In Lubin v. The Wackenhut Corp., the plaintiffs were security guards who claimed they should be certified as a class because their employer maintained a consistent policy of requiring them to remain constantly on-duty throughout their shifts at certain job sites. (The facts of the case were therefore basically similar to those in Augustus v. ABM Industries, Inc.)
The 50-page opinion thoroughly reviews and synthesizes the recent state and federal authorities related to class certification and collective proof. The opinion is worthy of several separate posts (which may be forthcoming). For now, however, I wanted to highlight what may be the most important aspects of the opinion -- i.e., how class-wide liability may be properly based on an evaluation of the employer's general policy.
The trial court in Lubin had determined that, even if Wackenhut's general policy was unlawful, it could still avoid liability by proving that "in practice" some individuals were nevertheless able to take legally compliant breaks. The trial court further reasoned that, under the U.S. Supreme Court's Title VII decision in Wal-Mart v. Dukes, such individual instances of compliance would need to be separately adjudicated.
The Appellate Court decisively rejected this liability standard. Instead, it explained that proof of an unlawful policy will, by itself, establish the employer's liability.
Throughout its order the court also found that individualized inquiries were necessary because, pursuant to Wal–Mart, Wackenhut was entitled to defend by proving that, even if plaintiffs presented evidence that it had a general policy of not providing valid meal or rest breaks, in practice some employees were afforded an off-duty meal or rest break. This rationale misapplies Wal–Mart. In Wal–Mart, the Supreme Court found that plaintiffs failed to present evidence establishing the existence of a common policy of discrimination. In this case, when it originally certified the class, the trial court found that plaintiffs had presented sufficient evidence that Wackenhut had policies and practices that violated wage and hour laws. Because plaintiffs met their burden of establishing a common policy, whether an individual was permitted to take a valid meal or rest break on any given day is a question of damages.
In other words, once liability is established on the basis of an unlawful policy, any instances in which legally compliant meal or rest breaks might have occurred in spite of the unlawful policy will merely serve to reduce the employer's aggregate damages.
In its 2014 decision of Brinker v. Superior Court, the California Supreme Court explained that employees must be "relieved of all duties" during their statutorily required 30-minute meal periods. Since that time, however, courts have struggled to define the exact status that employees are entitled to enjoy during the shorter 10-minute rest breaks which are also required by statute. In particular, is it permissible for employees to remain "on-call" during their rest breaks?
For example, ABM Industries required its security guards to wear two-way radios and pagers and to remain "vigilant" and "available to respond" during their rest breaks. The trial court entered a 90 million class action judgment on the ground that this "on-call" status was tantamount to requiring the employees to work during their rest breaks. An appellate panel overturned this judgment on the ground that being on-call should not be considered the same as being required "to work."
But the December 22, 2016 Supreme Court opinion in Augustus v. ABM Industries, emphatically settled the issue. The Supreme Court held that the same "relieved of all duty" standard for legally compliant meal periods also applies to rest periods. This means that during rest periods employees must be temporarily relieved of even the minimal duty to remain available to respond to radio or pager calls. As a result, "state law prohibits on-duty and on-call rest periods."
Obtaining class certification in wage and hour cases typically requires a showing that the employer has engaged in a systemic policy that violates the law. Maintaining scheduled hours, expecting employees to meet minimum production requirements, and requiring advance approval to work overtime are not illegal practices. In combination, however, these policies can result in an environment that systemically pressures employees to work unreported hours beyond their scheduled shifts and to skip breaks in order to complete their assigned tasks in the time allotted.
For example, in Alberts v. Aurora Behavioral Health Care, 241 Cal.App.4th 388 (2015), the Second District Court of Appeal held that the lower court had erred in refusing to certify a class of registered nurses based on the following allegations:
Hospital policy requires overtime be approved in advance, and failure to seek approval for overtime may subject an employee to discipline. Plaintiffs assert that the Hospital actively discouraged nursing staff from requesting overtime by criticizing and threatening to discipline employees who worked too much overtime, criticizing and intimidating employees who requested overtime and repeatedly denying legitimate overtime requests. At the same time, employees—especially RN’s, who were required to complete charts and other mandatory paperwork—were placed under pressure to ensure that all their work was completed each shift. . . . As a result, employees were routinely forced to clock out after their shifts, then return to work to complete paperwork.
The lower court had articulated a number of rationales for rejecting certification based on such evidence, including its view that there would be no liability if the decision to work off-the-clock was a personal choice made by individual workers. The appellate court rejected this reasoning, noting that:
[E]ven if we assume there is evidence some members of the nursing staff voluntarily worked uncompensated overtime, such a "choice" is impermissible under California law. A nonexempt employee (such as the putative class members here) may not lawfully volunteer to work off-the-clock without compensation.
Alberts v. Aurora thus reinforces several important lessons. Employers need to be aware that their policies need not be illegal on their face to trigger class-wide liability -- it may be sufficient that their cumulative effect communicates an implied expectation for employees to under-report their work time. Employees on the other hand should recognize that they are still entitled to additional compensation even if they "voluntarily" agreed to work off-the-clock.
The Labor Code and Wage Orders impose two separate obligations on employers: (a) to provide uninterrupted, 30-minute off-duty meal periods at specified time intervals; and (b) to pay one hour of compensation as a "premium wage" for each time that the employee was effectively prevented from actually taking such a compliant break.
In the aftermath of Brinker v. Superior Court, courts have found that evaluating whether an employer has implemented an affirmative policy that fully complies with the first duty is well suited to a class-wide determination of liability. But what if the employer has a perfect policy on paper but never actually pays any premium compensation under the policy?
In Safeway Inc. v. Superior Court (Esparza), the court explained that such a uniform record of non-payment warrants class certification, at least where it is statistically implausible that such premium payments were never earned by class members.
In granting class certification, the trial court stated: “[Real parties] prove that before June 17, 2007, Safeway did not pay meal break premiums. . . . Safeway does not contest this fact. Safeway had thousands or tens of thousands of workers, but for years it never paid statutory meal break premiums. Why? One explanation is human perfection: Safeway never, ever erred.” This explanation is possible. But human perfection is rare. Another explanation is deep, system-wide error: that Safeway was unaware of, or for some other reason[,] violated its duty to pay statutory premiums when required. [¶] This situation presents the central and predominating common issue: did Safeway’s system-wide failure to pay appropriate meal break premiums make it liable to the class during this period. This dominant common issue makes certification proper . . . .
The Safeway Court went on to explain that under this theory of liability -- i.e., a uniform practice of never paying appropriate meal premium pay -- it would not be necessary for the class to prove each instance of a meal break violation, to prove that "all or virtually all" of the class were owed compensation, or to prove the precise amount of premium pay owed.
Rather, the class could use statistical analysis of time records and other data to establish that "on a system-wide basis, petitioners denied the class members the benefits of the the compensation guarantee [of] . . . section 226.7." In particular, the "time punch data and records identified by [Plaintiff's expert] are capable of raising a rebuttable presumption that a significant portion of the missed, shortened and delayed meal breaks reflected meal break violations under section 226.7."
The lesson of Safeway is clear: It is not sufficient for an employer to merely implement a policy that effectively provides compliant meal breaks. The employer must also record the timing and duration of the breaks, and then implement a separate good faith mechanism for determining whether a premium wage is actually due as a result of any missed breaks. If the employer simply assumes 100% of the time that no wage is due this practice may expose it to class-wide liability.
In Augustus v. ABM Security Services, Inc., the Second District Court of Appeal was called upon to decide whether time spent "on-call" by security guards (i.e., time spent on premises with a duty to respond to all radio calls) constituted a legitimate "rest period."
California law requires minimum compensation for all "hours worked." However, it also requires paid rest periods during which an employee "shall not be required to work." And just weeks earlier the California Supreme Court held in Mendiola v. CPS Security, Inc., that this exact type of "on-call" time by security guards was compensable "work."
So one would be excused for thinking the decision in Augustus should be an easy call. After all, if the same time has already been held to be "work," it can't also be a period of rest which is free from "work." Right?
It turns out one can never underestimate the law's ability to find a linguistic distinction -- even if it's a distinction within the same word. Thus, the Augustus court explained that the crucial distinction for purposes of providing a rest break is whether an employee's required activities are work "as a noun" or work "as a verb."
The word “work” is used as both a noun and verb in Wage Order No. 4, which defines “Hours worked” as “the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.” (Cal. Code Regs., tit. 8, § 11040, subd. 2(K).) In this definition, “work” as a noun means “employment”—time during which an employee is subject to an employer's control. “Work” as a verb means “exertion”—activities an employer may suffer or permit an employee to perform. (See Tennessee Coal, Iron & Railroad Co. v. Muscoda Local No. 123 (1944) 321 U.S. 590, 598, 64 S.Ct. 698, 88 L.Ed. 949 [work is “physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business”].) Section 226.7, which as noted provides that “[a]n employer shall not require an employee to work during a meal or rest or recovery period,” uses “work” as an infinitive verb contraposed with “rest.” It is evident, therefore, that “work” in that section means exertion on an employer's behalf.
As the court explained "Not all employees at work actually perform work." Employing this analysis, the court suggested there may be no need to provide distinct rest breaks to security guards as their jobs are "indistinguishable" from one long rest break anyway.
The Augustus Court's distinction between "noun work" and "verb work" is novel and is based on little more than the court's assertion that "it is evident" that this is what the Legislature must have intended. Moreover, it may be a problematic distinction to apply in practice as most employees inevitably have short periods during the day when they are not engaged in actual "exertion."
For example, under Augustus a cashier who waits more than ten minutes before a new customer comes into a store has apparently had a legal rest break whether she knew it or not. And an employer can apparently provide a legally compliant rest break by merely requiring its employees to stand motionless for 10-minutes. I am not sure this is really what the Legislature had in mind for a bona fide rest period.
Benton v. Telecom Network Specialists reversed the trial court's decision not to certify a class of employees for purposes of determining whether they had been denied meal and rest breaks. In doing so, the decision also clarifies the affirmative nature of an employer's legal obligation to provide off-duty breaks.
Last year's Supreme Court decision in Brinker explained that an employer cannot avoid liability merely by establishing that it has not actively prohibited or prevented breaks. To the contrary, employers have a legal duty under the Labor Code to affirmatively publish and implement internal policies that expressly authorize and permit employees to take compliant off-duty meal and rest breaks. An employer who fails to discharge this affirmative duty may be liable.
Benton continues the recent trend of appellate court decisions (including Bradley v. Networkers Int'l), which have instructed trial courts to follow this aspect of Brinker when evaluating a motion for class certification. The putative class of security guards in Benton claimed that they could establish class-wide liability based on their employer's lack of a compliant policy.
[T]he plaintiffs' “theory of legal liability” is that TNS violated wage and hour requirements by failing to adopt a policy authorizing and permitting its technicians to take meal or rest break periods. In plaintiffs' view, TNS was obligated to implement procedures ensuring that technicians received notice of their meal and rest period rights and were permitted to exercise those rights. For the purposes of class certification, the question is whether this theory of recovery can be “proved (or disproved) through common facts and law.”
In response, the employer argued that it could avoid liability by establishing that individual employees might nevertheless have had "opportunities" to take compliant breaks when they were not busy even if no company policy specifically authorized them to do so. The lower court bought this argument, finding that an assessment of the scope of these "opportunities" for each employee would prevent class certification. The appellate court in Benton held that this was error.
Rather than focusing on whether plaintiffs' theory of liability—that TNS violated wage and hour requirements by failing to adopt a meal and rest period policy—was susceptible to common proof, the court improperly focused on whether individualized inquiry would be required to determine which technicians had missed their meal and rest periods. The written order (as well as statements made at the motion hearing) make clear that the trial court did not believe TNS would be liable upon a determination that its lack of a meal and rest policy violated applicable wage and hour requirements; rather, it concluded that TNS would become liable only upon a showing that a technician had missed breaks as a result of TNS's policies.
[H]owever, Brinker “expressly rejected” this mode of analysis. As succinctly stated in Faulkinbury [v. Superior Court]: “the employer's liability arises by adopting a uniform policy that violates the wage and hour laws. Whether or not the employee was able to take the required break goes to damages, and ‘[t]he fact that individual [employees] may have different damages does not require denial of the class certification motion.'"
Benton therefore reinforces the message that class certification will normally be proper where the predominant issue is the legal sufficiency of the employer's meal and rest break policies, or the lack thereof.
In Abdullah v. U.S. Security Associates, Inc., the Ninth Circuit upheld the lower court’s grant of class certification where the employer required “on-duty meal period agreements” based on its contention that off-duty breaks were incompatible with “the nature of the work.”
In the course of reaching this result the Ninth Circuit fleshed out the scope of this often misunderstood defense. The Court explained, for example, that an employer might legitimately require on-duty meal breaks "where the employee is the only person employed in the establishment and closing the business would work an undue hardship on the employer." But the Court also noted that this defense may be dicey where, as in most cases, it was the employer who made the decision to staff only one employee in the first place.
In Abdullah, the employer claimed that its security guards could not take off-duty breaks because they were assigned to work by themselves and could not leave their posts unattended. The Ninth Circuit did not purport to prejudge this defense. But it was clear in holding that the lower could reject this defense on a class-wide basis.
[T]he merits inquiry will turn on whether USSA is permitted to adopt a single-guard staffing model that does not allow for off-duty meal periods—namely, whether it can invoke a “nature of the work” defense on a class-wide basis, where the need for on-duty meal periods results from its own staffing decisions.
Presumably this inquiry would involve an analysis of the feasibility or "undue burden" of alternative staffing models such as having guards work in shifts, hiring "relief" guards to cover during breaks, etc. At the very least, however, the Abdullah decision signals that employers cannot merely rely on their own desire to avoid additional staffing expenses as a rationale for requiring on-duty meal breaks.
The Fourth District Court of Appeal decision in Bradley v. Networkers International, LLC is significant because it directly addresses how the landmark Brinker decision should effect class certification of meal and rest break claims. (Bradley is also significant concerning misclassification of independent contractors but that warrants a whole separate post).
The employer in Bradley had never promulgated any policy specifically authorizing meal and rest breaks. Originally the trial court had denied certification and the appellate court had upheld the denial on the ground that it would be necessary to individually determine which workers had the opportunity to take breaks and whether they had voluntary chosen to waive the breaks. The Supreme Court issued a "grant and hold" and then remanded for reconsideration in light of its Brinker decision.
The Bradley Court explained upon remand that Brinker had changed everything. Under the Supreme Court's new rules the same record now required class certification of the meal and rest period claims. First, because Brinker clarified that employers have a legal obligation to affirmatively provide breaks, not having a policy is itself a common class-wide policy that warrants certification.
Networkers argues Brinker is not controlling because in Brinker the plaintiffs challenged an express meal and break policy whereas here plaintiffs are challenging the fact that the employer's lack of a policy violated the law. This is not a material distinction on the record before us. Under Brinker and under the facts here, the employer engaged in uniform companywide conduct that allegedly violated state law.
Secondly, the lack of an affirmative meal and rest break policy effectively takes the issue of "waiver" off the table, removing it as an obstacle to certification as well.
[A]s Brinker made clear, an employer is obligated to provide the rest and meal breaks, and if an employer does not do so, the fact that an employee did not take the break cannot reasonably be considered a waiver. “No issue of waiver ever arises for a rest break that was required by law but never authorized; if a break is not authorized, an employee has no opportunity to decline to take it.”
Prior to Brinker many employers got by with arguing that they did not prohibit breaks and that it was therefore up to their workers to take meal and rest breaks and that they could not prove that they had not voluntarily chosen to take breaks. Bradley is crystal clear in holding that this is no longer an option.
Under Brinker, the failure to implement and enforce an affirmative break policy (including records of whether the breaks were actually taken), is a substantive violation of the employer's legal duty under the Labor Code. Under Bradley this substantive violation will also be certified as a class action. In short, an employer without an affirmative break policy is now officially a sitting duck.
At this point employers should not need any further "wake up" call to get their meal and rest policies in compliance with California law. But if anyone is still unconvinced of the potential exposure the granting of a summary judgment in the amount of $89,741,426 in Augustus v. American Commercial Security should be persuasive.
As the ruling in Brinker made clear, the essence of a compliant meal or rest break is that the employer has affirmatively relieved the employee of all work duties within the prescribed time windows and for prescribed durations. Once the employer has discharged this obligation it has "provided" a break and it doesn't have the further obligation to force the employee to actually go off duty or stay off duty for the entire break period.
But woe unto the employer whose policies fall short of actually "providing" a compliant break in the first place. In that case the employer forfeits any argument that any missed break was the result of the employee voluntary decision to waive it. (Since an employee can't waive something he never received.)
That is exactly what happened in the Augustus case. The defendant was a security guard company which required its guard to remain "on-call" during breaks. Judge Wiley's order granting summary judgment explains how this one policy error ended up costing the company nearly $90 million:
In general, ACSS balks at the notion that the employer must relieve workers of all duties for the rest break to be legally valid. Put simply, if you are on call, you are not on break. . . . [¶] . . .Substantively, California's labor law gave advance notice of the penalties for depriving workers of rest breaks. Those penalties are straightforward and chastening. When the view is clear and the exposure chastening , the rational hiker steers clear of the cliff. ACSS broke the law and must pay according to that law.
The California Supreme Court's long-awaited decision in Brinker v. Superior Court finally addressed the question of what an employer must do to effectively "provide" a meal break and thereby avoid the one-hour of pay due as premium or penalty pay.
In Brinker the plaintiffs advocated for a rule that merely allowing an employee to work during his meal period must trigger a penalty. The defense bar advocated for a rule that no penalty is owed unless the employer has affirmatively "forced" the employee to work. The Court however went for a middle ground. Under the new rule an employer must take certain affirmative steps (and refrain from others) in order to meet its legal obligation to provide a compliant meal break.
What An Employer Must Do to Avoid A Penalty.
In particular, the employer must have a policy and affirmatively create the actual conditions that will "relieve the employee of all duty" and allow him to engage in any personal business or leave the premises during for the entire 30-minute break period. If an employer takes these afirmative steps in good faith and the employee nevertheless performs work during his break no penalty is owed.
What An Employer Cannot Do Without Paying a Penalty.
Many employers are clearly over-reading Brinker as simply allowing them to propound a policy and then having their workers "waive" their breaks. In reality, Brinker is replete with warnings that this "waiver" defense will be difficult to establish and will be forfeited if the company engages in any practices that have the intent or effect of "undermining" break rights. These forbidden practices include:
"discouraging" or "impeding" workers from taking breaks.
“pressuring employees to perform their duties in ways that omit breaks.”
“creating incentives to forego” breaks.
“otherwise encouraging the skipping of legally protected breaks.”
Courts and parties will have to grapple with the meaning of these terms in individual cases and different industries. But it seems to me that meal break litigation will start to resemble nothing so much as Title VII disparate impact cases -- i.e., the focus of litigation will be on whether facially neutral business practices may have crossed the line into having an impermissible (and perhaps unintended) effect on employee rights.
The California Supreme Court announced today that the opinion in Brinker v. Superior Court(Hohnbaum) will be published tomorrow at 10:00 a.m. The opinion will address many issues surrounding meal and rest break requirements under the California Labor Code, such as whether employers need to ensure or simply provide meal breaks, and when breaks should be taken during a shift.
Be among the first in California to understand the complete impact the monumental decision in Brinker v. Superior Court will have on employers. The Court’s decision is expected on April 12, and Anthony Zaller and Daniel Turner will analyze and discuss the impact of the decision. The webinar will explain the decision and what it means for employers and wage and hour class actions, discussing among other items:
Can meal periods be offered to employees, or do they need to be ensured?
When during the shift can meal and rest periods be taken?
What does the Court’s ruling mean for the status of meal and rest break class actions and class certification issues?
What is the impact for cases currently being litigated?
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.
The opinion in Tien v. Tenet Healthcare Corporation is a bit of a split decision on meal breaks. On one hand, the Court upheld the trial court's denial of class certification in a meal break case. On the other hand, the Court endorsed an interpretation of the meal law in which an employer may be liable merely for creating "a work environment that discourages employees from taking their breaks."
Consistent with the purpose of requiring employers to provide employees with meal breaks, the Labor Code uses mandatory language . . . precluding employers from pressuring employees to skip breaks, declining to schedule breaks, or establishing a work environment that discourages employees from taking their breaks.
While this is hardly a strict liability standard, it does focus attention on the employer's overall "work environment," which would tend to favor class certification in many cases. Once again, the take-away message for employers is to have an active, good faith compliance program.
If anyone were to present an award for the statute that has created the most interpretation issues per word, the meal and rest break provision of Labor Code section 226.7 would have to be a finalist.
The first big issue was how to characterize the one-hour of additional wages provided by the statute. This was finally settled by the California Supreme Court's Murphy v. Kenneth Cole decision, holding that this amount was a premium "wage" akin to premium overtime pay. The next high-profile dispute was the extent to which an employer must take affirmative steps to "provide" breaks in order to avoid the penalty/premium wage payments required by the statue. This is the subject of the pending Brinker case.
Another long-festering interpretation issue (which is also likely to eventually end up before the Supreme Court), is the number of penalty/premium wage payments that an employee may accrue in a single day under Section 226.7. The Second District Court of Appeal confronted this damages question head on in United Parcel Service v. Superior Court. It is probably not worth recounting the blow-by-blow statutory construction analysis used by the Court but the bottom line is that employees may recover two penalties per day:
In short, we conclude, based upon the wording of section 226.7, subdivision (b), the legislative and administrative history of the statute and IWC wage orders, the public policy behind the statute and wage orders, and also the principle that we are to construe section 266.7 broadly in favor of protecting employees, that the employees in this case may recover up to two additional hours of pay on a single work day for meal period and rest period violations-one for failure to provide a meal period and another for failure to provide a rest period.
The take-away for employers is that it more important than ever to have an effective break policy, as the potential liability has now been effectively doubled.
The meal period requirement does not explicitly exclude public sector employees and the plaintiffs argued that this indicated an intent to cover all employees -- both public and private. The Appellate Court held that plaintiffs arguments about alleged legislative intent were trumped by a more general presumption that the Labor Code does not apply to government employees:
This argument runs contrary to well-established principles of statutory construction. Our Supreme Court has noted: “A traditional rule of statutory construction is that, absent express words to the contrary, governmental agencies are not included within the general words of a statute.” The Legislature has acknowledged that this rule applies to the Labor Code.
Government employees should be aware, however, that they are still protected by the federal Federal Fair Labor Standards Act ("FLSA"). Although the FLSA contains no requirement to provide meal periods, its core protections are largely the same as under state law. Thus, California state and local employees may sue under the FLSA for violations, including:
Failure to pay overtime for all hours worked over 40 in a week.
Failure to pay for all hours actually worked, including time spent working during unpaid lunch breaks, at home, or "off-the-clock" outside of regular shift times.
Failure to timely pay the full amount of all wages earned on each pay period.
Special rules apply to the calculation of minimum wage and overtime for certain police and fire employees. But state and local employees who believe they are being shortchanged may discover that they have a remedy under federal law.
California Civil Code section 3294 provides that punitive damages are generally available in any "action for the breach of an obligation not arising from contract." So if the Legislature creates a statutory obligation and does not specifically limit the remedies, shouldn't a plaintiff be able to recover punitive damages if he proves the defendants acted with the requisite "malice, fraud or oppression?"
This question has been the subject of many demurrers over the years but has never had a very clear answer. In the context of state statutes prohibiting employment discrimination courts long ago held that punitive damages should be available even though they were not specifically authorized by the statutes themselves. Courts have been more reluctant, however, in the context of Labor Code violations.
Brewer v. Premiere Golf Properties is the first published appellate opinion to directly address the issue. The decision rejected the recovery of punitive damages for Labor Code violations -- or at least for an employer's violation of its obligation to pay minimum wage and provide meal periods.
The Court's first rationale for rejecting punitive damages was to invoke the so-called "new right-exclusive remedy" doctrine. Under this theory, the Legislature is presumed to deny punitive damages as a remedy for any new statutory right except where there is already a pre-existing "common law analog" for the new right.
Next, the Court opined that punitive damages should also be unavailable because "claims for unpaid wages and unprovided meal/rest breaks arise from rights based on [the plaintiff's] employment contract."
Neither rationale seems compelling. In particular, the Court's attempt to distinguish the cases allowing punitive damages for employment discrimination is less than convincing. After all, there was no common law cause of action for racial, gender, age or disability discrimination. And a claim for unequal wages due to discrimination could just as easily be described as "arising from" the underlying employment relationship. In either case, employees cannot contract out of their statutory rights.
The opinion is a welcome development for employers, who face enough liability from class action wage and hour claims already. But the Court reaches its result through some pretty suspect reasoning. And for that reason (as well as the importance of the issue), the case seems like a prime candidate for Supreme Court review.
Consider the state rules on work breaks. They are intended to make sure that employers don't force hourly workers to work for long periods without a break. Current law requires that mandatory, unpaid, half-hour lunch breaks be given before the end of the sixth consecutive hour on the job.
Employers say they want to modify the overly rigid law to give them and employees needed flexibility to set schedules. They say they want to make it possible for staff members to eat a sandwich at their desks voluntarily or to keep waiting tables -- and earning tips -- during a busy time at a restaurant. Additionally, working through a lunch break could give employees the option of going home early, employers contend.
The article continues:
As for overtime, California law calls for time-and-one-half pay for hourly workers after they clock eight hours in a single day. Additionally, in California and other states, extra pay accrues on a weekly basis after a worker puts in 40 hours.
Employers say the law makes it more expensive and difficult for managers to let an employee juggle his or her schedule to take care of personal or family needs, business lobbyists say.
My prediction is that these regulations are not likely to change anytime soon. However, history has proven that these items are politically charged. The eight-hour work day was done away with in 1997 when California’s Industrial Welfare Commission overturned state regulations for overtime pay after eight hours worked in one day. This change did not last long, and the eight-hour work day was reinstated in 1999 by Governor Grey Davis.
A recent case, Brinkley v. Public Storage, Inc. (October 28, 2008) is getting quite a bit of attention due to its ruling on employers’ duty to provide meal breaks. The court in Brinkley (out of the Second Appellate District), agreed with the holding of the appellate court in Brinker v. Superior Court that employer only had to provide meal breaks and not ensure that they were taken. Since the California Supreme Court granted review of Brinker, it is not controlling law, and this is why Brinkley is getting a lot of attention. (While Brinkley is good law for now, the issue will be ultimately decided by the Supreme Court in the Brinker case, and as many commentators have stated, it is likely that the Supreme Court will issue an order granting and holding Brinkley making it un-citable law until Brinker is decided.)
The Brinkley decision also addressed another hotly litigated wage and hour issue involving itemized wage statements, which is being overlooked given the meal break drama. Labor Code 226 requires employers to place certain information on the employee’s pay stub. In Brinkley, the Plaintiff alleged that defendant violated Labor Code section 226, subdivision (a), which requires employers to provide pay stubs that list (among other items): “(1) gross wages earned, (2) total hours worked by the employee . . . and (9) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee.” Plaintiff alleged that Public Storage violated this statute because certain pay stubs listed a mileage reimbursement rate that was different than the actual rate employees received.
In regards to section 226, the court noted that:
Section 226, subdivision (e) provides that an employee “suffering injury as a result of a knowing and intentional failure by an employer to comply with subdivision (a)” is entitled to recover the greater of actual damages or specified statutory penalties. The trial court found that defendant did not knowingly and intentionally violate section 226, subdivision (a). We agree.
Defendant met its burden of production by filing a declaration stating that the misstatement of the associated mileage rate was inadvertent and, when discovered, corrected. This evidence showed that plaintiff could not establish an essential element of his claim, namely that defendant intentionally and knowingly failed to provide required information on its paystubs. The burden of production thus shifted to plaintiff. Plaintiff, however, produced no evidence of knowing or intentional conduct by defendant.
The court also found that Plaintiff failed to show that he or any other proposed members of the class action suffered any injury. The court stated:
Plaintiff argues that the receipt of an inaccurate paystub ipso facto constitutes injury within the meaning of section 226, subdivision (e). This interpretation, however, renders the words “suffering injury” surplusage and meaningless. Such an interpretation is disfavored. We hold that section 226 means what it says: a plaintiff must actually suffer injury to recover damages or statutory penalties.
The present case is distinguishable from Wang v. Chinese Daily News, Inc. In Wang, the paystubs stated that the employees worked 86.66 hours regardless of the number of hours actually worked, the length of the pay period, or the number of work days in the pay period. This caused the employees to suffer injury because they might not be paid for overtime work to which they were entitled and they had no way of challenging the overtime rate paid by the employer. Here, by contrast, plaintiff was not underpaid or given insufficient information to challenge the payments he received. This inadvertent technical violation of section 226 caused no resulting damages.
The California Supreme Court announced today that it will be reviewing the much analyzed case Brinker v. Superior Court (Hohnbaum). The lower court ruling in the case was favorable to California employers, in holding that employers did not have to "ensure" that meal breaks were taken, but only that employers had to provide meals breaks. Click here for further analysis on the lower court's ruling.
This much awaited decision by the Supreme Court makes the lower court's ruling in the case non-citable, which means that it is not binding on courts in California. Therefore, California employers will have to wait for the Supreme Court decision to have some finality on this issue.
It was a pleasure conducting the presentation on “Meal and Rest Breaks in California: Why the Brinker Ruling Is Good News for Employers, and Where Caution is Still Required” through Business & Legal Reports. It was wonderful to have such a large audience, as well as great follow-up questions.
I’ve had a lot of request for the concluding points I made about what employers should do while we are waiting for the California Supreme Court to determine whether or not it will review the Brinker v. Superior Court (Hohnbaum) decision. So here are my concluding remarks I made during the presentation:
Employers should continue to have a strict written policy on providing meal and rest breaks and continue to monitor that employees are actually taking meal breaks.
Make sure management knows about and enforces these rules.
Record meal breaks! This is already an obligation of California employers, and the Brinker decision does not change this obligation.
Policies should require employees to come forward to report if they have been forced to work through a meal break.
Brinker’s policies, which were found to be valid by the appellate court, are a good example of policies California employers should have in place. For example, Brinker had a written policy titled “Break and Meal Period Policy for Employees in the State of California.” Brinker also required its employees to sign a form stating “I am entitled to a 30-minute meal period when I work a shift that is over five hours” and that “If I work over 3.5 hours during my shift, I understand that I am eligible for one [10-]minute rest break for each four hours that I work.” Brinker’s policy also stated that an employee’s failure to abide by the policy could result in termination. The court held that this ultimately was sufficient under California law to “provide” meal and rest breaks, only if the defendant has taken steps to establish and communicate the policy. Then if an employee fails to take a meal or rest break voluntarily, the employer is not liable for damages.
The DLSE has recently issued a memorandum to its deputy labor commissioners instructing them to follow the holding in Brinker v. Superior Court. The July 25, 2008 DLSE memorandum provides, in pertinent part, that the Brinker decision is “a published decision, and its rulings are therefore binding upon the [DLSE].” In addition, the memorandum makes clear that Brinker:
Held that Labor Code Section 512 and the meal period requirements set forth in the applicable wage order mean that employers “must provide meal periods by making them available, but need not ensure that they are taken. Employers, however, cannot impede, discourage or dissuade employees from taking meal periods.”
Rejected the so-called “rolling five hour” requirement as being inconsistent with the plain meaning of Labor Code Section 512 and the applicable wage order. The memorandum made clear that “[a]n employer must make a first 30-minute meal period available to an hourly employee who is permitted to work more than five hours per day, unless (1) the employee is permitted to work a ‘total work period per day’ that is six hours or less, or (2) both the employee and the employer agreed by “mutual consent” to waive the meal period.
Held that the rest period requirements set forth in the applicable wage order mean that “employers must provide rest periods, but need not ensure that they are taken. Employers, however, cannot impede, discourage or dissuade employees from taking rest periods.”
Held that employers need only authorize and permit rest periods every four hours or major fraction thereof and they need not, where impracticable, be in the middle of each work period.
Although this is a significant development as employers frequently find themselves before the labor commissioner, the DLSE memorandum is of little value if an employee chooses to pursue their claims in court. Moreover, the memorandum does not state if the DLSE will continue to follow Brinker in the event the California Supreme Court decides to review the decision. Nevertheless, the DLSE’s position will undoubtedly be welcomed by employers throughout California.
Brinker analyzes this question based on the language of California Labor Code section 512(a), which provides that “An employer may not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes.”
The Meal Period Timing Issue
At first glance, the phrase “work period” in the above-quoted provision might seem self-explanatory. In fact, hundreds of millions of dollars and the daily activities of millions of people hinge on the semantic ambiguity arising from these two words. The two competing interpretations are as follows:
Interpretation # 1: The Continuous “Work Period.” The five-hour “work period” must refer to any five-hour period of continuous work. Thus, employers must provide at least one meal period for each continuous five-hour period of work.
Interpretation #2: The Cumulative “Work Period.” The five-hour “work period” must refer to the total number of hours worked by the employee during any day. In other words, the statute is merely saying that whenever an employee is required to work more than a total of five hours in a day he must receive a 30 minute meal break at some point in the day – but the statute is not intended to dictate when during the day that break must be taken.
In Brinker v. Superior Court-- the first published opinion to address the issue – the lower court agreed with interpretation # 1. The Appellate Court, however, reversed in favor of interpretation #2. So does this mean that employers now have carte blanche to schedule meal breaks at whatever time of day they wish so long as they give the correct number of meal breaks per day?
We wouldn’t recommend it.
To begin with, there is a good chance that the California Supreme Court will grant review of Brinker– thereby rendering it non-citable. Moreover, the Brinker opinion has some pretty sizable holes in its reasoning. Thus, we would not bet the farm on Brinker’s interpretation holding up in the long run. Any employer who relies on Brinker to aggressively schedule meal breaks very close to the start or end of the workday could therefore find itself exposed to massive penalties if, and when, Brinker is eventually overturned by the Supreme Court.
The Vulnerabilities of Brinker Brinker is vulnerable to be being overruled on several grounds. For example, Brinker rejects Interpretation #1, above, on the ground that if the Legislature meant to trigger a meal period for each consecutive five hour work period it could have done so without using the words “per day” in the phrase “a work period of more than five hours per day.” Adopting an interpretation that gives significance to every word is one goal of statutory interpretation. But this “per day” reference is a fairly thin reed to grasp for purposes of making this argument.
For one thing, the monetary penalties imposed by the Labor Code do not even arise from Section 512. Rather, it is Labor Code Section 226.7 which imposes a penalty of “one additional hour of pay at the employee's regular rate” for any failure “to provide an employee a meal period . . . in accordance with an applicable order of the Industrial Welfare Commission.” Each of the IWC’s Wage Orders, however, conspicuously omits the very “per day” language that Brinker used as the basis for its ruling.
Brinker dismisses the significance of the Wage Orders themselves by holding that they must be interpreted as if they merely track the text of Section 512(a) verbatim. But why would the Legislature have used a violation of the IWC Wage Orders as the triggering event for imposing a penalty if it believed that the Wage Orders could only duplicate the text of Section 512? Brinker’s dismissive treatment of the actual text of the Wage Orders thus arguably repeals the portion of Section 226.7 that incorporates the Wage Orders by reference. In doing so, Brinker potentially violates its own standard that the words of a statute cannot be rendered meaningless.
Brinker also fails to address the significance of Labor Code Section 512(b), which authorizes the IWC to adopt Wage Orders allowing meal periods to begin "after six hours of work" if it determines that this is "consistent with the health and welfare of the affected employees." This provision presupposes that, in the absence of any new Wage Order provision, an employee cannot agree to wait more than six hours for a meal break.
Brinker also leads to some problematic practical results. For example, the over-arching Legislative purpose was to afford relief from fatigue and hunger that could result from long stretches of constant work. But under Brinker, an employer could schedule an employee to begin work at 9:00 a.m., take a meal break from 9:05 to 9:35 a.m., and then work thirteen hours straight before taking another 30-minute meal break immediately before leaving at around 11:05 p.m. It is hard to envision the Supreme Court endorsing this result as the true intent of the Legislature.
Notwithstanding the undeniably pro-employer Brinker decision, prudent employers should still strive to establish a record of good faith, affirmative efforts to enforce internal meal and rest break policies. Part of this record includes scheduling employee meal periods to begin before the start of any sixth consecutive hour of work. These steps may not be easy at an operational level, but they are necessary to avoid exposure to large-scale class action liability in the long run.
In Brinker Restaurant Co. v. Superior Court, ___ Cal.App 4th ___ (2008), the Fourth District Court of Appeal held that “meal periods need only be made available, not ensured.” Thus employers are not strictly liable for missed meal and rest breaks when an employee “merely show[s] that he did not take them regardless of the reason."
So what then, according to Brinker, must an employer do to make a meal or rest break “available”? Or, stated somewhat differently, what are the reasons for an employee missing a break that will trigger a penalty? The following answers seem to emerge from the Brinker decision, and especially from that court’s efforts to factually distinguish the Cicairos and Perez cases which had previously found employer liability for failure to provide breaks.
To begin with, employers cannot actively “impede, discourage or dissuade employees from taking meal periods.”
Moreover, "an employer must do something affirmative to provide a meal period." (Brinker, discussing Perez, 2007 WL 1848037 at *7)”
Thus, an employer’s “obligation to provide [employees] with an adequate meal period [is] not satisfied merely by assuming that the meal periods were taken." (Brinker, quoting Cicairos, 133 Cal.App.4th at p. 962.)
For example, an employer’s “lack of a policy for meal breaks" combined with an on-call policy that requires employers to be constantly available to report to work, is not sufficient to discharge its affirmative duty. (Brinker, discussing Perez, supra, at *7).
Also, failing to record meal periods, while “pressuring” employees to adhere to scheduling policies that make it “harder” to take meal breaks is not sufficient. (Brinker, discussing Cicairos, supra, 133 Cal.App.4th at p. 962.)
Likewise, knowingly permitting employees to work through meal breaks, while not “tak[ing] steps to address the situation,” and implementing “management policies” that make it “harder” to take a break , may “effectively deprive” employees of their breaks. (Brinker, discussing Cicairos).
The Brinker case is very likely headed for the California Supreme Court. However, it clearly points to the inevitable direction in which the meal period “policing” rule will evolve. The public policy implications of a strict liability enforcement regime (such as having to fire employees for not complying with employer break policies) will rule out any strict liability standard. Instead, “good employers” who make reasonable efforts to create and enforce internal break polices will not be subject to class-wide liability for failing to achieve an impossible 100% compliance rate. On the other hand, “bad employers” who either have no break policy or who merely go through the motions of compliance will not be allowed to escape liability by claiming their employees are “voluntarily” working through breaks.
Mapping the borderline between these two categories of employers will no doubt generate years of massive, hard fought litigation.
I was co-counsel for the employees in the appellate-level proceedings, and my normal policy is not to blog about my own cases (with an occasional exception if they are already getting outside press or blogosphere coverage). I am putting up this post only because I must clarify a comment that was attributed to me in the Recorder article:
[Kralowec] also said the 4th District's decision creates an appellate split that likely will ensure Supreme Court review. In Cicairos v. Summit Logistics Inc., 133 Cal.App.4th 949, Sacramento's 3rd District ruled in 2005 that employers have an affirmative duty to ensure that employees receive meal periods.
I do believe that the new Brinker decision creates a split in authority with Cicairos, and I also believe that the Supreme Court often grants review to resolve issues that are the subject of a split among the lower courts, particularly when two Court of Appeal panels have handed down conflicting published opinions. However, I did not say that I thought that in this specific case, the split between Brinker and Cicairos "likely will ensure Supreme Court review." I would never say something so presumptuous. It would have been more accurate to say that Brinker creates an appellate split, that such splits often lead to Supreme Court review, that Brinker is a particularly appropriate case for review, and that I certainly hope that the Supreme Court decides to grant review.
Wow. So, this is a major decision that could bring meal and break period class actions to a screeching halt, even though the Legislature does not seem inclined to do so. The only thing is, if the Supreme Court grants review, the decision could disappear for as much as a couple of years and could get reversed by the High Court.
I will post more later on this opinion, after I have chance to evaluate it further. For now, courts with pending meal break, rest break and off-the-clock claims should expect for the inevitable onslaught of paper that this will generate.
However, it was not the first, and Brinker disagrees with many prior opinions, most specifically, Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949, 962-963, which it discussed at length, and Bufil v. Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193, which it did not even mention, and more generally, a string of cases which promote class actions as an efficient way to resolve wage and hour disputes and a string of cases which discuss the remedial nature of wage and hour laws in California. With Brinker and Cicairos presenting such starkly contrasting views on California law, with Brinker presenting so many novel ideas regarding wage and hour claims and class actions, and with so many U.S. District Court cases disagreeing with Cicairos and each other, this case looks like an outstanding candidate for Supreme Court review.
Why do I bring this up in a Connecticut blog? For a few reasons. First, there are several Connecticut employers that have California employees, whether through sales or otherwise. Second, California tends to be on the cutting edge of some legal issues. With nearly 36 million people (or roughly 10 times the population of Connecticut), those issues just tend to pop up more than in a small state like Connecticut. Third, the case provides a good opportunity to highlight the Connecticut meal period law -- an underappreciated law that lays out what is necessary and is much different than California.
The consensus across the commentators (including our take on the issue) is that the California Supreme Court will likely grant review of this monumental ruling.
The Appellate Court, Fourth Appellate District, Division One, issued a much awaited opinion today in Brinker Restaurant Corporation, et al. v. Hohnbaum, et al. (July 22, 2008). The case is one of the first California state appellate court to rule on the parameters of employers’ duties under the California Labor Code requiring rest and meal breaks for hourly employees. As discussed below, the court’s opinion was across the board in favor for California employers. The primarily holding by the appellate court was that an employer does not have to “ensure” that meal and rest breaks are taken, therefore making these types of cases very difficult to certify as a class action.
Due to the monumental impact this case will have on the vast wage and hour litigation in California, this post is longer than we typically like to write. And this post will definitely not be the last time we discuss the case.
In November 2005 Brinker filed its first petition for writ of mandate (D047509) in this matter. In the petition, Brinker challenged the court's July 2005 meal period order. Specifically, Brinker requested a writ directing the trial court to "vacate its earlier order holding that: (1) a non-exempt employee is entitled to a meal period for each five-hour block of time worked[; and] (2) the premium pay owed for a violation of [section 226.7] is a wage."
In support of its petition, Brinker argued the trial court erred by interpreting section 512 to mean that an hourly employee's entitlement to a meal period is "rolling," such that "a separate meal period must be provided for each five-hour block of time worked . . . regardless of the total hours worked in the day. In other words, the [court] interpreted the law to be that . . . [o]nce a meal period concludes, the proverbial clock starts ticking again, and if the employee works five hours more, a second meal period must be provided."
Brinker also argued that although an employee working more than five hours and less than 10 hours is entitled under section 512 to a 30-minute meal period at some point during the workday, "nothing in [s]ection 512 . . . requires a second meal period be provided solely because [the] employee works five hours after the end of the first meal period, where the total time worked is less than  hours." Brinker further asserted that IWC Wage Order No. 5 also "does not dictate the anomalous result that meal periods must be provided every five hours" because, like section 512, it requires only that an employee working more than five hours "gets a meal period at some point during the workday." Brinker complained that the court's meal period ruling "requires servers to sit down, unpaid, during the most lucrative part of their working day."
Plaintiff’s Motion For Class Certification
Plaintiffs moved to certify a class of "[a]ll present and former employees of [Brinker] who worked at a Brinker[-]owned restaurant in California, holding a non-exempt position, from and after August 16, 2000 ('Class Members')." In their moving papers, plaintiffs alternatively defined the class as "all hourly employees of restaurants owned by [Brinker] in California who have not been provided with meal and rest breaks in accordance with California law and who have not been compensated for those missed meal and rest breaks."
Plaintiffs' motion also sought certification of six subclasses, three of which are pertinent to the appeal: (1) a "Rest Period Subclass," consisting of "Class Members who worked one or more work periods in excess of three and a half (3.5) hours without receiving a paid 10 minute break during which the Class Member was relieved of all duties, from and after October 1, 2000"; (2) a "Meal Period Subclass," consisting of "Class Members who worked one or more work periods in excess of five (5) consecutive hours, without receiving a thirty (30) minute meal period during which the Class Member was relieved of all duties, from and after October 1, 2000"; and (3) an "Off-The-Clock Subclass," consisting of "Class Members who worked 'off-the-clock' or without pay from and after August 16, 2000."
The class in question is estimated to consist of more than 59,000 Brinker employees.
Plaintiffs Rest Break Claims
Plaintiffs allege Brinker willfully violated section 226.7 and IWC Wage Orders Nos. 5-1998, 5-2000 and 5-2001 by "fail[ing] to provide rest periods for every four hours or major fraction thereof worked per day to non-exempt employees, and failing to provide compensation for such unprovided rest periods." Section 226.7, subdivision (a) provides: "No employer shall require any employee to work during any meal or rest period mandated by an applicable order of the [IWC]." (Italics added.)
The pertinent provisions of IWC Wage Order No. 5-2001 are codified in California Code of Regulations, title 8, section 11050, subdivision 12(A), which provides:
Every employer shall authorize and permit all employees to take rest periods, which insofar as practicable shall be in the middle of each work period. The authorized rest period time shall be based on the total hours worked daily at the rate of ten (10) minutes net rest time per four (4) hours or major fraction thereof. However, a rest period need not be authorized for employees whose total daily work time is less than three and one-half (3 1/2) hours. Authorized rest period time shall be counted as hours worked for which there shall be no deduction from wages. (Italics added.)
The court held that the phrase "per four (4) hours or major fraction thereof" does not mean that a rest period must be given every three and one-half hours:
Regulation 11050(12)(A) states that calculation of the appropriate number of rest breaks must "be based on the total hours worked daily." Thus, for example, if one has a work period of seven hours, the employee is entitled to a rest period after four hours of work because he or she has worked a full four hours, not a "major fraction thereof." It is only when an employee is scheduled for a shift that is more than three and one-half hours, but less than four hours, that he or she is entitled to a rest break before the four hour mark.
Moreover, because the sentence following the "four (4) hours or major fraction thereof" limits required rest breaks to employees who work at least three and one-half hours in one work day, the term "major fraction thereof" can only be interpreted as meaning the time period between three and one-half hours and four hours. Apparently this portion of the wage order was intended to prevent employers from avoiding rest breaks by scheduling work periods slightly less that [sic] four hours, but at the same time made three and one-half hours the cut-off period for work periods below which no rest period need be provided.
The court also held that the DLSE’s opinion that the term "major fraction thereof" means any time over 50 percent of a four-hour work period is wrong because it renders the current version of Regulation 11050(12)(A) internally inconsistent. As an employee cannot be entitled to a 10-minute break if she or she "works more than 2 . . . hours in a day," if the employee is not entitled to a 10-minute break if he or she works "less than three and one-half" hours in a day. The court also noted that it is not required to follow the DLSE opinion on the matter, citing Murphy v. Kenneth Cole, 40 Cal.4th at p. 1105, fn. 7.
The court also held that the law does not required employers to provide rest breaks before meal breaks:
Furthermore, contrary to plaintiffs' assertion, the provisions of Regulation 11050(12)(A)do not require employers to authorize and permit a first rest break before the first scheduled meal period. Rather, the applicable language of Regulation 11050(12)(A)states only that rest breaks "insofar as practicable shall be in the middle of each work period." (Italics added.) Regulation 11050(12)(A)is silent on the question of whether an employer must permit an hourly employee to take a 10-minute rest break before the first meal period is provided. As Brinker points out, an employee who takes a meal period one hour into an eight-hour shift could still take a post-meal period rest break "in the middle" of the first four-hour work period, in full compliance with the applicable provisions of IWC Wage Order No. 5-2001.
The court explained that Regulation 11050(12)(A) allows employers some “discretion to not have rest periods in the middle of a work period if, because of the nature of the work or the circumstances of a particular employee, it is not ‘practicable.’” In explaining what “practicable” means, the court specifically mentioned that:
…this discretion is of particular importance for jobs, such as in the restaurant industry, that require flexibility in scheduling breaks because the middle of a work period is often during a mealtime rush, when an employee might not want to take a rest break in order to maximize tips and provide optimum service to restaurant patrons. As long as employers make rest breaks available to employees, and strive, where practicable, to schedule them in the middle of the first four-hour work period, employers are in compliance with that portion of Regulation 11050(12)(A).
Ultimately, the court held that a determination about whether it is practicable to permit rest breaks near the end of a four hour work period is not an issue that can be litigated on a class-wide basis. In overruling the trial court’s granting of class certification the Appellate Court stated:
Had the court properly determined that (1) employees need be afforded only one 10-minute rest break every four hours "or major fraction thereof" (Reg. 11050(12)(A)), (2) rest breaks need be afforded in the middle of that four-hour period only when "practicable," and (3) employers are not required to ensure that employees take the rest breaks properly provided to them in accordance with the provisions of IWC Wage Order No. 5, only individual questions would have remained, and the court in the proper exercise of its legal discretion would have denied class certification with respect to plaintiffs' rest break claims because the trier of fact cannot determine on a class-wide basis whether members of the proposed class of Brinker employees missed rest breaks as a result of a supervisor's coercion or the employee's uncoerced choice to waive such breaks and continue working. Individual questions would also predominate as to whether employees received a full 10-minute rest period, or whether the period was interrupted. The issue of whether rest periods are prohibited or voluntarily declined is by its nature an individual inquiry.
Plaintiffs argued that even if the trial court erred in failing to define the elements of plaintiffs' rest period claims prior to certifying the class the appellate court should remand the case to the trial court to permit the trial court to rule on if plaintiffs' "expert statistical and survey evidence" makes their rest break claims amenable to class treatment. The appellate court refused to remand the case, stating that while courts may use such evidence in determining if a claim is amenable to class treatment, here, that evidence does not change the individualized inquiry in determining if Brinker allowed or forbade rest periods. The court stated:
The question of whether employees were forced to forgo rest breaks or voluntarily chose not to take them is a highly individualized inquiry that would result in thousands of mini-trials to determine as to each employee if a particular manager prohibited a full, timely break or if the employee waived it or voluntarily cut it short. (Brown v. Federal Express Corp. (C.D.Cal. 2008) ___ F.R.D. ___ [2008 WL 906517 at *8] (Brown) [meal period violations claim not amenable to class treatment as court would be "mired in over 5000 mini-trials" to determine if such breaks were provided].)
For these reasons, the appellate court vacated the order granting class certification for the rest break subclass.
Plaintiffs’ Meal Break Claims
In their second cause of action, plaintiffs allege Brinker violated sections 226.7 and 512, and IWC Wage Order No. 5, by failing to "provide meal periods for days on which non-exempt employees work(ed) in excess of five hours, or by failing to provide meal periods [altogether], or to provide second meal periods for days employees worked in excess of  hours, and failing to provide compensation for such unprovided or improperly provided meal periods." Plaintiffs claim that Brinker’s “early lunching” policy that required its employees to take their meal periods soon after they arrive for their shifts, usually within the first hour, and then requiring them to work in excess of five hours, and sometimes more than nine hours straight, without an additional meal period violated California law.
Plaintiffs asserted that common issues predominate on their rest break claims because they "presented corporate policy evidence of a pattern and practice by Brinker of failing to provide a rest period prior to employees' meal period as a result of its practice of scheduling meals early." Specifically, plaintiffs argued that "Brinker maintains company-wide policies discouraging rest periods, including requiring servers to give up tables and tips if they want a break and failing to provide rest periods prior to scheduled early meals."
1. Rolling five-hour meal period claim
The lower trial court in this case, found that a meal period "must be given before [an] employee's work period exceeds five hours." The lower court also stated that "the DLSE wants employers to provide employees with break periods and meal periods toward the middle of an employee[']s work period in order to break up that employee's 'shift.'" The court further stated that Brinker "appears to be in violation of [section] 512 by not providing a 'meal period' per every five hours of work."
In overruling the lower court, the appellate court ruled that this interpretation of the law was incorrect and that the trial court’s class certification order rests on improper criteria with respect to the plaintiffs' rolling five-hour meal period claim.
The appellate court began its analysis with Labor Code Section 512, subdivision (a), which provides:
An employer may not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes, except that if the total work period per day of the employee is no more than six hours, the meal period may be waived by mutual consent of both the employer and employee. An employer may not employ an employee for a work period of more than 10 hours per day without providing the employee with a second meal period of not less than 30 minutes, except that if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and the employee only if the first meal period was not waived.
The appellate court held that Section 512(a) thus provides that an employer in California has a statutory duty to make a first 30-minute meal period available to an hourly employee who is permitted to work more than five hours per day, unless (1) the employee is permitted to work a "total work period per day" that is six hours or less, and (2) both the employee and the employer agree by "mutual consent" to waive the meal period.
The appellate court also held that this interpretation of section 512(a), regarding an employer's duty to provide a first meal period, is consistent with the plain language set forth in IWC Wage Order No. 5-2001, which provides in part: "No employer shall employ any person for a work period of more than five (5) hours without a meal period of not less than 30 minutes, except that when a work period of not more than six (6) hours will complete the day's work the meal period may be waived by mutual consent of the employer and the employee."
On the issue regarding when an meal break must be provided the court stated:
With respect to the issue of when an employer must make a first 30-minute meal period available to an hourly employee, Brinker's uniform meal period policy (titled "Break and Meal Period Policy for Employees in the State of California") comports with the foregoing interpretation of section 512(a) and IWC Wage Order No. 5-2001. It provides that employees are "entitled to a 30-minute meal period" when they "work a shift that is over five hours."
The court continued in holding that Section 512(a) also provides that an employer has a duty to make a second 30-minute meal period available to an hourly employee who has a "work period of more than 10 hours per day" unless (1) the "total hours" the employee is permitted to work per day is 12 hours or less, (2) both the employee and the employer agree by "mutual consent" to waive the second meal period, and (3) the first meal period "was not waived."
Plaintiffs argue that Brinker's written meal policy violates section 512(a) and IWC Wage Order No. 5 (specifically, Cal. Code Regs., tit. 8, § 11050, subd. 11(A)) because it allows the practice of “early lunching” and fails to make a 30-minute meal period available to an hourly employee for every five consecutive hours of work. Plaintiffs maintained that every hourly employee should receive a second meal break five hours after they return from the first meal break. The court found this argument unpersuasive:
Under this interpretation, however, the term "per day" in the first sentence of section 512(a) would be rendered surplusage, as would the phrase "[a]n employer may not employ an employee for a work period of more than 10 hours per day without providing the employee with a second meal period of not less than 30 minutes" in the second sentence of that subdivision.
The appellate court held that without a proper interpretation of section 512(a), the lower court could not correctly ascertain the legal elements that members of the proposed class would have to prove in order to establish their meal period claims, and therefore could not properly determine whether common issues predominate over issues that affect individual members of the class.
2. Brinker's failure to ensure employees take meal periods
Plaintiffs also claim that Brinker's uniform meal period policy violates sections 512 and 226.7, as well as IWC Wage Order No. 5, by failing to ensure that its hourly employees take their meal periods. In the primary holding of the case, the appellate court stated:
We conclude that California law provides that Brinker need only provide meal periods, and, as a result, as with the rest period claims, plaintiffs' meal period claims are not amenable to class treatment.
The appellate court disagreed with Plaintiffs’ contention that an employer’s duty was to ensure a meal break. The court stated:
If this were the case, employers would be forced to police their employees and force them to take meal breaks. With thousands of employees working multiple shifts, this would be an impossible task. If they were unable to do so, employers would have to pay an extra hour of pay any time an employee voluntarily chose not to take a meal period, or to take a shortened one.
3. Amenability of plaintiffs' meal break claims to class treatment
The appellate court held that because meal breaks need only be made available, not ensured, individual issues predominate in this case and the meal break claim is not amenable class treatment. The court explained:
The reason meal breaks were not taken can only be decided on a case-by-case basis. It would need to be determined as to each employee whether a missed or shortened meal period was the result of an employee's personal choice, a manager's coercion, or, as plaintiffs argue, because the restaurants were so inadequately staffed that employees could not actually take permitted meal breaks. As we discussed, ante, with regard to rest breaks, plaintiffs' computer and statistical evidence submitted in support of their class certification motion was not only based upon faulty legal assumptions, it also could only show the fact that meal breaks were not taken, or were shortened, not why. It will require an individual inquiry as to all Brinker employees to determine if this was because Brinker failed to make them available, or employees chose not to take them.
The appellate court also found that the evidence does not show that Brinker had a class-wide policy that prohibited meal breaks. Instead, the evidence in this case indicated that some employees took meal breaks and others did not, and it requires the court to perform an individualized inquiring into the reasons why an employee did not take the break. The court also held that the plaintiffs’ statistical and survey evidence does not render the meal break claims one in which common issues predominate because while the time cards might show when meal breaks were taken and when there were not, they cannot show why they were or were not taken.
Plaintiffs’ Off-the clock claim
Plaintiffs also allege Brinker unlawfully required its employees to work off the clock during meal periods. This claim was comprised of two theories: (1) time worked during a meal period when an individual was clocked out; and (2) time “shaving,” which is defined as an unlawful alteration of an employee's time record to reduce the time logged so as to not accurately reflect time worked.
The court held, and the Plaintiffs did not dispute, that employers can only be held liable for off-the-clock claims if the employer knows or should have known the employee was working off the clock. (citing Morillion v. Royal Packing Co., 22 Cal.4th at p. 585.) The evidence also established that Brinker has a written corporate policy prohibiting off-the-clock work. Because of these facts, the court found that plaintiffs' off-the-clock claims are not amenable to class treatment. As the court stated:
Thus, resolution of these claims would require individual inquiries in to whether any employee actually worked off the clock, whether managers had actual or constructive knowledge of such work and whether managers coerced or encouraged such work. Indeed, not all the employee declarations alleged they were forced to work off the clock, demonstrating there was no class-wide policy forcing employees to do so.
The opinion can be viewed at the court’s website [Word] [PDF]. This case will no doubt change many wage and hour litigator's case strategies, unless the California Supreme Court grants review of the decision.
The California Court of Appeal today issued its eagerly-awaited Brinker decision, which handed a big victory to employers and helped to clarify the standards that apply to the provision of meal periods under Labor Code section 512. To cut right to the chase, the Appellate Court summarized its decision as follows:
Specifically, we conclude that (1) while employers cannot impede, discourage or dissuade employees from taking rest periods, they need only provide, not ensure, rest periods are taken; (2) employers need only authorize and permit rest periods every four hours or major fraction thereof and they need not, where impracticable, be in the middle of each work period; (3) employers are not required to provide a meal period for every five consecutive hours worked; (4) while employers cannot impede, discourage or dissuade employees from taking meal periods, they need only provide them and not ensure they are taken; and (5) while employers cannot coerce, require or compel employees to work off the clock, they can only be held liable for employees working off the clock if they knew or should have known they were doing so. We further conclude that because the rest and meal breaks need only be "made available" and not "ensured," individual issues predominate and, based upon the evidence presented to the trial court, they are not amenable to class treatment.
We’ll be blogging further about the Brinker decision, but the gist of the above-quoted holding is pretty self-explanatory. There is no longer any argument that employers are “strictly liable” for non-compliance with meal or rest period policies. And as a result, class certification will be far more difficult to obtain.
Once upon a time, employee meal and rest periods were an obscure legal backwater, which was the exclusive province of hard-core human resources nerds and bureaucrats. But no longer. Class action meal period litigation has now become a multi-million dollar political football.
This new reality was highlighted by response when the DLSE recently held two public hearings on the topic in Sacramento and Los Angeles. Over 200 and 400 concerned individuals showed up in person to the respective meetings, and another 200 written comments were submitted in writing
As the Labor Commissioner explained in her formal written report on the hearings.
It is apparent that emotions surrounding the issue of meal and rest periods have run high for a long time. Conflicts and confusion in the statute and in the IWC orders have proven problematic. The forums demonstrated an urgent need for common sense solutions by the Courts and by the Legislature which would greatly benefit workers and businesses throughout California.
The California Division of Labor Standards Enforcements (or “DLSE”) is the administrative enforcement arm of the Labor Commissioner. As such, it has some limited latitude to influence how courts will define the scope of the meal period requirements – i.e., Labor Code sections 512 and 226.7. At the behest of Governor Schwarzenegger, the DLSE initially sided with employers by issuing an administrative decision that would have cut the relevant statute of limitations from four years to just one year. The Division also propounded a set of “proposed” pro-employer regulations.
The DLSE was forced to beat a hasty retreat, however, when the California Supreme Court issued its decision in Murphy v. Kenneth Cole. This opinion, which constitutes controlling legal authority, took the exact opposite position.
At this point, it appears that the Labor Commissioner has abandoned her own attempts to formally weigh in on any matters of first impression. Instead, the main purpose of the recent hearings is apparently to flag various concerns and ambiguities and beseech the Courts and politicians for more definitive guidance.
The Labor Commissioner’s report recites that “Preserving the right to take meal and rest breaks is critical.” Nevertheless, Ms. Bradstreet primarily calls for more “flexibility” and highlights the following testimony:
Many workers who operate on tips or commissions object to taking breaks at times that cut into their earnings;
To keep consistent staffing, some employers are complying with the letter of law by scheduling “staggered lunch breaks” that begin as early as 9:00 a.m.
Employers are policing compliance by imposing ever-greater disciplinary measures on employees – for example, “UPS reported that in the first eight months of 2007 it issued 7,200 disciplinary citations and fired 22 workers for meal break violations.”
The report and various summaries of the comments on which it is based can be viewed through the following links.
Companies doing business in California frequently lament the “unique” burdens imposed by California wage and hour laws. But with all the attention on California wage and hour class action litigation, it is worthwhile to remember that many other states actually have similar laws.
No one knows this better than Wal-Mart, which has just been handed another costly meal period class action defeat under Minnesota law in the case of Braun v. Wal-Mart. The International Labor Communications Association blog has a good summary of what the case means for Wal-Mart:
Dakota County District Judge Robert King ordered the company to pay $6.5 million in back pay. In addition, Wal-Mart faces fines as high as $2 billion for the wage-and-hour violations.
King's ruling culminated a seven-year legal battle by four former Wal-Mart workers who filed a class-action lawsuit on behalf of 56,000 current and former employees who worked at Minnesota Wal-Mart and Sam's Club stores between Sept. 11, 1998, and Jan. 31, 2004.
"I was treated like so many of my co-workers," said Nancy Braun of Rochester, Minn., one of the four plaintiffs. "There was just too much work to do and never enough time to do it. There just wasn't enough time in the day to take the breaks we were entitled to."
Judge King found that Wal-Mart repeatedly and willfully violated Minnesota labor laws or its contract with its employees on the issues of contractual rest breaks, statutory meal breaks, shaving time from paid rest breaks and failure to maintain accurate records.
In the decision, the judge found that Wal-Mart was aware that employees were not receiving breaks to which they were entitled. "In essence, they put their heads in the sand," King stated.
He found that Minnesota law requires every employer to provide its employees with a sufficient time to eat a meal. King stated, "No time to eat a meal is not a sufficient time to eat a meal." King found that Wal-Mart violated the meal break law 73,864 times.
The California Legislature has once again missed its budget deadline. This is more of an annual tradition than news. But this year the deficit is particularly large and the resulting budget fight will therefore be especially brutal. For example, state Republicans want to put everything on the table, including non-budget items such as a reform of meal break rules. According to the LA Times, “GOP lawmakers hope to use their leverage over the state budget, which cannot pass without some of their votes, to roll back landmark policies implemented by Democrats,” such as “rules dictating when employers must provide lunch breaks for workers.”
But don’t bet the ranch on this particular reform. Democrats have a prohibitive lock on the Legislature and meal breaks have become a high-profile issue backed by unions, consumer attorneys and other key constituent groups.
Many employers believe that union and non-union labor law are two entirely different universes. In some respects this is understandable. After all, there is an extensive decades-old body of federal labor law regulating the relationship between management and organized labor. The purpose of this regime is to ensure that the terms and conditions of employment will be determined by a freely negotiated bargain struck between equal bargaining powers. So once this bargain is finally struck and reduced to a written collective bargaining agreement (“CBA”), shouldn’t it be the final word in determining the wages that must be paid to union employees?
The answer is no.
While a union and employer are permitted to bargaining over most workplace issues, federal labor law does not permit unions to bargain away “non-negotiable minimum labor standards” established by state law. For example, a union could not agree to allow its members to work for less than the California minimum wage. Nor, with one exception, may a CBA waive the right to collect all overtime pay authorized by the California Labor Code.
This exception is contained at Labor Code section 514, which provides:
[California overtime requirements] do not apply to an employee covered by a valid collective bargaining agreement if the agreement expressly provides for the wages, hours of work, and working conditions of the employees, and if the agreement provides premium wage rates for all overtime hours worked and a regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage.
Many employers are generally aware of this exemption but mistakenly believe that it exempts all employees covered by a CBA from state overtime requirement. The exemption is actually very narrow. For example, employees are exempted from state overtime only if their CBA provides a premium wage rate for “all overtime hours worked.” In California all hours worked in excess of eight per day are considered “overtime.” Thus, a CBA which only provides premium pay for hours in excess of 40 per week would not qualify for the exemption. Likewise, any employee whose regular straight time rate under the CBA is less than $9.75 would not qualify for the exemption and would be entitled to state law overtime payments.
In the 2005 case of Valles v. Ivy Hill Corp, the Ninth Circuit also held that federal labor law does not permit a CBA to waive California’s meal and rest break requirements. Thus, all employees must receive meal and rest breaks – and receive one hour of compensation for each missed meal or rest period – regardless of whether they are in a union or are covered by a CBA.
As any reader of our blog knows, pursuant to Labor Code section 226.7 and the Wage Orders (for example Wage Order 4-2001, section 11(b)), each failure to provide the specified meal period entitles the employee to receive an additional compensation premium equal to one hour of pay.
The Wage Order provides for an “on duty” meal period that is an exception to the required meal break if the following requirements are met:
An "on duty" meal period shall be permitted only when the nature of the work prevents an employee from being relieved of all duty and when by written agreement between the parties an on-the-job paid meal period is agreed to. The written agreement shall state that the employee may, in writing, revoke the agreement at any time.
Wage Order No. 4-2001(a)(emphasis added). Unfortunately, the definition of the “nature of the work” is not clear, and the only real guidance California employers have on this issue is a Department of Labor Standards Enforcement (“DLSE”) opinion letter. Click here to download the opinion letter.
In the opinion letter, the DLSE addressed the issue of whether a shift manager in a fast food restaurant working the night shift would be allowed to take a “on duty” meal period. The DLSE began its analysis in stating that the off duty meal period is the default requirement, and any exceptions to this requirement should be narrowly construed.
The DLSE set forth factors it considered in determining whether the nature of the work prevents the employee from taking an off-duty meal period. The factors included:
the type of work
the availability of other employees to relieve the employee during a meal period
the potential consequences to the employer if the employee is relieved of all duty
the ability of the employer to anticipate and minimize these staffing issues such as by scheduling employees in a manner that would allow the employee to take an off-duty meal break and
whether the “work product or process” would be destroyed or damaged if the employee were given an off-duty meal period.
The DLSE concluded that based on the facts presented in the situation of the fast food restaurant, it did not understand why the nature of the work in the restaurant prevented the shift manager from being relieved of all duties for 30 minutes.
As this issue has yet to be addressed by the courts (maybe the court in Bufil will provide some guidance), employers should follow the limited analysis set forth in the DLSE opinion letter, even though the DLSE opinion letter is not binding on the courts.
This case is a class action lawsuit filed by Caren Bufil for violations of California’s meal and rest break laws, and violation of California’s Unfair Competition Law against Dollar Financial Group, Inc. (Dollar). Bufil v. Dollar Financial Group, Inc. (filed April 14, 2008, ordered published May 13, 2008). Dollar is a company with 130 retail stores in California that provides check cashing, Western Union services and loans.
The plaintiff’s suit defined the putative class as consisting of two subclasses of hourly employees working in California from September 2003 until the present. The two subclasses were employees for whom Dollar’s meal break records showed that they did not receive a meal break because (1) they were the only employee working in the store at the time of their meal break or (2) they were training another employee who could not be left alone to operate the store when their meal break should have been taken.
Dollar’s “On-Duty” Meal Period Agreement
In 2001 Dollar implemented an "on-duty" meal agreement with hourly employees. The agreement was given to all new employees and states that (1) Dollar and the employees acknowledge that the nature of the business may prevent employees from being relieved of all duties during meal periods; (2) Dollar and the employees agree that an employee may take an on-duty meal break, and be paid accordingly; and (3) the employees may revoke their right to have the meal break deemed “on duty” by giving 24-hour written notice to a supervisor.
Dollar introduced an updated meal break policy effective September 2003. The revised policy sets forth that on-duty meal breaks are only permitted when the hourly employee (1) is the only employee in the store working during the entire work shift; and (2) is working with only one other employee who has been employed less than 90 days and is not certified to transact business alone. An e-mail to store managers in June 2006 reiterated this policy.
Dollar’s rest break policy did not require consecutive 10-minute breaks, but permitted a “net” 10 minutes of time that the employee could use throughout the day. The appellate court, relying upon a DLSE opinion letter, stated that the rest breaks had to be consecutive, and held that Dollar did not permit employees working alone or who were supervising other employees had the ability to take a 10-minute rest break.
Dollar Defeats Class Certification In Its First Wage & Hour Class Action: Chin v. Dollar Financial Group
Bufil’s lawsuit was filed just four months after an appellate court upheld a denial of class certification in favor of Dollar in a case that alleged similar violations of California’s wage and hour laws. In Chin, the plaintiff in that case filed a lawsuit against Dollar for missed meal and rest breaks, and proposed to certify a class of employees who were (1) employed for a period of more than five hours without a meal period of not less than 30 minutes, and/or (2) not authorized or permitted to take a rest break for every four hours of work.
In the Chin case, the court held the trial court properly ruled that the action was not suitable for class treatment because common questions of fact and law did not predominate over individualized issues. Because each employee would have to testify as to the particular facts pertaining to his or her case, it therefore was not a case suitable for class wide treatment.
Bufil’s Procedural History
The Plaintiff Bufil moved for class certification, and Dollar moved for judgment on the pleadings. Dollar argued that Bufil’s case was collaterally stopped because the earlier Chin litigation resolved these issues, and it is unfair that it has to defend itself again for the same issues already litigated in the previous lawsuit. The trial court agreed with Dollar, dismissed Bufil’s class allegations and denied plaintiff’s motion for class certification.
The appellate court overruled the trial court with the following holdings.
1. Bufil Is Not Precluded From Brining Her Suit On the Basis of the Collateral Estoppel Doctrine.
The principle behind the collateral estoppel doctrine is to prevent re-litigation of issues previous argued and resolved in an earlier proceeding. As the court set out, in order for the doctrine to apply, the issues must be identical to an issue that was actually litigated and decided to be final on the merits.
The court examined Alvarez v. May Dept. Stores Co. (2006) 143 Cal.App.4th 1223, which held that two cases filed against May Department Stores prior to the Alvarez case precluded the Alvarez case from proceeding under collateral estoppel. In Alvarez, the court held collateral estoppel applied because the two prior cases sought to certify the same class of employees, concerned the same policies, concerned the same time period, and one of the prior cases had the same attorneys. In this case, however, the court held that Bufil’s legal issues were not the same as the issues litigated in the prior Chin lawsuit against Dollar. The court held:
Unlike Alvarez, the class that Bufil asserts is not identical to the class asserted by Chin. Rather, it is a distinct subclass restricted to hourly employees who tracked Dollar’s recordkeeping system from September 2003 to the present with the designation of not having taken a meal period because the employee was the only employee in the store or was supervising a trainee who could not be left alone.
The court held Bufil’s theory that the meal period waivers for employees who were the only employees working at the store or who were providing training to employees are invalid because the waivers do not meet the “nature of the work” exception in Wage Order No. 4-2001 is different than the issues litigated in the Chin case. Wage Order No. 4-2001 provides:
An "on duty" meal period shall be permitted only when the nature of the work prevents an employee from being relieved of all duty and when by written agreement between the parties an on-the-job paid meal period is agreed to. The written agreement shall state that the employee may, in writing, revoke the agreement at any time. (emphasis added)
The court ruled that this is a legal question that was not present in the Chin litigation, and therefore was not barred under the collateral estoppel doctrine.
2. Bufil’s Case Is Appropriate For Class Certification.
The court also held that the lower court’s finding that “commonality”, an element that plaintiffs must prove in order to proceed as a class action, did not exist in this case was flawed. Despite Dollar’s argument, the court held that the individual employee’s understanding of the meal period waiver was irrelevant in this case. The court also held that a class was ascertainable in this case through Dollar’s records, which allowed the employee to electronically record if they did not take the meal break due to (1) the fact they were the only person in the store or (2) they were the only person with a trainee. Finally, the court held that Bufil could show that the class action was a superior method to resolve the litigation as class actions permit individuals to resolve all of their claims at the same time, it is more efficient and avoids repetitive actions, and allows for recover of small amounts of damages that may be too insignificant for individual litigation.
CNN Money.com reports that many companies across the U.S. are encountering wage and hour issues that California companies are all too familiar with. The article reports:
Rod Cotner, owner of Jericho Mortgage in Lancaster, Ohio, was shocked when the U.S. Department of Labor showed up at his door to investigate a wage-and-hour lawsuit filed on behalf of his 54 loan officers and sales managers.
His company was growing - sales exceeded $4 million that year - and his employees were profiting: "Some of the staffers named in the lawsuit were making over $150,000," he says. "After working in the industry for years, I'd never heard of this happening. Everyone pays their officers on a commission basis. How can someone who makes six figures a year demand back wages for his time?"
In 2006 the U.S. Department of Labor collected $172 million in back wages from employers, which is reported to be 3.6 percent higher than 2005.
Also, the article illustrates that while these laws were intended to protect employees, the laws often times have the opposite effect. This is especially true in California where the meal and rest break laws are so rigid that the employees cannot enter into agreements with their employer to skip meal breaks when needed for family issues. The article quotes Don Turner, the owner of the Golden Bear Inn in Berkeley:
"I had an employee who wanted to watch his child's Little League game at four, but he was scheduled to get off at 4:30," he says. "He asked me if he could work through his lunch break instead, and I had to refuse him - the overtime law just wouldn't let me."
The article concludes with a very appropriate caution to employers:
For now, the best that a small-business owner can do to avoid overtime lawsuits is keep painstaking payroll records for nonexempt employees and consult an employment lawyer to verify workers' status. And make sure to keep a sharp eye out for the kind of dedicated worker who might be tempted to skip lunch.
As a final warning, California employers need the advice of an attorney well versed in California labor and employment law - California law is more restrictive than federal law in almost every aspect. Courts apply the law that provides employees with the most protection, which means that California law applies in almost every case.
[UPDATE: On July 22, 2008 - the Fourth Appellate District court issued a published decision (which can be read about here) after the Supreme Court transferred the case back to the court for reconsideration.]
The Fourth Appellate District today issued its much-anticipated decision in Brinker Restaurant v. Superior Court (Hohnbaum). The case had come to the appellate court via a grant of writ review following the trial court’s certification of a class of approximately 60,000 employees who were seeking compensation for “missed” meal and rest breaks.
The big issue in Brinker was how to interpret the word “provide” when construing Labor Code section 512’s directive to “provide” a 30-minute meal period to employees. Does an employer meet its obligation by simply allowing its employees to take the statutory meal period if they wish to? Or must the employer effectively “force” its workers to take the unpaid break and be strictly liable for penalties if they refuse? Or is there perhaps some middle ground between a completely optional meal period and one that is completely mandatory?
For those who wanted a definitive resolution, Brinker was definitely a disappointment. First, the decision is unpublished, and hence un-citable as precedent. Second, the appellate court ducked the main issue and sent the case back to the trial court with directions to make a determination of its own regarding the scope of the duty. (The trial court had also ducked the issue by certifying the class without deciding exactly what elements the plaintiffs would have to prove).
The Brinker opinion does, however, contain a useful discussion of the separate statutory duty to “authorize and permit” rest breaks, which all parties agreed are generally waivable by employees. The court first disposed of some rather strained statutory interpretations by the plaintiffs as to when rest breaks must be provided during a shift. The Court then determined that – given that rest periods are waivable – it was necessarily an abuse of discretion for the trial court to have certified a rest period class. As the Court explained:
[B]ecause (as the parties acknowledge) Brinker’s hourly employees may waive their rest breaks, and thus Brinker is not obligated to ensure that that its employees take those breaks, any showing on a class basis that plaintiffs or other members of the proposed class missed rest breaks or took shortened rest breaks would not necessarily establish, without further individualized proof, that Brinker violated the provisions of [Labor Code] section 226.7, subdivision (a) and IWC Wage Order No. 5 as plaintiffs allege in the complaint.
The interesting part of this holding is that it reversed certification despite recognizing that the trial court’s decision is entitled to “great deference on appeal.”
This aspect of the ruling also illustrates why the stakes are so high in construing the duty to “provide” meal periods. If the duty is only to provide an optional, waivable meal break it would follow that the same result should apply – and meal period claims would likewise be un-certifiable as a matter of law in most cases.
Petitions to publish the opinion will presumably be filed shortly and we’ll post again if there is any change in the opinion’s current status as non-citable authority.
Daniel Schwartz over at the Connecticut Employment Law Blog, notes that Business Week's cover story on "Wage Wars" is not exactly breaking news (or at least should not be) for HR professionals and companies.
Audit your exempt employees. Go over job descriptions and compare that with actual duties. Sometimes "managers" are just glorified sales workers.
Take seriously any complaints by employees about their overtime. If there is a problem, odds are the complaining employee isn't the only one with the problem. And that means the potential for a class action case.
California has been "leading" the wage and hour class action trend mentioned in the Business Week article. These cases have arguably been the leading types of lawsuits filed in California for over the last five years. This is primarily due to California's unique wage and hour laws. Employers not familiar with California law mistakenly believe that because their policies comply with the FLSA, they are in compliance with California law. This is a costly mistake, as California's labor code is very unique, and out-of-state employers should always seek a California employment attorney's advice regarding whether the complies with California law. For example, the following are issues that illustrate how unique California law is compared to the rest of the country:
Meal and Rest Period Penalties
This is the current favorite claim of plaintiff’s class action attorneys in California. A 2001 statute imposes substantial penalties on employers who do not comply with very technical regulations concerning the timing and duration of employee lunch and rest breaks. In general, employees must receive a 30-minute meal break (during which they must be relieved of all duty and be free to leave the premises) before they complete 5 hours of work if their shift will be longer than 6 hours for the day. Employees are entitled to a second meal break whenever their shift will be longer than twelve hours. And employees are also entitled to take paid rest periods of at least 10-minutes for every four hours of work, taken as close to the middle of each work period as possible. The aggregate liability that can result over time was apply demonstrated by a 2005 jury verdict in a meal and rest break class action against Wal-Mart that awarded over $192 million in penalties and punitive damages.
California Overtime Exemptions Are Based on “Counting Hours” Test
Like the FLSA, California law provides that various job categories are exempt from overtime, including outside salespeople, commissioned salespeople and “white collar” employees. Employers have often defined positions on a nation-wide basis as salaried or hourly based on the definitions of exempt duties provided by the FLSA and its implementing regulations. California law, however, frequently rejects these federal rules in favor of its own, narrower definition of exempt duties. For example, under federal law, a position may be exempt from overtime where its “primary,” or most important job functions are exempt. In California, by contrast, the duties test is strictly quantitative — i.e., “does the employee spend more than 50% of his or her time performing exempt duties?” If not, the position may be misclassified and substantial back overtime may be due.
Daily Overtime and Double-Time
Virtually all employers know that the FLSA requires payment of “time-and-one-half” premium pay for all hours worked beyond 40 hours in one workweek. But a surprisingly large number of employers who set up shop in California are ignorant of the fact that California also requires “time-and-a-half” overtime for all hours worked beyond eight in a single workday and for the first eight hours worked on the seventh consecutive day worked in a workweek. Unlike, the FLSA, California also requires overtime at a double-time rate for all hours worked beyond 12 hours in a single workday and for hours worked beyond eight on the seventh consecutive day worked in a single week.
Mandatory Sexual Harassment Training for Supervisors
California law requires employers with 50 or more employees to provide two hours of sexual harassment training to all supervisors once every two years. Regulations are currently being proposed to clarify the extent to which this obligation applies to supervisors who are located outside California, but supervise California employees and other issues raised by the requirement.
No “Use-It-Or-Lose-It” Vacation Policy
California treats earned, but unused vacation time, as a form of vested compensation, which cannot be forfeited and must be paid out in full at the termination of employment. So-called “use-it-or-lose-it” vacation plans, which are permissible in most other states, are therefore illegal in California.
Appellate arguments were made recently in the case Brinker v. Superior Court (Hohnbaum). One issue that is being closely watched by all wage and hour attorneys raised in the appeal is whether the term “provide” in Labor Code § 512 requires employers to force employees to take meal breaks or whether employers only need to offer meal breaks to employees (similar to the "authorize and permit" requirement for rest breaks).
California Labor Code § 512(a) states:
An employer may not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes, except that if the total work period per day of the employee is no more than six hours, the meal period may be waived by mutual consent of both the employer and employee. An employer may not employ an employee for a work period of more than 10 hours per day without providing the employee with a second meal period of not less than 30 minutes, except that if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and the employee only if the first meal period was not waived.
This distinction argued in Brinker is critical in meal and rest break class actions. If the appellate court holds that Labor Code § 512 imputes a requirement on employers to force employees to take their meal and rest breaks, plaintiffs will have an easier argument that meal and rest break cases are subject to class certification. On the other hand, if the court holds that employers only need to make meal breaks available for employees, then class certification would be much harder to achieve because the court would have to make an individual inquiry into whether each employee could have taken a meal break and voluntarily waived it, or if the employee was forced to forego the break.
Courts that have reviewed this issue have reached differing conclusions about the meaning of the term “provide” in § 512. One court, in Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949, held that “employers have ‘an affirmative obligation to ensure that workers are actually relieved of all duty.’” Id. at 962 - 963 (citing Dept. of Industrial Relations, DLSE, Opinion Letter 2002.01.28, p. 1.). However, another California federal district court held employers are only required to offer meal breaks. White v. Starbucks, Corp., (N. D. Cal. July 2, 2007) 497 F.Supp.2d 1080, 2007 WL 1952975. The court refused to follow the DLSE opinion letter relied upon in Cicairos, and stated:
In the absence of controlling California Supreme Court precedent, the court is Erie-bound to apply the law as it believes that court would do under the circumstances. See Wyler Summit Partnership v. Turner Broadcasting System, Inc., 135 F.3d 658, 663 (9th Cir.1998). The interpretation that White advances-making employers ensurers of meal breaks-would be impossible to implement for significant sectors of the mercantile industry (and other industries) in which large employers may have hundreds or thousands of employees working multiple shifts. Accordingly, the court concludes that the California Supreme Court, if faced with this issue, would require only that an employer offer meal breaks, without forcing employers actively to ensure that workers are taking these breaks. In short, the employee must show that he was forced to forego his meal breaks as opposed to merely showing that he did not take them regardless of the reason.
The California Labor & Employment Defense Blog will post about the appellate court’s ruling in Brinker v. Superior Court once it is issued.
Employment lawsuits are continually on the rise. Here are seven things that may help you avoid employee lawsuits:
Treat Employees with Respect
Communicate with Your Employees
Implement an Effective Unlawful Discrimination and Harassment Policy
Document, Document, Document
Conduct Honest Employee Evaluations on a Regular Basis
Do Not Retaliate
Take Action and Investigate Promptly
These simple steps will go a long ways to reducing employee lawsuits. To ensure that your company has done everything it can to avoid employee lawsuits, you should have your employment policies, training and practices reviewed by your employment lawyer.
Rush's top seven tips are great reminders about what employers need to continually remind themselves to do. I also thought that it is interesting that Rush's top tip - treat your employees with respect - cannot be found in any of the 50 U.S. state laws, federal law, or any case law. Even though there is no "legal" requirement to treat employees with respect, I wholeheartedly agree that this is the single best step employers can take to prevent litigation (in addition to having a satisfied and productive workforce).
I also wanted to add three more tips to round out a "top ten" list for California employers:
8. Develop and strictly enforce a meal and rest break policy
9. Ensure your exempt employees (i.e., salaried employees) are properly classified as exempt under California law; and
10. Review and update your employee handbook and/or policies once a year to incorporate any changes in the law.
With July beginning, now is a perfect time for employers to review their meal and rest break policies. While readers may feel like they understand these regulations better than most non-employment attorneys, given the high penalties associated with violations, and the California Supreme Court’s ruling in April that the payments for violations are “wages,” increasing the statute of limitations periods up to four years, it is well worth it for employers to revisit these issues periodically to ensure compliance.
Meal Breaks: Q. What are the basic requirements for meal periods under California law?
A. Under California law (IWC Orders and Labor Code Section 512), employees must be provided with no less than a thirty-minute meal period when the work period is more than five hours (more than six hours for employees in the motion picture industry covered by IWC Order 12-2001).
Unless the employee is relieved of all duty during the entire thirty-minute meal period and is free to leave the employer's premises, the meal period shall be considered "on duty," counted as hours worked, and paid for at the employee's regular rate of pay. An "on duty" meal period will be permitted only when the nature of the work prevents the employee from being relieved of all duty and when by written agreement between the employer and employee an on-the-job meal period is agreed to. The test of whether the nature of the work prevents an employee from being relieved of all duty is an objective one. An employer and employee may not agree to an on-duty meal period unless, based on objective criteria, any employee would be prevented from being relieved of all duty based on the necessary job duties. Some examples of jobs that fit this category are a sole worker in a coffee kiosk, a sole worker in an all-night convenience store, and a security guard stationed alone at a remote site.
Q. Is it permissible if I choose to work through my meal period so that I can leave my job 30 minutes early?
A. No, working through your meal period does not entitle you to leave work early prior to your scheduled quitting time. In order for an "on duty" meal period to be permitted under the Industrial Welfare Commission Wage Orders, the nature of the work must actually prevent the employee from being relieved of all duty, and there must be a written agreement that an on-the-job paid meal period is agreed to. Additionally, the written agreement must also state that the employee may, in writing, revoke the agreement at any time.
Q. Can my employer require that I stay on its premises during my meal period?
A. Yes, your employer can require that you remain on its premises during your meal period, even if you are relieved of all work duties. However if that occurs, you are being denied your time for your own purposes and in effect remain under the employer's control and thus, the meal period must be paid. Minor exceptions to this general rule exist under IWC Order 5-2001 regarding healthcare workers. Pursuant to the Industrial Welfare Commission Wage Orders, if you are required to eat on the premises, a suitable place for that purpose must be designated. "Suitable" means a sheltered place with facilities available for securing hot food and drink or for heating food or drink, and for consuming such food and drink.
Q. What are the basic requirements for rest periods under California law?
A. California employees covered by the rest period provisions of the Industrial Welfare Commission Wage Orders must be provided with a net 10-minute paid rest period for every four hours worked or major fraction thereof. Insofar as is practicable, the rest period should be in the middle of the work period. If an employer fails to provide an employee a rest period, the employer shall pay the employee one hour of pay at the employee’s regular rate of pay for each workday that the rest period is not provided.
Q. Must the rest periods always be in the middle of each four-hour work period?
A. Rest breaks must be given as close to the middle of the four-hour work period as is practicable. If the nature or circumstances of the work prevent the employer from giving the break at the preferred time, the employee must still receive the required break, but may take it at another point in the work period.
Q. Is it permissible if I choose to work through both of my rest periods so that I can leave my job 20 minutes early?
A. No, working through your rest period does not entitle you to leave work early or arrive late.
Q. Can my employer require that I stay on the work premises during my rest period?
A. Yes, your employer can require that you stay on the premises during your rest break. Since you are being compensated for the time during your rest period, your employer can require that you remain on its premises. And under most situations, the employer is required to provide suitable resting facilities that shall be available for employees during working hours in an area separate from the toilet rooms.
Q. Can I have additional rest breaks if I am a smoker?
A. No, under California law rest period time is based on the total hours worked daily, and only one ten-minute rest period need be authorized for every four hours of work or major fraction thereof.
Q. When I need to use the toilet facilities during my work period does that count as my ten minute rest break?
No, the 10-minute rest period is not designed to be exclusively for use of toilet facilities as evidenced by the fact that the Industrial Welfare Commission requires suitable resting facilities be in an area "separate from toilet rooms." The intent of the Industrial Welfare Commission regarding rest periods is clear: the rest period is not to be confused with or limited to breaks taken by employees to use toilet facilities. This conclusion is required by a reading of the provisions of IWC Orders, Section 12, Rest Periods, in conjunction with the provisions of Section 13(B), Change Rooms And Resting Facilities, which requires that "Suitable resting facilities shall be provided in an area separate from the toilet rooms and shall be available to employees during work hours."
Allowing employees to use toilet facilities during working hours does not meet the employer’s obligation to provide rest periods as required by the IWC Orders. This is not to say, of course, that employers do not have the right to reasonably limit the amount of time an employee may be absent from his or her work station; and, it does not indicate that an employee who chooses to use the toilet facilities while on an authorized break may extend the break time by doing so. DLSE policy simply prohibits an employer from requiring that employees count any separate use of toilet facilities as a rest period.
The U. S. Department of Labor’s Wage and Hour Division website provides a self assessment tool for restaurants that employ minors. The assessment covers common violations of the Fair Labor Standards Act (FLSA ). Restaurant owners should note that this assessment does not cover California state law items. The assessment covers items that the DOL found in the past to be some of the most common problems encountered in restaurants, and therefore, are likely issues a DOL investigator will look for in a restaurant.
Here is a list of a few of the items covered in the assessment:
Do any workers under 18 years of age do the following: 1. Operate or clean power-driven meat slicers or other meat processing machines?
2. Operate or clean any power-driven dough mixer or other bakery machines?
3. Operate, load, or unload scrap papers baler or paper box compactors?
4. Drive a motor-vehicle on the job?
Do any workers under 16 years of age do the following:
7. Clean cooking equipment or handle hot oil or grease?
8. Load or unload goods from a truck or conveyor?
9. Work inside a freezer or meat cooler?
10. Operate power-driven bread slicers or bagel slicers?
11. Operate any power-driven equipment?
12. Work from ladders?
13. Work during school hours?
14. Work before 7:00 a.m. on any day?
15. Work past 7:00 p.m. between Labor Day and June 1?
16. Work past 9:00 p.m. between June 1 and Labor Day?
17. Work more than 3 hours on a school day, including Fridays?
18. Work more than 8 hours on any day?
19. Work more than 18 hours in any week when school was in session?
20. Work more than 40 hours in any week when school was not in session?
21. Do you employ any workers who are less than 14 years of age?
22. Do you fail to maintain in your records a date of birth for every employee under 19 years of age?
Click here to take the entire assessment. At the end of the assessment, there is a rules summary that explains an employer’s responsibility under the FLSA for the issues on the assessment.
California Employment & Labor Defense Lawyer & Attorney, Van Vleck Turner & Zaller, offering services related to employment litigation, wrongful termination, class action lawsuits, sexual harassment training and employment policies to the cities of Los Angeles, San Diego, San Jose, San Francisco, Long Beach, Fresno, Sacramento, Oakland, Santa Ana.