Peabody v. Time Warner Cable, Inc.
59 Cal. 4th 662
| Cal. | 2014Background
- Peabody worked as a Time Warner account executive selling advertising; paid biweekly with hourly wages plus commissions every other pay period.
- Claimed overtime, improper minimum wage, late payment, and wage statement violations related to Time Warner’s compensation plan changes in 2009.
- Commissions for January–February 2009 were paid under a new compensation plan and argued not earned until conditions were met.
- Time Warner removed the case to federal court and got summary judgment; Ninth Circuit asked California Supreme Court to resolve whether commissions may be allocated across pay periods to satisfy compensation requirements.
- California Supreme Court held that commissions cannot be attributed across pay periods to satisfy the minimum-earnings prong and that wages must be paid semimonthly as earned.
- Decision focuses on the commissioned employee exemption under Wage Order No. 4 and the interplay with §204(a) semimonthly pay requirements and DLSE interpretations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether commissions may be attributed across pay periods to satisfy the exemption. | Peabody | Time Warner | Not permitted; commissions cannot be reassigned to other pay periods. |
| Whether the minimum earnings prong can be satisfied by aggregating commissions from different pay periods. | Peabody | Time Warner | Not permissible; earnings must exceed the minimum in the actual pay period. |
| Whether section 204(a) semimonthly pay requirements govern the timing of earned wages including commissions. | Peabody | Time Warner | Semimonthly pay required; unearned commissions do not justify cross-period attribution. |
| Whether federal law permits the proposed attribution of commissions. | Peabody | Time Warner | California law controls; federal standards differ and do not apply here. |
Key Cases Cited
- Murphy v. Kenneth Cole Productions, Inc., 40 Cal.4th 1094 (Cal. 2007) (statutes governing employment terms; interpretation of wage provisions)
- Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004 (Cal. 2012) (broad protection of employees; exemptions construed narrowly)
- Nordquist v. McGraw-Hill Broadcasting Co., 32 Cal.App.4th 555 (Cal. App. 1995) (exemption scope and labor standards interpretation)
- Ramirez v. Yosemite Water Co., 20 Cal.4th 785 (Cal. 1999) (narrowly construed exemptions to protect employees)
- Martinez v. Combs, 49 Cal.4th 35 (Cal. 2010) (California wage-hour enforcement and interpretation of exemptions)
- Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal.4th 554 (Cal. 2007) (adoption of DLSE interpretations in wage matters)