In Bernstein v. Virgin America, Inc., a district court in California has ordered Virgin America to pay more than $77,000,000 in damages, restitution, interest and penalties for a variety of violations of the California Labor Code. The award is the latest example of the tremendous amount of damages and penalties that can be awarded for non-compliance with California’s complex wage and hour laws.

In 2016, the Bernstein Court granted the plaintiffs’ motion for class certification, certifying a class of California-based flight attendants who had been employed since March 2011.

Then in June 2018, the Court granted the plaintiffs’ motion for summary judgment, finding that Virgin America was liable for failure to pay for all hours worked, failure to pay overtime, failure to provide meal and rest breaks, failure to provide accurate wage statements claims and failure to pay for all wages due upon termination, triggering waiting time penalties. Because it granted summary judgment on these claims, the Court also found that Virgin America was liable on the plaintiffs’ claims under California’s Unfair Competition Law (“UCL”) and Private Attorneys’ General Act (“PAGA”).

Having determined that Virgin America was liable, the only issue left to resolve was damages and penalties. Last week the Bernstein Court awarded a staggering amount of damages to the certified class. The Court awarded the plaintiffs $45,337,305.29 in damages and restitution as a result of Virgin America’s unpaid wage, overtime and meal and rest period violations. It also imposed wage statement and waiting time penalties in the amount of $6,704,810. The Court awarded the class $3,552.71 per day in interest, assessed since October 25, 2018. And the Court imposed $24,981,150 in civil penalties under PAGA – an amount that reflected a 25% reduction from the maximum available.

In total, the penalties imposed against Virgin America made up more than 40% of the amount awarded to the employees. Although the company intends to appeal a number of the Bernstein Court’s rulings, the enormous award serves to emphasize the need for employers to take steps to ensure compliance with state wage and hour laws. That is particularly so in California, where penalties alone often exceed the damages assessed.

On December 12, 2018, in Furry v. East Bay Publishing, LLC, the California Court of Appeal held that if an employer fails to keep accurate records of an employee’s work hours, even “imprecise evidence” by the employee “can provide a sufficient basis for damages.”

In the case, not only did the employer in Furry not keep accurate records of the employee’s time, but only the amount of damages, and not the fact of the underlying violation, was in dispute. Under those circumstances, the Court held that the employee’s “imprecise evidence” of the unpaid hours that he worked was permissible to establish the amount of unpaid overtime.

The Court found that the level of detail that the employee advanced regarding his uncompensated hours was sufficient to shift the burden of proof to the employer to either give specific evidence of the hours actually worked or disprove the employee’s recollection. The Court stated that the fact “[t]hat [the employee] had to draw his time estimates from memory was no basis to completely deny him relief,” overruling the trial court’s complete denial of damages for the employee’s overtime claim.

In reaching reversing the trial court’s ruling on this issue, the Court rejected the employer’s argument that the trial court’s ruling was merely a credibility determination that was entitled to deference. Instead, the Court held that the trial court had a duty to draw “reasonable inferences” from the employee’s evidence – and had failed to do so.

Notably, the Court expressly distinguished this case from one where the underlying violation was in dispute. Therefore, this decision should only apply to disputes regarding damages.

While it reversed the trial court’s finding on that issue, the Court of Appeal upheld the trial court’s denial of relief on the employee’s meal period claim. The employee argued that although he was provided the opportunity to take off-duty meal periods and chose to take them at his desk, he was still entitled to regular compensation for time and meal period premiums when he worked through his meal periods. The Court held that the employee failed to show that the employer “knew or reasonably should have known” that he was working through his meal periods. Therefore, he was not entitled to relief on his meal period claim.

This decision reinforces for employers the importance of keeping and maintaining accurate time and payroll records. Of course, this decision is not binding on other Courts of Appeal, and it is possible that the California Supreme Court would reach a different conclusion, should it hear this case.

On July 18, 2018, the Ninth Circuit issued a published opinion in Rodriguez v. Taco Bell Corp., approving Taco Bell’s on-premises meal periods for employees who choose to purchase discounted food.

Like many food services employers, Taco Bell offers discounts on its food to its employees. And it requires that employees consume such food on premises.

In Rodriguez, employees contended that requiring employees to consume discounted meals on premises results in a meal period or unpaid wage violation, arguing that employees must be relieved of all duty and must be permitted to leave the premises during a statutory meal period. The Ninth Circuit rejected those arguments.

As the Court explained, Taco Bell employees were not required to purchase meals – “[t]he purchase of the meal is entirely voluntary.” And the “requirement that [a discounted] meal be eaten on the premises was to ensure that the benefit was utilized only by employees and that the food did not leave the premises to be given to friends and family.” That is, “employees had to consume the discounted food in the restaurant to prevent theft.” As the Court noted, Taco Bell “employees are free to purchase meals at full price and eat them wherever the employees wish.”

The Ninth Circuit concluded that Taco Bell satisfied its meal period and wage obligations by relieving employees of all duties during their meal periods and exercising no control over how or where they spent their meal periods. That is, “employees were free to use the meal break time as they wished, and that a requirement to remain on the premises was imposed only if an employee voluntarily chose to purchase a discounted meal.” And there was no evidence that Taco Bell “required or pressured [employees] to conduct work activities while on premises during the meal period.” The policy actually prohibited that, requiring employees who purchased discounted meals to eat them away from the food production and cash register area.

The Ninth Circuit’s Rodriguez opinion confirms that employers that relieve employees of all duty during meal periods do not violate California law merely by imposing certain requirements to benefits (e.g., discounted food) that an employee may voluntarily accept.

By Kara Maciel and Aaron Olsen

After five years of litigation, a Los Angeles Superior Court has denied class certification of a class action against Joe’s Crab Shack Restaurants on claims that it managers were misclassified as exempt and denied meal and rest periods in violation of California law.  The court found that the plaintiffs had not established adequacy of class representatives, typicality, commonality or superiority, and emphasized a defendant’s due process right to provide individualized defenses to class members’ claims.

Because the case was handled by our colleagues in our Los Angeles office, we think it best not to comment on the decision other than to say that it highlights the need for creative strategies in defending against wage-hour class actions.