Litigating California Wage & Hour and Labor Code Class Actions

Litigating California Wage & Hour and Labor Code Class Actions

16TH EDITION

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Editor's Note

This work reflects thousands of hours of labor--expended over 16 years--by scores of Seyfarth Shaw attorneys. While we cannot list them all here, their efforts are sincerely appreciated.

This 16th Edition contains significant contributions from Co-Editors Leo Li, David Rosenberg, Michael Kopp, Monica Rodriguez, and Geoffrey Westbrook. Marjorie Soto also provided valuable input.

David Kadue deserves special thanks for performing the unenviable task of editing the Editors. And thanks to Andrew Paley for his leadership and guidance, and to Sarah Guigliano for her production assistance.

Christopher A. Crosman, Editor in Chief

Important Disclaimer

This book is general commentary, not legal advice. We disclaim liability as to anything done or omitted in reliance on this publication. Readers should refrain from acting on any discussion in this publication without obtaining specific advice applying current law to particular circumstances. Thus, while we aim to provide authoritative information, this book is not legal advice. (From a Declaration of Principles adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations.)

Legal Notice

Copyrighted ? 2016. All rights reserved. Apart from fair use for private study or research permitted under copyright law, no part of this publication may be reproduced or transmitted without the prior written permission of Seyfarth Shaw LLP.

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Litigating California Wage & Hour Class Actions (16th Edition) 1

Table of Contents

I. Introduction and Overview .........................................................................................5

II. Common Exempt Misclassification Claims ..............................................................5

A.

Overview of State Overtime Law...................................................................................................6

B.

The Executive (Managerial) Exemption ........................................................................................7

C.

The Administrative Exemption ....................................................................................................11

D.

The Outside Sales Exemption.....................................................................................................16

E.

The Commissioned Salesperson Exemption..............................................................................19

III. Unlawful Deductions from Wages ...........................................................................20

A.

Generally .....................................................................................................................................20

B.

Unlawful Bonus Plans .................................................................................................................21

C.

Unlawful Commission Chargebacks ...........................................................................................23

IV. Reimbursement of Employee Expenses .................................................................28

A.

The Duty to Reimburse Expenses Under Labor Code Section 2802 .........................................28

B.

Reimbursement for Uniforms Under the Wage Orders...............................................................31

V. Meal and Rest Period Claims ...................................................................................33

A.

Nature of Claims..........................................................................................................................33

B.

Debate over Whether One-Hour Payment Is a "Penalty"............................................................35

C.

Meaning of "Provide" a Meal Period............................................................................................36

D.

Limits on IWC's Power to Alter Labor Code Meal Period Rules .................................................42

VI. Tip-pooling.................................................................................................................43

A.

Actions Alleging Tips Were Diverted to Co-Workers Who Did Not Earn Them ..........................44

B.

Actions Alleging "Agents" of Management Wrongfully Took Tips ...............................................45

C.

The Future of Tip-pooling Cases Under California Law..............................................................47

VII. Vacation/Paid Time Off Forfeiture ...........................................................................47

VIII.

Waiting Time Penalties .............................................................................................50

A.

Generally .....................................................................................................................................50

B.

Application to Fixed-Term and Temporary Employment.............................................................51

IX. Itemized Wage Statement Claims ............................................................................53

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X. California Minimum Wage Claims............................................................................56

A.

Wage Averaging Improper Under California Law .......................................................................56

B.

The Conflict Between Piece-rate Formulas And The Requirement To Pay Minimum Wages....59

C.

Neutral Time-Rounding Practices Are Lawful .............................................................................61

D.

Compensability of Time Spent in Security Checks .....................................................................62

XI. California Labor Code Private Attorneys General Act ...........................................64

A.

General Scope of the Law...........................................................................................................64

B.

Scope of the "Civil Penalty" Provisions .......................................................................................67

C.

Pursuing PAGA Claims Collectively Without Class Certification ................................................68

D.

Release of PAGA Claims Through Class Settlement .................................................................70

E.

Wage Order Claims.....................................................................................................................71

XII. Unfair Competition Claims, Business & Professions Code Section 17200..........73

A.

Former Law--Pre-Proposition 64................................................................................................73

B.

Reform of the Law--Passage of Proposition 64 .........................................................................75

C.

Proposition 64's Restrictions on UCL Class Actions...................................................................76

XIII.

Class Action Fairness Act of 2005...........................................................................77

A.

The Purpose of the Act................................................................................................................77

B.

General Requirements ................................................................................................................77

C.

Removal Under CAFA.................................................................................................................78

D.

Exceptions to CAFA Jurisdiction .................................................................................................83

E.

Waiver .........................................................................................................................................84

F.

After Removal and Effect of Denial of Class Certification...........................................................84

G. Settlement Process .....................................................................................................................86

XIV.

Class Certification.....................................................................................................87

A.

General Requirements ................................................................................................................87

B.

Class Certification in Exempt Misclassification Cases ................................................................89

C.

Subclasses ..................................................................................................................................93

D.

Opt-In Classes.............................................................................................................................94

E.

Wal-Mart Stores, Inc. v. Dukes - The Supreme Court Shifts The Landscape Of Class

Certification .................................................................................................................................96

F.

In Comcast v. Behrend, The Supreme Court Emphasizes That It Meant What It Said In

Dukes ........................................................................................................................................100

G. The California Supreme Court Enforces Due Process In Duran v. U.S. Bank .........................103

H.

Easing of Class Certification Standards Post-Brinker ...............................................................107

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Litigating California Wage & Hour Class Actions (16th Edition) 3

I.

Relitigation of Class Certification Denials .................................................................................111

J.

Defense Motions to Deny Class Certification ("Vinole Motions") ..............................................114

XV. Discovery Issues in Class Actions ........................................................................116

A.

Disclosure of Class Member Names and Addresses to Allow Access to Potential Witnesses 116

B.

Discovery to Facilitate Location of Substitute Class Representatives ......................................119

C.

Discovery Issues Regarding Putative Class Member Declarations ..........................................124

1.

Employers Must Approach Pre-Certification Communication With Their Employees With

Caution ......................................................................................................................................124

2.

Protection Of Attorney Procured Witness Interviews From Discovery......................................126

XVI.

Class Action Settlement .........................................................................................128

A.

Generally ...................................................................................................................................128

B.

Restrictions on Reversions of Settlement Funds ......................................................................129

C.

Court Scrutiny of the Adequacy of the Settlement Amount.......................................................132

D.

Class Notice ..............................................................................................................................135

E.

Objection to Settlements ...........................................................................................................135

F.

Individual Settlements with Putative Class Members ...............................................................136

XVII. Class Action Waivers and Arbitration ...................................................................138

A.

Class Action Waivers and Arbitration Generally .......................................................................138

B.

The Long And Winding Road To Iskanian ................................................................................139

1.

California Supreme Court's Decisions in Discover Bank and Gentry Effectively Negated Class

Action Waivers ..........................................................................................................................139

2.

The U.S. Supreme Court Holds That the FAA Preempts California Law Restricting Class

Action Waivers ..........................................................................................................................141

3.

California Courts Reach Conflicting Conclusions About Whether the Gentry Rules and

Unconscionability Analysis Survived Concepcion.....................................................................141

C.

The California Supreme Court Invalidates Gentry in Iskanian, but Carves Out Exception for

PAGA Claims ............................................................................................................................143

D.

California Courts' Reactions to the Iskanian Decision ..............................................................145

1.

Federal District Courts in California Initially Declined To Follow Iskanian's PAGA Exception,

But the Ninth Circuit Put an End to that Debate........................................................................145

2.

California Appellate Court Declines to Apply Iskanian Reasoning to Broughton-Cruz Rule ....146

3.

Applicability of Gentry's Unconscionability Analysis Following Iskanian and Concepcion .......146

XVIII. Individual Liability...................................................................................................148

Table of Authorities ...........................................................................................................151

Index of Terms ...................................................................................................................178

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