Employment Law Blog

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Class Action Settlements in California

The well-recognized factors that a trial court should consider in evaluating the reasonableness of the value of a class action settlement agreement include, but are not limited to:
[T]he strength of plaintiffs’ case, the risk, expense, complexity and likely duration of further litigation, the risk of maintaining class action status through trial, the amount offered in settlement, the extent of discovery completed and stage of proceedings, the experience and views of counsel, the presence of a governmental participant, and the reaction of the class members to the proposed settlement.
Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1801.

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Mandatory Meal and Rest Periods

Labor Code §§ 226.7 and 512 and the applicable wage orders requires an employer to authorize and permit meal and rest periods to its employees. California law prohibits employers from employing an employee for more than five hours without a meal period of at least 30 minutes, and from employing an employee more than ten hours per day without providing the employee with a second meal period of not less than 30 minutes. “[A]n employer’s obligation is to provide an off duty meal period: an uninterrupted 30–minute period during which the employee is relieved of all duty.” Brinker Rest. Corp. v. Super. Ct., 53 Cal. 4th 1004, 1035 (2012). “An employer must relieve the employee of all duty for the designated period.” Id. at 1034. An employer cannot “impede or discourage [employees] from [taking breaks].” Id. at 1040. Section 226.7 and applicable wage orders also require employers to authorize and permit employees to take 10-minute rest periods for each four hours or major fraction thereof of work, and to pay employees their full wages during their rest periods. “[A]s a general matter, one rest break should fall on either side of the meal break.” Id. at 1032. Unless the employee is relieved of all duty during the 30-minute meal period and 10-minute rest period, the employee is considered “on duty” and the meal or rest period is counted as time worked under the applicable wage orders. When an employer fails to provide a rest or meal period in accordance with the applicable wage orders, the employer must pay the employee one additional hour of pay at the employee’s regular rate of pay for each workday that a required rest period is not provided, and one additional hour of pay for each work day that a compliant meal period is not provided. Labor Code § 226.7.

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Penalties in California Wage & Hour Suits

California Labor Code § 510 requires employers to pay overtime compensation for hours worked over eight hours per day and 40 hours per week. An employer may avoid paying overtime for hours worked over eight per day by adopting a valid Alternative Workweek Schedule (“AWS”). The procedures for adopting a valid AWS are set forth in Labor Code § 511 and the relevant Industrial Welfare Commission (“IWC”) Wage Order No. 16 (California Code of Regulations, title 8, § 11160, subd. 3(B), 3(C)). Among other things, the law requires an employer to hold a secret ballot election regarding the AWS amongst its employees and to file the results of the election with the State. Prior to the election, the employer must issue a written notification to the affected employees, explaining the election process and the effects of the AWS on the employees’ work schedule and compensation.

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The Fair Labor Standards Act and Class Action Suits in California

There are many public policy considerations that favor the use of class actions in the employment context in California.  First, individual awards in employment cases tend to be modest so the availability of a class action claim plays an important function by permitting employees a relatively inexpensive way to resolve their disputes. Additionally, class actions allow many employees, who may not otherwise file an individual suit due to fear of retaliation, to safely have their day in court as a member of the class. Class actions also serve to inform and protect employees who, for one reason or another, may not otherwise become aware that their rights are even being violated.

Meal and rest break claims are specifically suited to class treatment. See Brinker Rest. Corp., 53 Cal.4th at 1033 (certifying a California class with meal and rest break claims).

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Overtime, Wage Violations, and Employer Obligations Regarding Disabilities

California Labor Code section 510 requires employers to pay overtime compensation for hours worked over 8 per day and 40 per week. An employer may avoid paying overtime for hours worked over 8 per day by adopting a valid Alternative Workweek Schedule. The procedures for adopting a valid AWS are set forth in Labor Code § 511 and the relevant Industrial Welfare Commission (“IWC”) Wage Order No. 4 at California Code of Regulations, title 8, § 11040, subd. 3(B). Among other things, the law requires an employer to hold a secret ballot election regarding the AWS amongst its employees and to file the results of the election with the State.

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Collective Action Under the Fair Labor Standards Act

The Fair Labor Standards Act (FLSA) is a remedial statute that protects the rights of workers and should not be applied narrowly. Tennessee Coal Iron & R. Co., v. Muscoda Local No. 123, 321 U.S. 590, 597-98 (1944). The FLSA’s purpose is to “eliminate” unfair labor practices because their existence “burdens commerce,” “constitutes an unfair method of competition,” and “leads to labor disputes.” 29 U.S.C. § 202(a)(b). It prohibits “customs and contracts which allow an employer to claim all of an employee’s time while compensating him for only a part of it” and provides employees a private right of action to recover their unpaid wages. Tennessee Coal Iron & R. Co.,321 U.S. at 602.

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The Definition of “On-Duty” and “Off-Duty” Periods

Employees must be relieved of all duty during their meal and rest breaks. Brinker, 53 Cal.4th at 1035–1036; Faulkinbury v. Boyd & Associates (2013) 216 Cal.App.4th 220, 236. During breaks, an employee “must be free to attend to any personal business he or she may choose.” Brinker, 53 Cal.4th at 1036. An employee is working and “on duty” when he is “subject to the control of an employer,” “including all the time the employee is suffered or permitted to work, whether or not required to do so.” Wage Order No. 9 § 2(H). Time spent by an employee waiting on standby for the benefit of the employer is considered to be on duty. Madera Police Officers Assn. v. City of Madera (1984) 36 Cal.3d 403.

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Certification of a Class Under California Law

The California Supreme Court has identified three requirements for the certification of a class: (1) “the existence of an ascertainable and sufficiently numerous class”; (2) a well-defined community of interest”; and (3) “substantial benefits from certification that render proceeding as a class superior to the alternatives.” Brinker Restaurant Corp. v. Superior Court (Hohnbaum) (2012) 53 Cal.4th 1004, 1021. The community of interest requirement in turn has three factors: (1) common questions of law or fact predominate over individual questions; (2) the class representatives have claims or defenses typical of the class; and (3) the class representatives can adequately represent the class. Id.

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