Gutierrez v. Fraiche Catering: $175K Wage & Hour Settlement

Case Background

Gerardo Gutierrez initiated a legal action against his former employer, Fraiche Catering, Inc., by filing a class action complaint in the Superior Court of California for the County of San Francisco on March 20, 2023. Gutierrez, a resident of California, had worked for the catering company as a non-exempt employee until his employment ended around January 2023. He sought to represent not only himself but also a class of similarly situated individuals who had worked for the Defendant in California.

The proposed class consisted of all individuals employed by Fraiche Catering as non-exempt employees within the four years preceding the filing of the complaint. Gutierrez alleged that the class comprised at least 100 individuals who had been subjected to similar employment practices. The lawsuit asserted that the company had engaged in systemic violations of California labor laws, including the failure to pay proper wages and provide mandated breaks.

Cause

The legal dispute arose from Fraiche Catering’s alleged failure to comply with various provisions of the California Labor Code and Industrial Welfare Commission Wage Orders. A central issue was the misclassification of employees; Gutierrez claimed the Defendant treated class members as exempt from overtime pay requirements, paying them a salary instead of an hourly wage, even though they did not meet the legal criteria for such exemptions. Specifically, the complaint argued these employees were not paid on a true salary basis and did not receive compensation equivalent to at least two times the minimum wage, which is required to establish an exemption status.

Additionally, the Plaintiff contended that the Defendant failed to compensate employees for all hours worked, including "off the clock" duties such as cleaning and closing tasks performed outside of recorded shifts. The complaint further alleged that Fraiche Catering did not provide legally required meal and rest periods, nor did they provide the necessary reimbursements for business expenses incurred by employees, such as the use of personal cell phones for work-related duties.

Injury

The Plaintiff alleged that these employment practices caused significant financial injury to himself and the class members. Due to the alleged misclassification, employees purportedly worked more than eight hours a day or forty hours a week without receiving the overtime rate of 1.5 times their regular pay.

Furthermore, the complaint detailed that employee were deprived of the premium wages owed to them for missed, short, or interrupted meal and rest breaks. Under California law, employers must pay an additional hour of wages for each day a compliant break is not provided, which Gutierrez claimed Fraiche Catering failed to do. The employees also allegedly suffered financial losses due to unreimbursed business expenses and the receipt of inaccurate wage statements that failed to list essential information such as total hours worked and applicable hourly rates.

Damages Sought

Gutierrez sought a broad range of remedies to rectify the alleged violations. He requested the recovery of all unpaid minimum and overtime wages, along with liquidated damages and statutory penalties. The complaint specifically asked for restitution of all amounts wrongfully withheld from the Plaintiff and the class members.

Additionally, the Plaintiff sought "waiting time penalties" for the Defendant’s alleged failure to pay all wages due immediately upon termination of employment, asserting that this failure was willful. Gutierrez also demanded penalties for the issuance of non-compliant wage statements, reimbursement for business expenses plus interest, and the payment of reasonable attorneys' fees and costs associated with the litigation.

Key Arguments and Proceedings

Legal Representation

Plaintiff(s): Gerardo Gutierrez, individually and on behalf of all others similarly situated.

·       Counsel for Plaintiff(s): J. Kirk Donnelly

Defendant(s): Fraiche Catering, Inc., a California corporation.

·       Counsel for Defendant(s): Lynn Hollenbeck | Nicole M. Clowdsley | Jasmyne Shaw

Claims

The Plaintiff organized the lawsuit into eight distinct causes of action.

• Unpaid Wages: The first and second causes of action asserted that the Defendant failed to pay minimum wages and overtime wages, largely stemming from the alleged misclassification of employees as exempt.

• Break Violations: The third and fourth causes of action focused on the failure to authorize and permit compliant meal and rest periods, or to pay the required premium wages in lieu of those breaks.

• Documentation and Penalties: The fifth cause of action cited a failure to provide accurate itemized wage statements as required by Labor Code section 226. The sixth cause of action sought waiting time penalties under Labor Code section 203 for the failure to timely pay wages upon separation.

• Reimbursement and Unfair Competition: The seventh cause of action demanded reimbursement for necessary business expenses, such as personal cell phone use. Finally, the eighth cause of action alleged violations of California's Unfair Competition Law based on these underlying labor practices.

Defense

Fraiche Catering, Inc. filed its Answer on June 26, 2023, issuing a general denial of all allegations. The defense argued that the Plaintiff and the putative class members were not entitled to any recovery or remedy.

The Defendant asserted thirty-eight affirmative defenses . A primary defense was that the employees were properly classified as exempt under the Professional, Administrative, or Executive exemptions recognized by California law. Fraiche Catering contended that it had acted in good faith, with reasonable grounds to believe its wage practices complied with the law, and that any failure to pay wages was not willful or intentional.

Regarding break periods, the defense argued that it had authorized compliant meal and rest periods and did not impede employees from taking them. They asserted that if breaks were missed, it was due to the employees' voluntary choice or consent. Similarly, the defense claimed that any business expenses were either reimbursed or not required to be borne by the employees. The Defendant also raised procedural defenses, arguing that the class action format was inappropriate because individual questions predominated over common ones and that the Plaintiff was not an adequate class representative.

Settlement

Following the initial pleadings, the parties resolved the dispute outside of a trial verdict. While the complaint outlined substantial statutory penalties and unpaid wages across a class of over 100 employees, the litigation concluded with a negotiated resolution. Fraiche Catering, Inc. agreed to a settlement amount of $175,000. This settlement serves to resolve the claims regarding unpaid wages, missed breaks, and unreimbursed expenses alleged by Gutierrez and the class, bringing the litigation to a close without a determination of liability by a jury.

Court documents are available upon request at jurimatic@exlitem.com