FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

SUSAN J. PEABODY,  No. 10-56846

Plaintiff-Appellant, D.C. No.

v. 2:09-cv-06485-AGRNB TIME WARNER CABLE, INC.,

Central District of Defendant-Appellee.

California,  Los Angeles

ORDER

CERTIFYING A

QUESTION TO

THE SUPREME

COURT OF

CALIFORNIA 

Filed August 17, 2012

Before: Richard C. Tallman and N. Randy Smith,

Circuit Judges, and Timothy M. Burgess, District Judge.*

ORDER

This panel of the United States Court of Appeals for the

Ninth Circuit, having heard the above-entitled case, hereby

certifies to the Supreme Court of California that, in this case,

there are questions concerning the law of California which are

determinative of the case and on which there is no clear controlling precedent in the California judicial decisions. We

*The Honorable Timothy M. Burgess, District Judge for the U.S. District Court for Alaska, sitting by designation. 

9437
therefore respectfully request that the Supreme Court of California answer the certified question presented below.

I. Question Certified

In this case, Peabody appeals four issues:1 1) whether Peabody qualified for the commissions paid exemption of Section

3(D) of Wage Order 4-2001; 2) whether Peabody was owed

additional minimum wage payments under Wage Order 4-

2001 4(B); 3) whether Time Warner Cable, Inc. (“TWC”) was

exempt from providing wage statements under California

Labor Code Section 226(a); and 4) whether TWC owes Peabody any late wage payments under California Labor Code

Section 203. However, the underlying question of whether

Peabody’s commissions can be allocated over the course of a

month, or whether the commissions must only be counted

towards the pay period in which the commissions were paid,

resolves all of these four issues.

Therefore, pursuant to Rule 8.548 of the California Rules

of Court, we request that the Court answer the following

question:

To satisfy California’s compensation requirements,

whether an employer can average an employee’s

commission payments over certain pay periods when

it is equitable and reasonable for the employer to do

so.

In response to the question listed above, the Supreme Court

of California shall not be bound by the manner in which the

question has been phrased by this court. Cal. R. Ct.

8.548(f)(5). We agree to accept and follow the court’s decision. Cal. R. Ct. 8.548(b)(2). 

1The fifth issue Peabody raised regarding unpaid commissions was not

related to the first four issues. Thus, the issue is not included in this order.

It has been resolved by a Memorandum Disposition filed concurrently

herewith. 

9438 PEABODY v. TIME WARNER CABLE
II. Statement of Facts

Susan Peabody was employed by TWC as an Account

Executive in the Media Sales Department between July 15,

2008, and May 15, 2009. Peabody worked for TWC for only

ten months and was not hired for any specific term. Peabody

was a commissioned salesperson who was responsible for

selling advertising on TWC’s various cable channels. Peabody’s commissions were based on the revenue generated by

advertising aired every broadcast month, which lasted four or

five weeks. Peabody also received a base salary of $20,000

per year. Peabody testified that she generally worked 45 hours

per week. Peabody received biweekly payments from TWC.

These pay stubs did not include the numbers of hours Peabody worked. 

Peabody resigned from TWC effective May 15, 2009. During Peabody’s ten months of employment, she was paid

nearly $75,000 in total compensation. 

Peabody brought a putative class action in California state

court against TWC on behalf of current and former employees

of TWC who held the position of “account executive.” Peabody alleged violations of California’s wage and overtime

laws. The case was removed to federal court pursuant to the

jurisdictional provisions of the Class Action Fairness Act, 28

U.S.C. § 1332(d). TWC and Peabody stipulated to decide the

dispositive motion for summary judgment prior to determination of class certification. The district court granted summary

judgment in favor of TWC, and Peabody now appeals.

III. Explanation of Certification

This request satisfies the requirements of Rule 8.548(a) of

the California Rules of Court, because there is no controlling

California precedent explaining how commissions should be

allocated, and this question will determine the remaining

issues Peabody raised in her appeal.

PEABODY v. TIME WARNER CABLE 9439
Generally, under California Labor Code Section 510, an

employer is required to pay overtime to an employee who

works more than 40 hours per week. Similarly, Section 4(B)

of IWC Wage Order 4-2001 requires that “[e]very employer

shall pay to each employee, on the established payday for the

period involved, not less than the applicable minimum wage

for all hours worked in the payroll period, whether the remuneration is measured by time, piece, commission, or otherwise.” IWC Wage Order 4-2001, Cal. Code Regs. tit. 8,

§ 11040 4(B) (emphasis added). In addition, this Wage Order

requires that employers pay employees overtime pay at the

rate of one and one half times the regular pay for all hours

worked over 40 hours in a workweek. Id. § 11040 3(A). California Labor Code Section 203(a) imposes penalties for any

employer that “willfully fails to pay” wages of an employee

who quits.

However, Section 3(D) of the IWC’s Wage Order 4-2001

creates an exemption from the overtime requirements for

employees paid through commission. This exemption provides that “[t]he [overtime] provisions of subsections (A), (B)

and (C) above shall not apply to any employee whose earnings exceed one and one-half (1 1/2) times the minimum wage

if more than half of that employee’s compensation represents

commissions.” IWC Wage Order 4-2001, Cal. Code Regs. tit.

8, § 11040 3(D). California Labor Code Section 226(a)(2)

also requires an employer to provide detailed wage statements

unless an employee is exempt from overtime pay.

Peabody contends that her earnings did not exceed one and

one-half times the minimum wage at all relevant times, and

she also contends that her earnings did not exceed the

required minimum wage at all times. During the time that

Peabody was employed, the relevant minimum wage was

$8.00 per hour. Therefore, Peabody’s earnings needed to

exceed $12.00 per hour for her to qualify for the commissions

paid exemption, and Peabody testified that she generally

worked about 45 hours per week.

9440 PEABODY v. TIME WARNER CABLE
The analysis hinges on how Peabody’s commission can be

calculated and allocated over pay periods. Peabody argues

that, for all of California’s compensation requirements, the

minimum wage threshold must be earned within each workweek and paid within the corresponding pay period for which

the exemption is claimed. Under this calculation, Peabody

received only $769.23 in the majority of her biweekly pay periods,2

 because Peabody received her large monthly commission in only about half of the pay periods. Dividing the

$769.23 amount by 45 hours for two weeks, Peabody’s pay

would reflect only $8.55 per hour for that pay period, which

is insufficient to qualify for the commissions paid exemption.

Peabody therefore argues that, while she qualified for the

commissions paid exemption in the pay periods when she was

paid her commission, TWC is unable to claim the exemption

for the workweeks in which Section 3(D)’s minimum wage

requirement was not met. 

On the other hand, TWC argues that Peabody’s earnings

should be calculated based on the broadcast month (which

ended every four or five weeks), so that Peabody’s commissions count towards the pay period for which they were

earned rather than the actual pay period in which the commissions were paid. Peabody received a large commission at the

end of every broadcast month. Under, TWC’s proposed calculation method, a pay period of four weeks multiplied by 45

hours per week and divided by $12.00 per hour would result

in a requirement that Peabody earn over $2,160 to qualify for

the commissions paid exemption. For a pay period of five

2This amount reflects Peabody’s biweekly payment for her base salary

of $20,000 per year. California law presumes that salary compensation is

only intended to cover 40 hours in a regular workweek, unless the

employer and employee explicitly agree otherwise. See Cal. Lab. Code

§ 515(d); Arechiga v. Dolores Press, Inc., 192 Cal. App. 4th 567 (Ct. App.

2011). No such agreement was provided to Peabody here. Thus, if TWC

is unable to average commission payments, Peabody may also be able to

assert minimum wage violations for hours Peabody worked beyond the

normal 40-hour workweek. 

PEABODY v. TIME WARNER CABLE 9441
weeks, Peabody needed to earn over $2,700. TWC’s compensation table demonstrates that Peabody easily qualified for the

exemption under this calculation method. The lowest commission amount Peabody received for any broadcast month was

$3,195.49, and the highest commission she received was

$13,288.09. The only months where the broadcasting month

was five weeks, rather than four weeks, were August and

November of 2008, and March 2009. This commission was in

addition to Peabody’s annual base salary of $20,000.

There is no California case directly on point that explains

how commission payments should be allocated over pay periods to determine whether an employee qualifies for California

compensation requirements. The only authority on point

appears to be the 2002 Updated Enforcement Policies and

Interpretations Manual written by the Division of Labor Standards Enforcement (“DLSE Manual”) or analogous federal

law interpreting the Fair Labor Standards Act (“FLSA”).

However, the Supreme Court of California has said that this

DSLE Manual is “void and not entitled to any deference”

because it was not passed in accordance with California’s

Administrative Procedure Act (“APA”). Tidewater Marine

W., Inc. v. Bradshaw, 927 P.2d 296, 308 (Cal. 1996); see also

Morillion v. Royal Packing Co., 995 P.2d 139, 151 (Cal.

2000) (same). But see Gomez v. Lincare, Inc., 93 Cal. Rptr.

3d 388, 396 n.6 (Ct. App. 2009) (“Although not controlling,

the DLSE’s interpretation of the motor carrier exemption in

the Enforcement Manual is instructive.”). It is also not clear

whether courts may look to federal law under the FLSA to

determine how commission payments should be allocated.

Compare Morillion, 995 P.2d at 150 n.8, 151 (concluding that

it was error for a court to rely on federal authority under the

FLSA to construe a wage order if such an interpretation

“provid[es] less protection to state employees”), with In re

United Parcel Serv. Wage & Hour Cases, 118 Cal. Rptr. 3d

834, 843 (Ct. App. 2010) (determining that “[f]ederal law

interpreting similar components of the FLSA exemptions is

9442 PEABODY v. TIME WARNER CABLE
properly considered as persuasive authority, even if not binding on this court” for a different wage order).

Because of the complexity of these state law issues and

because of their significant policy implications that will effect

many employers and employees throughout California, we

believe that the Supreme Court of California, which has not

yet interpreted the relevant provisions of the California Labor

Code, “is better qualified to answer the certified question in

the first instance.” See Parents Involved in Cmty. Sch. v. Seattle Sch. Dist. No. 1, 294 F.3d 1085, 1092 (9th Cir. 2002).

IV. Administrative Information

The title and number of the case is as follows: Peabody v.

Time Warner Cable, Inc., Case No. 10-56846.

The names and addresses of counsel for the parties are as

follows: 

Brian F. Van Vleck, Van Vleck Turner & Zaller

LLP, 6310 San Vicente Blvd., Suite 430, Los Angeles, CA 90048, for Appellant

J. Scott Carr, Wargo & French LLP, 999 Peachtree

Street, NE, 26th Floor, Atlanta, Georgia 30309, for

Appellee

See Cal. R. Ct. 8.548(b)(1). If the Supreme Court of California accepts this request, the Plaintiff-Appellant (Peabody)

should be deemed the petitioner.

The Clerk of the Court is hereby directed to immediately

transmit to the Supreme Court of California, under official

seal of the Ninth Circuit, an original and ten copies of this

order and request for certification, a certificate of service on

the parties, and all relevant briefs and excerpts of record pursuant to California Rules of Court 8.548(c)-(d). The Clerk

PEABODY v. TIME WARNER CABLE 9443
shall provide additional record materials if so requested by the

Supreme Court of California. Cal. R. Ct. 8.548(c).

The case is withdrawn from submission, and further proceedings in this court are stayed pending final action by the

Supreme Court of California. The parties shall notify the

Clerk of this Court within seven days after the Court accepts

or rejects certification, and again within seven days if the

Court renders an opinion. The panel retains jurisdiction over

further proceedings.

IT IS SO ORDERED.

9444 PEABODY v. TIME WARNER CABLE