Betancourt v. OS Restaurant Services, LLC says you still cannot get fees in a wage and hour case seeking meal and rest break premiums

Kirby v. Immoos Fire Protection, Inc., 53 Cal. 4th 1244 (2012) said that actions for failure to provide meal periods and rest breaks are not actions for non-payment of wages under Labor Code § 218.5. In Betancourt v. OS Restaurant Services, LLC (May 21, 2020), the Court of Appeal (Second Appellate District, Division Eight) says the same thing. There is a bit of discussion about what “predicate” violation was alleged (the plaintiff arguing that it was faulty record-keeping), but the Court was not persuaded to deviate from a growing list of decisions considering how to treat premium pay “penalties” and derivative claims under sections 203 and 226.

Interesting meal and rest break questions certified by Ninth Circuit to the California Supreme Court

This is interesting. On August 1, 2019, the Ninth Circuit certified a pair of questions to the California Supreme Court in Cole v. CRST Van Expedited, Inc. (No. 17-55606) (9th Cir. Aug. 1, 2019). Before we get ahead of ourselves, the California Supreme Court still needs to agree to take up the certified questions. They do so at an exceedingly high rate, but it isn’t a done deal…yet. So, what about those questions? The questions posed are as follows:

1.Does the absence of a formal policy regarding meal and rest breaks violate California law?

2.Does an employer’s failure to keep records for meal and rest breaks taken by its employees create a rebuttable presumption that the meal and rest breaks were not provided?

Slip op., at 4. The case arises in the context of the operation of truck drivers working for a shipping company. The discussion of the reason for the certification clarifies where the Ninth Circuit seeks guidance:

The California Supreme Court did not directly address in Brinker whether the absence of a policy providing for meal and rest breaks constitutes a violation of California labor law. However, in Duran v. U.S. Bank Nat’l Ass’n, 325 P.3d 916,933 n.28 (Cal. 2014), the California Supreme Court observed that “[i]n regard to other wage and hour claims, some courts have held that the absence of a uniform policy supports [class] certification if such a policy is required by law. We express no opinion on this question.” (emphasis in the original).

Slip op., at 11. After noting Benton and Bradley, the Court also observed the concurring comment in Brinker:

In Brinker, Justice Werdegar noted that “[i]f an employer’s records show no meal period for a given shift over five hours, a rebuttable presumption arises that the employee was not relieved of duty and no meal period was provided.” 273 P.3d at 545 (Werdegar, J., concurring).

Slip op. at 12.

If the California Supreme Court takes up the questions, I will be happy to handle action on the outcome for a 5% vig. Kidding. 10%. Still kidding.

A rest break says what? Vaquero v. Stoneledge Furniture LLC holds that commission-only pay employees must be paid separately for rest periods.

California is the wage and hour gift that keeps on giving.  And if you thought every wage and hour question must have been answered by now....well....the naivete is charming.  A few weeks ago, in Vaquero v. Stoneledge Furniture LLC (February 28, 2017), the Court of Appeal (Second Appellate District, Division Seven) tackled two new questions related to rest breaks:

Are employees paid on commission entitled to separate compensation for rest periods mandated by state law? If so, do employers who keep track of hours worked, including rest periods, violate this requirement by paying employees a guaranteed minimum hourly rate as an advance on commissions earned in later pay periods? 

Slip op., at 2.  And how do you think the Court answered these questions?  Everyone should pass this test; it's still California we're talking about.  The Court said yes to both questions.

The facts are important to the outcome, since this result would not apply to every commission plan.  The defendant had two different plans in operation during the class period. The first was described as follows:

After a training period during which new employees received $12.01 per hour, Stoneledge paid sales associates on a commission basis. If a sales associate failed to earn “Minimum Pay” of at least $12.01 per hour in commissions in any pay period, Stoneledge paid the 3 associate a “draw” against “future Advanced Commissions.” The commission agreement explained: “The amount of the draw will be deducted from future Advanced Commissions, but an employee will always receive at least $12.01 per hour for every hour worked.”

Slip op., at 2-3.  Later, the plan was changed:

Effective March 30, 2014, Stoneledge implemented a new commission agreement that pays sales associates a base hourly wage of $10 “for all hours worked.” In addition, sales associates can earn various types of incentive payments based on a percentage of sales. Under the new agreement, no portion of a sales associate’s base pay is deducted from or credited against incentive payments.

Slip op., at 4.  The Court began its analysis by exhaustively setting forth the rest break requirement, the nature of Wage Orders, and the policies underlying California wage and hour laws, beginning with a citation to Augustus.  Next, the Court examined whether Wage Order 7 requires separate compensation for rest breaks:

The plain language of Wage Order No. 7 requires employers to count “rest period time” as “hours worked for which there shall be no deduction from wages.” (Cal. Code Regs. tit. 8, § 11070, subd. 12(A), italics added.) In Bluford v. Safeway Stores, Inc. (2013) 216 Cal.App.4th 864 the court interpreted this 12 language to require employers to “separately compensate[ ]” employees for rest periods where the employer uses an “activity based compensation system” that does not directly compensate for rest periods. (Id. at p. 872.)

Slip op., at 11-12.  After a thorough examination, the Court agreed that the approach in Bluford was correct:

We agree with Bluford that Wage Order No. 7 requires employers to separately compensate employees for rest periods if an employer’s compensation plan does not already include a minimum hourly wage for such time. (See Gonzales, supra, 215 Cal.App.4th at pp. 48-49 [concluding that the identical language in Wage Order No. 4 requires employers to separately pay piecerate workers for nonproductive time].) All of the federal courts that have considered this issue of California law have reached a similar conclusion and have held employers must separately compensate employees paid by the piece for nonproductive work hours.

Slip op., at 14.  The Court then concluded that the same result applies to commission-pay employees:

The plain language of Wage Order No. 7 covers employees paid by commission. (See Cal. Code Regs. tit. 8, § 11070, subd. 1 [applying to “all persons employed in the mercantile industry whether paid on a time, piece rate, commission, or other basis”]; id. at § 11070, subd. 2(O) [“wages” includes “amounts for labor performed by employees of every description, whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculation”].) Where, as here, the language of a wage order is unambiguous, it is dispositive. (Brinker, supra, 53 Cal.4th at p. 1028; see also Gonzales, supra, 215 Cal.App.4th at p. 49 [the wage order “does not allow any variance in its application based on the manner of compensation”].)

Slip op., at 15.  The Court explained that commission pay systems and piece rate systems were essentially identical in their treatment of rest breaks:

The commission agreement used by Stoneledge during the class period is analytically indistinguishable from a piece-rate system in that neither allows employees to earn wages during rest periods. Indeed, the purpose of a rest period is to rest, not to work.

Slip op., at 16.  After reaching its conclusion, the Court then spent the balance of its discussion disposing of various arguments by the defendant.  In one example, the Court rejected that a guaranteed base drawn against future commissions did not pay for rest periods:

For sales associates whose commissions did not exceed the minimum rate in a given week, the company clawed back (by deducting from future paychecks) wages advanced to compensate 23 employees for hours worked, including rest periods. The advances or draws against future commissions were not compensation for rest periods because they were not compensation at all. At best they were interest-free loans. Stoneledge cites no authority for the proposition that a loan for time spent resting is compensation for a rest period. To the contrary, taking back money paid to the employee effectively reduces either rest period compensation or the contractual commission rate, both of which violate California law. (See § 221 [prohibiting employers from collecting or receiving from an employee “any part of wages theretofore paid by said employer”]; § 222 [prohibiting employers from withholding any part of a wage agreed upon]; § 223 [prohibiting employers from “secretly pay[ing] a lower wage while purporting to pay the wage designated by statute or by contract”]; cf. Armenta, supra, 135 Cal.App.4th at p. 323 [averaging wages across pay periods to satisfy minimum wage requirements “effectively reduces [employees’] contractual hourly rate”].)

Slip op., at 22-23.  The Court then went through mathematical examples to show that the system in place earlier in the class period did compensate employees differently depending upon whether they took rest breaks or not.  If you are paid exclusively on commission, expect to see your compensation system get a tweak in the near future.

California Supreme Court rejects "on duty" or "on call" rest breaks in Augustus v. ABM Security Services, Inc.

The California Supreme Court dropped a pretty big opinion in the wage and hour world today, reversing the Court of Appeal in Augustus v. ABM Security Services, Inc. (Dec. 22, 2016).  The Supreme Court specifically waded into the topic of rest breaks, and, specifically, whether an "on call" or "on duty" rest break is ever sufficient.  Here's the summary:

We granted review to address two related issues: whether employers are required to permit their employees to take off-duty rest periods under Labor Code section 226.7 and Industrial Welfare Commission (IWC) wage order No. 4-2001 (Cal. Code Regs., tit. 8, § 11040 (Wage Order 4)), and whether employers may require their employees to remain "on call" during rest periods. What we conclude is that state law prohibits on-duty and on-call rest periods. During required rest periods, employers must relieve their employees of all duties and relinquish any control over how employees spend their break time. (See Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1038-1039 (Brinker).)

Slip op., at 1.  While this decision won't directly impact most wage and hour cases, given that it is fairly specific to the sort of job circumstances encountered by employees like security guards, it will put a little bit of weight on the scale when rest break claims are up for settlement or certification.

If I can, I will write more about this decision later, but, for now, the first paragraph pretty much summarizes the result.

Roxborough, Pomerance, Nye & Adreani, Drew E. Pomerance, Michael B Adreani, Marina N. Vitek; The Ehrlich Law Firm, Jeffrey Isaac Ehrlich; Initiative Legal Group, Monica Balderrama, G. Arthur Meneses; Scott Cole & Associates, Scott Edward Cole, Matthew R. Bainer; Law Offices of Alvin L Pittman and Alvin L. Pittman were listed as counsel for Plaintiffs and Respondents.  Mr. Pomerance argued for Plaintiff.  Well done, Drew!

Watching how they make the sausage...Eastern District set to try Taco Bell wage & hour class actions

Class actions don't make it to trial all that often.  But when they get close, things can get pretty ugly.  In Medlock, et al. v. Taco Bell Corp., et al., the United States District Court for the Eastern District of California (Magistrate Stanley A. Boone presiding) issued an Order on nine motions in limine filed by the Plaintiffs. See 2016 WL 430438 (February 4, 2016).

In Medlock, the Court certified three classes, on claims for meal period violations, rest period violations, and improper time record adjustments.  With trial approaching on February 22, 2016, the Plaintiffs filed nine motions in limine to exclude expert testimony (motions 1 and 2), rates of meal and rest period violation (motion 3), challenges to the authenticity of raw time clock data (motion 4), evidence of job performance or discipline (motion 5), evidence related to elements of class certification (motion 6), evidence of explicit instructions to class members to skip meal or rest periods (motion 7), evidence of the likeability of working at Taco Bell (motion 8), and alterations to the testimony of Taco Bell's Rule 30(b)(6) designee.  The court denied all motions other than motion 6, and that motion was limited to ordering that the defendants could not discuss the Rule 23 elements before the jury.

Considering the evidence the Court described as potentially probative, it appears that the jury will get to hear the kitchen sink of Defendants' reasons why meal and rest periods were missed. 

And yes, I am not dead.

Class certification in California is still actually a "procedure"

What to make of this one?  I should have commented on it long ago, I know, but that start-your-own-law-firm thing is fairly time consuming, so I get to writing when I can.   So while I was doing some show prep for this upcoming weekend's podcast, I finally took a look at Benton v. Telecom Network Specialists, Inc. (Oct. 16, 2013) to see for myself what the Court of Appeal (Second Appellate District, Division Seven) did that has many plaintiff-side practitioners so excited.

In Benton, the plaintiffs, cell-phone tower technicians, filed a wage and hour class action lawsuit against Telecom Network Services (TNS) alleging, among other things, violation of meal and rest break requirements and failure to pay overtime.  Most of the proposed class of technicians were hired and paid by staffing companies that contracted with TNS. The remainder of the technicians were hired and paid by TNS directly.  Plaintiffs alleged that TNS was the employer of both categories of technicians and moved to certify their claims.  The trial court denied certification, holding that TNS’s liability could not be established “through common proof because: (1) the technicians worked under ‘a diversity of workplace conditions’ that enabled some of them to take meal and rest breaks; and (2) the staffing companies that hired and paid many of the TNS technicians had adopted different meal, rest break and overtime policies throughout the class period.”

The Court of Appeal reversed, remanding for further proceedings.  In an extensive opinion tracking development of the certification standards as applied to wage and hour cases beginning primarily with Brinker, the Court also examined decisions in Bradley v. Networkers International, 211 Cal. App. 4th 1129 (2012) and Faulkinbury v. Boyd & Associates, 216 Cal. App. 4th 220 (2013).

Discussing Bradley, the Court said:

On remand from the Supreme Court, however, the Court of Appeal concluded that, under the analysis set forth in Brinker, the trial court had improperly focused on individual issues related to damages, rather than on the plaintiffs’ theory of liability. (Bradley, supra, 211 Cal.App.4th at p. 1151.) According to the court, Brinker had clarified that “in ruling on the predominance issue in a certification motion, the court must focus on the plaintiff’s theory of recovery and assess the nature of the legal and factual disputes likely to be presented and determine whether individual or common issues predominate.” (Id. at p. 1150.) The court further explained that “plaintiffs’ theory of recovery [wa]s based on Networkers’ (uniform) lack of a rest and meal break policy and its (uniform) failure to authorize employees to take statutorily required rest and meal breaks. The lack of a meal/rest break policy and the uniform failure to authorize such breaks are matters of common proof. Although an employer could potentially defend these claims by arguing that it did have an informal or unwritten meal or rest break policy, this defense is also a matter of common proof.” (Id. at p. 1150.)

Slip op., at 22-23.  Notice that, at least in the context of these wage particular wage & hour claims, which have a natural tendency to be governed by some set of implementing policies, the certification question endorsed in this case is the question of whether the defendant's policy is legal, not whether any particular employee stumbled into compliant behavior.  Similarly, discussing Faulkinbury, the Court said:

Upon remand from the Supreme Court, the appellate court concluded that Brinker had rejected the mode of analysis set forth in its original opinion. As to plaintiffs’ meal break claim, the appellate court explained that Brinker clarified that the defendant’s liability would attach “upon a determination that [defendant’s] uniform on-duty meal break policy was unlawful . . . . Whether or not the employee was able to take the [off-duty] 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.’ [Citation.]” (Faulkinbury, supra, 216 Cal.App.4th at p. 235.)

Slip op., at 24-25.  This line of cases appears to strongly emphasize what was, for a time, an argument receiving less traction: variations in damages does not require denial of certification.

After establishing the framework for its analysis, the Court examined the trial court’s ruling:

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.

Slip op., at 27.  The Court then rejected the trial court’s mode of analysis, holding that Brinker, and then Bradley and Faulkinbury clarified the correct approach:

As explained in Bradley and Faulkinbury, however, Brinker “expressly rejected” this mode of analysis. (Bradley, supra, 211 Cal.App.4th at pp. 1143, 1151; Faulkinbury, supra, 216 Cal.App.4th at pp. 235, 237.) As succinctly stated in Faulkinbury: “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.’ [Citation.]” (Faulkinbury, supra, 216 Cal.App.4th at p. 235; see also Bradley, supra, 211 Cal.App.4th at p. 1151 [“under the logic of [Brinker],when an employer has not authorized and not provided legally-required meal and/or rest breaks, the employer has violated the law and the fact that an employee may have actually taken a break or was able to [take a break] during the work day does not show that individual issues will predominate in the litigation”].) Indeed, Bradley and Faulkinbury both specifically concluded that evidence showing that some class members’ working conditions permitted them to take breaks, while others did not, was not a sufficient basis for denying certification. (See Faulkinbury, supra, 216 Cal.App.4th at pp. 236-237 [evidence that some employees were able to “take breaks at [their] posts”, while others “could not leave the assigned post for a rest break” does not “establish individual issues of liability”]; Bradley, supra, 211 Cal.App.4th at p. 1150 [evidence that some employees worked “alone for long periods of time” or “took the authorized rest or meal break” was insufficient to show individual issues predominated.)

Slip op., at 27.  The Court continued in this same vein, thoroughly rejecting both the defendant’s theories and trial court’s method of analysis, repeatedly holding that variations in experiences by class members impacted their damages, not the plaintiffs’ theory of the case, which challenged the absence of lawful policies required by the Wage Order.

You can, at least in this context, certify the question of whether the defendant did the right thing, not the question of whether the plaintiffs always received the right thing.  In other words, luck won't save you; legal policies, implemented as written, will.  Somehow, I think the wage & hour defense bar is celebrating this just as much...