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.