A. The Actions
Plaintiffs alleged they were not paid for all the time they spent at the correctional institutions under defendants' control. Specifically, they were expected to sign in and sign out on time sheets that reflected only their officially assigned work day. Plaintiffs were required to be at their assigned posts at the beginning of their official shifts. However, the sign-in and sign-out locations were often significantly removed from plaintiffs' actual work posts, and they were not compensated for the time it took to travel from those locations to their work posts after signing in or to return to those locations to sign out at the end of a shift. Second, plaintiffs alleged that they were required to spend time before checking in and after checking out on such activities as being briefed before a shift, briefing relief staff at work posts after a shift, checking out and checking in mandated safety equipment, putting on and removing mandated safety equipment, waiting in lines, submitting to searches at security checkpoints, and taking inventories of weapons, ammunition, and other equipment. Plaintiffs were either not allowed to or were discouraged from adjusting their time logs to reflect these additional tasks. Plaintiffs alleged causes of action for failure to pay
In the Stoetzl action, the trial court certified a class of "[a]ll persons who are or who have been employed as Correctional Officers, Correctional Sergeants, Correctional Lieutenants, Medical Technical Assistants, Senior Medical Technical Assistants, Correctional Counselors I, Correctional Counselors II, Youth Correctional Officers, and/or Youth Correctional Counselors to work at adult and/or youth correctional institutions within the [CDCR] in the period commencing April 9, 2005 until the notice of pendency of this class action is given." The Stoetzl , Shaw , and Kuhn actions were later coordinated. ( Code Civ. Proc., § 404 et seq. ; rule 3.501 et seq.) The court granted class certification in the Shaw and Kuhn actions and, by stipulation, certified two subclasses for the three coordinated cases, one of unrepresented supervisory employees (consisting of Senior Medical Technical Assistants, some subclassifications of Correctional Officer II's, Correctional Sergeants, and
B. Judgment on the Pleadings
The State moved for judgment on the pleadings. The trial court granted the motion without leave to amend as to the causes of action for failure to pay overtime in violation of sections 222 and 223 and failure to keep accurate records of hours worked, and denied the motion as to the remaining causes of action.
C. Trial
1. Threshold Legal Issues
The parties stipulated that the trial would be bifurcated into multiple phases. In Phase I, several threshold legal issues would be tried to the court. The issues were: "Compensability[¶] (a) Whether the California state law standard of compensability (the 'control standard') or the [federal Fair Labor Standards Act of 1938,
2. Stipulations and Evidence at Trial
a. Represented Employees
The California Correctional Peace Officers' Association (CCPOA) is the exclusive collective bargaining representative for members of the subclass of represented employees. Labor relations between CCPOA and the State are governed by the Ralph C. Dills Act ( Gov. Code, § 3512 et seq. ) (the Dills Act), which provides for collective bargaining over wages, hours, and other terms and conditions of employment. The Department of Human Resources (CalHR, formerly known as the Department of Personnel Administration or DPA) represents the Governor of California as the state employer for purposes of collective bargaining with the CCPOA. The Dills Act allows parties to agree to a memorandum of understanding (MOU) to supersede certain provisions of law. ( Gov. Code, § 3517.61.) After the parties reach an agreement, they submit a joint MOU to the Legislature, when appropriate, for approval. ( Gov. Code, § 3517.5.)
The FLSA establishes overtime pay requirements for hours worked in excess of 40 per week. (
The State, through CalHR, and CCPOA have negotiated multiple MOU's since 1982 on behalf of the represented plaintiffs' collective bargaining unit, State Bargaining Unit 6. Before 1998, the MOU's generally provided for a 40-hour workweek. The MOU in effect from July 1, 1998 to June 30, 1999 contained a section entitled "7k Exemption," which began, "CCPOA and the State agree that the employees listed below are working under the provisions of Section 207k of the Fair Labor Standards Act (FLSA) and the parties
The State's chief negotiator for the 1998-1999 MOU, David Gilb, testified that the 7k schedule was designed to address the question of whether employees' work started when they picked up their equipment or when they reported to their posts. During negotiations, he defined pre- and post-work activities as work that began when employees picked up their tools in the central control area. The work could include walking from the control area to the post and participating in a brief pre-shift meeting. The State took the position that under the FLSA, it was not obligated to compensate employees for time they spent between entering the institution and picking up their equipment or the time after the equipment was returned, and CCPOA's negotiators understood this was the State's position. During the course of the negotiations, there was no discussion of whether the State would have to comply with California wage and hour laws. A member of the CCPOA's negotiating team, David Lewis, testified that he did not believe California law applied to the 7k schedule and that he did not raise the subject of California law because the parties were negotiating under federal law. The Legislature approved the 1998-1999 MOU, and it was signed by the Governor and chaptered into law by the Secretary of State. (Stats. 1998, ch. 820, § 2, p. 5135.)
The MOU in effect from July 1, 1999 to July 2, 2001 continued the relevant provisions of the 1998-1999 MOU. CCPOA's negotiators understood that when a provision was "rolled over" from one MOU to the next, the
The MOU in effect from July 1, 2001 to July 2, 2006 provided for a 7k schedule of 164 compensated hours in a 28-day work period, four of which were for pre-and post-work activities for represented Correctional Officers, Medical Technical Assistants, Youth Correctional Officers, and Youth Correctional Counselors. Correctional Counselor I and Correctional Counselor II Specialists also had a 164-hour schedule. "Overtime" was defined as any hours worked in excess of that schedule, and required pay at one and a half times the regular rate of pay. The MOU provided, "CCPOA agrees that generally this is sufficient time for all pre and post work activities during each work period, and that the compensation allotted for these activities under this provision is full compensation for all of these activities. This section shall not result in changes to the shift start/stop times." It included provisions
CCPOA and the State continued to give effect to these provisions from July 2, 2006 to September 18, 2007, as the parties negotiated unsuccessfully for a new MOU to succeed the 2001-2006 MOU. (See Gov. Code, § 3517.8, subd. (a).) On September 18, 2007, the State imposed on CCPOA and the represented employees the terms of its "last[,] best[,] and final offer," without substantive modification to the provisions discussed above. (See Gov. Code, § 3517.8, subd. (b).) The Legislature did not approve or ratify these terms.
The State and CCPOA entered into a new MOU on May 16, 2011, which was set to expire July 2, 2013. The 2011-2013 MOU recited that the parties were working under the provisions of section 207(k) of the FLSA (
b. Unrepresented Employees
Labor relations between the unrepresented employees are governed by the Bill of Rights for State Excluded Employees ( Gov. Code, § 3525 et seq. ), which does not permit collective bargaining. No MOU governs their hours, wages, or other terms and conditions of employment. Their regular working schedule was 40 hours of regular compensated duty during each work week. Correctional Sergeants, Correctional Lieutenants, and Senior Medical Technical Assistants were paid overtime at one and a half times the regular rate of pay for reported time in excess of that. Unrepresented employees did not receive the four hours of block pay for pre- and post-work activities that some represented employees received.
CalHR used the California Pay Scale Manual to document the salaries for state employees. The Pay Scale Manual established "Work Week Groups" under the FLSA.
Under the heading, "Determination of Coverage under FLSA," the Pay Scale Manual provided: "The provisions of Work Week Group 2 are made applicable to all classes which are determined by the Director of the Department of Personnel Administration to include positions subject to the FLSA." The DPA had determined that all the job classifications included in the Unrepresented Employees subclass were subject to the FLSA.
The trial court ruled in favor of the State on all issues at the Phase I trial. As to represented employees, it concluded the legal standard for determining what constituted compensable hours worked was the "first principal activity" test of the FLSA rather than California's "control test." It based this conclusion on the language of the MOU's, which it found "unambiguously establishes that the parties agreed that the FLSA's first principal activity test is the controlling legal standard"; evidence that the parties understood they were negotiating under federal law and agreed to adopt the FLSA's test; and the fact that the MOU's were approved by the Legislature and chaptered into law. As to the unrepresented employees, the trial court concluded CalHR had acted within its legislatively delegated authority in applying the FLSA as the standard for measuring compensable hours. As to plaintiffs' claim for common law breach of contract, the court ruled that this claim was subject to the general rule that the terms and conditions of public employment are controlled by statute and ordinance, rather than contract, and that, in any case, plaintiffs had not established the existence of an agreement between the State and plaintiffs to pay overtime.
II. DISCUSSION
A. Statutory and Regulatory Scheme Governing California Minimum Wage
"The IWC is a five-member appointive board initially established by the Legislature in 1913. For the first 60 years of its existence, the IWC's mission was to regulate the wages, hours and conditions of employment of women and children employed in this state, in furtherance of such employees' 'health and welfare.' To this end, the commission-beginning in 1916-promulgated a series of industry- and occupation-wide 'wage orders,' prescribing various minimum requirements with respect to wages, hours and working conditions to protect the health and welfare of women and child laborers.... [¶] ... [T]he California Legislature in 1972 and 1973 amended the applicable provisions of the Labor Code to authorize the IWC to establish minimum wages, maximum hours and standard conditions of employment for all employees in the state, men as well as women. [Citations.] The constitutionality of this legislative expansion of the IWC's jurisdiction to all California workers is explicitly confirmed by article XIV section 1 of the California Constitution which declares: 'The Legislature may provide for minimum wages and for the general welfare of employees and for those purposes may confer on a commission legislative, executive and judicial powers." ( Industrial Welfare Com. v. Superior Court (1980)
"[T]he IWC's wage orders are entitled to 'extraordinary deference, both in upholding their validity and in enforcing their specific terms.' [Citation.] ... [¶] The IWC's wage orders are to be accorded the same dignity as statutes. They are 'presumptively valid' legislative regulations of the employment relationship [citation], regulations that must be given 'independent effect' separate and apart from any statutory enactments [citation]. To the extent a wage order and a statute overlap, we will seek to harmonize them, as we would with any two statutes. [Citation.]" ( Brinker Restaurant Corp. v. Superior Court (2012)
Under section 1197, " '[t]he minimum wage for employees fixed by the commission is the minimum wage to be paid to employees, and the payment of a [lower] wage than the minimum so fixed is unlawful.' Under section 1194, 'any employee receiving less than the legal minimum wage ... applicable to the employee is entitled to recover in a civil action the unpaid balance of the full amount of this minimum wage ...' (id ., subd. (a)). Accordingly, today, as under the 1913 act, specific employers and employees become subject to the minimum wage only under the terms of an applicable wage order, and an employee who sues to recover unpaid minimum wages actually and necessarily sues to enforce the wage order." ( Martinez , supra , 49 Cal.4th at pp. 56-57,
California's general minimum wage order ( Cal. Code Regs., tit. 8, § 11000, Order No. MW-2001) requires employers to pay wages of at least the minimum wage for "all hours worked." Wage Order 4-2001 ( Cal. Code Regs., tit. 8, § 11040 ) (Wage Order 4), applicable to those employed in professional, technical, clerical, mechanical, and similar occupations,
"We independently review the construction of statutes [citation] and begin with the text. If it 'is clear and unambiguous our inquiry ends.' [Citation.] Wage and hours laws are 'to be construed so as to promote employee protection.' [Citations.] These principles apply equally to the construction of wage orders. [Citation.]" ( Mendiola v. CPS Security Solutions, Inc. (2015)
C. Failure to Pay Minimum Wage
Plaintiffs contend the State violated California's minimum wage law by failing to pay them for all hours they worked, specifically, for uncompensated pre- and post-work activity.
1. Represented Employees
The Dills Act requires the State to meet and confer in good faith with representatives of recognized employee organizations regarding wages, hours, and other terms and conditions of employment. ( Gov. Code, § 3517.) If they reach agreement, they must prepare an MOU to present to the Legislature for approval, where appropriate. ( Gov. Code, § 3517.5.) "The circumstances are 'appropriate' '[i]f any provision of the memorandum of understanding requires the expenditure of funds ...' or if 'legislative action to permit its implementation' is required." ( Service Employees Internat. Union, Local 1000 v. Brown (2011)
Under the federal Portal-to-Portal Act (
California law, as embodied in various wage orders, including Wage Order 4, applies a broader standard, requiring compensation when an employee is subject to the control of an employer. ( Mendiola , supra , 60 Cal.4th at pp. 839-840,
A necessary premise to plaintiffs' argument is that public employees are governed by California wage and hour laws. For this proposition, they rely upon Guerrero v. Superior Court (2013)
Plaintiffs also argue, however, that the protections of California minimum wage law may never be "waived." ( §§ 1194, 1197 ; Hoover v. American Income Life Ins. Co. (2012)
The flaw in plaintiffs' argument is that the MOU's were not only negotiated by CCPOA and the State, but they were also approved by the Legislature, signed by the Governor, and chaptered into law. They are thus not simply agreements between the parties, but laws specifically governing the terms and conditions of plaintiffs' employment. And, it is well established, "the more specific provision [citation] takes precedence over the more general one [citation]. [Citations.] To the extent a specific statute is inconsistent with a general statute potentially covering the same subject matter, the specific statute must be read as an exception to the more general statute. [Citations.]" ( Salazar v. Eastin (1995)
The fact that the MOU was approved by the Legislature and enacted into law distinguishes this case from Grier v. Alameda-Contra Costa Transit Dist. (1976)
Plaintiffs argue that even if the parties could have bargained away the protection of Wage Order 4, they in fact did not agree to have the represented plaintiffs' compensable time measured by federal, rather than state, law. Both the language of the MOU's and the circumstances of their negotiation demonstrate otherwise. Each MOU contained a section entitled "7K Exemption," which recited that the employees were working under the provisions of Section 207(k) of the FLSA and that the State was declaring a specific exemption for them, and established a 164-hour, 28-day work period consisting of 160 hours for posted duty and four hours for pre- and post-work activities. In each of the MOU's except that formed in 2011, CCPOA and the State agreed that four hours was generally sufficient for all such activities, that they had "made a good faith attempt to comply with all requirements of the FLSA in negotiating this provision," and that "[i]f any court of competent jurisdiction declares that any provision or application of this Agreement is not in conformance with the FLSA, the parties agree to [m]eet and [c]onfer immediately."
The evidence also supports the trial court's finding that, when negotiating the 1998-1999 MOU, the parties understood they were proceeding under the FLSA's standards and employees would not be entitled to compensation for the time they spent between entering the institution and picking up their equipment or the time after the equipment was returned. This agreed-upon schedule continued for all succeeding MOU's.
2. Unrepresented Employees
The trial court concluded the FLSA also provided the legal standard for
Plaintiffs challenge this conclusion, arguing that CalHR could not, and did not, supersede Wage Order 4, which defines "hours worked" to mean "the time during which an employee is subject to the control of an employer." ( Cal. Code Regs., tit. 8, § 11040, subd. (2)(K).)
Defendants, on the other hand, contend that CalHR, using its delegated authority to set salaries for unrepresented employees, fixed the FLSA as the controlling legal standard for compensable hours worked by virtue of the definition of Work Week Group 2 found in the California Pay Scale Manual. (See California Assn. of Professional Scientists v. Department of Finance (2011)
On this record, we agree with plaintiffs. We have already concluded that plaintiffs' premise-that (unless superseded) the minimum wage provisions of Wage Order 4 apply to state employees-is correct. The question, then, is whether the Pay Scale Manual, like the MOU, displaces the state
There is at least some tension between Wage Order 4 and CalHR's definition of Work Week Group 2, which relies upon the FLSA. But our Supreme Court has explained that wage orders are entitled to " 'extraordinary deference,' " and have "the same dignity as statutes." ( Brinker , supra ,
We first note that, unlike the MOU's, the Pay Scale Manual is not a legislative enactment. Moreover, the manual itself uses language parallel to Wage Order 4 regarding the definition of "hours worked." Wage Order 4 defines "hours worked" as "the time during which an employee is subject to the control of an employer."
Accordingly, we conclude the unrepresented employees are entitled to pay for all hours worked under the applicable California standard rather than the FLSA's standard. We shall therefore remand the matter to the trial court for further proceedings, in which it will determine whether, and to what extent, the unrepresented employees were not compensated for their work.
D. Breach of Contract
The trial court ruled against plaintiffs on their cause of action for failure to pay overtime in breach of their common law contractual obligation. As to the subclass of represented employees, the court concluded "[t]he comprehensive
Plaintiffs rely primarily on Madera Police Officers Assn. v. City of Madera (1984)
The court in Sheppard reached a similar conclusion. The plaintiff there, a part-time instructor for a program created by four public school districts, was required to spend 20 minutes of unpaid time preparing for every hour he spent teaching. Among the claims he asserted was one for breach of contract, and the trial court sustained the defendant's demurrer, which was made on the ground that " 'public employees hold their positions by statute and are prohibited from maintaining a cause of action for breach of contract ...' "
Also of note, our Supreme Court has concluded that "contractual rights may be implied from an ordinance or resolution when the language or circumstances accompanying its passage clearly evince a legislative intent to create private rights of a contractual nature enforceable against [a] county." ( Retired Employees Assn. of Orange County, Inc. v. County of Orange (2011)
With respect to the subclass of represented employees, we agree with the trial court that plaintiffs have not established a contract that would support their claim. We have already concluded that the State and CCPOA agreed to have their compensable time measured by federal, rather than state, law. Each
We reach a different result as to the subclass of unrepresented employees. We have already concluded they are entitled to compensation for all hours worked under California's broader standard. And Madera , White , and Sheppard teach that a breach of contract claim may be based on earned but unpaid wages. ( Madera , supra , 36 Cal.3d at pp. 413-414,
E. Violation of Sections 222 and 223
Plaintiffs' final challenge is to the trial court's grant of judgment on the pleadings as to their cause of action for failure to pay contractual overtime in violation of sections 222 and 223.
Section 222 provides: "It shall be unlawful, in case of any wage agreement arrived at through collective bargaining, either willfully or unlawfully or with intent to defraud an employee, a competitor, or any other person, to withhold from said employee any part of the wage agreed upon." Section 223 provides: "Where any statute or contract requires an employer to maintain a designated wage scale, it shall be unlawful to secretly pay a lower wage while purporting to pay the wage designated by statute or by contract." The trial court concluded that these statutes are not applicable to public employers and that, in addition, plaintiffs had not alleged facts sufficient to state a claim for violation of section 223 because they did not allege secret deductions or "kickbacks."
We agree with the trial court that plaintiffs cannot maintain this cause of action. As to the subclass of represented plaintiffs, we have already concluded that they agreed to have their hours worked measured by federal law and that the Legislature approved this arrangement. Their
We also agree with the trial court that the unrepresented employees may not maintain their cause of action for violation of section 223. Our high court has explained that "[t]he use of the device of deductions creates the danger that the employer, because of his superior position, may defraud or coerce the employee by deducting improper amounts.... [I]t was the utilization of secret deductions or 'kick-backs' to make it appear that an employer paid the wage provided by a collective bargaining contract or by a statute, although in fact he paid less, that led to the enactment of Labor Code sections 221 - 223 in 1937. These sections, this court said in Sublett v. Henry ' s etc. Lunch [ (1942) ]
Plaintiffs argue, however, that a violation of section 223 may be found even in the absence of a secret agreement. They draw our attention to Armenta , supra ,
Neither Armenta nor Gonzalez presents the situation we face here: Plaintiffs are not using sections 221, 222, and 223 to support a minimum wage claim, but instead assert a stand-alone cause of action for violation of section 223, which by its terms applies to an employer who "secretly pay[s] a lower wage while purporting to pay the wage designated by statute or by contract." (Italics added.)
We conclude, therefore, that the trial court properly granted judgment on the pleadings as to the causes of action for violations of sections 222 and 223. We need not address the additional question of whether public entities are subject to those statutory provisions.
III. DISPOSITION
The judgment as to the subclass of unrepresented employees is reversed as to the second and fourth causes of action, and the matter is remanded to the
We concur:
Ruvolo, P.J.
Reardon, J.
Notes
The three coordinated actions are Stoetzl et al. v. State of California, CGC-08-474096, filed in the San Francisco County Superior Court (the Stoetzl action); Shaw et al. v. State of California, 10C0081, filed in the Kings County Superior Court (the Shaw action); and Kuhn et al. v. State of California, BC450446, filed in the Los Angeles County Superior Court (the Kuhn action). Defendants are the State of California, the California Department of Corrections and Rehabilitation (CDCR), the California Department of Mental Health, and the California Department of Personnel Administration (DPA). We shall refer to defendants collectively as "the State."
All undesignated statutory references are to the Labor Code. All rule references are to the California Rules of Court.
Employees in the job classification of Correctional Counselor II (Supervisor) were later excluded from the class of unrepresented employees and dismissed from the action.
The parties stipulated to certain facts and legal conclusions for purposes of the Phase I trial, and additional evidence was admitted at trial.
Government Code section 19843, subdivision (a) provides: "For each class or position for which a monthly or annual salary range is established by the department [i.e., CalHR, see Gov. Code, § 19815, subd. (a) ], the department shall establish and adjust workweek groups and shall assign each class or position to a workweek group. The department, after considering the needs of the state service and prevailing overtime compensation practices, may establish workweek groups of different lengths or of the same length but requiring different methods of recognizing or providing compensation for overtime. The department may also provide for the payment of overtime in designated classes for work performed after the normal scheduled workday or normal scheduled workweek."
There is no dispute that plaintiffs' job classifications fall within the ambit of wage order 4.
This includes the time spent travelling between their sign-in and sign-out locations and their work posts, briefing and being briefed, checking equipment in and out, putting on and removing safety equipment, submitting to searches, and taking inventories of equipment.
"It is settled that the FLSA does not preempt state regulation of wages, hours, and working conditions. [Citations.]" (California Correctional Peace Officers ' Assn. v. State of California (2010)
Sheppard also explained that Wage Order 4's predecessor, Wage Order 4-2000, exempted public employers more broadly, providing: " 'The provisions of this Order shall not apply to employees directly employed by the State or any county, incorporated city or town or other municipal corporation, or to outside salespersons.' (Cal. Code Regs, tit. 8, § 11040, former subd. 1(B).)" (Sheppard, supra,
The 2011 MOU omitted these terms, but the parties agreed any changes would not prejudice their positions in this litigation.
Plaintiffs make no contention that we should reach a different result for later periods at issue here than for the earlier periods.
Government Code section 19845, subdivision (a) provides: "Notwithstanding any other provision of this chapter, the department is authorized to provide for overtime payments as prescribed by the Federal Fair Labor Standards Act...."
This definition goes on to provide, "Within the health care industry, the term 'hours worked' means the time during which an employee is suffered or permitted to work for the employer, whether or not required to do so, as interpreted in accordance with the provisions of the Fair Labor Standards Act." (Cal. Code Regs., tit. 8, § 11040, subd. (2)(K), italics added.) In Mendiola, our high court rejected an argument that the federal standard for measuring hours worked for resident employees should be applied to security guards who were subject to Wage Order 4, noting: "[L]anguage in Wage Order 4 demonstrates that the IWC knew how to explicitly incorporate federal law and regulations when it wished to do so. For example, the wage order provides that, within the health care industry, hours worked should be interpreted in accordance with the FLSA. (Wage Order 4, subd. 2(K).) But the order makes no reference to federal law applying in the case of guards. The language chosen by the IWC does not support [defendant's] argument that a broad importation [of federal rules] was intended. Indeed, it supports the contrary conclusion: The IWC intended to import federal rules only in those circumstances to which the IWC made specific reference." (Mendiola, supra,
As the trial court noted, this mirrors the language of 29 Code of Federal Regulations Part 785.7, which states: "The United States Supreme Court originally stated that employees subject to the act must be paid for all time spent in 'physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business.' [Citation.] Subsequently, the Court ruled that there need be no exertion at all and that all hours are hours worked which the employee is required to give his employer, that 'an employer, if he chooses, may hire a man to do nothing, or to do nothing but wait for something to happen....' [Citations.] The workweek ordinarily includes 'all the time during which an employee is necessarily required to be on the employer's premises, on duty or at a prescribed work place'. [Citation.] The Portal-to-Portal Act did not change the rule except to provide an exception for preliminary and postliminary activities. See § 785.34." (Italics added.)
We do not opine on whether Wage Order 4 can be supplanted by the Pay Scale Manual, but conclude that, in its current iteration, the Manual does not do so.
The court also noted that "[a] contractual right can be implied from legislation in appropriate circumstances. [Citation.] Where, for example, the legislation is itself the ratification or approval of a contract, the intent to make a contract is clearly shown." (Retired Employees, supra,
Section 221 provides: "It shall be unlawful for any employer to collect or receive from an employee any part of wages theretofore paid by said employer to said employee."
Noting that section 225 makes it a misdemeanor to violate section 223 and that section 225.5 establishes civil penalties for violating that statute, a federal district court has concluded the Legislature did not intend to create a private right of action for violation of section 223. (Calop Bus. Sys. v. City of Los Angeles (C.D.Cal. 2013)