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.

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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…)

California Truck Drivers and Meal Breaks

A company’s failure to provide the meal breaks that are required by law can give rise to PAGA penalties.  In 2012, the California Supreme Court clarified some of the basic rules that apply to meal breaks in the seminal case of Brinker Restautant Corp. v. Superior Court (2012) 53 Cal.4th 1004.  A recent case further clarifies how the rules regarding meal breaks apply to truck drivers in California.

In Driscoll v. Granite Rock Company (6th Appellate District, November 30, 2016, case no. H037662) the defendant was a concrete company that manufactures, delivers, and pours concrete.  The defendant hired mixer drivers to deliver the concrete to customers such as home owners and contractors.

The defendant provided its drivers with a handbook that stated that they had the right to take a 30 minute off-duty meal break during which the drivers were not paid.  The defendant also offered its drivers the opportunity to take an on-duty meal break-in other words, a meal break where the drivers kept working and kept getting paid.  On-duty meal breaks are allowed only:

[W]hen the nature of the work prevents an employee from being relieved of all duty and when by written agreement between the parties an on-the-job paid meal period is agreed to.

Critically, such agreements must be revocable by the employee at any time.  In Driscoll, the court found that the requirement of one day’s notice to revoke an on-duty meal break agreement violated the requirement that employees be able to revoke such an agreement at any time.

However, the court also found that no driver was ever denied an off-duty meal break if he or she requested it.  Additionally, the defendant allowed drivers to revoke their on-duty meal break agreements as long as they gave at least one day’s notice.  If drivers chose not to sign an on-duty meal break agreement, or revoked their agreement, and missed a meal break, they were paid one additional hour of pay.

Based on these facts, the court found that the drivers had failed to prove that the defendant violated the law with respect to meal breaks.  Specifically, the court found that the drivers had not been forced or coerced into signing the on-duty meal period agreements against their will.  The court also found that the defendant had not interfered with the drivers’ ability to take off-duty meal breaks.

After Driscoll, California drivers who are concerned about their meal breaks should ask the following questions:

1. Does your employer have a policy that provides you with a 30 minute, uninterrupted, off-duty meal break if you work more than 5 hours, and a second meal break if you work more than 10 hours?
   • Are you relieved of all duty during such breaks? If not, there may be a violation.
   • Does your employer have control over you during your meal breaks? If so, there may be a violation.

2. Does your employer do anything to interfere with your ability to take your meal breaks?
   • For example, is your schedule too busy to take breaks? If so, there may be a violation.
   • Does your employer discourage you from taking breaks? If so, there may be a violation.

3. Have you signed an agreement to take on-duty meal breaks?
   • Is there something about your industry that prevents you from being able to take off duty meal breaks? If not, there may be a violation.
   • Can you revoke your off-duty meal break agreement at any time? If not, there may be a violation.

4. Are you paid an extra hour of pay when you miss a meal break? If not, there may be a violation.

The Driscoll case also discusses how the practices of a particular industry may impact the legality of an employer’s meal breaks.  In particular, the court found that the nature of the work (pouring concrete) made it more difficult to schedule off-duty meal breaks because freshly batched concrete must be poured within 60 to 90 minutes in order to insure its structural integrity.  This made it reasonable for the defendant to offer on-duty meal breaks to its drivers.

If you have a question about your meal breaks and/or California’s Private Attorneys General Act (“PAGA”), feel free to contact Hunter Pyle Law for a free consultation.  We can be reached at 510.444.4400, or inquire@hunterpylelaw.com.

Can California Employers Combine Rest Breaks into One Break?

One common source of PAGA penalties occurs when employers fail to authorize and permit the rest breaks that are required under California law.   When this happens, workers can recover one hour of pay at their regular hourly rate for each day they are deprived of one or more rest breaks.  They can also seek penalties under PAGA, as well as their attorney’s fees.

A recent decision by the Second District of the California Court of Appeal clarifies the timing of rest breaks, and whether rest breaks can be combined into a single break.  Rodriguez v. E.M.E., Inc. (2016) 246 Cal.App.4th 1027 involved a class action brought by workers who paint metal parts manufactured in machine shops.  The workers worked eight hour shifts, so they were entitled to two ten minute rest breaks.  EME, the employer, required the workers to take their two rest breaks in one combined break that lasted 20 minutes.

The court looked closely at the language of Wage Order No. 1-2001, which provides 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 court also considered the holding in the seminal case of Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004.  There, the California Supreme Court held that employers could deviate from the preferred course of providing rest breaks in the middle of each work period “where practical considerations render in infeasible.”  The Rodriguez court also noted this critical language from Brinker:

As a general matter, one rest break should fall on either side of the meal break.  Shorter or longer shifts and other factors may alter this general rule.

Id. at 1032.

One of the critical questions resolved by Rodriguez is what the phrase “insofar as practicable” means.  The court interpreted that phrase narrowly, holding that an employer could depart from the preferred schedule only where it could meet two requirements:

1. Departing from the preferred schedule of two rest breaks, with one on either side of the meal break, would not unduly affect employee welfare; and
2. The departure is tailored to alleviate a material burden that would otherwise be imposed on the employer.

The court then turned to the evidence submitted by the parties.  If found that a single declaration submitted by the plaintiff was sufficient to defeat the employer’s motion for summary judgment.  This was somewhat surprising, given that the employer had submitted a large amount of evidence in support of its motion.

The court then turned to the question of whether the term “work period” meant the two work periods that fall on either side of the meal break under the preferred schedule, or something else.  The defendant, along with various employer-side legal organizations, argued that the term “work period” means the entire shift, and that an employer’s only obligation was to ensure that during the entire shift, the meal and rest breaks divide the shift into approximately equal work periods.

The court rejected the defendant’s argument.  Instead, it held that in an eight hour shift with a single meal break, the preferred schedule requires the provision of two rest breaks, with one in the middle of each of the work periods that fall either side of the meal break.

Last, the court considered the issue of under what circumstances an employer can combine two or more rest breaks into one longer rest break.  The court noted only one situation where that type of combination was permissible:  when an employer’s business requires shifts in which the meal break must be taken soon after the workers start their shifts.  (One example of this type of situation might be in a restaurant where the waitstaff eat their meals before the rush of customers makes it impossible to take breaks.)

Rodriguez thus establishes that employers that choose to depart from the standard meal and rest break schedule must be two relative stringent requirements.  Otherwise they will face significant liability under California’s wage and hour laws.

If you have questions about the meal or rest breaks at work, please feel free to contact Hunter Pyle Law for a free consultation.  We can be reached at inquire@hunterpylelaw.com or 510.444.4400.

Suing for Unpaid Wages in California: Recovering Attorney’s Fees

If I lose my wage and hour claim, will I have to pay my employer’s attorney’s fees?

California law provides many different ways for workers to recover attorney’s fees in wage and hour claims. Options for employees who wish to sue for unpaid wages may include:

• prevailing on a claim for failure to pay the minimum wage (see Labor Code section 1194)
• prevailing on a claim for unreimbursed business expenses (see Labor Code 2802)
• prevailing under California’s Equal Pay Act

These fee-shifting statutes are incredibly important in wage and hour cases (among others). This is because the damages in such cases, while often significant to the worker, are often not enough for an attorney to take the case on a contingency fee basis (whereby the attorney gets a percentage of the amount recovered). Absent the possibility of a fee shift, many workers who have not been paid the wages they are owed would be unable to find an attorney to help them recover those wages.

Recovering Attorneys Fees through California Labor Code Section 218.5(a)

One commonly used avenue to recover attorney’s fees in wage and hour actions is California Labor Code section 218.5(a), which provides in part as follows:

In any action brought for the nonpayment of wages…the court shall award reasonable attorney’s fees and costs to the prevailing party if any party to the action requests attorney’s
fees and costs upon the initiation of the action.

Significantly, the language quoted above is mandatory (“shall”) as opposed to permissive (“may”). As a result, attorney’s fee awards in unpaid wages claims often dwarf the plaintiff’s actual recovery.

Prior to 2014, section 218.5(a) was a completely two-way statute, meaning that it did not distinguish between prevailing employers and prevailing employees. As a result, if a worker brought a claim for unpaid wages and lost, the employer could recover its attorney’s fees. This threat was a strong disincentive for workers to sue, because if they lost they would be facing a judgment against them of tens if not hundreds of thousands of dollars.

Fortunately, an amendment to section 218.5, effective January 1, 2014, provides as follows:

[I]f the prevailing party in the court action is not an employee, attorney’s fees and costs shall be awarded pursuant to [section 218.5] only if the court finds that the employee brought the court action in bad faith.

This amendment was hugely beneficial to workers. As long as their claims for unpaid wages are not brought in bad faith (meaning that there is a reasonable, good faith dispute regarding their claims), they do not have to worry about getting hit with the employer’s attorney’s fees if they lose.

Recent Clarifications of Labor Code section 218.5

Two recent appellate decisions have resolved some of the lingering questions regarding section 218.

First, in USS-POSCO Industries v. Case (2016) 244 Cal.App.4th 19, the court addressed the question of whether the amendment to section 218.5 applied to actions that were pending before January 1, 2014. The court held that California courts have long treated legislation affecting the recovery of attorney’s fees as applying to actions pending at the time of
enactment. (This is different than federal courts, which have refused to apply the new version of section 218.5 to cases pending as of January 1, 2014.) Thus, in California state courts, the new version of section 218.5 applies to actions that were pending at the time of enactment. In other words, to recover attorneys’ fees in actions for unpaid wages, employers will need to show that the claims are brought in bad faith.

At the same time, employers that prevail on claims for unpaid wages may be able to recover their court costs, even if the plaintiff prevailed on other claims. See Sharif v. Mehusa, Inc. (2015) 241 Cal.App.4th 185. To unpack this a bit, under California Code of Civil Procedure section 1032(4), which provides for the recovery of court costs by a prevailing party, there is normally only one prevailing party. Thus, if the plaintiff wins on only one of his or her claims, the plaintiff is still likely to recover his or her costs and the defendant is unlikely to be able to do so.

However, section 218.5 provides a separate avenue to recover costs. Thus, if an employer prevails on a claim for unpaid wages, but loses on other claims, the employer can still recover costs if it can show that the employee filed its claim for unpaid wages in bad faith.

For these reasons, the news for workers on section 218.5 is mixed. But the recent amendments allowing employers to recover their attorney’s fees only in the case of bad faith will protect workers in the event that they sue and lose.

If you have questions about suing for unpaid wages, feel free to contact Hunter Pyle Law for a free initial intake. We can be reached at (510) 444-4400, or at inquire@hunterpylelaw.com.

New Law Prohibits Employers From Forcing Workers To Bring Claims In Other States and Countries

On September 26, 2016, Governor Jerry Brown signed Senate Bill 1241, which addresses choice of law and choice of forum clauses in employment contracts.  Simply put, some employers try to force workers to bring any claims they might have (for discrimination, failure to pay wages, etc.) in other states.  The most aggressive seek to force workers to bring their claims in other countries.  See, for example, Petersen v. Boeing Co. (9th Cir. 2013) 715 F.3d 276, in which the employer attempted to compel the plaintiff to litigate his claims in Saudi Arabia.

Choice of forum clauses are particularly burdensome for low wage workers.  It is often a challenge for these workers to find an attorney to represent them, in part because their claims are generally thought to be worth less money.  A choice of forum clause requiring a worker to litigate in another state renders it even more difficult to find an attorney willing to take the case.

Beginning on January 1, 2017, California workers will have an important tool to combat choice of forum clauses.  The new Labor Code section 925 will prohibit employers from requiring employees who primarily reside and work in California to agree that they must bring employment-related claims outside of California, provided that the employees’ claims arise in California.  Under section 925, such contractual provisions are voidable, and any dispute over them must be heard and decided in California.  Additionally, section 925 provides for attorney’s fees to an employee who is enforcing rights under that section. (more…)

Piece-Rate Workers and California Law

Some California employers pay their workers by the piece.  In other words, the workers do not get an hourly rate. Rather, they get a certain amount of money per item of whatever it is that they are producing.

While piece-rate compensation is legal in California, it is subject to certain requirements.  These requirements are set forth in Labor Code section 226.2.

Section 226.2 defines the term “other nonproductive time” as “time under the employer’s control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis.”  As explained below, piece-rate workers must be paid separately for their nonproductive time.  Piece-rate workers must also be paid separately for overtime and rest breaks. 

For example, section 226.2(a)(1) explicitly provides that piece-rate employees must be  “compensated for rest and recovery periods and other nonproductive time separate from any piece-rate compensation.”

Furthermore, employers must provide specific information to piece-rate workers in the workers’ itemized wage statements, which are required by Labor Code section 226.  Section 226.2(a)(2) reads as follows:

The itemized statement required by subdivision (a) of Section 226 shall, in addition to the other items specified in that subdivision, separately state the following, to which the provisions of Section 226 shall also be applicable:

(A) The total hours of compensable rest and recovery periods, the rate of compensation, and the gross wages paid for those periods during the pay period.

(B) Except for employers paying compensation for other nonproductive time in accordance with paragraph (7), the total hours of other nonproductive time, as determined under paragraph (5), the rate of compensation, and the gross wages paid for that time during the pay period.

An employer who fails to meet these requirements may be liable for penalties under Labor Code section 226(e) and (via PAGA) under Labor Code section 226.3.

Section 226.2(a)(3) further requires that employers pay piece-rate employees for their rest periods at their regular hourly rate, or the applicable minimum wage, whichever is higher.

Thus, if you are paid by the piece, you should check your wage statements to see if they comply with the law.  You should also be sure that you are being paid separately, and by the hour, for your rest breaks and your nonproductive time.  (You are entitled to one ten minute rest breaks if your shift is between 3.5 and 6 hours long, two such breaks if your shift is between 6.01 and 10 hours long, and three such breaks if your shift is more than 10 hours long.)  If your employer fails to pay you for these breaks, it may also be liable for penalties and liquidated damages that can add up quickly.

Piece-rate workers are also entitled to be paid separately for overtime.  In California, overtime is any work performed over 8 hours in a day, and over 40 hours in a week.  (This is true unless the employee has entered into a valid agreement for the payment of overtime on the basis of each piece produced during overtime hours.  See 29 C.F.R. § 778.418.)

The overtime rate for a piece-rate worker is calculated by determining the worker’s regular rate.  This is done by dividing the total amount earned by the total number of hours worked in a particular week.  Thus, if a piece-rate worker earned $600 in a 60 hour week, her regular rate would be $10 per hour.  The regular rate is then multiplied by .5 to get the overtime rate.  Here, that figure would be $5.  The overtime rate is then multiplied by the number of overtime hours to arrive at the amount that the piece-rate worker must be paid above and beyond her piece rate.  See 29 C.F.R. § 778.111.  The DLSE Manual also has a good discussion of this formula.  See § 49.2.1 (2005 edition).

Piece-rate workers thus have many protections under the California Labor Code.  If you are a piece-rate worker, check to be sure that you are being paid every dollar that you are owed.

The attorneys at Hunter Pyle Law have handled both individual and class action claims on behalf of piece-rate workers.  If you are paid by the piece, and have questions about your paycheck, please feel free to contact us for a free consultation at 510.444.4400, or inquire@hunterpylelaw.com.