Certification and Penalties for a Wage & Hour Class Action in California

Labor Code sections 226.7 and 512 in conjunction with Industrial Welfare Commission (“IWC”) Wage Order No. 5 (California Code of Regulations, tit. 8, sec. 11050) require Defendants to authorize and permit meal and rest breaks to their employees.  California law prohibits employers from employing an employee for more than five hours without a meal period of at least 30 minutes.  “[A]n employer’s obligation is to provide an off duty meal period: an uninterrupted 30–minute period during which the employee is relieved of all duty.”  Brinker Rest. Corp. v. Super. Ct. (2012) 53 Cal.4th 1004, 1035.  In order for an employee to be relieved of all duty, the employee must be free to leave the workplace premises.  Id. at 1036.  An employer cannot “impede or discourage [employees] from [taking breaks].”  Id. at 1040.

Section 226.7 and IWC Wage Order No. 5 also require employers to authorize and permit employees to take 10-minute rest breaks for each four hours of work, or major fraction thereof, and to pay employees their full wages during their rest breaks.  A “major fraction of four hours” means greater than two hours.  Brinker, supra, 53 Cal.4th at 1029.  Unless the employee is relieved of all duty during the 30-minute meal break and 10-minute rest break, the employee is considered “on duty” and the meal or rest break is counted as time worked under the applicable wage orders.

IWC Wage Order No. 5 requires that the order be “posted where employees can read it easily.”

When an employer fails to provide a meal or rest break in accordance with the applicable wage orders, the employer must pay the employee one additional hour of pay, or “premium wage”, at the employee’s regular rate of pay for each workday that a required meal break is not provided, and one additional hour of pay for each work day that the requisite number of rest breaks are not provided.  Labor Code § 226.7.  Missed-break premium wages are subject to a four-year statute of limitations when paired with an unfair business practices claim.  Murphy v. Kenneth Cole (2007) 40 Cal.4th 1094 (hour of pay for missed breaks is premium wage, subject to same statute of limitations as action for unpaid wages); Sullivan v. Oracle Corp. (2011) 51 Cal.4th 1191 (UCL, which carries four-year statute of limitations, provides remedy for failure to pay wages).

Meal and rest break violations give rise to various statutory and civil penalties.  Labor Code § 226 provides for a statutory penalty to employers who knowingly and intentionally fail to report wages earned on their employees’ paystubs.  Since missed-break premium wages are considered wages under Murphy v. Kenneth Cole, an employer’s failure to report missed-break premium wages on its employees’ paystubs gives rise to section 226 inaccurate wage statement penalties.

Labor Code §§ 201 and 203 provide for a statutory penalty to employers who wilfully fail to pay to their employees all wages earned immediately upon termination.  Since missed-break premium wages constitute wages, an employer’s failure to pay such premium wages to terminated employees gives rise to section 203 waiting time penalties.

Various civil penalties are recoverable through the Labor Code Private Attorneys General Act (Lab. Code § 2698 et seq.) (“PAGA”).  Labor Code § 2699 provides for a penalty for a violation of any Labor Code provision, unless another penalty is already provided.  Labor Code § 210 provides for a penalty for non-payment of wages.  Labor Code § 558 provides for a penalty for any violation of the IWC Wage Order.  Finally, Labor Code § 226.3 provides for a civil penalty for wage statement violations.

Code of Civil Procedure section 382 authorizes class action suits in California “when the question is one of a common or general interest . . . or when the parties are numerous, and it is impracticable to bring them all before the court.”  Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470 (quoting statute); Brinker, supra, 53 Cal.4th at 1021.  A party seeking class certification must “establish the existence of an ascertainable class and a well-defined community of interest among the class members,” and that proceeding as a class action is superior to the alternatives.  Id.  A “common or general interest” is established when: (1) there are questions of law or fact common to the class that are substantially similar and predominate over the questions affecting the individual members; (2) the claims of the representatives are typical of the claims or defenses of the class; (3) and the class representatives are able to fairly and adequately protect the interests of the class.  Id. (citing Civil Code § 1781); Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1806.

“A motion to certify a class action is not a trial on the merits, nor does it function as a motion for summary judgment.”  Carabini v. Superior Court (1994) 26 Cal.App.4th 239, 245.  “A class certification motion is not a license for a free-floating inquiry into the validity of the complaint’s allegations; rather, resolution of disputes over the merits of a case generally must be postponed until after class certification has been denied.”  Brinker, supra, 53 Cal.4th at 1023.  Class certification “is essentially a procedural [question] that does not ask whether an action is legally or factually meritorious.”  Id.  “Nor may a court deny certification on the ground that class members must individually prove their damages.”  Alberts v. Aurora Behavioral Health Care (2015) 241 Cal.App.4th 388, 397 (citing Brinker, supra, 53 Cal.4th at 1022).

 “The requirement of Code of Civil Procedure section 382 that there be ‘many’ parties to a class action suit is indefinite and has been construed liberally . . . .  No set number is required as a matter of law for the maintenance of a class action.  Thus, our Supreme Court has upheld a class representing the 10 beneficiaries of a trust in an action for removal of the trustees.”  Rose v. City of Hayward (1981) 126 Cal.App.3d 926, 934 (internal citations omitted).  “[Th]e statutory test is whether a class is so numerous that ‘it is impracticable to bring them all before the court . . . .’”  Hendershot v. Ready to Roll Trans., Inc. (2014) 228 Cal.App.4th 1213, 1222 (quoting Code Civ. Proc. § 382).

The focus at the class certification stage is whether common questions of fact or law will predominate such that class treatment is appropriate.  Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 327.  The Supreme Court in Brinker described the predominance test as follows:

The ‘ultimate question’ the element of predominance presents is whether ‘the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants.’  The answer hinges on ‘whether the theory of recovery advanced by the proponents of certificationis, as an analytical matter, likely to prove amenable to class treatment.’  A court must examine the allegations of the complaint and supporting declarations and consider whether the legal and factual issues they present are such that their resolution in a single class proceeding would be both desirable and feasible.  ‘As a general rule if the defendant’s liability can be determined by facts common to all members of the class, a class will be certified even if the members must individually prove their damages.’

Brinker, supra, 53 Cal.4^th at 1021–1022 (internal citations and footnote omitted). 

A court “must determine whether the elements necessary to establish liability are susceptible of common proof or, if not, whether there are ways to manage effectively proof of any elements that may require individualized evidence.”  Brinker, at 1024.

The test of typicality for a class representative is whether other members have the same or similar injury, whether the action is based on conduct which is not unique to the named plaintiffs, and whether other class members have been injured by the same course of conduct.  Seastrom v. Neways, Inc. (2007) 149 Cal.App.4th 1496, 1502. 

The test of adequacy is similar to that of typicality.  The inquiry into the adequacy of the class representatives serves to uncover conflicts of interest between the named plaintiffs and the putative class.  Global Minerals & Metals Corp. v. Superior Court (2003) 113 Cal.App.4th 836, 851.

In the context of meal and rest breaks, a facially noncompliant break policy is, in itself, grounds for class certification.  Alberts, supra, 241 Cal.App.4th at 405–406 (employer’s noncompliant break policy raised common issues and was grounds for class certification).  Even assuming an employer’s break policy is legally compliant, “the mere existence of a lawful break policy will not defeat class certification in the face of actual contravening policies and practices that, as a practical matter, undermine the written policy and do not permit breaks.”  Id.  Even if an employer has a lawful written break policy, the employer’s failure to implement the break policy by communicating it to the employees gives rise to liability and serves as the basis for class certification.  Benton v. Telecom Network Specialists, Inc. (2013) 220 Cal.App.4th 701 (class certification proper in break case where employees submitted declarations stating that the employer never communicated a break policy to them and that they were too busy to take breaks).

Employees need not make any showing that they were universally denied all breaks to warrant class certification, but instead need only show a “consistent” application of the asserted unlawful policy or practice.  Alberts, supra, 241 Cal.App.4th at 409.  Furthermore, the fact that some employees did sometimes take breaks will not defeat class certification.  Id. at 408.  That is an issue that relates to damages rather than the propriety of class treatment.  Id.  “In Brinker’s wake, courts have repeatedly found that a defendant employer’s evidence of an inconsistent application of an illegal policy to be insufficient on its own to defeat class certification.”  Id. at 409; see also Benton, supra, 220 Cal.App.4th at 730; Faulkinbury v. Boyd & Assoc., Inc. (2013) 216 Cal.App.4th 220, 237; Hall v. Rite Aid Corp. (2014) 226 Cal.App.4th 278, 289; Bradley v. Net. Inter’l (Cal. App. 2012) 2012 WL6182473, 1143.  “The theory of liability—that [the employer defendant] has a uniform policy, and that that policy, measured against wage order requirements, allegedly violates the law—is by its nature a common question eminently suited for class treatment.”  Brinker, supra, 53 Cal.4th at 1033.

Inaccurate wage statement penalties under Labor Code § 226 require proof that the employer knowingly and intentionally failed to include missed-break premiums on its employees’ paystubs.  Waiting time penalties under Labor Code § 203 require proof that the employer willfully failed to pay its terminated employees missed-break premium wages immediately upon their termination.  These are common issues of fact since they are based on the same challenged company-wide policies and practices relating to the underlying meal and rest break claims.  Common methods of proof include employers’ facially illegal policy and testimony from the employers’ person-most-knowledgeable witnesses and managers.

PAGA representative actions do not have to comply with class action requirements because PAGA actions are law enforcement actions.  Arias v. Superior Court (2009) 46 Cal.4th 969, 981 (“An employee need not satisfy class action requirements to bring a representative action against an employer under [PAGA].”); Guifu Li v. A Perfect Day Franchise, Inc. (N.D. Cal. 2012) 2012 WL 2236752; Willner v. Manpower Inc. (N.D. Cal. 2012) 2012 WL 1570789.  The requirements of pursuing a PAGA representative action are far less stringent than for a section 382 class action since the nature of a PAGA action is a law enforcement proceeding.  For example, in a PAGA representative action, there is no commonality requirement.  Plaisted v. Dress Barn, Inc. (C.D. Cal. 2012) 2012 WL 4356158, 2.