Kaanaana v. Barrett Bus. Servs., Inc.

• Decision Date: 30 November 2018
• Docket Number: B279838,B276420
• Citation: 240 Cal.Rptr.3d 636,29 Cal.App.5th 778
• Court: California Court of Appeals Court of Appeals
• Parties: David KAANAANA et al., Plaintiffs and Appellants, v. BARRETT BUSINESS SERVICES, INC., et al, Defendants and Respondents.

29 Cal.App.5th 778

240 Cal.Rptr.3d 636

David KAANAANA et al., Plaintiffs and Appellants,

v.BARRETT BUSINESS SERVICES, INC., et al, Defendants and Respondents.

B276420

B279838

Court of Appeal, Second District, Division 8, California.

Filed November 30, 2018

SUMMARY

RUBIN, J.

These are appeals from a judgment and a postjudgment attorney fee order in a class action alleging Labor Code violations. The case presents two principal issues. The first is whether plaintiffs should have been paid the prevailing wage applicable to workers employed on public works. The second is the applicable remedy when an employer violates statutory and regulatory provisions requiring employers to provide workers with a duty-free 30-minute meal period, by shortening the meal period by three to five minutes. On the second issue, there is no dispute that plaintiffs are entitled to the statutory remedy under Labor Code section 226.7 – an additional hour of pay at their regular rate.¹ But plaintiffs contend they are also entitled to payment of the minimum wage for the entire 30-minute meal period, while defendants contend they are entitled to nothing more than the section 226.7 remedy.

The trial court found (1) the prevailing wage law did not apply to plaintiffs; and (2) the section 226.7 remedy was the exclusive remedy for the shortened meal period. We disagree with both conclusions and hold:

First, the prevailing wage law applies; under well-established principles of statutory interpretation, plaintiffs were engaged in "public work" within the meaning of the Labor Code. The amount of back pay to which plaintiffs are entitled for the prevailing wage law violation, and whether they are entitled to additional damages arising from the breach, are matters left to the trial court in the first instance on remand.

Second, the remedy for defendants' improper shortening of plaintiffs' meal periods consists of (1) one additional hour of pay for every shortened meal period (so-called "premium pay"), as provided under section 226.7, and also (2) payment of wages for actual time worked during the shortened meal period. Plaintiffs are not entitled to be compensated for that part of the meal period time during which they were free from employer control.

Because plaintiffs were entitled to payment of minimum wages for actual time they were required to work during their meal periods, defendants may be subject to the "waiting time penalties" that apply when an employer willfully fails to pay any wages of an employee who is discharged or quits (§ 203, subd. (a) ). In addition, defendants are subject to civil penalties under section 1197.1 for payment of wages less than the legal minimum.

Finally, because the case must be remanded to recalculate plaintiffs' recovery, we will not consider plaintiffs' claims of error in the attorney fee award, as that award is vacated to permit the trial court to reconsider attorney fees following remand.

FACTS AND PROCEDURAL BACKGROUND

Plaintiffs sued defendant Barrett Business Services, Inc., a company providing staffing and management services. Defendant provided employees for two publicly owned and operated recycling facilities under contracts with Los Angeles County Sanitation Districts. The class consisted of "belt sorters" employed by defendant at those facilities between April 15, 2011, and September 30, 2013. Plaintiffs alleged failure to pay minimum wages, overtime, and all wages owing at termination (all based at least in part on alleged noncompliance with the prevailing wage law); failure to provide meal periods; unfair competition; and civil penalties under sections 558, 1197.1 and 2698 (PAGA, the Private Attorneys General Act of 2004).²

Defendant brought a motion to strike the prevailing wage claims, contending it was not required to pay the prevailing wage as a matter of law. The trial court granted the motion in January 2016, concluding the work plaintiffs performed sorting recyclables did not come within the definition of "public works" under the prevailing wage law.

Thereafter, the parties stipulated to certain facts, and to the admissibility and authenticity of certain evidence, for purposes of trial on plaintiffs' other claims. Central to these claims was defendant's policy of requiring belt sorters to return to their stations at the conveyor belt before the end of their 30-minute meal break. The stipulated facts included, in addition to points already mentioned, the following.

The class members are all former employees of defendant. The belt sorters stood at sorting stations along a conveyor belt, removing recyclable materials from the conveyor belt and placing them in receptacles at their sorting stations.

The lead belt sorters would turn the belt off for meal breaks, and the belt sorters were required to clock out for meal breaks, which they all took together. The lead belt sorter was responsible for rounding up the belt sorters to clock back in after meal breaks. Plaintiffs were paid a base hourly rate between $8.25 and $10.75 during the class period.

The parties further stipulated that deposition testimony could be substituted for live testimony for any witness, and the deposition transcripts were deemed authentic. Only one witness presented live testimony at the trial: plaintiffs' expert witness on damages, who was cross-examined by defendant. The parties filed pretrial and posttrial briefs, and the court heard oral arguments after the posttrial briefing.

Plaintiffs asserted two theories of recovery on the wage and hour violations, both based on the meal period defendant provided. The first was that defendant failed to provide at least 30 minutes of duty-free time during meal periods, requiring plaintiffs to return to the conveyor belt (which was turned off for just 30 minutes during meal periods) three to five minutes before it restarted. This made defendant liable under section 226.7 for meal period premiums (one additional hour of pay) for each workday that a full 30-minute meal period was not provided. The amount claimed was $227,190.73.

Plaintiffs' second theory of recovery was that, by not counting the improperly shortened meal periods as "time worked," defendant did not pay plaintiffs "the legal minimum wage" under section 1194.³ That is, the "truncated meal periods should have been considered an ‘on-duty meal period,’ ... and the belt sorters should have been paid at least the minimum wage for this time." Plaintiffs asserted this theory of recovery was "separate and distinct from the right to recover a meal period premium" under section 226.7. According to plaintiffs, each class member could recover 30 minutes of pay at the minimum wage for each shortened meal period, plus interest, as well as liquidated damages in the same amount under section 1194.2.⁴ The amount claimed was $216,486.92.

In addition, plaintiffs contended they were entitled to "waiting time penalties" that apply when an employer willfully fails to pay "any wages of an employee who is discharged or who quits." (§ 203, subd. (a).)⁵ (This claim was based both on failure to pay the meal period premium pay and on failure to pay the minimum wage for the meal periods that were improperly shortened.) The amount claimed was $377,599.20.

Finally, plaintiffs sought civil penalties under PAGA, which allows a representative action to recover civil penalties for violations of the Labor Code. (§ 2699.) Plaintiffs sought these penalties under section 558 (for meal period violations)⁶ and section 1197.1 (for minimum wage violations).⁷ The amount claimed was $1,390,800.

Defendant contended that even if the court found plaintiffs were not provided a full 30-minute meal period, "the imposition on their time" was de minimis and therefore noncompensable. If the court were to find a remedy was justified, defendant argued, the "sole and exclusive" remedy was the additional hour of pay under section 226.7, and "no other remedies or penalties are legally or factually appropriate."

The trial court's verdict was as follows:

The evidence established that employees lost three to five minutes of a 30-minute break. The court awarded $227,190.73 "for the 22,220 instances in which the unrounded time records reflect breaks of less than 30 minutes."

"[F]or the employees who lost three to five minutes of a 30 minute break, they are not entitled to recover minimum wages for all or any portion of the meal period. Their exclusive remedy is a meal period premium under Labor Code section 226.7."

No waiting time penalties applied, because no minimum wages were owed for the shortened meal periods "and the meal period premiums that are owing for the shortened meal periods are not a wage that could trigger waiting time penalties."⁸

The court awarded the class $53,293.50 in civil penalties under PAGA. Plaintiffs sought civil penalties under section 558 for noncompliant meal periods totaling $409,950, but the court exercised its discretion to reduce the penalties to 13 percent of the full amount. (On average, plaintiffs were deprived of 13 percent of the 30-minute meal period.) The court found the full penalty would be "unjust, arbitrary and oppressive, or confiscatory" under section 2699, subdivision (e)(2). No civil penalties were owing under section 1197.1 for unpaid minimum wages.

Plaintiffs filed a timely notice of appeal.

Plaintiffs then sought attorney fees under PAGA and Code of Civil Procedure section 1021.5 of $1,095,140. The trial court awarded fees of $109,514, and plaintiffs appealed.⁹

We ordered the two appeals consolidated for purposes of oral argument and decision.¹⁰

DISCUSSION

1. The prevailing wage claim

a. Overview of prevailing wage law

Plaintiffs argue that performing recycling sorting work pursuant to defendant's contract with County Sanitation Districts constitutes "public work," which entitles them to payment of a prevailing wage. The trial court concluded the work was not "public work," because it was not in the nature of construction work. We disagree with this narrow...