ties exchanges and associations at the direction of Congress and the Commission can preempt state laws in certain circumstances." However, the adopting release falls short of concluding that preemption is a certainty: "Accordingly, issuers should be able to assert that state laws that would prevent or impede recovery are preempted, although the outcomes for any particular state law would depend on the details of that provision." Issuers can always assert, the money question, of course, is will they prevail?The SEC was able to cite only one case in support of its claim that issuers should be able to assert preemption - Credit Suisse First Bos. Corp. v. Grunwald, 400 F.3d 1119, 1128 (9th Cir. 2005). However, that case did not involve listing standards nor did it involve a national securities exchange. The question in that case was whether California's ethics standards for neutral arbitrators apply to arbitrations conducted in California by the National Association of Securities Dealers. Section 221 of the California Labor Code prohibits an employer from collecting or receiving "from an employee any part of wages theretofore paid by said employer to said employee". In the adopting release, the SEC points out Section 224 "provides that Section 221 'shall in no way make it unlawful for an employer to withhold or divert any portion of an employee’s wages when the employer is required or empowered so to do by state or Federal law.'" Listing rules do not, and cannot, "empower" an employer to take action nor do they require an employer to take action. Listing rules do not "empower" employers because they are merely conditions to continued listing on the exchange. They do not require an employer to take action because a decision to list securities on an exchange is voluntary. Although there may be consequences, an employer can always decide to delist without violating the law. Because Congress has not mandated exchange listing, California's law presents no obstacle to federal law.[View source.]

Seyfarth Synopsis: California Labor Code § 221 states it is “unlawful for any employer to collect or receive from an employee any part of wages … paid … to said employee.” In other words, employers cannot just take money back to correct an overpayment of wages.

issions or other activities related to the above.While many companies are adopting or modifying their existing clawback policies in a manner intended to meet the proposed Dodd-Frank clawback rules, some companies also go beyond these minimum requirements and include additional clawback triggers in their clawback policies and forfeiture provisions, such as detrimental behavior and violation of restrictive covenants.Big investment funds (e.g., BlackRock and CalPERS) are increasingly encouraging companies to expand these clawback policies to provide discretion covering management misconduct that results in significant reputational harm or adverse publicity unrelated to a financial restatement and executives who supervise employees who engaged in misconduct.Practice Note:It remains to be seen the extent to which clawbacks of already paid cash or stock are enforceable, particularly in California, which has a strong public policy favoring the protection of employees’ wages. In this respect, California Labor Code section 221 states that employers may not collect or receive any part of wages previously paid by the employer to an employee. California takes an expansive view of the term “wages”, which includes all amounts for labor performed by employees of every description, including bonuses and incentive compensation, but not stock options.

In addition to myself, several commenters pointed out that the proposed rules make no allowance for state law. I noted a potential conflict with California Labor Code Section 221. Mark Borgesat Compensia, Inc. and Cydney Posner at Cooley LLP noted a similar potential problem under the New York Labor Code (“No employer shall make any charge against wages, or require an employee to make any payment by separate transaction unless such charge or payment is permitted as a deduction from wages under the provisions of subdivision one of this section.”).

The Ninth Circuit’s holding that SRO rules have the force of law is likely to arise again when the exchanges adopt compensation clawback policies as required by the Dodd-Frank Act. Those policies may run afoul of California Labor Code Section 221 which provides “It shall be unlawful for any employer to collect or receive from an employee any part of wages theretofore paid by said employer to said employee.”NYT Covers Nuntii Latini I was pleased to see this article in The New York Times about Latin language news broadcasts by the Finnish state radio station.

The employer argued that it satisfied California’s minimum wage requirement because, dividing the employees’ compensation by the total number of hours worked (both productive and nonproductive), the employees still "averaged" more than minimum wage for all hours worked. Citing to California Labor Code sections 221, 222 and 223 (none of which concern minimum wages), theArmentacourt held that the employer could not satisfy minimum wage obligations by "averaging," but instead was required to pay minimum wage "for each hour worked." DTLA argued thatArmentashould not apply because its holding was specific tohourlyemployees who, the trial court found, were not paid minimum wage for allhoursworked.

[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.

4, 12 N.J. Admin. Code § 55-2.1(iv); 40 Okla. Stat. § 165.2; Okla. Admin. Code § 380:30-1-24See Va. Code Ann. § 40.1-29; Virginia Department of Labor and Industry, Field Operations Manual, Ch. 10., pp. 45-48.5See, e.g., Cal. Lab. Code §§ 221, 224; California Department of Labor Standards Enforcement Opinion Letter 1999.09.22-16SeeNew York State Department of Labor Opinion Letter RO-09-01527Duncan v. Office Depot, 973 F. Supp. 1171 (D. Or. 1997); Oregon Technical Assistance for Employers, Overpayment of Employee Wages FAQ

The Court of Appeal reversed the dismissal of plaintiffs’ claim for violation of California Business & Professions Code § 17200 (predicated upon a violation of the federal Fair Labor Standards Act), holding that the state law claim was not preempted by the federal statute. Similarly, the Court reversed the dismissal of plaintiffs’ overtime claim, finding material issues of fact as to whether they were subject to the commission exemption, and the chargeback claim on the ground the deductions may have been unlawful pursuant to California Labor Code § 221. Cf. Jones v. Gregory, 137 Cal. App. 4th 798 (2006) (company’s CEO was not personally liable for unpaid wages and vacation benefits).