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Liday v. Sim

California Court of Appeals, Second District, Third Division

September 25, 2019

LEA LIDAY, Plaintiff and Respondent,
v.
PETER SIM et al., Defendants and Appellants.

          APPEAL from a judgment of the Superior Court of Los Angeles County, Josh M. Fredricks, Judge. (Retired judge of the L.A. Sup. Ct. assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.) Reversed with directions.

          Schlichter & Shonack, Jamie L. Keeton and Ben Rothman for Defendants and Appellants.

          Law Offices of C. Joe Sayas, Jr., C. Joe Sayas, Jr., and Karl P. Evangelista for Plaintiff and Respondent.

          EGERTON, J.

         INTRODUCTION

         When determining a claim for unpaid minimum wages, does the court presume that a fixed salary paid to a live-in domestic worker-who is exempt from overtime but subject to minimum wage laws-covers only the regular, nonovertime work hours mandated for nonexempt workers? Or, does the court determine the worker’s unpaid minimum wages by calculating the difference between the total number of hours she worked at the prevailing minimum wage rate and the amount she received through her salary? That is the question this wage-and-hour appeal poses.

         Lea Liday sued her former employers, appellants, for unpaid wages incurred from April 2010 to April 2014. Liday worked for appellants as their children’s live-in caretaker for a fixed salary of $3, 000 per month. After a bench trial, the trial court found Liday was a “personal attendant” under Wage Order No. 15, 2001 (Cal. Code Regs., tit. 8, § 11150 (Wage Order 15)). It also found Liday’s salary did not compensate her at the statutory minimum wage for all the hours it found she had worked. Appellants do not contest the trial court’s finding that Liday worked more hours than they had argued at trial, but they do challenge the propriety of the formula the court used to determine Liday’s unpaid minimum wages due from April 2010 through December 2013.

         Before 2014, live-in domestic workers classified as “personal attendants” were exempt from California’s overtime requirements but were entitled to be paid at least the minimum wage for all hours worked. The Legislature passed the Domestic Workers Bill of Rights (DWBR) to provide personal attendants with overtime protection beginning January 1, 2014. Under that law, personal attendants cannot work more than nine hours per day or more than 45 hours per week unless paid one and one-half times their regular rate of pay for all hours worked in excess of those limits. (Lab. Code, § 1454.)[1]

         The DWBR applied only to the last three months of Liday’s employment. The trial court acknowledged Liday was exempt from overtime requirements for the period from 2010 through 2013. But, to calculate her unpaid minimum wages for that period, the court presumed Liday’s salary compensated her for a regular, nonovertime 45-hour workweek-the number of hours above which overtime is due under the 2014 law. It calculated Liday’s regular, hourly rate to be $15.38 by dividing her averaged weekly salary by 45 hours and concluded appellants owed Liday minimum wages at that rate for the hours she worked in excess of 45 per week.

         Appellants argue the trial court erred when it presumed a 45-hour workweek to make this calculation because Liday was exempt from overtime. They assert the court should have divided Liday’s salary by the $8 per hour statutory minimum wage to determine how many hours Liday’s salary had covered and then ordered appellants to pay Liday for any uncompensated hours at $8 per hour. The difference is significant. Using the $15.38 per hour rate at a presumed 45 hours per week, the court found appellants owed Liday $265, 720.26 in unpaid wages earned before 2014. Applying the minimum wage rate of $8 per hour to each hour the court found Liday worked, the amount drops to under $75, 000.

         Because personal attendants were exempt from overtime requirements before 2014, we conclude California law in effect at the time did not limit the number of hours a personal attendant’s salary could cover, except to require that it pay at least the minimum wage of $8 per hour for each hour worked. As the parties do not dispute the trial court’s finding that they did not agree to an hourly rate, and nothing in the record demonstrates they agreed Liday would work a set number of hours per week, the court erred when it presumed Liday’s monthly salary compensated her for only 45 hours of work per week. We thus reverse the judgment and remand to the trial court to recalculate the unpaid wages appellants owe Liday for work she performed from April 2010 through December 2013 applying an $8 per hour rate of pay for each hour she worked.

         FACTS AND PROCEDURAL BACKGROUND

         Liday was a live-in personal attendant for the two autistic sons of appellants Peter Sim, M.D., and Loraine Diego, M.D., from December 2002 until April 2014. Liday quit in April 2014 and sued appellants for failure to pay overtime, failure to pay wages for all hours worked in violation of the minimum wage law, waiting time penalties, unfair competition, and civil penalties under the Labor Code Private Attorney General Act (PAGA). After a bench trial, the court found in Liday’s favor on all causes of action except her PAGA claim and found the relevant claims period to be April 2010 to April 2014.[2] Appellants requested a statement of decision, and the court heard argument on the proposed statement on February 6, 2017.

         On March 17, 2017, the court issued its statement of decision and entered judgment in Liday’s favor awarding her $403, 256.33, including prejudgment interest. The judgment included unpaid wages for the entire claims period, but the only period relevant to this appeal is from April 2010 through December 2013. As appellants do not contest the court’s underlying factual findings, we primarily state the facts relevant to the appeal as described in the court’s statement of decision.

         1. Liday’s personal attendant status

         Sim and Diego, a married couple, are both medical doctors. The couple hired Liday as a live-in caretaker for their son who was born in October 2002. Liday also cared for appellants’ second son, born in December 2005. Their first child, who was between eight and 12 years old during the claims period, is severely autistic and nonverbal. Their younger son, between five and nine years old at the time, is mildly autistic. Appellants paid Liday $3, 000 a month during the relevant period.[3]

         The children went to school Monday through Friday, leaving the house at about 8:00 a.m. and returning at about 2:00 p.m. While at home, appellants’ elder son required continuous supervision and attention. He also had sleeping issues. Liday slept in the boy’s room to be available to supervise him when he woke up at night. The court found Liday supervised or was available to supervise appellants’ children around the clock, except during the time they were at school. It thus concluded Liday worked 18 hours per day on weekdays and 24 hours per day on Saturdays and Sundays. She took about three to four weekends off per year, totaling 14 weekends for the entire April 2010 to December 2013 period.

         The court also found Liday did not perform significant nonattendant work for the couple and classified her as a “personal attendant” under Wage Order 15. As a personal attendant, Liday was entitled to receive the minimum wage for all hours that she worked but was exempt from overtime requirements during the period from April 2010 through December 31, 2013.[4] For that period, therefore, Liday’s recovery was limited to unpaid wages under the minimum wage law. The parties stipulated that the minimum wage during that time was $8 per hour.

         2. Liday’s wages and hourly rate

         Liday testified that when she first was hired in 2002, Sim told her he would pay her $1, 000 per month to work six days a week. They did not discuss the number of work hours required. Liday testified she began working seven days a week in 2004 after she borrowed money from Sim through pay advances; she also received a raise at that time.[5] She began making $3, 000 per month around 2005. The court found Liday credibly testified she and appellants never discussed her hourly rate of pay.

         Sim testified he and Liday never discussed salaries during the 2010 to 2014 time frame, but he did when he hired her. Sim also testified Liday began to work seven days a week when he began to advance her pay. Sim said the $3, 000 per month was not a salary; he based Liday’s pay on an $8 hourly rate and estimated how many hours she worked per day. Appellants kept no record of the hours Liday worked. In preparation for his deposition in this case, Sim created a chart estimating Liday’s work at 9.5 hours per weekday at $8 per hour, $82 per week, plus $196 per month to pay for additional hours. Sim “just came up with” the $196 number. The court found Sim’s postfiling estimates of Liday’s hours and his testimony that he discussed paying her $8 per hour not credible. It found Sim’s calculations did not support “his assertion” that he paid Liday $8 per hour.

         The court concluded there was “no evidence to prove one way or the other” Liday’s hourly rate. It found Liday was not entitled to overtime before January 1, 2014, but was “entitled to be paid wages for each hour” she worked. Because there was no mutual wage agreement, the court presumed Liday’s $3, 000 per month salary compensated her for nine hours of work per day, 45 hours per week-the regular, nonovertime work hours applicable to personal attendants beginning in January 2014. It thus calculated an hourly rate for Liday at $15.38 by dividing her average weekly salary of $692.31 by 45 hours.

         That calculation, proffered by Liday’s counsel, was based on the formula used to determine overtime wages for salaried, nonexempt employees found in section 515. Addressing appellants’ counsel’s argument there was no basis for calculating Liday’s hourly rate based on a 45-hour workweek and that section 515 did not apply, the court explained, “I’m not basing it on the fact that someone cited... a definitive case or code section about how to calculate this. I’m just persuaded by looking at the whole banana here, that that is the correct way to do this. Even though... this is an ex[em]pt employee, ... and even though she’s not entitled to overtime. We have to calculate it based on something. And I understand you want me to calculate it on $8, but I think that the logic of this is that, and that’s what I’m persuaded by, that in the-the nonexempt employees, that-this is the way that they calculate and you agree with that. I just think this is the way we should calculate it in this case, also.... It’s not because I’m persuaded by some code section or a case.”

         3. Liday’s unpaid minimum wages

         The court applied Liday’s “regular rate” of $15.38 per hour to the hours Liday worked in excess of 45 per week to determine her unpaid wages. For the period at issue on appeal, April 2010 to December 2013, the court found Liday worked (a) 138 hours per week for 179 weeks, and (b) 90 hours per week for 14 weeks. Assuming a 45-hour workweek and a $15.38 hourly rate, the court concluded Liday was not paid for 93 hours per week for 179 weeks, $256, 030.86, and was not paid for 45 hours per week for 14 weeks, $9, 689.40, for a total of $265, 720.26 in unpaid wages.[6] The court also awarded Liday prejudgment interest.

         Appellants timely moved for a new trial on the ground that the trial court erred in calculating Liday’s pre-2014 hourly rate based on the “regular rate” formula for calculating overtime for nonexempt employees. They argued the court should have calculated Liday’s pre-2014 unpaid wages based on the minimum wage rate of $8 per hour for each hour she worked. The court heard and denied the motion on May 19, 2017. It reiterated, “I think that this [is] the analogous and appropriate way to determine what the regular hourly rate was and that’s why I calculated it that way.”

         This appeal followed.

         DISCUSSION

         Appellants challenge only that portion of the judgment awarding Liday unpaid minimum wages from 2010 through 2013. They contend, that because Liday was entitled to be paid the minimum wage, but was exempt from overtime requirements during this period, the court erred when it found Liday’s monthly salary compensated her for only 45 hours per week, entitling her to unpaid wages at a “regular rate” of $15.38 per hour for all hours she worked in excess of 45 per week. They argue the court instead should have applied the prevailing minimum wage rate of $8 per hour to all hours Liday worked during the contested period to determine the amount of wages appellants owed. Appellants ask us to reduce Liday’s base award of pre-2014 unpaid wages from $265, 720.26 to $74, 080.17, and to remand the matter to the trial court to reduce the corresponding prejudgment interest due.

         Liday acknowledges the court’s finding that she was an overtime-exempt personal attendant, but contends its method to calculate her unpaid wages was proper. She argues that as a salaried employee subject to the minimum wage, and without an agreed hourly rate, the 45-hour nonovertime workweek applied to her so that her salary compensated her for 45 hours of work per week and no more. We disagree with Liday’s interpretation and application of the law to the unchallenged facts before us.

         1. Governing law and standard of review

         “[W]age and hour claims are today governed by two complementary and occasionally overlapping sources of authority: the provisions of the Labor Code, enacted by the Legislature, and a series of 18 wage orders, adopted by the IWC.”[7] (Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1026 (Brinker).) “The IWC, a state agency, was empowered to issue wage orders, which are legislative regulations specifying minimum requirements with respect to wages, hours, and working conditions.” (Mendiola v. CPS Security Solutions, Inc. (2015) 60 Cal.4th 833, 838 (Mendiola).) Although the Legislature has since defunded the IWC, its wage orders are still in effect. (Gonzalez v. Downtown LA Motors, LP (2013) 215 Cal.App.4th 36, 43 (Gonzalez).)

         Wage orders “have the force of law” (Dynamex v. Superior Court (2018) 4 Cal.5th 903, 914, fn. 3), and “must be given ‘independent effect’ separate and apart from any statutory enactments” (Brinker, supra, 53 Cal.4th at p. 1027). Thus, when a wage order and statute overlap, ...


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