California Law on Vacation Pay
New DLSE Opinion Letters: 2008.11.25, 2008.11.25-1

Brewer v. Premier Golf - No Punitives for Labor Code Violations

We offer a hearty welcome to those of you who found this blog after attending Bridgeport's seminar on Wage & Hour litigation at UCLA on Tuesday and Wednesday. Every time I present something on recent developments in wage and hour law, I recite the mantra that this is one of the most busily changing areas of practice, and that rarely does a week go by without some significant development in the law coming from the courts, the legislatures, the DLSE or the DOL. Usually, something interesting pops up in the first few days after the seminar, and this was no exception.

Yesterday, the 4th District Court of Appeal ruled that punitive damages are generally unavailable as part of a claim for meal break, rest break or overtime claims based upon Labor Code violations, but attorney's fees are recoverable under  Labor Code § 218.5 "because it is now settled that compensation for missed meal and rest breaks are wages" [citing Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094]. Brewer v. Premier Golf Properties (2008) __ Cal.App.4th __.

The question of whether an aggrieved employee is entitled to punitive damages in an overtime case had never been squarely addressed in a published holding in a California case. The closest thing we had to a ruling on that issue was a bit of dictum in Gentry v. Superior Court (2007) 42 Cal.4th 443, that began with "Although exemplary damages are not available in overtime suits (see section 1194.2...)"

Employers seeking to avoid punitive damage claims would cite Gentry, and would argue something along these lines: Where a right is created by statute and the statute does not expressly permit punitive damages, punitive damages under California Civil Code section 3294 are not available. Turnbull & Turnbull v. ARA Transp., Inc. (1990) 219 Cal. App.3d 811, 826-27, 268 Cal. Rptr. 856 ("when a new right . . . is created by statute and a statutory remedy for the infringement thereof is provided, such remedy is exclusive of all others") (citing Orloff v. L.A. Turf Club (1947) 30 Cal.2d 110, 112-13, 180 P.2d 321); Czechowski v. Tandy Corp. (N.D. Cal 1990) 731 F.Supp. 406, 410 (penalty provision provided by Labor Code precludes award of punitive damages). Furthermore, claims under section 17200 of the Business and Professions Code will not support an award of punitive damages. Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal. 4th 1134, 1148.

The employees would argue Greenberg v. Western Turf Ass'n (1903) 140 Cal.357, 73 P. 1050, in which the California Supreme Court upheld the imposition of punitive damages where a statutory penalty had already been awarded, because it determined that the civil penalty was not meant to punish. Labor Code penalties, similarly, are not meant to punish, therefore, punitive damages are permitted for certain types of Labor Code violations where the defendant is guilty of blatant violations of law. See Bender v. Darden Restaurants, Inc. (2002) 26 Fed.Appx. 726 (compensatory damages in the sum of $9,860 and punitive damages in the sum of $943,000 for one plaintiff, and compensatory damages in the sum of $5,970 and punitive damages in the sum of $890,000 for the other plaintiff, all based upon denied meal and rest periods.)

Now, the analysis is much clearer:

"[P]unitive damages are not recoverable when liability is premised solely on the employer's violation of the Labor Code statutes that regulate meal and rest breaks, pay stubs, and minimum wage laws."  Brewer v. Premier Golf Properties (2008) __ Cal.App.4th __. "Labor Code statutes regulating meal and rest breaks, pay stubs, and minimum wages provide express statutory remedies, including penalties for violation of those statutes that are punitive in nature, that are available when an employer has violated those provisions, and are exclusive remedy available for such statutory violations absent evidence that statutory remedy is inadequate."

It is left to our imagination what kind of evidentiary showing would be necessary to establish that the statutory remedy under the Labor Code would be inadequate. We suspect that this holding would not have compelled a different result under so-called "slavery" cases, such as Bureerong v. Uvawas (1996) 922 F.Supp. 1450, where the District Court permitted punitive damages to be asserted in a wage claim brought by garment workers who were denied minimum wage and overtime.

Elsewhere in the Brewer opinion, the court upheld the trial court's award of $6,000 for unpaid meal and rest break wages (Labor Code § 226.7), $4,000 in pay stub penalties (Labor Code § 226), and $15,300 for "minimum wage" penalties (Labor Code § 1197.1). The court rejected the employer's statute of limitations defense on the penalties, rejected the employee's appeal of an order denying a JNOV based upon a claim for waiting time penalties, and held that the plaintiff had no obligation to exhaust any administrative remedies as a condition to the recovery of any penalties. The last point was founded upon the holding in Mokler v. County of Orange (2007) 157 Cal.App.4th 121, 133-136 that a party's failure to exhaust administrative remedies may not be raised for the first time in the appeal from the allegedly void judgment.

The published part of the opinion also addressed various FEHA issues, which is off topic for us, and we will leave that for others to discuss. For a the next few weeks, you will be able to download the full text of the opinion in Brewer here in PDF or MS Word format.

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