Employee’s Wage Deduction Claim Not Preempted By Federal Law, Court of Appeal Determines

[author: Michael A. S. Newman]

In Sciborski v. Pacific Bell Directory, the California Court of Appeal, Fourth Appellate District,Division One, determined that an employee’s claims for wage deductions under California Labor Code 221 was not preempted by section 301 of the Labor Management Relations Act (29 U.S.C. § 185).

Sciborski was a sales representative at Pacific Bell, selling advertising for Pacific Bell’s Yellow pages. She was a member of a union, and the terms and conditions of her employment were governed by a collective bargaining agreement (CBA). Sciborski was paid a commission on completed sales.

Sciborski made a sale of an account entitling her to $36,000 for commissions, which were paid Pacific Bell. The Union protested the commission, arguing that under the CBA, the account was improperly assigned to her. Pacific Bell thereafter notified Sciborski that there had been a clerical error and she should not have been assigned the account. Pacific Bell thereafter deducted amounts from Sciborski’s wages in order to recover the commission.

Sciborski resigned and sued Pacific Bell for violation of Labor Code 221, breach of contract, and constructive discharge in violation of public policy. At trial, the jury found in favor of Sciborski on her claims, and awarded attorney fees. Pacific Bell appealed, arguing that the section 221 claim was preempted by federal law because interpretation of the CBA was an essential part determining her contractual rights, and collective bargaining agreements are to be interpreted under federal law.

The Court of Appeal found as follows:

Sciborski’s Labor Code 221 claim was not preempted by federal law: Sciborski’s Labor Code 221 claim was not preempted by federal law: Under section 301 of the LMRA, federal law preempts state law pertaining to the interpretation of collective bargaining agreements. Section 301 preemption analysis utilizes a two-part test:

1. does the claim arise from state law or from the collective bargaining agreement; and
2. does the claim require interpretation or construction of a labor agreement?

A state law claim is preempted if a court must interpret a disputed provision of the collective bargaining agreement to determine whether the plaintiff’s state law claim has merit. There was no need to interpret the CBA here because the only question at issue was whether the CBA complied with state law, not the meaning of particular terms under the CBA. Furthermore, Pacific Bell conceded that there was no express provision of the CBA providing a commission was not earned if a clerical error caused the improper assignment. And the implied condition that Pacific Bell relied upon was contrary to Labor Code section 201.

Attorney fees were properly awarded: Under Labor Code 218.5, a court shall award reasonable attorney fees and costs to a party prevailing on a claim for failure to pay wages. Although the $291,155 fee award, on its face, appeared excessive given the relatively small $36,000 damage award, given the numerous disputed issues, the Court was within its discretion to award this amount. The Court of Appeal further rejected Sciborski’s claim on cross-appeal that a multiplier should have been applied, again noting that this issue was within the discretion of the trial court, and would not be disturbed.

Comments:

• Employers should beware that just because the union demands action be taken regarding a particular employee, that does not create a safe harbor for the employer. Here, the union demanded that Sciborski be deprived of her commission. When Pacific Bell complied, the fact that the union demanded such action did not shield it from liability under the Labor Code.
• Employers generally may not deduct amounts from wages, even to offset amounts owed by employees to the employer. Section 221 specifically prohibits such “self-help” in most circumstances.