Muldrow v. Surrex Solutions Corp.

• Decision Date: 29 August 2012
• Docket Number: Nos. D057955,D058958.,s. D057955
• Citation: Muldrow v. Surrex Solutions Corp., 208 Cal. App. 4th 1381, 146 Cal.Rptr.3d 447, 12 Cal. Daily Op. Serv. 9985, 2012 Daily Journal D.A.R. 12088 (Cal. App. 2012)
• Parties: Tyrone MULDROW et al., Plaintiffs and Appellants, v. SURREX SOLUTIONS CORPORATION, Defendant and Respondent.
• Court: California Court of Appeals

208 Cal.App.4th 1381

146 Cal.Rptr.3d 447

12 Cal. Daily Op. Serv. 9985

2012 Daily Journal D.A.R. 12,088

Tyrone MULDROW et al., Plaintiffs and Appellants,

v.SURREX SOLUTIONS CORPORATION, Defendant and Respondent.

Nos. D057955, D058958.

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

Aug. 29, 2012.

See Witkin, Summary of Cal. Law (10th ed. 2005) Agency and Employment, § 361.

Hogue & Belong, San Diego, Jeffrey Lee Hogue, Tyler J. Belong, Tony R. Skogen, Jr., and Law Offices of John S. Addams, San Diego, Niddrie, Fish & Addams, and John S. Addams for Plaintiffs and Appellants.

Gibbs & Fuerst, Murrieta, Michael T. Gibbs and Kevin L. Borgen for Defendant and Respondent.

AARON, J.

I.INTRODUCTION

In this appeal from a judgment after a bench trial, we consider two issues. First, we address whether the trial court erred in determining that an employer was not required to pay overtime wages (Lab.Code, § 510) ¹ to a class of its current and former employees because they were subject to the commissioned employees exemption ( Cal.Code Regs., tit. 8, § 11070, subd. (3)(D)). Pursuant to this exemption, employers are not required to pay overtime wages to employees “whose earnings exceed one and one-half (1 1/2) times the minimum wage if more than half of that employee's compensation represents commissions.” ( Ibid.) Second, we address whether the trial court erred in denying the class members' claim for missed meal periods on the ground that the employer was required only to provide such periods, and was not required to ensure that employees actually took the meal breaks.

In our initial opinion in this matter, we concluded that the trial court properly determined that the employees were subject to the commissioned employees exemption. We also concluded that the trial court had not erred in denying the meal period claim. The Supreme Court granted the class's petition for review ( Muldrow v. Surrex Solutions Corp. (2012) 202 Cal.App.4th 1232, 136 Cal.Rptr.3d 382, review granted Apr. 11, 2012, S200557) and deferred further action in the matter pending its consideration of a related issue in Brinker Restaurant Corp. v. Superior Court (2008) 165 Cal.App.4th 25, 80 Cal.Rptr.3d 781, review granted October 22, 2008, S166350. The Supreme Court subsequently transferred the case back to this court with directions to vacate our earlier decision and to reconsider the case in light of Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1037, 139 Cal.Rptr.3d 315, 273 P.3d 513( Brinker ). Upon transfer, we issued an order vacating our prior decision and soliciting briefing on the effect of Brinker, if any, on the issues in this case.

It is undisputed that Brinker does not affect our prior conclusion that the trial court properly determined that the class employees were subject to the commissioned employees exemption. With respect to the class members' meal break claim, in Brinker the Supreme Court held that while an employer has a duty to provide meal periods to its employees, it “is not obligated to police meal breaks and ensure no work thereafter is performed.” ( Brinker, supra, 53 Cal.4th at p. 1040, 139 Cal.Rptr.3d 315, 273 P.3d 513.) Accordingly, we again reject the class members' claim that the trial court erred “in ruling that [the employer] was not obligated to ensure that meal period were taken,” and affirm the judgment and a postjudgment order awarding costs to the employer.

II.FACTUAL AND PROCEDURAL BACKGROUND

Tyrone Muldrow filed this action against Surrex Solutions Corporation (Surrex) on behalf of himself and a class of current and former Surrex employees. In his complaint, Muldrow brought causes of action including failure to pay overtime (§ 510) and failure to provide meal periods (§ 512), among other claims. The trial court certified a class of current and former Surrex “senior consulting services managers,” who formerly worked (or were currently working) as employment recruiters for Surrex, since January 31, 2004.

At a bench trial of the class members' claims, Surrex asserted that it was not required to pay overtime to the class members because they were subject to the commissioned employees exemption (Cal.Code.Regs., tit.8, § 11070, subd. (3)(D)) and the administrative employees exemption ( id., subd. (1)(A)(2)). Surrex also contended that it had provided meal periods to the class members, as required.

The trial court determined that the class members were subject to the commissioned employees exemption. The trial court further concluded that Surrex had provided meal periods for the class members, and that the law did not obligate Surrex to ensure that the employees utilized the meal periods. Because these determinations disposed of the action, the court did not proceed to determine whether the class members were subject to the administrative employees exemption. The court entered judgment and a postjudgment award of costs in favor of Surrex.

Appellants filed an appeal from the judgment in which they claim that the trial court erred in determining that the commissioned employees exemption applied to them and that they were therefore not entitled to overtime. In addition, appellants claim that the trial court erred in denying their claim for missed meal periods.² Appellants also filed an appeal from a postjudgment order awarding costs to Surrex. Pursuant to the parties' stipulation, this court consolidated the appeal from the judgment with the appeal from the postjudgment cost award.³

III.DISCUSSION

A. The trial court did not err in determining that appellants were not entitled to overtime pay because they were subject to the commissioned employees exemption

Appellants claim that the trial court erred in determining that Surrex was not required to pay them overtime (§ 510) because they were subject to the commissioned employees exemption (Cal.Code.Regs., tit.8, § 11070, subd. (3)(D)).

1. Standard of review

Appellants' contention raises a mixed question of law and fact. ( Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785, 794, 85 Cal.Rptr.2d 844, 978 P.2d 2( Ramirez ) [“The question whether Ramirez was an outside salesperson within the meaning of applicable statutes and regulations is, like other questions involving the application of legal categories, a mixed question of law and fact”].) Mixed questions of law and fact are reviewed de novo, where the claim to be reviewed is “predominantly one of law.” (E.g., In re Marriage of Sonne (2010) 48 Cal.4th 118, 124, 105 Cal.Rptr.3d 414, 225 P.3d 546.)

In this appeal, appellants contend that the trial court erred in determining that they were subject to the commissioned employees exemption, in light of undisputed facts pertaining to both their employment duties and Surrex's compensation system. We apply the de novo standard of review to this claim, since the claim raises a question of law. (See Ramirez, supra, 20 Cal.4th at p. 794, 85 Cal.Rptr.2d 844, 978 P.2d 2 [applying de novo standard of review because, “[i]n the present case, although there was some controversy as to the facts—i.e., as to what Ramirez did as an employee for Yosemite—the predominant controversy is the precise meaning of the term ‘outside salesperson,’ a question of law”].)

2. Governing law

a. Relevant statutory and regulatory provisions

Section 510, subdivision (a) specifies that eight hours of labor constitute a day's work, and that any work in excess of eight hours in one day, 40 hours in one workweek, and the first eight hours worked on the seventh day of work in any workweek “shall be compensated at the rate of no less than one and one-half times the regular rate of pay for an employee.”

California Industrial Welfare Commission (IWC) Wage Order No. 7–2001 exempts from this statutory overtime compensation requirement “any employee whose earnings exceed one and one-half (1 1/2) times the minimum wage if more than half of that employee's compensation represents commissions.” (Cal.Code Regs., tit. 8, § 11070, subd. (3)(D).) ⁴

b. Relevant case law

In Keyes Motors, Inc. v. Division of Labor Standards Enforcement (1987) 197 Cal.App.3d 557, 242 Cal.Rptr. 873( Keyes Motors ), the Division of Labor Standards Enforcement (DLSE) determined that an employer that sold and serviced automobiles was required to pay overtime wages to its mechanics. The employer sought a judicial declaration that it was not required to pay overtime wages to its mechanics because the mechanics' compensation, which was based on a percentage of the hourly rate charged to customers for repairs, constituted “commission wages.” ( Id. at p. 560, 242 Cal.Rptr. 873.) The trial court granted the requested relief. ( Id. at p. 561, 242 Cal.Rptr. 873.)

On appeal, the Keyes Motors court began its analysis of the relevant statutory and regulatory provisions by stating that the “DLSE is the body charged with administration and enforcement of IWC orders,” and that the “DLSE's primary responsibility is to interpret the intent of the IWC.” ( Keyes Motors, supra, 197 Cal.App.3d at pp. 561–562, 242 Cal.Rptr. 873.) The Keyes Motors court then noted that the “DLSE has consistently read [the commissioned employees exemption] to exempt from overtime only employees in sales positions.” ( Keyes Motors, supra, at p. 562, 242 Cal.Rptr. 873.) The Keyes Motors court further observed that the DLSE cited the following portion of section 204.1 ⁵ in support of its position: “Commission wages are compensation paid to any person for services rendered in the sale of such employer's property or services and based proportionately upon the amount or value thereof.' ” ( Keyes Motors, supra, at p. 562, 242 Cal.Rptr. 873, quoting § 204.1.)

In adopting the definition of commission wages in section 204.1 for purposes of determining the applicability of the commissioned employees exemption, the Keyes Motors court stated, “We conclude Labor Code section 204.1 sets up two requirements, both of which must be met before a compensation scheme is deemed to...