CA Governor Signs AB 1506, a Bill Granting Limited PAGA Relief Re Wage Statements

Governor Jerry Brown signed AB 1506 (text here), which amends the Private Attorneys General Act, or PAGA.

This law affects only PAGA claims that are based on defective wage statement claims asserting violations of Labor Code section 226. And only those claims were the alleged defects are that the employer does not include on the wage statement:

(6) the inclusive dates of the period for which the employee is paid, 

(8) the name and address of the legal entity that is the employer

So, a PAGA claim based on those two criteria may be avoided if the employer "cures" the defect upon receiving notice from the employee.   How do you cure?

A violation of paragraph (6) or (8) of subdivision (a) of Section 226 shall only be considered cured upon a showing that the employer has provided a fully compliant, itemized wage statement to each aggrieved employee for each pay period for the three-year period prior to the date of the written notice sent pursuant to paragraph (1) of subdivision (c) of Section 2699.3.

So, to "cure" you just have to re-do your wage statements for three years and re-issue them to all employees who received the defective ones.   It also means that the "aggrieved employees" must be "made whole," but it's unclear what that means unless someone has suffered some harm because the proper weeks or employer name were not listed on the wage statement.

The cure must occur after the employer receives notice of a PAGA claim within the 33 day period before the employee can file a lawsuit. If the employee claims the employer has not cured the defect, the employee may appeal to the DLSE. The DLSE has 17 days to rule on whether or not the defect was cured.  If not, the employer has three more days to cure.  If the employee still disagrees, he may appeal to the superior court.  If the DLSE finds the the employer did not cure, then the employee may file suit.

So, this is a very minor amendment to PAGA, but one that may help employers avoid an expensive claim in limited circumstances.

This is an "urgency" measure, which means it takes effect right away. Stay tuned for explanations of some of the other legislation that will take effect in January.

Court of Appeal: Meal/Rest/Wage Statement Class Action Should Be Certified

Safeway compensated truck drivers based on a compensation formula rather than a straight hourly rate: 

The collective bargaining agreements also obligated Safeway to utilize what it calls an activity based compensation system to determine the drivers‟ wages. Pay was calculated based on (1) mileage rates applied according to the number of miles driven, the time of day the trips were taken, and the locations where the trips began and ended; (2) fixed rates for certain tasks (e.g., rates for number of pallets delivered and picked up); (3) an hourly rate for a predetermined amount of minutes for certain tasks (e.g., paid for 10 minutes at hourly rate for set-up time at each store); and (4) an hourly rate for delays (e.g., breakdowns, impassable highways, time spent at scales, or other causes beyond the driver‟s control).

Drivers logged their mileage and activities for each trip manually on trip sheets. They also logged their activities into an onboard computer system known as the XATA system. Through XATA, Safeway tracked the drivers' moves, including their stops. The drivers input codes into XATA to record specific reasons for delays. Neither the trip sheets nor the XATA system, however, provided a place or means to record meal or rest periods.

 
So, the compensation system did not include separate payment for contractually and legally required rest periods.  Safeway argued that the paid rest periods were included in its compensation formula, presumably because the payment for miles and tasks assumed the rest periods would be taken during these activities.  Safeway also had drivers sign time cards to acknolwedge they were authorized and permitted to take rest periods. 
The trial court refused to certify a sub-class of rest period claims.  But the court of appeal reversed.  The court held Safeway's system of compensation was akin to a piece rate method of compensation.  And, the court decided, California law does not allow paid rest periods to be included in piece rates because it was an improper averaging of compensation: 

under the rule of Armenta v. Osmose, Inc. (2005) 135 Cal.App.4th 314, 323 (Armenta), rest periods must be separately compensated in a piece-rate system. Rest periods are considered hours worked and must be compensated. (Cal. Code Regs., tit. 8, §§ 11070, subd. 12; 11090, subd. 12.) Under the California minimum wage law, employees must be compensated for each hour worked at either the legal minimum wage or the contractual hourly rate, and compliance cannot be determined by averaging hourly compensation.

The court expressly held that there was a common issue for determining liability - that the compensation system did not compensate employees for paid rest periods separately. The court did so by holding that piece rates may not include payment for rest periods. That is another way of saying that there was no payment for rest periods as a matter of law.

With all respect to the court of appeal, this decision seems to over-analyze the merits of the case.  The court seems to be saying the common proof is that all rest periods were paid incorrectly as a matter of law.  Without saying so, therefore, the court essentially granted summary judgment for the plaintiff rather than just class certification. 

While we're talking about the merits, I am not sure I understand why the piece rate payment cannot include implied payment for rest periods, as Safeway testified it did. An hourly pay rate does not expressly include payment for rest periods either.  During the hour that an employee takes a rest period, he is paid the same hourly rate, but simply works less.  During the hour that an employee does not take a rest period, she receives the same rate as if she did take one. Employers likely set their hourly rates under the assumption that the employee will take a rest period during one of every four hours worked.  The hourly rate therefore "averages" compensation, which the cout said could not be done.   Anyway, I don't get a vote.  So, I descend from my soap box, dejected.

The court also certified a meal period sub-class class on the basis that there was a common issue regarding whether Safeway adequately provided second meal periods before 2006, which is when the case was filed.  The court did not reach the plaintiff's argument that Safeway did not do enough to ensure drivers were relieved of duty, because the one common issue was enough for class certification.  This part of the decision may not be all that significant to employers who adequately provide for both meal periods per Brinker.  Safeway changed practices in 2006.

Finally, the court of appeal decided the wage statement sub-class should be certified.  The court agreed that the wage statement did not adequately spell out wage rates applicable to miles driven, such that the employees would have to refer to their own trip sheets to verify whether they received adequate compensation and engage in mathematical calculations:

Plaintiff‟s argument goes to the structure of the wage statements. As a result, his and the other drivers‟ claims of injury on account of the wage statements will be resolved by means of common proof. The structural omissions in the wage statements, and their alleged violation of Labor Code section 226, are, like employer policies, the types of matters best resolved by class adjudication.

There have been other decisions regarding  piece rates lately. See, e.g., here.  Employers should review their compensation plans to ensure compliance with minimum wage, overtime, meal and rest period laws.

This case is Bluford v. Safeway Stores, Inc. and the opinion is here.

Court of Appeal: Reporting Time Pay and Discharge

The Court of Appeal addressed California's "reporting time" pay requirement in the context of discharge. 
First it explained "reporting time" pay in the Wage Orders.

Section 5(A) of Wage Order Number 5-2001 states: “Each workday an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee‟s usual or scheduled day‟s work, the employee shall be paid for half the usual or scheduled day‟s work, but in no event for less than two (2) hours nor more than four (4) hours, at the employee‟s regular rate of pay, which shall not be less than the minimum wage.” (Cal. Code Regs., tit. 8, § 11050, subd. 5(A).)

The employee was called in for an unscheduled day to be fired. The company paid the employee 2 hours, but the employee wanted four hours' pay.  The Court of Appeal held that only two hours of reporting time pay was due.  In explaining why, the court will help employers in the case of meetings that are scheduled on employees' days off.

If an employee is required to work, reports to work, and is not put to work or does not work half of the employees‟ usual or scheduled day‟s work, the employee is paid a half-shift reporting wage not to exceed four hours. (Cal. Code Regs., tit. 8, § 11050, subd. 5(A).) If an employee is not scheduled to work or does not expect to work his usual shift, but must report to work for a meeting, the employee falls into the regulatory category of those employees called to work on their day off for a scheduled meeting. Price was entitled to the minimum payment, which is what he received.10

* * *

We do not agree with Price that he is entitled to receive more than the two-hour minimum; he did not report to work with the expectation that he would work a scheduled shift, but rather was scheduled to attend a meeting for an unspecified number of hours. Nor do we agree with Price that the term "usual" in the statute means the average of his previously scheduled days‟ worked during his employment at Starbucks. Rather, the term "usual" refers to the employee‟s expectation of the hours in the customary workday, just as, in the alternative, a scheduled work day formalizes the expectation of the hours worked. During his employment, Price's expectations of hours worked was solely based upon his scheduled hours. Price was not scheduled to work on November 16, and his expectation was he had been called to work for a meeting on his day off. He did not lose any pay because of a scheduling error. He was paid for reporting to the meeting consistent with the reporting time pay regulation.

This case also is very good because it, once again, says you have to have an actual injury to recover on a wage statement claim.  No injury, no money.  And a missing piece of information is not an injury.

The case is Price v. Starbucks Corp. and the opinion is here.