2ND EDITION Litigating California Wage & Hour and Labor ...

2ND EDITION

Litigating California Wage & Hour and Labor Code Class Actions

14TH EDITION

Editor's Note

The current edition of this volume is the result of thousands of hours of work, stretching back to before the turn of the last century, by scores of Seyfarth Shaw attorneys. While it is impossible to list them all here, their efforts are sincerely appreciated.

The 14th Edition contains significant contributions from Co-Editors Jonathan L. Brophy, Nicholas Rosenthal, Andrew Crane, Rachel Gradstein, Maya Harel, Leo Li, and David Rosenberg. David Kadue deserves special thanks for performing the unenviable task of editing the Editors. And thanks to Andrew Paley for his leadership and guidance.

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 ? 2014. 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 (14th 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

III. Unlawful Deductions from Wages ........................................................................19

A.

Generally ................................................................................................................................. 19

B.

Unlawful Bonus Plans ............................................................................................................. 20

C.

Unlawful Commission Chargebacks ....................................................................................... 22

IV. Reimbursement of Employee Expenses .............................................................. 27

A.

The Duty to Reimburse Expenses Under Labor Code Section 2802 ..................................... 27

B.

Reimbursement for Uniforms Under the Wage Orders ........................................................... 30

V. Meal and Rest Period Claims ................................................................................ 31

A.

Nature of Claims...................................................................................................................... 31

B.

Debate over Whether One-Hour Payment Is a "Penalty"........................................................ 33

C.

Meaning of "Provide" a Meal Period........................................................................................ 35

D.

Limits on IWC's Power to Alter Labor Code Meal Period Rules ............................................. 40

VI. Tip-pooling..............................................................................................................42

A.

Actions Alleging Tips Were Diverted to Co-Workers Who Did Not Earn Them ...................... 42

B.

Actions Alleging "Agents" of Management Wrongfully Took Tips ........................................... 44

C.

The Future of Tip-pooling Cases Under California Law .......................................................... 45

VII. Vacation/Paid Time Off Forfeiture ........................................................................ 46

VIII.

Waiting Time Penalties .......................................................................................... 48

A.

Generally ................................................................................................................................. 48

B.

Application to Fixed-Term and Temporary Employment......................................................... 50

IX. Itemized Wage Statement Claims ......................................................................... 52

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X. California Minimum Wage Claims.........................................................................55

A.

Wage Averaging Improper Under California Law ................................................................... 55

B.

The Conflict Between Piece Rate Formulas and the Requirement to Pay Minimum Wage ... 57

C.

Neutral Time-Rounding Practices Are Lawful ......................................................................... 58

XI. California Labor Code Private Attorneys General Act ........................................60

A.

General Scope of the Law....................................................................................................... 60

B.

Scope of the "Civil Penalty" Provisions ................................................................................... 63

C.

Pursuing PAGA Claims Collectively Without Class Certification ............................................ 64

D.

Release of PAGA Claims Through Class Settlement ............................................................. 65

E.

Wage Order Claims................................................................................................................. 66

XII. Unfair Competition Claims, Business & Professions Code Section 17200.......68

A.

Former Law--Pre-Proposition 64............................................................................................ 68

B.

Reform of the Law--Passage of Proposition 64 ..................................................................... 70

C.

Proposition 64's Restrictions on UCL Class Actions............................................................... 71

XIII.

Class Action Fairness Act of 2005........................................................................72

A.

The Purpose of the Act............................................................................................................ 72

B.

General Requirements ............................................................................................................ 72

C.

Removal Under CAFA............................................................................................................. 73

D.

Exceptions to CAFA Jurisdiction ............................................................................................. 77

E.

Waiver ..................................................................................................................................... 78

F.

After Removal and Effect of Denial of Class Certification ....................................................... 79

G. Settlement Process ................................................................................................................. 80

XIV.

Class Certification..................................................................................................82

A.

General Requirements ............................................................................................................ 82

B.

Class Certification in Exempt Misclassification Cases ............................................................ 83

C.

Subclasses .............................................................................................................................. 87

D.

Opt-In Classes......................................................................................................................... 88

E.

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

Certification ............................................................................................................................. 90

F.

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

In Dukes ................................................................................................................................. 94

G. The Caifornia Supreme Court Enforces Due Process In Duran v. U.S. Bank ........................ 97

H.

Easing of Class Certification Standards Post-Brinker ........................................................... 100

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I.

Relitigation of Class Certification Denials ............................................................................. 102

J.

Defense Motions to Deny Class Certification ("Vinole Motions") .......................................... 105

XV. Discovery Issues in Class Actions ..................................................................... 107

A.

Disclosure of Class Member Names and Addresses to Allow Access to Potential Witnesses107

B.

Discovery to Facilitate Location of Substitute Class Representatives .................................. 110

C.

Discovery Issues Regarding Putative Class Declarations .................................................... 115

XVI.

Class Action Settlement ...................................................................................... 119

A.

Generally ............................................................................................................................... 119

B.

Restrictions on Reversions of Settlement Funds .................................................................. 120

C.

Court Scrutiny of the Adequacy of the Settlement Amount................................................... 123

D.

Class Notice .......................................................................................................................... 125

E.

Objection to Settlements ....................................................................................................... 126

F.

Individual Settlements with Putative Class Members ........................................................... 127

XVII. Class Action Waivers and Arbitration ................................................................ 129

XVIII. Individual Liability ................................................................................................. 136

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