Wage and Hour Case Notes
| Publication year | 2019 |
| Author | By Lois M. Kosch |
By Lois M. Kosch
Lois M. Kosch is a partner at Wilson Turner Kosmo. She specializes in counseling and representing employers in all aspects of employment law and litigation. Ms. Kosch is a former member of the Labor and Employment Law Section's Executive Committee.
On March 7, 2019, the U.S. Department of Labor (DOL) announced proposals to update the regulations relating to overtime pay under the Fair Labor Standards Act (FLSA). The DOL proposes to raise the salary threshold for workers to qualify for the FLSA's "white collar" exemptions from $23,660 to $35,308 per year. The DOL estimated that more than a million additional American workers would be eligible for overtime pay under the proposed changes. The DOL also seeks public comment on periodic reviews of the salary threshold. The proposed regulations and additional information may be found at: www.dol.gov/whd/overtime2019.
Goonewardene v. ADP, LLC, 6 Cal. 5th 817 (2019)
In this case, plaintiff sued Altour International, Inc., her former employer, and ADP, the payroll provider for Altour, alleging she was not paid all wages due. Plaintiff claimed Altour and ADP were joint employers and also alleged breach of contract, negligence, and negligent misrepresentation. The trial court sustained ADP's demurrer to plaintiff's 6th amended complaint as to all causes of action without leave to amend.
The court of appeal found that ADP was not a joint employer with Altour and thus could not be liable under the Labor Code for failure to pay wages. However, the court held that an employee may maintain a breach of contract claim against a payroll company under the third-party beneficiary doctrine. It further held the employee may maintain tort claims for negligence and negligent misrepresentation.
In a unanimous decision, the California Supreme Court reversed the holdings of the court of appeal on plaintiff's theories of breach of contract, negligence and negligent misrepresentation. The joint employer theory was not before the court.
The supreme court first rejected plaintiff's attempt to hold ADP liable for breach of contract under the third-party beneficiary theory. Under this theory, an individual or entity that is not a party to a contract may bring a breach of contract action against a party to the contract only if the third party establishes that: (1) it is likely to benefit from the contract; (2) a motivating purpose of the contracting parties is to provide a benefit to the third party; and (3) permitting the third party to bring its own breach of contract action against a contracting party is consistent with the objectives of the contract and the reasonable expectations of the contracting parties. In this instance, a contract between an employer and a payroll company does provide some benefit to employees, but that is ordinarily not a motivating purpose of the contracting parties. Instead, the motivating purpose is to provide a benefit to the employer. The court also noted the considerable litigation defense costs a...
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