California Labor and Employment Defense Blog : California Employment Lawyer & Attorney : Van Vleck Turner & Zaller Law Firm : Wage and Hour Class Actions : Serving Los Angeles, San Diego, San Francisco

Each year California enacts some very bad employment-related laws.  By “bad” I don’t mean that they are necessarily bad policy.  What I mean is that they are so poorly drafted that the policy itself is unintelligible.

One of this year’s “bad” laws is AB 887, which prohibits discrimination based on “a person’s gender-related appearance and behavior whether or not stereotypically associated with the person’s assigned sex at birth.”

What can it possibly mean for one’s appearance or behavior to be “gender related?”  Webster’s defines “gender” as “the behavioral, cultural, or psychological traits typically associated with one sex.”  So the dictionary definition suggests that acting in a manner typically associated with one’s sex is now protected.  Thus, acting like an aggressive macho jerk would be protected if you are a man, or dressing in frilly pink ribbons and batting your eyelashes would be protected if you are a woman.

But then the statute doubles back on itself by providing that “gender-related” also means anything that is “not stereotypically associated” with the person’s sex. Thus “gender-related” is defined as anything associated with a person’s biological sex or anything that is not associated with the person’s biological sex. The statute thus prohibits discrimination based on everything that is either “x,” or “not x.”  It is literally meaningless as drafted.

I know nothing about the Legislative history of this bill.  Perhaps it was intended to prevent discrimination against transsexuals or transvestites.  But if that was the purpose why didn't the Legislature just say so.   
 

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Today, the California Supreme Court set oral argument in Brinker Restaurant v. Superior Court (Hohnbaum) to take place on November 8, 2011. The Court typically provides a ruling on cases within 90 days of oral argument, so I expect a ruling very early in 2012.

This case is the much anticipated ruling on whether employers need to “ensure” meal breaks or merely make the breaks available to employees.  The Supreme Court explains, "This case presents issues concerning the proper interpretation of California's statutes and regulations governing an employer's duty to provide meal and rest breaks to hourly workers."   Click here for a detailed analysis of the lower court’s ruling and the different issues that the Supreme Court may address.

We will continue to provide case updates routinely as the decision nears. 

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According to the automated notice from the California Supreme Court, oral argument in Brinker v. Superior Court (Hornbaum) has been set for November 8, 2011.  This means the Court's long-awaited opinion (which will presumably clarify the standards for providing meal periods for employees) will likely be issued some time early next year.

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The U.S. Supreme Court yesterday vacated the Ninth Circuit decision in Chinese Daily News v. Wang, which had upheld class certification of various California Labor Code claims.  The Supreme Court makes no substantive analysis of the opinion but merely directed that it be remanded back to the Ninth Circuit "for further consideration in light of Wal-Mart Stores, Inc. v. Dukes."  

Some may see this as a vindication of the view that Dukes is a "game changer" for certification of wage and hour claims.  But I tend to disagree. 

The unusual aspect of the Chinese Daily News decision was that it had based certification of the plaintiffs' monetary wage claims under both Rule 23(b)(2) (applicable to equitable claims) and Rule 23(b)(3) (applicable to damage claims).  Dukes however rejected the use of Rule 23(b)(2) for certifying monetary claims.   So it is understandable that the case was vacated and remanded. 

The vast majority of wage claims, however, are certified exclusively under Rule 23(b)(3).  And Dukes did not change the standard applicable to that prong of the rule.   Consequently, I predict that the Ninth Circuit will merely decide on remand that certification in the Chinese Daily News case was independently proper under Rule 23(b)(3). 

For example, in the recent Second Circuit opinion of Shahriar v. Smith & Wollensky Restaurant Group, the Court upheld class certification of wage claims under Rule 23(b)(3) without finding the need to even mention Dukes. 

In short, at this point there is really no reason to believe that Dukes will have any significant impact on class certification of California wage and hour claims.  

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In Ellis v. Costco Wholesale Corp., the district court certified a nation-wide class of female Costco employees in what amounted to a carbon copy of the Dukes case against Wal-Mart.  The Ninth Circuit was therefore required to re-evaluate the certification decision in light of the Supreme Court's ruling in Dukes.

The result was a mixed bag that affirmed as to some certification findings but vacated and remanded as to others.  The most significant (in my opinion) aspect of the ruling is the Ninth Circuit's express directive to weigh the merits of the class-wide discrimination claims on remand as part of the certification decision:

[T]he merits of the class members’ substantive claims are often highly relevant when determining whether to certify a class. More importantly, it is not correct to say a district court may consider the merits to the extent that they overlap with class certification issues; rather, a district court must consider the merits if they overlap with the Rule 23(a) requirements.

This seems to be the culmination of long terms trend to break down the distinction between the procedural certification decision and the assessment of the merits of the case.  This emphasis on the merits may make certification more difficult in some cases.  However, it further reinforces the certification decision as the "big event" that not only decides whether the case may proceed as a class action but also suggests that the court is favorably disposed toward the merits.

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The U.S. Supreme Court decision in AT&T Mobility v. Concepcion held that the Federal Arbitration Act preempts California's rule against waiving class action rights in consumer arbitration contracts.  As we previously posted, if the reasoning of Concepcion were extended to the arbitration of employment claims it would overrule a vast body of well settled California law.   

It was thus inevitable that California state courts would begin pushing back on this federal takeover of state contract and arbitration law.  And Brown v. Ralphs Grocery Company may be the first shot in that campaign.  

Brown ducks the big issue of whether Concepcion effective overruled the California Supreme Court's decision in Gentry v. Superior Court, which generally prohibits class action waivers in employment arbitrations.  But Brown nevertheless creates a firebreak against the spread of the Concepcion rule to the employment context.  It did this by holding that Concepcion does not allow the enforcement of an arbitration provision that waives the right of an employee to pursue a representative action on behalf of similarly situated employees under the Labor Code Private Attorney General Act, or "PAGA."  

What is significant about the Brown Court's analysis, however, is that it utterly ignores the policy concerns stated in Concepcion regarding the need to enforce arbitration agreements exactly as written.  Instead, it bases its conclusion on the public policies favoring the enforcement of PAGA on a representative basis.  As the Court explained:

The purpose of the PAGA is not to recover damages or restitution, but to create a means of “deputizing” citizens as private attorneys general to enforce the Labor Code. Here, the relief is in large part for the benefit of the general public rather than the party bringing the action.  And, a representative action has significant institutional advantages over a single claimant arbitration. The representative action is a means for public enforcement of the labor laws. Thus, assuming it is authorized, a single-claimant arbitration under the PAGA for individual penalties will not result in the penalties contemplated under the PAGA to punish and deter employer practices that violate the rights of numerous employees under the Labor Code.  That plaintiff and other employees might be able to bring individual claims for Labor Code violations in separate arbitrations does not serve the purpose of the PAGA, even if an individual claim has collateral estoppel effects.  Other employees would still have to assert their claims in individual proceedings. In short, representative actions under the PAGA do not conflict with the purposes of the FAA. If the FAA preempted state law as to the unenforceability of the PAGA rep-resentative action waivers, the benefits of private attorney general actions to enforce state labor laws would, in large part, be nullified.

All of this policy analysis is equally applicable to non-PAGA class actions.  Indeed, this is almost the identical reasoning employed by the California Supreme Court in Gentry.   Thus, notwithstanding its stated reservation of the issue, Brown has to be read as a strongly suggesting that Gentry is still good law in California and that Concepcion should be limited as closely as possible to its facts -- i.e., as applying only in the consumer context.

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For years it was a common refrain for mediators and attorneys in L.A. to persuade clients to settle before trial with statements to the effect that "remember, your case will be decided by the same jury pool that decided O.J. Simpson wasn't guilty -- no matter how good you think your case is absolutely anything can happen in a jury trial."

It wasn't a Los Angeles jury this time but it appears that Casey Anthoy may be the new poster child for jury irrationality.  In fact, O.J. prosecutor Marcia Clark thinks the Casey aquittal is even worse.  I think she may be right. 

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 The federal district court decision in McKenzie v. FedEx, provided some useful guidance to employers and employees regarding what information must be included in pay statements under Labor Code section 226(a).  For example, in fulfilling the requirement to show "all hours worked," a wage statement doesn't necessarily have to contain a separate line item listing that number.  However, the wage statement must contain sufficient information for an employee to easily add up the total hours from the other lines.  

In McKenzie, the court granted summary judgment to the employee on the ground that FedEx's "idiosyncratic" wage statements were not self-explanatory and therefore failed the test.  

[T]he total regular and overtime hours listed in FedEx's wage statements, when added together, do not sum up to the total hours worked by the employee during the pertinent time period. Without additional information regarding the wage statement, an employee cannot simply “arrive at the sum of hours worked.”  Evidence of this can be seen in the sample wage statement provided by FedEx for McKenzie's pay period ending on March 21, 2009. When the total overtime categories and the regular rate hours listed in that document are added together, the sum of these figures is 58.24, which represents a total of 40 regular hours and 18.24 overtime hours. However, because information provided by FedEx (and not disclosed on the wage statement itself) explains that the overtime hours are always listed twice, the sum of all of the figures on the wage statement during the relevant period is actually 49.12, not 58.24.  Thus, the Morgan rationale, which contemplates that an employee can determine his or her total hours worked by summing up the figures on a wage statement without need to reference any other time records or other documents, does not apply to FedEx's somewhat idiosyncratic wage statement.  Accordingly, the Court finds that FedEx violated Section 226(a)(2) by failing to state the “total hours worked by [an] employee” in its wage statements.

The Court also found that FedEx's wage statements violated Section 226(a)(6) because they listed only the end date and not the start date of the covered pay period, and violated Section 226(a)(9) because they failed to separately list the applicable overtime rate of pay.   The Court further held that these violations would trigger penalties on behalf of all similarly situated employees under the Private Attorney General Act of 2004 ("PAGA"), regardless of whether the employees had suffered any specific injury.

It is surprising how many employers, even large employers like FedEx, will incorrectly assume that the design and content of their pay stubs is a trivial issue.  In reality, the Labor Code recognizes that supplying employees with the information necessary to review their own wages and hours for legal compliance is a crucial part of the overall enforcement scheme. 

As a result, Labor Code Section 226(a) requires the issuance of accurate, itemized wage statements that contain the specific categories of information spelled out in the Labor Code. The good news for employers is that Section 226(a) sets up clear, bright-line requirements which should be easy to follow.  The bad news is that Section 226(e) and PAGA impose penalties for issuing defective statements.  And due to the typically uniform nature of a wage statement program these penalties claims are likely to be assessed on behalf of every employee who ever received a statement.

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As the "global economy" becomes more fluid it is increasingly common for employees to cross borders for short-term assignments.  This can lead to confusion concerning the proper calculation of wages for these assignments  -- e.g., should it be based on the law where the work is performed, or where the employee lives?

In Sullivan v. Oracle the California Supreme Court has clarified that California's overtime rules apply to anyone performing work within the state, regardless of their state of residency or how long they may be working in California. 

Although the Court's ruling is technically limited to overtime rules the same analysis would necessarily also apply to most other Labor Code protections.  Thus, employers and workers alike should assume that the provisions of the Labor Code will generally govern any work performed in California. 

In a secondary part of the decision the Court also held that plaintiffs could not use California's unfair competition law ("UCL") to recover overtime payments which were earned under federal law in another state.  That would be stretching the long arm of California law a bit too far.

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