On March 21, 2018, the California Court of Appeal (“Court”) published a decision affirming the dismissal of a staffing agency, Aerotek, Inc., from a class action wage and hour lawsuit filed by a temporary employee, Norma Serrano. Serrano claimed that Aerotek failed to ensure that its client, Bay Bread, LLC, implemented appropriate meal break policies. Bay Bread was also named as a defendant in the lawsuit. Aerotek filed a motion for summary judgment seeking to have all claims against it dismissed.
The trial court granted Aerotek’s motion, and the Court affirmed the trial court’s ruling. The Court concluded that Aerotek satisfied its own duty to provide meal periods to its temporary employees. The Court also concluded that Aerotek was not vicariously liable for any failure of Bay Bread to provide meal periods. Since Serrano’s claims against Aerotek (including claims for penalties) all stemmed from her meal period claim, all of Serrano’s claims against Aerotek were dismissed.
In 2010, Aerotek and Bay Bread entered into a contract under which Aerotek hired temporary employees to work at Bay Bread. Under the terms of the contract, Bay Bread was responsible for setting the work schedules of temporary employees such as Serrano. Bay Bread was also responsible for managing these employees’ shifts, including the taking of their meal breaks. The contract also required Bay Bread to “comply with applicable federal, state and local laws…”
Aerotek hired Serrano to work for Bay Bread as a temporary employee from September to October of 2012. Upon hire, Serrano signed an acknowledgement of receipt of Aerotek’s employee handbook, which contained a meal period policy that complied with California law. Serrano signed an additional acknowledgement of receipt upon re-hire in January 2013. Aerotek’s handbook instructed employees to report any meal break violations to Aerotek, and it informed employees that they would not be retaliated against for making any such reports. On hire, both Bay Bread and Aerotek provided orientation to Serrano and other temporary employees at which they received training regarding Aerotek’s policies, including its meal period policy.
Aerotek maintained an on-site manager at the Bay Bread administrative facility, and the on-site manager conducted 10-15 minute walk-throughs at the Bay Bread production facility twice a day. Aerotek’s on-site manager also reviewed temporary employees’ timekeeping records for missed clock-in and clock-out punches. Aerotek claimed that it did not review the timekeeping records for potential meal period violations, whereas Bay Bread said that it believed Aerotek was reviewing the records to ensure that employees were taking compliant meal breaks.
Serrano filed a class action lawsuit against Bay Bread and Aerotek alleging that both employers failed to provide her with 30-minute meal periods as required by law. Serrano’s time records showed several instances of late (taken more than five hours after beginning her shift) or missed meal periods, but Serrano admitted that she had never reported any violations to Aerotek. Additionally, Serrano stated that she was unaware of any affirmative actions taken by Aerotek to prevent her from taking meal breaks. Rather, Serrano claimed that Aerotek failed to ensure that Bay Bread implemented appropriate meal break policies.
Aerotek’s duty to provide meal periods
The Brinker Standard
In 2012, the California Supreme Court issued a landmark decision in the case Brinker Restaurant Corp. v. Superior Court, which provided guidance regarding the steps an employer must take to provide its employees with compliant meal breaks. The court in Brinkerstated that an employer meets its obligation to provide meal breaks where the employer 1) relieves employees of all duty, 2) relinquishes control over employees’ activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and 3) does not impede or discourage employees from taking their uninterrupted 30-minute breaks. Brinker Restaurant Corp. v. Superior Court(2012) 53 Cal.4th 1004, 1040.
Brinkeralso stated that even if an employer “has knowledge of employees working through meal periods,” this knowledge will not in itself make an employer liable for meal break violations. Id. The court continued to find that, since an employer is not required to “police” employees during their meal periods, “work by a relieved employee during a meal break does not thereby place the employer in violation of its obligations…” Id. at 1041.
Aerotek fulfilled its duty as set forth in Brinker
The Court concluded that Aerotek satisfied its obligation to provide temporary employees meal periods as required by Brinker. The Court suggested that merely providing a compliant meal policy would be insufficient to protect a staffing agency from liability, but concluded that Aerotek did more than provide Bay Bread with written policies, including: 1) contractually obligating Bay Bread to comply with applicable laws; 2) training employees on Aerotek’s meal period policy during orientation; and 3) requiring employees to notify Aerotek if they believed they were being prevented from taking meal breaks. In reviewing these facts, the Court stated that Serrano had failed to demonstrate “that anything more is required of staffing agencies when they provide temporary employees to other companies.”
No presumption of meal period violations based on Serrano’s time records
Serrano contended that her time records (which showed late and missed meal periods) created a presumption of meal period violations, saying that Aerotek should have known based on these records that Serrano had experienced meal period violations. The Court rejected this contention, giving strong emphasis to the language in Brinker, which states that employers are not required to “police” their employees’ meal breaks. The Court relied upon Brinkerin stating that “mere knowledge [meal breaks] are not being taken does not establish liability.”
The Court’s holding expands on Brinker, which was limited to a scenario in which employees clocked out for meal periods but claimed to have performed work off-the-clock during that time. Here, the Court held that, even where an employee’s time records showed missed or late meal periods, there was still no presumption that a meal period violation had been committed, provided the employer fulfilled its obligation to provide compliant meal periods.
Vicarious liability and co-employer liability
Serrano argued that Aerotek should be found vicariously liable for Bay Bread’s alleged meal period violations, saying that Aerotek could not delegate its duty to provide employees with compliant meal breaks. The Court noted that existing case law reaches the opposite conclusion, which is that a joint employer can satisfy its duties to provide meal and rest breaks by delegating them to a co-employer. In any event, Aerotek admitted that it was Serrano’s direct employer and that it had a duty to provide her with meal breaks.
The Court went on to say that, in the context of co-employer relationships, the determination of whether an employer can be found liable for its co-employer’s violations depends on the scope of the employer’s own duty under the relevant statutes (such as the Labor Code). The Court concluded that an employer who has fulfilled its own duty to provide meal periods is not automatically liable for its co-employer’s breach of its respective duty to provide meal periods.
Employers should bear in mind that their duties under the Labor Code are not necessarily satisfied simply because they contract with and receive employees from a staffing agency. The Court’s decision in Serrano v. Aerotekdemonstrates that both temporary staffing agencies and their clients may potentially be held liable for Labor Code violations depending on the facts of each case.
For instance, if Aerotek had contractually agreed to directly supervise Bay Bread’s employees and ensure that these employees were provided with compliant meal periods, the Court may have decided that Aerotek was partially or fully liable for any alleged meal period violations. Similarly, the court may have reached a different conclusion had Aerotek’s meal period policy failed to comply with California law or had Aerotek not maintained policies instructing employees to report any interference with their meal breaks and requiring Bay Bread to comply with all applicable laws. Although co-employers can be jointly and severally liable for wage and hour violations, this case illustrates that a co-employer may benefit from compliant practices relative to the other.
As such, this decision underscores the importance for employers (whether or not they are utilizing a staffing agency) to issue compliant meal and rest break policies that include a mechanism for employees to report violations, as well as the importance of training employees on these policies. In addition, companies who utilize staffing agencies should use services agreements that address the obligations of both parties to maintain compliant wage and hour practices, as well as any indemnification provisions needed to shift the liability and expense of claims in a manner intended by the parties.
Before entering into a contact with a staffing agency, employers may want to discuss their options with an attorney to ensure that they are aware of their ongoing duties under California law.