The California Supreme Court issued several employment law decisions during the past year. We summarize below the most important of these rulings.
Security Screenings Are Hours Worked
The Court unanimously decided employers must pay workers for time they spend waiting for and participating in mandatory “security screenings” (e.g., bag searches) before they leave work. The Court’s rationale in Frlekin v. Apple, Inc., 8 Cal. 5th 1038 (2020), is based on the definition of “hours worked,” found in the Industrial Welfare Commission’s Wage Orders: “the time during which an employee is subject to the control of an employer, [including] all the time the employee is suffered or permitted to work, whether or not required to do so.”
The Court found sufficient control based on Apple’s policies and procedures requiring employees to submit to bag checks and electronic device screenings before leaving Apple’s stores; the amount of time involved; and the consequences of failure to comply. The Court rejected Apple’s argument that screenings were optional, because employees could avoid them by coming to work without bags or electronic devices.
COVID-19 adds new significance to this ruling. Employers conducting health questionnaires and taking employees’ temperatures before they clock in may exercise sufficient control under Frlekin to require compensation for hours worked. The Department of Industrial Relations in recently issued guidance opined that such time must be paid.
Multi-State Employers, Wage Statements and Timing
The Court tackled the application of California’s “wage statement” and pay timing laws to employees who work in multiple states. Ward v. United Airlines, ___ Cal. 5th ___ (Jun. 29, 2020), concerned whether pilots and flight attendants were entitled to wage statements that complied with Cal. Labor Code section 226. Oman v. Delta Airlines, ___ Cal. 5th ___ (Jun. 29, 2020) also involved paycheck timing under section 204.
The Court ruled that interstate workers are entitled to California-compliant wage statements, and must receive paychecks timed in compliance with section 204, when their “principal place of work” is California. That test is satisfied when employees spend the majority of work time in California. For those workers who do not perform a majority of their work in any one state, “principal place of work” means where the job’s operations are “based,” i.e., where the employee first presents him or herself for work. Employees who neither work a majority of the time in California, nor are based there, are not entitled to California-compliant wage statements.
Separately, the Court in Oman also decided an issue of interest to all California employers, regardless of where work is performed. The Court clarified how employers lawfully may use different pay methods (such as flat rates or multiple job rates) for different tasks, without employers’ running afoul of the principle that employers cannot “average” wages over work hours to pay employees for each hour worked. In essence, the Court decided trouble occurs when employers “borrow” from compensation promised for one type of work and apply it to another type of work. This portion of Oman requires careful study before employers implement new compensation arrangements.
Private Attorneys General Act of 2004
The Court continues to interpret the Private Attorneys General Act of 2004, or PAGA. PAGA permits a plaintiff-employee to collect certain penalties for wage and hour violations, which only the Labor Commissioner previously could pursue. The plaintiff keeps 25% of penalties recovered and turns over the remainder to the state.
In Kim v. Reins Int’l Cal., Inc., 9 Cal. 5th 73 (2020), the Court addressed whether a former employee could pursue PAGA penalties after settling his own claims for unpaid wages. Kim’s settlement with Reins did not cover PAGA claims. However, Reins argued Kim lacked standing to sue because, having obtained complete relief, he was not an “aggrieved employee” – which is required for relief under PAGA.
Rejecting Reins’s arguments, the Court unanimously held an employee who settles individual claims does not lose standing under PAGA. Therefore, employers settling individual workers’ wage claims must take into account the potential for future PAGA actions.
In another PAGA-related ruling, a unanimous Court in ZB N.A. v. Superior Court, 8 Cal.5th 175 (2019), removed one of the possible penalties that plaintiffs may recover under PAGA. The Court held that, notwithstanding PAGA, only the Labor Commissioner may seek the penalties available under Labor Code Section 558, styled as “an amount sufficient to recover underpaid wages.”
The Court will decide several consequential employment law cases in the months to come.
In Donahue v. AMN Services, Inc., the Court will address whether employers may use timekeeping “rounding” practices for meal periods.
Ferra v. Loews Hollywood Hotel, LLC, involves whether employers must pay meal or rest period premiums under Labor Code section 226.7 at the employee’s “base” pay rate, or rather at the “regular rate of pay” used for overtime compensation.
At issue in Naranjo v. Spectrum Security Services, Inc. is whether an employer’s failure to pay meal period premiums may result in waiting time penalties under Labor Code section 203, as well as inaccurate wage statement penalties under section 226.
In Ducksworth v. Tri-Modal Distribution Servs., the Court will consider a statute of limitations issue under the Fair Employment and Housing Act, as well as an award of costs against an unsuccessful plaintiff.
In Vazquez v. Jan-Pro Franchising International, Inc., the Court will decide whether its decision in Dynamex Operations West Inc. v. Superior Court (2018) 4 Cal.5th 903 (imposing the “ABC test” for independent contractors in certain circumstances), applies retroactively.