Under California Labor Code, wage and hour violations routinely do not allow for the awarding of punitive damages. Workers who are denied pay for overtime (time and a half for more than 8 hours in a day or 40 hours in a week), missed meal or rest breaks, or prevailing wage for government-qualified work projects, are entitled to that missed pay plus modest statutory penalties. The concept of “punitive damages” is reserved for common law torts in most cases.
The recent case of Denise Steffens vs. Regus Management Group LLC litigated in San Diego shows that even claims based on innocuous wage and hour violations can result in tremendous punitive damage awards. Here, Ms. Steffens, as the office manager of an executive suite, was denied the numbers of personnel needed to adequately staff the center. To staff it with the resources given, she had no choice but to deny meals and breaks. She complained that the Regus’ plan didn’t give her enough hourly staff. Shortly after her complaint, she as was placed on a pretextual performance improvement plan. A former manager (Jones) so testified at trial that the real plan was to fire her for her complaints. Part of the scheme was to give the plaintiff unreasonable sales goals and certain management weaknesses were not her’s at all, but were copied nearly verbatim from another employee’s improvement plan. As is usually the case with whistle blowers, the company added insult to injury by claiming that she had a poor attitude.
Ms. Jones had been a model employee over 11 years with Regus. The jury recognized the pretextual nature of the termination, the reprehensibility of defendant’s conduct (this is usually the biggest factor in awarding punitive damages, Civil Code 3294 stating that punitive damages must be based on “malice, oppression or fraud”. So, what did she end up winning? The total award was $4,646,252 broken down by $196,252 (economic losses such as loss of past and reasonably-ascertainable future wages); emotional distress (called non-economic damages), $850,000; and, punitive damages of $3,500,000. In another recent case, just decided a week ago, a California Court of Appeals stated that ordinarily punitive damages may not exceed ten times the amount of actual damages. In Steffens, as healthy as the punitive damages award was, it does not approach ten times actual economic losses (let alone the combination of economic and non economic losses) and as such, should be safe on appeal from an excessiveness argument. (Your blogger personally believes that reprehensibility of conduct should outweigh any numerical yardstick in determining appropriate punitive damages. Further, the amount needed to send a message to the truly lawless corporation will vary according to the wealth of that corporation).
This was a San Diego employment locale and even though this venue usually produces conservative results, the injustice here was obvious. We shall look forward to more results like this in the future. Congratulations to our colleague Dan S. for his great victory. Good luck on appeal, Dan and Team. Stephen Danz and Associates litigates whistle blower/termination, California wage and hour violations (including class actions) in all Counties of California, through our incredibly bright staff and co counsels in our ten offices.