On February 17, 2011, the California Court of Appeal ordered published (and therefore citable) its previously unpublished (and therefore not citable) decision in Drake Price v. Starbucks Corporation, a decision that should prove helpful to employers defending against claims for allegedly non-compliant wage statements, which are nearly always included in wage and hour class action lawsuits.
Labor Code Section 226(a) requires employers to provide to employees with their paychecks a wage statement (sometimes referred to as a check stub) accurately stating the following nine items of information: (1) gross wages earned, (2) total hours worked by the employee (except exempt salaried employees), (3) the number of piece-rate units earned and any applicable piece-rate(s) if the employee is paid on a piece-rate basis, (4) all deductions, (5) net wages earned, (6) inclusive dates of the pay period, (7) the name of the employee and the last four digits of the employee's social security number or the employee's identification number other than the social security number, (8) the name and address of the legal entity that is the employer, and (9) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate.
When an employee suffers injury as a result of an employer's knowing and intentional failure to provide a compliant wage statement, the employee can recover the greater of either the employee's actual damages or $50.00 "for the initial pay period in which a violation occurs" and $100 "per employee for each violation in a subsequent pay period, not exceeding an aggregate penalty of four thousand dollars, and is entitled to an award of costs and reasonable attorney's fees." See Labor Code section 226(e).
Drake Price, who was employed by Starbucks for a total of 13 shifts before he was fired after failing to report to work for a scheduled shift, alleged, among other things, that Starbucks was liable to him and to each member of the purported class for Labor Code section 226.1 damages because, according to Mr. Price, the wage statements Starbucks issued do not list total hours worked, net wages earned, and all applicable hourly rates."Mr. Price contended "'total' means grand total, the sum of the regular and overtime rates." Price contended Starbucks' use of the words "'amount paid' following gross pay and deductions does not comply with the requirement to show 'net wages.'" Mr. Price contended, also, that the wage statements "lists the regular rate of pay, but fails to list the overtime rate of pay, requiring him to ensure that the overtime rate is one and one-half his regular rate of pay."
Recognizing that a non-compliant wage statement is not actionable without injury, Mr. Price contended he was injured because, according to him, "[t]his lack of information 'caused confusion and possible underpayment of wages due,' required the putative class to file [suit], and forced the putative class to attempt to reconstruct their time and pay records."
The Court of Appeal affirmed the trial court's decision that Mr. Price failed to allege a cognizable injury. Notably, the court distinguished a troublesome decision of the United States District Court for the Central District of California in Wang v. Chinese Daily News, Inc. (C.D. Cal. 2006) 435 F.Supp.2d 1042 essentially holding that injury occurs if the employee must perform mathematical calculations to determine whether he or she was paid correctly. Distinguishing Wang v. Chinese Daily News, the court explained: "Price alleged a 'mathematical injury,' that required him to add up his overtime and regular hours and to ensure his overtime rate of pay is correct, but the allegedly missing information from Price's wage statement is not the type of mathematical injury that requires 'computations to analyze whether the wages paid in fact compensated [him] for all hours worked.'" Simply put, "[t]he injury requirement in section 226, subdivision (e), cannot be satisfied simply if one of the nine itemized requirements in section 226, subdivision (a) is missing from a wage statement."
As part of its decision, the Court of Appeal clarified, also, the requirements for reporting time pay. The court rejected Mr. Price's contention Starbucks was required to pay him the one-half of the average of the 13 scheduled shifts he worked as reporting time pay for reporting to his place of work for a brief meeting with his supervisor during which Mr. Price's supervisor informed Mr. Price his employment was terminated effective that date. The court held because Mr. Price was not scheduled to work that day, Starbucks did not violate Industrial Welfare Commission Wage Order 5-2001 by paying him two hours pay to report for that meeting (which lasted approximately 45 seconds, according to Mr. Price).
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Christopher Andre is a seasoned civil litigator who focuses his practice on civil litigation and advising and representing employers. Mr. Andre is an editor of and frequent contributor to the firm’s Labor and Employment Law ...
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Scott Dauscher is Chair of the firm’s Commercial and Complex Litigation Practice Group. He also serves as Chair of the firm’s Class Action Defense Group, managing AALRR’s extensive class action practice and its team of ...
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