New law codifies and extends reach of Downtown LA Motors lawsuit

When the state legislature passed and Governor Brown signed AB1513 in October, 2015, they cleaned up abuses in the flat rate system used by numerous California auto dealerships. This was a major victory for techs who want a fair day's pay for a fair day's work.

Under the flat rate pay system, the technician is paid by the job, not by the hour. If a job that is estimated to take one hour takes three, the tech is still paid for one hour. However, if he completes the work in just 30 minutes, he still receives the full one hour flat rate. Under flat rate, techs are not paid for attending shop meetings or trainings, or waiting for parts or for the next car to come in. And they definitely do not get paid for breaks.

Flat rate was uncommon in the Bay Area until about 30 years ago. The union fought it, sometimes successfully, sometimes not, because they knew that without hourly guarantees, the flat rate system was likely to cost workers money.

Sponsored by Assembly member Das Williams, AB 1513 requires that employees who work on piece or flat rate be compensated for rest and recovery periods and other nonproductive time at or above specified minimum hourly rates, separately from any piece-rate compensation.

According to Attorney Caren Sencer from the Weinberg, Roger and Rosenfeld law firm, what that means in plain English is that employers must:

  1. Compensate for unproductive time. Dealerships must pay mechanics for their time waiting for cars or parts, getting trained, attending shop meetings. For mechanics who supply their own tools, that time needs to be compensated at a rate at least twice the minimum wage, and,
  2. The dealership has to pay for rest breaks.

The lawsuit that changed everything

AB 1513 codifies the Gonzalez v. Downtown LA Motors lawsuit that was decided in April 2013 by the California Court of Appeal. The Court ruled that piece-rate pay systems that do not provide compensation for time spent on so-called "non-productive" tasks violate California's minimum wage law. The original case involved a group of Mercedes-Benz mechanics who were not allowed to leave their employer's premises while waiting for vehicles to repair but were expected to perform various non-repair tasks such as cleaning their work areas, obtaining parts, participating in on-line training, and reviewing service bulletins. The mechanics received pay only for the repairs they performed. The employer argued that it complied with the minimum wage law because when all the hours mechanics were at work were divided into their total pay, the average compensation was greater than the minimum wage.

The court ruled that the employer had to provide additional pay during all hours worked, including waiting time, because the workers were required to remain at work under the employer's control.

California's Department of Industrial Relations helped draft AB 1513 in consultation with the Machinists and the automotive industry and with the agricultural industry and their unions—the farmworkers and Teamsters. "Since the Downtown LA Motors ruling came out, employers claimed they weren't sure what how to meet the letter of the law," says Senser. "Now, there's no more ambiguity— they have a clear set of rules to live by."

No "safe harbor" for dealers

One other issue addressed in AB 1513 is the "Safe Harbor provision." While employers recognized that they'd have to pay for "non-productive" work going forward, they were concerned about liability for large lawsuits to cover back wages going back in time. "The law includes a 4% payout (or a maximum of $4,000 per year for four years) for the agricultural industry to cover previously unpaid non-productive time," Sencer explained.

However, the IAM estimates that the typical non-productive time at a flat rate dealership is significantly higher than that. "We would never have accepted the 4% payout," says Area Director Don Crosatto. "That would have shortchanged our members significantly."

Ultimately, the auto dealers decided to opt out of the Safe Harbor provision altogether, taking the risk that mandatory arbitration would limit how much they had to pay techs for back wages.

"I'm glad the dealers opted out, but I'm not sure why they did," says Area Director Tom Brandon. "One of my shops owes their techs four years of back wages that come to about $83,000. With 33 people at the shop, times $83,000, that's a lot of money. We look forward to going after it."

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Wyotech: Lessons learned from a union campaign waged too late

By Bob Howard Former Wyotech Instructor

The robocall came early one Sunday, in April of 2015. Our company would close its doors the next day. Quite a few doors, actually; our parent owner, Corinthian Colleges, Inc., had bought up 120 forprofit vocational schools over the last decade, in a Wall Street profit play. Though not under the legal attack many other of CCI's schools were, Wyotech Fremont closed too. Collateral damage. Maybe you saw it on the news.

In existence since the 1960s, the vocational school in Fremont (formerly Sequoia Institute) had been re-branded by CCI, with a new name: Wyotech. Well-equipped with tools and with competent and dedicated instructors, we provided the auto industry with many good apprentice-level techs over the years.

Of course, students get out of school what they put in—and as a trade school, we were no different. Everyone reading this knows what our trade is like: knuckle- and back-busting, tough to keep up with technologically, and not the route to easy riches. Lazy people don't do well in the service bay—you need drive and desire. Not every student had that— but many did. That's what kept us instructors coming to work every day.

By the time the doors were shut, the number of auto instructors at Wyotech had been cut in half, to 18. Many teachers had teaching loads of 40 hours/ week, with no prep time. (Try lecturing for 8 hours a day. Repeat every other day. Do 8 hours of shop on days in-between.) Instructors' vacation time expired, unused. And instructors had to cover courses they were not experienced enough in to feel they could give students their best.

No one was more aware of the need for their employer to make a fair profit than the instructors. Many of us had run our own shops. But the push for corporate profit became intense. The economy worsened. Government found fault with the practices of some large, for-profit educational companies. Our business unit, Wyotech got caught in the downdraft.

As demand for profit increased, the workplace became intense and hostile. Instructors were blamed for declining enrollments. Punishments for having students drop out—students with family and financial issues, problems with the law, or with the language— were threatened. (We had to call absent students every day and attempt to resolve these issues.)

While management's mantra was "What can you do today to bring your students back tomorrow?", we were charged with enforcement of petty and irrelevant rules that were despised by the adult students. Poor enforcement by us could lead to a write-up. We weren't partners with management anymore—somehow, instructors had become the enemy. We were told, "Just be glad you have a job."

Finally, at the end of our rope, we called the IAM. Area Director for Organizing Jesse Juarez and Business Rep/Researcher Casey Gallagher came out to meet us on a Saturday, to convince us of the advantages of joining the IAM. We had a second meeting—more instructors came. Some of us were old hands, having been IAM members before going into teaching. Regardless, not much selling was necessary. We just asked, "Where do we sign?"

The day we notified management of our intent to be represented by the IAM was intense. We walked into the head office, and presented our letter. It was politely refused. But this was not Jesse's first rodeo—he marched in from the ranks, and made sure management copied our message, loud and clear, as much as they didn't want to hear it.

After that, he instructed us to put on our union buttons, and report how things were going while we waited for the election. The result? Instant respect! Management stopped treating us as hindrances and worked together with us, to try to hold the school together. A company "persuader" was sent to try to talk us out of unionizing—but no one was buying.

The union vote was disappointing to management, I'm sure. 17-to-1 in favor of being represented by Local 1546. But it allowed the workplace to become much more fair and a better place to work for all.

Negotiations for a contract began soon after, with Don Crosotto, assisted by Steve Older, representing the instructors. It was an odd negotiation: a lot of time, on both sides of the table, was spent trying to figure out a rescue plan for Wyotech. Basically, it wasn't bread-and-butter issues that separated us: CCI was basically fair with wages and benefits. What we really wanted was respect and a spirit of teamwork between management and instructors. Our local management were good and decent people, pressured and bowed by incessant demands for profit. But the pressure was equalized when the union started looking out for us—now we had protection from unreasonable demands.

The IAM put a lot of time and money into the negotiations—and we were just a small unit. For that, the instructors are truly grateful to Don, Jesse, Steve, and Casey, and to the whole IAM organization. But in the end, it was too late for CCI. Pressures from regulators became too great, and the company folded, taking Wyotech down with it. How did it work out for suddenly laid-off instructors?

  • No severance, even for those with 35 years in.
  • Only a few days to work out new health insurance plans.
  • A struggle for those with families to feed and mortgages to be paid.
  • Physically unable to turn wrenches anymore, some still had a lot to teach people—but few teaching jobs were to be had.
  • And, only 6 months of inadequate unemployment insurance to get to the next step. Did we make a mistake going union? Yes, we did. We waited too long.

Did we make a mistake going union? Yes, we did. We waited too long. Had we done it earlier, we might have been strong enough to resist the changes that made things worse. (After all, a small trim tab on a large rudder helps an even larger ship to be turned in a new direction.)

We could have worked jointly for a greater number of high-quality graduates, leading to more and better job placements, and more demand for our services. We would have had some leverage with the California Attorney General (who would not release any potential Wyotech buyers from the legal liabilities of CCI for their alleged misdeeds at other schools). Our union could have defended us, and spoken out for us. And we might still be a going concern today. But instead of acting, we waited too long, hoping things would get better.

Don't wait—insist on fair treatment now! Give yourself a chance at a better working life, fair pay and a chance of a decent retirement at the end of it. Best of luck to you all in your working lives—you are the people who I would have been proud to address as "Brother" and "Sister" if things had gone as we had wished and we had made the final step to union.