86 Litigating CA Wage & Hour and Labor Code Class Actions (22nd Edition) Seyfarth Shaw LLP | www.seyfarth.com After Reins, settlements with employee-plaintiffs will likely not preclude the employee from bringing an action for civil penalties as a PAGA plaintiff.510 Thus, obtaining individual releases from employees, through severance agreements or otherwise, may not preclude employees from then bringing PAGA claims, even if those claims are expressly included in the release (unless, of course, the employee has released claims while acting in the capacity of a PAGA plaintiff, and the trial court has granted approval of the settlement).511 G. Wage Order Claims California’s Industrial Welfare Commission sets forth minimum work standards for California employees in Wage Orders. These Wage Orders contain a variety of provisions that employers must follow, including everything from overtime and minimum wage requirements to the timing of meal and rest breaks. The Wage Orders, however, also contain more obscure sections, with no corresponding Labor Code provision, regulating things such as the location of clocks and, in some cases, bathroom temperature. These obscure sections have inspired claims that their violation constituted a violation of California Labor Code section 1198,512 and therefore give rise to PAGA penalties. The first case to reach the California Court of Appeal asserting such a theory was Bright v. 99¢ Only Stores.513 Bright filed a putative class action alleging that her employer violated a requirement in Wage Order 7-2001514 to provide employees with “suitable seats” where the nature of the work reasonably permits their use. Bright argued that 99¢ Only Stores, by violating the Wage Order, also violated California Labor Code section 1198, entitling her to PAGA penalties under Section 2699(f).515 In response, 99¢ Only Stores demurred on two grounds: (1) that the violation of the Wage Order’s seating provision is not a violation of Section 1198, because it is not a “prohibited” condition of labor; and (2) that even if a violation of the seating provision was a violation of Section 1198, civil penalties under PAGA are not available because the Wage Order has its own penalty provision.516 The trial court sustained the demurrer.517 510 The Supreme Court in Reins distinguished Villacres on its facts, but otherwise did not overrule it. Id. at 92-93. It is therefore unclear whether Villacres remains good law and, if so, to what extent it can still be relied upon by employers seeking to argue that PAGA claims were released by a prior non-PAGA settlement. 511 It is notable that the plaintiff’s individual settlement in Reins expressly excluded a release of PAGA claims. Although the Supreme Court’s decision did not indicate that this was a determinative factor, it is possible that an individual settlement that specifically included a release of PAGA claims could be effective in releasing such claims. Also unresolved is whether a covenant not to sue, if included in an individual settlement agreement covering PAGA claims, would be effective in precluding the settling individual from maintaining a subsequent PAGA representative action, even if the individual technically still had standing as an “aggrieved employee” to bring such an action. 512 Labor Code section 1198 states: The maximum hours of work and the standard conditions of labor fixed by the commission shall be the maximum hours of work and the standard conditions of labor for employees. The employment of any employee for longer hours than those fixed by the order or under conditions of labor prohibited by the order is unlawful. 513 Bright v. 99¢ Only Stores, 189 Cal. App. 4th 1472 (2010). 514 Wage Order 7-2001 applies to retail employers. 515 Bright, 189 Cal. App. 4th. at 1475. 516 See id. at 1476. 517 See id.
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