A federal jury in San Francisco delivered an expensive message to Wal-Mart Transportation and perhaps the entire California transportation industry by rendering a $55 Million verdict to 850 current and former Wal-Mart truck drivers. The jury ruled that Wal-Mart violated California minimum wage laws by failing to pay the drivers for all the work they performed.
Plaintiffs contended that Wal-Mart's payment policies, as stated in their Driver Pay Manuals, violated California wage law by failing to pay drivers at least minimum wage for certain tasks or duties. Review of the verdict form revealed the specific mandatory duties where driver class members were paid less than minimum wage:
- Pre and Post-Trip Vehicle Inspections
- Ten Minute Rest Breaks
- Taking Ten-hour Layovers
U.S. District Court Judge Susan Illston had actually set the stage for the jury verdict in 2015 by granting the plaintiff's Motion for Partial Summary Judgment and ruling that Wal-Mart had violated California's minimum wage law, leaving damages as the major issue to be decided by the jury.
The most significant component of the verdict involved the ten-hour layover task. Wal-Mart had argued that drivers were not subject to their control during layovers and did not need to be paid minimum wage. The drivers are, of course, required to take mandatory "layover" periods according to Federal Department of Transportation regulations.[1] And under California law (Cal. Code Regs, tit. 8 §11090), employers must pay employees at least the minimum wage per hour for alll hours worked. The California Supreme Court has defined "Hours Worked" as "the time during which an employee is subject to the control of an employer..." whether or not the employee is actually working. Morrillion v. Royal Packing Co ., (2000) 22 Cal. 4th 575. Since Wal-Mart Pay Manuals restricted the drivers to take layovers to the tractor cab and excluded use of the driver's residence without prior approval, Judge Illston ruled that the drivers were subjected to Wal-Mart control during the layovers. Illston specifically rejected Wal-Mart's argument that the drivers were free to leave their trucks for personal activities (meals, shopping, exercise) and focused on the required physical location of the layover (i.e. the cab). Accordingly, the jury then awarded the drivers almost $45 Million for the layover-related violations.
Judge Illston had also ruled that California law requires that employees must be directly compensated for all time worked and therefore does not allow an employer to "build in" time spent on non-driving tasks into a piece-rate compensation system. Wal-Mart had contended that its payment plan actually compensated drivers for activities like pre and post-trip vehicle inspections because those activities were subsumed within other activities for which they were paid. Illston found that driver activities that are not separately compensated like vehicle inspections and rest breaks may not be properly subsumed into the activity pay component of Wal-Mart's pay policies under California law.[2] The remainder of the jury verdict of almost $10 Million in wages Wal-Mart owed related to the inspection and rest break driver tasks.
In post verdict statements, counsel for Wal-Mart has indicated it will appeal the verdict stating that its drivers are among the highest paid in the industry. Meanwhile, plaintiff's counsel sermonized that the verdict should send a message to other trucking firms who are committing "wage theft."
Raymond A. Greene, III and Burnham Brown defend transportation companies of all sizes in both employment and personal injury litigation. Mr. Greene leads a multidisciplinary response to catastrophic events as a member of the Burnham Brown 24-Hour Client Response Team and provides continuing education on new developments in California transportation law to companies and industry groups on a regular basis.
[1] Drivers may drive a maximum of 11 hours only after 10 consecutive hours off duty as per C.F.R. §395.3(a)(1).
[2] Wal-Mart pay manuals did not identify inspections and rest breaks as paid activities.
