1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 DONNIE SANCHEZ BARRAGAN, Case No.: 3:19-cv-01766-AJB-AGS ARACELI BARRAGAN, and 12 JEREMEY BURCHAM, individually ORDER: 13 and on behalf of others similarly situated, (1) GRANTING IN PART 14 Plaintiffs, PLAINTIFFS’ EX PARTE MOTION 15 FOR RECONSIDERATION, (Doc. No. v. 55); 16 HOME DEPOT U.S.A., INC., a 17 Delaware Corporation, (2) DENYING AS MOOT Defendant. PLAINTIFFS’ MOTION FOR LEAVE 18 TO FILE A SUR-REPLY, (Doc. No. 70); 19 (3) GRANTING IN PART AND 20 DENYING IN PART PLAINTIFF 21 BURCHAM’S MOTION FOR SUMMARY JUDGMENT, (Doc. No. 22 59); AND 23 (4) GRANTING IN PART AND 24 DENYING IN PART HOME DEPOT’S 25 MOTION FOR SUMMARY JUDGMENT, (Doc. No. 60) 26 27 This wage and hour putative class action is brought by three Plaintiffs. Presently 28 pending before the Court are four motions: (1) Plaintiffs’ ex parte motion for 1 reconsideration, (Doc. No. 55), (2) Plaintiff Jeremey Burcham’s motion for summary 2 judgment, (Doc. No. 59), (3) Defendant Home Depot’s (“Home Depot”) motion for 3 summary judgment, (Doc. No. 60), and (4) Plaintiffs’ notice of intervening authority and 4 motion for leave to file a sur-reply in support of the ex parte motion for reconsideration, 5 (Doc. No. 70). The motions have been fully briefed and argument has been held. For the 6 reasons provided in detail below, the Court (1) GRANTS IN PART the ex parte motion 7 for reconsideration, (2) GRANTS IN PART AND DENIES IN PART Plaintiff 8 Burcham’s motion for summary judgment, (3) GRANTS IN PART AND DENIES IN 9 PART Home Depot’s motion for summary judgment, and (4) DENIES AS MOOT the 10 request for leave to file a sur-reply. 11 I. BACKGROUND 12 This is a wage and hour class action centering around Home Depot’s Success 13 Sharing bonus program. Home Depot’s Success Sharing bonus program rewards Home 14 Depot’s associates for meeting sales objectives and company goals. If a particular Home 15 Depot store achieves between 95 and 110 percent of its sales goal for the year, a bonus 16 award is given to the store that must be divided up among eligible store employees. (See 17 Deposition of Christine Barnaby (“Barnaby Depo.”), Doc. No. 59-3, at 58:9-60:24.) Each 18 employee’s Success Sharing bonus is based on a relative percentage of his or her earnings 19 compared with the earnings of others at the store. Important for this dispute, if an 20 employee’s share of the bonus is below a designated minimum amount ($100 for most 21 employees, $200 for department supervisors), the employee will receive a lump sum 22 minimum bonus payment. (Id. at 60:25-61:4, 66:7-67:12.) 23 The gravamen of Plaintiffs’ operative Complaint is that prior to September 2018, 24 Home Depot did not adjust overtime payments to account for the additional wages it paid 25 through the Success Sharing program when it awarded the minimum ($100 or $200) 26 Success Sharing bonus payments. (See Doc. No. 59-1 at 7.) In September 2018, Home 27 Depot apparently changed course and started adjusting overtime pay to account for 28 minimum Success Sharing payments under the following formula: bonus amount divided 1 by non-overtime hours during the bonus period multiplied by 1.5 times overtime hours 2 worked. (Id.) 3 Plaintiff Burcham (and not the other two Plaintiffs) received a minimum, $100, 4 Success Sharing payment in March 2018 for the August 2017 through January 2018 5 Success Sharing plan period. (See Declaration of Jeremy Burcham (“Burcham Decl.”), 6 ¶¶ 2–3.) He also worked overtime during this Success Sharing plan period in October, 7 November, and December of 2017 and again in January of 2018. (Id.) Consistent with 8 Home Depot’s practices in the early 2018 timeframe, it did not adjust Plaintiff Burcham’s 9 overtime wage to account for the additional Success Sharing pay attributable to the August 10 2017 through January 2018 Success Sharing plan period. 11 Plaintiff Burcham’s employment with Home Depot came to an end in February 12 2019. (See Deposition of Jeremy Burcham (“Burcham Depo.”), Doc. No. 59-4, at 17:8-16.) 13 Plaintiff Burcham contends because Home Depot had not adjusted his overtime wages to 14 account for his March 2018 minimum Success Sharing bonus as of his termination in 15 February 2019, he was not paid all wages owed upon termination. 16 On August 12, 2019, Plaintiffs Donnie Sanchez Barragan and Araceli Barragan filed 17 the first Complaint with a single cause of action in San Diego Superior Court. (See Doc. 18 No. 1-2.) The single cause of action alleged the failure to provide accurate itemized wage 19 statements. (Id. ¶¶ 37–41.) Home Depot removed the action to this Court on September 13, 20 2019. (Doc. No. 1.) In December 2019, the same two named Plaintiffs filed a First 21 Amended Complaint (“FAC”). (Doc. No. 18.) The FAC added three new causes of action 22 arising out of Home Depot’s failure to properly pay overtime wages: (1) failure to pay 23 overtime, (2) failure to pay all wages due upon termination, and (3) violation of 24 California’s unfair competition law (“UCL”). (Id.) In July 2020, after further discovery and 25 investigation into Home Depot’s pay practices, Plaintiffs filed a Second Amended 26 Complaint (“SAC”). (Doc. No. 33.) The SAC added a new named Plaintiff, Jeremey 27 Burcham, and also added a new claim, styled as the third cause of action, for failure to pay 28 all wages earned each pay period. (Id. ¶¶ 53–59.) Plaintiffs’ SAC asserted five claims for 1 (1) failure to provide accurate itemized wage statements (brought by all three Plaintiffs), 2 (2) failure to pay overtime (brought by Plaintiff Burcham only), (3) failure to pay all wages 3 earned each pay period (brought by all three Plaintiffs), (4) failure to pay all wages due 4 upon termination (brought by all three Plaintiffs), and (5) violation of California’s UCL, 5 (brought by all three Plaintiffs). 6 II. DISCUSSION 7 A. Plaintiffs’ Ex Parte Motion for Reconsideration 8 Before addressing the motions for summary judgment, the Court will first consider 9 the ex parte motion for reconsideration. As background, after the filing of the SAC, Home 10 Depot moved to dismiss the third claim for relief for the failure to pay all wages earned 11 each pay period. (Doc. No. 34.) This claim was brought by all three Plaintiffs. The gist of 12 the claim is that Home Depot failed to pay Plaintiffs for all wages because Home Depot 13 paid Plaintiffs their meal premiums at their base hourly rate, and not at their adjusted 14 regular rate of pay (i.e., the employee’s base rate of compensation plus any adjustments to 15 that rate arising from additional compensation the employee receives, including the 16 Success Sharing bonus payments). 17 In arguing for dismissal of this claim, Home Depot contended that: (1) Plaintiffs 18 framed the claim as a violation of California Labor Code § 204, but that section lacks a 19 private right of action, (2) Ferra v. Loews Hollywood Hotel, LLC, 40 Cal. App. 5th 1239 20 (2019) was a bar to the claim, and (3) Plaintiffs improperly sought to relate back their new, 21 unrelated claims in the third cause of action to the original pleading date. 22 In opposition to the motion to dismiss, Plaintiffs argued the claim was not dependent 23 on, or brought pursuant to Labor Code1 § 204. (Doc. No. 39 at 11.) Instead, Plaintiffs cited 24 paragraph 5 of the SAC to demonstrate that the cause of action was brought pursuant to 25 Labor Code § 1194 instead, which permits an employee to bring a civil action to recover 26 27 28 1 All references to “Labor Code” are to the California Labor Code, unless otherwise noted. 1 underpaid wages. (Id. at 11.) Plaintiffs also assert that, pursuant to Labor Code § 218, they 2 have a private right of action to pursue unpaid wages for missed meal and rest breaks under 3 Labor Code § 226.7. (Id. at 11–12.) In reply, Home Depot noted that the third cause of 4 action “fails entirely to mention” either Labor Code § 218 or § 1194. (Doc. No. 40 at 4.) 5 Home Depot asserts that mentioning these provisions “in passing” is insufficient to state a 6 claim. (Id.) 7 Agreeing with Home Depot, the Court granted the motion, and dismissed the third 8 claim without leave to amend. (Doc. No. 51.) First, the Court concluded that Labor Code 9 § 204 cannot serve as the basis for Plaintiffs’ claim as it does not permit a private right of 10 action, and in any event, Labor Code § 204 provides the right to timely wages, not a specific 11 amount or calculation of wages. Second, despite Plaintiffs’ failure to provide a short and 12 plain statement as to which Labor Code provision its third claim was based on, the Court 13 nevertheless analyzed Plaintiffs’ claim as if it had been clearly pleaded under either Labor 14 Code §§ 226.7 or 1194. The Court held then that Plaintiffs failed to adequately plead their 15 Labor Code §§ 226.7 or 1194 claims. No leave to amend was provided to Plaintiffs, but 16 contrary to Plaintiffs’ assertion, the claim was not dismissed with prejudice. Plaintiffs now 17 move for reconsideration of the order dismissing the third claim for relief. 18 1. Analysis 19 “Reconsideration is appropriate if the district court (1) is presented with newly 20 discovered evidence, (2) committed clear error or the initial decision was manifestly unjust, 21 or (3) if there is an intervening change in controlling law.” School Dist. No. 1J, Multnomah 22 County, Oregon v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993). Plaintiffs argue: (1) 23 there is an intervening change in the law that warrants reconsideration of the Court’s prior 24 order, and (2) dismissing the third cause of action with prejudice and without leave to 25 amend was clear error. Based on the second ground, the Court GRANTS IN PART the 26 motion for reconsideration, and provides Plaintiffs leave to amend their third claim. 27 In dismissing Plaintiffs’ third claim without leave to amend, the previous order noted 28 that “Plaintiffs have amended their complaint multiple times. Nothing in Plaintiffs’ filings 1 indicate that the newly alleged claims in the third cause of action were not discoverable 2 when Plaintiffs filed their initial complaint.” (Doc. No. 51 at 7.) While this may have been 3 true, Plaintiffs’ reconsideration motion also highlights that the parties had stipulated to 4 leave to amend to add the third claim for meal/rest break violations. (Doc. No. 58 at 4.) 5 This is a point not considered by the Court in its previous order. Accordingly, because 6 denial of leave was not based on futility of the amendment, and in light of this new 7 consideration, the Court provides Plaintiffs one final attempt to allege a claim based on the 8 failure to pay premium wages at the correct wage. In this amended claim, Plaintiffs are to 9 clearly and concisely set forth its claim in a short and plain statement such that Home 10 Depot can adequately defend against the allegations raised. 11 To be clear, Plaintiffs’ motion is granted in part. The Court does not reverse its 12 earlier decision to dismiss the third claim. The third claim remains dismissed for failure to 13 provide a short and plain statement of the relief Plaintiffs are entitled to. However, this 14 order amends the prior portion of the order which denied Plaintiffs leave to amend. For the 15 foregoing reasons, the Court GRANTS IN PART Plaintiffs’ motion for reconsideration, 16 and DENIES AS MOOT the request to file a sur-reply. (Doc. No. 55.) 17 B. The Parties’ Cross Motions for Summary Judgment 18 Having addressed the ex parte motion for reconsideration, the Court will turn to 19 arguments related to the pending summary judgment motions. Both Plaintiff Burcham and 20 Home Depot filed cross motions for summary judgment. (Doc. Nos. 59–60.) To the extent 21 the parties’ arguments overlap, they will be addressed together below. The Court 22 additionally notes that the parties agree on most material facts, and the disagreement 23 centers around the application of those undisputed facts to the law. 24 1. Legal Standard Governing Motions for Summary Judgment 25 A court may grant summary judgment when it is demonstrated that there exists no 26 genuine dispute as to any material fact, and that the moving party is entitled to judgment 27 as a matter of law. See Fed. R. Civ. P. 56(a); Adickes v. S.H. Kress & Co., 398 U.S. 144, 28 157 (1970). The party seeking summary judgment bears the initial burden of informing a 1 court of the basis for its motion and of identifying the portions of the declarations, 2 pleadings, and discovery that demonstrate an absence of a genuine dispute of material fact. 3 See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A fact is “material” if it might 4 affect the outcome of the suit under the governing law. See Anderson v. Liberty Lobby, 5 Inc., 477 U.S. 242, 248–49 (1986). A dispute is “genuine” as to a material fact if there is 6 sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. See 7 Long v. County of Los Angeles, 442 F.3d 1178, 1185 (9th Cir. 2006). 8 Where the moving party will have the burden of proof on an issue at trial, the movant 9 must affirmatively demonstrate that no reasonable trier of fact could find other than for the 10 movant. See Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). Where 11 the non-moving party will have the burden of proof on an issue at trial, the movant may 12 prevail by presenting evidence that negates an essential element of the non-moving party’s 13 claim or by merely pointing out that there is an absence of evidence to support an essential 14 element of the non-moving party’s claim. See Nissan Fire & Marine Ins. Co. v. Fritz 15 Companies, 210 F.3d 1099, 1102–03 (9th Cir. 2000). If a moving party fails to carry its 16 burden of production, then “the non-moving party has no obligation to produce anything, 17 even if the non-moving party would have the ultimate burden of persuasion.” Id. If the 18 moving party meets its initial burden, the burden then shifts to the opposing party to 19 establish that a genuine dispute as to any material fact actually exists. See Matsushita Elec. 20 Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The opposing party cannot 21 “rest upon the mere allegations or denials of [its] pleading but must instead produce 22 evidence that sets forth specific facts showing that there is a genuine issue for trial.” See 23 Estate of Tucker, 515 F.3d 1019, 1030 (9th Cir. 2008) (internal quotation marks and 24 citation omitted). 25 The evidence of the opposing party is to be believed, and all reasonable inferences 26 that may be drawn from the facts placed before a court must be drawn in favor of the 27 opposing party. See Stegall v. Citadel Broad, Inc., 350 F.3d 1061, 1065 (9th Cir. 2003). 28 However, “[b]ald assertions that genuine issues of material fact exist are insufficient.” See 1 Galen v. County of Los Angeles, 477 F.3d 652, 658 (9th Cir. 2007); see also Day v. Sears 2 Holdings Corp., No. 11–09068, 2013 WL 1010547, *4 (C.D. Cal. Mar. 13, 2013) 3 (“Conclusory, speculative testimony in affidavits and moving papers is insufficient to raise 4 genuine issues of fact and defeat summary judgment.”). Further, a “motion for summary 5 judgment may not be defeated . . . by evidence that is ‘merely colorable’ or ‘is not 6 significantly probative.’” See Anderson, 477 U.S. at 249–50; see also Hardage v. CBS 7 Broad. Inc., 427 F.3d 1177, 1183 (9th Cir. 2006) (same). If the nonmoving party fails to 8 produce evidence sufficient to create a genuine dispute of material fact, the moving party 9 is entitled to summary judgment. See Nissan Fire & Marine, 210 F.3d at 1103. 10 2. The Court’s Subject Matter Jurisdiction 11 First to be addressed are any concerns regarding this Court’s subject matter 12 jurisdiction. Home Depot argues in its motion for summary judgment that Plaintiffs have 13 no Article III standing with respect to the first claim for inaccurate itemized wage 14 statements. (Doc. No. 60-1 at 18.) Plaintiffs agree with Home Depot and asks the Court to 15 remand the entire case to state court based on this one claim. (See Doc. No. 62 at 5.) While 16 the parties agree as to the standing arguments, where the parties differ is the appropriate 17 remedy. Home Depot advocates for a dismissal of the claim, whereas Plaintiffs seek a 18 remand of the entire case. (Id.) Both parties are incorrect. 19 Labor Code § 226(a)(9)—the provision the inaccurate wage statement claim is based 20 on—requires an employer to provide an accurate itemized statement showing, among other 21 things, “all applicable hourly rates in effect during the pay period and the corresponding 22 number of hours worked at each hourly rate by the employee . . ..” Home Depot argues that 23 Plaintiffs lack standing to bring a wage statement claim because they have no concrete 24 injury flowing from the failure to display this information on the wage statements. (Doc. 25 No. 60-1 at 20.) Plaintiffs agree, and so, they argue that the appropriate action is for the 26 Court to remand the entire case to state court. The Court disagrees with this position. 27 The Ninth Circuit has very recently addressed this issue of standing in relation to a 28 claim under Labor Code § 226(a). In Magadia v. Wal-Mart Assocs., Inc., the Ninth Circuit 1 considered whether a plaintiff had standing to bring wage-statement claims under Labor 2 Code § 226(a). See 999 F.3d 668, 678 (9th Cir. 2021). The employer, like Home Depot 3 here, argued that a violation of Labor Code § 226(a) did not create a cognizable Article III 4 injury because there was no concrete injury. (Id.) The Ninth Circuit held otherwise. In 5 reaching this decision, the Ninth Circuit reasoned that Labor Code § 226(a) protects 6 employees’ concrete interest in receiving accurate information about their wages in their 7 pay statements, and in being “adequately informed of [the] compensation received” during 8 the pay period. (Id.) 9 Here, Plaintiffs adequately allege they did not receive the full information they were 10 entitled to under the law. Therefore, Magadia precludes a finding that Plaintiffs lack 11 standing to assert their wage statement claim. Although Home Depot disagrees with the 12 premise that required information was omitted, this does not invalidate Plaintiffs’ initial 13 concerns that certain information was absent from their wage statements. There is no 14 requirement under the law that a plaintiff prove they are likely to succeed on the merits 15 before they can be deemed to have standing. Therefore, Home Depot’s argument regarding 16 standing, and Plaintiffs’ request for remand based on lack of standing both fail. 17 In addition, Plaintiffs seem to request the remand of the entire case, including the 18 other claims regarding overtime, failure to pay all due wages, and the derivative claims. 19 (Doc. No. 62 at 5.) These other claims are not contingent on the success of Plaintiffs’ 20 inaccurate wage statement claim. Even if the Court were to find that it had no jurisdiction 21 over the wage statement claim (which it does not), Plaintiffs do not adequately explain how 22 that would warrant a remand of the entire action. There is no argument that the Court lacks 23 jurisdiction over the remaining causes of action. 24 Accordingly, the Court finds that it has jurisdiction over the action. 25 3. The Merits of Plaintiffs’ First Claim for Relief for Inaccurate Wage 26 Statements 27 Finding that Plaintiffs have standing to bring their first claim for relief for inaccurate 28 wage statements, the Court will turn to the substantive merits of Home Depot’s motion for 1 summary judgment as to this wage statement claim. This claim is brought by all three 2 Plaintiffs and alleges inaccurate wage statements based on Home Depot’s failure to account 3 for the bonus payments in calculating the hourly rate. Labor Code § 226, the relevant 4 provision, requires employers to include on wage statements, “all applicable hourly rates 5 in effect during the pay period and the corresponding number of hours worked at each 6 hourly rate by the employee.” 7 Plaintiffs’ allegations are that “Plaintiffs and the Pay Stub Class received 8 compensation in the form of an hourly wage and cash incentive bonuses.” (SAC ¶ 46.) 9 After Home Depot paid the foregoing bonuses, it issued wage statements showing a single 10 line item for “FLSA OTADJ.” This line item reflects overtime wages. (See id. ¶ 31.) 11 According to Plaintiffs, Home Depot failed to re-issue any wage statements showing the 12 correct, adjusted hourly rate for overtime hours worked and the number of hours worked 13 at each rate in light of the bonus payments. (Id. ¶ 32.) 14 In their opposition brief, Plaintiffs “agree that Magadia extinguishes the First Cause 15 of Action for Wage Statement violations as presented to this Court.” (Doc. No. 62 at 6.) In 16 Magadia, the Ninth Circuit held that bonus overtime adjustments that span several pay 17 periods do not trigger the pay-period-based wage statement requirements under Labor 18 Code § 226. See 999 F.3d at 681. The Ninth Circuit relied on a recent California court 19 opinion, which also recognized that the supposed “hourly rate” for the adjusted overtime 20 pay “is a fictional hourly rate calculated after the pay period closes in order to comply with 21 the Labor Code section on overtime”—“[i]t appears as part of the calculation for an 22 overtime bonus and then disappears, perhaps never to be seen again.” Id. (quoting Morales 23 v. Bridgestone Retail Operations, LLC, 2020 WL 1164120, at *1, *5 (Cal. Ct. App. Mar. 24 11, 2020).) As Plaintiffs concede, this holding forecloses their ability to succeed on the 25 merits of their wage statement cause of action. Because Home Depot must retroactively 26 calculate the overtime adjustment based on work from prior periods, it is not an “hourly 27 rate in effect during the pay period.” Cal. Lab. Code § 226(a). Instead, it is a “fictional” 28 hourly rate calculated only after the pay period has closed. Thus, the law does not mandate 1 that this fictional hourly rate appear on wage statements. It follows that Home Depot may 2 not be liable for failing to disclose this rate on its wage statements. 3 Accordingly, the Court GRANTS summary judgment in favor of Home Depot as to 4 the first claim for relief in the SAC. 5 4. Plaintiff Burcham’s Second Claim for Failure to Pay Overtime 6 The parties also filed cross summary judgment motions on the second claim for 7 relief. The second claim for relief—brought by Plaintiff Burcham only—asserts that Home 8 Depot failed to pay all overtime wages owed. In essence, the dispute concerns whether 9 Home Depot owed overtime when it awarded Plaintiff Burcham a minimum $100 bonus. 10 The gravamen of Plaintiff Burcham’s claim is that Home Depot should have recalculated 11 overtime pay after it paid him a $100 bonus. 12 California law looks to an employee’s “regular rate” to determine overtime wages 13 owed to employees. Cal. Lab. Code § 510. For purposes of determining what payments are 14 included or excluded from an employee’s regular rate, absent controlling or conflicting 15 California law, “California follows the federal standard. . ..” Prachasaisoradej v. Ralphs 16 Grocery Co., 42 Cal. 4th 217, 242 n.14 (2007) (citing Huntington Mem’l Hosp. v. Superior 17 Court, 131 Cal. App. 4th 893, 902 (2005)). The regular rate of pay includes all 18 remuneration an employee receives, with some exceptions discussed below. See 29 U.S.C. 19 § 207(e). Bonuses “must be totaled in with other earnings to determine the regular rate on 20 which overtime pay must be based.” 29 C.F.R. § 778.208. Whether there is an obligation 21 to include the bonus with other earnings to determine the regular rate depends on whether 22 the bonus can be classified as a “percentage-based bonus” or a “flat sum bonus.” This 23 lawsuit arose because the parties characterize Home Depot’s Success Sharing bonus 24 differently. Plaintiffs believe the $100 bonus is a “flat sum bonus,” whereas Home Depot 25 considers the $100 bonus a “percentage-based bonus.” 26 A “percentage-based bonus” (what Home Depot advocates for) is considered an 27 exception to the general rule that the regular rate of pay includes all remuneration an 28 employee receives. See 29 C.F.R. § 778.210. In other words, an employer is not liable for 1 additional overtime pay when they offer “percentage-based bonuses.” A “percentage-based 2 bonus” is one in which the employer will award a bonus calculated as a percentage of an 3 employee’s total wages (regular pay plus overtime pay). If an employer grants a bonus to 4 an employee as a percentage of total pay, the employer increased both the regular rate of 5 pay and the bonus pay by the same percentage. Under a “percentage-based bonus,” there 6 is no need for an employer to recalculate the regular rate on which overtime pay must be 7 based, because the employer has already accounted for an increase in overtime pay. 8 By contrast, a “flat sum bonus” (what Plaintiff Burcham advocates for) is one in 9 which the employer awards a lump sum which is not tied to the employee’s earnings. Thus, 10 “flat sum” bonuses must then be factored into an employee’s regular rate, and the overtime 11 pay must be recalculated in order to account for this increase in an employee’s overtime 12 earnings. See Alvarado v. Dart Container Corp. of California, 4 Cal. 5th 542, 562 (2018), 13 as modified (Apr. 25, 2018) (“[A] flat sum bonus must be treated as if it were earned on a 14 per-hour basis throughout the relevant pay period, augmenting the employee’s other hourly 15 wages.”). An overtime premium must then be paid after the fact to account for additional 16 overtime owed to the employee. (Id.) 17 The facts surrounding Home Depot’s payment of bonuses under the Success Sharing 18 program are not materially in dispute. Under Home Depot’s Success Sharing program, 19 Home Depot offered a bonus to eligible employees payable twice each year, in March and 20 September. Whether a bonus was available depended on the performance of each Home 21 Depot store. A store needed to achieve at least 95% of its financial target for employees of 22 that store to receive any Success Sharing bonus. If a store reached their financial targets, 23 Home Depot applied another small percentage to an employee’s earnings (regular and 24 overtime) during the bonus calculation period to determine the bonus for each eligible 25 employee. Home Depot applied the same percentage to each individual’s regular and 26 overtime earnings to determine the Success Sharing bonus amount. For example, Home 27 Depot could determine that the Success Sharing bonus was 1% of an employee’s total 28 earnings, including overtime. To award every eligible employee a meaningful bonus, 1 Home Depot had a policy of rounding up an employee’s bonus if after applying the relevant 2 percentage to an individual’s total earnings, the bonus was less than $100. At issue in this 3 case, are these minimum $100 bonuses. 4 Plaintiff Burcham received one of these $100 bonuses in March 2018. During this 5 bonus period, Plaintiff Burcham also worked overtime hours. He argues that because this 6 $100 bonus is a “flat sum” bonus, Home Depot needed, but failed to, recalculate his regular 7 rate, and pay him an overtime premium. Home Depot, on the other hand, argues that $100 8 Success Sharing bonus was a percentage-based bonus that did not require an additional 9 overtime payment. (Doc. No. 60-1 at 21.) Home Depot maintains that the $100 bonus is a 10 percentage-based bonus because it increases the percentage that may be applied to achieve 11 at least a $100 bonus. To give an example, Home Depot explains that “if a store’s 12 percentage was 2%, an eligible associate whose total eligible earnings were $3,333.33 13 would need the percentage increased to about 3% to receive a $100 bonus if the store 14 achieved its financial targets.” (Doc. No. 60-1 at 24.) Interestingly, although Home Depot 15 failed to pay overtime premiums prior to September 2018, it changed its policy starting in 16 September 2018 when it started adjusting overtime pay to account for the minimum 17 bonuses. 18 The parties are in agreement that the bonuses that exceeded $100 were “percentage- 19 based bonuses” in which no overtime premium is owed. (Doc. No. 62 at 7 (“Burcham’s 20 overtime claims take no issue with percentage-based bonuses under the Success Sharing 21 plans.”).) Therefore, Home Depot cannot be held liable for the bonus payments over $100 22 because they are properly calculated as a percentage of an employee’s regular and overtime 23 earnings, in accordance with 29 C.F.R. § 778.210. 24 The Court is only called upon to determine whether the $100 bonuses were “flat 25 sum” or “percentage-based.” It is not lost upon the Court that Home Depot’s apparent good 26 deed of providing each employee a meaningful bonus to award workers for their 27 productivity has exposed Home Depot to litigation. As Home Depot points out, if it did not 28 increase the payout to achieve a $100 Success Sharing bonuses, Plaintiffs would have no 1 overtime claim at all because these bonuses would be a straightforward percentage-based 2 bonus. (Doc. No. 60-1 at 25.) But because it decided to round up and provide each 3 employee a meaningful bonus of at least $100, it is now apparently on the hook for wage 4 and hour violations. However, based on a plain reading of the current overtime laws, Home 5 Depot’s Success Sharing program offers two different kinds of bonuses: (1) a percentage- 6 based bonus for those employees with awards over $100, and (2) a flat sum bonus for those 7 who received a $100 minimum bonus. 8 The evidence in the record does not support Home Depot’s interpretation of the 9 bonuses as percentage-based. California labor laws are to be liberally construed in favor of 10 worker protection. See, e.g., Mendoza v. Nordstrom, Inc., 2 Cal. 5th 1074, 1087 (2017). 11 Home Depot stands by its assertion that only percentages are used to calculate the $100 12 bonuses. It argues that it will first calculate the bonus based on a percentage applicable to 13 all employees, and once it determines that the resulting bonus is less than $100, Home 14 Depot will go back and increase the percentage to achieve a minimum $100 bonus. 15 However, there is simply no evidence in the record to support this claim. For example, 16 there is no document or testimony by a Home Depot employee showing how Home Depot 17 would recalculate these percentages twice to achieve the $100 bonus. Indeed, the evidence 18 merely shows that after applying the first percentage, and determining that the amount is 19 less than $100, the bonus is paid as lump sum. (See Barnaby Depo. at 60–61 (“Q: And then 20 if the employee’s share of the total store eligible amount is under a certain minimum, such 21 as $100, the employee will receive a minimum payment; is that correct? A: Yes.”). If the 22 Court were to accept Home Depot’s interpretation of percentage bonuses, all flat sum 23 bonuses could be recharacterized as percentage-based, eviscerating 29 C.F.R. § 778.210. 24 That is not to say that Home Depot did not at some point attempt to calculate the bonus 25 using a percentage. The evidence only indicates that after using a percentage-based 26 calculation, and after determining that this calculation yielded a total less than $100, Home 27 Depot converted the bonus to a lump sum. 28 Because no genuine dispute as to any material fact exists, Plaintiff Burcham is 1 entitled to judgment as a matter of law. 2 a) Basic Rate Regulations 3 Additionally, Home Depot argues that even if the bonus is considered flat sum, the 4 award was nevertheless properly excluded from Plaintiff’s regular rate of pay because the 5 total amount at issue is less than fifty cents per week. Home Depot relies on 29 C.F.R. 6 § 548.3(e), which provides that employers can exclude from an employee’s regular rate of 7 pay, “additional payments in cash or in kind which, if included in the computation of 8 overtime under the Act, would not increase the total compensation of the employee by 9 more than 50 cents a week on the average for all overtime weeks (in excess of the number 10 of hours applicable under section 7(a) of the Act) in the period for which such additional 11 payments are made.” 29 C.F.R. § 548.3(e). 12 However, 29 C.F.R. § 548.3(e) only applies to the calculation of overtime pay in 13 accordance with Section 7(g)(3) of the Fair Labor Standards Act (“FLSA”). That section 14 of the FLSA allows employers and employees to agree to certain basic wage rates and 15 thereby to set a “basic rate” on which overtime will be calculated. The purpose of the 16 provision is to provide an alternative to computing overtime pay at the regular rate and to 17 allow, under specific conditions, the use of an established, agreed-upon basic rate. 18 Establishing a basic rate may simplify the employer’s payroll calculations and bookkeeping 19 by standardizing the employee’s regular rate; this is particularly true if the employee’s 20 regular rate tends to fluctuate dramatically from week to week. See 29 C.F.R. § 548.100(a). 21 Here, Home Depot states that the wage statements show an agreement to pay 22 Plaintiff Burcham a “basic rate” that is equal to his straight time hourly rate, and additional 23 overtime pay is properly excluded. But as set forth in 29 C.F.R. § 548.100(a), the purpose 24 of Section 7(g)(3) of the FLSA, is to provide an exception from the requirements of 25 computing overtime at the regular rate. It logically follows that a basic rate will necessarily 26 be different from the straight time hourly rate in order to give the provision any meaning. 27 Additionally, Home Depot has not submitted any evidence showing that Plaintiff Burcham 28 and Home Depot agreed to some “basic rate” or understanding that the Success Sharing 1 bonuses would be excluded from the computation of overtime pay. See Provine v. Off. 2 Depot, Inc., No. C 11-00903 SI, 2012 WL 2711085, at *6 (N.D. Cal. July 6, 2012). 3 Furthermore, as noted by Plaintiff Burcham, it is doubtful that California’s wage and hour 4 statutes or regulations have adopted this de minimis doctrine found in the FLSA. See 5 Troester v. Starbucks Corp., 5 Cal. 5th 829, 835, 421 P.3d 1114, 1116 (2018), as modified 6 on denial of reh’g (Aug. 29, 2018) (on certification by the Ninth Circuit as to whether 7 California’s wage and hour statutes or regulations adopted the de minimis doctrine found 8 in the FLSA, the Supreme Court of California answered in the negative). In sum, the basic 9 rate regulations do not support Home Depot’s argument that there was an agreement to 10 exclude the bonus from overtime pay. 11 Accordingly, the Court GRANTS summary judgment in favor of Plaintiff Burcham 12 as to the second claim for overtime law violations. Home Depot’s motion for summary 13 judgment is DENIED on this claim. 14 5. Plaintiff Burcham’s Fourth Claim for Waiting-Time Penalties 15 The parties also both argue they are entitled to summary judgment as to the fourth 16 claim for waiting time penalties. Section 203 of the California Labor Code provides for 17 penalties where an employer “willfully” failed to pay wages at the time an employee is 18 terminated. See Cal. Lab. Code § 203. The California Department of Industrial Relations 19 defines the term “willful” as used in Section 203 to mean the absence of a good faith 20 dispute. See 8 Cal. Code Regs. § 13520(a). An employer’s failure to pay is not willful if 21 that failure is due to (1) uncertainty in the law; (2) representations by the taxing authority 22 that no further payment was required; or (3) the employer’s “good faith mistaken belief 23 that wages are not owed” grounded in a “good faith dispute,” which exists when the 24 “employer presents a defense, based in law or fact which, if successful, would preclude 25 any recovery on the part of the employee.” A good faith dispute can exist even if the 26 employer’s proffered defense is “ultimately unsuccessful,” but not if the defense is also 27 “unsupported by any evidence, [is] unreasonable or [is] presented in bad faith.” Diaz v. 28 Grill Concepts Services, Inc., 23 Cal. App. 5th 859, 868 (2018) (citations omitted). 1 Plaintiff Burcham argues that because Home Depot intended not to pay overtime 2 resulting from the bonus payment, he is entitled to a liability determination on his claim 3 for waiting time penalties under Labor Code § 203. (Doc. No. 59-1 at 12.) To support this 4 claim, Plaintiff Burcham asserts that Home Depot’s competitors attempted to pay overtime 5 on similar bonus programs, which undercuts any reasonable belief that Home Depot was 6 excused from overtime obligations when paying minimum Success Sharing bonuses. (Id. 7 at 13.) By contrast, Home Depot moves for summary judgment on this same claim as well, 8 arguing that there is no willful failure to pay wages if the legal duty to pay was unclear at 9 the time of the violation. (Doc. No. 60-1 at 28.) The Court agrees with Home Depot. 10 Here, the record shows Home Depot reasonably believed that it did not owe Plaintiff 11 Burcham premium wages at the time he left his employment based on the legal defenses 12 of the percentage-based exception. As stated above, this defense proved to be unsuccessful. 13 But it is still a defense “based in law” that “would preclude recovery on the part of the 14 employee.” Wilson v. SkyWest Airlines, Inc., No. 19-CV-01491-VC, 2021 WL 2913656, 15 at *3 (N.D. Cal. July 12, 2021) (finding a good faith defense despite the Ninth Circuit’s 16 rejection of the defense). A good faith dispute existed over whether Home Depot owed 17 Plaintiff Burcham overtime on the $100 minimum bonus. In particular, a California district 18 court had already held in 2016 that the Success Sharing bonuses were percentage-based 19 bonuses. See Bell v. Home Depot, Case No. 2:12-cv-02499-JAM-CKD, Doc. No. 113 (E.D. 20 Cal. 2016). Although that court did not address the issue of the $100 minimum bonus, 21 (which this Court finds commuted the percentage basis to a flat sum) there was at least 22 some reasonable basis to mistake the $100 minimum bonus as a percentage-based bonus. 23 Plaintiff Burcham’s Labor Code § 203 claim thus fails. 24 In accordance with the foregoing, the Court GRANTS Home Depot’s motion, and 25 enters summary judgment on the fourth claim for Home Depot. 26 6. Plaintiff Burcham’s Fifth Claim for Violation of the UCL 27 Next, the parties both move for summary judgment as to the UCL claim. Home 28 Depot argues that Burcham’s UCL claim fails as it is entirely duplicative of his overtime 1 claim, and therefore redundant. (Doc. No. 63 at 19.) It explains the UCL would allow only 2 the recovery of additional wages out to a four-year statute of limitations period, beyond the 3 three years otherwise granted to claims for unpaid wages in California. (Id. at 20.) 4 Burcham’s sole claim to allegedly unpaid wages arises out of a Success Sharing bonus paid 5 in March 2018, approximately two years before filing his claims in the operative Second 6 Amended Complaint. (Id.) Therefore, Burcham’s UCL claim adds no possible recovery on 7 top of Burcham’s overtime claim, and it should be dismissed as redundant. (Id.) 8 In moving for summary judgment on this claim, Plaintiff Burcham concedes his 9 claim is derivative of his overtime claim. Plaintiff Burcham, however, argues that his claim 10 is not redundant because injunctive relief may still be necessary. However, former 11 employees lack standing to bring a claim for injunctive relief against their employers 12 because such employees do not stand to benefit from the injunction. See Byrd v. Masonite 13 Corp., 215 F. Supp. 3d 859, 865 (C.D. Cal. 2016). Accordingly, Plaintiff Burcham’s UCL 14 claim may properly be dismissed as duplicative. See O’Connor v. Uber Techs., Inc., 58 F. 15 Supp. 3d 989, 1008 (N.D. Cal. 2014) (dismissing as redundant UCL claim predicated on 16 identical factual allegations as substantive Labor Code claims) 17 In sum, the Court GRANTS summary judgment in favor of Home Depot on Plaintiff 18 Burcham’s UCL cause of action. 19 III. CONCLUSION 20 For all the reasons stated, the Court: 21 (1) GRANTS IN PART Plaintiffs’ motion for reconsideration, (Doc. No. 55); 22 (2) DENIES AS MOOT the motion for leave to file a sur-reply, (Doc. No. 70); 23 (3) GRANTS IN PART AND DENIES IN PART Plaintiff’s motion for summary 24 judgment, (Doc. No. 59); and 25 (4) GRANTS IN PART AND DENIES IN PART Home Depot’s motion for 26 summary judgment, (Doc. No. 60). 27 In sum, the Court grants summary judgment in favor of Home Depot as to the first 28 (inaccurate wage statements), fourth (failure to pay all wages due upon termination), and 1 || fifth (UCL) causes of action. The Court grants summary judgment for Plaintiff Burcham 2 ||as to the second (overtime) claim. 3 By August 18, 2021, the parties must contact Magistrate Judge Andrew G. 4 || Schopler’s chambers for further scheduling of the matter in light of this decision, including 5 ||a time line for an amended complaint addressing the “third claim” only. 6 7 IT IS SO ORDERED. 8 Dated: August 17, 2021
10 United States District Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 19