No Good Deed Goes Unpunished

201811.08
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Paying Employees to be on Duty During Lunch Exposes Employer to Double Damages

Andy Kinstler, JD, Mediator, Pacific ADR Consulting

Employer-side attorneys in Washington have long used the “bona fide” dispute defense to avoid the “hammer” of double damages in wage withholding litigation.  That defense took a serious blow in the case Hill v. Garda, 424 P.3d 207 (August 23, 2018). The litigation between Garda CL Northwest Inc. and its employees addressed the liability of an employer who fails to make sure that employees get and take meal and rest breaks. In Hill, the Supreme Court addressed again the meal and rest break issues presented in a nine-year-old case where employees are off-site while working for the employer.

Garda operates an armored transportation service and requires its drivers and messengers to remain constantly vigilant while working. Typically, two Garda employees, a driver and a messenger, would be on guard during transport. To ensure the safety of those employees and their cargo, Garda required its drivers and messengers to remain vigilant at all times—even when taking rest and meal breaks.

Plaintiffs, former Garda drivers and messengers, argued that Garda’s policy of requiring drivers and messengers to be “vigilant” during paid rest breaks and meal periods violated an applicable Department of Labor regulation, WAC 296-126-092(guaranteeing workers rest breaks and meal periods), and Section49.46.020of the state Minimum Wage Act (entitling employees to compensation for all hours worked).

Plaintiffs filed a lawsuit on behalf of themselves and a class of similarly situated Washington drivers and messengers for compensation for these missed rest breaks and meal periods. They requested compensatory damages for unpaid wages, exemplary double damages under RCW 49.52.070, prejudgment interest under RCW 19.52.010, and, of course, attorney fees.

See you in court

The trial court certified the plaintiff class. It then ruled that the employees had a right to vigilance-free rest breaks and meal periods under the 2011 decision in Pellino v. Brink’s Inc.,164 Wash. App. 668, 267 P.3d 383 (2011).Pellinoheld that a similar “constant vigilance” policy used by one of Garda’s competitors, Brink’s Inc., violated WAC 296-126-092. Pellino,164 Wash. App. at 694-96. The trial court therefore granted summary judgment to the Plaintiffs on the issue of liability. A bench trial followed on the issue of damages and whether the court would award double damages.  The trial court subsequently determined a damage amount and awarded double damages, rejecting the employer’s contention that the wages were unpaid due to a bona fide dispute.

At trial Garda argued that it had attempted in good faith to comply with Washington law because it paid its employees for meal breaks while they were on duty, and that the employees had agreed through collective bargaining to remain vigilant during paid meal breaks.  The applicable regulation states as follows:

Employees shall be allowed a meal period of at least thirty minutes which commences no less than two hours nor more than five hours from the beginning of the shift. Meal periods shall be on the employer’s time when the employee is required by the employer to remain on duty on the premises or at a prescribed work site in the interest of the employer. [WAC 296-126-092(1), italics added.]

Garda argued that since the employees had agreed through collective bargaining to take meal breaks “on the employer’s time” (meaning the employer was paying for the meal break), the employees could be required to be vigilant during their meal breaks.  The trial court rejected this defense and awarded the employees additional pay for meal breaks (for which the employees had already been paid) and double damages on top of the additional pay, finding that the wage withholding was willful.

Not so fast

The Court of Appeals agreed that requiring the employee to be “vigilant” during a paid meal break violated the meal break rules, and affirmed the trial court decision that the employees were entitled to be paid a second time for the paid lunch break, since the employer had required the employees to be “vigilant” during the paid meal break.  The Court of Appeals reversed on the issue of double damages, however, finding that Garda had “not unreasonably” relied on its interpretation of the language of the collective bargaining agreements by agreeing to pay employees for “vigilant” meal breaks, and had, therefore, met the standard of a bona fide dispute such that an award of double damages was not justified.  As stated by the Court of Appeals,

While we agree that the Plaintiffs cannot waive their meal periods via a CBA, the state of the law was not clear. No case cited by either party squarely addressed the issue. Garda’s interpretation of the Policy on this point was not unreasonable. We conclude that there was a bona fide dispute as to whether the Plaintiffs could waive their meal periods through the CBAs, and, therefore, that Garda did not willfully withhold wages for meal periods.

But wait, there’s more…

The Washington Supreme Court reversed and reinstated the award of double damages on this issue.  The Supreme Court noted that under Washington law an employer who violates the minimum wage act owes its employees double exemplary damages and attorney fees unless certain exceptions apply. One exception is for wage claims over which the employer and employees have a “bona fide” or “fairly debatable” dispute, meaning a dispute that is both objectively and subjectively reasonable.

The Supreme Court found no basis for the employer’s argument that the employees had agreed through collective bargaining to take paid meal breaks in which they remained vigilant.  The Supreme Court’s holding, in essence, finds that the employer’s legal arguments on this issue were without merit even though the same arguments had enough merit to convince the Court of Appeals that the wage dispute was “bona fide!”

In reversing the Court of Appeals, the Supreme Court has now held that an employee cannot be required to even passively engage in any work-related duties during a paid, on duty meal break.  If the employee is required to keep an eye on the store, so to speak, during a paid lunch, then the employer violates the minimum wage act rules.  The Supreme Court has now set forth the rule that during an “on duty” paid meal period the employee must be relieved of all work duties— such that the only obligation the employer can impose on the employee is that the employee remain on the premises or at a prescribed work site.

The Supreme Court decision raises the question of why an employer would ever pay its employees for a meal break, if the employee cannot be asked to undertake any duties, no matter how passive, during a paid “on duty” meal break.

While the Supreme Court remanded the case for further proceedings on the issue of whether double damages will be awarded in this case based on other arguments made by Garda, the court also held that both double damages and prejudgment interest can be recovered by the workers for the same wage violation.

This case is yet another cautionary tale for employers in the State of Washington.

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