Source: http://scocal.stanford.edu/opinion/kerrs-catering-service-v-department-industrial-relations-29861
Timestamp: 2017-09-20 16:30:13
Document Index: 3218551

Matched Legal Cases: ['§ 408', '§ 26', '§ 1182', '§ 402', '§ 656', '§ 653', '§ 331', '§ 49', '§ 151']

Kerr's Catering Service v. Department of Industrial Relations - 57 Cal.2d 319 - Mon, 02/19/1962 | California Supreme Court Resources
Home > Opinions > Kerr's Catering Service v. Department of Industrial Relations
Citation 57 Cal.2d 319
Kerr's Catering Service v. Department of Industrial Relations , 57 Cal.2d 319
Brobeck, Phleger & Harrison and Alvin L. Rockwell as Amici Curiae on behalf of Plaintiff and Respondent. [57 Cal.2d 322]
Following receipt of the aforesaid notice, plaintiff instituted this action for an injunction and declaratory relief, alleging that section 8 of the foregoing order was in excess of [57 Cal.2d 323] the statutory authority of the commission and unconstitutional. The Industrial Welfare Commission of the Department of Industrial Relations filed an answer and moved for summary judgment.plaintiff filed a cross-motion for summary judgment. The trial court, acting on such motions, rendered judgment in favor of plaintiff.
The narrow question presented, then, is whether the commission has power to prohibit deductions for cash shortages from employees' commission even though the affected employees are earning more than the minimum wage. The question is composed of two parts: (1) Do subdivisions (a) and (b) of section 1182 of the Labor Code limit the commission's power to fix, under subdivision (c), only those "standard conditions of labor" which do not affect either the wage or hours? (2) If the commission's power under subdivision (c) is not so limited, can such deductions for cash shortages not due to the employee's dishonest or wilful act or culpable negligence be characterized as standard conditions of labor? [57 Cal.2d 324]
One such provision, first introduced into the commission's orders in 1947, and not challenged since, requires that employers pay for all necessary protective garments. This provision has never been limited to employees receiving the minimum wage. Although the protection of the health and safety of women and minors is the obvious purpose of this provision, it also affects wages, as the employer may not deduct the cost of protective garments from the employee's compensation. Under plaintiff's construction of section 1182, and the one adopted by the trial court, this provision concerning protective garments would come under question because of its effect on wages. Other provisions of the order now engaging our attention, namely Order No. 5-57, which regulates only the Public Housekeeping Industry, which would also be subject to question under this construction are the prohibition on deductions for uniforms, for tools and equipment, the requirement [57 Cal.2d 325] of time and one-half the regular rate of pay for overtime, one dollar per day extra for split shift workers, and two dollars for reporting for work if work is not available. All of these provisions have in common the fact that they "affect the wage," but apply regardless of whether or not the employee is making the minimum wage, and are for the purpose of prohibiting or discouraging working conditions prejudicial to the welfare of women and minor employees.
Among these statutes we find section 690.11 of the Code of Civil Procedure which exempts wages from garnishment. [3] It is doubtful that an employer with an unliquidated claim for damages against an employee would be permitted [57 Cal.2d 326] to withhold wages due the employee where such wages could not be reached by the employer as a judgment creditor.
More recently, this court in an opinion which held the misdemeanor penalty for the wilful failure to pay wages constitutional, observed that "It has long been recognized that wages are not ordinary debts, that they may be preferred over other claims, and that, because of the economic position of the average worker and, in particular, his dependence on wages for the necessities of life for himself and his family, it is essential to the public welfare that he receive his pay when it is due. [Citations.] An employer who knows that wages are due, has ability to pay them, and still refuses to pay them, acts against good morals and fair dealing, and necessarily intentionally does an act which prejudices the rights of his employee. Such conduct amounts to a 'case of fraud' within the meaning of the exception to the constitutional [57 Cal.2d 327] prohibition and may be punished by statute." (In re Trombley, 31 Cal.2d 801, 809-810 [193 P.2d 734].)
Still another expression of this state's concern for the workers who form such a large part of our population is found in People v. Vandersee, 139 Cal.App.2d 388, 390-391 [294 P.2d 77], wherein the court said: "And legislation which is enacted with the object of promoting the welfare of large classes of workers whose personal services constitute their means of livelihood must certainly be regarded as of direct and vital concern to every community and as calculated to confer direct or indirect benefits upon the people as a whole, thereby coming within the proper exercise of the police power, seeking as it does to promote the welfare of a large class against a real and existing danger. ...
[8a] Labor Code sections 400 through 410 set out in detail the employee's bond law, and the manner in which a cash bond may be exacted from an employee to cover merchandise [57 Cal.2d 328] entrusted to him. fn. 1 It provides a criminal penalty for the violation of its provisions. (Lab. Code, § 408.) These deductions from wages due appear to be in contravention of the spirit, if not the letter, of the Employee's Bond Law. [9] " 'Where a statute prohibits or attaches a penalty to the doing of an act, the act is void even though the statute does not expressly pronounce it so. ... [10] The imposition by statute of a penalty implies a prohibition of the act referred to and a contract founded upon such act is void.' [Citations.]" (Reid v. Overland Machined Products, supra, 55 Cal.2d 203, 208.) [8b] Manifestly, the Industrial Welfare Commission was intended to have authority under section 1182, subdivision (c) to prohibit a practice intended to accomplish the same purpose as one expressly proscribed by statute.
[11] Furthermore, the clerical or accounting feature of the employment relation, of which this system of deductions is a part, is certainly a condition of employment which the commission has the right to regulate. The use of the device of deductions creates the danger that the employer, because of his superior position, may defraud or coerce the employee by deducting improper amounts. [12] While it is conceded in the case at bar that plaintiff herein practiced no fraud or deceit upon his employees, nevertheless, it was the utilization of secret deductions or "kick-backs" to make it appear that an employer paid the wage provided by a collective bargaining contract or by a statute, although in fact he paid less, that led to the enactment of Labor Code sections 221-223 in 1937. These sections, this court said in Sublett v. Henry's etc. Lunch, 21 Cal.2d 273, 274 [131 P.2d 369], "are declarative of an underlying policy in the law which is opposed to fraud and [57 Cal.2d 329] deceit." In Shalz v. Union School District, 58 Cal.App.2d 599 [137 P.2d 762], the court held that deductions by the employer from stipulated wages for payment of exorbitant amounts for lodging and transportation were in reality nothing more than devices to reduce the wage scale.
[15] While it is fundamental in our law that an administrative agency may not, under the guise of its rule-making [57 Cal.2d 330] power, abridge or enlarge its authority or act beyond the powers given to it by the statute which is the source of its power, however, " 'the authority of an administrative board or officer ... to adopt reasonable rules and regulations which are deemed necessary to the due and efficient exercise of the powers expressly granted cannot be questioned. This authority is implied from the power granted.' [Citations.]" (California Drive-in Restaurant Assn. v. Clark, 22 Cal.2d 287, 303 [140 P.2d 657, 147 A.L.R. 1028].)
I concur in the judgment and, in general, in much of the opinion authored by Mr. Justice White. As a [57 Cal.2d 331] precaution, however, against the drawing of unwarranted inferences from the opinion I state more fully my reasons for concurrence.
On the record before us it is unnecessary to explore the meaning in this context of the criminal law term "culpable negligence" (see, e.g., Pen. Code, § 26 (subd. Six); People v. Sidwell (1915) 29 Cal.App. 12, 18-19 [154 P. 290]), or to consider whether the commission has statutory authority to prohibit deductions caused by negligence of the employe other than "culpable negligence." After three days of hearings on plaintiff-employer's appeal from the initial determination of violation of Order No. 5-57, the Division of Industrial Welfare made findings of fact concerning plaintiff's method of operation which are here set out in the footnote. fn. 1 From these findings the Division of Industrial Welfare concluded "that employees working under such conditions cannot be held to be guilty of culpable negligence, or any negligence. Indeed, the [57 Cal.2d 332] greatest diligence could still result in an overage or a shortage. Discrepancies are bound to occur due to the system, rather than the individual."
No such all-encompassing delegation of power was intended by the Legislature in enacting section 1182 of the Labor Code. The commission does not have authority to fix "conditions of labor" in general any more than it has authority to fix minimum wages or maximum hours without regard to the statutory criteria (Lab. Code, § 1182, subds. (a) and (b)). By subdivision (c) of section 1182 the commission's authority in this respect is expressly restricted to fixing those "standard" conditions of labor which are "demanded by the health and [57 Cal.2d 333] welfare" of women and minors engaged in an occupation in this state.
Section 923 of the Labor Code is "a general independent declaration of state policy" (Chavez v. Sargent (1959) 52 Cal.2d 162, 191 [19] [339 P.2d 801]), and represents an application to the area of collective bargaining of the constitutional right of liberty of contract (see Chavez v. Sargent (1959), supra, 52 Cal.2d at pp. 217-221 [concurring opinion]). That constitutional right is the foundation upon which our free enterprise system has been erected; it must remain free [57 Cal.2d 334] from arbitrary restraints, and may be limited only by reasonable regulations necessary to safeguard the public health and welfare. Absent such necessity, "The Legislature may not limit parties in their power to incorporate in their contracts, otherwise valid, such terms as may be mutually satisfactory to them." (Ibid at p. 217.)
­FN 1. Labor Code § 402. No employer shall demand, exact or accept any cash bond from an employee or applicant unless:
­FN 2. Rev. Laws of Hawaii, 1955 ch. 95-4, as amended by Act 137, L. 1957; Wis. Stats., ch. 103.455; McKinney's Consolidated Laws of New York, Book 30, Labor Law, § 656; Oregon Revised Statutes § 653.110, Wage and Hour Commission Order No. 14; Purdon's Pa. Statutes Annotated, title 43, § 331a, General Interpretative Bulletin No. 1 Applicable to All Minimum Wage Orders; Washington Revised Code, title 49, §§ 49.46.002 to 49.46.910, I.W.C. Order No. 46.
­FN 1. In addition to the facts summarized in the opinion of Justice White (ante, p. 319) the following findings were made:
­FN 2. Similarly, on the national level Congress has declared in the Labor Management Relations Act of 1947 (29 U.S.C. § 151) that it is "the policy of the United States to eliminate the causes of certain substantial obstructions to the free flow of commerce and to mitigate and eliminate these obstructions when they have occurred by encouraging the practice and procedure of collective bargaining and by protecting the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid or protection." (Italics added.)
Mon, 02/19/1962 57 Cal.2d 319 Review - Criminal Appeal Opinion issued
Feb 19 1962 Opinion: Reversed
SCOCAL, Kerr's Catering Service v. Department of Industrial Relations , 57 Cal.2d 319 available at: (http://scocal.stanford.edu/opinion/kerrs-catering-service-v-department-industrial-relations-29861) (last visited Wednesday September 20, 2017).