On Monday, the Fifth District Court of Appeal published an interesting opinion involving an attorney malpractice lawsuit. For wage and hour lawyers, it is interesting because the opinion begins with a summary of issues and conclusions concisely setting forth the Fifth District's view on statutes of limitation under the Labor Code. In Church v. Jamison the Court writes:
Business Expense Reimbursement. First, when does an employee’s claim under Labor Code section 2802 for reimbursement of business expenses accrue for statute of limitation purposes? Answer: The date the employee incurs the particular expense. Second, which statute of limitations applies to claims for business expenses brought under Labor Code section 2802? Answer: The three-year limitations period applies because the employer’s liability under Labor Code section 2802 for business expenditures is “a liability created by statute.” (Code Civ. Proc., § 338, subd. (a).)
Wages. First, which statute of limitations applies to Church’s Labor Code claims for unpaid wages? Answer: The two-year statute of limitations applicable to oral contracts. Second, when did the claims accrue for statute of limitations purposes? Answer: The date the Labor Code requires the wages to be paid. In this case, Labor Code section 204 required that the wages be paid twice each month—labor performed during the first 15 days of the month must be paid no later than the 26th of that month and wages from the last half of the month must be paid no later than the 10th of the following month.
Vested Vacation. First, when does an employee’s claim under Labor Code section 227.3 for payment of vested but unused vacation time accrue for statute of limitations purposes? Answer: The day the employee is terminated. Second, which statute of limitations applies to such a claim? Answer: We need not decide this issue.... Third, does the statute of limitations apply a second time, but in reverse from the date of termination, to limit the employer’s liability for vacation time to only that which vested within but not before that period? Answer: No. The creation of a look-back period that limits an employer’s liability for vested vacation is contrary to the fundamental principles of law governing statutes of limitations and is contrary to the text of Labor Code section 227.3.
The last part of the opinion was published because, as the court wrote,
our analysis conflicts with the analysis adopted in Sequeira v. Rincon-Vitova Insectaries, Inc. (1995) 32 Cal.App.4th 632 (Sequeira) and the position taken by California’s Division of Labor Standards Enforcement (DLSE) regarding a “look-back” application of the statute of limitations.
Most of the opinion, including the statement of issues and conclusions and the discussion of everything except part of the vacation pay issue, is unpublished, and with respect to the two-year statute of limitations, we aren't entirely sure the opinion is right. Most actions for unpaid wages are subject to the three-year statute of limitations applicable to statutory liabilities under Code of Civil Procedure § 338(a). Aubry v. Goldhor (1988) 201 Cal.App.3d 399, which was discussed and distinguished by the court. The court held that claims for wages due under an employment contract are subject to the normal statute of limitations for actions on a contract: two years for oral agreements (CCP § 339) and four years for agreements in writing (CCP § 337(1)); Cuadra v. Millan (1998) 17 Cal.4th 855, 859. But most wage claims involve an element that arises purely under statute. Did this?Usually you would assume that it didn't, or someone would have mentioned it. But that assumption might not be well placed here, because Business & Profession Code § 17200 also never came up.
The issue in Church v. Jamison boiled down to this: did the employee "blow his statute" before he ever met his lawyer, or did the lawyer sit on the case for a few months and thereby blow the statute for his client. If the statutes are all two years, the lawyer is off the hook, because the client had no case when he came in the door. The employee and his new lawyers argued that the statutes ran while the first attorney was sitting on the file.
The opinion notes that the underlying case is still pending. "In the malpractice case, the superior court granted Jamison’s motion for judgment on the pleadings based on its conclusion that Jamison could not be held liable for legal malpractice because he had timely filed the complaint in the employment case. Thus, the superior court judge in the malpractice case disagreed with the superior court judge in the [underlying] employment case. Church appealed the judgment in favor of Jamison in the malpractice case. The employment case is still pending, on the remaining claims of breach of contract and misrepresentation." (our emphasis).
Proceeding on breach of contract and misrepresentation? Haven't any of these judges and lawyers ever heard of recovering wages under the unfair competition law? The failure to pay earned wages violates the Unfair Competition Law under Business and Professions Code § 17200 et seq., and as a result, such claims are subject to a four-year statute of limitations.BPC § 17208; Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 178. That pending complaint should have an unfair competition claim in it. A well written amended complaint and a citation to Cortez might have avoided this whole mess.