Code, 1194.2.). Unfortunately, evaluating an employers exposure in a wage-and-hour class and/or PAGA action requires a fair amount of number crunching. (a)(1)-(2).) 4 The statute of limitations for non-compliant wage statements is one year. Fifth, paying meal period premiums under Labor Code section 226.7 does not excuse the failure to provide the meal period. Code, 2699, subd. Your investigation should include review of the employees social media accounts, as well as a comprehensive search of social media for advertising referencing the employee or your organization. 50 employees x 26 pay periods = 1,300 violations. It did not determine the amount of damages but held that the regular rate of pay provided the appropriate base for calculating damages for the plaintiffs' claims based on unpaid non-overtime hours. For large employers and/or for continuing violations, these penalties can quickly add up. Build specialized knowledge and expand your influence by earning a SHRM Specialty Credential. In its notice of removal, defendant alleged that the amount in controversy was $6,280,675, which included $2,286,900 in statutory penalties under PAGA. Employers should also be aware that in addition to PAGA penalties (which the plaintiff is ostensibly asserting on behalf of the State), plaintiffs may seek individual damages to compensate for any unpaid monies owed to the employee. They rejected the efforts of removing defendants, in calculating the amount in controversy, to aggregate the . The penalties under PAGA can add up very quickly. It also remains unsettled as to whether PAGA penalties for multiple violations in a pay period can be added together, also known as stacking. For example, 50 employees who receive non-compliant wage statements (e.g., non-itemized deductions) and were not paid five hours of overtime per pay period (30 minutes of overtime per workday) over the course of a year (26 pay periods) may be able to claim penalties on the basis of potentially two separate violations per pay period: one violation for each non-itemized wage statement and one for unpaid overtime per pay period. Depending on the type and extent of the wage and hour violations, some claims should be litigated, while others are better left tabled. In our view, the language of section 558, subdivision (a), is more reasonably construed as providing a civil penalty that consists of both the $50 or $100 penalty amount and any underpaid wages. (Thurman v. Bayshore Transit Mgmt., Inc. (2012) 203 Cal.App.4th 1112, 1145; see also, Lawson v. ZB, N.A. This installment addresses the penalties associated with wage statement violations. In general, these penalties are payable to the State of California.56 However, an employee can sometimes recover up to 25% of the penalty by bringing a lawsuit under the Private Attorneys General Act.57 These are called "PAGA" claims. 2010) 2010 WL 2793650 at *6; Smith v. Brinker Intl, Inc. (N.D. Cal. Given the complexities of the Labor Code and the Industrial Welfare Commission Wage Orders, you should contact your employment legal counsel for guidance on how they apply to your business. The court's decision to reduce the PAGA penalties award was driven by its recognition that the retailer had made a good faith effort to comply with Section 226, that it would be unreasonable to penalize the retailer by awarding maximum PAGA penalties for violations stemming from its practice of awarding bonuses that benefit employees, and . Although you are not required to file a response addressing the charges in the PAGA notice, standard practice for many counsel is to file a written response with the LWDA. For example, if an employer didn't provide a worker with a meal break, the employer would have to pay a penalty to the employee for the missed break and would also face a fine for failing to report the meal-break penalty on the pay stub. Hours worked after 12pm on the same shift are paid at penalty (1.5) So if a staff member worked an 8 hour shift on a Saturday starting at 9am, it would pay 5 hours of the 8 hour shift with an additional 50% penalty. You should review wage statements going back one year from the date of the PAGA notice for compliance with the requirements under Labor Code section 226(a), ensuring they provide: gross wages earned; total hours worked; the number of piece-rate units earned and the applicable piece rate if the employee is paid on a piece-rate basis; all deductions; net wages earned; start and end dates of the pay period; the name of the employee and the last four digits of their social security number or an employee ID number; the name and address of the employing legal entity; and all applicable hourly rates and the corresponding hours worked at each hourly rate. Thats not to say that you should stop engaging in formal discovery, but an informal exchange offers incentives for the defense to provide evidence that they otherwise wouldnt absent a lengthy meet and confer process, discovery motion practice, and all the delays and unpredictability attendant thereto. 2012) 2012 WL 2373372 at *17; Schiller v. Davids Bridal, Inc. (E.D. Are there any facially unlawful policies? Moreover, plaintiffs can recoup attorney fees under PAGA. This includes when an employer: When the Labor Code does not already provide a civil penalty, the PAGA default penalty is $100 for each employee per pay period for the initial violation and $200 for each employee per pay period for each subsequent violation. The damages periods used below should be reduced to three years if the lawsuit does not include a cause of action for unlawful business practices in violation of the UCL. 45 0 obj <>/Filter/FlateDecode/ID[]/Index[37 14]/Info 36 0 R/Length 60/Prev 133243/Root 38 0 R/Size 51/Type/XRef/W[1 2 1]>>stream In addition, employees are entitled to an unpaid 30-minute meal break once they work five hours. The penalty period for actions brought under the Private Attorneys General Act of 2004 (PAGA) is one year prior to the date of filing, plus 65 days for the PAGA notice period. Regardless of the sample size, going through the records will be time consuming and costly. of PAGA penalties and a trial court's consideration regarding same. SHRM Employment Law & Compliance Conference, California Employers Face Significant Penalties for Pay Stub Violations, New OSHA Guidance Clarifies Return-to-Work Expectations, Trump Suspends New H-1B Visas Through 2020, Faking COVID-19 Illness Can Have Serious Consequences, White House Takes Action Against Migrant Child Labor, Recruiters Brace for a Challenging Year Ahead, State by State: Hires, Quits, Job Openings and Unemployment. (Troester v. Starbucks Corp. (2018) 5 Cal.5th 829, 835.). The plaintiff can sue on behalf of other employees who suffered different violations than those suffered by the plaintiff so long as the plaintiff suffered at least one violation. Total Statutory and PAGA Damages Sought 203 (Hernandez v. Towne Park, Ltd. (C.D. (Lab. If the employer pays the employee late (a first violation), the employee can recover $400 ($100 penalty plus 25 percent of $1,200, or $300). Read the first parthere and the second parthere. It is sufficient to say that the PAGA notice fails to identify sufficient facts to allow either LWDA or you to conduct an investigation. Have you strictly complied with requirements if adopting an alternative workweek schedule? (Lab. Assuming each of those 50 employees was paid $25.00 per hour, overtime is paid at 1.5x the regular rate (i.e., $37.50). Mr. Rhodes has successfully represented thousands of employees individually and on a class-wide basis in actions arising out of the FEHA and Labor Code. The formula used to calculate PAGA penalties is therefore the same regardless of the predicate violation: (Initial violation penalty x total number of employees in the one-year period) + (subsequent violation penalty x [total number of pay periods in the one-year period total number of employees in the one-year period]). 2021 Hoge Fenton, Silicon Valley 408-947-2435 | Download v-card, Silicon Valley 408-947-2434 | Download v-card, 411 Borel Avenue, Suite 310 One employee can bring a class action on behalf of other employees. The Schiller court wrote: Labor Code Section 558 provides the Labor Commissioner authority to collect a civil penalty for certain Labor Code violations relating to overtime and hours and days of work, equal to $50 to $100 dollars for each underpaid employee for each pay period for which the employee was underpaid, in addition to "an amount sufficient to recover underpaid For Labor Code provisions that do not specify the penalty amount, PAGA provides default civil penalties at $100 for every employee for every pay period for the first violation, and $200 for each violation thereafter (though case law may provide an argument that PAGA penalties are limited to violations that occur after the PAGA notice). This is a big procedural hurdle for plaintiffs to overcome. 2023 The Industrial Welfare Commission issues orders regulating the wages, hours, and working conditions in certain industries or occupations. Here is a 10-step process you can take after receiving a PAGA notice to ensure your organization is as well-positioned as possible to minimize or avoid liability. Note that the California Supreme Court recently held that the de minimis defense is not applicable to off-the-clock wage-and-hour claims. (l)(2).). Code, 2699, subd. The calculation of Labor Code section 210 penalties is different, however, and amounts to $100 for the initial violation and $200 for each subsequent violation (or any willful or intentional violation) plus25% of the amount unlawfully withheld. Note that interruptions to meal periods are not readily apparent on the time records, so your actual violation rate may be higher than that which is shown on the face of the time records. Employers may incorrectly assume that pay stub compliance is just a matter of paperwork and can simply be corrected, said Christopher Ahearn, an attorney with Fisher Phillips in Irvine. You may not require an employee to work for a period of more than five hours per day without providing him/her with a 30-minute unpaid meal break. specifies 10 items that must be listed on the wage statements that are provided to employees each payday. For full functionality of this site, you must consent to the use of cookies. to calculate the hour of premium pay owed when employers fail to provide a compliant meal or rest period. Remember, 75% of PAGA penalties, which are all up to . PAGA penalties can quickly accumulate given the many possible Labor Code violations and the fact that penalties accrue for each violation (per pay period), which means that employers who do not realize they are doing something wrong face more liability as time goes on. Special considerations regarding PAGA penalties. California adopted a novel approach to enforcing the Labor Code of California when it enacted the Private Attorney General Act of 2004 ("PAGA") codified in Cal. 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