Appendices — Firestone v. Southern California Gas Co.
Supreme Court brief2002
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APPENDIX A
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
[Filed February 12, 2002]
No. 97-56055
SAMUEL FIRESTONE; CALVIN MIYASHIRO; JACK PUTNAM;
BRIAN FRAZEN, individually and on behalf of all other
present and former employees similarly situated,
Plaintiffs-Appellants,
v.
SOUTHERN CALIFORNIA GAS COMPANY,
Defendant-Appellant.
Before:
SCHROEDER, BEEZER, and GRABER, Circuit Judges.
OPINION
SCHROEDER, Circuit Judge:
The plaintiffs have filed a Petition for Rehearing and
Suggestion for Rehearing En Banc contending that our
court’s intervening en banc decision in Cramer v. Consoli-
dated Freightways, Inc., 255 F.3d 683 (9th Cir. 2001) (en
banc), cert. denied, 2002 WL 13239 (U.S. Jan. 7, 2002) (No.
01-432), requires us to hold that the plaintiffs have stated a
state law claim for overtime pay. In Cramer we clarified our
decisions with respect to preemption, an area that has become
increasingly confusing in recent years. In Cramer, we over-
ruled our cases that had held state law claims preempted
where the state right in question was not the subject of any
actual collective bargaining agreement provision, but was ““‘a
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properly negotiable subject for purposes of collective
bargaining.’” Jd. at 692-93 (quoting Util. Workers of Am. v.
S. Cal. Edison Co., 852 F.2d 1083, 1086 (9th Cir. 1988)). We
held that those cases applied preemption too broadly.
In Cramer, however, we reaffirmed the principle that a
state law claim is preempted if it necessarily requires the
court to interpret an existing provision of a collective
bargaining agreement (“CBA”) that “can reasonably be said
to be relevant to the resolution of the dispute.” Cramer, 255
F.3d at 693. A claim that requires only reference to the
collective bargaining agreement, but no interpretation, is not
preempted. /d. at 690 (citing Lingle v. Norge Div. of Magic
Chef, Inc., 486 U.S. 399, 409-13 (1988)).
In our original opinion in this case, we held that resolution
of plaintiffs’ state law overtime claim would require inter-
pretation of the agreement, because plaintiffs are not entitled
to any overtime under state law if they are paid a “premium”
for overtime work above the “regular rate” of pay in the
contract. Firestone v. S. Cal. Gas Co., 219 F.3d 1063, 1066
(9th Cir. 2000). The parties in this case disagree about which
rate in the contract is the “regular” rate and, thus, disagree on
whether plaintiffs are receiving a “premium” for overtime
work. Resolving this question, we held, requires
interpretation of the agreement. The agreement would be
enforced differently depending on which party’s
interpretation is accepted.
We conclude that Cramer does not change this result.
Resolution of plaintiffs’ claim to overtime pay under state
law cannot be decided by mere reference to unambiguous
terms of the agreement. We are in agreement with a recent
decision of the First Circuit, where the court noted:
In many cases, however, the state law claims are
“inextricably intertwined” with the meaning of terms in
the CBA and are thus preempted by federal labor law.
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Allis-Chalmers [Corp v. Lueck, 471 U.S. 202, 213
(1985)]. In such instances, state law “must yield to the
developing federal common law, lest common terms in
bargaining agreements be given different and potentially
inconsistent interpretations in different jurisdictions.”
Livadas [v. Bradshaw, 512 U.S. 107, 122 (1994)].
Adames v. Executive Airlines, Inc., 258 F.3d 7, 12 (lst
Cir. 2001).
The panel as constituted above has voted to deny the
petition for rehearing. Chief Judge Schroeder and Judge
Graber have voted to deny the petition for rehearing en banc
and Judge Beezer has so recommended. The full court has
been advised of the petition for rehearing en banc and no
judge of the court has requested a vote on the petition
for rehearing en banc. Fed. R. App. P. 35(b). The petition
for rehearing and the petition for rehearing en banc are
therefore DENIED.
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APPENDIX B
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
[Filed July 19, 2000]
No. 97-56055
SAMUEL FIRESTONE; CALVIN MIYASHIRO; JACK PUTNAM;
BRIAN FRAZEN, individually and on behalf of all other
present and former employees similarly situated,
Plaintiffs-Appellants,
Vv.
SOUTHERN CALIFORNIA GAS COMPANY,
Defendant-Appellant.
Argued Oct. 4, 1942
Before:
SCHROEDER, BEEZER, and GRABER, Circuit Judges.
OPINION
SCHROEDER, Circuit Judge:
This is a suit for overtime compensation under both federal
and California fair labor provisions. The most significant
issue On appeal is whether plaintiffs’ state law claim for time-
and-a-half of their regular hourly rate for all hours worked
beyond eight in a day and ‘forty in a week is preempted by
section 301 of the Labor Management Reiations Act
(LMRA), 29 U.S.C. § 185(a). On the merits, the employer
argues that the claim is foreclosed by an exemption in the
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California overtime law for employees who are covered by a
collective bargaining agreement that provides, in relevant
part, for “premium wage rates” for overtime work. The
district court held that plaintiffs’ claim was preempted by the
LMRA because resolution of the essential dispute between
the parties about the applicability of the California exemption
required interpretation of the complex pay and overtime pay
provisions in the collective bargaining agreement. The district
court dismissed on the merits plaintiffs’ claim under the
federal Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201
et seq. We affirm these rulings.
The Law of Preemption Under § 301
Section 301 of the LMRA provides in part:
Suits for violation of contracts between an employer and
a labor organization representing employees in an
industry affecting commerce . .. may be brought in any
district court of the United States having jurisdiction of
the parties. . . . ae
29 U.S.C. § 185(a). The Supreme Court ruled long ago that
the legislative history of § 301 makes clear that Congress
intended to have the federal courts create a body of federal
common law to be used to adjudicate disputes arising out of
labor contracts. See Textile Workers v. Lincoln Mills, 353
U.S. 448, 456, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957). “[T]he
pre-emptive force of § 301 is so powerful as to displace
entirely any state cause of action for violation of contracts
between an employer and a labor organization.” Franchise
Tax Bd. of Cal. v. Construction Laborers Vacation Trust for
Southern California, 463 U.S. 1, 23, 103 S.Ct. 2841, 77
L.Ed.2d 420 (1983) (punctuation omitted). A court’s
determination of whether a state law claim is preempted by
§ 301 “must focus ... on whether [the state law claim]
confers nonnegotiable state-law rights on employers or
employees independent of any right established by contract,
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or, instead, whether evaluation of the [state law] claim is
inextricably intertwined with consideration of the terms of the
labor contract.” Allis-Chalmers Corp. v. Lueck, 471 U.S. 202,
213, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985). Of course, not
every dispute involving provisions of a collective bargaining
agreement is preempted by the LMRA. See id. at 211, 105
S.Ct. 1904. When the meaning of particular contract terms is
not disputed, the fact that a collective bargaining agreement
must be consulted for information will not result in § 301
preemption. See Livadas v. Bradshaw, 512 U.S. 107, 123-24,
114 S.Ct. 2068, 129 L.Ed.2d 93 (1994) (citing Lingle v.
Norge Div. of Magic Chef, Inc., 486 U.S. 399, 413 n. 12, 108
S.Ct. 1877, 100 L.Ed.2d 410 (1988)); see also Audette v.
International Longshoremen’s and Warehousemen’s Union,
195 F.3d 1107, 1113 (9th Cir.1999). However, § 301 does
preempt state law claims that are “substantially dependent”
on an analysis of a collective bargaining agreement.
Caterpillar, Inc. v. Williams, 482 U.S. 386, 394, 107 S.Ct.
2425, 96 L.Ed.2d 318 (1987).
The Parties’ Overtime Arrangement
In 1995, the plaintiffs’ unions and the employer, Southern
California Gas Company (SCGC), agreed to a compensation
arrangement set forth in a document entitled “Pay-Per-Route
(PPR) for Meter Reading and Meter Reading A/B Routes”
(PPR document). Under the Pay-Per-Route system, ail meter
readers were paid flat sums for completing meter reading
routes of assigned lengths, even if it took less than the
estimated time to complete the routes. The flat sum for each
route was calculated by multiplying the hourly rate set forth
in the collective bargaining agreement ($16.56 per hour) by
the amount of time it was expected to take to complete
the route.
Meter readers who worked more than 8 hours in one day
received an adjustment to the flat sum normally paid. The
method of calculating compensation for these hours is the
CST Sree Sey eee errr ete rear
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subject of some dispute by the parties. According to the PPR
document itself, the unassigned overtime hours posted were
computed as follows: (assigned hours/actual hours) X .3334
X (actual hours-8). That figure was then multiplied by one
and one-half the hourly rate set forth in the collective
bargaining agreement and added to the flat rate for the
assigned hours. SCGC contends that the total pay for a meter
reader who worked unassigned overtime was actually
calculated by dividing the flat sum-by the total number of
hours it actually took to complete the route to arrive at the
employee’s “regular rate” for that day. The meter reader
would then receive one and one-half times that regular rate
for hours worked beyond 8 per day, added to 8 times
the”regular rate” for that day. The difference between the
formula contained in the PPR document and that allegedly
used by SCGC apparently resulted from the inability of
SCGC’s computerized payroll system to handle variable rates
of pay. These formulae yield almost the same result, however,
plaintiffs contend that under either one the defendant violates
State wage-and hour laws by failing to provide a “premium”
wage rate for overtime work.
Discussion
The applicable California statute on overtime provides:
“No employee eighteen (18) years of age or over shall be
employed more than forty (40) hours in any workweek unless
the employee receives one and one-half (1-1/2) times such
employee’s regular rate of pay for all hours worked over
forty (40) hours in the workweek.” 8 Cal.Code Reg.
§ 11040(3)(A). An overtime exemption provision provides
that the section quoted above “shall not apply to any
employee covered by a collective bargaining agreement if
said agreement provides premium wage rates for overtime
work and a cash wage rate for such employee of not less than
one dollar ($1.00) per hour more than the minimum wage.”
8 Cal.Code Reg. § 11040(3)(D).
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The district court held that one could not determine
whether plaintiffs were receiving a “premium wage rate” for
overtime under the collective bargaining agreement-making
them exempt from California overtime laws-without
interpreting that agreement to determine, inter alia, what the
regular rate was. For the following reasons, we agree with the
district court that resolution of this issue requires
interpretation of the agreement, and that the state law
overtime claim is therefore preempted.
According to plaintiffs, they are not paid a “premium rate”
because the rate they ultimately receive for overtime hours is
lower than the standard rate of $16.56 per hour used to
calculate the flat rate for each route. Thus, argue plaintiffs,
they actually receive lower wages for overtime hours than
they receive for scheduled hours. On the other hand, because
the empioyer perceives the “regular rate” to be the standard
rate divided by the number of hours it actually takes plaintiffs
to complete the route on any given day, the employer
maintains that piaintiffs are paid a rate for overtime work that
includes a “premium” equal to 50% of the regular rate for
that day.
The parties therefore disagree on the meaning of terms in
the collective bargaining agreement for purposes of
California law. To resolve that dispute, it would be necessary
to apply California law to determine the overtime rights and
obligations of the parties to the agreement. The claim is not
“independent” of the collective bargaining agreement under
federal preemption law. See Lingle, 486 U.S. at 407, 108
S.Ct. 1877.
The Court in Lingle held that a state law claim of
retaliatory discharge for exercising state Workers’ Compen-
sation rights was not preempted, because the dispute did not
turn on the meaning of any terms in the collective bargaining
agreement. It was irrelevant that a grievance could also have
been filed and arbitrated pursuant to that agreement. The right
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to be free of retaliatory discharge for filing a claim under the
State Workers Compensation laws existed independent of the
collective bargaining agreement.
In International Broth. of Elec. Workers v. Hechler, 481
U.S. 851, 107 S.Ct. 2161, 95 L.Ed.2d 791 (1987), on the
other hand, a claim under state law for breach of the duty to
provide a safe workplace was preempted because the
defendant’s duty was defined by reference to the collective
bargaining agreement. There was no duty independent of the
collective bargaining agreement. The Court pointed out that if
State law “were allowed to determine the meaning of
particular contract phrases or terms in a collective bargaining
agreement . . . the ‘parties would be uncertain as to what they
were binding themselves to’ in a collective-bargaining
agreement, and, as a result, ‘it would be more difficult to
reach agreement, and disputes as to the nature of the
agreement would proliferate.” Jd. at 858, 107 S.Ct. 2161
(quoting Allis Chalmers, 471 U.S. at 21 1, 105 S.Ct. 1904).
This case illustrates that problem well, for if California law
were to apply, the parties negotiating the agreement would
not know whether the employer’s overtime obligations were
defined by the contract or not, depending on which rate a
court determined was the “regular” rate under the California
law. The claim is preempted.
Plaintiffs rely on Livadas v. Bradshaw, 512 U.S. 107,
123-24, 114 S.Ct. 2068, 129 L.Ed.2d 93 (1994). In that case,
the Supreme Court held that a claim based on a state
requirement for timely payment of severance pay was not
preempted, because resolving the claim did not require any
interpretation of the collective bargaining agreement; it
required instead reference only to a calendar and the
undisputed wage rate. See 512 US. at 121-25, 114 S.Ct.
2068. There were no terms in the statute to be interpreted
with reference to the collective bargaining agreement, nor
were there any terms of the collective bargaining agreement
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to be interpreted in light of the statute. That is not so here.
Because the collective bargaining agreement must be
interpreted to determine whether the PPR document provides
for premium wage rates for overtime work and, therefore,
whether California’s overtime exemption provision applies,
Livadas is inapposite. Plaintiffs’ state law claim is preempted
by the LMRA.
In the alternative, plaintiffs maintain that the California
premium rate exemption is itself preempted by federal law,
because the exemption denies union employees benefits
extended to non-union employees. Again, plaintiffs’ reliance
on Livadas is misplaced. In Livadas, the Court considered a
state’s policy of refusing to enforce the severance pay
provisions as to all employees covered by collective
bargaining agreements with arbitration clauses. The Court
held that the policy was contrary to federal labor law because
it burdened all employees who were subject to the collective
bargaining and arbitration processes that federal law
recognizes as significant. See id. at 117-18, 114 S.Ct. 2068.
By contrast, the exemption from California’s mandatory time-
and-a-half overtime requirement is limited to those
employees covered by collective bargaining agreements
containing negotiated premium wage rates that are over and
above regular wage rates in excess of the minimum wage.
The exemption therefore applies only to those who have
sought and received alternative wage protections through the
collective bargaining process. The California statute as a
whole thus “provides protections to individual union and
nonunion workers alike, and thus ‘neither encourage[s] nor
discourage[s] the collective-bargaining processes that are the
subject of the NLRA.’” Fort Halifax Packing Co. v. Coyne,
482 U.S. 1, 20-21, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987)
(quoting Metropolitan Life Ins. Co. v. Massachusetts, 471
U.S. 724, 755, 105 S.Ct. 2380, 85 L.Ed.2d 728 (1985)).
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The Supreme Court in Livadas recognized that opt-out
Provisions for negotiated alternatives to State-law standards
are not in conflict with federal preemption law. These
“familiar and narrowly drawn opt-out provisions” exempt
employees covered by a collective bargaining agreement that
contains a negotiated provision on the same subject but
different from the Statutory provision. See Livadas, 512 U.S.
at 131-32, 114 S.Ct. 2068 (citing D.C.Code § 36-103
(“Unless otherwise specified in a collective agreement , . .
[w]henever an employer discharges an employee, the
employer shall pay the employee’s wages earned not later
than the working day following such discharge.”); 29 U.S.C.
§ 203(0) (“Hours [wlorked” for Fair Labor Standards Act
measured according to “express terms of . . . or practice under
bona fide collective-bargaining agreement”)); see also
Viceroy Gold v. Aubry, 75 F.3d 482, 489-90 (9th Cir.1996)
(holding that a California provision exempting from the
maximum hour laws employees covered by a “valid
collective bargaining agreement that expressly provides for
the wages, hours of work, and working conditions of the
employees” is not preempted by the NLRA).
Such an opt-out is essentially what California has adopted
here. California’s overtime exemption provision does not
Operate automatically to exempt virtually ali union-
represented employees from its coverage-it exempts only
those who have bargained for an alternative overtime
compensation scheme. We recognized as much in National
Broadcasting v. Bradshaw, 70 F.3d 69, 73 (9th Cir.i 995),
which stated that an identical California overtime exemption
was an opt-out provision not preempted under Livadas.
Accordingly, California’s overtime exemption provision is
not preempted by federal labor law.
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Plaintiffs also challenge the district court’s dismissal of
their claim for overtime pay pursuant to the FLSA. Section
207(a)(1) of the FLSA provides in part:
[N]jo employer shall employ any of his einployees who
in any workweek is engaged in commerce or in the
production of goods for commerce for a workweek
longer than forty hours, unless such employee receives
compensation for his employment in excess of the hours
above specified at a rate not less than one and one-half
times the regular rate at which he is employed.
29 U.S.C. § 207(a)(1). Plaintiffs assert that defendant’s
practice of determining on a daily basis the rate upon which
overtime compensation is based violates § 207(a)(1).
According to the regulations, however, an employee’s
“regular rate” may be calculated on the basis of an
employee’s average earnings over one of any number of
periods, including a day. See 29 C.F.R. § 548.3(b). Plaintiffs
nonetheless argue that because the basic rate arrived at by
defendant under the PPR document can “fluctuate wildly,”
SCGC’s utilization of a daily rate cannot comply with 29
C.F.R. § 548.2(e), which plaintiffs claim mandates that an
employee’s basic rate will be “substantially equivalent” to the
average earnings of the employee “over a representative
period of time.” The full provision states that the basic rate
established by the employer must be “authorized by § 548.3
or... authorized by the Administrator under § 548.4 as being
substantially equivalent to the average hourly earnings of the
employee, exclusive of overtime premiums, in the particular
work over a representative period of time.” 29 C.F.R.
§ 548.2(e). What is therefore required by § 548.2(e) is that the
basic rate used be either one permitted under § 548.3 or one
specially authorized by the Administrator of the Wage and
Hour Division of the Department of Labor pursuant to
29 C.F.R. § 548.4. Here, defendant’s method of calculating a
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regular rate upon which to base overtime compensation is
specifically authorized by 29 C.F.R. § 548.3(b). Accordingly,
it does not violate the FLSA. |
Finally, plaintiffs contend that the district court erred by
dismissing the federal and state law claims related to
nondiscretionary bonuses which they raised for the first time
in the first amended complaint. It is unclear from the record
whether the district court inadvertently dismissed those
claims without considering them. Accordingly, a remand is
appropriate for proper consideration of these Claims.
Costs on appeal are awarded to SCGC.
AFFIRMED IN PART AND REMANDED IN PART.
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APPENDIX C
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
[Filed July 14, 1998]
No.
SAMUEL FIRESTONE; CALVIN MIYASHIRO;
JACK PUTNAM; and BRIAN FRAZEN,
Plaintiffs,
Vv.
SOUTHERN CALIFORNIA GAS COMPANY,
Defendant.
ORDER GRANTING DEFENDANT’S MOTION
FOR SUMMARY JUDGMENT
Introduction
In this action, plaintiffs, gas meter readers, seek class-wide
relief from their employer, the Southern California Gas
Company (“the Gas Company”), on the basis that the Gas
Company’s method of computing overtime pay and failure to
schedule rest breaks violates state and federal wage and hour
laws. Under the system at issue, gas meter readers were paid
for the hours they were assigned to work rather than hours
actually worked. Plaintiffs’ First Amended Complaint alleges
violation of the Fair Labor Standards Act, 29 U.S.C. § 201 ef
~ seq., for failure to pay time and one half for all hours worked
in excess of forty per week, and violation of § 3(A) of Wage
Order 4, Cal. Code Regs. tit. 8 § 11040, by failing to pay an
overtime premium of one and one-half for all hours worked in
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excess of forty hours per week and eight hours per day and
for failing to permit rest breaks as required by Cal. Code
Regs. tit. 8 § 11040. Plaintiffs seek compensatory damages,
injunctive and declaratory relief.
Defendant’s motion to dismiss the state overtime claim
based on federal preemption of plaintiff's state law claim
under §301 of the Labor Management Relations Act
(“LMRA”) was argued December 15, 1997. Because the
plaintiffs submitted declarations and documents that could
not be properly considered on a motion to dismiss. the Court
elected to treat defendant’s motion as a motion for summary
judgment under Fed. R. Civ. P. 56. The Court then allowed
plaintiffs sixty days to conduct discovery on relevant factual
issues, and ordered supplemental briefing.
The Court now concludes that plaintiffs’ state law overtime
claim is indeed preempted by § 301 of the! LMRA. Plaintiffs
are unable to state a claim under the LMRA because they
failed to arbitrate this dispute as required by the collective
bargaining agreements between the Utility Workers of
America and the International Chemical Workers Union
Council of the UFCW, AFL-CIO and the Gas Company.
Furthermore, defendant is entitled to summary adjudication of
plaintiffs’ federal claim because there exist no genuine issues
of material fact and defendant is entitled to judgment as a
matter of law. With the resolution of plaintiffs’ federal
claims, the Court declines to exercise supplemental
jurisdiction over the remaining state law claim based on
defendant’s alleged failure to provide rest breaks.
Accordingly, defendant’s motion for summary judgment is
GRANTED as to the first and second claims for relief. The
third claim for relief is DISMISSED without prejudice.
Factual Background
Plaintiffs are members of a bargaining unit jointly
represented by the Utility Workers of America, AFL-CIO,
and by the International Chemical Workers Union Council of
the UFCW, AFL-CIO (collectively, “the Unions”). The
named plaintiffs in this action are represented by the Utility
Workers.
The Gas Company and the Unions are parties to a series of
collective bargaining agreements (“CBAs”) establishing the
wages, hours, and other terms and conditions of employment.
The most recent CBA was effective from September 9, 1996
through March 31, 1998 (“the 1996 Agreement”). See Exh. |
to Declaration of Alejandro Ahumada. The prior CBA was
effective March 9, 1994 to March 31, 1996 (“the 1994
Agreement”). See Exh. 2 to Ahumada Declaration. Between
April 1, 1996 and September 8, 1996, while the Unions and
the Gas Company were negotiating a new contract, plaintiffs
were not covered by a collective bargaining agreement.
Declaration of Samuel Firestone Declaration, { 6.
Part of the 1994 Agreement—a March 9, 1994 Letter of
Agreement re: “Competitive Benchmarking of Functions”—
gave the Gas Company the right to contract out the work of
meter reading, but reserved for the Unions the right to match
the savings generated by contracting out work to the lowest
qualified contractor. See Exh. 1 to Ahumada Declaration at
210-215. The Gas Company, however, agreed not to contract
out the work and to continue to employ meter readers if the
Unions could match the savings, a process known as
“competitive bench marking.”
On March 29, 1995, the Gas Company and the Unions
agreed through collective bargaining to change the way the
Gas Company’s meter readers performed their duties and
agreed to change the method by which meter readers were
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compensated. These changes were set forth in a document
entitled “Pay-Per-Route (“PPR”] for Meter Reading and
Meter Reading A/B Routes” (“PPR Document”). See Exh. A
to Firestone Declaration. Under the PPR system, as of
April 5, 1995, meter readers were no longer paid by the hour.
Instead, all meter readers were paid a flat sum for performing
an assigned meter reading route regardless of the actual time
it took to complete the route. The value assigned to a route
was calculated by multiplying the contractual hourly pay rate
for a Pay Grade 3, $16.56 per hour, by the amount of time it
was determined it would take to complete the route.’ The
PPR system was implemented “to help achieve cost savings
in Meter Reading. Pay per route simply means that meter
readers will be paid for hours assigned, not actual hours... .”
Exh. A to Firestone Declaration, PPR Document at 4.
There are two types of routes—A and B. A Routes were
predetermined to take eight hours to complete and. were
valued at $132.48 ($16.56 x 8 hours). B Routes were
predetermined to take 6.75 hours to complete, and were paid
a lower flat rate of $111.78 ($16.56 x 6.75 hours).
The “Calculating Overtime” section of the PPR Document
provides “if assigned or actual hours exceed 8 hours in a
single day, some form of overtime premium will be paid.”
PPR Document at 9. If a meter reader were to work more than
eight hours in one day, the flat sum paid would be adjusted to
reflect either “assigned” or “unassigned” overtime. Assigned
overtime was work over eight hours that was necessary for
completing a longer or more complicated route. Unassigned
' “Route value is calculated according to industrial engineering
concepts by determining, among other factors, the number of meters in a
given route, geographical and topographical factors, the locations of the
meters, and the speed in which a meter reader can walk at a fair pace. To
this, time is added for preparatory and concluding activities at the base
and 7.25% fatigue allowance, which calculates to thirty-five minutes over
eight hours.” Declaration of Mark L. Serrano, ] 9.
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overtime was extra time required for slower meter readers,
where there were excessive customer contacts, where there
was unusually heavy traffic, where there were dogs in
customers’ yards, and other distractions that might delay
timely completion of the route. If the extra hours were
assigned, the meter reader would be paid at a rate of one and
one half times the hourly rates for meter readers set forth in
the 1994 and 1996 Agreements. According to plaintiffs, if the
work in excess of eight hours were unassigned (a meter
reader took longer than the eight hours he was supposed to
take to complete the A Route or took more than one and one-
quarter hours longer than the 6.75 hours fixed for B Routes),
the following formula applied: (assigned hours + actual
hours) x 0.3334 x (actual hours - 8) = overtime hours posted.
This is the formula in the PPR Document. The .3334 factor is
calculated by dividing 1.5 (overtime rate is time and one half)
into .5—.5 + 1.5 (the premium over straight time). The
justification for this formula is that an overtime hour is
compensated by .5x “straight time” and overtime hours and
paid at 1.5x straight time. PPR Document at 10. Using this
formula, a meter reader assigned an eight hour route who
actually worked ten hours was paid for .5 overtime hours
((8 + 10) x .3334 x (10 - 8) = .53344 or 2 hour overtime), not
two hours. See Appendix A to PPR Document.
According to the Gas Company, this formula is not
compatible with its automated payroll system. Instead,
unassigned overtime is calculated according to the following
formula: The regular rate of pay is computed by dividing the
number of hours actually worked into the fixed value of the
route. Then this hourly rate is used to compute overtime at
50% of the employer’s regular rate. The longer a meter reader
takes to complete the route, the smaller his or her hourly rate
on which the time and one half is based. The only difference
between the formula in the PPR Document and this one is
that the PPR formula is set in terms of payroll hours. The two
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formulas yield the same result. Under the Gas Company’s
reported method, a meter reader who took ten hours to
complete an eight hour A route would be paid $132.48 + 10 =
$13.25 per hour, and 50% of that would be $6.62, yielding
an overtime hourly rate of $19.87. The total amount paid
would be ($13.25 X 8 straight hours) + ($19.87 X 2 overtime
hours) = $145.74.
The formula actually used by the Gas Company is the only
factual issue in dispute,” and it is does not rise to the level of
a genuine issue of material fact because the result is the same
using either formula.
The Unions did not sign the agreement regarding the
method of compensation for meter readers set forth in the
PPR Document signed by the Gas Company February 13,
1996, because they believed the system was unfair and
possibly illegal. See Ahumada Declaration, {9 7-8 and Exh. 4.
The Gas Company reports that its studies, which have not
been filed with the Court, show that meter readers work an
average of seven hours three minutes per day plus thirty-five
minutes compensated rest time and that 84% of A Route
meter readers complete their work in less than eight hours per
day. Plaintiff Samuel Firestone counters that routes assigned
ten and one-half hours to complete in July 1994 became eight
hour routes in April 1995 when the PPR system was
? Defendant points out in its Reply that the Court gave plaintiffs until
February 27, 1998 to conduct discovery on how overtime wages were
calculated and plaintiffs elected not to engage in further discovery.
Furthermore, defendant states although it furnished plaintiffs with the
payroll records for the named plaintiffs during the relevant time period,
plaintiffs made no use of this information. “As such, plaintiffs assertion
(at p. 4) that the PPR formula ‘is not rea/ly the formula’ that The Gas
Company uses to calculate unassigned overtime is purely speculation, and
further, this assertion is erroneous.” Reply at 1. Defendant's point is well-
taken, and plaintiffs’ failure to take advantage of additional discovery
cannot elevate this issue to a genuine issue of disputed material fact.
20a
implemented. Firestone Declaration, § 20. The Gas Company
responds that the Unions had to make concessions that
increased productivity and lowered the meter readers’ pay to
avoid losing their jobs altogether.
Plaintiffs argue that the PPR formula resulted in a
“negative premium” and disincentive for unassigned overtime
because meter readers are paid for overtime at a rate less than
their regular rate of pay. See Ahumada Declaration, 4 6. Thus
Local 132 of the Utility Workers’ Union and its members
filed several grievances protesting the implementation of the
PPR system, which culminated in a facilitation proceeding
held in February 1998. This grievance resulted in the
elimination of the position of full-time meter readers.
Ahumada Declaration, § 8. A number of Local 132 members
(including several of the plaintiffs) asserted that. it was
impossible for meter readers to complete their assigned routes
within the assigned time. These members determined that
they would be unlikely to prevail in an arbitration challenging
the PPR system because the arbitrator would likely conclude
the PPR system did not violate the CBAs because it was
implemented under the authority of the benchmarking
agreement that had been agreed to through collective
bargaining. “We concluded that SCGC effectively had the
power under the Benchmarking Agreement either to impose
the terms it wanted or to contract out meter reading.”
Ahumada Declaration, 4 9. The members ultimately failed to
complete the grievance process.
The benchmarking process has since been eliminated.
Ahumada Declaration, § 9.
Il.
Discussion
A. Standard for Motion for Summary Judgment
Rule 56(c) of the Federal Rules of Civil Procedure
provides for summary judgment if “the pleadings,
2la
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law.” Summary
judgment “terminates the action without trial” and is a
“judgment ‘on the merits.’” Schwarzer, Tashima, and
Wagstaffe, Cal. Prac. Guide: Fed. Civ. Proc. Before Trial
§ 14:28 (The Rutter Group 1996) (hereinafter Schwarzer).
Not only is summary judgment not “disfavored,” but it is “an
integral part of the Federal Rules as a whole, which are
designed ‘to secure the just, speedy and inexpensive
determination of every action.’” Celotex Corporation v.
Catrett, 477 U.S. 317, 327 (1986).
In a trilogy of 1986 cases, the Supreme Court clarified the
standard for summary judgment. See Celotex Corporation v.
Catrett, 477 U.S. 317 (1986); Anderson v. Liberty Lobby. Inc,
477 U.S. 242 (1986); Matsushita Electrical Industry Co. v.
Zenith Radio Corp., 475 U.S. 574 (1986).
The moving party bears the initial burden of demonstrating
the absence of a genuine issue of material fact for trial.
Anderson, 477 U.S. at 256. Whether a fact is material is
determined by looking to the governing substantive law; if
the fact may affect the outcome, it is material. /d. at 248. If
the moving party seeks summary adjudication with respect to
a claim or defense upon which it bears the burden of proof at
trial, its burden must be satisfied by affirmative admissible
evidence. By contrast, when the non-moving party bears the
burden of proving the claim or defense, the moving party can
meet its burden by pointing out the absence of evidence from
the non-moving party. The moving party need not disprove
the other Party’s case. See Celotex, 477 U.S. at 325; see also
Schwarzer §§ 14:123-141.
When the moving party meets its burden, the “adverse
party may not rest upon the mere allegations or denials of the
adverse party’s pleadings, but the adverse party’s response,
eannsassasemennes ND Hag ne
22a
by affidavits or as otherwise provided in this rule, must set
forth specific facts showing that there is a genuine issue for
trial.” Fed. R. Civ. P. 56(e).
In assessing whether the non-moving party has raised a
genuine issue, its evidence is to be believed, and all justifiable
inferences are to be drawn in its favor. Anderson, 477 U.S. at
255 (citing Adickes v. S.H. Kress and Company, 398 U.S. 144
(1970)). Nonetheless, “the mere existence of a scintilla of
evidence” is insufficient. 2Ld... at 252. As the Court
explained in Matsushita, 475 U.S. at 586-87:
When the moving party has carried its burden under
Rule 56(c), its opponent must do more than simply show
that there is some metaphysical doubt as to the material
facts. Where the record taken as a whole could not lead a
rational trier of fact to find for the nonmoving party,
there is no “genuine issue for trial.”
The rules of evidence generally govern the admissibility of
facts. Schwarzer, § 14:160 (citing Hal Roach Studios, Inc. v.
Feiner & Co. Inc., 892 F.2d 1542, 1555 (9th Cir. 1930)). Rule
56(e) requires that declarations or affidavits submitted in
support of or in opposition to a summary judgment motion
“be based on personal knowledge; state ‘facts as would be
admissible in evidence’ . . . ; and ‘show affirmatively that the
affiant is competent to testify to the matters stated therein[.]’”
Id., § 14:162. Declarations on information and belief are
insufficient. Taylor v. List, 880 F.2d 1040, 1045 (9th
Cir. 1989).
23a
B. Federal Preemption under § 301 of the LMRA
1. Standard
Section 301 of the LMRA provides that “[s]uits for
violation of contracts between an employer and a labor
organization representing employees in an industry affecting
commerce ... may be brought in any district court having
jurisdiction of the parties[.]” 29 U.S.C. § 185(a) (emphasis
added). The purpose of such broad preemptive power is to
prevent state courts from purporting to rule on the legal
consequences intended to flow from the breach of a collective
bargaining agreement, and to prevent parties from reneging
on arbitration promises in a collective bargaining agreement,
by “relabeling” breach of contract claims as tort claims.
Livadas v. Bradshaw, 512 U.S. 107, 124 (1994) . Section 301
has thus been interpreted “as a congressional mandate to the
federal courts to fashion a body of federal common law to be
used to address disputes arising out of labor contracts.” Allis-
Chalmers v. Lueck, 471 U.S. 202, 209 (1985), explaining
Textile Workers v. Lincoln Mills, 353 U.S. 448 (1957). The
need to establish a single body of federal labor law has been
found by the courts to be compelling. “The ordering and
adjusting of competing interests through a process of free and
voluntary collective bargaining is the keystone of the federal
scheme to promote industrial peace.” Teamsters v. Lucas
Flour Co., 369 U.S. 95, 104 (1962).
Section 301 has been broadly construed to cover most state
claims that require interpretation of collective bargaining
agreements. Builders & Contractors, Inc. v. International
Brotherhood of Electrical Workers, 109 F.3d 1353, 1356 (9tj
Cir. 1997). The preemptive force of the LMRA displaces any
state law causes of action that require interpretation of, and
are not independent of, a collective bargaining agreement.
Schwarzer, Tashima, and Wagstaffe, Cal. Prac. Guide: Fed.
Civ. Pro. Before Trial § 2:722 (The Rutter Group 1997)
(hereinafter Schwarzer); see also Franchise Tax Board v.
24a
Construction Laborers Vacation Trust, 463 U.S. 1. 23-24
(1983), superseded by statute on other grounds as Stated in
Ethridge v. Harbor House Restaurant, 861 F.2d 1389 (9th
Cir. 1988). State law is preempted by the LMRA only if the
court must interpret, rather than merely refer to or examine,
the collective bargaining agreement. Lingle v. Norge Division
of Magic Chef, 486 U.S. 399, 413 (1988); see also Schwarzer
§ 2:736. In other words, preemption is only proper if a state
law claim is “substantially dependent on analysis of a
collective bargaining agreement.” /d., citing Allis-Chalmers,
471 U.S. at 220. The Supreme Court instructs, “when the
meaning of contract terms is not the subject of dispute, the
bare fact that a collective-bargaining agreement will be
consulted in the course of state-law litigation plainly does not
require the claim to be extinguished.” Livadas, 512 U.S. at
124. Indeed, “‘purely factual questions’ about an employee’s
conduct or an employer’s conduct and motives do not
‘requir[e] @ court to interpret any term of a collective
bargaining agreement.’” Hawaiian Airlines, Inc v. Norris,
512 U.S. 246, 261 (1994)
Moreover, as the Supreme Court clarified in Livadas,
Ҥ 301 does not disable state courts from interpreting the
terms of collective bargaining agreements in resolving non-
preempted claims.” Livadas, 512 U.S. at 124n.17.° State law
claims are not broadly preempted if they are based on an
employee’s exercise of an independent or “non-negotiable,”
right protected by state law or public policy. Id. A
nonnegotiable right cannot be bartered away through
collective bargaining. Thus, “where a plaintiff contends than
an employer’s actions violated a state-law obligation, wholly
* The Supreme Court had previously noted that it “is conceivable that a
State could create a remedy that, although nonnegotiable, nonetheless
turned on the interpretation of the collective-bargaining agreement for its
application. Such a remedy would be preempted by § 301.” Lingle, 486
U.S. at 407 n.7.
25a
independent of its obligations under the CBA, there is no
preemption.” Espinal v. Northwest Airlines, 90 F.3d 1452,
1456 (9th Cir. 1996) (following Lingle and applying LMRA
preemption test to Railway Labor Act preemption). The test is
whether the evaluation of the state claim is “inextricably
intertwined with consideration of the terms of the labor
contract.” Allis-Chalmers, 471 U.S. at 213.
Courts must determine whether the state law provision
confers non-negotiable rights on employers or employees
independent of any right established by contract or the
evaluation of the claim is inextricably intertwined with terms
of a labor contract. Allis-Chalmers, 471 U.S. 219-20.
Analysis of federal preemption “turns on the actual content of
respondent’s policy and its real effect on federal rights.”
- Livadas, 512 U.S. at 119.
2. Application
Plaintiffs’ original complaint alleged that “a dispute exists
between [the Gas Company] and the Unions whether the
unlawful payroll practices described herein are authorized
under such Collective Bargaining Agreement.” Complaint,
{ 9. Plaintiffs’ First Amended Complaint, filed March 20,
1998, makes no such allegation, and plaintiffs stress that there
is no dispute over what the Unions agreed to—they seek only
a determination of whether the PPR system violated state and
federal wage and hour laws.
Section 3(A) of Wage Order 4, Cal. Code Regs. tit. 8
§ 11340 (“Wage Order 4”), provides that an employee may
not be employee more than forty hours per week or more
than eight hours per day unless the employee is paid at a
premium rate equal to one and one-half times such
employee’s regular rate for all hours worked in excess of
forty per week or eight per day. See Exh. | to Plaintiffs’
Opposition at 456. Section 3(G), the Overtime Exemption
Provision (“OEP”), exempts from these overtime provisions
26a
any employee “covered by a collective bargaining agreement
if said agreement provides premium wage rates for over-
time work and a cash wage rate for such employee of not less
than one dollar ($1.00) per hour more than the minimum
wage.” Id.
Plaintiffs argue the OEP is preempted by federal law
because the provision penalizes union workers by with-
drawing minimum standards because of union representation.
The Court orally rejected this argument at the December 15,
1997 hearing. The Supreme Court has explained, “These ‘opt-
out’ statutes are thus manifestly different in their operation
(and the effect on federal rights) from the Commissioner rule
that an employee forfeits his state law rights the moment a
collective bargaining agreement with an arbitration clause is
entered into. Hence, our holding that the Commissioner’s
unusual policy is irreconcilable with the structure and
purposes of the Act should cast no shadow on the validity of
these familiar and narrowly drawn opt-out provisions.”
Livadas, 512 U.S. at 131-32 (internal citations omitted). The
NINTH Circuit rejected the argument that an exemption
identical to 3(G) was invalid under Livadas, citing the same
language. See National Broadcasting Co. v Bradshaw, 70
F.3d 69, 73 (9th Cir. 1995).
Plaintiffs also contend that a valid opt-out provision did not
exist between Aprii -1, 1996 and September 8, 1996 when no
CBA was in effect. However, the 1994 Agreement covered
this time period because when a CBA expires, the agreement
remains in effect until a new one is reached. In National
Broadcasting, the NINTH Circuit quoted a letter from the
California Labor Commissioner that explained,
[T]he division has a long-established policy that
provides that the mere expiration of a collective
bargaining agreement will not operate to remove the
worker from coverage by the collective bargaining
agreement. Absent some other unilateral action by the
k
| |
27a
parties to the expired CBA, the terms and conditions
of the agreement (except for arbitration and union
recognition) continue.
70 F.3d at 71. In that case, the court found that an OEP did
not apply during the period between a declared bargaining
impasse and the effective date of the new CBA. The pre-
impasse period, however, would have been covered by the
expired agreement. Here, it is undisputed that during this time
period with no effective CBA, the Gas Company continued to
negotiate with the Unions and to pay its employees overtime
at the same rate it had paid under the expired agreement.
In its motion to dismiss, defendant contends that plaintiffs’
state overtime claim is preempted by § 301 of the Labor
Management Relations Act, 29 U.S.C. § 185(a), because the
factfinder must interpret and apply the applicable CBAs to
determine how meter readers are paid—whether hourly,
salary, piece-rate, or a day-rate; what their “regular rate of
pay” is; whether they are paid additional wages for overtime
hours and whether such wages constitute a “premium..” Thus
an arbitrator should determine whether the Gas Company is
paying a “premium” wage for overtime work so that the PPR
falls within the OEP of Title 8, California Administrative
Code § 11040(3)(G). The Court agrees.
First, Wage Order 4 cannot be said to confer nonnegotiable
rights, as those who are a party to a CBA meeting certain
minimum requirements are exempt. Thus, these state wage
and hour law protections obviously may be bargained away
through the collective bargaining process.
More importantly, the meaning of basic wage and hour
terms is the subject of dispute and the CBAs govern these
terms. The benchmarking letter is part of the 1994 and 1996
CBAs. The OEP does not define “premium” nor “regular rate
of pay.” Analysis of these terms requires more than merely -
referring to the CBAs. And whether the OEP applies turns on
28a
the meaning of “premium rate of pay” and “regular rate of
pay.” While plaintiffs stress that the Court need not interpret
any provision of the CBAs because none of their terms are
disputed by the parties, this argument misses the point. What
the parties think the CBAs mean is of no moment; the parties
may have agreed upon an inaccurate interpretation of the
CBAs. Significantly, if this matter went to trial, the CBAs
would be relevant evidence on plaintiffs’ overtime claim. The
Court cannot conclude that this claim is independent from the
CBAs because the outcome would not necessarily be the
same regardless of the CBAs. The Court simply cannot say
that California has created rights “wholly apart from any
provision of the CBA[s].” See Hawaiian Airlines, 512 U.S. at
258. In fact, the Supreme Court has specifically identified
claims involving overtime pay as the type of dispute
traditionally resolved through arbitration. See Allis-Chalmers,
471 U.S. at 219-20.
It is well-settled that federal law governing § 301 claims
includes a general requirement that employees exhaust
grievance and arbitration procedures before bringing suit. See
Republic Steel Corporation v. Maddox, 379 U.S. 650, 652
(1965); Carr v. Pacific Maritime Ass'n, 904 F.2d 1313, 1317
(9th Cir. 1990). Section 6.8 of the 1996 Agreement sets forth
the grievance and arbitration procedure between the Gas
Company and the Unions. See Exh. A to Declaration of
‘Gerald T. Abbott. Although one plaintiff filed a grievance in
1996 regarding the computation and payment of overtime and
the Unions initiated a request to arbitrate in 1997, the
arbitration has yet to occur. See Abbott Declaration, ¥ 4.
Plaintiffs have failed to exhaust their remedies through the
grievance and arbitration process contained in the CBAs, and
in fact specifically declined to do so because they believed
these attempts would be unsuccessful. Therefore, plaintiffs
cannot state a claim under the LMRA. Accordingly,
defendant is entitled to summary adjudication of this claim.
|
29a
C. Plaintiffs’ Federal Overtime Claim
Section 207(a) (1) of the Fair Labor Standards Act (FLSA)
requires that “no employer shall employ any of his employees
who in any workweek is engaged in commerce or in the
production of goods for commerce for a work week longer
than forty hours, unless such employee receives compen-
sation for his employment in excess of the hours above
specified at a rate not less than one and one-half times the
regular rate at which he is employed.” 29 U.S.C. S 207(a)
(1). Plaintiffs assert that the Gas Company violates federal
law by calculating the regular rate on a daily basis rather than
weekly basis.
The Gas Company has complied with the overtime
requirements of the FLSA. Federal regulations permit a
regular rate of pay to be calculated using a variety of time
periods. “Section 548.3(b) authorizes overtime to be
computed on the basis of the employee’s average hourly
earnings for a period longer or shorter than a workweek. It
permits the payment of overtime compensation on the basis
of average hourly earnings for a day, a week, two weeks or
any period up to 16 calendar days, if the period is established
and agreed to with the employee prior to the performance of
the work.” 29 C.F.R. § 548.302(b). A regular rate is
determined by “totaling all the sums received at such day
rates or job rates in the workweek and dividing by the total
hours actually worked.” 29 C.F.R. § 778.112; see also
29 C.F.R. § 778.111 (same for piece rates).
Plaintiffs argue that because a meter reader’s base rate may
fluctuate between $16.56 and $11.04 depending upon how
long it takes to complete the route, this rate cannot be said to -
be “substantially equivalent to the average hourly earnings of
the employee, exclusive of overtime premiums, in the
particular work over a representative period of time” as
required by 29 C.F.R. § 548.2(e). This interpretation would
preclude the applicability of § 548.302(b), which provides for
30a
a flexible approach to computing overtime following the
collective bargaining process, as the variable time period for
computing overtime is allowable “if the period is established
and agreed to with the employee prior to the performance of
the work.” Defendant’s motion for summary adjudication of
the federal overtime claim is GRANTED.
Although plaintiffs’ state rest break claim arises out of a
common nucleus of operative fact, the Court declines to
exercise supplemental jurisdiction given the resolution of the
state and federal overtime claims. This is particularly
appropriate where there is no longer any basis for federal
court jurisdiction and neither the parties nor the Court has
expended a significant amount of time on this remaining state
law claim. The remaining state law claim is DISMISSED
without prejudice to plaintiffs’ right to re-file this claim in
state court.
Conclusion
As plaintiffs concede, there is no dispute over what the
Unions and the Gas Company agreed to with respect to he
(sic) PPR system. Threatened with the layoff of all of the
meter readers, the Unions accepted a system of compensation
that lowered the number of hours credited to an employee’s
unassigned overtime, thus reducing the amount of money the
Company would have to pay for unassigned overtime First,
plaintiffs’ state law overtime claim is preempted by § 301 of
the LMRA because resolution of this claim is necessarily
dependent upon an interpretation of the relevant provisions of
the CBAs. Thus it cannot be said that this cause of action is
independent of the CBAs. Moreover, plaintiffs have failed to
state a claim for relief under the LMRA because they failed to
exhaust the grievance procedure established by the CBAs.
Second, with respect to the federal overtime claim, there are
no genuine issues of material fact in dispute and defendant is
entitled to judgment as a matter of law as the federal
regulations permit a flexible approach to computing overtime
3la
reached through collective bargaining. Finally, the Court
declines to exercise supplemental jurisdiction over the remain
state law rest break claim. Judgment shall be entered
dismissing the first and second claims for relief on the merits
and dismissing the third claim for relief without prejudice.
IT IS SO ORDERED.
DATED: July 14, 1998
/s/
Richard A. Paez
United States District Judge
32a
APPENDIX D
IN THE COURT OF APPEAL OF
THE STATE OF CALIFORNIA
Second Appellate District Division Four
[Filed March 13, 2002]
B148811
JOSE MILLAN, AS LABOR COMMISSIONER OF THE STATE OF
CALIFORNIA DEPARTMENT OF INDUSTRIAL RELATIONS,
Plaintiff and Respondent,
Vv.
SOUTHERN CALIFORNIA GAS COMPANY,
Defendant and Appellant.
APPEAL from a judgment of the Superior Court
of Los Angeles County, Madeleine Flier, Judge.
Reversed and remanded.
Opinion by: Hastings
OPINION:
Summary judgment was granted in favor of respondent,
Jose Millan as Labor Commissioner of the State of California
Department of Industrial Relations, Division of Labor
Standards Enforcement in an action against Southern
California Gas Company (hereinafter referred to as
Employer).' The trial court found that application of a
collective bargaining agreement between Employer and its
' The motion was also brought in the name of the People of the State of
California, but only the Labor Commissioner is named as a respondent in
this appeal.
33a
meter readers resulted in certain of the meter readers being
paid less than required for overtime pay pursuant to a
California labor regulation, Wage Order 4-89. Judgment
was entered against Employer in an amount stipulated by
the parties.
Three determinations were essentiai to the trial court’s
resolution of the case: (1) that federal law did not preempt
application of state law; (2) that it should defer to
respondent’s method of calculating the equivalent hourly
“regular pay” to determine whether the collective bargaining
agreement was at odds with Wage Order 4-89, subdivision
3(A); and (3) that the collective bargaining exemption within
Wage Order 4-89, subdivision 3(G), was not applicable.
We conclude that the trial court did not err on the issue of
preemption or in deferring to respondent’s method of
calculating the equivalent hourly regular pay referenced in
Wage Order 4-89, subdivision (A). But the court did err in its
determination that the collective bargaining exemption did
not apply to the collective bargaining agreement at issue.
Depending on the number of overtime hours worked,
application of the formula provided within the collective
bargaining agreement may or may not violate the terms of
Wage Order 4-89. The matter must therefore be remanded for
further proceedings to determine whether in any specific
instance the wage order was violated.
BACKGROUND
During the period from April 1995 through April 1998,
Employer’s gas meter readers were covered under a collective
bargaining agreement. Through the collective bargaining
process, Employer implemented a new compensation plan for
its meter readers in April 1995, known as the “Pay Per Route”
(PPR) program. The system in place prior to 1995
compensated the meter readers at a fixed hourly rate. Briefly
stated, the PPR provided that meter readers would be paid a
34a
flat daily rate for working routes designed with the
expectation they would be finished within an eight hour
period. Meter readers who took more than eight hours to
finish the routes received overtime compensation for the
additional hours according to a formula that divided the flat
daily rate by the number of hours actually worked that day.
As a result, there was no fixed overtime rate paid for hours
worked in excess of eight per day.
The Industrial Welfare Commission (IWC) is the state
agency empowered to formulate regulations governing
employment in California. Those regulations are known as
“wage orders.” (Lab. Code, §§ 1173, 1178.5, 1182.) The
Division of Labor Standards Enforcement, headed by
respondent, Labor Commissioner, is the state agency em-
powered to enforce California’s labor laws, including [WC
wage orders. (Lab. Code, §§ 21, 61, 95, 98-98.7, 1193.5.)
The wage order at issue here is 4-89, (Cal. Code Regs.,
tit. 8, § 11040),” which provides in section 3(A): “[E]mploy-
ees shall not be employed more than eight (8) hours in any
workday or more than forty (40) hours in any workweek
unless the employee receives one and one-half (1 '2) times
such employee’s regular rate of pay for all hours worked over
forty (40) hours in the workweek. Employment beyond eight
(8) hours in any workday . . . is permissible provided the
employee is compensated for such overtime at not less than:
[{] (1) One and one-half (1 2) times the employee’s regular
rate of pay for all hours worked in excess of eight (8)
hours... .”
Subdivision 3(G) provides an exemption to the terms of
subdivision 3(A) where an employee is “covered by a
collective bargaining agreement if said agreement provides
2 Section 11040 has been amended several times since 1995.
35a
premium wage rates for overtime work and a cash wage rate
for such employee of not less than one dollar ($1.00) per hour
more than the minimum wage.”
In April 1998, respondent, the State Labor Commissioner,
brought an action against Employer, alleging that the formula
in the PPR calculating overtime wages constituted a violation
of the state’s overtime law, and seeking to recover unpaid
overtime wages on behalf of the meter readers, as well as
waiting time penalties for those wages as provided for by the
Labor Code.
Employer asserted two affirmative defenses: (1) that
respondent’s complaint was preempted by federal labor laws;
and (2) the PPR compensation program fell under a special
exemption to the state’s overtime pay laws because it was
covered by a collective bargaining agreement.’
On February 9, 1999, Employer brought a motion for
summary judgment against respondent based on its two
affirmative defenses. The following day, respondent filed a
motion for summary adjudication against Employer, request-
ing an order adjudicating that there was no merit to either of
the affirmative defenses and that Employer owed a duty io
pay its meter readers in compliance with state law.
Respondent asserted that the formula contained within the
collective bargaining agreement is at odds with the method
> On appeal, Employer contends that the action is preempted by the
Federal Arbitration Act. This contention was not raised in the trial court in
connection with its motion for summary judgment. We assume that
Employer is referring to an arbitration clause contained in the collective
bargaining agreement, as there is no arbitration clause in the PPR
document. Since the issue was not first raised in the trial court and the
collective bargaining agreement is not part of the record, we do not
address this contention. (Mattco Forge, Inc. v. Arthur Young & Co. (1997)
52 Cal.App.4th 824, 847; Buckhart v. San Francisco Residential Rent etc.,
Bd. (1988) 197 Cal.App.3d 1032, 1036.)
36a
respondent was required to use to calculate the hourly
equivalent of the “regular rate of pay” referenced in Wage
Order 4-89. Respondent divides the fixed daily rate by eight,
the maximum number of hours that may be worked per day
before overtime pay is required pursuant to Wage Order 4-89.
In other words, if the fixed daily rate is $132.48, then the
hourly reguiar rate would equate to $16.56 ($132.48 divided
by 8). Using this hourly regular rate, if a meter reader worked
10 hours in one day and completed only the regularly
assigned number of routes, he or she should be compensated
for those two additional hours of overtime at the rate of
$24.84 ($16.56 x 1.5).
On the other hand, Employer contends that the method of
determining the equivalent hourly regular rate contained
within the collective bargaining agreement is sanctioned by
federal law, to which respondent and the courts should defer.
Federal regulations provide that the “regular rate” is deter-
mined by dividing total earnings per day by total hours
worked that same day. (29 C.F.R. § 778.111 and 778.112;
accord Bay Ridge Co. v. Aaron (1948) 334 U.S. 446, 464.)
Utilizing the federal method of calculation in the example
above, the hourly regular rate would equate to $13.25
($132.48 divided by 10). The meter reader would be
compensated for the two additional hours of overtime at the
rate of $19.87 per hour ($13.25 x 1.5). Under Employer’s
method, therefore, the regular rate is not fixed; an indi-
vidual’s regular rate can vary daily, and the more overtime
hours a meter reader works, the lower his or her regular rate
and overtime rate become.
On March 9, 1999, the trial court heard both motions. After
taking the matter under submission, it denied Employer’s
motion for summary judgment and granted respondent’s
motion for summary adjudication. It concluded that federal
preemption did not exist; that the agency’s determination of
its own regulation deserved great weight; and that Skyline
37a
Homes, Inc. v. Department of Industrial Relations (1985)
165 Cal.App.3d 239 “still governs as to calculating over-
time wages.”
Employer amended its answer to assert a third affirmative
defense, that it had made additional overtime payments which
should be credited against any liability. The matter proceeded
to trial in October 2000. At trial, Employer withdrew its third
affirmative defense, respondent withdrew its second cause of
action for waiting time penalties, and the parties stipulated
that the amount of overtime wages due, based on
respondent’s interpretation as adopted by the trial court, was
$286,683.87. Judgment was entered accordingly on
December 8, 2000. Employer’s motion for new trial was
denied and it appealed.
DISCUSSION
[. Preemption
Pursuant to section 301 of the Labor Management
Relations Act (29 U.S.C. § 185 (a)), federal law exclusively
governs suits for violation of contracts between an employer
and a labor organization representing employees in an
industry affecting commerce. (Caterpillar Inc. v. Williams
(1987) 482 U.S. 386, 393.) Section 301 has been construed to
cover most state law actions that require interpretation of
labor agreements to ensure uniformity. (Lingle v. Norge
Division of Magic Chef, Inc. (1988) 486 U.S. 399, 403.)
“(W]hen resolution of a state-law claim is substantially
dependent upon analysis of the terms of an agreement made
between the parties ina labor contract, that claim must either
be treated as a section 301 claim or dismissed as preempted
by federal labor-contract law.” (Allis-Chalmers Corp. v.
Lueck (1985) 471 U.S. 202, 220, internal citations omitted.)
Preemption has also been applied when the “heart” of a state
law complaint is a clause in the collective bargaining
agreement (sometimes referred to as a CBA) (Caterpillar,
38a
supra, 482 U.S. at p. 394), or if resolution of the state law
claim depends on the meaning of or requires the inter-
pretation of a collective bargaining agreement. (Lingle, supra,
at pp. 405-410.) However, “not every dispute concerning
employment, or tangentially involving a provision of a
collective-bargaining agreement, is preempted by section
301.” (Allis-Chalmers, supra, 471 U.S. at p. 211; Caterpillar
Inc., supra, 482 U.S. at p. 396, fn. 10.)
Preemption should not be lightly inferred. (Hawaiian
Airlines, Inc. v. Norris (1994) 512 U.S. 246, 252.) Section
301 should only be applied to “state law purporting to
determine ‘questions relating to what the parties to a labor
agreement agreed, and what legal consequences were
intended to-flow from breaches of that agreement.’” (Livadas
v. Bradshaw, (1994) 512 U.S. 107, 123; Builders & Con-
tractors v. Intern. of Elec. Workers, (9th Cir. 1997) 109 F.3d
1353, 1357.) When liability is governed by independent state
law, the mere need to “look to” the collective bargaining
agreement for damages computation is no reason to hold the
state law claim defeated by section 301. (Lingle, supra, 486
U.S. at p. 413, fn. 12.) “Purely factual questions” do not
require a court to interpret any term of a collective-bargaining
agreement. (Lingle v. Norge, supra, 486 U.S. at p. 407.)
“[W |hen the meaning of contract terms is not the subject of
dispute, the bare fact that a collective-bargaining agreement
will be consulted in the course of state-law litigation plainly
does not require the claim to be extinguished.” (Livadas,
supra, 512 U.S. at p. 124; citing Lingle, supra.) In Livadas, a
terminated union employee sought penalties for the period
between her discharge and the date she received the wages
due her. The issue raised was a question of state law, entirely
independent of any understanding embodied in the collective
bargaining agreement. There was no indication that there was
a dispute over the amount to which the employee would be
entitled as damages. (512 US. at p. 125.)
39a
Very recently, the Ninth Circuit noted: “The demarcation
between preempted claims and those that survive section
301’s reach is not, however, a line that lends itself to
analytical precision. As the Supreme Court acknowledged in
Livadas, ‘{[T}he Courts of Appeals have not been entirely
uniform in their understanding and application of the prin-
ciples set down in Lingle and [Allis-Chalmers].’ (Citation.]
And little wonder. ‘Substantial dependence’ on a CBA is an
inexact concept, turning on the specific facts of each case,
and the distinction between ‘looking to’ a CBA and
‘interpreting’ it is not always clear or amenable to a bright-
line test. [Citations.]” (Cramer v. Consolidated Freightways,
Inc. (9th Cir. 2001) 255 F.3d 683, 691.)
Respondent relies on Skyline Homes, Inc. v. Department of
Industrial Relations, supra, 165 Cal.App.3d 239 to support its
argument that California law, not federal law should apply.
In Skyline, salaried salespeople who worked a fluctuating
workweek filed a claim with the Department of Industrial
Relations, Division of Labor Standards Enforcement (the
LSE) alleging that their employer improperly computed their
overtime pay. (/d. at p. 244.) The relevant regulation was
substantially similar to the one at issue here, providing that
any employee who worked longer than 8 hours daily or 40
hours weekly would be compensated at one and one-half
times the employee’s regular rate. The salespeople were
guaranteed a fixed minimum weekly salary, but were paid
overtime compensation for all work performed over 40 hours
in any given workweek. Their employer computed overtime
pay in the same manner as the federal standard applied here
by Employer: by dividing the employee’s weekly salary by
the number of hours actually worked in a given week. Under
this method, as in the PPR, the more hours the employee
worked, the lower the regular rate became. (/d. at p. 245.)
In Skyline, as here, the employer maintained that its
method for deterring overtime pay was valid as sanctioned
40a :
under federal law. The Skyline court considered the conflict
between federal and state law and concluded that federal law
did not preempt state law because the Fair Labor Standards
Act (FLSA, 29 U.S.C. §§ 201-219) specifically states that:
“No provision of this chapter or of any order thereunder shall
excuse noncompliance with any Federal or State law or
municipal ordinance establishing a minimum wage higher
than the minimum wage established under this chapter or a
maximum workweek lower than the maximum workweek
established under this chapter.” (29 U.S.C. § 218, subd. (a).)
Federal regulations also provide that where state or local laws
provide greater protection to the employee, they shall be
interpreted to override the provisions of the FLSA. (Id. at pp.
250-251, citing 29 C.F.R. § 778.5.) The Skyline court
concluded that since the number of hours required to be
worked before the overtime rate is applied is less under state
law then under federal law, the State of California provides
for a lower maximum workweek, and thus comes within the
express savings clause of the FLSA. (/d. at p. 252.)
Employer argues that Skyline was expressly disapproved in
Tidewater Marine Western, Inc. v. Bradshaw, (1996) 14
Cal.4th 557 and is no longer good law.
In Tidewater, employees of companies that transported
workers and supplies to offshore oil drilling platforms filed
lawsuits against their employer seeking retroactive overtime
pay. The employers responded by filing a lawsuit for
injunctive relief, which was granted by the superior court. On
appeal, the Supreme Court affirmed the granting of the
injunction. It held, inter alia, that California could regulate
conduct outside its territorial boundaries, and that federal law
did not conflict with or otherwise preempt state regulation of
the employee’s overtime pay. (/d. at p. 566.) The Tidewater
court, however, also considered whether the DLSE’s policy
for determining whether IWC wage orders apply to maritime
employees constituted a regulation within the meaning of the
4la
Administrative Procedure Act (APA, Gov. Code, § 11340, et
seq.). It disapproved of Skyline only to the extent that it
concluded that the DLSE’s policy for calculating overtime
was not a regulation within the meaning of the APA. (/d. at
p. 573.) Therefore, we disagree with Employer’s contention
that the Skyline case is not applicable here.
Skyline has been followed in Alcala v. Western AG Enter-
prises, (1986) 182 Cal.App.3d 546, Hernandez v. Mendoza
(1988) 199 Cal.App.3d 721 and Ghory v. Al-Lahham, (1989)
209 Cal.App.3d 1487. It is clear that Skyline remains good
law with respect to the proposition that the State may use its
own definition of “regular rate” and may set its own standards
regarding the adequacy of overtime pay as long as it does not
fall below the federal standards. Moreover, Skyline is
consistent with the principle that establishment of labor
standards falls within the traditional police power of the State.
(Fort Halifax Packing Co. v. Coyne, (1987) 482 U.S. 1, 21:
Lingle v. Norge, supra, 486-U.S. at p. 411.)
Employer also attempts to distinguish Skyline, arguing that
the PPR provides for compensation on a “piece-rate” basis,
not an hourly basis. We disagree with this characterization.
As the trial court noted, Employer’s pay rate is truly a hybrid
system. Routes are categorized as to “difficulty.” The meter
readers are assigned a certain number of routes to complete
during a given day, based largely on the difficulty assess-
ment. The assignments are made assuming a traditional eight-
hour work day. Compensation is based upon completion of
that number of routes but is also based on a predetermined
number of hours. If, however, a meter reader consistently
does not complete that number of routes in eight hours, it may
affect his or her performance rating, and may effect a
reassignment of routes. Meter readers cannot simply choose
how many routes they wish to complete in a day—they are
penalized or reassigned if they cannot finish the number
prescribed. Neither may they choose to complete more
42a
than the specified number—that option must be specifically
assigned by Employer. The amount of pay is_ specif-
ically fixed as a “per hour assigned” amount in the PPR.
Employer’s computer payroll system is based on an eight
hour day and 40-hour workweek, although Employer goes to
elaborate lengths to “fool” the computer system. It is clear
that the PPR is not truly a piece-rate system, and thus we
cannot avoid following Skyline on that basis.
In its briefs, Employer relied extensively on Firestone v.
Southern California Gas Co., (9th Cir. 2000) 219 F.3d 1063,
a case brought against Employer in this case by four meter
readers regarding the same 1995 PPR at issue here. The case
was not certified as a class action.
During the briefing process, a petition for rehearing was
filed, and the Ninth Circuit issued an order deferring action
on the petition pending the completion of proceedings in
Cramer v. Consolidated Freightways, Inc., supra, 255 F.3d
683. An opinion in Cramer was filed in June 2001.
After this case had been argued and submitted, on February
12, 2002, the Ninth Circuit Court of Appeals denied a
rehearing in Firestone and tssued an opinion, concluding that
there was no change in result necessitated by the Cramer
opinion. The opinion affirmed that the claim of the meter
readers was preempted by the LMRA because, “The rarties in
this case disagree about which rate in the contract is the
‘regular’ rate and, thus, disagree on whether plaintiffs are
receiving a ‘premium’ for overtime work. Resolving this
question, we held, requires interpretation of the agreement.
The agreement would be enforced differently depending on
which party’s interpretation is accept. [{] We conclude that
Cramer does not change this result. Resolution of plaintiffs’
claim to overtime pay under state law cannot be decided by
mere reference to unambiguous terms of the agreement.”
255 F3d 683 (2002 WL 207025.)
43a
This case does not present a disputed disagreement over
interpretation of the collective bargaining agreement. The
parties do not dispute how Employer calculates the overtime
wages. Thus, the issue is not how to resolve a dispute over the
interpretation of the PPR, but a legal question of whether the
PPR complies with state law.
Turning to the facts of this case, the PPR does not define
“regular rate” of pay. The PPR specifies that “qualified”
meter readers are paid “$12.38 per hour assigned,” except for
overtime conditions. Apparently this hourly sate is set
pursuant to the collective bargaining agreement and may vary
from year to year. “Unassigned overtime premiums” are paid
when a meter reader takes longer than eight hours to complete
a certain number of routes. This is distinguishable from
“assigned overtime” which occurs when a meter reader is
asked to complete more than the normally assigned number
of routes, regardless of the number of hours \ orked. It is
the unassigned overtime premium with which we are
here concerned.
According to the literal language of the PPR, in unassigned
overtime, the number of hours actually worked is multiplied
by the ratio of assigned hours over actual hours. The resulting
product is multiplied by a complex formula, which yields a
number of “overtime hours” that is only a fraction of the
number of actual hours worked in excess of eight. The PPR
goes on to explain that the Employers’ payroll system was not
designed to accommodate this method of payment, and thus it
is necessary to “fool the payroll system” by posting all com-
pensation on an hourly basis, and then the hourly wage for
overtime hours is multiplied by 1.5.
We need not interpret the complex formula set forth in the
PPR because the parties do not dispute that, in actuality,
Employer computes the overtime compensation as follows:
the daily rate is divided by the number of actual hours
worked, which results in a figure which represents the
44a
“regular rate” of compensation and then one and one-half
times the regular rate is paid for hours worked in excess of
eight. In other words, the formula in the PPR works out to be
the same calculation allowed under federal law.
California law provides clear standards regarding rates of
Overtime pay which establish rights independent of a
collective bargaining agreement. An employer and a union
cannot bargain away an employee’s rights under state wage
statutes. (Lab. Code, § 219; Allis Chalmers v. Lueck, supra,
417 U.S. at p. 212, Balcorta v. Twentieth Century-Fox Film
Corp. (9th Cir. 2000) 208 F.3d 1102, 1111.) Nor may a
defendant attempt to inject a federal question into an action
that asserts what is plainly a state law claim and transform the
action into one arising under federal law, thereby selecting
the forum in which the claim shall be litigated. (Caterpillar
Inc. v. Williams, supra, 482 U.S. at p. 399; Cramer v.
Consolidated Freightways, Inc., supra, 255 F.3d at p. 694.)
Here, although the overtime compensation scheme is
computed according to a complex mathematical formula in
the PPR which equates with the federal standard, the parties
do not dispute how overtime is calculated. Thus, even though
the factual inquiry will necessarily include reference to the
collective bargaining agreement, no preemption occurs.
(Soldinger v. Northwest Airlines, Inc. (1996) 51 Cal.App.4th
345, 368.)
II. The Collective Bargaining Exemption
At this point we turn to a discussion of the exemption
which is contained within subdivision (G) of Wage Order 4-
89. It exempts employers from the provisions of subdivision
(A) where a “collective bargaining agreement . . . provides
premium wage rates for overtime work and a cash wage rate
for such employee of not less than one dollar ($1.00) per hour
more than the minimum wage.” .
45a
As we have previously noted, Wage Order 4-89 was
promulgated by statutory authority granted to the IWC and is
enforced by the Division of Labor Standards Enforcement.
We agree with the trial court that we should defer to
respondent’s interpretation of its wage order in calculating the
amount of “regular pay.” (Yamaha Corp. of America v. State
Bd. Of Equalization (1998) 19 Cal.4th 1, p. 12-13.)
Respondent’s interpretation of this exemption is succinctly
stated in its brief on appeal: “The exemption establishes a less
exacting standard of overtime compliance for employers
covered by a [collective bargaining agreement]: in particular,
it eliminates the specific premium wage rates set out in
subdivision 3(A) and authorizes the parties to negotiate
whatever premium wage rates above the regular rate of pay
they may deem appropriate for the broad range of hours
constituting overtime work.”
As we read this exemption in connection with subdivision
3(A), the parties to a collective bargaining agreement which
provides for payment of a “cash wage rate” of at least one
dollar more than the minimum wage are free to negotiate the
manner of calculating overtime pay without considering the
terms of subdivision 3(A) as long as a “premium” is paid. The
State DLSE manual defines “premium” as any amount above
“regular pay.” (DLSE Enforcement Policies and Interpre-
tations Manual § 1085; Accord, Bay Ridge Co. v. Aaron,
supra, 334 U.S. at p. 465.) Respondent figures the “regular
pay” by dividing the flat daily rate by eight. Using the fig-
ures from above, this results in a regular hourly rate
of $16.56. Thus, anything paid above this amount qualifies
as a “premium.”
Turning to the PPR, and assuming that the meter reader
worked a total of ten hours, we divide $132.48 by 10
resulting in $13.25 per hour. Multiplying $13.25 per hour by
1.5 equals an overtime rate of $19.88. This is more than
$16.56, so it qualifies as a premium and the exemption
46a
applies. But, as previously noted, a problem may be
encountered as additional overtime hours are worked. For
example, if 12 hours are worked, the rate of pay would not
qualify: $132.48 divided by 12 equals $11.04 which,
multiplied by 1.5, equals $16.56.
Employer concedes that the results of a study done over
one three-month period found one occasion where a meter
reader took more than 12 hours to complete the routes. In
only 2 percent of the cases did the routes take more than 11
hours. Thus, it appears that under the most typical scenario,
the PPR does provide for a “premium” above the “regular
pay” and the exemption would apply. But, because there was
at least one time it would not have applied, the court did not
err in denying Employer’s summary judgment motion. The
matter must be remanded to the trial court for a determination
of how many occasions application of the PPR resulted in a
failure to qualify for the exemption and for calculation of
damages, if any.
DISPOSITION
The judgment is reversed. The matter is remanded to the
superior court with directions to vacate its orders granting
summary judgment and denying summary adjudication and to
enter new and different orders denying those motions in
accordance with the principles set forth in this opinion and
setting the matter for trial to adjudicate whether application of
the PPR has resulted in failure of Employer to pay a premium
over the regular pay of $16.56. Costs on appeal are awarded
to appellant.
HASTINGS, J.
We concur:
EPSTEIN, Acting P.J.
CURRY, J.
47a
APPENDIX E
Labor Management Relations Act, 1947
Section 301, 29 U.S.C. § 185
Suits by and against labor organizations
(a) Venue, amount, and citizenship
Suits for violation of contracts between an employer and a
labor organization representing employees in an industry
affecting commerce as defined in this chapter, or between any
such labor organizations, may be brought in any district court
_ of the United States having jurisdiction of the parties, without
respect to the amount in controversy or without regard to the
citizenship of the parties.
(b) Responsibility for acts of agent; entity for purposes of
suit; enforcement of money judgments
Any labor organization which represents employees in an
industry affecting commerce as defined in this chapter and
any employer whose activities affect commerce as defined in
this chapter shall be bound by the acts of its agents. Any such
labor organization may sue or be sued as an entity and in
behalf of the employees whom it represents in the courts of
the United States. Any money judgment against a labor
organization in a district court of the United States shall be
enforceable only against the organization as an entity and
against its assets, and shall not be enforceable against any
individual member or his assets.
(c) Jurisdiction
For the purposes of actions and proceedings by or against
labor organizations in the district courts of the United States,
district courts shall be deemed to have jurisdiction of a labor
organization (1) in the district in which such organization
maintains its principal office, or (2) in any district in which its
duly authorized officers or agents are engaged in representing
or acting for employee members.
48a
(d) Service of process
The service of summons, subpena, or other legal process of
any court of the United States upon an officer or agent of a
labor organization, in his capacity as such, shall constitute
service upon the labor organization.
(e) Determination of question of agency
For the purposes of this section, in determining whether any
person is acting as an “agent” of another person so as to make
such other person responsible for his acts, the question of
whether the specific acts performed were actually authorized
or subsequently ratified shall not be controlling.
49a
APPENDIX F
INDUSTRIAL WELFARE COMMISSION
ORDER NO. 4-89
REGULATING WAGES, HOURS, AND WORKING
CONDITIONS IN PROFESSIONAL,
TECHNICAL, CLERICAL, MECHANICAL,
AND SIMILAR OCCUPATIONS
Article 4. Professional, Technical, Clerical, Mechanical, and
Similar Occupations (Order No. 4-89) Sec. 11040. Order
Regulating Wages, Hours, and Working Conditions in
Professional, Technical, Clerical, Mechanical and Similar
Occupations.
Effective July 1, 1989
1. APPLICABILITY OF ORDER. This Order shall apply to
all persons employed in professional, technical, clerical,
mechanical, and similar occupations whether paid on a time,
piece rate, commission, or other basis, unless such occupation
is performed in an industry covered by an industry order of
this Commission, except that:
(A) Provisions of Sections 3 through 12 shall not apply
to persons employed in administrative, executive, or profess-
sional capacities. No person shall be considered to be
employed in an administrative, executive, or professional
capacity unless one of the following conditions prevails:
(1) The employee is engaged in work which is
primarily intellectual, managerial, or creative, and which
requires exercise of discretion and independent judgment, and
for which the remuneration is not less than $1150.00 per
month; or
(2) The employee is licensed or certified by the State
of California and is engaged in the practice of one of the
50a
following recognized professions: law, medicine, dentistry,
pharmacy, optometry, architecture, engineering, teaching, or
accounting, or is engaged in an occupation commonly
recognized as a learned or artistic profession; provided,
however, that registered nurses shall not be considered to be
exempt professional employees for the purposes of this
subsection (2) of this order, unless they individually meet the
administrative, executive, or professional criteria described in
subsection (A)(1) above.
(B) The provisions of this Order shall not apply to
employees directly employed by the State or any county,
incorporated city or town or other municipal corporation, or
to outside salespersons.
(C) Provisions of this Order shall not apply to any
individual who is the parent, spouse, child, or legally adopted
child of the employer.
2. DEFINITIONS.
(A) “Commission” means the Industrial Welfare
Commission of the State of California.
(B) “Division” means the Division of Labor Standards
Enforcement of the State of California.
(C) “Professional, Technical, Clericai, Mechanicai, and
Similar Occupations” includes professional, semi-
professional, managerial, supervisorial, laboratory, research,
technical, clerical, office work, and mechanical occupations.
Said occupations shall include, but not be limited to the
following: accountants; agents; appraisers; artists; attendants;
audio-visual technicians; bookkeepers; bundlers; billposters;
canvassers; carriers; cashiers; checkers; clerks; collectors;
communications and sound technicians; compilers; copy
holders; copy readers; copy writers; computer programmers
and operators; demonstrators and display representatives;
dispatchers; distributors; door-keepers; drafters; elevator
5la
operators; estimators; editors; graphic arts technicians;
guards; guides; hosts; inspectors; installers; instructors;
interviewers; investigators; librarians; laboratory workers;
machine operators; mechanics; mailers; messengers; medical
and dental technicians and technologists; models; nurses;
packagers; photographers; porters and cleaners; process
servers; printers; proof readers; salespersons and sales agents;
secretaries; sign erectors; sign painters; social workers;
solicitors; statisticians; stenographers; teachers; telephone,
radio-telephone, telegraph and call-out operators; tellers;
ticket agents; tracers; typists; vehicle operators; x-ray
technicians; their assistants and other related occupations
listed as professional, semiprofessional, technical, clerical,
~ mechanical, and kindred occupations.
(D) “Emergency” means an_ unpredictable or
unavoidable occurrence at u.ischeduled intervals requiring
immediate action.
(E) “Employ” means to engage, suffer, or permit to
work.
(F) “Employee” means any person employed by an
employer.
(G) “Employer” means any person as defined in Section
18 of the Labor Code, who directly or indirectly, or through
an agent or any other person, employs or exercises control
over the wages, hours, or working conditions of any person.
(H) “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. Within the health care
industry, the term “hours worked” means the time during
which an employee is suffered or permitted to work for
the employer, whether or not required to do so, as inter-
preted in accordance with the provisions of the Fair Labor
Standards Act.
52a
(I) “Minor” means, for the purpose of this Order, any
person under the age of eighteen (18) years.
(J) “Outside Salesperson” means any person, 18 years of
age or over, who customarily and regularly works more than
half the working time away from the employer’s place of
business selling tangible or intangible items or obtaining
orders or contracts for products, services or use of facilities.
(K)”Primarily” as used in Section 1, Applicability,
means more than one-half the employee’s work time. Within
the health care industry, the term “primarily” as used in
Section 1, Applicability, means (1) more than one-half the
employee’s work time as a rule of thumb or, (2) if the
employee does not spend over 50 percent of the employee’s
time performing exempt duties, where other pertinent factors
support the conclusion that management, managerial, and/or
administrative duties represent the employee’s primary duty.
Some of these pertinent factors are the relative importance of
the managerial duties as compared with other types of duties,
the frequency with which the employee _ exercises
discretionary powers, the employee’s relative freedom from
supervision, and the relationship between the employee’s
salary and the wages paid other employees for the kind of
nonexempt work performed by the supervisor.
(L) “Split shift” means a work schedule which is
interrupted by non-paid non-working periods established by
the employer, other than bona fide rest or meal periods.
(M) “Teaching” means, for the purpose of Section | of
this Order, the profession of teaching under a certificate from
the Commission for Teacher Preparation and Licensing or
teaching in an accredited college or university.
(N) “Wages” (See California Labor Code, Section 200)
(O) “Workday” means any consecutive 24 hours
beginning at the same time each calendar day.
53a
(P) “Workweek” means any seven (7) consecutive days,
starting with the same calendar day each week. “Workweek”
is a fixed and regularly recurring period of 168 hours, seven
(7) consecutive 24-hour periods.
3. HOURS AND DAYS OF WOR
(A) The following overtime provisions are applicable to
employees eighteen (18) years of age or over and to
employees sixteen (16) or seventeen (17) years of age who
are not required by law to attend school: such employees shall
not be employed more than eight (8) hours in any workday or
more than forty (40) hours in any workweek unless the
employee receives one and one-half (14) times the
employee's regular rate of pay for all work over eight (8)
hours in any workday or in excess of forty (40) hours in any
workweek. Employment beyond eight (8) hours in any
workday or more than six (6) days in any workweek is
permissible provided the employee is compensated for such
overtime at not less than:
(1) One and one-half (1 %) times the employee’s
regular rate of pay for all hours worked in excess of eight (8)
hours up to and including twelve (12) hours in any workday,
and for the first eight (8) hours worked on the seventh (7th)
day of work; and
(2) Double the employee’s regular rate of pay for all
hours worked in excess of twelve (12) hours in any workday,
and for all hours worked in excess of eight (8) hours on the
_ seventh (7th) day of work in any workweek.
(B) No employer shall be deemed to have violated the
provisions of this Section 3, Hours and Days of Work, by
instituting, pursuant to a written agreement voluntarily
executed by the employer and by at least two-thirds (2/3) of
the employees in the affected work unit following a secret
ballot and before the performance of the work, a regularly
54a
scheduled week of work consisting of such hours and days as
shall be agreed upon consistent with both of the following
provisions: the premium wage rate provisions of one and
one-half (14) times the emp!>yee’s regular rate of pay shall
apply to all hours worked in any workday in excess of the
regularly scheduled hours established by the agreement for
that workday up to twelve (12) hours a workday, or to all
hours worked in excess of 40 hours per week; and the
premium wage rate provisions of double the employee’s
regular rate of pay shall apply to all hours worked in excess
of twelve (12) hours per day and to all hours worked in
excess of eight (8) hours on those days worked beyond
the regularly scheduled number of workdays in the writ-
ten agreement.
(1) Prior to the secret ballot vote, any employer who
proposes to institute an alternative schedule shall make a
disclosure in writing to the affected employees, including the
effects of the proposed schedule on the employees’ wages,
hours, and benefits. Such a disclosure shall include meetings
duly noticed, for the specific purpose of discussing the effects
of alternative scheduling. Failure to comply with this section
shall make the election null and void.
(2) Any employer who institutes a regularly scheduled
week of work pursuant to this subsection shall make a
reasonable effort to find an alternative work assignment for
any employee who participated in the vote which authorized
the schedule and is unable or unwilling to work it. An
employer shall not be required to offer an alternative work
assignment to an employee if an alternative work assignment
is not available or if the employee was hired after the
adoption of the alternative schedule.
(3) After a lapse of twelve (12) months and upon
petition of one-third (1/3) of the affected employees, a new
vote by secret ballot shall be held and a two-thirds (2/3) vote
of the affected employees will be required to reverse the
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agreement above. li such agreement is revoked the employer
shall comply within sixty (60) days. Upon a proper showing
by the employer of undue hardship, the Division may grant an
extension of time for compliance.
(4) For purposes of Section 3(B), affected employees
may include all employees in a readily identifiable work unit,
such as a division, a department, a job classification, a shift, a
separate physical location, or a recognized subdivision of any
such work unit. A work unit may consist of an individual
employee as long as the criteria for an identifiable work unit
in this subsection are met.
(C) Provisions of subsections (A) and (B) above shall
not apply to any employee whose earnings exceed one and
one-half (112) times the minimum wage if more than half (’4)
of that employee’s compensation represents commissions.
(D) One and one-half (1%) times a minor’s regular rate
of pay shall be paid for all work over forty (40) hours in any
workweek except that minors sixteen (16) and seventeen (17)
years old who are not required by law to attend school and
may therefore be employed for the same hours as an adult are
subject to subsections (A) or (B) above.
(VIOLATIONS OF CHILD LABOR LAWS are subject
to civil penalties of from $100 to $5,000 as well as to
criminal penalties provided herein. Refer to California Labor
Code Sections 1285 to 1311 and 1390 to 1398 for additional
restrictions on the employment of minors.)
(E) An employee may be employed on seven (7)
workdays in one workweek with no overtime pay required
when the total hours of employment during such workweek
do not exceed thirty (30) and the total hours of employment
in any one workday thereof do not exceed six (6).
(F) If a meal period occurs on a shift beginning or
ending at or between the hours of 10 p.m. and 6 a.m.,
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facilities shall be available for securing hot food or drink or
for heating food or drink; and a suitable sheltered place shall
be provided in which to consume such food or drink.
(G) Except as provided in subsections (D), (F) and (I),
this section shall not apply to any employee covered by a
collective bargaining agreement if said agreement provides
premium wage rates for overtime work and a cash wage rate
for such employee of not less than one dollar ($1.00) per hour
more than the minimum wage.
(H) The provisions of this section are not applicable to
employees whose hours of service are regulated by (1) the
United States Department of Transportation Code of Federal
Regulations, Title 49, Sections 395.1 to 395.13, Hours of
Service of Drivers, or (2) Title 13 of the California Code of
Regulations, Subchapter 6.5, Section 1200 and following
sections, regulating hours of drivers.
(I) No employee shall be terminated or otherwise
disciplined for refusing to work more than 72 hours in any
workweek, except in an emergency as defined in Section 2(D).
* * * *
12. REST PERIODS. Every employer shall authorize and
permit all employees to take rest periods, which insofar as
practicable shall be in the middle of each work period. The
authorized rest period time shall be based on the total hours
worked daily at the rate of ten (10) minutes net rest time per
four (4) hours or major fraction thereof.
However, a rest period need not be authorized for
employees whose total daily work time is less than three and
one-half (3%) hours. Authorized rest period time shall be
counted as hours worked for which there shall be no
deduction from wages.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.