El Pollo Loco Case Could Test SB 796
By CHRIS CZIBORR
Irvine-based El Pollo Loco Inc. has been hit with an overtime wage lawsuit, with a twist.
Three managers at the Mexican fast food chain charge they were misclassified as exempt from overtime and are seeking back pay and other compensation.
A fast food chain being sued for overtime isn’t new. What is new: Those suing could try to win damages under a new California law, SB 796, which allows workers to sue their employers for violations of state labor law.
Cesar Nava, an Oxnard lawyer representing the managers, said the case has nothing to do with SB 796. Others familiar with the suit say both privately and publicly the case has ties to the new law.
El Pollo Loco officials declined to comment on the lawsuit. Assemblyman John Campbell, a Republican representing Irvine and other areas, said he has spoken with El Pollo Loco Chief Executive Stephen Carley about the suit. Campbell is trying to repeal SB 796.
Eric Sohlgren, a lawyer with Irvine’s Payne & Fears LLP, which defends businesses on labor and employment issues, said he sees the suit as a test case for pursuing overtime suits under SB 796.
“The plaintiffs are indirectly attempting to obtain relief under SB 796, which allows an employee to recover labor code penalties on behalf of others,” he said. “In this case, the plaintiffs may use 796 to try to recover penalties. There will probably be a fight in this case about whether the plaintiffs can use SB 796. If a court agrees with the plaintiffs on this point, it could expand the scope of the legislation even further.”
Lake Forest-based Del Taco Inc. also is being sued for overtime pay in a case that could invoke SB 796.
In the El Pollo Loco case, the managers are suing on behalf of themselves and other general managers and restaurant managers in California. The class-action suit seeks back overtime, meal periods and other penalties. They’re claiming penalties of $50 for each underpaid manager for each pay period for the initial violation, and $100 per underpaid manager for each subsequent pay period.
The suit could mark the start of a series of lawsuits against businesses, critics of SB 796 say. The law could become the new favorite weapon of choice for lawyers, just as the state’s Business & Professions Code 17200 has been in recent years.
SB 796 is similar to 17200, which lets anyone act as attorney general and sue businesses for alleged violations of the state code. SB 796 lets workers sue for alleged violations of state labor law, something handled in the past by the state.
Sen. Joe Dunn, a Democrat representing Santa Ana and other areas, said he wrote the legislation behind SB 796 because he didn’t think the state’s labor enforcement office had the funding to go after employers.
So far, there hasn’t been a flood of SB 796 lawsuits in OC, according to Sohlgren of Payne & Fears.
“I’m starting to see some evidence that it’s creeping into litigation, and being threatened in wage and hour litigation in particular,” he said.
California companies being sued under the law include Thousand Oaks-based Amgen Inc., which faces litigation over the font size used in an employee notice, as well as Warner Bros. Television Production Inc., Touchstone Television Productions LLC and others.
While SB 796 lawsuits haven’t reached a fever pitch yet, there are signs of more to come. One lawyer, Sacramento’s Brian Kindsvater, has put up a Web site dedicated to SB 796 at sueyourboss.com. The site features a link to a $49.95 electronic book authored by Kindsvater entitled “California’s ‘Sue Your Boss’ Law.”
Kindsvater said he wrote the book as a guide for both businesses and workers.
“I couldn’t find any information about the statute online or anywhere, so I decided to put something together myself,” he said. “I can understand why businesses are upset, and they should be. Literally, if you run out of toilet paper, you’re subject to liability under the law. I can’t believe anybody in the Legislature bothered to look at the ramifications of this.”
Kindsvater has worked on behalf of clients suing under 17200. In March, he agreed to return about $35,000 in 17200 settlement money after being sued by state Attorney General Bill Lockyer.
Despite his run-in with Lockyer, Kindsvater said he isn’t worried about his book and Web site promoting litigation.
“The book is primarily for businesses,” he said. “Certainly it has information for employees, but primarily it’s for businesses so they can become aware of the law and its ramifications.”
As for the fate of SB 796, efforts by Campbell and other Republicans to repeal or alter the law haven’t been successful in the Democrat-controlled Legislature.
Dunn says he’s open to changes short of a repeal.
Assemblyman Lou Correa, a moderate Democrat who represents Santa Ana and Anaheim and is a supporter of 17200 reform, is waiting to see what Dunn does with the bill before taking any action himself, according to a spokesman.
