On May 23, 2022, in Naranjo v. Spectrum Security Services, Inc., P.3d (2022), the California Supreme Court issued an important wage-and-hour decision. In Naranjo, the Court held that meal break premiums that an employer pays to an employee for missed, late, or short meal breaks constitute wages. Consequently, an employer must report those premium payments on an employee’s wage statement pursuant to Labor Code section 226 and must promptly pay any owed premiums when an employee terminates employment or face waiting time penalties under Labor Code section 203. Naranjo also concluded that the California Constitution’s default prejudgment interest rate of seven percent applies to calculating the prejudgment interest on claims for meal and rest break premiums.
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
On September 18 2019, Governor Gavin Newsom signed into law AB-5, which codified the California Supreme Court’s Dynamex v. Superior Court decision. In Dynamex, the California Supreme Court adopted the so-called “ABC” test to determine coverage under the Industrial Welfare Commission (“IWC”) Wage Orders. AB-5 expands the application of the ABC test to the entire California Labor Code and will take effect on January 1, 2020.
Continue Reading It’s Official: Newsom Expands The Definition of “Employee” Under California Law
Following the launch of the so-called “MeToo” movement, the California Legislature (controlled by a Democratic supermajority) has aggressively churned out new bills that further strengthen the ability for workers to sue their employers and increase the already-significant regulatory burden on these companies. This fall, the California Legislature is geared to send three significant bills to Governor Gavin Newsom that all California employers should carefully follow.
Continue Reading Three Major Workplace Bills to Land on Gov. Gavin Newsom’s Desk
In the aftermath of the Illinois Supreme Court’s Rosenbach decision, Illinois employers have faced a wave of class action litigation filed under the Biometric Information Privacy Act (“BIPA”). Employers hoping for relief from the statute’s private right of action must wait for another day (or another session) as Senate Bill 2134 (“SB 2134”) did not report out of committee by the March 28, 2019 deadline.
Continue Reading The Potential For Stemming BIPA Suits Waits Another Day
Albert Einstein believed “Everything should be made as simple as possible, but not simpler.” The Ninth Circuit seems to agree. In Gilberg v. Cal. Check Cashing Stores, LLC, No. 17-16263, 2019 WL 347027 (Ninth Cir. Jan. 29, 2019), the Ninth Circuit held a single form combining nearly identical federal and state disclosures violates both federal and state laws. Employers who conduct pre-employment background checks must now provide applicants with two separate standalone forms: (1) disclosure and consent under Fair Credit Reporting Act; and (2) disclosure and consent under California’s Investigative Consumer Reporting Agencies Act (or other applicable state law). This decision applies to employees providing services in the Ninth Circuit (California, Arizona, Hawaii, Alaska, Idaho, Montana, Nevada, Oregon and Washington).
Continue Reading Complicating Simplicity: Ninth Circuit Requires Separate Stand-Alone Documents for Employment Background Checks
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
Last week, the ridesharing giant, Uber, secured a resounding legal win when a federal judge dismissed a putative class action lawsuit alleging the company violated the Fair Labor Standards Act by failing to pay drivers overtime. The ruling is enormously important, not simply for Uber, but for the growing rideshare technology industry as a whole.
Less than a decade ago, outside of calling a cab company and hoping for the best, the notion of reliably getting from ‘here to there’ via a few button presses on a cell phone was unthinkable. Things have changed. Uber—the now-ubiquitous application that allows patrons to hail various styles of ride—has wholly disrupted the transportation service industry. According to the latest estimates, over 160 thousand Uber drivers dot the roads. Those drivers provide approximately 40 million rides each month, and the company’s 2017 valuation reached $69 billion. The term “Uber” has become a verb (e.g., “I’ll Uber there”) analogous to “just Google it” or “xerox the document.”…
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
The Court’s opinion in Scott v. Chipotle Mexican Grill demonstrates how employers can successfully combat class action claims that employees were misclassified as exempt. The successful defense of the class certification motion relied chiefly on deposition and declaration testimony to highlight inconsistencies, variations, and individualized inquiries that prevented resolution of the claims at issue on a class-wide basis.
Continue Reading Sheppard Mullin Secures Major Victory for Chipotle in Nationwide Misclassification Action By Demonstrating Variations Among Proposed Class Members
The ability of hospitals to use meal period waivers was called into question by a 2015 Court of Appeal decision in Gerard v. Orange Coast Memorial Medical Center (Gerard I), which held that the provision in Wage Order 5 allowing waivers even when employees work over 12 hours was invalid. Following two more years of litigation, we can now inform you that the three-member panel that reached the 2015 decision in Gerard I, reversed itself on March 1, 2017 in Gerard II. In its new opinion, the Court of Appeal adopted Sheppard Mullin’s argument and confirmed that the special meal period rules for health care employees in Wage Order 5 are, in fact, valid.
Continue Reading California Court of Appeal Affirms Validity of Hospital Meal Period Waivers