Waiting time penalties under California Labor Code 201 and 203 (which one depends on whether you are fired or quit) total up to 30 days of compensation following your separation if your employer does not pay you all that you are owed at the time of termination. A recent case from the federal Ninth Circuit (Urbino vs. Orkin Services of California, No 11-56944 (cited as 2013 DJDAR 10797) sheds new light (and hope for employees) on an aspect of the waiting time penalty.
The PAGA laws (Labor Code 2698, et seq and known as “The Private Attorney General Act of 2004) allows workers to collectively sue for waiting time penalties in addition to the 30 days’ pay described above. These penalties are basically $200 per employee per pay period for each pay period in which wages due are not paid. These wages due can arise from missed meal or rest breaks, vacation pay,overtime, or similar violations. Of this amount, 75% is payable to the State Labor and Workforce Development Agency (“LWDA”), and you the employee are entitled to 25%. The issue in the Urbino case is, essentially, whether the penalties of each worker can be combined so that the defendant may remove the case to federal court since the amount in controversy exceeds the federal jurisdictional amount. In Urbino, the defendants had removed the case to federal court on the basis of diversity, alleging that aggregated over the 811 affected workers, the amount in controversy was great enough for federal court. The court of appeals found that the $75,000 threshold for federal court would be met by aggregation of all the claims but that aggregation would not be appropriate in this case and remanded the case to the district court.
The Appellate court held that these types of claims are not owned by the group as a whole, but by each employee. Even though the claims may have a common question of fact or law does not mean that there is a common and undivided interest. Put another way, the defendant employer Orkin did not owe an obligation to the group, but simply to each individual plaintiff. The court stated that each employee may have rights to numerous wage and hour, discrimination, interference-type lawsuits, but these are held individually by each employee. If the injury is unique to each employee then that is an individual, not collective, right.
In what could best be described as a Hail Mary, defendants went on to contend that the interest of Mr. Urbino, the named plaintiff, was not an individual interest but rather the state’s collective interest in seeing to it that labor laws are enforced through PAGA (citing Amalgamated Transit Union, Local 1756, AFL-CIO vs. Super Crt, 209 P3d 937, 943 (CA 2009). The defendants point out (to their dismay down the road, I’m sure), that the state is the primary beneficiary or “real party in interest”, since 75% of the penalties go to the state.
So why was this such a mistake for defendants? The court held that the state may never be a “citizen” for purposes of diversity jurisdiction. Navarro Sav. Ass’n vs. Lee, 446 US 458, 461 (1980). As such, no subject matter jurisdiction existed at the federal level and the case was sent back (“remanded”) to the state court.
One mistake many plaintiffs make is not taking quick and necessary steps to file an administrative claim with the proper governmental agency prior to filing in court. In almost all cases involving the California Labor Code, you are required to file a claim with the Department of Labor Standards Enforcement. This was just held to apply to our favorite whistle blower statute under LC 1102.5. Other circuits differ, but if you know about your claim within six months, I see no reason not to file it with the DLSE. There is then one more step to take, which is to advise the DLSE after 30 days that since they have not responded to your claim, you will be moving ahead with court action. You are allowed to amend your lawsuit automatically at that point to allege the cause of action which your DLSE letter mentioned or concerned.
We’ve discussed in other blogs why California employees benefit from keeping their claims in state court and we won’t repeat those reasons here. Danz & Associates represents hundreds of employees state-wide and in state court on all forms of employment-related litigation, including (like this case) PAGA claims, wage and hour violations for meal, rest, overtime and unpaid vacation time, discrimination based on age, sex, race, national origin, perceived physical or mental conditions and the like. Call Danz & Associates for a free phone consult at any time. My cell number 310 600 9276 or call the office and speak with Astrid or Kathy to begin an immediate intake at 877 789 9707 (toll free).