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Litigating California Wage & Hour Class and PAGA Actions - 24th Edition

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
2. Olson v. State of California: AB 5 Does Not Violate the Equal Protection Clause 25
E. California Voters Adopt Proposition 22 25
IV. Unlawful Deductions from Wages 29
A. Generally 29
B. Bonus Plan “Deductions” 30
C. Unlawful Commission Chargebacks 31
1. Nature of the Violation 31
2. Steinhebel Approves Certain Chargeback Plans 32
3. Further Development of the Law Since Steinhebel 33
V. Reimbursement of Employee Expenses 37
A. The Duty to Reimburse Expenses Under Labor Code Section 2802 37
B. Reimbursement for Uniforms Under the Wage Orders 41
VI. Meal and Rest Period Claims 43
A. Nature of Claims 43
1. Employers Must “Provide” Meal Periods 43
2. Employers Must “Authorize and Permit” Rest Periods 44
3. Meal and Rest Period Premium Pay 45
B. Debate Over Whether One-Hour Payment Is a “Penalty” 47
C. Meaning of “Provide” a Meal Period 48
D. Limits on IWC’s Power to Alter Labor Code Meal Period Rules 51
VII. Tip-Pooling 55
A. Actions Alleging Tips Were Diverted to Co-Workers Who Did Not Earn Them 55
B. Actions Alleging “Agents” of Management Wrongfully Took Tips 57
C. Timing of Payment Of Tips To Employees 58
D. The Future of Tip-Pooling Cases Under California Law 58
E. Service Charges 59
VIII. Vacation/Paid Time Off Forfeiture 63
IX. Waiting Time Penalties 67
A. Generally 67
B. Application to Fixed-Term and Temporary Employment 69
1. Assignments for a Fixed Term 69
2. Temporary Employment Agencies 70
X. Itemized Wage Statement Claims 73
A. Labor Code Section 226 73
B. Purpose Of The Wage Statement Statute 74
C. The Supreme Court Approves Of Derivative Wage Statement Claims Based On Unpaid Meal And Rest Premiums 74
D. Paid Sick Leave Must Be Recorded On Wage Statements 75
E. Accrued Vacation Time Need Not Be Recorded 75
F. Wage Statement Penalties 75
G. The “Injury” Requirement For Wage Statement Penalties Is Weakened 76
H. The Requirement That Violations Be “Knowing And Intentional” 77
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 88
F. Computer Bootup Time is Compensable Under FLSA 90
G. Compensability of Call-In Time for Standby Shifts 91
H. Reasonable Attorney’s Fees And Costs Must Be Awarded To A Prevailing Plaintiff In Unpaid Wage Cases 92
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. 2024 Reforms— Enactment of “New PAGA” 99
C. Requirement to Exhaust Administrative Remedies 100
C. Scope of the “Civil Penalty” Provisions 103
D. Pursuing PAGA Claims Collectively Without Class Certification 106
E. Whether PAGA Claims Can Be Stricken Or Otherwise Limited As Unmanageable 107
F. Release of PAGA Claims Through Class Settlement 110
G. Wage Order Claims 112
H. Class-Like Discovery for PAGA Claims 114
XIV. Unfair Competition Claims, Business & Professions Code Section 17200 117
A. Former Law—Pre-Proposition 64 117
B. Reform of the Law—Passage of Proposition 64 118
C. Proposition 64’s Restrictions on UCL Class Actions 119
D. Federal Courts Lack Jurisdiction Over UCL Claims For Restitution When There Is An Adequate Remedy At Law 120
XV. Class Action Fairness Act of 2005 123
A. The Purpose of the Act 123
B. General Requirements 123
C. Removal Under CAFA 124
1. The Timeliness Requirement For A CAFA Removal 124
2. Premature Removal and Sanctions 125
3. Establishing The “Amount In Controversy” In A CAFA Removal 125
4. The Amount In Controversy Does Not Include Non-Class Action Claims 128
D. Exceptions to CAFA Jurisdiction 128
1. Local Controversy Exception 128
2. Home State Exception 129
E. Waiver 129
F. After Removal and Effect of Denial of Class Certification 130
G. Settlement Process 131
XVI. Class Certification 135
A. General Requirements 135
B. Class Certification in Exempt Misclassification Cases 136
C. Subclasses 140
D. Opt-In Classes 141
E. Wal-Mart Stores, Inc. v. Dukes—The Supreme Court Shifts the Landscape of Class Certification 143
1. Class Members Must All Suffer A Common Injury Capable Of Class-Wide Resolution 143
2. The Similarly Situated And Commonality Standards Are Not So Different 144
3. Dukes Presents An Early Evidentiary Hurdle For Plaintiffs 145
4. Individualized Issues Preclude Certification 146
F. In Comcast v. Behrend, The Supreme Court Emphasizes That It Meant What It Said in Dukes 147
1. The Supreme Court Holding 147
2. The Antitrust Claim 147
3. The District Court Opinion 148
4. The Third Circuit Decision 148
5. The Supreme Court Applies its Holding to the Facts 148
G. The California Supreme Court Enforces Due Process in Duran v. U.S. Bank 149
1. Lower Court Proceedings 149
2. The Supreme Court Decision 150
3. What Duran Means For Employers 151
H. Easing of Class Certification Standards Post-Brinker 152
I. Relitigation of Class Certification Denials 156
J. Defense Motions to Deny Class Certification (“Vinole Motions”) 159
XVII. Discovery Issues in Class Actions 163
A. Disclosure of Class Member Names and Addresses to Allow Access to Potential Witnesses 163
B. Discovery to Facilitate Location of Substitute Class Representatives 166
C. Discovery Issues Regarding Putative Class Member Declarations 170
1. Employers Must Approach Pre-Certification Communications With Their Employees With Caution 170
2. Protection Of Attorney Procured Witness Interviews From Discovery 173
XVIII. Class Action Settlement 177
A. Generally 177
B. Restrictions on Reversions of Settlement Funds 177
C. Court Scrutiny of the Adequacy of the Settlement Amount 180
D. Class Notice 183
E. Objection to Settlements 183
F. Individual Settlements with Putative Class Members 184
XIX. Class Action Waivers and Arbitration 189
A. Class Action Waivers and Arbitration Generally 189
B. The U.S. Supreme Court’s Epic Systems Decision 190
C. The Supreme Court Holds That Class Arbitration Must Be Expressly Agreed Upon 191
D. The California Supreme Court’s Arbitration Waiver Exception for PAGA Claims 192
E. California Judicial Reactions to Iskanian and PAGA 193
1. California Appellate Courts Continue to Keep PAGA Claims out of Arbitration 193
F. The Return of the U.S. Supreme Court – The Viking River Decision 194
G. The California Supreme Court Counters Viking River – The Adolph Decision 195
H. The Rise Of “Headless” PAGA Actions Threatens To Render Viking River Moot 197
I. Unconscionability Analysis Following Iskanian and Concepcion 198
J. The Ninth Circuit Invalidates California’s Legislative Attacks on Employee Arbitration Agreements 200
K. Enforcement of Arbitration Agreements By Non-Signatory Third Parties 201
L. Trial Court Proceedings Are Automatically Stayed Pending An Interlocutory Appeal Of An Order Denying A Motion To Compel Arbitration 202
M. Employers Risk Waiving The Right To Compel Arbitration If They Fail To Pay Arbitration Fees Within 30 Days Of Receipt 203
N. #MeToo Reforms To Limit Arbitration Agreements 204
O. Increasing Challenges To Electronic Signatures On Arbitration Agreements 205
XX. Overview Of Joint Employer Liability 207
A. Joint Employer Liability Standards Under The FLSA 207
B. Joint Employer Liability Standards Under California Law 208
C. California Statutory Joint Liability For Workers Placed By Employment Agencies 209
D. Litigating Joint Employer Claims 210
XXI. Individual Liability 213
A. No Individual Liability for Wages 213
B. Individual Liability for Civil Penalties 215
XXII. Out of State Employees Working Sporadically in California 217
Statutes of Limitations for Selected California Wage and Hour Claims 221
Statutes of Limitations for Selected California Wage and Hour Claims 222
1. Waiting Time Penalties 222
2. Unpaid Wages and Unpaid Overtime 222
3. Meal and Rest Period Penalties 222
4. Non-Compliant Wage Statements 223
5. Private Attorneys General Act (PAGA) 223
6. Unlawful Business Practice under the Unfair Competition Law 224
7. Reimbursement of Expenses 224
8. Failure to Provide Timely Records and Inspection 224
9. Violation of Wage Orders and Certain Labor Code sections 224
Table of Cases 227
Index of Terms 269

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