California Court of Appeal Upholds Dismissal of ‘Unmanageable’ PAGA Claim

On September 9, 2021, the Second District of the California Courts of Appeal ruled in Fred Wesson v. Staples the Office Superstore, LLC that trial courts have “inherent authority” to strike claims under the California Private Attorneys General Act (PAGA) if they will not be manageable at trial. As the first precedential decision on this issue from a California court, this case provides employers with a welcome potential defense to some PAGA claims.

Facts and Background

Under PAGA, employees in California are empowered to bring claims on behalf of other employees (and the state of California) for violations of the California Labor Code. Critically, plaintiffs need not meet class action requirements or go through class action procedures to bring claims under PAGA on behalf of other employees. As a result, unlike class actions, employers have had relatively limited recourse to challenge wide-reaching PAGA claims, sometimes brought on behalf of hundreds or thousands of employees.

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An Employee Whose Individual Claims Are Time-Barred Can Still Pursue a PAGA Action

On July 21, 2021, the California Court of Appeal, Fourth Appellate District, held in Johnson v. Maxim Healthcare Services, Inc., that an aggrieved employee whose individual claim was time-barred had standing to pursue a representative claim under the Private Attorney General Act of 2004 (PAGA) on behalf of other allegedly aggrieved employees. The court’s decision was based on its interpretation of the California Supreme Court’s 2020 ruling in Kim v. Reins, wherein the high court held an aggrieved employee who settled his individual claims nonetheless had standing to maintain a representative PAGA action. This decision is poised to have a significant impact on all employers in California by expanding the scope of individuals with standing to bring a PAGA action.

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California Supreme Court: Paying Meal and Rest Period Penalty Based on Employee’s Base Hourly Rate Is Not Enough

On July 15, 2021, the California Supreme Court ruled that an employee’s “regular rate of compensation” for the purposes of meal and rest break penalties includes all nondiscretionary payments, not just hourly wages. This decision will have significant impact on all employers in California because (1) going forward, employers cannot simply pay the employee’s base hourly rate for meal and rest break violations, and (2) this decision is retroactive.

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Ninth Circuit Decision Provides Potential Defense Strategy for Employers Facing PAGA Suits

In Magadia v. Wal-Mart Associates, Inc., the Ninth Circuit Court of Appeals tossed a $100 million-plus judgment against Walmart and held that employees lack standing to bring a claim under California’s Private Attorneys General Act (PAGA) for labor code violations that they themselves did not suffer. Among other highlights, the federal appeals court found that California’s wage-statement law does not require employers to list a corresponding hourly rate when making a lump sum overtime adjustment payment. The decision provides helpful precedent for businesses litigating wage-and-hour class and representative actions, as well as employers with similar bonus schemes to Walmart.

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Summary of Cal/OSHA’s Revised COVID-19 ETS Adopted on June 17, 2021

On June 17, 2021, the California Occupational Safety & Health Standards (Cal/OSHA) Board voted to re-adopt its COVID-19 prevention emergency temporary standards (ETS) incorporating changes Cal/OSHA noticed on June 11, 2021 (revised ETS).

The revised ETS (which will make changes to California Labor Code Sections 3205 through 3205.4) are aligned with the latest guidance by the Centers for Disease Control and Prevention (CDC) and the California Department of Public Health (CDPH). The revised ETS are also aligned with Governor Newsom’s guidelines to reopen California as of June 15, 2021. Following Cal/OSHA’s vote, Governor Newsom signed an Executive Order on June 17, 2021, enabling the revised ETS to take effect without the normal 10-day review period by the Office of Administrative Law.

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Summary of Revisions to Cal/OSHA’s COVID-19 Emergency Temporary Standards

UPDATE: Cal/OSHA Withdraws June 3, 2021 revised ETS. In a special meeting held on the evening of June 9, 2021, the Cal/OSHA Board met to consider the latest guidance from the Centers for Disease Control and California Department of Public Health regarding masking. The Board voted unanimously to withdraw the revisions to Cal/OSHA’s revised ETS that they had voted to approve on June 3, 2021, and that were set to go into effect on June 15, 2021 (pending approval from the Office of Administrative Law).  In a press release, Cal/OSHA stated that it will review the new mask guidance, bring any recommended revisions to the Board and that the Board could consider new revisions at a future meeting, perhaps as early as the regular meeting on June 17, 2021. In the meantime, the Cal/OSHA’s ETS adopted in November of 2020 will continue to remain in effect. Faegre Drinker will continue to monitor and provide insights with respect to Cal/OSHA’s revised ETS as well as other COVID-19-related topics. Insights will be updated on the firm’s COVID-19 Resource Center.

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