Court Opinion

ID: 4273489
Source: CourtListenerOpinion
Date Created: 2018-05-08 23:04:22.306069+00
Date Added: 2024-06-11T14:06:36.080763
License: Public Domain

Filed 4/18/18; Certified for publication 5/8/18 (order attached)

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                    SECOND APPELLATE DISTRICT

                               DIVISION EIGHT

OLVIN MALDONADO et al.,                               B278022 c/w B281129

        Plaintiffs and Respondents,                   (Los Angeles County
                                                      Super. Ct. No. BC460298)
        v.

EPSILON PLASTICS, INC.,

        Defendant and Appellant.

      APPEAL from a judgment of the Superior Court of Los
Angeles County. Mel Red Recana, Judge. Affirmed in part,
reversed in part and remanded with direction.

      Stuart Kane, Robert J. Kane, Peter L. Wucetich and Shane
P. Criqui for Defendant and Appellant.

     Abrolat Law, Nancy L. Abrolat and Shahane A.
Martirosyan for Plaintiffs and Respondents.
                  __________________________
       Plaintiff employees were successful in a wage and hour
class action against defendant and appellant Epsilon Plastics.
Specifically, at four different times, Epsilon employees worked on
a 12-hour/day schedule, under which they were paid for 10 hours
at the regular rate of pay and 2 hours of overtime. This
Alternative Workweek Schedule (AWS) would have been
permissible if it had been adopted in accordance with the rules
set forth in the applicable wage order. However, the trial court
concluded, after a bench trial, that the AWS had not been
properly adopted. The court further concluded that Epsilon’s
failure to pay overtime for the ninth and tenth hours of work, in
reliance on the improperly adopted AWS, was not in good faith.
As a result of the improperly adopted AWS, plaintiffs obtained
judgment for unpaid overtime, interest, waiting time penalties
(Lab. Code, § 203), inaccurate wage statement penalties (Lab.
Code, § 226), and attorney’s fees.1
       Epsilon appeals, arguing: (1) the evidence does not support
the trial court’s conclusion that the AWS was improperly adopted
in one of the four periods; (2) the evidence does not support the
full award of damages for unpaid overtime; (3) the evidence does
not support the trial court’s conclusion of lack of good faith for
two of the four periods, undermining the award of waiting time
penalties; (4) the evidence does not support the award of waiting
time penalties for certain former employees; (5) the wage
statement penalties must be reversed because plaintiffs suffered
no injury; (6) the attorney’s fee award was untimely sought; and
(7) the attorney’s fee award incorporated a multiplier that was
not supported by the evidence. We agree with Epsilon only in

1       All undesignated statutory references are to the Labor
Code.

                                  2
two respects: the evidence does not support the full award of
damages for unpaid overtime; and the wage statement penalties
must be reversed. We therefore affirm in part, reverse in part,
and remand for recalculation of damages, and reconsideration of
the attorney’s fee award.
       FACTUAL AND PROCEDURAL BACKGROUND
       Because of the complexity of the issues and the variety of
mathematical calculations for different time periods, we spend
considerable time reciting the facts and procedural history
through and including the court’s final statement of decision.
1.     The Plant and the Plaintiffs
       Epsilon manufactures plastic bags. The manufacture
requires the operation of one or more lines of machines which are
designed to operate 24 hours per day. Whenever the machines
are shut down, it takes up to six hours to restart them. This
process creates a lot of wasted plastic, and excessive wear and
tear on the machines. For this reason, Epsilon strongly preferred
to run its plant 24 hours a day, seven days a week.
       Plaintiffs are production employees who operate the
machines. Plaintiffs are largely Spanish-speaking, and many are
uneducated.
2.     The Two Schedules Used by Epsilon
       As a general rule, overtime pay is required for each hour in
excess of 8 hours in one day, or 40 hours in one week. (§ 510,
subd. (a).) Epsilon could have run the plant full time with four
shifts of employees working 8-hour shifts, with minimal
overtime.2 But Epsilon did not run the plant in that fashion.

2     Mathematically, this is true. If the plant runs 24 hours a
day for 7 days, that is 168 hours of work. Four shifts of

                                 3
       A.    The 10/2 AWS
       Instead, Epsilon’s employees each worked 12-hour shifts –
four shifts in one week and three in the next.3 If no AWS had
been adopted, Epsilon could operate its plant in this manner, but
would be required to pay its employees overtime for each hour in
excess of 8 hours each day. In other words, the employees would
be paid regular time for the first 8 hours of each 12-hour shift,
and overtime for the last 4 hours. However, Epsilon used an
AWS, under which the employees were paid regular time for the
first 10 hours, and overtime for the last 2 (the 10/2 AWS). In
weeks that an employee worked 48 hours (4 shifts), the employee
would receive 40 hours of regular pay and 8 hours of overtime; in
weeks that the employee worked 36 hours (3 shifts), the employee
would receive 30 hours of regular pay and 6 hours of overtime.
       Under the 10/2 AWS, Epsilon also agreed to give its
employees a half-hour paid meal break. As a result, the
employees were paid for the full 12 hours of each shift, even
though they only worked 11.5 hours. A dispute regarding
overtime pay for these meal breaks would ultimately become the
main damages issue at trial.
       B.    The Ten Day/Eight-Hour Schedule
       At times, Epsilon did not have enough orders to justify
operating the plant 24 hours a day, 7 days a week. However, it
was keenly aware of the problems caused by continually starting
and stopping its machines. Therefore, when it could not operate

employees working 40 hours per week is 160 hours of work,
leaving 8 hours of overtime per week.

3    There were four shifts of employees – two on night shift
and two on day shift for each two-week period.

                                4
the plant full time, it adopted a schedule of 24 hours a day for 10
days straight, then closed down for 4 days, before restarting for
another 10 days, and so forth. Epsilon put its employees into
three 8-hour shifts, and had each shift work for 8 hours, for 10
days straight. Epsilon paid no overtime, because it structured its
workweek such that employees were working the last five days of
one week and the first five days of the next, thereby never
exceeding 40 hours in one week.
      It can come as no surprise that Epsilon’s employees vastly
preferred the 10/2 AWS to the Ten Day/Eight-Hour schedule. On
the 10/2 AWS, they worked fewer days and received greater pay
(both for additional hours worked and for overtime). In contrast,
the Ten Day/Eight-Hour schedule required them to commute to
work more often, and work ten days in a row, for less money.
However, although Epsilon’s employees testified that they
preferred the 10/2 AWS to the Ten Day/Eight-Hour schedule,
several of them also testified that, had they been offered the
option of a 12-hour schedule with 4 hours of overtime, they would
have preferred that. It does not appear that were ever given this
option, nor were they given the option of running the plant full
time with 8-hour schedules and minimal overtime.
3.    The Governing Authority for Adoption of an AWS
      Before we address the circumstances in which Epsilon
adopted the AWS each of the four times it did so, we provide an
overview of the legal requirements for an AWS.
      Overtime compensation is required to be paid for any work
in excess of eight hours in one workday unless an exception
applies. One such exception is an “alternative workweek
schedule adopted pursuant to Section 511.” (§ 510, subd. (a)(1).)
Section 511 in turn, provides that an employee may adopt an

                                 5
AWS only if it receives approval in a secret ballot election by at
least two-thirds of the affected employees. Specific requirements
for the adoption of an AWS are then set forth in the applicable
wage orders. For the manufacturing industry, we are concerned
with Industrial Welfare Commission wage order 1-2001. (Cal.
Code Regs., tit. 8, § 11010.) This wage order permits an AWS
which has up to 10 hours of work per day at regular pay with up
to 2 additional hours to be paid at the overtime rate. (Cal. Code
Regs., tit. 8, § 11010, subd. 3(B)(1); see Mitchell v. Yoplait (2004)
122 Cal.App.4th Supp. 8, 12.)
       The wage order provides detailed requirements for the
adoption of such an AWS:
       - it shall begin with a proposal “in the form of a written
agreement proposed by the employer” (Cal. Code Regs., tit. 8,
§ 11010, subd. 3(C)(1));
       - in “order to be valid, the proposed alternative workweek
schedule must be adopted in a secret ballot election, before the
performance of work, by at least a two-thirds (2/3) vote of the
affected employees in the work unit. The election shall be held
during regular working hours at the employees’ work site” (id. at
subd. 3(C)(2));
       - prior to the vote, the employer “shall have made a
disclosure in writing to the affected employees, including the
effects of the proposed arrangement on the employees’ wages,
hours, and benefits. Such a disclosure shall include meeting(s),
duly noticed, held at least 14 days prior to voting, for the specific
purpose of discussing the effects of the alternative workweek
schedule” (id. at subd. 3(C)(3));

                                  6
       - the results of the election shall be reported by the
employer to the Division of Labor Statistics and Research within
30 days (id. at subd. 3(C)(6));
       - employees affected by the AWS “may not be required to
work those new hours for at least 30 days after the
announcement of the final results of the election” (id. at
subd. 3(C)(7))); and
       - the employer “shall not intimidate or coerce employees to
vote either in support of or in opposition to a proposed alternative
workweek” (id. at subd. 3(C)(8)).
4.     The Four Challenged Periods in Which Epsilon Used the
       10/2 AWS
       The present lawsuit encompasses four periods in which
Epsilon used the 10/2 AWS. The trial court found that Epsilon’s
adoption of the 10/2 AWS was faulty, and not in good faith, each
time. As Epsilon does not challenge these findings with respect
to the later two times, we focus the bulk of our discussion on the
first two periods.
       A.     The First Period: April 26, 2007 – October 13, 2008
       Although the first challenged period began in April 2007,
Epsilon did not actually adopt the 10/2 AWS at that time.
Instead, April 2007 was simply as far back as the statute of
limitations allowed plaintiffs to reach. The 10/2 AWS in effect in
2007 had been in operation when Epsilon acquired the plant in
2002. Epsilon’s predecessor was Apple Plastics; Epsilon
purchased Apple’s assets when the latter filed for bankruptcy.
The issue then, turned not on whether Epsilon had properly
adopted the 10/2 AWS, but whether Apple had.4

4    The parties and the trial court all operated under the
assumption that if Apple had, in fact, properly adopted the 10/2

                                 7
       The evidence at trial regarding Apple’s adoption of the 10/2
AWS was minimal. There was certainly evidence that the 10/2
AWS was in effect at Apple. Several workers remembered it, and
one testified to having voted at Apple to keep the schedule, but
there was no testimony as to a vote at Apple initially adopting
the 10/2 AWS. Indeed, Epsilon’s controller, Jim Gifford – who
had worked in the same position for Apple since 1993 – testified
that although he recalls Apple employees voting on the AWS, he
was unable to identify a time when the employees voted on it
before they actually worked on that schedule.
       Instead, Epsilon relied on two documents found by Gifford.
The first is a May 1, 1995 memo, found in an Apple file, directed
to “Production Employees.” It states, “We have been on the 12
hour workday schedule. Would like to know if you would like to
continue working 12 hour shifts. We would like to have your
opinion on this matter. Please read following information
regarding the 12 hour work day schedule. Indicate on the bottom
half of this memo if you are in favor or not in favor of the 12 hour
work schedule.” There follows a description of the 10/2 AWS, and
a tear-off at the bottom of the memo on which the employee can
vote.5 It states, “Special Note: The 12 Hour Work Day Schedule

AWS, Epsilon would be permitted to continue operating the plant
under it without a new secret ballot process. We therefore
assume that this is true, although there appears to be no
authority on the subject.

5      We note that to the extent this memorandum is a ballot, it
is not a secret one. The ballot has a line for the “Employee name”
and directs that the employee return the form to “your
supervisor.”

                                 8
has been implemented since May 1993 and needs to be reviewed
on an annual basis and evaluated to ensure that the program is
working properly.”
       The second is a December 15, 1999 letter, on Apple
letterhead, addressed to the Industrial Welfare Commission,
requesting “an exemption to continue with the current
alternative work schedule that is currently in place.” After
explaining the 10/2 AWS, it states, “We have had this schedule
since 1993 and have surveyed employees on May 1995 and May
1996 as to whether they would like to continue with the 12 hours
shift as described above. More than 2/3 of the employees voted to
continue with the 12 hours work schedule.” The letter closes
with, “Again, I would like to respectfully request the exemption to
continue with our alternate work schedule. Respectfully, I await
your reply on this matter.” There was no evidence whether this
letter was actually sent to, or received by, the Commission.
       The trial court would ultimately conclude that there was no
evidence the 10/2 AWS was properly adopted for this initial
period. Specifically, there was no evidence of a written
disclosure, a meeting, voting, a 30-day waiting period, or a report
to the state within 30 days.
       At one point during this period, in January 2008, Epsilon
conducted a revote to confirm its employees’ agreement to the
10/2 AWS. Exhibits indicate that it was a secret ballot, preceded
by a written memo, circulated to employees in Spanish,
explaining the 10/2 AWS. An employee who recalls the vote does
not remember any meeting prior to the vote. Additionally, the
exhibits demonstrate that a supervisor took part in the vote (he
voted yes), even though he was salaried and therefore not part of
the work group subject to the 10/2 AWS.

                                9
      The 10/2 AWS continued until October 2008. At that time,
the recession reduced the plant’s orders, and Epsilon was unable
to keep operating 24 hours per day, 7 days a week. Instead, the
plant switched to the Ten-Day/Eight-Hour schedule described
earlier. The return to this schedule does not implicate AWS
regulations.
      B.     The Second Period: October 11, 2009 – November 23,
             2009
      In October 2009, orders picked up, and the plant was able
to return to the full 24/7 schedule. Controller Gifford delegated
to Human Resources administrator Marisol Mendoza the task of
conducting the vote to return to the 10/2 AWS. Mendoza was
given an order that “we had to move back to the 12-hour shift.” It
was her understanding that Epsilon had no choice; it had to move
to the 12-hour shift in order to fulfill its orders.6
      Mendoza was untrained on the AWS adoption procedure.
She conducted her own research, by reviewing how a previous
Human Resources administrator had handled it, and searching
the Department of Labor’s website for direction. She is certain
that she had access to counsel if she needed it, but chose not to
contact the lawyers, explaining, “I just went by what the – I think
it was the Department of Labor asked for. It was pretty simple.
Just follow those guidelines, and you know everything was done
in good faith.”
      Mendoza prepared a memorandum, dated October 6, 2009,
stating, “Due to our customer demands our plant will be moving
from an (8) eight hour shift to a (12) twelve hour shift. This will
be ongoing for approximately (1) one month or more should we

6      The “12-hour shift” was another way of saying the 10/2
AWS.

                                10
get more orders in. To get an [sic] employee input we are
conducting this election. Below please indicate if you agree with
the (12) twelve hour shift schedule or if you disagree with it.”
The memo explained the terms of the 10/2 AWS, although it did
not specifically state that, without adoption of the 10/2 AWS,
overtime pay on a 12-hour shift would begin after the first 8
hours.
      After preparing the memorandum, Mendoza had meetings
with each shift of employees on October 6, 2009. During the
meetings, she explained that Epsilon “will be going to the 12-hour
schedule” and that employees would be paid 10 hours at regular
time and 2 hours overtime. The employees voted on the 10/2
AWS at the meetings.
      The employees’ vote was in favor of the 10/2 AWS. Several
employees testified that they were told that, although they were
asked to vote, they were told to vote yes “because it was going to
happen anyway.” Indeed, one employee testified that he was told
by the plant manager that if he did not agree with the AWS, he
could leave at any time, as there were a lot of people outside who
wanted work. Additionally, the salaried supervisor who should
not have voted in October 2008 voted again in October 2009.
      The 10/2 AWS went into effect on October 12, 2009, six
days after the vote. On October 16, 2009, Mendoza wrote a letter
to the Division of Labor Statistics and Research, in order to
comply with the AWS requirements and inform the Division of
what Epsilon “was trying to do.” The letter explained that the
employees voted unanimously on October 6, 2009 to adopt the
10/2 AWS, and that the schedule went into effect on October 12,
2009.

                               11
       This adoption of the 10/2 AWS was short-lived. The plant
returned to the Ten-Day/Eight-Hour schedule in late November
or early December 2009. Again, this schedule does not implicate
AWS rules.
       C.    The Third Period: October 18, 2010 – October 31,
             2010
       The plant briefly returned to the 10/2 AWS for two weeks
in October 2010 with no vote whatsoever. Mendoza conceded
that she did nothing to implement the 10/2 AWS during this
period. She testified, however, that she thought Epsilon was
“okay in doing it” because the employees preferred the 10/2 AWS
to the Ten-Day/Eight-Hour schedule.
       D.    The Fourth Period: May 22, 2011 to March 31, 2013
       Mendoza did conduct a vote related to Epsilon’s final
adoption of the 10/2 AWS in May 2011. However, as her May 31,
2011 letter to the Division indicates, the 10/2 AWS took effect on
May 23, 2011, but the employees did not vote on it until May 31,
2011.7
       When asked at trial whether a vote after the AWS was
implemented complied with the rules for an AWS, Mendoza
testified, “At that time, since this was already something
implemented in the past, um, some things may have changed,
um, because the process was, you know, similar, the same, and I
could have mentioned it, like I said last time on my safety
meetings, which are conducted monthly. And because it’s so – it

7     Moreover, while her voting records indicate that shifts “B”
and “C” voted on May 31, 2011, shifts “A” and “D” did not vote
until June 2, 2011, after Mendoza wrote to the Division stating
the employees had voted unanimously in favor of the 10/2 AWS.

                                12
was, like, kind of, like, a popular schedule and a lot of people
wanted it, we kind of went that way.”
5.     The Complaint
       On April 26, 2011, plaintiffs Olvin Maldonado and Manuel
Cobian Hernandez, individually and on behalf of the class of
hourly employees of Epsilon, brought suit against Epsilon for
violation of wage and hour laws and violation of the unfair
competition law (Bus. & Prof. Code, § 17200).8 The complaint
alleged numerous wage and hour violations, not all of which
plaintiffs pursued at trial. The unfair competition law cause of
action was based on the same alleged wage and hour violations.
6.     Class Certification
       In December 2012, plaintiffs moved to certify a class with
respect to a more limited set of claims: (1) failure to pay overtime
for hours 9 and 10 under the 10/2 AWS each time it was
implemented; (2) failure to pay overtime for work more than 40
hours in a week (and failure to give one day of rest in seven)
under the Ten-Day/Eight-Hour schedule; (3) denial of meal and
rest breaks; (4) failure to provide accurate pay stubs, as the pay
stubs did not reflect the overtime rate for all overtime hours
actually worked; and (5) waiting time penalties for those former
employees who were not paid all earned wages.
       On September 30, 2013, the trial court granted the motion
in part and denied it in part. The court granted certification with
respect to the claims for overtime, inaccurate wage statements,
waiting penalties, and related unlawful business practices. The
court denied certification as to the claims for failure to provide
meal and rest breaks. The court explained that certification of

8     Plaintiffs also named the plant manager as a defendant,
but eventually voluntarily dismissed him.

                                13
these latter claims was denied because those claims required
individualized fact-specific inquiries, such that individual issues
predominated over common ones.9
7.     Summary Adjudication of Ten-Day/Eight-Hour Schedule
       Claims
       Epsilon next moved for, and obtained, summary
adjudication of plaintiffs’ claim that they were owed overtime for
the Ten-Day/Eight-Hour Schedule. The court concluded that the
schedule was legal, and that no additional overtime was owed.
Plaintiffs do not challenge this ruling on appeal.
8.     Court Trial – Phase One
       The matter proceeded with a bifurcated trial, with the
parties trying the equitable claim under the unfair competition
law to the trial court first. The sole issue at this phase of the
trial was whether Epsilon owed plaintiffs overtime for hours 9
and 10 when the 10/2 AWS was in effect or if, to the contrary, the
payment of overtime for those hours was excused by the proper
adoption of an AWS.
       The court heard testimony from Mendoza and others at
Epsilon regarding their adoption of the 10/2 AWS for the four
relevant periods. Employees also testified as to their recollection
of the procedures followed for adopting the 10/2 AWS.
       Following written briefing, the court issued its statement of
decision in favor of plaintiffs. The court concluded that, in all
four periods, there was no validly implemented AWS. The court
was specifically troubled by the fact that, throughout the entirety

9      Plaintiffs did not cross-appeal from the denial of class
certification of the meal and rest break claims, but we discuss the
facts underlying these claims as they relate to points Epsilon
makes in its appeal.

                                14
of the period, Epsilon “failed to inform the Employees that by
agreeing to the [10/2 AWS], they were waiving overtime pay for
hours nine and ten of the 12-hour shift that they would otherwise
be entitled to.” The court also noted specific problems with the
adoption in each of the four periods. In the first period, there was
no written disclosure, no meeting, no voting, no 30-day waiting
period, and no report to the state within 30 days. In the second
period, the meeting was the same day as the vote, not 14 days
before; and the AWS was implemented 6 days, not 30 days later.
For the third period, there was no vote at all or any other attempt
to comply with the procedures. For the fourth period, the AWS
had been implemented before the vote.
       As the 10/2 AWS was never properly adopted, the court
concluded the failure to pay overtime for hours 9 and 10 was not
excused, and Epsilon violated both the Labor Code and the unfair
competition law. The case would therefore proceed to the second
phase, where the parties would litigate the amount of unpaid
overtime, as well as liability and damages for the waiting time
and inaccurate wage statement claims.
9.     Court Trial – Phase Two Testimony
       The phase two trial was broadly concerned with three
issues: (1) the calculation of damages owed for the failure to pay
overtime for hours 9 and 10 under the 10/2 AWS; (2) whether
Epsilon had a good faith defense to the failure to pay overtime,
which would excuse it from waiting time penalties; and
(3) whether Epsilon was also liable, and in what amount, for

                                15
inaccurate wage statements.10 We discuss the evidence on each
issue.
        A.    Damages for Uncompensated Overtime
        As we have explained, under the 10/2 AWS, employees
were paid regular time for 10 hours and overtime for 2 hours; this
time included 1/2 hour for a meal break even though, as a general
rule, an off-duty meal break need not be paid. (Cal. Code Regs.,
tit. 8, § 11010, subd. 11(C).) Plaintiffs and Epsilon each
presented expert testimony as to the amount of unpaid overtime
owed to the class; the difference between them was simply how to
handle the paid meal break which had been part of the 10/2 AWS.
        Specifically, Epsilon took the position that, since its
employees did not work during their lunch breaks, they actually
did not work full 12-hour shifts, but only worked 11.5 hours. As
they had already received 2 hours of overtime for each shift, their
damages should be calculated as 1.5 hours of unpaid overtime per
shift only. Notably, Epsilon did not seek to offset the half-hour it
had paid for lunch against the damages owed. It simply had its
expert, Robert Plante, make calculations on the basis that there
should be no overtime calculated on the paid half-hour meal
break. Under Epsilon’s calculation, once damages were awarded,
each employee’s compensation for a 12-hour shift would be: 8
hours of regular pay, plus 3.5 hours of overtime, plus a .5 hour
regular pay bonus for lunch.
        Plaintiffs had hired two experts. Their first expert, Jim
Skorheim, performed his calculations, but was then fired by
plaintiffs, who sued him for fraud and extortion in connection

10    The court also tried the named plaintiffs’ individual claims
for missed meal and rest breaks. These are not at issue on
appeal.

                                16
with his billing. Their second expert, forensic accountant Henry
John Kahrs, actually testified at trial. When Kahrs realized the
only difference between Skorheim’s initial calculations and
Plante’s calculations was whether overtime was due for the half-
hour meal break, Kahrs went into the punch clock data to
determine the actual hours the employees had worked, and tried
to figure out if they had, in fact, been paid for a 30-minute break.
       Kahrs originally pulled “30 or 31 random punch cards and
calculated what the time in, the time out, the total number of
hours they worked.” In that initial sample, which was actually
32 individual time cards, he concluded that only two employees
were paid for the meal break, and the remainder were not. In
addition, he concluded that, of the employees who were not paid
for their meal break, 21 were underpaid by at least a minute,
while nine others were overpaid (but not by the full 30 minutes
which would constitute payment for the meal break). He did a
second random sample of 19 and reached a similar conclusion.
Kahrs extrapolated from this data, offsetting the overpayments
against the underpayments, and concluding that, on average,
each class member was underpaid by about 60 cents per shift.
Plaintiffs did not seek to recover this amount; however, they
relied on this testimony to bolster their conclusion that the
employees were not paid for their meal breaks.
       Epsilon pointed out three general problems with Kahrs’s
random sampling. First, plaintiffs questioned whether a sample
as small as Kahrs’s could have any statistical significance.
Kahrs’s sample consisted of no more than 51 line items of data,
out of a total of 56,000 time sheet line items. This is less than
one-tenth of 1 percent of the data. Kahrs testified that this tiny
sample was nonetheless statistically significant, stating, “If you

                                 17
go through and you calculate a confidence interval, even if you
ran a million pieces in your sample, if you took 35 random items,
your confidence level of being correct would be roughly above 95
percent. That’s why randomness is so important. [¶] The object
isn’t to go through and test hundreds and hundreds of thousands.
The object is to take a small sample and take a look at it and see
if it’s representative.” Kahrs was not himself a statistician, but
testified that there was a statistician on his staff. Kahrs testified
that he told someone in his office to randomly choose the records
to constitute the sample with the statistician, saying, “Do it
however is the most random and gives us a 95-percent confidence
interval.”
        Second, it appears that several of the samples Kahrs
selected were actually from 8-hour shifts, for which Epsilon had
never agreed to pay for the meal break. Of his initial sample of
32, 10 of entries were from 8-hour shifts, and thus should be
excluded from his data. Our review of his second sample of 19
shows another 10 entries were from 8-hour shifts. Kahrs
conceded this would “drag down the average.”
        Third, some of the samples he selected were from
employees who were not members of the class. Only production
line employees were part of the class; maintenance employees
were not. Yet, of the 51 line items in his random sample, 26
came from maintenance employees. Faced with the suggestion
that the majority of his data did not come from class members,
Kahrs nonetheless believed that this would not call into question
the accuracy of his analysis. He testified that the randomness of
his sample established its accuracy. Eventually, he conceded
that “In hindsight, I may choose a different sample and take a

                                 18
look at this,” but he did not believe it was problematic to include
non-class member data in his sample.
       There appears to be another problem with Kahrs’s analysis
of his line items of data. By calculating what he believed to be a
number of minutes over- or under-paid for an entire day, Kahrs
went beyond the issue of whether the employees were paid for
their meal breaks and instead offset paid meal break time
against unpaid time-clock rounding time. This was problematic,
as there was no class certified on the issue of improper time-clock
rounding, and the only issue on which Kahrs should have been
testifying was whether the meal breaks had actually been taken.
       To counter Kahrs’s conclusion that employees on the 10/2
AWS were not paid for their meal break, Epsilon presented
various time sheet line items establishing that at least some of
the employees were paid for some meal breaks. Kahrs responded
that Epsilon’s data was cherry-picked, not random, and stood by
his conclusion that although some of the employees were, in fact,
paid for meal breaks, “these people on the whole were not paid for
their lunch.” Kahrs also testified that he had his staff just
randomly pick pages in the time card data, and the results
confirmed that the employees were not paid for meal breaks.
       At one point, Kahrs testified that if the class is not awarded
the extra half-hour of overtime in dispute, the employees will be
underpaid, but if the half-hour is awarded, they will be overpaid.
This led defense counsel to ask, “Wouldn’t the happy medium be
maybe to split it in half, your damages number and Mr. Plante’s
number, and meeting in the middle on this issue?” Kahrs
responded, “Well, I suggested that at least 15 times during the
course of this to plaintiffs’ counsel, who tried to get them to

                                 19
stipulate to that so that I wouldn’t have to come here. Yeah.
That would have been brilliant.”
       B.    Good Faith Defense
       Section 203 provides that employees must be paid their
wages upon discharge or quitting. If the wages are not paid in
accordance with law, the employee’s wages “shall continue as a
penalty” for up to 30 days. However, a “good faith dispute” will
preclude the imposition of these waiting time penalties.
       Once the court found overtime was owed under the 10/2
AWS, Epsilon would also be liable for waiting time penalties to
its former employees, unless it could establish there was a good
faith dispute. Epsilon therefore introduced testimony at the
second phase of the trial on this point.11
       Specifically, human resources administrator Mendoza
testified that she had intended to comply with all AWS
implementation requirements. She said, “I tried to do the best
that I can based on the research; so yes. I was trying to comply
with the law.” She continued, “Everything was done in good
faith, and I was trying to follow and comply with the law.” Plant
manager Tamayo Covarrubias testified he believed all iterations
of the 10/2 AWS were valid, regardless of the failures to comply
with the provisions set forth in the wage order, because all the
employees preferred the 10/2 AWS. Controller Gifford testified
that when Epsilon took over from Apple, it believed the 10/2 AWS

11    The parties, and the trial court, proceeded on the
assumption that Epsilon had the burden of proof of its good faith,
as a defense. Perhaps for this reason, plaintiffs did not
specifically introduce additional evidence to refute good faith;
they simply relied on the testimony regarding the adoption of the
AWS from the first phase of the trial, and cross-examination of
Epsilon’s witnesses.

                                20
had been properly implemented, although he conceded that, on
behalf of Epsilon, he did nothing to confirm that fact beyond
looking in the file and seeing the two documents on which he had
relied in phase one of the trial.
       C.    Wage Statements
       Plaintiffs also sought damages for inaccurate wage
statements. The evidence introduced at trial on this point,
however, was virtually nonexistent. A handful of wage
statements for one employee were introduced into evidence,
reflecting that he was paid under the 10/2 AWS. There was no
testimony by any of the class members as to damages arising
from the wage statements.
10. Final Statement of Decision
       After additional briefing, the court issued a statement of
decision, supporting an award of over $900,000 in favor of the
plaintiff class. The court’s statement of decision explained its
ruling on the issues in controversy as follows:
       A.    Amount of Overtime Damages
       Plaintiffs were entitled to a total of 4 hours of overtime for
each 12-hour shift. As they had already received overtime for two
of those hours, and regular time for the other two, damages
would be calculated as the overtime premium (difference between
regular wage and overtime wage) for two hours. Notably, there
would be no reduction for the meal period. The court reached this
conclusion on the basis that most punches for meal breaks were
for less than 30 minutes, and sometimes the employees did not
punch out at all for a break. Moreover, the meal breaks were not
duty free, as the employees were required to continue to monitor
their machines. The court was persuaded by Kahrs’s analysis
that if 30 minutes of overtime premium were to be deducted, the

                                 21
employees would be underpaid, due to both time-clock rounding
and the fact that employees rarely received a full 30-minute
break. The court completely adopted Kahrs’s analysis,
specifically noting that Kahrs “utilized random samplings that
provided a 95% confidence interval,” and that “even if one were to
remove the 8-hour shifts and the non-class members, still only
one employee received a lunch of at least 30 minutes according to
the punch details. Further, when confronted with this, Kahrs
confirmed that it did not change the conclusion.”
       While the court declined to deduct 30 minutes from the
overtime award, it noted that this was “not to be confused with
Labor Code meal break violations which were not at issue during
this trial for the Class, only for the individual Plaintiffs.”
Nonetheless, the court went on to conclude that Epsilon “failed to
show that it uniformly gave the Employees a paid 30-minute,
duty free lunch for each 12-hour shift worked to entitle it to
reduce the overtime damages.” Here, the court itemized evidence
supporting this conclusion, including that there was no schedule
to guarantee breaks; managers often summoned employees back
to their machines when they were on break; employees could not
leave the premises for breaks during the night shift; and there
were not enough employees to provide coverage for the breaks.
       B.     Lack of Good Faith
       Epsilon did not establish the good faith defense to the
imposition of waiting time penalties. Epsilon failed to
substantially comply with the AWS requirements. In addition to
its obvious failures – such as voting after the AWS was put into
effect on the fourth period, and not voting at all on the third
period – the court specifically found other evidence of lack of good
faith in the fact that Epsilon never actually informed the

                                22
employees that by voting for the 10/2 AWS, they were giving up
two hours of overtime to which they were entitled. Moreover,
Epsilon offered the employees a paid meal break to entice them to
vote for the 10/2 AWS. The court also found bad faith in Epsilon
telling the employees how to vote, and allowing employees who
were not subject to the 10/2 AWS to vote for its adoption.
       C.      Wage Statement Penalties
       Plaintiffs were entitled to wage statement penalties. The
court’s discussion that the wage statements caused the plaintiffs
injuries was limited to the following: “The evidence presented at
trial revealed that the paystubs that Epsilon provided to the
Employees inaccurately listed overtime hours worked by the
Employees at regular-time hourly rates, rather than the
enhanced overtime rates as required by law, thereby causing
injury, i.e., the Employees were paid regular rate instead of the
enhanced overtime rate. Although Epsilon actually paid the
Employees the regular rate of pay for hours 9 and 10, as shown
on the paystub, this was inaccurate because the law required
Epsilon pay overtime premium for hours 9 and 10.”
11. Judgment
       On July 26, 2016, the court entered judgment in favor of
plaintiffs, consisting of $249,866.60 in unpaid overtime,
$391,933.50 in waiting time penalties, $161,250 in wage
statement penalties, and $132,247.30 in prejudgment interest on
the unpaid overtime, for a total of $935,297.40.
12. Notice of Judgment
       On August 10, 2016, plaintiffs served Epsilon a file-
stamped copy of the judgment, giving notice that it had been
entered.

                               23
13.    Attorney’s Fees
       On October 11, 2016, plaintiffs sought their attorney’s fees
under section 218.5. Plaintiffs sought fees in a lodestar amount,
enhanced by a multiplier of 1.7.
       Epsilon opposed the motion on the basis that it was
untimely, because the clerk allegedly served a file-endorsed copy
of the judgment when it was entered on July 26, 2016. Epsilon
also challenged the lodestar in some respects; and the multiplier.
       Plaintiffs responded that the clerk’s mailing was not
sufficient to start the clock running for a motion for attorney’s
fees, and that the motion was timely when measured from
plaintiffs’ August 10, 2016 notice of judgment.
       The court agreed with plaintiffs, finding the motion to be
timely. It awarded fees in the amount of $888,811.50, based on a
somewhat reduced lodestar, and a multiplier of 1.5.
14. Appeal
       Epsilon filed timely notices of appeal from both the
judgment and the award of attorney’s fees. We have consolidated
the two appeals for argument and resolution in a single opinion.
                            DISCUSSION
       The several arguments on appeal are affected by various
burdens of proof and our standard of review. We discuss each
under the applicable argument.
1.     Challenges to the Overtime Damages Based on Improper
       Adoption of the AWS
       Plaintiffs were awarded damages for unpaid overtime due
to the improper adoption of the 10/2 AWS in four separate
periods. Defendant challenges both the finding of liability with
respect to one of the four periods and the calculation of damages.

                                24
      A.     Substantial Evidence Supports the Finding of
             Liability
      With respect to the first period the 10/2 AWS was in effect
– the period based on Apple’s earlier adoption of its 10/2 AWS –
Epsilon argues that the AWS was properly adopted as a matter of
law, based on undisputed evidence. Epsilon argues, “The AWS
that was in place during this time period was first implemented
in the early 1990s by Apple, and no evidence was presented that
Apple failed to follow necessary procedures to implement this
AWS.” However, it was not plaintiffs’ burden to establish that
Apple failed to follow the procedures; it was Epsilon’s burden to
establish that it did.
      We begin with the premise that section 510, subdivision (a)
provides that any work in excess of 8 hours in one day shall be
compensated at the overtime rate of time and a half. This does
not apply, however, to an employee working pursuant to a
properly adopted AWS. (§ 510, subd. (a)(1).)
      “[T]he assertion of an exemption from the overtime laws is
considered to be an affirmative defense, and therefore the
employer bears the burden of proving the employee’s exemption.
[Citations.]” (Ramirez v. Yosemite Water Co. (1999) 20 Cal. 4th
785, 794-795.)
      Thus, Epsilon had the burden to establish the 10/2 AWS
was properly adopted. Specifically, as to the first period, Epsilon
had the burden to establish that Apple had properly adopted its
AWS. Epsilon’s evidence on this point was limited to
documentary evidence indicating that the 10/2 AWS was adopted
in 1993 and confirmed by votes in 1995 and 1999. But while the
two documents indicate the 10/2 AWS was implemented in 1993,
neither document states that there was a pre-adoption vote, by

                                25
secret ballot or otherwise. Controller Gifford, the only Epsilon
witness who testified to working at Apple in 1993, conceded that
he could not testify to a vote happening prior to the Apple
employees working on the 10/2 AWS.
       This does not establish as a matter of law that the 10/2
AWS was properly adopted. Instead, there was an absence of
evidence that it was. Subsequent attempts (by Apple and
Epsilon) to reaffirm the employees’ commitment to the 10/2 AWS
after it had been adopted do not meet the requirements of a pre-
adoption vote, preceded by written notice and meetings.
       Epsilon failed to meet its burden, and the trial court did not
err in finding there was insufficient evidence that the 10/2 AWS
was properly adopted. Our analysis would be the same whether
we employed a de novo review based on uncontested facts (as
suggested by Epsilon) or substantial evidence to the extent there
were conflicting facts or conflicting inferences to be drawn from
undisputed facts (as argued by plaintiffs).
       B.    Overtime Damages Were Miscalculated
       As the 10/2 AWS was not properly adopted (in any of the
four periods at issue), the trial court awarded overtime to the
plaintiff class. The sole dispute at the second trial, regarding the
damage calculation, was whether to award plaintiffs 1.5 hours of
overtime premium for each shift or 2 hours of overtime premium
for each shift. Epsilon conceded that the plaintiffs were entitled
to 1.5 hours. The issue was simply whether they were entitled to
the additional half-hour for the time which Epsilon allocated to
the paid meal break.
       Here, it is plaintiffs who had the burden of proof, but who
wrongly argue the burden was on Epsilon. Plaintiffs were
seeking an award of damages; they had the burden of proof.

                                 26
(Evid. Code, § 500.) As a general rule, employees have the
burden of proving that they performed work for which they were
not compensated. (Hernandez v. Mendoza (1988) 199 Cal. App. 3d
721, 727.) To be sure, employees need not prove this time with
perfect exactitude when the employer’s time records are
inaccurate or inadequate. (Ibid.) But that is not this case, and
plaintiffs do not argue that it is. Indeed, plaintiffs’ evidence on
this point was based on Kahrs’s testimony, which was, in turn,
based on Epsilon’s detailed punch card records.
       Instead, plaintiffs take the position that Epsilon bore the
burden of proof because it was seeking a “reduction” in overtime
damages for the meal break. Specifically, they argue that “in
order for Epsilon to get this lunch reduction, Epsilon needed to
prove that: 1) it gave the Employees with the ‘opportunity’ to
take a 30-minute duty-free lunch; and 2) the lunch lasted a full
30 minutes; and 3) the lunch occurred before the fifth hour of
work; and 4) the Employees were relieved of all duties, including
leaving the facility at will; and 5) [Epsilon] did not discourage the
Employees from taking the 30-minute lunch.”
       Plaintiffs here rely on section 512, the Labor Code
provision governing meal breaks. But plaintiffs overlook the fact
that this was not a cause of action under the Labor Code for the
failure to provide statutorily-mandated meal breaks. Plaintiffs
had alleged such a cause of action and the court had denied class
certification on it. Instead, this was merely an element of
damages for unpaid overtime. In short, the question was
whether, under the 10/2 AWS, the employees worked 11.5 or 12

                                 27
hours. The burden of proof that this additional half-hour was
worked was squarely on plaintiffs.12
       The misallocation of the burden of proof on this element
drove plaintiffs, their expert Kahrs, and the trial court, to focus
on the wrong issue. Plaintiffs believed they had defeated
Epsilon’s defense merely by establishing that not every employee
took the full 30-minute meal break at every shift. But plaintiffs
instead needed to establish that every class member worked for
the entirety of the break during every shift, so that 30 minutes
(or some specified lesser amount) could be added onto the
overtime calculation. Perhaps this could have been established
by a statistical analysis of the time card punch data. (Compare
Duran v. U.S. Bank National Assn. (2014) 59 Cal. 4th 1, 40
[discussing the use of statistical sampling to prove damages in
overtime cases] (Duran).) But because plaintiffs believed the
burden of proof was on Epsilon, plaintiffs made no effort to
affirmatively establish the amount of time that plaintiffs worked
over and above the 11.5 hours defendant conceded (as the trial
court had already found an invalid AWS).
       This failure of proof is sufficient to undermine that portion
of the trial court’s award granting plaintiffs the additional half
hour of overtime damages. However, we believe it necessary to
briefly address three failings in the theory pursued by plaintiffs
and supported by Kahrs’s testimony.

12    Epsilon did not seek to offset against damages the
additional half-hour of pay it gave its employees for the meal
breaks. Epsilon would have had the burden of establishing such
an affirmative defense. But Epsilon was simply taking the
position that plaintiffs had not earned as much overtime as they
claimed; this did not shift the burden.

                                 28
       First, Kahrs, as we have discussed, sought to determine
whether the employees were paid for their meal breaks. He did
so not by simply checking whether the time cards reflected 30-
minute meal breaks were taken. Instead, he added up the total
amount of minutes the time cards reflected were worked.
Finding that employees clocked in earlier and clocked out later
than the times for which they were paid (due to time-clock
rounding), he offset the “unpaid” minutes due to time-clock
rounding against the “paid” minutes for meal breaks, and
concluded that meal breaks were not, on the whole, compensated.
But time-clock rounding itself may be permissible or
impermissible; there is authority governing when a employer
may use time-clock rounding. (See Silva v. See’s Candy Shops,
Inc. (2016) 7 Cal.App.5th 235, 239, 249.) In this case, even if
plaintiffs’ complaint could be broadly interpreted to encompass a
claim for improper time-clock rounding, plaintiffs did not seek
class certification on it, and, most importantly, never tried the
issue of whether Epsilon was liable for it. Kahrs’s overtime
calculations simply assumed that plaintiffs were entitled to be
paid for every minute they were on the clock – effectively
imposing liability on Epsilon for time-clock rounding in the
course of a damages analysis for an improperly adopted AWS.
This was improper.
       Second, Kahrs’s attempt to establish any conclusion at all
with respect to the class, based on a random sample of 51 pieces
of data, over half of which did not even pertain to class members,
is the sort of “profoundly flawed” mock statistical analysis by a
non-statistician rejected by the California Supreme Court in
Duran. (Duran, supra, 59 Cal. 4th 1 at p. 13.) As the Supreme
Court explained: “Sampling is a methodology based on

                                29
inferential statistics and probability theory. ‘The essence of the
science of inferential statistics is that one may confidently draw
inferences about the whole from a representative sample of the
whole.’ [Citation.] Whether such inferences are supportable,
however, depends on how representative the sample is.
‘[I]nferences from the part to the whole are justified only when
the sample is representative.’ [Citation.] Several considerations
determine whether a sample is sufficiently representative to
fairly support inferences about the underlying population.” (Id.
at p. 38.) It is enough to say Kahrs made no determination of
variability, and simply stated that his random sample of less
than 1 in 1000 was sufficient because it was random. This is
inadequate as a matter of law.
       Third, we reject Kahrs’s attempt to cloak his testimony in
the statistical respectability of a 95 percent “confidence interval”
as not only unsupported, but missing key data. The 95 percent
“confidence interval,” as used by statisticians, is the “interval of
values above and below the estimate within which one can be 95
percent certain of capturing the ‘true’ result.” (Duran, supra,
59 Cal.4th at p. 46.) The interval is expressed in terms of the
margin of error; and if the margin of error is too large, the result
can be rejected as a matter of law. (Ibid.) Here, Kahrs testified
to a 95 percent “confidence interval” in the conclusion that the
employees were not, on the whole, paid for meal breaks. This is
not an interval at all, and not a statement in which, statistically
speaking, one can have a 95 percent “confidence interval.” No
testimony was elicited on the margin of error.
       Having rejected Kahrs’s inferences, we are left with the
question of whether plaintiffs established entitlement to any
overtime, over and above the 1.5 hours per shift conceded by

                                 30
Epsilon. Kahrs’s conclusions may be lacking, but his data
demonstrates that some employees did not, in fact, get paid for
every meal break. This anecdotal evidence, even if truly random,
is not sufficient to justify an award of overtime for any particular
amount of minutes. This is especially true given that Epsilon
presented competing anecdotal evidence that some employees
were paid for some meal breaks.
       However, on appeal, Epsilon argues not for a reversal of the
additional half hour of overtime, but for the court to split the
difference and award the midpoint between 1.5 hours per shift
and 2 hours per shift. As Epsilon concedes that this is an
appropriate amount of damages, we will direct the judgment be
reduced to that amount. On remand, the trial court shall make
the calculation. Because the amount of overtime damages will
change following recalculation, the court will also be required to
recalculate the waiting time penalties and prejudgment interest.
2.     Challenges to the Award of Waiting Time Penalties
       Epsilon has two challenges to the award of waiting time
penalties. First, it argues that it has established its good faith
defense as a matter of law with respect to the first two periods in
which it used the 10/2 AWS. Second, it argues that those waiting
time penalties imposed for the period after March 31, 2013, were
not supported by the evidence.
       A.     The Evidence Supports the Finding of Lack of Good
              Faith
       “If an employer willfully fails to pay, without abatement or
reduction, . . . any wages of an employee who is discharged or
who quits, the wages of the employee shall continue as a penalty
from the due date thereof at the same rate until paid or until an

                                31
action therefor is commenced; but the wages shall not continue
for more than 30 days.” (§ 203, subd. (a).)
       “A willful failure to pay wages within the meaning of Labor
Code Section 203 occurs when an employer intentionally fails to
pay wages to an employee when those wages are due. However, a
good faith dispute that any wages are due will preclude
imposition of waiting time penalties under Section 203. [¶]
(a) Good Faith Dispute. A ‘good faith dispute’ that any wages are
due occurs when an employer presents a defense, based in law or
fact which, if successful, would preclude any recover[y] on the
part of the employee. The fact that a defense is ultimately
unsuccessful will not preclude a finding that a good faith dispute
did exist. Defenses presented which, under all the circumstances,
are unsupported by any evidence, are unreasonable, or are
presented in bad faith, will preclude a finding of a ‘good faith
dispute.’ ” (Cal. Code Regs., tit. 8, § 13520.)
       This regulation “imposes an objective standard.” (FEI
Enterprises, Inc. v. Yoon (2011) 194 Cal. App. 4th 790, 802.) “The
appearance of the language ‘or presented in bad faith’ in the list
of circumstances precluding a finding of a good faith dispute does
not render the test a subjective one, but indicates that subjective
bad faith may be of evidentiary value in the objective bad faith
analysis.” (Id. at p. 802, fn. 9.)
       Although the trial in this case proceeded as though Epsilon
had the burden to prove a good faith dispute, the law on this
point is not entirely clear. Certainly, an argument could be made
that since section 203 provides that waiting time penalties are
awarded only for a “willful” failure to pay wages, lack of good
faith is an element of willfulness on which plaintiffs had the
burden of proof. (See, e.g., Armenta v. Osmose, Inc. (2005)

                                32
135 Cal. App. 4th 314, 325-326.) We need not resolve the burden
of proof issue, however, as Epsilon’s only argument on appeal is
that it had established good faith as a matter of law, a point that
we reject. The issue of good faith is, in actuality, an issue of fact
reviewed for substantial evidence. (Road Sprinkler Fitters Local
Union No. 669 v. G & G Fire Sprinklers, Inc. (2002)
102 Cal. App. 4th 765, 781.)
       Courts have found good faith disputes in a failure to pay
wages when the legal duty to pay the wages was unclear at the
time of the failure to pay. (E.g. Amaral v. Cintas Corp. No. 2
(2008) 163 Cal. App. 4th 1157, 1201-1202.) However, the existence
of a bona fide legal dispute will not necessarily result in a finding
of good faith when other evidence indicates the defendant knew it
was not paying all wages due. (Armenta v. Osmose, Inc., supra,
135 Cal.App.4th at pp. 325-326.)
       Epsilon challenges the trial court’s findings that its failure
to pay full overtime during the first two periods it used the 10/2
AWS was not the result of a good faith dispute. Epsilon argues
that the issue may be resolved in its favor as a matter of law.
But, there is legally sufficient evidence supporting the trial
court’s conclusion in favor of plaintiffs.
             1.     Sufficient Evidence of Lack of Good Faith in the
                    First Period
       Epsilon’s argument that it had a good faith dispute that
overtime was due under the first 10/2 AWS is based on Epsilon’s
evidence that it had a subjective good faith belief that it had
inherited a properly-adopted AWS from Apple. But, a mere
subjective good faith belief that wages were not due is
insufficient; the test is whether there was an objectively
reasonable, even if unsuccessful, defense to the payment of

                                 33
wages. Here, there was no objectively reasonable factual basis
for Epsilon’s defense – it offered, for example, no evidence that
Apple represented to it that the 10/2 AWS was properly adopted,
and that it relied on that representation. Instead, the evidence
showed that Epsilon made no inquiry whatsoever when it took
over the plant, and simply assumed the 10/2 AWS had been
properly adopted. This is sufficient to defeat Epsilon’s claim of
good faith.
             2.     Sufficient Evidence of Lack of Good Faith in the
                    Second Period
      Epsilon’s argument that it had a good faith dispute that
overtime was due under the second 10/2 AWS is based on its
evidence that Mendoza attempted, in subjective good faith, to
comply with the legal requirements for the adoption of an AWS,
and that, although there were some errors in the process, Epsilon
substantially complied. In short, Epsilon argues that
“substantial compliance” was its defense with respect to the
second period, and that although the defense did not win the day,
it was sufficient to establish a good faith dispute as a matter of
law.
      There was a flaw in the adoption of the 10/2 AWS in the
second period which could, conceivably, fall under the framework
of “substantial compliance,” were it the only error: the AWS was
implemented 6 days after the vote, rather than 30. Harder to fit
under that rubric is the fact that the employees voted on the
AWS on the same day as written notice of the AWS and the
meetings discussing it, rather than 14 days after. Even if this,
too, were the sort of deficiency that could objectively constitute
substantial compliance, there were other circumstances
surrounding the adoption of the 10/2 AWS which defeat Epsilon’s

                                34
claim. Specifically, there was evidence that the employees were
not given an opportunity to freely exercise their vote. Mendoza
had been told that the plant “had no choice; it had to move to the
12-hour shift.” The document she drafted proposing the 10/2
AWS said that the “plant will be moving from an (8) eight hour
shift to a (12) 12-hour shift.” The document asked the employees
for their “input” on whether they agreed or disagreed with the
schedule, but it did not indicate that an employee vote would
actually govern whether the 10/2 AWS would be adopted. The
employees were never told what the alternative would be if the
plant needed to run 24/7 but the 10/2 AWS was not adopted.
Several employees testified that they were told to vote yes,
“because it was going to happen anyway.” The trial court
believed this evidence. Irrespective of which party had the
burden of proof, this evidence defeats Epsilon’s claim that it
proved good faith as a matter of law, and it constituted
substantial evidence that plaintiffs had proved a lack of good
faith under the statute.
       B.    Substantial Evidence Supports the Challenged
             Waiting Time Damages After March 31, 2013
       As mentioned, plaintiffs initially hired Skorheim as their
expert. They subsequently fired him and hired Kahrs. At trial,
Kahrs testified to a small amount of waiting time penalties,
incurred after March 31, 2013, based solely on Skorheim’s
calculations; Kahrs had not independently verified Skorheim’s
math.13 Epsilon’s expert, Plante, also did not review any of
Skorheim’s calculations on this particular line item.

13    At no point did Epsilon argue that it could not be liable for
these waiting time penalties on the basis that waiting time
penalties stop accruing when the action is commenced (§ 203,

                                35
       The trial court awarded the damages. On appeal, Epsilon
argues this aspect of the award is unsupported by the evidence,
because Skorheim did not testify to the calculation himself, and
his credibility came into question when plaintiffs sued and
replaced him.
       The award is supported by Kahrs’s testimony. While it is
clear that plaintiffs disagreed with Skorheim in several respects
(largely related to billing), neither party questioned his ability to
calculate waiting time penalties from established data.
Moreover, Plante, who had been retained by Epsilon to review
Skorheim’s calculations and point out disagreements with them,
did not challenge Skorheim on this point. The evidence was
admitted with no objections, and, although sparse, was legally
sufficient
3.     The Award of Wage Statement Penalties is Unsupported
       Plaintiffs were awarded penalties for inaccurate wage
statements. Specifically, they established that the wage
statements were inaccurate because, whenever the plant was on
the 10/2 AWS, the wage statements did not properly indicate the
ninth and tenth hours were overtime. Plaintiffs did not plead, or
argue, that the wage statements were inaccurate in any other
particular.14
       But inaccurate wage statements alone do not justify
penalties; the plaintiffs must establish injury flowing from the

subd. (a)), and that these penalties accrued after the complaint
was filed and the class certified.

14    Specifically, there was no suggestion that the wage
statements were inaccurate due to time clock rounding or the fact
that the meal period was simply included in 12 hours of paid
work, rather than separately itemized.

                                 36
inaccuracy. Here, the trial court concluded the plaintiffs had
suffered injury because they were not paid all of the overtime
they were due.
       On appeal, Epsilon argues that this is not sufficient to
support the award, in that the failure to pay overtime flowed
from the improperly adopted AWS, for which we affirm
compensation, not from the inaccurate wage statements.
Therefore, according to Epsilon, there is no injury as a matter of
law. In response, plaintiffs pursue a new theory, not raised
before the trial court: that injury is presumed under the statute.
Because the issue presents primarily an issue of law, we exercise
our discretion to consider it. (In re J.C. (2017) 13 Cal.App.5th
1201, 1206.)
       Section 226, subdivision (a) itemizes nine categories of
information which must be included in a wage statement. As
relevant to this case, it provides: “(a) 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 showing (1) gross wages earned, (2) total hours worked by
the employee . . . , (5) net wages earned, . . . and (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 . . . .”
       Wage statement penalties are awarded only to employees
who suffer injury “as a result of a knowing and intentional failure
by an employer to comply with subdivision (a).” (§ 226,
subd. (e)(1).) The statute provides, however, that an employee is
deemed to suffer injury if the employer “fails to provide accurate

                                  37
and complete information as required by any one or more of items
(1) to (9) inclusive, of subdivision (a) and the employee cannot
promptly and easily determine from the wage statement alone
one or more of the following: (i) The amount of gross wages or net
wages paid to the employee during the pay period or any of the
other information required to be provided on the itemized wage
statement pursuant to items (2) to (4) inclusive, (6) and (9) of
subdivision (a).” (§ 226, subd. (e)(2)(B) & (e)(2)(B)(i).) It further
explains that “[f]or purposes of this paragraph, ‘promptly and
easily determine’ means a reasonable person would be able to
readily ascertain the information without reference to other
documents or information.” (§ 226, subd. (e)(2)(C).) In short,
while the statute requires nine categories of information to be
included in a wage statement, injury is only presumed if one of
five specific categories is omitted, and, even then, only if a
reasonable person would be unable to readily ascertain the
missing information without reference to other documents or
information.
       Here, plaintiffs argue the missing information from which
injury can be presumed is that of category (a)(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.” The applicable hourly rates were included on the pay
stub. Plaintiffs argue that the corresponding number of hours
worked at each hourly rate was not because, in hindsight, the
employees legally worked 8 hours at the regular time rate and 4
hours at the overtime rate (for each 12-hour shift), but the
paystub indicated they worked 10 hours at the regular rate and 2
hours at the overtime rate.

                                 38
        Epsilon takes the commonsense position that the pay stubs
were accurate in that they correctly reflected the hours worked
and the pay received. Epsilon argues that if plaintiffs’ argument
were followed to its logical conclusion, the only way it could have
avoided wage statement penalties while operating under the 10/2
AWS it believed was legitimate would have been to issue a wage
statement which bore no similarity to the pay the employees were
actually receiving. As it is illogical to think this is what the
Legislature intended, plaintiffs’ counter argument boils down to
the proposition that any failure to pay overtime at the
appropriate rate also generates a wage statement injury
justifying the imposition of wage statement penalties – an
apparent unintentional double recovery.15
        We believe Epsilon has the better argument. We look at
the statutory language. Subdivision (a) uses both the term
“earned” and the term “worked.” That is, categories (a)(1) and
(a)(5) require the employer to provide information regarding the
“gross wages earned” and “net wages earned” respectively; but
these two categories are excluded from subdivision (e)(2)(B)(i)’s
list of those categories whose omission gives rise to a
presumption of injury. In contrast, categories (a)(2) and (a)(9)
refer to the “total hours worked,” and “number of hours worked at
each hourly rate.” These categories are included in subdivision
(e)(2)(B)(i) – if they are excluded from the wage statement, injury

15    The issue appears to be one of first impression. In Stewart
v. San Luis Ambulance, Inc. (9th Cir. 2017) 878 F.3d 883, the
Ninth Circuit certified to the California Supreme Court the
related question of whether meal period violations may form the
basis for improper wage statement claims under section 226. The
case was initiated in the Supreme Court, but briefing has not yet
begun. (Stewart v. San Luis Ambulance, S246255.)

                                39
may be presumed. There is a clearly a significance to the
Legislature’s decision that injury is not presumed when a wage
statement fails to include wages “earned” but is presumed when
the wage statement fails to include hours “worked at” a
particular rate. The difference, we believe, is to account for
precisely this situation – where at the time the work was
performed, the work was done and paid for at a particular rate,
but it was subsequently determined that the employee had
actually earned the right to additional compensation. Wage
statements should include the hours worked at each rate and the
wages earned. In a perfect world, the first numbers will calculate
out to the second. But when there is a wage and hour violation,
the hours worked will differ from what was truly earned. But
only the absence of the hours worked will give rise to an inference
of injury; the absence of accurate wages earned will be remedied
by the violated wage and hour law itself, as is the case here.
       This interpretation is supported by legislative intent. The
purpose of section 226 is to “document the paid wages to ensure
the employee is fully informed regarding the calculation of those
wages.” (Soto v. Motel 6 Operating, L.P. (2016) 4 Cal.App.5th
385, 392.) “ ‘ “The purpose of requiring greater wage stub
information is to insure that employees are adequately informed
of compensation received and are not shortchanged by their
employers” ’ (quoting Assem. Com. on Labor and Employment,
Analysis of Sen. Bill No. 1255 (2011–2012 Reg. Sess., italics
added).)” (Ibid.)
       Here, Epsilon’s plant was operating under the 10/2 AWS;
Epsilon paid its employees pursuant to the 10/2 AWS; and its
wage statements accurately reflected the pay under the 10/2
AWS. That the 10/2 AWS ultimately turned out to be invalid

                                40
mandates that the employees receive unpaid overtime, interest,
and attorney’s fees. (§ 1194, subd. (a).) It does not mandate that
they also receive penalties for the wage statements which
accurately reflected their compensation under the rates at which
they had worked at the time.
4.     Arguments Related to Attorney’s Fee Award
       Plaintiffs were awarded nearly $900,000 in attorney’s fees.
On appeal, Epsilon contends the attorney’s fee award must be
reversed because it was untimely sought. In the alternative,
Epsilon argues that the court abused its discretion in using a
multiplier of 1.5 in calculating the award. We do not reach the
latter argument. As we conclude the plaintiffs’ recovery must be
reduced in two respects (part of the overtime award, which
impacts the waiting time penalties; and the wage statement
penalties), we remand to enable the court to exercise its
discretion to reconsider the amount of the fee award, should it so
choose. However, we briefly address Epsilon’s argument that no
fees could properly be awarded because the motion seeking them
was untimely filed.
       A notice of motion for attorney’s fees “must be served and
filed within the time for filing a notice of appeal under rules
8.104 and 8.108.” (Cal. Rules of Court, rule 3.1702(b)(1).)
       California Rules of Court, rule 8.104(a)(1) provides that,
unless otherwise extended, the time for filing a notice of appeal is
the earliest of: “(A) 60 days after the superior court clerk serves
on the party filing the notice of appeal a document entitled
‘Notice of Entry’ of judgment or a filed-endorsed copy of the
judgment, showing the date either was served; (B) 60 days after
the party filing the notice of appeal serves or is served by a party
with a document entitled ‘Notice of Entry’ of judgment or a filed-

                                41
endorsed copy of the judgment, accompanied by proof of service;
or (C) 180 days after entry of judgment.”
       In this case, the signed file-stamped judgment is dated
July 26, 2016. On August 10, 2016, plaintiffs served “Notice of
Judgment” on Epsilon, attaching a file-stamped copy of the
judgment. Sixty days from August 10, 2016 is October 9, 2016.
That day is a Sunday. October 10, 2016 was Columbus Day, a
state holiday. (Gov. Code, § 6700, subd. (a)(12).) When “the last
day for the performance of any act that is required by these rules
to be performed within a specific period of time falls on a
Saturday, Sunday, or other legal holiday, the period is extended
to and includes the next day that is not a holiday.” (Cal. Rules of
Court, rule 1.10(b).) The next court day was October 11, 2016.
Plaintiffs’ motion for attorney’s fees was filed on that day. As
long as the 60-day period is measured from August 10, 2016,
plaintiffs’ motion was timely.16
       Epsilon argues, however, that the motion was untimely
because it should be measured from the date of the clerk’s
certificate of mailing. According to a declaration of counsel, on
July 26, 2016, the court sent a single mailing consisting of:
(1) the court’s one-page order indicating it signed the judgment;
(2) the judgment itself; and (3) the clerk’s certificate of mailing.
This only starts the clock running if the clerk serves “a document
entitled ‘Notice of Entry’ of judgment or a filed-endorsed copy of

16    Epsilon notes that, due to what was apparently an
overloaded fax filing system, plaintiffs’ supporting documentation
was not filed until the next morning, although it was timely
served. The trial court was well within its discretion to consider
this document.

                                 42
the judgment, showing the date either was served.” (Cal. Rules
of Court, rule 8.104(a)(1)(A).) The clerk did not serve a document
entitled “Notice of Entry”; the clerk’s document was, at most, a
certificate of mailing. Moreover, the document did not indicate
the date it was served. Nor did the clerk serve a file-endorsed
copy of the judgment showing the date it was served. The file-
endorsed copy of the judgment which Epsilon’s counsel
represented he received in the mailing contains no proof of
service beyond the original proof of service from when plaintiffs
served it as a proposed judgment. We also observe that the trial
court, in its attorney’s fee order, found that the judgment was not
a part of the mailing, stating that the exhibit attached to
counsel’s declaration, “does not comport with the document on
file, which consists of only two pages and does not include a copy
of the judgment.” In sum, the July 26, 2016 mailing did not meet
the requirements of the court rule sufficient to start the 60-day
clock running. The attorney’s fees motion was therefore timely.
                           DISPOSITION
       The case is remanded to the trial court with directions to:
(1) reduce the award of overtime damages to provide the overtime
premium of 1 hour 45 minutes per shift, rather than 2 hours per
shift; (2) recalculate the waiting time penalties and interest
accordingly; and (3) eliminate the award for wage statement
penalties. The trial court’s order awarding attorney’s fees is
vacated to permit the trial court to reconsider attorney’s fees
following remand. In all other respects the judgment is affirmed.
The parties are to bear their own costs on appeal.

                                          RUBIN, J.

                                43
WE CONCUR:

             BIGELOW, P. J.

             GRIMES, J.

                          44
Filed 5/8/18
               CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

               SECOND APPELLATE DISTRICT

                        DIVISION EIGHT

OLVIN MALDONADO et al.,              B278022 c/w B281129

     Plaintiffs and                  (Los Angeles County
Respondents,                         Super. Ct. No. BC460298)

       v.                              ORDER CERTIFYING
                                         OPINION FOR
EPSILON PLASTICS, INC.,                  PUBLICATION

       Defendant and Appellant.        [No Change in Judgment]

THE COURT:
      The opinion in the above-entitled matters filed on April 18,
2018, was not certified for publication in the Official Reports. For
good cause, it now appears that the opinion should be published
in the Official Reports and it is so ordered.
      There is no change in the judgment.

____________________________________________________________
BIGELOW, P. J.            RUBIN, J.             GRIMES, J.