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Wednesday, December 22, 2010

Home Depot v. Superior Court: Court of Appeal Confirms that PAGA Penalties Apply to Wage Order Violations

In Home Depot U.S.A., Inc. v. Superior Court (Harris) (December 22, 2010) --- Cal.App.4th ----, 2010 WL 5175194, the Court of Appeal again confirmed that employees may pursue civil penalties under the Labor Code Private Attorneys General Act (PAGA) for violations of the IWC Wage Orders.

The Wage Order at issue was section of Wage Order 7-2001, which requires employers in the retail industry to provide their employees with "suitable seats when the nature of the work reasonably permits the use of seats." The plaintiffs alleged that Home Depot failed to provide seats, although it has ample room for seats in its cashier and counter areas. Home Depot demurred, arguing that the plaintiffs had no private remedy for the Wage order violation. The trial court (LASC Judge Green) overruled Home Depot's demurrer, and Home Depot petitioned for a writ.

The Court of Appeal affirmed, holding that PAGA, specifically Labor Code section 2699(f), provides a civil penalty for violations of Labor Code section 1198, which provides:
The maximum hours of work and the standard conditions of labor fixed by the commission shall be the maximum hours of work and the standard conditions of labor for employees. The employment of any employee for longer hours than those fixed by the order or under conditions of labor prohibited by the order is unlawful.
Because the Wage order's seating requirement is a "standard condition of labor," violation of the requirement also violates section 1198 and gives rise to a civil penalty under PAGA. (This is the same conclusion that the Court of Appeal reached in Bright v. 99¢ Only Stores (November 12, 2010) 189 Cal.App.4th 1472, which I somehow failed to note when it came down. Mea culpa.) The Court explained:
The first amended complaint alleges that Home Depot has not provided seating for its employees, even though “there is ample space behind each counter/cashier to allow for a stool or seat.” The seating requirement of Wage Order 7-2001 clearly prohibits such conduct.
Slip op. at 12.

A secondary issue was which penalty provision applies: section 2699 or section 20(A) of the Wage Order, which provides:
In addition to any other civil penalties provided by law, any employer or any other person acting on behalf of the employer who violates, or causes to be violated, the provisions of this order, shall be subject to [enumerated civil penalties for the underpayment of wages].
The Court explained that 2699, rather than 20(A), applies to the alleged violation. Slip op. at 13-18.

The opinion is available here.

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