On March 23, 2022, a California court of appeal in Estrada v Royalty Cabinet Mills. Inc. reversed a trial court’s decision to decertify a class action alleging violations of California’s meal and rest period laws and its decision to dismiss the plaintiffs’ Private Attorneys General Act (PAGA) claims as unmanageable. The Estrada court made significant rulings on several issues.
First, the employer’s meal period policy was unlawful because even though employees were paid for their 30-minute duty free meal periods, employees were not free to leave the premises. The Estrada court added that the employer was not entitled to offset the one hour of premium pay it owed for each non-compliant meal period by the amount it paid employees for their 30-minute meal periods because “premium pay serves a different purpose than wages.”
Second, the settlement releases several employees signed after the suit was filed were valid because a good faith dispute existed as to whether the employer owed the employees premium pay for meal periods under these circumstances, but because the employer continued its policy of prohibiting employees from leaving the premises during their meal periods after the releases were entered, the releases were effective only through the date they were entered.
Third, the Estrada court disagreed with another court of appeal that had ruled that a trial judge had the inherent power to dismiss a PAGA claim it determined was unmanageable and held that a trial court may only “limit the amount of evidence PAGA plaintiffs may introduce at trial to prove alleged violations to other unrepresented employees.”
Fourth, the wage-related allegations the plaintiffs made in their third amended complaint “related back” to those made in the original complaint, so the statute of limitations permitted recovery for meal period violations beginning in October of 2010, rather than in June of 2012, as the trial court had held.
Fifth, even though the employer’s Employee Handbook contained lawful policies regarding employees taking first and second meal periods, its time records showed that in practice, its supervisors followed an “informal policy” of scheduling the employees’ first meal periods late, and not providing second meal periods when employees worked over 10 hours in a day. Given the entries in the employer’s time records, the Estrada court applied the Donohue presumption to place the burden of proof on the employer, not the plaintiffs, to then show that employees were provided with lawful meal periods, but that they nonetheless choose to work.