Private staffing agencies will rest easier following the 1st District Court of Appeal’s recent decision in Serrano v. Aerotek, Inc. (March 9, 2018, No. A149187), which upheld a lower court ruling on summary judgment not to impose liability on a staffing agency (“Aerotek”) for the alleged meal period violations of its client and co-employer, Bay Bread (“BB”).

BB is a bakery south of San Francisco. BB and Aerotek entered into an agreement whereby Aerotek would supply BB with temporary employees to meet its staffing needs. The agreement set forth that the employees would be under the exclusive control and management of BB in BB’s facility, and that BB agreed to comply with all applicable federal and state laws in connection with their employment. Aerotek thereafter hired plaintiff Serrano (“Serrano”) to work in BB’s facility. Serrano worked two different periods at BB. Before each period began, Serrano received a copy of Aerotek’s employment handbook containing a lawful meal period policy. Aerotek personnel instructed Serrano on two different occasions of its meal period policy at BB’s facility during a joint orientation meeting. Serrano signed an acknowledgment of the applicable meal period policy. In the acknowledgment Serrano also agreed to abide by Aerotek’s policies and to immediately report any violations to Aerotek. Despite never complaining to Aerotek about not receiving meal periods or being discouraged from taking them, Serrano’s time records indicated untimely and occasionally missed meal periods.

Serrano brought a class action to recover damages and penalties on the theory that both Aerotek and BB had failed to provide employees with proper meal periods. In affirming the lower court ruling, the Court of Appeal, relying on the California Supreme Court’s seminal ruling in Brinker v. Super. Ct. (2012) 53 Cal.4th 1004, 1040, concluded that Aerotek had satisfied its duty to provide employees at BB with meal periods despite never seeing the employees take them. The Court rejected what it characterized as Serrano’s attempt to impose a higher burden on Aerotek, at odds with Brinker – that Aerotek had a duty to investigate or police whether BB was providing proper meal periods. Echoing Brinker’s ruling regarding how an employer satisfies its duty to provide meal periods “may vary from industry to industry,” the Court held that Aerotek satisfied its duty by promulgating a compliant meal period policy, educating the employees on the policy, and making it a policy to report any known or suspected violations of the policy.

The Court, as with the lower court, found this sufficient where BB exercised exclusive control of the employees and had contractually agreed to comply with all applicable federal and state laws in connection with their employment. The Court dismissed Serrano’s argument that her time records created a presumption of liability sufficient to hold Aerotek liable because, again, Brinker held to the contrary. Constructive and even actual knowledge of employees not taking meal breaks is not enough to subject an employer to liability because the law imposes no obligation to ensure the breaks are taken. Finally, the Court found no support for Serrano’s argument that the Labor Code makes an employer’s meal period duties non-delegable to hold Aerotek vicariously liable for BB’s failings, particularly where Aerotek was never put on notice of any violations.

Importantly, the Court did not state that a staffing agency could never be found liable for the labor violations of its clients. This case presented unique facts. It is difficult to opine on what might have happened had BB not contracted to comply with all laws, if Aerotek had been on notice of violations, or if Aerotek shared control over employees within BB’s facility.

Moving forward, staffing agencies and their clients generally should review their meal and rest break policies and practices together, including any agreements between them, to discuss their respective responsibilities to greater protect and reduce the potential for liability.