By Ronald Miller, J.D.
The employer’s unlawful use of total hours worked in the divisor of its overtime formulas was not sufficient to establish predominance where a large portion of the proposed class did not work overtime or did not receive a bonus, and so was not exposed to the overtime formulas.
A Bank of America call center employee was properly denied her motion to certify a class regarding overtime wage claims under the California Labor Code, ruled the Ninth Circuit. Although the employee satisfied the requirements of commonality and typicality under Rule 23(a)(2)-(3), she failed to establish predominance under Rule 23(b)(3), because the challenged employer policies either did not apply or did not cause an injury to many employees. While the employer’s method of calculating overtime—using total hours worked in the divisor of its overtime formula—was improper, its calculations were not evidence of harm in every instance to all employees. Not all class members worked overtime or received a bonus in the same period (Castillo v. Bank of America NA, November 18, 2020, Gould, R.).
The employee worked as an hourly employee at a BOA call center. The employer operates 13 call centers in California, and employed approximately 5,000 employees to handle calls regarding banking and investment services. During the relevant time period, an employee could receive a flat-sum, nondiscretionary incentive bonus each month. If employees worked overtime and received a bonus during the same period, the employer would apply the bonus to the employee’s straight-time pay to calculate the employee’s regular rate of pay for purposes of overtime premiums.
Overtime calculations. This case arose from a dispute regarding the proper method of calculating overtime wages under California law. BOA’s methods of payment can be divided into two separate periods. During the first period, it “divided the incentive pay amount by the number of total hours worked in the previous two pay periods, even if those two pay periods did not coincide with the month for which the incentive pay compensated, then multiplied that amount by the overtime hours worked in those pay periods.”
Under the second method, BOA “divide[d] the month’s incentive pay by weekdays in the month regardless of how many days an employee actually worked that month.” Then it “multiplie[d] that number by five, representing the days worked in a week, regardless of how many days an employee actually worked.” BOA then divided “that number by total hours worked instead of only non-overtime hours worked.” Finally, BOA would then divide “that number by two to get the new overtime ‘half rate,’ which it multiplied by the overtime hours worked to retroactively pay the underpaid overtime amount.”
Class claims. The employee filed a class action complaint alleging that the employer (1) failed to pay minimum wages, (2) failed to accurately pay overtime wages, and (3) failed to provide second meal periods. In May 2019, the employee moved for class certification. The district court denied the motion. With respect to the minimum wage claim and the meal break claim, the district court found no commonality, no typicality, and no predominance. As to the overtime wage claim, the district court found commonality and typicality, but found that there was no predominance. On appeal, the employee challenged only the overtime wage claim.
Commonality. She argued on appeal that “each policy applied uniformly to all putative class members employed during the period in which the policy was in effect.” For its part, BOA argued that the district court improperly found commonality. The appeals court agreed with the employee’s interpretation. It found her overtime claim presented at least one common question central to her claim: whether BOA’s policy of calculating overtime wages by using total hours worked in the divisor was lawful. Although there were differences between the two policy periods, a common question remained regarding the lawfulness of BOA’s using total hours worked in the divisor.
Typicality. Moreover, the appeals court concluded that the district court properly found the employee established typicality. The employee showed that she “was subject to Defendant’s policies regarding its inclusion of bonuses in the regular rate of pay for purposes of calculating overtime and suffered injury therefrom.” Although there were differences between the two policies, the evidence demonstrated that the employee was subject to BOA’s policies and suffered injuries. Her claims arose from the same allegedly unlawful policy of using total hours worked in the divisor. Thus, her claims were “reasonably co-extensive” with the putative class members, and so she satisfied the requirement of typicality.
Predominance. On the other hand, the employee failed to establish predominance under Rule 23(b)(3). BOA contended that the employee had not established predominance because she sought to certify a class that would require highly individualized inquiries to determine whether class members had suffered an injury in the first place. The appeals court concluded that BOA persuasively argued that the employee had not properly established predominance. It noted that those employees who did not work overtime or did not earn a bonus during the same period in 2016 or 2017 can have no claim for compensation based on an erroneous method of overtime-rate calculation.
BOA’s unlawful use of total hours worked in the divisor of its overtime formulas was not sufficient to establish predominance where a large portion of the proposed class either (1) did not work overtime or did not receive a bonus in the same period, and thus could not have been exposed to the employer’s overtime formulas in the first place; or (2) if they were exposed to a formula, they were not underpaid and thus were not injured.
Here there was no common proof of liability, because a large portion of the proposed class was never exposed to the challenged formulas or was not underpaid, and thus could not have been injured by those formulas in the first place. Thus, the employee could not provide a common method of proof to establish BOA’s classwide liability. Accordingly, the employee had not established predominance. The holding of the district court denying class certification was affirmed.
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