California Court of Appeal Holds No Right to Jury Trial in PAGA Cases and Affirms Suitable Seating Win for Employer
On February 18, 2022, the California Court of Appeal, Second District, held there is no right to a jury trial in a Private Attorneys General Act (PAGA) action for civil penalties. In that same decision the Court of Appeal affirmed a trial court’s judgment in favor of Ralphs Grocery Company after a bench trial in which the trial court found the company’s decision not to provide seats to cashiers did not violate workplace suitable seating requirements under the applicable Industrial Wage Commission (IWC) wage order.
Background on PAGA
Under PAGA, the State of California deputizes “aggrieved employees” to sue employers to recover civil penalties as a mechanism to enforce provisions of the Labor Code. An aggrieved employee is a person who was employed by the defendant employer and against whom one or more of the alleged Labor Code violations occurred. Under PAGA, the plaintiff-employee pursues civil penalties for Labor Code violations the employer allegedly committed against all aggrieved employees (not just the plaintiff). The employee who brings a PAGA action acts as an agent of the state enforcement agencies; therefore the action is considered a dispute between the employer and the state, as opposed to a suit for damages. If the employee prevails in the litigation, 75 percent of the civil penalties go to the state, and the remaining 25 percent go to the aggrieved employees. Prevailing PAGA plaintiffs are also entitled to recover reasonable attorneys’ fees and costs.
California’s “Suitable Seating” Requirements
For decades, California’s IWC wage orders have required most employers to provide “suitable seats” to their employees “when the nature of the work reasonably permits the use of seats.” When the nature of employees’ work requires standing and the employees are not actively engaged in those duties, the wage orders require employers to provide their employees seats when using seats “does not interfere with the performance of their duties.”
These “suitable seating” requirements were little noticed until after the enactment of PAGA in 2004. Although the suitable seating requirement does not appear within the Labor Code itself, section 1198 of the Labor Code makes it unlawful to employ any employee under conditions prohibited by an IWC wage order. The result is that a violation of any IWC wage order is also a violation of Section 1198, which gives rise to a PAGA claim. Under PAGA, the civil penalty for a violation of Section 1198 is $100 for each aggrieved employee per pay period for the initial violation, and $200 for each aggrieved employee per pay period for each subsequent violation. It doesn’t require a calculator to see how PAGA provided the financial incentive behind the explosive growth of suitable seating litigation.
LaFace v. Ralphs Grocery Co.
Ralphs Grocery Company employed Jill LaFace as a cashier. She brought a PAGA action against Ralphs on behalf of herself and other current and former Ralphs cashiers, alleging Ralphs violated an IWC wage order requiring the company to provide suitable seating when the nature of the work reasonably permitted the use of seats, or, for a job where standing was required, to provide seating for employees to use when their use did not interfere with their duties.
The trial court set a jury trial but later granted Ralphs’s motion for a bench trial after finding PAGA actions are equitable in nature and are therefore not triable to a jury. After a bench trial the trial court found Ralphs had not violated the wage order because the evidence showed even when cashiers were not functioning in their primary roles as cashiers, they were required to move about the store fulfilling other tasks. LaFace appealed the judgment, contending she was entitled to a jury trial on her PAGA claim.
On appeal, LaFace and Ralphs agreed that PAGA itself does not confer a right to a jury trial, so the Court of Appeal limited its inquiry to whether the California Constitution’s guarantee of a right to a jury trial applies to PAGA actions. Surveying the line of cases examining the reach of the state constitutional right to a jury trial, the Court of Appeal determined the issue turned on whether a PAGA action is of “like nature” or “of the same class as a pre-1850 common law right of action” that the constitutional provision was designed to protect.
Examining the nature of a PAGA action, the Court of Appeal concluded there is no right to a jury trial in PAGA actions for four reasons. First, notwithstanding the fact that a PAGA action’s designated forum is the trial courts which technically makes it a civil action, PAGA plaintiffs act as mere proxies for the state, bringing on behalf of the state what would otherwise be an administrative regulatory enforcement action. Second, PAGA’s penalty provisions are subject to a variety of equitable factors that call for a qualitative evaluation and the weighing of a variety of factors that is typically undertaken by a court, not a jury. Third, the Labor Code proscribes a wide range of conduct that was unknown at common law, including suitable seating requirements among others. Fourth, although the penalty assessment portion of a PAGA action could be severed from the liability portion, with a jury deciding liability and the court deciding penalties, as noted above many PAGA violations are based on newly created rights that did not exist at common law, with the result that a PAGA action typically does not have a pre-1850 analog that would call for the right to a jury trial under the California Constitution.
After addressing the constitutional issue, the Court of Appeal next turned to the merits of LaFace’s suitable seating claim. On appeal, LaFace did not argue the nature of her cashier duties reasonably permitted the use of seats; her appeal was limited to her contention that she was entitled to a seat during the brief periods of time when she was on the clock but not checking out customers. LaFace and Ralphs generally agreed the evidence, including the testimony of longtime cashiers and expert witnesses, showed that when cashiers were not checking out customers, Ralphs expected them to be performing other tasks that required standing, to include cleaning, restocking, and looking for customers ready to check out.
The parties disagreed, however, whether Ralphs’s expectation about these secondary tasks required Ralphs to provide seats. LaFace contended that notwithstanding Ralphs’ expectation that cashiers would perform these secondary tasks when they were not checking out customers, the “reality” was that cashiers would often remain at their checkstands, talking to other employees or using their mobile phones. Ralphs argued that because cashiers were expected to be active and busy at all times, no seating was required, and “rogue employees” should not be able to create an entitlement to seats by shirking their job duties. The Court of Appeal sided with Ralphs and affirmed the trial court’s judgment, holding an objective inquiry into whether using a seat would interfere with an employee’s performance of job duties properly takes into account an employer’s reasonable expectations regarding customer service and acknowledges an employer’s role in setting job duties. “An expectation that employees work while on the clock, rather than look at their phones or do nothing, seems objectively reasonable.”
While the bulk of suitable seating litigation has been brought by cashiers and other customer service employees who deal directly with the public, any California employer can be the target of a suitable seating claim. Employers are therefore well advised to periodically review job duties and provide suitable seats where warranted. When an employer concludes a seat is not warranted by an employee’s job duties, those duties should be clearly defined to make it clear an employee should not be sitting while on the clock.
Aaron Buckley – Paul, Plevin, Sullivan & Connaughton LLP – San Diego, CA
Ninth Circuit Asks California Supreme Court to Clarify Suitable Seating Requirements
Last week the Ninth Circuit Court of Appeals asked the California Supreme Court to clarify how the state law requiring employers to provide workers with “suitable seating” should be applied.
California’s Industrial Welfare Commission wage orders require most employers to provide their employees with suitable seating “when the nature of the work reasonably permits the use of seats.” This has been the law for decades, but the suitable seating requirement was little noticed until after the enactment of the California Labor Code Private Attorneys General Act of 2004 (the “PAGA”). This law allows employees to sue their employers on behalf of themselves and other “aggrieved employees” for violation of labor laws, and allows prevailing plaintiffs to collect civil penalties that previously were available only in administrative enforcement actions brought by the state. Under the PAGA, the civil penalty for violation of the suitable seating requirement is $100 for each aggrieved employee per pay period for the initial violation, and $200 for each aggrieved employee per pay period for each subsequent violation.
The two cases that triggered the Ninth Circuit’s request are Kilby v. CVS Pharmacy, Inc., 2013 BL 359084, 9th Cir., No. 12-56130; and Henderson v. JPMorgan Chase Bank NA, 2013 BL 359084, 9th Cir., No. 13-56095.
In Kilby, Nykeya Kilby brought a putative class action on behalf of a class of current and former CVS clerk/cashiers. She alleged that during her employment at CVS she spent around 90 percent of her working time operating a cash register. CVS has a policy of not providing seats to its cashiers because, in the company’s judgment, standing while operating the cash register promotes excellent customer service. The district court found that the “nature of the work” performed must be considered, and that courts should consider an employer’s “business judgment” when considering the nature of the work. The district court denied class certification because of differences in the duties of CVS cashiers, and granted summary judgment to CVS because many of Kilby’s duties required her to stand, CVS expects its cashiers to stand, and she knew of this requirement when she took the job.
In Henderson, four Chase bank tellers brought a putative class action on behalf of current and former Chase tellers. They alleged they spent most of their working time standing at their teller stations servicing bank customers, but also performed a variety of additional duties away from their teller stations. The district court denied class certification after finding that the nature of a teller’s work could vary based on the different tasks the teller performs away from the teller station, the bank at which the teller works, and which shift the teller works.
In both cases the plaintiffs appealed to the Ninth Circuit, contending that the district courts misapplied the suitable seating law. In their view, if an employee is engaged in a task that can objectively be performed while seated, the employer must provide a suitable seat, and neither the employee’s other tasks, nor the employer’s business judgment, should affect the court’s determination of whether the nature of the work reasonably permits the use of seats.
The Ninth Circuit certified three questions to the California Supreme Court. First, does the phrase “nature of the work” refer to individual tasks an employee performs during the day, or should it be construed “holistically” to cover the entire range of an employee’s duties? Second, should an employer’s business judgment, the physical layout of the workplace, or the physical characteristics of the employee be considered when determining whether the nature of the work “reasonably permits” the use of a seat? And third, does a plaintiff need to prove what could constitute “suitable seats” to show the employer has violated the law?
In certifying its questions to the California Supreme Court, the Ninth Circuit cited the potentially “dramatic” impact of the suitable seating law on California employers, stating that “tens of millions of dollars” are at stake in the Kilby and Henderson cases alone, depending on how the law is interpreted. The Ninth Circuit wrote, “A definitive decision from the California Supreme Court would avert the potential uncertainty of federal courts and state courts adopting different interpretations . . . and would provide businesses in California with clear guidance on how to comply with the Wage Orders.”
The California Supreme Court could accept the Ninth Circuit’s invitation to clarify the law, or it could decline the request, leaving the responsibility for interpreting and applying the law with individual trial courts.
Aaron Buckley – Paul, Plevin, Sullivan & Connaughton LLP – San Diego, CA