Clocking System

California Appellate Court Upholds Employee's Calculation of Unpaid Wages

In a decision submitted for official publication on October 14, 2021, the Court of Appeal of the State of California Second Appellate District Division Four upheld a trial court’s decision to enter judgment in favor of a warehouse employee for wage violations claims filed in a lawsuit against his former employer. The trial court awarded the employee $99,394.16, of which $42,792.00 accounted for unpaid overtime wages. The case, Byron Jerry Morales v Factor Surfaces LLC et. al., reaffirms California Labor Code and principles of employment law when calculating an employee’s regular rate of pay.

Case Background

Byron Jerry Morales was a warehouse employee employed by Factor Surfaces LLC. The company hired Morales in 2016. Morales performed a variety of duties, vital to the financial success of the company. Morales cleaned and sanitized the warehouse; he accepted shipments of supplies and equipment; he facilitated and personally made deliveries and pick-up of workplace materials; and, he engaged in customer service relations.

In 2018, the employment relationship between Morales and Factor soured, when Factor terminated Morales’s employment, after Morales asked to be compensated for unpaid overtime wages.

In 2019, Morales filed a lawsuit against his former employer, alleging that the company retaliated against him; the company violated California law by failing to maintain and provide employee records and wage statements; the company failed to pay overtime wages, along with meal and rest break compensation; and, for wrongful termination.

The Trial

At trial, Factor Surfaces LLC and its agents Gregory and Bianca Factor, both testified that the company was unable to produce as evidence Morales’s employment records and wage statements as required by statute. The employment records and wage statements would have indicated, at minimum, Morales’s regular rate of pay along with the number of days and hours he worked.

However, the company claimed that the records went “missing” after a truck owned by the company was stolen from inside a gated community. Supposedly, Morales’s employment records were inside the truck, and although the stolen truck was later recovered, the records were not. The company also testified that Morales was not paid commissions for sales.

Morales, however, was able to provide evidence at trial of his regular rate of pay and wage history with his former employer. Prior to March 9, 2018, Morales worked a full-time schedule at his former employer: 8:00 a.m. to 6:00 p.m. Monday through Friday and 9:00 a.m. to 5:00 p.m. on Saturdays. After March 9, 2018, Morales stated that he worked two (2) or three (3) Saturdays per month. Morales estimated that prior to March 9, 2018, he earned eighteen (18) hours of overtime per week, and after March 9, 2018, he earned approximately fourteen (14) hours of overtime per week because he was not working every Saturday.

Morales testified and provided evidence in the lawsuit that his regular rate of pay in 2016 was $120.00/per day, and that he received a three percent (3%) commissions on sales, which at the end of 2017, was reduced to one and a half percent (1.5%). Without explanation, the company cut Morales’s commission on sales to zero (0%). Also, at some point during Morales’s term of employment the company increased his weekly wages to $150.00/per day.

The burden is on employers to maintain records of an employee's time worked, duties performed, and wage history.

The Trial Decision

The issues of the trial ultimately boiled down to two questions: (1) which side of the lawsuit, Morales or Factor Surfaces, was more credible or believable based on their testimonies and evidence presented at trial; and (2) whether the trial court should accept Morales’s calculation of his regular rate of pay which included unpaid overtime wages and commission sales?

The trial court’s answer to the first question: Morales. In this case, the employee was found to be more credible than the former employer. Morales established that he performed work for the company that was not properly compensated; and, he provided sufficient evidence to demonstrate the amount and extent of work he performed. The burden then shifted to Factor Surfaces to provide accurate and complete employee records and wage statements as required by California law, and the employer could not. The best defense the company could raise was the documents were stolen. With that, the trial court accepted Morales’s calculation of his regular rate of pay while employed by Factor Surfaces. In result, the company filed an appeal challenging the trial court’s acceptance of the employee’s calculation of regular rate of pay.

The Appeal

The Court of Appeal reminds us that – under California Labor Code Sec. 510(4) – overtime pay means “any work performed by an employee in one workday, and work performed in excess of forty (40) hours in any one work week, must be compensated at no less than one-half time times the employee’s regular rate of pay.” Generally, commission workers receive compensation for their commission sales based on a different formula under California law.

However, in this case, because the employee was found to be more credible than the former employer; and the employer failed to provide any records as evidence, the Court of Appeal agreed that the trial court’s acceptance of Morales’s calculation of his regular rate of pay which included unpaid overtime wages and weekly commission sales was proper.

What does this mean?

What this means for employees is that the Court of Appeal is signaling one way to protect job interests against the unfair labor practices of employers. Employees may be able to do this by keeping copies of their wage statements, records of time worked, and work performance. The Court reiterates “where the employer has failed to keep records required by statute, the consequences for such failure should fall on the employer, not the employee. In such a situation, imprecise evidence by the employee can provide a sufficient basis for damages.”

The Court is saying that, even if the employee is not able to provide precise records, if the employee can at least present credible or believable testimony and records of the employee’s wage history and hours worked, it may be sufficient to shift the burden to the employer to prove otherwise; and, if the employer cannot prove otherwise, then it may lead to recovery of commission sales, unpaid overtime wages, and damages in a lawsuit. $25,000.00 of Morales’s award was for emotional distress damages.

Employees should practice saving and cataloguing their pay stubs or weekly paychecks; track missed meal or rest break periods; track duties performed at work and hours worked; and, track the number of wages earned from commission sales. This information could prove to be vital in a lawsuit for damages.

Each case will depend on the specific facts, so it is important to consult with an experienced labor law attorney to assess the specifics of your case to determine if you are owed additional compensation and unpaid overtime wages from your employer.

Free Consultation

Srourian Law Firm, with locations in Los Angeles, Westwood, Woodland Hills, and Orange County is experienced in all aspects of employment law including wage, labor, meal and rest break violations in the workplace, and have aggressively represented employees in Los Angeles, Hollywood, Santa Monica, Orange, Irvine, Anaheim, Santa Ana, Newport Beach, Costa Mesa, Fullerton, Tustin, Mission Viejo, San Clemente, Garden Grove, Laguna Niguel, Brea, Fountain Valley, Aliso Viejo, Yorba Linda, Westminster, Laguna Hills, Cypress, and La Habra.

If you or someone you know suffered employment violations, you may have certain employee rights under state and federal law, and may be entitled to compensation as a part of a class action lawsuit. Please contact us to speak with one of our lawyers for a free consultation.


Lunch break note on office clock

California Supreme Court Decides Non-Discretionary Payments Are To Be Included When Calculating Overtime Pay

In a published opinion, Ferra v. Loews Hollywood Hotel LLC, 11 Cal. 5th (2021), the California Supreme Court examined the issue of whether the state legislature intended the term "regular rate of compensation" as it is used under California Labor Code Section 226.7(c) has the same meaning as the term "regular rate of pay" pursuant to California Labor Code Section 510(a), so that an employer's calculation of overtime or premium pay owed to an employee must account for the employee's hourly wages and non-discretionary payments for work performed by the employee during missed meal or break and recovery periods. The Court determined that it does!

What are non-discretionary payments?

Non-discretionary payments are payments for an employee's work that are owed under a prior contract, agreement or promise between the employer and the employee. Non-discretionary payments are not determined at the sole discretion of the employer, meaning that an employee will have meaningful input when arriving at the agreement to receive non-discretionary payments from an employer. Examples of non-discretionary payments or wages include hiring bonuses, attendance bonuses, individual or group production bonuses, and incentive bonuses.

California Supreme Court rules Non-Discretionary Payments must be accounted for when calculating Overtime or Premium Pay for work performed by employee during missed meals, breaks, and recovery time. 

What happened in Ferra?

Non-discretionary payments were at the heart of the issue underlying the Ferra lawsuit filed before the California Supreme Court. Jessica Ferra, a bartender employed by Lowes Hollywood Hotel LLC, filed a lawsuit against Loews alleging that the company failed to include her non-discretionary payments - specifically quarterly incentive payments - when calculating her regular rate of pay for overtime or premium payments owed to her for work performed during missed meals, and rest break periods as required by the California Labor Code Section 510(a). Loews argued that under its interpretation of the law, Jessica was only to be compensated her hourly wage - or regular rate of compensation - under California Labor Code Section 226.7(c), meaning that the company should not have to include quarterly incentive payments in calculating overtime or premium payments that Jessica accrued while working through her meal and rest break time.

At trial and on appeal, Jessica Ferra lost both times, meaning the trial court and appeals court agreed with Loews that "regular rate of compensation" and "regular rate of pay" had two different definitions, despite being used interchangeably throughout the California Labor Code and by the Industrial Welfare Commission (IWC). However, the California Supreme Court granted review of Ferra's lawsuit and reversed the lower court decisions. Essentially, the California Supreme Court found Loews' interpretation of the law to be incorrect, and that "regular rate of compensation" and "regular rate of pay" have the same meaning under California wage and labor laws.

To arrive at the conclusion that "regular rate of compensation" under Labor Code Section 226.7(c) and "regular rate of pay" under Labor Code Section 510(a) are synonymous, the California Supreme Court unpacked in detail the lengthy legislative history behind the creation of the Industrial Welfare Commission (IWC); the Court reviewed the state legislature's adoption of California Labor Code Sections 226.7(c) and 510(a); and, it discussed how California's wage and labor policies are intended to mirror federal law where consistent, mainly, the Fair Labor and Standards Act (FLSA). The underlying goal of California and Federal wage and labor laws are meant to protect employees from meal and rest break violations by penalizing employers for non-compliance with meal and rest break laws.

Key Takeaways

One key takeaway from the Ferra lawsuit for employees is that regular rate of compensation and regular rate of pay are synonymous or have the same meaning. The California Supreme Court noted during its discussion of the legislative history that the Industrial Welfare Commission adopted an overtime or premium pay requirement for meal or rest break period violations using the term "regular rate of compensation", while at the same time the IWC issued an adopted wage order revising overtime policies that included use of the term "regular rate of pay". In short, Loews' interpretation was wrong as the Court outlined several instances in California's legislative history where "compensation" and "pay" along with "regular rate" were used interchangeably to describe how employees wages are to be calculated. Ultimately, Ferra determined that employees are entitled to receive non-discretionary wages or payments as part of the calculation for the employee's pay - or compensation - for overtime work performed during missed meal and rest break time.

The second key takeaway from the Ferra lawsuit for employees is that the California Supreme Court ruled that its decision would have retroactive application in workplaces throughout California. What this means is that employees in California may be owed additional overtime or premium pay for non-discretionary wages or payments accrued for work performed by the employee during missed meal and rest break periods that were not calculated in the employee's regular rate of compensation or regular rate of pay. Each case will depend on the specific facts, so it is important to consult with an experienced labor law attorney to assess the specifics of your case to determine if you are owed additional compensation and unpaid wages from your employer.

Free Consultation

Srourian Law Firm, with locations in Los Angeles, Westwood, Woodland Hills, and Orange County is experienced in all aspects of employment law including wage, labor, meal and rest break violations in the workplace, and have aggressively represented employees in Los Angeles, Hollywood, Santa Monica, Orange, Irvine, Anaheim, Santa Ana, Newport Beach, Costa Mesa, Fullerton, Tustin, Mission Viejo, San Clemente, Garden Grove, Laguna Niguel, Brea, Fountain Valley, Aliso Viejo, Yorba Linda, Westminster, Laguna Hills, Cypress, and La Habra.

If you or someone you know suffered employment violations, you may have certain employee rights under state and federal law, and may be entitled to compensation as a part of a class action lawsuit. Please contact us to speak with one of our lawyers for a free consultation.


A gavel and a name plate with the engraving COVID-19

Update on COVID-19 Related Legal Issues

COVID-19 related lawsuits are increasing as the pandemic continues.

The scope of COVID-19 related lawsuits continues to expand as workers across the country are filing lawsuits seeking protection and damages from unfair labor practices. Moreover, there is a sense that more cases will be filed as more employees are impacted by the pandemic and businesses close, sometimes with little or no notice to soon-to-be unemployed workers.

Congress enacts the Families First Coronavirus Response Act

In March 2020, when Congress realized that a shut-down was imminent, Congress passed the Families First Coronavirus Response Act (FFCRA) which requires certain employers to offer employees paid sick leave or expanded family and medical leave for COVID-19 related reasons. Employees must have been employed for at least 30 days to benefit from FFCRA.

In general, the FFCRA provides for two weeks (up to 80 hours) of paid sick leave with regular pay if the employee is unable to work due to quarantine, or experiencing COVID-19 symptoms. Also, under the FFCRA, if an employee is unable to work due to the need to provide care for another individual under quarantine, or if their child’s school or child care provider closes due to COVID-19, the employee is allowed two weeks (up to 80 hours) of paid sick leave at two-thirds regular pay.

When an employee is unable to work in order to provide child care due to schools or child care being closed, employees are eligible for an additional 10 weeks of paid expanded family and medical leave at two-thirds regular pay.

Shortly after the FFCRA was enacted, a federal lawsuit was filed by an Eastern Airlines executive alleging she was fired after she requested time off under the FFCRA. According to the plaintiff, a single mother, she requested two hours of paid time off each day in order to care for her son, whose school was closed due to the pandemic. On the surface, it appears that the FFCRA was enacted to provide assistance to working parents such as the plaintiff in the midst of the pandemic. In this case, however, Eastern Airlines contends that the former employee was terminated on March 27, 2020, prior to the FFCRA taking effect on April 1, 2020.

COVID-19 and the ADA

Since 1990, the Americans with Disabilities Act (ADA) has provided significant protection to persons with disabilities in the workplace as well as society in general. One key aspect of the ADA is the requirement that employers provide reasonable accommodations to qualified employees with disabilities unless the accommodation would result in undue hardship to the employer. This requirement is quite broad and, for example, protects potential employees during the hiring and training process.

What constitutes a reasonable accommodation depends on the nature of the employee’s disability, the necessary duties of the job, the physical workplace and hardship (if any) to the employer. As a result of COVID-19, however, courts have been asked to consider how COVID-19 impacts established law and perhaps the need to re-interpret the meaning of reasonable accommodation under the ADA.

In June 2020, an engineer filed a lawsuit against his employer alleging discrimination in violation of the Massachusetts state ADA. In March, the employee was allowed to work from home in light of a state “stay at home” order. In April, his employer requested that he return to the office for work, but the employee requested he be allowed to continue to work remotely. The employee, who has high blood pressure and cares for his elderly mother, argues that he is at high risk of serious illness if he contracts COVID-19. He also fears transmitting the disease to his elderly mother who suffers from multiple medical conditions that place her at high risk. When his request for a reasonable accommodation, specifically to work remotely, was denied, he refused to return to the office, and was terminated.

Prior to the pandemic, courts did not consider a request to work remotely to be a reasonable accommodation. However, with increased health risks due to COVID-19, courts will be asked to re-consider whether a request to work remotely due to a heightened health risk of contracting or spreading the virus is a reasonable accommodation under the ADA.

More broadly, attorneys are using novel legal arguments in lawsuits based on the unique circumstances due to COVID-19 and the need to protect employees when current labor laws may be insufficient or simply never considered the challenges posed by the pandemic.

Lawsuits Filed after Employees Die From COVID-19

Sadly, some employees have died from COVID-19, and their families have filed lawsuits claiming that the workplace was not safe and employers failed to protect employees from the deadly virus. The key issue is whether employers followed federal and state safety guidelines, and if the employer failed to ensure proper protocols at work, they may be held liable for the death of an employee who contracted COVID-19 as a result of an unsafe workplace. Employers, however, claim that it is very difficult to prove how or where someone contracts the disease.

In one case, the family of a Safeway employee allege that the work environment was not safe because sick employees were still coming to work. Moreover, according to the lawsuit, on March 20, a memo was posted that stated, “If you are healthy, a mask will not protect you from the respiratory drops an infected person coughs out. Open areas of the mask can let those drops in.” The family filed a lawsuit after the employee tested positive for COVID-19 on April 4 and died eight days later. According to the family, Safeway failed to follow guidelines of the Occupational Safety and Health Administration (OSHA) issued on March 9 that required sick employees to be isolated.

Similar lawsuits have been filed against Walmart. In one case against a Walmart in Illinois, an employee was allegedly told to continue to work despite having symptoms, and was eventually sent home two days later when his symptoms worsened. He died two days later. Another Walmart employee in Dallas has filed a lawsuit that alleges she contracted COVID-19 because Walmart failed to provide personal protection equipment (PPE) and failed to follow health guidelines issued by health agencies including the Centers for Disease Control (CDC) and OSHA. As a result, she claims she contracted COVID-19 from the unsafe work environment at Walmart.

FREE CONSULTATION

Srourian Law Firm, with locations in Los Angeles, Westwood, Woodland Hills, and Orange County is experienced in all aspects of employment law including COVID-19 related health and safety violations in the workplace, and have aggressively represented employees in Los Angeles, Hollywood, Santa Monica, Orange, Irvine, Anaheim, Santa Ana, Newport Beach, Costa Mesa, Fullerton, Tustin, Mission Viejo, San Clemente, Garden Grove, Laguna Niguel, Brea, Fountain Valley, Aliso Viejo, Yorba Linda, Westminster, Laguna Hills, Cypress, and La Habra.

If you or someone you know suffered employment violations due to COVID-19 related health and safety violations, you may have certain employee rights under state and federal law, and may be entitled to compensation as a part of a class action lawsuit. Please contact us to speak with one of our lawyers for a free consultation.


Know The Law

Know the Law. Know your Rights.

Are you Earning at Least the Minimum Wage Required by California Law?

Employees in California must be paid the minimum wage and are protected by law. While there are some exceptions, it is illegal for employers to pay employees less than the required minimum wage. The California state minimum wage is higher than the federal minimum wage, so workers should be paid the higher required pay under state law. Moreover, some cities and counties have even higher minimum wages, so you should always be aware of the applicable minimum wage, as well as any increases to the minimum wage that typically occur every January 1.

California Labor Code §512(1)(a)

The minimum wage for employees fixed by the commission or by any applicable state or local law, is the minimum wage to be paid to employees, and the payment of a lower wage than the minimum so fixed is unlawful. This section does not change the applicability of local minimum wage laws to any entity.

If your employer is not paying you the minimum wage required by law, you can file a lawsuit to recover unpaid wages, interest on the wages, as well as attorneys’ fees and court costs. Also, if there are many employees that are not being paid the required wage, you could be part of a class action claim against the employer.

California Labor Code § 1194

Any employee receiving less than the legal minimum wage or the legal overtime compensation applicable to such employee is entitled to recover in a civil action the unpaid balance of the full amount of such minimum wage or overtime compensation, together with costs of suit, notwithstanding any agreement to work for a lesser wage.

Also, be aware that in addition to the hours you are actually performing your job, your employer must also pay you for any additional time that your employer has control over you. For example, you are entitled to minimum wage for the time needed to change into a uniform; time on-call waiting to be called in to work; as well as time needed to pass through security between shifts. This time is covered by California labor laws, and your employer must pay you at least the minimum wage or they are breaking the law, and you may be entitled to compensation.

FREE CONSULTATION

Srourian Law Firm, with locations in Los Angeles, Westwood, Woodland Hills, and Orange County is experienced in all aspects of employment law including minimum and unpaid wages and have aggressively represented employees in Los Angeles, Hollywood, Santa Monica, Orange, Irvine, Anaheim, Santa Ana, Newport Beach, Costa Mesa, Fullerton, Tustin, Mission Viejo, San Clemente, Garden Grove, Laguna Niguel, Brea, Fountain Valley, Aliso Viejo, Yorba Linda, Westminster, Laguna Hills, Cypress, and La Habra.

If you or someone you know suffered employment violations as an employee such as being paid less than minimum wage in California, you may have certain employee rights under state and federal law and may be entitled to unpaid wages, interest, attorneys’ fees and costs, and/or be entitled to compensation as a part of the class action lawsuit. Please contact us to speak with one of our experienced lawyers for a free consultation.


Srourian Law Firm Files Class Action Lawsuit Against Ruth's Chris Restaurant

Srourian Law Firm has filed a class action lawsuit on behalf of former and current workers of Ruth's Chris Steak House workers. The lawsuit includes both front of house and back of house workers, including waiters, hosts, barbacks, runners, and kitchen staff for all restaurant locations in the State of California. The lawsuit alleges that Ruth's Chris violated various provisions of the California Labor Code, including failure to pay minimum wage, failure to pay overtime, failure to authorize meal breaks, failure to authorize rest breaks, failure to timely pay final paychecks, failure to provide proper paystubs, and violation of California Private Attorney General Act, among several other violations.

The lawsuit further alleges unlawful restaurant policies of denying and discouraging breaks based on providing team meals to be eaten quickly, lack of adequate resting facilities, and a requirement to keep inaccurate records of meals breaks. The lawsuit further alleges the requirement for workers to take on-duty meal breaks in violation of California leave.

SROURIAN LAW FIRM’S CLASS ACTION LAWSUIT

The class action lawsuit, titled Adrian Quiroz v. Ruth's Chris Hospitality Group, Inc., is currently pending in Riverside Superior Court Case No. RIC1804127. If you worked for any Ruth's Chris location in California at any time from February 26, 2014, until the present and would like more information about this case, please call us at (310) 601-3131 or send an email to contact@slfla.com. Be sure to give your name, telephone number, and the best time to reach you, and an attorney will get back to you soon.

FREE CONSULTATION

Srourian Law Firm, with locations in Los Angeles, Westwood, Woodland Hills, and Orange County is aggressively pursuing claims against MedMen, and other California cannabis dispensaries in Los Angeles, Hollywood, Santa Monica, Orange, Irvine, Anaheim, Santa Ana, Newport Beach, Costa Mesa, Fullerton, Tustin, Mission Viejo, San Clemente, Garden Grove, Laguna Niguel, Brea, Fountain Valley, Aliso Viejo, Yorba Linda, Westminster, Laguna Hills, Cypress, and La Habra. If you or someone you know suffered violations of the California Labor Code in relation to their employment with a cannabis dispensary, you may be entitled to compensation as a part of the class action lawsuit. Please contact us to speak with one of our lawyers for a free consultation.