Temporary Furlough Of Employees Can Trigger Final Payment Of Wages, Says 9th Circuit
When the pandemic hit hard in 2020, many employers faced the grim decision of laying off workers that simply were not needed at a time when customers were unable to patronize their businesses. The Hyatt Corporation was among those struggling. The hotel chain temporarily furloughed 7000 workers in March hoping that the situation would soon improve, but with no end in sight, these jobs were permanently terminated three months later, in June, with payouts of all earned and unpaid wages at that time.
One of these dismissed workers proceeded to file a class action complaint on behalf of a putative class of California Hyatt employees, asserting claims under California law for failure to pay all wages upon discharge (at the time of the furlough in March 2020), waiting time penalties (up to 30 days’ wages), failure to furnish accurate wage statements, unfair business practices, and enforcement under the Private Attorneys General Act (“PAGA”), Labor Code section 2698. The District Court agreed with Hyatt noting that the March temporary layoffs did not warrant instant distribution of the final wages.
The case was appealed to the 9th Circuit in Harstein v. Hyatt Corporation, No. 22-55276, 2023 WL 6167607 (9th Cir. Sept. 22, 2023), which reversed the lower court’s decision regarding final payment of wages. It found that a temporary layoff without a specific return date within the normal pay period is a discharge that triggers the prompt payments provision. The appellate court based its decision on a Division of Labor Standards Enforcement (DSLE) opinion letter and its Policies and Interpretations Manual, both of which have been noted by some to carry questionable weight. The 9th Circuit did, however, remand the case back to the lower court to decide if Hyatt’s failure to pay in March was “willful.” California courts have in fact found that an employer’s reasonable, good faith belief that wages are not owed may negate a finding of willfulness.
