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.
The Ninth Circuit clarifies the requirements for standing in FCRA cases: Spokeo 2
On August 15, 2017, after remand from the U.S. Supreme Court, the Ninth Circuit issued a second opinion in the case of Robins v. Spokeo, case no. 2:10-cv-05306-ODW-AGR (Spokeo II). Spokeo II clarifies the requirements for standing under the Fair Credit Report Act (“FCRA”). At the same time, it leaves open two critical questions that will need to be resolved by future litigation. (more…)
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
On-Call Rest Periods Not Permitted in California
California’s Wage Orders provide as follows:
Every employer shall authorize and permit all employees to take rest periods, which insofar as practicable shall be in the middle of each work period. The authorized rest period time shall be based on the total hours worked daily at the rate of ten (10) minutes net rest time per four (4) hours or major fraction thereof. However, a rest period need not be authorized for empl
oyees whose total daily work time is less than three and one-half (31/2) hours. Authorized rest period time shall be counted as hours worked for which there shall be no deduction from wages.
The Wage Orders require employers to pay the employee for one (1) hour of pay at the employee’s regular rate of compensation for each workday that the rest period is not provided and for an additional hour of pay at the employee’s regular rate of compensation for each workday that a meal period is not provided. See also California Labor Code Section 226.7.
In a recent case addressing an employer’s obligation to relieve its employees of all duties during a rest period, the California Supreme Court held that “employers must relieve their employees of all duties and relinquish any control over how employees spend their break time.” Augustus v. ABM Sec. Servs., Inc. (Mar. 15, 2017) 2 Cal.5th 257, 260. The Court clarified that an employers’ obligation to relieve an employee of all duties applied not only to meal periods, but also to rest periods. Id. at 265. (more…)
Injunctive Relief and Arbitration Agreements in California
What is injunctive relief?
Arbitration agreements cannot ban injunctive relief in California. Many California laws provide for injunctive relief, such as a court order prohibiting the defendant from continuing to engage in the acts of practices that gave rise to the lawsuit.
Injunctive relief is both critical and powerful. In some cases it prevents defendants from getting away with a slap on the wrist. It also allows courts to stop defendants from engaging in illegal conduct now and into the future.
Can arbitration agreements ban injunctive relief in California?
In recent years, however, many companies have implemented arbitration agreements that bar anyone who sues them from seeking injunctive relief. Some of these agreements go so far as to prevent people from seeking injunctive relief in any forum, including court. The California Supreme Court recently reviewed such agreements, and held that provisions in arbitration agreements that waive the right to seek public injunctive relief in any forum are contrary to public policy and unenforceable. This ruling should allow workers who are forced into arbitration to at least be able to pursue their claims for injunctive relief.
One example of injunctive relief is the unfair competition law, Business & Professions Code § 17200 et seq, which is referred to as the UCL. In the employment law context, workers sometimes bring claims under the UCL in part because it has a longer statute of limitations (4 years) than many wage and hour laws.
The UCL provides that an injured person can seek an order preventing future conduct:
Any person who engages, has engaged, or proposes to engage in unfair competition may be enjoined in any court of competent jurisdiction. The court may make such orders or judgments…as may be necessary to prevent the use or employment by any person of any practice which constitutes unfair competition, as defined in this chapter, or as may be necessary to restore any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition. (Bus. & Prof Code, § 17203.)
PAGA and Arbitration: The Growing Conflict between State and Federal Court
In earlier posts, we have explored the question of whether arbitration agreements that are broad enough to include claims under California’s Private Attorneys General Act (Labor Code section 2698), or PAGA, should be enforced. As of March 2017 there is a growing split between state and federal courts on this issue. As a result, which court a case winds up in may very well determine how the court rules on this critical question. (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…)
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.