©2023 Seyfarth Shaw LLP www.seyfarth.com 2023 Cal-Peculiarities | 309 328 Canela v. Costco Wholesale Corp., No. 2013-1-cv-248813 (Santa Clara Sup. Ct. 2023). 329 Fobroy v. Video Only, Inc., No. C-13-4083 EMC, 2014 WL 6306708, at *6 (N.D. Cal. Nov. 14, 2014) (granting summary judgment against Wage Order section 15 temperature claims for a failure to “introduce evidence of deviation from applicable ‘industry wide-standards’“) 330 E.g., Hudgins v. Neiman-Marcus Grp., Inc., 34 Cal. App. 4th 1109 (1995) (unidentifiable returns of merchandise not attributed to sales made by particular employee could not be deducted from commissions); Quillian v. Lion Oil Co., 96 Cal. App. 3d 156 (1979) (unlawful to determine bonus payments by deducting amount of cash shortages for sales). See also Sciborski v. Pac. Bell Directory, 205 Cal. App. 4th 1152 (2012) (unlawful to unilaterally declare commission was unearned and use self-help to deduct funds from wages already paid; although employers and employees may agree on certain conditions to a sales commission being earned, permitting an employer to recoup advances if the conditions are not satisfied, those conditions must be clearly expressed, generally in writing, and must relate to the sale and cannot merely serve as a basis to shift the employer’s cost of doing business to the employee). 331 DLSE Enforcement Policies and Interpretations Manual §§ 11.2.1-11.2.3 (2002). As the DLSE has stated in an opinion letter: “[Labor Code provisions] announce the long-standing policy of the State of California in regard to an employer’s obligation to pay all costs his employee expends or loses in carrying out the duties of the employment. … As is clear from the [Labor Code], under the California law, an employer may not ‘pass through’ the normal costs of operating a business to the employee he hires. Debiting an employee’s earned wages to cover a normal operating expense of the employer is not allowed in California.” DLSE Opinion Letter 2000.08.01 at 4. 332 57 Cal. 2d 319 (1962). 333 Lab. Code § 224 (arguably suggesting that any valid deduction must be authorized by state or federal law or expressly authorized in writing by the employee, or in a collective bargaining agreement, to cover health or pension plan payments). Two cases indirectly support this view: Hudgins v. Neiman Marcus, Inc., 34 Cal. App. 4th 1109 (1995) (suggesting without deciding that Labor Code itself bars deductions for innocently caused business losses); Quillian v. Lion Oil Co., 96 Cal. App. 3d 156 (1979) (applying anti-deduction rule to gas station store manager without addressing whether manager was exempt, on apparent assumption that Labor Code provisions discussed in Kerr’s Catering directly bar deductions for business losses, rather than simply authorize the IWC to issue Wage Orders against those deductions). 334 IWC Wage Orders § 9. 335 IWC Wage Orders § 9; DLSE Enforcement Policies and Interpretations Manual § 45.5.5 (2002). 336 See Dep’t of Indus. Relations v. UI Video Stores, Inc., 55 Cal. App. 4th 1084, 1088 (1997) (Blockbuster Video settled action brought by DLSE alleging that dress code requirements for its 1,914 employees violated section 9(A) of Wage Order 7). 337 Lab. Code § 222.5. 338 Barnhill v. Robert Saunders & Co., 125 Cal. App. 3d 1 (1981) (employers may not seek self-remedies not available to other creditors). The DLSE has opined that employers may take deductions to recover debts owed them, “provided that the amount of the deduction from any one paycheck cannot exceed the amount authorized by the employee for any such deduction, and that after making any such authorized deduction, the employee must still receive no less than the minimum wage.” DLSE Opinion Letter 1999.09.22–1 at 3. Otherwise, the employer must “pursue a civil action to recover any unpaid debt from the employee.” Id. The DLSE also has opined that deductions cannot be taken from final wages, even with employee authorization. DLSE Opinion Letter 2008.11.25-1. While this opinion may be inconsistent with Barnhill, employers should use caution when recovering employee debts or overpayments at termination. 339 California State Employees’ Ass’n v. State of California, 198 Cal. App. 3d 374 (1988) (salary deductions to recoup prior overpayments violated attachment and garnishment laws). 340 DLSE Opinion Letter 2008.11.25 at 4. 341 See Lab. Code § 224. 342 See, e.g., Roman v. Jan-Pro Franchising Int’l, Inc., 342 F.R.D. 274 (N.D. Cal. 2022). 343 Lab. Code § 2802. 344 Lab. Code § 2802(c). 345 Lab. Code § 2802(b). 346 BLACKS LAW DICTIONARY 342 (2d pocket ed. 2001). 347 E.g., DLSE Opinion Letter 2001.03.19 (section 2802 requires reimbursement of client entertainment expenses where entertainment encouraged by employer); DLSE Opinion Letter 1998.11.05 (section 2802 requires reimbursement of mandated auto insurance premiums above statutory minimum); DLSE Opinion Letter 1993.02.22-3 (section 2802 requires reimbursement for actual cost of operating employee’s vehicle in the course of employment). 348 Gattuso v. Harte-Hank Shoppers, Inc., 35 Cal. Rptr. 3d 260 (2005), rev. granted, No. S139555 (Cal. Feb. 22, 2007). 349 Gattuso v. Harte-Hank Shoppers, Inc., 42 Cal. 4th 554 (2007). 350 Id. at 560 n.3 (“In the trial court, Harte-Hanks argued in the alternative that section 2802 did not require employers to reimburse employees ‘for routine expenses of employment such as car expenses,’ but only for losses caused by third parties. Both the trial court and the Court of Appeal rejected that argument, and Harte-Hanks does not assert it in this court. Accordingly, we do not address it here.”). 351 42 Cal. 4th at 568-71, 574. 352 Id. at 570-71. 353 Id. at 574 n.6, 575-76. 354 Estrada v. FedEx Ground Package System, Inc., 154 Cal. App. 4th 1 (2007). 355 Stuart v. RadioShack, 2009 U.S. Dist. LEXIS 57963 (N.D. Cal. June 25, 2009) (Judge Chen). 356 Cochran v. Schwan’s Home Serv., Inc., 228 Cal. App. 4th 1137 (2014).
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