Areso v. CarMax, Inc.
195 Cal. App. 4th 996
Cal. Ct. App.2011Background
- Areso started with CarMax on 06/23/2004 as a sales consultant trainee and was overtime-eligible until 07/18/2004.
- On 07/19/2004 she was promoted to sales consultant and classified as a “commissioned exempt salesperson.”
- CarMax paid via national plan (through 02/01/2005) with a uniform per-sale amount and 10% of accessories; no overtime paid.
- From 2005, California pay plan paid by a formula based on level (vehicles sold) and average sale price, yielding about $154 per vehicle regardless of price, plus 10% of accessories; intent was to avoid high-price incentives.
- Areso filed a class action (07/10/2008) alleging overtime and other Labor Code/Business and Professions Code violations; CarMax moved for summary adjudication arguing commissions exempt overtime.
- Trial court granted summary adjudication, concluding payments were commissions under Labor Code §204.1 and that CarMax’s plans yielded exempt compensation; Areso appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CarMax’s per-vehicle payments are commission wages under §204.1 | Areso argues payments are not commissions because not tied to price, and are uniform per item (piece-rate). | CarMax argues payments are commissions because they are based on the amount or value of goods sold and constitute “commission wages” under §204.1. | Yes; payments constitute commission wages under §204.1. |
| Whether the §204.1 interpretation should rely on Keyes Motors or the statutory text | Keyes Motors controls; commission requires percentage of price and principal selling duties. | Statutory text allows commission wages based on amount or value; Keyes Motors is not dispositive for all facts. | Statutory text governs; standard is two-part test and amount-based interpretation applies here. |
Key Cases Cited
- Keyes Motors, Inc. v. Division of Labor Standards Enforcement, 197 Cal.App.3d 557 (Cal. App. 1987) (two-part test for commission wages: sale-focused and percentage of price)
- Ramirez v. Yosemite Water Co., 20 Cal.4th 785 (Cal. 1999) (definition of commission and outside salesperson; remand on selling activity and percentage basis)
- Harris v. Electric & Gas Industries, 138 Cal.App.4th 28 (Cal. App. 2006) (commission vs. non-commission under a point system; price/base connection required)
- Belio v. Panorama Optics, Inc., 33 Cal.App.4th 1096 (Cal. App. 1995) (appealability of partial final judgments when ancillary claims depend on overtime ruling)
- Sullivan v. Delta Air Lines, Inc., 104 Cal.App.4th 869 (Cal. App. 2002) (finality and appealability of partial adjudications; amendment sometimes allowed)
- United Parcel Service Wage & Hour Cases, 190 Cal.App.4th 1001 (Cal. App. 2010) (persuasive independent interpretation of DLSE guidance; not binding)