Monday, November 22, 2010

Court of Appeal Expands Availability Of PAGA Penalties

By Ronald W. Novotny and Christopher S. Andre

In a case of first impression, in Bright v. 99¢ Only Stores, the California Court of Appeal held an employee may seek Private Attorney General Act ("PAGA") penalties for alleged violations of an Industrial Welfare Commission ("IWC") wage order requirement that employers provide employees suitable seats in the workplace when the nature of the work reasonably permits the use of seats.  The court rejected the employer's argument that PAGA penalties are available only for violations of wage payment laws and concluded such penalties are available for violation of nonwage labor standards contained in the IWC's wage orders.
The plaintiff in the case, Eugenia Bright, alleged 99¢ Only Stores violated Section 14 of Wage Order 7-2001 stating all working employees “shall be provided with suitable seats when the nature of the work reasonably permits” such use.  She sought civil penalties under Labor Code section 1198, stating the employment of any employee “under conditions prohibited by” IWC wage orders is unlawful.  The court held civil penalties available under PAGA, consisting of $100 per each "aggrieved employee" per pay period for the first violation and $200 per "aggrieved" employee per pay period for each subsequent violation, could be recovered because no other penalties for violating the seating requirements were provided by law.   
This case raises the prospect that employers will face similar penalties for violating other non-monetary labor standards contained in the wage orders, such as those requiring that employers maintain a minimum temperature of 68 degrees in restrooms and requiring employers to provide elevators when employees work more than four stories above ground level. 
When PAGA penalties are awarded, 25% of the penalties are to be disbursed to the employee(s) bringing the action, and the remaining 75% are to be disbursed to the California Labor and Workforce Development Agency.  Persons bringing such claims can also be awarded their reasonable attorney's fees and costs.  Thus, PAGA penalties operate in part as a "bounty" to encourage employees and the attorneys who represent them to bring such claims. 
Employers concerned about the seemingly ever expanding exposures associated with California's employment laws should consider consulting with experienced employment counsel about policies and practices that can help to reduce that potential exposure.

Wednesday, November 10, 2010

AALRR Defeats Motion For Class Certification

On November 8, 2010, the firm was successful in defeating a motion for class certification and was able to obtain an order striking the class allegations of the complaint pending in the San Bernardino County Superior Court.  Tom Kovacich argued the motion on behalf of the employer, VCI Telcom, Inc.  The complaint alleged a menu of wage and hour violations, including underpayment of prevailing wages and sought to certify a class consisting of 89 workers.  The court stated on the record that the case presented the closest case for class certification the court has ever had but felt that individual issues predominated over the issues common to the class.  Tom felt a critical factor in the case was the development of evidence that the company's policies and practices were consistent with the law, and plaintiffs did not carry their burden of establishing that the alleged violations were common to the class.  As a result of the Court's denial of class certification, the employer must address only the claims by the two plaintiff former employees who were employed for approximately nine months. 

Monday, November 8, 2010

California Court Denies Certification of Meal and Rest Break Classes

By Ronald W. Novotny

Adding to the body of case law that has been developed pending the Supreme Court's decision in the Brinker Restaurant case, a California appellate last week sided with the employer's arguments they need only “provide” meal periods under state law and not “ensure” that they are taken. The court in Hernandez v. Chipotle Mexican Grill accordingly upheld an order denying certification of a proposed meal break class on this basis.

In the Chipotle case, the employer informed its employees that they were entitled to meal breaks, and paid them for the time the employees took them. A class of employees nevertheless sued for missed meal and rest breaks, contending that they were denied breaks or that their breaks were interrupted by their managers. Based on employee declarations showing that some employees were always provided breaks, that some missed them, and that others may have chosen to willingly forego them, the court concluded that the “requisite community of interest [wa]s missing” and that certification of the proposed “missed meal break class” was improper. The court noted that the only evidence of a company-wide policy and practice was the “employer’s evidence that it provided employees with meal and rest breaks as required by law,” and that no evidence common to all class members could establish liability on that claim.

The case is also noteworthy because it recognized that certification of meal and rest break classes could be improper even if the employer did not require the employees to record their break times. The court noted that because employees are relieved of all duty and free to leave the premises, there was “no financial incentive to record all breaks accurately.” The court also noted that the law does not require employers to keep records of paid rest breaks, and denied certification of the proposed meal break class even through the employer paid the employees for their meal breaks and did not require employees to record them. This is important in view of the fact that employers are often challenged in these cases for failing to record the meal breaks as required by the state wage orders.