Faulty Pay Stubs Result in Over $100M Award to Employees

/
Faulty Pay Stubs Result in Over $100M Award to Employees.jpg

The Ninth Circuit heard a California employer's appeal of a $102 million damages award for a class action suit alleging California Labor Code violations. Over $48 million of the award was designated for violations of the California Labor Code's itemized wage statement requirement. The additional $48 million covered penalties under PAGA (Private Attorneys General Act). Additional penalties were assessed against the employer due to PAGA penalties for violating the Labor Code's final wage statement provisions and PAGA penalties for violations of meal period mandates. 

Details of the Case: Robert Magadia v. Wal-Mart Associates, Inc.

Court: United States District Court, N.D. Cal.

Case No.: 5:17-cv-00062

Does Proposition 22 Apply in this Situation? 

Currently, Proposition 22 is limited to app-based rideshare app and delivery companies. However, this legislation's passage could spur activists in other industries to bring serious arguments for independent contractors classification to California voters. 

Summary of the Case: Robert Magadia v. Wal-Mart Associates, Inc.

The plaintiff in the case had no monetary loss from the technical pay stub violation. The argument in the case focused primarily on whether the plaintiff suffered any injury sufficient enough to confer standing to sue under PAGA. The only alleged harm the plaintiff suffered was the inability to confirm he was paid fair compensation for his work as agreed. However, according to the plaintiff in the case, his injury was not the main issue. He argued that under PAGA, he was entitled to enforce state law and pursue relief on behalf of workers in similar situations (the class of aggrieved workers in the case was approximately 50,000). The violation claim occurred after the company failed to identify how bonuses were calculated into their workers' hourly rate for overtime calculations. 

Was the Labor Law Violation Intentional? 

Another question that came up during the case was whether or not the pay stub violation was intentional, which is required by statute before assessing damages. The ruling of the Ninth Circuit could narrow the trial courts' ability to impose PAGA penalties on California employers in cases where the plaintiff has not suffered financial harm. However, inadvertent violations that seem harmless can lead to significant penalties for California employers, particularly in situations where wage statements are not fully compliant with California Labor Code. 

If you have questions about California labor law violations or how employment law protects you against labor law violations, please get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.