Wage Statements and PAGA: Penalties under Labor Code 226.3
California Labor Code section 226(a) requires that employers provide accurate, itemized wage statements to employees. Those statements must include nine categories of information. Labor Code section 226(e)(1) provides that an employee who suffers injury as a result of a knowing and intentional failure to comply with subdivision (a) is liable for up to $4,000 plus costs and reasonable attorney’s fees. (The terms injury and knowing and intentional failure are further defined in section 226(e)(2)).
Litigants have grappled for years over the question of whether the injury and knowing/intentional failure requirements of section 226(e) apply to a plaintiff who sues under the Private Attorneys General Act (“PAGA”) seeking civil penalties for a violation of section 226(a). (more…)
California Labor Code 558 and PAGA: Recovering Wages
What penalties do employers face for underpayment of employees?
California Labor Code Section 558 outlines penalties employers face for underpayment of employees.
The relevant language from section 558 is as follows:
(a) Any employer or other person acting on behalf of an employer who violates, or causes to be violated, a section of this chapter or any provision regulating hours and days of work in any order of the Industrial Welfare Commission shall be subject to a civil penalty as follows:
(1) For any initial violation, fifty dollars ($50) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages.
(2) For each subsequent violation, one hundred dollars ($100) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages.
(3) Wages recovered pursuant to this section shall be paid to the affected employee.
Recovery of Lost Wages and Civil Penalties through PAGA
Through the Private Attorneys General Act, or PAGA, workers are able to recover civil penalties that otherwise would only be recoverable by the State of California, including the civil penalties described in Labor Code section 558. Section 558 is unusual because, through PAGA, it provides that workers can recover both flat rate penalties and penalties equal to their underpaid wages. And unlike other PAGA penalties, of which 75 percent go to the State and 25 percent go to the workers, the underpaid wages recovered under section 558 all go directly to the workers.
Workers have relied on Section 558 to bring representative actions under PAGA to recover unpaid wages on behalf of themselves and their co-workers.
See, e.g., Thurman v. Bayshore Transit Mgmt., Inc. (2012) 203 Cal.App.4th 1112, 1148 (underpaid wages can be recovered under section 558 “as part of a civil penalty for Labor Code and IWC order violations that result in underpayment of wages.”) Significantly, pursuant to the holding in Iskanian v. CLS Transportation Los Angeles (2014) 59 Cal.4th 348, the right to collective action to enforce Labor Code section 558 survives even if the workers have signed an arbitration agreement banning such actions.
Recent Changes in Interpretation of California Labor Code section 558
Unfortunately, a recent decision of California’s Fifth Appellate District misinterprets section 558 in a confusing and potentially harmful manner. In Esparza v. KS Industries, Inc., No. F072597 (August 2, 2017), the court ignored the plain language of section 558 in holding that an attempt to recover wages under section 558 is a “private dispute.” As such, preventing arbitration of a claim for unpaid wages under section 558 would interfere with the Federal Arbitration Act.
All of that is a long way of saying that if workers bring PAGA claims under both section 558 and other Labor Code sections, and they have signed an arbitration agreement, Esparza will require them to arbitrate their section 558 claims, but leave them free to sue in court for the other claims.
Esparza is misguided for a number of reasons. First, Iskanian did not hold that PAGA claims cannot be arbitrated. Rather, it holds that waivers or representative claims under PAGA are contrary to public policy and not enforceable under state law. 59 Cal.4th at 384.
Second, the plain language of section 558, quoted above, states that civil penalties under that section include “an amount sufficient to recover underpaid wages.” The Thurman court recognized this. 203 Cal.App.4th at 1148. But Esparza ignores this language and creates a false distinction between the two types of civil penalties available under section 558 (the flat rate penalties of $50 or $100 per violation and the separate penalty equal to the underpaid wages).
Last, Esparza creates from whole cloth a new rule that PAGA representative claims for civil penalties are limited to those where a portion of the recovery is allocated to the State. In applying this rule, which has no support, the court ignores the fact that a portion of the civil penalties under section 558 is allocated to the State: the 75 percent of the flat rate penalty. Thus, Esparza misapplies the very rule that it creates.
Esparza does not directly address the next logical question, which is whether an arbitration agreement that bans representative actions would be enforceable as to claims for underpaid wages under section 558, but not as to claims for other penalties under that same section. That critical issue will have to wait for another day. For now, we can hope that the California Supreme Court will grant review and depublish Esparza before it causes too much confusion.
If you have a question about whether you are owed wages, feel free to contact Hunter Pyle Law and utilize our free, confidential intake process. We can be reached at (510) 444-4400 or at inquire@hunterpylelaw.com.
Ninth Circuit Issues Decision Regarding Employee’s Retaliation Claim Against Employer’s Attorney
In Arias v. Raimondo, Plaintiff Jose Anrulfo Arias filed suit against his employer’s attorney, Anthony Raimondo, for retaliation after Raimondo tried to have Arias taken into custody by U.S. Immigration and Customs Enforcement (“ICE”) during a deposition. Arias v. Raimondo, No. 15-16120 (June 22, 2017). Raimondo was representing Angelo Dairy in a lawsuit that Arias had filed in 2006 alleging various wage and hour violations. In an attempt to derail this lawsuit, Raimondo provided ICE with information helpful in determining Arias’ legal status in the United States, and offered to “make the necessary arrangements” to assist ICE in apprehending Arias just ten weeks before trial. When Arias discovered what Raimondo had done, he settled his wage and hour claims out of fear that he might be deported. Then, Arias filed suit against Raimondo for retaliation in violation of the the Fair Labor Standards Act (“FLSA”) under the theory that Raimondo was acting as Angelo Dairy’s agent when he retaliated against Arias. 
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SLAPP Motions and Discrimination Claims: The California Supreme Court Limits Defendants’ Ability To Attack FEHA Cases
California has a powerful statute that is aimed at protecting our right to engage in free speech. Known as the SLAPP law, Code of Civil Procedure section 425.16 allows people who are sued for engaging in free speech to bring a motion dismiss the lawsuit that has been filed against them. In order to prevail on such a motion, the defendant in such a lawsuit must show that the claims at issue arise from protected activity. If the defendant makes that showing, the plaintiff must then prove that the claims have some degree of merit.
In recent years, public entities have begun to rely on the SLAPP law to challenge lawsuits claiming discrimination or retaliation under California’s Fair Employment and Housing Act (FEHA). For example, in Nesson v. Northern Inyo County Local Hospital Dist. (2012) 204 Cal.App.4th 65, a hospital brought a SLAPP motion in a case in which a doctor claims to have been discriminated and retaliated against. The Nesson court held that the hospital’s peer review proceedings were official proceedings. Therefore, decisions that resulted from those proceedings were protected by the SLAPP law. See also DeCambre v. Rady Children’s Hospital-San Diego (2015) 235 Cal.App.4th 1, 22.
However, on May 4, 2017, the California Supreme Court recently limited employers’ ability to rely upon the SLAPP law in discrimination cases. In Park v. Board of Trustees of the California State University (2017) S229728 the Court held that a claim for national original discrimination under the FEHA did not arise from protected activity. Therefore, it was not subject to the SLAPP law.
The plaintiff in Park sued after he was denied tenure at California State University, Los Angeles. The University then moved to dismiss Park’s claim on the grounds that it arose from the decision to deny tenure and the communications that led up to that decision. As such, the University claimed that Park’s lawsuit arose from protected activity.
The Court rejected the University’s argument. The Court reasoned that the basis of Park’s claim was the decision to deny Park tenure. The decision to deny tenure may have been communicated either verbally or in writing, but that did not convert the lawsuit into one arising from the exercise of free speech. Similarly, Park might rely upon certain comments that were made about him to show discriminatory animus. But that did not convert his case into one that arose from protected speech.
The Court also limited the scope of an earlier decision, Kibler v. Northern Inyo County Local Hospital Distr. (2006) 39 Cal.4th 192. The Court clarified that its holding in Kibler was only that hospital peer review proceedings could be (not that they always were) official proceedings for the purposes of the SLAPP law.
Interestingly, the Court did not address an issue that arose in an earlier case called Hunter v. CBS Broadcasting Inc. (2013) 221 Cal.App.4th 1510. In Hunter, the court of appeal found that a defendant news media organiation’s refusal to hire a particular person as a weather news anchor was in furtherance of protected speech. The defendant in Park tried to rely upon a similar argument, however the Court found that it had not developed that argument sufficiently.
If you have been discriminated against or retaliated against at work, feel free to contact the attorneys at Hunter Pyle Law for a free initial intake. We can be reached at (510) 444-4400 or at inquire@hunterpylelaw.com
The Ninth Circuit Examines Whether Prior Salary Can Justify Wage Discrepancies Under the Equal Pay Act
The Equal Pay Act prohibits employers from paying men and women differently for equal work. However, is it unlawful for an employer to have a policy that offers its new hires a salary that is five percent higher than their previous salary if the policy results in a female worker getting paid less than all her male colleagues?
In a 1982 decision, Kouba v. Allstate Insurance, the Ninth Circuit held that an employer can take prior salary into account when deciding an employee’s pay rate if the prior salary effectuated a business policy and was reasonable. 691 F.2d 873 (9th Cir. 1982). In a decision last month, the Ninth Circuit provided further guidance on the extent to which employers can rely on prior salary in determining its employees’ pay. Rizo v. Yovino, No. 16-15372 (April 27, 2017). (more…)
No Arbitration of PAGA Claims
PAGA continues to be an important tool for workers in California seeking to enforce their rights under the Labor Code. Employers continue to try to force PAGA claims into arbitration, where they think that they have a decisive advantage. Yet courts continue to block these efforts. As a result, PAGA claims remain in court where they belong.
The latest case to hold that PAGA claims cannot be arbitrated is Hernandez v. Ross Stores, Inc. (2d DCA Pub. Order 1/3/17) E064026. There, the plaintiff, a warehouse worker, sought to bring a PAGA-only action against the discount store giant for failure to pay wages, failure to properly itemize hours, and failure to pay overtime. Ross attempted to compel Hernandez to arbitrate her individual claims, arguing that its arbitration agreement stated that it applied to “any disputes arising out of or relating to the employment relationship” between Ross and an employee. Ross contended, based upon this language, that before Hernandez could bring a PAGA action, she had to arbitrate the “dispute” over whether she was an aggrieved employee.
Not surprisingly, this too-clever-by-half argument failed. Both the trial court and Division Two of the Second District Court of Appeal held that Hernandez could not be compelled to arbitrate her PAGA claims. The trial court grounded its analysis in the seminal case of Iskanian v. CLS Transportation (2014) 59 Cal.4th 348, which held that PAGA actions-whether seeking penalties for one employee or for a group of them-are fundamentally law enforcement actions designed to protect the public. In PAGA cases, there are therefore no individual claims to arbitrate. (more…)
Rest Period Pay and Overtime Premiums for Piece-Rate Workers
A complicated and developing area of California wage and hour law involves how to calculate wages and premium pay for piece-rate workers. In this post, we will explain the calculations for rest period wages and overtime premiums for piece-rate workers.
Many California workers are compensated on what is known as a “piece-rate” basis. Piece-rate means that a worker’s pay is based on a specific amount paid for completing a particular task or making a particular piece of goods. This could include truck drivers who are paid based on the number or type of loads delivered, factory workers who are paid based on the number of widgets completed, or construction workers, such as plumbers or electricians, who are paid based on the number of installations they do.
Even though piece-rate workers are not paid by the hour, they are still entitled to the protections provided by the California Labor Code. These protections include overtime premium pay for more than eight hours of work in a day or 40 hours in a week, meal periods before the end of fifth hour of work, separate compensation for required rest periods, and wage statements showing, among other things, the number of pieces completed, the applicable piece rates, and overtime and rest period pay.
But if someone is paid by the piece, how is their hourly wage calculated for the purpose of determining the amount of wages for paid rest periods and overtime premiums?
No On Call or On-Duty Rest Periods in California
On December 22, 2016, the California Supreme issued a blockbuster opinion in the case of Augustus v. ABM Security Services, Inc. (S224853). As described more fully below, the Court held that California law prohibits both “on call” and “on duty” rest periods. On call rest periods are those in which an employee is available by phone or by radio. On duty rest periods are those in which the employees continue to perform some job duties. For example, the plaintiffs in Augustus claimed that:
ABM required guards to keep their radios and pagers on, remain vigilant, and respond when needs arose, such as escorting tenants to parking lots, notifying building managers of mechanical problems, and responding to emergency situations.
The holding in Augustus means that employers must relieve their workers of all duties, and relinquish all control over them during their breaks. As such, Augustus is consistent with the seminal case of Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004. Like Brinker, Augustus is a huge win for workers.
Penalties for Late Payment of Wages under California Labor Code 204
How soon after payroll period are employers required to pay employees?
Employers in California have to pay their employees by a certain date. That date depends on whether the payments are made every two weeks (bi-weekly), twice a month (bi-monthly), or otherwise. If an employer does not make its payments on time, it can face significant liability under the Private Attorneys General Act, as described below. (more…)
Another Win for Workers in the War over Sampling and Damages in Class Actions
As workers have increasingly turned to class actions in order to combat wage theft and other unlawful actions in the workplace, employers have fought back on a number of fronts. Two issues that have gotten a lot of attention lately are (1) the use of sampling and (2) the role of individualized damages.
How courts rule on the issue of sampling is important because it is often an effective way for workers to manage issues that arise in the class context. How courts rule on the issue of individualized damages is critical because sometimes employers have unlawful policies or practices, but not all employees are damaged by them. Under those circumstances, should the employees who have been damaged be able to bring a class action to vindicate their rights?
On November 21, 2016, workers in California won a significant victory with respect to both sampling and damages. In Lubin v. Wackenhut (Second App. Dist., case no. B344383), the court of appeal reversed an order decertifying the class in a case brought by private security officers. As a result, those workers will be able to proceed to trial and to bring their claims on a class-wide basis. (more…)