Brinker Analysis: California still protects employees

The California Supreme Court has been consistent in its recognition that California law protects employees as part of a fundamental policy of the state of California.  For instance, in Sav-On, the California Supreme Court observed that “California’s overtime laws are remedial and are to be construed so as to promote employee protection.”  More recently, in an easily overlooked opinion in the matter of Brinker Restaurant Corporation, et al. v. Superior Court (Hohnbaum) (April 12, 2012), the California Supreme Court began its opinion by observing, “For the better part of a century, California law has guaranteed to employees wage and hour protection, including meal and rest periods intended to ameliorate the consequences of long hours.”  At this point, it should be clear that, at least to some degree, Brinker will be consistent with the Court’s employee-protective view of California law.

Brinker is long and complex.  The unanimous opinion is 54 pages long, and Justice Werdegar offered an additional concurring opinion about four pages long to offer further guidance on the certification issue remanded for further consideration.

Brinker will also fail to resolve all questions about meal and rest periods, or certification of those claims.  Widely divergent analyses of its core holdings have already surfaced.

Brinker summarizes what is encompassed in the opinion as follows:

We granted review to consider issues of significance to class actions generally and to meal and rest break class actions in particular.  We conclude, contrary to the Court of Appeal, that trial courts are not obligated as a matter of law to resolve threshold disputes over the elements of a plaintiff’s claims, unless a particular determination is necessarily dispositive of the certification question.  Because the parties have so requested, however, we nevertheless address several such threshold disputes here.  On the most contentious of these, the nature of an employer’s duty to provide meal periods, we conclude an employer’s obligation is to relieve its employee of all duty, with the employee thereafter at liberty to use the meal period for whatever purpose he or she desires, but the employer need not ensure that no work is done.

Slip op., at 2.  As I will discuss, below, that summary, by virtue of its brevity, cannot fully capture the nuanced holdings in Brinker.

First, a brief comment on the facts and procedural history.  The Plaintiffs were nonexempt restaurant employees.  The procedural summary, covering nearly six pages, is not essential to understanding the core holdings in Brinker, though it is of interest.

Brinker is both a wage & hour opinion and class certification opinion.  That, more than anything, explains its length.  On the certification issues, Brinker begins by reminding us how class actions developed, and where we should look for certification requirements.  As to the later, the Court said, “Drawing on the language of Code of Civil Procedure section 382 and federal precedent, we have articulated clear requirements for the certification of a class.”  Slip op., at 8.  Because predominance of common issues was the only aspect of certification in dispute, the Court also restated a number of principles surrounding predominance.  For instance, the Court said, “ ‘As a general rule if the defendant’s liability can be determined by facts common to all members of the class, a class will be certified even if the members must individually prove their damages.’ ”  Slip op., at 9, quoting Hicks.

The Court then summarized the core elements of the appellate reversal:

The appellate judgment reversing certification rests on two separate grounds.  First, the Court of Appeal held the trial court committed error per se by ruling on certification without first resolving legal disputes over the scope of Brinker’s duties to provide meal and rest periods.  Second, it held that any court, upon resolving those disputes, could only have concluded certification was inappropriate.  We consider the first of these grounds in part II., post, and the second of them in parts IV. through VI., post.  As we shall explain, the first ground does not support the judgment, while the second supports it only partially.

Slip op., at 10.

Beginning with the issue of whether disputes over a claim’s elements should be resolved prior to certification, the Court said:

The trial court concluded it could certify a class without resolving disputes over the scope of Brinker’s duty to provide breaks because common questions would predominate even if Brinker’s legal positions were correct.  According to the Court of Appeal, this was error:  the trial court “was required to determine the elements of plaintiffs’ claims” because the court “could not determine whether individual or common issues predominate in this case, and thus whether a class action was proper, without first determining this threshold issue.”  While we agree trial courts must resolve any legal or factual issues that are necessary to a determination whether class certification is proper, the Court of Appeal went too far by intimating that a trial court must as a threshold matter always resolve any party disputes over the elements of a claim.  In many instances, whether class certification is appropriate or inappropriate may be determined irrespective of which party is correct.  In such circumstances, it is not an abuse of discretion to postpone resolution of the disputed issue

Slip op., at 10.  Brinker recognizes, first, that a “class certification motion is not a license for a free-floating inquiry into the validity of the complaint’s allegations.”  Slip op., at 11.  Next Brinker also recognizes that “ ‘issues affecting the merits of a case may be enmeshed with class action requirements….’”   Slip op., at 11.  But Brinker also cautions that such inquiries are limited:

Such inquiries are closely circumscribed.  As the Seventh Circuit has correctly explained, any “peek” a court takes into the merits at the certification stage must “be limited to those aspects of the merits that affect the decisions essential” to class certification.  (Schleicher v. Wendt (7th Cir. 2010) 618 F.3d 679, 685.)  While the Schleicher defendants urged that the trial court had erred by failing to resolve disputes over the falsity and materiality of their statements, the Seventh Circuit affirmed class certification without inquiry into such matters, concluding no element of the certification determination hinged on their resolution.  (Ibid.)  Likewise, in Jaimez v. Daiohs USA, Inc. (2010) 181 Cal.App.4th 1286, 1303-1305, the Court of Appeal reversed the trial court’s refusal to certify a wage and hour class without deciding contested legal issues concerning the defendant’s meal break policy because common questions predominated in any event.  (See also Medrazo v. Honda of North Hollywood (2008) 166 Cal.App.4th 89, 97-98 [trial court erred in resolving the merits of an affirmative defense divorced from consideration of the specific criteria for class certification].)

Slip op., at 12-13.  The citation to the Seventh Circuit opinion is noteworthy, as is the reference to Medrazo, which case just resulted in a second pro-consumer opinion in the last week.  The Court then criticized the Court of Appeal for over-reliance on Washington Mutual Bank v. Superior Court (2001) 24 Cal.4th 906, explaining that the decision stood for the unremarkable proposition that issues directly impacting the predominance issue should be evaluated with the predominance analysis.

In short, Brinker holds that a trial court need not resolve any dispute concerning the elements of a claim unless resolution is essential to the predominance analysis, and even then, the evaluation should be the bare minimum necessary to determine whether a predominance problem exists.

The Court then turned to the parties’ disputes regarding the actual elements of the plaintiffs’ claims and the Court of Appeal’s conclusion that certification was precluded as a matter of law.  Brinker begins section III with a helpful history lesson of sorts, separating out the various sources of authority for California’s wage & hour laws:

Nearly a century ago, the Legislature responded to the problem of inadequate wages and poor working conditions by establishing the IWC and delegating to it the authority to investigate various industries and promulgate wage orders fixing for each industry minimum wages, maximum hours of work, and conditions of labor.  (Martinez v. Combs, supra, 49 Cal.4th at pp. 52-55; see Cal. Const., art. XIV, § 1 [confirming the Legislature’s authority to establish a commission and grant it legislative and other powers over such matters].)  Pursuant to its “broad statutory authority” (Industrial Welfare Com. v. Superior Court (1980) 27 Cal.3d 690, 701), the IWC in 1916 began issuing industry- and occupationwide wage orders specifying minimum requirements with respect to wages, hours, and working conditions (id. at p. 700).  In addition, the Legislature has from time to time enacted statutes to regulate wages, hours, and working conditions directly.  Consequently, wage and hour claims are today governed by two complementary and occasionally overlapping sources of authority:  the provisions of the Labor Code, enacted by the Legislature, and a series of 18 wage orders, adopted by the IWC.  (Reynolds v. Bement (2005) 36 Cal.4th 1075, 1084; see IWC wage order Nos. 1-2001 to 17-2001 and MW-2007 (Cal. Code Regs., tit. 8, §§ 11000-11170).)

Slip op., at 15-16.  As part of that history lesson, the Court emphasized the remedial nature of the Labor Code provisions and wage order provisions:

As with the Labor Code provisions at issue, the meal and rest period requirements we must construe “have long been viewed as part of the remedial worker protection framework.”  (Murphy v. Kenneth Cole Productions, Inc., supra, 40 Cal.4th at p. 1105.)  Accordingly, the relevant wage order provisions must be interpreted in the manner that best effectuates that protective intent.  (Martinez, at pp. 61-62; see Industrial Welfare Com. v. Superior Court, supra, 27 Cal.3d at p. 724; Bono Enterprises, Inc. v. Bradshaw (1995) 32 Cal.App.4th 968, 974.)

Slip op., at 16-17.

Diving into the specific claims, Brinker begins with rest period obligations.  First, the Court confirms that “major fraction” means more than half, or two hours for rest break purposes.  Second, summarizing the impact of wage order subdivision 12(A), the Court held that employees “are entitled to 10 minutes’ rest for shifts from three and one-half to six hours in length, 20 minutes for shifts of more than six hours up to 10 hours, 30 minutes for shifts of more than 10 hours up to 14 hours, and so on.”  Slip op., at 20.  The Court of Appeal’s alternative construction was dismissed as unsupportable.

Next, the Court examined rest period timing.  On that issue, the Court also followed the wage order language as explicitly stated:

Wage Order No. 5, subdivision 12(A) provides in relevant part:  “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.”  Neither this part of the wage order nor subdivision 11, governing meal periods, speaks to the sequence of meal and rest breaks.  The only constraint on timing is that rest breaks must fall in the middle of work periods “insofar as practicable.”  Employers are thus subject to a duty to make a good faith effort to authorize and permit rest breaks in the middle of each work period, but may deviate from that preferred course where practical considerations render it infeasible.  At the certification stage, we have no occasion to decide, and express no opinion on, what considerations might be legally sufficient to justify such a departure.

Slip op., at 22.  The Court was unwilling to conclude that the ordering of breaks could create a per se violation.  For example, the Court examined a six-hour shift where one meal period and one rest break were required.  In that scenario, the Court held that nothing about the policies underlying the wage and hour laws suggested that a break at two hours and lunch at four hours was lawful while the reverse was not.  Instead, the Court only said:

Rather, in the context of an eight-hour shift, “[a]s a general matter,” one rest break should fall on either side of the meal break.  (Ibid.)  Shorter or longer shifts and other factors that render such scheduling impracticable may alter this general rule.

Slip op., at 23.  Turning the Court of Appeal’s treatment of certification, the Court held that the question presented by the plaintiffs – whether the uniform rest break policy was contrary to law – presented, by its nature, a common question “eminently suited for class treatment.”

The Court then turned the high-profile question, the nature of the employer’s duties related to meal periods:

We consider what it means for an employer to provide a nonexempt employee a meal period.  Hohnbaum contends an employer is obligated to “ensure that work stops for the required thirty minutes.”  Brinker, in a position adopted by the Court of Appeal, contends an employer is obligated only to “make available” meal periods, with no responsibility for whether they are taken.  We conclude that under Wage Order No. 5 and Labor Code section 512, subdivision (a), an employer must relieve the employee of all duty for the designated period, but need not ensure that the employee does no work.

Slip op., at 27.  Analyzing the language of the wage order in detail, and comparing “off duty” to “on duty” meal periods, the Court held:

The attributes of such off duty meal periods are evident from the nature of their reciprocal, on duty meal periods.  An on duty meal period is one in which an employee is not “relieved of all duty” for the entire 30-minute period.  (Wage Order No. 5, subd. 11(A).)  An off duty meal period, therefore, is one in which the employee “is relieved of all duty during [the] 30 minute meal period.”  (Ibid., italics added.)  Absent circumstances permitting an on duty meal period, an employer’s obligation is to provide an off duty meal period:  an uninterrupted 30-minute period during which the employee is relieved of all duty.

Slip op., at 28.  Following that summary, the Court examined decades of wage order revisions and DLSE construction.  The Court next concluded that the 1999 enactment of Labor Code § 512 was not clearly intended to upset more than 50 years of extant rules.  Instead, section 512 was mere shorthand for the settled requirement:  “Employers must afford employees uninterrupted half-hour periods in which they are relieved of any duty or employer control and are free to come and go as they please.”  Slip op. at 31.  Section 512 codified existing guarantees following the Legislature’s reaction to the IWC’s amended orders that abolished daily overtime compensation.

But the Court then rejected one of the plaintiffs’ arguments, the contention that the employer must ensure that no work is performed during a meal period.  Interestingly, the Court observed that ensuring no work occurs could run contrary to the core guarantee of meal periods:  “Indeed, the obligation to ensure employees do no work may in some instances be inconsistent with the fundamental employer obligations associated with a meal break:  to relieve the employee of all duty and relinquish any employer control over the employee and how he or she spends the time.”  Slip op., at 33.  So “no control” really means no control.

Of course, the Court also observed that an employer would be obligated to pay regular compensation when it knows or reasonably should know that an employee has worked during an otherwise properly authorized meal period.  Thus, proof of work during a meal period, alone, will not create a premium pay obligation, but any pressure to work will trigger the premium pay obligation:

Proof an employer had knowledge of employees working through meal periods will not alone subject the employer to liability for premium pay; employees cannot manipulate the flexibility granted them by employers to use their breaks as they see fit to generate such liability.  On the other hand, an employer may not undermine a formal policy of providing meal breaks by pressuring employees to perform their duties in ways that omit breaks.  (Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949, 962-963; see also Jaimez v. Daiohs USA, Inc., supra, 181 Cal.App.4th at pp. 1304-1305 [proof of common scheduling policy that made taking breaks extremely difficult would show violation]; Dilts v. Penske Logistics, LLC (S.D.Cal. 2010) 267 F.R.D. 625, 638 [indicating informal anti-meal-break policy “enforced through ‘ridicule’ or ‘reprimand’ ” would be illegal].)  The wage orders and governing statute do not countenance an employer’s exerting coercion against the taking of, creating incentives to forego, or otherwise encouraging the skipping of legally protected breaks.

Slip op., at 35.  It seems to me that this analysis, coupled with the certification admonitions elsewhere in Brinker, mean that a trial court would have to accept the claim of a coercive policy to work during meal periods and could not adjudicate whether the policy actually existed at the time of certification.  Thus, it might be the case that employer-provided declarations that there was no uniform pressure to work through breaks could not be considered at the time of certification.  That would be tantamount to considering a merits issue, the existence of such a policy giving rise to a premium pay obligation, which would be unnecessary at the certification stage.

On the question of meal period timing, the Court stated what is likely the most commonly accepted construction:  “We conclude that, absent waiver, section 512 requires a first meal period no later than the end of an employee’s fifth hour of work, and a second meal period no later than the end of an employee’s 10th hour of work.”  Slip op., at 37.  Twelve pages and a lot of wage order history later, the Court confirmed that there is no obligation to schedule a second meal period no more than five hours after the first.

Concluding that the meal period certification by the trial court was incorrectly influenced by a misunderstanding of the timing obligation, the Court remanded for further consideration.

On the off-the-clock claim, the Court concluded that no evidence of a uniform policy or practice was presented and no method for common proof was shown.  As such, the Court let stand the Court of Appeal’s judgment that certification should be denied as to that claim.

Thus ends the opinion.  What follows is a fascinating concurring opinion that discusses what should be considered by the trial court when evaluating the meal period claim for certification:

In returning the case for reconsideration, the opinion of the court does not endorse Brinker’s argument, accepted by the Court of Appeal, that the question why a meal period was missed renders meal period claims categorically uncertifiable.  Nor could it, for such a per se bar would be inconsistent with the law governing reporting obligations and our historic endorsement of a variety of methods that render collective actions judicially manageable

Conc. Op., at 1.  That, my friends (assumes facts not in evidence), could be one of the blockbuster quotes of Brinker.  The concurring opinion emphasized the employer’s obligation to record meal periods as well as provide them:

If 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.  This is consistent with the policy underlying the meal period recording requirement, which was inserted in the IWC’s various wage orders to permit enforcement.

Conc. Op., at 1.  Thus, if an employer asserts that it did relieve an employee of all duties and the employee waived, it has asserted an affirmative defense that the plaintiff need not disprove as part of a case-in-chief.  The concurring opinion noted that this emphasis on burdens would discourage employers from avoiding the recording duty to gain a “windfall from the failure to record meal periods.”

Detour: Consider the implications of this Court vis-à-vis the likely treatment that misclassification appeals would receive:

For purposes of class action manageability, a defense that hinges liability vel non on consideration of numerous intricately detailed factual questions, as is sometimes the case in misclassification suits, is different from a defense that raises only one or a few questions and that operates not to extinguish the defendant’s liability but only to diminish the amount of a given plaintiff’s recovery.  We have long settled that individual damages questions will rarely if ever stand as a bar to certification.

Conc. Op., at 3.

The plaintiffs didn’t get everything they wanted, but the defense-authored blogs calling this a big win for employers (combined with an important policy review opportunity!) are full of it.  And even if an employer establishes that it satisfied its meal period obligation, work performed during meal periods is still compensable time.