18th Annual Workplace Class Action Report - 2022 Edition

370 Annual Workplace Class Action Litigation Report: 2022 Edition Code (“CLC”). Specifically, Plaintiff alleged that by omitting non-discretionary incentive payments from its calculation of premium pay, Defendant failed to pay her for non-compliant meal or rest breaks in accordance with her regular compensation rate as required by § 226.7(c). Defendant paid Plaintiff hourly wages as well as quarterly non-discretionary incentive payments, i.e. , payments for an employee’s work that are owed pursuant to a prior contract, agreement, or promise, that was not determined at the sole discretion of the employer. The trial court granted summary adjudication for Defendant because its calculation of premium pay according to an employee’s base hourly rate was proper under § 226.7(c). In so ruling, the trial court agreed with Defendant that “regular rate of compensation” § 226.7(c ) was not interchangeable with the term “regular rate of pay” under § 510 of the CLC, which governed overtime pay. Id . at *5. The trial court also granted summary judgment to Defendant on Plaintiff’s remaining causes of action. On Plaintiff’s appeal to the California Court of Appeal, it affirmed. The Court of Appeal held that the terms “regular rate of compensation” in § 226.7(c) and “regular rate of pay” in § 510(a) were not synonymous, and the premium for missed meal and rest periods was the employee’s base hourly wage. Plaintiff subsequently appealed the Court of Appeal’s judgment and the Supreme Court of California granted review. The Supreme Court reversed the judgment of the Court of Appeal. The Supreme Court held that because the Legislature intended "regular rate of compensation" under § 226.7 to have the same meaning as "regular rate of pay" under § 510, the calculation of premium pay for a non-compliant meal, rest, or recovery period, like the calculation of overtime pay, had to account for not only hourly wages, but also other non-discretionary payments. Id . at *23. For this reason, Defendant’s calculation of premium pay for non-compliant meal or rest breaks according to the Plaintiff’s base hourly rate, while omitting non-discretionary incentive payments, failed to pay Plaintiff in accordance with her regular rate of compensation as required under the CLC. Additionally, the Supreme Court rejected Defendant’s request that it apply its decision prospectively. The Supreme Court determined that no considerations of fairness or public policy warranted applying the decision only prospectively because the previous state of the law was not firmly fixed and its decision was procedural rather than substantive. For these reasons, the Supreme Court reversed the judgment of the Court of Appeal. Garcia, et al. v. Haralambos Beverage Co., 2021 Cal. App. LEXIS 3 (Cal. App. 2d Dist. Jan. 4, 2021). Plaintiffs, a group of truck drivers, filed a class action alleging that Defendant, a beverage distributor, violated state wage & hour laws. The parties engaged in multiple status conferences and rounds of discovery. Defendant thereafter filed a motion to compel arbitration of Plaintiffs’ claims pursuant to agreements included in Defendant’s employee handbook, which Plaintiffs acknowledged receiving and agreeing to its terms. Plaintiffs filed an opposition, asserting that Defendant had waived its right to arbitrate by its unreasonable delay and litigation conduct that was inconsistent with the right to arbitrate, which misled and prejudiced them. Defendant contended that it initially could not find the signed arbitration agreements, and that they were only located during the discovery process. The trial court denied Defendant’s motion to compel arbitration. It found that Defendant knew from the time it filed its answer that it had an arbitration policy and failed to demonstrate that it conducted a diligent search for the signed arbitration agreements. Id . at *8. Further, the trial court determined that even after locating the signed arbitration agreements, Defendant continued to act in a manner that was inconsistent with the right to arbitrate. On appeal, the California Court of Appeal affirmed the trial court’s ruling. The Court of Appeal noted that there was no dispute that Defendant was aware of its right to arbitrate at the outset of litigation, as it asserted the right to arbitrate as an affirmative defense in its answer and further “reserved” its right to arbitrate in the joint status conference statements. Id . at *11. The Court of Appeal therefore rejected Defendant’s contention that it was reasonable to wait until it located the executed arbitration agreements before filing its motion, particularly in light of its concession that at the outset of the litigation, it was not only aware of its policy requiring arbitration, but had located checklists that demonstrated both Plaintiffs had received a copy of the arbitration agreement. Id . at *11-12. The Court of Appeal further opined that the 24 months which pass from the time Defendant was served with Plaintiffs’ original complaint to when it filed its motion to compel arbitration was unreasonable. The Court of Appeal also determined that Defendant consistently acted in a manner inconsistent with arbitration by participating in discovery, status conferences, agreeing to mediation, and meeting and conferring with Plaintiffs’ counsel over discovery issues on several occasions. The Court of Appeal reasoned that submitting the claims to arbitration at this point in the litigation would lead to substantial prejudice to Plaintiffs, as they spent time and resources over two years of litigation. For these reasons, the Court of Appeal affirmed the trial court’s ruling denying Defendant’s motion to compel arbitration.