On May 29, 2021, the Ninth Circuit Court of Appeals issued a significant ruling in Magadia v. Wal-Mart Associates, Inc. Walmart was sued in 2016 under the Private Attorneys General Act (PAGA) by former employee Roderick Magadia alleging violations of California Labor Code wage statement and meal period laws. The allegations included hyper-technical violations relating to: 1) failure to provide adequate information on wage statements regarding applicable rates of pay and hours worked; 2) failure to provide compensation for missed meal periods; and 3) failure to provide applicable dates of pay on the employee’s final wage statement.

The Court’s reversal of the $102 million judgment against Walmart has important implications for California wage and hour litigation.

Key Aspects of the Court’s Reversal

PAGA authorizes aggrieved employees (e.g., those who allege personal harm based on one or more Cal. Lab. Code violations) to file lawsuits to recover civil penalties on behalf of themselves, other employees, and the State of California, for Labor Code violations. A key question in Magadia was whether a PAGA plaintiff – not directly harmed by the violation(s) alleged – has standing to pursue such claims on behalf of other aggrieved employees.

Prior California appellate court rulings have suggested an aggrieved employee may have standing to pursue PAGA based claims not only for violations they themselves have experienced, but also other alleged violations for which they suffered no direct harm. In opposition to these prior rulings, the Ninth Circuit found Magadia lacked standing to bring his meal period violation claim because he had suffered no direct harm. This finding is likely to have far reaching implications as it may serve to limit standing in future PAGA matters where the plaintiff has suffered no direct harm.

Another key aspect of this case is the Court’s reversal of the lower court’s decision on Magadia’s hyper-technical wage statement claims.[1] Magadia alleged Walmart’s failure to display the rate of pay and hours worked regarding its bonus overtime adjustment calculation violated the requirements of Cal. Lab. Code section 226.[2] He also alleged a similar violation for Walmart’s alleged failure to list the applicable dates of the pay period on his final pay wage statement.

Disagreeing with the lower court’s ruling, the appellate court determined that Walmart’s bonus adjustment was not an adjustment made in the “current pay period” but a retro adjustment for payments during past pay periods and therefore did not violate Section 226. Additionally, because Walmart had provided Magadia with a final wage statement at the end of the normal semimonthly pay period which listed the pay period dates and complied with Section 226, the fact this information was omitted from his final wage statement did not technically violate the statute. 

The Court’s failure to uphold such hyper-technical violations provides important guidance that may limit the scope of such technical wage statement claims in the future.

Overall, this case serves as a stark reminder of the potential for high penalties in PAGA matters. It also evidences the court’s discretion to reduce such penalties if it finds them to be unjust, arbitrary, oppressive, or confiscatory. However, the fact remains that even hyper-technical violations can cost millions. Employers should conduct periodic audits of its wage and hour practices to ensure compliance and reduce risk.

Growers seeking further information about complying with California wage and hour laws should contact Western Growers.

Colorado’s continued push to eradicate inequitable pay practices, coupled with (surprisingly) effective remote work technologies, and evolving workplace perspectives have raised unique concerns for in-state employers as well as multijurisdictional employers whose employees live and work within the state. Signed into law in 2019, and unique among the states, Colorado’s Equal Pay for Equal Work Act (EPEWA) requires employers to:

• Disclose in every job posting “the hourly or salary compensation, or range of the hourly or salary compensation” including any benefits offered; and
• Notify current employees – before filling an open position – if the job opening qualifies as a promotional opportunity

Traditionally considered proprietary information, an employer’s compensation scheme is an important tool used to attract top talent and gain a competitive advantage in the marketplace; the type of information one is understandably reluctant to disclose.

With an upswing in remote work options – including those that can be performed in other states (including Colorado), the EPEWA has the potential to impact employers whose open positions could be performed in Colorado (e.g., AZ employer seeking to fill open positions with remote workers must consider EPEWA disclosures if the position could be filled by a Colorado worker and/or could be viewed as a promotional opportunity for workers already employed within the state).

Push-back from Colorado employers fighting the disclosure requirement have resulted in a waiting game as initial efforts to seek a preliminary injunction failed.[1] The result? Multijurisdictional employers have simply excluded Colorado workers from open positions (e.g., “This position is available for remote work, except in Colorado”). While avoidance may be legal, it remains a risky proposition as employers excluding Colorado workers may be perceived as dismissive of pay equity concerns or the laws in effect to address them. In addition, noncompliance has its own serious financial consequences with fines ranging from $500 – $10,000 per violation coupled with a private right of action for wage discrimination (i.e., back pay damages of up to 3 years).

Still interested in hiring remote workers from anywhere in the U.S? Consider these options:

• Conduct your own public relations risk analysis and weigh your options for excluding Colorado workers from all available job postings; or
• Comply with the EPEWA by providing a good faith estimate of a compensation range that is reasonably broad and clearly indicates all relevant qualifiers (e.g., qualifications, geographic location, experience).

Only time will tell if further litigation efforts are successful. In the meantime, Colorado employers, and those whose jobs could be filled by Colorado workers, should consider EPEWA mandates and the risks of non-compliance.

Members seeking further information about Colorado’s EPEWA should contact Western Growers.