No Punitive Damages for Meal and Rest Period Violations

While the wage and hour world waits for the Walmart decision, in which the court awarded roughly $170 million in meal period premiums, penalties and punitive damages. the other courts are working away.

Wait no longer. Ms. Brewer is a waitress at Cottonwood golf resort's restaurant. She sued for meal and break violations among a smorgasbord of other employment claims. She lost on her age discrimination claims. But she won on some Labor Code violations. The jury also awarded her punitive damages, over and above the meal and break premiums, penalties for improper wage statements, etc. (I bet you thought I was going to make food puns throughout this post, didn't you?)

The court of appeal reversed on punitive damages. The court decided that the Labor Code creates new rights not available at common law. Therefore, their remedies are exclusive. The court also held that a claim for unpaid meal periods and other Labor Code violations "arise" out of contract - the employment relationship. As such, punitive damages are not available as a matter of law.

Here's a long quote from the opinion to prove I read it, or at least that I know how to cut and paste:

We agree with Cottonwood’s contention, which Brewer does not dispute on appeal, that the Labor Code statutes regulating pay stubs (§ 226) and minimum wages (§ 1197.1) create new rights and obligations not previously existing in the common law. Moreover, those same statutes provide express statutory remedies, including penalties for the violation of those statutes that are punitive in nature, that are available when an employer has violated those provisions. Section 226, subdivision (e), provides that any employee “suffering injury as a result of a knowing and intentional failure by an employer to comply with [the pay stub requirements] is entitled to recover the greater of all actual damages or fifty dollars ($50) for the initial pay period in which a violation occurs and one hundred dollars ($100) per employee for each violation in a subsequent pay period, not exceeding an aggregate penalty of four thousand dollars ($4,000), and is entitled to an award of costs and reasonable attorney’s fees.” Similarly, section 1197.1, subdivision (a) provides that any employer who pays or causes to be paid to any employee a wage less than the minimum wage “shall be subject to a civil penalty as follows: [¶] (1) For any initial
violation that is intentionally committed, one hundred dollars ($100) for each underpaid employee for each pay period for which the employee is underpaid[;]
[¶] (2) For each subsequent violation for the same specific offense, two hundred fifty dollars ($250) for each underpaid employee for each pay period for which the employee is underpaid regardless of whether the initial violation is intentionally committed.” Here, Brewer sought and recovered the maximum $4,000 penalty available for Cottonwood’s pay stub violations, and the judgment contained an additional penalty of $15,300 pursuant to section 1197.1 for the overtime violations. We are not persuaded by Brewer’s argument that the remedies set forth in the statutory scheme were not intended to be the exclusive remedy available for statutory violations, and Brewer does not articulate any basis for concluding those penalties are so inadequate that other remedies should be permitted. Similarly, the
regulations requiring employers to provide meal breaks (§ 512) and rest breaks
(Cal. Code Regs., tit. 8, § 11090, subd. 12(A)), and providing numerous forms of
remedies for their violation, also appear to have created new rights and obligations not previously existing in the common law, and the statutory scheme provides “a comprehensive and detailed remedial scheme for its enforcement.” (Rojo v. Kliger, supra, 52 Cal.3d at p. 79.) Those remedies include an award in the nature of liquidated damages under section 226.7 (cf. Murphy v. Kenneth Cole
Productions, Inc. (2007) 40 Cal.4th 1094, 1112 [because “damages [from missed
meal and rest breaks] are obscure and difficult to prove, the Legislature may
select an amount of compensation [for the violation] without converting that
remedy into a penalty” for statute of limitations purposes]), injunctive relief
(see generally § 1194.5), and potential statutory penalties (see § 558). We are convinced that, because the meal and rest break provisions of the Labor Code “established a new and comprehensive set of rights and remedies for [employees]… [and] [n]o such specialized rights and remedies existed at common law… the remedy provided in the statute ‘is exclusive of all others unless the statutory remedy is inadequate.’ [Quoting Turnbull, supra, 219 Cal.App.3d at p. 827.]” (De Anza Santa Cruz Mobile Estates Homeowners Assn. v. De Anza Santa Cruz Mobile Estates, supra, 94 Cal.App.4th at p. 916.)

* * *
We are also convinced that, even were the remedies provided by the statutory scheme not the exclusive remedies for the new rights, punitive damages would nevertheless be unavailable because punitive damages are ordinarily limited to actions “for the breach of an obligation not arising from contract” (Civ. Code, § 3294), and Brewer’s claims for unpaid wages and unprovided meal/rest breaks arise from rights based on her employment contract. Brewer argues, without citation to relevant authority, that Cottonwood’s breach of its statutory obligations under the Labor Code is a “breach of an obligation not arising from contract,” thereby supporting the award of punitive damages.

However, in analogous situations, the courts have recognized that, when a statute imposes additional obligations on an underlying contractual relationship, a breach of the statutory obligation is a breach of contract that will not support tort damages beyond those contained in the statute.(See, e.g., Kwan v. Mercedes-Benz of North America, Inc. (1994) 23 Cal.App.4th 174, 187–192 [breach of Consumer Warranty law obligations is breach of contract and does not support tort damages for emotional distress].) We apprehend the Labor Code provisions governing meal and rest breaks, minimum wages, and accurate pay stubs constitute statutory obligations imposed only when the parties have entered into an employment contract and are obligations arising from the employment contract. The breach of an obligation arising out of an
employment contract, even when the obligation is implied in law, permits contractual damages but does not support tort recoveries. (Cf. Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 700.) Although Brewer relies on language from Gould v. Maryland Sound Industries, Inc. (1995) 31 Cal.App.4th 1137, 1147 to assert prompt payment of wages involves sufficiently fundamental public polices that the willful failure to make such payments will support punitive damages, the court in Gould expressly recognized that, although a claim for wrongful discharge in violation of public policy would state a tort claim, a claim seeking tort recoveries based on the allegation the employer otherwise breached the employment contract agreement was barred by Foley. (Gould, at p. 1155.)

The case is Brewer v. Premier Golf Properties and the opinion is here.