In Aleman v. AirTouch Cellular, 2012 DJDAR 13269, a group of customer service representatives who sold cell service and equipment in kiosks filed suit claiming the company did not pay them properly for attending store meetings. The company required employees to attend periodic training meetings lasting approximately 90 minutes. Sometimes the meetings ended early. In addition, some employees were required to attend the meeting and then report to work at a later shift in the day. The primary claims asserted were that AirTouch did not pay reporting time pay or split shift premiums.
Reporting Time Pay
Under California wage orders, if an employee reports for work as required, but is not provided at least half of his/her scheduled or usual shift, then the employee must be paid half of his/her scheduled or usual shift, no less than two hours, no more that four hours. This is referred to as reporting time pay.
Employees testified that they were asked to attend a 90 minute meetings, but that the meetings would end 30 minutes early. They claimed that under the reporting time pay provision of the wage order, they were entitled to two hours of compensation. (A very disingenuous claim!)
The court examined the language of the wage order. Employees were scheduled to work 90 minutes. They attended a meeting that lasted 60 minutes. This was more than half of the scheduled shift. Thus, the reporting time pay provision does not apply.
Split Shift Premiums
When an employee works a split shift, one hour of pay must be paid to the employee in addition to the minimum wages for the workday. This is referred to as a split shift premium. Employees who attended the training meeting and then reported for work later in the day claimed they were entitled to receive the split shift premium.
The court denied the relief requested. It reasoned, consistent with the position of the DLSE, that if the employee's wages for the day are more than minimum wage plus one hour of minimum wage, a split shift premium has already been paid. AirTouch employees earned an hourly rate of pay that when multiplied by the number of hours worked, exceeded minimum wage for those hours plus one additional hour at minimum wage.
This is where the case gets interesting. AirTouch sought attorneys' fees for successfully defending against these two claims. The trial court initially awarded AirTouch approximately $300,000 in fees, which was appealed. The Court of Appeal remanded the cast to the trial court for a review of the attorneys' fees issue in light of Kirby v. Immoos Fire Protection, Inc. (2012) 53 Cal.4th 1244. (Discussed in a prior blog.)
The award of attorneys' fees depended upon whether the lawsuits were brought under Labor Code section 1194 or 218.5. Section 1194 is a one-way attorneys' fee provision. It applies to lawsuits for unpaid minimum wages or overtime. Only a successful plaintiff can recover attorneys' fees under section 1194.
Section 218.5 is a two-way attorneys' fee provision. It applies to lawsuits for the non-payment of wages. A successful defendant as well as a successful plaintiff can recover attorneys' fees under section 218.5.
The court concluded that a claim for a split shift premium is a claim for unpaid minimum wages. Therefore, section 1194 applies to these cases. However, a reporting time pay claim is not a claim for unpaid minimum wages or overtime. Thus section 218.5 applies to these claims.
On remand, the trial court awarded attorneys' fees to AirTouch on the reporting time pay provision.
What Does This Mean?
Many employment-based lawsuits are focused on attorneys' fees. Consider the barista who sued Starbucks for not providing him with what he considered to be his full reporting time pay. A lawsuit was brought on a claim of less than $10. Why? Because the attorney believed he could make big money.
What I predict is that attorneys will be less likely to bring frivolous or negligible claims for reporting time pay. Attorneys, or more appropriately, their clients, will be less willing to risk an adverse claim for fees in the event they are unsuccessful. (By the way, it is not the unsuccessful attorney who pays the other side's attorneys' fees; it's the unsuccessful litigant.) Rather, attorneys will focus on claims governed by section 1194, where a successful employer won't have the right to seek attorneys' fees if it prevails.
But my advice doesn't change. Employers should focus their efforts on compliance. Avoiding the claim is the least expensive alternative for an employer.