Wage and Hour Case Notes
| Publication year | 2023 |
| Author | Lauren Teukolsky |
AUTHOR*
Lauren Teukolsky
Navas v. Fresh Venture Foods, LLC, 85 Cal. App. 5th 626 (2022)
This case will be useful for any plaintiff-side employment attorneys looking to show that an arbitration agreement is unconscionable because it contains a wholesale PAGA waiver.
Navas and other Fresh Venture Foods (FVF) employees filed a class action lawsuit against FVF for minimum wage and overtime violations. The complaint also alleged a claim for penalties under the Private Attorneys General Act (PAGA). Navas signed an arbitration agreement requiring him to arbitrate all disputes against FVF on an individual basis, and waiving his right to bring any claims on a class or representative basis, including his right to bring a PAGA claim.
The arbitration agreement was substantively unconscionable because, among other things, it required Navas to waive his right to bring a PAGA claim, contrary to the rule enunciated under Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014). Although employers may require employees to bring the "individual" component of a PAGA claim in arbitration, they may not include a wholesale PAGA waiver in a mandatory arbitration agreement. See Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906 (2022). Navas's arbitration agreement contained a wholesale PAGA waiver, and this illegal term contributed to the unconscionability of the entire agreement. When viewed in combination with a number of other unconscionable terms, the court held that the agreement as a whole was unenforceable. The trial court did not abuse its discretion in refusing to sever the offending terms because there were so many of them.
Espinoza v. Warehouse Demo Services, Inc., 86 Cal. App. 5th 1184 (2022)
This case provides extensive discussion of the circumstances under which California's "outside salesperson" exemption applies to an employee who works on property that is not owned or controlled by the employer.
Warehouse Demo Services (WDS) is the exclusive in-house product demonstration company for Costco. WDS employs non-exempt "demonstrators" to perform demonstrations of products inside Costco warehouses. Demonstrators are assigned to a single Costco and do not travel. WDS does not rent space from Costco, but maintains an office inside each Costco where it has employees.
Espinoza worked as a WDS demonstrator for five years. She worked in a specific demonstration area inside a single Costco warehouse. She worked four days a week, six hours a day, a schedule set by WDS. She was not allowed to leave the demonstration area except when another demonstrator relieved her for breaks. Espinoza was supervised by an on-site event manager and two shift supervisors. She was required to clean up her demonstration area at the end of her shift.
Espinoza filed a wage-and-hour class action against WDS, alleging claims for minimum wage, overtime, and missed meal and rest breaks. WDS filed a summary judgment motion, arguing that Espinoza's claims failed because she fell within the "outside salesperson" exemption. Outside salespersons" are exempt from statutory overtime, minimum wage, reporting time, and meal-and-rest break requirements. See CAL. LAB. CODE § 1171. To qualify as an "outside salesperson," the
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employee must: 1) work more than half the time away from his or her employer's place of business; and 2) be engaged in sales.
The trial court granted WDS's motion, concluding that Espinoza worked more than half of her time away from WDS's place of business because WDS did not maintain, own, or control any space within Costco. The appellate court reversed. The main reason for the exemption is that outside salespersons generally control their own hours and it is difficult to control their working conditions. The facts of this case present the...
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