Raines v. Coastal Pacific: No Actual Injury Required for PAGA Wage Statement Claim

On May 22, 2018, a California appellate court rejected an “injury” requirement to secure Labor Code Private Attorneys General Act (“PAGA”) civil penalties for defective wage statements under Labor Code section 226(a). See Raines v. Coastal Pac. Food Distribs., Inc., No. C083117 (3d District, May 22, 2018) (slip op. available here). This follows and reinforces a sister court’s holding in Lopez v. Friant & Assocs., LLC, 15 Cal. App. 5th 773 (2017), previously reported on this blog here. When a wage statement claim is a predicate to a PAGA violation, the “knowing and intentional” standard or the injury requirement of section 226(e) does not apply. Thus, under both Raines and Lopez, wage statement claims under PAGA are effectively governed by a strict liability standard.

Among other claims relating to her employment, the plaintiff in Raines sought statutory penalties under section 226(e) for the failure to include the overtime hourly rate of pay on wage statements as required by section 226(a), as well as claims for civil penalties under PAGA predicated on the violation of section 226(a). The court ruled at trial that “a reasonable person could determine the overtime hourly rate from the wage statement; consequently, there was no injury.” Slip op. at 5. Thus, the section 226(e) claim was extinguished. Further, the trial court ruled that the PAGA wage statement claim was also extinguished because it found that injury was also necessary for the PAGA claim.

The appellate court agreed with the trial court’s disposition of the section 226(e) claim, because section 226(e) indeed requires injury, and the missing overtime rate “can be ‘promptly and easily’ determined by simple arithmetic” leading to no injury. Slip op. at 10. However, the issue of whether a PAGA claim for a section 226(a) violation required injury yielded a different outcome. Relying primarily on Lopez v. Friant and the federal authorities and reasoning it provided, the appellate court in Raines agreed that “the requirements for a section 226(e) claim do not apply to a PAGA claim for a violation of section 226(a).” Id. at 14. The Raines court observed that “PAGA is concerned with collecting civil penalties for the violation of section 226(a), not the damages or statutory penalties provided for in section 226(e).” Id. And in this regard, the appellate court saw no difference between the injury requirement of section 226(e) or any of its other requirements. The court also emphasized that PAGA’s civil penalties remedy is intended to “punish the wrongdoer and to deter future misconduct” (id. at 16, citing People v. First Federal Credit Corp., 104 Cal. App. 4th 721, 732 (2002)), rather than to compensate for injury. Accordingly, the appellate court reversed the judgment as to the PAGA wage statement claim.

Raines and Lopez together affirm that a facial violation of section 226(a) is the only requirement for liability under PAGA, and that knowledge, intent, and injury are relegated to section 226(e) claims. This continues the judicial trend of reaffirming the law enforcement objective of PAGA, focusing the inquiry on whether the employer violated the law rather than exploring to what extent an employee is harmed by the unlawful conduct.

Authored by:
Jonathan Lee, Associate
CAPSTONE LAW APC