No Punitive Damages for Labor Code Violations

Spring 2009Newsletters California Update - Second Quarter 2009

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An appellate court recently held for the first time that punitive damages are generally unavailable as part of a claim for meal break, rest break or overtime claims based upon Labor Code violations. The decision was based on the “new right exclusive remedy” doctrine, which holds that, where a statute creates a new right that did not exist in the common law, the expressed statutory remedy is exclusive. The Court determined that the Labor Code sections regarding pay stubs and minimum wages, and the regulations concerning meal and rest breaks, created new rights that did not exist in the common law, and therefore the remedies provided in the Labor Code are exclusive. The California Supreme Court declined to review the decision on March 18, 2009. Consequently, the appellate decision is citable and precedent-setting. This is good news for employers who face the seemingly endless threat of class action lawsuits and the accompanying damages for such claims. The case is Brewer v. Premier Golf Properties, LP (2008)168 Cal. App.4th 1243 (Fourth Appellate District, Division One).

The Brewer case comes after a jury in Alameda County awarded over $100 million in punitive damages against Wal- Mart for various violations of the wage and hour provisions of the Labor Code. The Wal-Mart case, called Savaglio v. Wal- Mart Stores, Inc.,Case No. A116458, is currently on appeal before the First Appellate District Court. An appellate decision in Savaglio presents the possibility of a split among appellate courts on the punitive damage issue. It will be some time before there is a decision in Savaglio, however, because the appeal in that case is currently stayed pending a decision in Brinker v. Superior Court (Hohnbaum), the highly anticipated case concerning the proper interpretation of the Labor Code and California regulations governing an employer’s duty to provide meal and rest breaks to non-exempt employees.