programs to maintain “methods of administration … reasonably calculated to insure full payment of unemployment compensation when due.” The settlement requires EDD to provide conditional payment to unemployment insurance claimants in continuing claims status when EDD has failed to make a determination regarding the claimant’s eligibility by the end of the week following the week that EDD first became aware of the eligibility issue.  The settlement also requires EDD to notify those claimants that the payments they are receiving are conditional pending the result of EDD’s investigation and to inform those claimants of the basis for EDD’s eligibility concerns and how the claimant can respond to those concerns.  More information about the agreement is available here and here. The complaint, entitled Center for Workers’ Rights v. EDD et al., is pending in Alameda County Superior Court and can be read here.

Altshuler Berzon LLP attorneys Michael Rubin and Amanda Lynch represent the Center for Workers’ Rights in this case, assisted by summer associate Nina Oishi. The complaint, entitled Center for Workers’ Rights v. EDD et al., is pending in Alameda County Superior Court.

Court Refuses to Toss Case Against McDonald’s for Sexual Harassment at 100 Corporate Operated Restaurants in Florida

July 20, 2021 – In April 2020, Altshuler Berzon LLP, with co-counsel, filed a putative class action lawsuit against McDonald’s, on behalf of all women who work at McDonald’s corporate owned and operated restaurants in Florida.  The lawsuit, Fairley et al. v. McDonald’s Corp., et al.,  alleges a pattern of unchecked sexual harassment at 100 restaurants in Florida.  In particular, the lawsuit alleges that McDonald’s does not have sufficient policies, procedures, and training to prevent sex harassment.  It also alleges that McDonald’s fails to train low level managers – to whom reports of sex harassment are most frequently made or who may actually observe the harassment while performing their job – as to what to do when they receive a report of harassment or observe harassment themselves.  McDonald’s filed a motion to dismiss the case, and to strike the class action allegations.  The Court denied that motion, finding that Plaintiffs had alleged sufficient facts to move forward on all of their claims on behalf of all women workers at McDonald’s corporate owned and operated restaurants in Florida.  The Plaintiffs are seeking $500 million in class-wide damages.

California Supreme Court Rules that Meal and Rest Period Premium Pay Must Include All Forms of Nondiscretionary Compensation

In a significant victory for California workers, the California Supreme Court ruled on July 15, 2021, in Ferra v. Loews Hollywood Hotel, LLC, that the premium pay owed to an employee who does not receive a legally compliant meal or rest period is calculated by incorporating all forms of nondiscretionary compensation owed to the employee.

Labor Code Section 226.7(c) states that the premium pay is one hour of pay at the employee’s “regular rate of compensation.” Reversing the Court of Appeal, the Supreme Court ruled that this language is interpreted identically to the term “regular rate” in federal and state overtime law. In overtime law, the “regular rate” is a calculation that incorporates all forms of nondiscretionary compensation, including, for example, hourly wage rates, commissions, shift differentials, piece rate pay, and nondiscretionary bonuses. The Supreme Court rejected the employer’s argument that “regular rate of compensation” means only the employee’s base hourly wage rate. 

Michael Rubin and Eileen Goldsmith of Altshuler Berzon LLP filed an amicus brief in the Supreme Court on behalf of the California Employment Lawyers Association, supporting the employee plaintiffs. Ms. Goldsmith participated in the Supreme Court oral argument. 

You can read the decision here.