Source: https://casetext.com/case/alvarado-v-dart-container-corp
Timestamp: 2019-04-25 20:42:01+00:00

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Alvarado v. Dart Container Corp.
Hector ALVARADO, Plaintiff and Appellant, v. DART CONTAINER CORPORATION OF CALIFORNIA, Defendant and Respondent.
Lavi & Ebrahimian, Joseph Lavi, Jordan D. Bello, Beverly Hills; and Dennis F. Moss, Los Angeles, for Plaintiff and Appellant. Best Best & Krieger, Howard Golds and Elizabeth A. Han, Riverside, for Defendant and Respondent.
Lavi & Ebrahimian, Joseph Lavi, Jordan D. Bello, Beverly Hills; and Dennis F. Moss, Los Angeles, for Plaintiff and Appellant.
Best Best & Krieger, Howard Golds and Elizabeth A. Han, Riverside, for Defendant and Respondent.
Plaintiff Hector Alvarado (plaintiff) appeals summary judgment entered in favor of defendant Dart Container Corporation of California (defendant). The facts are undisputed. This appeal raises the sole question of law of whether defendant's formula for calculating overtime on flat sum bonuses paid in the same pay period in which they are earned is lawful. We conclude it is. There is no California law specifying a method for computing overtime on flat sum bonuses, and defendant's formula complies with federal law, which provides a formula for calculating bonus overtime. We accordingly affirm summary judgment in favor of defendant.
The following summary of facts is based on the parties' joint statement of undisputed material facts. Defendant is a producer of food service products, including cups and plates. Plaintiff began working for defendant in September 2010, as a warehouse associate, and was terminated in January 2012.
According to defendant's written policy, an attendance bonus would be paid to any employee who was scheduled to work a weekend shift and completed the full shift. The bonus was $15 per day, for working a full shift on Saturday or Sunday, regardless of the number of hours worked beyond the normal scheduled length of a shift.
3. Multiply the number of overtime hours worked in a pay period by the employee's regular rate, which is determined in step 2. This amount is then divided in half to obtain the “overtime premium” amount, which is multiplied by the total number of overtime hours worked in the pay period (overtime premium pay).
4. Add the amount from step 1 to the amount in step 3 (total overtime pay). This overtime pay is added to the employee's regular hourly pay and the attendance bonus.
During plaintiff's employment, he earned attendance bonuses during weeks he worked overtime and sometimes double time.
In August 2012, plaintiff filed a complaint for damages and restitution, alleging defendant had not properly computed bonus overtime under California law. Plaintiff's complaint as amended (complaint) alleges the following causes of actions: (1) Failure to pay proper overtime in violation of Labor Code sections 510 and 1194 by not including shift differential premiums and bonuses in calculating overtime wages; (2) Failure to provide complete and accurate wage statements, in violation of Labor Code section 226; (3) Failure to timely pay all earned wages due at separation of employment, in violation of Labor Code sections 201, 202, and 203; (4) Unfair Business Practices, in violation of Business and Professions Code section 17200 et seq.; and (5) civil penalties under the Private Attorneys' General Act of 2004, Labor Code section 2698 et seq. (PAGA).
Defendant filed a motion for summary judgment or, alternatively, for summary adjudication. Defendant argued that defendant's formula for calculating overtime on plaintiff's attendance bonuses, earned during pay periods in which they were earned, was lawful, and there was no legal basis for plaintiff's proposed alternative formula. Defendant further argued federal law applied to calculating overtime on the bonuses because there was no California law providing a formula for calculating overtime on bonuses. Defendant asserted that plaintiff's proposed formula is based solely on California public policy and void regulations from the Division of Labor Standards Enforcement (DLSE) Manual which have no force or effect. Defendant concluded that, since defendant's overtime formula complies with federal law and does not conflict with state law, it is lawful. Therefore plaintiff's entire complaint has no merit.
Plaintiff filed opposition, arguing there was valid California authority, Marin v. Costco Wholesale Corp. (2008) 169 Cal.App.4th 804, 87 Cal.Rptr.3d 161 (Marin), applicable in the instant case to calculating overtime on bonuses. Plaintiff further argued that defendant's formula dilutes and reduces the regular rate of pay by including overtime hours when calculating the regular rate of pay used to compute overtime on plaintiff's flat sum bonuses. Plaintiff asserted this violates California wage and hour policy, in which overtime is discouraged. Plaintiff also argued defendant's formula failed to account for all required overtime rates and improperly used a multiplier of .5, rather than 1.5, or 2.0, if applicable.
After reviewing the parties' briefs and listening to oral argument, the trial court granted defendant's motion for summary judgment on the following grounds: The facts were undisputed; there was no California law applicable to calculating overtime on bonuses paid in the same pay period in which they were earned; Marin is inapplicable; DLSE Manual sections 49.2.4.2 and 49.2.4.3 do not have force of law and are void regulations; in the absence of controlling California law, federal law directing the method of computing overtime on bonuses must be followed; defendant used this federal formula, which was lawful; and therefore there was no basis for liability on any of plaintiff's causes of action.
29 United States Code sections 201–219.
Likewise, here, there is no federal law preemption. None of the three situations in which preemption may occur applies here. First, the FLSA does not expressly preclude states from regulating overtime applied to bonuses. Furthermore, as explained in Tidewater, supra, 14 Cal.4th 557, 59 Cal.Rptr.2d 186, 927 P.2d 296, the FLSA includes a savings clause which expressly permits states to regulate overtime wages. Second, as indicated by our high court in Tidewater, the federal law is not so comprehensive that it leaves no room for supplementary state regulation of overtime. Third, federal and state laws regarding overtime, as applied to bonuses, do not actually conflict; primarily because there is no express state law providing a formula for calculating bonus overtime. Even though federal law does not preempt state law here, this does not preclude applying federal law where there is no state law regulating bonus overtime.
Plaintiff's reliance on Skyline is misplaced because it was confined to salaried employees working a fluctuating workweek, did not address bonuses, and dealt with an employer who failed to pay overtime for work exceeding eight hours in a day. (See Marin, supra, 169 Cal.App.4th at pp. 810–811, 87 Cal.Rptr.3d 161.) In rejecting an equal protection challenge, the Skyline court states: “[T]he method of computing overtime compensation for employees other than salaried employees is not before us. Plaintiffs' pleadings in the trial court specifically stated that ‘The dispute in this case centers on the proper method of overtime computation for employees who receive a fixed salary but work a variable number of hours each week. This case does not concern employees working on a commission, piece rate or other wage basis.’ There has been no showing that those employees are similarly situated to salaried employees.” (Skyline, supra, 165 Cal.App.3d at p. 254, 211 Cal.Rptr. 792 (emphasis added); see Marin, at pp. 812–813, 87 Cal.Rptr.3d 161.) Skyline is not dispositive in the instant case, which concerns computing an hourly employee's bonus overtime.
The Tidewater court explained that in the early 1980's, written DLSE “policy existed only in a draft policy manual the DLSE prepared for the guidance of deputy labor commissioners. In 1989, however, the DLSE prepared a formal ‘Operations and Procedures Manual’ incorporating the same policy and made that manual available to the public on request. The manual reflected ‘an effort to organize ... interpretive and enforcement policies' of the agency and ‘achieve some measure of uniformity from one office to the next.’ The DLSE prepared its policy manuals internally, without input from affected employers, employees, or the public generally.” (Tidewater, supra, 14 Cal.4th at p. 563, 59 Cal.Rptr.2d 186, 927 P.2d 296.) There was thus no compliance with the APA, which is required when creating regulations.
“1. Decisions of California's courts which construe the state's labor statutes and regulations and otherwise apply relevant California law.
“2. California statutes and regulations which are clear and susceptible to only one reasonable interpretation.
“3. Federal court decisions which define or circumscribe the jurisdictional scope of California's labor laws and regulations or which are instructive in interpreting those California laws which incorporate, are modeled on, or parallel federal labor laws and regulations.
“4. Selected opinion letters issued by DLSE in response to requests from private parties which set forth the policies and interpretations of DLSE with respect to the application of the state's labor statutes and regulations to a specific set of facts.
The DLSE Manual contains provisions on how to calculate overtime on bonuses. It distinguishes between flat sum bonuses and percentage of production or other formulaic bonuses. The DLSE Manual sections 49.2.4.2 and 49.2.4.3 of the DLSE Manual address overtime on flat sum bonuses. The DLSE Manual section 49.2.4.2 provides: “If the bonus is a flat sum, such as $300 for continuing to the end of the season, or $5.00 for each day worked, the regular bonus rate is determined by dividing the bonus by the maximum legal regular hours worked during the period to which the bonus applies. This is so because the bonus is not designed to be an incentive for increased production for each hour of work; but, instead is designed to insure that the employee remain in the employ of the employer. To allow this bonus to be calculated by dividing by the total (instead of the straight time hours) would encourage, rather than discourage, the use of overtime. Thus, a premium based on bonus is required for each overtime hour during the period in order to comply with public policy.” The DLSE Manual section 49.2.4.3 of the Manual gives an example of how such overtime on a flat sum bonus is calculated.
Because the DLSE Manual does not carry the force of law, this court is not required to mandate compliance with the formula provided in the DLSE Manual section 49.2.4.2. As explained in Marin, supra, 169 Cal.App.4th at p. 815, 87 Cal.Rptr.3d 161, “[l]ike the DLSE interpretation at issue in Skyline, Manual section 49.2.4.2 is ‘a standard of general application interpreting the law the DLSE enforce[s],’ and ‘not merely a restatement of prior agency decisions or advice letters.’ [Citation.] Our conclusion is supported by section 1.1.6.1 of the Manual, which states that if the source of the interpretation is a statute, regulation, court decision, opinion letter, or ‘Administrative Decision’ or ‘Precedent Decision’ of the Labor Commissioner, that source will be identified in the Manual. No such sources are mentioned in section 49.2.4.2. The only source cited for the flat sum bonus rule is ‘public policy.’ Accordingly, section 49.2.4.2 does not have the force of law.” (Ibid. fn. omitted.) It not only has no precedential value, it carries very little, if any, persuasive value because the DLSE Manual section 49.2.4.2 does not cite any supporting legal authority. This lack of any citation to supporting binding California law is because there is none. There is no state law specifying a formula for overtime applied to bonuses, particularly flat sum bonuses.
The Marin court noted that, “[i]n the case of a true flat sum bonus where the employee cannot earn any additional bonus by working overtime hours, excluding such hours from the divisor prevents them from diluting the regular rate. Including those hours would give the employer an incentive to impose overtime because the additional overtime would reduce the cost of overtime by decreasing the regular rate—part of the situation addressed in the Skyline case.” (Marin, supra, 169 Cal.App.4th at p. 819, 87 Cal.Rptr.3d 161.) Although, as indicated by Marin, the DLSE Manual section 49.2.4.2 provides a reasonable formula for calculating overtime on a flat sum bonus, the formula has not been enacted as enforceable law and therefore this court cannot enforce it. Furthermore, enacting the formula in the DLSE Manual section 49.2.4.2 as enforceable law falls within the domain of the Legislature and IWC, not this court.
Marin is not dispositive here. Marin concerns a deferred, semi-annual, formulaic bonus which is primarily a production bonus and was not paid in the same pay period earned. The Marin bonus was based on the number of years worked for the company and number of paid hours accrued during a six-month period. In addition, the bonus was paid at the end of a six-month period, with overtime pay added to the bonus. Furthermore, in Marin, unlike in the instant case, there was no directly applicable federal regulation or statute. Here, plaintiff's bonus is a flat sum bonus paid in the same period earned. Unlike in Marin, federal regulation, CFR section 788.209(a), applies and provides a formula used by defendant for computing overtime on plaintiff's bonus.
Defendant argues that since there is no state law that provides a formula for computing overtime on bonuses, defendant lawfully applied the federal formula. In urging this court to find defendant's use of the federal formula lawful, defendant explains it had no alternative but to follow the only existing explicit method founded on enforceable law. By not regulating overtime pay on bonuses, the state has in effect left to federal regulation computing overtime on bonuses. Congress has specifically permitted states to enforce overtime laws more generous than the FLSA under the savings clause (Tidewater, supra, 14 Cal.4th at p. 567, 59 Cal.Rptr.2d 186, 927 P.2d 296; Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785, 795, 85 Cal.Rptr.2d 844, 978 P.2d 2 (Ramirez)), yet this state has not enacted any legislation or regulations specifying a formula for computing overtime paid on bonuses. This court therefore cannot mandate and enforce compliance with plaintiff's proposed formula for computing overtime on bonuses, when there is no applicable statute or regulation providing for such a formula. Even though the federal formula for computing bonus overtime may not comport with state policy discouraging overtime, defendant's use of the federal formula is lawful because it is based on federal law, and there is no state law or regulation providing an alternative formula.
In the absence of a formula for computing bonus overtime founded on binding state law, there is no law or regulation the trial court or this court can construe or enforce as a method for computing overtime plaintiff's bonuses, other than the applicable federal regulation, CFR section 778.209(a). This is not a situation in which state and federal labor laws substantially differ and therefore reliance on federal law is misplaced. (Skyline, supra, 165 Cal.App.3d at pp. 247–249, 211 Cal.Rptr. 792; Ramirez, supra, 20 Cal.4th at p. 798, 85 Cal.Rptr.2d 844, 978 P.2d 2.) Defendant therefore lawfully used the federal formula for computing overtime on plaintiff's flat sum bonuses. In turn, the trial court properly granted defendant's motion for summary judgment.
During oral argument plaintiff untimely raised new legal theories not previously briefed by plaintiff and authority not included in plaintiff's appellate briefs. Plaintiff argued for the first time the flat sum bonus was not actually a bonus but rather salary, and the flat sum bonus was artificially labeled a bonus, constituting a subterfuge that operates to evade overtime pay laws by reducing the regular hourly rate when overtime hours are worked on the weekend. The legal authority, raised for the first time during oral argument, included Huntington Memorial Hospital v. Superior Court (2005) 131 Cal.App.4th 893, 32 Cal.Rptr.3d 373; Walling v. Youngerman–Reynolds Hardwood Co. (1945) 325 U.S. 419, 424–425, 65 S.Ct. 1242, 89 L.Ed. 1705; 29 CFR § 778.203 (premium pay for work on Saturdays, Sundays, and other “special days”); 29 CFR § 778.327(b) (temporary or sporadic reduction in schedule); and 29 CFR § 778.502 (artificially labeling part of the regular wages a “bonus”).
We do not address in this decision such untimely, waived theories and legal authority on the grounds plaintiff did not include them in its appellate opening brief or reply; plaintiff did not provide defendant or this court with notice before oral argument of plaintiff's intent to rely on new legal authority and raise new theories; and defendant therefore did not have an opportunity to review and provide a fully informed response to such new theories and legal authorities.
Furthermore, without suggesting whether plaintiff's new theories and legal authority have merit, we decline to consider them because plaintiff has not demonstrated good cause for raising them for the first time during appellate oral argument. (See Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, 894, fn. 10, 93 Cal.Rptr.2d 364 [points raised in appellate reply brief for the first time will not be considered, unless good reason is shown for failure to present them before] ); Acquire II, Ltd. v. Colton Real Estate Group (2013) 213 Cal.App.4th 959, 977, fn. 12, 153 Cal.Rptr.3d 135; Estate of McDaniel (2008) 161 Cal.App.4th 458, 463, 73 Cal.Rptr.3d 907, quoting People v. Harris (1992) 10 Cal.App.4th 672, 686, 12 Cal.Rptr.2d 758 [“ ‘contentions raised for the first time at oral argument are disfavored and may be rejected solely on the ground of their untimeliness.’ ”].
The judgment is affirmed. Defendant is awarded its costs on appeal.

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