Seyfarth Synopsis: Employment-related cases pending before the California Supreme Court concern various questions that sometimes seem technical, but the answers they elicit will have big consequences. Questions raised by the current crop of cases include standing to sue, the availability of certain claims and remedies, federal preemption of California laws, what counts as compensable time, and—that perennial favorite—how to interpret the infernal PAGA statute.

We expect the California Supreme Court in 2019 to issue decisions addressing many important issues in private employment. Some topics easily warrant their own article or blog post, and will receive that treatment as the Supreme Court’s decisions emerge. But it’s not too soon to highlight some coming attractions.

Anti-SLAPP and Alleged Employer Motive

  • Is an employer’s anti-SLAPP motion to strike an employee’s suit affected by the employer’s alleged discriminatory motive? In Wilson v. Cable News Network, Inc., the Supreme Court has agreed to decide “whether an employee’s claims for discrimination, retaliation, wrongful termination, and defamation arise from protected activity for purposes of a special motion to strike,” and “what is the relevance of an allegation that the employer acted with a discriminatory or retaliatory motive?”

Application of CA Wage-Hour Law to Out-of-State Employers

  • Does California employment law apply to non-California residents who work in California on a transitory basis? In Ward v. United Airlines and Oman v. Delta Air Lines, the Supreme Court has accepted the Ninth Circuit’s request to address five questions:
    • (1) “Does California Labor Code section 226 apply to wage statements provided by an out-of-state employer to an employee who resides in California, receives pay in California, and pays California income tax on her wages, but who does not work principally in California or any other state?”
    • (2) Does the exemption in Wage Order 9 for collective bargaining agreements (CBA) under the Railway Labor Act bar a wage statement claim brought under California Labor Code section 226 by an employee who is covered by such a CBA?
    • (3) “Do California Labor Code sections 204 and 226 apply to wage payments and wage statements provided by an out-of-state employer to an employee who, in the relevant pay period, works in California only episodically and for less than a day at a time?”
    • (4) “Does California minimum wage law apply to all work performed in California for an out-of-state employer by an employee who works in California only episodically and for less than a day at a time?”
    • (5) “Does the Armenta/Gonzalez bar on averaging wages apply to a pay formula that generally awards credit for all hours on duty, but which, in certain situations resulting in higher pay, does not award credit for all hours on duty?

Arbitration

  • When is an arbitration remedy broad enough to preclude an employee’s resort to a Berman hearing? Under existing law, employers cannot necessarily compel employees to arbitrate wage claims unless and until employees have had the chance to bring those claims before the Labor Commissioner in a “Berman hearing.” In OTO, L.L.C. v. Kho, the Supreme Court has agreed to decide these issues:
    • “(1) Was the arbitration remedy at issue in this case sufficiently affordable and accessible within the meaning of Sonic-Calabasas A, Inc. v. Moreno (2013) … to require the company’s employees to forego the right to an administrative Berman hearing on wage claims?
    • (2) Did the employer waive its right to bypass the Berman hearing by waiting until the morning of that hearing, serving a demand for arbitration, and refusing to participate in the hearing?”

Compensability

  • Does an employee engage in compensable work while waiting for the employer to inspect a bag the employee chose to bring to work? In Frlekin v. Apple, Inc., the Supreme Court has accepted the Ninth Circuit’s request to decide this issue: “Is time spent on the employer’s premises waiting for, and undergoing, required exit searches of packages or bags voluntarily brought to work purely for personal convenience by employees compensable as ‘hours worked’ within the meaning of California Industrial Welfare Commission Wage Order No. 7?”
  • Is walking to and from a time clock compensable hours worked? In Stoetzl v. State of California, the Supreme Court has agreed to decide this issue: “Does the definition of ‘hours worked’ found in the Industrial Wage Commission’s Wage Order 4, as opposed to the definition of that term found in the federal Labor Standards Act, constitute the controlling legal standard for determining the compensability of time that correctional employees spend after signing in for duty and before signing out but before they arrive at and after they leave their actual work posts within a correctional facility?”

Liability for Wage Payment

Preemption—By the FAA and the LMRA

  • Is a PAGA suit for unpaid wages immune from arbitration? In its 2014 Iskanian case, the California Supreme Court acknowledged that the Federal Arbitration Act (FAA) preempts state laws against class-action waivers in arbitration agreements, but also held that representative PAGA actions are not subject to mandatory arbitration. Now, in Lawson v. Z.B., N.A., the Supreme Court has decide to whether a representative action under PAGA, seeking recovery of individualized lost wages as civil penalties under Labor Code section 558, falls within the preemptive scope of the FAA.
  • Does federal labor law preempt a claim for termination wages? In Melendez v. San Francisco Baseball Associates, the Supreme Court has agreed to decide this issue: “Is plaintiffs’ statutory wage claim under Labor Code section 201 subject to mandatory arbitration pursuant to section 301 of the Labor Management Relations Act because it requires the interpretation of a collective bargaining agreement?”

Remedies

  • Can an employee seeking unpaid wages use the tort of conversion? In Voris v. Lampert, the Supreme Court has agreed to decide this issue: “Is conversion of earned but unpaid wages a valid cause of action?”

Rest Breaks & Meal Periods

  • Rest breaks for ambulance attendants on 24-hours shifts. In Stewart v. San Luis Ambulance, Inc., the Supreme Court accepted the Ninth Circuit’s request to decide these issues: (1) “Under the California Labor Code and applicable regulations, is an employer of ambulance attendants working twenty-four hour shifts required to relieve attendants of all duties during rest breaks, including the duty to be available to respond to an emergency call if one arises during a rest period?: (2) “Under the California Labor Code and applicable regulations, may an employer of ambulance attendants working twenty-four hour shifts require attendants to be available to respond to emergency calls during their meal periods without a written agreement that contains an on-duty meal period revocation clause? If such a clause is required, will a general at-will employment clause satisfy this requirement?” (3) “Do violations of meal period regulations, which require payment of a ‘premium wage’ for each improper meal period, give rise to claims under sections 203 and 226 of the California Labor Code where the employer does not include the premium wage in the employee’s pay or pay statements during the course of the violations?”

Standing for PAGA Claims

  • Can a PAGA plaintiff settle his individual wage and hour claims and still pursue his PAGA action as an “aggrieved employee”? In Kim v. Reins International California, Inc., the Supreme Court has agreed to decide whether an employee bringing an action under PAGA loses standing to pursue representative claims as an “aggrieved employee” by dismissing his or her individual claims against the employer.

Workplace solution. Some of the issues raised by the above cases may seem relatively minor, technical, or limited to particular industries. Yet many a significant class action has turned upon issues no more monumental. We will keep our eyes and ears on the Court’s progress and keep readers updated with the latest developments.

Seyfarth Synopsis: California’s rules on rest breaks are still developing. Recent cases have addressed the timing of rest breaks, and whether employees (particularly those who remain “on call”) must be relieved of all duty during breaks.

Our fair state has long imposed peculiar—and specific—requirements for employee work breaks. Varying interpretations of the rules for meal and rest breaks have spawned prodigious class action litigation, both before and after the California Supreme Court’s crucial 2012 decision in Brinker Restaurant Corp. v. Superior Court. Accordingly, California employers have a keen interest in making their break policies and practices as compliant as possible.

But this can be hard to do while the rules remain in flux. In this post, we discuss two cases—one decided a few months ago and the other now pending before the California Supreme Court—that bring the requirements for rest breaks into finer focus. The cases raise these questions: (1) Exactly when must employers provide rest breaks? (2) Can employers require workers on break to remain “on call”?

So we invite you to “take 10” and read on.

The Basic Rule

Section 226.7 of the Labor Code says that employers can’t require employees to work during breaks mandated by an order of the Industrial Welfare Commission. The IWC, in turn, has mandated (in Section 12(A) of the Wage Orders) that:

Every employer shall authorize and permit all employees to take rest periods, which insofar as practicable shall be in the middle of each work period. The authorized rest period time shall be based on the total hours worked daily at the rate of ten (10) minutes net rest time per four (4) hours or major fraction thereof.

More about that pesky phrase “insofar as practicable,” below.

Timing of Rest Breaks

The rule on rest breaks is often short-handed as “10 minutes paid rest for every four hours (or major fraction thereof) worked.” But must each rest break occur during the middle of each four-hour work period? Or can it be permissible to allow—or require—employees to combine breaks, or to schedule them at some time other than midway through the work period? And what does “insofar as practicable” mean, anyhow?

The 2016 California Court of Appeal decision in Rodriguez v. E.M.E., Inc. took a stab at answering. E.M.E. gave one 20-minute rest break and one meal break per eight-hour shift, due to the nature of the work and the clean-up time required at each break. Rodriguez brought a class action claiming that this practice violated Section 12(A) of the applicable Wage Order.

The Court of Appeal held that the phrase “insofar as practicable” means that employers must implement the rest schedule specified in the Wage Orders unless there is “an adequate justification why such a schedule is not capable of being put into practice, or is not feasible as a practical schedule.” More specifically, employers may depart from the Wage Order schedule (i.e., a rest break in the middle of each four-hour period or major fraction thereof) only when it (1) will “not unduly affect employee welfare” and (2) “is tailored to alleviate a material burden” on the employer that would result from using the Wage Order schedule.

Reversing summary judgment for the employer on the certified rest break claim, the Court of Appeal sent the case back to the trial court to resolve triable issues about these questions. The court highlighted two issues: (1) Was the nature of the work (i.e., sanding, painting and finishing metal parts for the aerospace industry) such that it took 10 minutes to prepare for each break and 10 minutes to ramp up again after the break? (2) Did the employees actually prefer to receive one combined 20-minute break? If E.M.E. could establish these points, then E.M.E. could use a schedule other than the one specified by the Wage Order.

Relief From All Work?

Poised for decision by the California Supreme Court in Augustus v. ABM Security Services, Inc., 233 Cal. App. 4th 1065 (2014) review granted, 186 Cal. Rptr. 3rd 359 (2015), is the question whether an employee on a rest break must be relieved of all duties, even the duty to be on call. The employees at issue in Augustus were security guards who remained “on call” even while taking their rest breaks. The guards claimed that their “on call” status deprived them of legally compliant rest breaks. The trial court agreed and granted them summary judgment.

But then, in a refreshing display of common sense, the Court of Appeal reversed, holding that on-call rest breaks are permissible. The Court of Appeal explained that although on-call hours constitute “hours worked,” an employee who is merely available to work is not actually working. Section 226.7 proscribes only work on a rest break; being on call is a compensable activity, but it is not work. This result is consistent with the point that employers may require employees on a rest break to stay on the employer’s premises because the breaks are, after all, paid. The issue of whether a rest period is compensable time (it is) is not the same as whether a rest period is a true break from work (on-call duty, when one is not called, is not work).

Yet employer hopes that the Court of Appeal had the final say on this matter were dashed when the California Supreme Court granted review of the decision. Check this space after the oral argument on this case, scheduled for September 29, 2016, to read our take on how the Supreme Court may be leaning when it comes to the issues presented in this case.

Workplace Solution

Even after Brinker, the waters continue to roil around rest break rules. We welcome your inquiries regarding any Cal-peculiar issues of employment law.