Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_15-cv-00657/USCOURTS-cand-4_15-cv-00657-13/pdf.json

Parties Involved:
Best Buy Stores, L.P.
Defendant
Starvona Harris
Plaintiff

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

STARVONA HARRIS,

Plaintiff,

v.

BEST BUY STORES, L.P.,

Defendant.

Case No. 15-cv-00657-HSG 

ORDER GRANTING IN PART AND 

DENYING IN PART DEFENDANT’S 

MOTION FOR SUMMARY 

JUDGMENT; SETTING CASE 

MANAGEMENT CONFERENCE

Re: Dkt. No. 64

Pending before the Court is Defendant Best Buy Stores, L.P.’s motion for summary 

judgment. Dkt. No. 64. Plaintiff Starvona Harris filed this collective action on February 11, 2015, 

alleging eight causes of action for violations of state and federal labor code provisions. Plaintiff 

was a Best Buy employee from October 2013 to September 2014, and she contends that Defendant 

failed to properly calculate overtime wages, timely pay wages, provide accurate wage statements, 

reimburse business expenses, and satisfy record-production obligations. The pending summary 

judgment motion relates only to Plaintiff’s individual claims. 

After reviewing the materials submitted by the parties, hearing oral argument, and 

considering the issues raised in both, the Court GRANTS IN PART and DENIES IN PART 

Defendant’s motion.

I. FACTS

The basic facts are not in dispute. In addition to hourly wages, Defendant offers

employees in Plaintiff’s position three other types of payment: (1) a short-term incentive (“STI”) 

program that is tied to an individual and store’s performance, (2) the Path to Excellence (“PTE”) 

Program, which gives employees points based on their performance, and (3) an employee discount 

program that gives employees discounts on products and services in the store.

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A. Short-Term Incentive

The parties do not dispute that the STI was a nondiscretionary bonus. See March 24, 2015 

recording of oral argument; see also Dkt. No. 64 at 9-12; Dkt. No. 66 at 12. The STI program was 

tied to individual, store, and company performance. See Dkt. No. 64-9, Ex. A at 1. Defendant

used the following formula to calculate a store associate’s STI bonus: 

= (Store Associate’s Monthly Eligible Earnings for the Fiscal 

Month) x (Store All Channel Revenue Incentive Target Percentage) 

x (Store All Channel Revenue Score1). 

Dkt. No. 64-9, ¶ 9; Dkt. No. 64-9, Ex. A at 7. For purposes of the STI program, an employee’s 

monthly eligible earnings included all regular, overtime, holiday, and other paid leave pay, but did 

not include the value of any discounts or points that employees received through Defendant’s 

employee discount program or the Path to Excellence program. Dkt. No. 64-9, ¶ 9. The fiscal 

year 2015 Store All Channel Revenue Incentive Target was 5% for Plaintiff’s position. Dkt. No. 

64-9, Ex. A at 7. 

Starting in fiscal year 2015, Plaintiff was eligible for the STI payment that was determined 

using the above formula, Dkt. No. 64-9, ¶ 6, and she earned the bonus in fiscal months February, 

March, April, June, and August. Dkt. No. 64-10 at 11. 

B. Path to Excellence

The PTE program allows Defendant’s managers to “recognize employees by awarding 

them points that the employees can use to obtain various products, services, or gift cards.” Dkt. 

No. 64-4, ¶ 3. Defendant values each point at $0.05 per point. Id. at ¶ 5. 

Defendant’s vendor provides and administers the PTE program, classifying points as either 

overtime eligible with the code “Points Rcvd GU” or as not overtime eligible with code “NFLSA 

GU.” Dkt. No. 64-8, ¶ 6. If points were coded as “Points Rcvd GU,” the vendor also provided the 

start and end date of the award earnings period. Id. at ¶ 7. Plaintiff received awards that were 

overtime eligible on July 6, 2014; July 13, 2014; July 15, 2014; July 25, 2014; August 3, 2014; 

and August 6, 2014. Id.; Dkt. No. 69-11 at 30. The only work week that Harris both received an 

 

1

The Store All Channel Revenue Score was the actual All Channel Revenue compared to the 

store’s budgeted All Channel Revenue for that fiscal month. Dkt. No. 64-9, ¶¶ 6, 9; Dkt. No. 64-9,

Ex. A at 4. 

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award of points and worked overtime was July 20-26, 2014; this was for the pay period ending

August 2, 2014, and occurred in the fiscal month of July 2015. Dkt. No. 22-2; Dkt. No. 69-11 at 

30.

C. Employee Discount Policy

The Employee Discount Policy was available to employees after 30 days of continuous 

employment, and it allowed employees “to purchase most products and services at 5% above 

cost.” Dkt. No. 64-8. The policy further stated that the policy was not a contract and could be 

changed or varied in Best Buy’s sole discretion. Additionally, the policy noted the income tax 

consequences of the discount program: 

[T]he IRS considers anything greater than a 20% discount to be 

taxable income. Therefore, you will be taxed on the difference 

between the 20% off price and the 5% above-cost Employee 

Discount price. This amount will appear as Merchandise Recvd on 

your pay statement. 

Id. 

Plaintiff used the discount program a number of times, see Dkt. No. 67, ¶ 9; Dkt. No. 69-

11 at 31, and specifically contests Defendant’s failure to include “Merchandise Recvd” earnings in 

June and August 2014 in the STI calculation for fiscal months June 2015 and August 2015, as well 

as Defendant’s failure to calculate overtime on the merchandise value. Dkt. No. 68, ¶¶ 5-8. 

II. LEGAL STANDARD

Summary judgment is proper if “the pleadings, 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.” Fed. R. 

Civ. P. 56(c).

The Court must view the facts and draw inferences in the manner most favorable to the 

nonmoving party. Chevron Corp. v. Pennzoil Co., 974 F.2d 1156, 1161 (9th Cir. 1992). The 

moving party bears the initial burden of demonstrating the absence of a genuine issue of material 

fact for trial, but it need not disprove the other party’s case. Anderson v. Liberty Lobby, Inc., 477 

U.S. 242, 256 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986).

Once the moving party meets its burden, the “adverse party may not rest upon the mere 

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allegations or denials of the adverse party’s pleading, but the adverse party’s response, by 

affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a 

genuine issue for trial. If the adverse party does not so respond, summary judgment, if 

appropriate, shall be entered against the adverse party.” Fed. R. Civ. P. 56(e); see also Anderson, 

477 U.S. at 248-49. Furthermore, a party cannot create a genuine issue of material fact simply by 

making assertions in its legal papers. There must be specific, admissible evidence identifying the 

basis for the dispute. S.A. Empresa de Viacao Aerea Rio Grandense v. Walter Kidde & Co., Inc., 

690 F.2d 1235, 1238 (9th Cir. 1980). The Supreme Court has held that “[t]he mere existence of a 

scintilla of evidence . . . will be insufficient; there must be evidence on which the jury could 

reasonably find for [the opposing party].” Anderson, 477 U.S. at 252.

III. DISCUSSION

A. First and Second Causes of Action: failure to pay overtime wages under Fair 

Labor Standards Act and under California Labor Code §§ 204, 510, 1198

Defendant seeks summary judgment on Plaintiff’s first and second causes of action for 

unpaid overtime compensation under the Fair Labor Standards Act (“FLSA”) and the California 

Labor Code. 

1. Applicable Law

In addressing whether Defendant properly calculated overtime compensation, the Court 

examines federal and state wage and hour law. While the second cause of action is brought under 

California law, California courts look to federal labor regulations for guidance in the absence of 

controlling or conflicting California law. See Huntington Mem’l Hosp. v. Superior Court, 131 

Cal. App. 4th 893, 903 (2005) (“[E]ven though this case involves California law—the payment of 

overtime for work in excess of eight hours in one day—and federal law requires overtime pay only 

for work exceeding 40 hours in one workweek, federal authorities still provide useful guidance in 

applying state law.” (parenthetical omitted)); see also Marin v. Costco Wholesale Corp., 169 Cal. 

App. 4th 804, 815 (2008), as modified on denial of reh’g (Jan. 21, 2009) (“[N]o California court 

decision, statute, or regulation governs bonus overtime . . . there is no controlling California 

authority apart from the directive that overtime hours be compensated at a rate of no less than one 

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and one-half times the regular rate of pay.”).2 Accordingly, the Court analyzes the first and 

second causes of action by looking to federal law. 

FLSA requires that employees be compensated for all hours worked in excess of forty 

hours each workweek 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). An employee’s regular rate is “the hourly rate actually paid for 

the normal, non-overtime workweek,” and is “obtained by dividing the weekly wage payable for 

the working of the scheduled workweek by the number of hours in such scheduled workweek.” 

149 Madison Ave. Corp. v. Asselta, 331 U.S. 199, 204, modified sub nom. 149 Madison Ave. Corp. 

v. Asselta, 331 U.S. 795 (1947); Brennan v. Valley Towing Co., 515 F.2d 100, 106 (9th Cir. 1975). 

The FLSA defines “regular rate” to include “all remuneration for employment paid to, or on behalf 

of, the employee” unless it falls under one of eight statutory exceptions. 29 U.S.C. § 207(e); see 

also Opinion Letter FLSA, 1997 WL 998000, at *1 (“As a general matter, all remuneration paid to 

employees except that expressly excluded by the FLSA is included in their total compensation 

when computing their regular rate for overtime purposes.”). “Bonuses which do not qualify for 

exclusion . . . must be totaled in with other earnings to determine the regular rate on which 

overtime pay must be based.” 29 C.F.R. § 778.208. “When including these bonuses in the regular 

rate of pay, they must be apportioned back over the workweeks of the period during which they 

may said to have been earned.” Opinion Letter FLSA, 1997 WL 998000, at *1; see 29 C.F.R. 

§ 778.209. 

Alternatively, an employer can calculate overtime compensation without relying on the 

regular rate: § 778.210 permits employers to satisfy FLSA’s overtime compensation requirements 

by calculating the bonus as a “percentage of total earnings” by multiplying the employee’s pay by 

the same fixed percentage of both the employee’s straight-time earnings and overtime earnings. 

§ 778.210; see also Opinion Letter FLSA, 1997 WL 998000, at *1; FLSA 2006-4NA (February 

 

2 Additionally, the California Division of Labor Standards Enforcement (“DLSE”) has adopted the 

Department of Labor regulation in its Enforcement Policies and Interpretation Manual (“DLSE 

Manual”). See DLSE Manual § 49.1.2 (“In determining what payments are to be included in or 

excluded from the calculation of the regular rate of pay, California law adheres to the standards 

adopted by the U.S. Department of Labor to the extent that those standards are consistent with 

California law.”). 

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17, 2006). Section 778.503 similarly provides that a “bonus based on a percentage of total 

wages—both straight time and overtime wages—satisfies the Act’s overtime requirements, if it is 

paid unconditionally. Such a bonus increases both straight time and overtime wages by the same 

percentage, and thereby includes proper overtime compensation as an arithmetic fact.” 29 C.F.R. 

§ 778.503. Under §§ 778.210 and 778.503, the lump sum payment is a simultaneous payment of 

the bonus and overtime compensation on the bonus, satisfying FLSA’s overtime requirements. 

§ 778.210; Opinion Letter FLSA, 1997 WL 998000, at *1. Under this provision, recomputation is 

not needed and the bonus is excluded from the employee’s regular rate of pay for overtime 

purposes. § 778.210; Opinion Letter FLSA, 1997 WL 998000, at *1. 

The parties’ primary dispute relates to the definition of “total earnings” under § 778.210.

Defendant contends that “total earnings” under the percentage of earnings method only includes

straight-time earnings and overtime earnings. Plaintiff relies on Department of Labor (“DOL”) 

opinion letters to argue a broader definition of “total earnings.” For example, the DOL’s February 

5, 2001 letter provides:

[W]here an employer’s payments under a bonus plan are based upon 

a percentage of total earnings of the employee, the payments may be 

excluded from the regular rate of pay if the conditions prescribed in 

29 CFR § 778.210 are met. Under the method of allocation 

discussed in this section, where a bonus is paid as a production 

incentive percentage of the employee’s total compensation, 

including straight time, overtime, bonuses, and commissions, the 

overtime pay due under the FLSA is automatically included and no 

additional computation or payment of overtime is required.

Opinion Letter FLSA, 2001 WL 1558953, at *1 (emphasis added). A September 21, 2004 letter 

contains similar language:

Under the method of allocation discussed in this section, where a 

bonus is paid as a predetermined percentage of an employee’s total 

compensation, including straight-time, overtime, bonuses, and 

commissions, the overtime pay due under the FLSA is automatically 

included and no additional computation or payment of overtime is 

required. However, the employer must pay the same percentage of 

the straight time and overtime earnings.

Opinion Letter FLSA, 2004 WL 3177882, at *1 (emphasis added); see also Opinion Letter FLSA,

2006 WL 4512946, at *1. 

Although the parties’ dispute focuses on the facial differences between § 778.210 and the 

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DOL opinion letters, the Court concludes that the provisions are internally consistent and that a 

plain reading of both supports Plaintiff’s position. To begin with, the Court finds that the 

regulations and opinion letters treat the terms “total earnings,” “total compensation,” and “total 

wages” as synonymous. Although the terms are not expressly defined, the opinion letters and 

§§ 778.210 and 778.503 use the terms interchangeably. For example, § 778.503 does not 

differentiate between wages and earnings, using both “percentage of total wages” and “percentage 

of total earnings” when describing § 778.210. And the letters use “total compensation” and “total 

earnings” interchangeably in the same paragraph, expressly defining total compensation to include 

“straight time, overtime, bonuses, and commissions.” See, e.g., Opinion Letter FLSA, 2001 WL 

1558953; Opinion Letter FLSA, 2004 WL 3177882. 

The DOL’s treatment of these terms as synonymous informs the Court’s analysis. 

Contrary to Defendant’s argument, nothing in the language of § 778.210 defines “total earnings” 

as limited to straight-time and overtime compensation. In the example described in § 778.210, the 

employee received only straight-time earnings and overtime earnings, and thus the percentage of 

“total earnings” was based on the received straight-time and overtime earnings. Moreover, 

§ 778.210 expressly introduces the relevant sentence with “for example” and includes the word 

“may,” thus leaving room for the possibility of additional forms of compensation.3 Accordingly, 

the Court finds that §§ 778.210 and 778.503 simply include one example of how an employer can 

make a simultaneous payment of overtime compensation on a bonus, and that in the opinion 

letters, the DOL delineates the full scope of the definition of “total earnings.” 

The Court cannot ignore the plain language of the regulations and opinion letters. See 

Imada v. City of Hercules, 138 F.3d 1294, 1297 (9th Cir. 1998) (holding that DOL’s opinion 

letters are “normally entitled to a high degree of deference”). The Supreme Court has held:

 

[T]he rulings, interpretations and opinions of the Administrator 

under this Act, while not controlling upon the courts by reason of 

their authority, do constitute a body of experience and informed 

judgment to which courts and litigants may properly resort for 

 

3

“For example, a contract made prior to the performance of services may provide for the payment 

of additional compensation in the way of a bonus at the rate of 10 percent of the employee’s 

straight-time earnings, and 10 percent of his overtime earnings.” § 778.210 (emphases added).

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guidance. The weight of such a judgment in a particular case will 

depend upon the thoroughness evident in its consideration, the 

validity of its reasoning, its consistency with earlier and later

pronouncements, and all those factors which give it power to 

persuade, if lacking power to control. 

Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944). The Court must give deference to the DOL’s 

interpretation of its regulations, Webster v. Pub. Sch. Employees of Washington, Inc., 247 F.3d 

910, 914 (9th Cir. 2001), unless the interpretation is plainly erroneous or inconsistent with the 

regulation, Auer v. Robbins, 519 U.S. 452, 117 (1997). See also In re Farmers Ins. Exch., Claims 

Representatives’ Overtime Pay Litig., 481 F.3d 1119, 1129 (9th Cir. 2007) (“We must give 

deference to the DOL’s interpretation of its own regulations through, for example, Opinion 

Letters.”). Moreover, the Court must interpret the letters in a manner that does not conflict with 

the FLSA and regulations, Adoma v. Univ. of Phoenix, Inc., 779 F. Supp. 2d 1126, 1137 (E.D. Cal. 

2011), and may disregard them only if there is an unresolvable conflict. 

Although perhaps a close call, the Court concludes that the regulations and the opinion 

letters are not fatally inconsistent. Because the agency’s interpretations are entitled to a high 

degree of deference, Imada, 138 F.3d at 1297, and because the Court does not find an unresolvable 

conflict, the Court concludes that the letters and plain language of § 778.210 require an employer 

to multiply an employee’s total earnings (including bonuses not exempted under § 207(e)) by the 

same percentage to satisfy FLSA’s overtime compensation requirements under the “simultaneous 

method.”4

2. Application to Facts of this Case

Plaintiff argues Defendant failed to properly calculate overtime on the STI Bonus, the 

points earned through the PTE program, and the value of the merchandise received through the 

Employee Discount Policy. 

With respect to the STI bonus and the points received, the Court DENIES Defendant’s 

 

4 Defendant also suggests the Court ignore the plain language of the DOL’s letters because they 

“create some confusion,” arguing that § 778.210 does not in fact “involve an exclusion from the 

regular rate at all.” Dkt. No. 72 at 5. But the title of § 778.210’s header refutes Defendant’s 

contention; it reads: 

Subpart C. Payments that May be Excluded from the ‘Regular Rate’ 

Bonuses

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summary judgment motion as Defendant failed to establish that it properly calculated the STI as a 

percentage of total earnings, including all bonuses not falling under a statutory exemption. 

Although Defendant contends in the alternative that under the apportionment method, see 

§ 778.209, Defendant met FLSA’s overtime compensation requirements, the Court finds that there 

is an absence of evidence supporting this contention. It is not clear from the record that the 

amount of the bonuses received in fiscal June 2015 and fiscal August 2015 was properly 

apportioned back over the relevant workweeks.5 

Defendant also argues that summary judgment as to the second cause of action is 

appropriate because § 204 does not create a private right of action against employers. The Court 

agrees that there is no private right of action under § 204. See Johnson v. Hewlett-Packard Co., 

809 F. Supp. 2d 1114, 1136 (N.D. Cal. 2011); Villalpando v. Exel Direct Inc., No. 12-CV-04137 

JCS, 2014 WL 1338297, at *18 (N.D. Cal. 2014). However, the Court does not grant summary 

judgment as to the second cause of action on this basis, because the action also alleges violations 

under §§ 510 and 1198, and Defendant does not contend that there is no private right of action 

under these statutes.6 

With respect to the value of merchandise discounts, the Court GRANTS Defendant’s 

motion, finding that the merchandise discounts fall under a statutory exclusion and that overtime 

compensation was not warranted. 

Although merchandise discounts are not expressly listed as an exemption to the regular 

 

5

The Court rejects Defendant’s additional argument that the Court may credit the premium paid to 

Plaintiff for working holidays against the overtime pay Plaintiff earned in other workweeks. Dkt. 

No. 71 at 3. Defendant does not cite any authority supporting its suggested interpretation of 

§ 207(h). Moreover, other courts including the Ninth Circuit have rejected similar arguments, 

finding that an employer may only credit extra payments against overtime liability accruing in the 

same workweek. See Herman v. Fabri-Centers of Am., Inc., 308 F.3d 580, 589 (6th Cir. 2002); 

Howard v. City of Springfield, 274 F.3d 1141, 1148 (7th Cir. 2001); Haro v. City of Los Angeles, 

745 F.3d 1249, 1260 (9th Cir. 2014) (citing Herman and Howard decisions with approval); Stiller 

v. Costco Wholesale Corp., No. 3:09-CV-2473-GPC-BGS, 2013 WL 5417134, at *3 (S.D. Cal. 

Sept. 26, 2013). The Court finds the reasoning of these decisions compelling, and declines to 

reject them in the absence of authority to the contrary. 

6

The Court notes that although the second cause of action may not proceed on § 204 grounds, the 

allegations that form the basis of § 204 violations may be used to support Plaintiff’s claims under 

California’s Unfair Competition Law and the California Private Attorney General Act. See Byrd 

v. Masonite Corp., No. EDCV 16-35 JGB (KKX), 2016 WL 756523, at *7 (C.D. Cal. 2016).

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rate, the Court finds that such discounts qualify under § 207(e)(1), which expressly excludes from 

the regular rate:

sums paid as gifts; payments in the nature of gifts made at Christmas 

time or on other special occasions, as a reward for service, the 

amounts of which are not measured by or dependent on hours 

worked, production, or efficiency;

§ 207(e)(1). 

Contrary to Plaintiff’s argument, the Court does not read § 207(e)(1) to apply only to sums 

paid on “special occasions.” Rather, the semicolon separates “sums paid as gifts” from “payments 

in the nature of gifts made [on] special occasions,” thereby denoting two alternative means of 

triggering the exemption. 

The federal regulations provide further support as they omit any reference to “special 

occasions.”

(b) Gift or similar payment. To qualify for exclusion under section 

7(e)(1) the bonus must be actually a gift or in the nature of a gift. If 

it is measured by hours worked, production, or efficiency, the 

payment is geared to wages and hours during the bonus period and 

is no longer to be considered as in the nature of a gift. If the 

payment is so substantial that it can be assumed that employees 

consider it a part of the wages for which they work, the bonus 

cannot be considered to be in the nature of a gift. Obviously, if the 

bonus is paid pursuant to contract (so that the employee has a legal 

right to the payment and could bring suit to enforce it), it is not in 

the nature of a gift.

29 C.F.R. § 778.212(b); see also Rau v. Darling’s Drug Store, Inc., 388 F.Supp. 877, 879 (W.D.

Penn. 1975) (finding that merchandise discounts were gifts, not based upon the number of hours 

worked, and thus not compensation to be included in the ‘regular rate’ calculation). 

Here, the Employee Discount Policy became available to employees after 30 days of 

continuous employment, and the policy expressly provided that the discount was not pursuant to a 

contract and could be changed or varied in Best Buy’s sole discretion.

7

 Dkt. No. 64-8. Moreover, 

the discount was available to all employees without any restrictions based on the number of hours 

worked, production, or efficiency. See id. at ¶ 3. The DOL’s interpretative guidance further 

 

7 Although Plaintiff contends that the Employee Discount Policy was pursuant to a contract, 

Plaintiff has offered no evidence to refute the plain language on the face of the Employee Discount 

Policy: “This Policy is not a contract . . . .” See Dkt. No. 64-8. Accordingly, there is no material 

issue in dispute as to this matter. 

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supports this interpretation. See 1962 DOLWH LEXIS 217 (stating that the Division did not 

regard as wages the “discounts on merchandise offered by many retail establishments to their 

employees”); see generally Imada, 138 F.3d at 1297.

Plaintiff relies on cases where the employer offered meal, board and lodging, and tuition 

allowances as support. See Wang v. Chinese Daily News, Inc., 435 F. Supp. 2d 1042, 1057 (C.D. 

Cal. 2006), aff’d 623 F.3d 743 (9th Cir. 2010), cert. granted, judgment vacated, 132 S. Ct. 74 

(2011) (meal allowance); Marshall v. Valhalla Inn, 590 F.2d 306, 308 (9th Cir. 1979) (meal 

allowance); Walling v. Alaska Pac. Consol. Min. Co., 152 F.2d 812, 813 (9th Cir. 1945) (board 

and lodging); Adoma, 779 F. Supp. 2d at 1136 (tuition). The Court does not find these cases 

persuasive, as the cases primarily relate to the applicability of § 207(e)(2) as well as to 

reimbursements for an employee’s “normal everyday expenses,” such as costs incurred “in 

traveling to and from work, buying lunch, paying rent, and the like,” which do enter the regular 

rate calculation. § 778.217(d); see also 29 U.S.C. § 203(m) (“‘Wage’ paid to any employee 

includes the reasonable cost, as determined by the Administrator, to the employer of furnishing 

such employee with board, lodging, or other facilities, if such board, lodging, or other facilities are 

customarily furnished by such employer to his employees.”); Walling, 152 F.2d at 815 (“[I]t seems 

clear that the cost of board and lodging customarily furnished employees must also be included in 

the regular rate, particularly as Section 3(m) of the Act itself specifically provides that ‘wages’

include the reasonable cost of such board and lodging.”). Plaintiff has cited no case relating to 

discounts on store merchandise, and the Court declines to extend the application of the cited cases

to the circumstances here. 

For these reasons, the Court rejects Plaintiff’s contention that Defendant was required to 

pay overtime on the merchandise discounts, and GRANTS summary judgment as to the first and 

second causes of action insofar as the claims are based on the failure to pay overtime on the value 

of merchandise discounts. 

B. Third Cause of Action: failure to pay wages within required time in violation 

of California Labor Code §§ 201, 202, 203

California Labor Code § 201 provides: “If an employer discharges an employee, the wages 

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earned and unpaid at the time of discharge are due and payable immediately.” Cal. Lab. Code 

§ 201(a). Section 202 provides: “If an employee not having a written contract for a definite period 

quits his or her employment, his or her wages shall become due and payable not later than 72 

hours thereafter . . . .” § 202(a). Finally, California Labor Code § 203 provides:

If an employer willfully fails to pay, without abatement or reduction, 

in accordance with Sections 201, 201.3, 201.5, 201.9, 202, and 

205.5, any wages of an employee who is discharged or who quits, 

the wages of the employee shall continue as a penalty from the due 

date thereof at the same rate until paid or until an action therefor is 

commenced; but the wages shall not continue for more than 30 days. 

Cal. Lab. Code § 203 (emphasis added). In this context, willfulness refers to an “intentional [ ] 

fail[ure] or refus[al] to perform an act which was required to be done.” Amaral v. Cintas Corp.

No. 2, 163 Cal. App. 4th 1157, 1201 (2008). “A ‘good faith dispute’ that any wages are due 

occurs when an employer presents a defense, based in law or fact which, if successful, would 

preclude any recovery on the part of the employee. The fact that a defense is ultimately 

unsuccessful will not preclude a finding that a good faith dispute did exist.” Id. See also 

Nordstrom Comm’n Cases, 186 Cal. App. 4th 576, 584 (2010) (“There is no willful failure to pay 

wages [under Section 203] if the employer and employee have a good faith dispute as to whether

and when the wages were due.”).

The parties dispute whether Plaintiff resigned or was discharged. Plaintiff contends that 

she submitted a letter on September 3, 2014, giving Defendant notice that she would resign in two 

weeks. See Dkt. No. 67, ¶ 12; Dkt. No. 67-2. In a letter dated September 16, 2014, Defendant 

informed Plaintiff that her employment was terminated effective September 13, 2014 and that her 

final pay had been paid through the regular payout method. Dkt. No. 67-3. A screenshot attached 

to Plaintiff’s declaration shows that Plaintiff was paid on September 16, 2014. Dkt. No. 67-4. 

Citing deposition testimony of Best Buy employees, Defendant contends that Best Buy paid 

Plaintiff her final wages on September 15, 2014, three days after Plaintiff allegedly resigned. See 

Dkt. No. 64-2 at 12 (“Q [T]he date of direct deposit for her would have been the 16th or the 15th? 

A The 15th.”); id. at 14 (“On September 12th Star was scheduled to work a full shift. She decided 

midway through her shift that she didn’t want to work there anymore . . . and she left.”). 

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Defendant contends that § 202(a) gives employees three days to pay employees after they 

resign and that because Best Buy paid her on September 15, Plaintiff has no claim for untimely 

payment of her final paycheck. On the other hand, Plaintiff argues that she was terminated on 

September 13, 2014. The statute requires payment of final wages immediately when an employer 

is terminated. Thus, if Plaintiff was in fact terminated and Best Buy did not pay her final wages 

until September 16, 2014, Plaintiff would be entitled to penalties under § 203. 

The Court finds summary judgment inappropriate as to this cause of action. First, this 

cause of action is derivative of her overtime compensation allegations, which have largely 

survived summary judgment. Second, there remain genuine issues of material fact as to (1) 

whether Best Buy terminated Plaintiff or whether she resigned, and (2) whether Plaintiff received 

her final wages on September 15 or September 16.8 And, third, there also remain genuine issues 

of material fact as to the existence of a good faith dispute that would preclude Plaintiff’s recovery. 

Accordingly, summary judgment as to this cause of action is DENIED.

C. Fourth Cause of Action: failure to provide itemized wage statements in 

violation of California Labor Code § 226

California Labor Code § 226 requires an employer at the time that wages are paid to 

provide an accurate itemized statement that contains nine items. See Cal. Labor Code § 226(a).

To recover under § 226(e), a plaintiff must show: (1) a violation of § 226(a) that (2) was knowing 

and intentional, and (3) an injury suffered as a result of the violation. See Novoa v. Charter 

Commns., Inc., 100 F.Supp.3d 1013, 1025 (N.D. Cal. 2015). A violation of § 226 is “knowing and 

intentional” when the employer actually knows that it has omitted from a pay statement any item 

required by § 226(a); it is not enough merely to prove a violation of § 226(a). See Willner v. 

Manpower Inc., 35 F.Supp.3d 1116, 1131 (N.D. Cal. 2014); see also Novoa, 100 F.Supp.3d at 

1028. A plaintiff suffers an injury for purposes of § 226(e) if: (1) the employer fails to provide a 

wage statement altogether; or (2) the employer omits an item required by § 226(a) and the 

employee “cannot promptly and easily determine from the wage statement alone” one of four 

 

8

The Court rejects Defendant’s sham affidavit argument, as it cannot conclude on this record that 

Plaintiff’s assertions were made solely to create an issue of material fact and avoid summary 

judgment. See Kennedy v. Allied Mut. Ins. Co., 952 F.2d 262, 267 (9th Cir. 1991).

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enumerated categories of information. See Cal. Lab. Code § 226(e)(1), (2); Derum v. Saks & Co., 

95 F.Supp. 3d 1221, 1229 (S.D. Cal. 2015). 

Here, Plaintiff argues that her managers failed to timely approve her manual and corrective 

time entries to the company’s electronic timekeeping system. Because of the delayed approval, 

Plaintiff contends that her wage statements for pay periods in February and March 2014 are 

inaccurate as they do not reflect the actual hours worked, or gross wages and net wages earned. 

The Court finds there remain genuine issues of material fact, including, for example, 

whether the manager’s failure to approve the manual entries was knowing and intentional. 

Additionally, insofar as Plaintiff’s fourth cause of action relies on Defendant’s alleged failure to 

pay overtime wages, the argument is derivative of her first and second causes of action, making 

summary judgment inappropriate here. Accordingly, the Court DENIES summary judgment as to 

the fourth cause of action. 

D. Fifth Cause of Action: failure to reimburse business expenses in violation of 

California Labor Code § 2802

Section 2802 provides that “an employer shall indemnify his or her employee for all 

necessary expenditures or losses incurred by the employee in direct consequence of the discharge 

of his or her duties, or of his or her obedience to the directions of the employer.” Cal. Lab. Code

§ 2802. “[T]he term ‘necessary expenditures or losses’ shall include all reasonable costs.” Id. 

Plaintiff contends that her managers instructed her to use her personal cell phone to call 

customers and the distribution warehouse, and to use her phone to look up information on the 

company website. Dkt. No. 67, ¶ 11. According to Plaintiff, her manager informed her that she 

would not be reimbursed for her cell phone expenses and that there was no policy providing for 

reimbursement of such non-travel expenses. Id. As a result, she did not submit a reimbursement 

request and was not reimbursed for the amount she spent on her personal cell phone. Id. 

The Court DENIES summary judgment, as there remain genuine issues of material fact 

regarding whether Plaintiff’s cell phone use was necessary and reasonable. 

E. Sixth Cause of Action: unfair competition in violation of Business and 

Professions Code § 17200

Section 17200 of the Business and Professions Code, also known as California’s Unfair 

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Competition Law (“UCL”), prohibits certain “unlawful, unfair or fraudulent business act[s] or 

practice[s].” Cal. Bus. & Prof. Code § 17200. The UCL “borrows violations from other laws by 

making them independently actionable as unfair competitive practices.” Korea Supply Co. v. 

Lockheed Martin Corp., 29 Cal.4th 1134, 1143 (2003). “A UCL action is equitable in nature; 

damages cannot be recovered. . . . ‘Prevailing plaintiffs are generally limited to injunctive relief 

and restitution.’” Id. at 1144 (citations omitted); see also Cortez v. Purolator Air Filtration 

Products Co., 23 Cal. 4th 163, 173, (2000) (“[C]ompensatory damages are not available in a UCL 

action.”). Accordingly, Plaintiff’s UCL cause of action only survives if the remaining derivative 

claims are equitable in nature. 

To the extent Plaintiff’s UCL claim is based on her allegations that Defendant failed to

provide an accurate wage statement, the Court determines that § 226 provides for penalties rather 

than restitution and that because Plaintiff seeks penalties here, see Dkt. No. 59, ¶ 41, § 226 cannot 

be the predicate violation for the UCL claim.9 See Brewer v. Gen. Nutrition Corp., No. 11-CV3587 YGR, 2015 WL 5072039, at *7 (N.D. Cal. Aug. 27, 2015) (“[T]he complaint seeks 

“damages and penalties” for the violations of section 226(a), which do not fall under the rubric of 

restitutionary relief provided by the UCL.”); Ordonez v. Radio Shack, No. CV 10–7060 CAS 

MANX, 2011 WL 499279, at *6 (C.D. Cal. Feb. 7, 2011) (“Section 226(e) on its face provides for 

penalties rather than restitution and therefore cannot be the predicate violation on which to base[] 

plaintiff’s UCL claim.”). 

Similarly, the Court finds that the UCL claim may not rely on § 203 as a basis. See Pineda 

v. Bank of Am., N.A., 50 Cal. 4th 1389, 1402 (2010) (holding “section 203 penalties cannot be 

recovered as restitution under the UCL”). 

Finally, the Court finds that the UCL claim may be maintained to the extent it is predicated 

on Plaintiff’s § 2802 claim. See Ordonez, 2011 WL 499279, at *6 (“The Court further concludes 

 

9

Plaintiff cites Willner v. Manpower Inc., 35 F. Supp. 3d 1116, 1133 (N.D. Cal. 2014) and Fobroy 

v. Video Only, Inc., No. C-13-4083 EMC, 2014 U.S. Dist. LEXIS 160365, at *14 (N.D. Cal. Nov. 

14, 2014), for support. Because neither case recognizes the equitable requirement for predicate 

claims in a UCL action or offers reasoning distinguishing Cortez and Korea Supply, the Court 

respectfully declines to follow Willner and Fobroy here. 

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that the UCL claim may be maintained to the extent it is predicated on plaintiff’s claim under 

Sections 221 and 2802.”); Nelson v. Dollar Tree Stores, Inc., No. 2:11-CV-01334 JAM, 2011 WL 

3568498, at *5 (E.D. Cal. Aug. 15, 2011) (“[P]reviously incurred expenses may be recovered as 

restitution under the UCL.”); Brandon v. Nat’l R.R. Passenger Corp. Amtrak, No. CV 12-5796 

PSG VBKX, 2013 WL 800265, at *4 (C.D. Cal. Mar. 1, 2013) (holding that where unreimbursed 

business expenses are restitutionary, they are recoverable under the UCL); Woo v. Home Loan 

Group, L.P., 2007 WL 6624925 at *4 (S.D. Cal. Jul. 27, 2007). Accordingly, Plaintiff’s UCL 

cause of action survives insofar as it relies on § 2802 violations as the predicate. 

F. Seventh Cause of Action: failure to produce personnel file and employment 

records in violation of California Labor Code §§ 226(b), (c), 432, 1198.5

The seventh cause of action contests Defendant’s alleged failure “to timely produce 

Harris’s wage statements or a computer-generated equivalent, and a letter terminating Harris’ 

employment.” Dkt. No. 66 at 24. Plaintiff relies on three California labor code provisions. First, 

§ 226(b) gives current and former employees a right to inspect or copy their employment records, 

and § 226(c) requires that the employer comply with a § 226(b) request as soon as practicable, but 

no later than 21 calendar days from the date of the request. Cal. Lab. Code § 226(b), (c).

Second, § 1198.5 provides that “[e]very current and former employee . . . has the right to 

inspect and receive a copy of the personnel records that the employer maintains relating to the 

employee’s performance or to any grievance concerning the employee.” Cal. Lab. Code § 1198.5. 

The employer must make the contents of the personnel records available for inspection at a 

reasonable time, but no later than 30 days from the request. Id.

Finally, under § 432, “[i]f an employee . . . signs any instrument relating to the obtaining 

or holding of employment, he shall be given a copy of the instrument upon request.” See Cal. 

Lab. Code § 432.

Plaintiff made a written request in November 2014 for documents including her wage 

statements, payroll records, personnel files, and documents that relate to her holding or obtaining 

employment. Dkt. No. 69-14, Ex. L. Although in December 2014, Defendant produced some 

documents in response to Plaintiff’s request, see Dkt. No. 64-2, Ex. G, Plaintiff argues that 

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Defendant failed to produce all required documents, including Plaintiff’s wage statements and 

termination letter. Defendant moves for summary judgment as to all three labor code provisions.

To begin with, the Court agrees with Defendant that summary adjudication as to § 432 is 

appropriate. While §§ 226(c) and 1198.5 expressly include “former employees,” the plain 

language of § 432 limits applicability to “employees or applicant[s],” omitting any reference to 

former employees. See Arizona Elec. Power Co-op., Inc. v. United States, 816 F.2d 1366, 1375 

(9th Cir. 1987) (“When Congress includes a specific term in one section of a statute but omits it in 

another section of the same Act, it should not be implied where it is excluded.”); Briggs v. Eden 

Council for Hope & Opportunity, 19 Cal. 4th 1106, 1117 (1999) (“Where different words or 

phrases are used in the same connection in different parts of a statute, it is presumed the 

Legislature intended a different meaning.”). Because Plaintiff does not dispute that the request for 

records was made after Plaintiff was no longer an employee, § 432 cannot apply here.

With respect to § 1198.5, the Court DENIES Defendant’s motion, declining to interpret the 

term “personnel records” in a hyper-technical fashion. Common sense dictates that a termination 

letter “relates to” an employee’s performance and that any failure to produce such letter within 30 

days of the request would trigger liability under § 1198.5. See generally Wellpoint Health 

Networks, Inc. v. Superior Court, 59 Cal. App. 4th 110, 124 (1997) (“[Section 1198.5] intends a 

broad definition of ‘personnel file’ to preclude employers from assigning documents to files 

having some other name, and then refusing access to the documents on the ground that they are 

not contained in the ‘personnel file.’”).

Finally, with respect to § 226(b), the Court finds there remains a genuine issue of material 

fact as to whether Defendant’s December 2014 production of the payroll register records fully 

satisfied the § 226(a) requirements relating to Plaintiff’s wage statements. Accordingly, the Court 

DENIES Defendant’s motion as to the seventh cause of action to the extent it relies on §§ 226(b)

and 1198.5.

G. Eighth Cause of Action: violation of Private Attorney General Act 

Plaintiff’s final cause of action asserts a claim under the California Private Attorney 

General Act (“PAGA”) on behalf of “herself and other current and former employees” of 

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Defendant. Dkt. No. 59, ¶ 66. Under PAGA, “any provision of [the Labor Code] that provides for 

a civil penalty to be assessed and collected by the Labor and Workforce Development Agency

[LWDA] . . . may, as an alternative, be recovered by an aggrieved employee on behalf of himself 

or herself and current or former employees.” Cal. Lab. Code § 2699(a). “Recovery of civil 

penalties under the act requires proof of a Labor Code violation.” Arias v. Superior Court, 46 Cal. 

4th 969, 987 (2009). 

Before an employee can commence a civil action under PAGA, the follow requirements 

must be met. 

A civil action by an aggrieved employee pursuant to subdivision (a) 

or (f) of Section 2699 alleging a violation of any provision listed in 

Section 2699.5 shall commence only after the following 

requirements have been met . . . . The aggrieved employee or 

representative shall give written notice by online filing with the 

Labor and Workforce Development Agency and by certified mail to 

the employer of the specific provisions of this code alleged to have 

been violated, including the facts and theories to support the alleged 

violation.

Cal. Lab. Code § 2699.3(a). The complaining employee may only file suit after the LWDA gives 

notice that it has decided not to investigate or cite the employer for the alleged violations (or if the 

LWDA does not act within certain time deadlines). Cal. Lab. Code § 2699.3(a)(2)(B). These 

administrative procedures must be exhausted before the civil suit may proceed. See Caliber 

Bodyworks, Inc. v. Superior Court, 134 Cal.App.4th 365, 382 (Cal.App.2d Dist. 2005) 

(“[P]laintiffs were required to comply with section 2699.3, subdivision (a)’s administrative 

procedures before pursuing causes of action for civil penalties based on violations of Labor Code 

provisions specified in section 2699.5. Their failure to plead compliance as to the causes of action 

seeking only civil penalties is fatal to those claims.”).

Defendant contends that summary judgment is appropriate on two bases. First, it argues 

that Plaintiff cannot bring a PAGA claim for the failure to produce personnel and payroll records 

because Plaintiff failed to give LWDA notice of that specific claim. Second, it argues that because 

Plaintiff’s “PAGA claim is entirely dependent on her other untenable claims, [Defendant] is 

entitled to summary judgment on this claim.” 

The Court rejects both bases. The only remaining statutes underlying Plaintiff’s allegation 

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of failure to produce personnel and payroll records are §§ 226(b) and (c), and § 1198.5. The 

notice requirements of § 2699.3(a) do not apply to §§ 226(b) and (c), or § 1198.5. See Cal. Lab. 

Code § 2699.5. Moreover, because several of Plaintiff’s predicate claims have survived summary 

judgment, the second basis does not apply. Accordingly, summary judgment as to the eighth 

cause of action is DENIED. 

IV. CONCLUSION

For the reasons stated, Defendant’s motion for summary judgment is GRANTED IN 

PART and DENIED IN PART. The parties are directed to attend a case management conference 

set for August 16, 2016 at 2:00 p.m. to discuss the setting of case deadlines. 

IT IS SO ORDERED.

Dated:

HAYWOOD S. GILLIAM, JR.

United States District Judge

8/1/2016

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