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The California Supreme Court on Wednesday agreed to take up the controversial subject of employee meal breaks, the very issue at the heart of the Division of Labor Standards Enforcement’s recent decision to fire one of its lawyers, Miles Locker. In firing Locker, the DLSE pointed to a series of clashes, most of them related to Locker’s vocalization of his views that an additional hour of compensation under the Labor Code should be defined as a “wage” rather than a “penalty.” The DLSE under Gov. Arnold Schwarzenegger’s administration has pushed for the opposite interpretation. By happenstance, the state Supreme Court agreed Wednesday to decide whether payments for missed meal and rest periods constitute penalties rather than wages — a distinction with huge dollar consequences for employers. The justices’ unanimous vote to take Murphy v. Kenneth Cole Productions, S140308, will give them the opportunity to decide the issue that divided the state’s appeal courts — and drove a wedge between Locker and his employer. Earlier this month, the DLSE sent Locker a 23-page explanation of its grounds for terminating him. The papers offer a glimpse of the infighting at the DLSE that led to Locker being placed on administrative leave in August. “You have repeatedly put your own beliefs above your client’s goals,” Acting State Labor Commissioner Robert Jones wrote, referring to the DLSE as the client. “You have secretly communicated your disagreements with your client to others in the legal community; you have repeatedly attempted to undermine your client’s effort to develop and enforce policy; and you have gone behind your client’s back to obtain results that your client did not wish. These acts were the ultimate in disloyalty.” Locker’s lawyer, Rudy, Exelrod & Zieff’s Steven Zieff, says Locker unsuccessfully appealed his firing on Friday at a hearing before Labor Commission officials. Zieff now plans to take Locker’s case before the state personnel board and is considering filing a lawsuit. In the papers, the DLSE outlines 10 incidents that are the “bases for discipline.” Among them, Locker’s bosses say he: criticized the agency and its direction in e-mails to outside lawyers; encouraged outside lawyers to seek depublication of a Supreme Court decision without informing his bosses; asked to be listed as an attorney in Murphy even though the DLSE had not taken a position in the case; sent hearing officers information in an effort to influence them; forwarded an internal memo to outsiders; didn’t inform his then-boss, Labor Commissioner Donna Dell, that she was going to be sued; and in July, defied an order by Dell — because she was concerned about pending litigation against her — not to speak at a Bar Association of San Francisco’s Barristers Club meeting. But Zieff says the accusations are “a transparent, politically motivated attempt to retaliate against Miles for work he had done to further the mission of the DLSE, which is to vigorously enforce minimum labor standards intended to protect California workers.” In a response to the specific charges against Locker, Zieff, for instance, argues that the DLSE had an ongoing co-counsel arrangement with the Civil Justice Clinic of Hastings College of the Law in the Murphy case and that Locker’s actions were in accordance with that arrangement. Zieff says Locker’s work on Murphy ended before the Labor Commissioner issued a precedent decision on June 26, 2005. “Mr. Locker’s actions were in accordance with a mandatory legal duty to provide such enforcement policy statements to the public,” Zieff says of the allegation of forwarding an internal memo. “The DLSE cannot promulgate secret enforcement policies.” In the Murphy case, San Francisco’s 1st District Court of Appeal unanimously ruled on Dec. 6 that payments for missed meal and rest periods constitute penalties rather than wages. But on Jan. 20, San Diego’s 4th District disagreed, calling them wages in a 2-1 decision in National Steel and Shipbuilding v. Superior Court ( Godinez), 06 C.D.O.S. 636. On Jan. 27, Los Angeles’ 2nd District, ruling 2-1 in Mills v. Superior Court ( Bed, Bath & Beyond), 06 C.D.O.S. 837, joined the 1st District in declaring them penalties. Whether the payments are considered wages rather than penalties is important because violations could subject offenders to a longer statute of limitations for liability. If the missed breaks are wages, then employees would have four years to seek restitution under Business & Professions Code �17200. If penalties, they would have only one year. In petitioning the supreme court for review, Donna Ryu, an attorney at the Civil Justice Clinic, begged the court to cut through the chaos. She argued that review “of this important and cutting-edge legal question will provide an urgently needed definitive answer.” Ryu — who represented John Murphy, a former manager in a San Francisco Kenneth Cole store who was seeking more than $17,000 in unpaid meal and rest periods — even noted that the DLSE has done a “complete turnaround” under the Schwarzenegger administration “now opining … that meal and rest pay is a ‘penalty.’” In its ruling, the 1st District agreed that Murphy was due overtime pay, but not payment for rest and meal periods. In her supreme court petition, Ryu argued that the appeal court erred on the latter issue. “The characterization of the payments as ‘pay’ … makes sense in light of how the payments function, and what they pay for,” she wrote. “The ‘one additional hour of pay’ for a missed meal or rest break is not an ‘arbitrary amount’ constituting a penalty … but is specifically tied to that employee’s ‘regular rate of compensation.’” In his answer and cross-petition, Kenneth Cole’s attorney, Robert Tollen, a partner in Seyfarth Shaw’s San Francisco office, disagreed. “The additional hour of pay imposed by Labor Code �226.7 is in addition to and apart from actual losses incurred,” he wrote. “It does not pay for time worked, which must be separately paid. “It does not compensate for injuries on the job or for other potential consequences of being denied a meal or rest period,” he added. “It punishes an employer for violating its meal and rest period obligations.” Tollen had also asked the high court to let stand the 1st District’s decision in Murphy, and instead grant review in National Steel and Shipbuilding, which came down on the other side of the issue. “Seven of nine court of appeal justices, versus two, agree that the sanction under �226.7 is a penalty subject to the one-year statute of limitations,” he wrote. “The NASSCO two got it wrong.” Ultimately, lawyers were unsure if the California Supreme Court’s decision might have an impact on Locker’s fate. “It is interesting that Mr. Locker always felt that this was an issue that could go to the [California] Supreme Court,” says Zieff. “I don’t know that everybody in the administration had as clear thinking as Mr. Locker.”

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