Labor & Employment Law

Court Rejects Punitive Damages for Labor Code Violations -- Brewer v. Premier Golf Properties

California Civil Code section 3294 provides that punitive damages are generally available in any "action for the breach of an obligation not arising from contract."  So if the Legislature creates a statutory obligation and does not specifically limit the remedies, shouldn't a plaintiff be able to recover punitive damages if he proves the defendants acted with the requisite "malice, fraud or oppression?"

This question has been the subject of many demurrers over the years but has never had a very clear answer.  In the context of state statutes prohibiting employment discrimination courts long ago held that punitive damages should be available even though they were not specifically authorized by the statutes themselves.  Courts have been more reluctant, however, in the context of Labor Code violations.

Brewer v. Premiere Golf Properties is the first published appellate opinion to directly address the issue.  The decision rejected the recovery of punitive damages for Labor Code violations -- or at least for an employer's violation of its obligation to pay minimum wage and provide meal periods.   

The Court's first rationale for rejecting punitive damages was to invoke the so-called "new right-exclusive remedy" doctrine.  Under this theory, the Legislature is presumed to deny punitive damages as a remedy for any new statutory right except where there is already a pre-existing "common law analog" for the new right.  

Next, the Court opined that punitive damages should also be unavailable because "claims for unpaid wages and unprovided meal/rest breaks arise from rights based on [the plaintiff's] employment contract."  

Neither rationale seems compelling.  In particular, the Court's attempt to distinguish the cases allowing punitive damages for employment discrimination is less than convincing.  After all, there was no common law cause of action for racial, gender, age or disability discrimination.  And a claim for unequal wages due to discrimination could just as easily be described as "arising from" the underlying employment relationship.  In either case, employees cannot contract out of their statutory rights.    

The opinion is a welcome development for employers, who face enough liability from class action wage and hour claims already.  But the Court reaches its result through some pretty suspect reasoning.  And for that reason (as well as the importance of the issue), the case seems like a prime candidate for Supreme Court review.  

Full post as published by California Labor & Employment Defense Blog on December 29, 2008 (boomark / email).