Filed 6/26/14

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

BRENDA LEIGH VON NOTHDURFT,

Plaintiff and Appellant,

v.

JOHN STECK et al.,

Defendants and Respondents.

F066608

(Super. Ct. No. 12 CECG 01394)

OPINION

APPEAL from a judgment of the Superior Court of Fresno County. Carlos A. 

Cabrera, Judge.

Law Offices of Kenneth F. Moss and Kenneth F. Moss for Plaintiff and Appellant.

Gilmore, Wood, Vinnard & Magness, Daniel W. Rowley for Defendants and 

Respondents.

-ooOooJohn Steck hired Brenda Leigh Von Nothdurft to work as a resident manager at an 

apartment complex he owned. The two of them signed a management agreement which 

provided that Von Nothdurft would be compensated by, among other things, “[f]ree rent 

of a three bedroom apartment during the term as manager.” Believing she had not been 

adequately compensated, she sought to recover wages for all of her work without 

deduction for her free apartment. 
2.

Von Nothdurft can’t have it both ways. We conclude the parties’ agreement 

satisfies the requirements of the applicable wage order to allow Steck to take a rental 

credit against Von Nothdurft’s wages, so we affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

Steck, a retired engineer living in San Jose, California, owns an apartment 

building in Clovis. In 2009, he needed to hire a manager for the apartments, so he placed 

an ad on Craig’s List. Von Nothdurft responded to the ad; at the time, she was a resident

of the apartments, renting a three bedroom unit for $955 per month. 

Steck decided to hire Von Nothdurft, effective October 1, 2009. Steck presented 

Von Nothdurft with a written agreement which provided that she would be compensated 

for her services as manager by “(1) free rent for her apartment, (2) $100 per month 

toward utility expenses, (3) one telephone line, and (4) an Internet high speed 

connection.” At that time, neither party was aware of the requirements of Wage Order 

No. 5-2001. When Steck presented the agreement, entitled “Residential Rental Property 

Management Agreement,” to Von Nothdurft, he told her it was the written agreement for 

her job, and asked her to review it and let him know if there were any changes she would 

like to make. Von Nothdurft did not suggest any changes. 

Von Nothdurft testified at trial that she felt she had no alternative but to accept the 

terms offered in order to get the job. Early in her employment, Steck gave her a copy of 

a book entitled “California Landlord’s Law Book[,]” which she had used as a reference 

but had not read cover to cover. Steck testified at trial that he acquired the apartment 

building in 1992 as a retirement investment. He had used essentially the same 

management agreement with other persons he had hired previously to manage the 

apartments and never had any problems or complaints until this case. Steck 

acknowledged that he was aware he had to pay his employees minimum wage. 

In April 2010, Von Nothdurft filed a complaint against Steck with the California 

Labor Commissioner, alleging Steck had not adequately compensated her pursuant to 
3.

California labor law, specifically Wage Order No. 5, which requires payment of a 

minimum wage of $8 per hour. Von Nothdurft also sought liquidated damages and 

penalties. Following a hearing, the Labor Commissioner found, among other things, that 

Steck was entitled to a credit of $451.89 per month for the free apartment provided Von 

Nothdurft, pursuant to the maximum allowed by the wage order against the wages owed 

Von Nothdurft. 

At the conclusion of the Labor Commissioner proceedings, the parties settled Von 

Nothdurft’s claims with the exception of whether Steck was entitled to a credit against his 

minimum wage obligations for the free rent given Von Nothdurft during her employment. 

Von Nothdurft appealed the Labor Commissioner’s decision to Fresno County 

Superior Court, where a trial de novo was held. Before evidence was presented, the 

parties stipulated that Von Nothdurft had worked 2,496 hours for Steck between October 

1, 2009 and December 31, 2011, and that all issues regarding wages, bonuses, and utility 

expenses had been settled and fully paid by Steck before trial. 

After testimony was received and closing arguments made, the court took the case 

under submission. The court subsequently issued a written decision, in which it 

explained the issue before it – whether Steck was entitled to take a credit for the rent free 

apartment provided Von Nothdurft against the wages owed her – turned on whether the 

hiring agreement the parties signed meets the definition of a “voluntary written 

agreement” as set forth in Section 10 of the Wage Order. The court found that while the 

parties were unaware of the statutory minimum wage requirements when the agreement 

was signed, “it is clear that both parties intended that the waiver of rent for the apartment 

was to be compensation for [Von Nothdurft]’s work. Both parties signed the agreement 

voluntarily without coercion and [Von Nothdurft] did receive use of the apartment rent 

free, for the time in question. It is this Court’s opinion that the signed agreement does 

meet the definition of the Wage Order and, therefore, [Steck] is entitled to the allowed 

credit for the benefit conferred upon [Von Nothdurft].” 
4.

DISCUSSION

The sole issue before us, as set forth in the settled statement, is: “Does the written 

agreement between the parties satisfy the requirements of Wage Order [No.] 5-2001 (as 

amended)[,] Paragraph 10, sufficiently to permit Defendant/Respondent Steck to take a 

credit of $451.89 per month against Plaintiff/Appellant Von No[]thdurft’s right to receive 

minimum wage?” 

 The resolution of this issue turns on the interpretation of Industrial Welfare 

Commission (IWC) wage order No. 5-2001 (Cal. Code Regs., tit. 8, § 11050), commonly 

known as Wage Order 5. Wage Order 5 contains rules governing how resident managers 

of apartment houses and motels must be paid, including the circumstances under which 

an employer may credit lodging toward a resident manager’s pay. (Brewer v. Patel 

(1993) 20 Cal.App.4th 1017, 1020 [explaining Wage Order No. 5-89, a prior version of 

Wage Order No. 5-2001] (Brewer).) As explained in Brewer, Wage Order 5 “first states 

that compensation must be paid for ‘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 . . . .’ This language describes the general principle applicable in all hourly 

employment contexts and means that an employee must be paid for the time he is at 

work. [¶] [The wage order] then mandates a special rule for apartment managers and 

motel clerks who are obligated to reside on the work premises. In that situation, only 

‘that time spent carrying out assigned duties shall be counted as hours worked.’” 

(Brewer, supra, 20 Cal.App.4th at p. 1021.) Thus, a resident apartment manager must be 

compensated only for work the manager actually provides. (Ibid.)

Wage Order 5 also provides, as applicable here: “. . . lodging may not be credited 

against the minimum wage without a voluntary written agreement between the employer 

and the employee. When credit for . . . lodging is used to meet part of the employer’s 

minimum wage obligation, the amounts so credited may not be more than . . . two-thirds 

(2/3) of the ordinary [apartment] rental value, and in no event more than . . . $451.89 per 
5.

month [effective January 1, 2008].” (Cal. Code Regs., tit. 8, § 11050, subd. 10(C), as 

amended and republished by the Dept. of Industrial Relations, effective January 1, 2007 

pursuant to AB 1835, Chap. 230, Stats. 2006 (subd. 10(C).) Wage Order 5 prohibits the 

employer from charging rent in excess of this value where the apartment is provided as a 

condition of employment. (Cal. Code Regs., tit. 8, § 11050, subd. 10(E).)1

Here, Von Nothdurft’s management agreement provides:

“4. Manager shall be compensated as follows[:]

“a) Free rent of a 3-bedroom apartment during the term as manager. The 

initial value of this compensation is $955 per month.

“b) $100 per month toward utility expenses.

“c) One telephone line costs, less any personal long distance charges.

“d) Internet high speed connection.” 

Von Nothdurft argues this provision does not satisfy the legal requirements to 

credit rent towards minimum wage as a matter of law because it does not mention 

minimum wage, does not provide for recording of hours worked, and purports to value 

the lodgings in an amount in excess of the maximum allowed by the wage order. Von 

 

1 These provisions of Wage Order 5 are to be read alongside Labor Code section 

1182.8, which provides: “No employer shall be in violation of any provision of any 

applicable order of the Industrial Welfare Commission relating to credit or charges for 

lodging for charging, pursuant to a voluntary written agreement, a resident apartment 

manager up to two-thirds of the fair market rental value of the apartment supplied to the 

manager, if no credit for the apartment is used to meet the employer’s minimum wage 

obligation to the manager.” (See Brock v. Carrion, Ltd. (E.D.Cal. 2004) 332 F.Supp.2d 

1320, 1328 (Brock).) “[S]ection 1182.8 governs where an employer does not credit 

lodging against minimum wages, and Wage Order No. 5 applies when an employer does 

seek to impose such a credit.” (Brock, supra, 332 F.Supp.2d at p. 1328.) Since the 

employment agreement here included free rent as part of Von Nothdurft’s compensation, 

she is subject to the crediting provision of Wage Order 5, not the limitation on rental 

charges for managers under Labor Code section 1182.8.
6.

Nothdurft also asserts the agreement is unenforceable because it is unconscionable and an 

adhesion contract.

Wage and hour claims are governed by “two complementary and occasionally 

overlapping sources of authority: the provisions of the Labor Code, enacted by the 

Legislature, and a series of 18 wage orders, adopted by the IWC.” (Brinker Restaurant 

Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1026 (Brinker).) “We apply the usual 

rules of statutory interpretation to the Labor Code, beginning with and focusing on the 

text as the best indicator of legislative purpose.” (Ibid.) “In turn, the IWC’s wage orders 

are entitled to ‘extraordinary deference, both in upholding their validity and in enforcing 

their specific terms.’ (Martinez v. Combs [(2010)] 49 Cal.4th [35,] 61.) When a wage 

order’s validity and application are conceded and the question is only one of 

interpretation, the usual rules of statutory interpretation apply.” (Brinker, supra, 53 

Cal.4th at p. 1027; see also California State Restaurant Assn. v. Whitlow (1976) 58 

Cal.App.3d 340, 344 (Whitlow).) The provisions of both the Labor Code and the wage 

orders are to be liberally construed with an eye to promoting employee protections, and 

must be interpreted in the manner that best effectuates that protective intent. (Brinker, 

supra, 53 Cal.4th at pp. 1026-1027.)

“‘The fundamental purpose of statutory construction is to ascertain the intent of 

the lawmakers so as to effectuate the purpose of the law.’ [Citation.] To determine the 

intent, the court turns first to the words, attempting to give effect to the usual, ordinary 

import of the language and to avoid making any language mere surplusage. [Citations.] 

When the language is clear, we must apply that language without further interpretation. 

[Citation.] ‘If there is no ambiguity in the language of the statute, “‘then the Legislature 

is presumed to have meant what it said, and the plain meaning of the language 

governs.”’” (Singh v. Superior Court (2006) 140 Cal.App.4th 387, 392 (Singh).)

Wage Order 5 does not define the phrase “voluntary written agreement” as used in 

subdivision 10(C) or otherwise specify that any particular terms must be included in such 
7.

an agreement to permit a valid lodging credit – it requires only a “voluntary written 

agreement between the employer and the employee” without qualification. Under its 

plain terms, no express reference to a credit toward minimum wage, statement that the 

employee is entitled to minimum wage for every hour worked, or the precise amount to 

be credited, need be included as long as the parties understand and agree – as they did 

here by entering into the management agreement – that lodging is to be credited toward 

the employee’s compensation. Since the wage order’s language is clear, we apply it 

without further interpretation.

Despite the plain language of subdivision 10(C), Von Nothdurft urges us to read 

requirements into the subdivision that are not there or that are not supported by law, 

citing to extrinsic aids such as the policies behind the wage orders. It is only where 

regulatory language is ambiguous and susceptible of more than one reasonable meaning, 

however, that we consider “‘extrinsic aids, including the ostensible objects to be 

achieved, the evils to be remedied, the legislative history, public policy, 

contemporaneous administrative construction, and the statutory scheme of which the 

statute is a part.’” (Singh, supra, 140 Cal.App.4th at p. 393.) Subdivision 10(C) is not 

ambiguous and Von Nothdurft admits as much, stating in her reply brief that she “does 

not seek to have the Court declare [subdivision] 10(C) to be ambiguous.” Accordingly, 

we do not resort to extrinsic aids in our analysis.

Von Nothdurft next asserts that, in interpreting subdivision 10(C), we should look 

to a January 29, 1992 opinion letter from the Division of Labor Standards Enforcement 

(DLSE), which responded to an inquiry regarding the requirements for an “explicit wage 

agreement” under California law.2 As one appellate court explained such agreements, 

 

2 “The DLSE is the state agency empowered to enforce California’s wage and 

hour laws, including IWC wage orders.” (Gonzalez v. Downtown LA Motors (2013) 215 

Cal.App.4th 36, 46 fn. 4.)
8.

generally “a fixed salary for an irregular workweek does not compensate an employee for 

statutory overtime work unless the parties have entered into an explicit, mutual wage 

agreement. [Citations.] The exception to that general rule requires an agreement which 

specifies the basic hourly rate of compensation upon which the guaranteed salary is based 

before the work is performed, and the employee must be paid at least one and one-half 

time the agreed-upon rate for hours in excess of forty.” (Ghory v. Al-Lahham (1989) 209 

Cal.App.3d 1487, 1491 (Ghory).)3

Von Nothdurft contends that, like explicit wage agreements, her agreement was 

required to set forth the specifics of her compensation, namely the relationship between 

the lodging credit, actual hours worked and the minimum wage. But explicit wage 

agreements have no bearing on the interpretation of subdivision 10(C), which does not 

include any such requirement in order for the employer to take a lodging credit against 

the employee’s compensation. Instead, all that is required is that the employer and 

employee voluntarily agree to credit lodging against the employee’s wages. For this 

reason, her reliance on cases involving explicit wage agreements, such as Hernandez v. 

Mendoza (1988) 199 Cal.App.3d 721 and Ghory, supra, 209 Cal.App.3d 1487, is 

misplaced. 

Von Nothdurft asserts that without more specificity in the “voluntary written 

agreement between the employer and employee,” the employee is not put on notice of the 

facts that (1) the employee is entitled to be paid minimum wage, (2) in fulfilling the 

employer’s duty to be paid minimum wage, a credit is being taken for providing an 

apartment, and (3) the credit is in an amount legally permitted by the wage order. Von 

Nothdurft reasons that any other interpretation does not promote the protection and 

benefit of employees. But we cannot add to subdivision 10(C) requirements that are not 

 

3 As Steck notes, the Legislature amended Labor Code section 515 in 2012 to 

effectively prohibit such agreements. (Stats. 2012, ch. 820, § 2 (AB 2103).)
9.

there. (See Wells Fargo Bank v. Superior Court (1991) 53 Cal.3d 1082, 1097 [“a statute 

‘. . . is to be interpreted by the language in which it is written, and courts are no more at 

liberty to add provisions to what is therein declared in definite language than they are to 

disregard any of its express provisions.’”]; Code Civ. Proc., § 1858 [“[i]n the 

construction of a statute or instrument, the office of the Judge is simply to ascertain and 

declare what is in terms or in substance contained therein, not to insert what has been 

omitted, or to omit what has been inserted; . . .”].)

Von Nothdurft next contends the management agreement is an unconscionable and 

illegal contract of adhesion. She asserts the agreement is unconscionable because it 

(1) contains a “blatantly illegal term” in the form of the statement that her compensation 

would be the value of her apartment, $955, which the trial court impermissibly rewrote 

when it allowed Steck to take a rental credit of $451.89 per month, and (2) she was 

illegally required to “purchase her apartment at the rate of $955 per month . . . instead of 

receiving her wages on an hourly basis[,]” in violation of Labor Code section 450, 

subdivision (a). 

Steck responds that Von Nothdurft is precluded from raising these issues because 

they were not identified in the settled statement. When oral proceedings are not reported 

or cannot be transcribed, an appellant may proceed by way of a settled statement in lieu 

of a reporter’s transcript. (Cal. Rules of Court, rule 8.137(a).)4 To do so, the appellant 

must file a motion in superior court to use a settled statement and, if the motion is 

granted, must serve and file in the superior court “a condensed narrative of the oral 

proceedings that the appellant believes necessary for the appeal. . . .” (Rule 8.137(b)(1).) 

“If the condensed narrative describes less than all the testimony, the appellant must state 

the points to be raised on appeal; the appeal is then limited to those points unless, on 

motion, the reviewing court permits otherwise.” (Rule 8.137(b)(2).) 

 

4 Subsequent references to Rules are to the California Rules of Court.
10.

Stating the points to be raised on appeal enables the respondent to determine 

whether additional portions of the oral proceedings should be included in the settled 

statement. (See Ermoian v. Desert Hosp. (2007) 152 Cal.App.4th 475, 497 [discussing 

former Rule 4, now Rule 8.130(a)(2), which provides that if an appellant lists less than all 

of the testimony in his or her notice designating the reporter’s transcript, the notice must 

state the points to be raised on appeal and the appeal is limited to those points].) Failure 

to include issues in the settled statement precludes the appellant from raising them on 

appeal. (Marogna v. Mitchell (1951) 104 Cal.App.2d 799, 805-806.)

Here, the settled statement specifically identifies the one issue Von Nothdurft 

would raise on appeal, namely whether the “written agreement between the parties 

satisf[ies] the requirements of Wage Order 5-2001 (as amended) Paragraph 10, 

sufficiently to permit . . . Steck to take a credit of $451.89 per month against . . .Von 

No[]thdurft’s right to receive a minimum wage?” Thus, this appeal is limited to the 

determination of whether the agreement satisfies the requirements of subdivision 10 of 

Wage Order 5. Nothing in the statement implies or suggests the issues to be presented on 

appeal would include a challenge to the validity of the entire agreement based on 

unconscionability or adhesion.

In reply, Von Nothdurft asserts that the issues of unconscionability and adhesion 

are encompassed within the stated issue. She reasons that since the issue before us is 

whether the written agreement satisfies the requirements of subdivision 10, which 

requires a “voluntary written agreement,” she can show that the agreement was not 

“voluntary” if she can demonstrate it is unconscionable or an adhesion contract. Whether 

a contract is voluntarily entered into and whether it is adhesive or unconscionable, 

however, are two separate issues. Unconscionability provides a basis for refusing to 

enforce a contract which the court finds, as a matter of law, to have been unconscionable 

when it was made. (Code Civ. Proc., § 1670.5, subd. (a).) It does not determine whether 
11.

an agreement was voluntary. Here, the trial court specifically found that “[b]oth parties 

signed the agreement voluntarily without coercion.” 

Even were we to consider the issue, it fails for the simple reason that the 

management agreement is not procedurally unconscionable. Unconscionability consists 

of both procedural and substantive elements; the procedural element addresses the 

circumstances of contract negotiation and formation, focusing on oppression and surprise 

due to unequal bargaining power, while the substantive element pertains to the fairness of 

the agreement’s actual terms. (Pinnacle Museum Toward Assn. v. Pinnacle Market 

Development (US), LLC (2012) 55 Cal.4th 223, 246 (Pinnacle).) Both elements must be 

shown, but they need not be present to the same degree and are evaluated on a sliding 

scale. (Id. at p. 247.)

With respect to procedural unconscionability, “‘“[o]ppression occurs where a

contract involves lack of negotiation and meaningful choice, surprise where the allegedly

unconscionable provision is hidden within a prolix printed form.”’” (Pinnacle, supra, 55

Cal.4th at p. 247.) “Procedural unconscionability, and in particular ‘“oppression,”’

generally entails a contract of adhesion; that is, ‘“a standardized contract, which,

imposed and drafted by the party of superior bargaining strength, relegates to the

subscribing party only the opportunity to adhere to the contract or reject it.”’ [Citations.]

‘“[S]urprise”’ typically involves a provision ‘“‘hidden’”’ within the prolixity of a

preprinted form contract drafted by the party having superior bargaining strength.” 

(McCaffrey Group, Inc. v. Superior Court (2014) 224 Cal.App.4th 1330, 1349.)

There is no evidence before us to show that the agreement is procedurally 

unconscionable. There is no evidence of surprise or misrepresentation, or that the 

management agreement was a contract of adhesion. The agreement was not a preprinted 

form contract, the allegedly unconscionable provision was not hidden, and the agreement 

was not presented on a take-it-or-leave-it basis. Instead, Steck gave Von Nothdurft the 

opportunity to make changes, yet she did not do so. Although Von Nothdurft testified 
12.

she “felt” she had no alternative but to accept the terms offered to get the job, there is no 

evidence to show the basis for her feelings or that she had no meaningful choice but to 

agree to the compensation provision. Since there is no evidence of oppression or 

surprise, Von Nothdurft failed to show procedural unconscionability and her claim fails.

In sum, we hold that the management agreement satisfies the requirements of 

subdivision 10(C) of Wage Order 5, as the parties entered into a voluntary written 

agreement to credit the free rent against her compensation. Accordingly, Steck is entitled 

to take a rental credit of $451.89 per month against Von Nothdurft’s right to receive 

minimum wage.

DISPOSITION

The judgment is affirmed. Costs on appeal are awarded to Steck.

_____________________

Gomes, J.

WE CONCUR:

_____________________

Cornell, Acting P.J.

_____________________

Poochigian, J.