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Saul Deleon v. Verizon Wireless

July 10, 2012

SAUL DELEON, PLAINTIFF AND APPELLANT,
v.
VERIZON WIRELESS, LLC, DEFENDANT AND RESPONDENT.



APPEAL from a judgment of the Superior Court of Los Angeles County, William F. Highberger, Judge. Affirmed. (Los Angeles County Super. Ct. No. BC328769)

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

CERTIFIED FOR PUBLICATION

Plaintiff Saul Deleon, on behalf of himself and other aggrieved employees, appeals from the judgment following the trial court's order granting summary judgment in favor of defendant AirTouch Cellular doing business as Verizon Wireless (Verizon Wireless). Deleon was a former retail sales representative for Verizon Wireless and filed a complaint seeking civil penalties under the Labor Code Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698)*fn1 for a violation of section 223,*fn2 which prohibits the secret underpayment of wages. Deleon's compensation plan included commission payments, which Verizon Wireless could recover, or charge back against future commissions, if certain conditions were not met. We must determine whether the chargeback provision violates section 223 by "secretly pay[ing] a lower wage while purporting to pay the wage designated by statute or by contract." Based upon the undisputed facts, we conclude the commission payments were advances, not wages, and the chargeback provision did not violate the Labor Code because Verizon Wireless may legally advance commission payments to its retail sales representatives before completion of all conditions for payment, and charge back any excess advance over commissions earned against future advances should the conditions not be satisfied. Thus, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

1. Undisputed Facts

Deleon worked as a retail sales representative for Verizon Wireless. His compensation was based upon the 2004 and 2005 Sales Compensation Plans for Retail and Telesales Channels (unless specified, compensation plans).

a. The Compensation Plans

Retail sales representatives received an hourly wage plus monthly commissions as described in the compensation plans. Our focus is on the provisions in the compensation plans addressing commissions, chargebacks, and incentive payments.

(1) Commission Earned at the End of the Chargeback Period

The compensation plans explain that commissions on the sale of cell phone service plans are paid in advance, but not earned until the expiration of a chargeback period during which the customer may cancel the service. The 2004 compensation plan stated: "Customer retention is an important element of earning any commission; therefore your commission for sales of service is not earned until after the expiration of the applicable chargeback period. However, as a benefit to employees so that they will have use of the money before it is actually earned, Verizon Wireless has a policy of advancing commission dollars, if certain requirements are met, for the sale of commission-eligible services." The 2005 compensation plan stated: "Your commission . . . is not earned and the sale does not 'vest' until . . . your customer satisfies his [or her] contract during the applicable chargeback period."

(2) Chargeback of Commission Advance

The compensation plans include a section entitled, "Chargeback of Commission Advance." The 2004 compensation plan stated: "In the event a customer disconnects service during the commission chargeback period, your commission is subject to adjustment by the original amount advanced for the sale. Your commission advance will be adjusted to account for disconnects within the chargeback period . . . ." The 2005 compensation plan stated if a customer disconnects service during the chargeback period, "the sale is not considered vested[.]"

The chargeback provision did not affect base pay. The compensation plans explained that if a customer disconnected service during the chargeback period, the employee's future commission advances would be reduced by the original amount advanced for the sale.

The chargeback periods under the compensation plans were: (1) 365 days for postpaid price plans, (2) 150 days for prepaid price plans, and (3) 120 days for enhanced services.

Verizon Wireless generated monthly commission statements for retail sales representatives. The commission statements used the term "commission advance," and, when appropriate, also contained chargeback information.

(3) Incentive Allowance Payment

The compensation plans also had an "incentive allowance" for new hires. During the incentive allowance period, retail sales representatives were "advanced 100% of target commission or your actual performance, whichever is greater[.]" All sales completed during the incentive allowance period were "subject to the applicable chargeback period."

(4) Acknowledgement and Training

The compensation plans contained a section entitled "Acknowledgement Form." The acknowledgement in the 2004 compensation plan stated: "My signature below and/or my continuing work on and after the effective date of this Plan, indicates that I have received and read the Verizon Wireless Sales Compensation Plan provided to me in this package dated February 1, 2004 and that the terms and conditions of the applicable plan will govern how sales ...


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