California Court of Appeals, Second District, Fourth Division
LINDA M. HEYEN, Plaintiff and Respondent,
SAFEWAY INC. et al., Defendants and Appellants.
APPEAL from a judgment of the Superior Court of Los Angeles County Super. Ct. No. BC277481, Anthony J. Mohr, Judge.
Littler Mendelson, J. Kevin Lilly, R. Brian Dixon, and Philip L. Ross for Defendants and Appellants.
Law Offices of Stephen Glick, Stephen Glick; Law Offices of Ian Herzog, Ian Hergoz; Daniels, Fine, Israel, Schonbuch & Lebovits, Paul R. Fine, Scott A. Brooks, and Craig S. Momita for Plaintiff and Respondent.
Plaintiff/respondent Linda Heyen is a former assistant manager for defendant/appellant Safeway Inc. (Safeway). After Safeway terminated her employment, Heyen brought this action to recover unpaid overtime pay, contending Safeway should have classified her as a “nonexempt” employee because she regularly spent more than 50 percent of her work hours doing “nonexempt” tasks such as bagging groceries and stocking shelves. An advisory jury and the trial court agreed with Heyen and awarded her overtime pay of $26, 184.60, plus interest.
Safeway appeals, contending that the trial court failed to properly account for hours Heyen spent simultaneously performing exempt and nonexempt tasks—i.e., “actively... manag[ing] the store while also concurrently performing some checking and bagging of customer grocery purchases.” Safeway urges that, consistent with federal law, the trial court should have classified as “exempt” all hours during which Heyen simultaneously performed exempt and nonexempt tasks. Because the court failed to do so, Safeway claims it prejudicially erred, requiring a reversal of the judgment.
We disagree with Safeway’s analysis as inconsistent with California law. Hence, we affirm the judgment for Heyen.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs Peter Knoch and Jason Ritchey filed the present action on July 31, 2002, against Safeway and The Vons Companies, Inc. (Vons) alleging causes of action for nonpayment of overtime compensation and unfair business practices. They filed a second amended complaint adding Heyen as an additional plaintiff on December 20, 2006.
On September 11, 2008, the trial court denied plaintiffs’ motion for class certification. Thereafter, Heyen’s claims were tried before an advisory jury over 10 days in June and July 2009. The relevant testimony is summarized below.
A. Plaintiff’s Case
1. William Gillette
Gillette was a Safeway assistant manager in 2004 and 2005. He testified that “operating ratio” or “O.R.” refers to the number of labor hours budgeted to a Safeway store based on the store’s sales. O.R. is calculated on a weekly basis. A manager is disciplined for missing O.R. in any week.
Gillette opined that Safeway’s expectations for O.R. are not realistic. Under the company’s “checkout success” policy, if three customers are in a checkout line, a new line must be opened. Gillette said there are not enough hourly employees to keep the checkout lines as short as company policy requires, and thus “you basically have to take the salaried employees and have them do hourly work in order to hit both the checkout piece of it and still make your payroll budget.”
When Gillette was an assistant manager, he typically worked between 60 and 70 percent of his time as an hourly employee. He had superiors tell him that he would have to be in the checkout line for more than 50 percent of his time in order to make budget. Superiors also told him that “it’s up to you as an assistant manager to make O.R. in any way you can, but you better make it.” He believed Safeway’s “superior service” and “checkout success” programs require salaried employees to do hourly work. “[I]t’s a requirement that we hit our payroll budget and a requirement that we hit our checkout success, and in order to do that, given the constraints of what they give us to do our labor, we have to be in the check stand 65 to 70 hours of our time.... It could be putting bananas on the shelf because the produce manager is on the check stand, or it could be filling the beer box because... the beer box didn’t get filled that day or somebody bought a bunch of beer, and we want to make sure that we get the stuff back on the shelf for the evening crowd.”
Gillette said managers had very little discretion in operating their stores. They did not have discretion to price merchandise, put merchandise on sale, choose what to stock, create store promotions, determine when to take store inventory, select store staffing levels, select the number of labor hours budgeted to the store, set store hours, hire assistant managers, set employee pay rates, determine employee dress codes, determine store layout, select the store suppliers or vendors, or set the criteria for employee evaluations.
Gillette testified bookkeeping had been a high-paying job before the supermarket strike, but afterwards became a low-paying, hourly position. Safeway budgeted five hours per day for bookkeeping, and it trained the assistant managers to do the books if the bookkeepers could not.
Gillette agreed that as a manager, he observed his employees constantly, albeit “[m]ostly from the check stand.” When he worked a check stand, he also ran the “front end” of his store, observing whether the checkers on adjacent stands were doing their jobs correctly. Gillette said he was always doing several things at the same time, and that multitasking was “part of the job.”
2. Linda Heyen
Heyen was transferred to the Oceanside store after the supermarket strike ended in April 2004, and she worked there until October 2005. When she transferred to Oceanside, Allen Martin was the store’s manager. The store was at that time having trouble retaining a bookkeeper and “courtesy clerks, ” who “[b]ag groceries, bring in the carts, do customer service as far as taking a customer to the item.” As a result, Martin asked Heyen to do the store’s bookkeeping.
About a month and a half after Heyen transferred to Oceanside, Martin was replaced by manager Daniel Lombardo. The store was not given enough hours to make O.R. without both Heyen and Lombardo doing the work of hourly employees, such as checking and general merchandising. Heyen typically spent four to six hours per day bookkeeping, and about three hours in the front end of the store. On delivery days, she typically spent six to eight hours merchandising, working 14 to 15 hours per day.
During Heyen’s tenure in Oceanside, Lombardo became ill and Heyen took over his responsibilities. During that time, she worked about 15 hours per day, doing hourly tasks for about 12 to 13 hours. On about six occasions, she worked six days a week. Because she was not getting enough sleep, she temporarily relocated to live closer to work. She told her district manager that she needed some help, but he said he could not help her because “it is all sent down by industrial engineering.” Eventually, the long hours began to affect Heyen’s health and she asked to be reassigned to a store closer to her home.
As the assistant manager in the Oceanside store, Heyen was responsible for the sales forecasts and the master budget. She also was responsible for all store operations, including supervising the store’s 25 to 35 employees. She hired and trained staff, maintained employee files, disciplined employees, did salary performance paperwork, responded to management email, prepared reports, scheduled employees, and did employee evaluations. She was responsible for safety, cash security, and assuring that employees did not over-order supplies.
According to Heyen, “We cannot run the store with what they give us without the manager and assistant manager working hourly like the other hourly employees. It’s impossible.” Moreover, she said, the demands of the job required that the manager and assistant manager work “[m]uch more” than 40 hours a week—“[t]hat’s the only way we can get it done.”
Heyen said that before the strike, Safeway hired experienced bookkeepers who were paid $17.90 per hour and were permitted six to eight hours each day to do the books. After the strike, Safeway hired untrained bookkeepers who were paid $7 per hour and were permitted only three hours per day to do the books. As a result, “an assistant manager like myself had to make up what they couldn’t get done — what they couldn’t finish with all the mistakes that they made.”
As a salaried employee, Heyen earned $50, 200 per year, calculated as $25.72 per hour for 40 hours per week. Based on the number of hours she actually worked, Heyen said she actually made less per hour than she had made as an hourly employee.
Heyen agreed that she was able to manage the store and work the register at the same time. When she was stocking shelves, she was also observing general conditions in the store.
3. James Reynolds
Reynolds was promoted to Safeway assistant manager in 2002. He expected that he would be given management duties, but actually spent most of his time stocking and checking because the store had not been allotted sufficient employee hours. At one point, his district manager told Reynolds that he would have to work six days per week because the store’s “checkout success” and “superior service” were not adequate. Reynolds was working an average of 12 hours per day at that time.
4. Luis Valle
Valle worked for Safeway for 25 years, from 1981 until June 2005. He began as a courtesy clerk, was an assistant manager from 1995 until 2004, and then was a corporate auditor from 2004 to 2005. As an auditor, Valle did about 170 different audits. He consistently heard from managers that they were not allocated enough hours to get all the work done properly. He explained: “Every department and everybody in the store has a function. Every department gets some hours, but all of the departments basically don’t get enough hours, you know. There’s just never enough hours for what they need to do, and the expectations are so high that they just don’t have the hours. The O.R. that they get, the manpower that they get to do the business for the week is — it’s just not there. So as I would come into the store, managers are trying to fill the gap wherever there’s a need. They need to go and do a clerk’s job, an hourly clerk job. Because the assistant managers and the store managers, they don’t clock — punch in the clock, so for them there’s no need for breaks, no need for lunch. They sacrifice all of that, and they [work] hours and hours and those extra days that they’re not even supposed to be there because they just don’t have enough hours, and they got to meet the payroll needs; they got to meet the O.R.”
Valle said that before the supermarket strike, highly-paid bookkeepers spent six to eight hours per day keeping the books. After the strike, Safeway was allowed under the new collective bargaining agreement to use lower-paid, inexperienced clerks to do the bookkeeping. The new bookkeepers worked on the books only two hours per day and “never had the benefit of the training, and that’s why there were so many mistakes.”
Valle said that the assistant managers were required to be in the front of the stores at least eight hours per day, “[b]agging, checking, making sure that everything is flowing through the register, ... greeting the customers.”
5. Daniel Lombardo
Lombardo worked for Safeway for 38 years. He was a store manager for about 20 years, until he retired in 2007. In May 2004, Lombardo was assigned to the Oceanside store, where Heyen was the assistant manager. In Oceanside, Lombardo spent about 75 percent of his time doing hourly work such as checking, receiving, collecting carts, and stocking. He typically worked 10-12 hours per day. Heyen also worked more time than she was scheduled. The long hours were necessary because Lombardo did not have enough help in the store. In his experience, there was no way all of the necessary work could be completed without the manager and assistant manager doing a significant amount of hourly work. The Oceanside store was somewhat unusual in this regard because it was a very low volume store and so there was not much hourly help in the store. Even during the busiest times of day, there were only seven or eight employees in the store.
Lombardo said there were chronic bookkeeping problems in the Oceanside store and Heyen had to fix the bookkeeping errors. He estimated that she, too, spent about 75 percent of her time doing hourly work. At one point Lombardo became aware that Heyen was working six and seven days a week because the store did not have a bookkeeper. Lombardo called his district manager for help and was told something like, “Do what you can.”
Lombardo took medical leave from the Oceanside store for three weeks when he had knee surgery, and another four days when he had chest pains. During those times, Heyen took on the responsibilities of store manager.
The store was allowed an additional 40 hours of employee time during Lombardo’s absences, but that wasn’t sufficient because Lombardo did more than 40 hours worth of work in a typical week.
While working a check stand, Lombardo was “kind of managing a store, ” but “it’s not a very effective way to run a store.” He conceded that while in a check stand, he was able to direct other employees, answer questions, observe the check lines, and observe store conditions. However, he was not able to coach other employees because “[m]y focus was on the customer.”
Lombardo agreed that the store’s managerial functions included planning and budgeting, which he and Heyen typically did together. Heyen did the schedule and generally was in charge of the store’s front end. She also hired employees as necessary. Lombardo agreed that Heyen would decide when to go home at the end of the day. Lombardo believed Heyen was a very hard worker who met his expectations as an assistant manager.
B. Safeway’s Case
1. Krista Rush
Rush testified that she currently was an hourly manager for Vons. Immediately after the supermarket strike, she worked as a bookkeeper in the Oceanside store. She had never done books before, but she was able to learn to do them in about two weeks. It generally took her about three and a half hours per day to do the books. She had no trouble getting the work done during her scheduled hours. At some point, Rush trained other people to do the books. Heyen was generally in her managerial office “[a] little more than half” the day.
2. Victoria Settles
Heyen hired Settles to work as a bookkeeper in the Oceanside store in August 2005. Heyen trained Settles to do the bookkeeping. It generally took Settles three to four hours a day to do the books, and Heyen never had to finish Settles’s work. Settles said she subsequently kept the books at four other Safeway stores; the bookkeeping at the Oceanside store was the easiest.
Before Settles was hired to work at Safeway, she shopped frequently at the Oceanside store but she never saw Heyen. She met Heyen for the first time when she interviewed for the bookkeeping job. Once Settles began working at the Oceanside store, she frequently saw Heyen doing paperwork at her desk. She did not recall ever seeing Heyen work anywhere other than at her desk. Settles occasionally saw Heyen on the floor, but she “wasn’t doing anything.”
Settles sometimes “faced” the health and beauty aisle,  which typically took her less than an hour. She did not recall whether she ever saw Heyen “facing” the health and beauty aisle.
Settles said that the Oceanside employees were frustrated with Heyen’s scheduling: “[T]hey used to say how she couldn’t schedule anybody with their right job, and that they were all getting frustrated because they didn’t have the right amount of hours for the jobs or knowing when that — the product would come in to be scheduled for it and how to do it. So there’s a lot of conflict there with the orders and everything.” Further, Settles said employees “walked on pins and needles around [her].... She... had a very strong personality. You know, so it’s like, ‘You better do this’ — or, you know, that’s how you felt, or else you were gone, too, or getting watched by whoever she tried to get to watch you.”
3. Tariq Salihi
Salihi began working for Safeway in the Oceanside store in February 2005. He said Heyen generally arrived at work between 6:30 and 7:00 a.m. He never saw Heyen “walk the store”; generally, he found her in her office. He estimated that Heyen spent about 85 percent of her time in her office, generally working on the schedule. He saw Heyen working in the check stands only a few times each week.
Salihi said there were significant problems with the schedule that made his job stressful. He said: “[I]f somebody is not scheduled to work and you have a load sitting there, basically it fell on me or somebody else and made my job harder or somebody else — if I was scheduled off and there’s a milk load that is coming in and nobody is working dairy. ...