Alaska Airlines Didn't Provide Accurate Wage Statements to Employees

California employers are required to give their employees detailed wage statements for every pay period worked. These statements must include accurate, itemized information to allow employees to understand how many hours they worked and their applicable pay rates. In Gunther v. Alaska Airlines, Inc., Cal. Ct. App. Case No. D076762, D07731, the California Court of Appeal considered whether flight attendants who were based in California but who worked primarily in other states were protected by California's labor laws.^[1]

Julie Gunther is employed as a flight attendant based in San Diego, California with Alaska Airlines. Gunther both lives in San Diego and is based out of its airport. Alaska Airlines is headquartered in Washington State. In 2018, the airline employed 1.181 flight attendants who were based in California. Under the state's employment laws, flight attendants can reside outside of California but still be based in the state, and many fly from their homes outside of the state to the airports within California from which they are based. Between 2016 and 2019, 22% of the California-based flight attendants lived out of state. For flight attendants who are based in California, Alaska Airlines is required to provide wage statements that comply with the state's labor laws.

Flight attendants employed by Alaska Airlines have a collective bargaining agreement with the airline under the Railway Labor Act. Under the agreement, flight attendants are compensated by trips for pay, which are calculated by the end-to-end mileage of individual flights. The collective bargaining agreement was reached in 1994.

In Sept. 2017, Gunther mailed a letter to the California Labor and Workforce Development Agency and Alaska Airlines, notifying them that she intended to pursue a claim against the airline under the Private Attorneys General Act for alleged violations committed by Alaska Airlines of California's Labor and Business and Professions Codes. She subsequently filed a representative lawsuit on behalf of all California flight attendants employed since Oct. 2016 with Alaska Airlines. Gunther alleged that the wage statements provided by Alaska Airlines failed to comply with California law and prevented her from understanding what she was being paid.

The case went to a bench trial. At trial, Gunther testified that her wage statements did not provide her with information about the number of trips for pay she earned during each pay period. She also testified that her wage statements did not reveal her pay rate for the trips for pay she worked, the number of hours she worked during each pay period or month, or the rate of pay she earned per hour she worked. For one wage statement, Gunther testified that it reflected she had worked 568 hours during the month, which would be equivalent to working 18 hours per day. She testified that was not possible and that she did not know any flight attendants who worked that many hours per day every day.

Alaska Airlines argued that it was impossible for it to comply with California's laws regarding wage statements. Following the bench trial, the judge found that the wage statements provided by Alaska Airlines to the class of flight attendants failed to provide the information required by Cal. Lab. Code § 226. The judge found that the wage statements did not provide information to the flight attendants about their total hours worked, the number of trips for pay units earned, their trips for pay rates, and their overall pay rates per hour worked. The court then awarded Gunther $4,000 in statutory penalties under § 226(e) and $25,010,158 in Private Attorneys General Act penalties under § 226.3. It also awarded Gunther $944,860. Alaska Airlines filed an appeal of the judgment and of the award of attorney's fees. The appeals were consolidated by the Court of Appeals upon a joint motion filed by the parties.

Issue: Whether California's wage statement laws apply to flight attendants who work a majority of their time in federal airspace and in other states?

Alaska Airlines raised several issues on appeal. It argued that California's laws were preempted by federal law. It also argued that since flight attendants had a collective bargaining agreement, their claims were precluded by Industrial Welfare Commission Wage Order No. 9. It also argued that where the flight attendants spend most of their time working controls instead of where they are based, meaning that they should not be protected by section 226. It also argued that the trial court abused its discretion when it calculated Gunther's attorney's fees award.

Rule: When California qualifies as the principal place of work for flight attendants, pilots, and others who work in interstate transportation, the workers are entitled to wage statements that comply with California's labor laws.

In Ward v. United Airlines, Inc., 9 Cal.5th 732 (2020), the California Supreme Court held that employees who work across the country must still be provided with compliant wage statements when their principal place of business is in California. California qualifies as the principal place of work when they are based out of the state, regardless of where they live or if they have entered into a collective bargaining agreement.^[2] However, Alaska Airlines argued that California's labor laws were preempted by the National Railway Act and the Deregulation Act. It also argued that the flight attendants were precluded from filing claims since they were covered by a collective bargaining agreement.

Under Cal. Lab. Code § 226(a), employers are required to provide employees with detailed, itemized wage statements to their employees with their checks or as separate statements if they are paid electronically or in cash.^[3] These statements must include all of the following types of information:

• Gross wages
• Total hours worked
• Number of piece-rate units worked and the applicable pay rate for them
• Deductions
• Net pay
• Pay period dates
• Employee's name and last four digits of his or her Social Security Number
• Name and address of the employer
• Hourly rate effective during the pay period and the number of hours worked at that rate
• All applicable rates during the period and the pay rates for each

Employers are required to provide detailed wage statements so that employees can understand what they have been paid and determine whether they have received full and fair compensation for all hours worked. When an employer fails to provide an accurate and itemized wage statement to its employees, they are entitled to pursue wage and hour claims.^[4]

The Court of Appeal started by examining whether the flight attendants were protected under § 226. Alaska Airlines first argued that the flight attendants were not protected because they performed most of their work outside of California. However, it later argued in its reply brief following the California Supreme Court's decision in Ward that the law does not apply automatically to every wage statement that is issued. Instead, it contended that each wage statement had to be analyzed individually to determine where the flight attendant worked and whether the law of a different jurisdiction might apply. Gunther argued that Alaska Airlines' reading of Ward was inaccurate and that the trial court correctly applied the test enunciated by the California Supreme Court when determining whether § 226 applied.

The court agreed with Gunther, finding that Alaska Airlines' argument would establish an overly rigid bright-line rule to the test enunciated by the California Supreme Court. The Court of Appeal found that all of the flight attendants in Gunther's lawsuit were based in California and were protected by the law even though they didn't spend a majority of their time working within the state's boundaries.

The Court of Appeal next considered Alaska Airlines' argument that the flight attendants were precluded from pursuing a claim because they were covered by a collective bargaining agreement under IWC Wage Order No. 9.^[5] Under Wage Order No. 9, employees that are covered by a collective bargaining agreement under the RLA are exempted from the wage statement rules. However, Gunther argued that Alaska Airlines did not raise this argument during the trial and was precluded from raising it on appeal, and the court agreed. The court also found that federal law did not pre-empt the wage statement rules under § 226, and it found that the court did not abuse its discretion when awarding attorneys' fees to Gunther. However, the court did find that the trial court erred when it awarded more than $25 million in PAGA penalties because heightened penalties only apply when employers fail to provide wage statements or to keep adequate records.

The court affirmed the trial court's judgment and award of attorneys' fees. It reversed the case to the trial court on the issue of the PAGA penalties and ordered the lower court to recalculate the penalties that should be applied.

If your employer has failed to provide you with wage statements or has provided statements that do not comply with the law, you should speak to an experienced wage and hour lawyer at Steven M. Sweat, APC. Contact us today at 866-966-5240 for a free consultation.

^[1] Gunther v. Alaska Airlines, Inc.

^[2] Ward v. United Airlines, Inc.

^[3] CA Labor Code § 226

^[4] elaborlaw.com - Wage and Hour Claims

^[5] IWC Wage Order No. 9