Front Cover 264

Litigating California Wage & Hour Class and PAGA Actions

Table of Contents V
I. Introduction and Overview 1
II. Common Exempt Misclassification Claims 3
A. Overview of State Overtime Law 3
B. The Executive (Managerial) Exemption 4
C. The Administrative Exemption 9
1. General Overview 9
2. California Develops a Unique Interpretation of the Administrative/Production Dichotomy 9
3. The Administrative/Production Dichotomy Test Survives—Harris v. Superior Court 12
4. The Ninth Circuit Makes a Mountain out of the Administrative/Production Dichotomy Molehill 13
D. The Outside Sales Exemption 14
E. The Commissioned Salesperson Exemption 16
III. Independent Contractor Classification 19
A. Dynamex Decision 19
1. Freedom From Control and Direction of the Hiring Entity 20
2. Outside the Usual Course of the Hiring Entity’s Business 20
3. Customarily Engaged in an Independent Business 21
B. Post-Dynamex Cases 21
1. Curry v. Equilon Enterprises, LLC: Application of Dynamex to Joint Employer Analysis 21
2. Garcia v. Border Transportation Group, LLC 22
3. Retroactivity of Dynamex: Vazquez v. Jan-Pro Franchising International, Inc. and Gonzales v. San Gabriel Transit 23
C. Addition of the ABC Test to the Labor Code 23
D. The Battle Over AB 5 24
1. California Trucking Ass’n v. Bonta: AB 5 Enforced as to Motor Carriers 24
E. California Voters Adopt Proposition 22 25
IV. Unlawful Deductions from Wages 27
A. Generally 27
B. Bonus Plan “Deductions” 28
C. Unlawful Commission Chargebacks 29
1. Nature of the Violation 29
2. Steinhebel Approves Certain Chargeback Plans 30
3. Further Development of the Law Since Steinhebel 31
V. Reimbursement of Employee Expenses 35
A. The Duty to Reimburse Expenses Under Labor Code Section 2802 35
B. Reimbursement for Uniforms Under the Wage Orders 39
VI. Meal and Rest Period Claims 41
A. Nature of Claims 41
1. Employers Must “Provide” Meal Periods 41
2. Employers Must “Authorize and Permit” Rest Periods 42
3. Meal and Rest Period Premium Pay 43
B. Debate Over Whether One-Hour Payment Is a “Penalty” 45
C. Meaning of “Provide” a Meal Period 46
D. Limits on IWC’s Power to Alter Labor Code Meal Period Rules 49
VII. Tip-Pooling 53
A. Actions Alleging Tips Were Diverted to Co-Workers Who Did Not Earn Them 53
B. Actions Alleging “Agents” of Management Wrongfully Took Tips 55
C. Timing of Payment Of Tips To Employees 56
D. The Future of Tip-Pooling Cases Under California Law 56
E. Service Charges 57
VIII. Vacation/Paid Time Off Forfeiture 61
IX. Waiting Time Penalties 65
A. Generally 65
B. Application to Fixed-Term and Temporary Employment 67
1. Assignments for a Fixed Term 67
2. Temporary Employment Agencies 68
X. Itemized Wage Statement Claims 71
A. Labor Code Section 226 71
B. Purpose Of The Wage Statement Statute 72
C. The Supreme Court Approves Of Derivative Wage Statement Claims Based On Unpaid Meal And Rest Premiums 73
D. Paid Sick Leave Must Be Recorded On Wage Statements 73
E. Accrued Vacation Time Need Not Be Recorded 74
F. Wage Statement Penalties 74
G. The “Injury” Requirement For Wage Statement Penalties Is Weakened 75
H. The Requirement That Violations Be “Knowing And Intentional” 76
XI. California Minimum Wage Claims 79
A. Wage Averaging Improper Under California Law 79
B. The Conflict Between Piece-Rate Formulas and the Requirement to Pay Minimum Wage 82
C. Neutral Time-Rounding Practices: Federal Law vs. California Law 84
D. Compensability of Time Spent in Security Checks 86
E. California’s Application of the De Minimis Doctrine 87
F. Computer Bootup Time is Compensable Under FLSA 89
G. Compensability of Call-In Time for Standby Shifts 90
XII. Regular Rate of Pay 93
A. What is Included (and Excluded) 93
1. Discretionary Versus Non-Discretionary Bonuses 94
2. Percentage-of-Earnings Payments 94
B. Calculating the Regular Rate 94
1. Hourly Rates and Shift Differentials 95
2. Commissions and Production-Based Incentives 95
3. Salary 95
4. Flat-Sum Bonuses 96
XIII. California Labor Code Private Attorneys General Act 97
A. General Scope of the Law 97
B. Requirement to Exhaust Administrative Remedies 100
C. Scope of the “Civil Penalty” Provisions 103
D. Pursuing PAGA Claims Collectively Without Class Certification 105
E. Whether PAGA Claims Can Be Stricken As Unmanageable 106
F. Release of PAGA Claims Through Class Settlement 109
H. Class-Like Discovery for PAGA Claims 113
XIV. Unfair Competition Claims, Business & Professions Code Section 17200 115
A. Former Law—Pre-Proposition 64 115
B. Reform of the Law—Passage of Proposition 64 116
C. Proposition 64’s Restrictions on UCL Class Actions 117
D. Federal Courts Lack Jurisdiction Over UCL Claims For Restitution When There Is An Adequate Remedy At Law 118
XV. Class Action Fairness Act of 2005 121
A. The Purpose of the Act 121
B. General Requirements 121
C. Removal Under CAFA 122
1. The Timeliness Requirement For A CAFA Removal 122
2. Premature Removal and Sanctions 123
3. Establishing The “Amount In Controversy” In A CAFA Removal 123
4. The Amount In Controversy Does Not Include Non-Class Action Claims 126
D. Exceptions to CAFA Jurisdiction 126
1. Local Controversy Exception 126
2. Home State Exception 127
E. Waiver 127
F. After Removal and Effect of Denial of Class Certification 128
G. Settlement Process 129
XVI. Class Certification 133
A. General Requirements 133
B. Class Certification in Exempt Misclassification Cases 134
C. Subclasses 138
D. Opt-In Classes 139
E. Wal-Mart Stores, Inc. v. Dukes—The Supreme Court Shifts the Landscape of Class Certification 141
1. Class Members Must All Suffer A Common Injury Capable Of Class-Wide Resolution 141
2. The Similarly Situated And Commonality Standards Are Not So Different 142
3. Dukes Presents An Early Evidentiary Hurdle For Plaintiffs 143
4. Individualized Issues Preclude Certification 144
F. In Comcast v. Behrend, The Supreme Court Emphasizes That It Meant What It Said in Dukes 145
1. The Supreme Court Holding 145
2. The Antitrust Claim 145
3. The District Court Opinion 146
4. The Third Circuit Decision 146
5. The Supreme Court Applies its Holding to the Facts 146
G. The California Supreme Court Enforces Due Process in Duran v. U.S. Bank 147
1. Lower Court Proceedings 147
2. The Supreme Court Decision 148
3. What Duran Means For Employers 149
H. Easing of Class Certification Standards Post-Brinker 150
I. Relitigation of Class Certification Denials 154
J. Defense Motions to Deny Class Certification (“Vinole Motions”) 157
XVII. Discovery Issues in Class Actions 159
A. Disclosure of Class Member Names and Addresses to Allow Access to Potential Witnesses 159
B. Discovery to Facilitate Location of Substitute Class Representatives 162
C. Discovery Issues Regarding Putative Class Member Declarations 166
1. Employers Must Approach Pre-Certification Communications With Their Employees With Caution 166
2. Protection Of Attorney Procured Witness Interviews From Discovery 169
XVIII. Class Action Settlement 173
A. Generally 173
B. Restrictions on Reversions of Settlement Funds 173
C. Court Scrutiny of the Adequacy of the Settlement Amount 176
D. Class Notice 179
E. Objection to Settlements 179
F. Individual Settlements with Putative Class Members 180
XIX. Class Action Waivers and Arbitration 185
A. Class Action Waivers and Arbitration Generally 185
B. The U.S. Supreme Court’s Epic Systems Decision 186
C. The Supreme Court Holds That Class Arbitration Must Be Expressly Agreed Upon 187
D. The California Supreme Court’s Arbitration Waiver Exception for PAGA Claims 188
E. California Judicial Reactions to Iskanian and PAGA 189
1. California Appellate Courts Continue to Keep PAGA Claims out of Arbitration 189
2. Federal District Courts in California Initially Declined to Follow Iskanian’s PAGA Exception, but the Ninth Circuit Ended That Debate 190
F. The Return of the U.S. Supreme Court – The Viking River Decision 190
G. The California Supreme Court Counters Viking River – The Adolph Decision 191
H. Unconscionability Analysis Following Iskanian and Concepcion 193
I. The Ninth Circuit Invalidates California’s Legislative Attacks on Employee Arbitration Agreements 195
J. Enforcement of Arbitration Agreements By Non-Signatory Third Parties 196
K. Trial Court Proceedings Are Automatically Stayed Pending An Interlocutory Appeal Of An Order Denying A Motion To Compel Arbitration 196
XX. Overview Of Joint Employer Liability 199
A. Joint Employer Liability Standards Under The FLSA 199
B. Joint Employer Liability Standards Under California Law 200
C. California Statutory Joint Liability For Workers Placed By Employment Agencies 201
D. Litigating Joint Employer Claims 202
XXI. Individual Liability 205
A. No Individual Liability for Wages 205
B. Individual Liability for Civil Penalties 207
Table of Cases 219
Index of Terms 258

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