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California Appellate Court Decisions Impact Wage and Hour Actions

Two recent California appellate decisions will impact wage and hour class actions and representative actions.

Donohue v. AMN Services, LLC

California law requires that employers “must generally provide employees with one 30-minute meal period that begins no later than the end of the fifth hour of work and another 30-minute meal period that begins no later than the end of the tenth hour of work.” If an employee is not provided the opportunity to take a timely and uninterrupted meal period, the employee is due one hour of wages as a “wage premium.” Cal. Lab. Code § 512(a); see also, Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004 (2012).

In Donohue v. AMN Services, Inc., plaintiff filed a class action against her employer, AMN Services, for failure to pay the wage premium for her missed meal periods. Plaintiff contended that AMN’s timekeeping software had an automatic rounding process whereby an employee’s punched time was rounded to the nearest 10-minute increment, which resulted in a meal period violation and a failure to pay the wage premium for the missed meal period. In a February 25, 2021, decision, the California Supreme Court held that employers cannot use rounding in the meal period context. The Court also held that time records showing non-compliant meal periods raise a rebuttable presumption of meal period violations, including at the summary judgment stage.

The California Supreme Court’s decision sends a clear signal that while rounding time punches may be permissible for purposes of calculating hours worked, it cannot be done with respect to the 30 minute meal period requirement.

Crestwood Behavioral Health v. Superior Court

On February 17, 2021, California's First District Court of Appeal issued a decision that expands the venues available for plaintiffs to file a Labor Code Private Attorney General Act (PAGA) suit. Crestwood Behavioral Health, Inc. v. Superior Court of Alameda Cty., No. A160523 (Cal. Ct. App. Feb. 17, 2021). The court held that the proper venue for a PAGA action is any county where any alleged aggrieved employee suffered a Labor Code violation, even if the plaintiff did not suffer Labor Code violations in that county. In Crestwood, plaintiff had worked in Solano County but filed suit in Alameda County, where the defendant also maintained facilities. Defendant moved to transfer venue to Sacramento County (where it maintained its principal place of business), asserting, that venue was not proper in Alameda County because plaintiff did not work there.

The Court held that venue for PAGA actions is not limited to the counties in which plaintiff suffered Labor Code violations but lies in any county where an allegedly aggrieved employee suffered Labor Code violations. The Court reasoned that in a PAGA action, the plaintiff serves as a “proxy for the state” and that there is no “reason why the legislature would have limited venue to the location where the representative plaintiff worked when she [was] suing on behalf of all aggrieved employees, not just herself.” Thus, the Court held that Alameda County was a proper venue since the defendant had aggrieved employees there.

The Court’s Crestwood decision is significant because it opens the door for some PAGA plaintiffs to engage in forum shopping.

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