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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.


Know The Law

Know the Law. Know your Rights.

What is OSHA?

“OSHA” is the Occupational Safety and Health Administration, which enforces the Occupational Safety and Health Act of 1970 (OSH Act). The Act, enacted by Congress, ensures safe and healthful working conditions for employees. OSHA provides protection to almost all private sector and some public sector employees by establishing and enforcing strict standards.

What is the Occupational Safety and Health Act of 1970?

“OSH Act” is a set of laws that enforces the workplace conditions that employers must comply with and includes regulations that ensure the health and safety of employees. In general, that means that the workplace must be free of hazards that can cause injuries or illnesses. For example, OSH Act protects employees from being exposed to toxic chemicals, unsanitary work conditions, extremely loud noises and physical hazards that could result in slips and falls.

In addition to specific standards tailored to a particular industry (i.e. construction), all employers must comply with the General Duty Clause which requires the workplace to be “free of serious recognized hazards that are likely to cause death or serious physical injury to his employees.”

The Act also requires employers to provide employees with personal protective equipment (PPE) as well as attempt to eliminate or reduce hazards to minimize risks. However, any serious hazard must be eliminated. A “serious hazard” is defined by OSH Act as one “that there is a substantial probability that death or serious physical harm could result.”

How does OSH Act ensure workplace safety?

The Act requires employers identify hazards and keep records of workplace injuries. Moreover, employers must investigate workplace injuries, illnesses and incidents. Employers are required to use this data to identify hazards and implement practices to reduce the risks with corrective actions.

In addition, OSHA investigates workplace complaints as well as conducts random inspections. Employers also have the right to file a confidential safety and health complaint requesting an OSHA inspection if the employee believes there is a hazard.

What happens if OSHA finds a workplace violation?

OSH Act has strict penalties for employers who “willfully or repeatedly” violate the Act. Civil penalties can range from $5,000 to $70,000 for each willful violation. Employers can also be fined for failing to correct hazardous conditions. In the most serious cases of OSH Act violations, OSHA can seek a court order to force the employer to eliminate any “imminent danger” and the immediate removal of all employees from the workplace.  

Does OSH Act conflict with California State Law?

The Division of Occupational Safety and Health (DOSH or Cal/OSHA) provides state protection to employers that often provides greater protection than the federal OSH Act. In fact, California boasts some of the country’s most strict protections for employees under state law. If you are an employee working in California, you should file a complaint with the state agency in most cases. However, there are some cases that must be filed with OSHA. An experienced labor law attorney can provide you with the appropriate agency based on the facts of your case.

Can an employee sue an employer for OSHA violations?

Yes. If an OSHA violation resulted in an injury, you can sue your employer for failing to adhere to OSHA. You may also sue any negligent or legally liable party which could include the property owner, a general contract or a third party. Also, depending on your injury and the OSHA violation, you could be part of a class action if other employees are similarly injured.

Also, your rights as an employee could be violated in other ways such as being fired for filing an OSHA complaint, or for refusing to work in unsafe conditions. In fact, there are over 20 labor laws that protect whistleblowers and prohibit employers from retaliating against an employee who complains. There are strict time limits for filing these claims for whistleblower protection, so be sure to consult an experienced labor law attorney immediately after a retaliatory action occurs.

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 OSHA and Cal/OSHA violations 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 due to hazards in the workplace, you have certain employee rights under state and federal law, and 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.