Wage Law

Moments ago, the United States Senate confirmed Samuel Alito as the 110th Supreme Court Justice of the United States by a 58-42 vote. One Republicans voted against the confirmation, and four Democrats voted in favor. All other votes were party line, Republican ayes and Democrat nays.

The confirmation gives the high court an apparently strong conservative and pro-business majority. Also, curiously, its first Roman Catholic majority in the history of the court. The confirmation is a major victory for employers and a major setback for employees and unions.

First, we had Murphy v. Kenneth Cole Productions, where, on December 2, 2005, in a carefully crafted collection of dicta, the First District Court of Appeal stated that meal and rest period pay is a penalty. That case is under Supreme Court consideration right now, and the defense's answer to the plaintiff's petition for review is due on Tuesday.

Next, on January 5, 2006, the Fourth District, Division Three, passed on considering the issue when it denied the employer's writ petition in Norm's Restaurants, Inc. v. Superior Court.

A couple of weeks later, we had National Steel and Shipbuilding Company v. Superior Court (Godinez), where the Fourth District Court of Appeal ruled on January 20, 2006 that meal and rest period pay is a wage. You can download that opinion here. It is possible that we will have a ruling on the Murphy writ petition before any petition for review is due in this case.

On Friday, we got Mills v. Superior Court, where, as we predicted, the Second District Court of Appeals called the pay a penalty. Unlike Murphy, this was a holding. You can download the Mills opinion here in pdf or MS Word format. We are sure we'll be getting a pile of supplemental briefs citing this case next week.

We are still awaiting a tentative decision from Division Two of the Fourth District in Banda v. Richard Bagdasarian, Inc., where, because of the former tentative ruling in the Orco Block case, we suspect the decision will also be that the pay is a penalty.

The dictum in Caliber Bodyworks Inc. v. Superior Court (2005) 134 Cal. App. 4th 365, calling the pay a penalty, is now with us for good. No petition for review was filed.

Some defense counsel are claiming that two penalties and a wage ruling will convince the Supreme Court to refuse to review Murphy. We believe that the split of authority makes it more important than ever for the Supreme Court to decide the issue. Until it does, for example, virtually every Orange County judge will call the pay a wage, and nearly all Los Angeles judges will call it a penalty. The value of a case will depend entirely upon where the plaintiff chooses to file. That is bad public policy. We will be sending a letter to the Supreme Court urging them to review Murphy.

As we predicted, now that there is authority supporting the view that meal and rest period pay is a wage, at least one Orange County Judge (Stephen Sundvold). In Vega v. Domino's Pizza, Judge Sundvold made the following ruling today on a demurrer and motion to strike in a wage and hour class action case:

The sole issued raised by these Motions is whether the payment for a violation of the duty to pay reporting time is a penalty or wage,  There is nothing in the Wage Order to indicate that the reporting time payment is anything other than a wage.  It is compensating the employee for his or her time set aside for the employer’s benefit.  The reporting time payment is therefore a wage, subject to restitution and subject to a three-year statute of limitation.

Wage statement penalties are true penalties subject to a one-year statute of limitation and are not recoverable under the UCL.  The portions of the pleading which Defendant seeks to strike are not objectionable as to time and therefore the Motion is DENIED as to them.

Meal and rest break violations are paid in wages and not penalties.  A three-year statute of limitation extended to four years under the UCL applies.  Although the issue has been in a state of flux, the opinion in National Steel  is best reasoned.

As the payments constitute wages, attorney fees are recoverable.

Next week, we will learn how Judge Cannon views the issue.

Appearances may be deceiving, but the Norm’s Restaurants case seems to have turned into nothing but extended fight over the statute of limitations (Norm's Restaurant is not one of our cases). First, the defendant filed a motion to strike much of the plaintiff's complaint with respect to meal and rest break claims, on the ground that break pay under Labor Code § 226.7 is a penalty, not a wage. Judge Kim Dunning denied the motion. Norm's Restaurants appealed with a petition for writ of mandate, which the Fourth District denied. The denial came after Murphy, but before National Steel and Shipbuilding Company. It also came after Judge Thierry Colaw replaced Judge Dunning on the Orange County Superior Court complex litigation panel.

After Murphy was decided, the defendant filed another motion to strike. The opposition was filed before National Steel and Shipbuilding Company. The hearing was scheduled for tomorrow. It won't go forward just yet. With the benefit of both Murphy and National Steel and Shipbuilding Company, Judge Colaw paused to reflect further, after yet more input from the parties.

The court to Strike Portions of Plaintiff’s 2nd Amended Complaint: We now have National Steel v. Superior Court from Division One of the Fourth Appellate District. At page seven [7] of the opinion the court held that it was both a wage and a penalty! They looked at the legislative history and determined that it was “not particularly enlightening” [page 12]. They then moved on to an examination of the entire statutory scheme. The court stated that the legislature was aware of how the word “penalty” impacts applicable statutes of limitations, and could have but did not label the statutory payment of section 226.7 a “penalty”. The court concluded at page 15 that the payment of Labor Code § 226.7 is an obligation created by statute, other than a penalty, and is governed by the 3 year statute of C.C.P. § 338(a). There was a dissenting opinion. So where are we? We have dueling opinions, and one is from the Fourth District. The matter is continued to 2-10-06. Both Parties are to submit concise further briefs, no more than ten pages, on the issue of which of the competing cases is better reasoned and adopts the better rule. There shall be no replies. Moving Party to give Notice.

If you are aware of any other trial court rulings which are post Murphy and National Steel and Shipbuilding Company, let us know who ruled what.

Lately, we've had to defend a number of frivolous motions claiming that plaintiffs cannot proceed with wage claims until they have exhausted their remedies under the Labor Code Private Attorneys General Act of 2004 (PAGA). We're starting to work on a sanctions motion form that we are going to start filing when we see these things in the future.

The defendants typically raise both issues in a motion to strike and/or a demurrer, claiming that (as if they really want this to happen) the plaintiffs are first required to give notice under Labor Code § 2699 before proceeding with an action for wages or penalties under the Labor Code. The motions were always denied, even before Caliber Bodyworks, Inc. v. Superior Court (2005) 134 Cal. App. 4th 365.

Labor Code § 2699(a) allows "an aggrieved employee on behalf of himself or herself" to recover civil penalties in addition to the Labor and Workforce Development Agency. Subsection (f) defines the amount of the penalties. ($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.) Such penalties may only be sought after notice to the employer and to the Labor and Workforce Development Agency.

However, if a plaintiff is not seeking penalties under Labor Code § 2699, there is no requirement that notice be given to the state, nor any requirement that defendants be given notice or an opportunity to cure. Exhaustion of administrative remedies is only required where a civil action is brought by an aggrieved employee "pursuant to subdivision (a) or (f) of Section 2699 alleging violation of any provision listed in Section 2699.5…"Labor Code § 2699.3(a).

In Caliber, the employees did not allege that they had satisfied the pre-filing notice and exhaustion requirements of Lab. Code, § 2699.3, subd. (a), before initiating their lawsuit, and their complaint made no reference to the PAGA. The court logically held that the employees could not maintain a private action under Labor Code § 2699, because the pre-filing notice and exhaustion requirements were mandatory as to causes of action that alleged a violation of one of the provisions listed in Labor Code § 2699.5, and that sought recovery of a civil penalty assessable by the California Labor and Workforce Development Agency. However, the court also held that workers could maintain private causes of action for unpaid wages, statutory penalties, including unfair business practice claims, because those were not subject to the notice and exhaustion requirements.

Because Caliber is now final (no petition for review was filed), employers and their counsel can not longer argue that they are making a good faith argument on an unsettled area of law. Sanctions under Code of Civil Procedure § 128.7 should be granted every time this ridiculous tactic is employed.

On January 13, 2006, Governor Schwarzenegger reversed course and withdrew regulations that would have significantly limited the right of California workers to a lunch break. The proposed regulations were pending for more than a year, and, if passed would have taken away rights that California workers had enjoyed for more than a half century. The proposal would have benefitted corporations such as Wal-Mart, and other retail and restaurant chains that increased their profits by cheating workers out of their breaks. The regulations would have also reduced the statute of limitations on meal break cases from three years to one year. Strangely, the latest information on the DIR web page suggests that the regulations are still being considered:

The written comments received in the last period for comments which expired on July 25, 2005 are being reviewed and analyzed. The volume of comments received was quite large and the process is very time consuming. Although it is hoped that it will not be much longer before the review is completed, the rulemaking process does statutorily allow up to a year to complete. Once the review is completed, if it is determined that further revisions to the proposed regulations are needed, the regulations will, by the provisions of the rulemaking process, be submitted for yet further public comment. If no further revisions are needed, the proposed regulations will be submitted for approval and finalization. In the meantime and until the new regulations are approved, you should continue to follow the procedures currently specified in the Labor Code. Please continue to watch our web site for updates.

Nonetheless, the California Department of Industrial Relations (DIR) did announce that the Division of Labor Standards Enforcement (DLSE) would not file the regulations governing meal and rest periods with the Office of Administrative Law within the deadline.

The regulations were first proposed as "emergency" regulations in 2004, which were then withdrawn and submitted under the regular rulemaking process on January 4, 2005. Any such regulations now would have to be resubmitted and taken through a new comment period before enactment.

That process could begin soon. John Rea, acting director of the DIR, noted that the most critical component of the regulations, governing the classification of payments made to employees for an employer’s failure to provide meal and rest periods, has been independently reviewed by the First District Court of Appeal, which found that the "payment" is indeed a penalty and not a wage. "That decision is in full agreement with our position," Rea said. "When viewed in combination with a precedent decision recently issued by the Labor Commissioner, the need for a regulation clarifying that the 'payment' is a penalty and not a wage is significantly reduced at this time."

The recent National Steel and Shipbuilding Company v. Godinez case may prompt the agency to start anew immediately. Of course, if Godinez remains good law, the DLSE's opinion on the wage/penalty debate will not matter.

For the first time, a California Court of Appeal has considered, in a holding, the issue of whether the additional hour of pay under Labor Code section 226.7 is a wage or a penalty, and the court concluded that it is a wage.

In National Steel and Shipbuilding Company v. Godinez (December 20, 2006) the primary question presented is what statute of limitations applies to the payment, the one-year statute of limitations for an "action upon a statute for a penalty or forfeiture" (Code Civ. Proc. § 340, subd. (a)), or the three-year statute of limitations for "[a]n action upon a liability created by statute, other than a penalty or forfeiture" (Code Civ. Proc. § 338, subd.(a)). The answer to this question turns on whether the payment is considered primarily a penalty against employers or a wage to employees.

We conclude that a payment under section 226.7 is an obligation created by statute, other than a penalty, subject to a three-year statute of limitations period (Code Civ. Proc. § 338, subd. (a)), and that this remedy will support a claim for restitution under Business and Professions Code section 17203.
...
Employees earn the additional hour of pay when they are denied a meal or rest period; thus, the payments under section 226.7 are restitutionary and recoverable under California's Unfair Competition Law.

The publication of this opinion significantly increases the likelihood that the California Supreme Court will review or depublish Murphy v. Kenneth Cole Productions, Inc. Until the Supreme Court acts, there will be a split of authority, and the fact that National Steel and Shipbuilding Company is the first actual holding to address the issue makes it better authority. We'll be spending the next two days filing supplemental briefs on all those motions for reconsideration we are opposing.

If you would like to read the full text of the opinion, you can download it as a Word file or a pdf.

After fighting several minimum wage hikes, Arnold Schwarzenegger is proposing a 50-cent increase in the minimum wage in October 2006, followed by another 50-cent increase in July 2007. Business leaders appear to be willing to go along with the plan, but only because the Schwarzenegger plan has no inflation indexing.

Labor leaders want indexing, pointing out that minimum wage workers have lost 10% of their wages, in real value, to inflation just since Schwarzenegger took office. But that's just a drop in the bucket. The minimum wage for California employees in 1968 was worth $10.09 in 2006 dollars. No one is suggesting that workers be restored to the "good old days" of 1968, but if we are going to tie future minimum wage increases to the inflation index, perhaps we should wait until minimum wage is raised back up to what it was, in real dollars, before the legislature let inflation cut it to shreds.

A recent tentative ruling in a case called Lim vs. Victoria's Secret, Inc. (Orange County Superior Court case no. 04CC00213) further illustrates how a weak response from the class can affect the value of a law firm's work on a class action. Lim involved a $1.25 million settlement in a meal and rest break case. Frankly, we didn't like it. The settlement paid just $1.95 per week per employee. Perhaps the low amount was because employees got most, but not all of their breaks. We don't know. The notice did not say. All we know is that, in our next mediation, despite strong evidence of liability for rampant break violations and highly compensated workers ($14 or more per hour on average), we just know some defense lawyer is going to try to convince us, the mediator, and his own client, that $3 per week is fair compensation because it is "50% higher than the Victoria's Secret settlement."

Equally significant, however, is the low response rate. There were 25,620 notices sent to class members, but just 3,503 claims were filed. That response rate is a meager is 13.67%, with not even one in seven workers sufficiently motivated to sign their claim form and mail it to receive their settlement check. If the total responses represented an equivalent percentage of the total value of the settlement (in other words, if the typical responding class members had "average" seniority), then the payout, exclusive of attorney's fees, may have been as little as $119,000. That left the court unimpressed, and it reviewed the fee application on a strict lodestar basis, rather than simply awarding a percentage of the settlement. The lodestar analysis was much harsher than the class counsel was probably expecting.

Counsel has provided the value of his hourly services. It totals $211,900.00. The hourly rate of $400 per hour is high, especially since the claimed duties performed could very easily have been done by someone with a much lower hourly rate. If the bill is discounted by 30%, it amounts to $148,330.00. That’s still high given the total award made to the class.

That means that the lawyers made $266 per hour. That sounds like a lot to those unfamiliar with class action litigation, but bear in mind that even mediocre and inexperienced attorneys can make $300 per hour or more for hourly work, and they don't have to wait one to five years before receiving payment, plus they get paid whether they win, settle or lose. In many class actions, the lawyer's time is valued at $450 per hour, with a lodestar enhancement, called a "multiplier" of between 1.5 and 4 times that value, to reflect the skill and experience of the attorney, the risks and costs faced in the litigation, and the level of success achieved, among other things (or inter alia, as fancy lawyers like to say). We have received multipliers of 1.3 to 3.5 in prior cases. Here, the court's lodestar multiplier was less than one. The court reduced the fee by 30%.

The court also clipped the class representative's requested enhancement of $5,000, cutting it to $2,500, noting that "there is nothing in either the declaration of Lim or her counsel that supports the requested $5,000." If that's true, then even $2,500 is pretty generous. Our class representatives often spend long hours working with us to improve the case, gather witnesses and evidence and respond to discovery and other demands of the litigation. Someone who just signs on the start the case and disappears while the lawyers work the case up should not receive more than a few hundred dollars more than a "regular" class member.

After the fees and enhancements got reduced, the costs apparently got whacked a bit, too: "With the exception of the expenses related to travel to the mediation, the costs are reasonable. Counsel claims $1,584.00 in travel and food costs for an overnight trip to San Francisco."

We have to admit, $1,584 for a single overnight trip to San Francisco is a bit high. Our last trip to the City cost about $500 in airfare, $550 for a two night stay at a Marriott, $250 for food and $50 for cab fare. That's $1,000 for two nights, for two lawyers. And we weren't exactly slumming it.

Anyhow, the lesson remains the same. If class counsel want to earn their fees, they need to fight for the best settlement possible, not just the amount that the defense will pay at the end of the first mediation session. And after the settlement is approved, class counsel needs to be diligent to make sure that a strong percentage of the class participate. The consequence for failure to accomplish both of these objective could be a thinning of class counsel's own wallet.

Cicairos v. Summit Logistics, which we discussed a few days ago, is final. This morning, the California Supreme Court denied the defendant's petition for review, denying also the concurrent request for depublication. Justice Chin recused himself for reasons which were not disclosed on the Supreme Court's website.

The opinion has a number of gems which will become part of our standard points & authorities on a number of issues, including the practical effect of employer policies on rest periods, shoddy meal period record-keeping and references to DLSE opinion letters.

Congratulations to plaintiff's counsel David Rosenfeld, who wrote a fantastic brief. The defendant was represented by Little Mendelson's James Yunhao Wu and Henry D. Lederman, who also wrote a decent brief, but who didn't really have the facts and the law on their side.

New class actions or 17200 cases filed in Orange County Superior Court must include, within the first thirty days, a class counsel and class representative disclosure. The disclosure must be made on form L-277, approved for mandatory use in 2005.

For your amusement, we present "I Got Friends in Low Wages" - a Jib-Jab style anti-WalMart flash animation.

For your more practical enlightenment, we present a link to Kimberly A. Kralowec's outstanding UCL blog, which includes within it, a link to the actual jury verdict in that $172 million meal period trial against Wal-Mart. The employees in that case were represented by other members of Ms. Kralowec's law firm.

The plaintiff in Murphy v. Kenneth Cole Productions, Inc. has filed a petition for review with the California Supreme Court. The petition will be fully briefed by early February, and a decision from the Supreme Court can be expected by mid-March, though it could be as late as April or even May.

The Supreme Court has at least 60 days to grant review, running from the date that the last petition in the case was filed, but the court has the right to extend this deadline for one or more additional periods up to 30 more days. Single extensions are often ordered, though multiple extensions are uncommon.

If the court denies review, the wage/penalty debate concerning meal and rest period pay will be all but over. If review is granted, no party will be permitted to cite Murphy v. Kenneth Cole Productions, Inc. and it will likely be a year or more before the issue is finally resolved.

The October 2005 opinion in Cicairos v. Summit Logistics, Inc., reversing a summary judgment in favor of an employer in an action brought by several truck drivers for meal and rest period pay, plus penalties for wage statement violations, was a well reasoned opinion with some very useful language concerning employers's obligations to employees regarding breaks. For example, the court held that where the employer violates the Labor Code by failing to maintain records, it is the employer, not the employee, who should suffer the adverse consequences that result from the lack of records. In so doing, the court applied existing case law regarding estimated hours of work to the now often-recurring area of meal and rest period records.

“[W]here the employer has failed to keep records required by statute, the consequences for such failure should fall on the employer, not the employee. In such a situation, imprecise evidence by the employee can provide a sufficient basis for damages.” (Hernandez v. Mendoza (1988) 199 Cal.App.3d 721, 727.)

Because the employer is required to keep records of meal periods, the lack of such records is not a ground for denying an employee his or her day in court.

The court also addressed the extent of the employer's duty to make sure that the employees receive a full meal period during which they are relieved of all job duties. Employers often argue that they do not have an affirmative duty to ensure that workers are actually relieved of all duty during meal breaks. Cicairos rejects that claim, adopting the reasoning of a DLSE opinion letter which treated meal period liability much the same as overtime liability. In other words, the employer is liable for missed meal periods as long as it requires, permits, knows or should know that the employees are missing their meal periods:

An opinion letter from DLSE regarding meal periods for drivers who delivered cement to construction sites stated: “An employer is liable for the meal period penalty not only if the employer prohibits the employee from taking the required meal break, but also, if the employee (though authorized and permitted to take a meal break) works, with the employer’s sufferance or permission, during the period that the employee had been authorized to take his or her meal period. An employer is deemed to have suffered or permitted the employee to work if the employer (or the employer’s agent, including managers and supervisors) knew, or reasonably should have known, that the employee was working instead of taking the required meal break.” (Dept. of Industrial Relations, DLSE Opinion Letter 2001.04.02, p. 5, italics added.)

We also like the opinion's modification concerning rest periods. The court noted that

Although the defendant was not required to keep records of the plaintiffs' rest breaks and the collective bargaining agreement authorized rest breaks, the defendant could still be liable if the plaintiffs did not take their full 10-minute rest breaks because, as a practical matter, the defendant did not permit the plaintiffs to take their rest breaks. (See Cal. Code Regs., tit. 8, § 11090, subd. (12)(A) [employer must authorize and permit rest period].)

We have several cases in which "as a practical matter" the employer does not permit rest breaks.

A petition for review has been filed, along with multiple requests for depublication, seeking to have the Supreme Court reject the notion that companies have "an affirmative obligation to ensure that workers are actually relieved of all duty during required meal periods." Instead, the employers want the court to adopt the reasoning of those proposed regulations that still haven't been passed, which provide considerably more leeway to employers who want only to "provide" their employees the chance to take a meal period, or, preferably, to skip it. The petition for review is fully briefed, and the Supreme Court is expected to grant or deny review within a few weeks.

The National Employment Lawyers Association has released a report on Supreme Court nominee Samuel Alito. NELA's report concludes:

During his time on the Third Circuit, Judge Alito ... has shown a tendency to ignore well-established precedent in crafting dissents that, had they been embraced by the majority, would dramatically circumscribe employee rights. On several occasions, Judge Alito’s opinions have demonstrated an aversion and lack of commitment to protecting American workers. Accordingly, NELA joins more than 50 advocacy and civil rights groups in urging the members of the United States Senate to oppose Judge Alito’s confirmation to the Supreme Court of the United States.

That's good enough for me. I'm opposed to this nominee. Unfortunately, Judge Alito's confirmation seems all but assured. Business interests across the nation are rejoicing. The dirtier the business, the louder their applause.

From Judge Sundvold last week:

"The First District Court of Appeal has ruled in Murphy v. Kenneth Cole Productions (2005) 134 Cal. App 4th 728 that the payment imposed by Labor Code Section 226.7 is a penalty and is therefore subject to a one-year statute of limitations. While the Federal decision cited by Plaintiff may be better reasoned, this Court is bound by the Murphy decision."

It's pretty clear from that comment in a tentative ruling that if Murphy is reviewed, meal and rest period pay will become a wage again in Orange County, at least among the current panel of jurists. If not, of course, the issue becomes settled until and unless the legislature acts.

So far, we have permitted anonymous comments. However, if you choose to post comments anonymously, you can disagree with what we say, but if you are the slightest bit obnoxious, sarcastic or disrespectful, your comment will be deleted. If fact, we might even do that if you are not anonymous. We just might even ban you from making comments in the future. This page is not a democracy. It is not your First Amendment forum. If you want to disagree with us, do so politely and/or under your real name.

Yesterday, we reported that the writ petition in Norm's Restaurants, Inc. v. Superior Court (4th District, Division 3) was still being considered by the Court of Appeal. We were correct at the time, but only a few hours later, the writ petition was given a "postcard" denial. While that ruling does leave standing the trial court's determination that meal and rest period pay is a wage, not a penalty, the denial of the writ petition has no precedential value in any other cases.

In Caliber Bodyworks Inc. v. Superior Court, (2005) 134 Cal. App. 4th 365, in a footnote, the 2nd District Court of Appeal characterized Labor Code § 226.7 remedies as penalties:

Under Labor Code § 226.7 an employer failing to provide an employee a meal period or rest period in accordance with the applicable IWC wage order is liable to the employee for one additional hour of pay at the employee's regular rate of compensation for each day's violation. Although section 226.7 does not expressly label this payment a "penalty," it is in the nature of a statutory penalty because it requires the employer to pay more than the value of the missed meal or rest period. The section 226.7 payment does not compensate the employee for any extra time worked but rather punishes the employer for its failure to provide the meal or rest period mandated by the IWC. (See Hartwig v. Orchard Commercial, Inc. (2005) (Cal. Div. Labor Stds. Enforcement, May 11, 2005, No. 12-56901RB) [as of November 21, 2005] [designated a Precedent Decision of Division of Labor Standards Enforcement and finding section 226.7 payment a penalty because its purpose is to enforce the meal and rest period requirements and deter noncompliance rather than to compensate the employee].)

The time for seeking Supreme Court review expires soon, and we do not know if the plaintiff's lawyer, Anthony Luti, is seeking review. If he does not, a remittitur will issue on January 23, 2006.

The more interesting opinion is the December 2, 2005 Murphy v. Kenneth Cole Productions case. The full opinion can be read here. After a lengthy discussion of the arguments raised by both sides, the court stated:

"We conclude that the payment imposed for impermissibly failing to provide a meal or rest break is a penalty. As a penalty, it had to be raised within one year of the last date that the claim accrued."

Oddly enough, because of the procedural holdings of the court (that Murphy was not entitled to bring a new claim under section 226.7 in the de novo appeal from the ODA) arguably the "penalty" ruling is dicta. Nonetheless, the court discussed it at length and if the decision stands, it will become the guiding authority for every trial court in the state. Right now, the decision is prompting more motions in our caseload than any decision we have ever seen. Here, too, the time for seeking Supreme Court review expires soon, but we are all but certain that the plaintiff's lawyers will be filing a petition for review.

In Mills v. Superior Court, we were expecting an opinion (and one construing the remedies as a penalty) by January 3, 2006. So far, however, there is no decision.

In Norm's Restaurants, Inc. v. Superior Court, the 4th District, Division 3 has not yet ruled upon the employer's writ petition or requested further briefing.

In National Steel and Shipbuilding Company v. Godinez, the issue was argued on December 16, 2005, and an opinion is expected by March 2006.

And finally, in Banda v. Richard Bagdasarian, Inc., the case has been fully briefed since March 2005, but there is no argument set or tentative ruling yet issued.

If you know of any other appeals pending regarding the wage/penalty issue under Labor Code § 226.7, please let us know.

IRS mileage rates have changed again. The Standard Mileage Rates for 2005 were 40.5 cents per mile, from January 1, 2005 to August 31, 2005. The rates were increased to 48.5 cents per mile from September 1, 2005 to December 31, 2005.

Effectively January 1, 2006, the rates have decreased to 44.5 cents per mile. Most employers reimburse their employees using the IRS standard mileage rate.

Effective January 1, 2006, the jurisdictional limit of the small claims court has been increased from $5,000 to $7,500 (Assembly Bill 1459 [Canciamilla], Stats. 2005, ch. 618 and Senate Bill 422 [Simitian], Stats. 2005, ch. 600). Only natural persons (in other words, not business entities or other organizations or representative plaintiffs) will be able to seek more than $5,000. As before, a plaintiff can file no more than two cases per year which exceed $2,500 in claims. As a result, we will probably advise more employees to take their wage cases to small claims court.