Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
Received for posting 9/29/08
Alameda County Super. Ct. No. RG06254576
RIVERA, J.
Plaintiff Tina O’Dell appeals after the trial court ruled that she was not entitled to recover for unpaid overtime work she had performed while employed by defendant International Asset Systems USA, Ltd. (IAS). We affirm.
I. BACKGROUND
O’Dell began working for IAS as a project manager in May 2002. About a year later, her job title changed, and she became a product manager. It is undisputed that during her time at IAS, O’Dell worked more than 40 hours a week as a salaried employee and was paid no overtime compensation. In January 2004, IAS terminated her employment. IAS provided four weeks of severance pay. At the same time, O’Dell signed a resignation agreement (the agreement).
The agreement included the following release: “You agree that the consideration provided for in this Agreement represents payment in full of all outstanding obligations owed to you by the Company or any parent, subsidiary or affiliate of the Company. You . . . hereby fully and forever release the Company . . . from, and agree not to sue or otherwise institute or cause to be instituted any legal or administrative proceedings concerning, any claim, duty, obligation or cause of action related to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that you may possess against the Company arising from any omissions, acts or facts that have occurred up until and including the Effective Date including, without limitation, [¶] (a) any and all claims relating to or arising from your relationship with the Company . . . and the termination of that relationship; [¶] . . . [¶] (d) any and all claims for violation of any federal, state or municipal statute, including, but not limited to . . . the California Labor Code; [¶] . . . [¶] (f) any and all claims arising out of any other laws and regulations relating to employment or employment discrimination; and [¶] (g) any and all claims for attorneys’ fees and costs.” The agreement also included a waiver of O’Dell’s rights under Civil Code section 1542.
Civil Code section 1542 provides as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”
Approximately one year later, O’Dell filed a claim against IAS with the Division of Labor Standards Enforcement of the California Department of Industrial Relations, claiming she had been a non-exempt employee and that IAS had failed to pay overtime. The Labor Commissioner found that IAS had not met its burden to show that O’Dell met the criteria for exemption from the overtime requirements of Labor Code section 510, and awarded O’Dell $53,819.75 in unpaid overtime wages, plus interest and penalties.
All undesignated statutory references are to the Labor Code.
IAS appealed the Labor Commissioner’s decision to the Alameda County Superior Court. The court found that IAS had carried its burden to show that O’Dell was an exempt employee while she worked as a product manager in the latter part of her employment, but had not carried its burden as to the time she spent as a project manager in the earlier part of her employment. The court also found, however, that in entering into the agreement, O’Dell had released her claim for unpaid overtime. In doing so, the court noted that O’Dell had four days to consider the agreement before she signed it, that IAS paid all wages concededly due without any condition, and that it offered additional consideration in exchange for a broad, general release. Accordingly, the trial court ruled against O’Dell, and awarded IAS its costs. This timely appeal ensued.
II. DISCUSSION
A. Enforceability of Release
O’Dell’s primary contention on appeal is that to the extent the agreement applied to her claim for overtime compensation, it was a “prospective release” and was void and unenforceable as a matter of law. As O’Dell points out, entitlement to overtime compensation “ ‘is mandated by statute and is based on an important public policy,’ ” (Earley v. Superior Court (2000) 79 Cal.App.4th 1420, 1430; see also Gentry v. Superior Court (2007) 42 Cal.4th 443, 456; Gould v. Maryland Sound Industries, Inc. (1995) 31 Cal.App.4th 1137, 1148-1149) and statutes governing wages should be construed broadly (Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575, 592).
Several provisions of the Labor Code are pertinent to O’Dell’s contention. First, section 206, subdivision (a) provides, “In case of a dispute over wages, the employer shall pay, without condition and within the time set by this article, all wages, or parts thereof, conceded by him to be due, leaving to the employee all remedies he might otherwise be entitled to as to any balance claimed.” Section 206.5 provides: “No employer shall require the execution of any release of any claim or right on account of wage due, or to become due, or made as an advance on wages to be earned, unless payment of such wages has been made. Any release required or executed in violation of the provisions of this section shall be null and void as between the employer and the employee and the violation of the provisions of this section shall be a misdemeanor.” Section 219, subdivision (a) provides in part: “[N]o provision of this article can in any way be contravened or set aside by a private agreement, whether written, oral, or implied.”
The legislative history indicates this provision was added in 1959 to prevent abuses by employers who paid employees less than the actual amount of wages due, but withheld payment unless the employees signed a release of their claims for wages.
O’Dell contends the agreement violated section 219 because it was a “prospective release” of her claim for overtime, and operated to waive her statutory right to overtime compensation. O’Dell’s position that the release was “prospective” seems to be based on her contention that she was unaware of her overtime claim when she signed the agreement. Whether or not she had yet identified that claim, we conclude that the agreement was not an illegal waiver under section 219. The agreement was not a contract for O’Dell to work overtime without overtime pay; rather, it was a release of any claims she may have had, based solely on IAS’s past actions, in exchange for compensation.
For this reason, the cases cited by O’Dell are inapplicable. In County of Riverside v. Superior Court (2002) 27 Cal.4th 793, 804-805, for example, our Supreme Court noted that certain “statutory schemes [including section 219 and section 206.5] enacted for the protection of a class of employees [are] not subject to blanket waiver.” (Accord, Jersey v. John Muir Medical Center (2002) 97 Cal.App.4th 814, 823-824 [Labor Code’s protective provisions regarding wages may not be waived by agreement].) And the court in Zavala v. Scott Brothers Dairy, Inc. (2006) 143 Cal.App.4th 585, 588, 594-595, concluded that a union could not waive employees’ statutory right to rest breaks and wage stub itemization through a collective bargaining agreement and, therefore, the employees could pursue their right in a judicial forum. Similarly, the Ninth Circuit held in Balcorta v. Twentieth Century-Fox Film Corp. (9th Cir. 2000) 208 F.3d 1102, 1111, that a collective bargaining agreement could not operate to waive an employee’s right to prompt payment of wages after discharge. None of these cases, however, holds that an employee cannot compromise a dispute over the amount of wages due for past work.
We likewise reject O’Dell’s contention that the agreement is invalid under Civil Code section 1668, which provides: “All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.” The agreement did not exempt IAS from responsibility for its actions; rather, it compromised O’Dell’s claims against IAS in return for severance pay.
Nor do the cases O’Dell cites support her position that the release violates section 1668. Those cases consider the enforceability of a contract releasing a party from liability from future conduct (Tunkl v. Regents of University of California (1963) 60 Cal.2d 92, 94 [release from liability for future negligence as condition for admission to hospital]; Gavin W. v. YMCA of Metropolitan Los Angeles (2003) 106 Cal.App.4th 662, 666 [release of claims signed by parents when they enrolled child in childcare program]; Baker Pacific Corp. v. Suttles (1990) 220 Cal.App.3d 1148, 1151 [release of claims in connection with potential exposure to asbestos as condition of employment]; Gardner v. Downtown Porsche Audi (1986) 180 Cal.App.3d 713, 715 [auto repair shop order bearing disclaimer that shop was not responsible for loss or damage to cars left for repairs]), or the enforceability of a contract imposing an improper condition on future employment (D’Sa v. Playhut, Inc. (2000) 85 Cal.App.4th 927, 929, 932-935 [covenant not to compete imposed as condition of future employment violated public policy and was unenforceable]).
Both parties rely on Jefferson v. Department of Youth Authority (2002) 28 Cal.4th 299 (Jefferson). IAS cites it as authority for the general rule that “ ‘ “when a person with the capacity of reading and understanding an instrument signs it, he is, in the absence of fraud and imposition, bound by its contents, and is estopped from saying that its provisions are contrary to his intentions or understanding.” ’ ” (Id. at p. 303.) No fraud or imposition having been asserted by O’Dell, IAS argues, the release must be enforced in accordance with the meaning of its plain language. O’Dell, on the other hand, argues that Jefferson stands more for the proposition that a general release is not a “fixed and impenetrable barrier precluding the pursuit of any claim that might otherwise fall within the scope of the release.”
We think O’Dell overstates the value of Jefferson to her argument. In Jefferson the issue before the court was whether a workers’ compensation release, executed in connection with a settlement, included the release of a related claim for sex discrimination. (Jefferson, supra, 28 Cal.4that pp. 302-303.) While the court did discuss cases in which the language of the standard workers’ compensation release was construed, in certain circumstances, not to release all claims (id. at pp. 303-309), the agreement actually at issue in Jefferson included not just the standard release, but also appended a separate document stating that “[t]he settlement is to compensate for all aspects of all injuries included herein” and reciting that “all rights under Sections [sic] 1542 of the Civil Code of California are hereby expressly waived.” (Id. at pp. 302-303.) Under these circumstances, and in the absence of contrary extrinsic evidence showing an intent to exclude claims from the release, the court had no hesitation in enforcing the agreement according to its terms. (Id. at p. 310.) O’Dell, similarly, offered no evidence of any intent to exclude any claims from the scope of the release—assuming such evidence would even be admissible in this factual setting (see Winet v. Price (1992) 4 Cal.App.4th 1159, 1167)—so the general rule of enforceability articulated in Jefferson applies here.
O’Dell also points to language in Jefferson acknowledging that the general rule enforcing releases as to all claims is more strictly applied in workers’ compensation settlements because “in that context, WCAB oversight helps to ensure fairness.” (Id. at pp. 303-304.) O’Dell argues this protective feature is not present in her case. True enough. But the court in Jefferson did not abrogate the general rule of enforceability in the absence of the element of oversight; rather, it merely stated the courts were “particularly rigorous about strictly enforcing broad release language” under those circumstances. (Id. at pp. 303-304.)
O’Dell argues, however, that the general release could not lawfully encompass her overtime wage claim because the matter was not the subject of a bona fide dispute at the time her employment ended. Citing section 206, our Supreme Court has stated, “An employer and employee may of course compromise a bona fide dispute over wages but such a compromise is binding only if it is made after the wages concededly due have been unconditionally paid.” (Reid v. Overland Machined Products (1961) 55 Cal.2d 203, 207 (Reid). This provision, as the court noted, is “designed to secure to the wage earner prompt payment of all wages concededly due and it expressly precludes an employer’s coercing a settlement of disputed claims by offering conditional payment. (Id. at p. 208.) Similarly, citing sections 206 and 206.5, the court in Sullivan v. Del Conte Masonry Co. (1965) 238 Cal.App.2d 630, 633, stated that “upon termination of an employee’s services, the employer is bound to pay the employee all wages conceded to be due, and can require no condition in connection with payment.” However, as the court went on to note, after such wages are paid, the employer and employee may compromise a bona fide dispute over wages. (Id. at p. 634, citing Reid, supra, 55 Cal.2d at p. 208.) O’Dell has not cited, and we have not found, any California authority holding that such a compromise is permissible only as to claims that have been identified when the release is signed and cannot extend to claims that are unknown at the time.
The trial court found that IAS paid O’Dell all wages concededly due on her last day, and O’Dell does not contend otherwise. This is not a case in which an employer withheld wages unless the employer signed a release, and does not involve the abuses sought to be remedied by section 206.5. The agreement specified that in consideration of the additional severance pay, O’Dell released all claims, known or unknown, suspected or unsuspected, including claims for violation of the California Labor Code and any other laws relating to employment. O’Dell also waived her rights under Civil Code section 1542. We have no basis for concluding it would violate sections 206 or 206.5—or public policy—to allow an employer to buy peace from all future claims, including claims that are unknown and unsuspected at the time the release is signed.
Amicus curiae California Employment Lawyers Association (CELA) argues that we should apply the standards used under the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. (FLSA), and require the settlement of any overtime wage dispute to be supervised by the California Division of Labor Standards Enforcement or by the courts. (See, e.g., Walton v. United Consumers Club, Inc. (7th Cir. 1986) 786 F.2d 303, 306 [“Section 16(c) creates the possibility of a settlement, supervised by the Secretary to prevent subversion, yet effective to keep out of court disputes that can be compromised honestly.”]; Lynn’s Food Stores, Inc. v. United States, Etc. (11th Cir. 1982) 679 F.2d 1350, 1352-1353 [claims for back wages under FLSA may be compromised through payment supervised by Secretary of Labor or by stipulated judgment scrutinized by court for fairness]). This case, however, was not brought under federal law, and we must decline CELA’s invitation for us to read a similar requirement into California law. Our Supreme Court has stated that an employer and an employee may compromise a bona fide dispute over wages so long as the wages concededly due have been unconditionally paid. (Reid, supra, 55 Cal.2d at p. 207.) In light of this clear language, we will not imply an additional requirement that such a compromise be supervised by a state agency or the courts.
Indeed, the Legislature knows how to create such a requirement when it so chooses: Section 5001 provides that no release of liability or compromise agreement related to a workers’ compensation claim is valid unless it is approved by the workers’ compensation appeals board or a referee.
B. Costs
O’Dell contends, and IAS concedes, that the trial court erred in awarding costs to IAS. Section 98.2, subdivision (c) provides that if a party who appeals an order of the Labor Commissioner to the superior court is unsuccessful, that party must pay the other parties’ costs. (See also Murillo v. Fleetwood Enterprises, Inc. (1998) 17 Cal.4th 985, 996-997.) Here, IAS successfully appealed the order, and the parties agree that under section 98.2 IAS is not entitled to its costs in the superior court. IAS also concedes that it is not entitled to costs on appeal because the agreement contains a provision that each party shall bear its own costs.
III. DISPOSITION
The portion of the judgment awarding costs to IAS is reversed. In all other respects, the judgment is affirmed. The parties shall bear their own costs on appeal.
We concur: RUVOLO, P.J., REARDON, J.