On December 3, 2008, the Fourth District Appellate Court overturned a jury verdict awarding $195,000.00 in punitive damages to a former waitress, despite numerous meal and rest period violations by her former employer. This decision constitutes an important victory for California employers at a time when plaintiff’s attorneys routinely request punitive damages in actions against California employers for unpaid wages. (Brewer v. Premier Golf Properties, D050686 – Super. Ct. No. GIE27293)

Christine Brewer, a former waitress at Cottonwood Golf Club, sued her former employer for both age discrimination as well as for numerous California Labor Code violations for missed meal and rest periods, for unpaid regular and overtime wages and for pay stub reporting violations. At trial, the jury ruled against Brewer on her age discrimination claim, but found for Brewer on her wage claims.

Brewer testified that, as a long term employee, she was never provided meal or rest periods and, in fact, was told that she could not take those breaks. She testified that she worked nine or ten hour days without breaks. Brewer also presented time sheets and spreadsheets to prove that her employer, Cottonwood Golf Club, also underpaid her for both regular and overtime hours worked over the course of numerous pay periods. Brewer proved that she did not receive a meal period on 392 separate occasions; did not receive rest periods on 491 occasions; and that on 68 separate occasions Cottonwood knowingly and intentionally failed to accurately report the total hours that Brewer worked on her pay stubs, all of which constituted separate violations of California’s Labor Code. The jury awarded compensation of $26,300.00 only as compensation for unpaid wages and for the meal period-rest period violations. But, the jury was clearly incensed by Brewer’s evidence of Cottonwood’s repeated, intentional and knowing violations of the law. The jury found that Cottonwood was guilty of “oppression, fraud and malice,” awarding $195,000.00 in punitive damages. The trial court also awarded Brewers’ attorneys an additional $64,710.00 in attorneys fees and costs.

Nevertheless, the Appellate Court ordered the trial court to strike, or eliminate, the entire punitive damage award, and also reversed the award of attorneys fees.

This Appellate Court decided that, in California, punitive damages are not available in an action for unpaid wages for two reasons: 1). Punitive damages are not available for the alleged breach of a contractual relationship existing between an employer and employee; and 2). When a statute (law) creates new rights that didn’t exist previously, the only remedies available are the remedies provided by that law (“new right-exclusive remedy doctrine”). California’s Labor Code does not expressly allow recovery of punitive damages for unpaid wages, or for meal period or rest period violations. Therefore, the Appellate Court reasoned, punitive damages should not be awarded.

While a step in the right direction, this Appellate Court’s reasoning and decision is only binding on superior courts in Orange, San Diego, Riverside, Imperial, San Bernardino and Inyo Counties. Other Courts may choose to disregard or reject its decision.

More importantly, the evidence in the case again demonstrates why California employers must insure that employees have the opportunity to take the meal periods and rest periods to which they are entitled, as well as be compensated for all regular and overtime hours worked. Most employers simply cannot afford the cost of litigation for violation of these laws. It is always prudent to review your compensation practices to verify compliance with wage and hour laws, to minimize or eliminate your exposure to these type of wage claims.