Jackpot Harvesting Co. v. Superior Court of Monterey Cnty., H044764

Citation26 Cal.App.5th 125,237 Cal.Rptr.3d 1
Decision Date14 August 2018
Docket NumberNo. H044764,H044764
CourtCalifornia Court of Appeals
Parties JACKPOT HARVESTING COMPANY, INC., Petitioner, v. The SUPERIOR COURT of Monterey County, Respondent; Jose Roberto Lainez et al., Real Parties in Interest.

26 Cal.App.5th 125
237 Cal.Rptr.3d 1

JACKPOT HARVESTING COMPANY, INC., Petitioner,
v.
The SUPERIOR COURT of Monterey County, Respondent;

Jose Roberto Lainez et al., Real Parties in Interest.

No. H044764

Court of Appeal, Sixth District, California.

Filed August 14, 2018


Patane Gumberg Avila, LLP, James K. Gumberg, Jennifer C. Owens, Salinas, for Petitioner Jackpot Harvesting Company, Inc.

Karasik Law Firm, Gregory N. Karasik, Law Offices of Santos Gomez, Santos V. Gomez, Oxnard, Maria Esmeralda Vissuzi, for Real Parties in Interest Jose Roberto Lainez et al.

Grower-Shipper Association of Central California, James Bogart, Western Growers Association, Jason Resnick, California Farm Bureau Federation, Carl Borden, Ventura County Agricultural Association, Robert Roy, Tanimura & Antle Fresh Foods, Inc., Carmen A. Ponce, Arnold & Porter Kaye Scholer LLP, Martin R. Glick, Christopher T. Scanlan, Nunes Cooling, Inc., Brett R. Harrell, for Amici Curiae on Behalf of Petitioner.

BAMATTRE-MANOUKIAN, J.

26 Cal.App.5th 133

Labor Code section 226.2,1 which became effective January 1, 2016, addresses the manner in which piece-rate employees are to be compensated for rest and recovery periods and other

26 Cal.App.5th 134

nonproductive time on the job (collectively, rest/NP time). Subdivision (b) of the statute (hereafter section 226.2(b) ) provides a safe harbor for an employer that, prior to 2016, failed to properly compensate its piece-rate workers for rest/NP time.2 Under section 226.2(b), an employer that pays its employees for previously unpaid rest/NP time accrued between July 1, 2012 and December 31, 2015, is entitled to assert "an affirmative defense to any claim or cause of

237 Cal.Rptr.3d 4

action ... based solely on the employer's failure to timely pay the employee the compensation due for [rest/NP time] ... for time periods prior to and including December 31, 2015."

This lawsuit concerns whether an employer complying with the requirements of section 226.2(b) has a safe harbor against any employee claims for rest/NP time accruing prior to and including December 31, 2015, or has an affirmative defense only to those claims accruing between July 1, 2012 and December 31, 2015. We will conclude that under the plain and unambiguous language of section 226.2(b), an employer complying with the statute has an affirmative defense against any employee claims for rest/NP time accruing prior to and including December 31, 2015.

I. INTRODUCTION

Employers in California—and, specifically, agricultural employers—are required to "authorize and permit all employees to take rest periods." ( Cal. Code Regs. tit. 8, § 11140, subd. 12.) Agricultural employees working outdoors in temperatures exceeding 95 degrees Fahrenheit are entitled to a specified recovery period. ( Cal. Code Regs. tit. 8, § 3395, subd. (e)(6) [minimum 10-minute recovery period every two hours].) Under California law, mandated rest and recovery periods "shall be counted as hours worked, for which there shall be no deduction from wages." (§ 226.7, subd. (d); see id. , subd. (c) [providing for penalties for an employer's failure to provide mandated rest or recovery periods].) Further, where an employee's work hours are separately classified by the employer as productive (directly compensated) or nonproductive (not compensated), an employer must still pay the employee for all hours worked; an employer may not simply divide the total hours worked into the amount the employee was paid for productive

26 Cal.App.5th 135

time to arrive at an average hourly wage. ( Armenta v. Osmose, Inc. (2005) 135 Cal.App.4th 314, 324, 37 Cal.Rptr.3d 460 ( Armenta ).)

Appellate courts in two 2013 decisions— Gonzalez v. Downtown LA Motors, LP (2013) 215 Cal.App.4th 36, 155 Cal.Rptr.3d 18 ( Gonzalez ) and Bluford v. Safeway Stores, Inc. (2013) 216 Cal.App.4th 864, 157 Cal.Rptr.3d 212 ( Bluford )—clarified that the principles that nonproductive time and rest/recovery time are separately compensable apply to workers who are paid on a piece-rate basis, i.e., workers compensated based upon the type and number of tasks performed rather than the number of hours worked. The California Legislature thereafter, through Assembly Bill 1513 (AB 1513), enacted section 226.2, which codified the Gonzalez / Bluford decisions and provided a mechanism for compensating piece-rate workers for previously unpaid accrued rest/NP time. (Stats. 2015, ch. 754, § 4, p. 5609.)

Real party in interest Jose Roberto Lainez (Lainez) filed suit on May 14, 2015, against his former employer, petitioner Jackpot Harvesting Company, Inc. (Jackpot), a company that performs harvesting and farming activities in Monterey County and Ventura County. Lainez alleged that he had worked for Jackpot as an agricultural worker and was compensated on a piece-rate basis. He alleged six causes of action for himself and on behalf of all members similarly situated. Only the first cause of action—asserting claims for unpaid minimum wages for rest/NP time, as well as interest, liquidated damages, and statutory penalties—is at issue here.

On January 1, 2016, approximately six months after Lainez filed the class action complaint, section 226.2 went into effect. Under section 226.2(b), an employer complying with the statute's requirements, including payment (by December 15, 2016)

237 Cal.Rptr.3d 5

of all amounts due to employees for uncompensated rest/NP time for the period of July 1, 2012 to December 31, 2015, may assert an affirmative defense to an employee's "claim or cause of action" arising out of such uncompensated rest/NP time "for time periods prior to and including December 31, 2015." ( § 226.2(b).)

In March 2016, Jackpot filed a first amended answer to the Lainez complaint, alleging its compliance with section 226.2(b) as a 37th affirmative defense. Jackpot later moved for summary adjudication, contending that because it had complied with all of the safe harbor requirements by making back payments to Lainez and other Jackpot employees—a total of 1,138 current and former employees—the 37th affirmative defense was an absolute bar to the first cause of action of the complaint. Lainez opposed the motion, but he admitted that Jackpot had complied fully with section 226.2(b).

The superior court denied the motion, concluding that the language of the statute was unclear and that, while section 226.2(b) provided a safe harbor to

26 Cal.App.5th 136

employers against claims by piece-rate workers for unpaid rest/NP time accruing between July 1, 2012 and December 31, 2015, it did not provide a defense for such claims accruing prior to July 1, 2012.

Jackpot challenges that order by this petition for writ of mandate. Jackpot contends that under the plain language of the statute, if an employer complies with the requirements of section 226.2(b), it has a safe harbor defense to all employee claims for unpaid rest/NP time accruing on or prior to December 31, 2015. Jackpot argues alternatively that even if the language of section 226.2(b) is unclear, applying all rules of statutory interpretation, including consideration of legislative history, the intent of the Legislature was to provide employers that complied with section 226.2(b) a complete defense to all such claims for unpaid rest/NP time accruing on or prior to December 31, 2015. Jackpot urges that writ relief is appropriate to address the claimed error because, inter alia, the trial court's ruling "has far-reaching consequences for similarly situated California employers" that, like Jackpot, elected under the safe harbor provision to make back payments to their piece-rate employees. Jackpot claims that over 2,300 private companies made such an election.3

The parties have cited no published cases interpreting the safe harbor provisions of section 226.2(b). After our careful reading of the statute and our application of established rules of statutory interpretation, we conclude that the unambiguous language of section 226.2(b) provides the employer a safe harbor for all employee claims for unpaid rest/NP time accruing on or prior to December 31, 2015, where the employer has complied with all the requirements of the statute, including timely paying employees for such claims that had accrued between July 1, 2012 and December 31, 2015. We conclude that the court erred in denying Jackpot's motion for summary adjudication. We will therefore grant the petition for writ of mandate and will direct respondent superior court to enter

237 Cal.Rptr.3d 6

an order granting Jackpot's motion for summary adjudication of the first cause of action of the complaint.

II. FACTUAL AND PROCEDURAL BACKGROUND

A. Pleadings

Lainez filed his class action complaint on May 14, 2015, alleging six causes of action. In the first cause of action of his complaint, Lainez alleged

26 Cal.App.5th 137
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