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Class Action Defense Issues–California Supreme Court Holds That Additional Hour Of Pay Under Labor Code Is Subject To 3-Year Statute Of Limitations

“On Additional Hour of Pay” under California Labor Code Section 226.7 Constitutes Wage or Premium Pay Subject to Three-Year Statute of Limitations Period, not a Penalty Subject to One-Year Limitations Period, California Supreme Court Holds

In a case that will have a substantial and immediate impact on labor law class action cases, the California Supreme Court today issued its long-awaited decision in Murphy v. Kenneth Cole Productions, Inc., which addressed two issues: “first, whether the ‘one additional hour of pay’ provided for in Labor Code section 226.7 constitutes a wage or premium pay subject to a three-year statute of limitations . . . or a penalty subject to a one-year statute of limitations . . .; second, whether a trial court, conducting a de novo trial, can consider additional wage claims not presented in the administrative proceeding before the state Labor Commissioner.” Slip Opn., at 1 (citations omitted). The Court of Appeal had held that the payment was a penalty subject to the shorter limitations period; the Supreme Court disagreed. As the Supreme Court summarized its opinion, “We conclude that the remedy provided in Labor Code section 226.7 constitutes a wage or premium pay and is governed by a three-year statute of limitations and that the trial court properly considered the additional, but related, wage claims during the de novo trial.” Id.

A complete summary of the opinion will be posted later this week.