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Class Action Defense Cases-McCoy v. Superior Court: California Court Holds Class Action Labor Law Claims For Waiting Time Penalties Governed By One-Year Limitations Period And Grants Defense Motion To Strike Certain Class Action Claims

California Appellate Court Holds that Class Action Claims Seeking not Wages but Rather Waiting Time Penalties for Late Payment of Wages are Governed by One-Year Statute of Limitations Thus Supporting Defense Motion to Strike Portions of Class Action Complaint

Plaintiff filed a class action against his employer, Kimco Staffing Services, which places temporary employees; the class action complaint alleged that Kimco “fail[ed] to timely pay final wages on completion of temporary work assignments in violation of [California] Labor Code sections 201 and 202.” McCoy v. Superior Court, 157 Cal.App.4th 225, 68 Cal.Rptr.3d 483, 484 (Cal.App. 2007). The class action complaint alleged further that “instead of paying plaintiffs upon discharge or within 72 hours of resignation,” Kimco paid its employees “on the next scheduled pay day.” Id. The class action did not seek wages, as plaintiff admitted that Kimco paid all wages due; rather, the complaint sought only “waiting time” penalties for late payment of wages under California Labor Code section 203. Id. Defense attorneys moved to strike those portions of the class action complaint seeking waiting time penalties for four years, arguing that the general one-year statute of limitations in Labor Code section 340(a) applied. Id. Plaintiff disagreed, urging that “when an action seeks waiting time penalties only, the statute of limitations is the same as when a plaintiff sues for both back wages and penalties” and so is governed by a four-year statute. Id. The trial court agreed with the defense and struck those portions of the class action complaint that sought waiting time penalties for late payment of wages outside the one-year limitations period. Id. Plaintiff petitioned the appellate court for a writ of mandate, but the Court of Appeal affirmed.

The class action complaint sought waiting time penalties for late payment of wages under Section 203, which provides: “If an employer willfully fails to pay … any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days…. [¶] Suit may be filed for these penalties at any time before the expiration of the statute of limitations on an action for the wages from which the penalties arise.” The Court of Appeal explained that “The issue in this petition revolves around the meaning of the last sentence.” McCoy, at 485. Defense attorneys argued that if a complaint seeks only penalties, then the usual one-year statute of limitations for statutory penalties found in section 340(a) applies; plaintiff’s lawyer argued that “the statute of limitations in section 203 applies to any action for penalties, regardless of whether there is also a claim ‘for the wages from which the penalties arise.’” Id. The Court of Appeal held that the four-year limitations period would “applies to actions for waiting time penalties sought in conjunction with back wages”; however, this class action complaint sought penalties only and, based on the appellate court’s analysis, “the objective of section 203, the legislative intent, and the common sense meaning of the section’s language persuade us defendant’s interpretation is correct” and the one-year limitations period applies. Id. We do not here discuss further the court’s legal analysis of its interpretation of California Labor Code section 203; interested readers may find that discussion at pages 485 through 489.

Because the appellate court agreed with defense attorneys that the one-year statute of limitations period governed the class action complaint, it affirmed the trial court’s order and denied plaintiff’s request for mandate. McCoy, at 489.

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