Wednesday, April 3, 2013
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C.A. Rules for Auto Technicians in Pay-Dispute Class Action
By KENNETH OFGANG, Staff Writer
Automotive technicians who are paid on a “piece-rate” basis for fixing cars are separately entitled to minimum wages when waiting for cars to come in for repair or performing other duties, the Court of Appeal for this district has ruled.
The March 6 decision by Div. Two upholds a ruling in favor of 108 technicians who worked for Downtown LA Motors Mercedes Benz between April 2002 and June 2008. Justice Victoria Chavez’s opinion was certified yesterday for publication.
DTLA, Chavez explained, used a compensation system in which each task performed by a technician was assigned a specified number of “flag hours,” corresponding to the amount of time the company believed was necessary to perform the task. Technicians were then compensated at the rate of between $17 and $32 per flag hour, regardless of the amount of time actually spent.
The company also tracked all time spent at the worksite, whether the technician was working on repairs or not, and technicians who did not work enough flag hours during a two-week period to earn the minimum wage were bumped up to that amount.
Stuck at Site
The plaintiffs presented evidence that they were required to remain at the job site during their regular eight-hour shifts, even if there were no cars to repair, in case customers came in. Those not working on repairs were given other tasks—for which they were not credited with flag hours—such as cleaning work stations, obtaining parts, attending meetings, picking up and returning cars, reviewing service bulletins, and participating in online training.
Following a bench trial, Los Angeles Superior Court Judge Mary H. Strobel ruled that under California law, the technicians had to be paid for the time they were working at non-repair tasks or otherwise required to be at the site. Based on “credible” expert testimony, the judge found that class members had worked an average of 1.85 hours per day without compensation, and that the average amount of lost compensation per worker per day was $27.76.
Based on those amounts, the judge awarded more than $550,000 in compensation, more than $1 million in interest, and more than $230,000 in penalties for willful failure to pay wages at time of employee termination.
IWC Wage Order
Chavez, writing for the Court of Appeal, said the trial judge correctly applied Industrial Welfare Commission Wage Order No. 4, which has the force of law. The wage order requires that an employee be paid “not less than the applicable minimum wage for all hours worked in the payroll period, whether the remuneration is measured by time, piece, commission, or otherwise,” and defines “hours worked” as “the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.”
The justice rejected the dealer’s argument that it complied with the wage order by paying the minimum-wage differential. But Chavez said that contention was inconsistent with the plain language of the order.
She cited Armenta v. Osmose, Inc. (2005) 135 Cal.App.4th 314, which interpreted the same wage order. The court in that case ruled in favor of employees who maintained utility poles in rural or remote areas, to which they were required to travel from a central meeting location in company trucks, and who were not paid for time classified by the company as “unproductive,” including time spent traveling to and from job sites, loading or maintaining vehicles, or attending safety meetings.
While the average wage under this system exceeded the minimum wage, the Court of Appeal said it violated the requirement that employees be paid for “all hours worked.” While a different result might have been reached under federal law, the court said, California law is more protective of workers and discourages the use of per-week or per-pay-period “averaging” schemes as a matter of public policy.
Willful Failure
The justice went on to agree with Strobel that the failure to pay the wages due was willful within the meaning of Labor Code Sec. 203. Chavez explained that while the trial judge found the company to have acted in good faith, and thus not be liable for liquidated damages, there was substantial evidence of willfulness, including testimony that the company did not always comply with its own stated policy of paying the difference when an employee’s piece rate compensation fell below the minimum wage in a given pay period.
Attorneys on appeal were Arthur F. Silbergeld and Jennifer A. Awrey of Dickstein Shapiro and Robin Meadow, Cynthia E. Tobisman, and Alana H. Rotter of Greines, Martin, Stein & Richland for the dealer and Aaron C. Gundzik of Gartenberg Gelfand Hayton & Selden, along with Neal J. Fialkow, for the technicians.
The case is Gonzalez v. Downtown LA Motors, LP, 13 S.O.S. 1662.
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