May 27, 2020

May 26, 2020

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Jury Returns Verdict in Favor of Dollar Tree in Electronic Wage Statement Class Action

On November 7, 2017, after a four-day trial, a federal jury in Los Angeles, California returned a verdict in favor of Dollar Tree Stores, Inc. in a class action filed against the company by former employee Francisca Guillen. The case was pending in the Central District of California before Hon. Michael W. Fitzgerald.

The plaintiff did not dispute that Dollar Tree’s wage statements included all of the information required by California Labor Code section 226(a), California’s wage statement statute. Nor did she dispute that the paper wage statements accompanying Dollar Tree’s paychecks complied with California law. Instead, she alleged that store employees who elected to receive their wages by direct deposit—and who could only receive electronic wage statements—did not have easy enough access to those wage statements because they could only be accessed from store cash registers.

Labor Code section 226(a) requires that wage statements be issued “in writing” and that deductions be recorded “in ink or other indelible form.” In 2006, California’s Labor Commissioner issued an opinion letter regarding the circumstances in which employers can issue electronic wage statements while still complying with these requirements. According to the opinion letter, California employers may provide employees with electronic wage statements as long as:

  • Employees have the option to elect to receive wage statements on paper;

  • The electronic wage statements contain all of the information required by Labor Code section 226(a);

  • The employer retains pay records for at least three years and employees retain access to them;

  • Safeguards are in place to protect the confidentiality of employees’ information; and

  • Employees who receive electronic wage statements have “the ability to easily access the information and convert the electronic statements into hard copies at no expense to the employee.”

The plaintiff contended that Dollar Tree failed to satisfy this last requirement because store employees paid by direct deposit could only access their wage statements through in-store cash registers and could not access them over the Internet, a limitation she claimed was particularly burdensome for employees who were away from work.

In pre-trial briefing, the plaintiff conceded that there was “no hard and fast minimum standard for ‘easy’ access to electronic wage statements,” but she contended that the “obvious takeaway” from the Labor Commissioner’s opinion letter and earlier court rulings was that “the now-ubiquitous Internet by far is the most convenient, and likely only, means available to gain easy access to electronically delivered wage statements.” She took the position that “any mode of delivery of electronic wage information that does not take advantage of the Internet simply cannot, from a comparative standpoint, be considered ‘easy.’”

Judge Fitzgerald’s instructions to the jury explained that Dollar Tree could be liable for wage statement violations if “employees did not retain easy access” to their wage statements. The jury instructions also explained that the term “easy access” does not have any special legal meaning but that jurors should use their ordinary understanding of the term in deciding Dollar Tree’s liability.

Ruling in Dollar Tree’s favor, the jury evidently concluded that the company provided its store employees with easy enough access to their wage statements by making them available through stores’ cash registers.

Although Dollar Tree prevailed at trial, this case is yet another reminder that employers’ practices with respect to wage statements are highly scrutinized. Because wage statement claims are susceptible to class action treatment—and because prevailing class action plaintiffs can recover up to $4,000 in penalties per affected employee (not to mention attorney’s fees)—even technical violations of California’s wage statement requirements can create significant legal exposure. Employers should confirm that their wage statements contain all of the required information and should also ensure that employees who elect to receive electronic wage statements have easy access to them and the ability to print them.

Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.


About this Author

Stephen L. Taeusch, attorney, Sheppard Mullin

Stephen L. Taeusch is an associate in the Labor and Employment Practice Group in the firm's San Francisco office.

Areas of Practice

Stephen Taeusch represents employers in state and federal courts in a wide variety of employment-related matters, including wrongful termination, harassment, discrimination, unfair business practices, and retaliation in single and multi-plaintiff litigation. Stephen also has extensive wage and hour class and collective action experience and has helped employers in a variety...

Reanne Swafford-Harris attorney Sheppard Mullin

Reanne Swafford-Harris is an associate in the Labor and Employment Practice Group in the firm's San Francisco office.

Areas of Practice

Ms. Swafford-Harris represents employers in all aspects of employment-related matters in state and federal courts. Her practice includes defending employers against claims of discrimination, harassment, retaliation, wrongful termination, and wage and hour disputes. Prior to joining Sheppard Mullin, Ms. Swafford-Harris practiced as an associate at Seyfarth Shaw, LLP, where she focused on representing employers in the defense of wage and hour class and collective actions arising out of alleged violations of the California Labor Code and/or the Fair Labor Standards Act. Ms. Swafford-Harris also counsels employers on a wide range of employment issues, including employee handbooks, retail workers’ rights, and wage and hour compliance.

Ms. Swafford-Harris is committed to pro bono work, and has provided legal services in conjunction with a number of federal pro bono defense organizations.