California's Wage And Hour Class Action Epidemic: Updates And Solutions

Wage and hour class actions have moved to the forefront of employment litigation in California, due primarily to multimillion dollar settlements. Aside from the lucrative rewards, these class actions have spread in scope and popularity as they are easier to marshal than traditional employment related claims. With a singular focus on a particular job classification, a systematic process can be established. Even after resolving class action cases, Companies find on-going liability with "copy-cat" suits brought by different groups of workers alleging similar violations.

A. Existing and Future Exposure: Updates In Law

In California these wage and hour class actions have included claims of off-the-clock work, failure to pay overtime, misclassification of exempt positions or independent contractors, meal and rest break violations, failure to pay commissions or bonuses, paycheck stub violations, uniform violations and waiting time penalties. These complaints frequently include a claim of unfair competition under California Business and Professions Code section 17200 et. seq., which not only permits representative claims, but further increases the statute of limitations on non-penalty claims to four years. Some of the most recent developments have been discussed in greater detail below.

1. Meal and Rest Break Violations

California employers are required to provide hourly employees with a 30-minute unpaid meal break and two ten minute rest breaks.1 Under California Labor Code section 226.7, an employer incurs an hour of pay as violation for every meal or rest period it fails to timely provide an employee. With every missed meal break resulting in an additional hour of pay, the potential exposure can be significant.

This year, the California Supreme Court in Murphy v. Kenneth Cole Productions, Inc., 40 Cal. 4th 1094 (2007), held the additional hour of pay was a "wage" and therefore subject to a three-year statute of limitations. Murphy also held an employer could meet its burden to establish compliance by demonstrating they had not forced an employee to forgo a break or had not required an employee to work through break.

In July of this year, in a decision that favored employers, White v. Starbucks, similarly held the employee must show he was "forced to forego his meal breaks as opposed to merely showing that he did not take them regardless of the reason". White v. Starbucks, 2007 U.S. Dist. LEXIS 48922, (N.D. Cal. July 2, 2007). The court...