As an employer in the Golden State, it is crucial to have a clear understanding of the protections granted to employees by state law. California is known for its progressive stance on worker rights and its complex set of regulations facing employers. In this article, we will delve into the intricacies of unwaivable employment law rights, shedding light on these rights and how to navigate these regulations effectively. Whether you are a seasoned employer or just starting out, this overview covers which employment law right that cannot be negotiated.
1. Minimum wage
Labor Code Section 1194 provides a private right of action to enforce violations of minimum wage and overtime laws. The statute voids any agreement between an employer and employee to work for less than minimum wage.
California employees cannot waive their rights to overtime. In Gentry v. Superior Court, the Supreme Court explained:
[Labor Code] Section 510 provides that nonexempt employees will be paid one and one-half their wages for hours worked in excess of eight per day and 40 per week and twice their wages for work in excess of 12 hours a day or eight hours on the seventh day of work. Section 1194 provides a private right of action to enforce violations of minimum wage and overtime laws.
By its terms, the rights to the legal minimum wage and legal overtime compensation conferred by the statute are unwaivable. “Labor Code section 1194 confirms ‘a clear public policy . . . that is specifically directed at the enforcement of California’s minimum wage and overtime laws for the benefit of workers.’”
3. Expense reimbursement
Labor Code section 2802 requires employers to reimburse its employees for “necessary expenditures or losses incurred by the employee” while performing his or her job duties. Labor Code section 2804, provides that an employee cannot waive this right to be reimbursed for or liable for the cost of doing business. Section 2804 provides, “Any contract or agreement, express or implied, made by any employee to waive the benefits of this article or any part thereof, is null and void….”
4. Right to receive undisputed wages
Under Labor Code section 206.5 employers and employees may not enter into agreements that waive the employee’s right to receive wages that are undisputed. Labor Code section 206.5 also provides that an employer may not require “as a condition of being paid, to execute a statement of the hours he or she worked during a pay period which the employer knows to be false.”
5. Right to participate in Private Attorneys General Act (PAGA) representative actions?
Initially, the California Supreme Court held that employees may not waive their right to bring a representative action under the PAGA (even though the Court held that class action waivers in arbitration agreements are enforceable). The Court held in Iskanian v. CLS Transportation that, “we conclude that an arbitration agreement requiring an employee as a condition of employment to give up the right to bring representative PAGA actions in any forum is contrary to public policy.”
Overruling Iskanian, in Viking River Cruises, Inc. v. Moriana, the U.S. Supreme Court held that the FAA preempts California’s prohibition on the employer’s ability to implement arbitration agreements with PAGA waivers. In so holding, the U.S. Supreme Court upheld arbitration agreements wherein employees waived their ability to bring PAGA claims on behalf of other individuals. However, Justice Sotomayor’s concurring opinion in Viking made it clear that this ruling would not be the last decision regarding PAGA waivers. Justice Sotomayor stated that “[o]f course, if this Court’s understanding of state law is wrong, California courts, in an appropriate case, will have the last word. Alternatively, if this Court’s understanding is right, the California Legislature is free to modify the scope of statutory standing under PAGA within state and federal constitutional limits.”
The California Supreme Court was quick to act in response to the Viking decision, and in August 2022, granted review of Adolph v. Uber Technologies, Inc., and will decide the following issue:
Whether an aggrieved employee who has been compelled to arbitrate claims under the Private Attorneys General Act (PAGA) that are “premised on Labor Code violations actually sustained by” the aggrieved employee (Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. __, __ [142 S.Ct. 1906, 1916] (Viking River Cruises); see Lab. Code, §§ 2698, 2699, subd. (a)) maintains statutory standing to pursue PAGA claims arising out of events involving other employees” (Viking River Cruises, at p. __ [142 S.Ct. at p. 1916]) in court or in any other forum the parties agree is suitable.
We are anticipating the California Supreme Court’s decision in Adolph by June or July 2023. Therefore, employers will need to continue to monitor this case for developments.
On another front, PAGA is being challenged by the voters of California. California Fair Pay and Employer Accountability Act seeks to replace PAGA. The initiative gathered enough signatures to qualify to be on the November 2024 ballot. If passed, the initiative would provide employees with 100% of the penalties collected, instead of only 25% that is currently provided to the employees, prohibit attorneys’ fees from being awarded in these cases, and double the penalties against employers who willfully violate the law. More information about the initiative can be found at Californians for Fair Pay and Accountability here.