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Canales v. Wells Fargo Bank, N.A.

California Court of Appeals, Second District, Fifth Division

May 30, 2018

FABIO CANALES et al., Plaintiffs and Appellants,
v.
WELLS FARGO BANK, N.A., Defendant and Respondent.

         CERTIFIED FOR PARTIAL PUBLICATION [**]

          APPEAL from a judgment of the Superior Court of Los Angeles County, Super. Ct. No. BC502826 John Shepard Wiley, Jr., Judge. Affirmed.

          Law Offices of Sherry Jung and Larry W. Lee; Hyun Legal, Dennis S. Hyun for Plaintiffs and Appellants.

          Kading Briggs, Glenn L. Briggs, Theresa A. Kading and Nisha Verma, for Defendant and Respondent.

          KIM, J. [*]

         I. INTRODUCTION

         Plaintiffs Fabio Canales and Andy Cortes, on behalf of themselves and class members, appeal from a summary judgment. Plaintiffs were former or current non-exempt employees of defendant Wells Fargo Bank, N.A. Plaintiffs alleged that their wage statements failed to include information required under Labor Code[1] section 226, subdivision (a)(9). Specifically, plaintiffs argued that a line on the wage statement, “OverTimePay-Override, ” should, but did not, include hourly rates and hours worked. Plaintiffs also alleged defendant violated section 226 by failing to provide a wage statement concurrently with the terminated employees' final wages paid in-store. Plaintiffs moved for summary adjudication on the section 226 cause of action.

         Defendant in its summary judgment motion argued that OverTimePay-Override reflected additional overtime pay that was owed for work performed on a previous pay period, but could not be calculated because it was based on a nondiscretionary bonus not yet earned. Under subdivision (a)(9), defendant contended OverTimePay-Override did not have corresponding hourly rates or hours worked for the current pay period. As to plaintiffs' second theory, defendant asserted it complied with the statute by furnishing the wage statement by mail. The trial court found in favor of defendant and against plaintiffs.

         Plaintiffs contend the trial court erred by denying their summary adjudication motion and by granting defendant's motion. We affirm.

         II. BACKGROUND

         A. Factual Background[2]

         Plaintiffs are current or former non-exempt California employees of defendant. Defendant would in some instances issue a paycheck and wage statement that contained nondiscretionary incentive compensation[3] (the bonus) to employees who worked during the period covered by the incentive compensation. These bonus periods would be monthly, quarterly, or annually. For employees who worked overtime during those bonus periods, the wage statements contained a line item called “OverTimePay-Override, ” formerly called “OT-Flat.” OverTimePay-Override listed incremental additional overtime paid to the employee for overtime hours worked during the bonus period under the “Earnings” column.[4] For the OverTimePay-Override line on the wage statements, no hourly rates or hours worked was identified.

         In certain situations, defendant issued final wages to employees at the time of their termination through “in-store payments” made by cashier's check. Defendant's payroll department would then create the wage statement either the same day or the next day and mail it to the terminated employee by United States mail.[5] During their employment, employees had online access to their itemized wage statements. Employees lost such online access the day after termination.

         B. First Amended Complaint

         Plaintiffs filed their first amended complaint, the operative pleading, on June 20, 2013. Plaintiffs sued on behalf of themselves and a class composed of (1) current or former non-exempt California employees of defendant who received OverTimePay-Override from March 13, 2012 to present and (2) all former California employees of defendant who were terminated from March 13, 2012 to present and were paid their final wages through the “in-store payment” procedure. In their first cause of action, plaintiffs alleged defendant violated section 226[6] by failing to identify the hourly rates and the hours worked that corresponded to OverTimePay-Override. Plaintiffs also alleged defendant violated section 226 by failing to provide terminated employees with wage statements immediately upon termination. Plaintiffs alleged a second cause of action pursuant to the Private Attorneys General Act (§ 2698 et seq.) (PAGA) for violation of section 226.[7]

         C. Summary Adjudication/Judgment Motions

         On December 15, 2015, plaintiffs moved for summary adjudication.[8] Much like the allegations in their amended complaint, plaintiffs argued that defendant violated section 226, subdivision (a)(9) by failing to specify the hourly rates and number of hours worked for the OverTimePay-Override adjustment on the itemized wage statements. Plaintiffs also argued defendant violated section 226 by failing to provide to terminated employees an itemized wage statement concurrently with their final wages that were paid in-store by cashier's check.

         Defendant filed its own summary judgment motion on December 15, 2015. Defendant asserted it did not violate section 226, subdivision (a)(9) because OverTimePay-Override represented an increase in overtime pay, based on a periodic bonus, for overtime hours worked in previous pay periods. Defendant argued there were no “applicable hourly rates in effect during the pay period” that corresponded to OverTimePay-Override and thus defendant did not have to provide such information on the wage statement. As to plaintiffs' second theory, defendant contended it furnished the itemized statement as required under section 226 by mailing it to the terminated employee's last known address either the same day or the next day. Finally, defendant argued plaintiffs' PAGA cause of action failed because it was wholly derivative of a violation based on section 226 and because plaintiffs failed to exhaust administrative remedies. Plaintiffs do not dispute their PAGA cause of action is derivative of the section 226 claims.

         On May 26, 2016, the trial court issued its order granting defendant's motion and denying that of plaintiffs. As to defendant's first argument, the trial court agreed that section 226, subdivision (a)(9) did not apply to OverTimePay-Override because there was no applicable hourly rate for the pay period reflected in the wage statement. For defendant's second argument, the trial court found ...


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