Class action alleges waiting time violations, overtime wage breaches, unfair business practices
A recent wage law case arose from a December 2019 class action against Walt Disney Company and Walt Disney Parks and Resorts, U.S., Inc., as well as Sodexo, Inc. and Sodexomagic, LLC (Sodexo), which operated restaurants in Disney’s theme parks.
The employees alleged that, since Jan. 1, 2019, their employers failed to pay them a living wage, in violation of a 2018 Living Wage Ordinance (LWO) that applied to hospitality employers in the Anaheim or Disneyland Resort areas benefiting from a city subsidy.
A city subsidy was defined as an “agreement with the city pursuant to which a person other than the city has a right to receive a rebate of transient occupancy tax, sales tax, entertainment tax, property tax or other taxes, presently or in the future, matured or unmatured.”
The employees also alleged violations of the state’s waiting time penalties and overtime wage laws, unfair business practices, and civil penalties under the Private Attorneys General Act (PAGA).
In response, Disney and Sodexo filed a summary judgment motion. The defendants did not dispute that the employees did not receive the minimum hourly wage required under the LWO. But Disney argued that the LWO did not cover it because it did not benefit from a city subsidy.
Read more: Disney owes female workers over $150 million in pay gap, claims lawsuit
The trial court granted summary judgment in the defendants’ favor.
Employees entitled to living wage
In the case of Grace et al. v. The Walt Disney Company et al., the California Court of Appeal for the Fourth District, Third Division reversed the judgment of the trial court.
The appellate court noted that Disney signed the following agreements with the City of Anaheim:
- the 1996 Infrastructure and Parking Finance Agreement, in which the city agreed to issue around $400 million in municipal bonds to revitalize the Anaheim and Disneyland resort districts, to pay for infrastructure improvements, and to expand the Anaheim Convention Center
- the Disney Credit Enhancement Agreement, wherein Disney agreed that it would make up the shortfall if there was any year in which the city’s incremental tax revenues failed to meet its bond obligations
- the Reimbursement Agreement, in which the parties agreed that Disney would be reimbursed for certain shortfall payments
Under the finance agreement, the bondholders would receive repayment based on anticipated incremental increases in the city’s transient occupancy taxes, which were paid by hotel guests; local sales taxes, which were paid by consumers; and local property taxes, which were paid by Disney.
In the end, the appellate court concluded that Disney had to pay its employees the required minimum wages because it did receive a city subsidy as defined by the LWO.
As the appellate court explained, Disney was entitled to receive a rebate or a return of a portion of the incremental transient occupancy tax, sales tax, and property tax in the years when the city’s incremental tax revenues rebounded and could meet its bond obligations, in accordance with the three agreements that it signed with the city, particularly the Reimbursement Agreement.
