California Overtime for Restaurant Managers: Class Actions or Individual Lawsuits?

Los Angeles, CAIt is not easy to determine whether or not restaurant managers can claim California overtime, mainly because they are often misclassified as exempt. In April 2010 a California Court of Appeal denied a motion to certify a class action lawsuit against El Torito Restaurants, concluding there wasn't enough proof of widespread misclassification and that managers must sue on an individual basis.

More often than not, California law provides employees with more expansive rights than federal laws. In California, managers must be paid at least twice the state minimum wage for full-time employment. What defines an employee as a manager are her duties and the time spent carrying out those duties, not necessarily her job title or job description. For example, an employee hired as a restaurant manager has to spend at least 50 percent of her time performing managerial duties, such as directing the work of at least two employees.

But overtime issues are rampant in the hospitality business, particularly in this economic climate. The restaurant industry is always watching the bottom line, and a simple solution to increase profits without cutting back on food cost is to get staff to work longer hours without paying overtime.

The El Torito managers claimed in their lawsuit that salaried managers employed at El Torito, El Torito Grill, and GuadalaHarry's restaurants were improperly classified as exempt from California's overtime wage laws. To seek class action certification, the plaintiffs needed sufficient evidence to show that all managers carried out the same standard policies and procedures and were misclassified based on their titles as "manager." The defendants presented evidence that the managerial job duties and time spent on particular tasks differed from one restaurant to the next.

The Court of Appeal ruled that they must sue individually and not as a class.

Back in September 1999, a lawsuit alleged that the 300 company-owned Taco Bells in California violated wage and hour laws. The suit was granted class action status. (Similar lawsuits were filed against Wendy's International.) Taco Bell paid no overtime to managers and assistant managers who spent most of their time "mopping floors, making tacos and doing the exact job as crew members."

California law states that employees must be paid overtime if they spend more than half their time doing non-managerial duties. The class action claimed that "Taco Bell requires its managers to work a minimum 50 hours and many are putting 70-hour weeks."

The case was very similar to a 1997 class action suit in Washington State, which represented 16,000 non-management Taco Bell workers who were required to do certain work off the clock. The settlement to those workers was not disclosed.

Meanwhile, the California State Supreme Court is set to rule in a case that could mean billions of dollars and new responsibilities in monitoring meal and rest breaks for Brinker Restaurant employees. The Brinker case seeks clarification as to whether employers must merely offer meal and rest breaks and leave it to the employees to take them, or if the company must mandate breaks. In 2002 Brinker agreed to pay $10 million to settle a similar complaint by California's Labor Department on behalf of workers it had employed from October 1999 through the end of 2001.

For plaintiff attorneys, violations haven't changed: they urge employers to include rest and meal break violations in any type of workplace lawsuit to avoid a big payout at the end of the case. And employees are urged to seek legal help if their wage and hour rights have been violated.