Court Opinion

ID: 6495958
Source: CourtListenerOpinion
Date Created: 2022-06-28 19:02:50.99553+00
Date Added: 2024-06-11T08:48:22.983527
License: Public Domain

Filed 6/28/22
                         CERTIFIED FOR PUBLICATION

        IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                            FIRST APPELLATE DISTRICT

                                       DIVISION ONE

 ELSIE SEVIOUR-ILOFF,
            Plaintiff and Appellant,            A163503

 v.                                             (Humboldt County
 CYNTHIA LAPAILLE et al.,                       Super. Ct. No. CV2000530)
            Defendants and Respondents.

 LAURANCE ILOFF,
                                                A163504
            Plaintiff and Appellant,
 v.                                             (Humboldt County
                                                Super. Ct. No. CV2000529)
 CYNTHIA LAPAILLE et al.,
            Defendants and Respondents.

        Plaintiffs Elsie Seviour-Iloff and Laurance Iloff1 (jointly, plaintiffs) filed
wage claims with the Division of Labor Standards Enforcement (DLSE)
against defendants Cynthia LaPaille and Bridgeville Properties, Inc. (BPI)
for unpaid wages in violation of the Labor Code. Plaintiffs received a
favorable order from the Labor Commissioner, and BPI appealed to the
superior court. Following a de novo trial on the wage claims, the superior
court found plaintiffs were entitled to unpaid wages and certain penalties but
rejected plaintiffs’ unfair competition law (UCL; Bus. & Prof. Code, § 17200

       When we refer to plaintiffs individually, we use their first names to
        1

avoid confusion. We intend no disrespect in doing so.
et seq.) claims, declined to award other penalties, and did not impose
personal liability on Cynthia LaPaille, the chief executive officer of BPI.
      On appeal, plaintiffs contend the trial court (1) miscalculated the
statute of limitations when awarding unpaid wages, (2) erred in declining to
impose personal liability on LaPaille, (3) erred in declining to award
liquidated damages under Labor Code2 section 1194.2 or administrative
penalties under section 248.5, (4) abused its discretion in denying their UCL
claims, and (5) miscalculated the waiting time penalties. We conclude the
trial court miscalculated the statute of limitations, and erred in declining to
impose personal liability on LaPaille. We further conclude the trial court
failed to properly calculate the waiting time penalties owed to plaintiffs, and
remand to the trial court to recalculate those penalties in accordance with
this opinion. In all other respects, we affirm the judgment.3
                                         I.
                                BACKGROUND
A.    Statement of Facts
      BPI owned property in unincorporated Humboldt County, California,
which included eight rental units, a post office, and its own water system.

      2   All statutory references are to the Labor Code unless otherwise noted.
      3 On November 8, 2021, plaintiffs filed a request for judicial notice,
which they subsequently amended on November 24, 2021. This request
sought judicial notice of legislative materials related to Senate Bill No. 955
(Reg. Sess. 1991), Senate Bill No. 588 (Reg. Sess. 2015–2016) (Senate Bill
588), and Assembly Bill No. 970 (Reg. Sess. 2015–2016). On February 9,
2022, plaintiffs filed a second request for judicial notice of two webpages
maintained by the DLSE, entitled “Policies and Procedures for Wage Claim
Processing” and “How to File a Wage Claim,” and DLSE form 1, entitled
“Initial Report or Claim.” Defendants have not opposed either request.
Finding the documents submitted to be appropriate for judicial notice, we
grant plaintiffs’ requests. (Evid. Code, §§ 452, subds. (c), (h), 459, subd. (a).)

                                         2
LaPaille served as chief executive officer and chief financial officer of BPI
during the relevant time period. Laurance requested free rent if he kept the
water system running, maintained the weeds, and provided general
handyman services. Between 2009 and 2016, Laurance and Elsie performed
various tasks for BPI, such as managing the water system and serving rent
notices. BPI terminated plaintiffs’ work when it suspected Laurance was not
performing his maintenance jobs, was stealing equipment and supplies from
BPI, and was using BPI’s water rights for a private venture. BPI
acknowledged plaintiffs were not paid for any work they performed for BPI
apart from receiving free rent.
B.    Procedural Background
      On January 31, 2017, plaintiffs each filed DLSE form 1, entitled
“Initial Report or Claim,” with the Labor Commissioner (Initial Report or
Claim). The form identified the employer, set forth wage information, and
identified hours worked. Both plaintiffs alleged being owed $132,880.
      On May 17, 2017, plaintiffs each executed a form entitled “Complaint,”
which set forth the claimed regular and overtime wages contained in the
Initial Report or Claim forms, but also included a request for liquidated
damages and waiting time penalties.
      The Labor Commissioner conducted a hearing on plaintiffs’ claims. He
concluded LaPaille and plaintiffs entered into oral employment agreements
that Laurance would manage the water system and Elsie would serve as
town manager in lieu of paying their monthly $650 rent. The Labor
Commissioner concluded Laurance worked an average of four hours per day
and Elsie worked an average of 10 hours per day pursuant to those
agreements. The Labor Commissioner further concluded plaintiffs were
entitled to recover regular wages, overtime wages, liquidated damages,

                                        3
interest, and waiting time penalties, and LaPaille was personally liable for
those amounts.
      LaPaille and BPI appealed from the Labor Commissioner’s order to the
superior court. LaPaille and BPI contested plaintiffs’ claims, asserting the
number of hours plaintiffs claimed to have worked were “unbelievable,”
Laurance did not provide handyman services, and other individuals and
entities completed work for which plaintiffs sought payment.
      Following a five-day trial, the superior court concluded plaintiffs were
employees of BPI. Upon reviewing the evidence, the court concluded Elsie
was entitled to unpaid minimum wages for 20 hours per week and Laurance
was entitled to unpaid minimum wages for five hours per week, along with
interest on those amounts. It also awarded plaintiffs statutory damages for
BPI’s failure to provide a wage statement, waiting time damages, and travel
expense reimbursements. However, the court concluded BPI’s failure to pay
plaintiffs was in good faith, and it had reasonable grounds to believe it was
not violating the Labor Code. Accordingly, the court declined to award
liquidated damages pursuant to section 1194.2. It also declined to award
penalties for violations of sick leave notice requirements and concluded
LaPaille was not personally liable for BPI’s failure to pay wages.
      Plaintiffs objected to the court’s statement of decision. Plaintiffs
argued the court failed to explain why it rejected January 31, 2017 as the
filing date of their claims and did not address the paid sick leave claim under
section 248.5, subdivision (b)(1)(3) or whether the court found LaPaille to be
“an employer or other person acting on behalf of an employer, who violates, or
causes to be violated, any provision regulating minimum wages . . . .”
Laurance also took issue with alleged ambiguities regarding the manner in
which certain wages, interest, and penalties were calculated. The court

                                        4
overruled these objections apart from modifying the statement of decision to
award Laurance interest on unreimbursed expenses. The court subsequently
entered judgment for plaintiffs. The court awarded Laurance $16,341 plus
additional prejudgment interest at $2.01 per day from March 3, 2021 to the
date of judgment, and it awarded Elsie $38,738 plus additional prejudgment
interest at $5.96 per day from March 3, 2021 to the date of judgment.
Plaintiffs timely appealed.
                                       II.
                                DISCUSSION
      On appeal, plaintiffs raise six arguments: (1) the court utilized the
wrong date when calculating the statute of limitations for their unpaid wage
claims; (2) the court abused its discretion in denying plaintiffs’ UCL claims;
(3) the court lacked discretion to excuse LaPaille from personal liability;
(4) the court erred in concluding LaPaille established a good faith defense to
plaintiffs’ liquidated damages claims; (5) the court erred in declining to
award administrative damages under section 248.5; and (6) the court failed to
incorporate the rental value of plaintiffs’ house when calculating waiting
time penalties. We address each argument in turn.
A.    Statute of Limitations
      Plaintiffs contend the trial court erred by calculating the statute of
limitations from the date they filed complaints with the Labor Commissioner
rather than the date they filed their Initial Report or Claim forms with the
Labor Commissioner. They argue, pursuant to Cuadra v. Millan (1998) 17
Cal.4th 855 (Cuadra), the filing of the “Initial Report or Claim” form initiates
the Berman4 hearing procedure. We agree.

      4If an employer fails to pay wages in the amount, time or manner
required by contract or by statute, an employee can, among other options,
seek administrative relief by filing a wage claim with the commissioner
                                        5
      1.    Relevant Statutory Background
      Section 98, subdivision (a), authorizes the Labor Commissioner to
“investigate employee complaints.” Subdivision (a) further states: “Within
30 days of the filing of the complaint, the Labor Commissioner shall notify
the parties as to whether a hearing will be held, whether action will be taken
in accordance with Section 98.3, or whether no further action will be taken on
the complaint. If the determination is made by the Labor Commissioner to
hold a hearing, the hearing shall be held within 90 days of the date of that
determination.”
      The California Code of Regulations expands upon this provision: “An
employee complaint or claim for wages, penalties or other demand for
compensation properly before the [DLSE] or the Labor Commissioner . . .
under Labor Code Section 98[, subdivision ](a) shall be initiated by the filing
of a complaint on the form prescribed herein in any District Office of the
[DLSE].” (Cal. Code Regs., tit. 8, § 13501.) The California Code of
Regulations further provides a sample “complaint,” and states “[t]he
complaint contemplated by Labor Code Section 98 and filed with the [DLSE]
shall be in writing and substantially in” that form. (Cal. Code Regs., tit. 8,
§ 13501.5.) The sample complaint requires the claimant to identify the scope
of services, time of service, promised rate of compensation, and the amount of
wages, penalties, and other compensation sought from the employer. (Ibid.)

pursuant to a special statutory scheme codified in sections 98 to 98.8. This
legislation, enacted in 1976 (Stats. 1976, ch. 1190, §§ 4–11, pp. 5368–5371), is
commonly known as a “Berman” hearing procedure after the name of its
sponsor. (Cuadra, supra, 17 Cal.4th at p. 858.)

                                        6
      2.    Analysis
      Plaintiffs assert the statute of limitations should run from the filing of
the Initial Report or Claim form filed with the DLSE. In response,
defendants assert only the “complaint” initiates the Berman hearing process.
      Nothing in the California Code of Regulations, which expands upon the
form of complaint required by section 98, excludes plaintiffs’ initial filing with
the DLSE from the definition of “complaint.” Rather, Code of Regulations,
title 8, section 13501.5 only requires that the complaint be “substantially” in
the form provided. Here, plaintiffs used a form provided to them by the
DLSE to initiate a wage claim. That form contains substantially the same
information as in the form set forth in the Code of Regulations, including
employee and employer information, wage compensation, hours worked, and
scope of wages, compensation, and penalties sought.
      Calculating the statute of limitations from the initial claim filing is in
accord with California Supreme Court precedent and the purpose of
section 98. In Cuadra, the California Supreme Court addressed whether the
statute of limitations for unpaid wages sought pursuant to section 98 ran
from the date of the hearing or the date the plaintiffs filed their claims with
the DLSE. (Cuadra, supra, 17 Cal.4th at p. 857.) The Labor Commissioner
argued in part that the statute of limitations should not run from the filing
date because there is a statutory duty to first conduct a preliminary
investigation as to the merits of the claim. (Id. at p. 868.) The Labor
Commissioner asserted in part that “ ‘toll[ing] the statute of limitations’ upon
the initial presentation of the claim—i.e., to calculate backpay from that
date—would be unfair to the employer because it would compel the
commissioner to notify the employer of the claim immediately, which in turn
would compel the employer to incur legal expenses in preparing a defense

                                        7
before the commissioner has determined through his [or her] investigation
that he [or she] does have jurisdiction and that the claim is facially valid.”
(Ibid.)
      The court rejected this argument, concluding the intent of section 98 “is
best served, as we have seen, by calculating backpay from the filing date of
the claim itself.” (Cuadra, supra, 17 Cal.4th at p. 867.) And it implicitly
considered the filing of the initial claim as the relevant date. The court
discussed a hypothetical in which it noted if the limitations period ran from
the hearing date, a worker who invoked the Berman hearing procedure would
receive 14 percent less wages than one who filed a civil lawsuit. (Id. at
p. 862.) In reaching that calculation, the court incorporated (1) the 30 days
between the filing of the initial claim and holding a settlement conference,
(2) the 30 days between filing the complaint (postsettlement) and notifying
the parties whether the commissioner would hold a hearing, and (3) the 90
days within which to hold that hearing. (Id. at pp. 861–862.) Presumably, if
the filing of the initial claim would not trigger the limitations period, the
court would not have included the first 30-day period in its hypothetical.
Likewise, the court commented that it interpreted the Court of Appeals’
opinion as running the limitations period from the filing of the initial report
or claim. (Id. at p. 864, fn. 9.) And it affirmed that judgment.5 (Cuadra, at
p. 872.)

      5 In discussing the Berman hearing process, the Supreme Court
commented “DLSE prepares and causes the employee to execute and file the
above mentioned ‘Complaint’ form (DLSE 530),” which the commissioner
“treats . . . as finally initiating the complaint process referred to in
[section 98].” (Cuadra, supra, 17 Cal.4th at p. 861.) However, the court does
not reconcile this statement with its holding, affirming the Court of Appeals’
opinion calculating the statute of limitations from the filing of the initial
report or claim form. (See id. at p. 864, fn. 9 [“We infer that by ‘the date of
the claim filing’ the [C]ourt [of Appeal] meant the date on which the employee
                                        8
      Finally, we note the Berman hearing procedure is designed to “provide
‘an accessible, informal, and affordable’ avenue for employees to seek
resolution, with assistance available if necessary.” (OTO, L.L.C. v. Kho
(2019) 8 Cal.5th 111, 123.) Highly technical requirements, such as requiring
a wage claimant to file the DSLE form 530 “Complaint” form to halt the
running of the statute of limitations in lieu of the DSLE form 1 initial report
or claim form—especially when the Labor Commissioner instructs employees
to file the DSLE 1 form to initiate the Berman hearing process—runs counter
to the goal of an accessible forum. Accordingly, the court should have
calculated the statute of limitations from the filing date of the Initial Report
or Claim, which the record indicates was filed on January 31, 2017.
B.    Plaintiffs’ Unfair Competition Law Claims
      Plaintiffs assert the trial court abused its discretion in denying them
any relief under the UCL. They contend the trial court failed to fully
consider the equities in denying relief, such as BPI’s lengthy labor law
violations and the lack of remedy available to plaintiffs for part of their
employment period.
      As plaintiffs acknowledge, relief under the UCL “is purely equitable.
Therefore, determination of the appropriate remedy is left to the sound
discretion of the trial court in the exercise of that court’s power to grant
equitable relief.” (Cortez v. Purolator Air Filtration Products Co. (2000)
23 Cal.4th 163, 179.) And the court’s discretion is “very broad.” (Id. at
p. 180.) “UCL remedies are cumulative to remedies available under other

first presents his written claim or complaint to the DLSE, however the
agency labels that form. In the case of plaintiff Cuadra, for example, that
date was November 8, 1994, the date on which she filed her ‘Initial Report or
Claim’ (DLSE 1).”]; id. at p. 872 [affirming judgment].)

                                        9
laws [citation] and, as section 17203 indicates, have an independent purpose–
deterrence of and restitution for unfair business practices.” (Id. at p. 179.)
      Here, the court considered the “fundamental polices behind the Labor
Code’s requirement for prompt payment of wages,” and concluded “the
equities on both sides of this dispute . . . weigh in favor of not awarding
additional relief” under the UCL. In assessing those equities, the court
primarily focused on the lack of expectation or understanding by all parties
that wages were required to be paid. While plaintiffs believe the court should
have focused on other factors, we will not replace the trial court’s assessment
of the equities with our own. (People ex rel. Harris v. Aguayo (2017)
11 Cal.App.5th 1150, 1160 [“Where ‘ “there is a [legal] basis for the trial
court’s ruling and it is supported by the evidence, a reviewing court will not
substitute its opinion for that of the trial court.” ’ ”].) Based on the record, we
cannot conclude the trial court abused its discretion in denying relief under
the UCL.
C.    LaPaille’s Individual Liability
      Plaintiffs next argue the trial court erred by interpreting section 558.1,
which under certain circumstances imposes liability on a “person acting on
behalf of an employer” who violates the Labor Code, as granting it discretion
to decide whether to impose such individual liability on LaPaille. In
response, defendants argue section 558.1 does not provide for a private right
of action and, in any event, the court properly exercised its discretion.
      1.    Private Right of Action
      Defendants contend section 558.1 does not explicitly authorize a private
right of action, and the statute contains “ ‘a comprehensive scheme for
enforcement by an administrative agency.’ ”

                                        10
      Undoubtedly, “ ‘[a] violation of a state statute does not necessarily give
rise to a private cause of action. [Citation.] Instead, whether a party has a
right to sue depends on whether the Legislature has “manifested an intent to
create such a private cause of action” under the statute. [Citations.] Such
legislative intent, if any, is revealed through the language of the statute and
its legislative history.’ [Citation.] ‘[W]e consider the statute’s language first,
as it is the best indicator of whether a private right to sue exists.’ [Citation.]
‘A statute may contain “ ‘clear, understandable, unmistakable terms,’ ” which
strongly and directly indicate that the Legislature intended to create a
private cause of action. [Citation.] For instance, the statute may expressly
state that a person has or is liable [sic] for a cause of action for a particular
violation. [Citations.] Or, more commonly, a statute may refer to a remedy
or means of enforcing its substantive provisions, i.e., by way of an action.
[Citations.]’ [Citation.] If the statute ‘does not include explicit language
regarding a private cause of action, [but contains] provisions [that] create
some ambiguity, [courts may] look . . . to legislative history for greater
insight.’ ” (Noe v. Superior Court (2015) 237 Cal.App.4th 316, 336.)
      Here, there is no exclusive enforcement scheme by an administrative
agency. While the Labor Commissioner is empowered to enforce California’s
labor laws, the Legislature also has provided California employees a private
right of action to vindicate unpaid wages. (See § 1194, subd. (a).)
Section 1194, subdivision (a) provides “any employee receiving less than the
legal minimum wage . . . is entitled to recover in a civil action the unpaid
balance of the full amount of this minimum wage or overtime compensation,
including interest thereon, reasonable attorney’s fees, and costs of suit.” In
doing so, it makes little sense for the Legislature to authorize the Labor
Commissioner to enforce actions against individuals but bar such recovery for

                                        11
employees simply because they may opt to pursue a civil action. Moreover,
even if employees opted to pursue relief through agency action—i.e., by
initiating the Berman hearing process—employers are automatically entitled
to appeal any agency decision to the superior court. (§ 98.2, subd. (a).)
Which, according to defendants’ argument, would then void the employee’s
ability to pursue relief against an individual. Thus, defendants’ position
would allow individuals to avoid liability despite the passage of section 558.1.
      Individual liability that is, in effect, unenforceable could not have been
the Legislature’s intent. “[W]e are careful to uphold our duty to ‘harmonize
and reconcile [potentially conflicting statutory provisions] so as to carry out
the overriding legislative purpose of the statutory scheme as a whole.’
[Citation.] . . . ‘State wage and hour laws “reflect the strong public policy
favoring protection of workers’ general welfare and ‘society’s interest in a
stable job market.’ [Citations.]” [Citations.]’ [Citation.] For this reason,
‘ “the statutory provisions are to be liberally construed with an eye to
promoting such protection.” ’ ” (Gutierrez v. Brand Energy Services of
California, Inc. (2020) 50 Cal.App.5th 786, 803.)
      Nothing in the legislative history supports defendants’ interpretation.
Rather, the legislative history demonstrates that the Legislature was
concerned with addressing “wage theft,” noting only a small percentage of
employees who prevailed in their wage claims were actually able to recover
unpaid wages and, even then, only a small percentage of the amount owed.
(Sen. Rules Com., Off. of Sen. Floor Analyses, Rep. on Sen. Bill 588 Sept. 8,
2015, p. 8.) The Legislature thus enacted various provisions to discourage
employers from defaulting on such judgments, primarily by “updat[ing] and
improv[ing]” the Labor Commissioner’s collection methods. (See Sen. Com.
on Judiciary, Analysis of Sen. Bill. 588 as amended Apr. 20, 2015, p. 12.) The

                                        12
California Committee Report explained: “This bill . . . gives the Labor
Commissioner the authority to hold individual business owners accountable
for their debts to workers. This will discourage business owners from rolling
up their operations and walking away from their debts to workers and
starting a new company.” (Cal. Com. Rep., 3d reading analysis of Sen. Bill
588 Sept. 4, 2015, p. 8.)6
      As relevant to this dispute, the statutory language achieved these goals
by (1) allowing employees to hold certain individuals liable for wage
violations; and (2) empowering the Labor Commissioner to assist employees
in collecting on the resulting judgments, including against liable individuals.
Accordingly, section 558.1 must be interpreted as allowing for a private right
of action.7

      6  Defendants argue the other 12 new or amended statutory sections
that also were part of Senate Bill 588 all referenced the powers of the Labor
Commissioner. They assert section 558.1’s failure to do so “suggest[s] mere
oversight.” We disagree. To the contrary, the Legislature’s omission of such
language, while using it with other statutes enacted as part of the same bill,
suggests such omission was intentional. (See People v. Trevino (2001) 26
Cal.4th 237, 242 [“When the Legislature uses materially different language
in statutory provisions addressing the same subject or related subjects, the
normal inference is that the Legislature intended a difference in meaning.”];
accord, Digital Realty Trust, Inc. v. Somers (2018) ___ U.S.___, [138 S.Ct. 767,
777] [“ ‘[W]hen Congress includes particular language in one section of a
statute but omits it in another[,] . . . this Court presumes that Congress
intended a difference in meaning.’ ”].)
      7 While not binding on this court, we note at least two district courts
have likewise concluded section 558.1 provides a private right of action. (See,
e.g., Roush v. MSI Inventory Service Corp. (E.D.Cal. July 30, 2018) 2018 WL
3637066, at pp. *2–*3; Carter v. Rasier-CA, LLC (N.D.Cal. Sept. 15, 2017)
2017 WL 4098858, at p. *5, fn. 1 [concluding that limiting § 558.1’s
enforcement to actions by the Labor Commissioner would go against the
language of the provision itself].)

                                       13
      2.    Discretion Under Section 558.1
      We next address whether section 558.1 provides courts with discretion
as to whether to impose individual liability. Section 558.1 provides: “(a) Any
employer or other person acting on behalf of an employer, who violates, or
causes to be violated, any provision regulating minimum wages . . . may be
held liable as the employer for such violation.” (Italics added.) Plaintiffs
allege the trial court erroneously interpreted the word “may” in section 558.1
as providing the court with discretion as to whether to impose such liability.
Plaintiffs assert the term “may” is granting prosecutorial discretion, rather
than judicial discretion.
      “ ‘ “ ‘As in any case involving statutory interpretation, our fundamental
task . . . is to determine the Legislature’s intent so as to effectuate the law’s
purpose. [Citation.] We begin by examining the statute’s words, giving them
a plain and commonsense meaning.’ ” ’ [Citation.] ‘[W]e consider the
language of the entire scheme and related statutes, harmonizing the terms
when possible.’ ” (People v. Gonzalez (2017) 2 Cal.5th 1138, 1141; People v.
Valencia (2017) 3 Cal.5th 347, 357 [“ ‘[t]he words of the statute must be
construed in context, keeping in mind the statutory purpose, and statutes or
statutory sections relating to the same subject must be harmonized, both
internally and with each other, to the extent possible’ ”].) If the language of
the statute is clear and unambiguous, there is no need for judicial
construction and our task is at an end. If the language is reasonably
susceptible of more than one meaning, however, we may examine extrinsic
aids such as the apparent purpose of the statute, the legislative history, the
canons of statutory construction, and public policy. (Even Zohar Construction
& Remodeling, Inc. v. Bellaire Townhouses, LLC (2015) 61 Cal.4th 830, 838.)

                                        14
      We first turn to the plain language of the statute. As noted above,
section 558.1 states a “person acting on behalf of an employer, who violates,
or causes to be violated, any provision regulating minimum wages . . . may be
held liable as the employer for such violation.” (§ 558.1, subd. (a).) The
parties do not disagree that the word “may” implies a degree of discretion.
Rather, they disagree as to whether such discretion may be exercised by a
court or the party prosecuting the action.
      On this question, we find Jones v. Tracy School District (1980)
27 Cal.3d 99 instructive. As relevant to this appeal, the Supreme Court
evaluated subdivision (g) of former section 1197.5, which provided that an
“ ‘employee receiving less than the wage to which the employee is entitled . . .
may recover in a civil action the balance of such wages, including interest
thereon, together with the costs of the suit and reasonable attorney’s fees
. . . .’ ” (Jones, at p. 109.) The parties disagreed as to whether the court had
discretion to deny attorney fees based on the use of “may” in the statute.
(Ibid.) The Supreme Court concluded the statute “must be construed to
require an award of attorney’s fees.” (Ibid.) It explained while the word
“may” is usually permissive, “In the present case, however, the word ‘may’ is
not directed to the trial court, but to the complaining party. It indicates that
the plaintiff may choose among several alternative forms of relief.” (Ibid.)
“The use of the word ‘may’ does not demonstrate an intent to give the trial
court discretion to award attorney’s fees, but merely establishes the plaintiff’s
right to such an award should [he or] she elect to pursue the civil remedy.”
(Id. at p. 110.)
      We find a similar interpretation of the word “may” is appropriate as to
section 558.1. In the event an employer attempts to avoid a judgment arising
from a wage violation, the employee or the Labor Commissioner is entitled to

                                       15
enforce such liability against those individuals who “violates, or causes to be
violated” the minimum wage laws. (See § 558.1, subd. (a).) However, such
liability may not be necessary if the employee is able to collect his or her
unpaid wages from the employer.
      This interpretation also is in accord with the Legislative Counsel’s
Digest describing Senate Bill 588. That digest states the “bill would provide
that any employer or other person acting on behalf of an employer . . . who
violates, or causes to be violated, any provision regulating minimum wages
. . . is authorized to be held liable as the employer for such violation.” (Legis.
Counsel’s Dig., Sen. Bill 588.) Our interpretation also is supported by the
purpose of Senate Bill 588. Senate Bill 588 “ ‘targets individual officers who
are involved in the failure to pay wages’ ” and “sought to ‘ “discourage [such
individuals] from rolling up their operations and walking away from their
debts to workers and starting a new company.” ’ ” (Usher v. White (2021) 64
Cal.App.5th 883, 894.) Allowing courts to excuse such individual liability
would undermine the purpose of Senate Bill 588—to facilitate an employee’s
ability to recover unpaid wages.
      LaPaille solely relies on Usher v. White. In that case, the court resolved
a different issue: when an owner could be deemed to have “caused” a Labor
Code violation. The court concluded, absent personal involvement in the
violation, the owner must have “had sufficient participation in the activities
of the employer, including, for example, over those responsible for the alleged
wage and hour violations, such that the ‘owner’ may be deemed to have
contributed to, and thus for purposes of this statute, ‘cause[d]’ a violation.”
(Usher v. White, supra, 64 Cal.App.5th at pp. 896–897.) The court explained
this assessment of an individual’s participation “cannot be determined by any
bright-line rule, as this inquiry requires an examination of the particular

                                        16
facts in light of the conduct, or lack thereof, attributable to the [individual].”
(Id. at p. 897.) While Usher is useful to evaluate whether an individual falls
within the scope of section 558.1 as a “person acting on behalf of an employer,
who violates, or causes to be violated, any provision regulating minimum
wages,” it does not address the issue presented in this appeal: whether courts
have discretion to deny liability if the individual is, in fact, someone who
“violates, or causes to be violated” minimum wage laws. Accordingly, it does
not resolve how “may” should be interpreted.
      Based on the foregoing, we conclude the Legislature’s use of the term
“may” does not grant judicial discretion in imposing liability. Rather, we
interpret the term as reflecting a recognition by the Legislature that the
party prosecuting the wage violation may not need to pursue such liability in
the event the employer satisfies any outstanding judgment. The trial court
erred in concluding LaPaille was not liable for the wage violations under
section 558.1.8
      3.    Retroactivity
      Finally, LaPaille argues section 558.1 does not operate retroactively.
Plaintiffs do not dispute this, but assert liability for minimum wages extends
back to 2013, when section 1197.1—which first provided for individual
liability for minimum wages—was enacted.
      We agree with the parties that section 558.1 is not retroactive. In
California, “[a] statute is presumed to operate prospectively unless there is
‘an express declaration of retrospectivity or a clear indication’ that the
Legislature intended otherwise.” (Preston v. State Bd. of Equalization (2001)

      8 LaPaille does not argue she did not “violate[], or cause[] to be
violated” a minimum wage provision. And the trial court’s conclusion that
plaintiffs were employees in part due to their “constant contact with
[LaPaille]” demonstrates her involvement in the wage violations.

                                        17
25 Cal.4th 197, 228.) Plaintiffs have not identified any express declaration or
clear indication from the Legislature that it intended section 558.1 to operate
retrospectively. Nor are we aware of such intent. Therefore, we conclude it is
only prospective in application.
      However, plaintiffs argue section 1197.1, which took effect in 2012,
already imposed individual liability for wage claims, and Senate Bill 588
merely duplicated that substantive individual liability for wage claims and
provided a procedural expansion. In other words, Senate Bill 588 created
new mechanisms for enforcing the individual liability for wage claims that
already existed under section 1197.1. Plaintiffs argue such procedural
changes apply to all subsequent or pending cases, and simply allow future
enforcement of preexisting liability. LaPaille does not respond to this
argument.
      Section 1197.1 sets forth a civil penalty structure applicable to “[a]ny
employer or other person acting either individually or as an officer, agent, or
employee of another person, who pays or causes to be paid to any employee a
wage less than the minimum fixed by an applicable state or local law, or by
an order of the commission . . . .” (§ 1197.1, subd. (a).) As with section 558.1,
it provides for recovery of underpaid wages. (Compare § 1197.1, subd. (a),
with § 558.1, subd. (a).)
      In Tapia v. Superior Court (1991) 53 Cal.3d 282, the California
Supreme Court addressed when a legislative enactment is considered to have
a prospective or retroactive impact. The court explained “a law is
retrospective if it defines past conduct as a crime, increases the punishment
for such conduct, or eliminates a defense to a criminal charge based on such
conduct.” (Id. at p. 288.) However, in the example of trials still to occur,
“[s]uch a statute ‘ “is not made retroactive merely because it draws upon facts

                                       18
existing prior to its enactment . . . . [Instead,] [t]he effect of such statutes is
actually prospective in nature since they relate to the procedure to be
followed in the future.[”] ’ ” (Ibid.) The court noted a law is retroactive if it
“ ‘imposes a new or additional liability and substantially affects existing
rights and obligations.’ ” (Id. at p. 290.)
      In City of Clovis v. County of Fresno (2014) 222 Cal.App.4th 1469, the
parties disagreed regarding a fee the county withheld for the service of
collecting property taxes. (Id. at p. 1472.) The trial court ordered the county
to apply a different methodology for calculating the fee, repay owed amounts
to the plaintiffs, and pay prejudgment and postjudgment interest. (Id. at
p. 1473.) On appeal, the county challenged the award of prejudgment and
postjudgment interest based on then-recent statutes that altered the
applicable interest rates. (Ibid.) In concluding the new interest rates should
be applied to the judgment, the court noted interest, albeit at a different rate,
was already awardable under prior law. (Id. at p. 1478.) The court thus
concluded the new interest rate statute applied to the parties’ dispute
“because it is a remedial or procedural statute and will be in effect when the
judgment becomes final.” (Id. at p. 1483.) The court explained, “The
application of new procedural or remedial statutes to cases still pending on
appeal when they become effective is deemed not to be retroactive—even
though the cause of action arose earlier—because the change in the law
affects only the conduct of the litigation and the provision of a remedy going
forward, not the rights and duties of the parties in the past. [Citation.] New
procedural or remedial laws are consistently applied to cases not yet final
when they become effective, unless the Legislature expresses an intent [not]
to so apply them.” (Id. at p. 1484.)

                                         19
      Here, individual liability for underpaid wages existed prior to the
enactment of Senate Bill 588. Senate Bill 588 did not impact an individual’s
rights or duties, but rather allowed an employee to enforce such liability
rather than relying on the Labor Commissioner to do so. Accordingly, to the
extent LaPaille is liable for underpaid wages pursuant to section 588.1, that
liability extends back to the enactment of section 1197.1.9
D.    Liquidated Damages
      Plaintiffs assert the trial court erred in denying them an award of
liquidated damages under section 1194.2 based on a finding of good faith.
Plaintiffs argue an employer must demonstrate a subjective belief that is
objectively reasonable in order to successfully assert a good faith defense.
They contend ignorance of the law fails to meet this test.
      Section 1194.2 provides for liquidated damages where an employer has
failed to pay the minimum wage. (§ 1194.2, subd. (a).) If the employer
demonstrates it acted in good faith, the court may, in its discretion, reduce or
refuse to award liquidated damages. (Id., subd. (b).)
      Plaintiffs contend section 1194.2 should be interpreted in accord with
the “parallel” federal Fair Labor Standards Act of 1938 (FLSA; 29 U.S.C.
§ 201 et seq.). While the language of the two statutes are similar, there are
important differences in the intent behind their enactment. As plaintiffs
note, the FLSA is designed to serve as compensation for delayed payment

      9  We recognize statutes generally do not apply retroactively if they
create a new cause of action, and section 1197.1 does not provide a private
right of action for recovery of underpaid wages. (Atempa v. Pedrazzani (2018)
27 Cal.App.5th 809, 826.) In this instance, however, we conclude
section 558.1’s allowance of private rights of action to enforce individual
liability for wage violations operates more as a procedural method of
enforcement rather than a new cause of action. (See Sen. Com. on Judiciary,
Analysis of Sen. Bill 588 as amended Apr. 20, 2015, p. 15.)

                                       20
rather than serve as a penalty. (See U.S. v. Sabhnani (2d Cir. 2010) 599 F.3d
215, 260.) Accordingly, under the FLSA, liquidated damages are provided in
lieu of interest. (See, e.g., Evans v. Loveland Automotive Investments, Inc.
(10th Cir. 2015) 632 Fed.Appx. 496, 499 [“ ‘a party may not recover both
liquidated damages and prejudgment interest under the FLSA’ ”].)
Conversely, the California Supreme Court has noted “[t]he ‘liquidated
damages’ allowed in section 1194.2 are in effect a penalty equal to the
amount of unpaid minimum wages.” (Martinez v. Combs (2010) 49 Cal.4th
35, 48, fn. 8.) Thus, under California law plaintiffs may recover liquidated
damages and prejudgment interest.
      Here, the court awarded plaintiffs prejudgment interest for their
delayed wages. For Laurance, who was awarded $4,950 in unpaid wages, he
received prejudgment interest10 in the amount of $3,019, plus additional
prejudgment interest at $1.36 per day from March 3, 2021 to the date of
judgment. For Elsie, who was awarded $21,750 in unpaid wages, she
received prejudgment interest in the amount of $11,788, plus additional
prejudgment interest at $5.96 per day from March 3, 2021 to the date of
judgment. The motivation under the FLSA—to compensate for delayed
wages—is thus not present in the current case. Rather, the question is
simply whether LaPaille should be subject to an additional penalty in the
form of liquidated damages, which is an issue not addressed by federal law.
      Moreover, the federal cases cited by plaintiffs involve a clear
employment relationship, with the issues involving whether those employees
are entitled to specific forms of compensation such as lunch breaks or
overtime. (See, e.g., Reich v. Southern New England Telecommunications

      10 He also received a separate prejudgment interest award on his claim
for failure to reimburse expenses.

                                       21
(2d Cir. 1997) 121 F.3d 58, 61 [addressing failure to compensate employees
for lunch breaks during which they were required to perform certain work
functions]; Herman v. RSR Sec. Servs. Ltd. (2d Cir. 1999) 172 F.3d 132, 135
[addressing whether chairman of the board was liable as an employer for the
company’s FLSA violations]; Alvarez v. IBP, Inc. (9th Cir. 2003) 339 F.3d 894,
897 [whether employer required to compensate employees for time expended
changing into protective clothing]; Chao v. A–One Medical Services, Inc. (9th
Cir. 2003) 346 F.3d 908, 911 [action to recover unpaid overtime wages]; Block
v. City of Los Angeles (9th Cir. 2001) 253 F.3d 410, 413 [dispute regarding
whether employees entitled to overtime wages].)
      Here, we are presented with a very distinct set of facts unlike those in
the cases cited by plaintiffs. LaPaille testified Laurance approached her and
proposed, in essence, a barter situation in which plaintiffs would receive free
rent in exchange for Laurance performing certain maintenance tasks.
Laurance informed LaPaille he had his own handyman business and his own
tools with which to perform the maintenance tasks. LaPaille accepted this
arrangement, and all parties treated the exchange as an independent
contractor relationship rather than an employment relationship.
Accordingly, the present matter does not merely arise from a dispute
regarding what compensation is owed, but the parties’ ambiguity about the
employment relationship itself.11 While the trial court concluded plaintiffs

      11 We note that when the relationship commenced, in 2009, the
controlling case on the employment relationship was S. G. Borello & Sons,
Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341. The year the
relationship ended, 2018, the Supreme Court, in Dynamex Operations West,
Inc. v. Superior Court (2018) 4 Cal.5th 903, adopted the “ABC” test for
assessing whether an individual is an employee or independent contractor.
Certain aspects of the “ABC” test overlap with the Borello standard, and for
several years the application of Dynamex remained unsettled, with several
courts holding the “ABC” test applied only to claims based on wage orders,
                                       22
were employees—a ruling not before this court—the circumstances giving
rise to the relationship and the conduct of the parties during that
relationship are relevant to the inquiry of whether LaPaille acted in good
faith. In light of the different role of liquidated damages under federal and
California law and the unique facts presented here, we do not find authority
for awarding liquidated damages under FLSA instructive in this instance.
      Likewise, we do not find the award of damages under section 203
determinative. While both sections 1194.2 and 203 provide for a good faith
defense, section 20312 allows employers to avoid waiting time penalties if they
demonstrate a “good faith dispute.” (Cal. Code Regs. tit. 8, § 13520.) Courts
have concluded a good faith dispute arises when “an employer presents a
defense, based in law or fact which, if successful, would preclude any recovery
on the part of the employee.” (Id., subd. (a).) The fact that a defense
ultimately fails “will not preclude a finding that a good faith dispute did
exist.” (Ibid.) Under section 1194.2, however, there is no required showing of
a dispute between the parties. Rather, it simply allows a court to exercise
discretion in awarding liquidated damages if the employer “demonstrates to
the satisfaction of the court . . . that the act or omission . . . was in good faith
and that the employer had reasonable grounds for believing that the act or
omission was not a violation of any provision of the Labor Code . . . .”
(§ 1194.2, subd. (b).)

not the common law, as are the claims here. (See Parada v. East Coast
Transport Inc. (2021) 62 Cal.App.5th 692, 699, fn. 2.) In 2020, the
Legislature adopted the “ABC” standard for purposes of the entire Labor
Code. (Lab. Code, § 2775; Parada, at p. 699, fn. 2.) In short, during the
relevant time period, the law was not entirely settled.
      12 As discussed in greater detail in part II.F., post, section 203 provides
for waiting time penalties when an employer “willfully fails to pay . . . any
wages of an employee who is discharged or who quits.” (§ 203, subd. (a).)

                                         23
      No case suggests that section 1194.2 should be construed other than in
accord with its plain language, giving the trial court considerable latitude to
exercise its discretion and requiring only that the employer demonstrate good
faith and reasonableness “to the satisfaction of the court.” Here, the court
primarily focused on the lack of expectation or understanding by all parties
that wages were required to be paid. As noted above, Laurance proposed the
work-for-free-rent arrangement, and both parties believed plaintiffs were
independent contractors. While there are certainly facts that weigh in favor
of classifying plaintiffs as employees, there are some facts that could suggest
otherwise, and we will not replace the trial court’s assessment of LaPaille’s
conduct under the unique circumstances here with our own. (See People ex
rel. Harris v. Aguayo, supra, 11 Cal.App.5th at p. 1160 [“Where ‘ “there is a
[legal] basis for the trial court’s ruling and it is supported by the evidence, a
reviewing court will not substitute its opinion for that of the trial court.” ’ ”].)
Accordingly, we cannot conclude the trial court erred in declining to award, in
addition to the wages owed plus interest, the additional penalty of liquidated
damages.
E.    Healthy Workplaces, Healthy Families Act of 2014
      Plaintiffs note LaPaille failed to provide them with paid sick leave as
required by the Healthy Workplaces, Healthy Families Act of 2014 (§ 245 et
seq.). Plaintiffs thus argue they are entitled to seek administrative penalties
as a result of this violation as part of their civil action. Defendants contend
only the Labor Commissioner or the Attorney General is authorized to
enforce the Healthy Workplaces, Healthy Families Act.
      The plain language of section 248.5 contradicts plaintiffs’ position.
Section 248.5, entitled “Enforcement of article; Violation,” begins by stating,
“The Labor Commissioner shall enforce this article, including investigating

                                         24
an alleged violation, and ordering appropriate temporary relief to mitigate
the violation or to maintain the status quo pending the completion of a full
investigation or hearing through the procedures set forth in Sections 98, 98.3,
98.7, 98.74, or 1197.1 . . . .” (§ 248.5, subd. (a).) Subdivisions (b) through (d)
further outline the role of the Labor Commissioner. Subdivision (e) then
provides, “The Labor Commissioner or the Attorney General may bring a civil
action in a court of competent jurisdiction against the employer or other
person violating this article . . . .” (§ 248.5, subd. (e).) Nothing in this
language indicates a private right of action. (Vikco Ins. Services, Inc. v. Ohio
Indemnity Co. (1999) 70 Cal.App.4th 55, 62 [“a private right of action exists
only if the language of the statute or its legislative history clearly indicates
the Legislature intended to create such a right”].)
      Plaintiffs argue a private right of action must be read into the statute
because subdivision (a) of section 248.5 references various statutes by which
the Labor Commissioner may enforce the Healthy Workplaces, Healthy
Families Act, including section 98, the Berman hearing process. Plaintiffs
argue the trial court judgment, which gives rise to this appeal, was part of
that process. We disagree. The right to appeal from a Berman hearing and
have a trial court decide the matter de novo does not arise from section 98.
Rather, that right to appeal is set forth in section 98.2. (See § 98.2, subd. (a)
[“Within 10 days after service of notice of an order, decision, or award the
parties may seek review by filing an appeal to the superior court, where the
appeal shall be heard de novo.”].) Section 98.2 is notably absent from the list
of statutes by which the Labor Commissioner is authorized to enforce the
Healthy Workplaces, Healthy Families Act. (See § 248.5, subd. (a) [listing
“Sections 98, 98.3, 98.7, 98.74, or 1197.1”].) We cannot interpret section
248.5 to include enforcement via section 98.2. (Kunde v. Seiler (2011)

                                         25
197 Cal.App.4th 518, 531 [“ ‘ “[I]f a statute enumerates the persons or things
to be affected by its provisions, there is an implied exclusion of others . . . . It
is an elementary rule of construction that the expression of one excludes the
other. And it is equally well settled that the court is without power to supply
an omission.” ’ ”].)13 Accordingly, we conclude there is no private right of
action to seek administrative penalties under section 248.5.
F.    Waiting Time Penalties
      Plaintiffs argue the trial court’s award of waiting time penalties
pursuant to section 203 failed to include the value of their housing when
calculating the daily rate of pay. We agree.
      “Penalties under Labor Code section 203 are properly awarded when an
employer ‘willfully fails to pay’ an employee all wages owed at the times
specified in Labor Code section 201, for discharged employees, and in Labor
Code section 202, for employees who quit.” (Gonzalez v. Downtown LA
Motors, LP (2013) 215 Cal.App.4th 36, 54.) At issue is whether this amount
must include plaintiffs’ free rent.
      In Nishiki v. Danko Meredith, P.C. (2018) 25 Cal.App.5th 883, the
employer underpaid a former employee by $80 and subsequently delayed in
paying the employee that amount. (Id. at pp. 892–893.) In addressing the
amount of penalties under section 203, the employer argued the employee
was only entitled to $80 per day—the amount of the underpayment. (Nishiki,
at p. 893.) Our colleagues in Division Four rejected this argument,
concluding, “Section 203, subdivision (a) provides that if an employer willfully
fails to pay the wages of an employee who is discharged or who quits, ‘the

      13Because we conclude plaintiffs are not authorized to pursue remedies
under the Healthy Workplaces, Healthy Families Act in this action, we need
not address plaintiffs’ argument regarding the appropriate amount of
administrative penalties.

                                         26
wages of the employee shall continue as a penalty from the due date thereof
at the same rate until paid.’ This provision has been interpreted to mean the
penalty is an amount ‘equal to the employee’s daily wages for each day . . .
that the wages are unpaid.’ ” (Ibid.) The court thus calculated the statutory
penalties based on the amount of the employee’s entire daily wage. (Ibid.)
      The Labor Code defines wages as “all amounts for labor performed by
employees of every description, whether the amount is fixed or ascertained by
the standard of time, task, piece, commission basis, or other method of
calculation.” (§ 200, subd. (a).) “The term ‘wages’ has been held to include
money as well as other value given, including room, board and clothes.”
(Department of Industrial Relations v. UI Video Stores, Inc. (1997)
55 Cal.App.4th 1084, 1091; see also Murphy v. Kenneth Cole Productions, Inc.
(2007) 40 Cal.4th 1094, 1103 [“Courts have recognized that ‘wages’ also
include those benefits to which an employee is entitled as a part of his or her
compensation, including money, room, board, clothing, vacation pay, and sick
pay.”].)
      Here, it is undisputed that rent was provided to plaintiffs as
compensation for their work. Accordingly, it should have been incorporated
into the calculation of plaintiffs’ daily wages for purposes of calculating the
amount of penalties under section 203. As noted by plaintiffs, the daily rate,
incorporating rent, could vary depending on how the weekly hours are spread
throughout the week. Accordingly, we remand to the trial court to calculate
the section 203 waiting penalties, with a daily rate incorporating rent, in the
first instance.

                                       27
                                      III.
                                DISPOSITION
      The judgment is reversed as to the calculation of unpaid wages, the
denial of individual liability as to defendant Cynthia LaPaille, and the
calculation of waiting time penalties under Labor Code section 203. The
judgment is affirmed in all other respects. We remand the matter to the trial
court to recalculate the unpaid wages and waiting time penalties in
accordance with this opinion. The parties are to bear their own costs on
appeal. (Cal. Rules of Court, rule 8.278(a)(3).)

                                       28
                        MARGULIES, J.

WE CONCUR:

HUMES, P. J.

BANKE, J.

A163503, A163504

                   29
Trial Court:     Superior Court of Humboldt County

Trial Judge:     Timothy A. Canning, Judge

Counsel:

Department of Labor Relations, Division of Labor Standards Enforcement
and David M. Balter for Plaintiffs and Appellants.

Janssen Malloy and Amelia F. Burrough for Defendants and Respondents.

                                   30