In an interesting case, the CA Court of Appeals (Second District, Division Six) deemed the practice of averaging wages to meet minimum wage requirements, considered acceptable by the FLSA, to be a violation of California minimum wage laws.
In the case, Armenta v. Osmose, Inc., workers were paid well over minimum wage for their “productive” time spent out in the field maintaining utility poles. However during the workday, the workers also had “non-productive” time, during which they cleaned trucks and tools, travelled to another site or did paperwork, for which they were not paid at all. The company, Osmose, argued that when the work week was averaged out, the workers were paid at least a minimum hourly wage, if not more. The Appeals Court disagreed stating:
“As noted in the DLSE opinion, section 1194 is: [Â¶] ‘susceptible to two divergent readings: 1) that the obligation to pay minimum wages attaches to each and every separate hour worked during the payroll period, and that payment must be made for all such hours on the established payday, or 2) that the obligation to pay minimum wages for the total number of hours worked in the pay period is determined “backwards” from the date that any payment is due, without considering any hour (or part of any hour) in isolation.’
“As noted in the opinion letter, . . . federal courts have consistently followed the latter approach. However, . . . California State law differs dramatically from the Federal Labor Standards Act (“FLSA”). As asserted in the opinion letter, . . . the combined force of California Labor Code sections 221, 222, and 223 require a different result under California law. Those statutes clearly prohibit an employer from receiving from the employee, withholding from the employee, or secretly paying to the employee, some amount less than the employee’s actual agreed wages for work performed by the employee.” (Findlaw.com-registration required)
Essentially, the Court said that a California employer may not average wages over time to equal that of minimum wage as this would not provide for an hourly wage. Additionally, the Court noted that Osmose’s “method of “averaging” would permit it to extract lengthy work weeks from its employees without paying them for all hours worked, in violation of “our state’s policy of liberally construing California wage and hour provisions for the benefit of employees.” (Findlaw.com)
The Court found in favor of the workers and awarded to them $90,398.22 for wages and penalties owed plus attorneys’ fees.
Even the courts are saying how liberally they must interpret wage and hour law in favor of the employee. Yet another reason for our out-of-state peers to make fun of California HR. Personally, I love the challenge.