But that would be effective January 2021 in all likelihood, as the current session is over. . The Esparza court affirmed the trial court's ruling striking the PAGA claim, because the LWDA notice was sent more than 1 year after the last alleged violation. This information is readily available for most employers, and the defense should provide the requested data without objection or hesitation in any class or representative action that is headed to mediation. Assess whether your client will make an adequate class representative. Penalties for Missed Meal and Rest Breaks California law requires employers to give employees a paid ten-minute rest break for every four hours worked (or major fraction of four hours). Some courts have held that notice generally must come from a court or some enforcement authority (e.g., the Labor Commissioner). 3. Code, 2699, subd. Disclaimer | Privacy Policy | Sitemap | A PaperStreet Web Design. $("span.current-site").html("SHRM MENA "); Because Labor Code section 226 violations carry the heaviest penalty amount at $250 for the initial violation and $1,000 for subsequent violations, correcting the wage statements soon after the PAGA notice will allow you to argue that there are only a few subsequent violations for which penalties may be assessed, if at all. Failure to pay minimum wages during employment gets $100.00 for the initial penalty and $250.00 for subsequent violations. (The terms injury and knowing and intentional failure are further defined in section 226 (e) (2)). The Court justified its decision by illustrating there . For large employers and/or for continuing violations, these penalties can quickly add up. All Rights Reserved. Are the policies bareboned or do they fail to adequately inform employees of their rights and/or the employers obligations? Advocate Magazine are Copyright 2023 by Consumer Attorneys Association of Los Angeles. (Lab. This includes causes for unpaid minimum and overtime wages in addition to any unpaid premiums for meal/rest break violations. Your call to action is often triggered before you even receive a PAGA notice. Employers may incorrectly assume that pay stub compliance is just a matter of paperwork and can simply be corrected, said Christopher Ahearn, an attorney with Fisher Phillips in Irvine. PAGA penalties are calculated using a two-step process: Non-Compliant Wage Statements (e.g., non-itemized deductions) for 50 employees for one year (26 pay periods)3. Thus, the civil penalties recoverable by plaintiffs (25%) and those recoverable by the LWDA (75%) could not be aggregated when calculating CAFA's amount in controversy. If the wage statement violations have been cured, the law bars the employee from bringing a civil action pursuant to Section 2699 against you. For full functionality of this site, you must consent to the use of cookies. The employee can also seek penalties under PAGA for Labor Code violations that do not carry their own penalties. This installment addresses the penalties associated with wage statement violations. The second installment explored therules for electronic pay stubs. (d).). Code 2698, et seq. This was the third in a three-part series of articles on California wage statement laws. Proc., 340; Lab. If the defense is being difficult or resistant, remind them that class action and PAGA settlements are subject to court approval and that, without a reasonable exchange, any settlement reached might not withstand judicial scrutiny during the approval process. There are many free resources online to help you yield a truly random and statistically significant class size, including calculators that determine acceptable deviations, margins of error, and other statistical factors. Due to the prevalence of PAGA lawsuits and the aggressive nature of PAGA penalties, the best way for employers to avoid liability is to ensure compliance with the Labor Code. the statute of limitations is generally four years; damages are measured by the number of violations that occurred rather than by the pay period. $("span.current-site").html("SHRM China "); The focus of the case has shifted from pre-certification discovery to gathering information, documents, and data to present your damages and penalties claims to the mediator. And none of the employee's recovery has to be shared with the state. Do you automatically deduct time for a meal period? If the Labor Code already provides for a civil penalty for the underlying violation, the employee can sue to recover that penalty on behalf of similarly aggrieved employees and the State. You have 33 days from the postmark date of the notice to complete the cure. Luckily, there is a 10-step process you can take if you receive such a notice to put your organization in the best possible position. If the answers to these questions are yes, or the general quality of the employee handbook is poor, you should give your per-workweek quantifier a boost. The exposure will be doubled for an employer who pays its employees on a weekly basis. The Labor Code allows you to cure two types of wage statement violations: (1) failure to include either the start or end date of the pay period (Cal. For example, if an employer didn't provide a worker with a meal break, the employer would have to pay a penalty to the employee for the missed break and would also face a fine for failing to report the meal-break penalty on the pay stub. Posted in Civil rights in the workplace, Employee Rights, Employment Law on April 14, 2014. Mr. Rhodes has successfully represented thousands of employees individually and on a class-wide basis in actions arising out of the FEHA and Labor Code. Note that interruptions to meal periods are not readily apparent on the time records, so your actual violation rate may be higher than that which is shown on the face of the time records. On Friday, Michael Gray of Jones Day painstakingly questioned David Breshears about how he came to that conclusion, asking him about differences between his deposition testimony and earlier reports, and questioning if any court had ever actually confirmed that his method of calculating PAGA penalties was valid. at p. The wage orders can be found online at the Department of Industrial Relations public website. AB1654 (Chapter 529, Statutes of 2018), signed into law on September 19, 2018, now exempts employers and employees in the construction industry and under a collective bargaining agreement from . Defending against PAGA claims, class action lawsuits, or other legal action, Managing challenging employee situations such as leaves of absence, a remote workforce, or complaints of harassment, Other legal issues related to hiring, compensating, managing, and separating employees. Plaintiffs can assert those individual claims on behalf of themselves, or they can also assert them as a class action on behalf of similarly situated employees. If your client presents poorly, is a poor historian, has a significant disciplinary record, or only worked part time or for a short period, modify your quantifier accordingly. Several bills to further reform PAGA are currently making their way through the state legislature, Sarchet noted. Moreover, [a] sample must be randomly selected for its results to be fairly extrapolated to the entire class. (Id. A case with a high meal-break violation rate without payment of premiums deserves a higher quantifier per workweek. Background. (Lab. "Employers should understand that the penalties for wage statement violations can be very high," he noted. They rejected the efforts of removing defendants, in calculating the amount in controversy, to aggregate the . This law allows a private citizen to pursue civil penalties on behalf of the State of California Labor and Workforce Development Agency ("LWDA . Even simple formatting errors can result in penalties, Ahearn noted. As such, you should demand production of all employee handbooks and standalone policies regarding timekeeping, meal and rest breaks, payroll practices, overtime compensation, and expense reimbursements that were in effect at any time during the applicable damages period. Under PAGA, the default civil penalty for an employer's initial violation is one hundred dollars ($100) per employee per pay period, and two hundred dollars ($200) per pay period for any subsequent violations (though PAGA plaintiffs are required to remit 75% of recovered penalties to the Labor and Workforce Development Agency). of PAGA penalties and a trial court's consideration regarding same. (Lab. If putative class members have told you that employees were required to be on-call during their rest breaks, uptick the quantifier. Civil penalties under PAGA can be eye-popping. The following formulas can be useful to create high/low scenarios in your damages model for some of the main Labor Code violations. } For cases that require deeper investigation, consider producing your client for deposition and/or taking the deposition of the defendants person(s) most knowledgeable regarding its wage-and-hour policies, practices, and procedures. (Lab. To request permission for specific items, click on the reuse permissions button on the page where you find the item. Use an expert or staff member to go through the wage statements to determine if the employees were properly paid for all overtime and double-time. Moreover, for such claims: Taking the same example (50 employees who did not receive compliant wage statements and were not paid 30 minutes of overtime per workday who were each paid $25 per hour) and assuming these violations occurred over the course of four years, the class action liability could be $1,102,500: Combining the class damages with the stacked PAGA claims of $260,000, the potential liability exposure is now $1,362,500. Battle over amount in penalties. The foundational data needed to evaluate damages or penalties in any class or representative action consists of the class size, workweeks, and pay periods during the applicable damages period. Although you are not required to file a response addressing the charges in the PAGA notice, standard practice for many counsel is to file a written response with the LWDA. PAGA penalties on that claim based on violations incurred by other Walmart employees. If the employers violation rate is anything less than once per pay period, you should modify the formula to reflect your estimated violation rate. The penalties under California law can add up quickly. Note that the California Supreme Court recently held that the de minimis defense is not applicable to off-the-clock wage-and-hour claims. Code, 218.6; Civ. The requirement for fully compliant corrected wage statements should be interpreted to mean wage statements that comply with all nine requirements set forth in Labor Code section 226(a). (Lab. We use cookies on our site to analyze traffic, enhance your experience, and provide you with tailored content. Code, 1197.1, subds. Lab. For the typical Class, PAGA, and UCL action, here is what you must know before mediating: 1) total number of employees during the four-year period; 2) total number of workweeks during the four-year period; 3) total number of employees who were terminated and/or quit during the three-year period; 4) total number of employees during the one-year period; and, 5) total number of pay periods during the one-year period. Under PAGA, the penalty for an initial violation is $100 per pay period, while the penalty for a subsequent penalty doubles to $200 per pay period. Code 2699.3(a)(1)(A)). This article shows how PAGA penalties for common wage and hour violations are calculated and compares them to class action damages so that the reader can assess potential exposure for wage and hour violations. 2010) 2010 WL 1838726 at **2-6. The statute of limitations is based on the date of the violation. Section 226.3 provides a penalty of up to " [$250] for an initial citation and [$1,000] for a subsequent citation, for which the employer fails to provide the employee a wage deduction statement or fails to keep the records required in subdivision (a) of Section 226 " (emphasis added). If you identify problems, you should immediately correct any missing or inaccurate information on the wage statements. Are employees allowed to leave the premises during meal and rest breaks? 5For purposes of damages under Labor Code section 226, initial violation and subsequent violation are defined differently such that there is only one initial violation per employee. The plaintiff can sue on behalf of other employees who suffered different violations than those suffered by the plaintiff so long as the plaintiff suffered at least one violation. Keep up with the latest news and events from Hoge Fenton, https://esd.dof.ca.gov/Documents/bcp/1920/FY1920_ORG7350_BCP3230.pdf, https://www.populardemocracy.org/sites/default/files/sPAGA%20Report_WEB.pdf, https://advocacy.calchamber.com/policy/issues/private-attorneys-general-act/. Uber Technologies, Inc. (N.D. Cal. 2 PAGA fines can be significant. Wage and Hour Class Actions vs. PAGA Lawsuits. The average overtime premium rate is one and one-half times the average hourly rate. Is there any indication that meal periods are automatically deducted from the employees time? Lab. Moreover, in calculating PAGA penalties, Dr. Kriegler did not make the same mistake as discussed above regarding the statute of limitations date for the PAGA penalties. In fact, 2018 saw a record number of PAGA claimsover 5,700, a 15 percent jump from 2017filed with the Labor and Workforce Development Agency. You must also file a notice of the cure that includes a description of actions taken with the LWDA ( 2699.3(c)(2)(A)). A violation occurs each time an individual . If the defendant raises any privacy concerns with respect to the time and wage records, offer to stipulate to a protective order or suggest substituting any identifying information, like names and social security numbers, with generically assigned employee numbers. 2.PAGA cases are representative claims, which are different than class actions. Members may download one copy of our sample forms and templates for your personal use within your organization. var temp_style = document.createElement('style'); On top of all that, one employee can sue on the behalf of others. "Those numbers add up really fast," Ahearn said. Code, 2802.). This is in contrast to penalties under the Private Attorneys General Act. %%EOF Was this article useful? For the first half-hour, or fraction thereof: $25 For the second half-hour, or fraction thereof: $35 For each half-hour thereafter, or fraction thereof: $50 Meal penalty calculator note: For Student, Short, and Ultra Low Budget Films, the meal penalty amount is reduced to $25/half-hour or fraction thereof. Wage statement violations: ($50.00 x total number of employees during the one-year period) + ($100.00 x [total number of pay periods in the one-year period total number of employees in the one-year period]). . An experienced attorney will help you calculate all of the . Additional data that will be helpful to your analysis includes: 1) the average hourly rate for non-exempt employees; 2) the average hours worked by non-exempt employees each shift; 3) the total number of shifts greater than five, but less than 10 hours; 4) the total number of shifts greater than 10 hours; and, 5) the percentage of shifts that are eight hours or longer. PAGA claims must be filed within one year of the violations occurring. This penalty is in addition to any statutory penalties that may be assessed. The defense has expressed an interest in resolving your wage-and-hour class and/or representative action. Specifically, the court in Bernstein decided that heightened penalties for "subsequent violations" under California's Private Attorney General Act (PAGA) cannot be imposed until the Labor Commissioner or a court notifies the employer in question of the Labor Code violation (s) at issue. Although PAGA penalties are subject to a relatively favorable one-year statute of limitations, they can be significant, particularly for large employers, as penalties may be assessed per employee and per pay period for each Labor Code violation or wage order violation not otherwise covered by a Labor Code provision. PAGA Law. (Lab. (Lab. Every subsequent violation carries a $200 penalty. The formula used to calculate PAGA penalties is therefore the same regardless of the predicate violation: (Initial violation penalty x total number of employees in the one-year period) + (subsequent violation penalty x [total number of pay periods in the one-year period total number of employees in the one-year period]). Also, the total damages per employee cannot exceed $4,000.00, so if your average number of pay periods per employee is greater than 40, you can complete the calculation simply by multiplying the total number of employees during the one-year period by $4,000.00. 43.) Note that the amount is doubled because employees are entitled to liquidated damages in the amount of the total unpaid minimum wages. Wage statement violations arguably are calculated at a rate of $250.00 for the initial violation, and $1,000.00 for every subsequent violation thereafter! PAGA provides for a default penalty of $100 for initial violations and $200 for subsequent violations unless the Labor Code specifically provides for a different penalty. (Belaire-West Landscape, Inc. v. Superior Court (2007) 149 Cal.App.4th 554.). 2012) 2012 WL 2373372 at *17; Schiller v. Davids Bridal, Inc. (E.D. A 30 day penalty is $64 x 30 days = $1,920. The Labor Code Private Attorneys General Act (PAGA) authorizes aggrieved employees to file lawsuits to recover civil penalties on behalf of themselves, other employees, and the State of California for Labor Code violations.Those who intend to pursue PAGA cases must follow the requirements specified in Labor Code Sections 2698 - 2699.5. (Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1800; Lab. 37 0 obj <> endobj You have successfully saved this page as a bookmark. Thus, two late payments of wages totaling $2,000 will result in a penalty of $800 ($100 for the first violation plus $200 for the subsequent violation + $500 [$2,000 x .25]). SHRM offers thousands of tools, templates and other exclusive member benefits, including compliance updates, sample policies, HR expert advice, education discounts, a growing online member community and much more. What Is a PAGA Settlement? Regardless of the sample size, going through the records will be time consuming and costly. Are the shifts or lunch breaks rounded or exactly eight hours or 30 minutes, respectively? Another wrinkle in the law is that penalties are assessed per paycheck, Sarchet explained. The amount in controversy was often easy to establish, as PAGA penalties mount rapidly: $100 per employee per pay period, even if one counts only the 25% of the penalties that go to the employees (75% go to the State of California). First, the PAGA provides two tiers of civil penalties an amount for an initial violation and an amount for a subsequent violation. (Code Civ. Civil penalties are assessed for violations of the Labor Code; 75% of the penalties go to the State, and 25% are paid to the aggrieved employees. The penalty is measured at the employee's daily rate of pay and is calculated by multiplying the daily wage by the number of days that the employee was not paid, up to a maximum of 30 days. You should consult a seasoned labor and employment counsel to flag potential wage and hour violations and develop a game plan prior to receiving the inevitable PAGA notice. In other words, there is a one-year statute of limitations when it comes to PAGA lawsuits. The class damages for unpaid overtime would be 26,000 x $37.50 = $975,000. Under PAGA, Plaintiff may seek penalties in the sum of one hundred dollars ($100) per [*3] aggrieved employee, per pay period for an initial Labor Code violation, and two hundred dollars ($200) for each subsequent violation per aggrieved employee, per pay period. 4 The statute of limitations for non-compliant wage statements is one year. They contain evidence of unpaid wages, unpaid premiums, meal and rest break violations, and unlawful timekeeping practices, such as rounding or auto-deductions, among other things. Legal precedent has established that PAGA provides a "civil penalty." This means that employees can recover both the statutory penalty associated with the Labor Code provision at issue, as well as civil penalties under PAGA, thereby creating a stacking of penalties against the employer.