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« | Home | »

Legal policy changes at the California State Athletic Commission ignite an internal uproar

By Zach Arnold | October 4, 2012

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Facing enormous in-state travel costs & time-and-a-half salary issues, the Department of Consumer Affairs announced that they would immediately change protocol regarding the way they will pay athletic inspectors. In an internal memo sent out on Tuesday, the Department of Consumer Affairs issued a ‘legal opinion’ that claims DCA has the right to no longer pay full-time state workers time-and-a-half when they work as an athletic inspector for the California State Athletic Commission. Furthermore, the memo’s legal opinion claims that DCA no longer has to give compensation to athletic inspectors for travel.

The legal opinion ignores California labor laws and instead relies on an interpretation of the federal Fair Labor Standards Act law as the only law that matters. Later in this article, we’ll cite an opinion letter from an important state agency in California that says that FLSA can only be used as a floor and not a ceiling when it comes to the amount of rights an employee has. If the state’s labor laws are of a higher standard than FLSA standards, then state law supersedes FLSA in terms of enforcement.

By state law in California, athletic inspectors are considered intermittent state employees. This can be found in section 3513, section 3527, and section 19815 of the state’s Government code.

The memo claims that the legal opinion will change CSAC’s legal policy effective immediately and that inspectors have until October 15th to sign new duty agreements. The move comes two months after an attempt by DCA to have athletic inspectors sign Voluntary Service Agreements, which are coercive contracts of adhesion.

Internal reaction to the memo, amongst those who work for the athletic commission, has been very bitter. The new policy will decrease the number of qualified athletic inspectors available to work events throughout the state. However, the inspectors that will stick around are much more likely to be politically pliable and adhere to management’s situational ethics. It is our interpretation that Che Guevara will be able to gain even more control over the behavior of inspectors working for CSAC. It means that inspectors like Anthony Olivas, who oversaw the debacle involving deadbeat promoters stiffing fighters on their purses in Oxnard, will be in positions of power and will ensure that Guevara maintains his political power in Sacramento. Inspectors like Olivas will be full-fledged emasculated political puppets.

For Kathi Burns, the memo is her parting shot as she leaves DCA for the California Highway Patrol. As a life long bean-counter, Burns telling inspectors that she is eliminating time-and-a-half pay along with reimbursement for travel expenses initially means that the CSAC balance sheet will look better — regardless as to whether or not the new policy is legal.

The obvious elephant in the room with this new ‘legal opinion’ is CSAC’s sudden change in behavior. After spending millions of dollars to pay for CSAC-related in-state travel costs & time-and-a-half salaries to inspectors, why does DCA suddenly feel emboldened to flip the switch?

Scenario one: The overpaid, incompetent legal department led by Doreathea Johnson at DCA is so stupid about their knowledge & application of federal & California state law that they cost California taxpayers millions of dollars due to their professional ignorance.

Scenario two: The Department of Consumer Affairs knew the federal FLSA law existed and purposely ignored it, thus giving taxpayer money to athletic inspectors that could be (now) constituted by DCA’s new legal opinion as illegal gifts and/or bribes to state employees.

Scenario three: The Department of Consumer Affairs legal department knows that California labor laws trump the federal FLSA law. They followed California law… until it suddenly cost them too much money, resulting in DCA getting an ‘outside’ legal opinion telling them to ignore state labor law and to sell the claim that FLSA trumps state law because, hey, it’s federal law and not state law.

So, what does the new ‘legal policy’ look like? Here’s a look at the internal memo with the new legal opinion, the law that this new legal opinion is based on, and what the fallout will be from this new (and drastic) action by the Department of Consumer Affairs.

DCA’s new legal opinion & the Fair Labor Standards Act

For the sake of visual cues, we will use green as the color of the internal memo text and blue as the color for the FLSA text.

In the opening section of the memo sent out to everyone at CSAC on Tuesday, an admission is made that the “3 inspector policy” per show has been nothing short of nightmarish.

In response to the fiscal situation at the Athletic Commission, DCA requested a Legal Opinion from the California Department of Human Resources (CalHR) on matters affecting compensation. In accordance with that Legal Opinion, this memo is to notify all Athletic Inspectors of changes regarding the following:

1) Rate of pay
2) Working (paid) hours

As a result of these changes, which will become effective immediately, the Athletic Commission will be able to make more effective and efficient assignments with respect to the number of Athletic Inspectors for each event, thereby achieving more effectual regulation of each event.

It should be noted that the new tactic from DCA for slightly increasing the amount of inspectors at events is theoretically accomplished by dividing the amount of money currently being spent on the athletic inspectors. In other words, put the squeeze on the current athletic inspectors in order to marginally increase the number of inspectors per show. It fits right in with the current theme of DCA being penny-wise, pound-foolish and their obsession of nickel-and-diming everything in their path. The end result is that inspectors who are qualified to do the job will work less shows or just give up their jobs entirely, thus resulting in less-experienced & less-qualified inspectors taking over positions of authority.

As you read the (new) legal opinion stated in the memo, take note that the opinion is based strictly on the letter of the law & not case law. You will not see FLSA law citations anywhere in the memo. There are no case law citations to back up the legal opinion’s assertions. The memo is poorly-written — written in a manner where you can see the legal ‘buzzwords’ from FLSA, just not stated with a level of good clarity.

It is important to note that case law isn’t cited in the legal opinion. Case law citations tell you how judges in previous court cases have interpreted the law.

1) Rate of Pay

When an Athletic Inspector has a primary job or multiple jobs in a different capacity with the State, the Athletic Inspector is NOT entitled to premium (time and a half) overtime compensation for hours when working as an Athletic Inspector. Why? The work performed by an Athletic Inspector is at his or her own option; it is in a different capacity than the Athletic Inspector’s primary position and the work is occasional and sporadic, as defined by the Fair Labor Standards Act (FLSA).

The legal opinion doesn’t cite which part of FLSA they are referring to. You have to read the text of the bill to try to figure out what they are referring to. FLSA, which is federal law, has the following section:

(p) Special detail work for fire protection and law enforcement employees; occasional or sporadic employment; substitution

(2) If an employee of a public agency which is a State, political subdivision of a State, or an interstate governmental agency undertakes, on an occasional or sporadic basis and solely at the employee’s option, part-time employment for the public agency which is in a different capacity from any capacity in which the employee is regularly employed with the public agency, the hours such employee was employed in performing the different employment shall be excluded by the public agency in the calculation of the hours for which the employee is entitled to overtime compensation under this section.

The Department of Consumer Affairs has paid full-time state employees time-and-a-half for years because they believed this was the correct legal opinion. Suddenly, they have changed their tune and dramatically so. How can the legal department at Consumer Affairs legally justify their new behavior based on their past behavior? Either they have to admit they are too stupid to do their jobs right or else they were not following the law and giving illegal gifts/contributions to state workers. Which is it?

While the issue of paying time-and-a-half to current full-time state employees is a hot potato, the issue that is raising much more anger internally at CSAC is the new legal opinion about athletic inspectors (considered intermittent state employees in the state’s Government code) no longer being able to get reimbursed for travel expenses.

2) Working (paid) Hours

Athletic Inspectors are NOT entitled to pay for the time it takes to drive to and from events. (See exception below) Why? Events are located throughout the state and necessarily cover a wide geographic area. The commute distance is a reasonable expectation of the inspectors’ employment and is therefore considered routine. Such home-to-work travel that is contemplated and a normal incident of employment is not compensable under FLSA.

When we originally started covering the budget mess for the athletic commission, what we noticed about in-state travel costs was that the problems didn’t revolve around actually reimbursing inspectors for their costs. The issues as to why in-state travel costs exploded dealt with the CSAC front office assigning certain individuals to travel long distances across the state and bill the state for lodging, rental cars, and airplane tickets. Athletic inspectors driving from Sacramento to Fresno in their own car to go to a show didn’t bust CSAC’s budget. What busted the budget was the front office sending a bunch of people from Sacramento down to Los Angeles for a big show and vice versa.

The issue of in-state travel costs ballooning falls squarely on the front office and their inability to complete any sort of administrative task with a high level of efficiency. As a result of their incompetence, the Department of Consumer Affairs is now going after the athletic inspectors instead of going after the front office that has created the chaos we are currently witnessing. California’s athletic commission is a laughing stock in America.

As you can see in the CalHR legal opinion, there is no case law citation to back up the claims made in the opinion nor does the opinion actually cite the specific section of the FLSA they are drawing their conclusions from. On our own accord, we read the Fair Labor Standards Act bill and figured out what section of the law this new legal opinion CalHR is basing their claims on. An amendment to the FLSA called the 1947 Portal-to-Portal Act states the following:

-STATUTE-

(a) Activities not compensable

Except as provided in subsection (b) of this section, no employer shall be subject to any liability or punishment under the Fair Labor Standards Act of 1938, as amended [29 U.S.C. 201 et seq.], the Walsh-Healey Act, or the Bacon-Davis Act,(!1) on account of the failure of such employer to pay an employee minimum wages, or to pay an employee overtime compensation, for or on account of any of the following activities of such employee engaged in on or after May 14, 1947 –

(1) walking, riding, or traveling to and from the actual place of performance of the principal activity or activities which such employee is employed to perform, and

(2) activities which are preliminary to or postliminary to said principal activity or activities, which occur either prior to the time on any particular workday at which such employee commences, or subsequent to the time on any particular workday at which he ceases, such principal activity or activities.

The CalHR legal opinion obtained by DCA is careful to stick to interpreting federal law and not addressing California labor law. There’s an important reason & motive behind this.

California’s Department of Industrial Relations (DIR) web site published the following citation of their own opinion letter in the 2002 Division of Labor Standards Enforcement Policies and Interpretations Manual. Page 175:

46.3 – Extended Travel Time. The California rule requires wages to be paid for all hours the employee is engaged in travel. The state law definition of “hours worked” does not distinguish between hours worked during “normal” working hours or hours worked outside “normal” working hours, nor does it distinguish between hours worked in connection with an overnight out-of-town assignment or hours worked in connection with a one-day out-of-town assignment. These distinctions, and the treatment of some of this time as non-compensable, are purely creatures of the federal regulations, and are inconsistent with state law. (O.L. 2002.02.21).

The DLSE opinion letter states that California labor laws, which grant additional protections to employees, supersedes the FLSA law. They base this opinion on… case law.

“State wage and hour law differs in many respects from federal law, including in the extent to which various activities are treated as “hours worked” under state law, or as compensable worktime under federal law. The federal FLSA provides the floor below which no employer may go, but when California law provides greater protections to employees, the more protective provisions of California law will apply.

Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575; See also Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785. Every one of the industrial and occupational orders adopted by the California Industrial Welfare Commission (IWC) defines “hours worked” to include “the time during which an employee is subject to the control of an employer” and “all the time the employee is suffered or permitted to work, whether or not required to do so.”

As the California Supreme Court held in Morillion, compulsory travel time constitutes time during which the employee is “subject to the control of an employer” and thus constitutes compensable “hours worked,” whether or not the employees are free to read a newspaper or engage in other personal pursuits while riding in a bus as passengers.

And as the Supreme Court observed in both Ramirez and Morillion, federal regulations which have no counterpart in state law, and which would have the effect of undercutting protections provided by state law to employees, do not apply and will not be used to interpret state law.”

The legal opinion given to DCA by CalHR is careful not to address any sort of California labor laws — and the DLSE opinion letter cited above gives you an answer as to why DCA didn’t address it.

The key buzzword in the DCA memo touting CalHR’s legal opinion is ‘reasonable.’ The CalHR legal opinion takes it a step further by stating that any and all travel by athletic inspectors throughout the state is ‘reasonable’ and that there’s no room for exceptions if you are not a lead inspector. Of course, they do not cite any case law or opinion letters by DLSE to back this legal opinion.

In addition to the DLSE opinion letter, the federal Portal-to-Portal Act contains this caveat:

Notwithstanding the provisions of subsection (a) of this section which relieve an employer from liability and punishment with respect to any activity, the employer shall not be so relieved if such activity is compensable by either:

(1) an express provision of a written or nonwritten contract in effect, at the time of such activity, between such employee, his agent, or collective-bargaining representative and his employer; or

(2) a custom or practice in effect, at the time of such activity, at the establishment or other place where such employee is employed, covering such activity, not inconsistent with a written or nonwritten contract, in effect at the time of such activity, between such employee, his agent, or collective-bargaining representative and his employer.

Given that athletic inspectors are considered intermittent state employees & California is one of the strongest states in America when it comes to labor law, you can definitely see where there is room for interpretation for a legal fight by the athletic inspectors against Consumer Affairs.

I cannot stress highly enough how the legal opinion from CalHR to DCA does not cite case law. I realize that you can never underestimate the stupidity of DCA’s legal department, but if they were so confident in their new legal opinion wouldn’t you think they would hammer it home by pointing of examples of where the law applies and how they are in the clear there by changing their tune?

Divide & conqueror strategy

After claiming in the new legal opinion that they can stop paying full-time state employees time-and-a-half and no longer reimburse travel expenses, the legal opinion contains a very curious and poorly written exception:

Exception: in accordance to the FLSA, Continuous Workday Doctrine, Lead Athletic Inspectors (Event Leads) are entitled to travel time compensation when performing substantive work at their homes before or after weigh-ins and events. It is the policy of the CSAC that for weigh ins, pre-weigh in work shall be performed at the weigh in site. Accordingly, the Event Lead shall not be compensated for commute time to or from the weigh-in. For events, pre-event work may be performed at the home of the Event Lead if it is not feasible to perform the work at the event site. Where substantive work is performed at the home of the Event Lead prior to the event, the Event Lead shall be entitled to travel time compensation. However, pre-event work should be performed the day before the event, at the weigh in or the day of the event at the event site, whenever possible. Post-event work should occur at the event site or at the home of the Event Lead the day after the event. Event Leads are not entitled to travel time returning to home, as the post-event duties are not integral or indispensible to the Lead inspector’s duties as such duties may be performed at home the next day or by office staff.

What’s most interesting about this claim is not so much the interpretation of the law but what the net effect of it will be. Anyone who has followed our investigation into CSAC understands what kind of political animals we are dealing with here. By having this exception in the legal opinion, it allows Che Guevara to play favorites with athletic inspectors he likes and thinks he can control. Want to have some power as an athletic inspector? Play by his rules and maybe you’ll be appointed as a lead inspector so you can get your travel costs covered. Want to speak up and tell truth to power while being a lead inspector? Well, it would be a shame if we couldn’t pay for your travel costs in the future, wouldn’t it?

See what kind of game is ready to be played here?

Earlier in the memo, we cited a deadline DCA issued to the inspectors of October 15th to sign duty agreements in order to continue getting booked to work shows. Let’s take a look at that deadline notice and combine it with the memo’s closing:

As a result of these changes, which will become effective immediately, the Athletic Commission will be able to make more effective and efficient assignments with respect to the number of Athletic Inspectors for each event, thereby achieving more effectual regulation of each event.

New duty statements for Athletic Inspector and Event Lead are attached and must be signed and returned to the CSAC office by October 15, 2012. If you serve as both an Athletic Inspector and an Event Lead, please sign and return both statements.

There are two important factors to focus on here. First, the memo claims the new legal opinion & policy is effective immediately. Second, the memo instructs athletic inspectors to sign the duty agreements by October 15th (less than two weeks notice). Unlike a private business telling an employee to take-it-or-leave-it, we have the state of California pressuring state employees to accept new terms & conditions for employment on short notice. In my opinion, this is a classic case of a coercive contract of adhesion. A contract of adhesion simply means one party has such a large disparity in bargaining power, which in this case is entirely true. A state government versus an employee is a perfect example of a wide disparity in bargaining power. The memo tells the inspectors to sign the duty agreements by October 15th and says the new ‘legal opinion’ is being implemented immediately. You can only come to a natural conclusion from the memo that if you, as an inspector, don’t go along with the program that you won’t get booked to work shows regulated by the commission.

What the new legal opinion means for future fight regulation in California

The Department of Consumer Affairs, in their attempt to pinch pennies, is fostering a climate for more lawsuits from athletic inspectors. DCA is increasing their liability risk by forcing out (otherwise) qualified inspectors in exchange for inspectors who will work on the cheap, regardless if they are qualified (or not) to do the job. Blatant negligence.

I guess Che Guevara would rather worry about an inspector costing the state a few bucks in travel expenses as opposed to using inspectors who can’t manage a box office and end up costing the state of California up to 7-figures over a period of time in lost revenue. Che would rather have an inspector who he can control as his puppet, just like DCA controls Che as their top puppet right now.

I expect the remaining competent inspectors at CSAC to quit and get replaced by fresh-faced political hacks who don’t know how to do the job properly. After all, it’s only a matter of life and death what happens inside a ring or cage for fighters. For Che Guevara, having incompetent inspectors who don’t know what they are doing (as opposed to competent inspectors he may not have as much control over) is a feature and not a bug.

Topics: Boxing, CSAC, MMA, Media, Zach Arnold | 8 Comments » | Permalink | Trackback |

8 Responses to “Legal policy changes at the California State Athletic Commission ignite an internal uproar”

  1. [...] More Trouble with the CSAC (FightOpinion.com) [...]

  2. Jason Harris says:

    When this whole ordeal started you were doing an expose into how much money they were wasting paying inspectors, and now this piece is taking the opposite stance of your earlier stuff.

    At this point we get it, there’s an employee with an axe to grind in CSAC, but isn’t it time to exercise some editing? Not every bit of office drama in the CSAC needs to be explained in excruciating detail.

    • Zach Arnold says:

      There is no “one employee” with an axe to grind. You can join Alan and company on their side, which I’m OK with as long as you are prepared to make any needed admissions in the future.

      What’s happening now is a (slow) disintegration of the commission and there are victims out there (not disgruntled employees) who had nothing to do with the commission’s business practices but ended up getting caught in their web of incompetence.

      Just because I write about history doesn’t mean I get to dictate it. I have a suspicion of what the final chapters may be, but the path of getting there? Couldn’t tell you any predictions. Impossible.

      You call the amount of detail excruciating. I call it proper documentation. When you’re writing on a topic like this, you have to be careful — and also be right. You can’t make the claims that I’m making and be unprepared if they are placed under scrutiny. All my ducks have to be in a row here.

      If it means more words, then that’s baked into the cake.

      • Jason Harris says:

        Meanwhile, UFC, OneFC and Invicta are all running cards this weekend and they are getting almost no coverage here.

        The rest of the site is suffering while you dig into the office politics of the CSAC. What started as MMA related has veered wayyyy off the scale. This is beyond inside….honestly if I’m not directly working in this office, why does this effect me at all? We get it, CSAC is in turmoil. There is a lot of other stuff happening in the MMA world that you aren’t covering while writing dozens of these articles.

        Didn’t you used to be the go to guy on the Asian MMA scene? Now OneFC has a show coming up and you haven’t said much of anything about it.

      • Jason Harris says:

        And to add, are there even any MMA shows outside of the smallest of the small?

        California is big, but the majority of the regional players here don’t even bother with the CSAC. King of the Cage, Gladiator Challenge and Tachi Palace Fights run at indian casinos.

        Pretty much unless UFC or Strikeforce decides to run shows in LA or San Jose, this has even less relevance to MMA….and nothing in the announced future is being run in CA by any of the big orgs.

  3. [...] employees who work as athletic inspectors are not entitled to time-and-a-half overtime pay rates. They even developed a phony legal memo touting this new stance… despite the fact that any armchair lawyer could immediately trounce [...]

  4. [...] letters of confiscation given to 18 CSAC athletic inspectors last month are based on a trumped up legal opinion crafted by Cal HR (California Human Resources) and given to the Department of Consumer Affairs. The phony legal opinion touted by DCA is a [...]

  5. [...] October, I wrote an extensive article regarding a U-turn from the Department of Consumer Affairs regarding the way they pay athletic inspectors. When DCA [...]

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