Source: https://caselaw.findlaw.com/ca-court-of-appeal/1898387.html
Timestamp: 2019-04-26 13:15:40+00:00

Document:
Fabio CANALES et al., Plaintiffs and Appellants, v. WELLS FARGO BANK, N.A., Defendant and Respondent.
Law Offices of Sherry Jung and Larry W. Lee, Los Angeles; Hyun Legal, Dennis S. Hyun, Los Angeles, for Plaintiffs and Appellants. Kading Briggs, Glenn L. Briggs, Theresa A. Kading, Irvine, and Nisha Verma, for Defendant and Respondent.
Plaintiffs Fabio Canales and Andy Cortes, on behalf of themselves and class members, appeal from a summary judgment. Plaintiffs were former or current non-exempt employees of defendant Wells Fargo Bank, N.A. Plaintiffs alleged that their wage statements failed to include information required under Labor Code 1 section 226, subdivision (a)(9). Specifically, plaintiffs argued that a line on the wage statement, “OverTimePay-Override,” should, but did not, include hourly rates and hours worked. Plaintiffs also alleged defendant violated section 226 by failing to provide a wage statement concurrently with the terminated employees' final wages paid in-store. Plaintiffs moved for summary adjudication on the section 226 cause of action.
Defendant in its summary judgment motion argued that OverTimePay-Override reflected additional overtime pay that was owed for work performed on a previous pay period, but could not be calculated because it was based on a nondiscretionary bonus not yet earned. Under subdivision (a)(9), defendant contended OverTimePay-Override did not have corresponding hourly rates or hours worked for the current pay period. As to plaintiffs' second theory, defendant asserted it complied with the statute by furnishing the wage statement by mail. The trial court found in favor of defendant and against plaintiffs.
Plaintiffs contend the trial court erred by denying their summary adjudication motion and by granting defendant's motion. We affirm.
Plaintiffs are current or former non-exempt California employees of defendant. Defendant would in some instances issue a paycheck and wage statement that contained nondiscretionary incentive compensation 3 (the bonus) to employees who worked during the period covered by the incentive compensation. These bonus periods would be monthly, quarterly, or annually. For employees who worked overtime during those bonus periods, the wage statements contained a line item called “OverTimePay-Override,” formerly called “OT-Flat.” OverTimePay-Override listed incremental additional overtime paid to the employee for overtime hours worked during the bonus period under the “Earnings” column.4 For the OverTimePay-Override line on the wage statements, no hourly rates or hours worked was identified.
In certain situations, defendant issued final wages to employees at the time of their termination through “in-store payments” made by cashier's check. Defendant's payroll department would then create the wage statement either the same day or the next day and mail it to the terminated employee by United States mail.5 During their employment, employees had online access to their itemized wage statements. Employees lost such online access the day after termination.
On December 15, 2015, plaintiffs moved for summary adjudication.8 Much like the allegations in their amended complaint, plaintiffs argued that defendant violated section 226, subdivision (a)(9) by failing to specify the hourly rates and number of hours worked for the OverTimePay-Override adjustment on the itemized wage statements. Plaintiffs also argued defendant violated section 226 by failing to provide to terminated employees an itemized wage statement concurrently with their final wages that were paid in-store by cashier's check.
Defendant filed its own summary judgment motion on December 15, 2015. Defendant asserted it did not violate section 226, subdivision (a)(9) because OverTimePay-Override represented an increase in overtime pay, based on a periodic bonus, for overtime hours worked in previous pay periods. Defendant argued there were no “applicable hourly rates in effect during the pay period” that corresponded to OverTimePay-Override and thus defendant did not have to provide such information on the wage statement. As to plaintiffs' second theory, defendant contended it furnished the itemized statement as required under section 226 by mailing it to the terminated employee's last known address either the same day or the next day. Finally, defendant argued plaintiffs' PAGA cause of action failed because it was wholly derivative of a violation based on section 226 and because plaintiffs failed to exhaust administrative remedies. Plaintiffs do not dispute their PAGA cause of action is derivative of the section 226 claims.
On May 26, 2016, the trial court issued its order granting defendant's motion and denying that of plaintiffs. As to defendant's first argument, the trial court agreed that section 226, subdivision (a)(9) did not apply to OverTimePay-Override because there was no applicable hourly rate for the pay period reflected in the wage statement. For defendant's second argument, the trial court found that defendant complied with the “furnish” requirement under section 226 by mailing the wage statement.
However, by the plain meaning of the statute, defendant also had the option of furnishing the wage statement semimonthly. (§ 226, subd. (a).) Additionally, nothing in section 226 suggests that an employer cannot furnish the wage statement prior to the semimonthly date. For example, suppose an employer furnishes wage statements on the first and the fifteenth of each month. The employer discharges an employee on the second of the month. Per the statute's plain language, if an employer pays the final wages by personal check or cash, it has the option of furnishing the discharged employee with the wage statement on the fifteenth. We find it illogical to conclude an employer violates section 226 by furnishing a wage statement before the semimonthly date has been reached. If the employer furnishes the wage statement to the discharged employee on the fifth of the month, the employer has complied with the requirement that it furnish the wage statement to the employee “semimonthly” because the employee would have ostensibly been furnished with the wage statement by the semimonthly date.
The DLSE's interpretation is not persuasive. The term “whichever occurs first” is not in section 226. The plain meaning of the statute indicates the Legislature specifically intended a choice for employers as to when to furnish the wage statement. There is also no requirement in section 226 that the wage statement “must accompany” the personal check or cash payment to the employee. As noted, the wage statement must be a detachable part of the check, draft, or voucher, unless payment is by personal check or cash; in such instance the wage statement may be furnished separately. (§ 226, subd. (a).) Accordingly, we decline to follow the DLSE's interpretation.
Plaintiffs cite several cases that purportedly determined that section 226, subdivision (a) requires employers to furnish a wage statement to each employee “at the time wages are paid.” (See Zavala v. Scott Brothers Dairy, Inc. (2006) 143 Cal.App.4th 585, 591 (Zavala); Reinhardt v. Gemini Motor Transport (E.D.Cal. 2012) 879 F.Supp.2d 1138, 1141 (Reinhardt); In re Bimbo Bakeries USA FLSA Actions (N.D.Cal. Oct. 24, 2008, No. C 05-00829 JW) 2008 WL 10850153, at *7, 2008 U.S. Dist. Lexis 125068, at *23 (Bimbo Bakeries).) Such statements were dicta as the cases concerned issues unrelated to the one here. (Zavala, supra, 143 Cal.App.4th at pp. 592-593 [whether collective bargaining agreement required arbitration of Labor Code claims]; Reinhardt, supra, 879 F.Supp.2d at pp. 1141-1142 [whether plaintiffs sufficiently alleged Labor Code violations were “ ‘knowing and intentional’ ” for recovery under § 226, subd. (e) ]; Bimbo Bakeries, supra, 2008 WL 10850153, at *7, 2008 U.S. Dist. Lexis 125068, at *24 [whether defendant's violation was “knowing and intentional” for summary judgment purposes].) They are thus unpersuasive.
Defendant should prevail on this theory. Because there are no triable issues of material fact and defendant is entitled to judgment as a matter of law, summary judgment was properly granted in its favor.
The judgment is affirmed. Defendant Wells Fargo Bank, N.A. is entitled to recover its costs on appeal from plaintiffs Fabio Canales and Andy Cortes.
1. Further statutory references are to the Labor Code unless otherwise indicated.
2. All facts are considered undisputed for purposes of summary judgment.
3. Teresa Swanson, defendant's person most knowledgeable, stated that a nondiscretionary bonus was “given to a team member, based on some sort of preset work definition, goal, something that they have to meet. And then they earn that bonus.” It appears this bonus was a production or piecework bonus.
6. At the time of the alleged offenses, section 226, subdivision (a)(9) provided in pertinent part: “(a) Every employer shall, semimonthly or at the time of each payment of wages, furnish each of his or her employees, either as a detachable part of the check, draft, or voucher paying the employee's wages, or separately when wages are paid by personal check or cash, an accurate itemized statement in writing showing ․ (9) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee․” (Stats. 2012, ch. 844, § 1.7.) Subdivision (a)(9) was added by the Legislature in 2000. (Stats. 2000, ch. 876, § 6.)Section 226, subdivision (a) was amended by the Legislature in 2016 to read in pertinent part: “An employer, semimonthly or at the time of each payment of wages, shall furnish to his or her employee, either as a detachable part of the check, draft, or voucher paying the employee's wages, or separately if wages are paid by personal check or cash, an accurate itemized statement in writing․” (Stats. 2016, ch. 77, § 1, eff. Jan 1, 2017.) Subdivision (a)(2) was also amended, and subdivision (j) was added. (Ibid.) The 2016 amendment does not substantively affect our opinion.
7. A third plaintiff, Luciano Gonzales, was initially part of this action. However, Gonzales was not named as a class representative in plaintiffs' motion for class certification and is not an appellant. The class was certified on March 20, 2015.
8. Though plaintiffs categorized their motion as one for summary judgment or in the alternative, summary adjudication, plaintiffs sought only summary adjudication as to their first cause of action for violation of section 226.
KIM, J.** FN** Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
We concur: KRIEGLER, Acting P.J. BAKER, J.

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