In a rare “win” for California employers, the California Supreme Court recently ruled in ZB, N.A. Beth West and the other employment attorneys at Weintraub Tobin are available to assist you in your wage and hour compliance and are happy to discuss the Lawson case further. Labor Code Section 558 was enacted as part of the Eight-Hour-Day Restoration and Workplace Flexibility Act of 1999. The Court also said Labor Code section 558 – individually actionable through PAGA – makes clear that an individual defendant can be subject to the penalties of Labor Code section 510 if he is “acting on behalf of an employer who violates, or causes to be violated” (Lab.Code, § 510. Indiana Lawson brought the representative action against her employer, ZB, N.A. Board of Patent Appeals, Preamble However, it ordered the issue to arbitration “as a representative action” for the unpaid wages of all aggrieved ZB employees. After consolidating the two, the appellate court dismissed the appeal, holding that Code of Civil Procedure section 1294 only gave it appellate jurisdiction over an order dismissing, not granting, a motion to compel arbitration. Home > Employment Contracts and Agreements > The California Supreme Court Clarifies Wages are NOT Part of the “Civil Penalty” under Labor Code Section 558 in a PAGA Action. Florida However, as the Court explained, while section 558 gave the state exclusive power to collect unpaid wages through its citation procedure, section 558 achieves the same result with respect to unpaid wages as a private right of action for unpaid wages under Labor Code section 1194 does. In its prior Iskanian case, the Supreme Court held that a court may not enforce an employee’s alleged pre-dispute waiver of the right to bring a PAGA claim in any forum. ZB, N.A. In the very last paragraph of SB 588, a new Labor Code §558.1 was added which, for the first time, creates individual liability for owners, directors, officers, or managing agents of an employer for violations of certain sections of the California Labor Code. If the Labor Commissioner issues a citation, the local entity shall not cite the employer for the same violation. Texas The Labor & Employment Group is dedicated to providing up-to-date, useful information to allow employers and human resources professionals to react to rapidly evolving case law, statutes, and regulations that control the California workplace. The Court began its analysis by examining the history of Section 558 and PAGA. ), Alabama However, the Supreme Court determined that to resolve the Lawson case it was required to ask an even more fundamental question: Can a plaintiff seek “an amount sufficient to recover underpaid wages” [as stated in Section 558] in a PAGA action at all? III - Judicial The Golden State's highest court said the Private Attorneys General Act doesn't give workers claims for back pay under state labor code Section 558, which lets the commissioner of labor … Illinois Massachusetts On September 12, 2019, the California Supreme Court issued it decision in ZB, N.A., and Zions Bancorporation v. Superior Court [Lawson, real party in interest] (“Lawson”). The Court of Appeal thought so and concluded that section 558’s civil penalty encompassed the amount for unpaid wages [into the “civil penalty”], and therefore Lawson’s claim for unpaid wages could not be compelled to arbitration under Iskanian. There is no private right of action to recover such “unpaid wages” under section 558. (citing Ontiveros v. The Supreme Court granted review of the Lawson case to decide whether the Iskanian case controlled the facts and whether or not the Federal Arbitration Act (FAA) (9 U.S.C. (2)        For each subsequent violation, one hundred dollars ($100) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages. (c) In a jurisdiction where a local entity has the legal authority to issue a citation against an employer for a violation of any applicable local overtime law, the Labor Commissioner, pursuant to a request from the local entity, may issue a citation against an employer for a violation of any applicable local overtime law if the local entity has not cited the employer for the same violation. Section 558 is unusual because, through PAGA, it provides that workers can recover both flat rate penalties and penalties equal to their underpaid wages. 1. Therefore, only the fixed amount stated in section 558 qualifies as a “civil penalty” for purposes of a PAGA claim. the enactment of the PAGA, section 558 gave the Labor Commissioner authority to issue overtime violation citations for “a civil penalty as follows: [¶] (1) For any initial violation, fifty … (Labor Code §558, italics added.) With offices in Sacramento, San Francisco, Beverly Hills, Newport Beach and San Diego, the Weintraub Tobin Law Corporation combines its shared vision and pledges to be an innovative provider of sophisticated legal services to dynamic businesses and business owners, as well as non-profits and individuals with litigation and business needs. CA Labor Code § 558 (2017) (a) Any employer or other person acting on behalf of an employer who violates, or causes to be violated, a section of this chapter or any provision regulating hours and days of work in any order of the Industrial Welfare Commission shall be subject to a civil penalty as follows: The Court found that its conclusion — that unpaid wages under section 558 must be distinguished from the civil penalty aggrieved employees may recover under the PAGA — is not inconsistent with the Labor Code’s broader remedial purpose or “the protection of employees.”   It also rejected Lawson’s contention that unpaid wages recovered under section 558 meet the definition of “civil penalty” because prior to the PAGA, only the state could bring an action under section 558 because there is no private right of action under that section. It held that the civil penalties a plaintiff may seek under section 558 through a PAGA action do not include the “amount sufficient to recover underpaid wages.” The Court reasoned that, although section 558 authorizes the Labor Commissioner to recover such an amount, “… this amount –– understood in context –– is not a civil penalty that a private citizen has authority to collect through the PAGA.”. Section 558 also provides that these civil penalties are in addition to an amount sufficient to recover underpaid wages. The Private Attorneys General Act and Labor Code Section 558 PAGA, codified in Labor Code, § 2698 et seq., allows an employee to recover civil penalties for Labor Code violations committed against them and other aggrieved employees by bringing — on behalf of the state — a representative action against the employer. (a) Any employer or other person acting on behalf of an employer who violates, or causes to be violated, a section of this chapter or any provision regulating hours and days of work in any order of the Industrial Welfare Commission shall be subject to a civil penalty as follows: (1) For any initial violation, fifty dollars ($50) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages. (a) Any employer or other person acting on behalf of an employer who violates, or causes to be violated, a section of this chapter or any provision regulating hours and days of work in any order of the Industrial Welfare Commission shall be subject to a civil penalty as follows: Attorneys representing employees have relied heavily on Labor Code section 558 in most PAGA actions. New Jersey (d) The civil penalties provided for in this section are in addition to any other civil or criminal penalty provided by law. the enactment of the PAGA, section 558 gave the Labor Commissioner authority to issue overtime violation citations for “a civil penalty as follows: [¶] (1) For any initial violation, fifty dollars ($50) for each underpaid employee for each pay period US Tax Court In the appellate court’s view, an employee could pursue the entire, indivisible civil penalty through the PAGA action, and that pursuant to Iskanian v. CLS Transportation Los Angeles, LLC, her employer could not compel the PAGA claim to arbitration. The firm continues its long-time and strong support of the communities in which its attorneys live and work. Lukas Clary in The Sacramento Bee: A COVID Vaccine is On The Way. Michigan California And unlike other PAGA penalties, of which 75 percent go to the State and 25 percent go to the workers, the underpaid wages recovered under section 558 all go directly to the workers. The result is that (if your trial court follows Lawson) employers cannot compel your PAGA civil-enforcement claims under section 558 into arbitration. After a nine-day bench trial, the trial court ruled in Plaintiffs’ favor on every cause of action. (2) For each subsequent violation, one hundred dollars ($100) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages. Art. Therefore, as a PAGA claim and not a separate claim for victim- specific relief, § 558 wage claims may not be compelled to arbitration, because they are part of PAGA’s civil penalty scheme. Section 558 of the California Labor Code is a civil penalty statute permitting the Labor Commissioner to issue citations for: (1) civil penalties, which are to be dispersed to the state, and (2) "underpaid wages," which are … Georgia In support of this holding, the Court explained that the only PAGA remedy under Section 558 is the civil penalty of either $50 or $100 per pay period. (AB 970) Effective January 1, 2016. Art. — with whom she agreed to arbitrate all employment claims and forego class arbitration — and its parent company, Zions Bancorporation (collectively, “ZB”). Will Employers Require Their Workers Get The Shot? Before the enactment of the PAGA, section 558 gave the Labor Commissioner authority to issue overtime violation citations for a civil penalty as follows: (1) For any initial violation, fifty dollars ($50) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages . Art VII - Ratification. Because a claim under Labor Code § 558 is indivisible and it is a civil penalty encompassed by the California Private Attorneys General Act (“PAGA”), the entire claim under Labor Code § 558 is not subject to any arbitration agreement between an employee and an employer, even if the employee waived his or her right to bring a class or representative claim against his or her employer. As such, the Court affirmed the order denying ZB’s motion to compel arbitration and remanded the case to the trial court who can decide whether or not to grant her leave to amend her complaint to pursue the “unpaid wages” claim under section 1194 instead of section 558. had preemptive force where an aggrieved employee seeks to recover an amount sufficient to recover underpaid wages in a PAGA action. 2015, Ch. Lawson brought the … As originally written, the Act enabled the California Labor Commissioner to collect civil penalties and unpaid wages from employers. II - Executive Labor Code section 1197.1 has similar language, and the legislature later amended that code to state clearly and specifically that penalties and wages were separate items. If you identify problems, you should immediately correct any missing … IV - States' Relations Oregon Before the enactment of the PAGA, section 558 gave the Labor Commissioner authority to issue overtime violation citations for a civil penalty as follows: (1)        For any initial violation, fifty dollars ($50) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages. In a significant victory for California employers who use arbitration agreements, the California Supreme Court ruled (ZB, N.A. Specifically, as to the eighth cause of action for civil penalties under PAGA… (3) Wages recovered pursuant to this section shall be paid to the affected employee. Seyfarth Synopsis: The California Supreme Court has held that an individual may not seek unpaid wages under Labor Code section 558. Labor Code Section 558.1 California Labor Code § 558.1, effective January 1, 2016, states that an employer or “ other person acting on behalf of an employer ” who violates California’s wage and hour laws “may be held liable as the employer. North Carolina Now Available! ZB filed a motion compelling that Lawson  individually arbitrate her “unpaid wages” claim under section 558 because it was not a PAGA civil penalty claim. The Lawson case concerned a PAGA action seeking civil penalties under Labor Code section 558. Accordingly, the Court ordered Mr. Pedrazzani personally to pay $31,074 in civil penalties and over $300,000 in attorneys’ fees to the plaintiff. Weintraub Genshlea Chediak Law Corporation, What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws, Newsom Signs Executive Order Modifying CalOSHA’s Emergency Temporary COVID-19 Regulations. As for the question of arbitration in this case, the motion to compel the “unpaid wages” part of the section 558 claim to arbitration really became a moot point. PAGA allows employees to recover civil penalties on behalf of themselves and other employees that previously were recoverable only by the Labor Commissioner, including the civil penaltie… This blog’s objective is to serve as a forum to discuss labor and employment topics, issues and legal news. It sought to interpret Section 558 consistently with other codes that have similar language. Section 558.1 expressly defines “employer or other person acting on behalf of an employer” to include a “natural person who is an owner, director, officer, or managing agent of the employer.” Accordingly, potentially any managing agent who “causes” a wage and hour Labor Code provision to be violated could be held personally liable. Arizona v. Superior Court of San Diego County, S246711 (September 12, 2019)) that the recovery of underpaid wages was not a civil penalty recoverable under the Private Attorney General Act, Labor Code section 2699 et seq. On February 27, 2012, in Thurman v. Bayshore Transit Management, Inc., the California Court of Appeal affirmed a trial court's award of underpaid "wages" – i.e., premium payments for violations of California's meal and rest period laws and regulations – as a penalty under California Labor Code section 558. 381.) seq.) California Labor Code 558… Nevada Art. The trial court generally agreed, bifurcating Lawson’s action and granting ZB’s motion to compel arbitration of the “unpaid wages” issue. Art. Washington, US Supreme Court Art. Section 558 can be invoked only by the Labor Commissioner or by an individual suing under PAGA, and PAGA claims are limited to the recovery of civil penalties. The dispute in ZB centered on the language of Labor Code Section 558. The procedures for issuing, contesting, and enforcing judgments for citations or civil penalties issued by the Labor Commissioner for a violation of this chapter shall be the same as those set out in Section 1197.1. Section 558 authorizes the Labor Commissioner to seek a civil penalty in connection with overtime and other workday violations at an initial violation rate of $50 for each underpaid employee for each pay period and a subsequent violation rate of $100 for each underpaid employee for each pay period. I - Legislative Art. In analyzing whether the Plaintiff’s lawsuit could be compelled to binding arbitration under the arbitration agreement she entered into with her employer, the Supreme Court clarified that under Labor Code section 558, employees are not entitled to recover underpaid wages in a Private Attorneys General Act (“PAGA”) claim. 558. Section 558 provides that "any employer or other person acting on behalf of an employer who violates, or causes to be violated, [Labor Code sections 500 through 558], or any provision regulating hours and days of work in any order of the [IWC] shall be subject to a civil penalty...." V - Mode of Amendment Labor Code Section 558 and PAGA. The Supreme Court concluded differently. 783, Sec. California workers are increasingly turning to the Private Attorneys General Act (PAGA) to protect their rights under the Labor Code. Ohio In Iskanian v. Copyright © 2020, Weintraub Tobin Chediak Coleman Grodin Law Corporation. Pedrazzani therefore qualified as the “other person” who could be held liable under Labor Code §§ 558 and 1197.1. Since § 558 articulated no private right of action, it therefore could only be enforceable by the state’s Labor and Workforce Development Agency. PAGA, California’s Private Attorneys General Act of 2004, allows employees to sue their employers on behalf of themselves and other “aggrieved” employees to recover penalties for Labor Code violations. Feel free to contact any one of them. The Court of Appeal also held that such underpaid wages may also be recoverable … et al. § 1 et. Labor Code Section 558 and PAGA Section 558 of the California Labor Code is a civil penalty statute permitting the Labor Commissioner to issue citations for: (1) civil penalties, which are to be dispersed to the state, and (2) “underpaid wages,” which are … California’s Private Attorneys General Act (PAGA) Pennsylvania ZB responded by filing both an appeal and petition for writ of mandate with the Court of Appeal. All Rights Reserved. However, ZB persuaded the Court of Appeal to issue the writ of mandate, but the court did so on a different ground from the one ZB asserted. v. Superior Court of San Diego County. Labor Code section 558 (a) provides for recovery of civil penalties for violations of overtime requirements and other provisions: v. Superior Court that the “underpaid wages” authorized by Labor Code §558 are not recoverable in a PAGA action. Labor Code section 558(a) is particularly useful to . The Court found that where such a waiver appears in an employee’s arbitration agreement, the FAA does not preempt state law. Weintraub Tobin’s 2021 Labor and Employment Virtual Seminar and Training Schedule, A Deeper Dive into the New Cal/OSHA Temporary Emergency Standards for COVID-19 Prevention. The appellate court concluded that Lawson’s request for “unpaid wages” under section 558 in fact could not be arbitrated at all. Make Necessary Corrections. New York The wages recovered purs… Focusing on legal trends in data security, cloud computing, data privacy, and anything, The California Supreme Court Clarifies Wages are NOT Part of the “Civil Penalty” under Labor Code Section 558 in a PAGA Action. (b) If upon inspection or investigation the Labor Commissioner determines that a person had paid or caused to be paid a wage for overtime work in violation of any provision of this chapter, any provision regulating hours and days of work in any order of the Industrial Welfare Commission, or any applicable local overtime law, the Labor Commissioner may issue a citation. Paga is a city in Ghana, well-known for its crocodile pools. VI - Prior Debts (e) This section does not change the applicability of local overtime wage laws to any entity. Virginia Relying on Thurman v. Bayshore Transit Management (Thurman), the Court of Appeal interpreted section 558 to expressly include “underpaid wages” within the scope of its “civil penalty” provision. (Amended by Stats. Labor Code section 558 only permits plaintiffs to recover civil penalties, not any recovery of unpaid wages in PAGA actions. 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