By Shaudee Navid, Duane Morris LLP

A recent decision by the California Court of Appeal underscores the importance of maintaining and enforcing compliant wage and hour policies. Indeed, having the right policies in place may very well be an employer's most powerful weapon for defeating wage and hour class claims.

One California employer's written wage and hour policies single-handedly defeated its employees' overreaching motion for class certification.

Hospital Maintains and Enforces Compliant Wage and Hour Policies

Queen of the Valley Medical Center (QVMC) is a full-service hospital with 94 departments. In accordance with California law, QVMC and its employees agreed to adopt an alternative work schedule that allowed employees to work more than 10 hours but less than 12 hours per day.

To that end, QVMC's employee manual contains a written policy addressing alternative workweek schedules and the payment of short-shift premiums when an employee works more than 8 hours but less than 12 hours during a scheduled 12-hour shift at the request of QVMC. The written policy further clarifies that the short-shift premium won't be paid if the employee voluntarily decides to leave the shift early. The short-shift policy is also contained in the alternative work schedule agreement that employees sign at the time of hire.

Similarly, QVMC maintains a written meal break policy that provides a 30-minute meal break for each work shift longer than 5 hours and a second meal break for each work shift longer than 10 hours. Under the policy, an employee who works more than 10 but less than 12 hours in a workday may voluntarily waive his second meal period by executing a meal waiver agreement.

Hospital Employees File Overreaching Motion for Class Certification

QVMC employed Michael Lampe and Karen McNair as nurses. McNair worked 8-hour shifts as an operating room nurse before becoming a relief charge nurse. Lampe worked 12-hour shifts as a nurse in the mother-child services department. Lampe and McNair filed a putative class action against QVMC alleging numerous violations of state labor laws governing overtime, meal breaks, and wage statements.

Specifically, they claimed that QVMC didn't properly compensate employees for short shifts, failed to maintain written policies informing employees that they are entitled to short-shift premiums, and required employees to waive their second meal period.

Based on those claims, Lampe and McNair sought to certify an "overtime class," a "meal break class," and a "wage statement class," along with various subclasses. The trial court denied their entire motion to certify, finding that individualized issues predominated and the claims couldn't be proven efficiently as a class. Lampe and McNair appealed.

Individual Issues Preclude Class Certification of Wage and Hour Claims

In affirming the trial court's decision, the court of appeal reiterated that class certification is inappropriate when individualized issues predominate. As a threshold matter, Lampe and McNair didn't set forth adequate evidence to support the three proposed classes, relying predominantly on their own declarations and failing to provide testimony from any proposed class members. Regardless, against the backdrop of QVMC's applicable policies, all three of the proposed classes required an individualized inquiry into the alleged issues, making class certification inapposite.

Overtime claims. First, Lampe and McNair sought certification of an overtime class consisting of two subclasses:

1. Employees who didn't have their regular rate of pay calculated correctly; and
2. Alternative work schedule employees who were improperly denied a short-shift premium.

With respect to the regular rate subclass, Lampe and McNair failed to present evidence of which pay categories should have been included in the regular rate calculation. Based on their overly generalized allegations, the trial court denied certification of the regular rate subclass. The court of appeal agreed, noting that without knowing which pay categories were at issue, the trial court couldn't properly determine if individual or common issues predominated.

With respect to the short-shift premium subclass, Lampe and McNair claimed that QVMC didn't pay employees overtime when it required them to leave their shifts early or when employees volunteered to leave early. QVMC's stated policy was to pay employees their short-shift premium by using the regular overtime code.

The hospital didn't separately record whether a short-shift premium was paid because it was recorded as overtime. Concluding that this claim required an individualized assessment of each employee's pay records, the trial court denied certification of the short-shift premium subclass.

Expanding on the trial court's rationale, the court of appeal noted that employees were aware of QVMC's short-shift payment policies because it was included in the alternative work schedule agreement each employee signed upon hire.

More important, Lampe and McNair's proposed class failed to differentiate between employees who volunteered to leave early and those who were required to leave early by QVMC. Thus, an individualized assessment would be needed to determine whether an employee left early at QVMC's direction or at the employee's own volition for each shift.

Meal period claims. Next, Lampe and McNair sought to certify a meal break class based on QVMC's alleged failure to provide a second meal break when employees worked 12 or more hours and its alleged failure to provide a meal break within the first 5 hours of an employee's shift. The class consisted of 12-hour shift employees and included employees in 94 departments working in various jobs. Notably, McNair hadn't signed a meal period waiver because she worked an 8-hour shift, and Lampe signed a waiver voluntarily giving up his meal break.

In addition to its written meal period policies, QVMC presented evidence demonstrating the wide variance in the way meal periods are scheduled in different departments. Accordingly, the trial court concluded that there were too many individualized issues to reconcile before determining an employee's right to recover damages for a missed meal period, rendering the meal break class inappropriate for certification.

The court of appeal affirmed, explaining that Lampe and McNair's meal break claim was problematic because an individualized inquiry would be required to determine whether any given class member was denied a meal break or agreed not to take a meal break that was offered. The court of appeal also noted that QVMC's written meal break policy, and the enforcement of the policy, directly contradicted Lampe and McNair's contention that QVMC required employees to waive their second meal break.

Wage statement claims. Finally, Lampe and McNair sought to certify a class of every nonexempt hourly employee who received a pay stub since November 2010, on the basis that the class was derivative of the wage claims. The trial court determined that there was no basis to certify the wage statement class because class certification was inappropriate for the proposed overtime class and meal break class. The court of appeal agreed. Michael Lampe et al. v. Queen of the Valley Medical Center (California Court of Appeal, 1st Appellate District, 1/2/18).

Bottom Line

In a state where the law heavily favors employees, this decision is a great win for employers. Increasingly, employees' attorneys are overreaching in trying to assert class claims against employers. You can defeat these over-inclusive class actions by ensuring that you are maintaining and enforcing compliant wage and hour policies, particularly with regard to meal periods and overtime wages.

Shaudee Navid, a contributor to California Employment Law Letter, can be reached at Duane Morris LLP in San Francisco, snavid@duanemorris.com.