Wage Law

This afternoon, Judge Jonathan Cannon ruled on Main Street Restaurant Group, Inc.'s motion to strike portions of the third amended complaint in the TGI Friday's uniform, meal and rest period class action. The motion was primarily focused upon allegations that reach back more than one year from the filing date with respect to meal and rest period pay. The primary ground asserted in support of the motion was that an hour of meal and rest period pay is a penalty, such that claims more than a year old are invalid. The court rejected the defense position and ruled as follows:

ANALYSIS: Most of Defendant’s Motion rests on the proposition the remedies of Labor Code §226.7 are penalties, not wages. As discussed below, Defendant’s proposition is incorrect. This Court is not bound by the DLSE’s interpretation the provisions § 226.7 constitute a penalty rather than a wage. There is very little case law addressing the question as to whether the provisions of § 226.7 should be considered a wage or a penalty.

The Court in Tomlinson v. Indymac Bank F.S.B. (CD Cal. 2005) F.Supp.2d 8991 applied and interpreted California law in considering the issue. The Tomlinson Court stated: “The Court agrees with Plaintiffs that payments under Section 226.7 are restitutionary because they are akin to payment of overtime wages to an employee: both are “earned wages” and thus recoverable under the UCL. See Cortez, 23 Cal.4th at 178, 96 Cal.Rptr.2d 518, 999 P.2d 706. Just as an understaffed company may make the conscious decision to pay its employees time and a half to work overtime, the same understaffed company also can decide to have its employees forego their meal and rest breaks if it compensates them at a higher rate. In both instances, the employee earns the higher wage by working additional time.”

The issues regarding subclass “A” should have been raised at the hearing on certification. The statute of limitations regarding the 3rd cause of action may be addressed by way of summary adjudication.

RULING: The Motion to Strike is denied.

The ruling assures that the class, which was certified earlier this year, will be able to conduct all of the discovery needed to present a full case on the merits of all issues at trial.