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Employees Suing For Civil Penalties Under the “Sue Your Boss” Law Must Comply with Pre-Filing Notice Requirements
By Emilio G. Gonzalez
[December 2005]
In a recent case—Caliber Bodyworks, Inc. v. Superior Court—the California Court of Appeal issued the first published opinion interpreting the Labor Code Private Attorney General Act of 2004 (the “Act”), commonly known as the “Sue Your Boss” law. The Act allows individual employees to recover “civil penalties,” previously recoverable only by state labor law enforcement agencies, for certain Labor Code violations. In Caliber Bodyworks, the Court addressed for the first time recent amendments to the Act, effective August 2004, which require that employees first give notice to the employer and the Labor and Workforce Development Agency (LWDA) of the alleged violation and thereafter allow the LWDA to investigate and cite an employer for such violations. Only after he or she has given the employer and LWDA such notice can an employee file a lawsuit demanding civil penalties under the Act.
What Does The Act Do?
The California Legislature adopted the Act effective Jan. 1, 2004. The Act (1) establishes a civil penalty for existing Labor Code sections for which no civil penalty had previously been established and (2) allows an aggrieved employee to bring a civil action (on behalf of themselves and others) to collect civil penalties for alleged Labor Code violations. Labor Code § 2699, subd. (a). The civil penalties collected in these private attorney general actions are to be distributed 75 percent to the LWDA and 25 percent to the aggrieved employee or employees.
Prior to the Act’s enactment, an employee claiming a labor code violation was entitled to recover only unpaid wages (plus interest) and, under certain circumstances, statutory waiting-time penalties. Civil penalties, in contrast, were recoverable only by state labor law enforcement agencies, such as the Division of Labor Standards Enforcement (DLSE). An example of a “civil penalty” is Labor Code Section 225.5, which provides, in addition to any other penalties assessed, that an employer that unlawfully withholds wages in violation of certain specified provisions of the Labor Code is subject to a civil penalty initiated by the DLSE in the sum of $100 per employee for the initial violation and $200 per employee for subsequent or willful violations.
Pre-Filing Notice Requirements
The Act was amended as of Aug. 11, 2004. Under these amendments, before an employee can file a civil action demanding civil penalties, the employee must give written notice by certified mail to the Labor and Workforce Development Agency and the employer of the specific provision of this code alleged to have been violated, including the facts and theories to support the alleged violation. (Labor Code § 2699.3, subd. (a)(1).) Within 30 calendar days of that notice, the LWDA must notify the employer and the aggrieved employee or representative whether it intends to investigate the alleged violation. (Labor Code § 2699.3, subd. (a)(2)(A).) If the LWDA notifies the aggrieved employee it does not intend to investigate, or fails to give notice within the prescribed time period, the aggrieved employee may commence a civil action under section 2699. If the LWDA chooses to investigate, it has an additional 120 days to do so and issue any appropriate citation; if, after investigation, the LWDA provides notice that no citation will issue or fails to give timely or any notification, the aggrieved employee may then file suit. (Labor Code § 2699.3, subd. (a)(2)(B).) Thus, only after the LWDA has exhausted its opportunity to bring a claim may a claim for civil penalties be brought by an individual.
Significance of Caliber Bodyworks Case
The plaintiff in Caliber Bodyworks filed a civil action alleging 13 causes of action that fell into four, distinct categories: (1) causes of action seeking only civil penalties for violations of Labor Code provisions specified in section 2699.5; (2) hybrid causes of action seeking unpaid wages and statutory penalties, as well as civil penalties for violations of Labor Code provisions specified in section 2699.5; (3) causes of action seeking only unpaid wages or statutory penalties or both; and (4) a section 17200 cause of action seeking equitable relief. Plaintiff did not comply with the Act’s pre-filing notice and exhaustion requirements.
The Court held that the causes of action in the first category, those seeking only civil penalties, should be dismissed entirely because the plaintiff failed to comply with the Act’s pre-filing and exhaustion requirements. As to the second category, the causes of action seeking unpaid wages and statutory and civil penalties, the Court held that the demand for civil penalties in those causes of action should be stricken, but that the causes of action otherwise should be allowed to proceed.
The decision in Caliber Bodyworks is significant for what it does not do—it does not relieve plaintiffs of their statutory pre-filing notice obligations under the Act’s amendments merely because they seek “other remedies” in the causes of action for which they also seek civil penalties. As the Court pointed out; “allowing plaintiffs in wage-and-hour cases to circumvent the Act merely because they seek ‘other remedies’ in addition to civil penalties would vitiate the Legislature's express intent that the LWDA have the initial right to investigate and cite an employer for Labor Code violations.”
Nevertheless, employers should take heed. The Act has put some serious teeth into the Labor Code, making employers vulnerable to employee-generated lawsuits over a variety of Labor Code violations, such as record-keeping and payroll errors. The Act allows an employee to bring an action on behalf of himself “and other current or former employees against whom one or more of the alleged violations was committed.” Some comfort can be taken in the fact that employers will be given notice of the violation, and an opportunity to cure it, prior to being subjected to a lawsuit for civil penalties. But employers should be diligent in making sure they are in compliance with the Labor Code.
If you have any questions about the types of Labor Code violations that may result in monetary liability to employers, or any other questions about this article, please contact:
Other DWT Employment Contacts:
Rochelle L. Wilcox, Los Angeles, (213) 633-6883, RochelleWilcox@dwt.com
This Advisory is a publication of the Employer Services Department of Davis Wright Tremaine LLP. Our purpose in publishing this Advisory is to inform our clients and friends of recent developments in employment law. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may be given only in response to inquiries regarding particular situations.
Copyright © 2005, Davis Wright Tremaine LLP.
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