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	EMPLOYMENT LAW UPDATE: CA Appellate Court Just Says "No" to Punitive Damages Based on Wage and Hour Violations Employment/Labor  By David B. Ezra California employers have long known that a failure to pay wages or provide wage statement information can lead to awards of compensatory damages and penalties, not to mention the complaining employee’s legal fees and costs. But whether statutory wage and hour violations can also result in a punitive damages award, has been uncertain. Confronted with the question of whether failure to pay regular and overtime wages, failure to pay minimum wage, and pay stub irregularities could support punitive damages, the court in Brewer v. Premier Golf Properties, LP, held that wage and hour statutory violations could not support a punitive damages award. In California, punitive damages are permitted for certain non-contractual inquiries and only when “clear and convincing evidence” establishes that the defendant is “guilty of oppression, fraud or malice.” Cal. Civ. Code § 3294. Christine Brewer was a waitress at the Cottonwood Golf Club restaurant, who quit after she was replaced by younger waitresses and told to work a less lucrative early morning shift. Brewer promptly sued for unpaid regular and overtime wages (California Labor Code section 226.7), violation of minimum wage law (California Labor Code section 1197.1) and “pay stub penalties” (California Labor Code section 226). Brewer also sued for age discrimination -- a cause of action that could have supported punitive damages if Brewer was successful. However, the jury found in the golf club’s favor on the age discrimination claim. Brewer received an award of less than $1,000 for unpaid regular and overtime wages, about $6,000 for unpaid meal and rest breaks, $4,000 in “pay stub penalties” and $15,300 for “minimum wage” penalties. The golf club was also ordered to pay legal fees and costs Brewer incurred to pursue her claims. Based on its finding that the golf club acted with fraud, malice or oppression, the jury awarded $195,000 in punitive damages against the golf club. The jury found that the golf club had not given Brewer meal periods 392 times, failed to provide rest periods 491 times, and “knowingly and intentionally” failed to accurately set forth the total hours Brewer worked on 68 separate wage statements. Holding that the punitive damages award had to be reversed as a matter of law, the Fourth Appellate District, Division One, held that the statutory claims Brewer asserted against the golf club arose from her employment contract. Therefore, those claims could not support punitive damages. In addition, the court held that the “new right-exclusive remedy” doctrine applied. Since the violated wage and hour statutes created new rights that did not previously exist under common law, the statutory remedies were exclusive. As a result, punitive damages were not an available remedy for an employer’s violation of the various wage and hour statutes. This is an important and well-reasoned decision. It goes a long way toward eliminating uncertainty as to the scope of available remedies in wage and hour contexts - at least as the uncertainty pertains to possible punitive damages. Unless the California Supreme Court grants a petition for review, this decision will mean that California employers can address statutory wage and hour claims without the prospect of punitive damages awards. ******* If you would like to discuss how the Alert might affect you or your business, please contact David B. Ezra at (949) 474-1880, X239 or the attorney with whom you regularly work. This Alert is published as a service to our clients and friends. It is intended for informational purposes only and is not intended to constitute advertising, solicitation or legal advice. ©2008 Berger Kahn, A Law Corporation. All Rights Reserved. Back
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