California Employer Duties and Employee Rights

February 19, 2015

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 (“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. 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.  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.

Labor Code § 226.7 prohibits employers from requiring an employee to work during any meal or rest period mandated by the relevant IWC Wage Order.  Wage Order No. 4 requires employers to authorize and permit its employees to take one 30-minute meal break for every 5 hours of work and one 10-minute rest break for every 4 hours of work, or major fraction thereof.  8 C.C.R. § 11040, subds. 11–12.  Employees are entitled to one hour of pay per day in which the employer fails to authorize and permit a meal break and one hour of pay per day in which the employer fails to authorize and permit a rest break.  Id.; Lab. Code § 226.7(c).

Subdivision 7(A)(3) of the Wage Order provides that meal breaks shall be recorded.  If they are not, “a rebuttable presumption arises that the employee was not relieved of duty and no meal period was provided.”  Brinker Restaurant Corp. v. Superior Court (Werdeger, J., concurring) (2012) 53 Cal.4th 1004, 1052–1053.

“An employer’s assertion that it did relieve the employee of duty, but the employee waived the opportunity to have a work-free break, is not an element that a plaintiff must disprove as part of the plaintiff’s case-in-chief.  Rather . . . the assertion is an affirmative defense, and thus the burden is on the employer, as the party asserting waiver, to plead and prove it.  Id. (citing Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 31, 33; Williams v. Marshall (1951) 37 Cal.2d 445, 456).

The Wage Order requires that employers provide suitable seating for its employees:

When employees are not engaged in the active duties of their employment and the nature of the work requires standing, an adequate number of suitable seats shall be placed in reasonable proximity to the work area and employees shall be permitted to use such seats when it does not interfere with the performance of their duties.

Labor Code § 226(a) requires employers to furnish accurate, itemized wage statements to each of its employees showing, inter alia, the total hours the employee worked during the pay period and the applicable pay rate.  Section 226(e) gives each injured employee the right to collect statutory penalties for an employer’s knowing and intentional failure to provide accurate wage statements—$50 for the initial violation and $100 for each subsequent pay period in which there is a violation, up to a maximum of $4000 per employee.  Clearly, overtime rates and wages should be reported on wage statements.  Furthermore, rest break premium wages constitute wages for the purposes of inaccurate wage statement penalties.  Murphy, supra, 40 Cal.4th 1094, 1114 (missed-break premium wages are part of an employees wages earned).  See also Avilez v. Pinkerton Government Services (C.D. Cal. 2012) 286 F.R.D. 450 (“[I]f an employer fails to provide appropriate meal breaks . . . and also fails to record the premium accured as a result . . . the employer has not kept accurate records and so also violates Section 226(a).”).

Labor Code § 201(a) requires an employer to pay all wages owed to employees immediately upon termination.  If the employer willfully fails to do so, the employer must pay the aggrieved employees 30-days’ pay as an individually-recoverable statutory penalty under Lab. Code § 203.  Missed-break premium wages constitute wages for the purposes of waiting time penalties.  Murphy, supra, 40 Cal.4th 1094, 1114 (missed-break premium wages are part of an employees wages earned).  See also Avilez, supra, 286 F.R.D. 450.  Pursuant to Lab. Code § 203(b), the statute of limitations for these “waiting time” penalties is the same as that for the underlying wages owed.

“Wilfulness” in the context of waiting time penalties just means “intentional.”  “’[T]o be at fault within the meaning of [section 203], the employer’s refusal to pay need not be based on a deliberate evil purpose to defraud workmen of wages which the employer knows to be due.  As used in section 203, ‘wilful’ merely means that the employer intentionally failed or refused to perform an act which was required to be done.’”  Armenta v. Osmose, Inc., 135 Cal.App.4th 314, 325 (2005) (quoting Barnhill v. Robert Saunders & Co., 125 Cal.App.3d 1, 7 (1981)).

“An employer’s good faith mistaken belief that wages are not owed may negate a finding of wilfulness.”  Road Sprinkler Fitters Local Union No. 669 v. G & G Fire Sprinklers, Inc., 102 Cal.App.4th 765, 782–783.  In Road Sprinkler the employer misclassified its employees as exempt and failed to pay them overtime.  The employer argued that its failure to pay the employees their overtime wages upon termination was not wilful, for the purposes of waiting time penalties, since it believed in good faith that it its employees were exempt.  The court rejected that argument, holding that, in order to negate wilfulness, a good faith mistaken belief has to be reasonable.  In that case it was clear from existing law that the employees were non-exempt, so the employer’s subjective belief that the employees were exempt was unreasonable.  Thus the court upheld waiting time penalties. 

The Labor Code Private Attorneys General Act of 2004 (Lab. Code § 2698 et seq.) (“PAGA”) deputizes private parties to collect civil penalties for Labor Code violations.  Arias v. Superior Court, 46 Cal.4th 969, 986 (2009) (“An employee plaintiff suing, as here, under [PAGA] does so as the proxy or agent of the state’s labor law enforcement agencies.”).  “When proven, Labor Code violations give rise to civil penalties.”  Amaral v. Cintas Corp. No. 2, 163 Cal.App.4th 1157, 1195 (2008).  “Imposition of civil penalties has, increasingly in modern times, become a means by which legislatures implement statutory policy.”  Hale v. Morgan, 22 Cal.3d 388, 398 (1978); Starving Students, Inc. v. Department Of Industrial Relations, 125 Cal.App.4th 1357, 1367 (2005).  Without penalties, employers are encouraged to violate the labor code because doing so would be a zero sum game—they would just owe the unpaid wages if they got sued.  Thus, penalties are an essential part of California’s wage-and-hour protections.

Where the Labor Code does not provide a penalty for a particular violation, PAGA establishes a default penalty of $100 per employee per pay period for an initial violation and $200 per employee per pay period for subsequent violations.  Lab. Code § 2699(f).  If the Labor Code does not provide any civil penalty specifically for overtime and break violations, the PAGA default penalty applies.  Thurman v. Bayshore Transit Management, Inc., 203 Cal.App.4th 1112, 1134 (2012); Home Depot U.S.A., Inc. v. Superior Court, 191 Cal.App.4th 210, 218 (2010). 

Lab. Code § 204 requires employers to, every pay period, pay its employees their wages earned for that pay period.  Lab. Code § 210 subjects employers to a penalty for failing to do so.  The penalty is $100 per employee per pay period for an initial violation and $200 per employee per pay period for subsequent violations, plus 25% of the unpaid amount.  Section 210 states that the penalty is “In addition to, and entirely independent and apart from, any other penalty.”  Since employees are immediately entitled to overtime when they work over 8 hours per day and to premium wages whenever they miss a break, those wages must be paid to the employee at the end of the pay period during which the wages accrued.  Murphy, supra, 40 Cal.4th at 1108. 

Lab. Code § 558 subjects employers to penalties for violating any provision of any IWC Wage Order regulating hours of work.  The penalty is $50 per employee per pay period for an initial violation and $100 per employee per pay period for subsequent violations.  Section 558 penalties are “in addition to any other civil or criminal penalty provided by law.”

Lab. Code § 226.3 subjects employers to a civil penalty for wage statement violations.  The penalty is $250 per employee per violation for an initial citation and $1000 per employee per violation for subsequent citations.  Penalties under this section are discretionary if the violation was due to a “clerical error or inadvertent mistake.”  Lab. Code §§ 226.3, 2699(e)(1).  “Inadvertent” in this context means “unintentional, accidental or not deliberate.”  Heritage Residential Care, Inc. v. DLSE, 192 Cal.App.4th 75, 83–86 (2011). 

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, supra, 53 Cal. 4th at 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.  The main issue with respect to maintaining a class action is the predominance issue:

“The ‘ultimate question’ the element of predominance presents is whether ‘the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants.’  The answer hinges on ‘whether the theory of recovery advanced by the proponents of certification is, as an analytical matter, likely to prove amenable to class treatment.’  A court must examine the allegations of the complaint and supporting declarations and consider whether the legal and factual issues they present are such that their resolution in a single class proceeding would be both desirable and feasible.  ‘As a general rule if the defendant’s liability can be determined by facts common to all members of the class, a class will be certified even if the members must individually prove their damages.’

Brinker, supra, 53 Cal.4th at 1021-1022. (internal citations and footnote omitted).

Courts have routinely granted class certification of meal and rest break class actions, particularly where the question is whether the employer’s break policy, or lack thereof, violates the law.  “The theory of liability—that Brinker has a uniform policy, and that that policy, measured against wage order requirements, allegedly violates the law—is by its nature a common question eminently suited for class treatment.”  Id. at 1034.  “Claims alleging that a uniform policy consistently applied to a group of employees is in violation of the wage and hour laws are of the sort routinely, and properly, found suitable for class treatment.”  Id. at 1033 (citing Jaimez v. DAIOHS USA, Inc. (2010) 181 Cal.App.4th 1286, 1299–1305; Ghazaryan v. Diva Limousine, Ltd., (2008)169 Cal.App.4th, 1524, 1533–1538; Bufil v. Dollar Financial Group, Inc., supra,162 Cal.App.4th at 1205–1208.)

In reality, an employee need not even resort to class certification in order to obtain substantial recovery for all aggrieved employees since an employee can obtain relief as a private attorney general under PAGA.  PAGA representative actions do not have to comply with class action requirements because PAGA actions are law enforcement actions, and an employee is authorized to investigate and prove Labor Code violations just as the State would.  Arias v. Superior Court (2009) 46 Cal.4th 969, 981 (“An employee need not satisfy class action requirements to bring a representative action against an employer under [PAGA].”).

Author: Richard Hoyer
Category: Class Actions, Legal Procedure, Overtime, Unpaid Wages, Wage and Hour
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