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As a quick reminder of just how costly rest and meal break violations can be, on May 8, 2018, a California federal judge awarded $97.28 million to a class of 4,481 home mortgage consultants for Wells Fargo Bank, N.A. (“Wells Fargo”) in Ibarra v. Wells Fargo Bank, N.A., No. CV 17-4344 PA (ASx), 2018 U.S. Dist. LEXIS 78513 (C.D. Cal. May 8, 2018). Divided evenly among the class members, that comes out to roughly $21,710 per person. Though the plaintiffs in this case were granted summary judgment in January, this award came out of a dispute over the method for calculating the damages for rest break violations.

In California, we often see what are referred to as “derivative” additional claims when employees bring suits against employers for wage-related violations. Frequently, these “derivative” claims include an assertion that the employer issued incorrect wage statements. For example, if employees were suing their employer for not paying minimum wage, they would also claim that the employer issued incorrect wage statements, as the wage statements would, of course, not include the pay the employees claimed they should have earned. This may trigger as much as $4,000 per employee in penalties.

Fortunately, in a recent employer-friendly opinion, a California Court of Appeal reversed an award for wage statement penalties, noting that the wage statement claims fail as a matter of law when based on the alleged failure to show all wages “earned” when the wage statements accurately show all wages paid to the employee.

In a decision published Monday morning, the California Supreme Court rejected the longstanding multifactor standard that has been used to determine whether workers should be classified as employees or as independent contractors for purposes of California wage orders.

The case in which this decision was made, Dynamex Operations West Inc. v. The Superior Court of Los Angeles County, involved delivery drivers suing their employer Dynamex Operations West, Inc. (“Dynamex”), for misclassifying them as independent contractors rather than employees.

Last week, the U.S. Department of Labor’s Wage and Hour Division (“WHD”) issued three new opinion letters, which we reported on briefly here. Opinion letters provide the agency’s view of the law in specific situations, as requested by employers or other parties.  The letters are not legally binding but are instead intended to offer employers guidance on how the WHD interprets and would enforce the law based on the circumstances provided. These are the first WHD opinion letters released by the Trump administration. Today, we’re going to dive a little deeper into two of these letters and what they mean for employers.

Last week, the Los Angeles County Superior Court decided in Castillo, et al. v. Glenair, Inc. No. B278239, Calif. App., 2nd Dist., Div. 2, 2018 Cal. App. LEXIS 338 (“Castillo”) that, in a joint-employer arrangement, a class of workers cannot bring a lawsuit against a staffing company, settle that lawsuit, and then bring identical claims against the company where they had been placed to work.

Brothers Andrew and David Castillo, employees of a staffing company, GCA Production Services, Inc. (“GCA”), brought a wage and hour putative class action against, Glenair, Inc. (“Glenair”), a company where they had been placed to work. They characterized GCA and Glenair as joint employers and asserted that, among other things, Glenair had failed to provide required meal and rest periods, failed to pay overtime wages, and failed to pay minimum wage.

While their case against Glenair was pending, the Castillos were involved in the settlement of Gomez v. GCA Production Services, Inc. (Super. Ct. San Bernadino County, 2014, No. CIVRS1205657) (“Gomez”). The settlement in Gomez barred the settling class members from asserting certain wage and hour claims (such as those brought forth in Castillo) against GCA and its agents. The claims they asserted in Castillo were the same claims they released under the Gomez settlement for the same work done in the same period of time.

As stated in the Court’s Opinion, the Court decided that there was sufficient evidence to demonstrate that GCA had enough control over Glenair to find that Glenair was an agent of GCA, as GCA authorized Glenair to perform necessary timekeeping-related tasks for GCA employees at Glenair’s facility. Therefore, the Court found that the Gomez settlement bars the Castillos’ claims against Glenair as a matter of law, due to the Castillos’ release of these claims against agents of GCA. The Court stated that “if the Castillos were permitted to pursue their causes of action here, they would undermine the finality of the bargained-for and court-approved Gomez settlement, waste judicial resources, and potentially obtain a double recovery on their already-settled claims” (emphasis added).

COUNSEL TO MANAGEMENT:

This employer-friendly decision is exciting in that it emphasizes that settlements represent a bargained-for finality, and it explicitly notes that allowing claims against a company when the plaintiff has already settled the exact same claims with its joint employer would be wasteful and redundant. If you have any questions or concerns about your company’s wage and hour liability, please contact the experts at The Saqui Law Group.

The first week of April brought with it more than showers; it also brought an employer-friendly ruling from the Supreme Court of the United States (“SCOTUS”) regarding overtime pay exemptions!

In Encino Motorcars, LLC v. Navarro et al. (US 16–1362 4/2/18), current and former service advisors at Encino Motorcars, LLC (“Encino Motorcars”), a car dealership in California, sued Encino Motorcars for backpay in 2012, claiming that it had violated the Fair Labor Standards Act (“FLSA”) by misclassifying them as exempt from overtime pay.

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