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Carlos Arechiga v. Dolores Press

February 7, 2011


(Los Angeles County Super. Ct. No. BC380124) APPEAL from a judgment of the Superior Court of Los Angeles County. Aurelio Munoz, Judge. Affirmed.

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


Carlos Arechiga appeals from the court's judgment dismissing his complaint seeking payment of additional overtime wages from his former employer, Dolores Press, Inc. We affirm.


Appellant Carlos Arechiga began working as a janitor for respondent Dolores Press, Inc. ("Employer"), in January 2000. Arechiga and Employer orally agreed he would work eleven hours a day, six days a week, for a total of 66 hours per week. Because Arechiga was a nonexempt employee under labor law, they agreed his work-schedule meant he earned 26 hours of overtime pay each week. By agreement, Employer paid Arechiga $880 a week.

In October 2003, Arechiga and Employer signed a written "Employment Separation Agreement," followed that same day by a written "Employment Agreement" which they both signed. Apparently, Employer directed that they enter into a written agreement in order to institute privacy safeguards for members of a religious body affiliated with Employer. Other than adding privacy provisions, the written employment agreement did not change the terms of Arechiga's employment. The written agreement stated "Employee shall be paid a salary/wage of $880.00"; the word "salary" was circled, which we indicate with a box, and the dollar amount was filled in by hand.

Three years later in September 2006, Employer terminated Arechiga. In November 2007, Arechiga filed a complaint alleging multiple causes of action against Employer. Except for a cause of action for unfair business practices (Bus. & Prof. Code, § 17200 et seq.), Arechiga eventually dismissed, or the court summarily adjudicated and dismissed, all of Arechiga's causes of action, leaving for trial only his unfair business practice claim.*fn1 Arechiga predicated that claim on his contention that Labor Code section 515 governed his employment agreement. Citing subdivision (d) of that statute, Arechiga asserted the court must find that his salary of $880 compensated him only for a regular 40-hour work-week at an imputed base pay of $22 per hour ($880 40 hours), and did not include his regularly scheduled 26 hours of overtime. Subdivision (d) states:

"For the purpose of computing the overtime rate of compensation required to be paid to a nonexempt full-time salaried employee, the employee's regular hourly rate shall be 1/40th of the employee's weekly salary." (Lab. Code, § 515, subd. (d).)

Thus, according to Arechiga, Employer owed him for the three years at issue in the complaint overtime pay equal to 1.5 times his hourly base pay for his regularly scheduled 26 hours of weekly overtime.*fn2 (Lab. Code, § 511 [overtime pay shall be 1.5 times base pay].) Employer disagreed. It asserted that California's "explicit mutual wage agreement" doctrine applied. Under that doctrine, an employer and employee may lawfully agree to a guaranteed fixed salary so long as the employer pays the employee for all overtime at least one and one-half times the employee's basic rate.

The court entered judgment for Employer. The court found that an explicit mutual wage agreement existed between Arechiga and Employer under which Arechiga's fixed salary of $880 lawfully compensated him for both his regular and overtime work based on a regular hourly wage of $11.14 and an hourly overtime wage of $16.71. In finding for Employer, the court rejected Arechiga's assertion that Labor Code section 515, subdivision (d), outlawed explicit mutual wage agreements. This appeal followed.


1. Substantial Evidence of Explicit Mutual Wage Agreement

The trial court found substantial evidence that Arechiga and Employer had entered into an explicit mutual wage agreement. (See Espinoza v. Classic Pizza, Inc. (2003) 114 Cal.App.4th 968, 974; Ghory v. Al-Lahham (1989) 209 Cal.App.3d 1487, 1491.) An explicit mutual wage agreement "requires an agreement which specifies the basic hourly rate of compensation upon which the guaranteed salary is based before the work is performed, and the employee must be paid at least one and one-half times the agreed-upon rate for hours in excess of forty." (Ghory at p. 1491.) The trial court explained in its statement of decision:

"Under California law, when there is an explicit mutual wage agreement between the parties, even a fixed salary like the one [Arechiga] received serves to adequately compensate him for both overtime and regular pay. . . . In order to establish an explicit, mutual wage agreement, [Employer] was required to show that the parties entered into an agreement that specified (1) the days that [Arechiga] would work each week; (2) the number of hours [Arechiga] would work each day; (3) that [Arechiga] would be paid a guaranteed salary of a specific amount; (4) that [Arechiga] was told the basic hourly rate upon which his salary was based; (5) that [Arechiga] was told his salary covered both his regular and overtime hours; and (6) the agreement must have been reached before the work was performed. [Employer] has met its burden. [¶] The first three elements of the explicit, mutual wage agreement were stipulated to by the parties in their joint trial statement and read into the record as evidence. It was stipulated that an oral agreement was reached between the parties, wherein [Arechiga] would work Monday through Saturday, 11 hours a day, and for these hours he would receive a guaranteed salary of $880 per week. [¶] The last three elements were overwhelmingly established through ...

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