Seyfarth Shaw LLP | www.seyfarth.com Litigating CA Wage & Hour and Labor Code Class Actions (22nd Edition) 61 Courts have thus begun to flesh out the meaning of the phrase “knowing and intentional” in the context of Section 226. However, employers still lack clear guidance as to the application of the “knowing and intentional” standard, because the defendants in many of the reported cases were alleged to have been aware that their wage statements were not in compliance and to have done nothing to fix them. It is less clear how the standard applies where an employer believes that their wage statements are accurate and has a reasonable basis for that position. In any event, the 2013 amendment clarified that a “knowing and intentional failure” will not include an isolated and unintentional payroll error due to a clerical or inadvertent mistake. The amendment also provided that the fact finder can consider whether the employer, prior to an alleged violation, has adopted and complied with a set of policies, procedures, and practices that fully comply with Section 226.347 XI. California Minimum Wage Claims A. Wage Averaging Improper Under California Law In Armenta v. Osmose, Inc.,348 employees alleged that their employer violated state minimum wage laws by failing to pay for off-the-clock work. The employer defended the claim by arguing that the employees’ average hourly pay for the workweek was greater than the minimum wage, which defeats any claim for minimum wage under the federal “averaging method” for determining minimum wages.349 However, the Court of Appeal in Armenta rejected the employer’s argument and instead adopted the position set forth in a DLSE Opinion Letter that California law requires that the minimum wage be paid for each and every hour worked. Accordingly, regardless of the total compensation an employee earns during a week, or even during a single day, if there are hours the employee has worked but was paid less than the minimum wage, then the employer has violated Labor Code section 1194 by failing to pay minimum wage for those hours..350 Armenta reasoned that California intended its minimum wage law to be more protective than the FLSA, and that this greater protection required employers to pay minimum wage for “all hours worked,” which is language absent from the FLSA.351 Armenta also noted that Labor Code sections 221-223, which have no counterparts under the FLSA, make it illegal to secretly pay employees less than the amount designated by statute or contract.352 Armenta failed to be); Furry v. E. Bay Publ’g, LLC, 30 Cal. App. 5th 1072, 1085 (2018) (“Numerous other courts considering the issue have rejected a good faith defense to Labor Code section 226, because it stands contrary to the often repeated legal maxim: ignorance of the law will not excuse any person, either civilly or criminally.”). 347 A violation of Labor Code section 226(a) for failure to provide accurate itemized wage statements triggers PAGA civil penalties even though the plaintiff cannot satisfy the “injury” or “knowing and intentional” requirements to recover statutory penalties under Section 226(e). Lopez v. Friant & Assocs., LLC, 15 Cal. App. 5th 773, 788 (2017) (“a plaintiff seeking civil penalties under PAGA for a violation of section 226(a) does not have to satisfy the ‘injury’ and ‘knowing and intentional’ requirements of section 226(e) (1).”); Raines v. Coastal Pac. Food Distributors, Inc., 23 Cal. App. 5th 667 (2018) (same); see also McKenzie v. Federal Express Corp., 765 F. Supp. 2d 1222 (C.D. Cal. 2011) (judgment entered against defendant for PAGA penalties where violation under Section 226 is established; injury need not be shown). 348 Armenta v. Osmose, Inc., 135 Cal. App. 4th 314 (2006). 349 Id. at 319. 350 Id. at 324-25. 351 Id. at 323-24. 352 Id.
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