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In an article published on 7/23 in Law360, Segal McCambridge Shareholder Michael Luchsinger discusses Bell v. Home Depot U.S.A., Inc., in which the U.S. District Court for the Eastern District of California granted partial summary judgment to Home Depot, holding that the company “never changed” the definition of a workday. The decision effectively demonstrates an employer’s “good faith dispute” defense when it came to owed wages. The Bell decision focused on two questions: What constitutes a “good faith dispute”? and to what extent does an employer have the discretion to set its employees’ workweek or workday?
“A good faith dispute, in the context used in Bell, operates as a defense to the imposition of waiting time penalties for wage violations under the California Labor Code,” writes Luchsinger. “The Bell decision relied heavily on the Ninth Circuit’s opinion in Hill v. Walmart, Inc., 32 F.4th 811, (9th Cir. 2022), wherein the Court held that the employer had made a good faith mistake about an employee’s employment status.”
In order to be valid, a good faith dispute claiming that wages are due would require an employer to present a defense, grounded in law, that would effectively preclude the employee from recovering said wages. Luchsinger writes that the Bell decision demonstrates employers have rather broad discretion to adjust their employees’ workday or workweek. Because the complainant in this case was unable to demonstrate any particular failure on the part of the respondent to change the workday, this was evidence of bad faith.
“Courts therefore take an objective approach to test whether the defense is supported by evidence, reasonable, and not raised in bad faith,” Luchsinger writes. “If the defendant can show that its defense, if proved, would be successful in court, it is likely to hold up as a good faith defense. But the fact that a defense may be ultimately proved unsuccessful is immaterial.”
Read the story in full; click here (subscriber-based).
