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Wednesday, May 30, 2012

Salas v. Sierra Chemical: Court of Appeal Affirms Summary Judgment in Disability Discrimination Action on Basis of Immigration Status; Cal. Supreme Court Grants Review

I'm cleaning up some older cases that I never got to.

In Salas v. Sierra Chemical Co. (8/9/11) 198 Cal.App.4th 29, the Court of Appeal affirmed a trial court order granting summary judgment in a disability discrimination action.

Vicente Salas sued his former employer, Sierra, for disability discrimination in violation of the Fair Employment and Housing Act (FEHA) and denial of employment in violation of public policy. Specifically, Salas alleged that Sierra Chemical failed to make reasonable accommodation for his disability and failed to engage in an interactive process to determine such a reasonable accommodation. He also alleged that Sierra denied him employment to punish him for filing a claim for workers' compensation benefits, and to intimidate and deter him and others from bringing such claims. 

Prior to trial, Salas filed a motion in limine stating that he would assert his Fifth Amendment right against self-incrimination in response to any questions concerning his immigration status. Sierra apparently then discovered that his Social Security number belonged to someone else. Sierra moved for summary judgment, arguing that the after-acquired evidence doctrine barred Salas's causes of action because there was no genuine factual dispute concerning: (1) his use of a counterfeit Social Security card with another person's Social Security number in order to secure employment; and (2) that Sierra would not have hired him had it known that he was using a counterfeit Social Security card. Sierra also claimed the unclean hands doctrine barred his causes of action because the misrepresentation of his eligibility to work in the United States and fraudulent use of another person's Social Security number amounted to inequitable conduct that directly related to his causes of action. 

In opposition to the motion, Salas declared that Sierra knowingly employed a number undocumented workers, a number of whom had received Social Security "no match" letters while employed by Sierra. Salas declared that his supervisor told him and others that they "need not worry about any discrepancies with Social Security numbers... [and that] as long as [defendant] remained happy, he would not fire us over a discrepancy with a Social Security number." Salas also declared that he "never heard of Sierra Chemical discharging any person due to a discrepancy with a Social Security number, or for any other immigration-related issue." 

The trial court (San Joaquin Superior, Judge Elizabeth Humphreys) originally denied the motion, but the Court of Appeal issued an order directing the court either to grant the relief requested or show cause why it should not be granted. The trial court granted the relief, and Salas appealed. 

The Court of Appeal affirmed. It held that Sierra produced evidence that the SSN did not belong to Salas and that it had "a long-standing policy" that "precludes the hiring of any applicant who submits false information or false documents in an effort to prove his or her eligibility to work in the United States." The Court held that Salas failed to raise a triable issue of fact in opposition: 
Salas also claims that he raised a triable issue of fact with respect to Sierra Chemical's policy of refusing to hire applicants who submit a false Social Security number. We are not persuaded. Unlike [Murillo v. Rite Stuff Foods, Inc. (1998) 65 Cal.App.4th 833], where plaintiff submitted direct evidence that the company knowingly hired undocumented aliens and took no steps to discharge them, Salas submitted mere speculation. According to his declaration, he and several other employees had an informal meeting with Huizar to discuss the letters they received from the Social Security Administration. Huizar told the employees that Kinder “was happy with [their] work and that as long as he remained happy, he would not fire [them] over a discrepancy with a Social Security number.” In order to find a triable issue of fact, we would have to draw the inference that Sierra Chemical did not have a settled policy of refusing to hire an applicant who submits a false Social Security number from the fact that Huizar told Salas that he would not be fired over a discrepancy with a Social Security number. However, as Salas himself observed in his opposition to the summary judgment motion, a discrepancy with a Social Security number could be caused by typographical errors, unreported name changes, or inaccurate or incomplete records. Thus, the fact that Sierra Chemical would not fire him over a discrepancy with a Social Security number is not inconsistent with Kinder's declaration that Sierra Chemical had a settled policy of refusing to hire applicants who submit a false Social Security number.  
198 Cal.App.4th at 38-39. The Court also held that Salas's claims were barred by the unclean hands doctrine:
Similarly, here, Salas's use of another person's Social Security number to obtain employment with Sierra Chemical went to the heart of the employment relationship and related directly to his claims that Sierra Chemical wrongfully failed to hire him following his seasonal lay off and discriminated against him by failing to provide a reasonable accommodation for his back injury. Because Salas was not lawfully qualified for the job, he cannot be heard to complain that he was not hired. This is so even though he alleges that one reason for the failure to hire was Sierra Chemical's unwillingness to accommodate his disability.  
198 Cal.App.4th at 45. 

The opinion is available here

On November 16, 2011, the California Supreme Court granted review (Case No. S196568). The Court stated the issues as follows: 
Did the trial court err in dismissing plaintiff's claims under the Fair Employment and Housing Act (Gov. Code § 12900 et seq.) on grounds of after-acquired evidence and unclean hands, based on plaintiff's use of false documentation to obtain employment in the first instance? 
Did Senate Bill No. 1818 (2001-2002 Reg. Session) preclude application of those doctrines in this case? (See Civ. Code § 3339; Gov. Code § 7285; Health & Saf. Code § 24000; Lab. Code § 1171.5.) 
The Court's Case Summary page is here. I have added the case to our watch list. 

Tuesday, May 29, 2012

Schechner v. KPIX-TV: Ninth Circuit Issues Disparate Treatment Age Discrimination Decision

In Schechner v. KPIX-TV (9th Cir. 5/29/12) --- F.3d ---, the Ninth Circuit Court of Appeal addresses the use of statistical evidence in disparate treatment age discrimination cases. The Court summarized the case as follows:
Plaintiffs William Schechner and John Lobertini were television news reporters at KPIX-TV, one of the two San Francisco affiliates of CBS Broadcasting, Inc. They were laid off after CBS issued a directive requiring each of its affiliates to reduce its annual budget by ten percent. Schechner and Lobertini were sixty-six and forty-seven years old, respectively, when they lost their jobs. They brought suit alleging that KPIX discriminated against them on the basis of age and gender, in violation of California law. The district court [N.D.Cal., Judge Marilyn Hall Patel] granted KPIX’s motion for summary judgment, dismissing all of Plaintiffs’ claims. We affirm. We write to clarify that a plaintiff can make out a prima facie case of disparate-treatment age discrimination using statistical evidence, even where that evidence does not account for the defendant’s legitimate nondiscriminatory reason for the discharge.
The district court properly applied the McDonnell Douglas burden-shifting analysis, but erred in collapsing the three-step analysis into a single step.  "We clarify that a plaintiff’s statistical evidence need not necessarily account for an employer’s proffered non-discriminatory reason for the adverse employment action to make a prima facie case of discrimination."  
The employee in an age discrimination case makes a prima facie case of disparate treatment “by demonstrating that he was (1) at least forty years old, (2) performing his job satisfactorily, (3) discharged, and (4) either replaced by substantially younger employees with equal or inferior qualifications or discharged under circumstances otherwise ‘giving rise to an inference of discrimination.’ ”
The plaintiffs' proffered statistical evidence of discrimination satisfied the fourth element of this test, even though it failed to account preemptively for the defendant’s proffered non-discriminatory reasons for discharge:  
Consistent with our precedents, we conclude that a plaintiff who submits statistical evidence that shows a stark pattern of age discrimination establishes a prima facie at step one of the McDonnell Douglas  framework. We hold that statistical evidence does not necessarily fail to establish a prima facie case because it does not address the employer’s proffered non-discriminatory reasons for the discharge. We do not hold that any statistical evidence of disparate treatment, regardless of its strength, will be sufficient to establish a prima facie case.
The Court then held that the defendant had met its burden of showing that it had a legitimate, non-discriminatory reason for its layoffs, and that the plaintiffs had failed to meet their burden of showing that this reason was pretextual.

The opinion is available here

Perez v. Torres: Court Requires Strict Compliance with CCP 998

When I was litigating, it surprised me how frequently parties failed to comply with or understand the implications of CCP 998 offers to compromise.

In Perez v. Torres (5/24/12) --- Cal.App.4th ----, the Court of Appeal held that parties must comply strictly with 998's requirements in order to enjoy its benefits. Specifically, a CCP 998 offer is invalid if it lacks the required "provision that allows the accepting party to indicate acceptance of the offer by signing a statement that the offer is accepted."

The opinion is available here.

Monday, May 28, 2012

Cash v. Winn: Court of Appeal Clarifies "Personal Attendant" Overtime Exemption

The Court did a very good job summarizing the issues in this case, so here it is:  
When a family hires an employee to care for an elderly person in his or her home, is the employee entitled to overtime pay? Under California law, the answer depends on the type of work performed by the caretaker. If the employee performs work of a "personal attendant[ ]," defined to mean "a person employed . . . to supervise, feed, or dress" the client, the caretaker is exempt from overtime pay requirements. (Industrial Welfare Commission (IWC) Wage Order No. 15-2001, §§ 1(B), 2(J), codified at Cal. Code Regs., tit. 8, § 11150.) However, if the caretaker performs a "significant amount of work" in addition to these tasks, the caretaker is not exempt from overtime pay requirements. (§ 11150, subd. 2(J).) Additionally with certain exceptions, if the caretaker is a registered nurse employed to engage in the practice of nursing in the home, the nurse is not exempt from overtime pay requirements. (§ 11150, subd. 1(A)(3)(f), (g).) 
The issue here is whether there exists an additional exception to the personal attendant exemption rule applicable if a caretaker, who is not a licensed nurse, performs any form of health care related services for an elderly client. Based on a sentence originally contained in an interpretive bulletin issued by the Department of Labor Standards Enforcement (DLSE) in 1986, the court instructed the jury that the personal attendant exemption to the overtime requirements is inapplicable if a caregiver, who is not a licensed nurse, regularly performs any health care functions, even if those tasks are incidental to the caretaker's primary tasks and regardless of the amount of time spent on these functions.  We conclude this instruction reflects an improper interpretation of Wage Order No. 15 and, based on the jury's findings in the special verdict form, constituted prejudicial error.  
Cash v. Winn (5/14/12) --- Cal.App. 4th ----.  

Plaintiff Joy Cash cared for defendant Iola Winn in Winn's home.  After her employment ended, she sued for overtime compensation.  At trial, the court (San Diego Superior, Judge Steven R. Denton) instructed the jury that the personal attendant exemption would not apply if Cash's "duties require the regular administration of health care services such as the taking [of] temperatures or pulse or respiratory rate . . . , regardless of the amount of time such duties take . . . ."  Slip op. at 3.  On a special verdict, the jury found that Cash's work involved "the regular administration of health care services" as defined by the court and returned a verdict for Cash.  Winn appealed.  

The Court of Appeal reversed and ordered the trial court to enter judgment for Winn. After a long recitation of the facts and the trial, the Court held that there is no exception to the "personal attendant" overtime exemption for one who regularly performs health care related services, such as taking a temperature or pulse or or assisting with over-the-counter blood sugar tests.  

There is no California case law supporting this exception to the personal attendant definition.4  And there is nothing in the provisions of Wage Order No. 15 providing an exception to the personal attendant definition for an individual who engages in "regular administration of health care services," but who is not a trained health care provider. 
Slip op. at 17.  

The opinion is available here

Friday, May 25, 2012

People ex rel. Harris v. Sunset Car Wash: Court of Appeal Clarifies Successor Liability Under Car Wash Worker Statute

Labor Code section 2050, et seq., established a regulatory scheme for car wash operators, motivated by a legislative concern that car wash employees were not being paid in accordance with law. One component of the statutory scheme — section 2066 — imposes liability upon a "successor" to a car wash employer for unpaid wages and penalties owed by a predecessor employer in four circumstances, including where the successor uses the same facilities to perform substantially the same services as the predecessor. We hold that the four circumstances of liability set forth in section 2066 determine the meaning of "successor," and there is no need to look to other statutes and case law to further define the term. We further hold that imposition of liability against a successor who operates at the same location as a predecessor car wash employer does not constitute a violation of due process.
Thus starts People ex rel. Harris v. Sunset Car Wash, LLC (5/16/12) --- Cal.App.4th ----, in which the Court of Appeal upheld the car wash successor liability statute.

Briefly, the facts are as follows: Auto Spa operated a car wash. Sunset Alvarado Investors, which held a note secured by a trust deed on the property, foreclosed on the property, evicted Auto Spa, and leased the same premises to Sunset Car Wash ("Sunset"). Auto Spa had failed to pay minimum wage and overtime to its employees and denied paid rest breaks. The Attorney General brought an action to hold Sunset liable for Auto Spa's unpaid wages and penalties. The trial court (Los Angeles Superior, Judge Daniel J. Buckley) denied Sunset's motion for summary judgment, holding that Sunset was liable under the statute as Auto Spa's successor.

The Court of Appeal affirmed. Labor Code section 2066, provides as follows:

A successor to any employer that is engaged in car washing and polishing that owed wages and penalties to the predecessor‘s former employee or employees is liable for those wages and penalties if the successor meets any of the following criteria: 
(a) Uses substantially the same facilities or workforce to offer substantially the same services as the predecessor employer. 
(b) Shares in the ownership, management, control of the labor relations, or interrelations of business operations with the predecessor employer. 
(c) Employs in a managerial capacity any person who directly or indirectly controlled the wages, hours, or working conditions of the affected employees of the predecessor employer. 
(d) Is an immediate family member of any owner, partner, officer, or director of the predecessor employer of any person who had a financial interest in the predecessor employer.
The Court held that a "successor" under the statute is an entity that meets any of the four criteria, notwithstanding the common law or other definition of the term.  Slip op. at 5-6.  

The Court rejected Sunset's contention that imposing liability denied due process because Sunset did not have notice of its potential successor liability.  "In the context of the car washing industry, section 2066 provides the necessary notice of the potential for successor liability for labor law violations.  Any entity commencing business in the industry is presumptively aware of the requirements of section 2050 et seq."  Slip op. at 9.  

The opinion is available here.  

Thursday, May 24, 2012

Fitzsimons v. California Emergency Physicians: Partner May Sue Partnership for Retaliation for Opposing Sexual Harassment of Employee

In Fitzsimons v. California Emergency Physicians Medical Group (5/16/12) --- Cal.Ap.4th ----, the Court of Appeal has held that a partner has standing to assert a claim for retaliation under the FEHA against his or her partnership.

Plaintiff Mary Fitzsimons was a partner in defendant California Emergency Physicians Medical Group ("CEP"). She alleged that CEP retaliated against her because she she reported to her supervisors that certain officers and agents of CEP had sexually harassed female employees of CEP‘s management and billing subsidiaries. The trial court (Alameda County Superior, Judge Yvonne Gonzalez Rogers) granted summary judgment on grounds that a partner does not have standing to sue her partnership under the FEHA.
The trial court, relying largely on the decision in Jones v. Lodge at Torrey Pines Partnership (2008) 42 Cal.4th 1158, 1163-1164 (Torrey Pines), agreed with CEP that section 12940, subdivision (h) does not apply to retaliation by a partnership against a partner, because partners are not in an employer-employee relationship.
Slip op. at 3. The Court of Appeal reversed. It explained:
[S]ection 12940, subdivision (h) uses the word "person" repeatedly, with two different referents. The subdivision states that it is an unlawful employment practice for "any employer, labor organization, employment agency, or person" to engage in proscribed activity which includes discriminating against "any person because the person has opposed any practices forbidden under this part." The subdivision first prohibits a person from retaliating, and secondly states the retaliation must not be against a person who opposes discrimination or harassment of other employees. Torrey Pines held that the first reference to a "person" does not include nonemployer individuals. It did not hold that the second reference excludes partners or other persons who are not themselves the victim of the harassment. 
While CEP is not in an employment relationship with plaintiff, CEP is the employer of those persons who are the victims of the alleged harassment that plaintiff reported, for which she allegedly became the subject of CEP's retaliation. The harassment of CEP employees, if proven, is an unlawful practice for which CEP is liable under section 12940, subdivision (j). And subdivision (h) makes it an unlawful practice for CEP to retaliate against "any person" for opposing that harassment. Interpreting "person" in the context of those against whom the employer may not retaliate to include a partner gives the word its normal meaning and is consistent with the definition in section 12925, subdivision (d). This interpretation does not contravene any of the reasons explained in Torrey Pines for excluding supervisors from the scope of liability. Plaintiff‘s claim does not seek to impose liability on any "nonemployer individual" but only upon the employer—the partnership. Upholding plaintiff‘s claim here does not imply that a partner would have a valid claim for harassment or discrimination against himself or herself by the partnership. As CEP urges, the alleged sexual harassment of a partner by a fellow partner is not a "practice[] forbidden under this part," but harassment of the partnership's employees is an unlawful employment practice forbidden under "this part." Plaintiff, although a partner, is a person whom section 12940, subdivision (h) protects from retaliation for opposing the partnership-employer's harassment against those employees.
Slip op. at 5-6.

The opinion is available here.

Wednesday, May 23, 2012

Lidow v. Superior Court: California Law Applies to Wrongful Termination Claim by Officer of Company Incorporated in Delaware

In Lidow v. Superior Court (International Rectifier Corp.) (5/23/12) --- Cal.App.4th ----, the Court of Appeal held that California law, rather than Delaware law, applies to the wrongful termination claim of an officer of a corporation organized under Delaware law.

Alexander Lidow was the CEO of International Rectifier Corp. ("IR"). IR is incorporated in Delaware and based in El Segundo, California. In 2007, IR began investigating certain financial improprieties and placed Lidow on administrative leave. It eventually terminated him, and he sued for wrongful termination and other claims. The Court (Los Angeles Superior, Judge Highberger) granted IR's motion for summary adjudication of Lidow's wrongful termination claim, holding that Delaware law insulated IT from any action by its CEO. The Court of Appeal granted Lidow's petition for writ of mandate and reversed.  

The internal affairs doctrine is a conflict of laws principle which recognizes that only one State should have the authority to regulate a corporation‘s internal affairs -- matters peculiar to the relationships among or between the corporation and its current officers, directors, and shareholders -- because otherwise a corporation could be faced with conflicting demands. 
Slip op. at 7.  The law of the state of incorporation ordinarily controls.  Ibid.  
There is, however, a vital limitation to the internal affairs doctrine:  "The local law of the state of incorporation will be applied . . . except where, with respect to the particular issue, some other state has a more significant relationship . . . to the parties and the transaction[.]" 
Slip op. at 8 (ital. in original).  After reviewing relevant cases, the Court divined a rule for application of the internal affairs doctrine: 
courts are less apt to apply the internal affairs doctrine when vital statewide interests are at stake, such as maintaining the integrity of California security markets and protecting its citizens from harmful conduct.  In contrast ... when less vital state interests are at stake (e.g., whether a foreign corporation headquartered in another state pays promised dividends to its shareholders, or whether the shareholder of a foreign corporation must fulfill certain procedural requirements set before bringing a derivative suit), courts are more apt to apply the internal affairs doctrine.
Slip op. at 11.  This case, involving allegations that the corporation removed an officer in retaliation for his complaints about possible illegal or harmful activity and breaches of ethical conduct, goes beyond internal governance and "touches upon broader public interest concerns that California has a vital interest in protecting."  Slip op. at 12.  Because " claims for wrongful termination in violation of public policy serve vital interests," California law applies.  

The opinion is available here

Thursday, May 17, 2012

California Supreme Court Grants Review in Duran v. U.S. Bank

In Duran v. U.S. Bank N.A., the Court of Appeal reversed a trial court judgment in favor of a class of bank officers and ordered the class decertified.  Our blog post on the Court of Appeal's decision is here.  

The Supreme Court yesterday granted the plaintiffs' petition for review, with all seven Justices voting in favor. The Supreme Court has updated its web page (here) to state the issues as follows:
This case presents issues concerning the certification of class actions in wage and hour misclassification litigation and the use of representative testimony and statistical evidence at trial of such a class action.
Not very specific, is it?  I have added Duran to our watch list.  

Thursday, May 3, 2012

Rehmani v. Superior Court: Court Reverses Summary Judgment in National Origin Discrimination Action

In Rehmani v. Superior Court (Ericsson, Inc.) (3/29/12) --- Cal.App.4th ---, plaintiff Mustafa Rehmani filed suit against his former employer, Ericsson, and several co-workers, alleging that he suffered harassment based on his Pakistani national origin and Muslim religious beliefs. The trial court (Santa Clara County Superior, Hon. Kevin McKenney) granted Ericsson's motion for summary adjudication of Rehmani's harassment claims, finding that "Plaintiff was not subjected to unwelcome harassment based on religion and/or national origin, and/or the harassment did not unreasonably interfere with his work performance by creating an intimidating, hostile, or offensive work environment." Rehmani sought a writ of mandate, and the Court of Appeal reversed.

After reviewing the black letter law on FEHA harassment claims, the Court stated the issue as "Whether in this case Rehmani's employer failed to take appropriate steps to curb the verbal abuse he allegedly suffered." Slip op. at 7.

The Court reviewed in detail Rehmani's allegations, which the Court summarized as follows:
Rehmani generally alleged that [his co-workers], all Indian, were frequently rude, dismissive, and hostile toward him because he was a Pakistani and a Muslim. At first the "hostility" of these three took the form of unwillingness to help him with his projects. But it became more severe and "overtly discriminatory" following the November 2008 attacks in Mumbai, India by Pakistani terrorists. Rehmani further alleged that management had disregarded his complaints about this behavior.
Slip op. at 7. Rehmani alleged several specific incidences of alleged harassing behavior, including a co-worker's stating that Pakistan should be blown up because it is full of terrorists, another co-worker asking him if he was going to "blow him up," and other co-workers stating that Rehmani was "celebrating 9/11 and planning terrorist attacks." Rehmani alleged that he complained repeatedly to management, to no avail.
A jury might agree with Ericsson that none of the alleged acts by [his co-workers] was based on Rehmani's national origin or religion, and such a conclusion would refute the assertion of Ericsson's liability in the first two causes of action. Or a jury might determine that Ericsson was not liable for the hostile work environment Rehmani allegedly experienced because Daftari adequately responded to Rehmani's complaints about Ghevaria and others. But considering these employees' conduct in the overall context of Rehmani's allegations of hostility by Indian employees toward non Indians, we cannot determine as a matter of law that the evidence supplied by Ericsson establishes that Rehmani will not be able to convince a trier of fact that he experienced a hostile environment and that his reports of mistreatement were ignored by his supervisor. His claim that he suffered emotional harm, physical illness, and loss of his ability to do his work effectively has not been challenged by Ericsson.
Slip op. at 14.
Rehmani offered evidence of a larger picture than just a few interpersonal squabbles. His declaration, together with testimony from coworkers, suggests rudeness, taunting, and intimidation from Indian engineers toward their non-Indian colleagues. Rehmani's evidence in support of his discrimination claims -- notably Ericsson's favoritism toward Indian engineers in hiring, promotions, salary increases, and work assignments and the managers' practice of assigning non-Indian employees to tasks that help the Indian employees look impressive -- may also be relevant in proving a hostile workplace.
Slip op. at 14-15.

The Court concluded that a trier of fact would have to determine whether Rehmani's claims have merit or not, as Rehmani had presented sufficient evidence to survive summary adjudication.

The opinion is available here

Tuesday, May 1, 2012

Kirby v. Immoos: Supreme Court Holds that Parties Cannot Recover Attorney Fees in Rest Period Actions

In Kirby v. Immoos Fire Protection, Inc. (4/30/12) 53 Cal.4th 1244, the California Supreme Court considered whether a defendant can recover its attorney fees when it prevails in an action for meal and rest period compensation under California Labor Code section 226.7. The Court held that the answer is no, and neither can a successful plaintiff.

Plaintiff Anthony Kirby worked for a contractor, IFP. He filed suit, alleging that IFP violated a number of wage and hour laws. He also named a number of doe defendants, alleging that they were liable under Labor Code section 2810 because they entered into contracts with IFP while knowing that the contracts did not provide sufficient funds to allow IFP to comply with all applicable labor and wage laws. Kirby settled with the doe defendants and dismissed his action against IFP. The trial court awarded IFP its attorney fees under Labor Code section 218.5, and the Court of Appeal affirmed. The Supreme Court reversed.

First, the Court held that a section 226.7 claim is not a claim for which attorney's fees can be awarded to a prevailing employee under Labor Code section 1194.  Section 1194 allows successful plaintiffs to recover attorney's fees in actions for the "legal minimum wage or the legal overtime compensation." The Court rejected Kirby's argument that the required payment for missed meal or rest periods is tantamount to a statutorily prescribed minimum wage. Slip op. at 7-8.

Next, the Court held that Labor Code section 218.5 does not authorize a prevailing party -- either the employer or the employee -- to recover its attorney's fees in an action under section 226.7. The Court based this on its conclusion that an action under section 226.7 does not constitute an “action brought for the nonpayment of wages” within the meaning of section 218.5. Slip op. at 11.  

Section 226.7 is not aimed at protecting or providing employees' wages. Instead, the statute is primarily concerned with ensuring the health and welfare of employees by requiring that employers provide meal and rest periods as mandated by the IWC. When an employee sues for a violation of section 226.7, he or she is suing because an employer has allegedly “require[d] [the] employee to work during [a] meal or rest period mandated by an applicable order of the Industrial Welfare Commission.” In other words, a section 226.7 action is brought for the nonprovision of meal and rest periods, not for the “nonpayment of wages.”
Slip op. at 11-12 (citations omitted).

The Court then explained its holding in light of Murphy v. Kenneth Cole Productions (2007) 40 Cal.4th 1094, in which it held that the remedy for a violation of section 226.7 is one additional hour of pay, and that such pay constitutes a wage, rather than a penalty. "Nonpayment of wages," the Court said, "is not the gravamen of a section 226.7 violation." Slip op. at 13.  

The “additional hour of pay” provided for in subdivision (b) is the legal remedy for a violation of subdivision (a), but whether or not it has been paid is irrelevant to whether section 226.7 was violated. In other words, section 226.7 does not give employers a lawful choice between providing either meal and rest breaks or an additional hour of pay. An employer's failure to provide an additional hour of pay does not form part of a section 226.7 violation, and an employer‟s provision of an additional hour of pay does not excuse a section 226.7 violation. The failure to provide required meal and rest breaks is what triggers a violation of section 226.7. Accordingly, a section 226.7 claim is not an action brought for nonpayment of wages; it is an action brought for non-provision of meal or rest breaks.
Slip op. at 13-14.

The Court found support for its holding in the legislative histories of sections 218.5 and 226.7. "In sum, the legislative history shows that the Legislature (a) considered including a one-way fee-shifting provision in favor of employees in section 226.7, (b) ultimately deleted the provision from the final version of section 226.7, and then (c) gave no indication that section 218.5's two-way fee-shifting rule should apply to section 226.7 claims, even as (d) it adopted amendments to section 218.5 as part of the very same legislation that created section 226.7." Slip op. at 17.

Finally, the Court rejected IFP's argument that the public policies of discouraging unmeritorious lawsuits and encouraging employees to file administrative complaints instead of civil suits support the applicability of section 218.5's two-way fee-shifting rule to section 226.7 claims. Slip op. at 17.

The Court's holding does not address the plaintiff's argument that that, when a suit includes claims covered by section 1194, that section shields an unsuccessful employee against a section 218.5 award of attorney fees in favor of a successful employer. That argument will have to wait for another day.