Avoiding Class Actions – The Impact of Uniformly-Applied Policies
As most employers know, class action lawsuits alleging wage and hour violations have been a huge part of doing business in California over the last ten years. No employer wants to defend a class action lawsuit. One of the best ways to avoid it; carefully examine personnel policies that could give rise to liability and could provide the incentive for a class action.
In the long-awaited Brinker decision last year, the California Supreme Court made a number of significant rulings, including guidance on how trial courts should determine whether or not to certify (permit) a class action. The court analyzed the “community of interest” requirement for class action certification, and specifically the “predominance of common questions” aspect of it. The court stated:
The “ultimate question” the element of predominance presents is whether the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants. The answer hinges on whether the theory of recovery advanced by the proponents of certification is, as an analytical matter, likely to prove amenable to class treatment. A court must examine the allegations of the complaint and supporting declarations and consider whether the legal and factual issues they present are such that their resolution in a single class proceeding would be both desirable and feasible. As a general rule if the defendant’s liability can be determined by facts common to all members of the class, a class will be certified even if the members must individually prove their damages. [Citations and internal quotations omitted]
The Brinker court noted that where an employer has a uniformly-applied policy and the plaintiffs allege that the policy is unlawful, class certification is, in most cases, appropriate without determining whether or not the policy is lawful. In other words, the employer’s uniformly-applied policy has the effect of almost ensuring class certification. While class certification does not mean the employer is liable for anything, it creates massive practical problems for the employer even if the employer can ultimately prove that the policy was lawful.
This impact just occurred in Faulkinbury v. Boyd & Associates, Inc. In this new appellate case, the purported class members were security guards. The attorneys representing the security guards wanted to create a class action and asserted a variety of wage and hour claims to do so. One claim was based upon the fact that Boyd & Associates had a uniform policy under which all security guards were required to sign an on-duty meal period agreement. In very limited circumstances, it may be lawful for employees to agree to take meals without being relieved of all duties. The nature of the work must be such that the employees cannot be relieved of all duties. One of the classic examples of a permissible on-duty meal period involves a security guard working alone. Even under the classic example, however, individualized analysis of the facts that prevent the employee of being relieved of all duties must be conducted.
In Faulkinbury, the plaintiffs asserted that the on-duty meal period policy was unlawful because it was uniformly applied and no individualized consideration was given to whether or not the nature of a particular assignment prevented an employee from being relieved of all duties. Because the policy was alleged to be unlawful and it was undisputed that all the security guards were subject to it, the appellate court relied on the Brinker decision to rule that the case should be certified as a class action. It did so without making a determination of whether or the policy was unlawful or even the likelihood of it being unlawful. Under the Brinker rulings, that question should be made after the ruling on certification.
The message to employer from Brinker and Faulkinbury: uniformly-applied policies can have the effect of almost ensuring class certification. It is thus critically important to review policies to make sure they do not create liability. Had Boyd & Associates policy been to review the facts of a given security guard assignment before requiring the security guard to sign the on-duty meal period agreement, the result would likely have been different.
The court’s opinion can be reviewed by following the link below.