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.


Sunrise on the highway

Appeals Court Gives Delivery Drivers the Green Light to Trial

A recent decision by a federal appeals court is good news for delivery drivers seeking compensation for unpaid wages and unreimbursed expenses. In an important decision dated July 17, 2020, the First Circuit U.S. Court of Appeals held that Amazon delivery drivers are considered “transportation workers engaged in interstate commerce” even if they never physically cross state lines to complete deliveries.

The decision is important because this means that Amazon delivery drivers may proceed with a class action lawsuit without having to go through private arbitration. Defendant Amazon argued that plaintiffs may only resolve disputes through arbitration, and are prohibited from filing a law suit according to the Federal Arbitration Act (FAA). The appeals court, however, disagreed with Amazon’s argument that the FAA required arbitration in this case because the FAA does not require arbitration for “entire categories of workers in the transportation industry just because those workers might not have physically crossed state lines.”

Amazon unsuccessfully argued that “last-mile delivery workers” who do not always cross state lines when traveling the final legs of the delivery did not “engage in interstate commerce” and therefore must settle claims in arbitration, not court. The court’s decision, however, firmly includes these last-mile delivery drivers as engaging in work “within the flow of interstate commerce.” The key to the decision was whether or not the delivery drivers “engaged in” interstate commerce if they did not actually travel across state lines to deliver goods. According to the appeals court, the drivers were entitled to sue employers for claims of labor law violations and it was not important that they did not actually physically cross a state line in order to make the delivery. This reasoning is based on a 2001 U.S. Supreme Court decision that held employees were engaged in interstate commerce even when employees did not actually cross a state line as long as the intrastate portion of their work was part of an overall “interstate journey.” In other words, the court did not want to penalize the drivers for being assigned delivery routes by Amazon that did not require them to cross state lines, but nonetheless was part of interstate delivery of goods.

The recent appeals court decision will allow delivery drivers to proceed in court with claims that Amazon misclassified employees in violation of their rights.

The class action suit against Amazon was originally filed in 2017 by drivers in Massachusetts who claimed Seattle-based Amazon misclassified delivery drivers as independent contractors. This misclassification allowed Amazon to refuse to provide drivers with vehicles or reimburse for expenses incurred by drivers such as insurance, gas, and mileage. Amazon argued that arbitration was the appropriate and only forum available to plaintiffs because of the FAA. Employers favor arbitration because arbitration usually favors employers, awards are binding and not subject to appeal, and arbitration is generally much less expensive than a trial. Moreover, if an employer loses at trial, often the award includes plaintiff's attorney's fees.

Additionally, Amazon unsuccessfully argued that Washington state law prohibited the class action lawsuit because the employees were bound by a class action waiver that was part of their employment contract. A class action waiver prohibits employees from filing a class action against employers, but the appeals court refused to apply Washington state law. Instead, the court relied on Massachusetts state law, which is considerably more favorable to employees. Under Massachusetts state law, the appeals court held that the class action waiver was “contrary to the commonwealth’s fundamental public policy” and invalid because it was not possible to enforce the arbitration provision independently from the rest of the relevant section of the contract dealing with dispute resolution.

This decision has significant impact on the pending litigation, as well as other class action lawsuits across the country where employees are misclassified by employers in order to violate labor laws and avoid paying certain wages or reimburse expenses, and will greatly assist employees who have had their rights violated by employers.

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 unpaid wages and unreimbursed expenses 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 a delivery driver or employee including unpaid wages or unreimbursed expenses, you may 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.