Good News, for a Change, for California Employers in Connection with Wage and Hour Cases

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By: Don Samuels

The Courts were kind to California employers in September, 2019, issuing two decisions which substantially reduce the damages which plaintiffs can recover in wage and hour cases. 

In the first case, ZB N.A. and Zions Bancorp.v. the Superior Court of San Diego County, the Supreme Court held that individuals cannot recover unpaid wages as part of a Private Attorneys General Act (“Paga”) action.  In doing so, it held that the "unpaid wages" that are available pursuant to § 558 can only be recovered by the Labor Commissioner and that they are not a civil penalty that a private citizen has authority to collect through PAGA.

In the second decision, Naranjo v. Spectrum Security Services, Inc., the Court of Appeals of the State of California Second Appellate District held, among other things, that unpaid premium wages from meal and/or rest break violations do not entitle employees to additional remedies pursuant to §§ 203 and 226 of the Labor Code.  In doing so, the Court rejected those "derivative" claims and, relying on the Court in Kirby v. Immoos Fire Protection, Inc., (2012) 55 Cal.4th 1244, concluded that a § 226.7 action is brought for the non-provision of meal and rest periods, not for the "non-payment of wages." 

The significance of these cases is that the damages available to employees who claim that they have been denied meal and/or rest breaks is limited to the premium payments allowed for under Cal.Lab.Code § 226.7 but they are not entitled to recover unpaid wages under Cal.Lab.Code § 558 nor are the entitled to recover waiting time penalties under § 203 or penalties for violation of § 226 relating to itemized wage statements.  Additionally, under Kirby, attorney’s fees are not payable for alleged meal and rest break violations because those violations are not wages. 

The net result of these cases is that employees pursuing claims, whether on an individual basis, class basis or based on Paga, will only be able to recover the premium payments under § 226.7 but will be unable to recover any derivative damages and/or attorney's fees for an employer's failure to provide meal and/or rest breaks.