Case Information
*1 Filed 10/20/16
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
LIDIA SOTO, D069403
Plaintiff and Appellant,
v. (Suрer. Ct. No. 37-2015-00017074- CU-OE-CTL) MOTEL 6 OPERATING, L.P.,
Defendant and Respondent. APPEAL from a judgment of the Superior Court of San Diego County, Joel Wohlfeil, Judge. Affirmed.
Gaines & Gaines, Stephen H. Krumm and Daniel F. Gaines, for Plaintiff and Appellant.
Ogletree, Deakins, Nash, Smoak & Stewart, Spencer C. Skeen, Jennifer L. Santa Maria, and Sarah A. Williams for Defendant and Respondent.
Lidia Soto sued her former employer, Motel 6 Operating, L.P. (Motel), alleging Motel violated Labor Code section 226, subdivision (a)1 by failing to include the monetary amount of accrued vacation pay in its employees' wage statements. Soto filed the action in her individual capacity and on behalf of all aggrieved workers under the Private Attorney General Act of 2004 (PAGA). (§ 2698 et seq.)
The court sustained Motel's demurrer without leave to amend. We affirm. Section 226(a) does not require employers to include the monetary value of accrued paid vacation time in employee wage statements unless and until a payment is due at the termination of the employment relationship.
FACTUAL AND PROCEDURAL SUMMARY
Soto wоrked for Motel from June 2012 through January 2015. In May 2015, Soto brought a representative PAGA action alleging a single cause of action under section 226(a).2 Soto alleged Motel violated section 226(a) by failing to provide its California 1 All statutory references are to the Labor Code; we omit the word subdivision when referring to the statutоry subparts.
2 Section 226(a) states: "Every employer shall, semimonthly or at the time of each payment of wages, furnish each of his or her employees, either as a detachable part of the check, draft, or voucher paying the employee's wages, or separately when wages are paid by personal check or cash, an accurate itemized statement in writing showing (1) gross wages earned, (2) total hours worked by the employee, except for any employee whose compensation is solely based on a salary and who is exempt from payment of overtime under subdivision (a) of Section 515 or any applicable order of the Industrial Welfare Commission, (3) the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis, (4) all deductions, provided that all deductions made on written orders of the employee may be aggregated аnd shown as one item, (5) net wages earned, (6) the inclusive dates of the period for which the employee is paid, (7) the name of the employee and only the last four digits of his or her social security number *3 nonexempt employees with wage statements setting forth "all vacation and PTO (paid time off) wages accrued during the applicable pay period." Soto sought statutory penalties and attorney fees. (§ 2699(g)(1).)
Motel demurred, asserting that section 226(a) does not require employers to itemize the monetary value of vacation balances before the employment relationship is terminated. Motel relied on the plain lаnguage of the statute, the language of related statutes (§§ 227.3, 227.5), federal and state case law, and a sample itemized wage statement contained on the Division of Labor Standards Enforcement (DLSE) website.
In opposing the demurrer, Soto argued that section 226(a) requires itemization of
earned "wages" and California сases have recognized (in other contexts) that a "wage"
includes
vacation pay
. (See
Murphy v. Kenneth Cole Productions, Inc.
(2007) 40 Cal.4th
1094, 1103 (
Murphy
);
Suastez v. Plastic Dress-Up. Co.
(1982)
After cоnsidering the arguments and taking judicial notice of the DLSE sample wage statement, the trial court sustained the demurrer without leave to amend. The court concluded "section 226(a) does not require a wage statement to include the value of vacation or PTO wages accrued and earned."
I. Review Standards
On appeal from a judgment dismissing an action after sustaining a demurrer
without leave to amend, the "reviewing court gives the complaint a reasonable
interpretation, and treats the demurrer as admitting all material facts properly pleaded."
(
Aubry v. Tri-City Hospital Dist.
(1992)
II. Statutory Interpretation Principles
The issue before us requires that we ascertain the legislative intent underlying
section 226. (See
Gattuso v. Harte-Hanks Shoppers, Inc.
(2007)
"When the statutory language is ambiguous, a court may consider the
consequences of each possible construction and will reasonably infer that the enacting
legislative body intended an interpretation producing practical and workable results rather
than one producing mischief or absurdity . . . . '[A] court's "overriding purpose" in
*5
construing a statute is "to give the statute a
reasonable
construction conforming to [the
Legislature's] intent. . . ." ' . . . . 'The court will apply common sense to the language at
hand and interpret the statute to make it workable and reasonable.' " (
Gattuso, supra
, 42
Cal.4th at p. 567; accord,
Yohner v. California Dept. of Justice
(2015)
We independently determine the meaning of a statute. (
Ramos v. Garcia
(2016)
III. Analysis
Section 226 requires "employers [to] provide accurate itemized stаtements of
wages to their employees." (
Morgan v. United Retail Inc.
(2010)
The Legislature enacted section 226 to ensure an employer "document[s] the basis
of the employee compensation payments" to assist the employеe in determining whether
he or she has been compensated properly. (
Gattuso, supra
,
Soto contends section 226 requires the monetary amount of earned vacation pay to be listed on each itemized wage statеment. Five years ago, a federal district court rejected the identical argument, finding that neither the statutory language nor the statutory purpose supports this requirement. ( Heinzman v. Home Depot U.S.A., Inc. (U.S. Dist. Ct., C.D. Cal., Jan. 20, 2011, No. SACV 10-01827-CJC (RNBx)) 2011 WL 12817699.) We agree with the court's conclusion.
First, section 226(a) is highly detailed, containing nine separate categories that
must be included on wagе statements, and the code section does not identify accrued paid
vacation as one of these categories. (See fn. 2,
ante
.) When a statute omits a particular
category from a more generalized list, a court can reasonably infer a specific legislative
intent not to include that category within the statute's mandate. (See
Blankenship v.
Allstate Ins. Co.
(2010)
Soto contends the accrued value of a paid vacation benefit need not have been
specifically identified because vacation pay falls within the definition of the "gross wages
earned" and "net wages earned" statutory categories. (§§ 226(a)(1), (5); see fn. 2,
ante
.)
Soto relies оn language in California Supreme Court decisions recognizing that vacation
pay is a form of a "wage[]." (See
Murphy, supra
,
Soto's argument reflects a misunderstanding of the nature of an accrued vacation benefit under California law. Under section 227.3, if an employer provides for paid vacation, "all vested vacation shall be paid to [the employee] as wages at his final rаte in accordance with" the employment contract or policy. In interpreting section 227.3 and applying "equity and fairness" principles, the California Supreme Court in Suastez held paid vacation is a form of deferred wages for services rendered, similar to a pension or retirement benefit. ( Suastez, supra , 31 Cal.3d at pp. 780-781, 783-784.) Under this view, a proportionate right to a paid vaсation vests as the labor is provided. ( Id. at p. 784 . ) On termination, the employee must be paid for a pro rata share of his or her unused vacation time. ( Ibid. )
Consistent with Suastez, the courts have recognized that although vacation time vests as labor is provided, unused vacation time does not become a quantifiable vacation wage until the employеe separates from the employment. ( Church v. Jamison (2006) 143 Cal.App.4th 1568, 1576-1577 ( Church ) ["termination of employment is the event that converts the employer's obligation to allow an employee to take vacation from work into the monetary obligation to pay that employee for unused vested vacation time," fn. omitted].) This principle is suppоrted by section 227.3's language that "upon termination," vested vacation pay shall be paid to the employee " as wages ," leading to the reasonable inference that before this time accrued vacation pay is not a "wage." (Italics added.)
Under these authorities, vacation pay cannot be fairly defined аs "gross wages earned" or "net wages earned" under section 226(a)(1) or (a)(5) until the termination of the employment relationship. The employee has vested rights to paid vacation or vacation wages during the time of his employment, but these rights do not ripen and become an entitlement to receive the monetary value of the benefit as wages until the separation date. ( Church, supra , at pp. 1576-1577, 1583; see Suastez, supra , 31 Cal.3d at p. 784.) Further, before separation, the amount of vacation pay tо which the employee is entitled is not ascertainable. An employee is entitled to obtain the value of unused paid vacation at his or her " final rate ." (§ 227.3, italics added.) Because the amount of unused vacation and an employee's final rate may change, an employee's accrued vacation balance depends on the particulаr circumstances at the employment termination date.
Additionally, even assuming the statutory term "wages" can be fairly defined to
include "vacation pay," in interpreting a statute's plain meaning, a court should not focus
solely on " ' "a single word or sentence; the words must be construed in context, and
provisions relating to the sаme subject matter must be harmonized to the extent
possible." ' " (
Morgan v. Beaumont Police Department
(2016)
This interpretation is also supported by section 226(a)'s statutory purpose, which is to document the paid wages to ensure the employee is fully informed regarding the calculation of those wages . As Soto recognizes, " 'The purpose of requiring greater wage stub information is to insure that employees are adequately informed of compensation received and are not shortchanged by their employers' " (quoting Assem. Com. on Labor and Employment, Analysis of Sen. Bill No. 1255 (2011-2012 Reg. Sess., italics added). Consistent with this purpose, an employer is rеquired to identify only those statutory items that are part of the employee's current monetary compensation. The employer must provide the employee with an itemized statement identifying the specific wages being paid at the time of the payment (or at least semimonthly). (§ 226(a).) Until a vacation benefit is required tо be paid, it need not be included in a wage statement under section 226(a).
In urging this court to adopt her interpretation of section 226(a), Soto argues the trial court's conclusion will "keep employees in the dark as to whether their employer has correctly computed and credited vacation pay аnd paid time off." However, there is nothing in the statutory language or its legislative history suggesting that the Legislature intended section 226 to set forth disclosure rules governing all parts of an *10 employer/employee relationship. The statute is directed at the contents of a wage statement pertaining to the specific component parts of the employee's current compensation. If an employer is not required to compensate an employee for unused vacation in a particular paycheck, there is no statutory duty to identify the monetary amount of the accrued vacation balance.
Soto contends we are required to construe wage statutes broadly in favor of
employees. (See
Murphy, supra
,
3 Section 227.5 (relied upon by Motel) requires an employer to provide annual statements upon request regarding payments made "to a health or welfare fund, pension
In reaching our conclusions, we do not rely on the sample wage statement on the DLSE website. As Soto notes, the sample statement does not address the issue of vacation pay, and therefore it is not helpful on the issue before us. We additionally note that Soto's complaint alleged a section 226(a) violation based also on Motel's failure to specify "paid time off" on the wage statements. Soto does not suggest there is any different analysis regаrding this benefit, and therefore we do not separately discuss the issue. Our conclusions apply equally to the "paid time off" allegations.
DISPOSITION
Judgment affirmed. Respondent to recover its costs on appeal.
HALLER, J.
WE CONCUR:
HUFFMAN, Acting P. J.
NARES, J.
fund or vacation plan or such other plan, for the benefit of the employee." This provision does not appear to be directly applicable to the issue here.