United States District Court, N.D. California
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT; SETTING CASE
MANAGEMENT CONFERENCE RE: DKT. NO. 64
HAYWOOD S. GILLIAM, JR. United States District Judge.
Re:
Dkt. No. 64 Pending before the Court is Defendant Best Buy
Stores, L.P.’s motion for summary judgment. Dkt. No.
64. Plaintiff Starvona Harris filed this collective action on
February 11, 2015, alleging eight causes of action for
violations of state and federal labor code provisions.
Plaintiff was a Best Buy employee from October 2013 to
September 2014, and she contends that Defendant failed to
properly calculate overtime wages, timely pay wages, provide
accurate wage statements, reimburse business expenses, and
satisfy record-production obligations. The pending summary
judgment motion relates only to Plaintiff’s individual
claims.
After
reviewing the materials submitted by the parties, hearing
oral argument, and considering the issues raised in both, the
Court GRANTS IN PART and DENIES IN PART Defendant’s
motion.
I.
FACTS
The
basic facts are not in dispute. In addition to hourly wages,
Defendant offers employees in Plaintiff’s position
three other types of payment: (1) a short-term incentive
(“STI”) program that is tied to an individual and
store’s performance, (2) the Path to Excellence
(“PTE”) Program, which gives employees points
based on their performance, and (3) an employee discount
program that gives employees discounts on products and
services in the store.
A.
Short-Term Incentive
The
parties do not dispute that the STI was a nondiscretionary
bonus. See March 24, 2015 recording of oral
argument; see also Dkt. No. 64 at 9-12; Dkt. No. 66
at 12. The STI program was tied to individual, store, and
company performance. See Dkt. No. 64-9, Ex. A at 1.
Defendant used the following formula to calculate a store
associate’s STI bonus:
= (Store Associate’s Monthly Eligible Earnings for the
Fiscal Month) x (Store All Channel Revenue Incentive Target
Percentage) x (Store All Channel Revenue Score[1]).
Dkt. No. 64-9, ¶ 9; Dkt. No. 64-9, Ex. A at 7. For
purposes of the STI program, an employee’s monthly
eligible earnings included all regular, overtime, holiday,
and other paid leave pay, but did not include the value of
any discounts or points that employees received through
Defendant’s employee discount program or the Path to
Excellence program. Dkt. No. 64-9, ¶ 9. The fiscal year
2015 Store All Channel Revenue Incentive Target was 5% for
Plaintiff’s position. Dkt. No. 64-9, Ex. A at 7.
Starting
in fiscal year 2015, Plaintiff was eligible for the STI
payment that was determined using the above formula, Dkt. No.
64-9, ¶ 6, and she earned the bonus in fiscal months
February, March, April, June, and August. Dkt. No. 64-10 at
11.
B.
Path to Excellence
The PTE
program allows Defendant’s managers to “recognize
employees by awarding them points that the employees can use
to obtain various products, services, or gift cards.”
Dkt. No. 64-4, ¶ 3. Defendant values each point at $0.05
per point. Id. at ¶ 5.
Defendant’s
vendor provides and administers the PTE program, classifying
points as either overtime eligible with the code
“Points Rcvd GU” or as not overtime eligible with
code “NFLSA GU.” Dkt. No. 64-8, ¶ 6. If
points were coded as “Points Rcvd GU, ” the
vendor also provided the start and end date of the award
earnings period. Id. at ¶ 7. Plaintiff received
awards that were overtime eligible on July 6, 2014; July 13,
2014; July 15, 2014; July 25, 2014; August 3, 2014; and
August 6, 2014. Id.; Dkt. No. 69-11 at 30. The only
work week that Harris both received an award of points and
worked overtime was July 20-26, 2014; this was for the pay
period ending August 2, 2014, and occurred in the fiscal
month of July 2015. Dkt. No. 22-2; Dkt. No. 69-11 at 30.
C.
Employee Discount Policy
The
Employee Discount Policy was available to employees after 30
days of continuous employment, and it allowed employees
“to purchase most products and services at 5% above
cost.” Dkt. No. 64-8. The policy further stated that
the policy was not a contract and could be changed or varied
in Best Buy’s sole discretion. Additionally, the policy
noted the income tax consequences of the discount program:
[T]he IRS considers anything greater than a 20% discount to
be taxable income. Therefore, you will be taxed on the
difference between the 20% off price and the 5% above-cost
Employee Discount price. This amount will appear as
Merchandise Recvd on your pay statement.
Id.
Plaintiff
used the discount program a number of times, see
Dkt. No. 67, ¶ 9; Dkt. No. 69-11 at 31, and specifically
contests Defendant’s failure to include
“Merchandise Recvd” earnings in June and August
2014 in the STI calculation for fiscal months June 2015 and
August 2015, as well as Defendant’s failure to
calculate overtime on the merchandise value. Dkt. No. 68,
¶¶ 5-8.
II.
LEGAL STANDARD
Summary
judgment is proper if “the pleadings, depositions,
answers to interrogatories, and admissions on file, together
with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(c).
The
Court must view the facts and draw inferences in the manner
most favorable to the nonmoving party. Chevron Corp. v.
Pennzoil Co., 974 F.2d 1156, 1161 (9th Cir. 1992). The
moving party bears the initial burden of demonstrating the
absence of a genuine issue of material fact for trial, but it
need not disprove the other party’s case. Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986);
Celotex Corp. v. Catrett, 477 U.S. 317, 323-25
(1986).
Once
the moving party meets its burden, the “adverse party
may not rest upon the mere allegations or denials of the
adverse party’s pleading, but the adverse party’s
response, by affidavits or as otherwise provided in this
rule, must set forth specific facts showing that there is a
genuine issue for trial. If the adverse party does not so
respond, summary judgment, if appropriate, shall be entered
against the adverse party.” Fed.R.Civ.P. 56(e); see
also Anderson, 477 U.S. at 248-49. Furthermore, a party
cannot create a genuine issue of material fact simply by
making assertions in its legal papers. There must be
specific, admissible evidence identifying the basis for the
dispute. S.A. Empresa de Viacao Aerea Rio Grandense v.
Walter Kidde & Co., Inc., 690 F.2d 1235, 1238 (9th
Cir. 1980). The Supreme Court has held that “[t]he mere
existence of a scintilla of evidence . . . will be
insufficient; there must be evidence on which the jury could
reasonably find for [the opposing party].”
Anderson, 477 U.S. at 252.
III.
DISCUSSION
A.
First and Second Causes of Action: failure to pay overtime
wages under Fair Labor Standards Act and under California
Labor Code §§ 204, 510, 1198
Defendant
seeks summary judgment on Plaintiff’s first and second
causes of action for unpaid overtime compensation under the
Fair Labor Standards Act (“FLSA”) and the
California Labor Code.
1.
Applicable Law
In
addressing whether Defendant properly calculated overtime
compensation, the Court examines federal and state wage and
hour law. While the second cause of action is brought under
California law, California courts look to federal labor
regulations for guidance in the absence of controlling or
conflicting California law. See Huntington Mem’l
Hosp. v. Superior Court, 131 Cal.App.4th 893, 903 (2005)
(“[E]ven though this case involves California law-the
payment of overtime for work in excess of eight hours in one
day-and federal law requires overtime pay only for work
exceeding 40 hours in one workweek, federal authorities still
provide useful guidance in applying state law.”
(parenthetical omitted)); see also Marin v. Costco
Wholesale Corp., 169 Cal.App.4th 804, 815 (2008), as
modified on denial of reh’g (Jan. 21, 2009)
(“[N]o California court decision, statute, or
regulation governs bonus overtime . . . there is no
controlling California authority apart from the directive
that overtime hours be compensated at a rate of no less than
one and one-half times the regular rate of
pay.”).[2] Accordingly, the Court analyzes the first
and second causes of action by looking to federal law.
FLSA
requires that employees be compensated for all hours worked
in excess of forty hours each workweek at “a rate not
less than one and one-half times the regular rate at which he
is employed.” 29 U.S.C. § 207(a). An
employee’s regular rate is “the hourly rate
actually paid for the normal, non-overtime workweek, ”
and is “obtained by dividing the weekly wage payable
for the working of the scheduled workweek by the number of
hours in such scheduled workweek.” 149 Madison Ave.
Corp. v. Asselta, 331 U.S. 199, 204, modified sub
nom. 149 Madison Ave. Corp. v. Asselta, 331
U.S. 795 (1947); Brennan v. Valley Towing Co., 515
F.2d 100, 106 (9th Cir. 1975). The FLSA defines
“regular rate” to include “all remuneration
for employment paid to, or on behalf of, the employee”
unless it falls under one of eight statutory exceptions. 29
U.S.C. § 207(e); see also Opinion Letter FLSA,
1997 WL 998000, at *1 (“As a general matter, all
remuneration paid to employees except that expressly excluded
by the FLSA is included in their total compensation when
computing their regular rate for overtime purposes.”).
“Bonuses which do not qualify for exclusion . . . must
be totaled in with other earnings to determine the regular
rate on which overtime pay must be based.” 29 C.F.R.
§ 778.208. “When including these bonuses in the
regular rate of pay, they must be apportioned back over the
workweeks of the period during which they may said to have
been earned.” Opinion Letter FLSA, 1997 WL 998000, at
*1; see 29 C.F.R. § 778.209.
Alternatively,
an employer can calculate overtime compensation without
relying on the regular rate: § 778.210 permits employers
to satisfy FLSA’s overtime compensation requirements by
calculating the bonus as a “percentage of total
earnings” by multiplying the employee’s pay by
the same fixed percentage of both the employee’s
straight-time earnings and overtime earnings. § 778.210;
see also Opinion Letter FLSA, 1997 WL 998000, at *1;
FLSA 2006-4NA (February 17, 2006). Section 778.503 similarly
provides that a “bonus based on a percentage of total
wages-both straight time and overtime wages-satisfies the
Act’s overtime requirements, if it is paid
unconditionally. Such a bonus increases both straight time
and overtime wages by the same percentage, and thereby
includes proper overtime compensation as an arithmetic
fact.” 29 C.F.R. § 778.503. Under §§
778.210 and 778.503, the lump sum payment is a simultaneous
payment of the bonus and overtime compensation on the bonus,
satisfying FLSA’s overtime requirements. §
778.210; Opinion Letter FLSA, 1997 WL 998000, at *1. Under
this provision, recomputation is not needed and the bonus is
excluded from the employee’s regular rate of pay for
overtime purposes. § 778.210; Opinion Letter FLSA, 1997
WL 998000, at *1.
The
parties’ primary dispute relates to the definition of
“total earnings” under § 778.210. Defendant
contends that “total earnings” under the
percentage of earnings method only includes straight-time
earnings and overtime earnings. Plaintiff relies on
Department of Labor (“DOL”) opinion letters to
argue a broader definition of “total earnings.”
For example, the DOL’s February 5, 2001 letter
provides:
[W]here an employer’s payments under a bonus plan are
based upon a percentage of total earnings of the employee,
the payments may be excluded from the regular rate of pay if
the conditions prescribed in 29 CFR § 778.210 are met.
Under the method of allocation discussed in this section,
where a bonus is paid as a production incentive percentage of
the employee’s total compensation, including
straight time, overtime, bonuses, and commissions, the
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