Jones v. Tracy School District

611 P.2d 441, 27 Cal. 3d 99, 165 Cal. Rptr. 100, 25 Wage & Hour Cas. (BNA) 586, 1980 Cal. LEXIS 167, 23 Empl. Prac. Dec. (CCH) 30,988, 26 Fair Empl. Prac. Cas. (BNA) 762

• Court: California Supreme Court
• Decided: May 12, 1980
• Docket: S.F. 24045
• Status: Published

Opinions

Opinion

RICHARDSON, J.

Is a female employee who establishes an unlawful wage discrimination practice which is violative of Labor Code section 1197.5 subject to the two-year limitations period for recovery of back wages, and is she entitled to the attorney’s fees which she incurred in asserting her claim? We will conclude that under the applicable statutory provisions, (1) recovery of back wages is ordinarily limited to the two-year period preceding the filing of a complaint for wage discrimination, but under the circumstances herein presented the period may be extended because plaintiff filed a wage discrimination claim in an earlier federal administrative proceeding; and (2) attorney’s fees are recoverable.

I. The Facts

From a review of the pleadings and declarations filed herein we glean the following uncontradicted facts: Appellant Bessie Jones has been a custodian for respondent Tracy School District since 1964, and has continuously performed the same duties as her male colleagues. In 1968, after four years of wage parity, she was reclassified by the district as a “custodial matron,” with a decrease in salary, while continuing to perform the same work.

In January 1974, appellant requested reinstatement to her former classification with equal pay, together with her lost pay accumulated during the previous six years. In response, the district changed appellant’s classification and gave her commensurate pay, but refused to compensate her for any back wages.

Appellant consulted the United States Department of Labor, which investigated and, on June 24, 1974, informed respondent that it was in violation of the federal Fair Labor Standards Act. (29 U.S.C. § 206(d)(1).) The department estimated that respondent owed $1,838 in back wages as a result of its unlawful discrimination over the preceding six years. Respondent refused to accept the Labor Department’s recommendation, but offered appellant $558.30. This offer was rejected by appellant, who then filed suit in superior court on July 8, 1975, under Labor Code section 1197.5, the state “equal pay” provision. (All further statutory references are to the Labor Code unless otherwise cited.) It is unclear from the record why appellant abandoned assertion of her federal claim.

Appellant moved for a summary judgment, claiming that she was entitled to back pay for the entire period of unlawful discrimination. While the trial court granted her motion, it found that although respondent had discriminated against her for six years, recovery was limited to the actual loss of wages sustained within the two years immediately preceding the filing of her complaint herein. (See § 1197.5, subd. (h).) Accordingly, appellant was awarded only $318.58 in back wages and court costs. Her request for attorney’s fees was denied and she appeals.

II. Limitations Provision

It is undisputed that respondent unlawfully discriminated against appellant because of her sex by withholding a portion of her salary from 1968 to 1974. The issue herein presented is whether appellant may recover compensation for that entire six-year period or only for the limited period during the two years preceding the filing of her complaint. In combination, the language of the statute taken as a whole, prior interpretations of similarly worded antidiscrimination statutes, and the important policy promoted by the statute of limitations, point strongly toward a limitation of recovery. In part III we discuss the question of tolling of the statute of limitations.

Section 1197.5 provides in pertinent part: “(a) No employer shall pay any individual in the employer’s employ at wage rates less than the rates paid to employees of the opposite sex in the same establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions, except where such payment is made pursuant to a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or a differential based on any bona fide factor other than sex.

“(b) Any employer who violates subdivision (a) is liable to the employee affected in the amount of the wages, and interest thereon, of which such employee is deprived by reason of such violation. . . .

“(d) Every employer shall maintain records of the wages and wage rates, job classifications, and other terms and conditions of employment of the persons employed by such employer. All such records shall be kept on file for a period of two years....

“(h) A civil action to recover wages under subdivision (a) may be commenced no later than two years after the cause of action occurs.”

This section was intended to codify the principle that an employee is entitled to equal pay for equal work without regard to gender. (Subd. (a).) An employer in violation of this principle is liable to the employee “in the amount of the wages. . .deprived by reason of such violation.” (Subd. (b).) Other provisions of the section may be paraphrased. The statute is enforced by the Division of Labor Standards Enforcement of the Department of Industrial Relations, which can approve and finalize a settlement between an employer and an employee. (Subd. (c).) Employers are required to keep records of wages and job classifications for two years. (Subd. (d).) An aggrieved employee may file a complaint with the division, which is then charged with the enforcement of the statute. (Subd. (e).) The division may file a civil action to recover back wages on the employee’s behalf (subd. (f)), or an employee may file on his or her own behalf (subd. (g)). Finally, any such action “may be commenced no later than two years after the cause of action occurs.” (Subd. (h).)

To support her contention that recovery of back pay is not limited by the foregoing statute of limitations, appellant correctly observes that section 1197.5 must be read as a whole to give effect to all of its provisions. (People v. Shirokow (1980) 26 Cal.Sd 301, 306-307 [162 Cal.Rptr. 30, 605 P.2d 859]; People ex rel. Younger v. Superior Court (1976) 16 Cal.3d 30, 40 [127 Cal.Rptr. 122, 544 P.2d 1322].) In appellant’s view, subdivision (h) is merely a filing requirement, and the language of subdivisions (b), (e), (f), and (g), seemingly allowing recovery for all back wages without express reference to a two-year limitation, evinces a legislative purpose to provide for complete recovery in discrimination cases.

In this regard, appellant’s contention lacks merit. The section, read as a whole, demonstrates a legislative intent to limit back pay recovery to two years. It is significant that subdivision (d) requires all employers to keep records of wages and job classifications for only two years. As explained below, this requirement discloses a legislative intent to limit recovery of back wages in the manner sought by respondent.

The relationship between the two-year record-keeping requirement of subdivision (d) and the limitations period set forth in subdivision (h) becomes apparent when these provisions are viewed in the light of the important purpose served by the statute of limitations, namely, “to prevent the assertion of stale claims by plaintiffs who have failed to file their action until evidence is no longer fresh and witnesses are no longer available.” (Addison v. State of California (1978) 21 Cal.3d 313, 317 [146 Cal.Rptr. 224, 578 P.2d 941]; People v. Universal Film Exchanges (1950) 34 Cal.2d 649, 659 [213 P.2d 697].) By reason of the operation of subdivision (d), documentary evidence may be lacking to support or defend against claims of discrimination occurring more than two years before the. initiation of an action for back wages, while less stale claims, in all probability, will be well documented. Surely the Legislature would not have imposed only a two-year record retention requirement had it intended to permit unlimited recovery in wage discrimination cases. Thus, in order to harmonize the various provisions of section 1197.5, we read the two-year limit of subdivision (h) as both a filing requirement and a limitation upon recovery.

This interpretation is further supported by prior decisions in cases awarding back pay or similar periodic benefits under similar California statutes or administrative regulations. We have consistently limited the extent of such awards by the applicable statute of limitations. (Fry v. Board of Education (1941) 17 Cal.2d 753, 761 [112 P.2d 229] [teacher’s pay improperly withheld because of reduced job classification]; Dryden v. Board of Pension Commrs. (1936) 6 Cal.2d 575, 580-581 [59 P.2d 104] [policeman’s pension benefits unlawfully withheld]; Raymond v. Christian (1937) 24 Cal.App.2d 92, 115 [74 P.2d 536] [state hospital worker’s pay withheld after administrative revision of pay scale].) Recovery limitations were imposed in these cases on the theory that each deficient payment created a separate and distinct violation, triggering the running of a new limitations period. (Dryden, supra, at [May 1980] p. 581; see Hodgson v. Behrens Drug Company (5th Cir. 1973) 475 F.2d 1041, 1050 [interpreting the federal Fair Labor Standards Act].) The application of this “separate violation” rationale to suits filed under section 1197.5 would allow recovery for the same period during which employers must retain wage records. We think the Legislature intended precisely this result.

Appellant asserts that the language of subdivisions (b), (e), (f) and (g) of section 1197.5, awarding back pay without apparent time limitation, demonstrates a legislative intent to provide for recovery of all back wages. Nonetheless, in cases involving similarly worded antidiscrimination statutes, it has been held that recovery is limited by the period of the applicable statute of limitations. For example, the equal pay provision of the federal Fair Labor Standards Act (29 U.S.C. §§ 206(d)(1), 216(b), 255(a)), containing a two-year limitations period similar to section 1197.5, has been interpreted to limit back pay awards to the two-year period prior to the filing of a complaint. (Hodgson v. Behrens Drug Company, supra, 475 F.2d 1041, 1050; Mitchell v. Birkett (W.D.Ark. 1960) 183 F.Supp. 291, 296; see Shandelman v. Schuman (E.D.Pa. 1950) 92 F.Supp. 334, 335.) We conclude, accordingly, that the use of language which seemingly allows recovery of back wages without express limitation as to time does not conclusively demonstrate a legislative intent to permit recovery without regard to the time which has elapsed before the complaint is filed.

Appellant additionally argues that the remedial nature of section 1197.5 requires us to interpret it liberally in favor of an aggrieved employee. (See Viles v. State of California (1967) 66 Cal.2d 24, 32-33 [56 Cal.Rptr. 666, 423 P.2d 818]; Buck v. City of Eureka (1893) 97 Cal. 135, 137-138 [31 P. 845].) However, we find significance in the fact that the federal courts also operate under a canon which provides that a remedial statute should be construed liberally to effect its purpose. (Peyton v. Rowe (1968) 391 U.S. 54, 65 [20 L.Ed.2d 426, 433, 88 S.Ct. 1549]; Westinghouse Electric Corp. v. Pacific Gas & Electric Co. (9th Cir. 1964) 326 F.2d 575, 580.) Nevertheless, as we have seen, in interpreting a similar remedial antidiscrimination law heretofore discussed, federal courts have limited recovery of back pay in the manner sought by respondent herein.

Appellant observes that her position is supported by a policy statement of the Department of Industrial Relations that recovery under section 1197.5 includes “the balance of wages for the entire period of discrimination....” (Div. of Labor Stds. Enforcement, Internal Policy/ Procedure Memo. No. 79-2 (Mar. 9, 1979).) Although we ordinarily defer to the administrative interpretation of a statute adopted by the agency charged with its enforcement (e.g., Judson Steel Corp. v. Workers’ Comp. Appeals Bd. (1978) 22 Cal.3d 658, 668 [150 Cal.Rptr. 250, 586 P.2d 564]; Louis Stores, Inc. v. Department of Alcoholic Beverage Control (1962) 57 Cal.2d 749, 759 [22 Cal.Rptr. 14, 371 P.2d 758]), such deference is not appropriate here. The foregoing interpretation of section 1197.5 occurs in an internal memorandum, rather than in an administrative regulation which might be subject to the notice and hearing requirements of proper administrative procedure. (Gov. Code, § 11420 et seq.) Further, the memorandum was composed and circulated after the Department of Industrial Relations had become an amicus curiae in this case. Following its issuance, both appellant and the department cited it in their respective briefs. This chronology, in our view, substantially dilutes the authoritative force of the memorandum. (Cf., Carmona v. Division of Industrial Safety (1975) 13 Cal.3d 303, 311-312, fn. 8 [118 Cal.Rptr. 473, 530 P.2d 161].)

In summary, the trial court properly ruled that recovery under section 1197.5 is limited by the two-year statute of limitations of that section. The wording of the provision as a whole, prior interpretations of similar antidiscrimination statutes, and important policy considerations aimed at preventing the litigation of stale claims, together compel this result. However, as we discuss below, the trial court failed to consider the possible application of an equitable tolling of the statute by reason of the filing of a federal wage discrimination claim. Accordingly, the court erred in entering summary judgment for appellant in an amount limited by the two-year period before appellant filed her present suit.

III. Equitable Tolling of the Statute of Limitations

Appellant’s points and authorities in support of her motion for summary judgment referred to a prior attempt by the United States Department of Labor to induce respondent to pay appellant the wages it unlawfully withheld from her. Although appellant failed to specify when, if ever, she filed her complaint with the department, she appended a letter from the department to respondent, dated June 24, 1974, which informed respondent that it was in violation of the federal Fair Labor Standards Act and requested that respondent pay appellant the entire amount of withheld wages back to 1968. The letter referred to prior correspondence from respondent to the department, but did not indicate whether or not appellant had filed a formal claim with the department.

Appellant’s motion for summary judgment, by its reference to the federal proceedings, thereby sufficiently raised the issue whether her prior pursuit of a federal remedy may have equitably tolled the state statute of limitations. In Elkins v. Derby (1974) 12 Cal. 3d 410 [115 Cal.Rptr. 641, 525 P.2d 81, 71 A.L.R.3d 839], we held in the context of a suit to recover for an industrial injury that the running of a limitations period is equitably tolled when an injured person has several formal legal remedies and reasonably and in good faith pursues one. Elkins involved an injury for which the plaintiff arguably had both administrative and judicial remedies. He first filed a workers’ compensation claim and, after the claim was denied for failure to prove his status as an employee, he then filed a personal injury action in superior court. Although the suit was filed after the expiration of the one-year statute of limitations, we nevertheless held that the statute was tolled during the pendency of the administrative remedy, regardless of whether or not exhaustion of the administrative remedy was a prerequisite to suit. Similarly, in Addison v. State of California, supra, 21 Cal.3d 313, we applied the foregoing equitable tolling principle to reverse dismissal of an action filed in state court, on the basis that plaintiff had reasonably and in timely fashion pursued a concurrent federal remedy which had been dismissed for lack of jurisdiction after the applicable state statute of limitations had run.

Although appellant has not expressly relied upon the equitable tolling doctrine of the foregoing cases, we may consider it here. We have, on occasion, allowed consideration of issues not previously raised by the parties where the facts necessary for their resolution were on record. (See, e.g., Wong v. DiGrazia (1963) 60 Cal.2d 525, 532, fn. 9 [35 CaLRptr. 241, 386 P.2d 817]; Fawkes v. Reynolds (1922) 190 Cal. 204, 209 [211 P. 449].) Appellant’s motion for summary judgment affirmatively demonstrated that she had pursued a federal remedy before filing in superior court. Her request for all back pay in her motion encompassed an enhancement of her award by equitable tolling and was sufficient to raise the equitable tolling issue.

A review of the record reveals that when appellant made her motion for summary judgment, there still remained a triable issue of fact as to whether she had met the requirements for the invocation of the equitable tolling doctrine. We thus hold that the trial court erred in granting the motion and limiting appellant’s measure of recovery without permitting her the opportunity to litigate the matter. (See, e.g., Good Government Group of Seal Beach, Inc. v. Superior Court (1978) 22 Cal.3d 672, 685-686 [150 Cal.Rptr. 258, 586 P.2d 572]; Corwin v. Los Angeles Newspaper Service Bureau, Inc. (1971) 4 Cal.3d 842, 851 [94 Cal.Rptr. 785, 484 P.2d 953]; Code Civ. Proc., § 437c.) On remand, appellant should be given the chance to show, if she is able to do so, that the two-year statute of limitations under section 1197.5 was tolled during the period in which appellant was pursuing an alternative federal remedy, pursuant to the principles set forth in Elkins and Addison, both supra.

IV. Attorney’s Fees

Next, we examine appellant’s contention that a successful plaintiff in a suit filed under section 1197.5 is entitled to recover attorney’s fees. Appellant urges that the language of the section as a whole and its legislative history clearly mandate such an award. Respondent, however, asserts that the section merely gives the trial court discretion to disallow attorney’s fees, and that the court did not abuse its discretion in denying such an award here.

We agree with appellant that the statute, read as a whole, must be construed to require an award of attorney’s fees. Subdivision (g) of section 1197.5 provides that an “employee receiving less than the wage to which the employee is entitled. . .may recover in a civil action the balance of such wages, including interest thereon, together with the costs of the suit and reasonable attorney’s fees.. .. ” Section 15 provides that in construing provisions of the code, the use of the word “shall” is mandatory and “may” is permissive. In the present case, however, the word “may” is not directed to the trial court, but to the complaining party. It indicates that the plaintiff may choose among several alternative forms of relief.

An aggrieved employee has three alternative remedies under section 1197.5. An employee “may” file a complaint with the Division of Labor Standards Enforcement requesting administrative relief. (Subd. (e).) The division “may” bring a civil action on the employee’s behalf, unless the employee objects. (Subd. (f).) Finally, subdivision (g) specifies that on her own behalf the employee “may” file a civil action to recover her lost wages, interest thereon, suit costs, and attorney’s fees without prior exhaustion of her administrative remedy. (See Bass v. Great Western Sav. & Loan Assn. (1976) 58 Cal.App.3d 770, 773 [130 Cal.Rptr. 123].)

Thus, reading the statute as a whole, we conclude that the word “may” in subdivision (g) indicates that the filing of a civil suit is only one of three options possessed by an aggrieved employee. The use of the word “may” does not demonstrate an intent to give the trial court discretion to award attorney’s fees, but merely establishes the plaintiff’s right to such an award should she elect to pursue the civil remedy.

The legislative history of section 1197.5 supports our conclusion that the Legislature intended to require an award of attorney’s fees to a successful plaintiff. Prior to 1976, section 1197.5 was silent on the subject of attorney’s fees. On April 17, 1975, a bill to add the following language to subdivision (g) was introduced in the Senate (along with several other changes in the section) as Senate Bill No. 1051: “Any employee receiving less than the wage to which he is entitled under this section may recover in a civil action the balance of such wages, together with the costs of suit, notwithstanding any agreement to work for a lesser wage. The court in any such action shall, in addition to any judgment awarded to the plaintiff, allow a reasonable attorney’s fee to be paid by the defendant.” This proposed amendment evinces an unequivocal intent to require an award of attorney’s fees. This intent is further reflected in the analyses prepared by two independent sources in the Legislature. According to one such analysis, “The court would be required [under the proposed amendment] to award the plaintiff in an action under the equal pay provision a reasonable attorney’s fee.” (Sen. Industrial Relations Com., Analysis of Sen. Bill No. 1051 (May 5, 1975) p. 3.) Under the second legislative review, it was concluded that “This bill would require the court in.. . civil suits to award attorney’s fees and suit costs to the employee.” (Legislative Counsel’s Dig. of Sen. Bill No. 1051 (1975-1976 Reg. Sess.).)

After the bill passed the Senate, the Assembly added a provision to subdivision (g) which expanded the plaintiff’s remedies by requiring an award for prejudgment interest on unpaid wages. Additionally, subdivision (g) was shortened by condensing its two sentences into one. In so doing, the Assembly deleted the word “shall” before the provision for the award of attorney’s fees. However, the analysis which accompanied this final simplified version of subdivision (g) indicates that the assembly maintained its intent to require an award of attorney’s fees: “This bill would require the court in such civil suits to award attorney’s fees... to the employee.” (Legislative Counsel Dig. of Sen. Bill No. 1051, supra, as amended in Assembly (1975-1976 Reg. Sess.).) We must conclude that although the Assembly altered the phraseology of the original bill, it demonstrated no intent to change the original bill’s mandatory award of attorney’s fees. (Cf., Mosk v. Superior Court (1979) 25 Cal.3d 474, 493 [159 Cal.Rptr. 494, 601 P.2d 1030]; Hammond v. McDonald (1942) 49 Cal.App.2d 671, 681 [122 P.2d 332].)

Finally, a strong policy argument exists in favor of an interpretation of section 1197.5 that the award of attorney’s fees is mandatory. Most employers in employment discrimination suits can more readily afford a protracted discrimination suit than can their employees. The mandatory award of attorney’s fees encourages aggrieved employees to pursue meritorious but expensive claims, some (like the instant claim) involving lost pay awards which are small compared to the plaintiff’s attorney’s fees. This policy was recognized by Congress when it mandated an award of attorney’s fees to a successful plaintiff in a suit under the federal Fair Labor Standards Act (29 U.S.C. § 216(b)), which the California “equal pay” act closely tracks.

In summary, the language of section 1197.5 read as a whole, the legislative history of subdivision (g), and the relative inability of some employees to bring wage discrimination suits require a conclusion that the trial court lacked discretion to disallow the award of attorney’s fees to appellant.

V. Conclusion

The trial court properly ruled that the recovery of back wages under section 1197.5 is limited by the two-year statute of limitations of that section. However, the court erred when in the course of granting appellant’s motion for summary judgment it limited her recovery from respondent without regard to the unresolved and triable issues of fact with respect to the equitable tolling of the statute of limitations. Further, in the light of the legislative history of section 1197.5, subdivision (g), the court erred in denying appellant recovery of her attorney’s fees.

The judgment is reversed and the cause remanded for further proceedings in accordance with this opinion.

Tobriner, J., Mosk, J., Clark, J., Manuel, J., and Newman, J., concurred.