DeLeon v. Verizon Wireless, LLC
143 Cal. Rptr. 3d 810
Cal. Ct. App.2012Background
- DeLeon, a former Verizon Wireless retail sales representative, sued under PAGA alleging Labor Code section 223 secret underpayment of wages based on commission chargebacks.
- Verizon Wireless compensation plans provide commissions as advances payable before all conditions are satisfied, with a chargeback provision if a customer disconnects during the chargeback period.
- Chargeback periods: 365 days (postpaid), 150 days (prepaid), 120 days (enhanced services); advances reduce future advances if conditions aren’t met.
- Incentive allowances and online/in-person trainings document employee understanding of the plan; plans describe advances, not earned wages, until the chargeback period expires.
- Dispute centers on whether commissions are wages or advances and whether the chargeback terms were clearly understood and consensual.
- Trial court granted summary judgment for Verizon, holding commissions were advances and chargebacks compliant with the plan terms; DeLeon timely appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are commissions advances or wages for 223 purposes? | DeLeon argues commissions are wages once earned at sale. | Verizon contends commissions are advances that become earned only after the chargeback period. | Commissions are advances, not wages. |
| Does the chargeback provision secretly underpay under §223? | DeLeon contends the policy secretly reduces earned wages via chargebacks. | Verizon asserts chargebacks reconcile advances and are not secret underpayment of wages. | Chargeback provision does not violate §223; it reconciles advances and reflects contract terms. |
| Must there be signed authorization to validate chargebacks under §223? | Steinhebel/Koehl require written acknowledgment; DeLeon argues absence of signed consent matters. | Performance and training constitute assent; plans did not require signed acknowledgment. | Mutual assent can be shown by performance and training; no signed acknowledgment required. |
Key Cases Cited
- Steinhebel v. Los Angeles Times Communications, LLC, 126 Cal.App.4th 696 (Cal.App. 2005) (advance commissions are not wages; deductions via chargebacks permitted when defined)
- Koehl v. Verio, Inc., 142 Cal.App.4th 1313 (Cal.App. 2006) (written acceptance not strictly required; contract terms govern assent)
- Harris v. Investor's Business Daily, Inc., 138 Cal.App.4th 28 (Cal.App. 2006) (distinguishes Steinhebel where employee agreement to chargeback was not in writing)
- Amaral v. Cintas Corp. No. 2, 163 Cal.App.4th 1157 (Cal.App. 2008) (defines the 'secret' underpayment concept in §223 as the employer's obligation to pay more)
- Prudential Ins. Co. v. Fromberg, 240 Cal.App.2d 185 (Cal.App. 1966) (contract principles govern wage agreements and performance-based assent)
- Sciborski v. Pacific Bell Directory, 205 Cal.App.4th 1152 (Cal.App. 2012) (supporting that express chargeback terms may be required by writing, but not controlling here)