Christmas came early this year for California employers.  Bucking the trend of unrelentingly bad news for employers in the state, the California Court of Appeal has held that the default (lower) penalties found in the Labor Code Private Attorneys General Act (“PAGA”) and not the heightened penalties set forth in Labor Code section 226.3 (“Section 226.3”) apply to a run-of-the-mill PAGA claim involving allegedly incomplete or inaccurate wage statements.  In so ruling, the court in Gunther v. Alaska Airlines, Inc. expressly declined to follow an earlier decision by another panel of the same court in Raines v. Coastal Pacific Food Distributors, 23 Cal. App. 5th 667 (2018).  This conflict between the panels now sets the table for intervention by the California Supreme Court, which will have to decide which court got it right.

In Gunther, the trial court found Alaska Airlines liable for approximately $25 million in PAGA penalties stemming from wage statements that allegedly failed to contain all of the information required under Labor Code section 226(a) (“Section 226(a)”).  Relying on Raines, the trial court held that the proper measure of PAGA penalties for any violation of Section 226(a) is set forth in Section 226.3, which provides, in relevant part:  “Any employer who violates subdivision (a) of Section 226 shall be subject to a civil penalty … of two hundred fifty dollars ($250) per employee per violation in an initial citation and one thousand dollars ($1,000) per employee for each violation in a subsequent citation, for which the employer fails to provide the employee a wage deduction statement or fails to keep the records required in subdivision (a) of Section 226.”

However, the appellate court in Gunther held that “[u]nder the plain meaning of the[] words [in Section 226.3], the heightened penalties under [S]ection 226.3 apply only where the employer either fails to provide a wage statement or fails to keep required records as required by [S]ection 226(a).”  Accordingly, because it was undisputed that Alaska Airlines had provided wage statements (albeit allegedly noncompliant ones) to the “aggrieved employees” at-issue, the court reversed the trial court’s imposition of the heightened PAGA penalties based on Section 226.3 and held that any deficiencies in the wage statements would trigger only the “default” PAGA penalties of $100 per employee per pay period and, if a court or the Labor Commissioner previously notified Alaska Airlines of violations, $200 for subsequent violations.

As most employers who have faced such PAGA claims know, it is often the case that wage statement violations and their related penalties represent a substantial component of alleged liability in PAGA actions.  Accordingly, Gunther should provide valuable assistance to employers in keeping settlements reasonable in the face of absurdly inflated plaintiffs’ demands based on mere technical violations of Section 226(a).

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Photo of Tony Oncidi Tony Oncidi

Anthony J. Oncidi is the Co-Chair Emeritus of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s Los Angeles office.

Tony represents employers and management in all aspects of labor relations and employment law…

Anthony J. Oncidi is the Co-Chair Emeritus of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s Los Angeles office.

Tony represents employers and management in all aspects of labor relations and employment law, including litigation and preventive counseling, wage and hour matters, including class actions, wrongful termination, employee discipline, Title VII and the California Fair Employment and Housing Act, executive employment contract disputes, sexual harassment training and investigations, workplace violence, drug testing and privacy issues, Sarbanes-Oxley claims and employee raiding and trade secret protection. A substantial portion of Tony’s practice involves the defense of employers in large class actions, employment discrimination, harassment and wrongful termination litigation in state and federal court as well as arbitration proceedings, including FINRA matters.

Tony is recognized as a leading lawyer by such highly respected publications and organizations as the Los Angeles Daily JournalThe Hollywood Reporter, and Chambers USA, which gives him the highest possible rating (“Band 1”) for Labor & Employment.  According to Chambers USA, clients say Tony is “brilliant at what he does… He is even keeled, has a high emotional IQ, is a great legal writer and orator, and never gives up.” Other clients report:  “Tony has an outstanding reputation” and he is “smart, cost effective and appropriately aggressive.” Tony is hailed as “outstanding,” particularly for his “ability to merge top-shelf lawyerly advice with pragmatic business acumen.” He is highly respected in the industry, with other commentators lauding him as a “phenomenal strategist” and “one of the top employment litigators in the country.”

“Tony is the author of the treatise titled Employment Discrimination Depositions (Juris Pub’g 2020; www.jurispub.com), co-author of Proskauer on Privacy (PLI 2020), and, since 1990, has been a regular columnist for the official publication of the Labor and Employment Law Section of the State Bar of California and the Los Angeles Daily Journal.

Tony has been a featured guest on Fox 11 News and CBS News in Los Angeles. He has been interviewed and quoted by leading national media outlets such as The National Law JournalBloomberg News, The New York Times, and Newsweek and Time magazines. Tony is a frequent speaker on employment law topics for large and small groups of employers and their counsel, including the Society for Human Resource Management (“SHRM”), PIHRA, the National CLE Conference, National Business Institute, the Employment Round Table of Southern California (Board Member), the Council on Education in Management, the Institute for Corporate Counsel, the State Bar of California, the California Continuing Education of the Bar Program and the Los Angeles and Beverly Hills Bar Associations. He has testified as an expert witness regarding wage and hour issues as well as the California Fair Employment and Housing Act and has served as a faculty member of the National Employment Law Institute. He has served as an arbitrator in an employment discrimination matter.

Tony is an appointed Hearing Examiner for the Los Angeles Police Commission Board of Rights and has served as an Adjunct Professor of Law and a guest lecturer at USC Law School and a guest lecturer at UCLA Law School.

Photo of Philippe A. Lebel Philippe A. Lebel

Philippe (Phil) A. Lebel represents employers in all aspects of employment litigation, including wage and hour, wrongful termination, discrimination, harassment, retaliation, defamation, trade secrets, and breach of contract litigation, in both the single-plaintiff and class- and/or representative-action context, at both the trial and…

Philippe (Phil) A. Lebel represents employers in all aspects of employment litigation, including wage and hour, wrongful termination, discrimination, harassment, retaliation, defamation, trade secrets, and breach of contract litigation, in both the single-plaintiff and class- and/or representative-action context, at both the trial and appellate levels, as well as before administrative agencies.

In addition to his litigation work, Phil regularly advises clients regarding compliance with federal, state and local employment laws, and assists a variety of companies and financial firms in evaluating labor and employment issues in connection with corporate transactions. Phil also has experience assisting employers with sensitive employee investigations, cutting edge-trainings, pay equity analyses and comprehensive audits of employment practices.

Phil has assisted clients in a wide array of sectors including in the biotech, education, entertainment, fashion, financial services, fitness, healthcare, high-tech, legal services, manufacturing, media, professional services, retail, sports, and staffing industries, among others.

Phil regularly speaks on emerging issues for employers and has been published or quoted in Law360, the Daily JournalThe Hollywood ReporterBusiness Insurance, and SHRM.org regarding a variety of labor and employment law topics.

Before law school, Phil was an intern with the National Gay and Lesbian Task Force and the Gay and Lesbian Victory Fund, during which he assisted on political campaigns in Alabama and Georgia. Phil is a former member of the Board of Directors of the AIDS Legal Referral Panel.