Dukes Holding Not Applicable to Meal/Rest Period Class Action

Lubin v. Wackenhut Corp. is yet another recent published case (the other being Augustus v. ABM Security Services, see here) affirming the right of security guards to off-duty meal and rest breaks while limiting the applicability of the U.S. Supreme Court’s decision in Dukes v. Walmart to wage and hour claims.  It also draws into question the ability of a California employer to post a single security guard at a worksite without incurring stiff penalties and attorney fees or having to pay at least two hours a day of premium pay for failure to provide meal and rest periods.

Lubin was the class representative of Wackenhut representing a class of security guards posted at commercial businesses, governmental entities, gated communities, industrial facilities, banks, schools, and retail centers, and elsewhere.  Lubin moved for class certification on the ground that Wackenhut (now G4S Secure Solutions) had failed to provide off-duty meal and rest breaks (Labor Code 226.7 and Wage Orders), and as a result their pay stubs were inaccurate (under Labor Code 226(a)).  The trial court granted Lubin’s motion for class certification in May 2010.

The next year, while the case was still pending, the U.S. Supreme Court decided Wal-Mart Stores, Inc. v. Dukes (2011) 564 U.S. 338, which held that a nationwide class of female Wal-Mart employees could not be certified on gender grounds because individual issues predominated.  Wackenhut then moved for decertification, citing Wal-Mart as a significant change in law justifying reconsideration of class certification.

The court’s order granting Wackenhut’s decertification motion stated two main bases for its ruling: (1) that individualized issues predominated; and (2) that there was no way to conduct a manageable trial of plaintiffs’ claims.  The trial court was persuaded by the Supreme Court’s reasoning in Wal-Mart that “Wal-Mart’s ‘policy’ of allowing discretion by local supervisors over employment matters” did not permit class treatment, as the plaintiffs could not identify “a common mode of exercising discretion that pervade[d] the entire company.”  Moreover, the Supreme Court “disapproved of determining damages through statistical sampling, which it termed ‘Trial by Formula.”  This was relevant because Plaintiff in Wackenhut proposed assessing damages through statistical sampling.

The Court of Appeal reversed.  It noted that the Supreme Court clarified that Wal-Mart does not “stand for the broad proposition that a representative sample is an impermissible means of establishing classwide liability.” (Tyson Foods, Inc. v. Bouaphakeo (2016) ___ U.S. ___, ___ [136 S.Ct. 1036, 1048].)  Rather, Wal-Mart was a special case because it involved the class treatment of discrimination rather than wage-and-hour claims.  In Tyson, the Supreme Court upheld the use of statistical evidence to calculate the additional time class members spent donning and doffing, even though differences in the type of gear worn meant that plaintiffs may have taken different amounts of time to don and doff.  Thus, statistical modeling was not dead after all.

The next question was whether the “single guard staffing model,” where only one guard is assigned to a particular worksite and thus cannot go on an off-duty break as there is no one to relieve him or her, was sufficient to “prevent” an off-duty meal period.  The court opined that the question of whether “the class members’ duties do not allow for a meal break solely because no other guards are available to cover for them during their meal periods” is not a question that could be decided on class certification. Rather, this “nature of the work” defense involved questions of fact best suited for summary judgment or trial.  However, the court of appeal previewed its view on the merits:  “Client preference cannot be determinative under the wage order.”  In other words, just because a client prefers one guard instead of two guards, that may not relieve the security company of the duty to insist that two guards be provided or to at least enter into a dialogue on the issue.

Wackenhut could not discharge its affirmative duty to provide lawful meal and rest breaks without presenting evidence that it had precautions in place to ensure that its clients considered and applied the “five-factor test outlined by the DLSE” in determining whether the nature of the work at each site necessitated an on-duty meal period before requiring class members to take such meal periods.

Finally, the court found that the of statistical sampling in this case is distinguishable from the method rejected by the Supreme Court in Wal-Mart because, in that case, the plaintiffs proposed to use representative evidence as a means of overcoming the absence of a common policy, whereas here, the common policy was found to exist.

Not surprisingly, Wackenhut’s attorneys have filed a petition for review with the California Supreme Court.  The issues are currently being briefed. Time will tell whether it will remain economically feasible in California for a business to hire a single security guard.

Lubin v. Wackenhut Corporation (Cal. Ct. App. 2d Dist. Nov. 21, 2016) 2016 S.O.S. 5883 [B244383]. Click here for full opinion.

Labor Code 226(a) Paystub Requirement Clarified as to Vacations

In a rare employer-friendly ruling, the Fourth District of the Court of Appeal clarified that Labor Code Sec. 226(a) does not require employers to include the monetary value of accrued paid vacation time in employee wage statements unless and until a payment is due at the termination of the employment relationship.  Soto had sued Motel 6 alleging that it violated the pay stub requirement of section 226(a) by failing to provide its California nonexempt employees with wage statements setting forth “all vacation and PTO (paid time off) wages accrued during the applicable pay period.”  In other words, the pay stubs did not state the cash value of the accrued vacation and PTO.

In affirming the trial court’s grant of demurrer, the Court of Appeal held that “Because the amount of unused vacation and an employee’s final rate may change, an employee’s accrued vacation balance depends on the particular circumstances at the employment termination date.”  Moreover, “Because unused vacation pay is not owed to an employee and is not paid to the employee until the termination of the relationship, and the monetary value of the unused vacation pay cannot be determined until the termination date, the requirement that an employer identify earned ‘wages’ logically does not extend to accrued vacation benefits.”  Thus, Motel 6 was not required to itemize the value of vacation/PTO on each pay stub.

Soto v. Motel 6 Operating, L.P., 2016 S.O.S. 5209 (Cal. Ct. App. 4th Dist. Oct. 20, 2016), http://sos.metnews.com/sos.cgi?1016//D069403.