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Cuadra v. Millan

March 30, 1998


Ct. App. 1/4 Nos. A073632, A075040 San Francisco County Super. Ct. No. 972736

Court: Superior County: San Francisco Judge: William J. Cahill

The opinion of the court was delivered by: Mosk, J.

In this action for writ of mandate three wage claimants (hereafter plaintiffs) challenged the policy of defendant state Labor Commissioner (hereafter commissioner) of calculating back pay from the date the wage claims are heard rather than the date they are filed. *fn1 The trial court found the policy to be an abuse of discretion and ordered the commissioner to calculate back pay from the filing date of the claim. The commissioner appealed, and the Court of Appeal affirmed the judgment. As will appear, we conclude that the Court of Appeal was correct to do so and we therefore affirm its judgment.


The wage rights of an employee may be provided for in the employment contract between the employee and the employer, whether oral or written, including a collective bargaining agreement. The employee's wage rights are also closely regulated by statute: the Labor Code prescribes such matters as the time and manner of paying wages, minimum wage requirements, and mandatory overtime pay; for certain industries and occupations, minimum wages and overtime pay are also prescribed by administrative regulations known as wage orders, issued by the Industrial Welfare Commission pursuant to statutory authority (see Industrial Welfare Com. v. Superior Court (1980) 27 Cal.3d 690, 700-703). *fn2

If an employer fails to pay wages in the amount, time or manner required by contract or by statute, the employee has two principal options. The employee may seek judicial relief by filing an ordinary civil action against the employer for breach of contract and/or for the wages prescribed by statute. (§§ 218, 1194.) Or the employee may seek administrative relief by filing a wage claim with the commissioner pursuant to a special statutory scheme codified in sections 98 to 98.8. The latter option was added by legislation enacted in 1976 (Stats. 1976, ch. 1190, §§ 4-11, pp. 5368-5371) and is commonly known as the "Berman" hearing procedure after the name of its sponsor. *fn3

The Berman hearing procedure is designed to provide a speedy, informal, and affordable method of resolving wage claims. *fn4 In brief, in a Berman proceeding the commissioner may hold a hearing on the wage claim; the pleadings are limited to a complaint and an answer; the answer may set forth the evidence that the defendant intends to rely on, and there is no discovery process; if the defendant fails to appear or answer no default is taken and the commissioner proceeds to decide the claim, but may grant a new hearing on request. (§ 98.) The commissioner must decide the claim within 15 days after the hearing. (§ 98.1.) Within 10 days after notice of the decision any party may appeal to the appropriate court, where the claim will be heard de novo; if no appeal is taken, the commissioner's decision will be deemed a judgment, final immediately and enforceable as a judgment in a civil action. (§ 98.2.) (See generally 1 Wilcox, Cal. Employment Law (1997) §§ 5.10 to 5.19, pp. 5-16.2 to 5-52 (hereafter Wilcox).)

We are concerned here with questions of limitation. The general statutes of limitations set out in the Code of Civil Procedure govern the time in which an employee may commence a civil action for unpaid wages. (Code Civ. Proc., § 312.) Thus if the action is based on a written contract of employment it must be commenced within four years after the cause of action has accrued. (Id., § 337, par. 1.) If based on an oral contract, within two years after accrual. (Id., § 339, par. 1.) If based on a wage liability created by statute, within three years after accrual. (Id., § 338, subd. (a).)

A cause of action for unpaid wages accrues when the wages first become legally due, i.e., on the regular payday for the pay period in which the employee performed the work; when the work is continuing and the employee is therefore paid periodically (e.g., weekly or monthly) a separate and distinct cause of action accrues on each payday, triggering on each occasion the running of a new period of limitations. (Jones v. Tracy School Dist. (1980) 27 Cal.3d 99, 105-106.) And for statute of limitations purposes an action for unpaid wages is deemed to have commenced, like all civil actions, on the date on which the employee files the complaint. (Code Civ. Proc., § 350.)

It follows that such an action is timely as to all paydays falling within the relevant limitations period. For the same reason, in calculating the amount of unpaid wages due in such an action the court will count back from the filing of the complaint to the beginning of the limitations period-e.g., for three years on a statutory liability-and will award all unpaid wages earned during that period. (Jones v. Tracy School Dist., supra, 27 Cal.3d 99, 105; Calvao v. Superior Court (1988) 201 Cal.App.3d 921, 922-923.)

The calculation is much different in Berman proceedings. The statute creating those proceedings (§ 98) is silent as to time limitations: it does not provide (1) that such proceedings must be commenced within certain limitations periods, and it therefore does not specify either (2) the lengths of those periods or (3) the event that triggers them or (4) the date on which the proceedings are deemed to have commenced. The commissioner has nevertheless provided for all four of those factors as policy matters. For the first three the commissioner has adopted the procedures that govern civil actions for unpaid wages. Thus (1) the commissioner requires that administrative wage claims under section 98 be filed within certain limitations periods; (2) he specifies the lengths of those periods as four years for a claim on a written contract, two years for a claim on an oral contract, and three years for a claim on a statutory liability; and (3) he deems that all such periods are triggered when the wages first become legally due. But for the fourth factor-the date on which the proceedings are deemed to have commenced-the commissioner has not adopted the procedure that governs civil actions: instead, his policy provides in effect that for statute of limitations purposes a wage claim proceeding commences not when the claim is filed but when it is heard. The result is that in calculating the amount of unpaid wages due in such a proceeding the commissioner will count back from the hearing date, rather than the filing date, to the beginning of the limitations period.

There would be no significant difference in outcome, of course, if there were no appreciable delay between the filing date and the hearing date in Berman proceedings. But this is not the case: the time consumed by the various procedural steps that are routinely taken between the filing date and the hearing date typically adds up to four to six months.

The code itself contemplates a period of up to 120 days between the filing date and the hearing date. It provides that "Within 30 days of filing of the complaint, the Labor Commissioner shall notify the parties as to whether a hearing will be held . . . . If the determination is made by the Labor Commissioner to hold a hearing, the hearing shall be held within 90 days of the date of that determination." (§ 98, subd. (a).)

The code also vests the commissioner with discretion to "postpone or grant additional time before setting a hearing if the Labor Commissioner finds that it would lead to an equitable and just resolution of the dispute." (§ 98, subd. (a).) The commissioner has explained his understanding of the quoted statutory exception as follows: "Obvious examples of such a situation are when one or both of the parties request additional time, when service on the defendant has not been effected, when settlement negotiations are taking place (with or without the participation of the deputy [labor commissioner]), or when the issues are particularly complex or the documentation voluminous. I'm sure there are other examples where postponement will be appropriate." *fn5

In addition, the commissioner has adopted, as matters of policy, certain procedures that have the effect of lengthening still further the prehearing period; they do so by delaying the date on which the commissioner deems that the complaint process referred to in the statute (§ 98) has been initiated.

To begin with, when the employee first makes his claim for administrative relief the DLSE causes him to fill out and file a form entitled "Initial Report or Claim" (DLSE 1). But the commissioner does not treat the filing of a form DLSE 1 as initiating the complaint process referred to in the statute. Rather, "That form assigns the employee's claim to the Labor Commissioner and allows an initial screening of the claim. Formal proceedings before the Labor Commissioner are subsequently initiated by completion and filing of the DLSE `Complaint' form (DLSE 530) . . . ." (Wilcox, supra, § 5.10, p. 5-16.2, italics added.)

Before the latter form is filed, however, the DLSE ordinarily holds a settlement conference on the initial claim, requiring all parties to appear with their evidence. The commissioner's policy is to hold the settlement conference within 30 days after sending the parties notice thereof, but in practice the delay may be greater. (Wilcox, supra, § 5.12, p. 5-24.) *fn6

If a settlement is not reached at the conference, the DLSE prepares and causes the employee to execute and file the above mentioned "Complaint" form (DLSE 530). The commissioner treats this form as finally initiating the complaint process referred to in the statute. As noted above, the code requires that "Within 30 days of filing of the complaint, the Labor Commissioner shall notify the parties as to whether a hearing will be held" (§ 98, subd. (a)); and although the code draws no such distinction, "According to its Operations and Procedures Manual, the DLSE treats the date of the execution of the `complaint' form (DLSE 530) and not the date of the filing of the claim (DLSE 1) as the significant date for purposes of the 30-day time limit for action set forth in Labor Code section 98(a)." (Wilcox, supra, § 5.10, p. 5-17.)

Summing up the foregoing cumulative periods of 30, 30, and 90 days, the commissioner acknowledged in his cited memorandum (fn. , ante) that "In most cases where the conference procedure is utilized, hearings should be held within 150 days of the date the claim was filed unless additional time is granted" under the above stated statutory exception. *fn7

The result of these prehearing delays may be illustrated by a hypothetical example. Worker A and Worker B do the same job for the same employer for five years, and receive the same pay. In each pay period, however, their pay falls below the legal minimum wage by the same amount. They are laid off on the same day. Worker A promptly files a civil action for his unpaid wages. Regardless of when the matter comes to trial, the court will award Worker A his back pay for the full 36 months of the relevant limitations period (Code Civ. Proc., § 338, subd. (a)). Instead of filing a civil action, Worker B equally promptly files an administrative wage claim under the Berman hearing procedure. Using the commissioner's own figures, we will assume the hearing is held 150 days or 5 months later. Under the policy challenged in this case the commissioner will award Worker B only 31 months of back pay because he will count back for 36 months not from the filing date of the claim but from the date it is heard, which is 5 months after Worker B was laid off. It follows that Worker B will receive almost 14 percent less back wages than identically situated Worker A simply because he invoked the Berman hearing procedure rather than filing a civil action. *fn8

Procedural Facts

In separate proceedings the three plaintiffs herein filed claims with the commissioner under section 98 to recover unpaid wages from their former employers, basing their claims on violations of the statutory minimum wage and/or overtime requirements. They sought back pay for the full three-year limitations period preceding the filing dates of their claims, but were informed by DLSE that pursuant to the policy of the commissioner their back pay would be calculated instead from the dates of their respective Berman hearings. As a result, plaintiff Cuadra was awarded back pay for three months less than she would have received if her recovery had been calculated from the filing date of her claim; plaintiff Roncancio was awarded back pay for five months less than he would have received; and as of the filing of the present action, plaintiff Velasquez's hearing had been delayed several times and had not been rescheduled, but he had been informed that the commissioner's policy would cause him to lose six to seven months of back pay if it is applied to him.

Plaintiffs thereupon jointly filed the present petition in superior court for a writ of mandate directing the commissioner to rescind the foregoing policy and to adopt a new policy of calculating back pay under section 98 from the date ...

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