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Presented by: Vince M. Verde Orange County, CA

Trends In Class Action Litigation – Practical Tips To Avoid Liability. March 15, 2012. Presented by: Vince M. Verde Orange County, CA. New Wage Order Based Claims. Suitable Seating Change Rooms and Resting Facilities Uniforms and Equipment Temperature

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Presented by: Vince M. Verde Orange County, CA

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  1. Trends In Class Action Litigation – Practical Tips To Avoid Liability March 15, 2012 Presented by: Vince M. Verde Orange County, CA

  2. New Wage Order Based Claims • Suitable Seating • Change Rooms and Resting Facilities • Uniforms and Equipment • Temperature • Elevators (Four floors above and below ground)

  3. What Is The Statutory Authority? • Civil penalties under California’s Private Attorneys General Act of 2004, § 2698 et seq. (“PAGA”). • Employees may sue their employers and collect statutory penalties on behalf of all current/former employees. • Injury is not required.

  4. What Is The Exposure? • PAGA penalties consist of $100 for each aggrieved employee for the first violation and $200 per pay period for each aggrieved employee for subsequent violations. • Approximately $5,100 per employee (Based on 26 pay periods in a year). • Statute of limitations is one year.

  5. New California Laws Which Will Likely Lead to PAGA Suits • Wage Theft Protection Act of 2011 (AB 469) • Willful Misclassification of Independent Contractors (SB 459)

  6. Wage Theft Protection Act of 2011 (AB 469) - New Written Notice RequirementsAll New, Non-Exempt Employees • Required Information • Rates of Pay • All Allowances Against Minimum Wage (meal and lodging allowances) • Regular Pay Day • Employer Name Including All DBAs • Main Office Address • Employer Telephone Number • Workers’ Comp Carrier Contact Info • Duty to Update All Information

  7. “Any Other Info Labor Commissioner Deems Material and Necessary” • Employer must • Indicate if it is a “staffing agency” • Identify businesses used to hire employees or administer wages or benefits • State whether employment agreement is oral or written • List its Workers’ Compensation Insurance “Policy No.” or, if self insured, its “Certificate Number for Consent to Self-Insure” • Employee must sign acknowledgement of receipt

  8. Willful Misclassification of Independent Contractors (SB 459) • “Willful Misclassification” is Unlawful • Civil Penalties of $5,000 - $25,000 Each Violation • No private cause of action, but lawsuits under PAGA

  9. What You Can Do Today • Wage Statements • Timekeeping System • Audit • Complaint Procedure • Attestation Forms

  10. Wage Statements Labor Code Section 226 requirements: • Gross wages earned • Total hours worked (except for salaried exempt employees) • Number of piece-rate units and rate per unit (if applicable) • Deductions • Net wages earned • Dates of the pay period • Employee name and last four digits of SSN or employee ID number • Name and address of employer (legal name of employer) • All applicable hourly rates in effect during the pay period and corresponding number of hours worked at each hourly rate

  11. Wage Statement - New Requirement? • Labor Code section 226(a): "The deductions made from payments of wages shall be recorded . . . and a copy of the [accurate itemized] statement OR a record of the deductions shall be kept on file by the employer for at least three years.” • AB 469 changed the “OR" to “AND,” meaning employers who were in compliance because their computerized records showed deductions, must also arguably keep "on file" the "accurate itemized statement" for each employee.

  12. Itemized Wage Statement Penalties • Penalties for Violation • 226(e) – $50 per employee for initial pay period in which violation occurs; $100 per employee per pay period thereafter up to max of $4,000 • One year statute of limitations • Must result in actual injury to employee and “knowing and intentional failure by employer to comply” with requirements. • PAGA

  13. Timekeeping System: Check Your “Rounding” Practices • Legitimate justification • Proper intervals • No “one way” system • Does not systemically favor employer • Advise employees of policy • Spot audits • Document

  14. Check System for “Auto-Deductions” • Meal period deductions • Clock in/clock out “default” times • Double check with IT • Audit

  15. Don’t Ignore Your Data • Auditing • Categories of Information (e.g., meal period compliance) • “Point Person” to identify and respond • Maintain data and document responses

  16. Complaint Reporting & Response Procedure • Post, publicize, train • No retaliation • Respond • Document

  17. Attestation Forms • Use to educate employees • Use to confirm compliance • Methods of distribution

  18. Arbitration Agreements • AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (April 27, 2011) • D. R. Horton, Inc. and Michael Cuda, Case 12–CA–25764 – NLRB decided that mandatory arbitration agreements which preclude employees from joining together in a class action lawsuit or class arbitration to pursue employment-related claims violate the National Labor Relations Act. • Brown v. Ralphs, 197 Cal.App.4th 489 (July 20, 2011) - Second Appellate District held that the PAGA representative action waiver was unconscionable and unenforceable.

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