California Supreme Court Watch

#23-110 Naranjo v. Spectrum Security Services, Inc., S279397. (B256232; 88 Cal.App.5th 937; Los Angeles County Superior Court; BC372146.) Petition for review after the Court of Appeal affirmed in part and reversed in part the judgment in a civil action. This case presents the following issue: Does an employer’s good faith belief that it complied with Labor Code section 226, subdivision (a) preclude a finding that its failure to report wages earned was “knowing and intentional” as is necessary to recover penalties under Labor Code section 226, subdivision (e)(1)?

Petition for review granted: 5/31/2023

Case fully briefed: 10/12/2023

Cause argued and submitted: 3/05/2024

Opinion filed: Judgment affirmed in full: 5/06/2024

See the Court of Appeal Opinion.

See the Petition for Review.

See the Oral Argument.

See the California Supreme Court Opinion.  (Naranjo v. Spectrum Security Services, Inc. (2024) 13 Cal.5th 93.)

“California law requires employers to provide their employees with written wage statements listing gross and net wages earned, hourly pay rates, hours worked, and other employment-related information. (Lab. Code, § 226.) If a claimant demonstrates that an employer has failed to comply with this requirement, the claimant is entitled to an injunction compelling compliance and an award of costs and reasonable attorney’s fees. (Id., subd. (h).) But in the case of a ‘knowing and intentional failure . . . to comply,’ the law provides for statutory penalties of up to $4,000 or the employee’s actual damages, should the employee’s damages exceed the statutory penalties. (Id., subd. (e)(1).) The question presented is whether an employer has knowingly and intentionally failed to comply with section 226’s requirements when the employer had a good faith, yet erroneous, belief that it was in compliance.

…

We now conclude that if an employer reasonably and in good faith believed it was providing a complete and accurate wage statement in compliance with the requirements of section 226, then it has not knowingly and intentionally failed to comply with the wage statement law. We affirm the judgment of the Court of Appeal, which reached the same conclusion.”

Justice Kruger authored the opinion of the Court, in which Acting Chief Justice Evans and Justices Corrigan, Liu, Groban, Jenkins, and Rodriguez* concurred.

In the news: McQueen, et al., In a Rare Win for Employers, the California Supreme Court Holds That Wage Statement Penalties Are Not Available if an Employer Acted in Good Faith, Nat. Law Rev. (May 14, 2024).