wage order

Pulling the Seat From Under PAGA Plaintiffs

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From the time of its enactment, the California Private Attorneys General Act of 2004 (“PAGA”) has been a thorn in the side of employers.  For example, the California Supreme Court insists PAGA actions are not class actions, but that hasn’t stopped aggrieved employees from seeking class-wide discovery.  And because PAGA permits employees to seek penalties for unconventional causes of action previously off-limits to private plaintiffs (such as the California Wage Order’s suitable seating requirement), employers must grapple with new uncertainties. 

But one aspect of PAGA that provides some relief to employers is the requirement that plaintiffs exhaust administrative remedies before filing a lawsuit.  To satisfy this this requirement, a plaintiff is required to send a notice to her employer and the Labor Workforce Development Agency (“LWDA”) setting forth the “specific provisions” of the Labor Code allegedly violated and explaining the “facts and theories to support the alleged violation” and then wait 65 days before filing suit.  This notice requirement has two purposes: (1) to give the LWDA sufficient information to determine whether the alleged violation justifies an investigation and/ or citation and (2) to put the employer on notice so that it may voluntarily cure the alleged violation. Oftentimes, however, plaintiffs’ notice letters are deficient because they fail to include sufficient facts and theories to inform the employer or the LWDA of the nature of the claims.  In such cases, plaintiffs have failed to exhaust administrative remedies. 

Judge Gonzalo Curiel’s recent decision in Gunn v. Family Dollar Stores, Inc., Case No.: 3:14-cv-1916-GPC-BGS (S.D. Cal. Dec. 2, 2016), reminds us of the standard that notice letters must meet.  Plaintiff Gunn’s notice letter advised the LWDA of his intent to file a PAGA action for violations of Wage Order 7-2001, Section 14, and “[s]pecifically . . . allege[d] that Family Dollar failed to provide suitable seats to Plaintiff and other current and former employees when the nature of their work reasonably permits the use of seats, in violation of California Labor Code section 1198 and Wage Order 7-2001, section 14.”  Judge Curiel held that such an allegation was insufficient to meet PAGA’s standards.  As he noted, plaintiffs must detail the “facts and theories” supporting their alleged violations. But here, the plaintiff’s allegations simply parroted the language of the underlying regulation, amounting to nothing more than a “string of legal conclusions” devoid of any of the facts or theories required by the Labor Code.  The court rejected the plaintiff’s contention that facts could be implied by his allegations (i.e., that the class of employees at issue would not include office employees because they have seats). 

The most notable aspect of Judge Curiel’s opinion, however, was his denial of the plaintiff’s request for leave to amend.  Although the court recognized leave to amend tends to be granted freely, he disagreed that applied to defective PAGA notices.  The court stated that “courts have granted PAGA claimants leave to amend only when the plaintiff’s complaint failed to adequately plead exhaustion, not when Plaintiff provided defective notice to the LWDA” (emphasis added).  Indeed, granting the plaintiff leave here would tacitly endorse a strategy that precludes the LWDA from receiving the information necessary “to intelligently assess the seriousness of the alleged violation,” thereby frustrating the purpose of PAGA’s statutory notice requirement.

While the unpublished opinion in Gunn will not likely mark a sea change in how courts treat PAGA actions, it is nevertheless a victory for California employers.  Those facing suitable seats claims, which are based on a notoriously ambiguous statute, may have the most to gain. 

 

Ninth Circuit Holds Employees Are Not Required To Allege a Request for “Suitable Seats” For Their Claims to Proceed

Last week in Green v. Bank of America Corp., No. 11.56365 (9th Cir. Feb. 13, 2012), the Ninth Circuit held that “suitable seats” lawsuits cannot be dismissed at the pleading stage based on an employee’s failure to allege that he or she requested suitable seating. The Ninth Circuit’s reversal raises significant questions regarding one of the more common employer defenses to the recent wave of “suitable seats” litigation based upon IWC Wage Order 7-2001.

Filed in April 2011, the plaintiffs in Green raised standard “suitable seats” allegations by claiming Bank of America failed to comply with the requirement of Section 14 of IWC Wage Order 7-2001 that employees be provided with “suitable seats when the nature of the work reasonably permits use of seats.” The district court granted Bank of America’s motion to dismiss, holding that the bank only needed to provide tellers access to seats if seats were requested. On appeal, the Ninth Circuit reversed, holding that the district court mistakenly assumed a requirement that employees allege that they requested seats where the text of the Wage Order does not expressly require such a request. The Court’s brief opinion also clarified that its reversal did not present an opinion on whether any seating provided to the employees was “suitable” or whether the nature of the work “reasonably permits use of seats” because these issues would be developed at the district court upon remand.

Though Green is confined to its context and should not be read to preclude employers from raising the defense of a failure to request suitable seating, it nonetheless raises the critical question of whether employers have an affirmative obligation to provide suitable seats in the absence of any employee requests. As more “suitable seats” lawsuits reach the summary judgment and trial stages, and as state appellate courts begin to take up the issue, employers should expect more clarity. In the meantime, employers should stay tuned for further updates regarding this rapidly changing area of employment law.

California Court of Appeal Smacks Down Unfair Competition Claim Based on Cursory Pleading

time is money

In Aleksick v. 7-Eleven, Inc., California’s Fourth District Court of Appeal provided a stark reminder that claims brought under California’s Unfair Competition Law (“UCL”) must specifically invoke an underlying law or public policy in order to be properly pled.  The plaintiff in Aleksick alleged that 7-Eleven, which provides payroll services to its franchisees, used a payroll system that improperly converted partial hours worked from minutes to hundredths of an hour.  According to the plaintiff, this practice of “truncating” hours shorted employees a few seconds of time for every converted partial hour and thereby violated the UCL, which prohibits “any unlawful, unfair or fraudulent business act or practice.”  The plaintiff’s complaint, however, did not specify any underlying Labor Code section as a basis for plaintiff’s UCL claim.

The court affirmed the trial court’s grant of summary judgment for 7-Eleven on two grounds.  First, the court held that the plaintiff’s complaint failed to specifically allege a statutory predicate for the UCL claim of “unlawfulness,” and that plaintiff’s failure in this regard constituted a forfeiture of her UCL claim.  Second, the court held that, even absent forfeiture of the UCL claim, the claim necessarily failed against 7-Eleven because 7-Eleven was not the plaintiff’s employer.  Rather, under both the applicable Wage Order and the common law, the individual franchisee was the plaintiff’s employer.  As the court observed, only the employer has the duty to pay wages.  Thus, the plaintiff could not assert a UCL claim against 7-Eleven, whether based on an assertion of “unfair” or “unlawful” business practices.

Aleksick is a helpful decision for employers because it reinforces a pleading rule that is not always followed by plaintiffs’ attorneys: complaints alleging UCL claims must specifically invoke the statutory or public policy bases underlying the UCL claims.  It also could cause plaintiffs’ attorneys to think twice before naming franchisors in lawsuits involving allegations of unpaid wages.