Not every cloud has a silver lining, but some do, and the California Court of Appeal's decision today in Thomas McGann v. United Parcel Service, Inc., contains a terrific silver lining for employers. Thomas McGann was employed by United Parcel Service, Inc., ("UPS") for a number of years and worked as an On Road Supervisor. UPS classified Mr. McGann as an exempt employee and therefore did not pay Mr. McGann premium pay (i.e., overtime pay) for hours worked in excess of eight hours in a workday.
Mr. McGann filed suit against UPS alleging six causes of action: (1) failure to pay overtime pursuant to Labor Code sections 510 and 1194, (2) failure to provide meal periods and rest periods pursuant to Labor Code section 226.7, (3) failure to provide compliance wage statements pursuant to Labor Code sections 226 and 226.3, (4) common law conversion premised on the theory Mr. McGann had a property interest in the premium pay he alleged UPS owed to him but failed to pay to him, (5) injunctive and other equitable relief, and (6) unfair competition pursuant to Business and Professions Code section 17200, et seq.
UPS prevailed on all six of Mr. McGann's causes of action, and the trial court made an award of attorney's fees and costs in favor of UPS. Mr. McGann appealed the award of attorney's fees and costs.
On appeal, in a somewhat paradoxical decision, the court reversed the trial court's award of attorney's fees in favor of UPS and affirmed the trial's court's award of costs to UPS. The Court of Appeal held UPS was not entitled to an award of prevailing party attorney's fees because Labor Code section 1194 permits only an award of attorney's fees to an employee who prevails on a claim for alleged unpaid minimum wages or overtime compensation and does not permit an award of prevailing party attorney's fees to an employer that defeats such a claim. The Court of Appeal held, also, that there was no basis for the trial court to award prevailing party attorney's fees to UPS as to Mr. McGann's other claims because no statute permits such an award.
The Court of Appeal's decision to affirm the award of costs to UPS is good news for employers, but it is not the silver lining alluded to above. The silver lining alluded to above is the court's holding the prevailing party attorney's fees provisions of Labor Code section 218.5 do not apply to claims for additional compensation under Labor Code 226.7 for an employer's alleged failure to provide required meal periods and/or rest periods. In Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, the California Supreme Court held the additional compensation to be awarded to employees under Labor Code section 226.7 when an employer fails to provide required meal periods and/or rest periods is more akin to a wage than a penalty and was therefore subject to a three-year statute of limitations and not the one-year statute of limitations applicable to statutory penalties. Based on that decision, it was widely believed that the prevailing party attorney's fees provisions of Labor Code section 218.5 for claims for unpaid wages other than minimum wages or overtime wages applied to claims for additional compensation under Labor Code section 226.7 for meal and/or rest period violations. However, in today's decision, the Court of Appeal held the additional compensation payable under Labor Code section 226.7 is more like a wage than a penalty for purposes of determining which statute of limitations applies to such claims, as the Supreme Court held in Murphy, but not sufficiently like a wage to be subject to the prevailing party attorney's fees provisions of Labor Code section 218.5.
This is a terrific silver lining for employers. It means employees who are determined to be the prevailing parties on claims for an employer's failure to provide required meal periods and/or rest periods are likewise not entitled to an award of attorney's fees based on such claims and such claims are very, very commonly asserted in wage and hour class action lawsuits. But there is more. Because the Court of Appeal held the additional compensation payable under Labor Code section 226.7 is not sufficiently like a wage to be subject to the prevailing party attorney's fees provisions of Labor Code section 218.5, it follows that claims for such non-wage additional compensation cannot be the basis for an award of "waiting time" penalties under Labor Code section 203 because section 203 provides for an award of "waiting time" penalties only when there has been a "willful" failure to pay wages due and owing at the time of termination.
Given the amount of the attorney's fees award at state (approximately $100,000) and other considerations, we doubt UPS will petition the California Supreme Court for review of today's decision, and it is not immediately clear that there would be a viable basis for Mr. McGann to petition for review of today's decision. The more likely risk to today's decision would be a request by the plaintiff's bar or by labor unions to depublish the decision so it becomes unciteable. We will monitor this issue and will report any further significant developments.
- Partner
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 ...
- Partner
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 ...
Other AALRR Blogs
Recent Posts
- President Biden’s Administration Halts Department of Labor’s Final Rule for Worker Classification
- Rotational Employees Can Have Their “On” And “Off” Weeks Counted Against Their FMLA Leave Entitlement
- Ninth Circuit Issues Important Decision on Per Diem Pay
- Ninth Circuit Upholds Victory for Trucking Industry: California Meal and Rest Break Rules Preempted by Federal Law as to Commercial Drivers
- They Say Never Discuss Politics In Polite Company, But How Can Employers Handle Impolitic Off-Duty Conduct?
- DOL Permits Back-of-the-Restaurant Staff to Share in Servers’ Tips
- Can California Employers Be Liable For Failure To Prevent Something That Never Happened?
- Employer’s Delay is Fatal to Enforcement of Arbitration Agreement
- California Employers: The federal Department Of Labor’s Final Rule For Worker Classifications Does Not Eliminate The Requirements Under California’s ABC Test
- Court Holds California Law Applies to Offshore Workers on Oil Platforms
Popular Categories
- (43)
- (40)
- (135)
- (22)
- (6)
- (6)
- (31)
- (26)
- (22)
- (14)
- (5)
- (6)
- (4)
- (3)
- (3)
- (14)
- (9)
- (2)
- (2)
- (1)
- (3)
- (1)
- (3)
- (1)
- (1)
- (2)
- (1)
- (1)
- (1)
- (1)
- (1)
- (1)
- (1)
Contributors
- Christopher S. Andre
- Cindy Strom Arellano
- Sarkis A. Atoyan
- Alicia A. Belock
- Eddy R. Beltran
- Rex Darrell Berry
- William M. Betley
- Brigham M. Cheney
- Michele L. Collender
- Kevin R. Dale
- Scott K. Dauscher
- Alexandria M. Davidson
- William A. Diedrich
- Alfonso Estrada
- Lauren D. Fierro
- Paul S. Fleck
- Robert Fried
- L. Brent Garrett
- Carol A. Gefis
- Kieran D. Hartley
- Amber S. Healy
- Jonathan Judge
- David Kang
- Nate J. Kowalski
- Joshua N. Lange
- Catherine M. Lee
- Thomas A. Lenz
- David M. Lester
- Martin S. Li
- Mia A. Lomedico
- Jorge J. Luna
- Michael J. Morphew
- Ronald W. Novotny
- Michael J. O'Connor, Jr.
- Aaron V. O'Donnell
- Shawn M. Ogle
- Sharon J. Ormond
- Justin R. Peters
- Chesley D. Quaide
- Todd M. Robbins
- Irma Rodríguez Moisa
- Casandra P. Secord
- Jon M. Setoguchi
- Lauren B. Shelby
- Ann K. Smith
- Amber M. Solano
- Susana P. Solano
- Ethan G. Solove
- Susan M. Steward
- April Szabo
- Jay G. Trinnaman
- Jonathan S. Vick
- Robert L. Wenzel
- Brian M. Wheeler
- Glen A. Williams
- Kimberley A. Worley
- Lisa C. Zaradich
Archives
2021
2020
- December 2020
- October 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- January 2020
2019
- December 2019
- November 2019
- October 2019
- September 2019
- August 2019
- June 2019
- May 2019
- April 2019
- March 2019
- February 2019
2018
- December 2018
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- June 2018
- May 2018
- March 2018
- February 2018
- January 2018
2017
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- June 2017
- May 2017
- March 2017
- February 2017
2016
- December 2016
- November 2016
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016
- February 2016
2015
- December 2015
- October 2015
- September 2015
- August 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- May 2014
- April 2014
- February 2014
- January 2014
2013
- October 2013
- September 2013
- July 2013
- June 2013
- May 2013
- April 2013
- March 2013
- February 2013
- January 2013
2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
2011
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011