A new California Supreme Court ruling makes it much easier for employees to sue you for unpaid wages—not just for themselves, but also on behalf of their co-workers. We’ll explain the facts that led to this decision and suggest ways to minimize the possibility you’ll be hit with one of these wage claims.
Sued Under Unfair Competition Law
After Rosalba Cortez was fired from her production job at Purolator Air Filtration Products in Santa Rosa, she sued the company for several years of unpaid overtime she claimed was owed to her and her co-workers.
Employing a novel strategy, her lawyers brought the case under the California Unfair Business Practices Act, an unfair competition law not usually used in wage and hour disputes. The major advantage to employees of suing under this law rather than the labor laws is that a group of workers can recover wages without having to follow the cumbersome and costly class action procedures.
The HR Management & Compliance Report: How To Comply with California Wage & Hour Law, explains everything you need to know to stay in compliance with the state’s complex and ever-changing rules, laws, and regulations in this area. Coverage on bonuses, meal and rest breaks, overtime, alternative workweeks, final paychecks, and more.
Alternative Workweek Not Documented
During the period in question, Cortez and other production crew members had worked four consecutive 10-hour (or more) days a week. Purolator asserted that it was exempt from paying overtime because the workers had agreed to an alternative workweek plan. But because the company couldn’t produce written documentation of the agreement, the trial court ruled that Purolator owed Cortez overtime pay. However, the court refused to allow her to represent the other workers.
Failure To Pay Wages Is Unfair Competition
The case went all the way to the state Supreme Court, where Purolator argued that the employees couldn’t use the unfair competition law to recover back wages. But the court found that by failing to pay its employees overtime, the company had engaged in an unfair business practice and violated the law.
What’s more, the court confirmed that one employee can act as a representative for their co-workers, and they all can recover back wages—even if the others aren’t parties to the lawsuit. Consequently, the Supreme Court instructed the trial court to award back pay to the entire group of affected employees.
Minimize Danger Of Suits
Because of this ruling, it’s now easier than ever for a group of employees to make claims for back overtime. Therefore, it’s critical to periodically audit your pay practices to assure you’re complying with all state and federal wage and hour rules. And, when individual employee pay issues arise, it is important to remedy the situation quickly so the problem doesn’t expand to other workers. Finally, when you resolve a pay dispute with an employee, it is always a good idea to add a confidentiality clause to the settlement agreement.