Wage and Hour Case Notes

• Citation: Vol. 29 No. 5
• Publication year: 2015
• Author: By Leonard Sansanowicz

Wage and Hour Case Notes

By Leonard Sansanowicz

Leonard H. Sansanowicz is a senior associate with Feldman Browne Olivares, APC and represents employees in all aspects of employment law. He has been a Southern California Rising Star each year since 2013 and in 2015 was named to the Up-and-Coming 100 list.

Labor Code Section 226.8 Extends Liability to Certain Co-Employers, But the Section Does Not Confer a Private Right of Action

Noe v. Superior Court, 237 Cal. App. 4th 316 (2015)

Anschutz Entertainment Group (AEG) contracted with Levy Premium Foods (Levy) to manage food and beverage services at AEG venues in Southern California. Levy subcontracted with Canvas Corporation (Canvas) to provide food and beverage vendors. Four vendors filed a class action for various wage and hour violations, including recovery under California Labor Code section 226.8, which imposes civil penalties on employers who willfully misclassify employees as independent contractors. Plaintiffs alleged that AEG, Levy, and Canvas were joint employers, that liability under section 226.8 should extend to any employer who "engaged" in the act of willful misclassification, and that awareness of the conduct of another joint employer constituted having "engaged" for purposes of enforcing the statute.

Defendants moved for summary judgment. Plaintiffs provided emails from a Levy human resources representative showing that Levy was aware that Canvas paid vendors on a commission-only basis and that Levy openly questioned Canvas about whether their pay practice violated wage and hour laws. Plaintiffs also presented evidence that Levy directly hired vendors for AEG and classified those workers as employees. The trial court granted summary adjudication on the section 226.8 claim, holding that the language "engage in" required an affirmative act by an employer, not mere awareness, and therefore, section 226.8 limited liability to the employer that made the actual misclassification decision.

The court of appeal overruled the trial court, holding that the term "engage in" was entitled to a broader interpretation. It further held that section 226.8 does not provide a private right of action but instead must be enforced by the Labor Commissioner or through a representative PAGA action, as section 226.8 provides for a civil, not statutory, penalty.

Forum Selection Clauses in Employment Agreements May Not Diminish Unwaivable Rights Preserved by the California Labor Code

Verdugo v. Alliantgroup, L.P., 237 Cal. App. 4th 141 (2015)

Plaintiff brought a wage and hour class action against her Texas employer. The trial court granted the employer's motion to stay the suit based on a mandatory forum selection clause in the employment agreement designating Harris County, Texas as the exclusive venue of dispute resolution. The court of appeal reversed. It acknowledged that, while parties opposing enforcement of a choice-of-law clause normally bear the burden of showing that enforcement would be unfair or unreasonable, when the underlying claims are based on unwaivable statutory rights (such as overtime, meal period, and rest period protections), the burden falls on the moving party to show that enforcement of a forum selection clause would not diminish the rights the Legislature has declared are unwaivable. The appellate court noted that if the parties had stipulated to have the Texas courts apply California law to those claims, then they could have preserved the statutory rights of plaintiff and the putative class; however, absent a showing by the employer as to how a Texas court would interpret the choice-of-law provision, enforcement of the forum selection clause would violate California's clearly articulated public policy.

A Single-Claim PAGA Action May Not Be Split Between the Court and Arbitration Because PAGA Actions Are Representative, Not Individual, Actions

Williams v. Superior Court, 237 Cal. App. 4th 642 (2015)

Plaintiff filed a PAGA-only action seeking civil penalties for rest period violations. The employer moved for an order to enforce a waiver of PAGA claims in any forum (including arbitration) that plaintiff signed, arguing that Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal. 4th 348 (2014), did not preclude enforcement of a voluntary PAGA waiver. In the alternative, the employer sought an order severing PAGA penalties from the rest period claim and compelling plaintiff to submit to arbitration his individual claims based on a...