In the underlying action, real parties in interest sought to recover civil penalties from petitioner Home Depot U.S.A., Inc. (Home Depot), under the Labor Code Private Attorneys General Act of 2004 (PAGA; Lab. Code, § 2698 et seq.).
On September 11, 2009, real parties in interest Devon Harris and Lawrence Winston filed their first amended complaint, which asserts a single claim under PAGA on behalf of themselves and former and current employees of Home Depot. The complaint alleges that Home Depot operates stores across the nation that sell home improvement products and hardware, including more than 100 stores in California. According to the complaint, although the cashier and counter areas within the California stores contain ample space for seats for employees, Home Depot has not provided such seats, in contravention of section 1198 and wage order No. 7-2001 of the Industrial Welfare Commission (IWC). Real parties in interest sought civil penalties under PAGA, as specified in section 2699, subdivision (f), as well as reasonable attorney fees and costs (§ 2699, subd. (g)).
Home Depot demurred to the first amended complaint, asserting that section 2699, subdivision (f), provides no remedies for the alleged violations of section 1198 and wage order No. 7-2001. After the trial court overruled the demurrer, Home Depot filed its petition for writ of mandate, prohibition, or other appropriate relief. We issued our order to show cause and temporary stay on July 30, 2010.
Home Depot contends that the trial court erred in overruling its demurrer. As explained below, we disagree.
Generally, "[t]he standard of review for an order overruling a demurrer is de novo. The reviewing court accepts as true all facts properly pleaded in the complaint in order to determine whether the demurrer should be overruled. [Citation.]" (Guardian North Bay, Inc. v. Superior Court (2001) 94 Cal.App.4th 963, 971 [114 Cal.Rptr.2d 748].)
We begin by examining the applicable statutes and wage order. Under the Labor Code, the Labor and Workforce Development Agency (LWDA) and its constituent departments and divisions are authorized to collect civil penalties for specified labor law violations by employers. (Caliber Bodyworks, Inc. v. Superior Court (2005) 134 Cal.App.4th 365, 370 [36 Cal.Rptr.3d 31].) To enhance the enforcement of the labor laws, the Legislature enacted PAGA in 2003. (134 Cal.App.4th at p. 370.) In so doing, the Legislature stated: "Adequate financing of essential labor law enforcement functions is necessary to achieve maximum compliance with state labor laws . . . . [¶] . . . [¶] . . . Staffing levels for state labor law enforcement agencies have, in general, declined over the last decade . . . . [¶] . . . It is therefore in the public interest to provide that civil penalties for violations of the Labor Code may also be assessed and collected by aggrieved employees acting as private attorneys general. . . ." (Stats. 2003, ch. 906, § 1, p. 5179.)
The key issues concern whether the "default" remedy provided in section 2699, subdivision (f), encompasses violations of section 1198 and wage order No. 7-2001, insofar as they require employers to supply adequate seating to workers. Section 1198 is an element of the statutory framework related to the IWC, which issued the wage order. In 1913, the Legislature created the IWC, which was authorized to regulate the wages, hours, and working conditions of various classes of workers to protect their health and welfare. (Industrial Welfare Com. v. Superior Court (1980) 27 Cal.3d 690, 700-701 [166 Cal.Rptr. 331, 613 P.2d 579].) To this end, the IWC promulgated so-called "wage orders," which prescribe "minimum requirements with respect to wages, hours and working conditions" for workers in a number of industries and occupations. (Industrial Welfare Com. v. Superior Court, supra at p. 700.)
The Legislature has established remedies for wage order violations, including criminal penalties. In 1937, the Legislature enacted sections 1198 and 1199, which provide, respectively, that certain violations are unlawful and are subject to criminal penalties. (Stats. 1937, ch. 90, §§ 1198-1199, pp. 217-218.) For purposes of our inquiry, the current versions of these statutes are materially similar to the 1937 provisions. Section 1198 provides: "The maximum hours of work and the standard conditions of labor fixed by the commission shall be the maximum hours of work and the standard conditions of labor for employees. The employment of any employee for longer hours than those fixed by the order or under conditions of labor prohibited by the order is unlawful." Subdivision (a) of section 1199 states that it is a misdemeanor for employers and their agents to require employees "to work for longer hours than those fixed, or under conditions of labor prohibited by an order of the commission."
Home Depot maintains that the default remedy is inapplicable to the alleged seating requirement violations for two principal reasons. Home Depot first argues that the alleged violations, if they occurred, did not contravene section 1198; in addition, Home Depot argues that the alleged violations fall outside the scope of the default remedy because wage order No. 7-2001 provides a civil penalty for them. For the reasons explained below, we reject these contentions.
Home Depot contends that an employer's failure to comply with the seating requirement in wage order No. 7-2001 is not unlawful under section 1198 because the seating requirement is expressed in affirmative—rather than prohibitory—terms. The crux of Home Depot's argument is that because the wage order mandates that employees "shall" be provided suitable seating, rather that expressly prohibiting failure to provide such seating, the failure to
The argument's central flaw is that it demotes mandatory labor conditions in wage orders to simple recommendations or advice when the conditions are stated in affirmative terms. Aside from the seating requirement, wage order No. 7-2001 contains mandates of this type concerning uniforms, changing rooms, and work area temperatures. Indeed, the wage order ordinarily expresses labor conditions in affirmative language, although it contains some notable exceptions, including a prohibition barring employers from directing employees to share beds in employer-supplied lodging ("Employees shall not be required to share a bed."). (Cal. Code Regs., tit. 8, § 11070, subd. 10(B).)
The term "prohibited," as used in section 1198, cannot be examined in isolation, but must be interpreted in context, with an eye to the statutory scheme as a whole. (Lungren v. Deukmejian (1988) 45 Cal.3d 727, 735 [248 Cal.Rptr. 115, 755 P.2d 299].) Furthermore, section 1198 must be interpreted in a manner that promotes the goals of the Labor Code. (Industrial Welfare Com. v. Superior Court, supra, 27 Cal.3d at p. 702.) Here, the phrase "conditions of labor prohibited by the order," as found in section 1198, is properly viewed in the context of section 1199, subdivision (a), which was enacted at the same time as section 1198 and contains the same phrase. Due to the similarity in language, the Legislature's evident purpose in enacting
In our view, the phrase "conditions of labor prohibited by the order," as found in sections 1198 and 1199, manifests the Legislature's intent to limit liability to clear violations of IWC labor conditions, rather than to impose liability only when the labor conditions are expressed in prohibitory terms. Generally, "[c]ivil as well as criminal statutes must be sufficiently clear as to give a fair warning of the conduct prohibited, and they must provide a standard or guide against which conduct can be uniformly judged by courts and administrative agencies." (Morrison v. State Board of Education (1969) 1 Cal.3d 214, 231 [82 Cal.Rptr. 175, 461 P.2d 375].) Here, the Legislature's use of the phrase "conditions of labor prohibited by the order" is traceable to the fact that the IWC wage orders often set only minimum labor standards. (Industrial Welfare Com. v. Superior Court, supra, 27 Cal.3d at p. 700.) When the standards are minima, employers may properly adopt practices that exceed them. (See id. at p. 721 [noting that historically, employers complied with IWC workplace safety standards by meeting more rigorous standards set under the California Occupational Safety and Health Act of 1973 (Lab. Code, § 6300 et seq.)].) To avert inferences that such practices might subject employers to liability, the Legislature appears to have adopted the phrase "conditions of labor prohibited by the order," thereby establishing that liability attaches only for conduct below the minimal standards.
Home Depot's proposed interpretation of the phrase "conditions of labor prohibited" must be rejected, as the limit it imposes on the remedies stated in section 1199, subdivision (a) would frustrate the operation of the statutory scheme. In authorizing the IWC to establish standard labor conditions, the Legislature did not oblige the IWC to give special attention to conditions framed in prohibitory terms. (See §§ 1173-1185 [specifying IWC's procedures for issuing wage orders].) Accordingly, under Home Depot's proposal, the remedies available under section 1199, subdivision (a), would be tied to a happenstance, namely, whether the IWC's statement of a standard labor condition contains prohibitory language. The Legislature cannot have intended such an arbitrary result. (County of Orange v. Bezaire (2004) 117 Cal.App.4th 121, 130 [11 Cal.Rptr.3d 478] ["As between two alternative interpretations of language, courts prefer the interpretation which is the more natural and logical."].)
In Ex parte Daniels (1920) 183 Cal. 636, 653, 637-643 [192 P. 442], the Supreme Court confronted a statute that required motor vehicle operators to drive "`in a careful and prudent manner and at a rate of speed not greater than is reasonable and proper,'" not to exceed specified maximum speeds for certain enumerated driving conditions (see Stats. 1917, ch. 218, § 16, p. 404). The court described the statute as "prohibit[ing] the operation of motor vehicles at any time or place at an unsafe and unreasonable rate of speed," and held that the standard of conduct it specified was sufficiently determinate to support the imposition of criminal penalties. (Ex parte Daniels, supra, 183 Cal. at pp. 643, 646-647.) Similarly, in Pacific Coast Diary v. Police Court (1932) 214 Cal. 668, 672 [8 P.2d 140], the pertinent statute obliged persons in possession of registered milk bottles "`"to make diligent effort to find the owner thereof and to restore or return the same."'" In concluding the statute set a standard of conduct supporting criminal penalties, the Supreme Court characterized its purpose as a "`prohibition of the unlicensed use of such containers.'" (Id. at pp. 675-679.)
In view of this authority, we reject Home Depot's contention. The seating requirement of wage order No. 7-2001, though framed as an affirmative
This contention fails in light of the language of section 2699, subdivision (f), and section 20(A) of the wage order. As noted above, subdivision (f) of section 2699 creates a default remedy "[f]or all provisions of [the Labor Code] except those for which a civil penalty is specifically provided" (italics added). In view of the italicized terms, the default remedy is available for any statutory violation for which there is no specific preexisting civil penalty. Thus, in Solis v. Regis Corp. (N.D.Cal. 2007) 612 F.Supp.2d 1085, 1087, an employer paid an employee's wages with checks from a bank that charged a fee to cash the checks, in violation of section 212, subdivision (a)(1). The employer maintained that the default remedy was inapplicable to this violation because section 225.5 establishes penalties for "`unlawfully withhold[ing] wages'" under section 212. (Solis v. Regis Corp., supra, at pp. 1087-1089.) In concluding that the violation was subject to the default remedy, the court reasoned that section 225.5 provided no "specific penalty" for the violation alleged by the employee, which did not involve the withholding of wages. (Solis v. Regis Corp., at p. 1088.)
Home Depot maintains that the default remedy does not supplement section 20(A) of the wage order because the legislative history of PAGA lacks evidence that the Legislature intended to authorize civil penalties for wage order violations. We disagree. As explained below, the legislative history shows that PAGA was enacted to provide a civil remedy to employees for Labor Code violations previously enforceable only through administrative or criminal actions, including violations of section 1198 arising from labor conditions prohibited in a wage order.
Section 2699 originated as Senate Bill No. 796 (2003-2004 Reg. Sess.). (Stats. 2003, ch. 906, § 2.) An Assembly committee analysis of the bill identifies its sponsors as the California Labor Association and the California Rural Legal Assistance Foundation. The analysis describes the bill's purpose as follows: "The sponsors state that many Labor Code provisions are unenforced because they are punishable only as criminal misdemeanors . . . . Since district attorneys tend to direct their resources to violent crimes and other public priorities, supporters argue, Labor Code violations rarely result
This statement of legislative intent encompasses violations of section 1198 arising through "conditions of labor prohibited" by a wage order. Prior to PAGA, such violations were enforceable only through administrative activity or criminal actions. As violations of this type fell within the enforcement gap that PAGA was intended to close, they are subject to the default remedy established in section 2699, subdivision (f).
Home Depot contends that PAGA is properly interpreted under the rule of strict construction applicable to penal statutes. Generally, "[w]hen language which is susceptible of two constructions is used in a penal law, the policy of this state is to construe the statute as favorably to the defendant as its language and the circumstance of its application reasonably permit." (People v. Overstreet, supra, 42 Cal.3d at p. 896.) Home Depot thus argues that the phrase "specifically provided," as used in section 2699, subdivision (f), must receive an interpretation under which section 20(A) of the wage order "specifically provide[s]" comprehensive remedies for violations of the wage order.
Home Depot contends that construing the default remedy in section 2699, subdivision (f), as a supplement to section 20(A) of the wage order would lead to unacceptable results. Because the penalties stated in section 2699,
Here, Home Depot's contention amounts to a facial challenge to the default remedy, viewed as a supplement to section 20(A) of the wage order: Home Depot argues that the default remedy provision, so understood, necessarily imposes excessive and unreasonable penalties. We disagree. In determining whether a penalty assessment is constitutionally infirm, courts examine several factors, including whether the penalty is potentially "unlimited" and whether it is "more severe than that provided . . . for other more serious transgressions under the statutory scheme." (Starving Students, Inc. v. Department of Industrial Relations (2005) 125 Cal.App.4th 1357, 1368 [23 Cal.Rptr.3d 583].) However, notwithstanding the presence of such factors, a penalty provision is facially constitutional if it clearly can be applied in a constitutional manner. (Ibid.)
The petition for writ of mandate or other relief is denied. The order to show cause is discharged, and the temporary stay order is lifted upon finality of this decision. Real parties in interest are awarded their costs.
Willhite, Acting P. J., and Suzukawa, J., concurred.