In a long-awaited ruling, the California Supreme Court has finally clarified the rules applicable to meal and rest periods for non-exempt employees. The Court concluded that employers are only required to provide meal and rest periods to employees, they are not, however, required to ensure that their employees actually take them. Here is a short synopsis of the Court’s conclusions.

Meal Periods Must be Provided Following Five Hours of Work
Employers are required to provide an “off-duty,” unpaid meal period to non-exempt employees following any shift in excess of five hours. An “off-duty” meal period means the employer relieves the employee of all duties during the meal period. Meal periods must last for at least 30-minutes.
Employers have flexibility concerning how the meal-period is scheduled, and do not have to provide the meal-period during the fifth hour of work. Instead, employers must simply provide their employees with a meal period no later than the end of the employee’s fifth hour of work. If the employee is working more than ten hours, then the employee is entitled to a second 30-minute meal period to be taken no later than the end of the employee’s tenth hour of work. The meal period may be scheduled any time within the employee’s shift so long as these time constraints are observed.
Even though employers are required to provide “off-duty” meal periods to their employees, they are not required to police their employees to ensure they do not work during the meal period or otherwise force their employees to take the meal period However, employers may not coerce or encourage employees to skip their meal period or take an “on-duty” meal period. If an employer does so, it is subject to a mandatory penalty equal to one additional hour of pay at the employee’s regular rate of pay.

In summary, employees can decide how to spend their meal period, but employers must allow them an uninterrupted, off-duty meal period of 30-minutes after any work period of more than five hours.

Rest Breaks Must be Provided During a Shift Longer Than 3.5 Hours.
Employers are also required to provide paid rest breaks to non-exempt employees who are scheduled to work more than 3.5 hours in a day. Employers must count rest periods as time worked, and must authorize and provide employees with a 10-minute rest in a 3.5 to 6 hour shift, 20 minutes rest in a shift longer than 6 hours but no more than 10 hours, and 30 minutes rest in a shift more than 10 hours but no more than 14 hours. Failing to account for the mandated rest periods in scheduling and assigning shifts may be considered a denial of the rest period, which could subject employers to a penalty (e.g., payment of one additional hour of pay at the employee’s regular rate of pay).

Employers must make a good faith effort to authorize and permit the 10-minute rest periods in the middle of each 4-hour period to the extent it is practical (e.g., at or near 2-hours into the shift). Within an eight-hour shift, one rest break should generally fall on either side of the meal period.

In summary, employers must authorize and provide rest periods to employees. As with meal periods, however, employers need not ensure that employees actually take the rest periods.

What This Means For You
All employers should have policies in place informing employees of their right to take mandated rest and meal periods and explaining that failure to do so can lead to discipline, up to and including termination of employment. However, with the Supreme Court’s new ruling, employers need not require employees to clock in and out for rest periods (although it is still a good idea to do so for meal periods, which are unpaid). Employers should see a decrease in the number of wage and hour class actions based on meal and rest break violations as a result of this ruling, as employees will now be required to prove that they were not allowed to take breaks, rather than simply that they worked through their breaks.

By Dana Olsen

Move over, Big Law. Small Law is in. And the trend has proven to be more than a temporary reaction to the 2008 financial meltdown. Four years later, corporate lawyers are flocking to small firms.

Some lawyers call it disaggregation, and it reflects a change in the way the legal industry operates. Small firms are flourishing because clients’ demands have evolved over the years. Rather than relying on one firm and paying for a package of legal needs, clients are turning to different firms, and in some cases to legal support businesses, for different tasks. While the economic downturn certainly encouraged clients to search for more cost-effective legal representation, many clients had already come to think that they were throwing money away by sending all their work to big firms.

The key has been the unbundling of legal services. This allows legal departments to match specific tasks with the right service providers. Converts point to high-priced first-year associates as an example of the problem with big firms. Some clients unknowingly pay nearly the same hourly rate for these inexperienced lawyers to review documents and perform discovery as they pay for partners to, say, write briefs and hold settlement conferences. By contrast, small firms aren’t saddled with the need to train armies of associates on the client’s dime.

The unbundling of tasks has also permitted firms to tap new technology to perform time-consuming jobs. They now rely on software to help speed some of the most burdensome e-discovery jobs, like document production and review, rather than hit up clients with first-year associate rates.

Beth Anisman has watched the evolution over the past decade. She was a lawyer for Lehman Brothers Holding Inc. before the financial firm declared bankruptcy in 2008; then she became the chief operating officer for the legal department of Barclays Capital Inc. She spent years managing legal operations for the two financial powerhouses before she struck out on her own to found B&Co Consulting in New York, which advises corporate lawyers on how to manage their clients’ needs. Much of her current work consists of advising corporate lawyers on which law firms and agencies to hire for which tasks.

Anisman advocates splitting up work and using small firms whenever possible. Before clients began breaking apart legal services, many would pay one brand-name law firm a huge fee to perform all legal duties. "Clients are smarter about how they manage their legal accounts," says Anisman. "They started to say to themselves, ‘What did I just buy?’ "

Consultant Peter Zeughauser has observed the same phenomenon from his perch in California. "I think big corporations are more careful about who they hire for what work," says the legal strategist, who founded Newport Beach–based Zeughauser Group in 1995. "They won’t automatically hire big firms, which is what they used to do. They’ve become more sophisticated, which means they hire firms that are right for each individual matter.

"There’s a lot of pressure from the general counsel’s office on the lawyers in the department to keep costs down," Zeughauser continues. "For a lot of the day-to-day work that needs to be done, they’re hiring small firms more and more."

That’s the case at American International Group, Inc. Eric Kobrick, AIG’s deputy general counsel, says he began hiring small firms to work for the insurance giant in 1997, the day he walked in the door. "The old structure—an hourly rate presented with no detail—has never been acceptable," Kobrick says. "Small firms, in general, are more flexible. They’re able to use rate flexibility, and still provide excellent service."

But money isn’t everything. In fact, some small firms take umbrage at the suggestion that what they offer is slashed rates. Kathryn Ellsworth, a former Dewey Ballantine partner who left the mammoth firm to cofound a 15-lawyer shop, says her firm’s marginally cheaper pricing is one small part of the equation. "We do the same work [as big firms], and we pay our lawyers the same," says Ellsworth, who cofounded Grais & Ellsworth in 2007. "We don’t want clients to hire us because we’re cheaper; we want them to hire us because we’re better."

The Medicare fiscal intermediary for California defines co-management as the “planned transfer of care during the global period from the operating surgeon to another qualified provider.” Optometrists and ophthalmologists have long engaged in the practice of co-managing cataract patients undergoing surgery. Typically, optometrists refer their patient out to an ophthalmologist for surgery, and the ophthalmologist in turn refers the patient back to the optometrist for his or her post-operative care.

This type of co-management arrangement can be hugely beneficial for the patient. Patients are able to receive the specialty surgical services they require from an ophthalmologist, while retaining access to their regular optometrist – who may be more geographically convenient to the patient and who often have provided years of consistent optometric care to the patient – for post-operative care. When these circumstances are present, and when the patient provides valid and informed consent, co-management can be a vital tool for providing optimal care to cataract surgery patients.

Because of some ostensibly conflicting language in federal laws and regulations, however, confusion has sometimes arisen about the precise circumstances under which co-management is permissible. The federal anti-kickback statute provides civil and criminal penalties for giving or receiving “remuneration” in exchange for referrals. Because the law is so broad, the federal government outlined many “safe harbors” which, while potentially covered by the anti-kickback statute, would not be prosecuted. One of these safe harbors specifically exempts co-management from the anti-kickback prohibition, so long as certain conditions are met. Although the safe harbor language prohibited the sharing or splitting of a Medicare global fee, the government later clarified that “we do not mean to suggest that all specialty referral arrangements involving splitting of global fees are illegal under the anti-kickback statute.” Rather, making this determination requires a “case-by-case analysis” of factors such as whether the services are medically necessary, whether the timing of referrals is clinically appropriate, and whether the services performed are commensurate with the portion of the global fee received.

The American Optometric Association (AOA) later set forth a bulletin that echoed and expanded on the above factors. AOA’s seven factors to be considered when determining whether co-management in a given instance is appropriate are:

1. The selection of an operating surgeon for patient referral should be based on providing the best potential outcomes for that patient. Financial relationships between providers should not be a factor.
2. The patient’s right to choose the method of postoperative care should be recognized consistent with the best medical interest of the patient.
3. Co-management of post-operative care should be determined on a case-by-case analysis and not prearranged. For example, agreements to refer all patients back on a date certain should be avoided. The patient should be advised prior to surgery of potential postoperative management options.
4. The transfer of post-operative care must be clinically appropriate and depend on the particular facts and circumstances of the surgical event.
5. Following surgery, transfer of care from the operating surgeon to an optometrist should occur when clinically appropriate at a mutually agreed upon time or circumstance; and such time should be clearly documented via correspondence and be included in the patient’s medical record. For example, Section 4822 of the Medicare Carriers’ manual states that “Both the surgeon and the physician providing the postoperative care must keep a written transfer agreement in the beneficiary’s record.” This may be accomplished by including the appropriate information in the referral letter from the ophthalmic surgeon to the optometrist at the time of transfer of care.
6. The operating surgeon and the co-managing optometrist should communicate during the post-operative period to assure the best possible outcome for the patient.
7. Compensation for care should be commensurate with the services provided. Cases involving care for Medicare beneficiaries should reflect proper use of modifiers and other Medicare billing instructions.
Similarly, the American Academy of Ophthalmology (AAO) has also published an advisory opinion clarifying that co-management is perfectly appropriate under certain circumstances, specifically where the postoperative care can be provided by a qualified non-ophthalmologic physician.

Medical providers must of course tread very carefully when contemplating the co-management of patients so as not to encroach on the type of arrangements prohibited by the federal anti-kickback statute. Most importantly, all decisions should be based on the best potential outcome for the patient, not on any financial arrangement between providers. Blanket contracts to refer patients should especially be avoided, since such an arrangement would preclude the type of case-by-case analysis proscribed by the federal government. However, when the factors discussed above are present, and when the patient provides valid and informed consent, co-management has historically been a vital tool to providing optimal care for cataract surgery patients. There have been no recent changes in the law to preclude the future practice of co-management by optometrists and ophthalmologists when the appropriate circumstances are present.