ILN Today

In bringing meal and rest period claims on behalf of their clients, the plaintiffs’ bar has long argued that merely because there was an alleged meal or rest period violation, there were also “derivative” statutory violations entitling their clients to additional penalties.  By arguing that an employer is also on the hook for such penalties, plaintiffs’ attorneys argue that the potential exposure is greater.  And with greater potential exposure, employers will be more inclined to settle – or so the rationale goes.

These purported “derivative” violations have come in at least two forms.  One type of “derivative” violation the plaintiffs’ bar has advanced is the theory that, because an employee was allegedly denied a meal or rest period, and because the employee would thus be owed an hour of “premium” pay for such a violation, the employee’s wage statement was not accurate because it did not show the premium pay the employee allegedly should have been paid, but was not.  That theory has been nonsensical from the get-go because it ignored the primary purpose of California’s wage statement law – that employees be provided a statement showing a calculation of the wages that they were actually paid.  Nevertheless, the plaintiffs’ bar continued to push this theory.  Understandably so – the maximum statutory penalty for wage statement violations is $4,000.  And that would be for just one employee.

As employers with operations in California had feared, Governor Gavin Newsom has signed AB 51, which effectively outlaws mandatory arbitration agreements with employees – a new version of a bill that prior Governor Jerry Brown had vetoed repeatedly while he was in office.

The bill not only prohibits mandatory arbitration agreements, but it also outlaws arbitration agreements in which employees must take an affirmative action to escape arbitration, such as opting out.

And as the statute is written in broad terms that extend to waivers of statutory “procedures,” it appears to extend not just to arbitration of an employee’s claims, but also to waivers of jury trials and of class actions.