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Pracha Ruling: Good News For Employers, Employees

Law360 (August 30, 2007, 12:00 AM EDT) -- On August 23, 2007, in Prachasaisoradej v. Ralphs Grocery Company (No. S128576; “Pracha”), a 4-3 majority of the California Supreme Court decided what it characterized as “a significant question of California wage law.” Reversing two prior Court of Appeal decisions, Pracha holds that profit-based employee incentive compensation is in fact lawful in California.

The decision is significant because it ends over seven years of uncertainty about the legality of providing such compensation to California employees.

Numerous class actions had been filed throughout California by employees claiming...
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