Morales v. Factor Surfaces LLC ( 2021 )

Filed 9/22/21; Certified for Publication 10/14/21 (order attached)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
BYRON JERRY MORALES, B306652
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No.
v. 19STCV05373)
FACTOR SURFACES LLC, et al.,
Defendants and Appellants.
APPEAL from judgment of the Superior Court of Los
Angeles County, Susan Bryant-Deason, Judge. Affirmed.
Caskey & Holzman, Marshall A. Caskey, Daniel M.
Holzman and N. Cory Barari for Plaintiff and Respondent.
Schiffer & Buus, Eric M. Schiffer and William L. Buus for
Defendants and Appellants.
INTRODUCTION
Byron Jerry Morales sued his former employer, Factor
Surfaces LLC (“Factor”), and its managing agent Gregory Factor
(sometimes collectively referred to as appellants)1 for, among
other things, unpaid overtime wages, meal and rest break
compensation, statutory penalties for inaccurate wage
statements, retaliation, and wrongful termination in violation of
public policy.
After a bench trial, the trial court entered judgment in
favor of Morales in the amount of $99,394.16, which included
$42,792.00 in unpaid overtime wages. Factor’s sole contention on
appeal is that the trial court erred in calculating Morales’s
regular rate of pay for purposes of determining the amounts owed
to Morales for unpaid overtime. For the reasons discussed below,
we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Morales accepted a full-time position at Factor, a tile and
flooring store, in 2016. His duties included cleaning the
warehouse, accepting shipments, making deliveries to job site
locations, picking up tile from distributors, and assisting
customers in selection of tile. Morales’s regular hours were
Monday through Friday from 8:00 a.m. to 6:00 p.m. and
Saturdays from 9:00 a.m. to 5:00 p.m. Beginning March 9, 2018,
Morales no longer worked every Saturday. In or around 2018,
after asking Factor to be compensated for overtime hours,
Morales was terminated.
1 Morales also sued Bianca Factor, another managing agent
of Factor. She is not a party to this appeal. For convenience, we
will refer to Gregory Factor as “Gregory” and Bianca Factor as
“Bianca.” According to Factor’s opening brief on appeal, Bianca
filed for bankruptcy during the pendency of this action.
2
On February 14, 2019, Morales filed his complaint for
inaccurate wage statements, failure to pay overtime, failure to
pay wages owed, failure to provide meal and rest breaks, failure
to reimburse necessary expenditures, failure to pay unpaid wages
at time of discharge, violation of the unfair competition law (Bus.
& Prof. Code, § 17200), retaliation, and wrongful termination in
violation of public policy.
A bench trial began on March 4, 2020. Gregory testified
Morales’s employment records were in his truck, which was
stolen while parked in his gated complex. When the truck was
recovered, according to Gregory, nothing was in it.
Without records Gregory was unable to provide accurate
testimony regarding Morales’s rate of pay and hours worked. For
example, in response to a question regarding Morales’s hours,
Gregory responded: “How can I remember? It was in [2016.]”
Other responses were muddled. For example, in response to
questions regarding whether he told Morales that Morales would
be paid $120 per day, Gregory stated: “Approximately everything
was overtime, it’s $120 a day, something like that” and “I don’t
remember.” Similarly, Bianca testified she could not state how
many hours of overtime Morales worked. Her other testimony
was similarly unclear or unhelpful to establishing the relevant
facts. For example, when presented with a copy of a check
Morales received for the week of September 17, 2016 in the
amount of $1,209, Bianca testified: “I remember there was some
reimbursement for lunch. Okay. There was an amount that was
mistaken of [sic] his overtime, I think two or three checks prior to
that, which was added to this check.” She further testified
Morales was not paid commissions, and she could neither tell
from looking at the check, nor could she remember, how many
hours Morales worked that week.
Morales testified he was hired to work at Factor for $120
per day, Mondays through Saturdays. He further testified he
received 3 percent commission on sales, which was reduced to 1.5
3
percent at the end of 2017, and eventually cut to zero. At some
point, Morales’s compensation increased to $150 per day.
Beginning March 9, 2018, Morales only worked two or three
Saturdays per month.
Morales offered copies of the weekly checks he received
from Factor during his employment, which were admitted into
evidence. Factor did not produce a single document during
discovery or offer any exhibits at trial.
Following the trial, the court issued a statement of
decision. As relevant here, the court found Gregory and Bianca’s
testimony regarding theft of Morales’s employment records to be
“unbelievable and afford[ed] no weight to that testimony.” It
further found Factor was “unable to produce any time records or
reliable evidence to convincingly dispute [Morales’s] work hours
or the manner in which [Morales] testified he was being paid.”
Both sides presented evidence, however, that “[Morales] regularly
worked the shift of 8:00 a.m. [to] 6:00 p.m. on Mondays through
Fridays and 9:00 a.m. [to] 5:00 p.m. on Saturdays.” Thus, the
court “accept[ed] [Morales’s] estimate of 18 hours of overtime
each week based on an undisputed 6-day work week and
accept[ed] [Morales’s] lower estimate of 14 hours of average
overtime each week after March 9, 2018 (when [Morales] no
longer worked every Saturday).”
To calculate the overtime wages owed to Morales, the court
admitted the “Overtime and Meal/Rest Computations” chart
provided by Morales, and attached the chart as exhibit 1 to the
statement of decision. It concluded Morales’s calculations were a
“fair and accurate estimation of the overtime wages owed to him,
given that there are no records showing the hours worked by
[Morales], the rates of pay paid to [Morales], the overtime paid to
[Morales] (if any), or the commissions paid to [Morales].” It also
noted appellants were “unable to propose any other manner of
reliably calculating [Morales’s] wages that would be consistent
with the law and the facts presented at trial.” Accordingly, the
4
court found in favor of Morales on his claim for unpaid overtime
wages and awarded him a total of $42,792.00 in unpaid overtime.
The court entered judgment against Factor, Gregory, and
Bianca in the amount of $99,394.16.2 Factor and Gregory appeal
from the judgment.
DISCUSSION
Calculation of an employee’s overtime begins with a
calculation of his “regular rate of pay.” (See Lab. Code, § 510,
subd. (a) [“Any work in excess of eight hours in one workday and
any work in excess of 40 hours in any one workweek . . . shall be
compensated at the rate of no less than one and one-half times
the regular rate of pay for an employee.”].) The regular rate of
pay for an employee who receives a weekly salary is determined
by dividing the weekly salary by the number of non-overtime
hours worked (i.e., 40 hours). (See Lab. Code, § 515, subd. (d)(1)
[“the employee’s regular hourly rate shall be 1/40th of the
employee’s weekly salary”].)
The trial court calculated Morales’s regular rate of pay by
dividing his weekly paychecks by 40, the number of non-overtime
hours Morales worked per week. Appellants contend the trial
court erred by not isolating the commissions paid to Morales per
week, and dividing those commissions by the actual number of
hours Morales worked in a workweek (i.e., 50 or 58 hours) as
opposed to 40 hours. Morales does not dispute the proper method
for calculating the “regular rate of pay” for commission workers is
to divide the total commission payments for the week by the
actual number of hours worked during the week, including
2 In addition to unpaid overtime, the judgment included
statutory penalties for Labor Code violations, prejudgment
interest, and $25,000 in emotional distress damages.
5
overtime hours.3 He counters, however, that where, as here, the
employer failed to provide records demonstrating the portion of
each weekly paycheck attributable to commissions (if any) and
the actual number of hours worked by Morales each week, and
failed to propose any manner in which the court could accurately
estimate the commission payments, the court could properly
divide the total weekly paycheck by 40 to approximate Morales’s
regular rate. We agree with Morales.
“[W]here the employer has failed to keep records required
by statute, the consequences for such failure should fall on the
employer, not the employee. In such a situation, imprecise
evidence by the employee can provide a sufficient basis for
damages.” (Hernandez v. Mendoza (1988) 199 Cal.App.3d 721,
727 (Hernandez).) “‘[A]n employee has carried out his burden if
he proves that he has in fact performed work for which he was
improperly compensated and if he produces sufficient evidence to
show the amount and extent of that work as a matter of just and
reasonable inference. The burden then shifts to the employer to
come forward with evidence of the precise amount of work
performed or with evidence to negative the reasonableness of the
inference to be drawn from the employee’s evidence. If the
employer fails to produce such evidence, the court may then
award damages to the employee, even though the result be only
approximate.’ [Citations.]” (Ibid., citing Anderson v. Mt. Clemens
3 Under California’s Department of Industrial Relations,
Division of Labor Standards Enforcement Policies and
Interpretations Manual (DLSE Manual), a proper method for
calculating the “regular rate of pay” for commission workers is to
“divid[e] the total earnings for the week, including earnings
during overtime hours, by the total hours worked during the
week, including the overtime hours. For each overtime hour
worked, the employee is entitled to an additional one-half the
regular rate for hours requiring time and one-half and to an
additional full rate for hours requiring double time.” (DLSE
Manual, § 49.2.12.)
6
Pottery Co. (1946) 328 U.S. 680, 687-688 [66 S.Ct. 1187, 90 L.Ed.
1515] (Anderson).)
As discussed above, appellants failed to provide any records
demonstrating the hours worked by Morales, the rates of pay,
overtime paid (if any), or commissions paid to Morales. The trial
court therefore admitted a chart provided by Morales, which
contained his calculations of overtime owed per week. Among
other things, the chart contained a column titled “Regular Hourly
Rate (Check/40 hours).” To compute the weekly regular rate for
purposes of the overtime calculation, Morales divided his weekly
total check by 40 hours (e.g., for the week of June 18, 2016, the
total check ($720) divided by 40 hours equals a regular hourly
rate of $18). The trial court found Morales’s “proposed
calculations to be consistent with the law, which also allows for
commission payments to be included when determining regular
hourly rate of pay.”
Although the parties agree the portion of each weekly
paycheck attributable to commissions should be divided by the
total hours worked per week, here, there are no records
demonstrating what portion of Morales’s paychecks, if any, was
attributable to commission pay. We note it may have been
possible for appellants to have proposed a method by which the
court could have estimated the portion of each weekly paycheck
that may have been attributable to commissions. For example,
the paycheck dated June 25, 2016 was in the amount of $736.60.
Based on Morales’s testimony that he was hired in 2016 to work
six days a week for $120 per day, his weekly salary was $720.
Thus, the difference between $736.60 and $720 was likely
attributable to commission.4 But perhaps because Bianca
4 This calculation would be more uncertain for paychecks
later in Morales’s employment at Factor because no one could
testify precisely when Morales received a pay raise, and, after
March 9, 2018, there are no records demonstrating which weeks
Morales worked five days and which weeks he worked six days.
7
disclaimed Morales was ever paid commission, appellants failed
to propose any such calculations or other manner of reliably
calculating Morales’s commission payments at trial (nor do they
attempt to do so on appeal). Accordingly, we conclude the court
did not err by attributing Morales’s weekly paycheck to salary
(and dividing the paycheck by 40 to obtain his regular rate) as
opposed to speculating about the amount of commission paid each
week, even if that calculation resulted in a slight windfall for
Morales. (Hernandez, supra, 199 Cal.App.3d at p. 727 [“[W]here
the employer has failed to keep records required by statute, the
consequences for such failure should fall on the employer, not the
employee.”]; see also Anderson, supra, 328 U.S. at p. 688 [“The
employer cannot be heard to complain that the damages lack the
exactness and precision of measurement that would be possible
had he kept records . . . .”].)
8
DISPOSITION
The judgment is affirmed. Morales is awarded his costs on
appeal.
CURREY, J.
We concur:
MANELLA, P.J.
COLLINS, J.
9
Filed 10/14/2021
IN THE COURT OF APPEAL OF THE STATE OF
CALIFORNIA SECOND APPELLATE DISTRICT
DIVISION FOUR
BYRON JERRY MORALES, B306652
(Los Angeles County Super.
Plaintiff and Respondent, Ct. No. 19STCV05373)
v.
FACTOR SURFACES LLC, et
al.,
Defendants and Appellants.
THE COURT:*
The opinion in the above-entitled matter, filed on September
22, 2021, was not certified for publication in the Official Reports.
For good cause it now appears that the opinion should be certified
for publication in its entirety in the Official Reports and it is so
ordered.
There is no change in judgment.
_____________________________________________________________________________
* CURREY, J., MANELLA, P.J., COLLINS, J.
1