Trends In Class Action Litigation Practical Tips

Trends In Class Action Litigation – Practical Tips To Avoid Liability March 15, 2012 Presented by: Vince M. Verde Orange County, CA

New Wage Order Based Claims § Suitable Seating § Change Rooms and Resting Facilities § Uniforms and Equipment § Temperature § Elevators (Four floors above and below ground)

What Is The Statutory Authority? § Civil penalties under California’s § § Private Attorneys General Act of 2004, § 2698 et seq. (“PAGA”). Employees may sue their employers and collect statutory penalties on behalf of all current/former employees. Injury is not required.

What Is The Exposure? § PAGA penalties consist of $100 for § § each aggrieved employee for the first violation and $200 per pay period for each aggrieved employee for subsequent violations. Approximately $5, 100 per employee (Based on 26 pay periods in a year). Statute of limitations is one year.

New California Laws Which Will Likely Lead to PAGA Suits § Wage Theft Protection Act of 2011 (AB 469) § Willful Misclassification of Independent Contractors (SB 459)

Wage Theft Protection Act of 2011 (AB 469) - New Written Notice Requirements All New, Non-Exempt Employees § Required Information – Rates of Pay – Allowances Against Minimum Wage (meal and lodging allowances) – – – Regular Pay Day Employer Name Including All DBAs Main Office Address Employer Telephone Number Workers’ Comp Carrier Contact Info § Duty to Update All Information

“Any Other Info Labor Commissioner Deems Material and Necessary” § Employer must – Indicate if it is a “staffing agency” – Identify businesses used to hire employees or administer wages or benefits – State whether employment agreement is oral or written – List its Workers’ Compensation Insurance “Policy No. ” or, if self insured, its “Certificate Number for Consent to Self-Insure” § Employee must sign acknowledgement of receipt

Willful Misclassification of Independent Contractors (SB 459) § “Willful Misclassification” is Unlawful § Civil Penalties of $5, 000 - $25, 000 Each Violation § No private cause of action, but lawsuits under PAGA

What You Can Do Today § Wage Statements § Timekeeping System § Audit § Complaint Procedure § Attestation Forms

Wage Statements Labor Code Section 226 requirements: • Gross wages earned • Total hours worked (except for salaried exempt employees) • Number of piece-rate units and rate per unit (if applicable) • Deductions • Net wages earned • Dates of the pay period • Employee name and last four digits of SSN or employee ID number • Name and address of employer (legal name of employer) • All applicable hourly rates in effect during the pay period and corresponding number of hours worked at each hourly rate

Wage Statement - New Requirement? § Labor Code section 226(a): "The deductions made from payments of wages shall be recorded. . . and a copy of the [accurate itemized] statement OR a record of the deductions shall be kept on file by the employer for at least three years. ” § AB 469 changed the “OR" to “AND, ” meaning employers who were in compliance because their computerized records showed deductions, must also arguably keep "on file" the "accurate itemized statement" for each employee.

Itemized Wage Statement Penalties § Penalties for Violation – 226(e) – $50 per employee for initial pay period in which violation occurs; $100 per employee per pay period thereafter up to max of $4, 000 § One year statute of limitations § Must result in actual injury to employee § and “knowing and intentional failure by employer to comply” with requirements. PAGA

Timekeeping System: Check Your “Rounding” Practices § Legitimate justification § Proper intervals § No “one way” system § Does not systemically favor employer § Advise employees of policy § Spot audits § Document

Check System for “Auto-Deductions” § Meal period deductions § Clock in/clock out “default” times § Double check with IT § Audit

Don’t Ignore Your Data § Auditing § Categories of Information (e. g. , meal period compliance) § “Point Person” to identify and respond § Maintain data and document responses

Complaint Reporting & Response Procedure § Post, publicize, train § No retaliation § Respond § Document

Attestation Forms § Use to educate employees § Use to confirm compliance § Methods of distribution

Arbitration Agreements § AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (April 27, 2011) § D. R. Horton, Inc. and Michael Cuda, Case 12–CA– 25764 – NLRB decided that mandatory arbitration agreements which preclude employees from joining together in a class action lawsuit or class arbitration to pursue employment-related claims violate the National Labor Relations Act. § Brown v. Ralphs, 197 Cal. App. 4 th 489 (July 20, 2011) - Second Appellate District held that the PAGA representative action waiver was unconscionable and unenforceable.