A Win for California Employers-Appellate Court Denies Punitive Damages on Employee Wage Claims

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Employer defense attorney, Clifton Smith, comments on the decision by California's Fourth District Appellate Court, to deny punitive damages as an inappropriate remedy for a wage claim.

However, it should be noted that this decision is only binding precedent on those trial courts within the Fourth Judicial District. Other California courts outside this Judicial District may consider, follow or disregard this judicial decision

Oceanside, CA -- On December 3, 2008, California's Fourth District Court of Appeal reversed a jury verdict awarding $195,000.00 in punitive damages to a former waitress, despite numerous meal and rest period violations by her former employer under California Labor Code § 226.7. "The decision constitutes an important victory for California employers at a time when plaintiff's' attorneys routinely request punitive damages in actions against California employers for unpaid wages," states employer defense attorney, Clifton E. Smith, of CE Smith Law Firm. (Brewer v. Premier Golf Properties, D050686 - Super. Ct. No. GIE27293)

Christine Brewer, a former waitress at Cottonwood Golf Club, sued her former employer for both age discrimination as well as for numerous California Labor Code violations for missed meal and rest periods, for unpaid regular and overtime wages, as well as for pay stub reporting violations. At trial, the jury decided against Ms. Brewer on her age discrimination claim, but decided in her favor as to her wage claims.

"The evidence presented by Ms. Brewer, offered to prove her wage claims, seemed to inflame the jury," observed attorney Smith. Ms. Brewer testified that she worked 9-10 hour days without breaks and was not allowed to take breaks. "She also proved that she did not receive a meal period on 392 separate occasions, did not receive rest periods on 491 occasions, and also proved that, on 68 separate occasions, the Company knowingly and intentionally failed to accurately report the total hours that Brewer worked on Brewer's pay stubs. Each of these incidents represent separate and repeated violations of California's labor laws," noted Mr. Smith.

"The jury seemed clearly incensed by the evidence," concluded attorney Smith. "Even though it awarded only $26,300.00 in unpaid wages for these violations, the jury added $195,000.00 in punitive damages for oppression, fraud and malice on the part of Cottonwood." The trial court also awarded an additional $64,710.00 to Plaintiff for her attorneys fees and costs.

On appeal, the Fourth District Appellate Court overturned the award of punitive damages, purely based on a two-part, legal rationale: 1). Punitive damages are not available for breach of a contract arising from an employment relationship and 2). Because a remedy of punitive damages did not previously exist in common law, plaintiffs are limited to their statutory remedies for unpaid wages, which do not otherwise provide for punitive damages. The Appellate Court also reversed the award of attorney fees and remanded it to the trial court for reconsideration. "For California employers, this appears to be a step in the right direction towards limiting an employer's financial exposure for violation of California's wage and hour laws," observed attorney Smith. "However, it should be noted that this decision is only binding precedent on those trial courts within the Fourth Judicial District. Other California courts outside this Judicial District may consider, follow or disregard this judicial decision," explained attorney Smith.

More importantly, "the case again demonstrates why California employers must insure that their employees have the opportunity to take the meal periods and the rest periods to which they are entitled," noted Mr. Smith. "Most employers simply cannot afford the cost of litigation for violation of these laws." Attorney Smith encourages all employers to "review your compensation practices to verify compliance with wage and hour laws, to minimize or eliminate your exposure to these types of wage claims." CE Smith Law Firm offers legal solutions to California's employers. For further information, please visit: http://www.CESmithLaborLaw.com.

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Clifton E. Smith, Attorney
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