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On October 9, 2019, the Second Appellate District of the California Court of Appeal issued a decision clarifying the rate of pay at which an employer must pay meal period, rest break, and recovery period premiums. More specifically, the appellate court answered the question: what does the “regular rate of compensation” in Labor Code Section 226.7(c) actually mean? In Ferra v. Loews Hollywood Hotel, LLC, a 2-1 majority of the Court of Appeal affirmed the trial court’s holding that in paying meal period and rest break premiums, the regular rate of compensation is equal to one hour of the employee’s base hourly wage and is not synonymous with the “regular rate of pay” used to calculate overtime payments. This clarification is important to every employer in California.
Continue Reading California Appellate Court Clarifies the Monetary Amount for Meal Period, Rest Break, and Recovery Period Premiums, and Affirms an Employer’s Neutral Rounding Policy

In a 2010 decision, Stolt-Nielsen S. A. v. Animalfeeds International Corp., the United States Supreme Court held that parties may not be compelled to submit to class arbitration under the Federal Arbitration Act (FAA) unless there is a contractual basis for concluding that they agreed to do so. The Court held that such an agreement could not be presumed from the fact that the arbitration agreement is “silent” on the issue of class arbitration or the mere fact that the parties agreed to arbitrate.
Continue Reading U.S. Supreme Court Upholds Individualized Arbitration Where Agreement Is Ambiguous on Issue of Class Arbitration

On February 4, 2019, the California Court of Appeal, Second District issued a 2-1 decision in Ward v. Tilly’s, Inc. in which it held employees must be given “reporting time pay” under Wage Order No. 7-2001 when an employer requires its employees to call in two hours before a potential shift to learn whether the employee is needed for work and the employee is told not to come into work that day.  This decision strays from most employers’ general understanding that “reporting time pay” covers only the situation where the employee physically comes into work but is sent home early (usually for lack of work).  Nevertheless, as the only published California appellate decision addressing this specific issue, California employers are bound by Ward and should revise their reporting policies accordingly to avoid liability.
Continue Reading Ward v. Tilly’s, Inc.: California Employers Should Dial Back On-Call Shift Policies

On December 10, 2018, a California Appellate Court published its decision in Donohue v. AMN Services, LLC, affirming class-wide summary judgment for the employer.  The court’s decision in this wage and hour case presents some interesting take-aways for California employers in that it endorses the lawfulness of widespread timekeeping practices that class action attorneys often seek to challenge as unlawful.
Continue Reading California Wage and Hour Win for Employers: Rounding Policies and Timesheet Certifications

In AHMC Healthcare, Inc. v. Superior Court, the California Court of Appeal, Second Appellate District, Division Four, extended a prior line of California cases holding that California law follows federal law with respect to evaluating the lawfulness of time clock rounding systems. You can read our prior article about See’s Candy Shops I here. Specifically, California follows 29 C.F.R. § 785.48, which permits employers to compute employee worktime by rounding “to the nearest 5 minutes, or the nearest one-tenth or quarter of an hour,” so long as the rounding system adopted by the employer “is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.”
Continue Reading California Court Reaffirms And Extends Rounding Rules

The California Court of Appeals recently decided a new case potentially expanding the scope and impact of Private Attorneys General Act (PAGA) claims brought by an employee against his employer. In Huff v. Securitas Security Services USA, Inc., the court posed the question of “whether a plaintiff who brings a representative action under PAGA may seek penalties not only for the Labor Code violation that affected him or her, but also for different violations that affected other employees.” The court then answered that question in the affirmative, concluding “PAGA allows an ‘aggrieved employee’ – a person affected by at least one Labor Code violation committed by an employer – to pursue penalties for all the Labor Code violations committed by that employer.” Accordingly, an employee alleging a single violation of the California Labor Code may now bring PAGA claims against his employer for all violations, suffered by any other employee, of the same employer.
Continue Reading Court Expands Reach of California PAGA Representative Actions

On May 21, 2018, the United States Supreme Court upheld the legality of arbitration agreements containing class action waivers. In a 5-4 decision written by Justice Gorsuch, the Court held that arbitration agreements providing for individualized proceedings were valid, and neither the Federal Arbitration Act’s (“FAA”) savings clause, nor the National Labor Relations Act (“NLRA”) suggest otherwise.
Continue Reading U.S. Supreme Court Upholds Enforceability of Mandatory Employment Class Action Waivers

In Esparza v. KS Industries, L.P., 2017 WL 3276363 (2017), the Fifth District Court of Appeal recently clarified the arbitrability of certain claims brought under the Private Attorneys General Act (“PAGA”).  Previously, in Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.4th 348 (2014), the California Supreme Court held that PAGA representative actions for civil penalties are not subject to arbitration (the “Iskanian rule”). This decision led to a spate of actions by plaintiffs who signed valid and enforceable arbitration agreements asserting only PAGA claims, in an attempt to circumvent arbitration. This has been a significant hurdle to many employers, who have been forced to defend PAGA-only actions in civil court, despite the fact that their employees signed valid and enforceable arbitration agreements. Esparza offers a potential carve out to Iskanian that employers should be aware of.
Continue Reading Court Of Appeal Holds That Claims To Recover Wages Under Labor Code Section 558 Brought Through The Private Attorneys General Act May Be Arbitrated

The California Supreme Court issued its long awaited ruling in Williams v. Superior Court, in which it clarified the scope of discovery in actions brought under the Private Attorneys General Act of 2004, Labor Code § 2698 et seq., also known as PAGA. (Williams v. Superior Court, __ Cal.5th __ (July 13, 2017, S227228) (“Williams”).) At first glance employers may be concerned by the breadth of discovery the California Supreme Court permits under PAGA, however, in reality the case generally reaffirms the status quo by holding that the scope of discovery in PAGA actions is essentially the same as the scope of discovery in class actions. Specifically, the Court holds that as in class actions, the contact information of the individuals a PAGA plaintiff purports to represent is generally discoverable in the same manner as it has been for many years in wage and hour class actions. While trial courts cannot condition disclosure of employee contact information on the plaintiff making a prima facie showing on the merits of his claims, the same defenses that exist in class actions to such discovery also exist in PAGA actions. While the employer has a substantial burden of proof, the California Supreme Court reaffirmed that employers still have defenses based on undue burden and the need to protect employee privacy rights to limit such discovery. With the overall discussion of discovery issues, the Court also makes pronouncements that can be helpful to employers in other aspects of PAGA litigation, such as its statements indicating that a PAGA action must be manageable to proceed to trial.
Continue Reading California Supreme Court Reaffirms Broad Right to Discovery in PAGA Actions

On November 22, 2016, a federal court in the Eastern District of Texas issued a preliminary injunction blocking the Department of Labor from enforcing new regulations that would have drastically reduced the number of white collar employees who are exempt from overtime.  The disputed regulations were set to take effect on December 1.
Continue Reading Texas Federal Court Blocks New Salary Restrictions for Exempt Employees

On August 22, 2016, the Ninth Circuit joined the Seventh Circuit in the split amongst U.S. Circuit Courts of Appeal on the issue of enforceability of employment arbitration agreements precluding class actions.

The Ninth Circuit, similar to the Seventh Circuit in Lewis v. Epic Sys. Corp., held in 2-1 decision that an employer violates the National Labor Relations Act (NLRA) when it requires employees to sign an agreement precluding them from pursuing, in any forum, wage-and-hour claims against the employer on a collective basis.  To the contrary, the Fifth Circuit has upheld such arbitration agreements in D.R. Horton, Inc. v. NLRB and Murphy Oil USA, Inc. v. NLRB, finding that class action waivers do not violate the NLRA.


Continue Reading Ninth Circuit Invalidates Arbitration Agreement