Key California Employment Law Case Summaries: September, October, and November 2022
Camp v. Home Depot U.S.A. Inc., 84 Cal. App. 5th 638 (2022)
Where an employer can and does track the exact time in minutes that its employees work each shift, and those records show that employees were not paid for all the time they worked, neutral time rounding is not a viable defense.
See our in-depth analysis HERE.
Gavriiloglou v. Prime Healthcare Management Inc., 83 Cal. App. 5th 595 (2022)
An arbitrator’s finding that an employee’s alleged Labor Code violations did not occur does not have issue preclusive effect on a related PAGA claim.
Plaintiff Eleni Gavriiloglou sued Defendants Prime Healthcare Management Inc., Prime Healthcare Management II Inc., Hospital Business Services Inc., and Dr. Prem Reddy, asserting claims for violations of various provisions of the California Labor Code (including for penalties under the California Labor Code Private Attorneys General Act (“PAGA”)) and the California Fair Employment and Housing Act, as well as for wrongful termination and unfair competition. Based on the parties’ arbitration agreement, the trial court compelled all the non-PAGA claims to arbitration, and stayed the PAGA claim. After an evidentiary hearing, the arbitrator issued a final award in favor of Defendants, finding that the alleged Labor Code violations did not occur. Defendants filed a motion for judgment on the pleadings as to the remaining PAGA claim, arguing that Plaintiff lacked standing because the arbitrator’s ruling established that she was not an “aggrieved employee” as a matter of issue preclusion. The trial court granted judgment on the pleadings without leave to amend. Plaintiff appealed.
The California Court of Appeal reversed, finding that the trial court erred in granting judgment on the pleadings based on issue preclusion. California follows the rule that, for “identity of parties” to be satisfied for invocation of claim preclusion or issue preclusion, the party must be acting in the same capacity. Where, for instance, a party appears in one action in an individual capacity and another in a representative capacity, neither issue preclusion nor claim preclusion apply. However, there is an exception where the two suits are litigating the “same right.” Plaintiff in this instance was litigating in two different capacities—in her individual capacity in arbitration and in a representative capacity for her PAGA claim—but was not litigating the same right: “[t]hus, in the arbitration, Gavriiloglou was litigating her own individual right to damages for Labor Code violations, whereas in the present PAGA action, she is litigating the state’s right to statutory penalties for Labor Code violations.” As such, the court concluded that the arbitrator’s ruling did not have a preclusive effect as to the PAGA claim, and the trial court erred in granting judgment on the pleadings.
This decision is a disappointing one for employers coming on the heels of Viking River Cruises. The case would seem to suggest that arbitrating the named plaintiff’s individual Labor Code claims will have no preclusive effect on the concurrent PAGA claim pending in state court. But it is worth noting that Gavriiloglou did not involve an “individual PAGA claim,” as the initial motion to compel arbitration was decided well before the U.S. Supreme Court’s decision in Viking River Cruises. Based on the Court of Appeal’s reasoning, there is a compelling case to be made that an arbitrator’s decision with respect to an individual PAGA claim would have preclusive effect on the concurrent PAGA claim pending in state court.
Cadena v. Customer Connexx LLC, 51 F.4th 831 (9th Cir. 2022)
Time spent booting up work computers by customer call center workers was “integral and indispensable” to employees’ principal duties and was therefore compensable under the FLSA, but time spent shutting down their work computers was not compensable.
Defendant Customer Connexx LLC operated a call center where employees work in-person as call center agents. The employees used a “soft phone” operated through their employer-provided computer. Defendant had a policy prohibiting “off-the-clock” work and required employees to clock in and out using a computer-based timekeeping program, which they had to do before accessing other job-relevant programs, and which required them to awaken and turn on their computers, log in, and open up the timekeeping system. The average boot-up time for their computers was between 6.8 and 12.1 minutes. At the end of their shift, the employees would log off or shut down their computers, which took an average of 4.75 to 7.75 minutes. Plaintiffs Cariene Cadena and similarly situated call center employees brought a collective action against Defendant under the Fair Labor Standards Act (“FLSA”), alleging that the time spent booting up and shutting down their computers was compensable. The district court granted summary judgment in favor of Defendant. It observed that under the Portal-to-Portal Act, the FLSA was amended to make preliminary and postliminary activities that are not part of the employee’s “principal activities” non-compensable under the FLSA. The district court then concluded that “[s]tarting and turning off computers and clocking in and out of a timekeeping system are not principal activities” because Defendant did not hire employees for that purpose and, therefore, time spent on those tasks was non-compensable. Plaintiffs appealed.
The Court of Appeal for the Ninth Circuit reversed. The Ninth Circuit concluded that the district court correctly identified the employees’ principal duties as answering customer calls and performing scheduling tasks. However, the court concluded that these duties could not be performed without turning on and booting up their work computers, and that having a functioning computer was necessary before employees could receive calls and schedule appointments. Therefore, contrary to the district court’s findings, the Ninth Circuit determined that turning on the computers was integral and indispensable to the employees’ duties and was thus compensable as a “principal activity” under the FLSA. On the other hand, the Ninth Circuit held that the time spent by the employees shutting down their computers was not “integral and indispensable” to the employees’ principal duties and thus was not compensable under the FLSA. The Ninth Circuit noted that the need to engage the computer in order to access the electronic timekeeping system was a red herring that had no impact on the “integral and indispensable” analysis. It also specifically limited its holding to the facts of the case while expressing no opinion on the impact of its holding on remote workforces or other contexts. The Ninth Circuit also noted that not all activities an employer requires as part of an employee’s duties are compensable.
More and more we are seeing wage-and-hour claims targeting small periods of historically uncompensated time. By and large, the trend in the caselaw is toward finding these brief periods compensable. This is particularly true for recurring tasks, however brief, that can be tracked with the benefit of improved technology. We would encourage employers to revisit their timekeeping policies and practices to identify whether there are any small tasks that employees are regularly performing off the clock and to speak with their Payne & Fears attorney about how to address those.
Valiente v. Swift Transportation Co. of Arizona LLC, No. 21-55456, 2022 WL 17172337 (9th Cir. Nov. 23, 2022)
The FMSCA’s 2018 preemption decision retroactively applies to conduct occurring before the decision.
In 2018, the Federal Motor Carrier Safety Administration (“FMCSA”) determined that federal law preempts California’s meal and rest break rules with respect to truck drivers subject to federal regulations. In International Brotherhood of Teamsters, Local 2785 v. Federal Motor Carrier Safety Administration, 986 F.3d 841, 846 (9th Cir. 2021), the Court of Appeals for the Ninth Circuit held that the agency’s decision was a lawful exercise of its power under the Motor Carrier Safety Act of 1984. The question left open from that case was whether the decision applied retroactively. Here, Plaintiffs, former hourly truck drivers, had brought a class action lawsuit alleging meal and rest break claims on Oct. 16, 2018, before the FMCSA’s preemption decision. After the International Brotherhood decision, the district court called for supplemental briefing on whether the preemption decision affected Plaintiffs’ claims. Thereafter, the district court sua sponte granted summary judgment and dismissed the case, finding that Plaintiffs’ claims were preempted. Plaintiffs appealed.
In a split with the California Court of Appeal, the Court of Appeals for the Ninth Circuit held that the FMCSA’s 2018 decision preempting California’s meal and rest break rules with respect to truck drivers is retroactive and bars plaintiffs from proceeding with lawsuits that commenced before the decision was made. In so holding, the court applied the test set out in Landgraf v. USI Film Products, 511 U.S. 244 (1994). The court concluded that because Congress clearly intended for the FMSCA to have the power to halt enforcement of state laws, and because the FMSCA intended for this particular preemption determination to apply to pending lawsuits, the FMSCA’s decision prohibits present enforcement of California’s meal and rest break rules regardless of when the underlying conduct occurred.
The decision in Valiente creates a split between the state and federal courts regarding the issue of retroactivity. See Garcia v. Superior Court, 80 Cal. App. 5th 63 (2022). Employers with pending meal and rest break claims in federal court that may be affected by this ruling should move quickly to take advantage of this favorable ruling.