An employee who attended scheduled meetings and worked at least half of the scheduled time was not entitled to receive “reporting time pay” and he also was not entitled to additional compensation for “split shift” pay when he worked a shift on meeting days because he earned more than the minimum required by the wage order. (Aleman v. AirTouch Cellular (--- Cal.Rptr.3d ----, Cal.App. 2 Dist., September 20, 2012).
Former employees of AirTouch Cellular (“AirTouch”) brought a lawsuit in which they alleged AirTouch violated two provisions of a wage order of the Industrial Welfare Commission (“IWC”). The former employees, including Daniel Krofta (“Krofta”) and Mary Katz (“Katz”), alleged they were entitled to receive “reporting time pay” for attending scheduled meetings at work. They also alleged AirTouch was required to pay them “split shift” compensation for days they were required to attend a meeting and then work a shift later that same day. The employees alleged that AirTouch violated the IWC’s Wage Order No. 4-2001, which is commonly referred to as Wage Order 4.
Krofta worked at AirTouch’s store in 2005 and 2006. During that time, his salary ranged from $10.58 to $11.11 per hour, not including commissions. Krofta, like other AirTouch employees, was required to attend occasional meetings for work. The meetings were held once or twice per month before the store opened, usually on Saturday or Sunday mornings. The meetings would last an hour or one and a half hours. AirTouch scheduled the meetings in advance and the meetings were listed on the employees’ work schedules. The time the employees spent at the meetings was recorded on the electronic timekeeping system. Krofta’s timesheets show that there were five occasions for which he was scheduled to work, and did in fact work for less than four hours. These five occasions may represent days when AirTouch held employee meetings. His timesheets also show five times where he worked a split shift because he worked a short shift in the morning, probably for a meeting, followed by longer shifts later those same days.
AirTouch paid Krofta for all hours recorded on his timesheet. Krofta, however, asserts that AirTouch owes him additional compensation for “reporting time pay” for the five times he worked less than four hours and “split shift” premiums for the five times he worked split shifts. The trial court found that Krofta was not entitled to “reporting time pay” or “split shift” pay.
Katz brought the same claims as Krofta against AirTouch. AirTouch asserts Katz signed an agreement while the lawsuit was pending that released all of her claims against AirTouch. Katz, who signed the agreement in April 2008 in exchange for the right to exercise long-term incentive awards, received a payment from AirTouch for $25,796.28. The court granted summary judgment in favor of AirTouch because Katz received the incentive award payment, which AirTouch would not have otherwise owed her, in exchange for signing the release agreement.
AirTouch brought a motion to recover attorney fees. The trial court ordered Krofta to pay $146,000 of AirTouch’s attorney fees and Katz to pay $140,000.
The court of appeal affirmed the decision of the trial court regarding the employees’ right to “reporting time pay” and “split shift” pay and the summary judgment against Katz. The court, however, reversed and remanded the attorney fees award for further consideration by the trial court.
Subdivision 5(A) of Wage Order 4 regulates “reporting time pay” and provides: “Each workday an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee’s usual or scheduled day’s work, the employee shall be paid for half the usual or scheduled day’s work, but in no event for less than two (2) hours nor more than four (4) hours, at the employee’s regular rate of pay, which shall not be less than the minimum wage.” The court held that the employees were not entitled to receive reporting time pay for attending the meetings because the meetings were scheduled and the employees worked, and were paid for, at least half the scheduled time.
The court framed the issue as follows: “If an employee’s only scheduled work for the day is a mandatory meeting of one and a half hours, and the employee works a total of one hour because the meeting ends a half hour early, is the employer required to pay reporting time pay pursuant to subdivision 5(A) of Wage Order 4 in addition to the one hour of wages?” The court concluded that the answer to this question is no. The employer furnished the employee work for more than half of the scheduled time. The only reasonable interpretation of subdivision 5(A) is that when an employee is scheduled to work, the order’s two-hour pay requirement will only apply if the employer furnishes the employee work for less than half the scheduled time.
Wage Order 4, subdivision 4(C), addresses “split shift” pay and provides, “When an employee works a split shift, one (1) hour’s pay at the minimum wage shall be paid in addition to the minimum wage for that workday, except when the employee resides at the place of employment.” There were five occasions when Krofta worked a short shift in the morning followed by a longer shift that same day. These shifts fell within the Wage Order’s definition of a split shift. However, Krofta was not entitled to additional compensation because every time he worked a split shift, AirTouch paid him an amount greater than the minimum wage for all the hours worked plus one additional hour. The Wage Order provides that an employee who works a split shift must be compensated highly enough to ensure that the employer pays the employee more than the minimum wage for the time the employee actually works plus one hour.
The trial court did not err in granting summary judgment against Katz. She signed a release agreement and in exchange, she received $25,796.28. However, Katz argued that because her right to reporting time pay and split shift pay was undisputed, the release of rights was ineffective. The court of appeal rejected Katz’s argument and found that the release was enforceable and covered her claims.
The court of appeal found that the attorney fees award was partially improper. Labor Code section 218.5 provides that in an action for the nonpayment of wages “the court shall award reasonable attorney’s fees and costs to the prevailing party if any party to the action requests attorney’s fees and costs upon the initiation of the action.” Section 218.5 further provides, “This section does not apply to any action for which attorney’s fees are recoverable under Section 1194.” Labor Code section 1194, subdivision (a), provides, “Notwithstanding any agreement to work for a lesser wage, any employee receiving less than the legal minimum wage or the legal overtime compensation applicable to the employee is entitled to recover in a civil action the unpaid balance of the full amount of this minimum wage or overtime compensation, including interest thereon, reasonable attorney’s fees, and costs of suit.” Section 218.5 allows for a prevailing party to recover attorney fees but section 1194 only allows a prevailing employee to recover fees.
The split shift claim provision of the Wage Order is a minimum wage regulation. The court found that recovery for split shift compensation is governed by section 1194. Therefore, the defendant employer cannot recover attorney fees from the employees who lost their claim for split shift compensation.
The reporting time claim, however, does not seek minimum or overtime compensation and instead seeks compensation at an employee’s regular rate of pay. The court found that section 218.5 instead of section 1194 applies to the employees’ reporting time claims because the action is one brought on account of nonpayment of wages. Section 218.5 is a “two-way fee-shifting statute,” which means that AirTouch can recover attorney fees as the prevailing party. The court of appeal remanded the case back to the trial court for it allocate the reasonable fees incurred by AirTouch in defending the reporting time claim and then award AirTouch those fees.
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