67 Cal.App.5th 891
Cal. Ct. App.2021Background
- Jaime Zepeda Labor Contracting, Inc. (Zepeda) is a farm labor contractor that provided workers to client employers Anthony Vineyards, Inc. (AVI) and Richard Bagdasarian, Inc. (RBI). The Division of Labor Standards Enforcement (the Division) issued wage citations to Zepeda and the clients.
- The Division’s citations invoked Lab. Code § 1197.1 (minimum wage citation) and included § 203 waiting‑time penalties for alleged failures to pay final wages when employees were discharged or quit under §§ 201–202.
- It was undisputed that employees received at least the statutory minimum wage on or before their regular payday; in some instances final paychecks were issued a few days after the last day of work for a seasonal task.
- The Division argued that failing to pay final wages on the exact date required by §§ 201–202 (thus triggering § 203 penalties) also constitutes an independent minimum‑wage violation, authorizing § 1197.1 citations that include waiting‑time penalties.
- The superior court granted a peremptory writ directing dismissal of the § 1197.1 citations with prejudice; the Court of Appeal affirmed, concluding no minimum‑wage violation occurred where minimum wages were paid by payday. The Employers’ cross‑appeals were dismissed.
Issues
| Issue | Employer (Plaintiff) Argument | Division (Defendant) Argument | Held |
|---|---|---|---|
| Whether failing to pay final wages on the date required by §§ 201–202 (and thus incurring § 203 waiting‑time penalties) constitutes an independent minimum‑wage violation supporting a § 1197.1 citation | No: minimum‑wage citation requires payment below the minimum; here all employees were paid at least minimum wage by payday | Yes: late payment of final wages means the employee was unpaid on the payday due date, so a minimum‑wage violation occurred and § 1197.1 may be used to impose § 203 penalties | Held for Employers: where minimum wages were paid on or before payday, no separate minimum‑wage violation occurred and § 1197.1 citations were improper |
| Whether the Division may use § 1197.1 to enforce § 203 waiting‑time penalties absent an underlying minimum‑wage violation | § 1197.1 requires an underlying minimum‑wage violation; Division cannot enforce § 203 via § 1197.1 without one | Division reads § 1197.1 to permit issuance of citations that include § 203 penalties whenever the timing of final pay causes unpaid minimum wages on the due date | Held for Employers: § 1197.1 allows recovery of § 203 penalties only in connection with an underlying minimum‑wage violation; Legislature did not authorize using § 1197.1 to enforce § 203 standalone |
| Whether authorities the Division cites (Biggs/White) support treating a late final wage payment as a minimum‑wage violation | Employers: Biggs/White concern payday under FLSA and do not support imposing a California § 1197.1 citation when minimum wage is paid by payday | Division: relies on Biggs/White to show minimum wages must be paid on payday, so late final pay constitutes minimum‑wage breach | Held for Employers: Biggs/White do not support Division’s position because those cases concern FLSA payday requirements and here minimum wages were paid by payday |
| Procedural: Are Employers’ cross‑appeals proper to obtain additional relief? | Employers sought to advance alternative rulings but did not seek affirmative relief beyond dismissal | Division opposed | Cross‑appeals dismissed as Employers were not aggrieved by the judgment and sought no additional relief |
Key Cases Cited
- Biggs v. Wilson, 1 F.3d 1537 (9th Cir. 1993) (interpreting FLSA to require minimum wage be paid by regular payday for liability purposes)
- White v. Davis, 30 Cal.4th 528 (Cal. 2003) (reads Biggs to mean FLSA compliance requires minimum wage on payday, not full salary payment)
- Donohue v. AMN Services, LLC, 11 Cal.5th 58 (Cal. 2021) (wage orders and Labor Code construed to effectuate employee‑protection purpose; wage orders have force similar to statutes)
- Hurger v. Hyatt Lake Resort, Inc., 170 Or.App. 320 (Or. Ct. App. 2000) (Oregon appellate decision rejecting the argument that untimely final pay automatically creates a separate minimum‑wage violation when minimum wage and timing requirements otherwise satisfied)