Duane Morris Private Attorneys General Act Review – 2024

various putative class members' declarations. Id. The plaintiff appealed these orders. The Court of Appeal largely affirmed the rulings, but reversed several orders, including the order denying class certification of the plaintiff’s proposed wage statement class. Id. at 1046. The plaintiff had initially moved to certify five classes of current and former medical center employees seeking damages for the Medical Center’s alleged failure to pay overtime and waiting time penalties, neglecting to provide rest breaks, failing to compensate employees at their regular rate of pay, and providing inaccurate wage statements. Id. at 1059. The Court of Appeal affirmed the trial court’s denial of class certification for the overtime, rest break, regular rate, and waiting time classes on the basis that individual issues predominated. The plaintiff fared better on her wage statement claims, for which she sought to certify two classes - one for standalone wage statements pre-dating June 2018, which failed to include a line item for total hours worked by an employee, and the other, a wage statement class for derivative violations based on the plaintiff’s overtime and regular rate claims. The Court of Appeal affirmed the denial of the derivative wage statement class, but ruled that the trial court had abused its discretion in denying certification of the standalone wage statement class. The trial court had reasoned that because some employees received more complex wage statements than others, determining liability would necessitate an individualized review of thousands of wage statements. However, the Court of Appeal disagreed. It opined that the wage statements could be grouped into two categories, ones with overtime hours only, and others with shift differentials and paid time off, with common questions applying to each of the two categories. The Court of Appeal also concluded that the court abused its discretion in holding that the plaintiff was an inadequate representative of the standalone wage statement class, as the trial court had applied the improper criteria by prejudging the merits of the plaintiff’s claim on the basis of her deposition testimony, which was improper at the certification stage. The Court of Appeal therefore reversed the order denying certification of the standalone wage statement class, and remanded to the trial court for further review. VII. Other Notable California State Court PAGA Rulings The plaintiff, a sales manager, in Lemm, et al. v. Ecolab Inc. 87 Cal.App.5th 159 (Cal. App. 2023), filed a representative PAGA action against his employer, Ecolab, Inc. for failing to pay proper overtime rates as part of his non-discretionary monthly bonus. Id. at 166. The plaintiff and other sales managers at Ecolab were eligible to receive a non-discretionary bonus, as dictated by Ecolab’s Incentive Compensation Plan. Id. at 164. Under the terms of the Plan, sales managers could earn a monthly bonus for meeting or exceeding certain target metrics such that, if the plaintiff met his goal, his gross wages for the month – including all straight time, overtime and double-time wages - would be increased by a pre-set percentage. Id. at 165. In his PAGA claim, the plaintiff alleged that Ecolab routinely failed to pay the proper overtime rate, which should have taken into account any non-discretionary bonus consistent with both state and federal laws. Id. at 166. The plaintiff also subsequently filed an amended PAGA notice, adding claims for civil penalties for Ecolab’s alleged failure to pay reporting time and split shift wages during his employment. Id. In the interests of resolving the overtime issue first, the parties stipulated to the filing of cross-summary adjudication motions regarding Ecolab’s calculation of overtime rates with respect to the monthly bonus. Id. The parties’ motions presented competing methods for the proper calculation of overtime due on the bonus; while the plaintiff relied on the formula used to calculate the regular rate of pay cited by the California Division of Labor Standards Enforcement Manual (DLSE Manual), Ecolab relied on federal law, specifically 29 C.F.R § 778.210, for its method of calculating overtime due on percentage bonuses. Id. at 167. The trial court granted the Ecolab’s motion and denied the plaintiff’s motion. It concluded that Ecolab’s position provided for a more logical outcome. Id. Specifically, the trial court reasoned that Ecolab’s percentage bonus already included the overtime (and double-time) pay, such that requiring the company to use the plaintiff’s method of calculation would essentially force the employer to “pay overtime on overtime.” Id. Following the trial court’s ruling, Ecolab proceeded to file a motion for judgment on the pleadings with respect to the plaintiff’s amended PAGA claims for reporting time and split shift wage violations, which were not alleged in the complaint. Id. at 168. The plaintiff maintained that the allegations in his complaint included the same Labor Code violations asserted in his amended PAGA notice, relying on his general reference to Ecolab’s failure to “pay all wages.” Id. The trial court agreed with Ecolab and granted its motion, and denied the plaintiff leave to amend his complaint. Id. The plaintiff appealed both decisions.

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