Wednesday, May 2, 2012

Southern District Finds Waiver Argument Unpersuasive Post-Brinker; Certifies Meal and Rest Period Claims On Behalf of “Piece Rate” Workers: Schulz v. Qualxserv

On April 26, 2012, Southern District Court Judge, Hon. Anthony J. Battaglia, certified a swath of wage and hour claims on behalf of computer repair “field service technicians” who were paid by way of a piece-rate compensation.  See Schulz v. Qualxserv, LLC, 2012 U.S. Dist. LEXIS 58561, 1-2 (S.D. Cal. Apr. 26, 2012).  The Court’s opinion contains excellent discussion on various issues, many unique to alleged wage violations occurring in the context of fixed piece-rate compensation (as opposed to an hourly compensation).  Moreover, the Court’s opinion would seem to be the first district court opinion addressing the impact of Brinker Restaurant Corp. v. Superior Court [discussed previously here, here and here] on the certification of meal and rest period claims.

Here, the plaintiffs sought certification on the grounds that liability could be commonly established based on the employer’s failure to maintain a policy affirmatively relieving employees for meal and rest periods, coupled with a systematic failure to record meal periods.  [The employer apparently did not maintain detailed break policies or record meal breaks because employees were paid by project and free to determine their own breaks.  See Schulz, 2012 U.S. Dist. LEXIS 58561, 12].  The employer opposed certification – citing to Brown v. Fed. Express Corp., 249 F.R.D. 580, 585-87 (C.D. Cal. 2008) – on the grounds that plaintiffs had failed to provide “evidence that it ‘deprived’ technicians of meal or rest breaks as a general policy and, therefore, highly individual questions predominate over any common issue.”  See Schulz, 2012 U.S. Dist. LEXIS 58561, at 22.

Significantly, the Court rejected the defense argument based on Brinker’s finding that an employer must first establish it maintained a policy of actually relieving employees of duty (and control) for legally compliant meal/rest period before leaping to the question of waiver [this is discussed more thoroughly in a previous post, here (at paragraph 2)].  As the Court explained, the standard articulated in Brinker provides “that ‘an employer's obligation is to relieve its employees of all duty with the employee thereafter [being] at liberty to use the meal period for whatever purpose he or she desires….’” See Schulz, 2012 U.S. Dist. LEXIS 58561, at 22-23 (quoting Brinker, at page 8).  In granting certification, the Court reasoned that “common questions [predominated] under this standard because Plaintiffs' challenge the Defendants' common corporate policy of failing to relieve the technicians of all work during the rest and meal breaks.”  See id., at 23-24.  Thus, as the plaintiff’s theory of liability was focused on the legal adequacy of the employer’s policy itself, issues of pertaining to waiver were not implicated and certification was appropriate.

In addition to the forgoing, the Court also rejected the employer’s argument based on the fact “Plaintiff's meal break claim is … based on Defendants' alleged failure to comply with Wage Order No. 4-2001, which requires the employer to ‘record’ unpaid meal periods.”  See id., at 24.  As previously discussed here (at paragraph 4), Brinker precludes an employer who fails to record meal breaks from benefitting from its misconduct by claiming individualized issue of waiver must now prelude class-wide adjudication. 

In all, the Court’s analysis signifies a fairly dramatic departure from the pre-Brinker treatment of waiver as a defense to certification.

[As an aside, the fact pattern in this case raises other interesting questions.  For example, an employer who pays employees on a piece rate basis presumably cannot simply assume by default that employees took meal breaks, as such a policy would impermissibly compensates employees who work through their breaks the exact same amount as those employees take breaks.  At a minimum, employees must receive compensation for all hours worked, even if the employee waived his or her break.  Similarly, would an employee ever receive a "paid" rest period (as required by the Wage Orders) absent a separate piece-rate dedicated solely to rest break pay?  Absent such a policy, employees are technically only paid for the piece-rate tasks performed and would necessarily receive the same compensation regardless of whether an off-duty rest break was ever authorized (resulting in the employer extracting 20 minutes of “free work” from the employee).  See Murphy v. Kenneth Cole Productions, Inc., 40 Cal. 4th 1094, 1104 (2007) (“If denied two paid rest periods in an eight-hour workday, an employee essentially performs 20 minutes of ‘free’ work, i.e., the employee receives the same amount of compensation for working through the rest periods that the employee would have received had he or she been permitted to take the rest periods.”). ]

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