Category Archives: Wages

Sixth District Holds That Hours-Based Compensation That in Practice Delivered an Unvarying Minimum Amount of Pay Still Not a Salary

A de Beers 3d staff salary token given to empl...

A de Beers 3d staff salary token given to employees and only usable at their stores (Photo credit: Wikipedia)

The Sixth District held on Thursday that an hours-based compensation system which was based on the number of hours worked, with no guaranteed minimum cannot be considered a salary, and therefore cannot serve as the basis for an exempt classification.  Negri v. Koning & Associates, No. H037804, __ Cal. App. 4th __ (6th Dist. May 16, 2013).  Plaintiff is an insurance claims adjuster who was paid $29 per hour with no minimum guarantee.  Slip Op. at 1.  When he worked more than 40 hours in a week, he was still paid at $29 per hour.  He brought a claim for overtime pay, and the trial court issued a defense verdict, concluding that plaintiff was an exempt employee.  Id. at 3.

The Court of Appeal reversed:

We recognize that, in practice, defendant always paid plaintiff the equivalent $29 per hour for 40 hours per week so that he, in effect, received an unvarying minimum amount of pay. We also recognize that, as a general matter, an exempt employee may be paid extra for extra work without losing the exemption. (See Kennedy, supra, 410 F.3d at p. 371.) The problem here is that defendant stipulated to the fact that it “never paid [plaintiff] a guaranteed salary”; if he worked fewer claims “he made less money than if he worked more claims.” That is the same thing as saying that plaintiff was not paid “a predetermined amount” that “was not subject to reduction based upon the quantity of work performed.” He was not paid a salary. For that reason, defendant did not prove that the administrative exemption of Wage Order 4 applies in this case.

Slip Op. at 8-9.

By CHARLES H. JUNG

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Meal and Rest Break Class Certified in Light of Brinker

English: A guard at Prague Castle.

English: A guard at Prague Castle. (Photo credit: Wikipedia)

On Friday, the Court of Appeal for the Fourth District reversed a denial of certification of a meal and rest break class action.  Faulkinbury v. Boyd & Associates, Inc., No. G041702, __ Cal. App. 4th. __ (4th Dist. May 10, 2013).  Reconsidering in light of Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004 (2012), the court concluded that the primary issue was the legality of certain company policies, which could be determined on a class-wide basis, even if the application of the policies varied by individual.

By CHARLES H. JUNG

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Collective Bargaining Agreement’s Waiver of California Labor Code Section 227.3 Right to Vacation Pay Upon Termination Must Be Clear and Unmistakable

Take a Vacation!

Take a Vacation! (Photo credit: Wikipedia)

The Second District held today that the collective-bargaining exception to Labor Code section 227.3 requires that the right to immediate payment of vested vacation time is waived only if the CBA “clearly and unmistakably waives that right”.  Choate v. Celite Corporation, No. B239160, __ Cal. App. 4th __ (2d Dist. May 2, 2013).

The Court of Appeal, however, reversed the trial court’s ruling that defendant willfully refused to pay vacation time.  Labor Code section 203 allows for waiting time penalties of up to 30 days’ wages if an employer willfully fails to pay the employee any outstanding wages upon termination:

203. (a) If an employer willfully fails to pay, without abatement or reduction, in accordance with Sections 201, 201.3, 201.5, 202, and 205.5, any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days. . . .

(Emphasis supplied.)  But because the present case was the first to define the standard for waiver under section 227.3, the Court found defendant did not act unreasonably.

The trial court’s ruling that Celite acted willfully was based in part on the premise that Celite’s misunderstanding of the law governing waiver—even though shared by the Union—was unreasonable. This premise necessarily assumes that section 227.3 requires any waiver to be clear and unmistakable. Although we agree with the trial court that this is the appropriate standard, this is the first case to define the standard for waiver under section 227.3. Plaintiffs argue that Saustez decided this issue, but it did not. (Saustez, supra, 31 Cal.3d 774.) Celite’s good faith reliance on a different waiver standard was accordingly reasonable, particularly in light of the language in Firestone supporting that standard. (Armenta v. Osmose, Inc. (2005) 135 Cal.App.4th 314, 325-326 [position taken where law is undecided can be reasonable].) That Celite’s position did not prevail does not mean that its position was unreasonable. (8 Cal. Code Regs., § 13520.)

You can read more here.

By CHARLES H. JUNG

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Second District Reverses Class Action Judgment Relating to Bonuses Allegedly Due After Merger

Fiber Optic Candle
Image by Chris Tengi via Flickr

The Second District reversed a trial court’s judgment in favor of employees in a class action trial.  Pearline Zalewa v. Tempo Research Corporation, B210429, 2010 WL 3735240 (Cal. Ct. App. 2d Dist. Sept. 27, 2010).  Defendant  fiber-optic equipment manufacturer was sued in a class action by its former employees who claimed that the manufacturer breached an obligation to pay them annual bonuses, an obligation that allegedly continued for years after they were laid off from work during a business downturn.  Id. The court concluded that the employees were not entitled to any recovery: “All but two of the employees relinquished their right to sue when they were laid off, in return for compensation that exceeded their earned severance pay. In any event, there was no promise made to pay bonuses to the employees after they were laid off.”  Id.

The Trial Court’s Judgment

The trial court conducted a bench trial in January 2008, finding that plaintiffs were entitled to recover a direct bonus under theories of breach of contract, promissory estoppel, accounting, and unfair business practices. Id. The court deemed the bonus payments to be “wages” under the Labor Code. Id. And because the bonus payments are wages, plaintiffs were awarded prejudgment interest and attorney fees under the Labor Code. Id. The court enumerated the amount of the award for each employee, less offsets for monies already paid by defendants, plus interest. Id. The total amount of the award, including interest, was approximately $99,000, and plaintiffs’ counsel was awarded attorney fees of $881,715.  Id. Continue reading

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Class Certification Granted in Vacation, Uniform, Paycheck, Wage and Contract Class Action

New Orleans, LA, September 6, 2008 -- FEMA Com...
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The Southern District of California granted class certification in a vacation, uniform, paycheck, wage and contract class action.  Lopez v. G.A.T. Airline Ground Support, Inc., No. 09cv2268-IEG(BGS), 2010 WL 3633177 (S.D. Cal. Sept. 13, 2010) (slip op.).

Background

Former employees of Defendant G.A.T. Airline Ground Support, Inc. (“GAT”) sued for systematic wage and hour violations in violation of federal and state law. Id. *1.  GAT provides services to airlines, including ground transportation, aircraft maintenance, and cargo operations management.  Id. The four named Plaintiffs are former ramp agents employed by GAT in California.  Id. Continue reading

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Southern District Holds That Compensation Received But Later Forfeited Under Cliff Vesting Schedule in Mandatory Investment Plan, Are Not Unpaid Wages

LONDON - APRIL 17:  The company logo is displa...
Image by Getty Images via @daylife

In Callan v. Merrill Lynch & Co., Inc., No. 09 CV 0566 BEN (BGS), 2010 WL 3452371 (S.D. Cal. Aug. 30, 2010) (slip op.), the Southern District held that compensation plans that contained cliff vesting schedules in which awards are forfeited if employment terminates before the awards are vested did not constitute unpaid wages under the Labor Code.

Facts

Former employees of the Defendants Merrill Lynch & Co., Inc. and Merrill, Lynch, Pierce, Fenner & Smith, Inc. participated in three of Merrill Lynch’s employee compensation packages.  Id. *1. Plaintiffs alleged they were required to accept part of their wages in the form of “awards” under the plans. Id. Plaintiffs alleged the plans contain forfeiture provisions that constitute unlawful conversion and violate California’s Labor Code and Unfair Competition Law. Id. Continue reading

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