Petition for Writ of Certiorari — Delta Air Lines, Inc., Petitioner v. Dev Anand Oman, et al.
Supreme Court briefSep 9, 2021
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APPENDIX
TABLE OF APPENDICES
Appendix A
Opinion, United States Court of Appeals
for the Ninth Circuit, Dev Anan Oman et
al. v. Delta Air Lines, Inc., No. 17-15124
(Feb. 2, 2021) ............................................... App-1
Appendix B
Order Denying Petition for Rehearing,
United States Court of Appeals for the
Ninth Circuit, Dev Anan Oman, et al. v.
Delta Air Lines, Inc., No. 17-15124
(April 13, 2021) ............................................ App-4
Appendix C
Opinion, California Supreme Court, Dev
Anan Oman, et al. v. Delta Air Lines, Inc.,
No. S248726 (June 29, 2020) ...................... App-5
Appendix D
Order Certifying Questions to the
Supreme Court of California, United
States Court of Appeals for the
Ninth Circuit, Dev Anan Oman, et al. v.
Delta Air Lines, Inc., No. 17-15124
(May 9, 2018) ............................................. App-47
Appendix E
Order on Motions for Summary
Judgment, United States District Court
for
the
Northern
District
of
California, Dev Anan Oman, et al. v. Delta
Air Lines, Inc., No. 15-cv-00131-WHO
(Jan. 6, 2017) ............................................ App-60
ii
Appendix F
Order on Cross-motions for Summary
Judgment, United States District Court
for
the
Northern
District
of
California, Dev Anan Oman, et al. v. Delta
Air Lines, Inc., No. 15-cv-00131-WHO
(Dec. 29, 2015) ........................................... App-77
Appendix G
Constitutional and Statutory Provisions
Involved.................................................... App-104
U.S. Const. art. I, §8, cl. 3 ................ App-104
Cal. Labor Code §204 ....................... App-104
Cal. Labor Code §226 ....................... App-106
App-1
Appendix A
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
________________
No. 17-15124
________________
DEV ANAND OMAN, et al.,
v.
Plaintiffs-Appellants,
DELTA AIR LINES, INC.,
Defendant-Appellee.
________________
Filed: Feb. 2, 2021
________________
Before: WATFORD and FRIEDLAND, Circuit Judges
and
*
RAKOFF, District Judge.
________________
MEMORANDUM **
________________
Plaintiffs are four current or former flight
attendants who seek to represent an uncertified class
of Delta Air Lines flight attendants who have
performed work in California. They allege that Delta
* The Honorable Jed S. Rakoff, United States District Judge for
the Southern District of New York, sitting by designation.
** This disposition is not appropriate for publication and is not
precedent except as provided by Ninth Circuit Rule 36-3.
App-2
violated provisions of California law governing the
payment of minimum wages, timing of wage
payments, and the format of wage statements.
Plaintiffs appeal from the district court’s order
granting summary judgment to Delta on the
minimum-wage claims, and from the court’s separate
order granting summary judgment to Delta on the
timing-of-pay and wage-statement claims. We affirm
in part and reverse and remand in part.
1. We affirm the district court’s entry of summary
judgment in Delta’s favor on the minimum-wage
claims asserted by all plaintiffs. In response to our
certification request, the California Supreme Court
held that Delta complied with California’s minimumwage laws. Oman v. Delta Air Lines, Inc., 466 P.3d
325, 341 (Cal. 2020). That ruling obviates any need for
us to decide whether application of those laws would
be impermissibly extraterritorial or would violate the
dormant Commerce Clause.
2. We reverse and remand the district court’s
entry of summary judgment in Delta’s favor on the
timing-of-pay and wage-statement claims asserted by
plaintiffs Todd Eichmann, Albert Flores, and Michael
Lehr. In its decision in Oman, the California Supreme
Court held that California Labor Code §§204 and 226
apply to flight attendants who either perform a
majority of their work in California or who do not
perform a majority of their work in any one State and
are based for work purposes in California. 466 P.3d at
341. For the reasons stated in our concurrently filed
opinion in Ward v. United Airlines, Inc., No. 16-16415,
986 F.3d 1234 (9th Cir. 2021), application of this test
to flight attendants who meet its requirements does
App-3
not violate the dormant Commerce Clause. Although
it appears as though plaintiffs Eichmann, Flores, and
Lehr may satisfy this test, we remand to the district
court for a determination of that issue in the first
instance. We also remand to the district court to
determine in the first instance whether Delta
complied with §§204 and 226, assuming these
plaintiffs establish that they meet the requirements of
the California Supreme Court’s test.
The record establishes that plaintiff Dev Oman
does not meet the requirements of the California
Supreme Court’s test, so we affirm the district court’s
entry of summary judgment in Delta’s favor on the
timing-of-pay and wage-statement claims asserted by
Oman.
AFFIRMED in part; REVERSED and
REMANDED in part.
The parties shall bear their own costs.
App-4
Appendix B
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
________________
No. 17-15124
________________
DEV ANAND OMAN, et al.,
Plaintiffs-Appellants,
v.
DELTA AIR LINES, INC.,
Defendant-Appellee.
________________
Filed: April 13, 2021
________________
Before: WATFORD and FRIEDLAND, Circuit Judges
and RAKOFF, * District Judge.
________________
ORDER
________________
The panel unanimously votes to deny the petition
for panel rehearing. Judge Watford and Judge
Friedland vote to deny the petition for rehearing en
banc, and Judge Rakoff so recommends. The full court
has been advised of the petition for rehearing en banc,
and no judge requested a vote on whether to rehear
the matter en banc. Fed. R. App. P. 35. The petition
for panel rehearing and rehearing en banc, filed
March 18, 2021, is DENIED.
* The Honorable Jed S. Rakoff, United States District Judge for
the Southern District of New York, sitting by designation.
App-5
Appendix C
SUPREME COURT OF CALIFORNIA
________________
No. S248726
________________
DEV ANAND OMAN, et al.,
v.
Plaintiffs and
Appellants,
DELTA AIR LINES, INC.,
Defendant and
Appellee.
________________
Filed: June 29, 2020
________________
OPINION
________________
Opinion of the Court by KRUGER, J:
In this case, as in the companion cases Ward v.
United Airlines, Inc., and Vidrio v. United Airlines,
Inc. (June 29, 2020, S248702) 9 Cal.5th 732, 264
Cal.Rptr.3d 1, 466 P.3d 309 (Ward), we confront a
question about the application of various California
wage and hour laws to flight attendants who work
primarily outside California’s territorial jurisdiction.
Consistent with our holding in those cases, we
conclude that California’s wage statement laws apply
only to flight attendants who have their base of work
operations in California, and that the same is true of
App-6
California laws governing the timing of wage
payments. Finally, we hold that, whether or not
California’s minimum wage laws apply to work
performed on the ground during the flight attendants’
brief and episodic stops in California, the pay scheme
challenged here complies with the state requirement
that employers pay their employees at least the
minimum wage for all hours worked.
I.
Defendant Delta Air Lines, Inc., is a national and
international air carrier incorporated in Delaware and
based in Georgia. Delta offers service in and out of
roughly one dozen California airports, connecting
cities as small as Palm Springs and as large as Los
Angeles to the rest of the country and the world.
Plaintiffs Dev Anand Oman, Todd Eichmann,
Michael Lehr, and Albert Flores are or were flight
attendants for Delta. Oman lived in New York and had
a New York airport as a home base. Lehr lives in
Nevada but has a California airport as his home base.
Eichmann and Flores both live in California and have
California airports as their home bases. All four
employees have served on flights in and out of
California airports, as well as airports outside the
state.
In 2015, the named plaintiffs (collectively Oman)
filed a putative class action in federal court, alleging
that Delta violates California labor law by failing to
pay its flight attendants at least the minimum wage
for all hours worked. According to the operative
complaint, Delta’s published work rules (hereafter
Work Rules) pay flight attendants pursuant to
formulas that compensate them on an hourly basis for
App-7
certain hours worked but fail to provide any
compensation at all for other working hours, in
contravention of an obligation under California
statutory and regulatory law to pay no less than the
minimum wage for every hour worked. (See Lab. Code,
§§1182.12, 1194, 1194.2; Industrial Welfare
Commission (IWC) wage order No. 9-2001, §4 (Wage
Order No. 9).) Oman also alleged Delta fails to pay all
wages in accordance with the semimonthly timeframe
prescribed by Labor Code section 204 (section 204) and
to provide comprehensive wage statements reporting
hours worked and applicable hourly pay rates, as
required by California’s wage statement statute,
Labor Code section 226 (section 226). Oman sought
relief under these statutes, as well as civil penalties
under the Labor Code Private Attorneys General Act
of 2004 (Lab. Code, §2698 et seq.) and restitution and
injunctive relief under the unfair competition law
(Bus. & Prof. Code, §17200 et seq.).
On cross-motions for summary judgment, the
district court concluded Delta’s pay scheme does not
violate California’s minimum wage requirements.
(Oman v. Delta Air Lines, Inc. (N.D.Cal. 2015) 153
F.Supp.3d 1094, 1095.) Oman argued that Delta fails
to pay any compensation at all for certain hours
worked in California and, under Gonzalez v.
Downtown LA Motors, LP (2013) 215 Cal. App.4th 36,
155 Cal.Rptr.3d 18 (Gonzalez) and Armenta v. Osmose,
Inc. (2005) 135 Cal. App.4th 314, 37 Cal.Rptr.3d 460
(Armenta), Delta is prohibited from borrowing
compensation due for other hours worked to make up
for any shortfall. The district court examined the pay
formulas set out by Delta’s Work Rules and concluded
they adequately compensate flight attendants for all
App-8
hours worked, without any impermissible borrowing
or reduction in agreed-to contractual rates. (Oman,
supra, 153 F.Supp.3d at pp. 1102-1107.)
The parties then filed cross-motions for summary
judgment on Oman’s remaining wage statement and
timing claims. The district court granted judgment in
favor of Delta, concluding that the relevant California
statutes, sections 204 and 226, do not apply to Oman.
The court held that the jurisdictional reach of the
statutes should be determined according to a
multifactor analysis that examines ‘‘the particular
Labor Code provision invoked, the nature of the work
being performed, the amount of work being performed
in California, and the residence of the plaintiff and the
employer.’’ (Oman v. Delta Air Lines, Inc. (N.D.Cal.
2017) 230 F.Supp.3d 986, 992-993.) Here, ‘‘[f]ocusing
on the purpose of Section 226 (to give employees
clarity as to how their wages are calculated, so they
can verify that their wages are calculated
appropriately under California law), because the
undisputed facts show that the named plaintiffs only
worked a de minimis amount of time in California
(ranging from 2.6% to a high of 14%), and in light of
the nature of their work (necessarily working in
federal airspace as well as in multiple other
jurisdictions but during each pay period and day at
issue),’’ the court concluded that section 226 does not
apply to Oman’s claims. (Oman, supra, 230 F.Supp.3d
at p. 993, fn. omitted.) Seeing no argument for a
different result under section 204, and because
plaintiffs’ counsel had conceded the statute should
have a similar scope, the district court likewise
rejected Oman’s section 204 claims. (Oman, at p. 994.)
App-9
On appeal, the Ninth Circuit asked that we
resolve three unsettled questions of California law
underlying Oman’s claims. (Oman v. Delta Air Lines,
Inc. (9th Cir. 2018) 889 F.3d 1075, 1076-1077.) We
accepted the request and agreed to resolve the
following issues: 1
(1) Do sections 204 and 226 apply to wage
payments and wage statements provided by an out-ofstate employer to an employee who, in the relevant
pay period, works in California only episodically and
for less than a day at a time?
(2) Does California minimum wage law apply to
all work performed in California for an out-of-state
employer by an employee who works in California only
episodically and for less than a day at a time? (See
Lab. Code, §§1182.12, 1194; Cal. Code Regs., tit. 8,
§11090, subd. (4).)
(3) Does the Armenta/Gonzalez bar on averaging
wages (see Armenta, supra, 135 Cal. App.4th 314, 37
Cal.Rptr.3d 460; Gonzalez, supra, 215 Cal.App.4th 36,
155 Cal.Rptr.3d 18) apply to a pay formula that
generally awards credit for all hours on duty, but
which, in certain situations resulting in higher pay,
does not award credit for all hours on duty?
II.
A.
Our precedent makes clear that the application of
California wage and hour protections to multistate
workers like Oman may vary on a statute-by-statute
1 We have reframed these inquiries slightly. (Cal. Rules of
Court, rule 8.548(f)(5).)
App-10
basis. (See Sullivan v. Oracle Corp. (2011) 51 Cal.4th
1191, 1201, 127 Cal.Rptr.3d 185, 254 P.3d 237
(Sullivan).) We thus consider separately each of the
wage and hour statutes on which Oman relies,
beginning with section 226. That provision requires an
employer to supply each employee ‘‘semimonthly or at
the time of each payment’’ a written wage statement
disclosing the pay period and itemizing the hours
worked, applicable hourly rates, gross and net wages
earned, any deductions taken, and other relevant
information. (§226, subd. (a).)
As we explained in Ward, supra, 9 Cal.5th 732,
264 Cal.Rptr.3d 1, 466 P.3d 309, section 226 does not,
in so many words, define its geographic reach. (Ward,
at p. 752, 264 Cal.Rptr.3d 1, 13, 466 P.3d 309.) But we
ordinarily presume the Legislature drafts laws with
domestic conditions in mind (id. at pp. 748-749, 264
Cal.Rptr.3d 1, 10, 466 P.3d 309), and thus requires
some degree of connection between the subject matter
of the statutory claim and the State of California. In
Ward, we addressed the nature of the connection
required to trigger the wage statement requirements
set forth in section 226 and held that section 226
applies when an employee’s principal place of work is
in California. Ordinarily, this test is met if an
employee works primarily (i.e., the majority of the
time) in California. In the case of interstate
transportation workers and others who do not spend a
majority of their working time in any one state, this
test is satisfied when California serves as their base of
work operations. (Ward, at pp. 755-757, 264 Cal.
Rptr.3d 1, 15-17, 466 P.3d 309.) Under this rule,
because plaintiffs here never worked more than half
the time in California (or in any other state), whether
App-11
they are entitled to California-compliant wage
statements hinges on whether they were based for
work purposes in California.
The Ninth Circuit’s question in this case appears
to ask whether it is also relevant that Delta is a
nonresident corporation. Delta now concedes that its
foreign domicile does not foreclose the application of
state law. We accept the concession. Section 226
contains no exemption based on the employer’s
location. This is in contrast to, for example, the
worker’s compensation scheme, which expressly
exempts some out-of-state employers. (See Lab. Code,
§3600.5, subd. (b); Sullivan, supra, 51 Cal.4th at pp.
1197-1198, 127 Cal.Rptr.3d 185, 254 P.3d 237.) The
state’s power to protect employees within its borders
is not limited by whether the worker might be a
nonresident or might be employed by a nonresident
entity. (North Alaska Salmon Co. v. Pillsbury (1916)
174 Cal. 1, 5, 162 P. 93; see Kearney v. Salomon Smith
Barney, Inc. (2006) 39 Cal.4th 95, 105, 45 Cal.Rptr.3d
730, 137 P.3d 914 [‘‘individual states may adopt
distinct policies to protect their own residents and
generally may apply those policies to businesses that
choose to conduct business within that state’’].)
Instead, the onus ordinarily is on ‘‘a company that
conducts business in numerous states … to make
itself aware of and comply with the law of a state in
which it chooses to do business.’’ (Kearney, at p. 105,
45 Cal.Rptr.3d 730, 137 P.3d 914.) To hold otherwise
would, as Delta suggests, create an incentive for
businesses employing individuals who work in
California to avoid application of California law by
locating their business operations outside the state. If
employees are based for work purposes in California,
App-12
that is sufficient to trigger the requirements of section
226, regardless of where their employer resides.
The proposed class in this case includes
individuals who, like New York-based Dev Oman,
neither perform their work predominantly in
California nor are based for work purposes in the
state. Oman urges us to apply a different rule than the
one we have articulated in Ward. Although the
operative complaint does not so specify, Oman clarifies
in his briefing that unlike the Ward plaintiffs he does
not
seek
comprehensive
wage
statements
documenting all wages earned during a pay period. He
argues instead that section 226 ought to be
interpreted to require California- compliant
documentation for those hours, however few they
might be during any given pay period, when he worked
on the ground in California. He contends this
requirement should apply to any airline employee who
ever works in California, even those who are based out
of state.
This argument fails under the terms of section
226. Section 226 provides for the documentation of
wages and other information over an entire pay
period, not fractions thereof. A wage statement must
specify not only “total hours worked” and “all
applicable hourly rates,” but also “gross wages,” “net
wages,” and “all deductions” for the full period. (§266,
subd. (a).) The statute contains no indication that the
employer of an out-of-state worker must report
fractions of wages earned during brief trips to the
state, as well as attempt to calculate the fraction of
wage deductions attributable to these sojourns. The
statute requires “an accurate itemized statement”
App-13
reflecting “the inclusive dates of the period for which
the employee is paid” and all relevant information
concerning the employee’s pay during that period—
that is, a single comprehensive statement of pay.
(Ibid.)
Oman argues that our recent decision in Troester
v. Starbucks Corp. (2018) 5 Cal.5th 829, 235
Cal.Rptr.3d 820, 421 P.3d 1114 supports his proposed
fractional approach, but Troester has nothing to do
with the question before us. There, stressing that the
IWC’s wage orders ensure compensation for ‘‘ ‘all
hours worked’ ’’ (Troester, at p. 840, 235 Cal.Rptr.3d
820, 421 P.3d 1114, quoting IWC wage order No. 52001, §§3(A), 4(A)), we rejected the contention that
state wage law would not concern itself with unpaid
work on the order of a few minutes a day. Instead, we
held that an ‘‘employer that requires its employees to
work minutes off the clock on a regular basis or as a
regular feature of the job may not evade the obligation
to compensate the employee for that time by invoking
the de minimis doctrine.’’ (Troester, at p. 847, 235
Cal.Rptr.3d 820, 421 P.3d 1114.) That holding has no
relevance here. The issue before us is not whether
brief periods of work must be compensated—no one
disputes the point—but whether a few minutes or
hours of work in California necessarily trigger the
detailed pay-period documentation requirements of
California law. The answer to that question is no:
Employees are entitled to California-compliant wage
statements only if California is the principal place of
their work.
Oman also argues that an approach based on the
principal place of work will prove unworkable because
App-14
coverage can only be determined in retrospect. But
there is nothing unworkable about it. Wage
statements are, of necessity, prepared in retrospect;
their function is to record hours already worked and
wages already earned. And if the location of an
employee’s job duties shifts radically during the course
of employment—if, for example, a flight attendant
takes on a new job as a gate agent at Los Angeles
International Airport—the employer will have ample
opportunity to adjust. Likewise, if the employee’s base
of operations changes because the employee is
assigned to a different home airport, it will be a small
matter to determine whether section 226 now applies.
It is, in the end, Oman’s approach that poses
greater practical concerns. By insisting on Californiacompliant wage statements, but only for the fraction
of hours worked on the ground in California, Oman
would effectively require that employers either (1)
accompany each California-specific wage statement
with multiple similar separate statements under the
laws of each and every additional state in which an
employee worked during a pay period, or (2) issue a
single wage statement, but allow California law
effectively to dictate the form and contents for
documenting work predominantly performed in
foreign jurisdictions. The first option would
undermine the very purpose of section 226, which is
‘‘to ensure an employer ‘document[s] the basis of the
employee compensation payments’ to assist the
employee in determining whether he or she has been
compensated properly.’’ (Soto v. Motel 6 Operating,
L.P. (2016) 4 Cal.App.5th 385, 390, 208 Cal.Rptr.3d
618, quoting Gattuso v. Harte-Hanks Shoppers, Inc.
(2007) 42 Cal.4th 554, 574, 67 Cal.Rptr.3d 468, 169
App-15
P.3d 889.) This informational purpose would be illserved by a rule that led to employees receiving a
blizzard of wage statements every pay period, each
documenting only a state-specific sliver of their work,
and from this paper snowdrift trying to discern what
they had actually been paid. As to the second option,
allowing any work in California, no matter how
fleeting, to effectively impose California law on
documentation of all work in a pay period would raise
the very sorts of conflict-of-laws problems we
generally presume the Legislature seeks to avoid.
(Ward, supra, 9 Cal.5th at pp. 749-750, 264
Cal.Rptr.3d 1, 10-11, 466 P.3d 309.) It is presumably
for this reason that Oman has avoided arguing that
California law requires this result. We decline to
construe section 226 as putting employers to the
choice of either issuing a single California-compliant
wage statement for every interstate worker who works
for any amount of time, however brief, within the
state, or issuing a multiplicity of statements, when the
statute envisions that employees will receive just one.
The principal place of work rule we have
articulated in Ward means that some short periods of
work in California will not be covered by section 226’s
documentation requirements. Conversely, some
periods of work outside California will be covered, if
they occur as part of an overall period in which most
work occurs inside this state or are performed by an
employee who primarily works in no state but is based
here. Such consequences are inevitable and
unavoidable in a nation of 50 states where some forms
of employment stretch across the land. But an
understanding of section 226 that focuses on the
principal place of an employee’s work both serves the
App-16
informational purposes the Legislature sought to
achieve and minimizes the inevitable complications
that would result from a rule that any work in one
state, no matter how fleeting, is sufficient to trigger
application of that state’s wage reporting laws.
We thus conclude section 226 does not apply to
work performed in California during pay periods in
which the employee, based outside California, works
primarily outside California. A non-California-based
employee who works in California ‘‘only episodically
and for less than a day at a time’’ (Oman v. Delta Air
Lines, Inc., supra, 889 F.3d at p. 1077) is not entitled
to a wage statement prepared according to the
requirements of California law.
B.
We turn now to Oman’s section 204 claim. That
statute guarantees employees full payment on a
semimonthly basis, providing: ‘‘All wages,’’ with
certain exceptions not relevant here, ‘‘earned by any
person in any employment are due and payable twice
during each calendar month, on days designated in
advance by the employer as the regular paydays.’’
(§204, subd. (a).) Section 204 goes on to establish
specific deadlines by which wage payments must be
made. (Id., subd. (a).) 2 As is true of section 226,
2 With certain exceptions not relevant here, “[l]abor performed
between the 1st and 15th days, inclusive, of any calendar month
shall be paid for between the 16th and the 26th day of the month
during which the labor was performed, and labor performed
between the 16th and the last day, inclusive, of any calendar
month, shall be paid for between the 1st and 10th day of the
following month.” (§204, subd. (a).)
App-17
nothing in the statute explicitly specifies its intended
geographic scope.
As Oman conceded in the federal district court
(see Oman v. Delta Air Lines, Inc., supra, 230
F.Supp.3d at p. 994), there is no reason to interpret
section 204’s geographic coverage differently from that
of section 226. That is because section 204 works hand
in hand with section 226. Section 226 regulates the
information an employer must provide in connection
with wage payments, while section 204 regulates
when an employer must pay an employee for hours
worked. The Legislature has recognized that when an
employee must be paid (the subject of §204), and what
information must accompany each such required
payment (the subject of §226) are necessarily linked.
(See §204, subd. (b)(2) [coordinating the application of
these provisions].)
As with section 226, Oman seeks to apply section
204 only to those hours he worked within California.
And as with section 226, reading the statute as Oman
argues would pose difficulties that prove fatal to the
argument. Again, there are two options: Either the
employer must calculate and split out some portion of
the wages due as attributable to work performed in
California and pay only those on section 204’s
schedule, while paying other wages due in accord with
whatever timing statutes might apply under other
states’ laws, or the employer must pay all wages due
according to the schedule required under California
law by section 204. These interpretations present the
same issues as the corresponding options for
complying with section 226.
App-18
The first interpretation, aside from the
administrative headaches it would generate, runs
headlong into the text of section 204, which applies to
‘‘[a]ll wages … earned,’’ with exceptions not
significant here. (§204, subd. (a), italics added.) As
with section 226, nothing in the text suggests the
Legislature contemplated fragmenting wages earned
according to the state in which labor was performed
and requiring whatever sliver of wages might be
attributable to California to be paid on section 204’s
timeline, with other slivers for work elsewhere paid
according to whatever other state law might apply.
Nor is it clear how such a reading would advance the
policy underlying section 204. Section 204 serves the
‘‘public policy in favor of full and prompt payment of
an employee’s earned wages,’’ which ‘‘is fundamental
and well established: ‘ ‘‘Delay of payment or loss of
wages results in deprivation of the necessities of life,
suffering inability to meet just obligations to others,
and, in many cases may make the wage-earner a
charge upon the public.’’ ’ ’’ (Smith v. Superior Court
(2006) 39 Cal.4th 77, 82, 45 Cal.Rptr.3d 394, 137 P.3d
218, quoting Kerr’s Catering Service v. Department of
Industrial Relations (1962) 57 Cal.2d 319, 326, 19
Cal.Rptr. 492, 369 P.2d 20; see Voris v. Lampert (2019)
7 Cal.5th 1141, 1148, 250 Cal.Rptr.3d 779, 446 P.3d
284 [‘‘prompt and complete wage payments are of
critical importance to the well-being of workers, their
families, and the public at large’’].) Section 204,
insofar as it applies to the entirety of an employee’s
wages, directly serves this policy. It is less apparent
how the policy is meaningfully advanced by requiring
payment of California-earned wages on a Californiaspecified timeline when those wages represent just a
App-19
small fraction of the earnings an employee relies on
for support.
The second interpretation accords section 204 a
broad reach, allowing California law to dictate the
timing of payment for wages earned predominantly
outside California for work performed outside
California. Granting section 204 such an expansive
scope would generate significant complications. Given
the nature of the flight attendants’ work, treating any
work performed on the ground in any given state as
sufficient to trigger application of payment timing
requirements could subject the payment for work in a
given pay period to the often-conflicting laws of a
dozen or more states. Reading section 204 in concert
with section 226 as applying to pay periods in which
an employee works predominantly in California
avoids these problems.
In sum, we conclude section 204 is subject to the
same limits as section 226 and applies only to pay
periods during which an employee predominantly
works inside California.
III.
We turn, finally, to the minimum wage claims.
The Ninth Circuit asks two questions related to these
claims: First, whether California minimum wage law
applies to the hours (or fractions thereof) that Oman
worked on the ground in California, and second,
whether Delta’s method of computing Oman’s wages
complies with the state law. As discussed, the
application of labor protections must be analyzed on a
provision by provision basis in light of the nature of
the protection afforded, and so the rules we articulate
for sections 204 and 226 do not resolve whether the
App-20
state’s minimum wage laws might apply. (See Ward,
supra, 9 Cal.5th at pp. 752-753, 756-757 & fn. 10, 264
Cal. Rptr.3d 1, 13, 16-17 & fn. 10, 466 P.3d 309;
Sullivan, supra, 51 Cal.4th at p. 1201, 127 Cal.Rptr.3d
185, 254 P.3d 237; ante, at pp. 745-746, 264
Cal.Rptr.3d 1, 5, 466 P.3d 309.) But we need not settle
the reach of the state’s minimum wage laws if we can
determine that, even were those laws to apply, Delta’s
pay scheme would not violate them. Because the
record establishes Delta complies with state minimum
wage law, we address only that question.
Like other industry wage orders, Wage Order No.
9 requires that ‘‘[e]very employer shall pay to each
employee, on the established payday for the period
involved, not less than the applicable minimum wage
for all hours worked in the payroll period, whether the
remuneration is measured by time, piece, commission,
or otherwise.’’ (Id., §4(B).) Here, pursuant to the Work
Rules, the remuneration provided to Delta flight
attendants is measured by the ‘‘rotation,’’ a given
sequence of flights over a day or a period of days that
the attendant will serve on. Compensation for each
rotation is calculated according to four different
formulas; flight attendants are paid according to
whichever formula yields the largest amount for the
complete rotation. (See post, 264 Cal. Rptr.3d at pp.
33-34, 466 P.3d at pp. 336-337.) It is undisputed that
under this compensation scheme, flight attendants
are always paid, on an hourly average, above the
minimum wage. Oman contends that the scheme
nonetheless violates California’s minimum wage law,
principally because one of Delta’s four formulas—the
formula that most often determines how much flight
attendants will be paid, because it generally yields the
App-21
greatest compensation—is based solely on flight time
and does not factor in the hours flight attendants
spend working on the ground before and after flights.
The dispute between the parties does not concern
the substance of California’s minimum wage
guarantee. It is common ground that the law
guarantees at least minimum wage for ‘‘all hours
worked in the payroll period.’’ (Wage Order No. 9,
§4(B).) The parties’ disagreement instead concerns
how compliance is to be measured when the employer
does not compensate its employees according to a fixed
hourly rate applicable to all hours.
A.
To understand the nature of the dispute, some
background is required. Beginning several decades
ago, federal courts confronting questions about
minimum wage compliance commonly interpreted
federal law to require only that employers pay in each
week an average wage at or above the federal
minimum. (See 29 U.S.C. §206(a); U.S. v. Klinghoffer
Bros. Realty Corp. (2d Cir. 1960) 285 F.2d 487, 490;
see also, e.g., Dove v. Coupe (D.C. Cir. 1985) 759 F.2d
167, 171-172 (opn. of Ginsburg, J.).) At least without
further refinement, the workweek-average approach
means that if an employer agrees to pay a particular
amount for say, 20 hours of work in a week, but then
demands the employee work an additional 10 hours
for free, the minimum wage law is satisfied so long as
the total wages, divided by 30, equal or exceed the
applicable minimum wage. Under this approach,
Delta’s compensation scheme could create no possible
problems, since, as noted, it is undisputed that the
App-22
scheme yields an average hourly wage that well
exceeds the minimum set by California law.
The Division of Labor Standards Enforcement
(DLSE) and the unanimous Courts of Appeal,
however, have embraced a more stringent
understanding of state law that forbids taking
compensation contractually due for one set of hours
and spreading it over other, otherwise un- or
undercompensated, hours to satisfy the minimum
wage—a practice that has often, perhaps
misleadingly, been referred to as ‘‘wage averaging.’’ As
we will explain, the practice these authorities prohibit
might be more accurately characterized as ‘‘wage
borrowing,’’ and we employ that phraseology here.
The DLSE was first to consider the issue. (See
Dept. of Industrial Relations, DLSE Opn. Letter No.
2002.01.29 (Jan. 29, 2002) (hereafter DLSE Opinion
Letter No. 2002.01.29).) In response to a question by
parties to a collective bargaining agreement, the
DLSE determined that particular employee travel
time for which no compensation was being paid,
because the employer apparently viewed it as off-duty
and noncompensable, was in fact on-duty hours
worked and compensable. (Id. at pp. 1-7.) The DLSE
then considered whether payments for other
compensable hours, contractually promised under the
collective bargaining agreement, could be borrowed to
satisfy the employer’s minimum wage obligations, as
would have been true under the rule generally
articulated in the federal courts.
The DLSE viewed the language of the wage order
as ambiguous, so it turned to the statutory backdrop
for answers. California law, the DLSE observed,
App-23
differs from federal law in that it not only guarantees
a minimum wage but also expressly protects
employees’ right to receive the wages promised in a
contract or collective bargaining agreement.
Specifically, Labor Code section 221 prohibits an
employer from paying wages and then recouping some
portion of the wages as a kickback or secret
deduction; 3 Labor Code section 222 prohibits
underpayment of wages established by a collective
bargaining agreement; 4 and Labor Code section 223
prohibits underpayment of wages otherwise
established by contract. 5 Wage borrowing would
violate these statutes by reducing compensation, for
the hours from which wages were borrowed, below the
contractually agreed-upon level. (DLSE Opn. Letter
No. 2002.01.29, supra, at p. 11 [‘‘These statutes
prevent [an] employer that might be covered by a
[collective bargaining agreement (CBA) ] or other
contract that expressly pays employees less than the
minimum wage for certain activities that constitute
3 ‘‘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.’’ (Lab. Code, §221; see Kerr’s Catering
Service v. Department of Industrial Relations, supra, 57 Cal.2d at
p. 328, 19 Cal.Rptr. 492, 369 P.2d 20.)
4 “It shall be unlawful, in case of any wage agreement arrived
at through collective bargaining, either wilfully 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.” (Lab. Code, §222.)
5 “Where any statute or contract requires an employer to
maintain the 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.” (Lab. Code, §223.)
App-24
‘hours worked’ within the meaning of state law, from
using any part of the wage payments that are required
under that CBA or other contract for activities that are
compensated in an amount that equals or exceeds the
minimum wage, as a credit for satisfying minimum
wage obligations for those activities that are
compensated at less than the minimum wage under
the CBA or contract’’ (fn. omitted) ].) In practical
terms, this means that an employer who contracts to
pay $18 per hour for two hours of work, but who then
demands a third hour of unpaid work, cannot argue
that it has complied with a $12 hourly minimum wage
(see, e.g., Lab. Code, §1182.12, subd. (b)(1)(C), (2)(C))
because it has paid $36 over three hours, or $12 per
hour. Under the DLSE’s interpretation of the Labor
Code, the employer must pay the full $18 required by
contract for the first two hours. Then, for the third
uncontracted-for hour for which no compensation was
promised, it must pay no less than the applicable
minimum wage.
The Court of Appeal in Armenta, supra, 135
Cal.App.4th 314, 37 Cal.Rptr.3d 460, endorsed the
DLSE’s reasoning in a similar context. The employer
in Armenta, which maintained utility poles, had
promised in a collective bargaining agreement to pay
set hourly rates for hours spent engaged in
‘‘productive’’ tasks directly related to pole
maintenance. But employees were required to engage
in other, ‘‘nonproductive’’ activities, such as travel
time and paperwork, for which they received no
compensation. (Id. at p. 317, 37 Cal.Rptr.3d 460.) The
court held this unlawful, notwithstanding the fact
that the average of the paid and unpaid hours
exceeded the minimum wage. The court reasoned that
App-25
an employer who promises to compensate particular
hours worked at a particular rate cannot borrow some
of that compensation and apply it to other
compensable hours for which no compensation is
provided. To do so would effectively compel an
employee to sacrifice contractually promised
compensation and breach the employer’s contractual
commitments, in violation of either Labor Code section
222 (governing collective bargaining agreements) or
Labor Code section 223 (governing ordinary
contracts). (See Armenta, at p. 323, 37 Cal.Rptr.3d 460
[averaging pay across any uncompensated hours
‘‘contravenes these code sections and effectively
reduces [the employee’s] contractual hourly rate’’].)
Since Armenta, other Courts of Appeal have
uniformly followed its lead. These decisions have
extended the no-borrowing rule to employees under a
collective bargaining agreement (Bluford v. Safeway
Inc. (2013) 216 Cal.App.4th 864, 872-873, 157 Cal.
Rptr.3d 212 (Bluford)) and an ordinary contract
(Gonzalez, supra, 215 Cal.App.4th at pp. 50-51, 155
Cal.Rptr.3d 18), and without regard to whether the
basis for compensation is hourly (Sheppard v. North
Orange County Regional Occupational Program
(2010) 191 Cal.App.4th 289, 297-298, fn. 5, 120 Cal.
Rptr.3d 442), by piece rate (Bluford, at p. 872, 157
Cal.Rptr.3d 212; Gonzalez, at pp. 51-52, 155
Cal.Rptr.3d 18), or by commission (Vaquero v.
Stoneledge Furniture, LLC (2017) 9 Cal.App.5th 98,
108-114, 214 Cal. Rptr.3d 661 (Vaquero)). Although we
have not previously had occasion to address the issue,
we agree with this consensus: State law prohibits
borrowing compensation contractually owed for one
set of hours or tasks to rectify compensation below the
App-26
minimum wage for a second set of hours or tasks,
regardless of whether the average of paid and unpaid
(or underpaid) time exceeds the minimum wage. Even
if that practice nominally might be thought to satisfy
the requirement to pay at least minimum wage for
each hour worked, it does so only at the expense of
reneging on the employer’s contractual commitments,
in violation of the contract protection provisions of the
Labor Code.
Synthesizing the authorities, we summarize the
principles this way. The compensation owed
employees is a matter determined primarily by
contract. Compensation may be calculated on a variety
of bases: Although nonexempt employee pay is often
by the hour, state law expressly authorizes employers
to calculate compensation by the task or piece, by the
sale, or by any other convenient standard. (See Lab.
Code, §200, subd. (a) [compensation may be ‘‘fixed or
ascertained by the standard of time, task, piece,
commission basis, or other method of calculation’’];
Wage Order No. 9, §4(B) [compensation may be
‘‘measured by time, piece, commission, or otherwise’’].)
In many employment agreements, such as the one at
issue in Armenta, the unit of time or activity by which
an employer promises to pay an employee is easily
ascertainable. (See Armenta, supra, 135 Cal.App.4th
at p. 317, 37 Cal.Rptr.3d 460 [‘‘Under the terms of the
parties’ collective bargaining agreement, respondents
were paid hourly wages … .’].) In other cases, the
employer may compensate employees based on a
combination of methods. (See, e.g., Vaquero, supra, 9
Cal.App.5th at p. 103, 214 Cal.Rptr.3d 661
[compensation determined by the greater of sales
commission or hourly minimum pay]; Gonzalez, supra,
App-27
215 Cal.App.4th at p. 41, 155 Cal.Rptr.3d 18
[compensation determined by greater of repair tasks
completed or minimum hourly pay].) Consistent with
general contract interpretation principles, the unit for
which pay is promised should be determined based on
the ‘‘mutual intention of the parties as it existed at the
time of contracting.’’ (Civ. Code, §1636.)
Whatever the task or period promised as a basis
for compensation, however, an employer must pay no
less than the minimum wage for all hours worked.
(See Wage Order No. 9, §§2(H), 4.) The employer must
satisfy this obligation while still keeping any promises
it has made to provide particular amounts of
compensation for particular tasks or periods of work.
(Lab. Code, §§221-223.) For all hours worked,
employees are entitled to the greater of the (1) amount
guaranteed by contract for the specified task or period,
or (2) the amount guaranteed by the minimum wage.
Whether a particular compensation scheme complies
with these obligations may be thought of as involving
two separate inquiries. First, for each task or period
covered by the contract, is the employee paid at or
above the minimum wage? Second, are there other
tasks or periods not covered by the contract, but
within the definition of hours worked, for which at
least the minimum wage should have been paid?
For purposes of evaluating whether an employee
has received at least the hourly minimum wage for
tasks or periods compensated under the contract, it is
generally permissible to translate the contractual
compensation—whether it be done by task, work
period, or other reasonable basis—into an hourly rate
by averaging pay across those tasks or periods. An
App-28
employer can, for example, pay by the day, with daily
pay averaged across all hours worked to determine
whether the resulting hourly wage exceeds the
minimum. But an employer who instead promises to
pay by the hour may not compensate any given hour
at less than minimum wage. Nor may the employer
make up for the shortfall by pointing to other hours for
which contractual compensation exceeds the
minimum wage. As the DLSE explained in its letter,
if a contract or bargaining agreement expressly
guarantees compensation for one set of tasks or one
specific period, that compensation may not be reduced
to supplement pay for other tasks or periods within
the purview of the contract or bargaining agreement,
but otherwise undercompensated by them. (DLSE
Opn. Letter No. 2002.01.29, supra, at p. 11; Lab. Code,
§§221-223.)
The same ‘‘no borrowing’’ principle applies when
an employer requires work not covered by the contract
at all, but which falls within the definition of hours
worked under the minimum wage law. So, for
example, in Armenta, supra, 135 Cal.App.4th 314, 37
Cal. Rptr.3d 460, the collective bargaining agreement
ensured pay at or above the minimum wage for hours
engaged in specified productive tasks, and under the
agreement and Labor Code section 222, the employees
were entitled to their promised wages without
diminution. But for other periods not compensated
under the contract, but during which employees were
on duty and thus owed compensation under the wage
order, the minimum wage was also due.
App-29
B.
So far, we have described common ground: Delta
does not challenge the no-borrowing principle as it has
been elaborated in the Armenta line of cases. The
parties’ disagreement concerns whether Delta’s flight
attendant compensation scheme violates this noborrowing principle. Because the relevant provisions
of the Labor Code prohibit borrowing only when it
results in failure to maintain the wage scale
designated by contract, the resolution necessarily
turns on the nature of Delta’s contractual
commitments. (See Lab. Code, §223 [prohibiting an
employer from ‘‘secretly pay[ing] a lower wage while
purporting to pay the wage designated … by
contract’’].)
Delta’s Work Rules, which are disclosed to all its
flight attendants, promise to compensate attendants
by the rotation rather than by particular hours
worked. This is evident both from the structure of the
compensation scheme outlined in the Work Rules and
the procedures Delta employees follow to obtain work
assignments.
Each rotation contains one or more duty periods,
interspersed with layovers between duty periods. A
duty period begins when a flight attendant reports to
an airport before a flight. Thereafter, the flight
attendant may have preboarding obligations, in-flight
obligations, post touchdown obligations, transit or sit
time—the period in another airport before the next
flight is ready for boarding—and a similar set of
obligations during the next or each subsequent flight
until the end of the duty period. As Delta
acknowledges, flight attendants are on duty
App-30
continuously during a duty period, from first reporting
until release after the last flight of the period. For his
part, Oman does not contend flight attendants are on
duty or entitled to compensation for layovers between
duty periods.
Under the Work Rules, compensation is first
determined for each duty period within a rotation by
comparing three calculations and choosing the highest
pay from among these: ‘‘Each duty period of a rotation
pays the greatest of: [¶] 1) flight time (includes
deadhead flight time, minutes under, and flight pay
for ground time), or [¶] 2) 4:45 minimum duty period
credit (MDC), or [¶] 3) 1 for 2 duty period credit
(DPC).’’ Second, the maximum pay for all duty periods
within a rotation is summed and compared against a
fourth formula based on the length of the rotation, and
flight attendants are paid whichever of these two
amounts is greater. 6 Thus, although hours worked, or
credited, are elements in these successive
computations and comparisons to determine an
employee’s pay, Delta does not promise to pay by the
hour, nor does it promise to pay for certain hours and
not others.
The promise to pay by rotation is also reflected in
the procedures Delta uses for distributing work
assignments. The nature of these procedures is
undisputed: Each month, Delta circulates a bid packet
to its flight attendants listing rotations each employee
can request. The bid packet presents the number of
6 Under this alternative rotation formula, “[t]he sum of the duty
period credits listed above is then compared to 1 for 3.5 trip credit
(TRP), which guarantees at least 1 hour pay for every 3.5 hours
away from base. You will be paid the greater of the two values.”
App-31
duty periods and length of each duty period within
each rotation; report times and total scheduled flight
times for the flights within each rotation; and the
amount of time the flight attendant can expect to be
away from base. The bid packet also shows which
formula will apply and the minimum amount flight
attendants would be paid for the rotation at their
particular contractually established ‘‘flight pay’’ rate.
(See Oman v. Delta Air Lines, Inc., supra, 153
F.Supp.3d at pp. 1096-1098.) Flight attendants then
submit their rotation preferences, with the
understanding that their pay for each rotation will be
no less than the amount derivable from the bid packet.
That Delta pays flight attendants by the rotation, and
what it will pay for any particular rotation, are fully
disclosed. Delta then gives flight attendants access to
electronic databases that track credits and pay earned
for each assigned rotation.
Delta’s four-formula method for calculating
compensation guarantees that flight attendants are
always paid above the minimum wage for the hours
worked during each rotation without borrowing from
compensation promised for other rotations. Under one
of the four formulas—the one-for-two duty period
credit formula—pay is calculated by multiplying the
attendant’s established flight pay rate by the total
hours in the duty period, divided by two. To borrow the
simple example contained in Delta’s 2014 Work Rules,
a flight attendant working a duty period that lasts
12.5 hours would receive 6.25 hours of credit at the
flight pay rate—a rate that in 2014 ranged from
$23.28 to $53.52 depending on the employee’s years of
service. So long as the flight pay rate equals or exceeds
twice the applicable minimum wage, this formula
App-32
ensures a flight attendant is paid for all hours worked
in every duty period at no less than the minimum
wage. And because pay for a rotation is never less than
the sum of the pay for each duty period, rotation pay
also will always meet or exceed the hourly minimum
wage.
Oman does not contend that any flight attendant’s
flight pay rate was ever less than twice the applicable
minimum wage. But he nevertheless contends that the
duty period credit formula fails to compensate flight
attendants for all hours worked and instead
compensates them for only half the hours worked—
leaving the other half entirely uncompensated,
contrary to state minimum wage law. Specifically, as
Oman reads the Work Rules, the flight attendant
working a 12.5-hour duty period is being paid for only
half of that time, 6.25 hours, with the remaining 6.25
hours unpaid.
Oman’s reading is unsound. The Work Rules do
not, as he suggests, purport to compensate flight
attendants only for every other hour—which is to say,
they do not require a flight attendant to work an hour
for free in order to earn full flight pay credit for
working a second hour. Instead, flight pay credit
accumulates continuously as the duration of the duty
period lengthens: Every additional minute on duty
earns an employee an additional 30 seconds of flight
pay credit. As an example, a flight attendant subject
to a $40 flight pay rate who works an eight-hour duty
period would receive $160; for an 8.5-hour duty period,
$170; for a nine-hour duty period, $180; and so on. 7
7 The same is true no matter what causes the duty period to
extend. If the same flight attendant with a $40 flight pay rate
App-33
Each and every increment of on-duty time is
compensated under the formula, and at a rate equal to
or greater than the hourly minimum wage. There is no
impermissible borrowing from hours for which full
flight pay was promised to cover hours for which no
compensation is provided, both because every hour is
compensated at the same rate (half flight pay) and
because Delta never promised full flight pay for any
particular hour under this formula.
The duty period credit formula is, however, only
one of four formulas that may determine flight
attendant compensation; if any one of the other
formulas yields a greater amount of compensation, it
will instead control. Oman argues that when pay is
based on one of these other formulas, Delta violates
the state minimum wage law.
Oman focuses in particular on a second formula,
the flight time formula, which supplies the measure of
pay for most duty periods. (Oman v. Delta Air Lines,
Inc., supra, 153 F.Supp.3d at pp. 1100-1101.) Under
this formula, an attendant is paid at the contractually
established flight pay rate for each period between
flight ‘‘block out’’ and ‘‘block in’’—the period between
when each flight departs the block, or gate, and
arrives at the destination gate. The established flight
pay rate is multiplied by the longer of the scheduled
flight time or the actual flight time. Time between
reporting for duty and the first flight block out, during
works a duty period consisting of flights in and out of San
Francisco, and the second flight is delayed by fog, requiring
additional sit time in San Francisco, the amount owed under the
duty period credit formula will still rise, at the rate of $20 per
hour, for every extra minute of delay.
App-34
any between-flights sit time, and after the last flight
block in until release, is not directly factored into the
calculation. For duty periods where the flight time
comprises less than 50 percent of the total on-duty
time, a flight attendant can still be compensated
according to the duty period credit formula described
above; the flight time formula operates only to supply
additional compensation, above and beyond the
compensation that would be owed under the duty
period credit formula, for periods where flight time
exceeds this 50 percent threshold.
As Oman observes, there are on-duty periods to
which the flight time formula does not directly
attribute compensation, such as preflight briefings.
Oman contends that Delta’s failure to specify a
particular pay rate specific to these periods of time
violates the obligation to pay at least minimum wage
for all hours worked. And, according to Oman, any
attempt to satisfy the minimum wage law by
averaging the flight attendant’s pay over the entire
span of the duty period would violate the no-borrowing
rule of Armenta and its progeny.
Oman’s argument depends on a particular view of
the role of the flight time formula under the parties’
contract: That, by offering flight attendants a fixed
amount of compensation for a particular rotation, but
also disclosing the formula on which it has arrived at
that amount, Delta has in effect promised to
compensate flight attendants at their full flight pay
rate for hours in flight, and not to compensate them at
all for their other hours worked. But even if this were
a plausible view of the flight time formula in isolation,
it is not a plausible view of the formula as it operates
App-35
in the broader context of the Work Rules. Under those
rules, the flight time formula is just one of four
components of a single compensation scheme that
constitutes Delta’s contractual promise to its flight
attendants. Flight attendants are presented with
information about the entire scheme and bid on their
work assignments according to the entire scheme. And
the scheme, taken as a whole, does not promise any
particular compensation for any particular hour of
work; instead, as discussed above, it offers a
guaranteed level of compensation for each duty period
and each rotation. Because there are no on-duty hours
for which Delta contractually guarantees certain
pay—but from which compensation must be borrowed
to cover other un- or undercompensated on-duty
hours—the concerns presented by the compensation
scheme in Armenta, supra, 135 Cal.App.4th 314, 37
Cal.Rptr.3d 460 and like cases are absent here.
The same logic applies when either of Delta’s
remaining two formulas is used to calculate flight
attendant compensation. In all cases, flight
attendants are guaranteed at least the amount of
compensation owed under the duty period credit
formula, which, as already discussed, always exceeds
the minimum wage. To forbid Delta from offering
greater pay than the amount owed under that formula
based on the flight time formula or one of the other
two formulas would do nothing to ensure workers are
paid fair or adequate wages for all hours worked. (See
Barrentine v. Arkansas-Best Freight System (1981)
450 U.S. 728, 739, 101 S.Ct. 1437, 67 L.Ed.2d 641
[minimum wage laws serve to ensure ‘‘ ‘ ‘‘[a] fair day’s
pay for a fair day’s work’’ ’ ’’]; Brooklyn Savings Bank
v. O’Neil (1945) 324 U.S. 697, 706, 65 S.Ct. 895, 89
App-36
L.Ed. 1296 [minimum wage protections serve ‘‘to
protect certain groups of the population from substandard wages … due to … unequal bargaining
power’’].) There is no evident inadequacy or unfairness
in permitting Delta to compensate flight crew
members on a per-rotation basis, at a level no less
than contractually promised and in excess of the
hourly minimum wage—nor is there any unfairness in
permitting Delta to increase that compensation when,
for example, duty periods include a greater percentage
of flight time or rotations include more drawn-out offduty layovers between duty periods.
Resisting this commonsense conclusion, Oman
leans heavily on Gonzalez, supra, 215 Cal.App.4th 36,
155 Cal.Rptr.3d 18, but Gonzalez will not support the
weight. There, the employer auto dealership and
service center compensated auto technicians on a
piece-rate basis. Each repair task was assigned a set
number of ‘‘flag hours’’ roughly corresponding to the
length of time it ought to take to complete. The service
center promised its technicians a flat rate tied to their
experience level multiplied by the number of flag
hours completed. Technicians also had significant
wait time, during which no repair orders were pending
and so no flag hours could be accrued, but during
which the employer required them to remain on
premises in case new customers arrived. The employer
also calculated a ‘‘ ‘minimum wage floor,’ ’’ which
equaled the total hours a technician remained on the
premises multiplied by the applicable minimum wage.
(Id. at p. 41, 155 Cal.Rptr.3d 18.) If a technician’s ‘‘flag
hour’’ compensation fell below the minimum wage
floor, the employer supplemented the technician’s pay
to make up for the difference. (Id. at pp. 41-42, 155
App-37
Cal.Rptr.3d 18.) Employees sued for minimum wage
violations based on the failure to pay for wait time.
The Court of Appeal concluded that the
employer’s compensation scheme violated California
minimum wage law. It explained that the Armenta noborrowing rule ‘‘applies whenever an employer and
employee have agreed that certain work will be
compensated at a rate that exceeds the minimum
wage and other worktime will be compensated at a
lower rate.’’ (Gonzalez, supra, 215 Cal. App.4th at p.
51, 155 Cal.Rptr.3d 18.) In such circumstances, pay at
an agreed higher rate cannot be borrowed to make up
for subminimum wage pay during other worktime. As
the Gonzalez court read the parties’ contract, the case
before it involved such a situation: The employer’s
contractual commitment to its workers was a
guaranteed piece-rate for completing various repair
tasks. Having promised a particular amount of
compensation for each flag hour, the employer could
not borrow from that promised compensation to
supply at least a minimum hourly wage for unpaid
wait time hours without violating Labor Code section
223 and the Armenta no-borrowing rule. The court
illustrated with the hypothetical case of a worker
promised $20 per flag hour who completed repair
tasks assigned four flag hours but was then obligated
to spend an additional four hours on site, during which
no new orders came in. In the Gonzalez court’s view,
paying the employee only $80 for this shift would
either (1) violate the minimum wage, because the four
hours of wait time were uncompensated, or (2) require
the employee to forfeit half of his or her promised $20
per flag hour to cover the unpaid wait time, in
violation of section 223. (Gonzalez, at p. 50, 155
App-38
Cal.Rptr.3d 18.) In other words, the additional wait
time constituted periods not covered by the employer’s
commitment to piece-rate pay, but within the
definition of hours worked, for which at least the
minimum wage should have been paid.
This case is different from Gonzalez in critical
respects. In Gonzalez, the court understood the
contract at issue to promise pay at a certain rate for
certain tasks completed. The minimum wage floor,
which ‘‘supplement[ed]’’ employee pay only when
‘‘necessary,’’ did not alter the nature of that promise.
(Gonzalez, supra, 215 Cal.App.4th at p. 40, 155
Cal.Rptr.3d 18.) We do not address here, and express
no opinion concerning, a scenario in which a minimum
wage floor was written into a contract that otherwise
promised pay by the piece. 8 Because the employer in
Gonzalez required technicians to remain at work while
waiting for customers—time not accounted for by the
piece-rate system—the Court of Appeal concluded the
employer violated the no-borrowing rule by
attempting to use piece-rate pay as a credit against its
obligations to pay for wait time. By contrast, as we
8 Since Gonzalez, this particular scenario has been addressed
by the Legislature, which endorsed Gonzalez’s overarching
principles and codified for piece-rate workers a statutory right to
separate pay, at no less than the minimum wage, for otherwise
uncompensated nonproductive and rest time. (Lab. Code, §226.2,
subd. (a), added by Stats. 2015, ch. 754, §4; see Sen. Rules Com.,
Off. of Sen. Floor Analyses, 3d reading analysis of Assem. Bill No.
1513 (2015–2016 Reg. Sess.) as amended Sept. 9, 2015, pp. 2 [bill
“[c]odifies the Gonzalez and Bluford decisions that nonproductive
time, rest breaks, and recovery breaks are separately
compensated”], 3 [bill “[c]odifies that, for nonproductive time, the
rate of compensation is not less than the minimum wage”].)
App-39
have explained, Delta’s Work Rules reflect a promise
to pay by the rotation, and for each rotation, the
compensation Delta promises will, no matter which of
the four formulas applies, always exceed the state
minimum wage per hour worked. Thus, Delta satisfies
state minimum wage law without ever needing to
compromise its contractual commitments.
The minimum wage laws exist to ensure that
workers receive adequate and fair pay, not to dictate
to employers and employees what pay formulas they
may, or may not, agree to adopt as a means to that
end. (See Madison Ave. Corp. v. Asselta (1947) 331
U.S. 199, 203-204, 67 S.Ct. 1178, 91 L.Ed. 1432.)
Delta’s arrangement may be relatively unusual, but it
is not unlawful.
IV.
We answer the Ninth Circuit’s questions as
follows:
(1) Labor Code sections 204 and 226 do not apply
to pay periods in which an employee works only
episodically and for less than a day at a time in
California unless the employee works primarily in this
state during the pay period, or does not work primarily
in any state but has his or her base of operations in
California.
(2) State law limits on wage borrowing permit
compensation schemes that promise to compensate all
hours worked at a level at or above the minimum
wage, even if particular components of those schemes
fail to attribute to each and every compensable hour a
specific amount equal to or greater than the minimum
wage.
App-40
(3) In light of the answer to the question about the
substantive application of the state’s minimum wage
laws, we do not address the separate question
concerning the geographic scope of that law’s
application.
We Concur:
CANTIL-SAKAUYE, C. J.
CHIN, J.
CORRIGAN, J.
LIU, J.
CUÉLLAR, J.
GROBAN, J.
Concurring Opinion by Justice Liu
Today’s opinion endorses the rule against wage
borrowing established in Armenta v. Osmose, Inc.
(2005) 135 Cal.App.4th 314, 37 Cal.Rptr.3d 460
(Armenta) and reaffirmed in subsequent decisions.
(Maj. opn., ante, 264 Cal.Rptr.3d at p. 32, 466 P.3d at
p. 335.) The court holds that an employer may not
satisfy its obligation to pay at least the minimum wage
for all hours worked by ‘‘borrowing compensation
contractually owed for one set of hours or tasks to
rectify compensation below the minimum wage for a
second set of hours or tasks.’’ (Ibid.) Delta Air Lines,
Inc.’s (Delta) flight attendant compensation scheme
does not violate this ‘‘no-borrowing’’ rule. (Id. at pp.
33-38, 466 P.3d at pp. 336-340.)
While agreeing with today’s opinion, I write to
highlight the first step in applying the no-borrowing
rule: identifying the nature of the employer’s
contractual commitment to its employees. Because the
App-41
rule requires employers to keep their contractual
commitments in the course of fulfilling their minimum
wage obligations, whether the rule is violated turns on
what an employer’s contractual commitments are.
Courts should be careful not to allow employers to
characterize their contractual commitments in ways
that would effectively circumvent the no-borrowing
rule.
Although Armenta established the no-borrowing
rule in the context of a ‘‘minimum wage’’ claim, it is
important to clarify that the rule’s purpose is not to
ensure that employees are paid, on average, hourly
wages at or above a minimum threshold. In noborrowing cases, there is no dispute that the
employees are paid at least the minimum wage when
total compensation is averaged over all hours worked.
The question is whether the employer is using
contractually promised pay for certain tasks or hours
worked to make up for failing to pay the minimum
wage for other tasks or hours worked. As today’s
opinion explains, the purpose of the no-borrowing rule
is to prevent employers from using clever accounting
to effectively ‘‘reneg[e] on the employer’s contractual
commitments, in violation of the contract protection
provisions of the Labor Code.’’ (Maj. opn., ante, 264
Cal. Rptr.3d at p. 33, 466 P.3d at p. 336.) Plaintiff
flight attendants do not claim that their average pay
ever fell below the minimum wage. Rather, they claim
that the pay structure Delta promised did not
compensate them for all the hours they worked.
Whether Delta or any other employer violates the
no-borrowing rule thus turns on the nature of the pay
structure the employer has promised. ‘‘The
App-42
compensation owed employees is a matter determined
primarily by contract.’’ (Maj. opn., ante, 264
Cal.Rptr.3d at p. 33, 466 P.3d at p. 336.) Employers
may legally compensate their employees on any
number of bases, including ‘‘by the standard of time,
task, piece, commission basis, or other method of
calculation.’’ (Lab. Code, §200, subd. (a); see Industrial
Welfare Commission, wage order No. 9-2001, §4(B)
[compensation may be ‘‘measured by time, piece,
commission, or otherwise’’].) The unit of pay is often
straightforward. In Armenta, the plaintiff employees
‘‘were paid hourly wages ranging between $9.08 to
$20, depending on whether they were crew members
or foremen.’’ (Armenta, supra, 135 Cal.App.4th at p.
317, 37 Cal.Rptr.3d 460.) In other cases, the
compensation scheme may be more complex.
Employers may use a combination of methods (e.g.,
Bluford v. Safeway Inc. (2013) 216 Cal. App.4th 864,
867, 157 Cal.Rptr.3d 212 [truck drivers’ compensation
based on a combination of miles driven and hours
worked]) or alternative pay formulas that are
triggered when certain conditions are met (e.g.,
Vaquero v. Stoneledge Furniture, LLC (2017) 9
Cal.App.5th 98, 103, 214 Cal.Rptr.3d 661 (Vaquero)
[compensation determined by the greater of sales
commission or hourly minimum pay]; Gonzalez v.
Downtown LA Motors, LP (2013) 215 Cal.App.4th 36,
41, 155 Cal.Rptr.3d 18 (Gonzalez) [compensation
determined by the greater of repair tasks completed or
hourly minimum pay] ).
Consistent with general contract interpretation
principles, the employer’s contractual commitment,
including the unit of promised pay, is based on the
objectively reasonable expectations of the parties at
App-43
the time of contract. (See Civ. Code, §1636 [‘‘A contract
must be so interpreted as to give effect to the mutual
intention of the parties as it existed at the time of
contracting, so far as the same is ascertainable and
lawful.’’].) Such principles include interpreting the
employment agreement as a whole (id., §1641) and, if
the contract language is ambiguous, looking to the
context surrounding its formation (id., §1647) as well
as the subsequent conduct of the parties (1 Witkin,
Summary of Cal. Law (11th ed. 2017) Contracts,
§772).
Correctly identifying an employer’s contractual
commitment is critical to ensuring that employers do
not circumvent the no-borrowing rule simply by
inserting into employment agreements a minimum
wage floor — i.e., an agreement to make up the
difference if an employee’s promised pay, averaged
over all hours worked, falls below the applicable
minimum wage. A minimum wage floor, by
incorporating the concept of borrowing into the
contract, would seem to be an easy way for an
employer to inoculate itself against a no-borrowing
claim.
Courts applying Armenta have rejected such
compensation schemes. In Vaquero, a furniture store
paid its salespeople on a commission basis and did not
separately compensate them for legally mandated rest
breaks. (Vaquero, supra, 9 Cal.App.5th at p. 103, 214
Cal.Rptr.3d 661.) The employer also calculated
employee pay based on the total number of hours an
employee worked, including rest breaks. If a
salesperson failed to earn more than an average of
$12.01 per hour on commission, the employer made up
App-44
the difference and subtracted that amount from the
salesperson’s earnings in the next pay period. (Ibid.)
Construing the compensation scheme to promise
payment by commission, the Court of Appeal
concluded that the scheme failed to separately pay
employees for rest breaks and therefore failed to pay
for all hours worked. (Ibid.) The no-borrowing rule
barred the employer from using pay promised for an
employee’s commission to fulfill its obligation to pay
for rest breaks. (Id. at pp. 114-117, 214 Cal.Rptr.3d
661.) The fact that the employer supplemented an
employee’s commission if it fell below a specified
hourly floor did not cure the violation. (Ibid.)
Likewise, in Gonzalez, an automobile servicing
company paid its mechanics for each repair they
completed but did not compensate them for wait time
between repairs. (Gonzalez, supra, 215 Cal.App.4th at
p. 41, 155 Cal.Rptr.3d 18.) The employer also
calculated what it called a ‘‘ ‘minimum wage floor’ ’’
(ibid.): If a mechanic’s compensation for repairs fell
below what the mechanic would have made if paid the
minimum wage for all hours worked, including wait
time, the employer made up the difference. (Id. at pp.
41-42, 155 Cal.Rptr.3d 18.) Despite such a minimum
wage floor, the Court of Appeal affirmed the trial
court’s finding that the employer failed to pay for all
hours worked. (Id. at p. 55, 155 Cal.Rptr.3d 18.) The
court found that the compensation system was a
‘‘piece-rate system’’ because the ‘‘technicians [were]
paid primarily on the basis of repair tasks completed.’’
(Id. at p. 41, 155 Cal. Rptr.3d 18.) It concluded that
the no-borrowing rule developed in Armenta also
applied to piece-rate compensation schemes. (Id. at p.
49, 155 Cal.Rptr.3d 18.) Because the employer’s piece-
App-45
rate scheme did not separately compensate mechanics
for wait time between repairs, the employer did not
pay employees for all hours worked. Under the noborrowing rule, the employer could not use pay
promised for repair tasks to cover its obligations to pay
for wait time. (Id. at p. 50, 155 Cal.Rptr.3d 18; see also
Balasanyan v. Nordstrom, Inc. (S.D.Cal. 2012) 913
F.Supp.2d 1001 [finding a violation of California wage
law under Armenta where a department store paid
salespeople on a commission basis and supplemented
commissions if it fell below an average hourly
minimum].)
Although Vaquero and Gonzalez did not
extensively discuss the nature of each employer’s
respective contractual commitments, the reasoning of
those decisions recognizes that employers cannot
circumvent their obligation to pay employees for all
hours worked or to pay the full amount of
commissions, piece rates, or other compensation
promised to employees simply by inserting a minimum
wage floor into an employment agreement. A contrary
conclusion would make it all too easy to evade the rule;
a minimum wage floor would become a standard term
in many employment contracts, and the rule would be
emptied of real substance. The rule developed in
Armenta is grounded in the protections of the Labor
Code that prohibit an employer from diluting an
employee’s contractually promised wages. (Armenta,
supra, 135 Cal.App.4th at p. 323, 37 Cal.Rptr.3d 460
[discussing Lab. Code, §§221, 222, 223].) Vaquero and
Gonzalez held that the employers in those cases made
contractual commitments to commission and piecerate pay, respectively, and the addition of a minimum
wage floor did not change those commitments. (Cf.
App-46
Cardenas v. McLane FoodServices, Inc. (C.D.Cal.
2011) 796 F.Supp.2d 1246, 1252 [finding a violation of
California wage law under Armenta even though the
employer did not violate an ‘‘explicit agreement’’].)
Today’s opinion leaves those decisions, and the
protective force of the no-borrowing rule, intact.
I Concur:
CUÉLLAR, J.
App-47
Appendix D
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
________________
No. 17-15124
________________
DEV ANAND OMAN, et al.,
v.
Plaintiffs-Appellants,
DELTA AIR LINES, INC.,
Defendant-Appellee.
________________
Filed: May 9, 2018
________________
Before: PAUL J. WATFORD and MICHELLE T.
FRIEDLAND, Circuit Judges, and JED S. RAKOFF, *
Senior District Judge.
________________
ORDER CERTIFYING QUESTIONS TO
THE SUPREME COURT OF CALIFORNIA
________________
We respectfully ask the Supreme Court of
California to exercise its discretion to decide the
certified questions set forth in section II of this order.
* The Honorable Jed S. Rakoff, United States District Judge for
the Southern District of New York, sitting by designation.
App-48
I.
Administrative Information
We provide the following information in
accordance with California Rule of Court 8.548(b)(1).
The caption of this case is:
No. 17-15124
DEV ANAND OMAN; TODD EICHMANN;
MICHAEL LEHR; ALBERT FLORES,
individually, on behalf of others similarly
situated, and on behalf of the general public,
Plaintiffs-Appellants,
v.
DELTA AIR LINES, INC., Defendant-Appellee.
The names and addresses of counsel for the parties
are:
For Plaintiffs-Appellants Dev Anand Oman,
Todd Eichmann, Michael Lehr, and Albert
Flores: Daniel S. Brome and Matthew C.
Helland,
Nichols
Kaster,
LLP,
235
Montgomery Street, Suite 810, San
Francisco, CA 94104.
For Defendant-Appellee Delta Air Lines, Inc.:
Andrew P. Frederick, Robert Jon Hendricks,
and Thomas M. Peterson, Morgan Lewis &
Bockius LLP, One Market Street, Spear
Street Tower, San Francisco, CA 94105.
We designate Dev Anand Oman, Todd Eichmann,
Michael Lehr, and Albert Flores as the petitioners if
our request for certification is granted. They are the
appellants before our court.
App-49
II. Certified Questions
We certify to the Supreme Court of California the
following three questions of state law:
(1) Do California Labor Code §§204 and 226
apply to wage payments and wage statements
provided by an out-of-state employer to an
employee who, in the relevant pay period,
works in California only episodically and for
less than a day at a time?
(2) Does California minimum wage law apply
to all work performed in California for an outof-state employer by an employee who works
in California only episodically and for less
than a day at a time? See Cal. Labor Code
§§§1182.12, 1194; 8 C.C.R. §11090(4).
(3) Does the Armenta/Gonzalez bar on
averaging wages apply to a pay formula that
generally awards credit for all hours on duty,
but which, in certain situations resulting in
higher pay, does not award credit for all hours
on duty? See Gonzalez v. Downtown LA
Motors, LP, 155 Cal. Rptr. 3d 18, 20 (Ct. App.
2013); Armenta v. Osmose, Inc., 37 Cal. Rptr.
3d 460, 468 (Ct. App. 2005).
We certify these questions pursuant to California
Rule of Court 8.548. The answers to these questions
will determine the outcome of the appeal currently
pending in our court. We will accept and follow the
decision of the California Supreme Court on these
questions. Our phrasing of the questions should not
restrict the California Supreme Court’s consideration
of the issues involved.
App-50
III.
Statement of Facts
In this case, flight attendants have sued their
employer, Delta Air Lines, Inc. (Delta), for alleged
violations of California labor law. Delta is a major
passenger and cargo airline that operates throughout
the United States and the world. It is a Delaware
corporation, headquartered in Atlanta, Georgia. From
2012 to 2015, approximately 7% of its almost 22,000
United States-based flight attendants were based out
of California airports.
The plaintiffs are four Delta flight attendants,
only two of whom reside in California. Dev Anand
Oman was a flight attendant for Delta from 2011 to
2014, during which time he lived in New York and was
based out of New York’s John F. Kennedy Airport.
Todd Eichmann and Michael Lehr began working for
Delta in 2009, when Delta acquired their previous
employer. Eichmann has lived in California and been
based out of California’s Los Angeles International
Airport (LAX) since 2014. Lehr has lived in Nevada
and been based out of California’s San Francisco
International Airport throughout his time with Delta.
Albert Flores has been a flight attendant for Delta
since around 2008. He has lived in California and been
based out of LAX since 2010. The plaintiffs proposed a
class of Delta flight attendants “who have performed
work” in California, but they never sought to certify it.
During a sample of the time period in question,
the plaintiffs spent at most 14% of their “flight-related
working hours” in California. From January 2014 to
June 2016, Oman worked 3% of his time in California;
Eichmann, 9%; Lehr, 14%; and Flores, 11%. These
percentages are not in dispute.
App-51
The plaintiffs were paid according to a
complicated credit-based pay formula that is
explained in the Delta Work Rules. (Because Delta
flight attendants are not unionized, the Work Rules,
rather than a collective bargaining agreement, govern
their pay.) The pay formula calculates a flight
attendant’s pay by “rotation,” which is a set of flights
that can include layovers. The pay formula
incorporates four different credit calculations. The
credit calculations award credits based on different
criteria. For example, the Flight Pay calculation
awards one credit per hour flown or scheduled to be
flown, while the Duty Period Credit calculation
awards one credit per two hours on duty. The pay
formula compares the result of the four credit
calculations to determine which yields the most
credits per rotation. Delta then multiplies the highest
number of credits by the flight attendant’s hourly
wage rate (plus additions not relevant here) to
determine the flight attendant’s pay.
The pay formula at times fails to award credit for
all hours on duty, but it never results in an hourly rate
that is below California’s minimum wage. The pay
formula can fail to award credit for all hours on duty
because the Flight Pay calculation provides credit only
for hours flown or scheduled to be flown, not for hours
preparing the airplane for passengers, for example.
Still, a flight attendant is always paid an aboveminimum-wage hourly rate because the Duty Period
Credit calculation, in effect, guarantees a flight
attendant half her hourly wage rate per hour on duty,
and even the lowest flight attendant wage rate is more
than double California’s minimum wage. The
plaintiffs cannot identify a rotation in which they were
App-52
paid an average hourly wage below California’s
minimum wage.
The plaintiffs sued Delta in federal court, alleging
that the Flight Pay calculation violates California
minimum wage law by failing to pay the minimum
wage “per hour for all hours worked.” 8 C.C.R.
§§11090(4)(A); see Armenta, 37 Cal. Rptr. 3d at 468.
They argue that the Flight Pay formula impermissibly
averages a flight attendant’s wages for paid,
productive time and unpaid, unproductive time. See
Gonzalez, 155 Cal. Rptr. 3d at 20. They also contend
that Delta failed to pay their wages on time, in
violation of California Labor Code §204, and failed to
issue them wage statements that complied with
California Labor Code §226. The plaintiffs demand
damages and unpaid wages under California Labor
Code §§1194 and 1194.2; damages and statutory
penalties under California Labor Code §§203 and 226;
civil penalties under the Private Attorneys General
Act (PAGA), Cal. Labor Code §2699; and restitution
and attorney’s fees under California Business &
Professions Code §17200.
The plaintiffs seek to apply California law to their
claims based solely on the location of their work. They
seek to apply California law to work that lasted only
for hours and minutes, not days, in California. They
argue that California Labor Code §§204 and 226 apply
to any pay period in which they performed work in
California and that California minimum wage law
applies to any work performed in California, however
short the duration.
The district court granted summary judgment to
Delta and denied it to the plaintiffs in two orders.
App-53
First, the district court held that Delta complied with
California minimum wage law. Oman v. Delta Air
Lines, Inc., 153 F. Supp. 3d 1094, 1095 (N.D. Cal.
2015). Second, the district court granted summary
judgment on the §204, §226, and other remaining
claims. Oman v. Delta Air Lines, Inc., 230 F. Supp. 3d
986, 994 (N.D. Cal. 2017). It held that California labor
law does not apply to the four plaintiffs because they
worked only a de minimis amount of time in
California. Id. at 993-94. The plaintiffs appealed both
orders.
We heard oral argument on March 16, 2018. The
Air Transport Association of America, Inc., filed an
amicus brief in support of Delta. The California
Employment Lawyers Association filed an amicus
brief in support of the plaintiffs.
On the same day that we heard oral argument in
this case, we also heard oral argument in two related
cases, Ward v. United Airlines, Inc., No. 16-16415, and
Vidrio v. United Airlines, Inc., No. 17-55471. Those
cases raise questions about the extraterritoriality of
California Labor Code §226 that are similar to the
questions raised here. We are also certifying the statelaw questions in Ward and Vidrio to the California
Supreme Court, in a separate certification order.
IV.
Explanation of Certification Request
No controlling California precedent answers the
certified questions on the proper territorial reach of
the California Labor Code provisions at issue, or on
the application of California minimum wage law to a
credit-based pay formula. Because the first two
certified questions both concern the extraterritorial
application of the Labor Code, we explain our
App-54
certification of those two questions together in section
IV.A. We explain our certification of the third
question, which arises out of Armenta and Gonzalez,
in section IV.B. The answers to these certified
questions matter greatly to the many out-of-state
employers whose employees work in California for
only brief periods of time.
A.
There is no controlling California precedent on
the question whether California labor law applies to
an employee who works for an out-of-state employer
and does not work principally, or even for days at a
time, in California. The three principles that generally
guide our evaluation of the propriety of a potentially
extraterritorial application of California law, and the
California Supreme Court’s application of those
principles, do not provide sufficient guidance here.
The first principle is that “[o]rdinarily the
statutes of a state have no force beyond its
boundaries.” N. Alaska Salmon Co. v. Pillsbury, 162 P.
93, 94 (Cal. 1916). To evaluate whether a claim seeks
to apply the force of a state statute beyond the state’s
boundaries, courts consider where the conduct that
“creates liability” under the statute occurs. Sullivan v.
Oracle Corp., 254 P.3d 237, 248 (Cal. 2011); see also
RJR Nabisco, Inc. v. European Cmty., 136 S. Ct. 2090,
2101 (2016) (where the “conduct relevant to the
statute’s focus occur[s]”). If the conduct that “creates
liability” occurs in California, California law properly
governs that conduct. Sullivan, 254 P.3d at 248; see
also Diamond Multimedia Sys., Inc. v. Superior Court,
968 P.2d 539, 554 (Cal. 1999). By contrast, if the
liability-creating conduct occurs outside of California,
App-55
California law generally should not govern that
conduct (unless the Legislature explicitly indicates
otherwise, which it did not in the Labor Code). See
Sullivan, 254 P.3d at 248.
The second principle is that the proper reach of
Labor Code provisions can differ because the
provisions regulate different conduct and implicate
different state interests. See id. at 243-44. For
example, because “California’s interest in the content
of an out-of-state business’s pay stubs” may be weaker
than its interest in the payment of overtime wages,
wage statement provisions may apply more narrowly
than overtime provisions do. See id. at 243.
The third principle is that courts must balance
California’s interest in applying its law with
considerations of “interstate comity,” in order to avoid
unnecessary conflicts of state law. See id. at 242-43.
For example, courts should consider whether the
proposed use of California law would displace another
state’s law or would protect an employee who is
otherwise not protected by any state law. See id. at 243
(citing Bostain v. Food Express, Inc., 153 P.3d 846
(Wash. 2007)).
The California Supreme Court has applied these
principles twice to the Labor Code. Tidewater held
that wage orders apply to an employee who “resides in
California, receives pay in California, and works
exclusively, or principally, in California.” Tidewater
Marine W., Inc. v. Bradshaw, 927 P.2d 296, 309 (Cal.
1996). Sullivan held that overtime provisions apply to
day-long or week-long work performed in California
for a California employer by an out-of-state resident.
254 P.3d at 243, 247.
App-56
But with regard to the required strength of the
California connection, Tidewater did not address
whether California law applies to California residents
“who work primarily outside California[],” as the
California-resident plaintiffs in this case do. 927 P.2d
at 309. Sullivan did not resolve whether California
law applies to nonresident employees who work less
than a full day in California, as the nonresident
plaintiffs do. See 254 P.3d at 242-43. Neither case
discussed how to balance California’s interest in
applying its law to its residents with California’s
interest in avoiding interstate conflict by not applying
its law to an out-of-state employer, such as Delta.
With regard to the different Labor Code
provisions, Sullivan confined its holding to overtime
provisions, leaving uncertain whether it applies to
similar minimum wage claims. Neither Tidewater nor
Sullivan considered a statute that focused on an
employee’s receipt of pay and information about her
pay, as §204 and §226 do. See Cal. Labor Code
§§204(a), 226(e)(2); see also Lopez v. Friant & Assocs.,
LLC, 224 Cal. Rptr. 3d 1, 6 (Ct. App. 2017); Morgan v.
United Retail, Inc., 113 Cal. Rptr. 3d 10, 19 (Ct. App.
2010). If that focus makes the relevant location for a
§§204 or §226 claim the place where the employee
receives her pay, does an employee’s California
residence and receipt of pay in California strengthen
California’s interest in the content of an out-of-state
employer’s wage statement? Cf. Sullivan, 254 P.3d at
243. Does an employee’s out-of-state residence
preclude application of California wage-timing or
wage-statement law to her?
App-57
In short, Tidewater and Sullivan, even informed
by the principles of extraterritoriality, do not allow us
to confidently resolve the plaintiffs’ California law
claims. The claims implicate the proper reach of
California labor law, which in turn implicates the
wage-and-hour protections given to traveling workers.
For this reason, we certify these important questions.
B.
There is also no directly controlling California
precedent that determines whether Delta’s creditbased pay formula implicates California’s bar on
averaging wages. The California Court of Appeal has
held that the “FLSA model of averaging all hours
worked in any work week to compute an employer’s
minimum wage obligation under California law is
inappropriate.” Armenta, 37 Cal. Rptr. 3d at 468
(internal quotation marks omitted). Instead, the
“minimum wage standard applies to each hour
worked.” Id.; see Gonzalez, 155 Cal. Rptr. 3d at 28. The
plaintiffs argue that the Flight Pay calculation
violates this rule because, as they correctly note, the
calculation does not award credits for “each hour
worked.” But the plaintiffs’ proposed application
raises two unresolved issues regarding the proper
interpretation of when the bar applies (assuming that
it applies at all).
First, Gonzalez stated that the bar applies
“whenever an employer and employee have agreed that
certain work will be compensated at a rate that
exceeds the minimum wage and other work time will
be compensated at a lower rate.” Gonzalez, 155 Cal.
Rptr. 3d at 29 (emphasis added). Both Armenta and
Gonzalez premised their holdings in part on California
App-58
Labor Code §§221, 222, and 223, which articulate the
principle that “all hours must be paid at the statutory
or agreed rate and no part of this rate may be used as
a credit against a minimum wage obligation.”
Armenta, 37 Cal. Rptr. 3d at 467-68 (emphasis added);
see Gonzalez, 155 Cal. Rptr. 3d at 28. The references
to a pay agreement leave unresolved how directly that
agreement must link certain work to certain pay to
implicate the Armenta/Gonzalez bar. Does it matter
that the Delta Work Rules state that Delta awards
credits, rather than hourly pay, for certain work? Does
it matter that the Work Rules award credits not only
for the exact hours flown, but also for the hours
scheduled to be flown, thus somewhat severing the
link between certain work and certain pay?
Second, the Armenta/Gonzalez bar applies when
averaging wages “effectively reduces [an employee’s]
contractual
hourly
rate”
and
“results
in
underpayment of employee wages.” Armenta, 37 Cal.
Rptr. 3d at 467-68; Gonzalez, 155 Cal. Rptr. 3d at 28.
In this case, the challenged Flight Pay calculation
operates only to increase a flight attendant’s hourly
wage above the guaranteed minimum rate promised
under the Duty Period Credit calculation. Does the bar
apply to a pay system that effectively increases an
employee’s hourly rate?
Because existing California precedent does not
establish whether the Armenta/Gonzalez bar properly
applies here, we certify the question. Although the
question is somewhat fact-intensive, it implicates
California’s strong interest in enforcing its minimum
wage law.
App-59
V.
Accompanying Materials
The clerk of this court is hereby directed to file in
the Supreme Court of California, under official seal of
the United States Court of Appeals for the Ninth
Circuit, copies of all relevant briefs and excerpts of the
record, and an original and ten copies of this order and
request for certification, along with a certification of
service on the parties, pursuant to California Rule of
Court 8.548(c), (d).
This case is withdrawn from submission. Further
proceedings before us are stayed pending final action
by the Supreme Court of California. The Clerk is
directed to administratively close this docket, pending
further order. The parties shall notify the clerk of this
court within seven days after the Supreme Court of
California accepts or rejects certification, and again
within seven days if that court accepts certification
and subsequently renders an opinion. The panel
retains jurisdiction over further proceedings.
IT IS SO ORDERED.
App-60
Appendix E
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT
OF CALIFORNIA
________________
No. 15-cv-00131-WHO
________________
DEV ANAND OMAN, et al.,
v.
Plaintiffs,
DELTA AIR LINES, INC.,
Defendant.
________________
Filed: January 6, 2017
________________
ORDER ON MOTIONS FOR
SUMMARY JUDGMENT
________________
INTRODUCTION
The parties cross-move for summary judgment on
plaintiffs’ claims that Delta violates California Labor
Code section 226 by failing to provide Flight
Attendants who work for any amount of time on the
ground in California individualized wage statements
disclosing the total hours worked at specific hourly
rates. 1 Plaintiffs also separately move for summary
1 Delta moves for summary judgment on plaintiffs’ third claim
for wage statement penalties under California Labor Code
section 226, fourth claim for civil penalties under the Private
App-61
judgment on their PAGA claim under Labor Code
section 204, arguing that Delta fails to make timely
wage payments for pay periods encompassing any
work by Flight Attendants in California. 2
The facts regarding how and when Flight
Attendants are paid and what information they are
given regarding their wages are not in dispute.
Instead, the dispute is whether the protections of the
California Labor Code provisions at issue apply to the
four named plaintiffs when they only worked a de
minimis amount of time in California during any of
the relevant pay periods. I conclude that given the
undisputed facts in this case, California law does not
apply. Delta’s motion for summary judgment is
GRANTED and plaintiffs’ motion is DENIED.
BACKGROUND
I. DELTA’S PAY FORMULAS
Delta pays its flight attendants on a bid packet
and rotation system where each month Flight
Attendants “bid” on Rotations that are scheduled to
depart from the Flight Attendant’s base the following
month. 3 For each Rotation, the Bid Packets describe
Attorneys’ General Act, (PAGA) and fifth claim for violation of
California’s unfair competition law.
Delta argues that plaintiffs cannot move for summary
judgment on their PAGA claim under Labor Code section 204,
because the parties’ stipulation allowing for summary judgment
prior to class certification (Dkt. No. 57) did not encompass that
claim.
2
3 The facts regarding Delta’s four pay formulas and how they
operate are not disputed and taken from my prior Order granting
Delta’s motion for summary judgment on plaintiffs’ minimum
wage claims. Dkt. No. 45, December 29, 2015 Order.
App-62
the number and length of the Duty Periods
encompassed within the Rotation, the Report Times
for each Duty Period, the scheduled total flight time
for each Segment within the Rotation (which is
measured from Block Out to Block In), and the amount
of time that the Flight Attendant can expect to be
away from base. The Bid Packets show which of
Delta’s four pay formulas will apply to the Rotation,
what the credit value of the Rotation is, and calculates
the minimum compensation for each Rotation. The
credit valuation included in the Bid Packets for each
Rotation serves as a minimum guarantee for Flight
Attendants with respect to credits. The actual
compensation may increase as a result of delays,
changes, or other contingencies; it cannot decrease.
Delta’s bidding and compensation policies are laid
out in Delta’s Work Rules. Delta uses four formulas to
determine a Flight Attendant’s actual pay. The “Flight
Pay” formula is based on the actual flight time and/or
scheduled flight time of the Segments, whichever is
greater. Under the “Duty Period Credit,” Delta
“credits” flight attendants with “1 hour of flight pay
for every 2 hours on duty for any given period.” The
“Minimum Duty Period Credit” (MDC) multiplies 4:45
hours by the Flight Pay Rate for each Duty Period
within a Rotation that has at least one flight Segment.
And under the “Trip Credit” formula, Flight
Attendants receive credit for 1 hour of flight time for
each 3.5 hours they are away from base.
Delta runs calculations for each Flight
Attendant’s Rotation and pays the Flight Attendant
using the formula that results in the highest amount
of pay. In no event is a Flight Attendant’s pay less per
App-63
hour worked in the Duty Period (all hours worked),
than the California minimum wage rate. Each formula
uses a “base” which Delta defines as “Flight Pay Rate.”
But the Flight Pay Rate is not an agreed to “hourly
rate of pay;” it is instead part of the mathematical
equation Delta runs to determine actual pay.
II.
DELTA’S
WAGE
PAYMENTS
TRACKING
AND
Delta provides Flight Attendants information
about their hours worked and income paid through its
Monthly Time Display System (MOTS), which is
available to all Flight Attendants. Declaration of
Brian Moreau (Dkt. No. 59-2) ¶8. MOTS allows Flight
Attendants “real-time” access to their compensation
for each Rotation and non-flight activity as they
progress through their monthly schedules. Id.
Delta provides wage statements to Flight
Attendants at the time of each payment of wages.
Moreau Decl., ¶10. Those wage statements show each
“category” of payments made to Flight Attendants as
a separate line-items, but do not show the hours
worked or hourly rates paid for those categories. Id.;
see also, Frederick Decl., Ex. J (Eichmann wage
statements). Flight Attendants also receive a Monthly
Activity Pay Statement (“MAPS”) for each bid period,
which contains detailed pay information about their
flying and non-flying activities for each bid period.
Moreau Decl., ¶¶11-13; Frederick Decl. Ex. K
(Eichmann 2014 MAPS). For each flight within a
Rotation, the MAPS shows: (1) the flight number; (2)
the departure day; (3) the departure and arrival
airports; (4) the report time for the first flight of the
Duty Period; (5) the Block Out and Block In times; and
App-64
(6) the actual flight time. Moreau Decl. ¶12. It also
shows the total hours credited and provides a pay
summary breaking down the current monthly pay
based on flight credits and amounts paid for holding
pay, flight leader pay, and TAFB. Frederick Decl., Ex.
K.
Delta pays Flight Attendants on the 15th and last
day of each month (i.e., semi-monthly). Moreau Decl.,
¶9. As Delta does not know Flight Attendants’ final
schedules for a bid period until they are complete, it
provides them with a base allotment of 45 credits at
their Flight Pay Rate per bid period, where
Attendants receive 22.5 credits in each paycheck. Id.
Following the close of the bid period, Delta calculates
the total credits for that bid period, determines what
premium pay rates should be applied 4 and what
additional payments should be made, 5 and calculates
the TAFB pay. Id. 6 The resulting amount is then split
evenly between the two pay periods for the following
bid period. Id. For example, on October 15th, Flight
Attendants receive 22.5 credits for October 1st
through 15th, plus fifty percent of their credits,
premiums, and TAFB pay for September. Id. Then, on
4 For example, for being a Flight Leader or for international
flights. Moreau Decl. ¶12.
5 For example, for holding pay or training pay. Moreau Decl.
¶¶7, 12.
6 Time Away from Base Pay (TAFB) is a meal expense
reimbursement payment, paid at an hourly rate for every hour
spent away from base for any Rotation, including noncompensable time (e.g., layovers after release from duty). Moreau
Decl. ¶7. TAFB pay is paid at a different rate for domestic and
international travel.
App-65
October 31st, the Flight Attendants receive the
remaining 22.5 credits for October plus the remaining
credits, premiums, and TAFB pay for September. Id.
III. PLAINTIFFS’ WORK HISTORY
During the relevant time period, plaintiff Oman
was based out of New York/JFK airport. Plaintiff
Eichmann was based out of Los Angeles/LAX and a
California resident since February 2014, and before
that was based out of Detroit (DTW) or Seattle (SEA).
Plaintiff Lehr has been based out of San
Francisco/SFO, but has been a resident of Las Vegas,
Nevada throughout his employment with Delta.
Plaintiff Flores is a resident of California based out of
Los Angeles/LAX.
Plaintiffs do not dispute that the named plaintiffs
spent between 86 percent and 97.1 percent of their
“flight-related working hours” outside of California,
and that they continuously worked in multiple
jurisdictions on a pay period, weekly, and daily basis. 7
7 Specifically, Delta contends that the percentage of time each
named plaintiffs worked outside of California in the relevant
time periods is as follows: Eichmann 91.4%; Flores 89.1%; Lehr
86%; and Oman 97.1%. Declaration of Valentin Estevez (Dkt. No.
59-3) at 5-6. Delta calculated those figures by using two measures
to determine time spent on the ground in California; MAPS
reports showing reporting time and Block In and Block Out, and
on-time performance reports showing taxi times. Estevez Decl. at
2-5. Delta’s expert used those measures for flights flown by the
named plaintiffs into and out of California and compared report
times and departure times, turn time at California airports,
deplaning times at California airports, and taxi-times. Estevez
Decl. at 4. In their declarations, the named plaintiffs assert only
that they “regularly” fly into and out of California airports, but
provide no estimate as to how much time they worked in
App-66
IV. PRIOR ORDER
In my prior Order granting Delta’s motion for
summary judgment on plaintiffs’ minimum wage
claims, I concluded that Delta’s payment practice did
not violate California’s minimum wage requirements
because Delta’s Work Rules compensated Flight
Attendants for all of their hours worked, in a fully
disclosed manner based upon the floor guaranteed by
the Bid Packet process. I recognized that under Delta’s
system, workers were not provided a guaranteed
minimum rate for each hour on Duty, but that the
Flight Pay Rate was used as part of the mathematical
equation Delta runs to determine actual pay.
December 2015 Order at 5.
The parties now cross-move for summary
judgment on plaintiffs’ remaining claims under
California Labor Code sections 226 and 204.
LEGAL STANDARD
I. SUMMARY JUDGMENT
Summary judgment on a claim or defense is
appropriate “if the movant shows that there is no
genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a). In order to prevail, a party
moving for summary judgment must show the absence
of a genuine issue of material fact with respect to an
essential element of the non-moving party’s claim, or
to a defense on which the non-moving party will bear
California in any given pay period or during the class period. See
Dkt. No. 58-19, Flores Decl. ¶2 (“regularly fly into and out of
California airports”); Dkt. No. 58-20, Lehr Decl. ¶2 (same); Dkt.
No. 58-21, Eichmann Decl. ¶2 (same).
App-67
the burden of persuasion at trial. See Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). Once the movant has
made this showing, the burden then shifts to the party
opposing summary judgment to identify “specific facts
showing there is a genuine issue for trial.” Id. The
party opposing summary judgment must then present
affirmative evidence from which a jury could return a
verdict in that party’s favor. Anderson v. Liberty
Lobby, 477 U.S. 242, 257 (1986).
On summary judgment, the Court draws all
reasonable factual inferences in favor of the nonmovant. Id. at 255. In deciding a motion for summary
judgment, “[c]redibility determinations, the weighing
of the evidence, and the drawing of legitimate
inferences from the facts are jury functions, not those
of a judge.” Id. However, conclusory and speculative
testimony does not raise genuine issues of fact and is
insufficient to defeat summary judgment. See
Thornhill Publ’g Co., Inc. v. GTE Corp., 594 F.2d 730,
738 (9th Cir.1979).
II.
CALIFORNIA LABOR CODE
Section 226 requires employers to “semimonthly
or at the time of each payment of wages” provide
employees “either as a detachable part of the check,
draft, or voucher paying the employee's wages, or
separately if 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 … , (4) all deductions … , (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 or an employee identification number other
App-68
than a social security number, (8) the name and
address of the legal entity that is the employer … , and
(9) all applicable hourly rates in effect during the pay
period and the corresponding number of hours worked
at each hourly rate by the employee … . For purposes
of this subdivision, ‘copy’ includes a duplicate of the
itemized statement provided to an employee or a
computer-generated record that accurately shows all
of the information required by this subdivision.” Cal.
Lab. Code §226.
Section 204 requires that all wages “are due and
payable twice during each calendar month, on days
designated in advance by the employer as the regular
paydays. Labor performed between the 1st and 15th
days, inclusive, of any calendar month shall be paid
for between the 16th and the 26th day of the month
during which the labor was performed, and labor
performed between the 16th and the last day,
inclusive, of any calendar month, shall be paid for
between the 1st and 10th day of the following month.”
Cal. Lab. Code §204.
DISCUSSION
Delta’s main argument is that the four named
plaintiffs cannot be covered by Sections 226 and 204 of
the California Labor Code—which provide procedural
protections for wages earned under California law—
when the vast majority of their work occurred in
federal airspace governed by federal regulations and
any work on the ground in California was de minimis
and incidental to their work as Flight Attendants in
the air. Plaintiffs contend that whenever a Flight
Attendant flies into or out of California, their work in
that pay period becomes covered by the Labor Code
App-69
sections (and therefore California-compliant wage
statements and payments are required), regardless of
where the Flight Attendant resides or is based out of,
and regardless of how much time that Flight
Attendant works on the ground in California during
that pay period.
I.
SECTION 226
A.
Delta’s Wage Statements and Wage
Information
Delta does not dispute that it does not provide
Flight Attendants an itemized wage statement
showing all of the information required under Section
226 for each bi-monthly pay period, particularly the
exact hours worked by each Flight Attendant and the
rate or rates the Flight Attendant was paid for those
hours. Delta argues that it cannot provide that
information because, as discussed extensively on the
prior motion for summary judgment, Delta uses an
atypical method of payment which is not based on a
set hourly wage rate for each of the tasks it requires
of Flight Attendants.
Delta contends, however, that the essential
information required by Section 226 is provided
through the monthly MAPS and the accessibleanytime MOTS. The MAPS statements are apparently
generated on a monthly basis, not bi-monthly as
required under Section 226. Moreover, MAPS does not
disclose an hourly wage rate for each hour worked, but
instead show the formula of how the final payments
for each Rotation were determined. MOTS is not a
“statement” provided to the Flight Attendants at the
time they are paid, but instead a system that they can
access. As with the MAPS, it does not disclose an
App-70
hourly rate for each category of work performed by
plaintiffs.
Delta cannot rely on the MAPS and MOTS to
argue that Delta satisfies the requirements of Section
226. However, as discussed below, I reject plaintiffs’
theory of liability under Section 226. Because the
undisputed facts show that the named plaintiffs only
worked a de minimis amount of time on the ground in
California, the “situs” of their work is not California.
For the reasons that follow, California Labor Code
provisions do not apply to their wage statements.
B. Applicability of Section 226
Plaintiffs argue that under the California
Supreme Court’s decision in Sullivan v. Oracle Corp.,
51 Cal. 4th 1191 (2011) (Sullivan I), when any work is
performed within California, the employee should
receive a Section 226-compliant wage statement
regardless of where the bulk of her or his work in the
relevant pay period is performed. However, neither
Sullivan I nor the subsequent decision from the Ninth
Circuit in Sullivan v. Oracle Corp., 662 F.3d 1265,
1267 (9th Cir. 2011 (Sullivan II) addressed the
question presented here. In the Sullivan cases, the
non-resident plaintiffs sought overtime pay for full
days and weeks worked “entirely in California.”
Sullivan I, 51 Cal. 4th at 1196; id. at 1199-00
(“plaintiffs here claim overtime only for entire days
and weeks worked in California, in accordance with
the statutory definition of overtime.” (emphasis in
original)). 8 The California Supreme Court focused
8 The statute at issue provided that “[a]ny work in excess of
eight hours in one workday and … 40 hours in any one
workweek … shall be compensated at the rate of no less than one
App-71
narrowly on the nature, scope, and purpose of the
Labor Code provision at issue there—requiring
overtime for any entire day or week worked in
California-and concluded that in light of the purpose
and language of Section 510, it could be applied
against the California-based employer for the full days
and entire weeks worked by the non-resident
employees in California. The court was careful to limit
its holding to overtime under Section 510, and
repeatedly noted that its conclusion under Section 510
did not automatically apply to other provisions of the
Labor Code, for example, those regulating “pay stubs.”
Sullivan v. Oracle Corp., 51 Cal. 4th at 1201.
Here, plaintiffs ignore the purpose and scope of
Section 226. They argue, regardless even of whether
the Flight Attendant’s or the employer’s residence is
in California or whether they worked a full pay period
in California, that the trigger for liability is simply
performing any work in California during a pay
period. Given the nature of the claim under Section
226 and the nature of the plaintiffs’ jobs as Flight
Attendants, it is wrong to ignore whether California
can be considered the situs of the Flight Attendants’
work sufficient to invoke Section 226’s wage statement
requirements.
The analysis Judge Alsup recently undertook in a
factually analogous case, Ward v. United Airlines,
Inc., No. C 15-02309 WHA, 2016 WL 3906077 (N.D.
Cal. July 19, 2016), is instructive. There, Judge Alsup
determined that Section 226 did not apply to wage
and one-half times the regular rate of pay … .” Cal. Lab. Code,
§510(a).
App-72
statements issued to pilots who were California
residents but who worked “principally out of state.” Id.
at *3-5; see also Aguilar v. Zep Inc., No. 13-CV-00563WHO, 2014 WL 4245988, at *12 (N.D. Cal. Aug. 27,
2014) (“‘the critical factor is where the work at issue is
performed’ by the plaintiff.”).
Plaintiffs argue that the “situs” analysis in Ward
ignored the Sullivan precedent and should not be
followed. However, plaintiffs read Sullivan far too
broadly. To determine whether a particular California
Labor Code provision should apply in a situation
where work was performed in California and in other
jurisdictions, the appropriate analysis must focus on
the particular Labor Code provision invoked, the
nature of the work being performed, the amount of
work being performed in California, and the residence
of the plaintiff and the employer.
This multi-factor approach is consistent with the
recent ruling in Bernstein v. Virgin Am., Inc., No. 15CV-02277-JST (N.D. Cal. Jan. 5, 2017), where Judge
Tigar concluded that California wage and hour
protections, including Section 226, applied to a class of
California flight attendants. Judge Tigar reached that
conclusion because: (i) the attendants were California
residents; (ii) attendants sometimes worked entire
days on consecutive flights between California
airports; (iii) the defendant was headquartered in
California; (iv) the wrongful conduct (issuance and
application of compensation policies) emanated from
California; and (v) the defendant had other “deep ties”
to California, including that almost 90% of its daily
flights departed from a California airport and it
received millions of dollars in state subsidies to train
App-73
all of its flight attendants in California. That plaintiffs
only spent around 25% of their total work time in
California was a factor, but not a determinative one in
light of the others. Bernstein January 5, 2017 Order at
6-14.
The facts in Bernstein are starkly different than
the undisputed facts here. Here, the question is
whether Section 226 should apply based solely on a
Flight Attendant’s performance of a de minimis
amount of work in California during any pay period,
not on the Flight Attendants’ residence, an employer’s
California residence or other “deep ties” to California,
or the performance of a significant amount of work in
a particular pay period in California. Plaintiffs assert
that the amount of time worked in California-either
during the class period or during a particular pay
period-is irrelevant to the applicability of Section 226,
but that ignores important California and federal
precedent to the contrary. See, e.g., Tidewater Marine
W., Inc. v. Bradshaw, 14 Cal. 4th 557, 578 (1996) (“[I]f
an employee resides in California, receives pay in
California, and works exclusively, or principally, in
California, then that employee is a ‘wage earner of
California’ and presumptively enjoys the protection of
IWC regulations.”); see also Oil, Chem. & Atomic
Workers Int'l Union, AFL-CIO v. Mobil Oil Corp., 426
U.S. 407, 420 (1976) (concluding that the
“predominant job situs is the controlling factor” in
determining whether the National Labor Relations
Act “right to work” savings clause applies).
Focusing on the purpose of Section 226 (to give
employees clarity as to how their wages are calculated,
so they can verify that their wages are calculated
App-74
appropriately under California law)9, because the
undisputed facts show that the named plaintiffs only
worked a de minimis amount of time in California
(ranging from 2.6% to a high of 14%), and in light of
the nature of their work (necessarily working in
federal airspace as well as in multiple other
jurisdictions but during each pay period and day at
issue), I conclude that Section 226 does not apply to
the claims of the four named plaintiffs. That Delta is
not a California-based employer and that plaintiffs
explicitly disclaim any reliance on the residence of the
Flight Attendants further strengthen this conclusion.
Plaintiffs also make a totally unfounded
legislative history argument that recent amendments
to Section 226 evince the legislature’s intent to apply
Section 226 to all other workers who sometimes work
outside of the state. Plaintiffs’ MSJ at 12-13; Plaintiffs’
Reply at 16-17. 10 They rely on the legislature’s
clarification that the total hours worked for certain
categories of employees who had already been
determined to be exempt from overtime by an existing
statute or Industrial Welfare Commission order need
9 Soto v. Motel 6 Operating, L.P., 4 Cal. App. 5th 385, 392 (Ct.
App. 2016) (“section 226(a)’s statutory purpose … is to document
the paid wages to ensure the employee is fully informed
regarding the calculation of those wages.” (emphasis in original)).
Plaintiffs’ reliance on the legislative history of other
provisions of the Labor Code, e.g., Cal. Lab. Code §245.5(a)(4) is
similarly misplaced. Plaintiffs’ MSJ at 13. As the Sullivan I court
recognized, the determination of whether a Labor Code provision
extends to work performed in part in California depends on an
analysis of the particular Labor Code provision at issue. Sullivan
v. Oracle Corp., 51 Cal. 4th at 1201.
10
App-75
not be reported on their wage statements. 11 That has
nothing to do with whether employees who work a de
minimis amount in California are covered by Section
226. There is no logic or support to plaintiffs’
argument.
In sum, there is no basis to apply Section 226’s
procedural protections to the named plaintiffs. 12
II. APPLICABILITY OF SECTION 204
Like Section 226, Section 204 provides California
workers a procedural protection; requiring wages
earned in California to be paid to them on a specific
timeframe. 13 Delta does not dispute that it does not
comply with Section 204. However, plaintiffs at oral
argument admitted that if I conclude Section 226 does
not apply to the four named plaintiffs, then the result
for their Section 204 claim is the same. There are no
additional arguments—based on the nature, scope,
and purpose of Section 204—for reaching a different
conclusion under that section.
11http://leginfo.legislature.ca.gov/faces/billAnalysisClient.xhtm
l?bill_id=201520160AB2535.
12 Having concluded that Section 226 (and as discussed below,
Section 204) cannot apply to the claims of the named plaintiffs, I
need not reach whether application of those provisions to Delta
would violate the dormant commerce clause.
13 See’s Candy Shops, Inc. v. Superior Court, 210 Cal. App. 4th
889, 904–05 (2012) (“As observed by the California Supreme
Court more than 70 years ago, ‘the sole purpose of [section 204]
is to require an employer of labor who comes within its terms to
maintain two regular pay days each month, within the dates
required in that section.’” (quoting In re Moffett, 19 Cal.App.2d 7,
14 (1937)).
App-76
CONCLUSION
For the foregoing reasons, defendant’s motion for
partial summary judgment is GRANTED and
plaintiffs’ motion is DENIED. Because no issues
remain in this case, judgment will be entered in
Delta’s favor in full.
IT IS SO ORDERED.
Dated: January 6, 2017
[handwritten: signature]
William H. Orrick
United States District Judge
App-77
Appendix F
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT
OF CALIFORNIA
________________
No. 15-cv-00131-WHO
________________
DEV ANAND OMAN, et al.,
v.
Plaintiffs,
DELTA AIR LINES, INC.,
Defendant.
________________
Filed: January 6, 2017
________________
ORDER ON CROSS-MOTIONS FOR
SUMMARY JUDGMENT
________________
On the parties’ cross-motions for summary
judgment, the core question is whether Delta’s Work
Rules
violate
California’s
minimum
wage
requirements. Given the complexities of scheduling
and paying Flight Attendants, Delta has developed
formulas for determining Flight Attendant pay. Those
formulas (“Work Rules”) are fully disclosed to Flight
Attendants and form the basis for the minimum
promised pay included in each Bid Packet for each
Rotation that a Flight Attendant might want to work.
App-78
Even where flights are delayed or rescheduled, a
Flight Attendant will receive the minimum pay
promised in the Bid Packet and the highest pay
produced by applying each of the four Work Rules to
the Rotation actually worked by the Flight Attendant.
As explained in more depth below, I find that Delta’s
Flight Attendants are compensated for all hours
worked in California at an amount exceeding the
minimum wage.
There is no dispute—even when considering all
hours a Flight Attendant was on Duty within each
Rotation—that the Flight Attendants always received
at least the California minimum wage rate for each
hour within that Duty period. That Delta does not use
a set hourly wage for each different type of task Flight
Attendants perform (e.g., time in flight, time spent in
crew meetings or other pre-boarding duties, time
spent on the ground in-between flight Segments, and
time away from base) does not violate California law
because Delta’s formulas ensure that Flight
Attendants are compensated for all time spent on
Duty. Accordingly, I GRANT defendant’s motion for
partial summary judgment on plaintiffs’ First, Second,
and Third claims for relief and DENY plaintiffs’ crossmotion for summary judgment. 1
1 In their First Amended Complaint, plaintiffs allege violations
of San Francisco and San Jose’s Minimum Wage Ordinances. See
First Amended Complaint (Dkt. No 24). Delta moves for
summary judgment on those claims. Delta MSJ at 26-27.
Plaintiffs attempt to “withdraw” those claims in their Motion.
Plaintiffs’ MSJ at 15 fn. 11. Because plaintiffs do not oppose
Delta’s MSJ as to those claims for the three named plaintiffs, I
GRANT Delta’s Motion for Summary Judgment on plaintiffs’
Second and Third claims for relief.
App-79
BACKGROUND
I.
DELTA’S FLIGHT ATTENDANT
SCHEDULES AND PAY RULES
Delta provides air transportation for passengers
and cargo throughout the United States and World
through its network of hubs and international
gateways. Declaration of Andrew P. Frederick (Dkt.
No. 33), Ex. G at 2. 2 As of August 2015, Delta
employed approximately 80,000 employees worldwide
and 21,689 Flight Attendants in the United States. Id.
at 10; Declaration of Brian Moreau (Dkt. No. 32-1), ¶2.
The domestic flight attendants are primarily based at
one of Delta’s eight domestic hubs, Hartsfield-Jackson
Atlanta International Airport (“ATL”), Los Angeles
International Airport (“LAX”), Detroit Metropolitan
Wayne County Airport (“DTW”), Minneapolis-St. Paul
International Airport (“MSP”), New York-LaGuardia
Airport (“LGA”), New York-John F. Kennedy
International Airport (“JFK”), Salt Lake City
International Airport (“SLC”) and Seattle-Tacoma
International Airport (“SEA”). Moreau Decl. ¶¶2.
From May 1, 2012 to the present, between 5.3% and
6.2% of Delta Flight Attendants were based out of
LAX, and between 1.2% and 1.5% based out of SFO.
Moreau Decl. ¶¶3-4. Most Flight Attendants were and
are based out of Atlanta and New York. Id. ¶5.
Every month, Flight Attendants “bid” on
Rotations that are scheduled to depart from the Flight
Attendant’s base the following month. Frederick Decl.,
2 The following facts are undisputed, unless otherwise noted.
App-80
Exs. L-N. 3 Flight Attendants’ schedules, therefore,
fluctuate and depend upon the seniority-based bid
process. Moreau Decl. ¶6.
A Rotation begins when a Flight Attendant
reports to an airport at a designated Report Time for
“Sign in,” to let the Delta know he or she is present
and available to work the assigned Rotation. Moreau
Dep. 51:5-19, 52:17-21, 53:8-54:4. Report Time is
typically one hour before the departure time for
domestic flights, one and a half hours for international
flights, and is the start of the Flight Attendant’s Duty
Period. Moreau Dep. 51:5-19. After reporting, the
Flight Attendant is required to check his/her e-mail
and/or mailbox and attend a pre-flight briefing with
the other Flight Attendants working the flight (the
“Crew”) in the Flight Attendant lounge, reporting
location, or other designated area. Moreau Dep. 67:1516, 70:8-71:25.
The Flight Attendant must then report to the
departure gate prior to boarding. Moreau Dep. 77:2-4.
At the gate, the Flight Attendant’s pre-flight
responsibilities will vary depending upon whether
3 A Rotation is a sequence of flights that may consist of one or
more flight segments (i.e., a single flight) or one or more Duty
Periods. Deposition of Brian Moreau, Ex. D to Frederick Decl.
(Dkt. No. 34-3) 39:9-25, 41:6-8. A Duty Period begins at the
scheduled Report Time and ends upon the Flight Attendant’s
release from duty for that particular day or Rotation. Moreau
Dep. 40:5-15. Report Time is the time a Flight Attendant must be
present at the airport either for Sign-in or to return from a
layover. Frederick Decl. Exs. E, F at G13 (Work Rules Glossary).
Attendants do not have any duties or responsibilities prior to
their Report Time. Moreau Dep. 74:23-75:3.
App-81
they are serving as the Purser or Flight Leader, 4
regular crew member, or language destination Flight
Attendant. Moreau Dep. 68:2-70:2. For example, the
Purser/Flight Leader will typically obtain a copy of the
flight’s manifest and “brief” with the Captain while
the rest of the Crew performs a number of duties to
ensure the aircraft cabin is ready to receive
passengers before assisting with the boarding process.
Moreau Dep. 69:8-12.
Once the plane pushes back from the gate
(referred to as “Block Out”), the Flight Attendant
performs the necessary safety demonstrations and
other in-flight duties. Moreau Dep. 41:24-42:3. At
arrival, when the flight pulls into the gate (referred to
as “Block In”), the Flight Attendant assists with the
deplaning process after the boarding door has opened.
Moreau Dep. 42:4-9.
For Duty Periods with multiple flight Segments,
there is a period of time between the arrival on the
first Segment and the departure of the next Segment
referred to as Turn Time. Moreau Dep. 42:25-44:4-7.
During the Turn Time, Flight Attendants do not have
any responsibilities, but they are still on “duty.”
Moreau Dep. 108:2-12, 139:18-140:3. Flight
Attendants must remain at the airport for possible
contact from Crew Tracking. Work Rules at 11 (“Flight
4 The Flight Leader is the lead Flight Attendant on a domestic
flight and the Purser is the lead Flight Attendant on a
transoceanic flight. Moreau Dep. 20:5-20:16. Lead Flight
Attendants and Pursers were paid premiums of $3.20 or $5.40
per hour flown during the relevant time period, in addition to the
compensation earned for the Duty Period. Frederick Decl., Exs.
E, F (Work Rules §2.P).
App-82
Attendants must be contactable at all times in the
event of changes in flight times or routing.”). Delta
considers the Turn Time to be Duty Time for purposes
of compensation. Moreau Dep. 108:11-12.
If the Flight Attendant’s Duty Period ends in a
destination city other than the Flight Attendant’s
base, he or she is released from work into Layover
(usually overnight) until the next leg of the Rotation
begins. Moreau Dep. 42:13-17. A Layover is a period of
rest between Duty Periods of the Flight Attendant’s
Rotation. Id.
Regardless of whether the Duty Period is the only,
first, middle or last Duty Period within a Rotation, the
Duty Period ends 15 minutes after the block in of the
last flight Segment. Moreau Dep. 101:11-18. However,
in the event that deplaning takes longer than 15
minutes, Flight Attendants can notify the Scheduling
Department to extend the Duty Time. Deposition of
Dev Anand Oman, Ex. A to Frederick Decl. (Dkt. No.
34) 202:6-23; Deposition of Todd Eichmann, Ex. C to
Frederick Decl. (Dkt. No. 34-2) 135:4-24. The Duty
Period encompasses all time that the Flight
Attendants are on Duty, including during the preflight meeting, preparation of the aircraft cabin,
boarding, Flight Time, Turn Time, and deplaning of
passengers, even when a Flight Attendant’s release is
delayed due to extenuating circumstances. Moreau
Dep. 44:25-45:2.
The Bid Packets provided to Flight Attendants
include a listing of all available Rotations that are
scheduled to depart from the Flight Attendant’s base
the following month. Declaration of Michael Lehr, Ex.
B. to Frederick Decl. (Dkt. No. 34-1) 187:17-188:4. For
App-83
each Rotation, the Bid Packets describe the number
and length of the Duty Periods encompassed within
the Rotation, the Report Times for each Duty Period,
the scheduled total flight time for each Segment
within the Rotation (which is measured from Block
Out to Block In), and the amount of time that the
Flight Attendant can expect to be away from base.
Moreau Dep. 195:4-204:18; Frederick Decl. Exs. L-N.
The Bid Packets show which of Delta’s four pay
formulas will apply to the Rotations, what the credit
value of the Rotation is, and calculates the minimum
compensation for each Rotation. Eichmann Dep.
175:8-176:14; Lehr Dep. 191:9-21, 202:13-19. The
credit valuation included in the Bid Packets for each
Rotation serves as a minimum guarantee for Flight
Attendants with respect to credits. The actual
compensation may increase as a result of delays,
changes, or other contingencies; it cannot decrease.
Eichmann Dep. 175:8-14.
Delta’s bidding and compensation policies are laid
out in Delta’s Work Rules. Moreau Dep. 36:13-17.
Delta uses four formulas to determine a Flight
Attendant’s actual pay. Delta runs each calculation for
each Flight Attendant’s Rotation and pays the Flight
Attending using the formula that results in the
highest amount of pay. Frederick Decl. Exs. E, F at 3238 (Work Rules); Moreau Dep. 171:14-25. Delta
asserts—and plaintiffs do not contest—that in no
event is a Flight Attendant’s pay less per hour worked
in the Duty Period (all hours worked), than the
California minimum wage rate.
Plaintiffs’ challenge to the Delta’s Work Rules
stems from a misinterpretation of how the four
App-84
formulas work in determining compensation. Each
uses a “base” which Delta defines as “Flight Pay
Rate.” 5 The Flight Pay Rate is not an agreed to “hourly
rate of pay;” it is instead part of the mathematical
equation Delta runs to determine actual pay.
Plaintiffs point to no evidence that Delta or its Flight
Attendants understand that the Flight Pay Rate is an
hourly rate of pay that promises or guarantees
payment at that rate for each hour on Duty. Below is
a brief description of each formula.
A. Flight Pay
The Flight Pay formula is based on the actual
flight time and/or scheduled flight time of the
Segments, whichever is greater. Work Rules at 35.
Flight time for Flight Pay begins at Block Out and
ends at Block In (generally 15 minutes after landing).
Id. Under this formula, the flight time is multiplied by
the Flight Pay Rate to produce the value.
B.
Duty Period Credit
Delta refers to this formula in its Work Rules as
“Duty Period Credit (1 for 2).” Frederick Decl., Ex. F
(“Work Rules”) at 36. 6 A Duty Period is the period of
time from scheduled or actual Report Time to the
release at a base or on Layover. Moreau Dep. 40:5-15.
Under this formula, Delta “credits” flight attendants
A Flight Attendant’s Flight Pay Rate is based on an
individual’s length of service. Plaintiffs’ Flight Pay Rates from
May 1, 2012 through April 2015 were from $45.75 per hour up to
$53.52 per hour. Moreau Decl. ¶8; Frederick Decl. Exs. E, F.
5
6 Unless otherwise noted, I will refer to the 2015 Work Rules
attached as Exhibit F to the Frederick Decl. As far as the record
shows, all Flight Attendants have been subject to the same set of
compensation Work Rules since May 1, 2012.
App-85
with “1 hour of flight pay for every 2 hours on duty for
any given period.” Work Rules at 36. As an example,
Delta’s Work Rules explain:
You are scheduled for a turnaround worth
6:00 block time with a scheduled duty period
length of 10:00. Due to an operational delay,
your duty period is lengthened to 14:00. You
will be paid 7:00 for the turnaround,
comprised of 6:00 block time and 1:00 of 1 for
2 duty credit (14:00 divided by 2).
Id. Delta characterizes this formula as providing onehalf of the Flight Pay Rate for every hour worked in a
Duty Period. Delta’s MSJ at 12. Plaintiffs point out
that in Delta’s own examples, DPC appears to be
applied as a credit that supplements the Flight Pay
value (otherwise known as block time). Work Rules at
36.
Delta’s corporate designee (Brian Moreau)
confirmed that DPC is a formula that for “every two
hours on duty, one hour will be credited and paid at
the flight pay rate.” Moreau Dep. 170:12-17. Moreau
also testified that the description of DPC in the Work
Rules—“You will be credited with one hour of flight
pay for every two hours on duty for any given duty
period”—accurately reflected Delta’s actual practices.
Id. at 175:23-176:17. Moreau explained that under the
DPC, Flight Attendants are “compensated at a
minimum of one-half of their flight hourly rate for
every hour on duty” and referred to the Flight Pay
Rate as an “effective rate” that was half of the Flight
Pay Rate. Moreau Dep. 185:1-9, 190:24-191:14, 192:619.
App-86
C. Minimum Duty Period Credit
The Minimum Duty Period Credit (MDC)
multiplies 4:45 hours by the Flight Pay Rate for each
Duty Period within a Rotation that has at least one
flight Segment. Work Rules at 37. 7 For example:
A 3-day trip has daily block time scheduled of
3:00, 5:00, and 5:00 respectively for the three
days for a total of 13:00 block time. Because
the 4:45 minimum guarantee applies for all 3
days, the total credit for the trip would be
14:45, and the pairing will generate 1:45 in
MDC and you will be paid 14:45 for the trip
(13:00 block time plus 1:45 MDC).
Id. The time paid will be at the Flight Pay Rate. Id. at
32.
Delta explains that the MDC was intended to
provide Flight Attendants whose Rotations consisted
of relatively short flight segments within multiple
Duty Periods with higher compensation than they
would have received under the other formulas.
Moreau Decl. ¶7.
D. Trip Credit
Under this formula, Flight Attendants receive
credit for 1 hour of flight time for each 3.5 hours they
are away from base. Work Rules at 38. As an example:
Your 3-day trip is away from base a total of
60 hours. The 1 for 3.5 hours trip credit is
17:07 hours.
7 Prior to April 1, 2014, the MDC was called the Duty Period
Average, but functioned similarly. See, e.g., Frederick Decl., Ex.
E at 37.
App-87
Id. This formula expressly includes non-Duty Period
Time, such as travelling to airports during Layovers
and time when Flight Attendants have been released
from Duty.
Delta’s Work Rules explain how these formulas
are applied in slightly different ways. The 2015 Work
Rules explain: “Flight Attendant compensation is paid
as an hourly rate for all hours flown or credited.” Work
Rules at 32. “Each duty period of a rotation pays the
greatest of: 1) flight time (includes deadhead flight
time, minutes under, and flight pay for ground time),
or 2) 4:45 minimum duty period credit (MDC), or 3) 1
for 2 duty period credit (DPC); The sum of the duty
period credits listed above is then compared to 1 for
3.5 trip credit (TRP), which guarantees at least 1 hour
pay for every 3.5 hours away from base. You will be
paid the greater of the two values.” Id. The 2014 Work
Rules describe compensation as “for every trip, a
comparison is made between block time (which
includes Flight Pay, any 1 for 2 duty credit, and
deadhead time 8), the duty period average [now MDC],
and the 1 for 3.5 Trip Credit (TRP). After taking these
into consideration, you will be paid the greatest total
trip value.” 2014 Work Rules (Ex. E to Frederick Decl.)
at 36). 9
8 Deadhead time is when a flight attendant is transported by
plane as a passenger, for an assignment that will be begin at
another airport. Moreau Dep. 196:18-21.
9 Flight Attendants also receive various forms of premium pay,
including for working at as Lead Flight Attendant or Purser,
report pay, time away from base pay, and holding pay. Work
Rules, Section 2.
App-88
Plaintiffs characterize Delta’s Work Rules as
having one standard compensation formula—the
Flight Pay formula—and allege that despite Delta’s
use of the other “credit formulas” there are three
different time periods where plaintiffs are not
appropriately paid under California law: (i) preboarding time-the time from Report Time to Block In;
(ii) post-landing-the time from Block Out until all
passengers have deplaned and all other onboard
duties have been completed; and (iii) Turn Time (in
middle of duty period). Plaintiffs’ MSJ at 1.
II. PLAINTIFFS
A. Oman
For the relevant period, Oman has been based out
of JFK. Oman Dep. 40:15-18. From May 1, 2012
through his termination in September 2014, Oman
worked a total of 106 Rotations consisting of 369
flights. Oman Dep., Exs. 5 & 18. With respect to those
Rotations and flights: 11 Rotations included flight
Segments arriving at or departing from a California
airport; in those 11 Rotations there were 26 flight
Segments (13 arrivals and 13 departures); ten of the
13 flights arriving in California were the last flight
Segments of the Duty Period, meaning Oman was
immediately off-duty thereafter; for the remaining
three arrivals, Oman had a total Turn Time between
Block-In and Block-Out of 5 hours and 12 minutes;
and none of the flight Segments were intra-California
flights-i.e., a flight that both departed from and
arrived at California-based airports. Id.
Plaintiffs contend that Oman worked at least 27
flights into or out of California between over a longer
time period, November 24, 2011 and August 8, 2014.
App-89
Frederick Decl. Ex. H, Ex. A. Oman received small
amounts of Duty and Trip Credit on two flights, and
the remaining 25 flights (93%) was paid Flight Pay
only. Id.
B. Eichmann
Eichmann has been based out of LAX since
February 2014. Eichmann Dep. 35:16-22. Prior to
that, he was based out of DTW and SEA. Id. 95:8-13.
From May 1, 2012 through his relocation to LAX in
2014, Eichmann worked a total of 83 Rotations
consisting of 312 flights. Eichmann Depo. Exs. 36, 48,
49. Of those Rotations and flights: five Rotations
included flight Segments arriving at or departing from
a California based airport; the five Rotations consisted
of 10 such flight Segments (five arrivals and five
departures); three of the five flight Segments arriving
in California were the last flight of the Duty Period,
meaning Eichmann was immediately off-duty
thereafter; for the remaining arrivals, Eichmann had
a total turn time of 4 hours, 32 minutes; and none of
the flight Segments were intra-California flights. Id.
From February 2014 through June 21, 2015—
when based at LAX—Eichmann worked 88 Rotations
consisting of 414 flights, of which 196 flight Segments
arrived at or departed from a California-based airport.
Id., Exs. 36, 49. Only one of those flight Segments was
an intra-California flight—a June 19, 2014 segment
from SJC to LAX. Id.
Plaintiffs contend that Eichmann worked 178
flights into or out of California over a longer time
period, January 1, 2011 and May 1, 2015. Frederick
Decl. Ex. I, Ex. A. Eichmann received Duty Credit or
App-90
Trip Credit on 29 flights, and the remaining 149
flights (84%) was paid Flight Pay only. Id.
C. Lehr
Lehr has been based out of San Francisco and
living in Las Vegas throughout his employment with
Delta. Lehr Dep. 92:10-17. From May 1, 2012 through
June 16, 2015, Lehr flew 230 Rotations consisting of
839 flights, of which 236 flights departed from SFO, 5
flights were intra-California flights. Id. Exs. 25, 29,
30. During that time, the initial flight of all but one of
Lehr’s Rotations departed from SFO and he never had
more than five departures from SFO in any given
seven day period. Id. Moreover, of the 236 flights
departing from SFO, 229 were the initial leg of the
Rotation (i.e., Lehr’s Duty Period began an hour before
those departures), while the remaining seven
consisted of five secondary attempts at taking off (i.e.,
the initial leg blocked out but had to return to gate)
and two intra-Rotational flights (i.e., subsequent
flights within a Rotation). Id. For the two intraRotational flights, Lehr’s Turn Times prior to
departure were 35 minutes and 51 minutes,
respectively. Id.
Plaintiffs contend that Lehr worked 681 flights
into or out of California over a longer time period,
January 1, 2011 and May 1, 2015. Frederick Decl., Ex.
J, Ex. A. Of those 681 flights, Lehr received some sort
of Duty Credit on 52 flights and Trip Credit on 50
flights. Id. The remaining 579 flights, or 85% of Lehr’s
California flights, paid Flight Pay only. Id.
Delta asserts—and plaintiffs do not dispute—that
for every hour of Duty worked by plaintiffs, they were
paid an amount per hour that far exceeded California’s
App-91
minimum wage floor. Plaintiffs nonetheless contend
that under California law, the Flight Pay Rate is
essentially a guaranteed hourly rate, and that it
should be applied to all Duty hours worked, not just to
certain hours that Delta credits under the Work Rules.
LEGAL STANDARD
I.
MOTION FOR SUMMARY JUDGMENT
Summary judgment on a claim or defense is
appropriate “if the movant shows that there is no
genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a). In order to prevail, a party
moving for summary judgment must show the absence
of a genuine issue of material fact with respect to an
essential element of the non-moving party’s claim, or
to a defense on which the non-moving party will bear
the burden of persuasion at trial. See Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). Once the movant has
made this showing, the burden then shifts to the party
opposing summary judgment to identify “specific facts
showing there is a genuine issue for trial.” Id. The
party opposing summary judgment must then present
affirmative evidence from which a jury could return a
verdict in that party’s favor. Anderson v. Liberty
Lobby, 477 U.S. 242, 257 (1986).
On summary judgment, the Court draws all
reasonable factual inferences in favor of the nonmovant. Id. at 255. In deciding a motion for summary
judgment, “[c]redibility determinations, the weighing
of the evidence, and the drawing of legitimate
inferences from the facts are jury functions, not those
of a judge.” Id. However, conclusory and speculative
testimony does not raise genuine issues of fact and is
App-92
insufficient to defeat summary judgment. See
Thornhill Publ’g Co., Inc. v. GTE Corp., 594 F.2d 730,
738 (9th Cir.1979).
II.
CALIFORNIA WAGE ORDER
The Industrial Welfare Commission (IWC) wage
order that applies to the transportation industry, is
Wage Order 9-2001, and that Wage Order provides:
4. Minimum Wages
(A) Every employer shall pay to each
employee wages not less than [minimum
wage amount] per hour for all hours
worked, … .
(B) Every employer shall pay to each
employee, on the established payday for the
period involved, not less than the applicable
minimum wage for all hours worked in the
payroll period, whether the remuneration is
measured by time, piece, commission, or
otherwise.
Cal. Code Regs. tit. 8, §11090. 10
“Hours worked” means “the time during which an
employee is subject to the control of an employer, and
includes all the time the employee is suffered or
permitted to work, whether or not required to do so.”
Id., §2(G). (O) “Wages” includes “all amounts for labor
performed by employees of every description, whether
the amount is fixed or ascertained by the standard of
10 As of July 1, 2014, “the minimum wage for all industries shall
be not less than nine dollars ($9) per hour.” Cal. Lab. Code
§1182.12.
App-93
time, task, piece, commission basis, or other method of
calculation.” Id., §2(O).
DISCUSSION
Delta argues that, assuming that California law
applies to the work plaintiffs performed on the ground
in California, Delta’s compensation scheme is
compliant with California law because plaintiffs were
paid at least the California minimum wage rate for all
of their Duty hours in California. Delta relies heavily
on a recent case from the District Court in
Massachusetts. In DeSaint v. Delta Air lines, Inc., No.
CIV.A. 13-11856-GAO, 2015 WL 1888242 (D. Mass.
Apr. 15, 2015), the court faced exactly the same
question on the same facts as here: whether Delta’s
use of its four pay formulas violated Massachusetts
law by failing to pay plaintiff flight attendants for
every hour worked. The court granted Delta’s motion
for summary judgment.
The court in DeSaint phrased critical issue in that
case as follows:
whether
Delta’s
Flight
Attendant
compensation scheme runs afoul of the Wage
Act because it fails to pay those employees all
of their earned wages. The plaintiffs contend
that under Delta’s policies, Flight Attendants
are paid an hourly rate, known as a “flight
pay rate,” for flying time or other working
hours for which they receive a credit, but
never receive compensation for each and
every hour of work that they perform for the
defendant.
Delta
contends
that
its
compensation scheme accounts for every
minute of work that is performed by its Flight
App-94
Attendants, and guarantees that those
employees are paid well above minimum
wage for all hours spent on duty.
Id. at *1. It concluded that because Delta’s rules
accounted for each hour worked—by paying Flight
Attendants the highest value under each of the four
formulas—the compensation was compliance with
Massachusetts law. Id. at *4. In particular, it relied on
the DPC, which guarantees that “Flight Attendants
will be paid, at a minimum, at the rate of one half of
their flight pay for each hour that they spend working
on duty for defendant.” Id. *5. It also found that
plaintiffs’
argument
was
based
on
a
mischaracterization of the Flight Pay Rate as a
guaranteed minimum hourly wage. Instead, it
concluded that it was “in reality” “simply a number
used as a starting point to calculate compensation for
each rotation.” Id. *5, 8-10. And under Delta’s
compensation formulas, “it is not the rate that each
Flight Attendant will be paid for each hour worked.”
Id. With respect to the Flight Pay formula, the court
explained that while that formula arguably did not
account for all hours actually worked, because it could
“only be used to increase their pay above the Duty
Period Credit formula, which applies a specified
hourly rate to all hours worked,” there was no
violation. Id. at *6.
In reaching its conclusion, the DeSaint court
concluded that under Massachusetts law, employers
did not have to use a fixed per hour rate to compensate
workers and “were not prohibited from calculating the
hourly rate by dividing earnings by the number of
hours worked during the relevant pay period.” Id. at
App-95
*11. It is on that ground that plaintiffs’ argue DeSaint
is inapposite. They rely on a series of California cases
that have rejected as impermissible under California
law the approach that is permissible under the federal
Fair Labor Standards Act. Under FLSA, in
determining whether FLSA’s minimum wage
requirement was violated, courts can average all of the
hours worked in a pay period by the amount paid in
order to determine whether the employer has cleared
the minimum wage floor; in other words paid their
employees at least the minimum hourly wage for each
hour worked. This, however, is not what Delta does,
and the cases relied on by plaintiffs rejecting FLSA
averaging, discussed below, are inapposite.
In Armenta v. Osmose, Inc., 135 Cal. App. 4th 314
(2005), employees who worked for a company that
maintained utility poles were covered by a collective
bargaining agreement guaranteeing their pay at
specific rates. The employees’ work tasks were
classified as “productive” or “nonproductive” hours.
Employees were not paid for nonproductive time spent
travelling, loading equipment, completing paperwork,
and maintaining vehicles, despite written policies to
the contrary. Id. at 318. When sued for failure to pay
a minimum wage for all hours worked, the employer
argued that because the employees were compensated
weekly at an amount exceeding the total hours worked
multiplied by the applicable minimum wage rate,
their average hourly rate in any given pay period was
higher than California’s minimum wage floor and not
in violation of the law. Id. at 319.
The California Court of Appeal recognized that
California’s wage laws, while patterned on federal
App-96
FLSA statutes, were more protective of workers’
rights. As such, while FLSA required payment or
minimum wage to employees for their work in “any
work week,” California law required payment of a
minimum wage for “every hour” worked. Therefore,
the court concluded that the “averaging method”
allowed under FLSA—which permits a court to
average hours worked by the amount paid in a pay
period “to assess” whether there was a violation of the
federal minimum wage floor—is not allowed under
California law. Id. at 323. The court also noted that
provisions of the California Labor Code supported the
principal that “all hours worked must be compensated
at the statutory or agreed rate and no part of this rate
may be used as a credit against a minimum wage
obligation.” Id. (relying on Cal. Labor Code §§221
[precluding employers from taking back wages
already paid], 222 [precluding employers from
withholding any part of an agreed upon wage] and 223
[precluding employers from secretly paying a wage
lower than designated wage scale]). “California’s labor
statutes reflect a strong public policy in favor of full
payment of wages for all hours worked.” Id. at 324.
Delta’s Work Rules do not implicate the wrongs
identified in Armenta. Delta is not arguing, as the
Armenta defendant did, that it can avoid paying Flight
Attendants for certain hours on Duty because when
considering all hours on Duty the average amount
earned exceeds California’s minimum wage floor.
Delta is instead applying formulas that expressly
consider all hours worked in the first instance. It is not
engaging in a post-hoc attempt to rationalize a failure
to pay for all hours worked by pointing out that pay
exceeds the minimum wage floor as in Armenta. Nor
App-97
is this a case where Delta’s Work Rules run afoul of
Labor Code sections 221, 222, and 223. Delta is not
attempting to avoid payment of all hourly work at the
“agreed to” hourly wage scale. As noted above, there is
no evidence that Delta has promised or the Flight
Attendants expect to be compensated for each hour
worked at the Flight Pay Rate. Indeed, Flight
Attendants receive Bid Packets that state the
minimum guaranteed pay for each Rotation, so they
can easily calculate their rate of pay for the mix of
responsibilities they would have during the Rotation.
This is also no attempt by Delta to take back wages by
“building in” pay for uncompensated tasks to the pay
earned for compensated tasks.
Plaintiffs also rely on Ontiveros v. Zamora, No.
CIV S-08-567LKK/DAD, 2009 WL 425962 (E.D. Cal.
Feb. 20, 2009), where the Eastern District of
California followed Armenta. In that case, automobile
mechanics were paid on a piece-rate basis. Each type
of repair was given a “flag rate” and compensated at a
fixed amount based on the estimated time that repair
should take. Id. at *2. The employees alleged the
compensation system violated California law because
they were not compensated for non-piece work,
including attending meetings and setting up work
stations. Defendants asserted their compensation
scheme was legal as long as the amount of
compensation paid for a particular pay period did not
fall below the minimum wage considering all hours
worked. Id. The court found the rationale of Armenta
applicable—even though the employees were paid on
a piece-rate basis—because under the scheme at issue
“employees are not necessarily compensated for every
hour worked and an employee is compensated for non-
App-98
piece rate hours with wages accrued during piece
hours,” in violation of California law. Id. *3. As
discussed above, this is not a case where the amount
earned at an agreed-to rate for “paid hours” is used to
compensate other unpaid work.
The Central District of California followed
Armenta in Cardenas v. McLane FoodServices, Inc.,
796 F. Supp. 2d 1246 (C.D. Cal. 2011). There employee
drivers of a motor carrier were paid a piece-rate
formula based on the number of deliveries, number of
miles driven, and number of delivery stops. That
formula, the drivers alleged, failed to pay them for pre
and post-shift duties such as safety checks and vehicle
inspections.
The
employer
contended
that
compensation for the pre and post shift duties were
“built into” the compensation provided in the piecerate formula and that it need not compensate
employees for time not included in the piece-rate
formula if, at the end of the pay period, the average
wage exceeded the minimum wage. Id. at 1250-51. The
court concluded that the employer’s argument about
building in compensation was akin to the rejected
“averaging” of productive and unproductive time in
Armenta. Because the employer’s formula did not
actually directly compensate employees for pre and
post shift duties, it was impermissible under
California law. Id. at 1253. Delta’s Work Rules do not
suffer from the defect identified by the Cardenas
court, where the applicable pay formula did not
“calculate” for the pre and post shift duties required
by the employer. Id. Instead, the Work Rules expressly
consider all hours worked, and a Flight Attendant will
always be paid the highest value for each Rotation
worked under the applicable formulas.
App-99
In Balasanyan v. Nordstrom, Inc., 913 F. Supp. 2d
1001 (S.D. Cal. 2012), the Southern District likewise
rejected an argument that paid commissions and
hourly pay for non-sell time could adequately
compensate employees for un-paid non-commission
producing activities employees were required to
undertake (e.g., marketing activities and contacting
customers). While the employer argued its commission
rates adequately compensated employees for non-sell
time and that plaintiffs received an “effective”
minimum hourly wage that exceeded the minimum
wage, those arguments were foreclosed by Armenta
and the cases following it. Employees “must be directly
compensated at least minimum wage for all time spent
on activities that do not allow them to directly warn
[sic] wages,” in that case extra commissions. Id. at
1007. And an employer cannot justify preventing
employees from engaging in commission-generating
activities (by requiring them to engage in unpaid
tasks), even where post-hoc averaging hours and pay
demonstrates a minimum wage rate was always paid.
Id. Here the Delta Work Rules do not require Flight
Attendants to perform uncompensated tasks at the
expense of their ability to perform compensated tasks,
and there is no post-hoc “averaging” rationalization in
an attempt to justify treating specific tasks as
uncompensated.
Two Northern District cases likewise rejected
schemes which attempted to “build in” compensation
for unpaid tasks into the compensation for paid tasks.
In Quezada v. Con-Way Freight, Inc., No. C 09-03670
JW, 2012 WL 2847609 (N.D. Cal. July 11, 2012), the
court considered a compensation scheme where line
haul drivers were paid under a pre-set mileage rate
App-100
multiplied by the number of miles in a trip. Drivers
were not compensated for pre and post-trip vehicle
inspections and wait time. Defendant’s argument that
it “built into” the per-mile rate compensation for those
pre and post-trip tasks was rejected as impermissible
under IWC Wage Order 9-2001, because under
California law “all work time must be directly paid
for.” Id. at *4, 6. The Quezada court also concluded
that the pay formula at issue violated California law,
as expressed in a Division of Labor Standards
Enforcement (DLSE) manual provision which
explained that when employees are paid under a
“piece-rate” formula, employees must be separately
compensated for performing required tasks when—by
virtue of performing those tasks—they are unable to
earn additional piece-rate compensation during that
time. Id. at *4-5.
The deficiencies found in Quezada are not found
here. This is not a case where Delta “builds in”
payment for pre and post flight duties into Flight
Time, nor is it a situation where Delta is preventing
Flight Attendants from performing compensable tasks
by requiring them to perform expressly noncompensable tasks. Instead, Delta’s Work Rules
ensure that Flight Attendants are paid for all hours
worked, based on the minimum guarantee in the Bid
Packet and considering all hours worked during a
Rotation.
In Ridgeway v. Wal-Mart Stores, Inc., No. 08-CV05221-SI, 2015 WL 3451966 (N.D. Cal. May 28, 2015)
motion to certify appeal denied, No. 08-CV-05221-SI,
2015 WL 4463923 (N.D. Cal. July 21, 2015), the court
granted partial summary judgment to plaintiff drivers
App-101
on their claim that defendant’s piece-rate
compensation system—where drivers were paid based
on mileage, as well as hourly rates for certain required
activities—did not compensate them for other pre,
post and during-trip duties. The court followed
Armenta and its progeny and concluded that under
Wage Order 9-2001, the employer could not “subsume”
non-paid activities into the wages paid for other
activities because “California minimum wage
standards apply to each hour worked by an employee.”
Id. at *6. Again, this is not a “built into” pay scheme;
Flight Attendants are paid for all hours worked at an
effective rate that is fully disclosed and bid upon by
the attendants.
Finally, in Gonzalez v. Downtown LA Motors, LP,
215 Cal. App. 4th 36 (2013), a more decision from the
California Court of Appeal, the court considered a
scheme where car repair technicians were paid on a
“piece-rate” basis at a flat rate for different repairs
they were required to perform during their eight hour
shifts. During their shifts, the technicians were
required to stay on the premises even when there were
no cars for them to repair, and they were expected to
perform other tasks during that time, including
obtaining parts, cleaning up, and reviewing service
bulletins. They were not paid by the hour for those
tasks and they were not paid for other time spent
waiting for the next vehicle to repair. Id. at 42. At the
end of each 80 hour pay period, the employer would
multiply the “flag hours” the technicians spent
repairing vehicles at the technician’s “flat rate,” in
order to determine how much the technician earned.
At the same time, the employer also calculated how
much the technician would earn if paid an amount
App-102
equal to his total recorded hours (hours spent on shift)
by the applicable minimum wage. Id. at 41. If a
technician’s flag hours pay fell short of the “minimum
wage floor” the employer would supplement the pay in
the amount of the shortfall. Id. at 41-42. The
California Court of Appeal concluded that pay scheme
violated California law because the employees were
not being paid when they were required to be on duty,
but did not have a car to repair. The court also
rejected, as in Armenta, the employer’s reliance on its
post-hoc calculation to ensure it paid its workers at
least the minimum wage per hour worked during each
pay period, because that undermined the otherwise
agreed-to piece rate wage promised to the employees.
The facts of Gonzalez, like each of the other cases
relied upon by plaintiffs, are significantly different
from the facts before me. Delta is not attempting to
avoid paying an agreed-to hourly rate for specific tasks
and is not using a post-hoc averaging to ensure the
state’s minimum wage floor is met (as allowed by
FLSA). Delta’s Work Rules function in a different,
fully-disclosed way to ensure that Flight Attendants
are paid for each hour worked on their Rotations.
Delta’s Work Rules do not violate California’s
minimum wage requirements and, therefore,
summary judgment must be granted to defendant. 11
11 Because I agree with Delta that its Work Rules do not violate
California law, I need not reach the question of whether
California’s wage and hour laws can apply to the Flight
Attendants’ work in California consistent with Due Process and
Commerce Clause principles. Nor do I need to address whether
Delta is liable to plaintiffs under the materially similar
Northwest compensation.
App-103
CONCLUSION
Delta’s motion for summary judgment on
plaintiffs’ First, Second, and Third claims is
GRANTED. Plaintiffs’ cross-motion for summary
judgment is DENIED. I have set a Case Management
Conference on January 26, 2016. The parties shall file
a Joint Case Management Conference Statement by
January 19, 2016 that describes the remaining issues
in this case and proposes a schedule to adjudicate
them.
IT IS SO ORD
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