The California Court of Appeal, Second District, recently repealed a $94 million verdict related to a wage-and-hour class action against multinational ABM Industries Incorporated (ABM). The judgment was initially granted by a California trial court in 2012.
The class action lawsuit was seeking compensation in wages, interest and penalties to a class of around 15,000 former and present security guards. The lawsuit alleged that the company violated California law as the security guards were deprived of off-duty rest breaks.
The plaintiffs claimed that ABM Industries transgressed wage-and-hour laws by asking some employees to carry radios and remain "on call" during rest breaks. Consequently, the trial court passed a ruling on the grounds that "California law requires employers to relieve their workers of all duty during rest breaks".
However, the Court of Appeal dismissed the trial court’s basis of judgment, asserting that being on call does not amount to performing work. It emphasized that the Californian law only stipulates that employees should not be required to work during rest break, and thus the rest breaks were legitimate even when workers were responsible for some duties, like remaining on call during breaks.
The Court of Appeal also observed that the security guards got involved in several non-work actions during their rest breaks, like tending to personal business, reading, surfing the internet, etc.
The Court of Appeal’s reversal of the trial court's faulty grant of summary judgment in favor of the plaintiffs substantiated that ABM Industries complied with the law with regard to workers’ rest breaks.
ABM Industries, presently sporting a Zacks Rank #4 (Sell), has been facing pressure in increasing earnings despite strong growth in revenues. The company has been undergoing restructuring for a considerable period of time, and that might have contributed to its stressed margins and earnings volatility.
Some better-ranked stocks that look promising and are worth a look include Rollins Inc. (ROL), carrying a Zacks Rank #1 (Strong Buy), and ServiceMaster Global Holdings, Inc. (SERV) and Gartner Inc. (IT), both carrying a Zacks Rank #2 (Buy).
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