Violations of the California Labor Code cause extensive damage through the Private Attorney General's Law [PAGA]

A fictitious account of violations of the labor code

Disclaimer : This story is completely fictional without reference to any particular person, company or employee. Any resemblance or name that approximates a real individual or company is pure coincidence.

A backstory of multiple violations of the Labor Code that lead to sanctions.

Melinda worked for Busy-Body Industries to clean houses. Busy-Body had a written employment agreement with Melinda and another 2,000 home cleaning people in California. The agreement stipulated that all Busy-Body employees confirmed their appointments the day before by calling customers at a time delivered to the employee at the beginning of the week. Employees should also call just before and after each cleaning. Busy-Body required its employees to have mobile phones and subscribe for unlimited minutes through the wireless service provider of their choice. Busy-Body paid a standard of $ 2.00 per day to each employee for what Busy-Body designated as mobile phone expenses.

Melinda and all other cleaning employees used their mobile phones at least six times a day for Busy-Body related businesses. Melinda's unlimited monthly mobile phone service costs $ 130.00 per month. Using your phone for company calls did not increase your bill.

Busy-Body also demanded that its employees buy their cleaning supplies, and paid them a standard of 40.00 per month as an established reimbursement based on a historical average of 12 months for their 2000 employees. However, some employees worked in areas where the square footage of a luxury home required more cleaning agents than people who cleaned middle class neighborhoods.

Busy-Body collected the cleaning person's tip as part of the prepaid prices and charged the employee a fee of $ 5.00 per transaction for collecting tips. Employees were not allowed to receive tips directly from customers. Busy-Body used this method to track tips in order to make individual tax withholdings and contributions for each employee.

Busy-Body also required that each of its employees wash and press their uniforms. Employees who do not maintain dress codes. As proof that the uniforms were adequately clean and pressed, Busy-Body required employees to scan and deliver a separate cleaning bill each week, but did not reimburse these expenses. An employee who did not provide proof of cleaning costs was fined $ 15.00 for "failed inspection."

In addition, Busy-Body employees must pay their own vacuum cleaners and spare bags. They are allowed to use the vacuum cleaners for personal use. Busy-Body considers that the vacuum cleaner is a tool of the trade, similar to the tools that a carpenter owns and uses.

A cleaning person when he was sent left his house to go directly to his first appointment of the day. There was no Busy-Body "home office" that cleaning people led to or from their designated calls. The corporate office of Busy-Body is located in Tulsa, Oklahoma, without offices in other parts of the country. Once a month, employees had to attend a teleconference that provided training, company news updates and company comments on customer demands, expectations and levels of satisfaction. Employees were expected to attend these conferences after their regular work hours while they were at home computers, usually after 6:00 p.m. M. They were not compensated for this time, nor for the telephone and Internet expenses incurred as part of these monthly meetings.

When Melinda questioned the Company's practice of receiving a fine for the "failed inspection" fee when cleaning and pressing her uniforms at home at her own time, her manager told her, and throughout the conference, that the cleaning service at Dry was the only way the company could track that each employee presented the "brand" of the company.

"Then we should be paid for dry cleaning expenses," Melinda said.

"You paid for the uniforms and you can use them for personal use. It is not a company expense," his manager had told him during the conference call.

"Melinda was upset with this answer, and she didn't back down: but you chose the clothes and she has our company logo on the shirts."

"The logo is very attractive," their boss told them. You should be proud to use it for personal use.

A week after her comment, Melinda's employer called her to tell her that her services were no longer necessary and to return her company's documents and uniform. Melinda pressed to get an answer as to why she was being fired.

"I have never been written. All my clients love me. This is not fair."

"You are an employee at will," the Director of Human Resources told him during the conference call. "We don't have to have a reason."


Violation of the California Labor Code: personal cell phone use for business in an unlimited plan

This problem has been resolved in California by Cochran's decision. The employer cannot defend itself on the grounds that it does not cost the employee more to use the telephone. The court shifted the focus towards the benefit received by the employer and demanded an objective investigation into the probable average proportion of the use of personal use time to the employer. The employer owed the employees a percentage reimbursement of personal expenses incurred by the employer's business.

So, the question is whether $ 2.00 per day for each employee is a fair and reasonable estimate of the probable proportion of personal to commercial use. An employer in California is allowed to use an optional method to estimate costs instead of paying the exact dollar amount based on individual expense reports, but there should be a close approximation based on evidence of actual costs. An employer may want to follow this optional approach due to the difficulty and time associated with individual reports.

In this case, if the unlimited plan costs $ 80.00 per month, and employees use their personal plans between 30% and 50% of the time for business, and a random verification of business calls in the phone records supports that range, then 40% could be a reasonable and fair reimbursement, since any employee in a month could use the phone more or less than the midpoint.

The typical use of Melinda is six times a day, commercial use in 10 minutes each or 60 minutes per day. She uses the phone for personal reasons approximately 10 times a day at 20 minutes each or 200 minutes. The business to personal ratio is 60: 200 or 30%. With a flat rate of $ 130.00, you should receive a refund of $ 39.00 per month. $ 2.00 per month is clearly inappropriate.

Violation of the California Labor Code: Cleaning supplies and equipment.

Busy-Body pays a standard reimbursement rate of $ 40.00 per month for cleaning items based on a historical average of 12 months for its 2000 employees. Is this formula compatible with the evidence that shows that individual employees are being adequately compensated?

The cleaning cost seems reasonable depending on the depth of the data for 12 months, but Busy-Body may need to subclassify its employees in the "large home" neighborhood group and the "moderate home" group, since each set of Homes will do it. It has its own "cost of supplies." The more refined and specific the formula, the more likely it is to be defended as a legally sufficient approximation of the actual costs.

Vacuums are tools owned by employees who retain them in the possession of their staff and are also free to use them for personal purposes. They are probably not refundable expenses. But what about the replacement bags and belts related to wear for the benefit of the employer? These costs are possibly reimbursable because the volume of use of business bags is much greater than for personal use. Busy-Body employees, for example, routinely use and dispose of at least one bag for household cleaning. Each employee cleans between 1 or 2 homes per day, five days a week. Busy-Body could keep holding the bag for unreimbursed expenses due to 2000 employees, including fines and attorneys' fees.

Violation of the California Labor Code: Impose costs to collect tip revenue

Passing this cost to the employee would be illegal. In California, tips belong exclusively to the employee. Companies usually collect and distribute these tips. Most customers add the tip not as a separate payment to the employee, but as a component of the card's general authorized charge. Tip collection and administration is a business cost that is absorbed without compensation for the employee. In addition, Busy-Body is required by law to treat tip revenues such as regular wages and subject to withholding of UI, ETT, SDI and PIT. Therefore, Busy-Body must include deductions in its breakdown of the paycheck. This breakdown would include a category of "tip revenue", or a similar wording. If not reported, distributed and retained, everyone has taxes and penalties from the California Labor Code for noncompliance.

Violation of the California Labor Code: Work clothes Laundry expenses

California employers who require their California employees to wear exclusive clothing from the employer's brand based on features such as color, style, design or logo must pay the costs to obtain and maintain work-related clothing. If the employee advances the cost, the cost must be reimbursed immediately.

In California, the employee must be reimbursed for uniform cleaning and maintenance other than simple household laundry. If the employee is required to spend time at home to meet the employer's specific care requirements, such as ironing, the "fair value of time" used can be paid as an "allowance" for additional payment. If the employee is required to incur external laundry and ironing services, as could be the case with a dry cleaner, the actual employee expense must be reimbursed.

Busy-Body employees are required to wear clothes that have the company logo and pay a "fine" if the clothing is verified as clean and pressured by a dry cleaner. Busy-Body must reimburse these costs. In addition, imposing a "fine" for noncompliance is an undue deduction of wages not related to the intentional or grossly negligent damage of an employee to company property. The fine works as a "chargeback" against wages earned in violation of Labor Code Sec. 221.

Violation of the California Labor Code: Travel and travel expenses

Busy-Body employees do not have a "base of operations", that is, no place where they report on a predictable way to work, such as a preparation area or corporate office. Instead, their schedule takes them from their private homes to a scheduled customer location, often different each work day. The usual rule is that travel expenses are not refundable travel expenses, but Busy-Body employees do not have "travel" from home to the first place of work. Therefore, all your work-related driving expenses are refundable. To reinforce this conclusion, the Busy-Body corporate office is out of state and has no satellite offices.

There are 2000 Busy-Body employees across the country, each with a different set of distances actually traveled. Busy-Body must reimburse actual individual travel expenses, from portal to portal, for each employee based on proof of expenses presented. California jurisprudence recently allowed employers the option to pay a standard travel expense payment without taking into account specific registered expenses, but only if the formula has a rational and close relationship with actual expenses. Most companies use the IRS miles reimbursement rate in force as an acceptable rate to cover fuel, insurance and maintenance. This rate, along with data showing the average travel range in various regions of the country (which require Busy-Body to subclassify its employees) could satisfy California law and reduce employer administrative costs.

Melinda's case for illegal termination – Retaliation

Melinda is an employee "at will", but that state is irrelevant to the probable reason for her dismissal in this case. She had a good work history. His first friction with Busy-Body was when he questioned the convenience of washing uniforms required by Busy-Body. She was fired a week later without any explanation. The dismissal was illegal because Melinda protested a subject covered as a "fundamental right" in California: the payment of wages and expenses. California allows this "cause of action" to be heard by a jury if Melinda reasonably believes the violation of the law occurred, and somehow complained to the employer about the illegal practice. The short time between the complaint and the dismissal, along with his good work history, is strong circumstantial evidence that Busy-Body's motive was to punish or silence Melinda.

Strength in numbers: California Private Attorney General's Law (PAGA).

California has a unique law that designates private attorneys to process cases on behalf of the Department of Labor Relations, Labor and Workforce Development Agency of the State of California. This law is labeled California Private Attorney General's Law (PAGA).

PAY is so powerful because it provides an application power that was almost completely lacking due to the agency's limited resources. This lack of resources, and the widespread scope of the abuses, led the California legislature to basically allow private attorneys to be "Attorney Generals" for the good of the public. A powerful incentive of the law is that these private attorneys can recover employer sanctions and recover attorney fees incurred in prosecuting the case. The penalties recovered are divided between the State and the employees.

But one aspect of the case, unlike a state action, is that an employee files the lawsuit on behalf of several other employees who are invited to join the lawsuit. The corpus of recovered money is considered claimed by the employees once the State obtains its share. Many PAGA cases will be resolved before the trial, and the State is often willing to commit its share of the total recovery to less than 75% legal to facilitate the agreement.

The Private Attorney General must notify the Agency for Workforce Development and the Workforce ("LWDA") in detail about the nature of the proposed civil action, and the employer must be notified prior to trial with the opportunity to correct the alleged violations. . If the LWDA refuses to sue for the matter, and the employer does not present a timely "cure" for violations or conditions, then the individual employee represented by a private attorney may proceed on behalf of the State of California and the employees to collect sanctions . Section 2699 of the Labor Code defines a considerable fine: for most employers, the fine is $ 200.00 for each injured employee for each pay period in which a violation occurred. There is a statute of limitations of one year from the date of the last violation in a series to collect penalties. 26 payment periods multiplied by $ 200 = $ 5,000 per year per employee X 2000 employees = $ 10,400,000.00.

Technical problems related to a PAY case.

The accused employers and the courts have raised multiple questions about the interpretation and future of PAGA. Some of the most pressing:

  1. Does PAY have to comply with the class certification requirements applicable to the standard class action case?
  2. Can Courts requires that a PAGA employee named in the action go to arbitration to determine the merits of his individual action to determine if he is a typical representative of the issues that will be addressed in the case of PAGA. (Undecided by an appellate court, but the courts of first instance, in fact, "handle" PAY cases in this way).
  3. How much discovery is required at what stage of a PAGA case for a court to determine the scope of the PAGA claims? (It seems that the courts follow the trend initiated in motions for class action certification to include evidence obtained in an individual arbitration procedure to determine the probable merits of the claims, but an appeal decision on this issue has not yet been published. ). The individual claim will be expedited to meet the burden of proving that claim in Arbitration.
  4. What is the effect of the decision of the 2015 California Supreme Court (Valencia) on the future of PAGA cases? If the Federal Arbitration Act applies to require an individual to arbitrate their individual claim and waive participation in a class action lawsuit, does that same preference by federal law apply to a PAGA case? The employees do not argue: it is the State of California, and not the employee, who is represented by the "Private Attorney General."
  5. What is the PAGA damage test standard when each employee may have suffered damages somewhat differently, but within a probable range of minimum to maximum loss? The answer has been given in the "Duran" case. Statistical evidence is admissible to arrive at a probable acceptable amount of damages despite individual employee variations if the probable number is reached by an expert following generally accepted statistical methods with adequate sampling. Whatever the method adopted by the Court, it must allow the Respondent a fair opportunity to attack the methods used or the sampling that employees trust.


Busy Body will have a great time in court. The list of their violations of employee rights is long: unpaid mobile phone expenses; erroneous evaluation of employee fines to reduce salary payments, not to reimburse uniform laundry costs, expenses not paid for the supplies needed to do the job; unpaid travel expenses, do not deduct and itemize tips and taxes withheld; Unpaid work hours for mandatory training. Each of these violations entails penalties established by law, and if fully assessed against Busy-Body, it will result in tens of millions of dollars in damages if the Court allows the case to proceed as a PAY case, or if the case qualifies as an unrestricted class action by an arbitration agreement. The freedom to proceed with a PAGA case is under attack by the employers' community. To the extent that the courts are inclined to impose class action case management tools in a PAGA case, the freedom to proceed subject only to the PAGA notification requirements seems to be currently at risk. Still, Melinda and Busy-Body can have a complex and expensive battle that will end up with millions paid or lost. Melinda herself will proceed in her own case for unjustified dismissal due to reprisals when she opposed some of these illegal practices.