Litigating California Wage & Hour and Labor Code Class Actions

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also apply to non-resident employees who perform work in California for California employers. 7 Individual employees have a private right of action for unpaid overtime. Typically, a plaintiff invokes a private right of action by alleging violation of Labor Code Section 510 or a provision of the governing IWC order. Such a claim does not depend on the Fair Labor Standards Act (“FLSA”) or other federal law. A prevailing plaintiff may recover attorney’s fees for an overtime claim, 8 but California law, unlike the FLSA, does not provide a remedy of double damages for willful overtime violations. 9 In a private action for unpaid overtime compensation under the Labor Code, the statute of limitations reaches back to three years before the date the lawsuit is filed in court. 10 B. The Executive (Managerial) Exemption One issue frequently raised in misclassification class actions is that a proposed class of exempt managers—most often “working managers” in a retail establishment—do not qualify for the “executive” (aka “managerial”) exemption. The FLSA and California law contain similar executive exemptions, but California’s is more restrictive in key respects. California requires that an “executive” employee be paid a higher level of compensation than required under the FLSA. 11 The salary must be set at a level at least twice the minimum wage, which is currently $8.00 per hour in the State of California. 12 Accordingly, to qualify for the exemption, a manager must now be paid $33,280 per year. A manager 7 8 9 10 11 12 The California Supreme Court in Sullivan v. Oracle, 51 Cal. 4th 1191 (2011), held that California overtime laws apply to out-of-state employees who perform work within the state. The Court also held that overtime work performed by out-ofstate employees within California can serve as the basis for a claim under California’s unfair competition law. Cal. Bus. & Prof. Code § 17200 (“UCL”). However, the Court also held FLSA violations as to out-of-state employees outside California cannot serve as the basis for a California UCL claim. Although the Sullivan court explicitly limited its decision to “the circumstances of this case,” plaintiff’s bar may argue its reasoning suggests that similar conclusions may result for non-California-based employers. The Sullivan court declined to opine on the different burdens that a non-Californiabased employer may face in applying California overtime laws to nonresident employees working in California, but the plaintiff’s bar will undoubtedly seek to obtain judicial rulings that the California Supreme Court’s conflict of laws analysis suggests no reason for why a different conclusion would result for non-California-based employers. The California Court of Appeal has held that only the prevailing employee, and not the prevailing employer, may recover attorney’s fees in an action for overtime pay or for unpaid minimum wages. Early v. Superior Court, 79 Cal. App. 4th 1420 (2000). But see Lab. Code § 1194.2 (providing double damages for minimum wage violations). As explained infra, this statute of limitations can be extended to four years through the pleading of a companion claim under the state Unfair Competition Law, Bus. & Prof. Code § 17200, et seq. The revised FLSA regulations that went into effect on August 23, 2004, increased the minimum salary from $250 per week to $455 per week. Even under this revised minimum, California’s minimum remains higher than the FLSA’s minimum. The federal minimum wage is currently $7.25; employees working within California are generally subject to the higher state minimum wage. Seyfarth Shaw LLP | www.seyfarth.com Litigating California Wage & Hour Class Actions (12th Edition) 6
who does not meet the threshold compensation test is automatically disqualified from the exemption. The other requirements are that the manager (1) must have the power to hire and fire, or make recommendations on those topics that are given particular weight; (2) must supervise at least two full-time equivalent positions; (3) must “primarily” be engaged in managerial duties; and (4) must “customarily and regularly” exercise discretion and independent judgment. 13 Most litigation in California arises out of element (3) above, because the California Supreme Court in Ramirez v. Yosemite Water Co. 14 held that an employee meets element (3) only when the employee spends more than half of the work time on exempt duties. By contrast, under the FLSA’s executive exemption, the employer need only establish that management is the employee’s “primary duty,” which focuses on the relative importance of the duty rather than just the amount of time devoted to the duty. 15 Aside from its emphasis on the percentage of work time devoted to exempt duties, there has been little California case law explaining precisely which duties qualify as exempt “managerial work.” Since July 2000, however, the Wage Order has expressly incorporated by reference the then-existing FLSA regulations defining “managerial” duties. 16 Accordingly, federal authority construing those specific regulations is highly relevant in interpreting the California executive exemption. 17 Some examples of exempt work set forth in the federal regulation are interviewing, selecting and training employees, setting and adjusting pay rates and work hours, directing work, keeping production records for subordinates, evaluating employees’ efficiency and 13 14 15 16 17 See IWC Wage Order 1-2001(1)(A)(1); Nordquist v. McGraw-Hill Broad. Co., 32 Cal. App. 4th 555, 573 (1995) (“‘Discretion and independent judgment’ within the meaning of IWC Order No. 11-80 involves the comparison of possible courses of conduct, and acting after considering various possibilities. It implies that the employee has the power to make an independent choice free from immediate supervision and with respect to matters of significance . . . [meaning matters] of substantial significance to the policies or general operations of the business of the employer.”). 20 Cal. 4th 785 (1999). Id. at 797; see also Baldwin v. Trailer Inns, Inc., 266 F.3d 1104, 1113-16 (9th Cir. 2001) (although store managers spent less than one-half their time on duties that met the federal executive exemption, they still qualified as exempt because management was found to be their “primary” or most important duty). See Whiteway v. FedEx Kinko’s Office & Print Servs., Inc., 2007 U.S. Dist. LEXIS 61239; 12 Wage & Hour Cas. 2d (BNA) 1503 (N.D. Cal. Aug. 21, 2007) (citing IWC Wage Order 7-2001 § (1)(A)(1)(e) and noting that it incorporates the federal definition of management as set forth in 29 C.F.R. § 541.102). See Whiteway, 2007 U.S. Dist. LEXIS 61239, at *22 (relying on federal cases construing 29 C.F.R. § 541.202 to interpret California executive exemption); see also Bldg. Material & Constr. Teamsters Union v. Farrell, 41 Cal. 3d 651, 658 (1986) (“[f]ederal decisions have frequently guided our interpretation of state labor provisions the language of which parallels that of federal statutes”); Alcala v. Western Agric. Enters., 182 Cal. App. 3d 546, 550 (1986) (“It has been held that when California’s laws are patterned on federal statutes, federal cases construing those federal statutes may be looked to for persuasive guidance”). Seyfarth Shaw LLP | www.seyfarth.com Litigating California Wage & Hour Class Actions (12th Edition) 7
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: associated statutory penalties. 1 T
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 and 60:
the limitations period for a penalt
Page 61 and 62:
passage, then the employee could st
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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