Recently, a handful of law firms representing plaintiffs began targeting California-based large grower-shippers and farm labor contractors with class action lawsuits alleging failure to pay piece-rate employees for non-productive time (NPT) and break periods. These lawsuits generally allege that employers failed to pay agricultural employees for all hours worked; failed to pay in a timely manner; failed to pay all wages owed to employees who were terminated; and failed to provide an itemized wage statement or keep accurate pay records. In addition, these lawsuits often include causes of action for failure to authorize or permit mandated rest breaks or meal periods and other wage and hour claims.
Each of these causes of action allege violations of the California Labor Code and/or the California Industrial Welfare Commission Wage Orders and demand payment of back wages as well as exorbitant penalties, liquidated damages and attorneys’ fees under the Private Attorneys General Act (PAGA).
The state Labor Commissioner is legally authorized to intervene and resolve some of these PAGA claims on far more reasonable terms than would typically be extended by a plaintiffs’ attorney. It’s imperative that Western Growers’ members who are served with a PAGA notice or summons and complaint immediately notify Western Growers Vice President and General Counsel Jason Resnick so that we can in turn notify the Labor Commissioner that the claim is pending and help ensure they are aware of the case. This is because the time period for the Labor Commissioner to intervene is set by statue and is very brief, as little as 33 days in some cases. While no employer is compelled to settle a PAGA claim with the Labor Commissioner, that possibility is foreclosed if the deadlines for the Labor Commissioner to intervene and settle the case are missed.
The impetus for these lawsuits is two California Court of Appeal decisions that were handed down last year, Gonzalez v. Downtown LA Motors and Bluford v. Safeway Stores. These decisions held that employees paid on a piece-rate must be separately compensated for time in which they are not afforded the opportunity to earn the piece-rate (e.g., attending work-related meetings, pre-shift exercises, preparing tools and equipment for work, and walking between fields). Moreover, since these cases are interpretations of existing law, employers with piece-rate workers may face retroactive exposure going back up to four years from the last date of violation.
Western Growers led efforts to enact legislation that would have mitigated much of the potential exposure on unpaid NPT and rest period claims. While those efforts stalled in last legislative session, we will continue to pursue legislation in the next session. Passing such legislation is extremely problematic; employers facing these lawsuits should not take actions based on an assumption that the Legislature will act.
Calculating the proper compensation for rest breaks continues to be confounding for some employers. That is because while the Bluford case held that employees must be separately compensated for rest breaks at the “minimum wage or contracted hourly rate,” California’s Labor Commissioner, Julie Su, has determined that rest breaks should be paid at the “average daily piece rate.” Under the Labor Commissioner’s calculation, employers must divide the employee’s weekly piece-rate earnings by the number of productive hours worked (i.e., hours worked excluding rest periods) to determine the additional compensation that must be paid for rest periods. Plaintiffs’ attorneys have begun to take notice and some are now alleging that employers failed to pay the rest breaks at the “regular rate of pay.” The regular rate of pay is generally determined by dividing the employee's total compensation in the workweek, including incentive compensation, by the total hours worked in that workweek. Factoring in various rates of pay (piece-rate earnings, NPT, hourly), could result in a lower regular rate of pay than the “average piece rate.”
WG members are advised to consult with an experienced employment and labor law attorney before making any changes to your compensation program and to conduct routine wage and hour audits to ensure that pay practices and policies are compliant.
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