Litigating California Wage & Hour and Labor Code Class Actions

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law enforcement agencies, representing the same legal right and interest as those agencies, in a proceeding that is designed to protect the public, not benefit private parties.” 512 The court concluded that, because the purpose of the FAA was to govern arbitration of private disputes, as opposed to enforcing “public rights,” the FAA does not preempt state law exemptions PAGA claims from arbitration. 513 The National Labor Relations Board entered the fray, joining the assault on class-action waivers, in Cuda v. D.R. Horton, Inc., where the Board ruled that Concepcion did not apply in cases that involved waiver of rights protected by the NLRA . 514 The Board held that employers cannot force employees to sign arbitration agreements that include class action waivers. Such an agreement unlawfully restricts employees’ Section 7 right to engage in concerted action for mutual aid or protection, notwithstanding the FAA. The Board stressed that arbitration agreements are not per se unenforceable. However, whether the class/collective action mechanism is used in arbitration or in a court of law, the Board held that class resolution must be available to employees. The Board distinguished Concepcion on the ground that it involved a conflict between FAA and state law, whereas D.R. Horton involved a conflict between two federal statutes. XVIII. Individual Liability Some plaintiffs have employed the tactic of suing corporate officials personally in seeking unpaid wages. In 2005, in Reynolds v. Bement, 515 the California Supreme Court held that individuals cannot be held liable for overtime pay under Labor Code Sections 510 or 1194. The court left open the possibility, however, that individual supervisors could be held liable for civil penalties. Seyfarth Shaw advocated in Reynolds that California law does not impose individual liability on managers for wage and hour violations. Rather, the law imposes the primary civil obligation to comply with the wage and hour laws—including the obligation to provide back pay or damages— upon “employers” (a term that is not defined), while expending the scope of criminal liability or civil punishment to broader categories, such as “other persons” or “officers or agents” of an employer. Where the Legislature wanted to create individual liability, it referred to “any person” being liable, as opposed to cases where it held that an “employer” is liable. 516 512 513 514 515 516 197 Cal. App. 4th 489, 500 (2011). Id. (“AT&T does not provide that a public right, such as that created under PAGA, can be waived if such a waiver is contrary to state law”). Cuda v. D.R. Horton, Inc., 12-CA-25764 (N.L.R.B. Jan. 3, 2012) 36 Cal. 4th 1075 (2005). Compare Lab. Code § 553 (criminal liability for overtime violations available against “[a]ny person”) with Lab. Code § 510 (discussing only “employer’s” liability); see also Lab. Code § 1197.1 (imposing a civil fine on “[a]ny employer or Seyfarth Shaw LLP | www.seyfarth.com Litigating California Wage & Hour Class Actions (12th Edition) 116
The plaintiffs attempted to justify suing individual officers for damages by invoking the expansive definition of “employer” contained in the IWC Wage Orders. The defendants responded that to the extent anything in the Wage Orders could be read as creating individual liability for failure to pay overtime, such pronouncements are void in that they would exceed the scope of the Labor Code, which authorizes the IWC to adopt only regulations “consistent with” the Labor Code. 517 In 2005, the California Supreme Court largely adopted the defendants’ position, holding that under general common law principles of managerial immunity, managers are not liable for the corporate employees’ failure to pay wages. The Court found nothing in the plain meaning of the relevant Labor Code sections or in public policy to read individual overtime liability into the overtime statute. 518 The Court left the door open, however, to the recovery by an employee of statutory penalties from individual supervisors, such as the recovery of Section 558 penalties through a PAGA claim. 519 Moreover, the Court reaffirmed that a manager might be held liable under an alter ego theory if the employee proves the elements for this common law liability theory. 520 In 2010, the Supreme Court backtracked on its decision in Reynolds when it issued its ruling in Martinez v. Combs. 521 There, the Court held that “[i]n actions under section 1194 to recover unpaid minimum wages, the IWC’s wage orders do generally define the employment relationship, and thus who may be liable.” 522 The Court noted that the Wage Orders set forth a multi-pronged, disjunctive definition of employment: an employer is one who, directly or indirectly, or through an agent or any other person, engages, suffers, or permits any person to work, or exercises control over the wages, hours, or working conditions of any person. 523 The “engage, suffer, or permit” component of the definition does not require a common law “master and servant” relationship, but is broad enough to cover “irregular working arrangements the proprietor of a business might otherwise disavow with impunity.” 524 Further, “phrased as it is in the alternative (i.e., wages, hours, or working conditions), the language of the IWC's 'employer' definition has the obvious utility of reaching situations in which 517 518 519 520 521 522 523 524 other person acting either individually or as an officer, agent, or employee of another person” who fails to pay the minimum wage); Lab. Code § 210 (imposing a fine on “every person” who fails to make payments on paydays as required by §§ 204, 204b, and 205); Lab. Code § 215 (imposing criminal liability against “[a]ny person, or the agent, manager, superintendent or officer thereof” who violates statutory requirement to post a notice identifying when and where pay is made); Lab. Code § 1175 (imposing criminal liability on “[a]ny person, or officer or agent thereof” who fails to make certain kinds of work records and to make those records available to state inspectors). Lab. Code § 517(a). Reynolds, 36 Cal. 4th at 1087. Id. at 1089. Id. Martinez v. Combs, 49 Cal. 4th 35 (2010). Id. at 52 (emphasis added). Id. at 57. Id. at 58. Seyfarth Shaw LLP | www.seyfarth.com Litigating California Wage & Hour Class Actions (12th Edition) 117
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Litigating California Wage & Hour a
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Table of Contents I. Introduction a
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A. Disclosure of Class Member Names
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associated statutory penalties. 1 T
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who does not meet the threshold com
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exempt work is of a kind which in e
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3) The employee performs his or her
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decisions have concluded that under
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Bell court to look beyond the Wage
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place of business, would that quali
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IWC had the authority to promulgate
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stores” by providing them a porti
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declare such a system illegal witho
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employers should be able to defend
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waive the right to reimbursement, s
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Due to the ambiguity in the meaning
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For each workday the employer fails
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Arguably, no additional $100-per-pa
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permitted” the employee to work t
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federal decisions also held that an
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for all overtime hours worked. The
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much broader, such as the court’s
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In the appeal of Chau, the appellat
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years before the lawsuit, or for an
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imposition of penalties, 194 routin
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In one such class action, Elliot v.
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First, there has been a substantial
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Recent court decisions have begun t
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of her hours was paid at a rate of
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the limitations period for a penalt
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passage, then the employee could st
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all, but rather simply to proceed w
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Shortly thereafter, another Divisio
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Page 69 and 70: XIII. Class Action Fairness Act of
Page 71 and 72: the plaintiff is “master of her c
Page 73 and 74: alleged conduct or any related cond
Page 75 and 76: Initially, the decisions were split
Page 77 and 78: XIV. Class Certification A. General
Page 79 and 80: expectations and the realistic requ
Page 81 and 82: In the immediate wake of Sav-On, th
Page 83 and 84: Similarly, employers may argue that
Page 85 and 86: A 5 to 4 ruling reversed the Ninth
Page 87 and 88: facility to the next, or variations
Page 89 and 90: employer’s defense arsenal, and t
Page 91 and 92: In reaching this conclusion, the Co
Page 93 and 94: party who seeks the same relief, pr
Page 95 and 96: is to be so maintained.” This det
Page 97 and 98: speech. 429 Therefore, the court he
Page 99 and 100: Puerto, or Crab Addison cases would
Page 101 and 102: epresentative. That question was an
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Page 105 and 106: nothing but still are bound by the
Page 107 and 108: Initially, there appeared to be a v
Page 109 and 110: the case. As any one of these class
Page 111 and 112: have any great impact on class sett
Page 113 and 114: plaintiff’s attorney and putative
Page 115 and 116: the California Supreme Court issued
Page 117: While California courts have essent
Page 121: Breadth. Depth. Results. www.seyfar
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