Posts belonging to Category PAGA

In Brandon Olson v. Lyft, Inc., Cal. Ct. App. 4th Dist., No. A156322, Oct. 29, 2020 (slip op. available here), Lyft appealed an order denying its motion to compel Olson’s PAGA claims to arbitration. Lyft argued that the California Supreme Court’s holding in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014) (precluding enforcement of PAGA waivers) was “wrongly decided” and no longer good law in light of the United States Supreme Court’s decision in Epic Systems Corp. v. Lewis, 138 S.Ct. 1612 (2018). Slip op. at 1.

The court disposed of the first argument in a footnote, pointing out that arguing that a California Supreme Court decision was “wrongly decided” is “not productive” in either a trial or appellate court. Slip op. at 5. The court then rejected the second argument, noting that an “identical argument” was rejected in Correia v. N.B. Baker Electric, Inc., 32 Cal.App.5th 602 (2019). Slip op. at 1. In doing so, the First District joined a growing number of courts following Correia. E.g. Collie v. The Icee Co., 52 Cal.App.5th 477, 480 (2020) (“[w]e also join Correia . . . in holding that Epic Systems . . . does not undermine the reasoning of Iskanian”); Provost v. YourMechanic, Inc., 55 Cal.App.5th 982 (2020) (“[w]e reaffirm here our analysis and decision in Correia that Epic did not overrule Iskanian”) (Provost was previously covered on the ILJ here).

Epic cannot overrule Iskanian because Epic did not address private attorney general laws like PAGA or qui tam suits. “Epic held that an employee who agrees to individualized arbitration cannot avoid this agreement by asserting claims on behalf of other employees under the FLSA or federal class action procedures.” Slip op. at 11, quoting the trial court. But, a PAGA claim is a qui tam type action, and the PAGA litigant’s status is as “the proxy or agent” of the state, acting “on behalf of state law enforcement agencies.” Id. at p. 12, discussing Iskanian, 59 Cal.4th at 238 (emphasis added). No employee can waive PAGA claims because the claims are not theirs to waive. “[A] PAGA claim is a dispute between the state on the one hand, and the employer on the other.” Slip op. at 6, citing Iskanian at pp. 385-387.  Yet another court reiterates that, since Epic did not overrule Iskanian, PAGA waivers remain unenforceable in California.

Authored by:
Robert Friedl, Senior Counsel
CAPSTONE LAW APC

In Provost v. YourMechanic, Inc., Cal. Ct. App. 4th Dist., No. D076569, Oct. 15, 2020 (slip op. available here), a California Court of Appeal again thwarted an employer’s attempt to defeat an action brought under the Private Attorneys General Act of 2004 (“PAGA”) (Cal. Lab. Code § 2699, et seq.) by seeking to compel arbitration of the plaintiff’s standing as an “aggrieved employee.” The PAGA statute defines an “aggrieved employee” as “any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.”  Cal. Lab. Code § 2699(c).

The plaintiff’s action alleges that YourMechanic violated a myriad of Labor Code sections and that he and other “aggrieved employees” were misclassified as independent contractors. YourMechanic argued that this presents a “threshold issue” of whether Provost was an employee (as he contends) or an independent contractor. The defendant’s position was that, under its arbitration agreement with the plaintiff, “any private dispute arising out of or relating to [the plaintiff’s] relationship with the Company” was required to be arbitrated before he could proceed with his PAGA action. YourMechanic moved to compel the plaintiff to arbitrate whether he was an “aggrieved employee” within the meaning of the Labor Code.

The trial court denied the motion, and the Court of Appeal affirmed, largely based on Williams v. Superior Court, 237 Cal.App.4th 642 (2015), and its progeny. In Williams, the trial court granted the employer’s motion to compel a plaintiff’s “individual claim” that he had been subject to Labor Code violations, and was therefore an aggrieved employee. Williams held that a single representative cause of action under PAGA cannot be split into an arbitable “individual” claim and a non-arbitrable representative claim. Id. at 645. A long series of cases have followed Williams on this point. Slip op. at 11-12 (collecting cases).

Provost’s conclusion was buttressed by the recent decision in Kim v. Reins International California, Inc., 9 Cal.5th 73 (2020) (holding that employee who settles and dismisses individual claims for Labor Code violations does not lose standing to pursue a claim under PAGA). Kim cited with approval cases in which “[a]ppellate courts have rejected efforts to split PAGA claims into individual and representative components.” Id. at 88. Following Kim, Provost noted that, in PAGA-only actions, “standing . . . cannot be dependent on the maintenance of an individual claim because there is no claim for individual relief.” Slip op. at 14. In other words, “a PAGA-only representative action is not an individual action at all, but instead is one that is indivisible and belongs solely to the state.” Id. at 2 (emphasis in original).  Therefore, no part of any PAGA-only action can be compelled to arbitration. Id.

Authored by:
Robert Friedl, Senior Counsel
CAPSTONE LAW APC

On December 6, 2018, Judge Edward Davila approved a $65 million PAGA settlement for Wal-Mart’s failure to provide seats to its front-end cashiers. Williamson v. Wal-Mart Stores, Inc., No. 5:09-cv-03339-EJD (N.D. Cal. Dec. 6, 2018), Order Granting Motion for Preliminary Approval (slip op. available here). This represents the largest PAGA settlement in the history of the statute. In addition, the settlement provided for injunctive relief in the form of a “Seating Pilot Program” for these employees.

Suitable seating is one of the worker protections covered by California’s Wage Orders, which have the same dignity as statutes, are remedial in nature, and are to be broadly construed to effectuate the goal of protecting the comfort and welfare of employees. Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004, 1027 (2012). The suitable seating requirement at issue is contained in section 14(A) of the of the Wage Order and states: “All working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats.”

Although this sentence has been in the Wage Orders for decades and was originally included as a protection for women and children, its meaning was frequently debated by employers, who argued that it was only applicable if the employer believed that seating would have no effect on the job—essentially rendering it a nullity. However, in 2016, the California Supreme Court in Kilby v. CVS Pharmacy, Inc., 63 Cal.4th 1 (2016), issued its interpretation. As the Supreme Court explained, first, “[t]here is no principled reason for denying an employee a seat when he spends a substantial part of his workday at a single location performing tasks that could reasonably be done while seated, merely because his job duties include other tasks that must be done standing.” Furthermore, “[t]he inquiry does not turn on the individual assignments given to each employee, but on consideration of the overall job duties performed at the particular location by any employee while working there, and whether those tasks reasonably permit seated work.” Finally, it stated:

When evaluating whether the “nature of the work reasonably permits the use of seats,” courts must examine subsets of an employee’s total tasks and duties by location, such as those performed at a cash register or a teller window, and consider whether it is feasible for an employee to perform each set of location-specific tasks while seated . . . . An employee may be entitled to a seat to perform tasks at a particular location even if his job duties include other standing tasks, so long as provision of a seat would not interfere with performance of standing tasks . . . the frequency and duration of those tasks with respect to each other, and whether sitting, or the frequency of transition between sitting and standing, would unreasonably interfere with other standing tasks or the quality and effectiveness of overall job performance.

Id. at 10, 17-18.

The Wal-Mart settlement was reached when the parties were less than a month away from trial, and after nearly a decade of litigation. Notably, unlike many PAGA settlements, because the Williamson case was one of the first suitable seating cases filed, it faced unique challenges, such as a dispute regarding if Wage Order claims could be brought under PAGA. Moreover, unlike many PAGA actions, this was an already-certified class action.

Although, at first blush, the settlement may seem like an extraordinary gift to the plaintiffs, a closer analysis shows that it is in fact quite reasonable. The settlement involved approximately 99,000 employees and 2,610,921 pay periods. Thus, the settlement provided for approximately $25 per pay period. The PAGA statute provides for default penalties of $100 for each initial violation and $200 for each subsequent violation. Accordingly, when weighed against Wal-Mart’s potential exposure at trial, the settlement amounts to only approximately 12.45% of its exposure.

Authored by:
Arnab Banerjee, Senior Counsel
CAPSTONE LAW APC

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