Up-to-date information for employers on topics and issues that may affect workplace operations. The posts are current as of the date of the posting.


by D. Gregory Valenza | The Daily Journal | Mar 11, 2011

The wage and hour area of employment law has been especially volatile recently. What employment lawyers thought was safe advice may be rendered stale by a new court opinion, law, regulation or opinion letter.

The courts of appeal in recent weeks have issued opinions that may result in employment lawyers revising their advice on a variety of subjects. Here are just a few of the recent decisions that may affect advice and litigation, at least until another change comes along.

The “workweek” and “workday” are the benchmarks for determining daily or weekly overtime, whether a seventh day premium is due, etc. The federal Fair Labor Standards Act’s regulations say a workweek need “not coincide with the calendar week but may begin on any day and at any hour of the day. [D]ifferent workweeks may be established for different employees or groups of employees. Once the beginning time of an employee’s workweek is established, it remains fixed regardless of the schedule of hours worked by him.” 29 CFR § 778.105. The 2002 version of the California Division of Labor Standards Enforcement’s Enforcement and Interpretations Manual contains an almost identical provision at section 48.1.3, p. 48-1.

These established rules did not constrain the Court of Appeal in Seymore v. Metson Marine, Inc., ___ DJDAR ___ (Feb. 28, 2011). There, the employees worked consecutive, 14-day “hitches” that started on Tuesdays. The employer, though, started the workweek on Mondays. As a result, the 14-day work periods spanned three workweeks, rather than two. By designating the workweek in this manner, the employer saved some money on premiums for the seventh day worked, and some overtime.

The plaintiffs argued that because their work started on Tuesdays, so should their workweek. The Court of Appeal bought it, reversing the trial court’s summary judgment. The appellate court held that it was impermissible to start the workweek on a Monday when the workers started working on Tuesday. The court rejected a Division of Labor Standards Enforcement opinion letter and decided to follow a federal district court case in In re Wal-Mart Stores, Inc. Wage (N.D. Cal. 2007) 505 F.Supp.2d 609, 617-618. In that case, the district court held that Wal-Mart’s setting the workday as ending at midnight deprived graveyard-shift workers daily overtime by bi-secting their work day.

But the court did not address the federal regulation or the Division of Labor Standards’ manual discussed above. The court also apparently did not consider that many employees do not have fixed days off, and that their shift times may not be consistent either. Perhaps on rehearing it will modify its holding to apply only to discrete work periods such as was at issue in Seymore. Otherwise, employers should expect a new wave of wage and hour class actions.

The court in Seymore also found in favor of the employees regarding payment for “on call” time. Employers must pay workers under certain circumstances when the employer imposes sufficient restrictions on their activities while on call. Although the court’s analysis is somewhat contrary to precedent in this area, its holding is limited to when employees are required to sleep on premises and work 24-hour shifts. Therefore, the decision’s reach may be less broad than on the workweek issue.

Another appellate decision addresses “reporting time” pay. Every California employer is subject to one or more of the Industrial Welfare Commission’s Wage Orders. They each contain a “reporting time pay” requirement. For example, Section 5 of Wage Order 5-2001, applicable to hotels, restaurants, hospitals and other places of public accommodation, provides: “Each workday an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee’s usual or scheduled day’s work, the employee shall be paid for half the usual or scheduled day’s work, but in no event for less than two (2) hours nor more than four (4) hours, at the employee’s regular rate of pay . . . .”

This provision applies when employees come in for a short meeting, or when employers cut payroll during a low-volume. Reporting time pay also could apply, though, when an employee reports to work only to be fired on arrival. The court of appeal in Price v. Starbucks Corp., ___ DJDAR ___ (Feb. 17, 2011), considered reporting time pay in that context.

Drake Price was a short-term Starbucks barista. After missing a shift, he was dropped from the schedule. His manager called him into work for a 45-second meeting, at which he was discharged. Starbucks paid him for his hours worked, plus 2 hours of reporting time pay for the quick discharge meeting.

Price figured he was due 3 hours of pay, not 2, because he had averaged about 6 hours of work per shift. He believed he was due pay for one-half of his average shift as reporting time pay under the Wage Order. Affirming the trial court’s dismissal, the court of appeal decided that 2 hours of pay was correct. The court reasoned that Price was not scheduled for the day he was fired. Therefore, he was entitled to the 2-hour minimum, not one-half his shift. Had Price been on the schedule that day, the employer likely would have owed him for half the regular shift. Employers who resent paying extra money to employees they are firing may wish to wait until the at least half-way through the scheduled shift to do so.

The court in Price also refused to permit a claim based on allegedly inaccurate wage statements. Under Labor Code Section 226, an employer must provide employees with a statement accompanying the paycheck, which must contain certain data. Failure to provide a proper wage statement can result in significant penalties. Price claimed that Starbucks wage statements were technically deficient in several respects. Following recent decisions such as Jaimez v. Daiohs USA, Inc. (2010) 181 Cal.App.4th 1286, the court in Price held that technical non-compliance with Section 226 is not actionable, unless the plaintiff can plead and prove actual injury. Because Price could not do so, the claim failed.

Finally, unless you practice employment law under a rock, you are aware of Labor Code section 227.6, which requires employers to pay one hour of pay for “each work day that the meal or rest period is not provided.” That provision enforces Wage Order provisions that require California employers to provide unpaid meal periods and paid rest breaks. How many of those one-hour penalties must employers pay when employees are denied both meal and rest breaks in a single day?

The court of appeal in United Parcel Service, Inc. v. Superior Court (Allen), ___ DJDAR ___ (Feb. 16, 2011), answered that question: “up to two.” Thus, if an employee proves a violation of the meal period requirement on a given day, he may be entitled to one of the one-hour penalties. If the employee establishes a rest period violation for the same day, she may recover another one-hour premium.

UPS argued that the statute imposes a maximum of one one-hour penalties for “each work day” as the statute says. The plaintiffs stressed the penalty applies to denials of meal “or” rest periods. After reviewing a federal district court’s decision on the same issue, court of appeal decided that the employees had the better argument: “we believe it is more reasonable to construe the statute as permitting up to two premium payments per workday—one for failure to provide one or more meal periods, and another for failure to provide one or more rest periods.”

As the above decisions make clear, staying current on California wage-hour law is a full time job. Full-time lawyers usually are exempt from reporting time pay, meal periods, and overtime. It’s probably too much to ask the court of appeal to change that rule, though.