Litigating California Wage & Hour and Labor Code Class Actions
Litigating California Wage & Hour and Labor Code Class Actions
Litigating California Wage & Hour and Labor Code Class Actions
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imposition of penalties, 194 routinely applies the penalty provision when the employer has<br />
failed to pay any wage claim over the entire course of employment <strong>and</strong> continues not to<br />
pay it at the time of termination. As a result, an employer who shorts an employee $1 of<br />
owed vacation pay could be required to pay the employee the equivalent of six weeks’ pay<br />
in penalties.<br />
Courts have ruled that good faith, or lack of willfulness, is a defense to waiting time<br />
penalties. 195 As the <strong>California</strong> Supreme Court explained: “A good faith dispute that any<br />
wages are due will preclude imposition of waiting time penalties under Section 203.” 196<br />
Simple ignorance of the law, as opposed to a reasonable, good faith belief that the law<br />
provided a defense to payment of wages, generally is insufficient to avoid waiting time<br />
penalties. 197<br />
Unvested stock that an employee chose to receive in lieu of full wages is not viewed as<br />
wages that must be paid to an employee if the employee resigns prior to the vesting date of<br />
the stock, though the wages not paid due to the receipt of the stock must be paid (without<br />
interest) to an employee who is involuntarily terminated prior to the vesting date. 198<br />
B. Application to Fixed-Term <strong>and</strong> Temporary Employment<br />
1. Assignments for a Fixed Term<br />
By Section 203’s terms, waiting time penalties are recoverable only by an employee<br />
“who is discharged or who quits.” 199 But what happens when the assignment simply<br />
comes to an end by its own terms, either because a fixed term has expired, or a fixed<br />
project is completed? The appellate court held that neither of those circumstances<br />
194<br />
195<br />
196<br />
197<br />
198<br />
199<br />
8 C.C.R. § 13520 (“[A] good faith dispute that any wages are due will preclude imposition of waiting time penalties<br />
under Section 203.”).<br />
Road Sprinkler Fitters Local Union No. 669 v. G&G Fire Sprinklers, Inc., 102 Cal. App. 4th 765 (2002); Davis v. Morris,<br />
37 Cal. App. 2d 269 (1940).<br />
Smith v. Rae-Ventner Law Group, 29 Cal. 4th 345, 354 n.3 (2002), superseded on other grounds by statute, <strong>Code</strong> Civ.<br />
Proc. § 98.2(c) as recognized in Eicher v. Advanced Business Integrators, Inc., 151 Cal. App. 4th 1363 (2007); Amaral<br />
v. Cintas Corp., 163 Cal. App. 4th 1157, 1201-03 (2008)(defendant’s failure to pay wages according to “living wage”<br />
clause in contract did not constitute a willful violation of the <strong>Labor</strong> <strong>Code</strong> where the defendant’s position raised<br />
“complicated issues of first-impression”); see also Nordstrom Com’n Cases, 186 Cal. App. 4th 576, 584 (2010) (holding<br />
that the trial court did not abuse its discretion in discounting the penalties on a Section 203 claim because the<br />
defendant could avoid the penalties by showing that a “good faith dispute” existed regarding the claimed wages).<br />
Barnhill v. Robert & Saunders Co., 125 Cal. App. 3d 1, 7 (1981).<br />
Schacter v. Citigroup, Inc., 47 Cal. 4th 610 (2009). This decision did not foreclose the possibility of a different outcome<br />
if the employee were fired rather than voluntarily resigned.<br />
Lab. <strong>Code</strong> § 203. In addition, the penalties for employees who quit are limited to employees “not having a written<br />
contract for a definite period.” Lab. <strong>Code</strong> § 202.<br />
Seyfarth Shaw LLP | www.seyfarth.com <strong>Litigating</strong> <strong>California</strong> <strong>Wage</strong> & <strong>Hour</strong> <strong>Class</strong> <strong>Actions</strong> (12th Edition) 47