9th Circuit: California Wage Hour Class Action Should Be Certified

Employees of Medline Industries brought a wage and hour class actions, which Medline removed to federal court.  The claims included "rounding," improper calculation of the "regular rate" for overtime purposes, waiting time penalties, and inadequate wage statements. 

The district court refused to certify the class because, although there were common questions, the individualized assessments of which employees were entitled to damages, and how much, outweighed the common issues.

The Ninth Circuit held the district court abused its discretion.  The court explained that individual damage assessments do not defeat class certification if liability can be determined via common proof.

Of note, the court distinguished the U.S. Supreme Court's recent decision in Comcast Corp. v.Behrend, 133 S. Ct. 1426, 1435 (2013):

In Comcast, the Supreme Court reversed an order granting class certification because the plaintiffs relied on a regression model that “did not isolate damages resulting from any one theory of antitrust impact.” Id. at 1431. The Court concluded that “a model purporting to serve as evidence of damages in this class action must measure only those damages attributable to that theory.” Id. at 1433.

Here, unlike in Comcast, if putative class members prove Medline’s liability, damages will be calculated based on the wages each employee lost due to Medline’s unlawful testimony of Medline’s director of payroll operations, andMedline’s Notice of Removal. Those documents show that

Medline’s computerized payroll and time-keeping database would enable the court to accurately calculate damages and related penalties for each claim.

So, this case will proceed as a class action, and the Comcast decision does not preclude class certification when there are individual damages issues, when there is a reliable way of establishing each class member's damages.

This case is Leyva v. Medline Industries, Inc. and the opinion is here.

Rounding Hours Worked Is OK if Done Correctly

This post is brought to you by.... See's Candies.  Mmmmm nuts and chews.And their workers still give out those free samples. 

It turns out that See's also can deliver a tasty precedent! From the Court of Appeal.

See's Candy uses a timekeeping software system, known as Kronos, to record its employee work hours. Employees are required to "punch" into the system (located in the back room of each See's Candy store) at the beginning and end of their shifts, as well as for lunch breaks. A Kronos punch shows the actual time (to the minute) when the employee punched into the system. During the relevant times, See's Candy calculated an employee's pay based on his or her Kronos punch times, subject to adjustment under two policies: (1) the nearest-tenth rounding policy; and (2) the grace period policy.

Under the nearest-tenth rounding policy, in and out punches are rounded (up or down) to the nearest tenth of an hour (every six minutes beginning with the hour mark). The Kronos time punches are thus rounded to the nearest three-minute mark. For example, if an employee clocks in at 7:58 a.m., the system rounds up the time to 8:00 a.m. If the employee clocks in at 8:02 a.m., the system rounds down the entry to 8:00 a.m.

So, those are the relevant facts. The trial court held that rounding is not allowed in California, given that California requires payment for all hours worked.  See's argued that the federal rules on rounding should apply, and that they were adopted by the California DLSE.

The Court of Appeal agreed with See's:

In the absence of controlling or conflicting California law, California courts generally look to federal regulations under the FLSA for guidance. (Huntington Memorial Hospital v. Superior Court (2005) 131 Cal.App.4th 893, 903.) The policies underlying the federal regulation — recognizing that time-rounding is a practical method for calculating work time and can be a neutral calculation tool for providing full payment to employees — apply equally to the employee-protective policies embodied in California labor law. Assuming a rounding-over-time policy is neutral, both facially and as applied, the practice is proper under California law because its net effect is to permit employers to efficiently calculate hours worked without imposing any burden on employees. (See Gillings v. Time Warner Cable, LLC, supra, 2012 WL 1656937, at *5.

* * *

Relying on the DOL rounding standard, we have concluded that the rule in California is that an employer is entitled to use the nearest-tenth rounding policy if the rounding policy is fair and neutral on its face and "it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked." (29 C.F.R. § 785.48; see DLSE Manual, supra, §§ 47.1, 47.2.)

To emphasize - the employer will be responsible for ensuring the rounding policy does not unfairly favor the employer.  Over time, "rounding" should come out about even.  If not, the court left open the possibility that the payment system will be found to be illegal.

The case is See's v. Superior Court (Silva) and the opinion is here.