Class & Collective Actions

Actions under California’s Private Attorneys General Act (PAGA) have long plagued employers, both large and small, but that all may change this year.

What is PAGA?

PAGA, enacted in 2004, permits a single employee to stand in the shoes of the state’s Attorney General and file suit on behalf of other “aggrieved” employees to recover penalties for California Labor Code violations. The potential recovery against employers can be substantial, with default penalties calculated as $100 “for each aggrieved employee per pay period for the initial violation,” and $200 per aggrieved employer per pay period for “each subsequent violation.” As such, potential PAGA awards commonly reach millions of dollars against small employers, and tens of millions against large employers, just for simple administrative oversights.

In addition to the potential for steep penalties, several California court decisions have expanded the reach of PAGA over the years. In 2009, the California Supreme Court held that employees bringing actions under PAGA need not comply with the strict procedural rules governing class actions. See Arias v. Superior Court, 46 Cal. 4th 969 (2009). Then, in 2014, the California Supreme Court held that employees could not waive their right to bring PAGA claims in court, paving the way for an increase in PAGA litigation. See Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014).

Recently, California courts have provided some limits to the expansion of PAGA. In 2021, the California Court of Appeals provided a potential “manageability” defense for employers.  Specifically, in Wesson v. Staples The Office Superstore, LLC, the Court of Appeals held that trial courts have the discretion to strike claims for penalties under PAGA if the claims will be unmanageable due to individualized issues at trial. See 68 Cal. App. 5th 746 (2021).

Is there an end in sight?

However, the fate of PAGA may rest in the hands of California voters this year. In December 2021, California’s Secretary of State approved the distribution of a petition to put an initiative on the 2022 ballot called “the California Fair Pay and Accountability Act.” The California Fair Pay and Accountability Act aims to essentially repeal PAGA, and replace it with an alternative framework for the enforcement of labor laws.

Continue Reading California Employers: An End To California’s Private Attorneys General Act (PAGA)?

In brief

The California Supreme Court recently established new law on two important topics for meal period compliance and litigation. Donohue v. AMN Services, LLC (2021) San Diego Superior Court, Case No. S253677 (February 25, 2021). First, the Court held that California employers cannot round time punches for meal periods. Second, the Court held that time records showing noncompliant meal periods raise a rebuttable presumption of meal period violations. The Donohue Court also implicitly approved a method for employers to use to determine whether meal period premiums should be paid for missed, short or late meal periods.

Continue Reading California Rejects Meal Period Rounding

Government agencies are increasingly setting their sights on larger targets, ramping up enforcement efforts to root out systemic discrimination. This has important ramifications for employers who may suddenly find themselves defending a claim that, for all intents and purposes, feels like a class action, even though it started as an individual agency charge. With advancements in technology, large data sets on workforces are more common than ever, and government agencies are taking advantage of this and will not hesitate to request data on classes of individuals to search for trends indicating potential discrimination.

EEOC Intensifies Campaign against Systemic Discrimination

In her first public speech since being named as Chair of the EEOC, Charlotte Burrows pledged that the federal government’s workplace civil rights agency will emphasize enforcement of laws to combat systemic discrimination. This commitment to addressing systemic discrimination is consistent with President Biden’s plans to combat racism. (In January, Biden signed an executive order creating a government-wide “racial equity review” and underscoring enforcement of anti-discrimination laws. Read more here.)

Continue Reading Government Agencies Eye Larger Targets: How Employers Can Navigate the Increase in Systemic Litigation

We are pleased to share a recent SHRM article, “When Should Employers Reimburse Expenses for Remote Workers?,” with quotes from Robin Samuel. This article discusses reimbursing home-based employees for workplace related expenses since they are now working from home due to COVID-19.

Click here to view the article.

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Employers in the US are more than a little fearful of COVID-19 related class and collective action lawsuits coming their way, and with good reason. Since shelter-in-place orders were imposed in March, US employers have faced class action lawsuits for a variety of COVID-19 related reasons, including the alleged failure to implement proper workplace safety measures or provide appropriate paid sick leave. To keep workers safe from contracting the virus at work, many employers have allowed employees to continue to work from home indefinitely, which likely decreases the odds that an employer will be sued in class action litigation for failing to provide appropriate PPE in the workplace. However, managing employees working from home can create other issues worthy of class-action litigation, including reimbursing those employees for work-related expenses.

What can employers do to ensure they meet reimbursement requirements to steer clear of expense reimbursement class action lawsuits in the US? Go through the four considerations, below.

  1. Know the rules that apply in your jurisdiction

Several jurisdictions have specific rules regarding employee expense reimbursements, so you’ll need to check your local law. In California, an employer must reimburse an employee for all “necessary expenditures or losses incurred by the employee in direct consequence or discharge of his or her duties.” Cal. Lab. Code § 2802. Similarly, Illinois requires reimbursement of all “necessary expenditures or losses” an employee incurs within the scope of employment that are “directly related to services performed for the employer,” unless the employer has a written reimbursement expense policy and the employee fails to comply with that policy. 820 ILCS 115/9.5. And in the District of Columbia, employers must pay the cost of purchasing and maintaining any tools that the employer requires to perform the employer’s business. D.C. Mun. Reg. tit. 7, § 910.1. If you have operations in several jurisdictions, make sure that you know and follow each applicable jurisdiction’s rules.

In addition, the Fair Labor Standards Act (FLSA) may apply. Though the FLSA does not require employers to reimburse their employees, under the FLSA “kickback” rule, employees cannot be required to directly pay business-related expenses or reimburse their employer for such expenses if doing so would cause the employee’s wage rate to fall below the required minimum wage or overtime compensation thresholds. See 29 C.F.R. § 531.35. Remote workers typically earn well-above the federal minimum wage ($7.25 per hour), so employers don’t need to be as concerned about business expenses causing those employees’ wages to dip below the federal minimum wage. However, employers should be on the lookout for these situations, which require more attention:

  • Where employees are subject to overtime for working more than 40 hours in a workweek;
  • Where a particular pay threshold (whether under federal or state law) must be met for the employee to meet an exemption from overtime (in which case the employee will become nonexempt and must be paid overtime for any work over 40 hours in a workweek); or
  • Where state or local minimum wages are higher (such as Chicago’s $14 per hour or California’s $12 per hour), making it more likely that an employee’s payment of business-related expenses would cause their wages to dip below the minimum wage.

A violation of the FLSA occurs in any workweek in which the cost of the business-related expenses borne by the employee cuts into the minimum or overtime wages required to be paid to the employee. Therefore, employers can more easily run afoul of the FLSA in these scenarios, especially if the business-related expenses paid in any given workweek happen to be hefty.

Continue Reading Want to Avoid Employee Reimbursement Class Actions for Remote Work? Take These Four Steps

We hope you have found our video chat series helpful and informative. We are continuing this series of quick and bite-sized video chats, where our employment partners team up with practitioners in various areas of law to discuss the most pressing issues for employers navigating the return to work. Each 15-minute Q&A session offers targeted

Recently, Southwest Airlines won a second major victory when Northern District of Illinois Judge Seeger granted its motion to dismiss claims brought under Illinois’ unique Biometric Information Privacy Act (“BIPA”). Crooms v. Southwest Airlines Co., Case No. 19-cv-2149.

Plaintiffs alleged Southwest violated BIPA by requiring them to scan their fingers when clocking in and out of work without giving them the written notice or receiving their consent as required by BIPA. When initially employed, three of the plaintiffs were represented by the Transportation Workers Union of America, AFL-CIO Local 555 (“TWU”) and were covered by a collective bargaining agreement (“CBA”). The CBAs at issue provided Southwest had the “right to manage and direct the work force” and included a mandatory four-step grievance and arbitration procedure for resolution of disputes. Plaintiffs were later promoted to Ramp Supervisors, a non-union position and agreed to comply with Southwest’s Alternative Dispute Resolution (“ADR”) Program.  The fourth named plaintiff was never covered by a CBA but was always a party to the ADR Program.

Continue Reading “This Case Does Not Belong In Federal Court” — Southwest Secures Dismissal of Illinois Biometric Lawsuit

In jurisdictions across the country — especially COVID-19 “hot spots” — courts have entered emergency orders suspending trials and hearings, tolling the statute of limitations, and shuttering their doors to conducting anything but the most essential business. Non-essential hearings — including hearings related to non-emergency civil matters — are being conducted through Zoom and Skype to continue court proceedings without violating shelter-in-place orders and social distancing guidelines. In jurisdictions where shelter-in-place orders consider certain “legal services” as essential businesses which must remain open, those partaking must still abide by social-distancing guidelines (including six-foot spacing, and not gathering in groups of more than a minimal number such as 5 or 10), which can make something as routine as taking in-person depositions impossible. At the same time, businesses are reeling from the economic impact of COVID-19, and may find it beneficial to slow the pace of pending litigation. Responding to interrogatories, culling through thousands of emails to find responsive documents, and taking the time to prepare for depositions may not be front-of-mind for businesses simply trying to focus on retaining employees and staying afloat.

Continue Reading Emergency Court Rules for COVID-19 Slows Litigation and Provides Choices for Businesses

Last week, in Kim v. Reins International California, Inc., No. S246911, after more than two years on review and extensive briefing by amicus curiae, the California Supreme Court unanimously resolved an issue of first impression concerning the Private Attorneys General Act (PAGA): whether settlement of individual Labor Code claims extinguishes PAGA standing.

California’s Labor Code contains a number of provisions designed to protect the health, safety, and compensation of workers. Among those laws, PAGA provides a mechanism for employees to enforce the Labor Code as the state’s designated proxy. In particular, PAGA authorizes “aggrieved employees” to pursue civil penalties on behalf of the state. Those penalties differ from statutory damages or other penalties an employee may recover individually for alleged Labor Code violations because relief under PAGA is intended to benefit the general public, not the party bringing the action.

Continue Reading Employee Remains “Aggrieved” Under PAGA Even After Settling Individual Claims

In July, we reported that a three-judge panel for the Ninth Circuit withdrew its holding in Vazquez v. Jan-Pro Franchising Int’l that Dynamex Operations West, Inc. v. Superior Court—the landmark California Supreme Court decision that makes it harder for companies to rely on independent contractors—applies retroactively. Rather than answering the question of Dynamexs retroactivity, the Court stated its intent to file an order certifying that question.

Continue Reading The Ninth Circuit Asks The California Supreme Court If Dynamex Applies Retroactively