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December 22, 2016

Ninth Circuit Issues Opinion in AB 1513 Carve Out Case

The Ninth Circuit Court of Appeals has issued an opinion reinstating Fowler Packing Company’s and Gerawan Farming, Inc.’s lawsuit alleging that the Legislature denied them equal protection by intentionally targeting and excluding them from the AB 1513 piece-rate law safe harbor in order to win support for the bill from the United Farm Workers union.

Western Growers filed an amicus (“friend-of-the-court”) brief supporting Fowler and Gerawan’s appeal. 

The California Legislature passed Assembly Bill 1513 in response to state appellate court decisions that exposed employers to significant and unexpected minimum wage liability for unpaid rest periods and non-productive time (NPT). It created a “safe harbor” that gave employers an affirmative defense against such claims so long as the employer made back payments under certain conditions.

AB 1513 provides an affirmative defense to any employer facing claims for unpaid wages filed after March 1, 2014. However, a class action lawsuit against Gerawan was filed by the General Counsel of the UFW on February 3, 2014. The lawsuit alleges the date was specifically selected to preclude Gerawan from asserting the safe harbor in then-pending litigation against them.

A separate carve-out provision precludes the use of the safe harbor by a defendant facing unpaid rest or NPT claims filed prior to April 1, 2015, when the case contained a mere allegation that the employer has deprived employees of wages through the use of “fictitious worker names.” This carve-out prevents Fowler Packing from asserting the safe harbor in a class action filed against it by the UFW on March 17, 2015. According to the court record, the class actions against Fowler, Gerawan, and a third farming operation, Delano Farms, are the only three pending wage and hour class actions filed by the UFW in seven years before the filing of Plaintiffs’ complaint.

Plaintiffs’ lawsuit contended that AB 1513’s carve-outs violated the Equal Protection Clause and the prohibition against bills of attainder. While the court concluded that the district court correctly found that AB 1513 was not a bill of attainder in that no “punishment” was meted out by the law, the district court did err in dismissing the Equal Protection claim. The Court wrote:

“Accepting Plaintiffs’ allegations as true, the only conceivable explanation for AB 1513’s carve-outs is that they were necessary to procure the UFW’s support in passing that legislation. Because that justification would not survive even rational basis scrutiny, we conclude that Plaintiffs’ complaint plausibly states a claim that those provisions violate the Equal Protection Clause.”

The case has been remanded to the district court to reconsider the lawsuit in light of the valid Equal Protection claim. Jason Resnick, WG Vice President and General Counsel, says the Brown Administration should revisit its defense of these constitutionally suspect provisions.

“The 9th Circuit made it clear that carve-outs crafted to gain political support, allegations which were admitted to by the bill’s author, are unconstitutional,” Resnick said. “The state’s position is indefensible. The Administration can right this wrong by abandoning its defense of the UFW’s politically-motivated carve-outs and allowing two family farming operations to utilize the safe harbor they were wrongfully denied by the Legislature. Doing so would result in the delivery of checks to thousands more farm employees who have been denied the compensation provided to many others whose employers were not unconstitutionally singled out by the UFW and the Legislature.”

For more information, contact Jason Resnick at (949) 885-2253.