Posted on: 6/27/2012
Kerri L. Ruzicka, Murphy Pearson Bradley & Feeney
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On April 12, 2012, the California Supreme Court published its decision in the much-awaited case of Brinker Restaurant Corp. v. Superior Court of San Diego County (2012) 196 P.3d 216, setting to rest several contentious issues regarding California’s recent wave of meal and rest break class action lawsuits. While most commentaries and articles have highlighted Brinker’s implications upon class action suits, there is an overlooked implication—the effect of Brinker’s written rest break policy upon the court’s decision to uphold the rest break subclass certification. This implication is not unique to California and could have a wide range of consequences on wage and hour class actions generally.
California’s Meal and Rest Break Requirements
California Labor Code section 512 provides that an employer may not employ an employee for a work period of more than five hours per day without providing the employee a meal period of not less than 30 minutes and a second 30-minute meal break for hours worked in excess of 10 hours, absent a written waiver. Additionally, section 226.7 prohibits an employer from requiring any employee to work during any meal or rest period mandated by a Wage Order issued by the Industrial Welfare Commission. Wage Order No. 5 covers restaurant workers and employees and requires employers to “authorize and permit all employees to take rest periods, which insofar as practicable shall be in the middle of each work period. The authorized rest period time shall be based on the total hours worked daily at the rate of ten (10) minutes net rest time per four (4) hours or major fraction thereof. However, a rest period need not be authorized for employees whose total daily work time is less than three and one-half hours.”
California Class Certification Principles
California law requires a party seeking to certify a class of plaintiffs to demonstrate the existence of a “well-defined community of interest” in the predominant questions of law or fact. As a general rule, if liability can be determined by facts common to all members of the class, a class will be certified, even if the members must individually prove their damages. Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908, 916. Generally, a trial court should not inquire into the merits of a claim unless the merits are so enmeshed with the class action requirements. Bartold v. Glendale Federal Bank (2000) 81 Cal.App.4th 816. Then the trial court must consider evidence bearing on the factual elements of the claims before certifying a class. The ultimate question on the element of predominance is whether the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants. Collins v. Rocha (1972) 7 Cal.3d 232, 238. A trial court’s ruling in granting or denying certification is afforded great discretion and will not be overturned absent a clear abuse of discretion.
Factual Background
Brinker Restaurant Corp.’s (Brinker) written meal and rest break policy provides that employees are “entitled to a 30-minute meal period” when they “work a shift that is over five hours.” It requires nonexempt employees to clock out for the entire 30-minute period. It also states that employees who work “over 3.5 hours” during one shift are “eligible for one 10-minute rest break for each 4 hours that [they] work.” It further states, “It is your responsibility to clock in and clock out for every shift you work.... [Y]ou may not begin working until you have clocked in. Working ‘off the clock’ for any reason is considered a violation of Company policy.”
In 2006, the plaintiffs filed a class action lawsuit alleging three causes of action: (1) failing to provide rest breaks or to pay premium wages for missed breaks; (2) failing to provide meal breaks or premium pay for missed meal periods; and (3) unlawfully altering of employee time records and requiring employees to work “off-the-clock” during meal periods. The plaintiffs then sought to certify three subclasses of employees: (1) the “Rest Period Subclass” consisting of employees who worked one or more work periods in excess of three and a half hours without receiving a paid 10-minute break; (2) the “Meal Period Subclass” consisting of those who worked one or more work periods in excess of five consecutive hours without receiving a 30-minute meal period in which they were relieved of all duties; and (3) the “Off-the-Clock Subclass” consisting of members who worked off the clock without pay.
For both meal and rest break classes, two issues emerged: (1) whether Brinker has a duty to actively ensure that no work was performed during the break; and (2) at what point during the shift must the meal or rest break occur? The plaintiffs contended that Brinker was obligated to provide a 30-minute meal break at least once every five hours. Plaintiffs further argued that Brinker was required to offer a rest break before the first meal period, and the first rest break had to occur no later than three and a half hours into a shift. Brinker argued that there was no timing requirement at all. Rather, it only had to provide one meal period for shifts over five hours and two meal periods for shifts over 10 hours. Similarly, Brinker argued that pursuant to the plain language of Wage Order No. 5, an employee was entitled to one rest break for each four-hour work period, or major fraction thereof, i.e., more than two hours.
Rest Break Subclass Certification
The trial court certified the Rest Period Subclass, finding that the question of what Brinker was required to provide in terms of rest breaks predominated over individual issues. The appellate court reversed the trial court’s certification on two grounds: (1) it committed error per se by ruling on the certification before determining the legal dispute over Brinker’s duties to provide rest breaks; and (2) had it resolved this dispute first, it could not have concluded the certification was appropriate.
The California Supreme Court addressed the question of whether a trial court must resolve threshold legal issues before certifying a class. Generally, certification is procedural and does not inquire into the merits of an action. However, the court described the exceptions to the general rule, finding that often the appropriate ruling of whether common or individual issues predominate depends on the resolution of threshold legal or factual issues closely tied to the merits. In those very limited circumstances, the trial court “may, and indeed must, resolve them.” However, upon review, a court’s failure to resolve disputed legal issues does not automatically create reversible error.
In terms of the legal issues regarding the rest breaks, the court concluded that the language and history of Wage Order No. 5, including the IWC’s interpretation, led to only one conclusion: Employees are entitled to 10 minutes of rest break for shifts from three and a half hours to six hours in length, 20 minutes for shifts of more than six hours up to 10 hours, 30 minutes for shifts of more than 10 hours up to 14 hours, and so on. The court further clarified that there is no absolute requirement that a rest break occur before a meal break, only that it occur in the middle of a work period, in so far as is practical. It also concluded that the breaks only had to be made available, but that the employer had no duty to ensure that no work was performed during the break.
If the court had stopped its analysis there, employers and their defense counsel would be ecstatic. However, after clarifying the threshold legal issues, the court turned back to the issue of certification. It noted that Brinker had adopted a uniform corporate rest break policy that violated Wage Order No. 5 by failing to give full effect to the “major portion thereof” language. The court theorized that class wide liability could be established by evidence that Brinker refused to permit rest breaks for employees who worked shifts longer than 6 hours, but less than 8 hours. The court noted, “The theory of liability—that Brinker has a uniform policy, and that that policy, measured against wage order requirements, allegedly violates the law—is by its nature a common question eminently suited for class treatment.”
Meal Period and Off-the-Clock Subclass Certification
In stark contrast to the court’s upholding the certification of the Rest Period Subclass, the court declined to certify the Off-the-Clock subclass with the very same reasoning. Brinker’s uniform corporate policy specifically forbade employees from working off-the-clock and required them to clock in and out for each meal period. Because no common policy or method of proof existed, the court held that the trial court erred in certifying the subclass. It is also worthy to note that the plaintiffs had not presented any other substantial evidence of a systematic company policy pressuring employees to work off the clock. Thus, the only evidence for the court to consider was Brinker’s written policy. However, for the Rest Period Subclass, because the policy itself presented issues of commonality, it sufficed without the need for any other evidence.
The plaintiffs defined the meal period subclass as those employees who “worked one or more work periods in excess of five consecutive hours without a 30-minute meal period in which they were relieved of all duties”. The court’s interpretation of Wage Order No. 5 and section 512 provided no timing requirement beyond those in section 512 requiring one meal period no later than five hours of work and the second after no more than 10 hours of work. Thus, it found that the trial court’s certification, based upon an erroneous assumption that a timing requirement existed, was error. Moreover, after the court’s holding, the plaintiffs' definition of the meal period subclass would result in an over-inclusive class with members who had no conceivable claim. Consequently, the court remanded this subclass certification back to the trial court for reconsideration.
What Employers Can Learn from This
The plaintiffs used two primary means of proving the predominance of common issues to obtain class certification: (1) uniform policies written and disbursed to employees, and (2) uniform but unstated policies or practices. As demonstrated by Brinker, uniform written policies contained in employee handbooks can hurt or help depending on which side of the “v.” you are on. From the employer's standpoint, it is essential that your written policies comply with the law. If they do not reflect the applicable law, employees will have an automatic common issue that predominates to obtain class certification. A properly worded policy, however, is not an automatic bar to class certification. If plaintiffs have substantial evidence that, despite a properly worded policy, the actual practice of the company is to pressure employees to work through their breaks or make it impossible to take a full break without a waiver, they can still meet their burden of commonality. Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949, 962-963.
It goes without saying that an employer should annually review its employee handbook to ensure compliance as laws change. However, as Brinker demonstrates, each policy founded upon a statute or law, must accurately reflect the language of the statute or law in question. Paraphrasing or summarizing the applicable rules could result in a uniform policy that does not accurately reflect the statute, resulting in employees being able to obtain certification of a class based on the error.
Kerri L. Ruzicka
Murphy Pearson Bradley & Feeney
Sacramento, CA
(916) 565-0300