Key California Employment Law Cases: December 2021

Payne & Fears

Gunther v. Alaska Airlines, Inc., 72 Cal. App. 5th 334 (2021)

Summary: Heightened civil penalties under Labor Code section 226.3 ($250 & $1,000) do not apply to all violations of section 226, only when the employer entirely fails to furnish a wage statement or keep required records.

Facts: Plaintiffs, flight attendants for Defendant Alaska Airlines, Inc., brought suit under the California Labor Code Private Attorneys General Act (“PAGA”) alleging that Defendant failed to provide wage statements compliant with Labor Code section 226(a). The trial court concluded that Defendant’s wage statements did not comply with section 226(a). The court found Defendant liable for more than $25 million in heightened penalties under Labor Code section 226.3, which provides that “[a]ny employer who violates subdivision (a) of Section 226 shall be subject to a civil penalty in the amount of two hundred fifty dollars ($250) per employee per violation in an initial citation and one thousand dollars ($1,000) per employee for each violation in a subsequent citation, for which the employer fails to provide the employee a wage deduction statement or fails to keep the records required in subdivision (a) of Section 226.” Defendant appealed, arguing that section 226(a) could not be applied to flight attendants because it is preempted by federal law, and that heightened penalties under section 226.3 were inapplicable because such penalties are only triggered when an employer entirely fails to provide a wage statement or keep required records.

Court’s Decision: The California Court of Appeal affirmed in part and reversed in part, holding that the trial court correctly determined that section 226 is not preempted by federal law, but that it erred in awarding heightened section 226.3 penalties. Specifically, the court held that the plain language of section 226.3 provides that heightened penalties apply only where the employer fails to provide wage statements or fails to keep required records, which was not the situation in this case. This case creates a split in authority in the court of appeal as to the interpretation of section 226.3.

Practical Implications: While this case is welcome news for employers, employers must always remain vigilant and ensure that they issue wage statements and keep appropriate records of all wage statements issued pursuant to Labor Code section 226.

See’s Candies, Inc. v. Superior Court, No. B312241, 2021 WL 6015641 (Cal. Ct. App. Dec. 21, 2021)

Summary: Wrongful death action filed by employee and her children arising from employee’s husband’s death from COVID-19, which employee allegedly contracted at work and gave to her husband, was not preempted by the Workers’ Compensation Act.  

Facts: Plaintiffs, the wife (Matilde Ek) and daughters of decedent Arturo Ek, filed a wrongful death suit against Defendant See’s Candies, Inc. Plaintiffs alleged that Mrs. Ek, an employee of Defendant, contracted COVID-19 at work because of the company’s failure to implement adequate safety measures. Plaintiffs claimed that Mr. Ek subsequently caught the disease from Mrs. Ek while she convalesced at home. Mr. Ek then died from the disease a month later. Defendant demurred to the complaint, arguing that Plaintiffs’ claims were preempted by the exclusivity provisions of the Workers’ Compensation Act under the “derivative injury doctrine.” See Snyder v. Michael’s Stores, Inc., 16 Cal. 4th 991 (1997). Defendant argued that a claim is derivative if it would not exist absent injury to the employee. Because Plaintiffs alleged Mr. Ek contracted COVID-19 from Mrs. Ek, who in turn contracted the disease at work, Defendant contended Mr. Ek’s death would not have occurred absent Mrs. Ek’s workplace exposure, and thus was derivative of Mrs. Ek’s work-related injury. The trial court rejected this argument and overruled the demurrer. Defendant petitioned for a writ of mandate.

Court’s Decision: The California Court of Appeal denied the petition. The court upheld the trial court’s ruling, holding that Defendant’s interpretation of Snyder was incorrect. The court stated that Snyder stood for the proposition that the fact that an employee’s injury is the biological cause of a non-employee’s injury does not thereby make the non-employee’s claim derivative of the employee’s injury. Because Plaintiffs’ wrongful death claims were not, therefore, “derivative” of Mrs. Ek’s infection, they were not preempted by the Workers’ Compensation Act. The court did not address whether Defendant owed the husband a duty of care or whether Plaintiffs can demonstrate that either Mrs. Ek or her husband contracted COVID-19 because of any negligence by Defendant.

Practical Implications: This case is just one more reminder to employers that it is absolutely critical to stay vigilant and ensure compliance with all health and safety orders related to COVID-19.

Moniz v. Adecco USA, Inc., 72 Cal. App. 5th 56 (2021)

Summary: PAGA representative in one action has standing to appeal a judgment following settlement of another PAGA action with overlapping PAGA claims.

Appropriate standard of review for PAGA settlements is for a trial court “to determine whether it is fair, reasonable, and adequate in view of PAGA’s purposes to remediate present labor law violations, deter future ones, and to maximize enforcement of state labor laws.”

Facts: In separate representative actions under the California Labor Code Private Attorneys General Act (“PAGA”), Rachel Moniz and Paola Correa sued their former employer, Defendant Adecco USA, Inc., to recover civil penalties for Defendant’s alleged violations of the California Labor Code. Both PAGA actions alleged similar violations of the Labor Code. While Correa was a Plaintiff in a PAGA action filed before Moniz’s PAGA action, Moniz settled her case first. Moniz filed a motion to approve the settlement, and Defendant joined. Correa filed an opposition to the motion and attempted to intervene. The California Labor and Workforce Development Agency (“LWDA”) filed objections and comments on the settlement. Nonetheless, the trial court approved the settlement under two standards of review: (1) the “fair, adequate, and reasonable” standard used for class actions, and (2) the “meaningful and consistent with the purposes of PAGA” standard. Correa appealed, attacking many aspects of the settlement process and approval, including the manner in which the trial court treated objections to the settlement by Correa and the LWDA, the standard used by the trial court to approve the settlement, numerous alleged legal deficiencies of the settlement, and its overall fairness.

Court’s Decision: The California Court of Appeal reversed, finding that while the trial court applied an appropriate standard of review, the record failed to show that the trial court assessed the fairness of the settlement’s allocation of civil penalties between the affected aggrieved employees, or whether such allocation comported with PAGA. Particularly, the settlement allocated almost 15 times more penalties to one type of employee over the other covered by the settlement, and the court of appeal found no evidence in the record supporting this division. The court’s decision included two key elements. First, the court analyzed whether Correa was “aggrieved” by the judgment confirming the settlement, and, thus, had standing to appeal the judgment. Disagreeing with the Second District’s recent decision holding that a PAGA representative in one action does not have standing to move to vacate a judgment following the settlement of another PAGA action with overlapping PAGA claims or to appeal that judgment, see Turrieta v. Lyft, Inc., 69 Cal. App. 5th 955 (2021), the court here ruled that Correa was aggrieved, and, thus, had standing to appeal. Second, the court rejected many of Correa’s claims, but did agree that the appropriate standard of review for PAGA settlements is for a trial court “to determine whether it is fair, reasonable, and adequate in view of PAGA’s purposes to remediate present labor law violations, deter future ones, and to maximize enforcement of state labor laws.”

Note: On January 5, 2022, after Moniz was decided, the California Supreme Court granted review of Turrieta. The issue on appeal is: “Does a plaintiff in a representative action filed under the Private Attorneys General Act . . . have the right to intervene, or object to, or move to vacate, a judgment in a related action that purports to settle the claims that plaintiff has brought on behalf of the State.” We will be tracking this case and will report on any further developments.

Practical Implications: PAGA settlements should be carefully scrutinized to ensure that they will meet the standard set by the court for judicial approval. In addition, counsel should ensure, to the extent possible, that trial court judges provide a clear record of how the settlement agreement meets the new standard of review.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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