the ABC test created four years of potential class action liability and one year of potential PAGA liability during that Borello period. Are other key California court decisions relating to employment law being applied retroactively? Yes, because the California Supreme Court regularly applies its decisions retroactively, including when it announces new law. Based on statutes of limitations, such retroactive decisions generate four years of potential class action liability and one year of potential PAGA liability, often across multiple claims. This is because a single claim for unpaid wages gives rise to derivative claims, including penalties for inaccurate wage statements, penalties for untimely payment of wages and attorneys’ fees. Consider a few examples. For approximately 70 years, businesses in California relied on a federal doctrine holding that up to 10 minutes of work time each day need not be compensated if the time was difficult to track. This de minimis doctrine was endorsed by the US Supreme Court and then applied to California claims by the Ninth Circuit and the California Division of Labor Standards Enforcement (DLSE) – the state agency charged with enforcing California’s wage and hour laws. Further, a California Court of Appeal applied the federal de minimis doctrine in an employee compensation case. No California court had deemed the federal de minimis doctrine inapplicable under California law. But in Troester v Starbucks Corp, 5 Cal. 5th 829 (2018), the California Supreme Court rejected the federal de minimis doctrine. Troester is being applied retroactively. In 1990, 2011 and 2013, the California Court of Appeal held that an eight-hour sleep period could be excluded by written agreement from hours worked in a 24hour shift. The DLSE agreed that such sleep time need not be compensated. No California court had reached a contrary conclusion. But in Mendiola v CPS Sec. Sols., Inc, 60 Cal. 4th 833 (2015), the California Supreme Court first announced that sleep time during an on-call shift can be compensable. Mendiola was made retroactive. Since at least 2012, multiple federal courts concluded that premium pay – the hour of compensation owed to employees for an improper meal or rest break – is paid at an employee’s base hourly wage, not the potentially higher (and more difficult to calculate) regular rate of pay. In 2019, the first California Court of Appeal to consider this issue agreed. But in Ferra v Loews Hollywood Hotel, LLC, 11 Cal. 5th 858 (2021), the California Supreme Court held that premium pay must be paid at the regular rate of pay. Ferra was made retroactive. Starting in 2012, three California Courts of Appeal held that premium pay is not a wage that can trigger penalties for inaccurate wage statements or untimely payment of wages. At least seven federal courts applying California law agreed. But in Naranjo v Spectrum Sec. Servs., Inc, 13 Cal. 5th 93 (2022), the California Supreme Court parted ways with these authorities. The California Supreme Court has not barred retroactive application of Naranjo. What is your strategy to protect clients from the retroactive application of new California law? Among other strategies, I establish a 14 LAWYERMONTHLYDECEMBER 2022
RkJQdWJsaXNoZXIy Mjk3Mzkz