Two recent California court decisions mark major victories for California employers defending against wage and hour class actions. The two decisions by California’s Fourth Appellate District Court found class certification was not amenable in cases involving claims of meal and rest break violation, off-the-clock work, and failure to pay overtime wages.

First, last week in Brinker v. Superior Court (Hohnbaum), D049331 (July 22, 2008), the Court of Appeal held class certification was not amenable in a case involving meal and rest break violations and off-the-clock claims. Significantly, the Court settled several key disputed issues on claims of meal and rest break violation, holding that while employers cannot impede employees from taking meal or rest periods, they need only “provide” opportunity to take the breaks and “not ensure” they are taken. The Brinker court favorably cited White v. Starbuck, 497 F. Supp.2d 1080 (2007) and Brown v. Federal Express Corp., 2008 WL 906517), two federal cases that reached the same conclusion. Brinker also provided clarification on the timing of the rest and meal periods, and similarly rejected Plaintiff’s class action claims of off-the-clock work.

Last month, in a separate decision, In re BCBG Overtime Cases, G038594 (June 13, 2008), the Court of Appeal issued another favorable ruling for employers, upholding the order granting BCBG’s motion to strike class allegations. The preemptive motion was filed before plaintiffs had an opportunity to file their motion for class certification. The Appellate Court found the procedure proper and all class allegations were struck before plaintiffs had opportunity to proceed with their motion for class certification.

As further discussed below, assuming the California Supreme Court does not grant review, both decisions are significant victories for employers defending against class actions, particularly those involving claims of meal and rest break violations.

A. Brinker v. Superior Court (Hohnbaum): Denying Plaintiff’s Class Claims of Meal and Rest Break Violation and Off-the-Clock Work.

1. Background and Procedural History

Brinker involved a class action with claims of meal and rest break violation and “off-the-clock” work. The putative class included approximately 59,000 nonexempt employees at Brinker’s 137 California restaurants. The trial court granted plaintiff’s motion for class certification, which sought certification of six sub-classes. From these three were pertinent to the appeal: a “Rest Period subclass, a “Meal Period” subclass, and an "Off-the-clock" subclass. Defendants appealed and the Court of Appeal rejected the trial court’s findings, holding the Superior Court abused its discretion by certifying the class and misapplied the substantive law. The case then went through an unusual process of being unpublished, and then eventually transferred back to the Court of Appeal for reconsideration. On July 22, 2008 the Court of Appeal issued a new published decision.

2. Meal and Rest Breaks

a. Employers Must Merely “Provide,” Not Ensure Breaks Are Taken.

The Brinker court provided clarification on the employer’s obligation when providing a meal or rest break to its employees. First, the court clarified an employer’s obligation to provide an uninterrupted 30 minute meal break as required under Labor Code section 512. The Division of Labor Standard Enforcement (“DLSE”) takes the position that employers are liable if the employee does not take a timely meal period of at least 30 minutes, regardless of the employers’ policies. However, the Brinker court clarified the employer is not obligated to “ensure” the meal break is taken, but rather can meet its obligation so long as the employer provides opportunity for the break and does not “impede, discourage or dissuade” employees from taking the breaks.

Similarly with rest breaks, the Brinker court found the employer met its obligation under the Industrial Welfare Commission (IWC) Wage Orders and Labor Code, so long as it provided opportunity to take the breaks and did not “impede, discourage or dissuade” employees from taking these breaks. The court ruled employers were not obligated to “ensure” rest breaks were taken.

For these reasons the Court held that class certification was not appropriate for meal and rest break violation claims and concluded as follows:

Specifically, we conclude the class certification order is erroneous and must be vacated because the court failed to properly consider the elements of plaintiffs' claims in determining if they were susceptible to class treatment. Specifically, we conclude that (1) while employers cannot impede, discourage or dissuade employees from taking rest periods, they need only provide, not ensure, rest periods are taken; (2) employers need only authorize and permit rest periods every four hours or major fraction thereof and they need not, where impracticable, be in the middle of each work period; (3) employers are not required to provide a meal period for every five consecutive hours worked; (4) while employers cannot impede, discourage or dissuade employees from taking meal periods, they need only provide them and not ensure they are taken; and (5) while employers cannot coerce, require or compel employees to work off the clock, they can only be held liable for employees working off the clock if they knew or should have known they were doing so. We further conclude that because the rest and meal breaks need only be "made available" and not "ensured, "individual issues predominate and, based upon the evidence presented to the trial court, they are not amenable to class treatment. Finally, we conclude the off-the-clock claims are also not amenable to class treatment as individual issues predominate on the issue of whether Brinker forced employees to work off the clock, whether Brinker changed time records, and whether Brinker knew or should have known employees were working off the clock.  (Emphasis added)

b. The Timing of the Breaks

Another significant point of clarification offered by Brinker was the appropriate timing of the meal and rest break periods.

On meal breaks, the Labor Code and Wage Orders require an employee who works more than five hours to receive an unpaid meal period, and a second meal period if the employee works more than 10 hours. If an employee works less than six hours in a day, he or she may voluntarily waive the meal period. One of the allegations asserted by plaintiffs in Brinker was a claim of “early lunching,” where they claimed they were forced to take their meal break at the beginning of the shift and worked seven to ten hours between their first meal break and their second meal break.

The Brinker court found employers are not required to provide a meal period for every five consecutive hours worked, but rather only for a work period of more than five hours in a workday; “No such restriction on the timing of meal periods is contained in the wage order concerning meal periods.” The Court also found that where employees decided to waive their meal period, there was no statutory requirement that the “mutual consent” be in writing, as it is not specified by the statute. Rather, the Court found the issue of meal waivers presented another issue requiring individualized inquiry, making the meal break claim not amenable for class certification.

On the timing of rest breaks, the Brinker court found that employers need only authorize and permit rest periods for every four hours worked, or major fraction thereof. The Labor Code requires the rest break be taken close to the middle of a four-hour work period only if “practicable.” The plaintiffs claimed the company violated the law since they did not receive their rest breaks until after they had worked four hours. The court reasoned that “practicable” is a fact specific inquiry and, where impracticable, such breaks need not be in the middle of a work period. As noted above, the court found this claim also required an individualized inquiry and was not amenable to class certification.

3. Off-the-Clock Work

The Plaintiffs in Brinker also asserted class claims based on allegations of off-the-clock work. In support of this claim they submitted declarations and statistical data and survey evidence. The court was not convinced: “We conclude that, as with plaintiff’s rest and meal break claims, their off-the-clock claims are not amenable to class treatment because, once the elements of those claims are considered, individual issues predominate.”

The court did not find Plaintiff’s evidence convincing; “they do not submit evidence showing, on a class-wide basis, the reason why they worked off the clock.” Rather Brinker held that the off-the-clock claims were not amenable to class certification as individual questions predominated, including why each individual worked off-the-clock and whether the company had knowledge of each incident.

B. In re BCBG Overtime Cases: Upholding Order Granting Employer’s Motion to Strike Class Allegations.

1. Background and Procedural History

In re BCBG Overtime Cases (“BCBG”) involved a class action filed by three plaintiffs, in 2002, on behalf of managers and assistant managers in BCBG’s California stores, where the complaint alleged causes of action for failure to pay overtime compensation and disgorgement of unpaid wages under California’s Unfair Competition Statutes. In 2005, the three plaintiffs then filed a coordinated complaint against BCBG alleging the company designated all managers and assistant managers as “exempt” to avoid paying them overtime wages. In 2007, BCBG filed a motion to strike class allegations pursuant to California Rules of Court rule 1857(a)(3) and/or judgment on the pleadings. BCBG’s motion was supported with 25 declarations. The trial court granted BCBG’s motion to strike the class allegations, finding the motion was properly before it because “class certification issues may be determined at any time during the litigation.”

2. Preemptive Motion to Strike Class Allegations Properly Granted

The Court of Appeal in BCBG, upheld the order granting the employer’s motion to strike class allegations. The court found that under both California and federal law, “either party may initiate the class certification process.” The court further reasoned that the motion was not brought before Plaintiff had opportunity to conduct discovery on class certification issues. The court upheld the lower court’s order finding: “Trial courts are afforded broad discretion when managing class actions [], and we presume the correctness of their rulings unless an abuse of discretion is shown.”

C. Conclusion

The combination of these two California decisions provides employers defending against these types of class action lawsuits a great defense to effectively challenge class claims. The issue that remains is whether the California Supreme Court will grant review of the decision, which will deem it uncitable. In the meantime, California employers should continue to ensure their policies and practices on these issues are compliant.