Articles from October 2012

California Governor Jerry Brown has signed into law amendments to Labor Code section 226 — which sets forth the information that must be printed on California workers’ pay stubs — to clarify an ambiguity that allowed some non-compliant employers to elude meaningful enforcement actions.

The amendments chiefly address the language of Labor Code section 226(e), which provides that a plaintiff “suffering injury” may allege wage-statement violations. Some employer defendants have successfully argued that, in a class action, the inquiry into whether class members have suffered injury would be intrinsically individual, thus rendering individual questions predominant over common questions of law or fact. While many courts have rejected this argument, a sufficient number of state and federal courts have denied certification of wage-statement classes based on the idea that individual inquiry is required in order to make the injury determination. Under this analysis, class treatment of all wage-statement actions would effectively be precluded, despite the fact that standardized pay stubs allow for the sort of violation that is ideally suited to class treatment.

In order to remedy this inconsistency, the Legislature drafted a clarifying amendment, Senate Bill 1255, which provides that an employee is deemed to have suffered injury if the employer fails to include “accurate and complete information” on employees’ pay stubs, essentially making it a violation for an employer to omit any of the required data enumerated in Labor Code section 226(a)(1)-(9) (including gross and net wages earned, hours worked, and hourly rates). In addition, a “reasonable person” must be able to “promptly and easily determine” the information corresponding to each requirement. By making the analysis subject to a reasonable-person standard, the prospect of individualized inquiries is negated, analogous to the fraud-on-the market and presumed reliance doctrines applicable to securities and consumer class actions.

The amendments will take effect January 1, 2013

Over 4,000 California-based truckers will have their allegations of meal and rest break violations decided as a class, following the ruling by U.S. District Judge Jeffrey White granting the truckers’ class certification motion. See Bickley v. Schneider National Carriers, Inc., No. 08-5806 (N.D. Cal. Sept. 7, 2012) (Order on Motion for Class Certification) (available here).

This ruling is both procedurally and substantively significant. Procedurally, Bickley adds to the growing body of authority demonstrating that the rigorous analysis mandated by the U.S. Supreme Court’s Wal-Mart v. Dukes decision did not effectively end class actions, as many had predicted. Substantively, the Bickley decision applies the California Supreme Court’s Brinker v. Super. Ct., issued just this past spring.

In finding that common questions predominate as to the plaintiffs’ meal break claims, Judge White directly relied on Brinker’s holding that meal breaks must be 30 minutes long and that even an unwritten, informal policy of the employer that puts pressure on employees to forgo their breaks can be challenged using the class action mechanism. The defendant’s vague meal break policy, which stated that meal and rest breaks should be “not be less than ten (10) minutes nor more than two (2) hours in length”, proved decisive on the often-pivotal commonality issue. Order at 10. Judge White reasoned that, “[i]n light of Schneider’s failure to instruct its drivers regarding the timing of rest breaks and meal periods as required by California law and Schneider’s failure to keep records of its employees’ meal periods, the Court finds that Plaintiffs have sufficiently demonstrated common questions which are applicable class-wide.” Id.

The court also found that questions related to compensation for rest breaks and miles driven were common to the class. For the subclasses, the court concluded there were common questions over accrued vacation pay, itemized wage statements and rest and meal breaks. The defendant has petitioned for leave to file a motion for reconsideration of the certification order.