Supperior Court Issues a $90 Million Cautionary Tale Against Playing Too Close to "The Cliff" With Meal and Rest Break Policies -- Augustus v. American Commercial Security

At this point employers should not need any further "wake up" call to get their meal and rest policies in compliance with California law.  But if anyone is still unconvinced of the potential exposure the granting of a summary judgment in the amount of $89,741,426 in Augustus v.  American Commercial  Security should be persuasive.  

As the ruling in Brinker made clear, the essence of a compliant meal or rest break is that the employer has affirmatively relieved the employee of all work duties within the prescribed time windows and for prescribed durations.  Once the employer has discharged this obligation it has "provided" a break and it doesn't have the further obligation to force the employee to actually go off duty or stay off duty for the entire break period.   

But woe unto the employer whose policies fall short of actually "providing" a compliant break in the first place.  In that case the employer forfeits any argument that any missed break was the result of the employee voluntary decision to waive it. (Since an employee can't waive something he never received.)  

That is exactly what happened in the Augustus case.  The defendant was a security guard company which required its guard to remain "on-call" during breaks.  Judge Wiley's order granting summary judgment explains how this one policy error ended up costing the company nearly $90 million:

In general, ACSS balks at the notion that the employer must relieve workers of all duties for the rest break to be legally valid.  Put simply, if you are on call, you are not on break. . . . [¶] . . .Substantively, California's labor law gave advance notice of the penalties for depriving workers of rest breaks.  Those penalties are straightforward and chastening.  When the view is clear and the exposure chastening , the rational hiker steers clear of the cliff.  ACSS broke the law and must pay according to that law.




Court Clarifies Scope of Permissible Commission Chargebacks -- DeLeon v. Verizon Wireless, LLC

In DeLeon v. Verizon Wireless, LLC the California  Court of Appeal upheld the right of an employer to reclaim or "charge back" commissions which are provisionally advanced for sales that are later canceled.

California case law has been clear for some time in holding that the claw back of an "advance" that was never actually earned is not an illegal deduction from wages.  The usual scenario is an advance on a seemingly valid sale that is never finally consummated because the customer either cancels the order or fails to pay. 

DeLeon represents a slight variation on these facts only because it allowed commission advances to be reversed up to a year after the initial sale had been made where a customer canceled his cell phone service.  But in the context of an ongoing service plan (which may well have included loss leader incentives for the initial sign up), this is just a natural extension of the general rule that earning a commission may be legitimately conditioned on completing a final sale.          

Nevertheless, the discussion in DeLeon, especially when considered in conjunction with last month's decision in Sciborski v. Pacific Bell, begins to shed light on how courts will distinguish a legitimate contractual condition on earning a commission from an unlawful "deduction" or "withholding" of wages. 

Under the principles discussed in these two opinions it appears that courts will generally allow employers to deny a commission payment if an employee fails to fulfill a term that:

  • Is clearly expressed , preferably in writing, before the employee performs the work; and 
  • Is related to the sale itself.  

 By contrast, courts will tend to find a violation of California law where an employer denies a commission payment for a reason that:

  • Is unrelated to the successful completion of the particular sale itself;
  • Is outside the employee's ability to control or influence;
  • Is unpredictable or arbitrary; or
  • Is shifting a cost of doing business which the employer should pay to the employee.   

 It may be a long time before the case law is crystal clear in this area but the main outline of the rules is starting to come into focus.