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Litigating California Wage & Hour Class and PAGA Actions - 22nd Edition

Table of Contents V
I. Introduction and Overview 1
II. Common Exempt Misclassification Claims 2
A. Overview of State Overtime Law 2
B. The Executive (Managerial) Exemption 3
C. The Administrative Exemption 7
1. General Overview 7
2. California Develops a Unique Interpretation of the Administrative/Production Dichotomy 8
3. The Administrative/Production Dichotomy Test Survives—Harris v. Superior Court 10
4. The Ninth Circuit Makes a Mountain out of the Administrative/Production Dichotomy Molehill 11
D. The Outside Sales Exemption 12
E. The Commissioned Salesperson Exemption 15
III. Independent Contractor Classification 16
A. Dynamex Decision 16
1. Freedom From Control and Direction of the Hiring Entity 18
2. Outside the Usual Course of the Hiring Entity’s Business 18
3. Customarily Engaged in an Independent Business 19
B. Post-Dynamex Cases 19
1. Curry v. Equilon Enterprises, LLC: Application of Dynamex to Joint Employer Analysis 19
2. Garcia v. Border Transportation Group, LLC 20
3. Retroactivity of Dynamex: Vazquez v. Jan-Pro Franchising International, Inc. and Gonzales v. San Gabriel Transit 20
C. Addition of the ABC Test to the Labor Code 21
D. The Battle Over AB 5 22
1. California Trucking Ass’n v. Bonta: AB 5 Enforced as to Motor Carriers 22
E. California Voters Adopt Proposition 22 23
IV. Unlawful Deductions from Wages 24
A. Generally 24
B. Bonus Plan “Deductions” 25
C. Unlawful Commission Chargebacks 26
1. Nature of the Violation 26
2. Steinhebel Approves Certain Chargeback Plans 27
3. Further Development of the Law Since Steinhebel 28
V. Reimbursement of Employee Expenses 30
A. The Duty to Reimburse Expenses Under Labor Code Section 2802 30
B. Reimbursement for Uniforms Under the Wage Orders 33
VI. Meal and Rest Period Claims 34
A. Nature of Claims 34
1. Employers Must “Provide” Meal Periods 35
2. Employers Must “Authorize and Permit” Rest Periods 35
3. Meal and Rest Period Premium Pay 36
B. Debate Over Whether One-Hour Payment Is a “Penalty” 38
C. Meaning of “Provide” a Meal Period 39
D. Limits on IWC’s Power to Alter Labor Code Meal Period Rules 43
VII. Tip-Pooling 44
A. Actions Alleging Tips Were Diverted to Co-Workers Who Did Not Earn Them 44
B. Actions Alleging “Agents” of Management Wrongfully Took Tips 46
C. The Future of Tip-Pooling Cases Under California Law 47
VIII. Vacation/Paid Time Off Forfeiture 48
IX. Waiting Time Penalties 51
A. Generally 51
B. Application to Fixed-Term and Temporary Employment 53
1. Assignments for a Fixed Term 53
2. Temporary Employment Agencies 54
X. Itemized Wage Statement Claims 55
A. Labor Code Section 226 55
B. Purpose Of The Wage Statement Statute 56
C. The Supreme Court Approves Of Derivative Wage Statement Claims Based On Unpaid Meal And Rest Premiums 57
D. Paid Sick Leave Must Be Recorded On Wage Statements 57
E. Accrued Vacation Time Need Not Be Recorded 58
F. Wage Statement Penalties 58
G. The “Injury” Requirement For Wage Statement Penalties Is Weakened 59
H. The Requirement That Violations Be “Knowing And Intentional” 60
XI. California Minimum Wage Claims 61
A. Wage Averaging Improper Under California Law 61
B. The Conflict Between Piece-Rate Formulas and the Requirement to Pay Minimum Wage 64
C. Neutral Time-Rounding Practices Are Lawful 66
D. Compensability of Time Spent in Security Checks 68
E. California’s Application of the De Minimis Doctrine 70
F. Compensability of Call-In Time for Standby Shifts 72
XII. California Labor Code Private Attorneys General Act 73
A. General Scope of the Law 73
B. Requirement to Exhaust Administrative Remedies 75
C. Scope of the “Civil Penalty” Provisions 79
D. Pursuing PAGA Claims Collectively Without Class Certification 81
E. Whether PAGA Claims Can Be Stricken As Unmanageable 82
F. Release of PAGA Claims Through Class Settlement 84
G. Wage Order Claims 86
H. Class-Like Discovery for PAGA Claims 88
XIII. Unfair Competition Claims, Business & Professions Code Section 17200 89
A. Former Law—Pre-Proposition 64 89
B. Reform of the Law—Passage of Proposition 64 90
C. Proposition 64’s Restrictions on UCL Class Actions 91
XIV. Class Action Fairness Act of 2005 92
A. The Purpose of the Act 92
B. General Requirements 93
C. Removal Under CAFA 93
1. The Timeliness Requirement For A CAFA Removal 93
2. Premature Removal and Sanctions 94
3. Establishing The “Amount In Controversy” In A CAFA Removal 95
4. The Amount In Controversy Does Not Include Non-Class Action Claims 97
D. Exceptions to CAFA Jurisdiction 98
1. Local Controversy Exception 98
2. Home State Exception 99
E. Waiver 99
F. After Removal and Effect of Denial of Class Certification 100
G. Settlement Process 101
XV. Class Certification 103
A. General Requirements 103
B. Class Certification in Exempt Misclassification Cases 104
C. Subclasses 108
D. Opt-In Classes 109
E. Wal-Mart Stores, Inc. v. Dukes—The Supreme Court Shifts the Landscape of Class Certification 111
1. Class Members Must All Suffer A Common Injury Capable Of Class-Wide Resolution 111
2. The Similarly Situated And Commonality Standards Are Not So Different 112
3. Dukes Presents An Early Evidentiary Hurdle For Plaintiffs 113
4. Individualized Issues Preclude Certification 114
F. In Comcast v. Behrend, The Supreme Court Emphasizes That It Meant What It Said in Dukes 115
1. The Supreme Court Holding 115
2. The Antitrust Claim 115
3. The District Court Opinion 116
4. The Third Circuit Decision 116
5. The Supreme Court Applies its Holding to the Facts 116
G. The California Supreme Court Enforces Due Process in Duran v. U.S. Bank 117
1. Lower Court Proceedings 117
2. The Supreme Court Decision 118
3. What Duran Means For Employers 119
H. Easing of Class Certification Standards Post-Brinker 120
I. Relitigation of Class Certification Denials 124
J. Defense Motions to Deny Class Certification (“Vinole Motions”) 127
XVI. Discovery Issues in Class Actions 128
A. Disclosure of Class Member Names and Addresses to Allow Access to Potential Witnesses 128
B. Discovery to Facilitate Location of Substitute Class Representatives 132
C. Discovery Issues Regarding Putative Class Member Declarations 136
1. Employers Must Approach Pre-Certification Communications With Their Employees With Caution 136
2. Protection Of Attorney Procured Witness Interviews From Discovery 139
XVII. Class Action Settlement 141
A. Generally 141
B. Restrictions on Reversions of Settlement Funds 141
C. Court Scrutiny of the Adequacy of the Settlement Amount 144
D. Class Notice 147
E. Objection to Settlements 147
F. Individual Settlements with Putative Class Members 148
XVIII. Class Action Waivers and Arbitration 151
A. Class Action Waivers and Arbitration Generally 151
B. The U.S. Supreme Court’s Epic Systems Decision 152
C. The Supreme Court Holds That Class Arbitration Must Be Expressly Agreed Upon 153
D. The California Supreme Court’s Arbitration Waiver Exception for PAGA Claims 154
E. California Judicial Reactions to Iskanian and PAGA 155
1. California Appellate Courts Continue to Keep PAGA Claims out of Arbitration 155
2. Federal District Courts in California Initially Declined to Follow Iskanian’s PAGA Exception, but the Ninth Circuit Ended That Debate 156
F. The Return of the U.S. Supreme Court – The Viking River Decision 156
G. Unconscionability Analysis Following Iskanian and Concepcion 158
H. California Legislative Attacks on Employee Arbitration Agreements 159
I. Enforcement of Arbitration Agreements By Non-Signatory Third Parties 160
XIX. Individual Liability 160
A. No Individual Liability for Wages 160
B. Individual Liability for Civil Penalties 162
XX. Out of State Employees Working Sporadically in California 164
Statutes of Limitations for Selected California Wage and Hour Claims 168
Statutes of Limitations for Selected California Wage and Hour Claims 169
1. Waiting Time Penalties 169
2. Unpaid Wages and Unpaid Overtime 169
3. Meal and Rest Period Penalties 169
4. Non-Compliant Wage Statements 170
5. Private Attorneys General Act (PAGA) 170
6. Unlawful Business Practice under the Unfair Competition Law 171
7. Reimbursement of Expenses 171
8. Failure to Provide Timely Records and Inspection 171
9. Violation of Wage Orders and Certain Labor Code sections 171
Table of Cases 173
Index of Terms 203

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