By Thomas Kaufman

On Friday afternoon, the Fourth Appellate District, Division 3 (Orange County) decided Faulkinbury v. Boyd & Associates (Faulkinbury II). This was a meal period, rest period, and overtime class certification decision in which the trial court had previously denied certification and the Court of Appeal had previously affirmed the denial (in Faulkinbury I).   However, the California Supreme Court issued a grant/hold review on the decision in light of its grant of review in Brinker Restaurant Corp. v. Superior Court (Brinker), and the case was remanded to the court of appeal to consider in light of the Brinker decision.

The new decision reverses the previous denial of class certification and mandates class certification of the meal period, rest period, and overtime claims. Although that is unfortunate for the security guard employer, the decision is actually written fairly narrowly and should not open the door to easy certification in the typical meal and rest period cases.  As explained below, while the court of appeal got the analysis half-right, it still appeared to gloss over the existence of individualized issues that should raise doubts about the ability to try the meal or rest period claims in the case as a class action.

The Relevant Facts

The employer placed security guards with various clients throughout California. The decision does not provide information about any variation in the types of assignments given, but the case indicates that the employer had a uniform rule that all of its security guards had to sign an "on duty meal agreement" that required them to stay on duty for their meals, but to receive continued wages for the on-duty meal times. The employer lacked a formal rest break policy but had a written policy stating that all security guards had to stay at their posts unless relieved by a supervisor or another security guard. The defendant also made certain payments to the security guards that apparently were not included in the regular rate of pay for purposes of calculating overtime compensation: (1) an allowance for uniform cleaning and maintenance and gasoline; and (2) an annual bonus that the defendant claimed was discretionary but plaintiff claimed was non-discretionary.

Plaintiff sought certification of a meal period class on the theory that none of the security guards were provided with off-duty meal periods as a matter of policy. Plaintiffs argued that the on duty meal periods were invalid because they were not voluntary and because the nature of the work was not the type for which on duty meal periods are authorized (i.e., where taking an off-duty meal period is impracticable). 

Plaintiff sought certification of a rest period class on the theory that the law did not allow for an on-duty rest period and the combination of a lack of a rest period policy with a formal policy forbidding employees from leaving their post was tantamount to an unlawful failure to provide rest periods.

Plaintiff sought certification on the overtime claim on the theory that the aforementioned expense allowance and annual bonus payments should have been but were not included in the regular rate of pay for purposes of calculating overtime. As a result, employees who worked overtime received payments below what the law required them to receive.

The Court’s Analysis and Its Flaws

Although the court of appeal had previously affirmed the denial of class certification, it now ordered certification based on the notion that the plaintiff was merely challenging an policy that allegedly was facially unlawful. That is, this wasn’t simply an allegation that many employees failed to receive all their meal and rest periods, but rather plaintiff challenged a policy that, as written and commonly applied, allegedly violated the law. The Faulkinbury II court interpreted Brinker as requiring certification where the evidence showed that the trial would actually challenge the lawfulness of a common company policy.

In part, this is a fair reading of Brinker, if one assumes that there really existed a commonly applied policy that was either lawful or unlawful as to employees as a group. Common classwide questions suggested by the decision were (1) whether a security guard must have a choice as to whether to sign an on-duty meal period agreement for the on-duty meal period to be lawful; (2) whether the nature of work as a security guard is such that on-duty meal periods are permissible under the governing standards; (3) whether the company policy effectively forbade employees from taking off duty rest breaks; (4) whether the expense allowances should have been included in the regular rate for purposes of calculating overtime; and (5) whether the annual bonus was discretionary or non-discretionary. If one assumed that the terms of the applicable company policies were not in dispute and the only question was whether the policy complied with the law, then it would make sense to decide these issues on a class basis.

The court of appeal’s analysis appears flawed, however, in that it failed to address individual liability issues that might have existed at different worksites. Although I am not familiar with this particular company, I know enough about security guard work to know that it can vary widely depending where the security guard is assigned and for what purpose. The legal analysis on on duty meal periods and off-duty rest periods could be impacted by such individual issues as how many other guards are on duty, how remote the worksite is, what time of day or night the security guard is working, and whether the nature of the property being guarded allows for breaks. These individual variations would seem to be material to deciding whether, for that worksite, the "nature of the work" makes an off-duty meal period impracticable.   Rather than address that argument (which I assume the employer raised), the court of appeal fell back on the old saw that the employer treated this as a class issue– requiring everyone to sign an on duty meal agreement– so the court could treat it as a class issue as well.

That facile kind of reasoning has been repeatedly criticized in the exemption context. Several courts in the past held that if an employer treated everyone with a certain job title as exempt, that suggested that the issue was properly decided class wide. Numerous courts, including the Ninth Circuit in Vinole v. Countrywide, 571 F.3d 935 (9th Cir. 2009), and the First Appellate District in Walsh v. IKON, 148 Cal. App. 4th 1440, 1461-62 (2007), have held that the mere fact that the employer treated a group as exempt without conducting an individual job analysis for each employee does not mean that the exempt classification decision was uniformly lawful or unlawful. Just as the lawfulness of the decision to classify an employee as exempt could vary depending on the particular job duties of the class member, so too could the lawfulness of an on duty meal period vary depending on the nature of the particular assignment.

A similar flaw exists in the court’s rest period analysis. The court indicates that the defendant came forth with declarations reflecting that certain security guards on certain shifts were authorized and permitted to leave their posts for rest breaks or to take rest breaks at their posts. There was not a uniform policy that employee could not take ten minute rest breaks, but rather the policy was that employees could not leave their posts "without permission of a supervisor or proper relief during the absence." That seems quite different from a blanket policy prohibiting rest periods, as there could be individual variation as to whether supervisors granted permission for breaks or whether relief was readily available during breaks. The law does not require recordkeeping on this issue, so it would likely come down to a swearing contest among individual witnesses and individual supervisors.  This is distinguished from Brinker where the California Supreme Court asserted that the policy was commonly applied forbidding a second rest period for employees who worked more than six but fewer than eight hours.  If that were assumed true, there would not be individual liability issues as to rest periods.

The court’s analysis of the overtime claim seems on sounder footing. It would seem that the court could decide collectively whether the bonus at issue was discretionary or non-discretionary and whether the expense allowance met the criteria to be excluded from the regular rate.

It will be interesting to see how the trial court handles the individual variations that could go to liability. As many courts tend to do when trying to sweep that issue under the rug, the court of appeal simply labels these variations as individual "damages" issues, as if that is the end of the inquiry. Most likely, the issues will never get to trial as the case will probably settle now. But the fact remains that there appear to be individual issues as to liability and the court gave no hint as to how the trial court should deal with those issues.  All in all, this case makes an incremental contribution to class certification jurisprudence, but it does not support certification outside of the unusual circumstance where the plaintiff is challenging a policy as facially unlawful.