ALVARADO v. DART CONTAINER CORPORATION OF CALIFORNIA

Appellant’s Response to Amicus Curiae Brief

Cal.January 18, 2017

CE PERE rmoymre g pe PP gE eyJoe Bae ae MPs a a 232607 IN THE SUPREME COURT OF CALIFORNIA SUPREME COURT HECTOR ALVARADO FILED JAN 1 8 2017Plaintiff, Appellant and Petitioner Jorge Navarrete Clerk © VS. DART CONTAINER CORPORATIONOF CALIFORNIA Deputy Defendant and Respondent AFTER A DECISION BY THE COURT OFAPPEAL FOURTH APPELLATE DISTRICT CASE NO. E061645 APPEAL From the Superior Court of Riverside County. Hon. Daniel A. Ottolia. (Super. Ct. No. RIC1211707) APPELLANT'S ANSWER TO AMICUS BRIEFS (Service on Attorney General and District Attorney required by Bus. & Prof. Code §§ 17209, 17536.5) LAVI & EBRAHIMIAN, LLP DENNIS F. MOSS Joseph Lavi (SBN 77512; (SBN 209776;jlavi@lelawfirm.com) dennis@dennismosslaw.com) Jordan D. Bello 15300 Ventura Blvd., Suite 207 (SBN 243190; jbello@lelawfirm.com) Sherman Oaks, CA 91403 8889 W. Olympic Blvd., Suite 200 Tel: (310) 773-0323 Beverly Hills, CA 90211 Fax: (310) 861-0389 Tel: (310) 432-0000 ATTORNEYSFOR PLAINTIFF, APPELLANT AND PETITIONER HECTOR ALVARADO S232607 IN THE SUPREME COURT OF CALIFORNIA HECTOR ALVARADO Plaintiff; Appellant and Petitioner vs. DART CONTAINER CORPORATION OF CALIFORNIA Defendant and Respondent AFTER A DECISION BY THE COURT OF APPEAL FOURTH APPELLATE DISTRICT CASE NO. E061645 APPEAL From the Superior Court of Riverside County. Hon. Daniel A. Ottolia. (Super. Ct. No. RIC1211707) APPELLANT'S ANSWER TO AMICUSBRIEFS (Service on Attorney General and District Attorney required by Bus. & Prof. Code §§ 17209, 17536.5) LAVI & EBRAHIMIAN,LLP DENNIS F. MOSS Joseph Lavi (SBN 77512; (SBN 209776; jlavi@lelawfirm.com) dennis@dennismosslaw.com) Jordan D. Bello 15300 Ventura Blvd., Suite 207 (SBN 243190; jbello@lelawfirm.com) Sherman Oaks, CA 91403 8889 W. Olympic Blvd., Suite 200 Tel: (310) 773-0323 Beverly Hills, CA 90211 Fax: (310) 861-0389 Tel: (310) 432-0000 ATTORNEYSFOR PLAINTIFF, APPELLANT AND PETITIONER HECTOR ALVARADO TABLE OF CONTENTS JT. INTRODUCTION............cccsssosssssessesecssessecssenecsenscesesenssceessnsassseseoseesovoeee 1 Il. F, G. PROPER APPLICATION OF FEDERAL LAW DOES NOT SUPPORT APPLICATION OF 29 CEFR 778.209 FLSA “Regular Rate” Determinations Look to All Formsof Remuneration Paid In Non-Overtime WeEek6..........cccsssecccssrrcossscssseeees 5 29 CFR §778.203 Calling a Shift Differential A "Bonus" Does Not Legitimize Dart’s “Regular Rate” Formulla..........cccccccsssscsesssocssscesseeseccsseccsassecsenseceeecssesees 9 Federal Case Authority Supports The Conclusion That Dart's Practices Are Unlawful Under The FLSA.............sscssssssorssssosseesseseenee 12 If Dart’s Fixed Weekend Payments Actually Were “Bonuses” The Rules Of Statutory Construction Would Render29 CFR 778.209 Tnapplicablle............ssssssccssccsssenecsessscsscecsssessecsenssensnsecseseassensenscesceesons 15 A Shift Differential Is Not an “Attendance Bonus”’...........sscccccesees 16 29 CFR §778.209 Must Be Read In Contet............cccessecsssressseeee 18 I. CALIFORNIA LAW COMPELS APPLICATION OF SKYLINE A. HOMES V. DEPARTMENTOFINDUSTRIAL RELATIONS 165 Cal.App.3d 245 TO FIXED PAYMENT WAGES THAT ARE NOT DRIVEN BY THE TOTAL AMOUNTOF TIME WORKED....... 22 In An Action For Overtime Under California Law, When TheIntent Of California Overtime Law Diverges From TheIntent of Federal Overtime Law, TheIntent Of California Controls.............0csssssssssees 22 B. Skyline Revisited .........scsssccccccsssssscssecsssececsessscssscssssssceesescsscssseessssessees 24 C. This Court’s Views Can Clearly Be Informed By The DLSE............ 29 D. Dart’s Amici Misapprehend Labor Code § 515 (d)(1).............sesessees 30 IV. THE VARIETIES OF BONUS SCHEMES REFERENCED BY DART’S AMICI ARE NOT BEFORE THIS COURT.............ccc00 35 V. THE DUE PROCESS AND MASSIVELIABILITY CONTENTIONS OF AMICI ARE NOT WELL TAKEN,...........cscsscsssssssssssrscserssseoee 36 VI. CONCLUSION...........cccccccsrcsscavcccseeessssesccsesecsensessssnscsesseeresssneescosonses 38 TABLE OF AUTHORITIES Cases Alcala v. Western Ag Enterprises (1986) 82 Cal.App.3d 546.........c.:ccccceeeeees 28 Augustus v. ABMSecurity Services, Inc., __Cal. 5"_2016 WL 7407328oo... cecccecceecccceesceeeaeeseceseeeseeeeeceeeensceatestenes 27, 29, 30 Bay Ridge Operating Co. v. Aaron, 334 U.S. 446 (1948)... 7, 12, 13, 14 Brinker v. Superior Court, (2012) 53 Cal.4" 1004, 1029 ......ceccscccescesesseereeee 29, 30 California v. United States (9™ Cir. 2000) 215 F.3d 1005, 1013........ccccceeeeees 16 Duplesse v. County ofLos Angeles 714 F.Supp. 2d 1045, 1053-1054 (C.D. Cal. 2010)...ccccccccccscececeneecececesaeenseeneeeettetesetetaeeneees 15 Gagnon v. United Technologies,Inc. 607 F. 3d 1036 (5" Cir. 2010)..........00.0.... 12 Green v. Bock Laundry Mach. Co., 490 U.S. 504, 524, (1989)...eee 16 Gustafson v. Alloyd Co., 513 U.S. 561, 569, 115 S.Ct. 1061, 131 L.Ed.2d 1 (1995) oo... eee cece eee ceeeeeceseeeeeeeneeeteeeeeneteseessaaes 21 Hernandez v. Mendoza (1988) 199 Cal.App.3d 72.........c0.ccceceeceeseteeeeetecenees 28 Industrial Welfare Commission v. Superior Court (1980) 27 Cal.3d 690,71324, 26 Lujan v. Southern California Gas Co. 96 CA 4" 1200 (2002)........ccssesesceeceseees 28 Martinez v. Combs (2010) 49 Cal. 4" 35, 68......ccccccccccsccsscesssesesscsssesssseseseveeees 22 Mata v. Caring For You Home Health, Inc. (S.D. Texas 2015) 94 FSupp.3d 867 oo... cece eecceccceeeecneeeeneeceneesereeesecseeeeeeeeenseneaes 12 Morillion v. Royal Packing Co. (2000) 22 Cal.4th $75.00...eeeeeceseeees 23, 29 Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1103.......... 30 Negri v. Koning & Assocs. (2013) 216 CA4th 392, 397 o.oo... eeecceteetceseeeeeeees 31 Peabody v. Time Warner (2014) 59 Cal.4™ 662 ...c.ccccccscscssssssssssssessessveseesssteeees 30 Radzanowerv. Touche Ross & Co., 426 U.S. 148, 153 (1976)...........cccceceees 16 Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785..........0.cccccceecee 23, 29, 30 Reich v. Interstate Brands Corporation, (7th Cir. 1995) 57 F3d $74............. 14, 15 Scott v. City ofNew York 562 F.Supp. 2d 475, 487 ..........ecccescceecceeeeccetsesaceeseeees 21 See ’s Candy v. Superior Court 210 CA4th 889, 903 (2012).........ccceccceescteeees 22 Skyline Homes, Inc. v. Department ofIndustrial Relations 165 Cal.App.3d 245 ooo...eeeetter eeneneeeeenseee 23, 24, 26 State Dept. ofPublic Health v. Superior Court (2015) 60 Cal.4th 940, 960 ....... 16 Strother v. California Coastal Com. (2009) 173 Cal. App.4" 873, 879 .....cec. 16 United States v. Rosenwasser, 323 U.S. 360, 363 ........cccccccccccccccesteceseeeenteeeeeees 5 United States v. Stansell, 847 F.2d 609, 614 (9th Cir. 1988).........cece 20 Walling v. Henmerich & Payne 323 U.S. 40 (1944)...eee 5, 10, 13, 20 Walling v. Youngerman-Reynolds 325 U.S. 419, 424 (1945).....5, 7, 10, 18, 20, 21 Watson v. United States 582 U.S. 75, 81 (2008) .........cccccccccceeeeeeeteeeeeenteeeteeeees 20 Statutes 29 USC § 207 (€) ....ccceccceccceccecceeecceeeeeceeeeeeseceenecerecenaeeneeeseeeenaeecseesenetseeeneees 2, 6, 8 29 USC § 207 (Bf) oo... eeeeccccccceccceneeeeeeceeeceeeeeseeeeseeeseeessaaaaeeeceseenessesseeeeeeereeene 8 Labor Code § 511(d) (2)........ccccccccccccccccecceecesecneeeeeeeneeessaaaaauaaeeesessneeeeeeeeeseeas 32 Labor Code § S15(d) .......c.ccccccccceceeceeeneeeeneeseeeeeceseaeseeeceeneeseaeesestcssatisesessaaees 32 Labor Code § 515(d) (1).........eecceeccceecenneeenecee tenes secretes eeeeeeeaneesereneenee 33, 34, 35 Labor Code § S15 (d) (2).......ccccccccccccccccccccececeseeseeeeeeseneeeesnsneeecteeerseeaeens 32, 34, 37 Regulations 29 CE.R. § 541.602 ooo. ceccccccecceceeceeeeeceececeeeeseesceeeseeseaeeeeeeseesseeecsseensensags 31, 32 29 CER. § 778.108 ....ccccccccccccccceeceeecsceeeceeceseeneesseneeeseeseeeeseseeeenets 8, 10, 20, 21 29 CFR. § 778.114 oo occecceccccccceccceeceseecesneceneeneeseceneeceseseseesgaeeeenerssscsneeeneeseaaes 6, 25 29 CER. § 778.203 oo ..ccccccccccccceceeeceecesnnaceeeseteecneeceeneeeeseeseeeeeseesenenes 8, 10, 15, 16 29 CER. § 778.207 ooo.cececceecccecccsecceceeeeneeeseeceeseeeeeeseeseeseeeseesasnsenseseaes 2, 6, 10, 17 29 CER. § 778.208 o.oo ccccccccecccceseeceseeeceenseneseeestenseseaseseseegeasesesseseneseaeseenaase 17 29 C.ELR. § 778.209 oooocececcccceccecceeeeccceeeeeceeeetsetueeseneesaeeeseaaes 4, 15, 18, 19, 20, 21 29 CER. § 778.209(a) .o..ecccecccecceeeceeceeeeeeeceseeseneceseecsesseeersnaeessessessnenseeateeas 10, 16 29 CLF.R. § 778.201 ooo ccccccccccccesecceeceeeeeeeneeseecneseeecesseesesseeeeeseeseeesseerseeseeeeeeegs 17 29 CER. § 778.502 20... ccceeccccccccceneeeeceeeeeseceeeeeseceneecceseesesneeeeesesseeeneteeegs 10, 11, 12 29 C.E.R. § 778.S02(a) 0....eececceeccecceceneeceeeeceeenseseceeeseseeseeseeseeeseeenesecseceeteeneeens 15 29 CER. § 778.508 oo .cccccccccccececenceeseeeseeeeeeeeeecseesereeeecsaseenesaeseeseassnscsetecessatees 10 Other Authorities 29 Ops.Cal.Atty.Gen. 168 (1957) oo... eee eeceeeeeeeneeereeeeneeseneaeeeeseensvseseeeeeseatens 29 The Glossary ofCompensation Terms- US Bureau ofLaborStatistics, found at www.bls.gov/nes/ocs/sp/ncbl0062 0.0.2... eeseceeececeeeeceeee cess eeeeeaseeeeeeneeseaeeeee 17 I. INTRODUCTION The Amici Briefs filed on behalf of Appellant and Respondent crystallize the two strains of issues in this case. The immediate issue is the propriety of Dart's particular Saturday and Sunday payment plan under both Federal and State Law. The broader issue is the proper way to calculate overtime under California law when employees are paid a fixed amount of remuneration that is in no way tied to the total number of hours worked. The broader issue is framed in connection with Dart's payment plan, becauseit involves a fixed amount thatis not tied into total hours worked. The Amicus Brief of California Employment Law Council and Employers Group (“CELC”) in Support of Respondent (“CELC Brief”) begins with a bold pronouncement unsupported by the recordorreality: "For over 65 years, employers across California have relied upon well-established federal law governing the calculation of overtime compensation on bonuses paid to non-exempt employees". (CELC Brief pg.1). On the next page, it portends "staggering unanticipatedliability” that California employers would face. (See also CELC Brief at.3 1-33). Obviously, these assertions are intendedto elicit sympathy from the Court over a speculative consequence that should not and will not materialize. If bold unsupported statements are countenanced by the court, it is simpler to prognosticate dire consequences if the Court of Appeal decision 1 is not overturned. A failure to reverse would license employers, "across California", to convert hourly or percentage based shift differentials to flat amount shift differentials in order to undermine 65 years of overtime calculation practices. That result will have a "staggering" impact on the take home pay of countless Californians who work overtime and currently receive shift differentials that are paid in hourly pay increments above what they would earn per hour on moredesirableshifts. ' An example is illustrative. Suppose an employee at a hospital currently receives $30.00 per hour, plus a night shift premium of an extra $5.00 per hour, and the employee's non-overtime shift is 8 hours in length. Currently, that employee's regular rate for overtime purposes is $35.00 per hour under both federal and State law. (29 CFR §778.207; DLSE Manual 49.1.1 and 49.1.2 adopting the “all remuneration” language of 29 USC 207 (e)). If this Court upholds the Court of Appeal decision, the hospital would be incentivized to convert the $5.00 per hour shift premium to a flat premium of $40 per day (8 hours x $5.00), simply to get the benefit of a regular rate that decreases as more hours are worked.(e.g. for an employee * On March 25, 2009 the U.S. Bureau of LaborStatistics published A Look at Supplemental Pay: Overtime Pay, Bonuses, and Shift Differentials www.bls.gov/.../a-look-at-supplemental-pay-overtime-pay-bonuses-and- shift- differentials. In that study the BLS found that 19.75 % of workers receive shift differentials. It is quite telling that the Study treats shift differentials and bonusesas separate forms of supplementalpay. working 50 hours in 5 days, the regular rate would be $34.00 instead of $35. The $34 is calculated as follows -- $30.00 per hour in hourly rate pay + $4.00 per hour on the flat sum shift differential. The $4 is derived from the following: 5 daily premiumsat $40 per day equals $200, divided by 50 hours of total work during the week, per Dart's methodology equals $4.00). Or perhaps more insidiously, an employer could lower the hourly rate to $25.00 to achieve a much lower“regular rate”, while maintaining the exact same pay level in non-overtime weeks. Illustration: At the outset of this hypothetical, the night shift employee's "regular rate", combining base hourly rate with the $5.00 per hour shift premium, was $35.00 per hour. Multiplying that rate times a non- overtime week of 40 hrs. is $1400 for a week without overtime. To get to that $1400, if the employee's base hourly rate is reduced by $10 to $25.00, the employer would have to makethe flat rate shift premium $80. The reason being, 40 hours x $25.00 is $1000. The difference between $1400 and $1000 is $400. Dividing, $400 by a 5 day workweek = an $80 per day flat rate shift premium. In this scenario, if an employee worked 50 hours, her regular rate would be $33.00 per hour. $25.00 per hour in hourly regular rate wages would be added to $8 per hour based on the flat rate shift premium under Dart's methodology--$400 divided by 50 hours worked equals $8.00. The $33 per dollar regular rate, is $2 per hour lower than the $35 regular rate when the shift differential was hourly. The reduction in 3 “regular rate” occurred simply by transforming the hourly rate to a flat sum, and applying Dart’s fluctuating workweek formula. If the Court of Appeal decision is adopted by this court, and the demise of the foundation of California's time honored "regular rate calculations" are thereby secured, changes in the form of shift differentials throughout the State will be imposed, all to the detriment of a vast number of Californians. Il. PROPER APPLICATION OF FEDERAL LAW DOES NOT SUPPORT APPLICATION OF 29 CFR 778.209 (a) TO THE SATURDAY AND SUNDAY SHIFT DIFFERENTIALS DART PAYS ITS WEEKEND STAFF The Amicus Brief of California Employment Law Council and Employers Group in Support of Respondent contends that the Dart pay system is consistent with Federal law. (CELC Brief pg. 7-9). See also the Brief of the National Association of Manufacturers (“Manufacturers”) (Mfrs. Brief pgs. 2-11). Their position in this regard is not well taken. The Manufacturers Brief states a truism that Appellant also embraces: “The Federal Regulations provide a clear, straightforward rule for how to calculate overtimein this situation.” (Mfr. Brief at 21). What Dart and its Amicifail to appreciate is that in “this situation” Federal Regulations are clearly consistent with Appellant’s calculation methodology. The FLSA, as interpreted and applied in the CFR’s and binding precedent, rejects Dart’s methodology, and supports the calculation system advocated by Appellant. A. FLSA “Regular Rate” Determinations Look to All Forms of Remuneration Paid In Non-Overtime Weeks Under Federal Law, the regular rate is determined by dividing all types of wages earned per the contract of employment by the hours worked in a normal non-overtime week. Key here is the fact that the weekend shift premiums paid by Dart are paid irrespective of whether or not Dart employees scheduled for Saturdays and Sundays are working overtime during the weeks they work weekends. (Appx.68-70) For a workweek that includes Saturday and Sunday shifts, under the FLSA and California law, the “regular rate” is determined by adding the total hourly wages earned for non-overtime hours (40 in manufacturing) to the $30 in shift differential pay, and dividing by 40. “As we have previously noted, the regular rate refers to the hourly rate actually paid the employee for the normal, non-overtime workweek for which he is employed. Walling v. Helmerich & Payne, supra, 323 U.S. 40 United States v. Rosenwasser, 323 U.S. 360, 363” Walling v. Youngerman-Reynolds 325 U.S. 419, 424 (1945). (emphasis added)’;To 4 * Despite the attention it receives, the Federal “fluctuating workweek” exception to the Walling v. Youngerman-Reynolds rule is limited to a precise circumstance where an employee receives a fixed salary, works 5 determine the “hourly rate actually paid” 29 USC §207 (e) expressly requires the employer to look at “all remuneration” paid for a non- overtime week in determining the regular rate to be used in calculating overtime. Congress obviously contemplated that employees could be paid on a mixed basis, like in this case, with some hourly pay and some fixed payments a possibility. Here, “all remuneration” during non-overtime weeks includes hourly pay and $15.00 per weekend day for employees scheduled to work weekends. In 29 CFR §778.207, the Department of Labor ("DOL") expressly pointed out that shift premiumsare to be included in the determination of "regular rate", going so far as to address theissue in this case. "...lump sum premiumswhichare paid without regard to the number of hours worked are not overtime premiums and mustbe includedin the regular rate". In this case, if an employee during a “normal, non-overtime workweek [ in which he works a Saturday and Sunday]” is paid $15 per hour and $15 per day for work on both Sunday and Saturday, applying Walling v. Youngerman-Reynolds’s holding, to 29 CFR § 778.207’s “regular rate” requirement, the “hourly rate actually paid the employee” is $15.75 per hour. The $15.75 per hour is calculated as follows: different numbers of hours weekly, and the salary is large enough to pay statutory minimums during the longest workweeks. See 29 CFR §778.114 “Fixed salary for fluctuating hours”. In a “non-overtime week”that includes a day of Saturday and a day of Sunday work, he is paid $630 for the week, $600 in base hourly pay ($15 x 40 hours = $600) + $30 in fixed payments. Dividing $630 by 40 hours = $15.75 per hour-- the “regular rate”. Therefore, for weeks an employee works both weekend days and overtime, the overtime rate is 1.5 x $15.75 per hour under the Fair Labor Standards Acct. The Youngerman-Reynolds "regular rate” calculation process was codified in the Code of Federal Regulations: “The ‘regular rate’ of pay under the Act cannot be left to a declaration by the parties as to whatis to be treated as the regular rate for an employee; it must be drawn from what happens under the employment contract (Bay Ridge Operating Co. v. Aaron, (1948)334 U.S. 446). The Supreme Court has described it as the hourly rate actually paid the employee for the normal, non-overtime workweek for which he is employed—an ‘actual fact’ (Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419). Section 7(e) of the Act requires inclusionin the 'regular rate' of ‘all remuneration for employment paid to, or on behalf of, the employee' except payments specifically excluded by paragraphs (1) through (7) of that subsection. .... As stated by the Supreme Court in the Youngerman-Reynolds case cited above: ‘Once the parties have decided upon the amount of wages and the mode of payment the determination of the regular rate becomes a matter of mathematical computation, the result 7 of which is unaffected by any designation of a contrary 'regular rate’ in the wage contracts.” 29 CFR §778.108. Dart decided employees will get paid hourly wages and $15.00 per day for Saturday and Sunday work. Per the Federal authority referenced supra, this arrangement, under Federal law, compels dividing the combined forms of remuneration by 40 hours to determine the “regular rate”. B. 29 CFR §778.203 Expressly Prohibits Dart's Formula. Glaringly absent from the Amici Briefs filed in support of Dart, is any reference to 29 CFR §778.203. This omission is telling because 29 CFR §778.203 is entitled "Premium pay for work on Saturdays, Sundays, and other ‘special days'", and this case deals specifically with such premiums. There is no question that Dart's formula uses the premiums for Saturday and Sundaypayas a "credit" against overtime obligations. During a non-overtime week, the $15.00 per day funds the non-hourly part of the straight time paid for the week. Under Dart's formula, when overtime is worked, the $15.00 per day is divided by total hours, and therefore, it funds, in part, pay for overtime hours, hours over forty. This practice is expressly prohibited by 29 CFR §778.203, which provides: "Under section 7(e)(6) and 7(h) of the Act,[29 USC 207 (e) and (h)] extra compensation provided by a Premium rate of at least time and one- half which is paid for work on Saturdays, Sundays, holidays, or regular 8 days of rest or on the sixth or seventh day of the workweek (hereinafter referred to as “special days”) may be treated as an overtime premium for the purposes of the [Federal] Act. If the premium rate is less than time and one-half, the extra compensation provided by such rate must be included in determining the employee's regular rate of pay and cannot be credited toward statutory overtime due, unless it qualifies as an overtime premium undersection 7(e)(5)."" (emphasis added). With $15 per day, which works out to under $2 per hour, added to base hourly wages, even if Dart only paid minimum hourly wagesthe extra $2 per hour addedto the base hourly pay does not comeclose to 1.5 x the base hourly rate. (e.g. At well below the minimum wage, for example, $6 per hour, a weekend premium that works out to under $2 per hour when added to $6 per hour is less than $9 per hour which is 1.5 x the $6 base hourly wage). Therefore, under 29 CFR §778.203 the $15 cannot be credited in any manner toward statutory overtime due. Under Dart's formula, the $15 per day is unlawfully credited towards 2/3 of the overtime owing, the straight time part of the 1.5 multiplier. C. Calling a Shift Differential A "Bonus" Does Not Legitimize Dart’s “Regular Rate” Formula Employers have, since the 1940’s, attempted to come up with wage schemes in an effort to avoid paying overtime under the FLSA through calculation of “regular rate” by means other than taking all types of remuneration in a non-overtime week, and dividing by forty, or in some industries a number different than 40. (e.g. Walling v. Youngerman- Reynolds supra, and Walling v. Henmerich & Payne 323 U.S. 40 (1944).) The Department of Labor addressed one such ruse in regulations designed to ferret out pseudo bonuses. See 29 CFR §778.502 and 29 CFR §778.503. In the same mannerthat they ignored 29 CFR 778.203, Dart’s Amici completely ignored 29 CFR §778.502. This failure on the part of Amici for Dart to confront clearly applicable regulations that have a clear potential of undermining the foundation of their basic argument, speaks volumes. 29 CFR §778.502 makes clear that 29 CFR §778.209 (a), the “bonus” provision of the CFR’s relied on by Dart and its Amici, is inapplicable in this case. Thetitle of 29 CFR §778.502 provides: “Artificially labeling part of the regular wages a “bonus’.” Given the record in this case, there is no question that $15 a dayis, along with hourly wages, part of the regular wages paid to employees scheduled to work on Saturdays and Sundays. The $15 flat sum 1s a shift differential payment that must be included in the regular rate calculation in the manner dictated by 29 CFR §778.108, 29 CFR §778.203, 29 CFR §778.207, and Youngerman-Reynolds, supra. 29 CFR §778.502 goeson to provide: 10 “(a)The term ‘bonus’ is properly applied to a sum whichis paid as an addition to total wages usually because of extra effort of one kind or another, or as a reward for loyal service oras gift.” In this case, the so called "bonus"is not for extra effort, a reward for loyal service, or a gift, it is part of the contract of employment —extra remuneration for work on particular shifts stated as a flat sum, not an increased hourly rate. Subsection (a) of 29 CFR 778.502 goes on to provide: “The term [bonus] is improperly applied if it is used to designate a portion of regular wages which the employee is entitled to receive under his regular wage contract.” Given this language, Dart’s weekend premiums are improperly termed “bonuses”. The so-called "bonuses" in this case are clearly wages Dart employees are entitled to receive for every weekend day they work pursuant to an implied in fact contract, just as they are entitled to receive their hourly pay for their work. 29 CFR 778.502 concludes: “(e) The general rule maybestated that whenever the employee is guaranteed a fixed or determinable sum as his wages each week, no part of this sum is a true bonus and the rules for determining overtime due on bonuses do not apply.” At Dart, employees who work scheduled weekends are guaranteed a fixed amount of $15.00 per weekendday. 11 Given the foregoing,it is clear that 29 CFR 778.502 undermines the argumentthat Dart’s practices are consistent with Federal law. Amici who wrote in support of Dart did not confront the reality of 29 CFR 778.502, in the same mannerthat they did not confront 29 CFR §778.203, because to do so would compel a conclusion that Dart’s practices violate the FLSA. The flat sum payments at issue here are not a ”bonus” under the FLSA, but rather a Saturday and Sunday shift premium not subject to the calculation methodology Dart has employed. D. Federal Case Authority Supports The Conclusion That Dart's Practices Are Unlawful Under The FLSA. “ «The regular rate by its very nature mustreflect all payments which the parties have agreed shall be received regularly during the workweek, exclusive of overtime payments.’ Bay Ridge Operating Co. v. Aaron, 334 U.S. 446 (1948).” Gagnon v. United Technologies,Inc. 607 F. 3d 1036 is" Cir. 2010). (Emphasis Added) See also: Mata v. Caring kor You Home Health, Inc. (S.D. Texas 2015) 94 F.Supp.3d 867. Bay Ridge Operating Co, supra 334 U.S. 446, is directly on point. The United States Supremegranted certiorari because of the issue operative in this case, on “account of the importance of the method of computing the regular rate of pay in employment contracts providing for extra pay” Id, 334 US.at 459. 12 The Supreme Court then points out, consistent with the authorities cited above: “We have said that ‘the words ‘regular rate’ * * * obviously mean the hourly rate actually paid for the normal, non-overtime workweek.’ Walling v. Helmerich & Payne, 323 U.S. 37, 40, 65 S.Ct. 11, 13” Bay Ridge Operating Co, supra 334 U.S. at 461. (asterisks in original) The Court, in Bay Ridge, supra, apropos here, determined that a shift differential must be factored into the regular rate. i.e. the actual hourly rate paidfor non-overtime work: “Where an employee receives a higher wage or rate because of undesirable hours or disagreeable work, such wage represents a shift differential or higher wages because of the character of work done or the time at which heis required to labor rather than an overtime premium. Such payments enter into the determination of the regular rate of pay.[Cite Omitted]” Bay Ridge Operating Co, supra 334 U.S.at 469. The Supreme Court did not find that extra pay for night and holiday work in Bay Ridge is a bonus that could fund in part both regular and overtime hours for night or holiday work. Instead the Court found the payments to be a “shift differential” that had to be factored into determination of the regular rate when those shifts are worked, by determining what employees who work those shifts receive for non- overtime hours when working thoseshifts. 13 In Bay Ridge, the shift differential "wage" manifested itself in an increased hourly rate when unwelcome shifts were worked. Here, it manifests itself in a flat rate payment. The distinction, given the foregoing authority, does not makea difference. Reich v. Interstate Brands Corporation, (7th Cir. 1995) 57 F3d 574, picks up on the Bay Ridge, supra ruling in a context that involves a yearly payment over and above hourly wages. Reich points out that if an extra payment based on schedules is paid, the Bay Ridge analysis does not change. Particularly relevant is Reich’s views on lump sum differentials for weekend work: "Section 7(e)(6) contains a similar provision for weekend work. So if a baker’s regular weekday rate were $10 and the rate for Sunday work were $15, the Sunday premium would notbe figured back into the “regular rate,” and time-and-a-half pay for overtime during the week would remain at $15. But if the Sunday rate were $14, the extra pay would be included in the ‘regular rate’, raising the overtime rate for both weekdays and Sundays. Bay Ridge Operating Co. v. Aaron, 334 U.S. 446; ...It is awfully hard to see why things should differ if the employer chooses to pay a “Sunday bonus” in a lump sum.If the bonus is high enough to take the Sunday hourly wage over 150% of the weekday wage, then § 7(e) (7) keeps it out of the “regular rate”; but if it is not high enough, the mannerof its payment cannot sensibly make a difference." Reich, supra 57 F3d at 578. 14 The wisdom of Reich is a matter of commonsense. It would be absurd to think that Congress intended that, in the calculation of overtime premiums, that extra pay paid on account of a set of facts as an hourly premium would betreated differently in the calculation of overtime, than if the extra pay for the sameset of facts, was a lump sum. Duplesse v. County ofLos Angeles 714 F.Supp. 2d 1045, 1053-1054 (C.D. Cal. 2010) addressed what constitutes a “bonus” under the FLSA. The conclusion in Duplesse, after referencing 29 CFR 778.502 (a) was that premiumsforparticular shift work were not “bonuses” under the FLSAJd, 714 F.Supp. 2d at 1053-1054. Here, as in Duplesse, the premium is merely part of a contract for work on a particular shift, and not an FLSA “bonus”. In Duplesse, the shifts that triggered differentials were defined by days in which employees did particular jobs. Here the shifts that trigger differentials are defined by work onparticular days. E. If Dart’s Fixed Weekend Payments Actually Were “Bonuses” The Rules Of Statutory Construction Would Render 29 CFR 778.209 Inapplicable Amici for Respondent argue that the general bonus formula of 29 CFR 778.209 controls. Applying the tenets of statutory construction used in construing Federal law, this position is not well taken. The specific language of 29 CFR §778.203, whichis entitled "Premium pay for work on Saturdays, Sundays, and other ‘special days', trumps 29 CFR 778.209. 29 15 CFR § 778.203 specifically dictates how to calculate "regular rate" when weekend shift differentials are paid. "It is fundamental that a general statutory provision may not be used to nullify or to trump a specific provision, irrespective of the priority of enactment. See Green v. Bock Laundry Mach. Co., 490 U.S. 504, 524, (1989)(stating that a general statutory rule does not govern unless there is no more specific rule); Radzanower v. Touche Ross & Co., 426 U.S. 148, 153 (1976) (holding that the general venue provision of the Securities Exchange Act of 1934 does not trump the specific venue provision of the National Bank Act....” California v. United States (9" Cir. 2000) 215 F.3d 1005, 1013. California authorities are consistent with the above federal precedent. Strother v. California Coastal Com. (2009) 173 Cal.App.4"™ 873, 879; State Dept. ofPublic Health v. Superior Court (2015) 60 Cal.4th 940, 960. F. A Shift Differential Is Not an “Attendance Bonus” In support of its position, that 29 CFR §778.209(a) controls under Federal law, Amici Manufacturers repeatedly reference the weekend shift premiumsas an "attendance bonus" (Mfr. Brief, passim). This position is a perversion of the concept of an "attendance bonus", that if accepted would effectively convert all night shift and graveyard shift differentials to "attendance bonuses" as well. Preliminarily it needs to be pointed out that 16 the CFR’s address shift differentials in 29 CFR § 778.207, and address "Bonuses"separately, beginning at 29 CFR §778.208. The CFR’s separate placement of the two concepts is consistent with the fact that an extra payment for working an unwelcomeshift is not an attendance bonus. In industrial relations parlance, an attendance bonus is defined as a reward for perfect, or near perfect, attendance over a lengthy period of time, or an attendance record that reflects very little or no utilization of sick leave, over a period of time. The Glossary of Compensation Terms- US Bureau of Labor Statistics, found at www.bls.gov/ncs/ocs/sp/ncbl0062, published by the Department of Labor defines, at pg. 5, “Attendance Bonus” as “Paymentor other type of reward(e.g. a day off) for employees whose work attendance record meets certain standards.” A payment for working a Saturday or Sunday shift is clearly not a reward for a “good attendance”record. 29 CFR §778.211 provides: " _..Bonuses which are announced to employees to induce them to work more steadily or more rapidly or more efficiently or to remain with the firm are regarded as part of the regular rate of pay. Attendance bonuses... are in this category.” Nothingin the record in this case comes close to establishing that the Saturday and Sunday extra pay was intended to induce employees “to work 17 more steadily or more rapidly or more efficiently or to remain with the 2firm. G. 29 CFR §778.209 Must Be Read In Context Ashas been argued extensively in prior briefing, and as reiterated below, under California law,it is never appropriate to adopt a "regular rate" formula applied to a “flat sum” bonus that results in a decreasing “regular rate” with every additional minute of overtime work. Reading 29 CFR §778.209 in context makes the same conclusion operative under Federal law. The Court of Appeal decision could be reversed solely on account of state law, on account of the Federal Regulations that define “Bonus”, the Federal Regulation regarding “Saturday” and Sunday” work that expressly validate the calculation methodology advocated by Appellant, and/or on account of the holdings in United States Supreme Court cases, cited supra, including Youngerman-Reynolds, supra, 325 U.S. 419, 424, codified at 29 CFR 778.108. However, as amicus CELC points out, a larger issue looms, if the State law arguments of Appellants are not accepted by this Court. Howis “regular rate” to be calculated when true bonuses are paid under Federal law, where the criteria for the bonus is not tied into all hours worked? (E.g. A true attendance bonus, having nothing to do with work during both regular and overtime hours, where an employee is paid, for 18 example, a flat sum for arriving at work on time every work day during a fiscal year.) Dart’s Amici argue that 29 CFR §778.209 dictates that when bonusesare fixed rate bonuses, the divisor used in determining regularrate, is always the combination of straight time hours and overtime hours. (CELC Brief Page 8; Mfr.’s Brief Pg.3). A proper reading of 29 CFR §778.209 does not support their position. 29 CFR §778.209 begins: “Where a bonus payment is considered a part of the regular rate at which an employee is employed, it must be included in computing his regular hourly rate of pay and overtime compensation.” Substituting in the definition of “regular rate”, for the words “regular rate”, the language takes on clearer meaning. “Where a bonus paymentis considered a part of the [remuneration an employee receives for a non-overtime week] at which an employee is employed, it must be included in computing his regular hourly rate of pay and overtime compensation”. 29 CFR §778.209 continues, “No difficulty arises in computing overtime compensation if the bonus covers only one weekly pay period. The amount of the bonus is merely added to the other earnings of the employee (except statutory exclusions) and the total divided by total hours worked.” This section does not specify whether the divisor is the “total hours 19 worked during the “non-overtime”part of the week consistent with 29 CFR §778. 108, or the total hours worked including overtime. As referenced, supra, the Supreme Court laid out the general principal underlying regular rate calculations in Walling v. Helmerich & Payne, supra 323 U.S. 37, 40, (1944) whereit stated, “While the words ‘regular rate’ are not defined in the Act, they obviously mean the hourly rate actually paid for the normal, non-overtime workweek.” A position echoed in Youngerman-Reynolds, supra, 325 U.S. 419, 424. Here that amount is 40 hours of hourly wages and $30 for work on a Saturday and Sunday in “non-overtime workweeks”. Moreover, as referenced above, several DOL regulations note the Supreme Court’s holding in Walling and other cases. E.g. 29 C.F.R. § 778.108. It is in this context that 29 C.F.R. § 778.209 mustbe read. “The proper scope of [a regulation] is derived not from readingit in isolation, but from a careful consideration of the complete regulatory scheme... against the backdropofits policies and objectives.” United States v. Stansell, 847 F.2d 609, 614 (9th Cir. 1988). Given the foregoing, any ambiguity in section 778.209 should be resolved to yield a single consistent understanding of the regular rate throughout the DOL FLSAregulations. Cf. Watson v. United States (2008) 552 U.S. 74, 81 (noting the “paradigm of a statute ‘as a symmetrical and coherent regulatory scheme, ... in which the operative words have a 20 consistent meaning throughout” ) (quoting Gustafson v. Alloyd Co., 513 U.S. 561, 569, 115 S.Ct. 1061, 131 L.Ed.2d 1 (1995)). The basic regulation and the Supreme Court unambiguously define the regular rate as “the hourly rate actually paid for the normal, non- overtime workweek.” See 29 C.F.R. § 778.108 which expressly cites Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. at 419. Therefore, the ambiguous term “total hours worked” in 29 C.F.R. § 778.209 necessarily denotes the total number of hours worked in the regular non- overtime workweek. Scott v. City ofNew York (S.D.N.Y. New York 2008) 592 F.Supp. 2d 475, 487 invoked the above analysis in a context, similar to the context here, where the bonusat issue was not dependent on the numberofstraight time and overtime hours worked during the period for which the bonus was paid. The court in Scott went on to point out, that its interpretation of 29 C.F.R. § 778.209 was also the most logical outcome. “It is counterintuitive for [the bonusat issue in Scott] - as a component of the regular rate - to decrease when an experienced employee volunteers or is ordered to work more hours than a regularly scheduled work period.” Jd, 592 F.Supp. 2d 475, 487. The same applies here. It is counterintuitive for the $15 per day bonus in this case, $1.87 per hour in an 8 hour day, “as a component of regular rate”, to decrease when an employee is scheduled to work overtime 21 hours. WI. CALIFORNIA LAW COMPELS APPLICATION OF SKYLINE HOMES, INC. V. DEPARTMENT OFINDUSTRIAL RELATIONS(1985) 165 CAL.APP 3rd 239 TO FIXED PAYMENT WAGES THAT ARE NOT DRIVEN BY THE TOTAL AMOUNTOF TIME WORKED. A. In An Action For Overtime Under California Law, When The Intent Of California Overtime Law Diverges From TheIntent of Federal Overtime Law, The Intent Of California Controls Dart’s Amici make two principal arguments as to California law. First, they argue that Federal law applies because California cases such as See ’s Candy v. Superior Court 210 CA4th 889, 903 (2012) , and Martinez v. Combs (2010) 49 Cal. 4" 35, 68 require that California court defer to Federal law in interpreting “regular rate” because the expression “regular rate” is not defined in California as applied to fixed amounts that are not large salaries that constitute all of an employee’s wages. (CELC Brief 21- 22; Mfr. Brief 4). On this issue, as will be demonstrated below, they are wrong. However, if they are correct on this point, reversal would still be mandated because, as the first 21 pages of this brief establish, Dart’s formula is not compatible with Federal law. The error in the analysis of Dart’s Amici on deference to Federal interpretations, is embeddedin casestheyrely on. 22 “We have previously cautioned against “confounding federal and state labor law’ (Ramirez v. Yosemite Water Co., supra, 20 Cal.4th 785 and explained ‘that where the languageor intent of state and federal labor laws substantially differ, reliance on federal regulations or interpretations to construe state regulations is misplaced” (ibid.; see also Morillion v. Royal Packing Co., supra, 22 Cal.4th 575, 588 Courts must give the IWC’s wage orders independenteffect in order to protect the commission’s delegated authority to enforce the state’s wage laws and, as appropriate, to provide greater protection to workers than federal law affords. (See Morillion v. Royal Packing Co., supra, 22 Cal.4th 575, 592; Ramirez v. Yosemite Water Co., supra, 20 Cal.4th 785, 798 We therefore apply the applicable wage order according to its terms, having in mind its distinct language, history and function in the context of state wage law.” Martinez, supra, 49 Cal. 4"" 35, 68 . (Emphasis added) Per the foregoing authority, substantial differences in “language or intent” can justify application of State law in a mannerinconsistent with Federal law. As this Court recognized in Ramirez, supra, 20 Cal.4th 785,at 795 and 798, one case where this principle has been applied, is Skyline, supra where the State’s meaning of the term “regular rate” diverged from the Federal meaning based on the “language” of the Wage Order providing for an 8 hour day standard, and the substantial difference in “intent” in the use of the words “regular rate” under Federal and California law. 23 In making the argument that Skyline’s analysis does not apply in the context of this case, Dart’s Amici did not heed the requirement that the Court is to take into account the “distinct language, history and function” of the words regular rate in “ the context of state wage law.” Dart’s Amici did not contradict the findings of “intent” in Skyline, nor contradict, the evolution of the meaning of “regular rate” in California through the 1957 A.G.’s Opinion, the presumption that the IWC knew of that opinion when, over the years it repeatedly reenacted “regular rate” language unaltered, nor Skyline’s interpretation and holding as to the meaning and intent of “regular rate” under California law, followed by further unaltered use of “regular rate” by the IWC and Legislature in later enactments. B. Skyline Revisited The “intent” lesson of Skyline does not turn on whether something is called a "flat rate bonus", or a "production bonus", but rather on whether the flat rate paymentis based onstraight time and overtime work hours put in, or remuneration paid without regard to the amount of overtime worked. As was emphasized in earlier briefs submitted on behalf of Appellant, under California law, given the “penalty” intent of the IWC, as stated in the 1980 Statement of The Basis of its Wage Orders, quoted in Industrial Welfare Commission v. Superior Court (1980) 27 Cal.3d 690,713, cited in Skyline, supra 165 CA 3d at 249-250, a flat sum payment 24 paid irrespective of work during both regular and overtime hours, cannot be used to discharge an employer’s obligation to pay premium wagerates for overtime work. In California, a “fluctuating work hours” method ofcalculating the regular rate of pay, where regular rate has the potential to fluctuate from week to week is prohibited in non-production bonus contexts when flat amounts are paid for non-overtime work. California law precludes an employer from treating any part of a flat sum that is not tied into total hours worked, as compensation for overtime work. In Skyline Homes, supra, the court concluded that, given the legislative intent of the IWC, California law did not countenancea practice that progressively reduced the employee’s regular rate of pay for the non- overtime hours whenever the employee worked overtime, and used that reduction to partially discharge the employer’s premium wage rate obligations for the overtime hours---the effect of Dart's practice here. Per Skyline, such a practice was contrary to California’s core polices of discouraging and penalizing overtime work. The Skyline court concluded that the federal “fluctuating workweek” method of calculation(i.e., dividing a weekly salary that meets the specific criteria of 29 CFR § 778.114 by total hours) reduces the employee’s regular hourly rate with each overtime hour worked, and is incompatible with the overtime requirements imposed by the IWC wage orders . Skyline, 25 supra 165 Cal.App.3d at 245-249. As pointed out clearly in Skyline, one of the major differences between federal and state law in this area is the requirement in California that the premium pay for overtime is to be a penalty which creates a disincentive to employers to impose overtime on employees. See Industrial Welfare Commission, supra (1980) 27 Cal.3d 690,713. Skyline points out that "regular rate" under California law requires the employer, not the employee, to bear the costs of the additional compensation due for overtime work hours, otherwise, employers would be encouraged to work employees longer hours. “ [A] method of computation of overtime that would encourage patterns of employment using 10 or 12 hour days would be inconsistent with [[WC Wage Orders].” Skyline, supral65 CA 3d at 254. Here that is exactly what Dart’s formula does. By reducing the regular rate with each extra hour worked,just like in Skyline, the employer is encouraged to implement patterns of employment that increase employee overtime. As the number of hours increased under the fluctuating workweek practice in Skyline, the divisor increased, and therefore, the “regular rate” decreased. With the fixed payments here, the same result is assured, it becomesless expensive for Dart, per hour, to work their employees longer hours as the hours add up. This system, condemned in Skyline, is 26 unquestionably a benefit to employers, lowering their costs per hour workedas overtime increases. Theregular rate on a $30 flat sum for a Saturday and Sunday, when an employee works 41 hours in a week is $0.71 per hour. ($30 divided by 41). If the same employee works 51 hours, the regular rate on the flat sum is reduced to $0.59,under Dart’s system. ($30 divided by 51). California law does not, per Skyline’s well reasoned, and time honored decision, countenance employers receiving the benefit realized by a diminishing “regular rate”. Per the result in Skyline, no part of the flat sum could serve to compensate the employee for the overtime hours and the flat sum constituted compensation solely for the non-overtime hours. Thus, the regular rate of pay was required to be calculated by dividing the flat sum solely by the maximum legal non-overtime hours of 40 per week. The employer was obligated to use additional funds exclusive of the flat sum to pay the premium wage rates due for the overtime hours. The court in Skyline cameto its conclusions independently, but also referenced a DLSE interpretation which, per Augustus v. ABM Security Services, Inc.,Cal. sth December 22, 2016, 2016 WL 7407328 could inform this court's decision making. In Skyline, the Court stated, inter alia, "The DLSE interpretation equates ‘regular rate’ with normal, and 27 therefore, overtime should not be used in the computation of ‘regular rate of pay.’ Under this interpretation, the employee’s weekly salary is considered straight time compensation for the employee’s ‘regular hours’, i.e., non-overtime hours of no more than 40 in a week.” Skyline, supra, 165 Cal.App.3d at 239. Skyline was subsequently followed in other Court of Appeal decisions, referenced in prior briefing, including Hernandez v. Mendoza (1988) 199 Cal.App.3d 72, Alcala v. Western Ag Enterprises (1986) 82 Cal.App.3d 546, and Lujan v. Southern California Gas Co. 96 CA 4" 1200 (2002). Each case held that a flat sum paymentfor fluctuating work hours could not serve to compensate the employee for overtime work but only constituted compensation for the non-overtime work hours. The employer was precluded from using part of the flat sum to discharge its premium wage rate obligations for overtime work.’ Additionally, post Skyline, the IWC reenacted overtime provisions, using the words “regular rate” without modification. Amici did not address the implications to the outcome of this case, of the A.G. Opinion interpreting “regular rate” in the face of pre-Skyline post -A.G. Opinion IWC reenactments. Nor did they address the implications of IWC * Amici CELC contended that post-Skyline precedent wasonly applied in contexts when employees wages were exclusively a weekly salary.(CELC Brief 14). This assertion is erroneous. See Lujan, supra 96 CA 4"1200. 28 reenactments of the words “regular rate” after Skyline.declared the purpose and meaning of California’s “regular rate” language. In implementing the specific intent of the IWC, an intent first officially discerned in 1957 (see 29 Ops.Cal.Atty.Gen. 168 (1957)), Skyline and its progeny have uniformly prohibited the “fluctuating work” practice that the Court of Appeal decision now seeks to legitimize and insinuate into California law. This court is well acquainted with the Skyline decision andin prior opinionshascited the Skyline substantive holding with approval. (See Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575, 592 Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785, 795 The Court of Appeal decision in this case upsets this settled state of the law and opens the door to questionable employment practices that have been unequivocally rejected. C. This Court’s Views Can Clearly Be Informed By The DLSE Dart’s Amici seemingly take the position that this Court must ignore the DLSE’s position. (CELC Brief 10-13), and they do not acknowledge how their position is at odds with the purpose of California’s wage laws. In Augustus v. ABM Security Services, Inc.,Cal. 5"__, December22, 2016, 2016 WL 7407328,this Court explained: “When construing the Labor Code and wage orders, we adopt the construction that best gives effect to the purpose of the Legislature and the IWC. (Brinker, supra, 53 Cal.4th at pp. 1026-1027; Murphy v. Kenneth 29 Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1103 Time and again, we have characterized that purpose as the protection of employees— particularly given the extent of legislative concern about working conditions, wages, and hours when the Legislature enacted key portions of the Labor Code. [cites omitted]. In furtherance of that purpose, weliberally construe the Labor Code and wage orders to favor the protection of employees. (E.g., Brinker, at pp. 1026-1027, Murphy, at p. 1103, [‘statutes governing conditions of employment are to be construed broadly”’].) In doing so, we accord the I[WC’s interpretations ‘considerable judicial deference’ (Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785, 801) and take accountof interpretations articulated by the Division of Labor Standards Enforcement (DLSE), the state agency that enforces wage orders, for guidance [cite omitted].” Augustus, supra 2016 WL 7407328 at 5-6 (emphasis added). Appellant agrees with Dart’s Amici, that the DLSE Manual provisions are not regulations. However, as this Court recognized in Peabody v. Time Warner (2014) 59 Cal.4" 662, fn 5, and Brinker v. Superior Court, (2012) 53 Cal.4™ 1004, 1029, fn. 11, because the DLSEis the agency empowered to enforce California’s labor laws, including wage orders, the opinions of the DLSE constitute a body of experience and informedjudgmentto which courts andlitigants may resort for guidance. D. Dart’s Amici Misapprehend Labor Code§ 515 (d) (1) 30 In their Amicus Brief, CELC argues that Labor Code § 515(d)(1) precludes application of Skyline to flat sums that qualify as salaries but are not weekly salaries (CELC Brief 16-18). This argumentis not well taken. The Legislature did not scrap the rationale and rulings of Skyline. A “salary” is defined much broader than a “weekly amount” that comprises all of an employee’s wages for a week. Amici CELC acknowledges the following definition, then fails to apprehendits implicationsin this case: 29 CFR § 541.602 provides that an “employee will be considered to be paid on a ‘salary basis’ within the meaning of these regulations if the employee regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or a part of the employee’s compensation, which amount is not subject to reduction because variations in the quality or quantity of work performed.” (Emphasis added) Negri v. Koning & Assocs. (2013) 216 CA4th 392, 397, and CELC Brief 14-15. This matter involves a “salary” paid to those workers who work weekends, “a predetermined amountconstituting...a part of the employee’s compensation that is not subject to reduction because of variations in the quantity and quality of work.”--$15 per weekend day whether the employees who are scheduled for weekend shifts work 40, 50, or any other number of hours during the 7 day week. Critically forgotten in CELC’s 31 analysis of Labor Code 515 (d) is that a salary can be one of a numberof elements of remuneration paid to an employee during a week. In 2012, Labor Code § 515 was amendedto add § 515 (d) (2) to § 551 (d) (1) not focusing, as (d) (1) did, on a “weekly salary”. It is applicable here, where the salary at issue is not a weekly salary, but nonetheless, a salary, “a predetermined amountconstituting all or a part of the employee’s compensation, which amount is not subject to reduction because of variations in the quality or quantity of work performed. Labor Code § 511(d) (2) applies directly to Dart’s payment program: “Payment of a fixed salary to a nonexempt employee shall be deemed to provide compensation only for the employee’s regular, non- overtime hours, notwithstanding any private agreement to the contrary.” (Emphasis added). Here, there is no question that the Dart employees that are the subject of this action, those scheduled for weekend work, are “non- exempt”, and there is no question that they are paid a “salary” as part of their compensation. Negri, supra, 216 CA4th at 397, and 29 CFR § 541.602. The fact that the salary is only $15 or $30 during the weeksit is paid is inconsequential--- per Labor Code § 515 (d) (2), no part of the salary can be used to fund overtime. Even if Labor Code § 515 (d) (2) was not enacted, § 515 (d) (1) does 32 not evidence legislative intent to change the meaning of California law as declared in Skyline. Skyline’s findings were based on the differences in intent in enactment of overtime laws by the IWC generally, not just for weekly salaried employees, and the DOL enactment allowing a “fluctuating workweek” approach for employees paid exclusively on a salary basis. Unquestionably, the entire basis of the Skyline decision would apply to any flat amount paid to an employee without regard to total hours worked, whethercalled a “weekly salary”, a “premium payment”, or a “bonus”. The principle that such payments could not lead to diminishing “regular rates” as an employee’s overtime increases was, and remains the essence of the Skyline case, and it has stood the test of time. Dart, norits Amici, made a logical argument as to why the teachings of Skyline would only apply to fixed amounts that are 100% of wages, but not fixed amounts that are a lesser percentage of weekly wages. Passage of Labor Code § 515 (d) (1) did not dilute the rationale of Skyline, nor the applicability of its no diminishing regular rate holding to a myriad of fixed wage types. Although Labor Code § 515 (d) (1) presumes a context where the only wages an employee earns in a weekis a salary, using the expressions “full time salaried employee” and “1/40™ of the employee’s weekly salary”, the impact of that focus by the Legislature is not, as Amici assert, a Legislative limitation of the Skyline decision to the particular fixed wage 33 context that the Skyline case presented. If § 515 (d) (1) contemplated a Skyline factual context, it did not do so to the exclusion of otherfixed rate contexts. The passage of Labor Code 515(d) (2) reinforces this fact. Dart’s Amici clearly read too much into the enactment of Labor Code § 515 (d) (1) im asserting an intent of the Legislature’s to allow “fluctuating workweek” to apply except when the only wage an employee receives is a weeklysalary. Historical context is important. Labor Code § 515(d)(1) was passed as part of AB 60, which restored the “8 hour day” provisions of California law after a renegade IWCeliminated them. When the IWC, pre-passage of AB 60, eliminated the 8 hour day, it, at least temporarily, effectively eliminated the 8 hour day penalty rationale set forth in Skyline, and in the 1980 IWC Statement of Basis for California overtime laws referenced in Skyline. The renegade IWC,for a short time, embraced Federal law. When AB 60 was enacted, a newly constituted IWC had not yet enacted new regulations bringing back, as part of Administrative legislation, the 8 hour day. Since Skyline’s analysis was tied completely to the “regular rate” language in IWC Orders and an IWC Statement of Basis for Wage Orders that existed when Skyline was decided, there was a gap when AB 60 was enacted. To fill that gap, the Legislature codified the result of Skyline, and thereby fended off any arguments that Skyline cannot apply because ofits origins in Wage Orders that had been repudiated. After AB 60 was enacted, 34 the reconstituted IWC went back to the “regular rate” language that had existed for decades, thereby reviving Skyline andits progeny. Passage of Labor Code §515(d) (1) reflected the effort of a cautious Legislature intent to preserve the Skyline result in a Skyline factual context, until the IWC once again returned to the history and language upon which Skyline was decided. It was not, as Dart and its Amici would assert, to license employers to come up with “regular rate” schemes wherein the more overtime an employee works, the less an employer has to pay per hour of overtime. AB 60 was enacted to restore employee nights, and revive a public policy that had been hijacked, not to eliminate the rights or policy. IV. THE VARIETIES OF BONUS SCHEMES REFERENCED BY DART’S AMICI ARE NOT BEFORE THIS COURT. This case is focused on fixed wage payments that are paid to employees no matter the number of non-overtime and overtime hours worked, whether those payments are premium wages, non-discretionary bonuses, or weekly, daily, monthly or yearly salaries paid to non-exempt employees. The CELC Bnief references a number of wage payment practices such as production bonuses, safety bonuses, and profit sharing bonuses, * Reports during that era suggested that Governor Wilson stacked the IWC with opponents of the 8 hour day in order to eliminate it, and when Governor Davis replaced Governor Wilson, AB 60 codified and thereby “restored” the 8 hour day to avoid future incursions by political appointees. 35 where the criteria for the bonusesare tied into all hours worked—overtime and non-overtime hours worked. (CELC Brief 27-28). Those types of bonusesare not before this Court. An example elucidates the difference between those types of wages, and those at issue here. A different “regular rate” formula might apply in a situation where a team of 20 workers received, at the end of the year $2,000 each for a perfect safety record based on safe performance during all hours, non-overtime and overtime hours, and received a production bonus of $2,000 each for producing 10,000 widgets during their overtime and non- over time hours. Deciding how to calculate “regular rate” in the context of those possibilities was not before the Court here. A different analysis might apply. See DLSEat 49.2.4. Since those types of wages were not properly before this Court, nor briefed in the lower Courts, prudence dictates that the focus here should be on the pending issue. How should “regular rate” be calculated when employees receive fixed wage payments that are not tied into the combined number of non-overtime and overtime hours worked? V. THE DUE PROCESS AND MASSIVE LIABILITY CONTENTIONS OF AMICI ARE NOT WELL TAKEN CELC and Manufacturers both make due process arguments (CELC Brief at 33-37; Mfr. Brief 14-20). These arguments are fatally flawed. There is no question that the United States Department of Labor Regulations, referenced, supra, clearly articulate how Dart should have 36 calculated overtime, therefore the public was on notice of the law’s requirements.If, the law is as clear as Amici assert, in connection with the use of Federal to interpret State Law, the interpretation of “regular rate” and “salary” in the CFR’s gave employers, statewide, notice of how they should calculate “regular rate" in weekend premium contexts. The CFR's advised employers that premium payments like those made by Dart are not “bonuses”, they advised employers who pay Saturday and Sunday premiums, exactly how those premiums are to be factored into the “reoular rate”, and they spelled out how to calculate “regular rate”, citing Supreme Court cases. The Federal regulations clearly defined “salary”. Whenthat definition of salary is applied to California Labor Code 515(d) (2), there can be no doubtas to how Dart should have paid its employees. Additionally, the IWC, Skyline and Federal Court cases dating back to the 1940’s, cited supra, made clear for decades, that dividing fixed amounts that are paid for non-overtime work by both overtime and non- overtime hours, is not the way to ascertain “regular rate" under either California or Federal law. The prospect of massive liability asserted by CELC is preposterous. There has been no evidence of massive disregard of the clear rule of law that is applicable here. 37 VI. CONCLUSION The decision of the Court of Appeal in this matter was clearly wrongly decided andit should be reversed. Absentreversal, mischief will ensue that will undermine California's longstanding labor policies., giving employers the freedom to emphasize "fixed rate wages" in compensation schemes, that will reduce overtime paymentobligations. "Regular Rate" in California has definitely not contemplated, since at least the 1950's, through the repeated enactments of the expression by the IWC before and after the watershed case of Skyline Homes. The position that Dart's Amici has taken should be addressed by legislative bodies, not the courts. Dated: January 17, 2017 Respectfully Sdbmifted, / ENNIS F. MOSS, Attorney for Plaintiff, Appellant Hector Alvarado 38 e e RULE 14 CERTIFICATE OF COMPLIANCE Counsel of Record hereby certifies that pursuant to Rule 8.204(c)(1) or 8.260(b)(1) of the California Rules of Court, the enclosed brief of Appellant is produced using 13-point Roman type including footnotes and contains approximately 8,884 words, which is less than the total words permitted by the rules of court. Counsel relies on the word count of the computer program usedto preparethis brief. Dated: January 17, 2017 Dennis F. Moss 39 PROOF OF SERVICE I, the undersigned, declare: 1. That declarant is and was, at all times herein mentioned, a citizen of the United States and a resident of the County of Los Angeles, over the age of 18 years, and not a party to or interested party in the within action; that declarant’s business address is 15300 Ventura Boulevard, Suite 207, Sherman Oaks, California 91403. 2. That on January 17, 2017 declarant served the APPELLANT'S REPLY BRIEFby depositing a true copy thereof in a United States mail box at Sherman Oaks, California in a sealed envelope with postage fully prepaid and addressed to the parties listed on the attachedservicelist. 3. That there is regular communication by mail between the place of mailing and the places so addressed. I declare under penalty of perjury that the foregoing is true and correct. Executed this 17 January 2017 at Sherman Oaks, California. Lea Garbe 40 SERVICE LIST Clerk, California Court of Appeal Fourth District Court of Appeal Division 2 3389 Twelfth Street Riverside, CA 92501 Attorney General, State of California 1300 "I" Street Sacramento, CA 95814-2919 District Attorney, County of Riverside 2960 OrangeStreet Riverside, CA 92501 Attorneysfor California Employment Lawyers Association: Richard Edward Quintilone Alvin B. Lindsay Quintilone & Associates 22974 El Toro Road, Suite 100 Lake Forest, CA 92630 Attorneyfor Respondents and Defendants: Howard B. Golds, Esq. Elizabeth A. James, Esq. BEST BEST & KRIEGER LLP 3390 University Avenue, 5th Floor Riverside, CA 92502 Attorneysfor National Association ofManufacturers: MichaelJ. Lotito LITTLER MENSELSON,P.C. 333 BushStreet, 34th Floor San Francisco, CA 94104 Elizabeth Parry LITTLER MENDENSON,P.C. 1255 Treat Boulevard, Suite 600 Walnut Creek, CA 94597 Attorneysfor California Employment Law Council and Employers Group: Zachary Perry Hutton Paul W. Cane,Jr. PAUL HASTINGS, LLP 55 2ndStreet, 24th Floor San Francisco, CA 94105 41