Court Issues Favorable Decision on Reporting Time, Split Shifts, and Recovery of Fees by a Prevailing Defendant
This week a California court issued its decision in Aleman v. AirTouch Cellular, rejecting employees' claims that they were entitled to reporting time pay for attending store meetings, further rejecting the employees' split shift pay claim, and finally, awarding the prevailing employer its attorneys' fees incurred in defending the reporting time pay claim.
Reporting Time Claim
California law provides that if an employee reports to work as scheduled and is not put to work or is furnished with less than half of the scheduled day's work, the employee shall be paid for half of the scheduled day's work, but in no event less than two hours nor more than four hours. In this case, the employees claimed that they were owed reporting time pay for having to attend store meetings. It was undisputed that the store meetings were scheduled, that they always lasted at least half the time scheduled, and that the employees were paid their regular wages for time spent attending the meetings (which were of less than two hours duration). Nonetheless, the employees claimed that they were entitled to be paid for a minimum of two hours for every store meeting they had to attend, even if the meeting lasted only an hour. The court rejected this claim, holding that California's reporting time pay law does not require employers to pay employees for a minimum of two hours of work every time they report to work. Rather, the focus is on whether the employee is furnished with at least half of the scheduled day's work. If a meeting is scheduled for an hour and lasts an hour (or even a half hour), the employee is entitled only to regular pay for time actually spent attending the meeting and is not entitled to any additional reporting time pay.
[Note to employers: It is significant that the meetings at issue in this case were of a scheduled expected duration. The outcome may have been different (and a minimum of two hours pay owed) if there was no expectation as to how long the meetings would last from which it could then be determined whether the employees "worked" at least half the scheduled time.]
Split Shift Pay Claim
On certain occasions, the employees were required to attend a store meeting on the same day as a regular work shift. The store meeting and the sales shifts were not back to back, but were separated by a block of time. This constitutes a "split shift." Under California law, when an employee works a split shift, he/she is entitled to one hour additional pay at the minimum wage in addition to the minimum wage required for that workday. The AirTouch employees claimed that AirTouch failed to pay them the additional hour of pay on occasions when they worked split shifts. AirTouch argued that no additional pay was owed because on every occasion the employees worked split shifts they were paid more than the sum of minimum wage for all hours worked plus an additional hour at minimum wage. The court agreed with AirTouch's analysis and rejected the employees' split shift claim. The employees had argued that the Wage Order simply means that the employee must be paid an additional hour at his or her regular wage when a split shift is worked. Rejecting this argument, the court reasoned that the split shift provision refers not to "regular wages" but to "minimum wages" and that the provision is contained in the "Minimum Wage" section of the Wage Order, making it clear that the regulation is concerned solely with payment of minimum wage.
Release of Claims Bars One Employee's Claims
In addition to providing favorable rulings on split shift and reporting time pay requirements, the court also held that one employee's claims were barred by virtue of the fact that he had previously signed a general release of claims in favor of AirTouch. Relying on Labor Code section 206.5, the employee argued that the release could not bar claims for wages owed but unpaid. The court disagreed, holding that the release was valid and effective because 206.5 only bars a release of wages that are indisputedly owed. In this case, it was disputed whether the employee was owed reporting time pay and/or split shift pay.
Court Awards Attorneys' Fees to AirTouch
After prevailing on the merits of the case, AirTouch sought to recover its attorneys' fees. The court considered whether Labor Code section 218.5 permits a prevailing employer to recover its attorneys' fees incurred to successfully defend reporting time and split shift pay claims. In consideration of the California Supreme Court's recent ruling on this subject in Kirby v Immoos, the court held that AirTouch could recover its fees on the reporting time pay claim but not the split shift pay claim. The court reasoned that the split shift pay claim was a minimum wage claim and was thus governed by Labor Code section 1194, which has a one way fee shifting provision that does not allow a prevailing employer to recover its fees. However, the court held that the reporting time pay claim was not a minimum wage claim and thus fell under Labor Code section 218.5's two way fee shifting provision which allows the prevailing party (employee or employer) to recover its attorneys' fees. As such, the court held that AirTouch was entitled to fees incurred to defend the reporting time pay claim.