California Courts of Appeal Side with Employees in Two Wage-and-Hour Cases against Safeway

Twice in one week, the California Court of Appeal sided with employees in two cases against grocery giant, Safeway Inc.

First, in Bluford v. Safeway Stores, Inc., Case No. CV028541 (Cal. Ct. App. May 24, 2013), the Court of Appeal reversed the trial court’s denial of class certification in a case alleging Safeway denied its truck drivers proper meal and rest breaks and provided inadequate wage statements. The trial court denied certification on the grounds that “class members’ individual reasons for not taking rest or meal periods predominated over common issues.” Accordingly, the trial court held, plaintiffs’ claims could only be resolved “by inquiring into each episode where a class member did not take a break.” As to the wage statement claim, the trial court held that “class members did not suffer any common injury from the wage statements.”

The Court of Appeal reversed, finding that common issues predominated and class certification was appropriate in part because the plaintiffs’ claims were based on Safeway’s piece rate compensation system which did not separately compensate drivers for rest periods. According to the Court of Appeal, “rest periods must be separately compensated in a piece-rate system” because they are considered “hours worked” under Armenta v. Osmose, Inc. (2005) 135 Cal. App. 4th 314, 323. (For a discussion of the problems with the Armenta decision click here.) The Court also held that the meal break claim was certifiable because Safeway failed “as a matter of policy to provide a second meal period.”

Regarding wage statements, Safeway argued that certification was improper because “no injury results from mere inaccuracy” of wage statements. Plaintiffs, however, argued they were injured because the wage statements “cause employees difficulty in reconstructing pay records and require them to engage in mathematical computations to determine whether they were in fact paid for all hours worked.” Although Safeway tried to counter plaintiffs’ argument with evidence that this alleged injury can only be determined on an individualized basis, the Court held that certification was proper because the wage statements “contained the identical alleged defects and allegedly caused the same injury.”

In Heyen v. Safeway Inc., Case No. B237418 (Cal. Ct. App. May 23, 2013), the Court of Appeal affirmed the trial court’s determination that a former Safeway assistant manager was misclassified as exempt. In Heyen, following denial of class certification, plaintiff tried her individual claims against Safeway alleging that it improperly classified her as exempt even though she spent the majority of her time performing non-exempt duties such as cashiering, stocking, bagging, and bookkeeping. An advisory jury agreed and determined that plaintiff was improperly classified. Safeway appealed.

On appeal, Safeway argued that the trial court erred because (1) it “failed to properly account for hours [plaintiff] spent simultaneously performing exempt and non-exempt tasks” (such as managing the store while bagging groceries) and (2) it failed “to consider whether [plaintiff] performed non-exempt work because she chose to, not because Safeway expected her to.”

The Court of Appeal disagreed, finding that the federal regulations incorporated into the Wage Orders do not recognize “hybrid” activities, but rather the regulations “require that each discrete task be separately classified as either ‘exempt’ or ‘non-exempt’.” However, the Court recognized that non-exempt tasks could be considered exempt if performed for training or demonstration purposes. Second, the Court determined Safeway could not realistically expect the assistant managers to spend the majority of their time performing exempt work because of its unrealistic labor budgets. Accordingly, the Court affirmed the trial court’s judgment for the plaintiff.