Tuesday, August 9, 2011

Central District Certifies Meal Period and Off-The-Clock Claims on Behalf of California H&R Block Workers: Ugas v. H&R Block Enterprises, LLC

On Aug. 4, 2011, Central District Judge Christina A. Snyder granted certification of meal period and overtime claims on behalf of California “Tax Professionals" employed by H&R Block. See Ugas v. H&R Block Enters., 2011 U.S. Dist. LEXIS 86769 (C.D. Cal. Aug. 4, 2011). According to plaintiffs, the (1) defendant maintained a policy of not paying Section 226.7 premium wages despite utilizing a standardized computer time tracking system which placed defendant on actual notice that meal breaks were regularly being missed, and (2) alleged that a district manager overseeing the plaintiff’s location maintained a de-facto policy of having employees adjust their working time to exclude overtime hours and record meal breaks as having been taken. See id., at 11-13.  According to plaintiffs, the later was to be established by testimony of the manager of plaintiff's location, as well as a comparison of time records and times recorded through the tax preparation software utilized by employees.

In certifying plaintiff’s meal break claim, the Court reasoned that defendant’s absolute policy of not paying section 226.7 premium wages provided a common issue upon which defendant's liability could be adjudicated as to the class as a whole:
In this case, the Court need not reach the question of whether defendants were required to ensure that employees took their meal breaks or whether defendants were required only to make them available. Plaintiffs have presented sufficient evidence that defendants, as a policy, do not pay the legally required meal break premium pursuant to Cal. Labor Code § 226.7. This question of law and fact will be common to the class members and is central to plaintiffs' meal break claim. See Exh. 2, Plaintiffs' Compendium of Cited Portions of Depositions (deposition testimony of Kaye Micek stating that an associate will be paid "for the time that he is working" when a meal break is missed); Ugas Decl. ¶ 18, Guerra Decl. ¶ 18 ("While I was paid for working through the meal breaks, I was not reimbursed by H&R Block at a rate of an hour's pay at my regular rate of pay"). n5 Moreover, plaintiffs meets the typicality standard of Rule 23(a) because they, and all class members, were employed by defendants on an hourly basis during the class period, were subject to the same policies and procedures, and were allegedly improperly compensated. Therefore, the Court concludes that it is proper to certify the California subclass with respect to plaintiffs' meal break claim, and it is not necessary to stay that decision until the resolution of Brinker.
See Ugas, 2011 U.S. Dist. LEXIS 86769, at 23-25.

However, with regard to plaintiff’s off-the-clock claim, the Court concluded that deposition testimony by the office manager that district manager had instructed her to have employees adjust time records to exclude overtime was sufficient to only certify a sub-class for the specific district which the plaintiff worked:
In reaching this conclusion, the Court first finds that plaintiffs have satisfied the requirements of Rule 23(a). With respect to numerosity, plaintiffs establish that even if the class were limited to the Pomona region, it would include 148 putative class members, which is sufficient to meet this requirement. Moreover, as to commonality, plaintiffs have offered sufficient evidence that they may be able to show that defendants pursue an unwritten policy to improperly withhold overtime wages from class members in this district. Plaintiffs' evidence includes the comparison of computer programs tracking clock-in and clock-out times with time logged in to Tax Preparation Software, and testimony by Cabrera that she was instructed by the District Manager that she should alter time records to remove overtime and to add meal breaks. Cabrera Depo. 82:21-83:2 ("[I]f there was over time, there was yellow. And she says, 'Okay, you're going to take this off.' And then, 'Look, this person, so-and-so doesn't have a lunch break. You need to put at least 15 to 30 minutes in there.' Okay. So I'd go and fix it. And that's how I was taught how to do it"); Cabrera Depo. 87:7-12 ("She was training me, and she was telling me what all this is, yellow and red, and says 'See how this is? This has overtime here. You have to take that overtime because there's no overtime allowed right now. . .' it was part of what she was showing me how to do"). n6 This evidence is sufficient to establish a common method of proof as to the liability of defendants, based on the existence of an unwritten company policy. It is also sufficient to establish a common method of proof as to damages, as the Court finds the comparison of the STAR data with the TPS data seems to the Court to be a viable methodology to make a class-wide calculation.
See Ugas, 2011 U.S. Dist. LEXIS 86769, at 26-28.

In certifying the subclass, the Court rejected the defendant’s argument that the Supreme Court’s decision Wal-Mart precluded a finding of commonality based solely on the testimony of the discrict managers alleged de facto policy:
The Court also rejects defendants' argument that the recent Supreme Court decision in Wal-Mart Stores, Inc. v. Dukes, et al., No. 10-277, 564 U.S. (June 20, 2011) precludes certification in the instant case. Unlike in Wal-Mart, here plaintiffs have shown that there was "a common mode of exercising discretion that pervades the entire company," at least with respect to the Pomona district. Defendants may be able to prove at trial, or on a motion for summary judgment, that their policies, written and unwritten, do not violate any labor laws. However, plaintiffs' claims, as alleged, and as supported by sufficient, though controverted, evidence, support certification of the subclasses as defined by the Court.
See Ugas, 2011 U.S. Dist. LEXIS 86769, at 30.

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