Litigating California Wage & Hour and Labor Code Class Actions

“Plaintiffs seek to minimize the district court’s main concern--that although there are
common issues, including uniform classification, the inquiry into each HLC’s exempt status
would burden the court.” 58 “The principal factor in determining whether common issues of
fact predominate is whether the uniform classification, right or wrong, eases the burden of
the individual inquiry. But this is a legitimate concern. Plaintiffs’ claims will require inquiries
into how much time each individual HLC spent in or out of the office and how the HLC
performed his or her job; all of this where the HLC was granted almost unfettered autonomy
to do his or her job. This must be considered along with the lack of issues subject to
common proof that would actually ameliorate the need to hold several hundred mini-trials
with respect to each HLC’s actual work performance.” 59
III.
Unlawful Deductions from Wages
A. Generally
A second allegation commonly made in Labor Code class actions is that the employer
unlawfully deducted from the employee’s wages. Plaintiffs have used these allegations to
challenge policies designed to hold employees liable for cash shortages or theft, to pay
bonuses based on net profits, and to advance commissions subject to recoupment or
“chargeback.”
Under California law, an employer cannot deduct from an employee’s wages to account for
losses to the business that occurred as a result of simple negligence or through no fault of
the employee. Courts have held that such losses are part of the cost of doing business
and, therefore, should be borne by the enterprise rather than the individual employees.
This principle is codified specifically in Section 8 of the Wage Orders:
No employer shall make any deduction from the wage or require any
reimbursement from an employee for any cash shortage, breakage, or loss of
equipment, unless it can be shown that the shortage, breakage, or loss is caused
by a dishonest or willful act, or by the gross negligence of the employee.
In dicta, several California cases have indicated the rule codified in Section 8 extends
beyond deductions for cash shortage, breakage, or loss of equipment. The seminal case
on this issue, Kerr’s Catering Service v. Dep’t of Industrial Relations, 60 held only that the
58
59
60
Id. at 6.
Id. at 947 (emphasis added); see also Mevorah v. Wells Fargo Home Mortgage, Inc., 268 F.R.D. 604 (N.D. Cal. Jan.
12, 2010) (on remand after reversal of certification decision for reconsideration, district court denied certification as to
class of Wells Fargo home loan consultants); Maddock v. KB Homes, Inc., 248 F.R.D. 229 (C.D. Cal. 2007) (denying
class certification as to putative class of commissioned home salespersons).
57 Cal. 2d 319, 329 (1962).
Seyfarth Shaw LLP | www.seyfarth.com Litigating California Wage & Hour Class Actions (12th Edition) 18