Supreme Court Restricts Class Action Availability for Wage Theft Violations

Washington, DC“Congratulations! Welcome to FillInTheBlank Company! Sign here and ask for Ms. Someone when you come tomorrow.” By the time the intake interview is over, many workers have already signed away their rights to bring class action wage theft lawsuits under federal and California labor law.

It matters because wage theft is rampant. It affects all kinds of employees, but low-wage workers get hurt the most. The good news is that workers still have some options under California state labor law. Maybe other state legislatures should take a look.

Epic Systems Corp. v. Lewis

On May 21, 2018, in Epic Systems Corp. v. Lewis the Supreme Court upheld the enforceability of agreements in which employees agree to arbitrate employment disputes. Justice Gorsuch’s opinion proceeds from the quaint assumption that the parties have equal bargaining power, and so, of course, they should be able to enter freely into whatever agreements they like about how to resolve their differences.

Justice Ginsburg’s dissent, on the other hand, likens these arbitration agreements to the infamous (and illegal) ”yellow dog” union-busting contracts of the 1930s. As Justice Ginsburg recounts, a United States Senator of the day noted that “contracts of the yellow-dog genre rendered the ‘laboring man . . . absolutely helpless’ by ‘waiv[ing] his right . . . to free association’ and by requiring that he ‘singly present any grievance he has.’”

Sound familiar? So, too, it is with employment agreements that commit an employee to individual arbitration and preclude participation in a class action lawsuit.

Donning and Doffing Lawsuits

Donning and doffing lawsuits, originally named to describe the short periods of time during which workers put on and took off protective equipment before and after a paid shift, are particularly affected by restrictions on collective legal action. The term is now understood to mean any little bit of extra time an employee is asked to work off-the-clock.

The unpaid time in question is typically very short, so the money at stake for any individual is very small. But if the practice is widespread throughout the workforce of a large national employer, the corporate savings can be considerable. The employer has a big incentive to nickel and dime the little guy.

In Troester v. Starbucks Corp, for example, the plaintiff claimed to have been cheated out of only a few minutes of pay per day and to have lost only a little more than $100 over a period of months. The cost of individual arbitration would have been prohibitive. Had Douglas Troester been required to arbitrate, a widespread corporate practice affecting many employees would have remained unaddressed. As of this writing, the case is still pending before the California Supreme Court.

More typical in several ways is a recent California Labor Commissioner’s citation of The Camp Bootcamp, Inc. for more than $8.3 million for multiple wage theft and labor law violations, including many instances of de minimus “donning and doffing” shortages.

Altogether, The Camp Bootcamp was ordered to pay employees:
• $1,188,536 in unpaid minimum wages;
• $421,979 for unpaid overtime;
• $5,882 for unpaid split shift premium pay;
• $1,388,847 in liquidated damages;
• $392,106 for meal and rest period violations;
• $522,166 for waiting time penalties; and
• $190,600 for failure to provide itemized wage statements.

This added up to $4,110,116 payable to workers. The citation also included $1,250,200 in civil penalties and $2.95 million in contract wages owed.

Unpaid wages and damages were ultimately owed to 551 trainers, trainer assistants, facility managers and receptionists who worked in 15 locations throughout Southern California.

Usually, allegations of wage theft include overtime, missed meal breaks and a host of other issues. Rarely is “donning and doffing” time the only issue. But the second typical feature of The Camp Bootcamp citation was that it never went to court. This was an administrative proceeding. That may be the shape of things to come in California when wage theft is the issue.

California’s Private Attorney General Act

As described in Good Jobs First and Jobs with Justice Education Fund’s jointly produced report Grand Theft Paycheck: the Corporations Shortchanging their Workers’ Wages , the California Private Attorney General Act (PAGA) gives wage theft victims an alternative to either class action lawsuits or arbitration.

They may bring civil enforcement actions against wage and hour law violators. These actions subject the employers to the same civil penalties that the California attorney general could seek if she or he brought the case. Workers can essentially sue the company in the name of the state to collect penalties. The California courts have already held that the right to file a PAGA lawsuit cannot be signed away through a forced arbitration clause. Epic Systems Corp. will have no effect.

However, the remedy has its limits since 75 percent of an award under PAGA goes to the state and only 25 percent to the victims. In some ways it is more like a criminal statute than a civil lawsuit, so there is no financial windfall to the plaintiff. Nonetheless, given the Supreme Court’s recent decision, PAGA actions remain a way for California workers to enforce wage theft violations through private litigation.

California labor employment laws, like wage protection efforts throughout the United States, are clearly going through a time of change. Perhaps you signed an arbitration agreement to get your job. More likely, you signed something and are not entirely sure what it was. You might consider asking HR for whatever is in your file.

Remember, though, that there are remedies. Courage and persistence are the watchwords. Legal advice, even with administrative proceedings, can be very helpful.