This article originally appeared in the February 22 edition of the Los Angeles Daily Journal and is reprinted and/or posted with the permission of the Daily Journal Corp (2011).
Two decisions certified by the Second District Court of Appeal on February 16 offered mixed results for employers defending against wage and hour class actions involving meal and rest as well as wage statement violations. The first, Tien v. Tenet Healthcare Corp., 2011 DJDAR 2608 was a favorable decision for employers, affirming decertification of classes for meal and rest break and wage statement violations. Notably, Tien held that employers’ obligation to provide meal breaks does not require ensuring the employees actually take them. The court also held that wage statement claims brought under Labor Code Section 226, cannot be automatically certified as a class based simply on a company-wide practice for pay stub format. Rather, proof of actual injury by employees is required. Based on these findings, the Court of Appeal affirmed decertification of the classes, concluding that both claims required an individualized inquiry.
On the same day, the Court of Appeal also issued its decision in UPS v. Superior Court, 2011 DJDAR 2615, holding that recovery for missed meal and rest break violations under Labor Code Section 226.7, can authorize two premium payments per work day (instead of one), where there is evidence of both a meal and rest break violations.
While both issues continue to be hotly contested, the cases offer guidance to those defending against these types of wage and hour class actions. First, in Tien, plaintiff sought certification of four classes: missed meal periods, missed rest periods, waiting time penalties and pay stub violations. In June 2008, the trial court issued a certification order granting the missed waiting time penalty and wage statement classes, and conditionally certifying the meal period class. The court also narrowed the class definition to conditionally grant certification based on a determination of the accuracy of time keeping and meal break practices. The missed rest period class was denied.
Tenet Healthcare moved for clarification and reconsideration, which coincided with the issuance of Brinker Restaurant Corp. v. Superior Court (2008) 165 Cal.App.4th 25 and Brinkley v. Public Storage Inc. (2008) 167 Cal.App.4th 1278 (prior to its depublication). Both Brinker and Brinkley found that employers could meet their obligations by “providing opportunity” for employees to take their meal breaks, rather than the more stringent standard of ensuring compliance. The trial court was able to rely on Brinkley, before it was unpublished, following its rationale to find that an employer’s obligation to “provide” a meal period only obligated the employer to offer a period during which an employee could eat a meal. Consequently, the trial court denied class certification of the meal period, wage statement and waiting time penalty classes, finding class treatment was not superior based on the need for individualized inquiries.
The Court of Appeal upheld the trial court’s denial of class certification. First, the court found individual questions of proof predominated on the meal breaks claim: “The court’s findings coincide with the common-sense notion that individual questions about the reasons an employee might not take a meal period are more likely to predominate if the employer need only offer meal periods, but not need to ensure employees take those periods.” The court recognized that individualized questions existed on issues such as inconsistent timekeeping practices by employees, taking breaks without recording the time off, and shorting the clock by starting their breaks early, among others. Similarly on rest periods, the court found that class certification was unwarranted as the company’s obligation was only to offer the rest period. The court also upheld the decertification of the wage statement class, finding that it was not appropriate for class treatment as it would require an individualized inquiry into whether each class member “actually suffered injury or damages as a result of the pay stubs lacking the information.”
The Court of Appeal explained that although the state Supreme Court has granted review in Brinkley and Brinker, this does not mean they are no longer citable. Thus the trial court did not err by relying on Brinkley prior to its depublication. The trial court’s finding that the analysis in Brinkley was more persuasive than that of Cicairos v. Summit Logistics Inc. (2005) 133 Cal.App.4th 949 was also proper. Appellants had attempted to rely on Cicairos, arguing that employers should “guarantee” that employees take their meal breaks.
Given that Brinkley and Brinker are currently pending before the state Supreme Court, Tien is the first state court case that joins two existing federal cases in supporting decertification of meal and rest break cases. It further provides case law support on when courts can rely on precedent that is subsequently depublished.
In UPS, the 2nd District was asked whether Labor Code Section 226.7 authorizes one premium payment per work day no matter how many meal or rest periods were withheld, or two premium payments per work day — one for failure to provide a meal period and another for failure to provide a rest period. The court concluded that Section 226.7 permits up to two premium payments per work day, based on its review of state wage orders. There is, however, some authority supporting the contrary conclusion. See Arias v. Superior Court, 46 Cal. 4th 969, 987 (2009) (citing Murphy for the proposition that remedies for Section 226.7 violations are “one additional hour of pay”); see also Thomas v. Home Depot USA Inc., 527 F. Supp. 2d 1003, 1008 (N.D. Cal. 2007) (stating that Section 226.7 “provides for an additional hour of pay for each day that an employer fails to provide an employee a meal or rest period”); Corder v. Houston’s Rests. Inc., 424 F. Supp. 2d 1205, 1207 (C.D. Cal. 2006) (stating that “the plain wording of Section 226.7 is clear that an employer is liable per work day, rather than per break not provided”).
Significant developments in wage and hour law and the effect of these cases and pending cases remain to be seen.