Plaintiffs, former employees of Jack in the Box, sued the employer alleging three policy violations: overdeducting wages for the Workers' Benefit Fund (WBF), failing to pay for meal periods shortened to less than 30 minutes, and deducting pay for non-slip shoes. The district court granted summary judgment in part, finding the WBF overdeductions were willful and the shoe deductions were for the employees' benefit, while rejecting the unpaid break claims. The jury awarded significant penalty wages for the WBF claims, but the district court later granted Jack in the Box's renewed motion for judgment as a matter of law on the unpaid break claims and excluded penalty wages for the shoe deductions. Jack in the Box appealed the WBF and shoe rulings, while Plaintiffs cross-appealed the denial of the unpaid break class certification and the judgment as a matter of law on their individual break claims.
The panel applied de novo review to legal conclusions and abuse of discretion to evidentiary rulings. First, regarding the Workers' Benefit Fund, the court held that willfulness under Oregon law requires the employer to be 'fully aware' of the obligation to pay and consciously decide not to fulfill it. The district court erred by concluding willfulness as a matter of law because a reasonable jury could find the employer did not know it was using an outdated rate due to a reliance on payroll software, constituting an innocent miscalculation rather than willful conduct. Second, on unpaid breaks, the court analyzed Oregon regulations and held that employers must enforce 30-minute meal periods and pay for shortened breaks even before the 2010 amendment, relying on the reasoning in Athena v. Pelican Brewing Co. and Maza v. Waterford Operations. The district court's refusal to certify the class was erroneous because the legal question was common to all class members. Third, regarding shoe deductions, the court found the district court erred in granting summary judgment on the 'employee benefit' defense. The record showed Jack in the Box required employees to buy specific shoes that cost $2 more per pair, with the employer receiving a rebate, suggesting the deduction was not for the 'ultimate benefit' of the employee. A jury must decide this factual issue. Finally, the court affirmed the district court's refusal to toll prejudgment interest for plaintiff delays, noting Oregon law mandates interest on all due moneys without discretion to reduce it for litigation delays.
The case is remanded for a new trial on the issue of willfulness regarding the Workers' Benefit Fund overdeductions, which will determine the validity of the $5.3 million penalty wage award. The district court must recalculate prejudgment interest in light of the new willfulness findings. On the unpaid break claims, the district court must reconsider class certification and retry the individual claims, as employers are now liable for wages corresponding to shortened meal periods. On the shoe claims, the district court must retry the issue of whether the deductions were for the employee's benefit and reconsider class certification for both the wrongful deduction and minimum wage claims.
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