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Now that we’ve said goodbye to 2012 and 2013 has begun, employers and employees alike should take note of the various changes to California’s labor and employment laws. Among the legislation which took effect on January 1, 2013, are the following, each of which is likely to rely principally on private litigation for its enforcement.

• Pay Stub Statute Clarified: Labor Code section 226 is clarified, by SB 1255, to specify that “suffering injury” is generally coextensive with an employer’s violation of one of the nine enumerated requirements of wage statements issued in California. This is expected to foreclose the argument that the “suffering injury” requirement gives rise to individual inquiries, thereby precluding class treatment of pay stub claims.
• Social Media Privacy: AB 1844 prohibits employers from requiring that either job applicants or employees disclose user names and/or passwords to provide the employer with access to private social media information.
• Enhanced “Whistleblower” Protection: AB 2492 expands the cover age of California’s False Claims Act (aka “Baby Qui Tam”) beyond employees, to cover all contractors and agents.
• Right to Inspect Personnel Files: AB 2674 clarifies that employers must retain employee personnel files for at least three years after an employee’s tenure ends.
• Breastfeeding Discrimination: AB 2386 expands the California Fair Employment and Housing Act (FEHA) definition of “sex” to include breastfeeding, thereby making discrimination based on breastfeeding actionable.
• Religious Clothing: FEHA’s coverage of employers’ reasonable accommodation of employees’ religious beliefs is expanded by AB 1964 to include dress and grooming under the rubric of “beliefs and observances.”

Federal courts continue to interpret last year’s Wal-Mart v. Dukes Supreme Court decision more narrowly than many had expected, surprising those who viewed Dukes (in concert with AT&T v. Concepcion) as a virtual death knell for class actions.  In Myles v. Prosperity Mortgage Co., Judge Catherine C. Blake granted conditional class certification in an action alleging that the defendant misclassified its loan officers as exempt from overtime pay.  See Myles, No. 11-01234 (D. Md. May 31, 2012) (memorandum opinion re: class certification) (available here).  And of greater general significance, the court held that Dukes is inapplicable at the certification stage of an FLSA action.  Id. at 10-11.  Although Dukes did not address FLSA claims, the Myles defendant, Prosperity Mortgage Company (PMC), argued for the application of the more rigorous certification criteria articulated in Dukes, which would result in a radical remaking of the long-established, two-stage FLSA certification process.  Id. at 9-10.  PMC maintained that Dukes applies to “all aggregate claims,” including both class actions and collective FLSA actions. Id. at 9.

After considerable reasoning, however, the Myles court concluded that Dukes not only does not apply to FLSA certification determinations, but is also factually distinguishable from Myles, stating, “Dukes does not mention the FLSA or the two-step certification process, and such a conclusion does not necessarily follow from any particular language in the opinion.”  Id. at 9.  Judge Blake also pointed out that the first stage of FLSA certification requires only “relatively modest” evidence of commonality, in contrast to the far more demanding Dukes criteria.  Id. at 8-9.  Finally, she noted that in Dukes, there was no corporate discriminatory policy common to the class, and the class claims were based on individual, discretionary decisions made by many different managers, whereas in Myles, “PMC has acknowledged that it had an express policy of considering its loan officers to be exempt under the FLSA; thus, no local management discretion is at issue and no individualized inquiry is necessary to determine why individual loan officers were disfavored.”  Id. at 11.

Buttressing its analysis, the court noted that “‘numerous courts . . . have refused to apply Dukes on motions for conditional certification under the FLSA, concluding that the Rule 23 analysis had no place at this stage of the litigation.’”  Id. at 10, citing Winfield v. Citibank, N.A., ¬¬___ F. Supp. 2d ___, 2012 WL 423346 at *10 (S.D.N.Y. Feb. 9, 2012).

In a major victory for employees, the United States Supreme Court has denied Ralphs’ Petition for Certiorari in Brown v. Ralphs Grocery Co., 197 Cal. App. 4th 489 (2011), which held that AT&T Mobility v. Concepcion, 131 S.Ct. 1740 (2011), does not apply to representative actions brought pursuant to PAGA, the Labor Code Private Attorneys General Act of 2004. Coupled with the California Supreme Court’s refusal to review Brown, the decision now stands on strong footing that unequivocally exempts PAGA from the ambit of Concepcion and the Federal Arbitration Act.

Not surprisingly, the U.S. Supreme Court’s Dukes v. Wal-Mart decision caused many class action defendants to file motions asking trial courts to revisit prior class certification rulings.  One such motion for decertification was recently denied in Driver v. AppleIllinois.  In that action, the defendant argued that Dukes required the decertification of a wage and hour class.  The trial court disagreed, distinguishing Dukes from Driver on grounds that class treatment in Dukes would have required the assessment of numerous subjective employment decisions, whereas class treatment in Driver would involve “strictly objective” issues of law and fact.  See Driver v. AppleIllinois, No. 06-C-6149, Slip op. at 5 (N.D. Ill. Mar. 2, 2012) (order denying motion to decertify) (available here). 

 In Driver, the defendant’s decertification motion came at an unusually late stage in the case, after notice had been distributed to class members and merits discovery had been completed.  See Slip. op. at 2.  The defendant sought a further review of the certification decision following the issuance of new authority, including Dukes and several decisions from within the Seventh Circuit “elucidating the application of [Dukes v.] Wal-Mart.”  Slip op. at 2.

 In denying the motion to decertify, the Driver court emphasized that Dukes was “significantly different” from Driver.  Slip. op at 4.  The Dukes class lacked commonality because the plaintiffs could not show a policy of gender discrimination applicable to all members of the class.  Rather, the plaintiffs’ allegations were predicated on the notion that local store managers exercised their discretion in a manner that created an unlawful disparate impact on female employees.  Slip op. at 4 (quoting Dukes v. Wal-Mart, 131 S. Ct. 2541, 2548).  In contrast, the Driver class shared a common question: “whether AppleIllinois required its tipped employees to engage in duties unrelated to their tipped occupation without paying them at the minimum wage rate.”  Slip op. at 5.  Unlike the Dukes gender discrimination claim, the Driver class’ claims do not require any proof of individual discriminatory intent.  Rather,  “[t]he analysis is strictly objective.”  Id.

 The Driver court’s analysis distinguishing Dukes from wage and hour class actions is potentially advantageous authority for plaintiffs’ counsel as they seek certification.  Notably, the minimum wage and employee classification laws at issue in Drivers are quite similar to California’s comparable statutes.

 Driver may also prove useful in wage and hour actions where the relevant employment policy is unofficial (and thus often referred to as a “practice”).  Analogizing to an earlier Seventh Circuit ruling, the Driver decision concluded that “[t]his case parallels the Ross case, in which declarations supported the plaintiffs’ theory that the defendant enforced an unofficial policy of denying employees overtime pay that was lawfully due.”  Slip op. at 6 (citing Ross v. RBS Citizens, N.A., No. 10-3848, 2012 WL 251927, *7 (7th Cir. Jan. 27, 2012)).

 Between the Driver decision, Ross, and Messner v. Northshore University HealthSystem, No. 10-2514 (7th Cir. Jan. 13, 2012) (reversing denial of certification), the Seventh Circuit has made a substantial contribution to post-Dukes jurisprudence.  Above all, it appears that the death knell for state law wage and hour class actions was sounded prematurely, as post-Dukes jurisprudence has distinguished these cases from gender discrimination claims.