California Supreme Court Limits State Correctional Employees’ Claims For Additional Compensation

Category: Fire Watch
Date: Aug 8, 2019 03:29 PM

In these consolidated class action lawsuits, correctional employees sued the State of California and various departments of the State government for violations of wage and hour law. The correctional employees alleged that they were entitled to additional compensation for the time they spent in pre- and post-work activities. These activities included traveling between the outermost gate of the prison facility and the employees’ work posts within the facility; briefing at the beginning and end of each shift; checking in and out mandated safety equipment, and submitting to searches at various security checkpoints.

The California Supreme Court divided these activities into two categories: “entry-exit walk time” and “duty-integrated walk time.” Entry-exit walk time is the time an employee spends after arriving at the prison’s outermost gate but before beginning the first activity the employee is employed to perform (plus the analogous time at the end of the employee’s work shift). Duty-integrated walk time is the time an employee spends after beginning the first activity the employee is employed to perform but before the employee arrives at his or her assigned work post (plus the analogous time at the end of the employee’s work shift).

In each of the class action complaints, the correctional employees alleged the State failed to pay minimum wages, breached their contract, and failed to pay overtime compensation. The trial court divided the employees into two subclasses: (1) unrepresented supervisory employees; and (2) represented employees. The California Supreme Court addressed the causes of action for each subclass of employees separately.

Minimum Wage Claims

For the unrepresented supervisory employees’ minimum wage claim, the Court first had to determine which regulations applied: the Industrial Welfare Commission’s (“IWC”) wage order No. 4-2001; or CalHR’s Pay Scale Manual. The California Legislature delegated authority to the IWC to adopt regulations regarding wages, hours, and working conditions in the state of California. Similarly, the Legislature delegated authority to CalHR to adopt regulations governing the terms and conditions of State employment, which includes setting the salaries of state workers and defining their overtime.

IWC wage order No. 4-2001 provides that employers must pay their employees at no less than a designated hourly rate “for all hours worked.” The order defines all hours worked as “the time during which an employee is subject to the control of any employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.” While most provisions of the order do not apply to state or local public agency employees, the minimum wage provision does. Under this definition, entry-exit walk time would likely be considered hours worked.

In contrast, the PayScale Manual adopts the narrower definition of hours worked stated in the Fair Labor Standards Act (“FLSA”), the federal wage and hour law. The PayScale Manual provides “[f]or the purpose of identifying hours worked under the provisions of the [FLSA], only the time spent which is controlled or required by the State and pursued the benefit of the State need be counted.” The FLSA excludes entry-exit walk time from hours worked.

While the unrepresented correctional employees argued the more employee-friendly standard from the IWC wage order should apply, the Court disagreed. The Court concluded that the two definitions of “hours worked” could not be harmonized, and therefore, the CalHR PayScale Manual acted as an exemption to the IWC wage order. The Court noted that because the Legislature explicitly delegated to CalHR the authority to adopt regulations for State employees, the PayScale Manual, including its narrow FLSA-based definition of compensable work time, governed the rights of the unrepresented employees. Because the FLSA definition applied, the Court reasoned that the unrepresented employees were not entitled to compensation for entry-exit walk time. However, duty-integrated walk time is included as work time under the FLSA.  If the State did not take into consideration this time, the unrepresented employees may be entitled to additional compensation.

With regard to the represented employees’ minimum wage claim, the Court found that they were not entitled to additional compensation. The memoranda of understanding (“MOU”) at issue specifically provided the represented employees with four hours of compensation for duty-integrated walk time. As a result, they were not entitled to additional compensation for that time.  Also, the evidence did not suggest that the four hours was insufficient. The Court noted that although the MOUs did not specifically refer to entry-exit walk time, they expressly stated that they constituted the entire understanding of the parties regarding the matters they addressed, and compensation for pre- and post-work activities was one of those matters. Therefore, the represented employees were also not entitled to additional compensation for entry-exit walk time. Further, the Court highlighted that the Legislature approved the MOUs, which precluded the represented employees from relying on more general state laws to support their minimum wage claims.

Breach of Contract Claims

For the unrepresented employees’ breach of contract claim, the Court determined that because CalHR’s Pay Scale Manual controlled their right to compensation, they could only recover any uncompensated duty-integrated walk time under a breach of contract theory. The Court concluded that if the unrepresented employees performed duty-integrated walk time and did not receive overtime compensation for it, they may have a contractual interest in receiving that compensation.

For the represented employees, the Court concluded their breach of contract claim failed. The Court again noted that the Legislature approved the MOUs governing their employment, and the unrepresented employees’ contract rights derive from and are limited to, the legislatively-created terms of their employment. Thus, they were not entitled to additional compensation under a breach of contract theory.

Overtime Compensation Claims

Finally, the Court concluded that the unrepresented employees could not maintain a cause of action for unpaid overtime compensation under California Labor Code sections 222 or 223. The Court noted that section 222 only applies when an employer withholds “the wage agreed upon” in “any wage agreement.” Thus, it did not apply to the unrepresented employees because their employment was not governed by an agreement. Similarly, the Court noted that section 223 only applies to “secret deductions” or “kickbacks,” which were not alleged.

Similarly, the Court found that the represented employees’ overtime compensation claims under Labor Code section 222 and 223 were without merit. For section 222 claim, the Court noted that the represented employees could not prove that any duty-integrated walk time ever went uncompensated. Additionally, the MOUs precluded compensation for entry-exit walk time. Accordingly, the State did not withhold the wage agreed upon in a wage agreement. Further, as was the case with the unrepresented employees’ section 223 claim, the represented employees’ allegations did not involve “secret deductions” or “kick-backs.”

Stoetzl v. Department of Human Resources, 2019 WL 2722597 (2019).

Note:

Because wage and hour claims are often brought on behalf of a large category or class of employees, these lawsuits can subject public agencies to substantial liability. LCW attorneys have defended many FLSA collective actions and can assist public agencies to limit or eliminate liability.

Contact Us

General Inquiries

info@lcwlegal.com

Contact a Specific Office

Our Locations

Media Inquiries

Please contact Cynthia Weldon, Director of Marketing & Training, 800.981.2000.

close

back