On-Call Meal Breaks and On-Call Rest Breaks: A Critical Difference
The law regarding meal and rest breaks continues to develop. As it develops, it becomes more and more technical. A recent decision of California’s Second Appellate District highlights a critical difference between meal and rest breaks.
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Federal District Courts and California’s Private Attorneys General Act (PAGA)
California’s Private Attorneys General Act, or PAGA, provides that employees can recover civil penalties that otherwise could be recovered only by state law enforcement agencies. Examples of the civil penalties that can be recovered under PAGA include penalties: for the failure to pay wages due (Labor Code (LC) § 210); for inadequate wage statements (LC § 226.3); and for violations of wage orders regarding working conditions (LC § 1198). PAGA also allows employees who have been harmed to bring representative claims on behalf of all other affected employees. As such, it is a powerful tool for vindicating workers’ rights.
After the United States Supreme Court decision in AT&T Mobility v. Concepcion, many employers began to require employees to sign arbitration agreements that prevent them from bringing representative claims under PAGA. In Iskanian v. CLS Transportation (2014) 59 Cal.4th 348, the California Supreme Court addressed the critical issue of whether such agreements are contrary to public policy and unenforceable. Justice Goodwin Liu, writing for the majority, reasoned that PAGA was established for important public reasons. Therefore:
An employment agreement [that] compels the waiver of representative claims under the PAGA…is contrary to public policy and unenforceable as a matter of state law.
Just Liu then turned to the question that must be asked in the wake of Concepcion: Does the Federal Arbitration Act (FAA) preempt this analysis? After surveying the history and purpose of the FAA, Justice Liu concluded that it did not, because the FAA was only intended to cover private disputes. PAGA claims are between the employer and the state. As such, they are not private disputes. The FAA therefore does not apply to them.
Justice Ming Chin, concurring with the majority, had a different analysis. He noted that every PAGA action, whether seeking penalties as to one employee or as to others as well, is a representative action on behalf of the state. The arbitration agreement at issue barred representative actions. It therefore barred the plaintiff from pursuing a PAGA claim in any forum.
Under Mitsubishi Motors v. Soler (1985) 473 U.S. 614, 637, the FAA does not require enforcement of a “provision in an arbitration agreement forbidding the assertion of certain statutory rights.” The FAA therefore does not require enforcement of an arbitration agreement that forbids employees from bringing representative PAGA claims.
Iskanian is binding on all California courts, and must be followed unless it is reversed by the United States Supreme Court. One might think that because it addresses an issue that is unique to California law, federal district courts would defer to it. However, to the contrary, the federal courts that have considered this aspect of Iskanian have unanimously rejected it. See, for example, Lucero v. Sears Holdings Mgmt. Corp. (S.D.Cal., Dec. 2, 2014) 2014 U.S. Dist. LEXIS 168782 (citing five other district court cases).
The federal courts rejecting Iskanian’s PAGA analysis rely upon the reasoning in one of the earliest cases to take up the issue, Langston v. 20/20 Companies (C.D.Cal., Oct. 17, 2014) 2014 U.S. Dist. LEXIS 151477. In Langston, the court noted that it was not required to defer to the California Supreme Court, because the role of interpreting federal statutes like the FAA was left to federal courts.
Langston then concluded that Iskanian was driven by a “general disfavor” for agreements to arbitrate PAGA claims individually. This analysis is wrong for two reasons:
First, the Langston court argues that Justice Liu contends that PAGA waivers are unconscionable because an employee cannot waive a right that belongs to the government. However, as set forth above, to the contrary Justice Liu argues that PAGA waivers are unconscionable because PAGA was established for a public reason.
Second, the Langston court argues that Justice Liu’s reasoning about the unwaivability of PAGA claims is inconsistent with Jusice Liu’s later concession that an employee is free to choose whether or not to bring a PAGA claim after he becomes aware of Labor Code violations. That analysis is fallacious. There is an obvious and significant difference between pre-dispute waivers and permitting employees not to bring claims once they become aware of certain conduct. There is nothing inconsistent in the argument that (1) employers cannot be allowed to require employees to waive their right to bring PAGA claims before disputes arise, but (2) employees can decide not to bring PAGA claims once they have learned about certain violations.
Furthermore, even if an employee chooses not to bring a PAGA claim, the government can always bring the claim. See EEOC v. Waffle House (2002) 534 U.S. 279 (individual cannot waive government’s interest in bringing discrimination claims). Therefore, PAGA claims are not truly waivable either before or after an employee has learned about a violation.
Interestingly, none of the federal district court decisions disagreeing with Iskanian has addressed Justice Chin’s concurrence. However, that more narrow analysis might be better suited to survive the current federal assault.
If you have questions about PAGA claims, or believe that your rights in the workplace have been violated, please feel free to contact the attorneys at Hunter Pyle Law for a free consultation.
Hunter Pyle to speak on PAGA Claims for Low-Wage Workers
On January 18, 2015, Hunter Pyle, a partner at Hunter Pyle Law, will present at the fourth annual Staying True to Your Roots event in San Francisco. Staying True to Your Roots is a day-long program aimed at progressive attorneys, legal workers, and law students. Mr. Pyle will be presenting on the topic of using the Private Attorneys General Act, or PAGA, to represent low-wage workers. Joining him on the panel will be Catha Worthman of Lewis, Feinberg, Lee, Renaker & Jackson, P.C.
A Bright Spot for Workers in Tuesday’s Dismal Election Results
Despite the lingering outrage and disapproval many of us have regarding the Republican victory at the polls last Tuesday, there were some major wins for workers across California and the country which should be embraced and not overlooked.
Raising Minimum Wages:
Starting local, both Oakland and San Francisco voted to raise their local minimum wages. Oakland’s minimum wage will go up to $12.25 next year and San Francisco is now on track to gradually increase its minimum wage to $15 by 2015. (more…)
Unpaid TV Interns Settle Large Class Action Against NBCUniversal
Last year, a federal judge in New York ruled that Fox Searchlight Pictures violated minimum wage laws by not paying interns that worked on the set of the movie “Black Swan.” In holding that employers could not simply avail themselves of free labor by calling employees “interns,” this case opened the pathway for other intern cases against entertainment industry giants.
In the latest victory, a group of former interns reached a 6.4 million dollar settlement with NBCUniversal this week, representing the largest settlement yet in this new streak of cases. While the original complaint involved New York interns, the case grew to include plaintiffs from other states. This recent settlement makes clear that companies need to change the blanket exploitation of interns across industries and across the country, or pay the significant price that inevitably come with the growth of these cases.
California Supreme Court Holds Fast Food Employee Cannot Sue Franchisor For Sexual Harassment Claims.
On August 28, 2014, the California Supreme Court ruled that Domino’s Pizza could not be held liable for sexual harassment claims by an employee of a franchisee. The highly anticipated decision came on the eve of Labor Day weekend, dealing a blow to franchisee employees seeking accountability and meaningful compensation from franchisors.
A Win for Commissioned Salespeople: Peabody v. Time Warner Cable, Inc.
In order to be exempt from the overtime requirements of California law (as well as other wage and hour laws such as those requiring meal and rest breaks), commissioned employees must meet two requirements: [1]
1. They must earn more than one and half times the applicable minimum wage[2] (“the minimum wage test”).
2. They must earn at least half of their wages from commissions.
This test therefore poses the following question: What about employees who, because of their commission structure, earn less than one and a half times the minimum wage in some pay periods? Are employers allowed to average an employee’s wages across pay periods in order to determine whether they meet the minimum wage test?
The California Supreme Court recently addressed this issue. In Peabody v. Time Warner Cable, Inc. the Court held that employers may not consider commission payments in other pay periods in order to meet the minimum wage test of the commissioned employee exemption.
Let the Franchisor Beware: The NLRB Finds That McDonald’s Is Liable for the Conduct of Its Franchisees
Many of the market leaders in the industries that pay the lowest wages (think of fast-food restaurants and convenience stores) use a common device to limit their liability for unlawful conduct: the franchise. These companies (franchisors) grant franchises to other entities (franchisees) to operate locations in their name. Often the franchisees have limited assets. As a result, employees who challenge illegal labor practices at the franchises are unable to collect any money even when they prevail on their claims.
Some of these market leaders also use the franchise device to deny responsibility for the conduct of their franchise operators. For example, in response to the growing movement to require fast food restaurants to pay their workers a living wage, many of the market leaders have dubiously claimed that they have no control over the wages that their franchisees pay. They are thus seeking to use the franchise as an excuse for washing their hands of culpability for a situation in which women and men who work full time remain mired in poverty.
SSP Attorney Mana Barari Appointed to State Bar Commission
Hunter Pyle Law is proud to announce that associate attorney Mana Barari has been appointed by the State Bar Board of Trustees to the California Commission on Access to Justice.
The California Commission on Access to Justice was established in 1997 to pursue long-term fundamental improvements in the civil justice system so that it is truly accessible for all, regardless of income, geography, or language ability. The Commission pursues a wide range of projects to fulfill its mission, including funding local legal services programs around the state, helping to establish and expand court-based self-help centers, and the publication of reports focusing attention on possible solutions to access problems.
Ninth Circuit Clarifies California Labor Law Protections for Truck Drivers in Dilts v. Penske Logistics
California labor laws almost always offer stronger protections than their federal counterparts, which set the minimum baseline for all states. However, for some categories of employees, the California Labor Code protections can be preempted by federal laws- meaning the federal law supersedes the California law. Federal preemption of California laws almost always translates into fewer protections for employees.
Two federal regulatory schemes in particular contain preemption clauses: the Federal Aviation Administration Authorization Act of 1994 (FAAAA), dealing with motor carriers (the trucking industry), and the Airline Deregulation Act of 1978 (ADA), dealing with the air carriers. Both laws bar the application of California laws “relating to the rates, routes, or services” of any air or motor carrier.