Litigating California Wage & Hour and Labor Code Class Actions

Other decisions, however, have reached contrary conclusions. In early 2010 the California Court of
Appeal, in an order reversing the denial of class certification, held that difficulty and expense in
reconstructing time records may itself constitute evidence of injury. 217 (Notably, the plaintiffs’
226 claim was not purely derivative of their misclassification and meal- and rest-break claims.) And
in Kisliuk v. ADT Security Services, Inc., 218 a federal district court interpreted the “injury”
requirement to refer to the mere violation of a legal right, not damages. 219
The other important dispute over the construction of Section 226 concerns the meaning of the
phrase “knowing and intentional.” This standard appears, on its face, to differ from the standard for
awarding waiting time penalties under Labor Code Section 203, which is mere “willfulness.”
Normally, if an employer is conscious that it committed an act, and if the employer lacks a
reasonable basis for believing the act is lawful, then the act is “willful” for purposes of Section 203
even where the employer lacked bad faith or an intention to break the law. 220 Although this
statutory interpretation departs from the common-sense understanding of the term “willful violation,”
it furthers a strong public policy favoring payment of final wages to an employee (who may depend
on such wages for survival), so there is a colorable reason to use a broad interpretation of
“willful.” 221
With wage statement violations, by contrast, any injury to the employee is often purely theoretical.
Employers contend there is no strong public policy reason to hold them liable for penalties totaling
thousands (or even millions) of dollars merely because they were ignorant of a technical
requirement as to what should appear on an itemized wage statement. Accordingly, they believe
there is no strong reason to assume the Legislature intended to equate “knowing and intentional”
with “willful.” Several district court decisions have now granted summary adjudication against a
claim for penalties on the ground that while the wage statements violated Section 226(a), there was
no evidence that the employer knew of Section 226 and intended to violate it. 222
217
218
219
220
221
222
Jaimez v. Daiohs U.S.A., Inc., 181 Cal. App. 4th 1286 (2010) (“While there must be some injury in order to recover
damages, a very modest showing will suffice.”); see also Wang v. Chinese Daily News, Inc., 435 F. Supp. 2d 1042,
1050 (C.D. Cal. 2006) (where “wage statements consistently reflect 86.66 hours worked (regardless of numbers of
hours actually worked) and omitted hourly wages paid,” an employee “suffers injury” because the employee might not
be paid for any overtime, is prevented from challenging overtime rate paid, and has to incur expense of hiring experts to
reconstruct pay records); Perez v. Safety-Kleen Sys., Inc., 2007 U.S. Dist. LEXIS 48308 (N.D. Cal. June 27, 2007)
263 F.R.D. 544 (C.D. Cal. 2008).
See id. at 547-48 (plaintiff does not have to allege injury synonymous with actual damages to maintain claim under
§ 226(e)).
Barnhill v. Robert & Saunders Co., 125 Cal. App. 3d 1, 7 (1981).
See id. at 7-8 (explaining public policy underlying Section 203).
See Harris v. Vector Marketing Corp., 656 F. Supp. 2d 1128, 1145-46 (N.D. Cal. 2009) (summary adjudication
warranted on plaintiff’s § 226(e) claim where dispute existed as to whether plaintiff was independent contractor or
employee and record lacked evidence that conduct was knowing or willful); Reber v. AIMCO/Bethesda Holdings, Inc.,
2008 WL 4384147 (C.D. Cal. Aug. 25, 2008) (summary adjudication appropriate on plaintiff’s § 226 claim because of a
good faith dispute as to whether employees are exempt precludes finding defendant’s conduct was knowing and
Seyfarth Shaw LLP | www.seyfarth.com Litigating California Wage & Hour Class Actions (12th Edition) 52