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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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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President Biden Raises the Minimum Wage to $15 for Certain Federal Contractors

On April 27, 2021, President Joe Biden signed an Executive Order (EO) requiring certain federal contractors to pay workers on government contracts at least $15 per hour beginning January 30, 2022. After 2022, the minimum wage will be adjusted annually for inflation at a rate set by the secretary of Labor (the secretary). The EO supported the minimum wage increase by stating that raising worker wages will promote efficiency in federal procurement through: (1) enhanced worker productivity and generation of higher-quality work from increased workers’ health, morale and effort; (2) reduced absenteeism and turnover; and (3) lowered supervisory and training costs.

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Employer Beware: New California Employment Laws for 2021

Among the lasting 2020 impacts of fires, politics and COVID-19, is increased regulation of California employers. More than 563 bills introduced in the last California legislative session mention “employer,” compared to about 300 bills in 2019. While most bills stalled in the Legislature, many were signed into law by Gov. Gavin Newsom, bringing more rules and risks for employers in our state, dealing with workplace safety; sick leave; workers’ compensation; diversity and discrimination; worker classification and wages; privacy; employee leaves; and settlements.

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New California Laws for 2021: What Employers Should Know

Several new laws in California impact employers in a multitude of operational areas. From leave regulations to workers’ compensation, safety enforcement, wages and more, business leaders have much to research when it comes to compliance. All employers with operations in California should be aware of these new laws, understand how these laws may affect their operations and consult with counsel to address any questions on these new obligations.

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