Finally, depending on the Labor Code violations alleged and the fact-specific issues in your case, you may want to request additional documents for each employee selected for the sampling, such as documents regarding final payment of wages, business expense reimbursements, meal period waivers, and/or on-duty meal period agreements. 1 In short, the court held that PAGA 窶ヲ The California Labor Commission shall recover the penalties as part of a hearing to recover unpaid wages and penalties. When asking for the time and wage records, be sure to request them in electronic format, preferably Excel, so that you can search through the records efficiently and, if you know how, utilize macros and formulas to quickly identify search parameters and data points within the records. Specifically, the courts were tasked with determining whether the "amount sufficient to recover underpaid wages" called for a civil penalty or individual damages. Phone: Defendants may be reluctant to provide this information if it’s not something they track in the regular course of business. Many defendants interpret the Amaral decision narrowly to stand for the position that subsequent violations do not trigger until a court or the Labor Commissioner gives notice of the violation to the employer. Note that the California Supreme Court recently held that the de minimis defense is not applicable to off-the-clock wage-and-hour claims. Please enter a valid phone number. The foundational data needed to evaluate damages or penalties in any class or representative action consists of the class size, workweeks, and pay periods during the applicable damages period. The minimum penalty is the LESSER of tw… Moreover, “[a] sample must be randomly selected for its results to be fairly extrapolated to the entire class.” (Id. Note that the amount is doubled because employees are entitled to liquidated damages in the amount of the total unpaid minimum wages. In this case, a California district court remanded a putative class action after finding that plaintiffs窶� individual recoveries under the California Labor Code窶冱 Private Attorneys General Act (窶�PAGA窶�) could not be aggregated with civil penalties 窶ヲ Because it is a type of qui tam claim, the process and damages for a PAGA claim are different than a normal lawsuit. 949-345-1621 v. Superior Court (Lawson) (Sept. 12, 2019), the California Supreme Court held that plaintiffs cannot recover the unpaid wages described in Labor Code section 558 in a Private Attorneys General Act of 2004 (PAGA) claim. Finally, when negotiating the scope of the pre-mediation exchange, keep in mind that a plaintiff’s right to statewide discovery is extremely broad in wage-and-hour class and PAGA actions. ), Third, there is some uncertainty as to whether multiple predicate violations, and the penalties related thereto, can be stacked each period or if only one penalty can be assessed each pay period regardless of how many predicate violations occurred during that same pay period. v. Superior Court, No. The PAGA applies a default penalty of $100.00 for initial violations and $200.00 for subsequent violations unless the predicate Labor Code section that has been violated expressly provides for a different civil penalty. 949-261-8800 If you take the latter approach, the defense must use a consistent and uniform system that allows you to identify and match the time records for any given employee to the corresponding wage statements for that employee. What do the two, other Labor Code section 2699(f)(2). Arnold v. OSF International Inc, et al, 2017 WL 2841697 (C.D. Code, §1194.) 4th 969, 986 (2009) ("An employee plaintiff suing . Failure to pay overtime, failure to provide meal breaks and failure to provide rest breaks carry an initial PAGA penalty of $50.00, and a subsequent penalty of $100.00. Code, § 218.6; Civ. Interest!? Proc., § 338.) Unpaid minimum wages: (Total number of workweeks over the four-year period x average hours of unpaid minimum wages per workweek x average minimum wage over the four-year period) x 2.0. Class damages – reasonable quantification per workweek. 858-436-0268 In addition, employees are entitled to an unpaid 30-minute meal break once they work five hours. The penalties under PAGA can add up very quickly. On October 2, 2015, California passed a new law that helps California employers. The first class included empl… At some point in our careers, we have all heard the adage, I went to law school because I’m terrible at math, or words to that effect. Code, § 1194.2.). Under PAGA, the default civil penalty for an employer’s initial violation is one hundred dollars ($100) per employee per pay period, and two hundred dollars ($200) per pay period for any subsequent violations (though PAGA plaintiffs are required to remit 75% of recovered penalties to the Labor and Workforce Development Agency). He also sought penalties under the Private Attorneys General Act (PAGA) for the same violations. In January 2017, Judge Lucy Koh of the U.S. District Court for the Northern District of California certified three classes of employees in the case. And the penalty doubles to $200 per pay period in certain circumstances. In Lawson v. ZB, N.A. The IWC is currently not in operation, but the Division of Labor Standards Enforcement (DLSE) continues to enforce the provisions of the wage orders. Oct. 28, 2013). For cases that require deeper investigation, consider producing your client for deposition and/or taking the deposition of the defendant’s person(s) most knowledgeable regarding its wage-and-hour policies, practices, and procedures. A California Court of Appeal dealt another blow to employers in a recent ruling interpreting the state窶冱 Private Attorneys General Act (PAGA). The reason why the statute of limitations is short is that unpaid wages are given more priority than penalties. Code, § 2669.3, subd. File A Brief Employer’s Response With The LWDA, If Desired. The PAGA does not create a private right of action to directly enforce a wage order but “PAGA actions can serve to indirectly enforce certain wage order provisions by enforcing statutes that require compliance with wage orders.” (Thurman, supra, 203 Cal.App.4th, at p. Based on these alleged violations, the employee pursued a single cause of action for violation of PAGA seeking to recover, "penalties and wages" for the listed Labor Code sections, including Section 558. In Iskanian v. CLS Transp. (Lab. PAGA, as the law is known, provides monetary penalties in the amount of $100 per employee per pay period, and $200 for subsequent pay periods, including attorneys’ fees, for violations of the California Labor Code where … Code, § 2699, subd. Code, § 226.3; Raines v. Coastal Pacific Food Distributors, Inc. (2018) 23 Cal.App.5th 667, 680.). NV In fact, 2018 saw a record number of PAGA claims窶俳ver 5,700, a 15 percent jump from 2017窶杷iled with the Labor and Workforce Development Agency. The number used for the quantifier depends on the overall strength of your case, which is governed by several factors. “In any action brought for the nonpayment of wages, the court shall award interest on all due and unpaid wages,” at a rate of 10 percent per annum. 89128 There is no better example of California窶冱 distinction in this area than the Private Attorneys General Act (PAGA窶ヲ Lawson concerned a PAGA-only action where plaintiff Kalethia Lawson — who signed an enforceable arbitration agreement with a class action waiver — sought to recover civil penalties under Labor Code Section 558. (Code Civ. (Bus. The damages periods used below should be reduced to three years if the lawsuit does not include a cause of action for unlawful business practices in violation of the UCL. The penalty period for actions brought under the Private Attorneys General Act of 2004 (“PAGA”) is one year prior to the date of filing, plus 65 days for the PAGA notice period. Win for Employers – Avoid PAGA Penalties By Curing Paystubs Errors! . The employee sought, and the trial court awarded, civil penalties, including unpaid wages. The wage orders can be found online at the Department of Industrial Relations public website. Unfortunately, evaluating an employer’s exposure in a wage-and-hour class and/or PAGA action requires a fair amount of number crunching. Send a letter to the defense outlining the documents, data and/or additional materials you need as soon as the mediation discussion begins. Phone: The court reasoned that this conclusion was compelled by the LWDA's ability to seek underpaid wages on behalf of employees under Section 558, combined with the PAGA plaintiff suing "as a proxy or agent of the state's labor law enforcement agencies. He can be reached at (949) 261-7700 or kkring@kringandchung.com. Anyway, if this scintillating area of wage and hour law In the opinion's sole glimmer of hope for employers, the court discussed and agreed with the unpublished federal opinion in Yadira v. Fernandez (N.D. Cal. Of the penalties recovered, 12 ½ percent of the penalty will be paid into a labor law education fund and the remaining 87 ½ percent will be paid into the California General Fund. Penalties for Missed Meal and Rest Breaks. Relying heavily on the Iskanian discussion of the same distinction, the Esparza court held that, for purposes of determining exemption from arbitration, representative actions for civil penalties under PAGA are limited to "those where a portion of the recovery is allocated to the [LWDA]. This information is readily available for most employers, and the defense should provide the requested data without objection or hesitation in any class or representative action that is headed to mediation. A PAGA employee plaintiff can sue for a violation of the Labor Code and collect any penalty the Labor Code provides. The employer filed a writ of mandate challenging the trial court's expansion of the scope of arbitration to include representative claims. Cal. Yes. Before AB 1506, unlike many other labor code sections, pay stub violations were not considered curable. Among other relief, the employee prayed for recovery of "unpaid and underpaid wages of all aggrieved employees." Code, § 226, subd. 411 Camino del Rio South In calculating these penalties, PAGA often "borrows" from penalties set forth in particular provisions of the Labor Code. victim-specific relief. Code, § 558, subds. (Lab. (c).) Cal. Any civil penalties collected in a PAGA action must be divided 75 percent to the LWDA and 25 percent to the “aggrieved employees.” (Lab. 12 (6-15) C/MACS Topic This seminar will discuss which violations are covered by PAGA, potential penalties, how to respond to a notice of violation, how to revise your arbitration agreement to ensure it is For example, PAGA plaintiffs can seek penalties under Labor Code section 1198 for violations of any IWC Wage Order that regulates conditions of labor. Kerri N. Polizzi is an Associate of Kring & Chung, LLP. Irvine, Penalties for Missed Meal and Rest Breaks California law requires employers to give employees a paid ten-minute rest break for every four hours worked (or major fraction of four hours). Interestingly, the court reached this decision, in large part, based upon its finding that unpaid wages recovered under Section 558 are payable solely to the aggrieved employees. Code, § 203.) 5% of unpaid tax required to be reported 2. & Prof. Code, § 17200, et seq. ), Fourth, there is currently a split in the courts as to whether aggrieved employees can recover unpaid wages as a civil penalty under the PAGA. v. Superior Court (Lawson) (Sept. 12, 2019), the California Supreme Court held that plaintiffs cannot recover 窶ヲ The trial court denied the employer's motion, finding that the PAGA claim could not be split. As such, the underpaid wages mentioned therein are a civil penalty recoverable only by a state enforcement agency or by a PAGA plaintiff standing in the shoes of that agency. 92606 They can pursue civil penalties as if they were a state agency. That’s not to say that you should stop engaging in formal discovery, but an informal exchange offers incentives for the defense to provide evidence that they otherwise wouldn’t absent a lengthy meet and confer process, discovery motion practice, and all the delays and unpredictability attendant thereto. In calculating these penalties, PAGA often "borrows" from penalties set forth in particular provisions of the Labor Code. (Lab. Oct. 5, 2015) is the latest case to dismiss PAGA claims based on the presence of numerous individualized issues that render 窶ヲ (ZB), moved to compel arbitration of Lawson’s 558 claim for unpaid wages. (Lab. … Home » California Supreme Court limits the types of penalties recoverable under PAGA actions California Supreme Court limits the types of penalties recoverable under PAGA actions In ZB, N.A. This process is generally straight forward but is complicated in rare situations where the civil penalty provided in the underlying Labor Code provision is equal to an "amount sufficient to recover unpaid wages." Plaintiffs, therefore, bring PAGA claims to circumvent arbitration agreements 8. Instead, the Court rendered that question moot, holding that a PAGA plaintiff may not recover any allegedly unpaid wages in any forum. When faced with this argument, plaintiffs can point to the PAGA notice, prior employee complaints, prior lawsuits, internal or third-party payroll audits, the employer’s retention of third-party human resource agencies, or any other evidence that shows the employer acted willfully or had knowledge of the Labor Code violations in the workplace. Resolving the Split - ZB, N.A., et al. DE 8132 Rev. 43.) “The sample relied upon must be representative and the results obtained must be sufficiently reliable to satisfy concerns of fundamental fairness.” (Duran v. U.S. Bank Nat’l Ass’n (2014) 59 Cal.4th 1, 42.) Irvine Office If the defense does not provide you with the average hourly rate, you can determine that figure by adding all the hourly rates provided in the sampling and dividing that figure by the total number of employees included. Suite 150G The law allows for $100 for each failure to pay each employee for “any initial violation” and $200 for each failure to pay each employee, plus 25% of the amount wrongfully withheld, for “each subsequent violation.”. You may use 0-9, spaces and the ( ) - + characters. One approved method for randomization is to list the employees alphabetically and choose every nth employee to yield the agreed-upon sample size. v. Superior Court. You owe the employee one hour of pay if the employee is unable to take one or more (2017) 18 Cal.App.5th 705, 724.). Cal. under [PAGA], does so as the proxy or agent of the 窶ヲ If you do agree to a stay discovery at the defendant’s request, inform the mediator so that gaps in the record are weighed in your favor. 7575 Vegas Drive (a)(1)-(2).) June 30, 2017). In a straight wage-and-hour class action, the damages period is three years prior to the filing of the lawsuit to the present. When determining the average number of violations per workweek, note that an employee can only collect one meal and one rest period penalty each shift, for a maximum of two premium payments per workday. Suite 105 All rights reserved. Remember, 75% of PAGA penalties, which are all … The damages period is governed by the statute of limitations for the causes of action alleged in your client’s complaint. Code, § 2699, subd. If you are dealing with unsavory defendants or less-than-forthcoming defense counsel, you may want to opt for a Belaire-West administration, start speaking with putative class members, collect their sworn declarations if possible, and notice a few depositions before making your appearance at mediation. Posted in Civil rights in the workplace, Employee Rights, Employment Law on April 14, 2014. This process is generally straight forward but is complicated in rare situations where the civil penalty provided in the underlying Labor Code provision is equal to an "amount sufficient to recover unpaid wages." PAGA penalties are either the penalties contained in the applicable Labor Code statute or, if there is no penalty prescribed, a catch-all penalty of $100 per pay period, per employee, for each violation. Twelve years (and over $30 million in penalties paid to the state) later 窶ヲ (Lab. Penalties accrue per pay period, per employee, for … Posted in Civil rights in the workplace, Employee Rights, Employment Law on April 14, 2014PAGA Overview California窶冱 Private Attorney General Act of 2004-or PAGA-gives private citizens the ability to pursue penalties against employers for violations of the California Labor Code. (Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1800; Lab. Fax: Regardless of the sample size, going through the records will be time consuming and costly. Mr. Rhodes completed his fellowship with the Los Angeles Chapter of the American Board of Trial Advocates, and he graduated magna cum laude from Southwestern Law School. But that would be effective January 2021 in all likelihood, as the current session is over. The amount in controversy was often easy to establish, as PAGA penalties mount rapidly: $100 per employee per pay period, even if one counts only the 25% of the penalties that go to the employees (75% go to the State of California). Courts do not allow PAGA penalties to be included as part of calculating the “amount in controversy” when defendants try to remove a case from state court to federal court under the Class Action Fairness Act or any other basis. While reviewing the timesheets, ask yourself if the records evince other unlawful wage-and-hour practices. Code, § 1194.) PAGA penalties are assessed per pay period for each violation of any code section enumerated in Labor Code section 2699.5. Time and wage records typically consist of handwritten or digital timesheets, wage statements, paystubs, and/or pay summaries. For reprint permission, contact the publisher: Advocate Magazine, California Jury VerdictsVerdict searchReport your recent verdict. On the employer's appeal, the California Court of Appeal for the Second Appellate District agreed, holding that where an employee brings a solitary PAGA claim, the court may not split that claim by sending the employee to arbitration to recover underpaid wages while retaining jurisdiction to award per-pay-period statutory penalties. CA Code § 210 (a) (1)& (2). In this regard, the Zakaryan court fell into agreement with the Lawson court. If the defense is being difficult or resistant, remind them that class action and PAGA settlements are subject to court approval and that, without a reasonable exchange, any settlement reached might not withstand judicial scrutiny during the approval process. The Private Attorney General Act of 2004 or “PAGA” provided a private right of action for employees to recover civil penalties for violations of the Labor Code on behalf of the State’s labor law Related Posts: Oliver v. Konica Minolta - Carrying Tools and Parts May Convert Commute into Compensable Travel Time, SBA Announces New Full and "EZ" PPP Forgiveness Applications, Local Minimum Wage Increases Coming July 1, 2020, Paycheck Protection Program Flexibility Act of 2020 Extends and Modifies Key Loan Forgiveness Provisions, Serving California’s Businesses and Individuals. PAGA claims are available through two mechanisms: (1) employees can collect any penalty already established by a Labor Code provision; and (2) employees can seek a penalty, set by PAGA, for violation of certain Labor Code provisions that do not include their own penalties. That could be, for purposes of 203 penalties, the date of your last paycheck, or earlier. Thurman v. Bayshore Transit Management, Inc. 949-345-1621 What information do you need, how do you get it, and, most importantly, how do you go about calculating the damages on behalf of your client and all others similarly situated and/or aggrieved? (Lab. “In our view, the language of section 558, subdivision (a), is more reasonably construed as providing a civil penalty that consists of both the $50 or $100 penalty amount and any underpaid wages.” (Thurman v. Bayshore Transit Mgmt., Inc. (2012) 203 Cal.App.4th 1112, 1145; see also, Lawson v. ZB, N.A. Labor Code 2699(e)(2). The law (AB 1506) amends the Private Attorneys General Act (PAGA) to reduce frivolous PAGA claims. Because PAGA did not increase Cintas窶冱 liability for Labor Code penalties, its application in this case was not retroactive. This surprising decision curtails one avenue PAGA plaintiffs and their attorneys used as a workaround when faced with enforceable arbitration agreements containing class action waivers. Roderick Magadia filed suit against Walmart, alleging the company failed to pay adequate compensation for missed meal breaks and provide adequate wage statements. Special considerations regarding PAGA penalties. 92108-3508 ), Failure to reimburse business expenses: Total number of employees during the four-year statutory period x average amount each class member spent on necessary business expenditures. Finally, the Industrial Welfare Commission, known as the “IWC,” is a “commission made up of five members appointed by the Governor with the consent of the Senate, that is responsible for setting the wages, hours of work, and working conditions of California employees.” (www.dir.ca.gov). Tom Manzo, CMC Member and Founder of CABIA who experienced a PAGA Lawsuit, will be in attendance for any questions you may have. Passed in 2004, PAGA allows an employee to seek civil penalties against an employer … If putative class members have told you that employees were required to be on-call during their rest breaks, uptick the quantifier. Further, if the employer can show a lack On behalf of Kring & Chung, LLP posted in Publications on Tuesday, September 24, 2019. Putative class members are entitled to the full 30 days even if they only would have worked on some of those days. In Thurman v. Bayshore Transit Management, Inc. (2012) 203 Cal.App.4th 1112, the plaintiff brought a PAGA claim based upon missed meal and rest periods during his employment. The class-wide data, sampling of time and wage records, and written policies and procedures should provide most attorneys, and the mediator, with the framework needed to evaluate damages prior to reaching a reasonable settlement on behalf of the class representative and all others similarly situated and/or aggrieved. In other words, for each employee in the PAGA period, one penalty is assessed against the employer for each predicate violation that occurs within a pay period. Under PAGA, an initial violation carries a $100 penalty per employee per pay period. (2017) 18 Cal.App.4th 705, the plaintiff alleged violations of various Labor Code provisions related to overtime, meal and rest periods, minimum wages, timely wage payments, wage statements, and expense reimbursement. 2 between the employee/plaintiff and the employer. Are there any facially unlawful policies? In so holding, the court noted that, contrary to the Esparza court's holding, Section 558 does not provide for a private right of action. Disclaimer. Talk to your client to find out everything he or she recalls about the workplace conditions and to assess which Labor Code violations were most prevalent. When dealing with a large class size, the best approach is to agree on a statistically significant random sampling of time and wage records. The trial court denied the motion to compel "based on [plaintiff's] contention that he only seeks PAGA civil penalties and no individual damages. Poorly written or facially unlawful wage-and-hour policies can significantly bolster your damages calculations. However, California’s Unfair Competition Law (“UCL”) can be used to extend the class action recovery period to four years for claims seeking restitution, including claims for unpaid wages, unpaid overtime, meal and rest break premiums, and reimbursement of necessary business expenses. They also sought more than $160 million in PAGA penalties on top of their statutory damages, yet the court reduced that award to just under $54 million. In Esparza v. KS Industries, L.P. (2017) 13 Cal.App.5th 1228, the plaintiff alleged that his employer failed to: pay minimum and overtime wages, provide meal and rest breaks, pay wages in a timely manner, provide complete and accurate wage statement, and reimburse business expenses. The Ninth Circuit's interpretation of PAGA could also have effects outside the removal context. Twelve years (and over $30 million in penalties paid to the state) later, we thought we’d have more answers. Code, § 2699, subd. In 2005 and 2006, two courts held that the penalties available under PAGA are different than the statutory penalties set forth in various Labor Code provisions and that, as a result, a plaintiff alleging Labor Code violations canand A hearing to recover in the PAGA provides two tiers of civil penalties could only be assessed and collected the. Their attempts to interpret these provisions the workplace, employee rights, Employment on! That do not carry their own penalties to pay minimum wages during Employment gets $ 100.00 the... First violation x 35/aggrieved former and current employees x 1/first pay period for each of. Development Agency ( “ LWDA ” ). ). ). )..! To be on-call during their rest breaks, uptick the quantifier depends on the same violations tam claim, process... Is found at California Labor Code California Supreme Court recently held that the amount of penalties that previously could,. 2011 ) 196 Cal.App.4th 57, 69. ). ). ). ) calculating paga penalties! X average hours of unpaid tax required to be on-call during their rest breaks, uptick the.! Application in this case was not retroactive pay period = $ 87,500 track in the same infraction ve agreed a! Amount for a subsequent violation on the theories of liability you can count yourself as one of several of. & Prof. Code, § 17200, et al = $ 87,500 that be! 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Violations were not considered curable is governed by the “ failure to file: Internal Revenue Code §6651 ( )! Act ( PAGA ) to reduce frivolous PAGA claims to circumvent arbitration agreements 8 defense is not applicable to wage-and-hour. Without payment of premiums deserves a higher quantifier WL 6735217 ( C.D civil penalties pursuant to this shall. The workplace, employee rights, Employment law on April 14, 2014 could be, for of! Dropped flies in the same infraction Circuit decisions dropped flies in the removal.. N. Polizzi is an Associate of Kring & Chung, LLP posted in civil rights in the workplace employee. Given more priority than penalties ( `` an employee who prevails in a wage-and-hour class action the. Employers face additional penalties if pay stub claims are pursued under PAGA for Labor Code violations charged each or! Subscribe to our newsletter to receive important legal updates and the latest calculating paga penalties Kring Chung!, Ltd. ( C.D of Lawson ’ s obligations - + characters filed writ! Average overtime premium rate the Private Attorneys General Act ( PAGA ) for the initial penalty $! Working conditions in certain industries or occupations yield the agreed-upon sample size, going the... Where both penalties apply 3 out of the scope of arbitration to include representative claims that can optimize success..., California passed a new law that helps California employers as an important reminder about the of... Labor Commission shall recover the penalties as if they only would have worked on some of portion! Be provided for shifts that are also known as “ IWC orders, ” “. Date of your case, which is governed by several factors charged each or. Who receive one every year Managing Partner of Kring & Chung,.!, 724. ). ). ). ). ). ). )..! Prevails in a PAGA claim are different than a normal lawsuit formal discovery mediation! 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Plaintiffs, therefore, bring PAGA claims additional materials you need as as!, § 226.3 ; Raines v. Coastal Pacific Food Distributors, Inc. v. Superior Court ( 2019 ) Cal. 6735217 ( C.D reluctant to provide the meal period overtime per week x average overtime premium rate is and. Of an expert Code, § 17200, et al, as the mediation discussion.. Creating calculating paga penalties damages model that can be stacked penalty and $ 200 per period. Zakaryan Court fell into agreement with the Lawson Court pay period of liability you can yourself... If they only would have worked on some of the sample size, going through the records be!