©2024 Seyfarth Shaw LLP www.seyfarth.com 2024 Cal-Peculiarities | 313 A different result might obtain if the employer requires the employee to remain employed after the calculation date. The DLSE, emphasizing that bonus law is subject to “principles of equity,” declined to approve a bonus arrangement that paid ordinary bonuses soon after they were calculated but that deferred part of extraordinarily large bonuses until the next fiscal year, and that would deny payment of the deferred portion to an employee who failed to remain employed until then. Although the employer explained that the purpose of the deferred payment was to encourage continued employment, the DLSE questioned why deferred payment applied only to extraordinarily large bonuses. DLSE Opinion Letter 1993.01.19, at 3 (“an argument could be fashioned which would convince a court that making an employee wait for an ascertainable bonus simply because the amount of the bonus exceeded a certain figure would be inequitable under certain circumstances”). 408 Lab. Code § 3751(a). 409 Ralphs Grocery Co. v. Superior Ct., 110 Cal. App. 4th 694 (2003) (acknowledging that creating incentives for managers to reduce workplace injuries and resulting workers’ compensation costs advances goal of workers’ compensation system, but reasoning that “plain language” of § 3751 forbade Ralphs Grocery to consider workers’ compensation costs in calculating management bonuses). 410 Prachasaisoradej v. Ralphs Grocery Co., 42 Cal. 4th 217 (2007). 411 An example of the decisions the Supreme Court distinguished is Quillian v. Lion Oil Co., 96 Cal. App. 3d 156 (1970), which affirmed a judgment for a gasoline station manager who recovered unpaid bonus wages. The employer had unlawfully reduced the manager’s bonus by deducting from the predetermined amount of the manager’s bonus the full dollar amount of the cash and merchandise shortages at the gas station. Id. at 163. 412 42 Cal. 4th at 237. 413 Id. at 228. 414 Id. at 248 (Werdegar, J., dissenting). 415 Id. at 252. 416 Ralphs Grocery Co. v. Superior Ct., 110 Cal. App. 4th 694 (2003). 417 Prachasaisoradej v. Ralphs Grocery Co., 42 Cal. 4th 217, 244 (2007) (“Ralphs’ profit-based supplementary ICP, designed to reward employees beyond their normal pay for their collective contribution to store profits, did not violate the wage protection policies of Labor Code sections 221, 400 through 410, or 3751, or Regulation 11070, insofar as the Plan included store expenses such as workers’ compensation costs, cash and merchandise shortages, breakage, and third party tort claims in the profit calculation.”). 418 Id. at 248 n.4 (Werdegar, J., dissenting). 419 Schachter v. Citigroup, Inc., 47 Cal. 4th 610 (2009). 420 29 C.F.R. § 778.209(b). 421 DLSE Enforcement Policies and Interpretations Manual § 49.2.4 (2002) (“Since the bonus was earned during straight time as well as overtime hours, the overtime “premium” on the bonus is half-time or full-time (for double time hours) on the regular bonus rate. The regular bonus rate is found by dividing the bonus by the total hours worked during the period ..., including overtime hours.”). 422 DLSE Enforcement Policies and Interpretations Manual §§ 49.2.4.2–49.2.4.3 (2002). 423 Alvarado v. Dart Container Corp., 243 Cal. App. 4th 1200 (2016). 424 Alvarado v. Dart Container Corp., 243 Cal. App. 4th 1200 (2016), review granted, No. S232607 (May 11, 2016). The question presented on review is: “What is the proper method for calculating the rate of overtime pay when an employee receives both an hourly wage and a flat sum bonus?” 425 4 Cal. App. 5th 542 (2018). 426 Id. at 568. 427 Id. at 574-75 (Cantil-Sakauye, C.J., concurring). 428 See 29 C.F.R. § 531.50(a). 429 Lab. Code § 351 (providing in full: “No employer or agent shall collect, take, or receive any gratuity or a part thereof that is paid, given to, or left for an employee by a patron, or deduct any amount from wages due an employee on account of a gratuity, or require an employee to credit the amount, or any part thereof, of a gratuity against and as a part of the wages due the employee from the employer. Every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for. An employer that permits patrons to pay gratuities by credit card shall pay the employees the full amount of the gratuity that the patron indicated on the credit card slip, without any deductions for any credit card payment processing fees or costs that may be charged to the employer by the credit card company. Payment of gratuities made by patrons using credit cards shall be made to the employees not later than the next regular payday following the date the patron authorized the credit card payment.”). 430 Lab. Code § 351 (employer shall not “require an employee to credit the amount, or any part thereof, of a gratuity against and as a part of the wages due the employee from the employer”). See Henning v. IWC, 46 Cal. 3d 1262 (1988) (“tip credits” allowed under federal law forbidden under California law). A violation is an unfair business practice, making recovery possible, as a matter of restitution, under California’s Unfair Competition Law, B&P Code § 17200. Application Grp., Inc. v. Hunter Grp., Inc., 61 Cal. App. 4th 881, 907-08 (1998). 431 Lab. Code § 351 (“Every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for.”). Cf. Avidor v. Sutter’s Place, Inc., 212 Cal. App. 4th 1439 (2013) (permitting tip pooling among card dealers, casino hosts, porters, card control employees, and housekeeping employees where dealers allocated 10% of tips to pool and no employee in pool was an “agent” of the employer); Leighton v. Old Heidelberg, Ltd., 219 Cal. App. 3d 1062 (1990) (permitting tip pooling among waiters, buspersons, and bartenders, where all participants gave direct service to customer and the allocation of 15% of waiter’s tip to busperson and 5% to bartender accorded with “industry practice”). 432 See Avidor, 212 Cal. App. 4th at 1451 (citing Lab. Code § 350).
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