Friday, July 23, 2010

District Court Grants Plaintiffs Summary Judgment On Vacation and Wage Statement Claims: Lopez v. G.A.T. Airline Ground Support, Inc.

On July 19, 2010, Southern District Judge Irma E. Gonzalez, issued an order granting (in part) a plaintiff-side motion for summary judgment of various wage claims in Lopez v. G.A.T. Airline Ground Support, Inc., 2010 U.S. Dist. LEXIS 73029 (S.D. Cal. July 19, 2010). In my opinion, the Court’s discussion regarding the plaintiffs’ vacation pay and wage statement claims are noteworthy.

With regard to plaintiffs’ vacation pay claim, the Court held that the following policy contained in the defendant’s employee handbook violated Labor Code § 227.3 as a matter of law: “Upon completion of one year of continuous employment, hourly employees will receive 5 days of paid vacation. Employees will continue to receive 5 days of paid vacation annually on their Anniversary Date.” See Lopez, 2010 U.S. Dist. LEXIS 73029, at 10. Plaintiff claimed that this policy required employees to forfeit vested vacation pay if they are not employed on the one-year anniversary of their start date, in violation of Section 227.3. See id. Conversely, the defendant claimed that the policy merely conditioned an employee’s right to vacation on satisfying a “probationary period”, a practice which the defendant claimed was deemed lawful in Owen v. Macy's, Inc., 175 Cal. App. 4th 462 (2009).

The Court sided with plaintiffs, reasoning that defendant’s policy was distinguishable from Owen because it did not condition the “accrual” of vacation rights on satisfying the one year probationary period:
GAT's policy is distinguishable from the one in Owen. The policy in Owen expressly stated that employees did not "earn and vest in paid vacation" for the first six months of employment. [] Then, after the first six months, the employees in Owen received vacation days as an advance for the coming year, on the assumption that the employees would remain with the company during the coming year. Here, GAT's policy does not specify that no vacation is earned or vested during the first year, only that employees do not "receive" the five vacation days until their one-year anniversary. Also, unlike the policy in Owen, the vacation GAT employees receive on their first-year anniversary is not an "advance" for vacation earned during the second year of employment. Douglas Gray, a GAT payroll manager, testified employees receive five days of vacation after one year, and then accrue vacation time on a pro-rata basis going into their second year of employment (and continuing onward). [] Therefore, GAT's vacation policy requires employees to forfeit vested vacation pay in violation of Section 227.3.
See Lopez, 2010 U.S. Dist. LEXIS 73029, 11-12.

The Court also granted summary judgment in favor of plaintiffs with regard to their Section 226 wage statement claims. There, the Court concluded that the defendant’s failure to include the applicable hourly rate of pay for regular and overtime hours required plaintiffs to do complex mathematical calculations to determine the accuracy of their paychecks, and thereon, violated Section 226(a) as a matter of law:
It is undisputed that GAT's paychecks do not indicate the applicable hourly rate of pay for the employee's regular rate, overtime rate, or double-time rate of pay. Plaintiffs' paychecks included only the total number of hours worked and the total amount paid. Therefore, Plaintiffs had to perform mathematical calculations to determine if their paychecks were accurate. Cicairos v. Summit Logistics, Inc., 133 Cal. App. 4th 949, 35 Cal. Rptr. 3d 243, 247 (Ct. App. 2005) ("If it is left to the employee to add up the daily hours shown on the time cards or other records so that the employee must perform arithmetic computations to determine the total hours worked during the pay period, the requirements of section 226 would not be met."). The failure to provide this information violates Section 226(a).
It is also undisputed that GAT's wage statements indicate only the end date for each pay period, and do not list the beginning date. Defendants argue the pay period was sufficiently identified on the paychecks, because the paychecks provide the pay period when reviewed sequentially. However, the Labor Code requires each wage statement to provide "the inclusive dates of the period." See Cal. Labor Code. § 226(a).
Therefore, Plaintiff is entitled to summary judgment on the issue of whether Defendants furnished accurate itemized wage statements. Defendants violated Labor Code § 226(a) by failing to include the inclusive dates of the period for which employees were paid, the applicable hourly rates, and the corresponding number of hours worked at each hourly rate.
See Lopez, 2010 U.S. Dist. LEXIS 73029, 18-19.

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