NO WAITING TIME PENALTIES IF “GOOD FAITH” BELIEF THAT NO WAGES ARE DUE
As California employers are all too aware, when an employee claims that they have not been paid all the wages they were entitled to during employment and final wages are not timely paid at the time of separation, employees can file claims seeking “waiting time” penalties. To prevail on these claims, the employee must prove that the employer’s failure to pay certain wages was either “willful” under Labor Code Section 203, or “knowing and intentional” under Labor Code Section 226.
In addition, if an employee is not provided their required meals and breaks, the employee is entitled to be paid one hour of “premium pay” as a “penaltyThe penalty payment is required to be paid on the paycheck in the pay period in which the violation occurred; if not, the employee can claim their wage statement was inaccurate.
Up until a recent court decision, it has been difficult to defend claims for waiting time penalties. However, employers now have a new argument to assert to defeat these claims. A California Court of Appeals recently held that an employer’s “good faith dispute” that wages were due ate the time of separation can defeat a finding that such non-payment was either a “willful” or a “knowing and intentional” violation.
Some background: In May 2022 the California Supreme Court issued its decision of Naranjo v. Spectrum Security Services, Inc. which held that the “premium pay” required to be paid for missed meal and/or rest breaks was to be considered a “wage.” As a “wage” these payments are required to be included on wage statements and payment for such wages must be included in final paychecks. This was not good news for employers as it increased the potential liability for errors in payments.
- If the employer did not act “willfully” in failing to timely pay employees premium pay, is the recovery of waiting time penalties under Labor Code Section 203 barred; and
- Was the employer’s failure to report missed meal premium pay on wage statements a “knowing and intentional” failure for purposes of recovering penalties and attorneys’ fees under Labor Code 226.
The Court of Appeal recently held in favor of the employer (for a change) and stated that an employer’s “good faith belief” can defeat a claim that the employers failure to pay was “wilful” or “knowing and intentional.” And if such good faith belief is shown, no penalties should be assessed.
As a result, an employer who presents evidence establishing a good faith dispute can prevent the employee from collecting penalties under Labor Code Section 203.
PAID SICK LEAVE VIOLATIONS LEAD TO RECOVERY OF PAGA PENALTIES
In yet another case involving and expanding potential PAGA actions, the California Court of Appeal (4th Dist.) recently held that a plaintiff may, in fact, bring a PAGA action for alleged violations of California’s Healthy Workplaces, Healthy Families Act of 2014 (paid sick leave law). (Wood v. Kaiser Found. Hosps.)
The Court’s focus in reaching their decision was the interpretation of the language in the statute itself which provides that “any person or entity enforcing this article on behalf of the public as provided for under applicable state law shall, upon prevailing, be entitled only to equitable, injunctive, or restitutionary relief[.]” (Emphasis added). The Court looked to the legislative intent behind this language to determine what the intentions were for enforcement of the statute. The Court noted that the phrase “enforcing this article on behalf of the public” in section 248.5(e) is ambiguous. Does this phase refer to a PAGA action because relief under PAGA has been characterized as being “designed primarily to benefit the general public, not the party bringing the action” or does this refer to something else?
The conclusion reached was the limitation on remedies was intended to apply only to claims under the Unfair Competition Law (UCL). The statute’s “text and history provide compelling evidence that the phrase ‘on behalf of the public as provided under applicable state law’ in section 248.5, subdivision (e) was intended to refer to actions prosecuted under the UCL.” This holding leaves the door open for employees to bring PAGA actions for alleged violations of California’s Paid Sick Leave law.
This may not be the last word as this decision may be subject to further legal challenge before either the California Supreme Court or another Court of Appeal, because the Paid Sick Leave statute does not even mention the UCL. Rather, it broadly refers to enforcement actions bought “on behalf of the public as provided for under applicable state law.” California Labor Code § 248.5(e). In the meantime, however, this decision is binding on California trial courts allowing plaintiffs to seek PAGA penalties for alleged violations of the sick pay statute.
FEDERAL LAW PROTECTING PREGNANT WORKERS ENACTED
Pregnant Workers Fairness Act (PWFA)
The Pregnant Workers Fairness Act (the “PWFA”) applies to employers with 15 or more employees and will become effective on June 27, 2023.
The PWFA protects employees and applicants who have known limitations related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions regardless of whether the condition meets the definition of a disability specified in the ADA (a “qualified employee”).
Under the PWFA, as with current California law, when a reasonable accommodation is sought, an employer is required to engage in the interactive process and seek to provide a reasonable accommodation if it does not result in an undue hardship to the employer. The PWFA also makes it an unlawful employment practice to deny employment opportunities to qualified employees if the denial is based on the need for a reasonable accommodation. Additionally, an employer may not force an employee to take a leave if another reasonable accommodation can be provided.
Finally, the PWFA prohibits retaliating against an employee for requesting or using a reasonable accommodation.
The PWFA does not replace federal, state, or local laws that are more protective of workers affected by pregnancy, childbirth, or related medical conditions such as the ADA, FMLA and Title VII.
The EEOC has issued guidance on the PWFA as to the scope of the Act. Specifically, the EEOC points out that the PWFA only applies to accommodations which are defined as changes to the work environment or the way things are usually done at work, including the ability to sit or drink water; receive closer parking; have flexible hours; receive appropriately sized uniforms and safety apparel; receive additional break time to use the bathroom, eat, and rest; take leave or time off to recover from childbirth; and be excused from strenuous activities and/or activities that involve exposure to compounds not safe for pregnancy.
- Require an employee to accept an accommodation without a discussion about the accommodation between the worker and the employer;
- Deny a job or other employment opportunities to a qualified employee or applicant based on the person’s need for a reasonable accommodation;
- Require an employee to take leave if another reasonable accommodation can be provided that would let the employee keep working;
- Retaliate against an individual for reporting or opposing unlawful discrimination under the PWFA or participating in a PWFA proceeding (such as an investigation); or
- Interfere with any individual’s rights under the PWFA.
Providing Urgent Maternal Protections for Nursing Mothers Act (Pump Act)
The second new legislation is the Providing Urgent Maternal Protections for Nursing Mothers Act (PUMP Act) which will become effective April 28, 2023. Currently, the FLSA requires that employers provide unpaid, reasonable break time and a place shielded from view and free from intrusion (not a bathroom) for non-exempt employees to express breast milk up to 1 year after the child’s birth. The PUMP Act expands this requirement to all employees covered under the FLSA including exempt (i.e., salaried) employees and also includes a new anti-retaliation provision.
As a reminder, California law (Labor Code Section 1030) currently has an expansive law requiring Lactation Accommodation which provides every employer must provide a reasonable amount of break time to accommodate an employee desiring to express breast milk for the employee’s infant child each time the employee has a need to express milk.
The break time shall, if possible, run concurrently with any break time already provided to the employee. Break time for an employee that does not run concurrently with the legally required rest break need not be paid.
An employer must provide the use of a room or other location, other than a bathroom, in close proximity to the employee’s work area, shielded from view, and free from intrusion while the employee is expressing. The lactation room or location must be safe, clean, and free from hazardous materials, contain a surface to place a breast pump and personal items, contain a place to sit and have access to electricity or alternative devices, including but not limited to, extension cords or charging stations needed to operate an electric or battery-powered breast pump. Access to a sink with running water and a refrigerator suitable for storing milk, in close proximity to the employee’s workspace must also be provided by the employer.
An employer is not required to provide break time under the requirement of the Labor Code if to do so would seriously disrupt the operations. Employers with fewer than 50 employees, may be exempt from the lactation accommodation requirements if certain conditions are met.
The denial of a break or adequate space to express milk may result in the recovery of one hour of pay at the employee’s regular rate of pay for each violation under Labor Code section 226.7.