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.”
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Court Expands Reach of California PAGA Representative Actions
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.
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U.S. Supreme Court Upholds Enforceability of Mandatory Employment Class Action Waivers
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.
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Court Of Appeal Holds That Claims To Recover Wages Under Labor Code Section 558 Brought Through The Private Attorneys General Act May Be Arbitrated
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
California Supreme Court Reaffirms Broad Right to Discovery in PAGA Actions
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.
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Texas Federal Court Blocks New Salary Restrictions for Exempt Employees
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.
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Ninth Circuit Invalidates Arbitration Agreement
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
U.S. Supreme Court’s Tyson Foods v. Bouaphakeo Opinion Reaffirms The Importance Of Challenging Plaintiff’s Experts In Class Actions
On March 22, 2016, the United States Supreme Court decided Tyson Foods, Inc. v. Bouaphakeo, et al., No. 14-1146, a class action under Rule 23 of the Federal Rule of Civil Procedure (“Rule 23”) and a collective action under the Fair Labor Standards Act (“FLSA”). The issue on appeal involved the extent to which statistical evidence may be used as common proof of liability in class and representative actions. The Court specifically limited its ruling to the facts of that case, holding that a class plaintiff may use statistical sampling to determine classwide liability (which has been dubbed “trial by formula”) only when there is a scientifically viable way to extrapolate the results of a sample to any particular class member.
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Brinker for Dummies
On November 13, 2014, the Second District Court of Appeal, Division One, issued a decision in Walgreen Co. Overtime Cases. The opinion explains the meaning of Brinker Restaurant Corp. v. Superior Court as it applies to the duty to “provide” a meal period in a style that is so simple that a child could understand it. Unfortunately, it is so clear in its conclusions that we fear that it will be depublished.
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California Supreme Court Limits Application of Commissioned Employee Exemption
On July 14, 2014, the California Supreme Court held in Peabody v. Time Warner Cable, Inc. that employees qualify for the California “commissioned employee” exemption in a pay period only if they receive “earnings [that] exceed one and one-half (1-1/2) times the minimum wage” in that two-week pay period. The Court held that an employer may not satisfy the minimum earnings prong of the exemption by reassigning wages from a different pay period for employees who are paid commissions that are calculated monthly. In addition, as explained below, while the Court expressly declined to address the issue, its reasoning will lead plaintiffs’ counsel to argue that more than half of an employee’s pay in a pay period must “represent commissions” if the employee is to meet the exemption in that pay period.
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