Liday v. Sim ( 2019 )

Filed 9/25/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
LEA LIDAY, B283180
Plaintiff and Respondent, Los Angeles County
Super. Ct. No. BC542513
v.
PETER SIM et al.,
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of
Los Angeles County, Josh M. Fredricks, Judge. (Retired judge
of the L.A. Sup. Ct. assigned by the Chief Justice pursuant to
art. VI, § 6 of the Cal. Const.) Reversed with directions.
Schlichter & Shonack, Jamie L. Keeton and Ben Rothman
for Defendants and Appellants.
Law Offices of C. Joe Sayas, Jr., C. Joe Sayas, Jr., and
Karl P. Evangelista for Plaintiff and Respondent.
_________________________
INTRODUCTION
When determining a claim for unpaid minimum wages,
does the court presume that a fixed salary paid to a live-in
domestic worker—who is exempt from overtime but subject to
minimum wage laws—covers only the regular, nonovertime work
hours mandated for nonexempt workers? Or, does the court
determine the worker’s unpaid minimum wages by calculating
the difference between the total number of hours she worked at
the prevailing minimum wage rate and the amount she received
through her salary? That is the question this wage-and-hour
appeal poses.
Lea Liday sued her former employers, appellants, for
unpaid wages incurred from April 2010 to April 2014. Liday
worked for appellants as their children’s live-in caretaker for
a fixed salary of $3,000 per month. After a bench trial, the trial
court found Liday was a “personal attendant” under Wage Order
No. 15, 2001 (Cal. Code Regs., tit. 8, § 11150 (Wage Order 15)).
It also found Liday’s salary did not compensate her at the
statutory minimum wage for all the hours it found she had
worked. Appellants do not contest the trial court’s finding that
Liday worked more hours than they had argued at trial, but
they do challenge the propriety of the formula the court used to
determine Liday’s unpaid minimum wages due from April 2010
through December 2013.
Before 2014, live-in domestic workers classified as
“personal attendants” were exempt from California’s overtime
requirements but were entitled to be paid at least the minimum
wage for all hours worked. The Legislature passed the Domestic
Workers Bill of Rights (DWBR) to provide personal attendants
with overtime protection beginning January 1, 2014. Under that
law, personal attendants cannot work more than nine hours per
day or more than 45 hours per week unless paid one and one-half
2
times their regular rate of pay for all hours worked in excess of
those limits. (Lab. Code, § 1454.)1
The DWBR applied only to the last three months of Liday’s
employment. The trial court acknowledged Liday was exempt
from overtime requirements for the period from 2010 through
2013. But, to calculate her unpaid minimum wages for that
period, the court presumed Liday’s salary compensated her for
a regular, nonovertime 45-hour workweek—the number of hours
above which overtime is due under the 2014 law. It calculated
Liday’s regular, hourly rate to be $15.38 by dividing her averaged
weekly salary by 45 hours and concluded appellants owed Liday
minimum wages at that rate for the hours she worked in excess
of 45 per week.
Appellants argue the trial court erred when it presumed a
45-hour workweek to make this calculation because Liday was
exempt from overtime. They assert the court should have divided
Liday’s salary by the $8 per hour statutory minimum wage to
determine how many hours Liday’s salary had covered and then
ordered appellants to pay Liday for any uncompensated hours
at $8 per hour. The difference is significant. Using the $15.38
per hour rate at a presumed 45 hours per week, the court found
appellants owed Liday $265,720.26 in unpaid wages earned
before 2014. Applying the minimum wage rate of $8 per hour to
each hour the court found Liday worked, the amount drops to
under $75,000.
Because personal attendants were exempt from overtime
requirements before 2014, we conclude California law in effect at
the time did not limit the number of hours a personal attendant’s
1 All statutory references are to the Labor Code unless
indicated otherwise.
3
salary could cover, except to require that it pay at least the
minimum wage of $8 per hour for each hour worked. As the
parties do not dispute the trial court’s finding that they did not
agree to an hourly rate, and nothing in the record demonstrates
they agreed Liday would work a set number of hours per week,
the court erred when it presumed Liday’s monthly salary
compensated her for only 45 hours of work per week. We thus
reverse the judgment and remand to the trial court to recalculate
the unpaid wages appellants owe Liday for work she performed
from April 2010 through December 2013 applying an $8 per hour
rate of pay for each hour she worked.
FACTS AND PROCEDURAL BACKGROUND
Liday was a live-in personal attendant for the two autistic
sons of appellants Peter Sim, M.D., and Loraine Diego, M.D.,
from December 2002 until April 2014. Liday quit in April 2014
and sued appellants for failure to pay overtime, failure to pay
wages for all hours worked in violation of the minimum wage
law, waiting time penalties, unfair competition, and civil
penalties under the Labor Code Private Attorney General Act
(PAGA). After a bench trial, the court found in Liday’s favor
on all causes of action except her PAGA claim and found the
relevant claims period to be April 2010 to April 2014.2
Appellants requested a statement of decision, and the court
heard argument on the proposed statement on February 6, 2017.
2 Liday’s claims for violating the Labor Code were subject
to a three-year statute of limitations, but her unfair competition
claim extended to the period four years before she filed her
action. (Code Civ. Proc., § 338, subd. (a); Bus. & Prof. Code,
§ 17208.) Accordingly, Liday could recover unpaid wages from
April 2010 as restitution under her unfair competition claim.
For simplicity, we do not differentiate between Liday’s recovery
of unpaid wages versus restitution.
4
On March 17, 2017, the court issued its statement of
decision and entered judgment in Liday’s favor awarding her
$403,256.33, including prejudgment interest. The judgment
included unpaid wages for the entire claims period, but the
only period relevant to this appeal is from April 2010 through
December 2013. As appellants do not contest the court’s
underlying factual findings, we primarily state the facts relevant
to the appeal as described in the court’s statement of decision.
1. Liday’s personal attendant status
Sim and Diego, a married couple, are both medical doctors.
The couple hired Liday as a live-in caretaker for their son who
was born in October 2002. Liday also cared for appellants’ second
son, born in December 2005. Their first child, who was between
eight and 12 years old during the claims period, is severely
autistic and nonverbal. Their younger son, between five and
nine years old at the time, is mildly autistic. Appellants paid
Liday $3,000 a month during the relevant period.3
The children went to school Monday through Friday,
leaving the house at about 8:00 a.m. and returning at about
2:00 p.m. While at home, appellants’ elder son required
continuous supervision and attention. He also had sleeping
issues. Liday slept in the boy’s room to be available to supervise
him when he woke up at night. The court found Liday supervised
or was available to supervise appellants’ children around the
clock, except during the time they were at school. It thus
concluded Liday worked 18 hours per day on weekdays and
24 hours per day on Saturdays and Sundays. She took about
3 Appellants sometimes paid Liday $2,500 per month when
she took a weekend off work.
5
three to four weekends off per year, totaling 14 weekends for
the entire April 2010 to December 2013 period.
The court also found Liday did not perform significant
nonattendant work for the couple and classified her as a
“personal attendant” under Wage Order 15. As a personal
attendant, Liday was entitled to receive the minimum wage
for all hours that she worked but was exempt from overtime
requirements during the period from April 2010 through
December 31, 2013.4 For that period, therefore, Liday’s recovery
was limited to unpaid wages under the minimum wage law.
The parties stipulated that the minimum wage during that time
was $8 per hour.
2. Liday’s wages and hourly rate
Liday testified that when she first was hired in 2002, Sim
told her he would pay her $1,000 per month to work six days a
week. They did not discuss the number of work hours required.
Liday testified she began working seven days a week in 2004
after she borrowed money from Sim through pay advances; she
also received a raise at that time.5 She began making $3,000 per
month around 2005. The court found Liday credibly testified she
and appellants never discussed her hourly rate of pay.
Sim testified he and Liday never discussed salaries during
the 2010 to 2014 time frame, but he did when he hired her. Sim
also testified Liday began to work seven days a week when he
began to advance her pay. Sim said the $3,000 per month was
4 The DWBR governed only the last three months of Liday’s
employment—January 1, 2014 through April 4, 2014. Appellants
do not challenge the court’s calculation of overtime and unpaid
wages they owed Liday for that period.
5 Liday testified she paid off the 2004 loan from Sim by 2012.
6
not a salary; he based Liday’s pay on an $8 hourly rate and
estimated how many hours she worked per day. Appellants kept
no record of the hours Liday worked. In preparation for his
deposition in this case, Sim created a chart estimating Liday’s
work at 9.5 hours per weekday at $8 per hour, $82 per week,
plus $196 per month to pay for additional hours. Sim “just came
up with” the $196 number. The court found Sim’s postfiling
estimates of Liday’s hours and his testimony that he discussed
paying her $8 per hour not credible. It found Sim’s calculations
did not support “his assertion” that he paid Liday $8 per hour.
The court concluded there was “no evidence to prove one
way or the other” Liday’s hourly rate. It found Liday was not
entitled to overtime before January 1, 2014, but was “entitled
to be paid wages for each hour” she worked. Because there was
no mutual wage agreement, the court presumed Liday’s $3,000
per month salary compensated her for nine hours of work per
day, 45 hours per week—the regular, nonovertime work hours
applicable to personal attendants beginning in January 2014.
It thus calculated an hourly rate for Liday at $15.38 by dividing
her average weekly salary of $692.31 by 45 hours.
That calculation, proffered by Liday’s counsel, was based
on the formula used to determine overtime wages for salaried,
nonexempt employees found in section 515. Addressing
appellants’ counsel’s argument there was no basis for calculating
Liday’s hourly rate based on a 45-hour workweek and that
section 515 did not apply, the court explained, “I’m not basing it
on the fact that someone cited . . . a definitive case or code section
about how to calculate this. I’m just persuaded by looking at the
whole banana here, that that is the correct way to do this. Even
though . . . this is an ex[em]pt employee, . . . and even though
she’s not entitled to overtime. We have to calculate it based on
something. And I understand you want me to calculate it on $8,
7
but I think that the logic of this is that, and that’s what I’m
persuaded by, that in the—the nonexempt employees, that—this
is the way that they calculate and you agree with that. I just
think this is the way we should calculate it in this case, also. . . .
It’s not because I’m persuaded by some code section or a case.”
3. Liday’s unpaid minimum wages
The court applied Liday’s “regular rate” of $15.38 per hour
to the hours Liday worked in excess of 45 per week to determine
her unpaid wages. For the period at issue on appeal, April 2010
to December 2013, the court found Liday worked (a) 138 hours
per week for 179 weeks, and (b) 90 hours per week for 14 weeks.
Assuming a 45-hour workweek and a $15.38 hourly rate, the
court concluded Liday was not paid for 93 hours per week for
179 weeks, $256,030.86, and was not paid for 45 hours per week
for 14 weeks, $9,689.40, for a total of $265,720.26 in unpaid
wages.6 The court also awarded Liday prejudgment interest.
Appellants timely moved for a new trial on the ground that
the trial court erred in calculating Liday’s pre-2014 hourly rate
based on the “regular rate” formula for calculating overtime
for nonexempt employees. They argued the court should have
calculated Liday’s pre-2014 unpaid wages based on the minimum
wage rate of $8 per hour for each hour she worked. The court
heard and denied the motion on May 19, 2017. It reiterated,
“I think that this [is] the analogous and appropriate way to
6 Specifically, the court first determined Liday’s averaged
weekly salary was $692.31 ($3,000 x 12 months/52 weeks), and
then divided it by 45 hours to reach an hourly “regular rate” of
$15.38. The court then multiplied the $15.38 hourly rate by the
number of hours Liday worked per week in excess of 45 hours to
determine Liday’s unpaid wages.
8
determine what the regular hourly rate was and that’s why
I calculated it that way.”
This appeal followed.
DISCUSSION
Appellants challenge only that portion of the judgment
awarding Liday unpaid minimum wages from 2010 through 2013.
They contend, that because Liday was entitled to be paid the
minimum wage, but was exempt from overtime requirements
during this period, the court erred when it found Liday’s monthly
salary compensated her for only 45 hours per week, entitling her
to unpaid wages at a “regular rate” of $15.38 per hour for all
hours she worked in excess of 45 per week. They argue the court
instead should have applied the prevailing minimum wage rate
of $8 per hour to all hours Liday worked during the contested
period to determine the amount of wages appellants owed.
Appellants ask us to reduce Liday’s base award of pre-2014
unpaid wages from $265,720.26 to $74,080.17, and to remand the
matter to the trial court to reduce the corresponding prejudgment
interest due.
Liday acknowledges the court’s finding that she was an
overtime-exempt personal attendant, but contends its method
to calculate her unpaid wages was proper. She argues that as a
salaried employee subject to the minimum wage, and without an
agreed hourly rate, the 45-hour nonovertime workweek applied to
her so that her salary compensated her for 45 hours of work per
week and no more. We disagree with Liday’s interpretation and
application of the law to the unchallenged facts before us.
1. Governing law and standard of review
“[W]age and hour claims are today governed by two
complementary and occasionally overlapping sources of
authority: the provisions of the Labor Code, enacted by the
Legislature, and a series of 18 wage orders, adopted by the
9
IWC.”7 (Brinker Restaurant Corp. v. Superior Court (2012)
53 Cal.4th 1004, 1026 (Brinker).) “The IWC, a state agency,
was empowered to issue wage orders, which are legislative
regulations specifying minimum requirements with respect
to wages, hours, and working conditions.” (Mendiola v. CPS
Security Solutions, Inc. (2015) 60 Cal.4th 833, 838 (Mendiola).)
Although the Legislature has since defunded the IWC, its wage
orders are still in effect. (Gonzalez v. Downtown LA Motors, LP
(2013) 215 Cal.App.4th 36, 43 (Gonzalez).)
Wage orders “have the force of law” (Dynamex v. Superior
Court (2018) 4 Cal.5th 903, 914, fn. 3), and “must be given
‘independent effect’ separate and apart from any statutory
enactments” (Brinker, supra, 53 Cal.4th at p. 1027). Thus, when
a wage order and statute overlap, “we will seek to harmonize
them, as we would with any two statutes.” (Ibid.)
Like statutes, the interpretation of a wage order is a
question of law that we consider de novo. (Smith v. Superior
Court (2006) 39 Cal.4th 77, 83; Gonzalez, supra, 215 Cal.App.4th
at p. 44.) We apply the ordinary principles of statutory
construction to both the Labor Code and the IWC’s wage orders,
“beginning with and focusing on the text as the best indicator
of legislative purpose.” (Brinker, supra, 53 Cal.4th at pp. 1026-
1027; Mendiola, supra, 60 Cal.4th at p. 840; Gonzalez, at p. 43.)
We give the words of the statute (or regulation) “their ordinary
and usual meaning” and construe them “in their statutory
context.” (Gonzalez, at p. 43; Ward v. Tilly's, Inc. (2019) 31
Cal.App.5th 1167, 1175.) “When the language is clear, ‘we apply
the language without further inquiry.’ ” (Ward, at p. 1175.)
If the language is susceptible to more than one reasonable
7 “IWC” stands for Industrial Welfare Commission. (§ 70.)
10
interpretation, we “may consider ‘ “a variety of extrinsic aids,
including the ostensible objects to be achieved, the evils to be
remedied, the legislative history, public policy, contemporaneous
administrative construction, and the statutory scheme of which
the statute is a part.” [Citation.]’ ” (Gonzalez, at p. 44.)
We liberally construe state wage and hour laws in favor of
the legislative policy to protect workers. (Gonzalez, supra, 215
Cal.App.4th at p. 44.) But we must avoid a judicial construction
“that renders any part of the wage order meaningless or
inoperative” (ibid.), or leads to “absurd consequences” (Singh
v. Superior Court (2006) 140 Cal.App.4th 387, 393).
We also independently review the application of law to
undisputed facts. (Boling v. Public Employment Relations Bd.
(2018) 5 Cal.5th 898, 912.)
2. Wage and hour laws applicable to Liday
The payment of a wage lower than the minimum “fixed” by
the IWC or applicable law is unlawful. (§ 1197.) Under section
1194, “any employee receiving less than the legal minimum wage
or the legal overtime compensation applicable to the employee is
entitled to recover in a civil action the unpaid balance of the full
amount of this minimum wage or overtime compensation.” When
an employee sues to recover unpaid minimum wages under
section 1194, she “actually sues to enforce the applicable wage
order.” (Martinez v. Combs (2010) 49 Cal.4th 35, 62, 64.) “This is
because the ‘legal minimum wage’ recoverable under section 1194
is ‘[t]he minimum wage . . . fixed by the commission’ (§ 1197)
in the applicable wage order . . . and because employers and
employees become subject to the minimum wage only through
the applicable wage order and according to its terms [citation].”
(Ibid.) The prevailing minimum wage “fixed” during the relevant
period—to which the parties stipulated—was $8 per hour.
(Former § 1182.12, added by Stats. 2006, ch. 230, § 1.)
11
“The number and complexity of wage orders reflect the
reality that differing aspects of work in differing industries
may call for different kinds of regulation.” (Mendiola, supra,
60 Cal.4th at p. 839.) The wage order at issue in this case,
Wage Order 15, applies to all persons employed in household
occupations, including “personal attendants.” (Wage Order 15,
subd. 1.) As defined by the wage order, “personal attendants”
include babysitters and individuals employed “to supervise,
feed, or dress a child or person who by reason of advanced age,
physical disability, or mental deficiency needs supervision.”
(Wage Order 15, subd. 2(J).) The court determined Liday was
a personal attendant as defined by Wage Order 15. The parties
do not challenge that finding on appeal.
Before 2001, Wage Order 15 did not apply to personal
attendants at all. (IWC Order No. 15-2000, subd. 1(B)

[as of Sept. 24, 2019], archived at
[“The provisions of this Order shall not apply to personal
attendants.”].) Personal attendants thus were exempt from both
the minimum wage and overtime requirements found in Wage
Order 15. In 2001, however, the IWC amended Wage Order 15
to remove the personal attendant exemption from its minimum
wage requirement. (Compare IWC Order No. 15-2000,
subd. 1(B), supra, with Wage Order 15, subds. 1(B), 4.)
Subdivision 4 of Wage Order 15, entitled “Minimum Wages,”
provides: “Every employer shall pay to each employee, on the
established payday for the period involved, 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.” (Wage Order 15, subd. 4(B); subd.
(4)(A) [“[e]very employer shall pay to each employee wages not
12
less than [the prevailing minimum hourly wage] for all hours
worked”].)
The express language of Wage Order 15, however,
unambiguously exempts personal attendants from most of its
other provisions, including overtime. (Wage Order 15, subd. 1(B)
[“Except as provided in sections 1, 2, 4, 10, and 15, the provisions
of this Order shall not apply to personal attendants.”].) Thus,
the provisions restricting domestic workers’ number of hours
and days of work, providing meal and rest periods, and requiring
employers to keep certain records, among others, did not apply to
Liday. (See Wage Order 15, subds. 1(B), 3 [“Hours and Days of
Work”], 7 [“Records”], 11 [“Meal Periods”], 12 [“Rest Periods”].)
Unlike overtime-exempt personal attendants, nonexempt
employees in general must be paid one and one-half times their
“regular rate of pay” if they work more than eight hours per day
and 40 hours per week. (§ 510 [“Eight hours of labor constitutes
a day’s work.”].) Similarly, live-in, non-personal attendant
domestic workers are entitled to at least three duty-free hours
within any 12-hour span of work and may not be required to
work more than five days without a day off, unless paid overtime.
(Wage Order 15, subds. 3(A)(1), (B).)
The Legislature amended the personal attendant overtime
exemption when it enacted the DWBR. Beginning January 1,
2014, under section 1454, a personal attendant may not be
employed for “more than nine hours in any workday or more than
45 hours in any workweek unless the employee receives one and
one-half times the employee’s regular rate of pay for all hours
worked over nine hours in any workday and for all hours worked
more than 45 hours in the workweek.”
It is undisputed, however, that section 1454 did not apply
to Liday’s claim for unpaid wages incurred from April 2010
13
through December 31, 2013.8 Thus, Liday was an overtime-
exempt personal attendant under Wage Order 15 during the
entire period challenged on appeal. Accordingly, for the pre-2014
period, by the express, unambiguous terms of Wage Order 15,
appellants were required to pay Liday at least the minimum
wage of $8 per hour for all hours she worked, but were not
obligated to limit Liday’s required daily or weekly work hours
or to pay her premium overtime wages. (See Wage Order 15,
subds. 1(B), 3(A) & (B) [excluding personal attendants from
“Hours and Days of Work” provision that limits a live-in
employee’s daily and weekly work hours and requires employer
to compensate employee at one and one-half times or double her
regular rate of pay if those limits are exceeded].)
3. Pre-2014 California law does not support the
court’s presumption
Although Liday was an overtime-exempt employee under
Wage Order 15, the court nonetheless determined appellants’
pre-2014 minimum wage obligation by applying the formula for
calculating salaried, nonexempt employees’ “regular rate” of pay
of dividing their salary by their regular, nonovertime hours.
Liday argues this method was proper because “when an employer
chooses to pay an employee not exempt from the minimum-wage
laws a fixed monthly salary, such salary constitutes payment
only for said employee’s regular, non-overtime hours.”
While that statement may be true for Liday’s 2014 wage
claims, it is not for her pre-2014 claims when she was exempt
8 No one has argued section 1454 is retroactive and nothing
indicates the Legislature intended it to be so. (Californians for
Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223, 230
[“statutes operate prospectively absent a clear indication the
voters or the Legislature intended otherwise”].)
14
from overtime requirements. The authorities on which Liday
relies—section 515, the DLSE Enforcement Polices and
Interpretations Manual9 and Hernandez v. Mendoza (1988) 199
Cal.App.3d 721 (Hernandez)—do not require otherwise. They all
relate to calculating unpaid overtime for nonexempt employees.
a. The express language of the Labor Code demonstrates
the “regular hourly rate” calculation was intended to
determine overtime wages for nonexempt employees
Liday argues the trial court’s calculation of her “regular
hourly rate” based on her weekly salary divided by a regular,
nonovertime workweek of 45 hours is “congruent with” section
515 and the DLSE Manual. We disagree.
Section 515, subdivision (d)(1) provides: “For the purpose of
computing the overtime rate of compensation required to be paid
to a nonexempt full-time salaried employee, the employee’s
regular hourly rate shall be 1/40th of the employee’s weekly
salary.” (Italics added.) Section 515, subdivision (d)(2) in turn
states that “[p]ayment of a fixed salary to a nonexempt employee
9 The DLSE—Division of Labor Standards Enforcement—
is the agency “charged with enforcing California’s labor laws,
including the IWC wage orders.” (Alvarado v. Dart Container
Corp. of California (2018) 4 Cal.5th 542, 551, 555.) Its most
recent policy manual interpreting California’s labor laws is
published online. (See DLSE, The 2002 Update of the DLSE
Enforcement Policies and Interpretations Manual (rev. Aug.
2019) [as of Sept. 24, 2019], archived at
(DLSE Manual); Alvarado, at
p. 555.) Although DLSE policies are not necessarily entitled
to deference, a reviewing court may adopt the DLSE’s
interpretation if independently persuaded it is correct.
(Alvarado, at p. 561.)
15
shall be deemed to provide compensation only for the employee’s
regular, nonovertime hours, notwithstanding any private
agreement to the contrary.”10 (Italics added.) Thus, as we
discuss below, an employer may not calculate a nonexempt
salaried employee’s hourly rate by dividing her salary by the
combined total number of nonovertime and overtime hours she
worked. Including overtime hours in the calculus would reduce
the employee’s hourly rate, thereby reducing the base rate for
computing her overtime compensation to one lower than if she
had worked a regular, 40-hour workweek. (See Skyline Homes,
Inc. v. Department of Industrial Relations (1985) 165 Cal.App.3d
239, 250 (Skyline).)
Section 515 does not apply to Liday’s pre-2014 minimum
wage claim, however. The statute expressly relates to
determining the hourly rate for a salaried, nonexempt employee
for purposes of calculating overtime compensation. As we
have said, Liday was exempt from the hours and days of work
provision governing overtime under Wage Order 15. Therefore,
before section 1454 became effective no statute or regulation
imposed a maximum number of hours Liday could work per week
or day—nonovertime hours—or specified the number of hours
that constituted a regular workday or workweek for personal
attendants.
The DLSE Manual also makes clear the “regular rate
of pay” calculation was designed to determine overtime
compensation. First, section 49.1.1 of the Manual explains,
“overtime is computed based on the regular rate of pay.” (Italics
added.) And, section 48.1.2 explains, “ ‘Workday’ is defined in
10 This language was added to section 515 effective January 1,
2013. (Stats. 2012, ch. 820, § 2.)
16
the [IWC] Orders and Labor Code § 500 for the purpose of
determining when daily overtime is due.” (Italics added.)
Section 49.2.1.1 of the Manual, cited by Liday, in turn provides
the method for computing the “regular rate of pay” for salaried
workers: “Multiply the monthly remuneration by 12 (months)
and divide by 52 (weeks) = weekly remuneration. Divide the
weekly remuneration by the number of legal maximum regular
hours worked = regular hourly rate.” (Italics added.) That is
the formula the court used here, but before 2014, there was no
“legal maximum” number of regular hours that Liday could work,
rendering that formula inapplicable by the express terms of the
statute and DLSE’s interpretation of it.
In a colloquy with appellants’ counsel, the trial court agreed
section 515 did not apply to Liday’s pre-2014 wages.
“[Appellants’ counsel:] Labor Code [ ]515(d) doesn’t
apply because she was not entitled to overtime. And
the Code itself specifically says that that applies only
to nonexempt salaried employees. During that period
of time, she was an exempt employee because she
was a personal attendant.
“The Court: I agree.”
Despite this acknowledgement, the court nevertheless computed
Liday’s pre-2014 hourly rate based on a maximum 45-hour work
week, finding the calculation for nonexempt, salaried workers
“analogous.” But by doing so, the court effectively applied section
1454’s maximum hours requirement retroactively without legal
basis.
Based on the plain language of the statute and wage order,
before 2014 Liday’s $3,000 per month salary ($692.31 per week)
legally compensated her for whatever total number of hours she
worked, be it 20, 45, or 80 hours per week. The only limitation
the law placed on Liday’s salary was that it must compensate her
17
at least at the minimum wage rate of $8 per hour for every hour
she worked. Appellants concede they failed to do so and owe
Liday unpaid wages. But, the law does not require them to pay
Liday $15.38 per hour because of that failure or retroactively to
limit Liday’s salary to cover only 45 hours per week.
b. Case law also does not require that Liday’s salary
cover only regular, nonovertime hours
In support of her argument that the court’s calculation
was proper, Liday focuses on the Court of Appeal’s holding in
Hernandez that, “[a]bsent an explicit, mutual wage agreement,
a fixed salary does not serve to compensate an employee for the
number of hours worked under statutory overtime requirements.”
(Hernandez, supra, 199 Cal.App.3d at p. 725, second italics
added.) This holding from Hernandez is inapplicable to Liday’s
pre-2014 wage claim.
There, defendant hired plaintiff to work as a butcher
for a fixed salary of $300 per week. (Hernandez, supra, 199
Cal.App.3d at p. 724.) The butcher, who was entitled to overtime,
testified he worked every day for 13 hours a day during the
disputed period. (Ibid.) Defendant testified the butcher’s salary
included overtime wages because the butcher had agreed to
work every day for nine hours a day—63 hours per week—for
the minimum hourly wage, and the combined nonovertime and
overtime wages due for 63 hours was less than $300 a week.
(Ibid.) The trial court found the butcher had worked some
overtime, but entered judgment in favor of defendant, finding the
butcher failed to meet his burden of proof to establish the number
of overtime hours he had worked. (Id. at p. 725.)
The Court of Appeal reversed, finding the butcher had
met his burden of proof. (Hernandez, supra, 199 Cal.App.3d at
p. 725.) The court first found there was no evidence the parties
had agreed to the butcher’s working hours or hourly rate. (Ibid.)
18
As a result, it concluded the butcher’s $300 per week
compensation “must be construed as the payment he received
for a regular workweek,” not including overtime. (Ibid.) Citing
section 510, which provides for an eight-hour workday and
overtime wages for hours worked in excess of eight per day or
40 per week, the court explained, “[a]bsent an explicit, mutual
wage agreement, a fixed salary does not serve to compensate
an employee for the number of hours worked under statutory
overtime requirements”—the passage relied on by Liday.
(Hernandez, at p. 725.)
In other words, the butcher’s $300 per week salary
could not compensate him for hours he worked in excess of the
statutorily mandated eight hours per day and 40 hours per week.
He thus was entitled to unpaid overtime wages in addition to his
salary. (Hernandez, supra, 199 Cal.App.3d at pp. 725-726.) The
Court of Appeal also directed the trial court to draw “whatever
reasonable inferences it [could] from the employee’s evidence”
to determine his overtime hours because the employer had failed
to keep accurate records of the butcher’s hours. (Id. at p. 728.)
As with section 515, and the corresponding provisions of
the DLSE Manual, the key difference here is that Liday was not
subject to any statutory or regulatory overtime requirements like
the butcher. Her $692.31 per week compensation logically could
not be presumed to cover only “nonovertime” hours when she
had no set or maximum hours to exceed.11 The butcher’s weekly
11 Liday asserts that the trial court “expressly found” Liday’s
salary “covered only her regular non-overtime hours.” The
statement of decision cites the quoted passage above from
Hernandez, but the trial court never found the parties agreed to
the number of hours Liday would work per day or per week. The
court made clear it presumed the 45-hour “regular” workweek
19
salary could compensate him only for working nonovertime
hours—40 hours per week and eight hours per day under section
510—because to allow otherwise would circumvent statutory
overtime requirements. Nothing in Hernandez suggests that
a salary paid to an employee exempt from overtime cannot
compensate the employee for hours worked in excess of
what otherwise would be considered nonovertime hours for
a nonexempt employee. Such an interpretation of Hernandez
is nonsensical. If an employee is exempt from overtime, there
can be no “nonovertime” or “overtime” hours. Based on the law
at the time, appellants could not have anticipated that Liday’s
$3,000 per month salary would compensate her for nonovertime
hours only when she was exempt from overtime.
c. Liday cites no authority to support her contention
she was exempt from overtime wages, but not
overtime hours
Liday also seems to contend that as a salaried personal
attendant, she was exempt from “the separate requirement
of a premium overtime rate for overtime work,” but was not
excluded from application of regular, nonovertime work hours.
We cannot agree with Liday’s interpretation of her
overtime-exempt status. Liday would have us read the Labor
Code and Wage Order 15 as precluding an overtime-exempt
personal attendant’s regular workweek from exceeding the
statutory maximum number of hours specified for nonexempt
employees. Nothing in the Labor Code or Wage Order 15
suggests such an interpretation.
applied to calculate Liday’s unpaid minimum wages and did not
base its decision on any statute or case.
20
First, the maximum hours requirement logically cannot
be separated from the premium overtime rate required for hours
worked beyond the legal maximum. The two requirements go
hand in hand. Premium overtime pay was instituted to enforce
statutory maximum working hours by obligating employers to
pay higher hourly rates to employees whose work exceeded those
daily or weekly limits. (Monzon v. Schaefer Ambulance Service,
Inc. (1990) 224 Cal.App.3d 16, 37 [premium pay accomplishes
“IWC’s goal of enforcing maximum hours”]; Skyline, supra, 165
Cal.App.3d at p. 250 [“Premium pay for overtime is the primary
device for enforcing limitations on the maximum hours of
work.”].) Requiring nonovertime hours without requiring
payment of overtime wages would not achieve this goal.
Liday contends, “Wage Order 15 clearly delineates
between, on the one hand, regular, non-overtime work hours, and
on the other hand, overtime hours. The regular, non-overtime
hours are those up to 9 hours in a workday and 45 hours in a
workweek, while the overtime hours are those beyond those
thresholds.” That distinction may be true, but Liday fails to note
that Wage Order 15 also “clearly” exempts personal attendants
like Liday from the very provision she cites. That section limits
both the maximum number of hours a domestic employee may
work and provides for premium overtime wages should those
hours be exceeded. (Wage Order 15, subd. 3.) That provision
expressly does not apply to personal attendants.
Had the IWC intended the wage order’s hours of work
limitations to apply to personal attendants without providing
them with premium wages, it would not have excepted
application of the entire “hours and days of work” provision
to personal attendants when it removed the minimum wage
exemption in 2001. (Compare IWC Order No. 15-2000, subd.
1(B), supra, with Wage Order 15, subd. 1(B).) But it did.
21
We cannot interpret Wage Order 15 as nonetheless
intending to apply its limitations on nonovertime hours—without
premium overtime rates—to salaried12 personal attendants.
To do so not only would lead to the “absurd consequence[ ]” of
applying part of the wage order’s overtime requirement to an
employee explicitly exempt from all of its overtime requirements,
but also would fail to give effect to Wage Order 15’s explicit
exemption of personal attendants from that entire requirement—
both premium wages and maximum hours. (Singh v. Superior
Court, supra, 140 Cal.App.4th at p. 393 [interpretation of wage
order must not lead to “absurd consequences”]; Gonzalez, supra,
215 Cal.App.4th at p. 44 [construction of wage order must not
render part of it “meaningless”]; Brinker, supra, 53 Cal.4th at
p. 1027 [wage orders “must be given ‘independent effect’ ”].) We
thus conclude Liday was not subject to any set number of regular,
nonovertime work hours under Wage Order 15 on the ground she
received a fixed salary.
Moreover, the wage order’s minimum wage requirement
protects a salaried, overtime-exempt employee from the lack of an
agreed-upon hourly rate: if the salary compensates the employee
at less than the prevailing minimum wage for each hour the
employee works—as occurred here—the employee may recover
the difference. (§ 1194.) With no express restriction on the
number of hours the employee may be required to work, however,
no regular rate of pay calculation is mandated by assuming the
12 Nothing in Wage Order 15 prohibits an employer from
paying a personal attendant by salary, as long as the employer
pays the employee the legal minimum wage. (Wage Order 15,
subd. 4(B) [employer must pay employee the minimum wage
“whether the remuneration is measured by time, piece,
commission, or otherwise” (italics added)].)
22
salary covered only the statutory regular, nonovertime hours
for nonexempt employees.
The Legislature’s enactment of the DWBR supports our
analysis. By setting a maximum 45-hour workweek and nine-
hour workday for personal attendants (§ 1454), the Legislature
acknowledged, that before January 2014, employers were not
precluded from requiring personal attendants to work more than
45 hours per week or nine hours per day at only the minimum
wage rate. As one commentator noted, “Before the DWBR,
personal attendants were not entitled to any overtime
compensation, even if they provided 24-hour, live-in care, seven
days a week. Personal attendants did not have to receive any
duty-free meal or rest breaks. Furthermore, unlike many
other exemptions, such as the executive, administrative, and
professional exemptions, personal attendants did not have to be
paid a salary equal to two times the applicable minimum wage
for full-time work. In other words, an employer could lawfully
require a personal attendant to work 24 hours a day, six days
a week and only pay that employee the minimum wage.”
(Rehwald, Caregiver Care: Current Law Limiting the Amount of
Time Personal Attendants Spend on Tasks Other than Caregiving
May Represent Liability Issues for Employers (Nov. 2016) 39
Los Angeles Lawyer 20, 22.)
The Legislature understood personal attendants were
“completely exempt” from overtime. (Assem. Com. on Labor
& Employment, Analysis of Assem. Bill No. 241 (2013-2014
Reg. Sess.) as amended Mar. 19, 2013, p. 5 (DWBR Analysis)
[“ ‘Personal attendants’ are completely exempt from the general
overtime requirements of Wage Order 15. Therefore, under the
Wage Order, ‘personal attendants’ are only required to be paid
straight-time for all hours worked, regardless of whether they
work more than eight hours in a day or 40 hours in a week.”].)
23
Indeed, the DWBR was introduced specifically to correct the
inequity of the law’s exclusion of personal attendants from
overtime protections, while granting those protections to other
types of domestic workers. (See DWBR Analysis, p. 9.)
Only when Liday became entitled to overtime protections
in January 2014 did California law require the court to calculate
Liday’s overtime wages by determining Liday’s $15.38 per hour
regular rate of pay based on a 45-hour workweek and then
to apply that rate to the hours she worked in excess of 45 on
a weekly basis. But before that day, Liday was “completely
exempt” from overtime. No statutorily mandated “regular hours”
applied to her, nor, as we discuss, had the parties agreed on a
maximum number of daily or weekly hours to which her salary
applied.
4. Armenta does not apply because the parties did not
agree to an hourly rate higher than the minimum
wage or to a set number of work hours
Liday also contends appellants’ proposed wage calculation
—paying Liday the minimum wage of $8 per hour for each hour
she worked—would average her monthly salary over all the hours
she worked to effectively compensate her at a lower rate for some
of the hours she worked, a practice prohibited by California law
as expressed in Armenta v. Osmose, Inc. (2005) 135 Cal.App.4th
314 (Armenta). Liday and the employees in Armenta are not
similarly situated, however.
In Armenta, the Court of Appeal agreed a company violated
California’s minimum wage statute, section 1194, when it did not
pay its employees for “nonproductive” time, such as travel time
and time spent on paperwork.13 (Armenta, supra, 135
13 To avoid removal to federal court, the plaintiff employees
amended their complaint to seek only unpaid minimum wages
24
Cal.App.4th at pp. 317, 324.) Under the terms of a collective
bargaining agreement, the company paid its union employees,
who maintained utility poles, hourly wages higher than the
minimum wage for “productive time.” (Id. at pp. 316-317.) The
company argued it had complied with the minimum wage law
because its employees’ weekly pay resulted in an average hourly
rate (factoring both paid time and unpaid nonproductive time)
higher than the applicable minimum wage. (Id. at p. 319.) The
trial court rejected this averaging method, accepted by federal
courts, concluding it would permit the employer to “extract
lengthy work weeks from its employees without paying them
for all hours worked.” (Id. at pp. 320-321.)
The Court of Appeal agreed the federal “model of averaging
all hours worked ‘in any work week’ to compute an employer’s
minimum wage obligation under California law [was]
inappropriate” considering California’s “strong public policy in
favor of full payment of wages for all hours worked.” (Armenta,
supra, 135 Cal.App.4th at p. 324.) Rather, in California
“[t]he minimum wage standard applies to each hour worked
by [employees] for which they were not paid.” (Ibid.)
The court reached its holding after examining sections 221,
222, and 223. (Armenta, supra, 135 Cal.App.4th at pp. 323-324.)
Section 221 prohibits an employer from collecting from an
employee any part of the wages the employer has paid to the
employee. Section 222 prohibits employers, in the case of a
collective bargaining wage agreement, from withholding from
employees “any part of the wage agreed upon.” And, section 223
under section 1194, striking all references to unpaid overtime
wages. (Armenta, supra, 135 Cal.App.4th at p. 318.)
25
prohibits employers from “secretly pay[ing] a lower wage while
purporting to pay the wage designated by statute or by contract.”
The court concluded these sections “articulate the
princip[le] that all hours must be paid at the statutory or agreed
rate and no part of this rate may be used as a credit against a
minimum wage obligation.” (Armenta, supra, 135 Cal.App.4th at
p. 323.) Thus, the trial court had determined correctly that the
employer must pay its employees the minimum wage for each of
the hours they had not been paid despite having paid them a rate
“far in excess of the minimum wage” for their “productive” hours.
(Id. at pp. 319, 324.) Adopting the averaging method proposed
by the employer would “contravene[ ]” the Labor Code and
“effectively reduce[ ] [employees’] contractual hourly rate.”
(Id. at p. 323.)
Liday contends the same principle applies here—to
average her salary over all the hours she worked would result in
“stretch[ing]” her salary to cover hours appellants argued at trial
were noncompensable. We disagree.
Here, no collective bargaining agreement is at issue, and
the court found the parties did not agree to an hourly rate, much
less an hourly rate higher than the minimum wage as the parties
had in Armenta. Appellants thus are not trying to average an
agreed higher wage to cover compensated and noncompensated
hours. In Armenta, the averaging method would have resulted
in taking a portion of the employees’ agreed higher rate to cover
hours for which they had not been paid at all. They would not
have received the wages due them under their collective
bargaining agreement.
Appellants agreed to pay Liday $3,000 per month, but there
is no evidence—nor did the court explicitly find—the parties
agreed this salary would compensate Liday for a 45-hour
workweek or any other specific number of work hours that could
26
compute to an agreed hourly rate higher than $8 per hour.14
Liday argues appellants now are attempting to include work
hours they originally did not treat as covered by her $3,000 per
month salary—“ ‘downtime between 9:00 a.m. and 2:00 p.m. and
. . . sleep time between 10:00 p.m. and 5:45 a.m.’ ” But, the fact
remains that Liday was exempt from overtime laws and the
parties never agreed she would work a specific number of hours
per day or week.15
Paying Liday the $8 minimum hourly wage for each hour
the court found she worked, therefore, would not “effectively
reduce[ ]” her contractual hourly rate as in Armenta. Nor would
doing so violate section 223 by paying her a lower wage than
designated by statute or contract. The parties may not have
14 As we have described, there was testimony the parties
discussed Liday working six days per week when she was hired
in 2002 (and made less), but she then began to work seven days
per week with only a few weekends off per year. The parties
never discussed her working hours or hourly rate, however.
15 In any event, Liday’s argument does not support her
implied conclusion that excluding this “downtime” from her
salary would result in an agreed hourly rate higher than the
minimum wage. Excluding the 7.75 hours of sleep time each day
and the five hours of downtime during the weekdays (when the
children were at school), results in a total of 88.75 work hours for
a seven-day week (11.25 hours for five days and 16.25 hours for
two days). Based on her $692.31 weekly salary, 88.75 hours of
work results in an hourly rate of $7.80, which is less, not more,
than the minimum wage. Liday did take a weekend off some
months, but she also was paid less during those months. In any
event, even if the math resulted in an hourly wage higher than
$8 per hour for some weeks, the court concluded the parties
did not agree to an hourly rate and no one testified Liday was
expected to work only 45 hours per week.
27
agreed to the specific hourly rate of $8 per hour, as Liday notes,
but as an overtime-exempt employee, the law required only that
appellants pay her the statutory minimum wage of $8 per hour
for each hour she worked, not $15.38 per hour. Thus, calculating
appellants’ minimum wage obligation by multiplying the number
of hours the court found Liday worked by the $8 per hour legal
minimum wage and then deducting the amount she received16
will not result in paying Liday less than the statutory or
contractual rate, crediting part of that rate against appellants’
obligation, or extracting longer hours from Liday than the law
allowed at the time—the concerns expressed in Armenta.
5. Conclusion
No one contests the trial court’s categorization of Liday as a
personal attendant. The trial court and Liday acknowledged she
was exempt from overtime before January 1, 2014. But instead
of applying the $8 per hour minimum wage to each hour Liday
worked, the court calculated her rate of pay based on the formula
used to determine payment of overtime wages for nonexempt
employees. As a personal attendant, Liday was exempt from
overtime as a matter of law—no statute or wage order limited the
number of hours her salary could cover. Payment of at least the
minimum wage for each hour she worked was the only limitation.
16 The parties discuss the math in terms of dividing Liday’s
weekly salary by the total number of hours she worked
(appellants) or 45 hours (Liday) to determine the amount of
minimum wage she was underpaid. We find it less cumbersome
to describe appellants’ proposed calculation as multiplying the
total number of hours Liday worked by the $8 minimum wage
to determine what she should have been paid. The result is the
same.
28
Liday argues section 1194 does not require the court to
default to the lowest allowable amount of minimum wage fixed
by the IWC. But section 1194 does not entitle Liday to an hourly
wage higher than the minimum wage when the parties did
not agree to it. Nor does it allow the court to impose a 45-hour
workweek on an overtime-exempt employee when the parties
did not agree her salary would pay for a certain number of work
hours. While it was proper for the court to determine Liday’s
regular rate of pay based on a 45-hour workweek for the hours
she worked beginning January 1, 2014, the law in effect before
that time did not require appellants to limit the salary they paid
Liday to cover just 45 hours of work per week.
As there was no basis in law or contract for the court to
presume Liday’s salary covered a 45-hour workweek and require
appellants to pay her $15.38 for hours she worked in excess of
45 per week, we reverse the court’s judgment with respect to
Liday’s second and fourth causes of action17 for unpaid wages and
restitution due from April 2010 through December 2013. Based
on an $8 per hour rate and the court’s uncontested finding that
Liday worked a total of 25,962 hours from April 2010 through
December 2013, Liday was entitled to total compensation of
$207,696.00 for that period. Because appellants already paid
her $133,615.83, she is entitled to an award of $74,080.17 in
combined restitution and unpaid wages for that period.
DISPOSITION
The judgment is reversed and remanded as to Liday’s
second and fourth causes of action with instructions to the trial
court to recalculate the amount of unpaid wages due Liday from
April 2010 through December 31, 2013 (as unpaid wages from
17 We refer to Liday’s causes of action as the court numbered
them in its judgment.
29
2011 to 2013 and restitution from 2010 to 2013) by applying an
$8 per hour wage rate to all hours the trial court found Liday
worked during that period. The trial court also is to hold further
proceedings to redetermine the prejudgment interest owed on
the recalculated unpaid wages.
Appellants are to recover their costs on appeal.
CERTIFIED FOR PUBLICATION
EGERTON, J.
We concur:
LAVIN, Acting P.J.
HANASONO, J.*
* Judge of the Los Angeles Superior Court, assigned by the
Chief Justice pursuant to article VI, section 6 of the California
Constitution.
30