New Trend: Lawsuits for Wage Order Violations Concerning Work Conditions

First Quarter 2011Newsletters California Update Employment Law

The tail end of 2010 delivered some bad news for California employers in the form of twin rulings from the California Court of Appeal holding that employees may sue their employers and recover civil penalties under the Private Attorneys General Act of 2004 (PAGA) for violations of the seating provisions of Wage Order No. 7. The cases are Bright v. 99¢ Only Stores (2010) 189 Cal.App.4th 1472 and Home Depot U.S.A., Inc. v. Superior Court (Case No. B223184, decided on December 22, 2010).

PAGA gives private citizens the right to sue their employers for violations of the California Labor Code and recover civil penalties that previously could only be collected by the State of California. In addition, where the Labor Code has not established a penalty for a particular violation, PAGA sets a default penalty of $100 to $200 for each aggrieved employee per pay period, with the State of California receiving 75 percent of the penalties and the aggrieved employees receiving 25 percent. Needless to say, in a class action, such penalties could easily amount to millions of dollars in liability.

In Bright and Home Depot, the Courts of Appeal confirmed that PAGA also allows employees to sue their employers for violations of wage orders issued by the California Industrial Welfare Commission. These cases also hold that PAGA’s more costly default penalties apply to violations of the seating provisions of Wage Order No. 7, because the wage order’s own penalty provision applies only to the underpayment of wages.

The rulings effectively open the door to lawsuits concerning all previously unenforced “labor condition” requirements found in all wage orders, such as those concerning uniforms, changing rooms and work area temperatures. Unfortunately, employers are often unfamiliar with these requirements. Many California merchants, for example, do not realize that they must provide seats to all their cashiers, not just to those needing a reasonable accommodation. Now that employees can more easily seek to enforce any provision in any wage order, all California employers should carefully review and ensure compliance with the wage order(s) applicable to them.