Lawyer Says Perkins Coie Makes the Staff Bear Its Costs

SAN FRANCISCO (CN) - International law firm Perkins Coie docks paychecks for costs that employers are required to bear, such as workers' compensation and "accounting fees," a federal class claims.

Lead plaintiff Harold DeGraff says he joined the firm's Menlo Park, Calif., office as a transactional corporate attorney in 2007. Headquartered in Seattle, Perkins Coie employs more than 850 attorneys across the United States and Asia.

"Throughout Mr. DeGraff's employment at the California PC, Perkins Coie made deductions from Mr. DeGraff's wages," according to the complaint. "These deductions were made without Mr. DeGraff's authorization or consent, and resulted in a reduction of compensation to Mr. DeGraff.

"Perkins Coie regularly assessed Mr. DeGraff for Workers' Compensation Insurance. This is a business expense to be borne by the employer. These amounts were withheld by Perkins Coie from Mr. DeGraff's wages."

But Perkins Coie says DeGraff "has no legitimate basis for complaint" as a former voting equity partner.

"How our firm pays our partners is described in detail in the offer letter DeGraff signed, as well as in our firm manuals, and discussed at partner meetings," the firm said in a statement. "DeGraff was paid the same way as every other similar partner and had no complaint while he was with us. We intend to rigorously and successfully defend ourselves against these baseless claims."

DeGraff's complaint names other business-borne costs that Perkins Coie allegedly passed on to him: unemployment insurance, Medicare costs and Social Security costs.

"[These] are a business expense to be borne by the employer," DeGraff, a San Carlos resident, claims. "These amounts were withheld by Perkins Coie from Mr. DeGraff's wages."

Some of the deductions were more nebulous, he added.

"Perkins Coie regularly assessed Mr. DeGraff for 'accounting fees.' ... Perkins Coie made annual deductions from Mr. DeGraff's wages characterized as a 'shareholder loan,'" according to the complaint. "In 2007, $2,511 was deducted from Mr. DeGraff's wages. In 2008, $11,803 was deducted from Mr. DeGraff's wages. ... Perkins Coie also made deductions for state and federal income tax related to the 'shareholder loan.'"

DeGraff also claims that he had to foot the company's portion of his retirement plan.

"Perkins Coie made annual deductions that were characterized as 'Mandatory Retirement,'" the suit states. "In 2008, $20,297 was withheld as a deduction from Mr. DeGraff's wages. In 2009, $25,150 was deducted from Mr. DeGraff's wages.

"Perkins Coie made annual deductions that were characterized as the 401(k) employer matching contribution. This is a business expense to be borne by the employer. These amounts were withheld by Perkins Coie from Mr. DeGraff's wages.

"Perkins Coie made annual deductions that were characterized as 'Cash Balance Retirement Plan.' In 2008, $1,000 was withheld as a deduction from Mr. DeGraff's wages. In 2009, $859 was withheld as a deduction from Mr. DeGraff's wages."

DeGraff claims Perkins Coie also forced his $1,500 annual contribution to the "PC Charity Fund," again withholding these amounts from his paycheck.

"Perkins Coie also regularly assessed business expenses such as travel to Mr. DeGraff," according to the complaint. "These amounts were withheld by Perkins Coie from Mr. DeGraff's wages. In addition, Mr. DeGraff advanced business expenses for which he was not reimbursed by Perkins Coie.

"Due to Perkins Coie's practices of deducting from Mr. DeGraff's wages and failing to reimburse Mr. DeGraff for reasonable and necessary business expenses, Mr. DeGraff's guaranteed compensation was unlawfully reduced. Perkins Coie did not provide Mr. DeGraff with accurate wage statements that indicated the amount of his gross pay, net pay or deductions.

"These practices have been uniformly applied to dozens of attorneys classified as W-2 employees at Perkins Coie offices throughout California."

Although California Labor Code prohibits these deductions, "defendants have had a policy and practice of deducting amounts from the pay of plaintiff and class members for employer expenses including but not limited to Workers' Compensation Insurance, unemployment insurance, Medicare, Social Security, federal and state taxes, accounting fees, shareholder loans, unauthorized retirement contributions, unauthorized charitable contributions and business travel expenses," DeGraff says.

The firm also failed to indemnify employees for expenses, and it did not provide accurate and itemized wage statements in violation of California labor laws, according to the complaint.

The class seeks restitution, waiting time penalties, an injunction and damages.

It is represented by Monique Olivier with Duckworth Peters Lebowitz Olivier.

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