Cuadra v. Millan

• Decision Date: 30 March 1998
• Docket Number: No. S061138,S061138
• Citation: 952 P.2d 704,72 Cal.Rptr.2d 687,17 Cal.4th 855
• Court: California Supreme Court
• Parties: , 952 P.2d 704, 98 Cal. Daily Op. Serv. 2283 Maria Luisa CUADRA et al., Plaintiffs and Respondents, v. Jose MILLAN, as Labor Commissioner, etc., Defendant and Appellant

Page 687

72 Cal.Rptr.2d 687

17 Cal.4th 855, 952 P.2d 704, 98 Cal. Daily Op. Serv. 2283

Maria Luisa CUADRA et al., Plaintiffs and Respondents, v. Jose MILLAN, as Labor Commissioner, etc., Defendant and Appellant.

No. S061138.

Supreme Court of California

March 30, 1998.

H. Thomas Cadell, Jr., San Francisco, for Defendant and Appellant.

Sheppard, Mullin, Richter & Hampton, Richard J. Simmons and Michael G. Morgan, Los Angeles, as Amici Curiae on behalf of Defendant and Appellant.

Laura Ho, Lora Jo Foo, San Francisco, Cynthia L. Rice, Santa Rosa, William G. Hoerger, Maria Blanco, San Francisco, and Marci Seville, for Plaintiffs and Respondents.

MOSK, Justice.

In this action for writ of mandate three wage claimants (hereafter plaintiffs) challenged the policy of defendant state Labor Commissioner (hereafter commissioner) of calculating backpay from the date the wage claims are heard rather than the date they are filed. ¹ The trial court found the policy to be an abuse of discretion and ordered the commissioner to calculate backpay from the filing date of the claim. The commissioner appealed, and the Court of Appeal affirmed the judgment. As will appear, we conclude that the Court of Appeal was correct to do so and we therefore affirm its judgment.

Background

The wage rights of an employee may be provided for in the employment contract between the employee and the employer, whether oral or written, including a collective bargaining agreement. The employee's wage rights are also closely regulated by statute: The Labor Code prescribes such matters as the time and manner of paying wages, minimum wage requirements, and mandatory overtime pay; for certain industries and occupations, minimum wages and overtime pay are also prescribed by administrative regulations known as wage orders, issued by the Industrial Welfare Commission pursuant to statutory authority (see Industrial Welfare Com. v. Superior Court (1980) 27 Cal.3d 690, 700-703, 166 Cal.Rptr. 331, 613 P.2d 579). ²

If an employer fails to pay wages in the amount, time or manner required by contract or by statute, the employee has two principal options. The employee may seek judicial relief by filing an ordinary civil action against the employer for breach of contract and/or for the wages prescribed by statute. (§§ 218, 1194.) Or the employee may seek administrative relief by filing a wage claim with the commissioner pursuant to a special statutory scheme codified in sections 98 to 98.8. The latter option was added by legislation enacted in 1976 (Stats.1976, ch. 1190, §§ 4-11, pp. 5368-5371) and is commonly known as the "Berman" hearing procedure after the name of its sponsor. ³

The Berman hearing procedure is designed to provide a speedy, informal, and affordable method of resolving wage claims. ⁴ In brief, in a Berman proceeding the commissioner may hold a hearing on the wage claim; the pleadings are limited to a complaint and an answer; the answer may set forth the evidence that the defendant intends to rely on, and there is no discovery process; if the defendant fails to appear or answer no default is taken and the commissioner proceeds to decide the claim, but may grant a new hearing on request. (§ 98.) The commissioner must decide the claim within 15 days after the hearing. (§ 98.1.) Within 10 days after notice of the decision any party may appeal to the appropriate court, where the claim will be heard de novo; if no appeal is taken, the commissioner's decision will be deemed a judgment, final immediately and enforceable as a judgment in a civil action. (§ 98.2.) (See generally, 1 Wilcox, Cal. Employment Law (1997) §§ 5.10 to 5.19, pp. 5-16.2 to 5-52 (hereafter Wilcox).)

We are concerned here with questions of limitation. The general statutes of limitations set out in the Code of Civil Procedure govern the time in which an employee may commence a civil action for unpaid wages. (Code Civ. Proc., § 312.) Thus if the action is based on a written contract of employment it must be commenced within four years after the cause of action has accrued. (Id., § 337, subd. 1.) If based on an oral contract, within two years after accrual. (Id., § 339, subd. 1.) If based on a wage liability created by statute, within three years after accrual. (Id., § 338, subd. (a).)

A cause of action for unpaid wages accrues when the wages first become legally due, i.e., on the regular payday for the pay period in which the employee performed the work; when the work is continuing and the employee is therefore paid periodically (e.g., weekly or monthly) a separate and distinct cause of action accrues on each payday, triggering on each occasion the running of a new period of limitations. (Jones v. Tracy School Dist. (1980) 27 Cal.3d 99, 105-106, 165 Cal.Rptr. 100, 611 P.2d 441.) And for statute of limitations purposes an action for unpaid wages is deemed to have commenced, like all civil actions, on the date on which the employee files the complaint. (Code Civ. Proc., § 350.)

It follows that such an action is timely as to all paydays falling within the relevant limitations period. For the same reason, in calculating the amount of unpaid wages due in such an action the court will count back from the filing of the complaint to the beginning of the limitations period--e.g., for three years on a statutory liability--and will award all unpaid wages earned during that period. (Jones v. Tracy School Dist., supra, 27 Cal.3d 99, 105, 165 Cal.Rptr. 100, 611 P.2d 441; Calvao v. Superior Court (1988) 201 Cal.App.3d 921, 922-923, 247 Cal.Rptr. 470.)

The calculation is much different in Berman proceedings. The statute creating those proceedings (§ 98) is silent as to time limitations: it does not provide (1) that such proceedings must be commenced within certain limitations periods, and it therefore does not specify either (2) the lengths of those periods or (3) the event that triggers them or (4) the date on which the proceedings are deemed to have commenced. The commissioner has nevertheless provided for all four of those factors as policy matters. For the first three the commissioner has adopted the procedures that govern civil actions for unpaid wages. Thus (1) the commissioner requires that administrative wage claims under section 98 be filed within certain limitations periods; (2) he specifies the lengths of those periods as four years for a claim on a written contract, two years for a claim on an oral contract, and three years for a claim on a statutory liability; and (3) he deems that all such periods are triggered when the wages first become legally due. But for the fourth factor--the date on which the proceedings are deemed to have commenced--the commissioner has not adopted the procedure that governs civil actions: instead, his policy provides in effect that for statute of limitations purposes a wage claim proceeding commences not when the claim is filed but when it is heard. The result is that in calculating the amount of unpaid wages due in such a proceeding the commissioner will count back from the hearing date, rather than the filing date, to the beginning of the limitations period.

There would be no significant difference in outcome, of course, if there were no appreciable delay between the filing date and the hearing date in Berman proceedings. But this is not the case: The time consumed by the various procedural steps that are routinely taken between the filing date and the hearing date typically adds up to four to six months.

The code itself contemplates a period of up to 120 days between the filing date and the hearing date. It provides that "Within 30 days of filing of the complaint, the Labor Commissioner shall notify the parties as to whether a hearing will be held.... 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." (§ 98, subd. (a).)

The code also vests the commissioner with discretion to "postpone or grant additional time before setting a hearing if the Labor Commissioner finds that it would lead to an equitable and just resolution of the dispute." (§ 98, subd. (a).) The commissioner has explained his understanding of the quoted statutory exception as follows: "Obvious examples of such a situation are when one or both of the parties request additional time, when service on the defendant has not been effected, when settlement negotiations are taking place (with or without the participation of the deputy [labor commissioner] ), or when the issues are particularly complex or the documentation voluminous. I'm sure there are other examples where postponement will be appropriate." ⁵

In addition, the commissioner has adopted, as matters of policy, certain procedures that have the effect of lengthening still further the prehearing period; they do so by delaying the date on which the commissioner deems that the complaint process referred to in the statute (§ 98) has been initiated.

To begin with, when the employee first makes his claim for administrative relief the DLSE causes him to fill out and file a form entitled "Initial Report or Claim" (DLSE 1). But the commissioner does not treat the filing of a form DLSE 1 as initiating the complaint process referred to in the statute. Rather, "That form assigns the employee's claim to the Labor Commissioner and allows an initial screening of the claim. Formal proceedings before the Labor Commissioner are subsequently initiated by completion and filing of the DLSE 'Complaint' form (DLSE 530)...." (Wilcox, supra, § 5.10, p. 5-16.2, italics added.)

Before the latter form is filed, however, the DLSE ordinarily holds a settlement conference on the initial claim, requiring all parties to appear with their evidence. The commissioner's policy is to hold the settlement conference within 30 days after sending the parties notice thereof, but in practice the delay may be greater. (Wilcox, supra, § 5.12, p. 5-24.) ⁶

If a...