California Employment Law - PAGA (Manageable v. Unmanageable Wage Claims)

The case of  Brown v. American Airlines, Inc., No. CV 10-8431-AG (PJWx), 2015 WL 6735217 (C.D. Cal. Oct. 5, 2015) concerns the dismissal of PAGA claims  where the claims are based on  numerous individualized issues that may render the case unmanageable.

PAGA allows “aggrieved employees” to bring representative actions against employers for civil penalties on behalf of themselves and other employees for violations of the Labor Code.   To recover penalties, a PAGA plaintiff must prove an underlying Labor Code violation as to each allegedly aggrieved employee for each pay period for which the plaintiff seeks penalties.  But to determine liability on the underlying Labor Code provisions, the court may need to adjudicate issues specific to each pay period for each allegedly aggrieved employee — which raises potentially significant manageability problems.

A plaintiff may be able to meet the burden of proof where the employee alleges an employer violated Labor Code section 226(a) by providing copies or exemplars of the employer's standard wage statements.  However, if the employee claims that the employer violated Labor Code section 2802 by failing to reimburse business expenses would require individualized proof by each employee. The reason for the expenses and the reasons why an employer might have refused to reimburse the employee could vary greatly from employee to employee.  The result of litigating such specific issues for a large number of employees could result in an unmanageable series of mini-trials.

In Brown the plaintiff brought a putative class action asserting claims for failure to pay overtime wages, failure to provide accurate itemized wage statements, unlawful business practices, and PAGA penalties.  The court denied the plaintiff’s motion for class certification. The employer then brought a motion to strike the PAGA claims.

The court addressed defendant’s argument that the PAGA claims were unmanageable.  The court determined that there would be “too many individualized assessments to determine PAGA violations concerning overtime pay.”  By contrast, the court held that the wage statement claims, which were based on allegations that wage statements improperly reflected two different pay periods, were not unmanageable.  Accordingly, the court granted the motion to strike the PAGA claims except for the inaccurate wage statement claims.


The basic PAGA statute is California Labor Code Section 2699 which states:

"(a) Notwithstanding any other provision of law, any provision of this code that provides for a civil penalty to be assessed and collected by the Labor and Workforce Development Agency or any of its departments, divisions, commissions, boards, agencies, or employees, for a violation of this code, may, as an alternative, be recovered through a civil action brought by an aggrieved employee on behalf of himself or herself and other current or former employees pursuant to the procedures specified in Section 2699.3.
   (b) For purposes of this part, "person" has the same meaning as defined in Section 18.
   (c) For purposes of this part, "aggrieved employee" means any
person who was employed by the alleged violator and against whom one
or more of the alleged violations was committed.
   (d) For purposes of this part, "cure" means that the employer
abates each violation alleged by any aggrieved employee, the employer
is in compliance with the underlying statutes as specified in the
notice required by this part, and any aggrieved employee is made
whole. A violation of paragraph (6) or (8) of subdivision (a) of
Section 226 shall only be considered cured upon a showing that the
employer has provided a fully compliant, itemized wage statement to
each aggrieved employee for each pay period for the three-year period
prior to the date of the written notice sent pursuant to paragraph
(1) of subdivision (c) of Section 2699.3.
   (e) (1) For purposes of this part, whenever the Labor and
Workforce Development Agency, or any of its departments, divisions,
commissions, boards, agencies, or employees, has discretion to assess
a civil penalty, a court is authorized to exercise the same
discretion, subject to the same limitations and conditions, to assess
a civil penalty.
   (2) In any action by an aggrieved employee seeking recovery of a
civil penalty available under subdivision (a) or (f), a court may
award a lesser amount than the maximum civil penalty amount specified
by this part if, based on the facts and circumstances of the
particular case, to do otherwise would result in an award that is
unjust, arbitrary and oppressive, or confiscatory.
   (f) For all provisions of this code except those for which a civil
penalty is specifically provided, there is established a civil
penalty for a violation of these provisions, as follows:
   (1) If, at the time of the alleged violation, the person does not
employ one or more employees, the civil penalty is five hundred
dollars ($500).
   (2) If, at the time of the alleged violation, the person employs
one or more employees, the civil penalty is one hundred dollars
($100) for each aggrieved employee per pay period for the initial
violation and two hundred dollars ($200) for each aggrieved employee
per pay period for each subsequent violation.
   (3) If the alleged violation is a failure to act by the Labor and
Workplace Development Agency, or any of its departments, divisions,
commissions, boards, agencies, or employees, there shall be no civil
penalty.
   (g) (1) Except as provided in paragraph (2), an aggrieved employee
may recover the civil penalty described in subdivision (f) in a
civil action pursuant to the procedures specified in Section 2699.3
filed on behalf of himself or herself and other current or former
employees against whom one or more of the alleged violations was
committed. Any employee who prevails in any action shall be entitled
to an award of reasonable attorney's fees and costs. Nothing in this
part shall operate to limit an employee's right to pursue or recover
other remedies available under state or federal law, either
separately or concurrently with an action taken under this part.
   (2) No action shall be brought under this part for any violation
of a posting, notice, agency reporting, or filing requirement of this
code, except where the filing or reporting requirement involves
mandatory payroll or workplace injury reporting.
   (h) No action may be brought under this section by an aggrieved
employee if the agency or any of its departments, divisions,
commissions, boards, agencies, or employees, on the same facts and
theories, cites a person within the timeframes set forth in Section
2699.3 for a violation of the same section or sections of the Labor
Code under which the aggrieved employee is attempting to recover a
civil penalty on behalf of himself or herself or others or initiates
a proceeding pursuant to Section 98.3.
   (i) Except as provided in subdivision (j), civil penalties
recovered by aggrieved employees shall be distributed as follows: 75
percent to the Labor and Workforce Development Agency for enforcement
of labor laws and education of employers and employees about their
rights and responsibilities under this code, to be continuously
appropriated to supplement and not supplant the funding to the agency
for those purposes; and 25 percent to the aggrieved employees.
   (j) Civil penalties recovered under paragraph (1) of subdivision
(f) shall be distributed to the Labor and Workforce Development
Agency for enforcement of labor laws and education of employers and
employees about their rights and responsibilities under this code, to
be continuously appropriated to supplement and not supplant the
funding to the agency for those purposes.
   (k) Nothing contained in this part is intended to alter or
otherwise affect the exclusive remedy provided by the workers'
compensation provisions of this code for liability against an
employer for the compensation for any injury to or death of an
employee arising out of and in the course of employment.
   (l) The superior court shall review and approve any penalties
sought as part of a proposed settlement agreement pursuant to this
part.
   (m) This section shall not apply to the recovery of administrative
and civil penalties in connection with the workers' compensation law
as contained in Division 1 (commencing with Section 50) and Division
4 (commencing with Section 3200), including, but not limited to,
Sections 129.5 and 132a.
   (n) The agency or any of its departments, divisions, commissions,
boards, or agencies may promulgate regulations to implement the
provisions of this part.

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