Posted on June 30, 2016
On June 27, 2016, Nisei Farmers League filed a lawsuit against the California Labor and Workforce Development Agency, David Lanier; Department of Industrial Relations, Christine Baker; and the Division of Labor Standards Enforcement, Julie Su alleging that AB 1513 and Labor Code section 226 is unconstitutionally vague and ambiguous. Additionally, the Plaintiff filed an Exparte Application for a preliminary injunction to stay enforcement of AB 1513/Labor Code section 226. The hearing on the Exparte motion is set for this afternoon, June 30, 2016. (See Attached Complaint and related court filings.)
The complaint is a well-reasoned and thoughtful (and no doubt very expensive) challenge by the Nisei Farmers League to the new law i.e. AB 1513/Labor Code 226.2. While its chances of success at the trial court level are small, it is a well-reasoned and compelling challenge to the new law. This new constitutional challenge should not be interpreted as a reason to not take immediate efforts to mitigate your potential liability for unpaid or under paid rest breaks and non-productive time.
Unfortunately, the one thing this new action will undoubtedly do is bring attention to piece rate pay issues- i.e. overtime, rest breaks, and non-productive time.
The Complaint is generally based on the following:
1. Piece Rate pay is legal.
2. The two prior appellate opinions (Bluford and Gonzalez) were wrongly decided and/or limited to their facts. (very difficult argument)
3. The term “non-productive time” is unconstitutionally vague such that compliance with LC 226.2 affirmative defense is impossible to decipher.
4. The term “directly related” as it applies to non-productive time is unconstitutionally vague such that compliance with LC 226.2 affirmative defense is impossible to decipher (very good examples in agricultural industry). *Interestingly, the 4% option for the affirmative defense is not discussed, probably because it is not vague.
5. The term “actual sums due” in LC 226.2 is vague.
The most important aspect is the Exparte Application for an order to show cause for a preliminary injunction and temporary restraining order which is set for this afternoon, June 30, 2016 at 3:30 pm.
If the Exparte is granted, this could effectively stay the need to register with the DIR for the affirmative defense under AB 1513. The plaintiff will likely take up an immediate Writ to the Court of Appeal if the judge denies the Exparte Application at today’s hearing.
The bigger question is what if the Plaintiff prevails and there is no AB 1513/Labor Code 226.2? There is still Bluford and Gonzalez and the DIR/DLSE and plaintiff’s attorneys will continue to enforce the law. To me, that is still a significant concern, so efforts to limit potential liability for unpaid or underpaid rest breaks and non-productive time are still critical.
We will provide additional information and keep you posted but wanted to get you this information as soon as possible. I will let you know of the outcome of today’s hearing.
If you have any specific questions regarding your individual company’s strategy, and whether to notify DIR to obtain the affirmative defense, please give us a call.
Kyle Kring is the Managing Partner of Kring & Chung, LLP. He can be reached at (949) 261-7700 or [email protected]. Alis Moon is an Associate with Kring & Chung LLP. She can be reached at (949) 261-7700 or [email protected]