Wage and Hour Case Notes

• Publication year: 2023
• Author: Lauren Teukolsky

WAGE AND HOUR CASE NOTES

AUTHOR^*

Lauren Teukolsky

APPLYING ADOLPH V. UBER, PAGA PLAINTIFFS HAD STANDING TO PURSUE CLAIM ON BEHALF OF OTHERS

Barrera v. Apple American Group LLC, 95 Cal. App. 5th 63 (Cal. Ct. App. 1st Dist. 2023)

This is one of the first appellate decisions to apply the recent blockbuster holding in Adolph v. Uber Techs., Inc.,¹ in a PAGA case.

Defendants in this matter are related companies that own and operate 460 Applebee's restaurants in California and elsewhere. Plaintiffs worked for Applebee's as a kitchen manager and cook. They filed a PAGA-only action in April 2021, before the U.S. Supreme Court decided Viking River Cruises, Inc. v. Moriana.² After the trial court initially denied its motion to compel arbitration, Applebee's filed a renewed motion based on Viking River.

The arbitration agreement at issue did not contain an explicit PAGA waiver, but provided that all claims filed in arbitration must be brought on an individual basis. Applebee's limited its motion to plaintiffs' individual PAGA claims and did not seek to compel arbitration of the non-individual PAGA claims. The trial court ruled it did not have jurisdiction over the renewed motion and denied it on that basis.

The court of appeal reversed in part and affirmed in part. Because the arbitration agreement limited claims that could be brought in arbitration to individual claims per Viking River, the court held that PAGA claim must be split into its "non-individual" and "individual" components, and the individual claims must be sent to arbitration.

It found the plaintiffs did not lose standing to pursue the PAGA claim on behalf of others because they met the two statutory requirements for PAGA standing in that they:

1. were employed by the alleged violator; and
2. allegedly suffered one or more Labor Code violations.

The court in Barrera further concluded that in accord with the California Supreme Court holding in Adolph v. Uber, nothing more is required to maintain PAGA standing.

Applebee's requested that the court of appeal stay the PAGA claim on behalf of others, pending the arbitration of the individual claims. However, the court declined to enter a stay, instead remanding the stay question to the trial court to decide in the first instance.

EMPLOYERS LIABLE FOR EXPENSES INCURRED BY EMPLOYEES ORDERED TO WORK AT HOME

Thai v. International Business Machines Corp., 93 Cal. App. 5th 364 (2023)

This case represents a win for employees who worked from home during the COVID-19 pandemic and had to spend their own money on equipment and other items needed to perform their jobs.

Plaintiff Paul Thai is an IBM employee. In March 2020, Governor Gavin Newsom issued an order directing all non-essential employees to work from home because of the COVID-19 pandemic. Following the government's instructions, IBM directed Thai and his coworkers to work from home. Thai needed internet access, phone service, a headset, and a computer to perform his job. IBM provided these items to its employees in its offices, but refused to reimburse Thai and his coworkers after they spent their own money on these items to work from home.

California Labor Code section 2802, which requires employers to reimburse employees for necessary work expenses, is designed to prevent employers from shifting their operating expenses onto their employees.

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IBM argued that it was not required to reimburse Thai because the government had caused him to spend his own money on work items, not IBM. The trial court agreed, ruling that because IBM was acting in response to government orders, there was an intervening cause precluding direct causation of Thai's losses by IBM.

The court of appeal reversed. It held that the trial court improperly read section 2802 to require reimbursement only for expenses directly caused by the employer. The court surmised this reading inserts into the analysis a "tort-like causation element that is not rooted in the statutory language." It noted that the statutory provision plainly requires employers to reimburse an employee for all expenses that are a "direct consequence of the discharge of [the employee's] duties."

The court further explained that the obligation does not turn on whether the employer's order was the proximate cause of the expenses. It underscored that section 2802 simply allocates the risk of unexpected expenses—such as those caused by the COVID-19 pandemic—to the employer, not the employee.

DRIVERS WHO DID NOT CROSS STATE LINES EXEMPT FROM ARBITRATION UNDER THE FAA

Carmona v. Domino's Pizza, LLC, 73 F.4th 1135 (9th Cir. 2023)

This case represents a win for transportation workers who do not cross state lines and want to stay out of arbitration.

In December 2021, the Ninth Circuit ruled that drivers (D&S Drivers) who transport pizza ingredients from Domino's supply center in Southern California to its franchisees within state lines are "transportation workers" exempt from arbitration under section 1 of the Federal Arbitration Act.³ The court relied on Rittmann v. Amazon.com, Inc.,⁴ which held that Amazon drivers who transported goods that had traveled interstate "for the last leg" to their eventual destinations were transportation workers exempt from the FAA even though they did not cross state lines. The D&S Drivers similarly transported mushrooms and other goods that had traveled interstate "for the last leg" to Domino's franchisees in Southern California.

The U.S. Supreme Court then granted certiorari, vacated, and remanded the Carmona case for reconsideration in light of Southwest Airlines Co. v. Saxon,⁵ which held that a ramp worker who loaded and unloaded cargo on and off...