An employer who is strategic and proactive in California wage and hour compliance can avoid hundreds of thousands of dollars in potential liabilities and defense costs. For example, there is significant litigation regarding employment applications in California especially the limitations regarding criminal convictions set forth at California Labor Code Section 432.7, et seq. and Section 432.8. Look at the course of events involving an employer’s employment application which failed to properly exclude inquiries regarding certain marijuana convictions more than 2 years old.

Three individuals brought a class action against Starbucks Corporation (“Starbucks”) alleging more than $26 million in statutory penalties on behalf of an estimated 135,000 job applicants based on Starbuck’s employment application. In Starbucks Corp. v. Superior Court (2008) 168 Cal.App.4th 1436, the court held plaintiffs did not have standing to represent the proposed class because none had any marijuana convictions to disclose.

Subsequently, a court permitted plaintiffs to file a first amended complaint to include only job applicants with marijuana convictions and permitted class counsel to conduct further discovery to find a “suitable” class representative. Incredibly, Starbucks was ordered to review applications until it identified job applicants with prior marijuana convictions and then was ordered to disclose their names to class counsel. The employer appealed the discovery order. On April 25, 2011, the Fourth Appellate District Court reversed the discovery order since the order violates the “reform legislation the class action purports to enforce” – to avoid disclosure of certain marijuana convictions. See, Starbucks Corp. v. Super. Ct. (CA4/3 G043650 4/25/11)

In light of this chain of events, employers should consider being proactive and strategic by reviewing your employment application, forms and handbooks for California law.