Jaime Zepeda Labor Contracting, Inc. v. Dep't of Indus. Relations

• Decision Date: 12 August 2021
• Docket Number: D078062
• Citation: 67 Cal.App.5th 891,282 Cal.Rptr.3d 579
• Parties: JAIME ZEPEDA LABOR CONTRACTING, INC., et al., Plaintiffs and Appellants, v. DEPARTMENT OF INDUSTRIAL RELATIONS, DIVISION OF LABOR STANDARDS ENFORCEMENT, Defendant and Appellant.
• Court: California Court of Appeals Court of Appeals

67 Cal.App.5th 891

282 Cal.Rptr.3d 579

JAIME ZEPEDA LABOR CONTRACTING, INC., et al., Plaintiffs and Appellants,

v.DEPARTMENT OF INDUSTRIAL RELATIONS, DIVISION OF LABOR STANDARDS ENFORCEMENT, Defendant and Appellant.

D078062

Court of Appeal, Fourth District, Division 1, California.

Filed August 12, 2021

Kay K. Otani, Los Angeles, for Defendant and Appellant.

Swajian Law, Gregory A. Swajian and Dawn M. Swajian, Palm Desert, for Plaintiff and Appellant Jaime Zepeda Labor Contracting, Inc.

Bruce D. Carroll for Plaintiffs and Appellants Anthony Vineyards, Inc. and Richard Bagdasarian, Inc.

Shepard Mullin, Richter & Hampton, Babak Yousefzadeh and Brian S. Fong, San Francisco, for amicus curiae on behalf of Plaintiffs and Appellants.

AARON, J.

I. INTRODUCTION

California law requires that employers pay agricultural workers a minimum wage "on the established payday for the period involved." ( Cal. Code. Regs., tit. 8, § 11140, subd. (4)(B).) Labor Code section 205¹ in turn requires farm labor contractors to establish weekly paydays for the payment of wages to their workers.

In addition to these minimum wage provisions, the Labor Code's final wage prompt payment provisions impose timing requirements on the payment of final wages to employees who are discharged ( § 201 ) or who quit ( § 202 ). If an employer "discharges" an employee within the meaning of the statute, "the wages earned and unpaid at the time of discharge are due and payable immediately." ( § 201, subd. (a).) In addition, generally speaking, if an employee quits without notice, her wages become due and payable 72 hours thereafter, unless she has given 72 hours previous notice of her intention to quit, in which case the wages are due at the time of quitting. ( § 202, subd. (a).) An employer that "willfully fails to pay," in accordance with sections 201 and 202, "any wages of an employee who is discharged or who quits" is subject to so-called waiting-time penalties of up to an amount equal to 30 days of wages. ( § 203, subd. (a).)²

California law also specifies how the minimum wage and final wage prompt payment provisions may be enforced. As relevant to this appeal, section 1197.1, subdivision (b) authorizes the Division of Labor Standards Enforcement (the Division)³ to issue a citation to the employer if the Division "determines that a person has paid or caused to be paid a wage less than the minimum under applicable law." While a section 1197.1 minimum wage citation may include "any applicable penalties imposed pursuant to Section 203 in connection with the citation," the existence of a minimum wage violation is a prerequisite to the issuance of such a citation.

In this appeal, we consider whether certain employers, farm labor contractor Jaime Zepeda Labor Contracting, Inc. (Zepeda), and Zepeda's "client employers" ( § 2810.3 ), Anthony Vineyards, Inc. (AVI) and Richard Bagdasarian, Inc. (RBI) (collectively "Employers"),⁴ committed minimum wage violations that would support the Division's issuance of section 1197.1 citations. It is undisputed that the Employers paid all of the employees at issue at least the minimum wage by payday. Nevertheless, the Division contends that it properly issued section 1197.1 minimum wage citations because the Employers did not promptly pay the final wages of the employees who were purportedly discharged or deemed by the Division to have quit in accordance with the prompt payment mandates of sections 201, 202 and 203.⁵ The Division reasons that the failure to pay wages on the dates that the employees were discharged ( § 201, subd. (a) ), or within 72 hours of when they quit ( § 202, subd. (a) ), subjected the Employers to waiting time penalties under section 203, and constituted independent minimum wage violations that supported the issuance of section 1197.1 citations, even though the Employers paid final wages that were at or above the minimum wage on or before payday, in accordance with the minimum wage law.

After considering the text, structure, and purpose of the relevant laws, the lack of any authority supporting the conclusion that the Employers committed minimum wage violations under these circumstances, and a persuasive decision from another jurisdiction rejecting an argument nearly identical to the one that the Division advances here, we conclude that the Division improperly issued the section 1197.1 minimum wage citations to the Employers. We therefore conclude that the superior court properly issued a peremptory writ of administrative mandate directing the Division to dismiss the section 1197.1 minimum wage citations with prejudice.⁶ Accordingly, we affirm the superior court's judgment granting a peremptory writ directing the Division to dismiss the citations with prejudice.⁷

II. FACTUAL AND PROCEDURAL BACKGROUND

A. Factual background

Zepeda is a farm laborer contractor that provides employees to assist grape growers, including AVI and RBI.⁸ The employees perform various tasks for AVI and RBI, often referred to in the record as "seasonal activit[ies]." The superior court summarized the evidence pertaining to the seasonal activities that the employees perform for AVI and RBI as follows:

"Deputy Labor Commissioner (‘DLC’) Martinez testified that she issued an ‘Order to Appear’ ... at which time [Zepeda's representatives] explained the various grape growing [seasonal activities]⁹ to include pruning and ty[ ]ing in the winter, suckering in the spring, followed by leafing and harvesting in the late spring and summer. [Citations.] DLC Martinez testified that when she asked if there were different periods of work for each seasonal activity, [Zepeda's representatives] admitted that the workers would stop work after each seasonal activity and would return to work when the next seasona[l] activity commenced. [Citation.] DLC Martinez further testified that when she asked [one of Zepeda's representatives] how workers were paid at the end of each seasonal activity, [Zepeda's representatives] stated that the workers were paid on the next payday and not at the end of the seasonal activity."¹⁰

The Division collected evidence pertaining to when each seasonal activity ended on various dates between 2014 and 2016 and the dates on which Zepeda issued paychecks to employees. The Division later prepared audits based on this evidence. It is undisputed that the audits revealed that, with respect to each seasonal activity, Zepeda paid all of the employees at least the minimum wage at or before the employee's regular payday.¹¹ However, Zepeda frequently paid wages a few days after the employee's last day of work completing a seasonal activity.¹²

B. Procedural background

1. The wage citations

In November 2016, the Division issued four section 1197.1, subdivision (b) minimum wage citations to the Employers imposing the following penalties and liquidated damages: (1) minimum wage penalties pursuant to section 1197.1 ;¹³ (2) minimum wage liquidated damages pursuant to section 1194.2 ;¹⁴ and (3) section 203 waiting penalties.¹⁵ The Division issued one citation solely to Zepeda, and issued the other three citations jointly to Zepeda and either Sun World, AVI or RBI.¹⁶ The total liquidated damages and penalties imposed in the citations were $150,856.75 (Zepeda); $78,911.45 (Zepeda and Sun World); $61,990 (Zepeda and AVI); and $66,347 (Zepeda and RBI).

2. The Employers¹⁷ contest the citations in administrative proceedings

The Employers contested the citations on numerous grounds in administrative proceedings before a hearing officer.¹⁸ After briefing and an evidentiary hearing, the hearing officer issued a decision affirming in part the Division's imposition of penalties.¹⁹ As relevant to the dispositive issue in this appeal, the hearing officer concluded that the Employers had committed minimum wage violations that supported the issuance of the citations. In reaching this conclusion, the hearing officer reasoned:

"The [Division] relies on Biggs v. Wilson 1 F.3d 1537 (9th Cir. 1993) [( Biggs )], a case under the federal Fair Labor Standards Act (FLSA) for the proposition that the late payment of wages constitutes a minimum wage violation. The wages were paid late because they were not paid in conformity with ... section[s] 201 and 202, a wage fixed by statute. The employees are certainly underpaid when they receive nothing. Here, they were unpaid on the due date for wages, thus they were underpaid for purposes of assessing a penalty for failure to pay the minimum wage."

3. The Employers' petition for writ of administrative mandate

The Employers filed a petition for writ of administrative mandate in the Riverside County Superior Court in which they requested that the superior court vacate the hearing officer's decision and order the Division to dismiss the wage citations.²⁰ The employers raised numerous grounds for relief in their petition. As relevant to this appeal, the Employers argued:

"The Wage Citations were improperly issued here because Zepeda did not cause any employees to be paid a wage less than the minimum—a prerequisite for issuing citations and recovering penalties under ... section 1197.1, which gives the Division authority to investigate, issue citations, and recover damages and penalties when an employee has been paid less than minimum wage, and allows for an additional penalty to be assessed each pay period for which the employee was underpaid. [( § 1197.1, subd. (a).)] The Division overstepped its authority under Section 1197.1 because Zepeda did not pay less than the minimum wage. No court has ever approved assessment of a civil minimum wage penalty under ... section 1197.1 when minimum wages have actually been paid."

4. The superior court's ruling on the petition

After briefing and a hearing, the superior court confirmed its tentative order granting the petition and ordering the dismissal of all of the wage citations. The superior court also entered a formal order granting the Employers' petition.²¹

With respect to the dispositive issue in...