On November 12, 2010, the Court of Appeals for the 2d Appellate District reinstated a class-action lawsuit previously filed in Los Angeles Superior Court, predicated upon the employer’s alleged failure to provide suitable seating for its employees, in alleged violation of California’s Wage Orders and the Labor Code. Bright v. 99 Cent Only Stores (11/12/10) B 22016 (Los Angeles County Super. Ct. BC 415 527). The whole premise of this lawsuit, that an employer may be sued by ALL of its employees for an alleged failure to provide seats on the job is simply outrageous. Yet, according to the interpretation of this Appellate Court, it is at least arguably an obligation that is specifically required by both California’s Labor Code and its Wage Orders, which govern employee wages, hours and working conditions in California.
What You Need to Know: As an employer, to begin to understand the importance of this ruling, you need a basic legal framework for a point of reference. Here’s that framework: 1). California’s Labor Code authorizes the Industrial Welfare Commission (the “IWC”) to establish rules governing wages, hours and working conditions for California employees. 2). Pursuant to its authority, the IWC established Wage Orders, which specifically spell out what employers must do with respect to employees’ wages, hours and working conditions. There are specific Wage Orders that apply to each industry and they are numbered. In total, there are (17) seventeen different Wage Orders. (Employers – You are required to have YOUR Wage Orders posted at your place(s) of business). While these Wage Orders are NOT identical, they are very similar. Each Wage Order is divided into numerous sections. As you would expect, each Wage Order outlines the employer’s obligations with respect to overtime obligations, meal period – rest period obligations, etc. (PS: In terms of what you are required to do, these Orders do not provide all the answers. If you rely on the “plain language” of these Wage Orders, you do so at your legal and financial peril.) What you might not expect is that these same Wage Orders include a “suitable seating” obligation. This obligation is described below:
Here is what section (14) fourteen of most of these Wage Orders provides: (A) All working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of such seats. (B) When employees are not engaged in the active duties of their employment and the nature of their work requires standing, an adequate number of suitable seats shall be placed in reasonable proximity to the work area and employees shall be permitted to use such seats when it does not interfere with the performance of their duties. (emphasis added).
Are you surprised? I assure you that counsel for 99 Cent Stores were surprised when they received this class-action lawsuit, which may actually be the first of its kind in California. What is represents is yet another “point of attack” for ambitious plaintiffs’ attorneys who seek to exploit and victimize unsuspecting employers doing business in this state.
What Happened Here: In this case, Eugina Bright complained that her employer, 99 Cent Stores, did not provide its cashiers with seats, in alleged violation of IWC Wage Order 7, § 14, cited previously. Ms. Bright’s counsel made her the proposed, class action representative, in a class action complaint for violation of the Private Attorneys General Act of 2004 (PAGA) California Labor Code § 2698, et.seq. If violation of this Act sounds serious, it’s because it is. It literally allows one of your employees to step into the shoes of the Attorney General of California, and collect statutory penalties from your business on behalf of ALL of your current employees, as well as for ALL of your former employees who might have worked for you for at least a year prior to the date that the lawsuit is filed. As for your financial exposure, think of a random number followed by lots of zeros. Anyone can do the basic math here and see that this can translate into phenomenal amounts of money.
To simplify what happened next: 99 Cents’ Stores attorneys argued that this type of lawsuit is not a Labor Code violation and a PAGA suit doesn’t provide penalties for this type of violation. The trial court agreed with defense counsel. The Appellate Court agreed with plaintiffs’ counsel, reversed the judgment of the trial court, reinstated the lawsuit and ordered 99 Cents Stores to pay Bright’s costs of appeal. As of now, the lawsuit continues at great expense to 99 Cents Stores. The potential, financial exposure is far greater if Bright prevails.
What You Need to Do: A California class action lawsuit, predicated on any wage and hour violations (including this example), is the Weapon of Mass Destruction for any employer. Do Not Underestimate the magnitude of the threat. Insuring that you are in compliance with the Wage Orders for your business is NOT an intuitive exercise. In fact, it is counter-intuitive. If you try to “wing it,” you are going to get it wrong, it will likely cost you unbelievable amounts of money, and it could even put you out of business.
This case is another example why, if you do business in California, you MUST insure that you are in compliance with its employment laws. At a minimum, I suggest that you consider these three remedial measures: 1). Establish access to Human Resource professionals. If you do not have this function in-house, then locate and retain the outside expertise to help you protect your business. 2). I strongly recommend that you make a periodic, business investment in a comprehensive review of your employment policies, procedures and practices. You may discover that the cost of the “course correction” is far less than the heavy price you will pay for blithe ignorance. Do not let your business wander blindly into the minefield that is California’s labor laws. 3). Invest in your management team. Your managers must be properly trained and have the skill set(s) to insure that you act in compliance with these laws. If you have managers who are unable or unwilling to meet these standards, then maybe it’s time to look for new managers. If you at least take these three steps, I guarantee that you will sleep better at night, knowing that you are being pro-active and protecting your business.