Litigating California Wage & Hour and Labor Code Class Actions

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Before suing, an aggrieved employee now must exhaust an administrative procedure that involves providing written notice of the particular Labor Code violation to the employer and the Labor Commissioner, for possible investigation before filing suit. 248 Failure to exhaust this administrative remedy within one year of the violation bars the suit. 249 The Labor Commissioner now has authority to promulgate regulations to implement the statute (although they have yet to attempt to do so). Although the 2004 reforms to PAGA may seem modest, they appear to have had the effect of substantially reducing the attractiveness of these kind of lawsuits. PAGA claims are not typically asserted by themselves, but rather are added to standard wage and hour class actions, typically for bargaining leverage. B. Scope of the “Civil Penalty” Provisions With the creation of the administrative remedy requirement before an employee could seek penalties under PAGA, the question arose whether this administrative requirement applied to all statutes covered by PAGA. More specifically, Section 2699.3 sets forth a long list of particular statutes that are purportedly subject to the administrative remedy. Included on this list are several statutes that provided for penalties recoverable by individual employees even before the passage of PAGA (e.g., Labor Code Section 203, which provides for waiting time penalties where employers willfully fail to pay terminating employees all wages owed to them). Defendants began to argue that no employee could sue to recover penalties under any statute listed in Section 2699.3 without first exhausting administrative remedies. In November 2004, the Second District Court of Appeal issued Caliber Bodyworks v. Superior Court, 250 which clarified the scope of the administrative remedy exhaustion requirement in PAGA. The court held that the administrative remedy requirement applied only to actions seeking to recover a “civil penalty,” which the court distinguished from actions that could be advanced by individuals to recover “statutory penalties,” such as Labor Code Section 203. In short, the court held that if a plaintiff seeks to recover penalties that were available under a statute and recoverable by an individual prior to PAGA’s 248 249 250 Lab. Code §§ 2699(a), 2699(g)(1), and 2699.3. Moreno, 2007 U.S. Dist. LEXIS 43873, at *4-10 (N.D. Cal. June 5, 2007) (employee who filed lawsuit within one year, but failed to exhaust administrative remedies until more than one year after leaving employment was time-barred from asserting PAGA claims). 134 Cal. App. 4th 365 (2005). Seyfarth Shaw LLP | www.seyfarth.com Litigating California Wage & Hour Class Actions (12th Edition) 58
passage, then the employee could still recover such statutory penalties without complying with the administrative prerequisites of PAGA. 251 Although not at issue in the Caliber Bodyworks decision, the court’s holding that statutory penalties differ from “civil penalties” arguably expanded the scope of PAGA beyond what had broadly been understood. PAGA created a new civil penalty for every section of the Labor Code that did not previously provide for a “civil penalty.” 252 If statutes that always provided for a statutory penalty (e.g., Labor Code Section 203) are not statutes that provide for a “civil penalty,” then an employee arguably can recover civil penalties in addition to the penalties already available under those statutes. On the other hand, the Caliber Bodyworks decision leaves open the possibility that no new civil penalty is created for those Labor Code provisions that do not themselves provide for a civil penalty, but for which civil penalties may be recovered under a separate Labor Code provision. 253 Furthermore, even if it is theoretically possible to obtain an award of civil penalties on top of statutory penalties for the same violation, courts may exercise discretion not to award double penalties pursuant to Labor Code Section 2699(e)(2), which allows a court not to award a penalty where doing so would be “unjust, arbitrary and oppressive, or confiscatory.” C. Pursuing PAGA Claims Collectively Without Class Certification PAGA provides very little procedural guidance as to how an “aggrieved employee” is to seek penalties on behalf of other aggrieved parties. Given that the statute does not ever require that the other “aggrieved parties” consent to a suit being brought on their behalf, a dispute arose whether a party seeking to use PAGA to sue on behalf of aggrieved parties who did not actively join the action as parties would need to satisfy the requirements for class certification under Code of Civil Procedure Section 382. In Arias v. Superior Court, 254 the California Supreme Court held that there is no requirement that a party seeking to sue on behalf of other aggrieved parties under PAGA must first obtain class certification. Rather, the employee bringing the issue stands in the shoes of the Labor Commissioner and may seek to recover penalties in essentially the same manner as the Labor Workforce Development Agency (“LWDA”). The LWDA may pursue penalties 251 252 253 254 Id. at 377-78. The Second Appellate District reached the same result again in Dunlap v. Superior Court, 142 Cal. App. 4th 330 (2006). Lab. Code § 2699(f). See, e.g., Lab. Code § 256 (providing a separate civil penalty previously recoverable only by the DLSE for violations of Labor Code Section 203); Lab. Code § 210 (providing a separate civil penalty recoverable only by the DLSE for violations of Labor Code Sections 204, 204b, 204.1, 204.2, 205, 205.5, and 1197.5). 46 Cal. 4th 969 (2009). Seyfarth Shaw LLP | www.seyfarth.com Litigating California Wage & Hour Class Actions (12th Edition) 59
Page 1 and 2:
Litigating California Wage & Hour a
Page 3 and 4:
Table of Contents I. Introduction a
Page 5 and 6:
A. Disclosure of Class Member Names
Page 7 and 8:
associated statutory penalties. 1 T
Page 9 and 10: who does not meet the threshold com
Page 11 and 12: exempt work is of a kind which in e
Page 13 and 14: 3) The employee performs his or her
Page 15 and 16: decisions have concluded that under
Page 17 and 18: Bell court to look beyond the Wage
Page 19 and 20: place of business, would that quali
Page 21 and 22: IWC had the authority to promulgate
Page 23 and 24: stores” by providing them a porti
Page 25 and 26: declare such a system illegal witho
Page 27 and 28: employers should be able to defend
Page 29 and 30: waive the right to reimbursement, s
Page 31 and 32: Due to the ambiguity in the meaning
Page 33 and 34: For each workday the employer fails
Page 35 and 36: Arguably, no additional $100-per-pa
Page 37 and 38: permitted” the employee to work t
Page 39 and 40: federal decisions also held that an
Page 41 and 42: for all overtime hours worked. The
Page 43 and 44: much broader, such as the court’s
Page 45 and 46: In the appeal of Chau, the appellat
Page 47 and 48: years before the lawsuit, or for an
Page 49 and 50: imposition of penalties, 194 routin
Page 51 and 52: In one such class action, Elliot v.
Page 53 and 54: First, there has been a substantial
Page 55 and 56: Recent court decisions have begun t
Page 57 and 58: of her hours was paid at a rate of
Page 59: the limitations period for a penalt
Page 63 and 64: all, but rather simply to proceed w
Page 65 and 66: Shortly thereafter, another Divisio
Page 67 and 68: and the ability to bring a collecti
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
Page 103 and 104: CashCall to disclose the identities
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 and 118:
While California courts have essent
Page 119 and 120:
The plaintiffs attempted to justify
Page 121:
Breadth. Depth. Results. www.seyfar
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