TRINA RAY V. LOS ANGELES COUNTY DEPARTMENT ( 2022 )

FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS NOV 4 2022
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
TRINA RAY; SASHA WALKER, No. 20-56245
individually, and on behalf of all others
similarly situated, D.C. No.
2:17-cv-04239-PA-SK
Plaintiffs-Appellants,
v. OPINION
LOS ANGELES COUNTY DEPARTMENT
OF PUBLIC SOCIAL SERVICES,
Defendant-Appellee,
and
CALIFORNIA DEPARTMENT OF
SOCIAL SERVICES,
Defendant.
Appeal from the United States District Court
for the Central District of California
Percy Anderson, District Judge, Presiding
Argued and Submitted November 18, 2021
Pasadena, California
Before: Marsha S. Berzon and Johnnie B. Rawlinson, Circuit Judges, and
Matthew F. Kennelly, * District Judge.
*
The Honorable Matthew F. Kennelly, United States District Judge for the
Northern District of Illinois, sitting by designation.
Per Curiam Opinion;
Partial Concurrence and Partial Dissent by Judge Berzon
SUMMARY**
Labor Law
The panel affirmed in part and reversed in part the district court’s orders granting
summary judgment in favor of Los Angeles County Department of Social Services
and denying partial summary judgment to the plaintiffs in an action brought under
the Fair Labor Standards Act by In-Home Supportive Services providers and other
homecare workers.
Plaintiffs sought unpaid overtime wages for the period between January 1, 2015,
and February 1, 2016, during which a Department of Labor rule entitling homecare
workers to overtime pay under the FLSA was temporarily vacated. The district court
conditionally certified a putative collective consisting of IHSS providers who
worked overtime during this period.
Reversing in part and remanding, the panel held that the County was a joint
employer, along with care recipients, of IHSS providers, and thus could be liable
under the FLSA for failing to pay overtime compensation. The panel held that under
Bonnette v. Cal. Health & Welfare Agency, 704 F.2d 1465 (9th Cir. 1983), it must
consider the “economic reality” and apply four factors: “whether the alleged
employer (1) had the power to hire and fire the employees, (2) supervised and
controlled employee work schedules or conditions of employment, (3) determined
the rate and method of payment, and (4) maintained employment records.” The
court in Bonnette held that the State of California and three counties were joint
employers of IHSS providers. The panel held that, notwithstanding differences
between the IHSS program operating in Los Angeles County today and the programs
analyzed in Bonnette, the County was a joint employer of plaintiffs, in light of the
economic and structural control it exercised over the employment relationship. The
panel directed the district court, on remand, to grant partial summary judgment to
plaintiffs on the issue of whether the County was a joint employer of IHSS providers.
Affirming in part, the panel held that the district court did not err in granting
**
This summary constitutes no part of the opinion of the court. It has been prepared
by court staff for the convenience of the reader.
2
partial summary judgment to the County on the issue of willfulness and denying
partial summary judgment to plaintiffs on the issue of liquidated damages. The
panel held that a determination of willfulness and the assessment of liquidated
damages are reserved for the most recalcitrant violators. Here, it was undisputed
that the County had no ability to pay overtime wages in the absence of the State
making funds available to satisfy the overtime obligations. It was also undisputed
that resolution of the overtime wages for IHSS providers in California played out in
public, including numerous training sessions on implementing the new FLSA
requirements. The panel held that, under this circumstance, it agreed with the district
court that the County acted in good faith.
Concurring in part and dissenting in part, Judge Berzon joined the majority’s
holding that the County was a joint employer. She disagreed with the majority’s
holding that because, as a practical matter, the State controlled the payroll system
(1) the County acted in good faith for purposes of determining whether it had
established a defense to liquidated damages; and (2) the County’s failure to pay
overtime wages could not have been willful for purposes of determining the
applicable statute of limitations. Judge Berzon wrote that, although the result the
majority reached on liquidated damages and willfulness may seem equitable, it was
not consistent with the standards the panel was obligated to apply under the
FLSA. She would hold that the County was, on the record here, liable for liquidated
damages. For purposes of determining whether the County’s conduct was willful,
she would hold that plaintiffs raised a triable issue of fact as to whether the County
knew or showed reckless disregard that its conduct violated the FLSA.
COUNSEL
Matthew C. Helland (argued) and Daniel S. Brome, Nichols Kaster LLP, San
Francisco, California; Philip Bohrer, Bohrer Brady LLC, Baton Rouge, Louisiana;
for Plaintiffs-Appellants.
Jennifer M. Hashmall (argued), Jason H. Tokoro, Jeffery B. White, and Emily A.
Rodriguez-Sanchirico, Miller Barondess LLP, Los Angeles, California; Lester J.
Tolnai, Office of the County Counsel, Los Angeles, California; for Defendant-
Appellee.
Jennifer Bacon Henning, California State Association of Counties, Sacramento,
California, for Amicus Curiae California State Association of Counties.
3
Per Curiam
The State of California and the County of Los Angeles administer an In-
Home Supportive Services program (“IHSS program”), which allows low-income
elderly, blind, or disabled residents of the County to hire a provider to help them
with daily living activities. In 2013, the U.S. Department of Labor (“DOL”) issued
a new rule entitling IHSS providers and other homecare workers to overtime pay
under the Fair Labor Standards Act (“FLSA”). 78 Fed. Reg. 60,454 (Oct. 1, 2013)
(codified at 29 C.F.R. pt. 552). A district court vacated the rule before January 1,
2015, the rule’s scheduled effective date. Home Care Ass’n of Am. v. Weil
(“Weil”), 76 F. Supp. 3d 138, 148 (D.D.C. 2014). The D.C. Circuit reversed,
upholding the rule in a decision that mandated on October 13, 2015. Home Care
Ass’n of Am. v. Weil (“Weil II”), 799 F.3d 1084, 1087 (D.C. Cir. 2015). The State
began paying overtime wages to IHSS providers on February 1, 2016.
In June 2017, Trina Ray, an IHSS provider in Los Angeles County, filed a
putative collective action against the County seeking relief for unpaid overtime
wages for the period between January 1, 2015, and February 1, 2016. 1 This is our
second published opinion in this case. Our previous opinion, Ray v. County of Los
Angeles (“Ray I”), 935 F.3d 703 (9th Cir. 2019), held, first, that the County was
1
Ray initially named California as a defendant but later voluntarily dismissed the
State. Ray filed an amended complaint adding a second named plaintiff, Sasha
Walker. We refer to the plaintiffs collectively as “Ray.”
4
not an “arm of the state” with respect to the implementation of the IHSS program
and therefore was not entitled to Eleventh Amendment immunity from suit, and,
second, that the effect of Weil II was to reinstate the overtime rule’s original
effective date of January 1, 2015. Id. at 705, 713–14.
Three summary judgment rulings by the district court are at issue in this
appeal: The court granted summary judgment to the County on the ground that the
County does not employ IHSS providers for purposes of the FLSA, granted partial
summary judgment to the County on the issue of willfulness, and denied partial
summary judgment to Ray on the issue of liquidated damages. We unanimously
hold that the County is a joint employer of IHSS providers under the FLSA, and
we reverse the district court’s ruling to the contrary. In this per curiam opinion,
Judges Rawlinson and Kennelly also affirm the district court’s rulings on
willfullness and liquidated damages. Judge Berzon dissents with regard to those
rulings.
I.
A.
California’s IHSS program “serves hundreds of thousands of recipients.”
Ray I, 935 F.3d at 705. Providers help qualified individuals in their homes with
“daily activities like housework, meal preparation, and personal care.” Id.
“California implements the program through regulations promulgated by the
5
California Department of Social Services (CDSS), and the program is administered
in part by California counties.” Id. The federal government, the State, and the
counties all contribute funding to the program.
“In the County of Los Angeles alone there are about 170,000 homecare
providers and more than 200,000 recipients.” Id. County residents seeking IHSS
services apply through the County. County social workers review applications and
conduct in-home visits to assess recipients’ needs. Social workers determine the
services recipients are entitled to receive, the time allotted for each service, and the
total number of hours a provider may work for the recipient each month.
“Recipients . . . retain the right to hire, fire, and supervise the work of any
in-home supportive services personnel providing services for them.” Cal. Welf. &
Inst. Code § 12301.6(c)(2)(B). Prospective providers must attend an in-person
orientation in a County field office, where they view state-provided training
materials and sign state-issued forms. Cal. Welf. & Inst. Code § 12301.24.
The County has established a public authority, the Personal Assistance
Services Council, that serves as providers’ employer of record for collective
bargaining purposes. The Personal Assistance Services Council maintains a
registry of providers, coordinates provider background checks, and provides
training for providers and recipients.
Recipients are responsible for setting their provider’s work schedule. See id.6
§ 12300.4(d)(1)(A). Recipients also review and approve their provider’s
timesheets. Providers submit their timesheets directly to the State, which issues
their paychecks.2
B.
As mentioned, DOL issued a new rule in 2013 entitling IHSS providers to
overtime pay under the FLSA. 78 Fed. Reg. 60,454. “Before the Weil I decision,
California (through the CDSS) began taking steps to meet the January 1, 2015,
implementation date, including modifying its systems to process and calculate
overtime compensation.” Ray I, 935 F.3d at 707 (internal quotation marks
omitted). The County participated in state-organized meetings and trainings on the
new overtime rule beginning in 2014.
After Weil I vacated the new rule, “the CDSS decided that it would not
implement overtime payments ‘until further notice.’” Id. Once Weil II upheld the
rule, DOL announced that it would “not bring enforcement actions against any
employer for violations of FLSA obligations resulting from the amended domestic
service regulations for 30 days after the date the mandate [in Weil II] issues,” 80
Fed. Reg. 55,029, 55,029 (Sept. 14, 2015), which occurred on October 13, 2015.
DOL later confirmed that it would not begin enforcing the rule until November 12,
2
We provide more specifics about the roles of the County and State as pertinent to
our substantive analysis, below.
7
2015, and also stated that through December 31, 2015, it would “exercise
prosecutorial discretion in determining whether to bring enforcement actions, with
particular consideration given to the extent to which States and other entities have
made good faith efforts to bring their home care programs into compliance with the
FLSA.” 80 Fed. Reg. 65,646, 65,646 (Oct. 27, 2015).
On December 1, 2015, the State notified all counties that it would begin
implementing the rule on February 1, 2016. The County supported the State’s
implementation plan by training County staff on the new overtime requirements,
conducting information sessions for providers and recipients, and developing
informational materials. California began paying overtime wages to providers on
February 1, 2016.
Ray filed suit in June 2017, seeking relief for unpaid overtime wages
between January 1, 2015, and February 1, 2016. After we decided Ray I, the
district court conditionally certified a putative collective consisting of IHSS
providers in Los Angeles County who worked overtime between January 1, 2015,
and January 31, 2016. More than 10,000 providers opted in as plaintiffs.
The parties filed several motions for partial summary judgment. First, Ray
sought partial summary judgment on the issue of whether the County was liable for
liquidated damages for the time period after October 13, 2015—the date that Weil
II mandated. The district court denied the motion, ruling that there was a “factual
8
dispute as to whether the County [was] Plaintiffs’ employer,” and that the County
had “presented evidence of its efforts to comply with the FLSA, sufficient to avoid
summary judgment as to its good faith defense to liquidated damages at this stage.”
Second, the County asked the district court to find that the statute of
limitations for Ray’s FLSA claims was two years, rather than three years for
“willful” violations. The district court granted partial summary judgment to the
County on this issue, ruling that “the County’s inability to implement overtime
payment to IHSS providers demonstrates as a matter of law that the County’s
alleged violation of the FLSA was not ‘willful,’” and that “the undisputed facts in
the record show that the County did not act with knowing or reckless disregard of
whether its conduct was prohibited by the FLSA.”
Finally, both sides moved for partial summary judgment on the issue of
whether the County was an employer of IHSS providers. Only an employer
covered by the statute can be liable under the FLSA for failing to pay overtime
compensation. After weighing several factors, the district court held that “as a
matter of law . . . the ‘economic reality’ is that the County is not an employer of
IHSS providers.” The court therefore granted summary judgment in favor of the
County.
Ray timely appealed all three orders. Because the district court’s
determination that the County does not employ IHSS providers could be
9
dispositive of the entire action, we address the last order first.
II.
The district court erred in granting summary judgment to the County on the
ground that the County does not employ IHSS providers.
“The FLSA broadly defines the ‘employer-employee relationship[s]’ subject
to its reach.” Torres-Lopez v. May, 111 F.3d 633, 638 (9th Cir. 1997) (alteration in
original) (citation omitted). “‘Employ’ includes to suffer or permit to work.” 29
U.S.C. § 203(g). “‘Employer’ includes any person acting directly or indirectly in
the interest of an employer . . . .” Id. § 203(d).
“[A]n employee may have more than one employer under the FLSA.”
Torres-Lopez, 111 F.3d at 638. DOL so recognized in a regulation providing
guidance on joint employment. 29 C.F.R. § 791.2 (2019).3 “All joint employers are
individually responsible for compliance with the FLSA.” Bonnette v. Cal. Health
& Welfare Agency, 704 F.2d 1465, 1469 (9th Cir. 1983) (citing 29 C.F.R. §
791.2(a)), disapproved of on other grounds by Garcia v. San Antonio Metro.
Transit Auth., 469 U.S. 528 (1985). Like the employer-employee relationship
itself, “the concept of joint employment should be defined expansively under the
FLSA.” Torres-Lopez, 111 F.3d at 639. The parties agree that, to decide whether
3
Section 791.2 is not currently in effect but was in effect during the time period at
issue in this case. See 86 Fed. Reg. 40,939 (July 30, 2021).
10
the County is a joint employer of IHSS providers, we must consider the “economic
reality,” applying the four factors enumerated in Bonnette: “whether the alleged
employer (1) had the power to hire and fire the employees, (2) supervised and
controlled employee work schedules or conditions of employment, (3) determined
the rate and method of payment, and (4) maintained employment records.” 704
F.2d at 1469–70.
Ray maintains that Bonnette directly controls this case. Bonnette held that
the State and three counties (not including Los Angeles County) were joint
employers of IHSS providers, then called “chore workers,” “under the FLSA’s
liberal definition of ‘employer.’” 704 F.2d at 1470. The County disagrees that
Bonnette is dispositive, and points to differences between the IHSS program
operating in Los Angeles County today and the programs analyzed in Bonnette.
We conclude that Bonnette’s analysis and result do apply here, notwithstanding the
differences identified by the County.
Bonnette addressed whether recipients of services were the sole employers
of IHSS providers for FLSA purposes or whether the State and counties were joint
employers as well. We reasoned that the State and counties had “complete
economic control” over the employment relationship, because they paid the
providers’ wages and “controlled the rate and method of payment.” Id. The State
and counties also “maintained employment records.” Id. Additionally, the State
11
and counties “exercised considerable control over the nature and structure of the
employment relationship.” Id. They made the “final determination, after
consultation with the recipient, of the number of hours each chore worker would
work and exactly what tasks would be performed.” Id. Although Bonnette did not
take a position on whether the State and counties should be “viewed as having had
the power to hire and fire” providers, we observed that “their power over the
employment relationship by virtue of their control over the purse strings was
substantial.” Id. In light of the economic and structural control the State and
counties exercised, Bonnette concluded that the State and the counties were joint
employers of IHSS providers. Id.The most significant change between the IHSS program when Bonnette was
decided and now concerns the payment of providers. At the time of Bonnette, the
counties were responsible for making payments either to recipients of services,
who then paid their providers, or directly to providers. Bonnette, 704 F.2d at 1468.
The counties did not fund those payments, however. The federal government
provided 75% of the funding for the program and the State, 25%. Id. at 1467;
Bonnette v. Cal. Health & Welfare Agency, 525 F. Supp. 128, 130 (N.D. Cal.
1981). The “counties were relieved of any financial responsibility.” 525 F. Supp. at
130.4
4
The County maintains that it has “always contributed funds that make up a small
12
Today, payroll is consolidated statewide, and the State issues paychecks to
IHSS providers. We are not persuaded that the State’s assumption of payroll
responsibility changes Bonnette’s analysis. The County continues to exercise
considerable economic and structural control over the employment relationship in
a variety of ways.
As to economic control, the record shows that the County contributes a
substantial amount of funding to the IHSS program. As the result of a 1991
“realignment” of State and county responsibilities for social services, counties are
now responsible for 35% of the nonfederal costs of the program.5 See Cal. Welf. &
Inst. Code § 12306(c) (1992). The County maintains that its 35% share of program
costs is only nominal, because the State offsets the increase by directing revenue
from sales taxes and vehicle license fees to the counties. See Cal. Welf. & Inst.
Code §§ 17602, 17604. The record indicates, however, that counties have some
flexibility in deciding how to spend the realignment funds they receive from the
State. For one thing, the funds are deposited in a social services account, which the
County uses to fund a variety of social services programs, not just the IHSS
fraction of the total IHSS program costs,” citing a document from the Legislative
Analyst’s Office showing that before 1991, counties were responsible for 3% of
program costs.
5
In 2012, the State passed “Maintenance of Effort” legislation, which capped the
counties’ ongoing contributions to the IHSS program to no more than a 3.5 percent
annual increase. Cal. Welf. & Inst. Code § 12306.15(c)(1), repealed (2017).
13
program. See Cal. Welf. & Inst. Code § 17602(a). Counties are authorized to
transfer a certain percentage of funds among their social services, health, and
mental health accounts.
Moreover, during the time period under consideration in this case, the
County contributed significant additional funding to the IHSS program, apart from
the realignment revenue it received from the State. A representative of the County
testified that in fiscal year 2014–2015, the County paid its share of IHSS program
costs using $118 million from its general fund and $237 million in realignment
revenue. The representative also testified that the County’s share of program costs
goes toward provider wages.
Given that the County makes a significant financial contribution to provider
wages, Bonnette’s finding that providers “were paid by the [counties and State]”
remains accurate, even though the State is now responsible for cutting the checks.6
704 F.2d at 1470. If anything, the County’s share of funding for provider wages is
greater than it was at the time of Bonnette.
6
The California Court of Appeal reached the same conclusion in rejecting a
demurrer by Sonoma County to an IHSS provider’s suit for unpaid wages and
overtime under the FLSA. See Guerrero v. Superior Court, 213 Cal. App. 4th 912,
933 (2013), as modified on denial of rehearing (Mar. 11, 2013). The court held
that, “[a]s was the case in Bonnette, . . . the chore workers’ wages were determined
and paid by the state and its agents, [Sonoma] County and [the county’s] Public
Authority,” although the “providers were paid directly by the state.” Id. (emphasis
omitted).
14
Additionally, the County now has the authority, either by itself or through a
separate entity, to negotiate for wages covering the providers. Cal. Welf. & Inst.
Code § 12302.25. So the County sets or could set wages. As mentioned, the
County has established a public authority for collective bargaining purposes, the
Personal Assistance Services Council. The County can negotiate to pay providers a
rate above the state minimum wage, although the State must review and approve
all changes. Cal. Welf. & Inst. Code § 12306.1(a). California pays “65 percent and
the County 35 percent of the nonfederal share of wage and benefit increases
negotiated by the Public Authority, with the state contribution capped at a
maximum amount set by statute.” Guerrero, 213 Cal. App. 4th at 933 (citing Cal.
Welf. & Inst. Code § 12306.1(c), (d)). Between 2012 and 2016, the County
requested pay increases for providers and the State approved those increases. The
County therefore “exercised some power in determining the pay rates” for
providers. Torres-Lopez, 111 F.3d at 643. Such authority is a significant indication
of joint employer status even though the employer “was not involved in preparing
[employees’] payroll or directly paying their wages.” Id.7
The County also chooses the method of payment, as it did at the time of
Bonnette. At that time, as today, California state law “specified three methods by
7
Torres-Lopez held a grower a joint employer of farmworkers although a labor
contractor prepared the payroll and directly paid the wages.
15
which the counties could deliver chore worker services: the counties could hire
chore workers directly, contract with agencies or individuals for such services, or
make direct payment to the recipients for the ‘purchase’ of chore worker services.”
704 F.2d at 1467 (citing Cal. Welf. & Inst. Code § 12302). In Bonnette, all three
counties had chosen “the third method of delivery.”8 Id. Here, too, the County
chose to use the third option, the “direct payment” method.9 The County therefore
exercises at least some control over the method of payment, as in Bonnette.
Besides exercising substantial economic control, the County also continues
to “exercise considerable control over the nature and structure of the employment
relationship,” as in Bonnette. 704 F.2d at 1470. In Bonnette, a county social worker
would “consult[] with the recipient and others, using a standard county form,” and
8
The district court in this case misconstrued the facts in Bonnette with respect to
the counties’ choice of service delivery. The court stated incorrectly that “[a]ll
three counties at issue in Bonnette chose the first option for assisting the state with
the IHSS program. In other words, the counties opted to hire providers directly
with money provided by the counties.” The court erroneously distinguished
Bonnette on that basis.
9
The statutory language describing the “direct payment” option refers to payments
to recipients, but in Bonnette, payments were sometimes conveyed directly to
providers: “At different times the counties used various methods of payment,
including two-party checks payable to the recipient and chore worker, checks
payable directly to the recipient with the understanding that the recipient would
pay the chore worker, and checks payable directly to the chore worker.” 704 F.2d
at 1468. Likewise, today, although payments are conveyed directly to providers,
the parties agree that the County uses the third, direct payment option, presumably
because it is evident that the County is not hiring the providers or contracting with
agencies or individuals for such services.
16
“would determine the tasks to be performed for the recipient by the chore worker
and the hours per week required to perform the tasks.” 704 F.2d at 1468. Similarly,
today a County social worker performs an initial in-home assessment of the
recipient’s needs and applies state guidelines to determine how many service hours
the recipient is eligible to receive. The social worker reviews a list of twenty-five
types of services that IHSS providers can give and assigns a “functional rate index”
number of 1 to 5 for each of the services for which the recipient qualifies. The
social worker then authorizes the number of hours allocated to each task, based on
state guidelines prescribing a range of hours for each task at each functional
ranking. The social worker may deviate from the prescribed range if the worker
justifies the deviation.
Once the County has authorized the tasks and service hours the recipient is
entitled to receive, it is up to the recipient to set the IHSS provider’s schedule, Cal.
Welf. & Inst. Code § 12300.4(d)(1)(A), just as in Bonnette the “recipient was
responsible for the day-to-day supervision of the chore worker,” 704 F.2d at 1468.
“These aspects of the relationship between recipient and provider are no different
than when Bonnette was decided.” Guerrero, 213 Cal. App. 4th at 936–37.
Today, however, if a recipient needs a provider to work overtime hours
beyond the authorized amount, the recipient must request County approval, except
in narrow circumstances. And today, County social workers inspect the home to
17
make sure recipients are receiving the care they need.
Finally, the County is the public face of the employer as far as the providers
are concerned. Prospective providers attend an orientation session conducted by
County employees at a County field office, where they view state-provided
training materials and sign state-issued forms. Cal. Welf. & Inst. Code § 12301.24.
The County also assigned dozens of employees to answer providers’ questions
regarding the overtime requirements at issue here. And the County maintains some
employment records, including the forms a provider signs when applying for
employment, a copy of the provider’s ID, and a copy of the provider’s Social
Security card.
In light of the economic and structural control the County exercises over the
employment relationship, we conclude that Bonnette’s holding that counties are
joint employers of IHSS providers applies to the County. We reverse the district
court’s grant of summary judgment to the county and direct the court to grant
partial summary judgment to Ray on this issue.
III.
The district court did not err in granting partial summary judgment to the
County on the issue of willfulness and denying partial summary judgment to Ray
on the issue of liquidated damages. A review of the cases addressing willfulness
and the assessment of liquidated damages under the FLSA reflect that a
18
determination of willfulness and the assessment of liquidated damages are reserved
for the most recalcitrant violators. See Alvarez v. IBP, Inc., 339 F.3d 894, 909 (9th
Cir. 2003) (“[W]e will not presume that conduct was willful in the absence of
evidence.”) (citation omitted); (“[C]ourts need not award liquidated damages in
every instance . . .”); see also Bratt v. Cnty. of Los Angeles, 912 F.2d 1066, 1072
(9th Cir. 1990) (noting that the case was not one “like many of those cited by the
Employees, where the employer is using ‘ticky-tack’ reasons to attempt to evade
the wage and hour laws”) (alterations omitted). The County does not belong in that
group of recalcitrant employers.
It is undisputed that the County had no ability to pay overtime wages in the
absence of the State making funds available to satisfy the overtime obligations. See
Ray v. Cnty. of Los Angeles, 935 F.3d 703, 711 (9th Cir. 2019) (Ray I) (“[T]he
County contends — and Plaintiffs do not dispute — that it has no discretion over
the action (or inaction that subjected it to potential liability here: payment of
overtime wages under the FLSA.”)
In Ray I, we noted that “[t]he County had no choice in the matter of the
overtime wages, as the State mandated the payment start date.” Id. That conclusion
has not changed. Specifically relying on our opinion in Ray I, the district court
found that “the facts of this case demonstrate as a matter of law that the County
had no authority or ability to implement overtime pay for [In-Home Supportive
19
Services] (IHSS) providers.” District Court Order, p. 6.
We agree with the district court’s reliance on our reasoning in Ray I, and its
application of that binding precedent to the facts of this case. Notably, as the
district court determined, the payroll systems for IHSS providers “are all
centralized on a state-wide database controlled by [the California Department of
Social Services],” rather than by the County. Id.10
The facts of this case are more akin to those declining to impose a
willfulness penalty on the employer in the absence of an affirmative refusal to
comply with the requirements of the FLSA. For example, in Bratt, we reasoned
that there was no evidence in the record “that the County attempted to evade its
responsibilities under the Act.” 912 F.2d at 1072. We explained that “a decision
made above board and justified in public,” as was done by the County in this case,
“is more likely” made in good faith. Id. (alteration omitted).
We added that liquidated damages “are designed in part to compensate for
concealed violations, which may [otherwise] escape scrutiny.” Id.It is undisputed that resolution of the overtime wages for IHSS providers in
California played out in public, including numerous training sessions on
implementing the new FLSA requirements. Under this circumstance, we agree
Our colleague in dissent characterizes the State’s fiscal control as “a practical
10
matter.” This description is not consistent with the holding in Ray I.
20
with the district court and with our precedent in Bratt that the County acted in good
faith. See id.The facts in this case are in stark contrast to those in Alvarez, in which we
upheld the district court’s determination of “willful conduct.” 339 F.3d at 909.
The employer in Alvarez “took no affirmative action to assure compliance with
[the FLSA requirements].” Id. Rather, the employer “attempt[ed] to evade
compliance, or to minimize the actions necessary to achieve compliance.” Id.(footnote reference omitted). We emphasized that the employer “could easily have
inquired into . . . the type of steps necessary to comply” with the provisions of the
FLSA, but failed to do so. Id. (citation and internal quotation marks omitted).
There is absolutely no evidence in the record that the County “attempt[ed] to
evade compliance, or to minimize the actions necessary to achieve compliance”
with the overtime provisions of the FLSA. Id. Instead, the record reflects that the
only reason that the County failed to pay the required overtime wages sooner is
because the State controlled the purse strings.
IV.
We REVERSE the district court’s grant of summary judgment to the County
on the ground that the County does not employ IHSS providers. On remand, the
district court is directed to grant partial summary judgment to Ray on the issue of
whether the County is a joint employer of IHSS providers. The majority AFFIRMS
21
the district court’s decisions granting partial summary judgment to the County on
the issue of willfulness and denying partial summary judgment to Ray on the issue
of liquidated damages; Judge Berzon dissents from those holdings for the reasons
stated in her dissent.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
22
FILED
Ray v. Los Angeles County Department of Public Social Services, No. 20-56245
NOV 4 2022
BERZON, Circuit Judge, concurring in part and dissenting in part: MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
I fully concur in the per curiam opinion to the extent it holds that the district
court erred in granting summary judgment to the County of Los Angeles on the
ground that the County does not employ In-Home Supportive Services (“IHSS”)
providers. Per Curiam Op. 10. The opinion rightly holds that based on the
County’s economic and structural control over the employment relationship, the
County is a joint employer of IHSS providers. Per Curiam Op. 18.
Notwithstanding that conclusion, the majority holds that because, as a practical
matter, the State controlled the payroll system (1) the County acted in good faith
for purposes of determining whether it has established a defense to liquidated
damages; and (2) the County’s failure to pay overtime wages could not have been
willful for purposes of determining the applicable statute of limitations. Per
Curiam Op. 18–21. I disagree as to each of these holdings. Although the result the
majority reaches on liquidated damages and willfulness may seem equitable, it is
not consistent with the standards we are obligated to apply under the Federal Labor
Standards Act (“FLSA”). I would therefore reverse the district court’s denial of
partial summary judgment to the plaintiffs (“Ray”) as to liquidated damages, as
well as the district court’s grant of partial summary judgment to the County on the
question of willfulness.
1
I.
“In addition to overtime compensation, successful FLSA plaintiffs are
entitled to liquidated damages in the amount of the unpaid overtime compensation
(i.e. double damages).” Haro v. City of Los Angeles, 745 F.3d 1249, 1259 (9th Cir.
2014) (citing 29 U.S.C. § 216(b)). “Liquidated damages are ‘mandatory’ unless
the employer can overcome the ‘difficult’ burden of proving both subjective ‘good
faith’ and objectively ‘reasonable grounds’ for believing that it was not violating
the FLSA.” Id. (quoting Alvarez v. IBP, Inc., 339 F.3d 894, 909–10 (9th Cir.
2003), aff’d, 546 U.S. 21 (2005)); see 29 U.S.C. § 260. Thus, Ray is entitled to
partial summary judgment on this issue if the County is unable to meet its burden
of establishing either of these two prongs. Because the County falls short on both,
I would hold that the district court erred in denying the motion for partial summary
judgment.
The majority’s analysis of this issue begins with the premise that “the
assessment of liquidated damages [is] reserved for the most recalcitrant of
violators.” Per Curiam Op. 19. That starting premise is just wrong. Under the
FLSA, “liquidated damages represent compensation, and not a penalty.” Chao v.
A-One Med. Servs., Inc., 346 F.3d 908, 920 (9th Cir. 2003) (quoting Local 246
Util. Workers Union v. S. Cal. Edison Co., 83 F.3d 292, 297 (9th Cir. 1996)).
“Double damages are the norm; single damages are the exception.” Id.2
Here, Ray moved for partial summary judgment as to the County’s liability
for liquidated damages for the time period after October 13, 2015, the date Home
Care Ass’n of Am. v. Weil (“Weil II”), 799 F.3d 1084 (D.C. Cir. 2015), mandated.
The district court denied Ray’s motion on two grounds, ruling first that there was a
“factual dispute as to whether the County [was] Plaintiffs’ employer,” and, second,
that the County had “presented evidence of its efforts to comply with the FLSA,
sufficient to avoid summary judgment as to its good faith defense to liquidated
damages at this stage.” The per curiam opinion’s holding that the County employs
IHSS providers eliminates the first ground. And I disagree with the district court’s
holding that the County’s evidence creates a triable issue as to whether the
County’s effort eventually to comply with the FLSA’s overtime requirements is a
viable affirmative defense to the usual liquidated damages for the period between
October 13, 2015, and February 1, 2016, for which overtime wages have never
been paid.
“To satisfy the subjective ‘good faith’ component, the County [is] obligated
to prove that it had ‘an honest intention to ascertain what the FLSA requires and to
act in accordance with it.” Bratt v. Cnty. of Los Angeles, 912 F.2d 1066, 1072 (9th
Cir. 1990) (alterations omitted). For the objective component, the County must
prove it had “objectively ‘reasonable grounds’ for believing that it [did] not
3
violat[e] the FLSA” for the period between October 13, 2015, and February 1,
2016. See Haro, 745 F.3d at 1259.
The County cites a single case, Bratt, in which we concluded that an
employer (also Los Angeles County in that case) had successfully made out a good
faith defense to liquidated damages under the FLSA. In Bratt, there was no
evidence “that the County had anything other than an honest intention to comply
with the Act,” satisfying the subjective component of the test. 912 F.2d at 1072.
And the County’s conclusion that certain employees were exempt from FLSA
coverage, based on its interpretation of FLSA regulations, was “incorrect” but “not
unreasonable,” satisfying the objective component. Id.Here, the County has asserted on the merits that it does not employ IHSS
providers. But Ray introduced evidence that the County knew that courts could
well decide it was an employer of IHSS providers for FLSA purposes: the County
knew that DOL and state agencies had taken the position that it was a joint
employer of IHSS providers; there was pending litigation on the issue; and other
counties had been held liable for both back wages as well as liquidated damages.
And the existing judicial precedents, as well as decisions of the California Labor
Commissioner, pointed toward holding the County liable as a joint employer. See
Bonnette v. Cal. Health & Welfare Agency, 704 F.2d 1465, 1470 (9th Cir. 1983);
Guerrero v. Superior Court, 213 Cal. App. 4th 912, 930–37 (2013).
4
Moreover, unlike in Bratt, the County does not argue, for purposes of
meeting the narrow defense to the liquidated damages obligation, that it believed
IHSS providers were not entitled to overtime pay during the relevant period. Ray
pointed to evidence that the County knew the overtime rule would take effect on
October 13, 2015, when Home Care Ass’n of Am. v. Weil (“Weil II”), 799 F.3d
1084 (D.C. Cir. 2015) mandated. See infra pp. 8–9, 12.
Instead, the County maintains that it showed subjective good faith because
paying overtime wages required California to make “sweeping” and “complex”
changes to the IHSS program, and the County participated in the State’s efforts. In
other words, complying with the FLSA was difficult and took time, and the State
and County implemented overtime pay as quickly as they could.
The problem with this argument is that, even if the County could show that it
was not practical to pay overtime wages before February 1, 2016—more than three
months after Weil II mandated—that showing alone would not satisfy the
subjective component of the good faith test. To this day, IHSS providers have
never been paid overtime wages for the period between October 13, 2015, and
February 1, 2016. And although the County contends it “took substantial steps to
help the State comply with the FLSA in 2015 and 2016,” nowhere does the County
argue that it raised the matter of paying overtime wages for the period from
October 13, 2015, and February 1, 2016 with the State, or that it took other steps to
5
promote compliance with their joint obligation to pay overtime for that period,
even retroactively. Given the complete failure to pay the IHSS providers overtime
wages for that period either when they were owed or retroactively and the absence
of any contention by the County that it believed payment was not required, 1 the
County has not demonstrated “an honest intention to ascertain what the FLSA
requires and to act in accordance with it.” Bratt, 912 F.2d at 1072.
Nor has the County raised a triable issue on the second required showing,
whether it had “objectively ‘reasonable grounds’ for believing that it was not
violating the FLSA” after October 13, 2015. See Haro, 745 F.3d at 1259.
Notably, the majority’s liquidated damages discussion does not address this
essential prong at all.
The County’s argument on objective reasonableness is threefold: (1) the
U.S. Department of Labor (“DOL”) guidance on the final rule “highlighted the
State”; (2) the February 1, 2016, implementation date was objectively reasonable,
in light of the “shifting legal landscape” and DOL’s time-limited nonenforcement
policy; and (3) the State controls payroll for IHSS providers, and the County had
no authority to pay overtime wages sooner.
1
That the County was aware of the overtime obligation for the contested period is
reinforced by County documents in the record, which discuss the possibility that
IHSS providers would be owed retroactive pay for overtime after October 13,
2015.
6
In support of its first argument, the County cites an announcement from
DOL indicating that the federal agency, in exercising its enforcement discretion,
would give “particular consideration . . . to the extent to which States and other
entities have made good faith efforts to bring their home care programs into
compliance with the FLSA since promulgation of the Final Rule.” 79 Fed. Reg. at
60,974. The County does not explain the significance of this quotation—which on
its face refers to “States and other entities,” not just “States.” 79 Fed. Reg. at
60,974 (emphasis added). The sentence certainly is not sufficient to override the
rule that “joint employers are individually responsible for compliance with the
FLSA.” Bonnette, 704 F.2d at 1469. Nor does it establish that DOL does not
consider any counties to be employers of IHSS providers. Elsewhere, DOL has
said just the opposite. In 2014, DOL issued an opinion letter entitled “Joint
employment of home care workers in consumer-directed, Medicaid-funded
programs by public entities under the Fair Labor Standards Act,” which explained
that “a state itself, a statewide agency that oversees Medicaid programs, or a
county department of aging could all be potential joint employers of home care
workers providing services through a consumer-directed program.” Dep’t of
Labor, Administrator’s Interpretation No. 2014-2, 2014 WL 2816951, at *4 (June
19, 2014).
7
As for the County’s second contention, DOL’s time-limited non-
enforcement policy does not excuse the State and County’s failure to pay overtime
wages before February 1, 2016. After Weil II upheld the overtime rule, DOL said
it would not begin enforcing the rule until November 12, 2015, and that through
December 31, 2015, it would “exercise prosecutorial discretion in determining
whether to bring enforcement actions.” 80 Fed. Reg. 65,646, 65,646 (Oct. 27,
2015). But as recognized in Ray v. County of Los Angeles (“Ray I”), 935 F.3d 703(9th Cir. 2019), “[a]n agency’s discretionary decision to hold off enforcement does
not and cannot strip private parties of their rights to do so.” Id. at 715; see Kinkead
v. Humana at Home, Inc., 450 F. Supp. 3d 162, 187, 189 (D. Conn. 2020) (holding,
in a private action to enforce the overtime rule, that defendants’ reliance on DOL’s
non-enforcement policy as a defense to liability and liquidated damages was “not
reasonable”).
Moreover, there is record evidence that private enforcement actions could
still go forward, and that the County knew that. Minutes from an October 1, 2015,
meeting of the County’s FLSA Steering Committee noted that the overtime rule
would be “effective 10/13/15” and that the “only way to ‘postpone’
implementation is if agencies file a motion with the United States Supreme
8
Court.”2 On November 30, 2015, the California Welfare Directors Association
sent the County a Q&A document noting that DOL’s non-enforcement policy
“doesn’t insulate employers from potential lawsuits.” Earlier that month, the
California Association of Counties had circulated similar guidance. As these
communications attest, DOL’s decision to delay federal enforcement of the
overtime rule until November 12, 2015 is not informative as to whether the County
had an objectively reasonable belief that no overtime wages were due to IHSS
provides for the period between October 13, 2015, and February 1, 2016.
The County’s third argument—that it lacked authority to pay IHSS
providers—is more substantial. We recognized in Ray I that the County had “no
discretion over the action (or inaction) that subjected it to potential liability here:
payment of overtime wages under the FLSA.” 935 F.3d at 711. But although it
may seem anomalous to hold the County liable for unpaid overtime wages when it
ordinarily did not directly remit payment, the FLSA compels that result.
The County has not pointed to any cases excusing a joint employer from
compliance with the FLSA on the ground that only the other employer had the
usual authority directly to take the actions that would constitute compliance. Such
a result would be inconsistent with the well-established rule that “joint employers
2
The Supreme Court denied an application for a stay of the mandate on October 6,
2015. The Supreme Court denied a petition for writ of certiorari on June 27, 2016.
Home Care Ass’n of Am. v. Weil, 579 U.S. 927 (2016).
9
are individually responsible for compliance with the FLSA.” Bonnette, 704 F.2d at
1469. That rule reflects the “broad remedial purposes of the [FLSA],” Torres-
Lopez v. May, 111 F.3d 633, 639 (9th Cir. 1997) (citation omitted), a statute we
“construe[] liberally in favor of employees,” Rosenfield v. GlobalTranz Enters.,
Inc., 811 F.3d 282, 285 (9th Cir. 2015) (citation omitted). Allowing joint
employers to avoid liability for violations of the FLSA by showing they ordinarily
did not perform a particular employer function would risk undermining the
statute’s remedial purposes. Holding joint employers “individually and jointly”
responsible for compliance, regardless of whether, for example, one joint employer
“is controlled by” the other employer and may not perform some functions, is
consistent with DOL’s longstanding guidance on joint employment. 29 C.F.R. §
791.2(a), (b)(3) (2019).
I would reverse the district court’s denial of partial summary judgment to
Ray on the issue of liquidated damages.
II.
I would also reverse the district court on the issue of willfulness. The FLSA
has a two-year statute of limitations for actions for unpaid overtime compensation
unless the violation was “willful,” in which case the statute of limitations is three
years. 29 U.S.C. § 255(a).
10
Ray filed suit on June 7, 2017, seeking relief for unpaid overtime wages
between January 1, 2015, and February 1, 2016. For IHSS providers who opted
into the collective action after the complaint was filed, the timeliness of their
claims is measured from the date they filed a written consent to opt into the action.
See 29 U.S.C. § 256(b). The district court equitably tolled the statute of limitations
from September 28, 2017, the date the district court denied the County’s motion to
dismiss, to December 11, 2019, the date the court conditionally certified the
collective. 3 Ray maintains that the County’s alleged violation of the FLSA was
willful beginning on October 13, 2015, when Weil II mandated. Although some
providers opted into the collective action within two years of that date (not
counting the time during which the statute of limitations was equitably tolled),
others did not.
To show a willful violation, Ray must prove that “the employer either knew
or showed reckless disregard for the matter of whether its conduct was prohibited
by the statute.” McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988). I
would hold that Ray introduced evidence sufficient to raise a triable issue as to
whether the County “either knew or showed reckless disregard for the matter of
whether its conduct” violated the FLSA between October 13, 2015, and February
1, 2016. See id.3
That ruling has not been appealed.
11
As I have explained, there was evidence that the County knew (1) that the
overtime rule would take effect when Weill II mandated on October 13, 2015, and
(2) that there was a likelihood the courts would hold it was liable as a joint
employer of IHSS providers, particularly given Bonnette, DOL’s position, and the
fact that other counties had been deemed liable. See Bonnette, 704 F.2d at 1470;
Guerrero, 213 Cal. App. 4th at 930–37. And Ray introduced evidence that the
County knew that employers could face liability in private lawsuits for failing to
pay overtime wages after October 13, 2015, even if DOL was not yet enforcing the
new rule. See supra pp. 8–9.
The County maintains that it had no ability to implement overtime pay
because the State controls payroll for IHSS providers. But, again, the County does
not cite any authority excusing it from complying with the FLSA because it is a
joint employer with only partial responsibility for implementing the program.
Ray’s evidence was sufficient to create a triable issue as to whether the County
knew or showed reckless disregard for whether the failure to pay overtime wages
beginning on October 13, 2015, violated the FLSA. I would therefore hold that the
district court erred in granting partial summary judgment to the County on the
issue of the length of the limitations period.
III.
12
For the foregoing reasons, I would hold that the County is, on the record
here, liable for liquidated damages for the period between October 13, 2015 and
February 1, 2016. Further, for purposes of determining whether its conduct was
willful and so triggered a three-year limitations period, I would hold that Ray
raised a triable issue of fact as to whether the County knew or showed reckless
disregard that its conduct violated the FLSA during that period. I therefore
respectfully dissent as to those two issues.
13