Tiffany Hill v. Xerox Business Services , 868 F.3d 758 ( 2017 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
TIFFANY HILL, individually and No. 14-36029
on behalf of all others similarly
situated, D.C. No.
Plaintiff-Appellee, 2:12-cv-00717-JCC
v.
CERTIFICATION
XEROX BUSINESS SERVICES, LLC; ORDER TO THE
LIVEBRIDGE INC., an Oregon WASHINGTON
Corporation; AFFILIATED SUPREME COURT
COMPUTER SERVICES INC., a
Delaware Corporation;
AFFILIATED COMPUTER SERVICES
LLC, a Delaware Limited
Liability Company,
Defendants-Appellants.
Filed August 7, 2017
Before: Richard A. Paez and Consuelo M. Callahan,
Circuit Judges, and Morrison C. England,* District Judge.
*
The Honorable Morrison C. England, Jr., United States District
Judge for the Eastern District of California, sitting by designation.
2 HILL V. XEROX BUSINESS SERVICES
SUMMARY**
Certification to Washington Supreme Court
The panel certified to the Washington Supreme Court the
following question:
Whether an employer’s compensation plan,
which includes as a metric an employee’s
“production minutes,” qualifies as a
piecework plan under Wash. Admin. Code
§ 296-126-021?
COUNSEL
Todd L. Nunn and Patrick M. Madden, K&L Gates LLP,
Seattle, Washington, for Defendants-Appellants.
Marc C. Cote and Toby J. Marshall, Terrell Marshall Daudt
& Willie PLLC, Seattle, Washington; Jon W. MacLeod,
MacLeod LLC, Seattle, Washington; Daniel F. Johnson,
Breskin Johnson & Townsend PLLC, Seattle, Washington;
for Plaintiff-Appellee.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
HILL V. XEROX BUSINESS SERVICES 3
ORDER
This case arises from a dispute between Tiffany Hill
(“Hill”) and Xerox Business Services, LLC and its
predecessor companies (collectively, “Xerox”), over the
method by which Xerox calculated wages owed to Hill and
others similarly situated. Hill brought a statewide class
action lawsuit against Xerox for unpaid wages under the
Washington Minimum Wage Act (“MWA”), Wash. Rev.
Code § 49.46 et seq., and the Washington Consumer
Protection Act, Wash. Rev. Code § 19.86 et seq. This
interlocutory appeal involves only Hill’s claims under the
MWA.
Under Washington law, when an employee is paid on a
piecework basis, as opposed to an hourly basis, it is
permissible for an employer to determine whether the
employee’s compensation complies with the MWA on the
basis of a work-week period. See Wash. Admin. Code § 296-
126-021; Dept. of Labor and Indus. Admin. Policy ES.A.3.
In other words, as long as the total wages paid for a given
week, divided by the total hours worked that week, averages
to at least the applicable minimum wage, an employee’s
compensation complies with Washington law. On the other
hand, if an employee is an hourly employee, he “retain[s] a
per-hour right to minimum wage under Washington law,” and
weekly averaging is not permitted. Alvarez v. IBP, Inc.,
339 F.3d 894, 912 (9th Cir. 2003); see also Wash. Rev. Code
§ 49.46.020.
The parties do not dispute the applicability of
Washington’s framework for determining whether an
employer’s compensation plan complies with Washington’s
minimum wage law. Rather, they dispute whether Hill was
4 HILL V. XEROX BUSINESS SERVICES
an hourly employee or a piecework employee.1 Hill claims
that she was an hourly employee and therefore Xerox violated
the MWA by determining her hourly wage based on a work-
week, as opposed to a per-hour, calculation. Xerox, in
contrast, contends that Hill was a piecework employee and
therefore its work-week calculations were sanctioned by
Washington Administration Code Section 296-126-021. In
the district court, Xerox moved for partial summary judgment
on this issue, which the district court denied, stating that
Xerox was not paying its employees on a piecework basis,
and therefore summary judgment was inappropriate. After
denying a motion to reconsider, the district court certified
Xerox’s request for an immediate interlocutory appeal of its
denial of partial summary judgment. We granted Xerox’s
request, and this appeal followed. We have jurisdiction
pursuant to 28 U.S.C. § 1292(b).
This order certifies to the Washington Supreme Court the
dispositive question of state law before us—namely, whether
an employer’s payment plan, which includes as a metric an
employee’s “production minutes,” qualifies as a piecework
plan under Washington Administrative Code Section 296-
126-021?2
1
On appeal, Xerox contends that the district court erred in creating a
false dichotomy by only considering two different pay systems of many
available. In our view, however, Xerox cannot seriously contend that its
compensation plan was anything other than one of these two systems.
2
Hill’s Motion for Certification to the Washington Supreme Court is
denied as moot.
HILL V. XEROX BUSINESS SERVICES 5
I.
Before addressing the certified question, we summarize
the material facts.3 Xerox operates call centers where they
respond to calls for third-party clients such as phone
companies, hotels, and airlines. Hill worked as an employee
at the call center located in Federal Way, handling phone
calls from Verizon Wireless customers. During Hill’s entire
tenure and until mid-2014, Xerox paid its call agents under
the Achievement Based Compensation (“ABC”) Plan. Under
the ABC Plan, all employees’ pay derived from three
different sources: (1) ABC Pay, (2) Additional Pay, and
(3) Subsidy Pay. As the system is somewhat complex, a
description of the three sources follows.
First, Xerox primarily used ABC Pay to compensate its
employees. ABC Pay was an incentive-based model
rewarding agents who were efficient at dealing with customer
issues. The ABC Plan required employees to track all of their
time expended on certain activities—ranging from receiving
calls to performing follow-up work. “Some of these
activities—such as receiving inbound calls—[were] paid on
a per minute basis, and each minute [was] referred to as a
‘production minute.’” “Production minutes” were only
generated when an agent was either on an incoming call, on
hold during an incoming call, or completing after-call work
related to the incoming call. The rate at which Xerox payed
for “production minutes” was determined by both “qualitative
and efficiency measures.” The qualitative measure included
two components: (1) supervisor evaluations of the employee,
and (2) employee success in resolving the customer’s issues.
The efficiency measure was based on the employee’s ability
3
With respect to this appeal, there are no material facts in dispute.
6 HILL V. XEROX BUSINESS SERVICES
to keep his average time spent on calls/call-related activities
at or below a set number determined by Xerox. The rates at
which employees were paid for their “production minutes”
varied from fifteen cents per minute to twenty-five cents per
minute. To determine an individual’s ABC Pay for the week,
Xerox took the total “production minutes” per week and
multiplied it by the employee’s per-minute rate. All other
logged ABC time—i.e., non-“production minutes”—were not
given a rate, but were tracked and appeared on an agent’s pay
statements.
Second, Xerox used Additional Pay to compensate its
agents for some tasks that were not covered by ABC Pay.
These defined activities included (1) training,
(2) meeting/coaching, (3) work shortages, (4) system down
time, (5) non-ABC Pay tasks or special projects, and
(6) break pay. These activities were always paid at a standard
hourly rate based on Washington’s minimum wage for the
applicable year.
Third, Xerox used Subsidy Pay to supplement an agent’s
wages if Xerox determined that the employee’s hourly rate
did not comply with minimum wage. To determine whether
this supplement was necessary, Xerox took the Subsidy Pay
rate (the minimum wage) and multiplied it by the total hours
worked in a given week to calculate an employee’s minimum
pay. If that amount was greater than the result of adding an
employee’s ABC Pay to his Additional Pay, then the
difference would be paid to the employee as Subsidy Pay in
a lump-sum amount.
HILL V. XEROX BUSINESS SERVICES 7
II.
A.
We turn to the issue that is the basis of our certification
order. In Washington there are multiple ways to compensate
employees. We discuss the two that are relevant to this
dispute. First, employers can pay their employees under a
piecework system. According to the Washington State
Department of Labor and Industries, “[p]iece rate payment is
usually a price paid per unit of work. For example, in a
manufacturing plant, workers are paid 10 cents per widget
they make on the production line.”4 See also Dept. of Labor
and Indus. Admin. Policy ES.A.8.2 (“Piece rate employees
are usually paid a fixed amount per unit of work.”). Second,
employers can pay their employees a set hourly rate for their
work, otherwise known as an hourly wage.
As discussed supra, this distinction in how employees are
paid is critical because employees who are paid hourly rates
“retain a per-hour right to minimum wage under Washington
law.” Alvarez, 339 F.3d at 912. Piecework employees, on
the other hand, are entitled to a minimum wage based on a
work-week period.5 Wash. Admin. Code § 296-126-021. As
4
This definition appears on the Department of Labor and Industries’
website, available at http://lni.wa.gov/WorkplaceRights/Wages/PayReq
/CommBonus/default.asp (last visited July 28, 2017). Our research did
not reveal a definition of “piece rate” within Washington’s Revised Code
or Washington’s Administrative Code.
5
According to Washington’s Department of Labor and Industries
Administrative Policy ES.A.3, “In order to determine whether an
employee has been paid the statutory minimum hourly wage when the
employee is compensated on other than an hourly basis, the following
8 HILL V. XEROX BUSINESS SERVICES
the district court properly noted, the issue on summary
judgment was “whether the Federal Way workers [were]
hourly employees (as [Hill] contends) or pieceworkers (as
[Xerox] contend[s]).” If they were hourly employees, Hill’s
claim can move forward, whereas if they were pieceworkers,
Hill’s claim fails.
B.
As the district court noted, and as observed by the parties
in their appellate briefs, there is simply no caselaw on
whether a compensation plan such as Xerox’s qualifies as a
piecework system. The parties agree that a piecework system
generally compensates employees a set amount per unit of
work—i.e., apples picked, tax returns completed, miles
driven. The central question here, however, is whether
“production minutes” can be classified as a unit of work. A
brief discussion of both sides’ arguments reveals that the
issue is a close one, and one that we believe the Washington
Supreme Court should decide in the first instance.
According to both Hill and the district court, Xerox’s
system of labeling minutes as “production minutes” is
nothing but a strategy for circumventing the law. As the
district court explained, “agents being paid for ‘production
minutes’ are being paid on precise units of time.” If a
“minute” could be a unit of work, “every employer could pay
standards should be used: . . . For employees paid on commission or
piecework basis, wholly or in part, . . . the commission or piecework
earnings earned in each workweek are credited toward the total wage for
the pay period. The total wage for that period is determined by dividing
the total earnings by the total hours worked; the result must be at least the
applicable minimum wage for each hour worked.”
HILL V. XEROX BUSINESS SERVICES 9
hourly workers a ‘per-minute’ rate and thereby avoid the
Washington law governing workers paid on a per-hour rate.”6
There is certainly merit to this argument; defining a unit of
production as a minute is clearly based on a measurement of
time. And, the fact that potentially every employer could use
such a system to possibly circumvent wage and hour laws,
would be problematic for low-wage workers.
On the other hand, as Xerox points out, simply stating that
the ABC Plan is not a piecework compensation system
because it is novel in its application of units of time as
production units is an overly simplistic analysis that ignores
how the plan actually functions. To some extent, that
characterization elevates the form of the production
unit—time—over how it functions—as a compensable unit of
production being sold. Xerox is paid by Verizon on the basis
of “production minutes” that its employees spend in assisting
Verizon customers. As a result, just like a fruit-seller trying
to maximize the amount of fruit he has to sell by
incentivizing his employees to pick more through a
piecework system, Xerox sought to maximize the amount of
minutes it could charge Verizon by incentivizing its agents to
generate more “production minutes.” Although it may seem
odd for a unit of work to be simultaneously a measurement of
time, this does not necessarily mean it cannot be so. In a
6
Hill also argues that the ABC Plan cannot be a piecework plan
because call center employees who work the same number of hours, and
are paid the same per-minute rate, receive the exact same pay. Hill’s
contention is incorrect, as Xerox points out in its reply brief. It is not the
total hours worked, but the total minutes spent on incoming calls, that
determines an employee’s pay. So, even though two employees may work
the same number of total hours, one will earn more money if, during those
hours, he spends more time than the other agent on incoming calls—just
like a person who picks more strawberries.
10 HILL V. XEROX BUSINESS SERVICES
sense, Xerox’s compensation system responds to a modern
problem—one in which the “goods” are not always tangible.
Xerox cites to several documents demonstrating that
“production minutes” are an accepted standard in the call
center industry. These documents hardly establish an
industry standard, but they do nominally support the idea that
compensating employees on a per-minute basis arises out of
the unique situation facing call centers.
III.
Although the parties contentiously argue over an array of
issues, the critical issue in this case is whether Xerox’s
compensation plan complies with Washington law. There is
no controlling precedent on this issue and its resolution is
necessary to resolve Xerox’s appeal. Further, this issue
potentially affects swaths of workers in the current
Washington economy, and elsewhere, and is therefore a
matter of important public policy. See Kremen v. Cohen,
325 F.3d 1035, 1037 (9th Cir. 2003) (“The certification
procedure is reserved for state law questions that present
significant issues, including those with important public
policy ramifications, and that have not yet been resolved by
the state courts.”). In this case alone, there allegedly are
approximately 10,000 low-wage workers affected.
Accordingly, we believe that the Washington Supreme Court
should decide the issue.
Because the controlling question of state law is not
settled, we have concluded that the appropriate course of
action is to certify this issue to the Washington Supreme
Court and request that it provide the dispositive answer. If
the Washington Supreme Court concludes that the ABC Plan
is an hourly plan, we will affirm the district court on that
HILL V. XEROX BUSINESS SERVICES 11
basis. If, however, the Washington Supreme Court
determines that the ABC Plan is a piecework plan, we will
vacate the district court’s order denying partial summary
judgment to Xerox.
IV.
Because it is “necessary to ascertain the local law of this
state in order to dispose” of this appeal, Wash. Rev. Code
§ 2.60.020, we respectfully certify to the Washington
Supreme Court the following question: whether an
employer’s compensation plan, which includes as a metric an
employee’s “production minutes,” qualifies as a piecework
plan under Wash. Admin. Code § 296-126-021?
We do not intend our framing of this question to restrict
the Washington Supreme Court’s consideration of any issues
that it determines are relevant. If the Washington Supreme
Court decides to consider the certified question, it may, in its
discretion, reformulate the question. Broad v. Mannesmann
Anlagenbau AG, 196 F.3d 1075, 1076 (9th Cir. 1999).
If the Washington Supreme Court accepts review of the
certified question, we designate appellant Xerox as the party
to file the first brief pursuant to Washington Rule of
Appellate Procedure (“WRAP”) 16.16(e)(1).
The clerk of our court is hereby ordered to transmit
forthwith to the Washington Supreme Court, under official
seal of the United States Court of Appeals for the Ninth
Circuit, a copy of this order and all relevant briefs and
excerpts of record pursuant to Washington Revised Code
Sections 2.60.010, 2.60.030 and WRAP 16.16. The record
12 HILL V. XEROX BUSINESS SERVICES
contains all matters in the pending case deemed material for
consideration of the local law question certified for answer.
Further proceedings in our court are stayed pending the
Washington Supreme Court’s decision whether it will accept
review, and if so, receipt of the answer to the certified
question. This case is withdrawn from submission and the
clerk is directed to administratively close this docket, pending
further order from this court. When the Washington Supreme
Court decides whether or not to accept the certified question,
the parties shall file a joint report informing this court of the
decision. If the Washington Supreme Court accepts the
certified question, the parties shall file a joint status report
every six months after the date of the acceptance, or more
frequently if circumstances warrant.
QUESTION CERTIFIED; SUBMISSION VACATED
and PROCEEDINGS STAYED.
_________________________
Sidney R. Thomas
Chief Judge
Ninth Circuit Court of Appeals