A former Wal-Mart employee had his $102 million dollar verdict overturned in a recent win for California employers.  Roderick Magadia, the former employee, brought a class action and Labor Code Private Attorneys General Act (“PAGA”) complaint against Wal-Mart alleging, in part, that Wal-Mart issued deficient wage statements in violation of Labor Code Section 226.  The alleged defect was prompted by a “Myshare” bonus, a quarterly bonus based on non-discretionary metrics.  Because the bonus was non-discretionary, the law required Wal-Mart to factor the bonus into the “regular rate” of pay used to calculate the overtime premium.  But, since the bonus was earned and paid quarterly while the overtime premium on hourly pay is paid during every two-week pay period, the premium must be recalculated and adjusted with a supplemental payment each quarter.

Continue Reading Sheppard Mullin Helps Overturn $102 Million Dollar Verdict

In a decision of considerable significance in the world of wage and hour litigation, the United States Court of Appeals for the Fifth Circuit significantly departed from conventional standards for assessing conditional certification under Section 216(b) of the Fair Labor Standards Act (“FLSA”).  In Swales v. KLLM Transport Services, Inc., the Fifth Circuit rejected the conditional certification process entirely and drastically altered the procedure for assessing whether potential members of a collective action under the FLSA are “similarly situated.”
Continue Reading Fifth Circuit Shuts Down FLSA Conditional Certification

In Garcia v. Haralambos Beverage Co., the California Court of Appeal embraced the adage “time kills all deals” to conclude that an employer waived its right to arbitrate the wage-hour claims at issue in the case by, among other things, delaying two years to seek arbitration as a last resort and waiting to locate the plaintiffs’ signed arbitration agreements.  By waiving its right to arbitrate, the employer also lost its ability to strike class claims as a result.
Continue Reading Delaying Enforcement of Arbitration Agreements May Lead to Undesirable Consequences

After a decade of ups and downs on the question of federal preemption, the Ninth Circuit Court of Appeals has upheld the Federal Motor Carrier Safety Administration’s (“FMSCA”) decision to preempt California’s meal and rest break rules.  The long-awaited decision in IBT v. FMCSA upholds the FMSCA’s December 2018 determination that drivers, who are involved in interstate commerce and subject to federal hours-of-service regulations, are exempt from California’s stringent meal and rest break rules because they are “incompatible” with federal regulations.  “The FMCSA reached this conclusion because California required more breaks, more often and with less flexibility as to timing,” the Court’s three-judge panel said in its January 15 opinion.
Continue Reading The Ninth Circuit Puts the Brakes on Truckers’ California Meal and Rest Break Claims

On January 1, 2021, various new and amended employment laws will go into effect in California. Below is a summary of some of these laws that employers should make themselves aware of heading into the new year.  All laws discussed in this post go into effect on January 1, 2021, unless otherwise noted.
Continue Reading New Employment Laws to Look Out for in 2021

In Alfredo Sanchez v. Miguel Martinez, the Court of Appeal, Third Appellate District, held that although an employee who is not authorized and permitted to take a paid 10-minute rest break in compliance with California law may assert a claim for either unpaid wages or seek one additional hour of pay (i.e., a rest break premium) under Labor Code Section 226.7, the employee cannot recover damages under both theories.  All California employers will find this case instructive, as it may also provide a basis to argue against similar “double recovery” and/or “stacking” of penalties predicated on other Labor Code violations.

Continue Reading Employees Cannot Obtain “Double Recovery” of Unpaid Wages and Premiums for Non-Compliant Rest Breaks

As we have previously reported, California law utilizes the “ABC” test to determine if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission.
Continue Reading Expanding Independent Contractors in California: New Law Awaits Governor’s Signature

On April 1, 2020, the California Court of Appeal issued the first published decision addressing unlimited vacation policies under California law.  “Unlimited” vacation policies in which employees have no minimum and no maximum vacation and do not accrue any vacation time have become increasingly popular in recent years.  However, without guidance from the courts, employers that have implemented these policies have faced legal uncertainty.  In McPherson v. EF Intercultural Foundation, Inc., the court held that the employer’s purported “unlimited” paid time off policy violated Labor Code Section 227.3 based on the particular facts of that case.  Since the court limited its ruling based on the facts in McPherson, it left open many questions regarding the lawfulness of unlimited vacation policies generally.  Fortunately, the court also provided example features of an unlimited vacation policy that it suggested might not violate Section 227.3.  Nevertheless, this newly published decision may have opened a door for more litigation and we recommend employers review their flexible/unlimited time off policies.
Continue Reading California Court of Appeal Addresses Unlimited Vacation Policies for the First Time in McPherson v. EF Intercultural Foundation, Inc.

Effective February 10, 2020, the top ten members of an out-of-state limited liability company (“LLC”) can be held personally liable for violations of New York’s wage and hour laws. The bill, signed on December 12 by Governor Andrew Cuomo, amends New York’s LLC Law which previously only extended individual liability for unpaid wages to owners of domestic LLCs (text available here).
Continue Reading New York Targets Members of Out-of-State LLCs in New Wage Theft Bill