18th Annual Workplace Class Action Report - 2022 Edition

Annual Workplace Class Action Litigation Report: 2022 Edition 371 Gomez v. Regents of University of California, 2021 Cal. App. LEXIS 339 (Cal. App. 4th Dist. April 23, 2021). Plaintiff brought a putative class action on behalf of herself and all other similarly-situated non-exempt hourly employees alleging minimum wage violations of California law. Plaintiff worked for Regents of the University of California as an hourly employee at the University of California – San Diego Medical Center. In her lawsuit Plaintiff alleged that Defendant’s timekeeping procedures of rounding hours and automatically deducting 30-minute meal breaks resulted in her not receiving the minimum wage for all hours she actually worked in violation of The Industrial Welfare Commission’s (“IWC”) Wage Order No. 4. In addition to claiming that Defendant did not pay her the minimum wage, Plaintiff also sought penalties under the Private Attorneys General Act of 2004 (“PAGA”). The trial court sustained Defendant’s demurrer without leave to amend and entered judgment in its favor. In its ruling, the trial court concluded that Plaintiff’s minimum wage claim was barred as a matter of law because Defendant was exempt from statutes and regulations that govern wages and benefits of public employees. The trial court further found that Defendant was exempt from the PAGA under § 818 of the Government Code. On appeal to the California Court of Appeal, the parties disputed whether Wage Order No. 4 applied to Defendant. Wage Order No. 4 stated in relevant part that it “shall not apply to any employees directly employed by the State or any political subdivision thereof, including any city, county, or special district. “ Id . at *5. At the outset, the Court of Appeal noted that there were no cases specifically addressing the application of Wage Order No. 4 to Defendant. Plaintiff pointed to § 1(B) of Wage Order No. 4, which indicated that minimum wage requirements did apply to public employees. Subdivision 1(B) provided that the provisions of this order “shall not apply to any employees directly employed by the State or any political subdivision thereof, including any city, county, or special district.” Id . Thus, Plaintiff argued that this exclusionary language made it clear that Wage Order No. 4 applied to public entities like Defendant. For its part, Defendant asserted that subdivision 1(B) of Wage Order No. 4 did not apply to it, as the provision only referred to the state and the state’s political subdivisions. In the end the Court of Appeal sided with Defendant and held that that its timekeeping procedures were matters of internal affairs of the university that did not come within any of the exceptions to the Defendant’s constitutional immunity. As such, the Court of Appeal determined that Wage Order No 4 did not extend to Plaintiff’s minimum wage claim against Defendant. The Court of Appeal reasoned that because Plaintiff had not alleged that Defendant set her hourly pay below the minimum wage, and instead she only challenged certain timekeeping procedures of Defendant, this was a matter of internal affairs. In light of California’s consistent deference to Defendant regarding the setting of wages and benefits for employees, the Court of Appeal concluded that the trial court did not err in sustaining the demurrer without leave to amend as to Plaintiff’s minimum wage claim. Likewise, the Court of Appeal held that Plaintiff’s PAGA claim also failed because it was derivative of her first cause of action. For these reasons, the Court of Appeal affirmed the judgment of the trial court in favor of Defendant. Green, et al. v. Shipt, Inc., 2021 Cal. App. Unpub. LEXIS 6648 (Cal. App. 2d Dist. Oct. 21, 2021). Plaintiff filed a class action under the California Private Attorneys General Act of 2004 (“PAGA”) alleging she and other workers in California were misclassified as independent contractors in violation of the California Labor Code. Id . at *1. Defendant filed a motion to compel arbitration, and the trial court denied the motion It primarily relied on Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014), which held that agreements seeking to waive the right to bring representative actions under the PAGA are unenforceable. On appeal, the California Court of Appeal affirmed the trial court’s ruling. The arbitration agreement at issue stated that that Plaintiff would "agree that any and all disputes, claims, or controversies," "will be resolved through mandatory, binding arbitration,” including "any claims that a worker/independent contractor should be classified as an employee" and any disputes "regarding the scope, interpretation, validity, and enforceability of . . . the Arbitration Agreement." Id . at *3. The agreement also included a class action waiver. Iskanian held that a complete ban on PAGA actions was contrary to public policy, and unenforceable as a matter of state law because it would "disable one of the primary mechanisms for enforcing the Labor Code,” i.e. , the use of deputized citizen- employees to . . . pursue the civil penalties used to deter such violations. Id . at *9. Iskanian further determined that such a rule did not conflict with the Federal Arbitration Act (“FAA”) because the FAA was intended to govern private disputes and a PAGA action was a dispute between an employer and the state. Id . The Court of Appeal opined that it was bound to follow the California Supreme Court’s decision in Iskanian . Accordingly, the Court of Appeal reasoned that there was nothing in Plaintiff’s operative PAGA-only complaint to compel to arbitration, and therefore it affirmed the trial court’s ruling denying the motion to compel arbitration.