Opinion
BAXTER, J.
We confront a significant question of California wage law. Defendant Ralphs Grocery Company, Inc. (Ralphs), a supermarket chain, implemented a written incentive compensation plan (ICP or Plan) whereby certain employees of each store were eligible to receive, over and above their regular wages, supplementary sums based upon how the store’s actual Plan-defined profits, if any, for specified periods compared with preset profitability targets. For both target and actual purposes, profits were determined by subtracting store operating expenses from store revenues. Plaintiff claims the Plan’s formula for calculating these supplemental profit-sharing payments thus violated California statutes, rules, and decisions that prohibit an employer from shifting certain of its costs to employees by withholding, deducting, or recouping them from wages or earnings, or otherwise obliging employees to contribute to them.
Labor Code section 2211 provides that, except for deductions expressly authorized by state or federal law (see § 224), an employer may not “collect or receive from an employee any part of wages theretofore paid.” Section 3751, subdivision (a) prohibits an employer from “exacting] or receiv[ing] . . . any employee . . . contribution,” or “tak[ing] any deduction from [employee] earnings . . . , either directly or indirectly, to cover the whole or any part of the cost of [workers’] compensation.” Case law has interpreted various provisions of the Labor Code, and regulations issued thereunder, as prohibiting deductions from an employee’s stated wage to cover certain of the employer’s business costs, such as cash and merchandise losses not caused by the employee’s dishonesty, or his willful or grossly negligent act. A wage order of the Industrial Welfare Commission (Commission) expressly forbids such deductions and charges against the wages of so-called nonexempt employees in the mercantile industry. (Cal. Code Regs., tit. 8, § 11070, subd. 8 (Regulation 11070).)
[223]*223Deeming its decision compelled by prior case law, by section 3751, and by Regulation 11070, the Court of Appeal in Ralphs Grocery Co. v. Superior Court (2003) 112 Cal.App.4th 1090 [5 Cal.Rptr.3d 687] (Ralphs Grocery) held that the profit-based supplementary ICP we consider here was invalid insofar as it considered a store’s costs for workers’ compensation when computing the store profit on which Plan payments were calculated. Moreover, Ralphs Grocery concluded, the Plan was invalid as to nonexempt employees insofar as it factored cash shortages and merchandise damage and loss into the profit calculation. By doing so, Ralphs Grocery reasoned, the Plan effectively charged back a portion of such costs to employees through deductions from their wages.
On the authority of Ralphs Grocery, the instant Court of Appeal reversed a trial court judgment for Ralphs, entered after Ralphs’s demurrer to plaintiff’s complaint was sustained without leave to amend. We must now decide whether these latter decisions are correct.
After a careful examination of the relevant statutes, regulation, and judicial decisions, we reach a result largely contrary to the holdings of Ralphs Grocery and the instant Court of Appeal. As we will explain, nothing in those authorities suggests that an employer violates California wage-protection laws by providing, as Ralphs did, supplementary compensation designed to reward employees, over and above their regular wages, if and when their collective efforts produced a positive financial result for the store where they worked.
As described in plaintiff’s complaint, the ICP did not create an expectation of or entitlement to a specified wage, then take deductions or contributions from that wage to reimburse Ralphs for its business costs. At the outset, all Plan participants received, regardless of the store’s performance, their guaranteed normal rate of pay—the dollar wage they were promised and expected as compensation for carrying out their individual jobs. Over and above this regular wage, participants in the Plan understood that their collective entitlement to incentive compensation payments, and the amounts thereof, arose only under a formula that compared the store’s actual Plan-defined profit, if any, for a specified period, with target figures previously set by the company. Once the amount of an employee’s ICP compensation was calculated under this formula, Ralphs did not reduce it by taking unauthorized deductions, contributions, or charges.
The Plan was not illegal, we conclude, simply because, pursuant to normal concepts of profitability, ordinary business expenses, such as storewide workers’ compensation costs, and storewide cash and merchandise losses, were figured in, along with such other store expenses as the electric bill and the cost of goods sold, to determine the store’s profit, upon which the [224]*224supplementary incentive compensation payments were calculated. By doing so, Ralphs did not illegally shift those costs to employees. After fully absorbing the expenses at issue, Ralphs simply determined what remained as profits to share with its eligible employees in addition to their normal wages.
In sum, we are persuaded that the reasoning of Ralphs Grocery is flawed, and the authorities on which that decision relied are distinguishable. Ralphs’s ICP, as described in plaintiff’s complaint, was not illegal on the grounds plaintiff asserts. We will therefore reverse the instant Court of Appeal judgment.
FACTS AND PROCEDURAL BACKGROUND
In 2001, plaintiff, a produce manager in a Ralphs store, filed original and first amended complaints against Ralphs, on behalf of himself and other similarly situated Ralphs employees. The complaints alleged that, in addition to their regular wages, the relevant employees were paid supplementary compensation calculated on the basis of the net earnings of the store where they worked, and that the pertinent earnings figures were reduced—illegally for this purpose—by the store’s expenses for cash shortages, damaged or lost merchandise, workers’ compensation, tort claims by nonemployees, and other business expenses beyond the employees’ control.
This formula, the complaints asserted, violated wage-protection rules set forth in Labor Code sections 221, 400 through 410, and 3751, Regulation 11070, and associated cases, and was thus an unfair business practice prohibited by section 17200 of the Business and Professions Code. The complaints sought injunctive relief, restoration of lost wages, interest, and attorney fees.
Ralphs removed the case to federal court on grounds that plaintiff’s compensation, including the incentive portion thereof, was governed by his union’s collective bargaining agreement (CBA), and that the state-law claims were thus preempted by section 301 of the Labor Management Relations Act (LMRA) (29 U.S.C. § 185(a).) On plaintiff’s motion, the district court remanded the case, finding that no federal question was presented, because the claims arose under state law independent and irrespective of the CBA.
Following the remand, plaintiff filed a second amended complaint for himself and an alleged class of Ralphs employees covered by the Plan. This complaint alleged, as before, that the incentive compensation payments were calculated on the basis of the respective net earnings of the store where the covered employees worked, and that the net earnings figures used for this purpose were derived by subtracting, among other expenses, “workers’ [225]*225compensation claims and/or other losses” such as cash shortages, merchandise shortages or shrinkage, and the costs of nonemployee tort claims, “not caused by the willful or dishonest act(s) or gross negligence of’ the individual employees whose compensation was thereby diminished.
“Through this method of compensation,” the second amended complaint asserted, Ralphs “wrongfully deduct[s] expenses from the wages of [its] employees, including [p]laintiff, which expenses the law requires ... to be borne by the . . . employer[]. In other words, [the employees] are forced to carry the burden of losses from their respective stores in violation of’ Labor Code sections 221, 400 through 410, and 3751, Business and Professions Code section 17200, and Regulation 11070. The complaint sought injunctive relief, classwide lost wages according to proof, waiting time penalties, damages, disgorgement of wrongful profits, and fees and costs.
Ralphs demurred to the second amended complaint on grounds that the claims (1) were preempted by the LMRA and (2) did not allege violations of state law in any event. As to the latter issue, Ralphs asserted that incentive compensation, paid over and above the regular wage, and openly contingent on the achievement of profitability goals, as profitability is normally defined, does not constitute an improper charge against, or deduction from, wages in violation of the Labor Code.2
The trial court sustained the demurrer, finding the claims preempted by federal law. As a consequence, it did not decide whether they would otherwise be viable as a matter of state law. A judgment of dismissal was entered accordingly.
[226]*226Plaintiff appealed. The Court of Appeal for the Second Appellate District, Division Two, reversed. Contrary to the trial court, the Court of Appeal held that plaintiff’s claims did not depend on construction or application of the CBA, but arose under independent provisions of state law, and were thus not preempted by the LMRA. Then, addressing the issue left undecided by the trial court, the Court of Appeal applied Ralphs Grocery, supra, 112 Cal.App.4th 1090, to conclude that the second amended complaint’s allegations of state law violations were sufficient to withstand demurrer. The Court of Appeal remanded for proceedings consistent with its opinion.
We granted Ralphs’s petition for review, limiting the issues to the following: Does an employee bonus plan based on a profit figure that is reduced by a store’s expenses, including the cost of workers’ compensation insurance and cash and inventory losses, violate (a) Business and Professions Code section 17200, (b) Labor Code sections 221, 400 through 410, or 3751, or (c) Regulation 11070? We turn to that question.
DISCUSSION
As noted above, section 221 provides that an employer may not “collect or receive from an employee any part of wages theretofore paid by said employer to said employee.” “Wages” for this purpose “includes all amounts for labor performed by employees of every description, whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculation.” (§ 200, subd. (a).)3
Section 3751, subdivision (a), makes it a misdemeanor for an employer to “exact or receive from any employee any contribution, or make or take any deduction from the earnings of any employee, either directly or indirectly, to cover the whole or any part of the cost of [workers’] compensation.”
Regulation 11070—a Commission wage order covering “mercantile industry” workers except those “exempt” employees in administrative, executive, or professional positions (id., subd. 1)—provides that “[n]o employer shall make any deduction from the wage or require any reimbursement from an employee for any cash shortage, breakage, or loss of equipment, unless it can be shown that the shortage, breakage, or loss is caused by a dishonest or [227]*227willful act, or by the gross negligence of the employee.” (Id., subd. 8.) The order defines “wages” as in section 200, subdivision (a). (Reg. 11070, subd. 2(O).)4
Under these laws, plaintiff urges, the profitability figure on which, under Ralphs’s ICP, supplementary profit-based incentive compensation was calculated could not be reduced by the employer’s workers’ compensation expenses, or by cash shortages, the costs of merchandise damage or loss, or third party tort claims not attributable to the eligible employee’s own dishonesty, willfulness, or gross negligence. Otherwise, plaintiff contends, the employee’s stated and expected wage was subject to an unanticipated contribution, deduction, withholding, and/or reimbursement to the employer for expenses beyond the employee’s control, which the law requires the employer to bear on its own.
Plaintiff’s contention depends entirely on the meaning of the statutes and regulation we have noted above. Whenever we construe such a provision, we look first to its words, assigning them their usual and ordinary meanings, and reading them in context. If the words themselves are clear, we assume they mean what they say, and the plain meaning governs. If the language allows more than one reasonable construction, we may consider extrinsic aids to construction, including the impact of a particular interpretation on public policy. (E.g., Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1103 [56 Cal.Rptr.3d 880, 155 P.3d 284]; Wells v. One20ne Learning Foundation (2006) 39 Cal.4th 1164, 1190 [48 Cal.Rptr.3d 108, 141 P.3d 225].) Because the laws authorizing the regulation of wages, hours, and working conditions are remedial in nature, courts construe these provisions liberally, with an eye to promoting the worker protections they were intended to provide. (E.g., Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785, 794 [85 Cal.Rptr.2d 844, 978 P.2d 2].)
[228]*228Here we must determine, under the requisite statutes and regulation, whether Ralphs’s ICP withheld, or otherwise took, received, exacted, or collected impermissible “deductions” or “contributions” from Ralphs employees, or from their “earnings” or “wages,” to “reimburs[e]” Ralphs, in whole or in part, for business expenses the law required Ralphs to bear on its own.
As noted above, a “wage” for this purpose is “[any] amount [paid] for [an employee’s] labor,” however that amount is calculated. (§ 200.) “Earnings” are “[t]he salary or wages of a person.” (American Heritage Dict. (2d college ed. 1985) p. 434.) To “deduct” is to “take away [one amount] from another”; to “subtract.” (Id. at p. 373.) “Deduction” is “[t]he act of deducting,” or “[a]n amount that is . . . deducted.” (Ibid.) A “contribution” is “something contributed;” while to “contribute” is “[t]o give ... in common with others [or] to a common fund or for a common purpose.” (Id. at p. 318.)
Under these common definitions, an employee’s “wages” or “earnings” are the amount the employer has offered or promised to pay, or has paid pursuant to such an offer or promise, as compensation for that employee’s labor. The employer takes a “deduction” or “contribution” from an employee’s “wages” or “earnings” when it subtracts, withholds, sets off, or requires the employee to return, a portion of the compensation offered, promised, or paid as offered or promised, so that the employee, having performed the labor, actually receives or retains less than the paid, offered, or promised compensation, and effectively makes a forced “contribution” of the difference.
Here, each Ralphs store employee was offered, promised, and paid, as full compensation for his or her individual work, an agreed and guaranteed dollar wage, which did not vary with the store’s financial fortunes, and from which no unauthorized amounts were deducted, withheld, set off, or otherwise received or collected back by the employer.5 In addition, Ralphs then sought, through the Plan, to encourage and reward certain employees’ cooperative and collective contributions to the profitable performance of their stores by sharing with these employees, in addition to their regular wages, a portion of the profits, if any, their efforts had produced, and which Ralphs would otherwise be entitled to retain for itself.
[229]*229Employees’ expectations with respect to these supplementary payments— i.e., what Ralphs offered or promised to pay—derived exclusively from the terms of the Plan itself. By these terms, an individual store employee’s entitlement to a periodic incentive compensation payment, and the amount of any such payment, depended fundamentally on (1) whether the store’s overall operations for the period had been profitable, as the Plan defined profitability, and (2) how any such profit compared to goals or targets previously set for the store. The first and most basic step in determining whether, and to what extent, supplementary incentive compensation payments were due to store employees was to ascertain whether the store had registered a Plan-defined profit for the relevant period.
Under the Plan formula, the relevant profit figure was calculated by subtracting various store expenses from store revenues. The record contains no exhaustive catalog of the expenses considered—we may infer that “ ‘ “[i]nterest, [t]axes, [depreciation, and [ajmortization” ’ ” were not among them (see fn. 2, ante)—but, pursuant to usual accounting principles, the included items presumably encompassed such day-to-day operating expenses as the store’s cost of goods sold, its payroll, its utility bills, any rent paid for the store premises, and the like. They similarly included the store’s expenses for workers’ compensation, cash shortages, merchandise losses, and third party tort claims not traceable to the gross negligence, dishonesty, or willful misconduct of individual employees subject to the Plan.
By the Plan’s terms, it was only after the store had completed the relevant period of operation, and the resulting profit or loss figure was then derived, that it was possible to determine, by a further comparison to the preset targets, whether Plan participants were entitled to a supplementary incentive compensation payment, and if so, how much. This final figure, and this figure only, once calculated, was the amount offered or promised as compensation for labor performed by eligible employees, and it thus represented their supplemental “wages” or “earnings.”
Plaintiff concedes Ralphs followed the Plan to the letter, and paid all amounts due thereunder, exactly as provided. He does not claim Ralphs received, deducted, withheld, set off, or otherwise exacted any unauthorized amount from any employee’s supplementary incentive compensation as finally computed and paid under the Plan.
[230]*230Plaintiff nonetheless insists the Plan violated the law because, by subtracting workers’ compensation costs, and damage or loss expenses beyond individual employees’ control, from the store’s revenues to determine the profit figure on which supplementary incentive compensation payments were calculated, the Plan reduced, to that extent, the “wages” or “earnings” otherwise due. Accordingly, plaintiff asserts, Ralphs effectively shifted to employees, by virtue of deductions from their expected wages, costs the law requires the employer to bear on its own. We disagree.
For his premise, plaintiff, like the Courts of Appeal here and in Ralphs Grocery, supra, 112 Cal.App.4th 1090, invokes a body of California case law that has developed around some of the statutes and regulations quoted above, or closely analogous ones. As we shall explain, however, the cited decisions are inapposite to this profit-based ICP.
The line of cases on which plaintiff relies begins with a 45-year-old decision of this court, Kerr’s Catering Service v. Department of Industrial Relations (1962) 57 Cal.2d 319 [19 Cal.Rptr. 492, 369 P.2d 20] (Kerr’s Catering). There, each of the employer’s female lunch-truck drivers was entitled to receive, as part of her compensation, a 15 percent commission on her own sales exceeding $475 per week. However, the promised commission was subject to reduction for any cash shortage attributable to the driver for the month. The employer computed the cash shortage figure by comparing, at the end of each day, the driver’s cash receipts and remaining inventory against inventory on the truck at the beginning of the day. The amount, if any, by which the latter exceeded the former was the daily shortage.
The Division of Industrial Welfare notified the employer that this practice violated Wage Order No. 5-57, which, in terms essentially identical to those of current Regulation 11070, prohibited “deduction[s]” from wages for cash shortages, breakage, or loss of equipment not caused by the employee’s dishonesty, willful act, or culpable negligence. (Kerr’s Catering, supra, 57 Cal.2d 319, 322.) The employer sued for injunctive and declaratory relief, urging that Wage Order No. 5-57 exceeded the Commission’s authority. The trial court entered judgment for the employer, and this court reversed.
Our opinion first noted the parties’ agreement that the Commission’s power derived from former section 1182,6 which authorized the Commission to “fix” the “minimum wage” (former § 1182, subd. (a)), maximum hours (id., subd. (b)), and “standard conditions of labor” (id., subd. (c)) for women and [231]*231minors. (Kerr’s Catering, supra, 57 Cal.2d 319, 323.) Because the drivers earned more than the minimum wage independent of the sales commission, the issues presented were whether, under subdivision (c), the Commission could regulate “standard conditions of labor” insofar as they affected wages beyond the minimum wage, and, if so, whether the deduction of cash shortages from the drivers’ sales commissions was a condition subject to regulation under subdivision (c).
The court disposed of the first issue easily. It concluded that subdivision (c) allowed the Commission to regulate “standard conditions of labor” in ways that affected, but did not “fix,” wages above the statutory minimum and hours below the statutory maximum. (Kerr’s Catering, supra, 57 Cal.2d 319, 323-325.)
Addressing the second issue, the court cited multiple provisions of the Labor Code to justify the Commission’s regulation of loss, breakage, and shortage deductions from employee wages. First, the court observed, the public policy of special protection for wages generally had been expressed in numerous statutes and decisions that required the prompt and full payment of wages due, as the employee’s exclusive property, and imposed limitations on the ability of creditors, including the employer itself, to satisfy unliquidated claims against the employee by using garnishment, assignment, or accord and satisfaction to appropriate wages otherwise due. (Kerr’s Catering, supra, 57 Cal.2d 319, 325-327.)
Kerr’s Catering noted in particular that the deductions taken from the sales commissions there at issue extended to shortages beyond the driver’s control, or the result of mere simple negligence. Hence, the court reasoned, these deductions effectively made her an insurer of the employer’s merchandise and served the same purpose as an employee’s bond to cover such losses. Accordingly, they contravened “the spirit, if not the letter, of the Employee’s Bond Law” (see §§ 400-410), which states the exclusive conditions under which employers may require employees to furnish such cash undertakings. (Kerr’s Catering, supra, 57 Cal.2d 319, 328.)
The court suggested that employers, exploiting their superior position, could also use such deductions to defraud employees by withholding inflated and exorbitant amounts, thus effectively reducing the wage scale. Such concerns, said the court, underlie section 221, which was adopted to prevent the use of secret deductions or “kickbacks” to make it appear the employer is paying a required or promised wage, when in fact it is paying less. (Kerr’s Catering, supra, 57 Cal.2d 319, 328.)
[232]*232“A further reason for legislative disapproval of deductions,” the court observed, “exists in the reliance of the employee on receiving his expected wage, whether it be computed upon the basis of a set minimum, a piece rate, or a commission. To subject that compensation to unanticipated or undetermined deductions is to impose a special hardship on the employee.” (Kerr’s Catering, supra, 57 Cal.2d 319, 329.)
Finally, the court rejected the employer’s complaint that Wage Order No. 5-57 unfairly placed the burden of the cash shortages on the employer. The court explained that “some cash shortages, breakage and loss of equipment are inevitable in almost any business operation. It does not seem unjust to require the employer to bear such losses as expenses of management when it is presently the unchallenged practice [also pursuant to Wage Order No. 5-57] to require him to bear, as a business expense, the cost of tools and equipment, protective garments and uniforms furnished to the employee by prohibiting . . . deductions for these costs. [][] Furthermore, the employer may, and usually does, either pass these costs on to the consumer in the form of higher prices or lower his employees’ wages proportionately, thus distributing the losses among a wide group.” (Kerr’s Catering, supra, 57 Cal.2d 319, 329, italics added.)
In Quillian v. Lion Oil Company (1979) 96 Cal.App.3d 156 [157 Cal.Rptr. 740] (Quillian), the plaintiff managed two of defendant’s self-service gasoline stations. Her mandatory employment agreement included provision for a manager’s incentive bonus in addition to her modest base pay. The bonus, intended to encourage managerial efforts to increase sales and reduce losses, was defined as a dollar amount based on the volume of gasoline sold at the stations, plus a flat 1 percent of the stations’ nongasoline sales, less the full dollar amount of cash and merchandise shortages at the stations.7
In a suit for unpaid wages attributable to the shortages, the trial court entered judgment for the plaintiff. The Court of Appeal affirmed. Noting the Labor Code’s prohibition of deductions from wages (§ 221), the court held that under Kerr’s Catering, reduction of the promised bonus by shortages applicable to the stations under the plaintiff’s supervision constituted an illegal charge against employee earnings, and made her an insurer of the employer’s merchandise, in violation of the employees bond law. (Quillian, supra, 96 Cal.App.3d 156, 163.)
[233]*233The employer argued that there were no deductions from the plaintiff’s wages, because the actual amount of the wage, in the form of the bonus, was determined only after losses and shortages were applied against volume and sales figures. Once so determined, the employer insisted, the wage was paid without deduction. The Court of Appeal deemed this a mere circumvention. In reality, the court observed, the bonus was a commission—a scheduled amount based on sales volume and revenue. To the extent cash and merchandise shortages were charged against this scheduled amount, said the court, the result was the same as in Kerr’s Catering—the employee carried the burden of the employer’s losses and suffered the “special hardship” of “unanticipated” or “undetermined” deductions from the set wage. (Quillian, supra, 96 Cal.App.3d 156, 163.)
Again citing Kerr’s Catering, the court stressed that placing the burden of cash and merchandise shortages on the employer was not unjust, because the employer could pass the cost on to customers “ ‘or lower [its] employees’ wages proportionately, thus distributing the losses among a wide group.’ ” (Quillian, supra, 96 Cal.App.3d 156, 162, quoting Kerr’s Catering, supra, 57 Cal.2d 319, 329.)
In Hudgins v. Neiman Marcus Group, Inc. (1995) 34 Cal.App.4th 1109 [41 Cal.Rptr.2d 46] (Hudgins), sales associates for a department store chain were paid commissions on their individual “net sales.” (Id. at p. 1113.) Associates received advances, or draws, against commissions, subject to charge-backs against future draws if actual commissions, as finally determined, fell short of the amounts previously advanced. Until 1986, an associate’s net sales were defined as his or her gross sales, less (1) gift wrap and alterations on those items and (2) “identified returns”—i.e., goods returned during the pay period which could be identified as sold by that employee. In 1986, after obtaining associates’ signed acknowledgements of the new policy, the employer began charging back, against each associate’s earned commissions on his or her own net sales, a pro rata share of advance commissions deemed to have been paid on “unidentified returns”—i.e., returned merchandise as to which, for whatever reason, the selling employee could not be determined.
Plaintiff, a sales associate subjected to this policy, sued for himself and others to obtain lost wages and other relief, claiming that the deduction for unidentified returns violated section 221. The trial court granted summary judgment for the employer. The Court of Appeal reversed.
Deeming the case governed by Kerr’s Catering and Quillian, the Court of Appeal held that the deduction from employees’ earned commissions on valid sales to reimburse the employer for the cost of unidentified returns violated section 221, sections 400 through 410, and pertinent wage orders such as [234]*234Regulation 11070. These provisions, said the court, have “long been held to prohibit deductions from an employee’s wages for cash shortages, breakage, loss of equipment, and other business losses that may result from the employee’s simple negligence. [Citations.]” (Hudgins, supra, 34 Cal.App.4th 1109, 1118.)
The court explained that insofar as the inability to identify which associate had sold the returned merchandise was the result of that employee’s record-keeping negligence, conscientious employees were giving up their own earned commissions to cover losses occasioned by the misconduct of others. Conversely, said the court, if the cause of the unidentified return was customer neglect, abuse, or dishonesty, conscientious employees were sacrificing their own earned commissions to compensate the employer for losses occasioned by its generous return policy.
Either way, the court concluded, “employees [were made] the ‘insurers of the employer’s business losses’ ” (Hudgins, supra, 34 Cal.App.4th 1109, 1123) and were subjected to unpredictable deductions from their wages for losses due to factors beyond their control (id. at pp. 1123-1124). As in Quillian, the court further admonished, the employer could not defend the lawfulness of its policy on grounds that “the deduction is just [one] step in its calculation of commission income. [Citation.]” (Hudgins, supra, at p. 1124.)
Ralphs Grocery, supra, 112 Cal.App.4th 1090, presented the precise issue we address in this case—whether a cause of action arose for wages improperly withheld under Ralphs’s ICR As here, the plaintiff sought to represent a class of both exempt and nonexempt Ralphs employees. As here, the complaint alleged that by charging storewide expenses of workers’ compensation, cash shortages, and merchandise losses against storewide revenues to obtain the store net earnings figures on which supplementary incentive compensation payments were calculated, the plan violated sections 221, 400 through 410, and 3751, and Regulation 11070. The trial court overruled Ralphs’s demurrer. Ralphs sought mandate, and the Court of Appeal denied relief.
The Ralphs Grocery court observed at the outset that Ralphs had persuasively demonstrated the beneficial effects of profit-based incentive compensation plans for both employers and employees. Moreover, after reviewing Kerr’s Catering, Quillian, and Hudgins, the court acknowledged Ralphs had shown that, “as a matter of economics, calculation of an incentive bonus based on profitability by taking into account not only revenues but also store expenses in accordance with standard accounting principles differs markedly from reducing (or recapturing) wages through prohibited deductions.” (Ralphs Grocery, supra, 112 Cal.App.4th 1090, 1101.)
[235]*235Nonetheless, the court in Ralphs Grocery felt compelled to conclude that the ICP was, in certain respects, illegal. By including workers’ compensation costs in the formula for calculating the store’s net earnings on which supplementary incentive compensation payments were based, the Court of Appeal held, Ralphs was taking a deduction from employee wages to cover such costs, in direct violation of section 3751. Moreover, the court concluded, insofar as the net earnings calculation took into account cash shortages, breakage, and loss of equipment not caused by the compensated employee’s dishonesty, willful act, or gross negligence, the plan violated Regulation 11070 as applicable to nonexempt employees. This formula, said the court, forced such workers to assume business costs the law places exclusively upon the employer, and to face the “special hardship” of uncertain and unanticipated wage deductions.
On the other hand, Ralphs Grocery held, no law prevented consideration of cash, merchandise, and equipment losses in calculating the supplementary incentive compensation payments of exempt, or managerial, employees not covered by Regulation 11070. Neither in letter nor in spirit, said the Court of Appeal, did such a formula resemble the “recapture” of wages already paid, as prohibited by section 221, or the exaction of an employee cash bond governed by sections 400 through 410. (Ralphs Grocery, supra, 112 Cal.App.4th 1090, 1105.)
Kerr’s Catering, the court noted, had suggested that losses of these kinds were “expenses of management,” thus implying it was appropriate for managerial employees to bear some of the costs associated with their supervision and oversight of business operations. Such a system is fair and comports with common sense, the court observed, because managers have control of business operations that may affect both revenues and expenses. “At the very least,” said the court, “it would require a significant extension of the Supreme Court’s dicta [in Kerr’s Catering] regarding the underlying spirit of the Labor Code provisions protecting workers’ wages to conclude an incentive compensation plan that determines an exempt employee’s bonus on a full range of revenue and expense items, including cash shortages, is unlawful.” (Ralphs Grocery, supra, 112 Cal.App.4th 1090, 1106.)8
[236]*236We entirely agree with this latter observation, but it leads us to conclude, contrary to Ralphs Grocery, that Ralphs’s ICP is not illegal in any respect. To paraphrase Ralphs Grocery, the Plan does not resemble, in letter or spirit, the prohibited deduction, setoff, or recapture of expected wages for the purpose of saddling employees with prohibited employer costs, as was at issue in Kerr’s Catering, Quillian, and Hudgins. For similar reasons, the Plan does not produce, in violation of section 3751, a prohibited direct or indirect deduction or contribution from employee wages to cover the costs of workers’ compensation. Plaintiff and his amici curiae are incorrect when they argue that Ralphs’s ICP is simply a relabeled version of the wage-deduction schemes addressed in Kerr’s Catering, Quillian, and Hudgins.9
In each of those cases, the employee’s compensation, whether regular or supplementary, was set, in essence, as a sales commission, i.e., a specified and promised share of the revenues attributable to that employee’s personal sales or managerial efforts. The set commission was then directly reduced by the full dollar value of merchandise and cash losses, as determined by the employer, and regardless of employee fault. The employer thus defrayed its merchandise and cash losses by charging them, dollar for dollar, against its liability for wages. Without following the rules for cash bonds, the employer assessed individual employees the entire unliquidated value of such losses, and did so by withholding amounts from earned and promised commissions until those commissions fell to zero. By this means, the employer reduced individual employees’ wages to increase its own retained profits. This is the practice the statutes, regulations, and cases have prohibited.
Here, unlike in Kerr’s Catering, Quillian, and Hudgins, no employee was offered or promised a specified bonus or commission that was based upon, and immediately measurable by, his or her individual sales or managerial efforts, but was then subject to deductions to cover employer costs. Instead, under the ICP, all eligible employees’ supplementary incentive compensation was equally and collectively premised, at the outset, on store profits, a factor that necessarily considers the employer’s expenses as well as its income.
[237]*237Employees understood from the beginning that, by the Plan’s very nature, supplementary incentive compensation for a particular period depended on the extent to which the store’s revenues for the relevant period exceeded its operating expenses, as defined in the Plan. Amounts calculated as a percentage of the store’s Plan-defined profit were the only “wages” or “earnings” offered or promised to eligible employees under the Plan. Ralphs took no unauthorized deductions or contributions, direct or indirect, from the wages so offered or promised. If there was uncertainty in the amount ultimately due, it arose, not from employer charge-backs taken after the basic Plan wage was determined, but inherently from the basis on which Plan compensation was awarded.
Thus, employees suffered neither a prohibited recapture of compensation already offered, promised, or paid, nor an uncertain or unanticipated deduction from expected wages. And because they attained no interest or entitlement in any supplementary compensation other than that finally calculated under the Plan, they made no forced “contribution,” direct or indirect, from their own resources to reimburse Ralphs for costs the law requires the employer to bear alone.
The supplementary incentive compensation promised or offered under the Plan was collective in nature, intended to promote and reward employee teamwork that produced a net profit for the store as a whole. This necessarily entailed not only increasing the store’s overall sales, but reducing its overall costs, including those arising from workers’ compensation, and losses of cash and merchandise. The Plan contemplated that this was an effort in which all eligible employees could and should be involved. To encourage and reward their participation, the Plan offered them, over and above their regular wages, a proportionate stake in the successful result.
We cannot conclude that such a supplementary incentive compensation system, beneficial to both employer and employees (see Ralphs Grocery, supra, 112 Cal.App.4th 1090, 1101), contravenes the wage-protection policies of the Labor Code and Regulation 11070. Considering the “marked[]” economic difference between Ralphs’s plan and the compensation systems at issue in Kerr’s Catering, Quillian, and Hudgins (Ralphs Grocery, supra, at p. 1101), a holding that those decisions govern here would defy reason and common sense.
[238]*238First, insofar as the law precludes the employer from using wages to shift business losses to employees, or to make employees the insurers of such losses, Ralphs did not do so here. Under the ICP, Ralphs absorbed all store costs, and took them as full charges against its own profits. As the Plan specified, Ralphs then simply determined if there remained any profit to split with its employees.10
Nor did Plan participants become prohibited insurers of Ralphs’s workers’ compensation expenses, or of its cash shortages and merchandise losses, simply because the level of a store’s expenses in these categories might have the effect of raising or lowering the wages or earnings ultimately offered or promised to Plan participants. An employer “may, and usually does,” defray business expenses either by “pass[ing] these costs on to the consumer ... or [by] lowering] his employees’ wages proportionately, thus distributing the losses among a wide group.” (Kerr’s Catering, supra, 57 Cal.2d 319, 329; see Quillian, supra, 96 Cal.App.3d 156, 162; but cf. Hudgins, supra, 34 Cal.App.4th 1109 [prohibiting deductions from the earned commissions of individual employees to reimburse employer for commissions wrongly paid to others].)11
[239]*239Plaintiff cites the policy against subjecting employees to the “special hardship” of “unanticipated or undetermined” wage fluctuations. (Kerr’s Catering, supra, 57 Cal.2d 319, 329; Quillian, supra, 96 Cal.App.3d 156, 163.) Of course, the regular wages paid to Ralphs employees involved no such hardships. Those wages, in concrete dollar amounts, were promised and paid regardless of a store’s profit or loss for a specified period. On the other hand, a supplementary incentive compensation plan based on the financial performance of the business is by nature fluctuating and uncertain, insofar as the enterprise’s success, and the sums thus available for distribution under the plan, will vary from period to period. But this uncertainty alone cannot cause the plan to violate the wage-protection policies of the Labor Code and Regulation 11070. To hold otherwise would make every kind of achievement-based supplementary incentive compensation system, whether based on individual or overall business performance, illegal.
The wage-protection statutes and rules do not demand that employee compensation be absolutely certain or stable from pay period to pay period, regardless of the employees’ contrary understanding. Nor do they forbid a system in which, even though services have already been performed, the final amount of wages cannot be determined until after specified contingencies have come to pass.
On the contrary, numerous California cases have held that, where the parties so understand and agree, final compensation, or at least a portion thereof, may be contingent on events that occur after the employee has performed service, and even where he or she has already received advance sums. In such circumstances, the employer may set off, against future payments, any excess amounts previously paid. Such a system does not violate section 221’s prohibition on the employer’s recapture of wages already earned or paid. (E.g., Neisendorf v. Levi Strauss & Co. (2006) 143 Cal.App.4th 509, 520-523 [49 Cal.Rptr.3d 216] [§ 221 not violated by incentive compensation plan which, though based on profits for a particular year, rendered employee who worked that year ineligible for bonus if not still employed on later date when bonuses were distributed]; Koehl v. Verio, Inc. [240]*240(2006) 142 Cal.App.4th 1313, 1329-1337 [48 Cal.Rptr.3d 749] [employer may charge back sums advanced on sales commissions, which are not deemed earned until all conditions precedent thereto have been satisfied]; Steinhebel v. Los Angeles Times Communications, LLC (2005) 126 Cal.App.4th 696, 704-712 [24 Cal.Rptr.3d 351] [newspaper could charge back commission advances to subscription telemarketers where commission was deemed earned only if subscription was retained for 28 days]; Prudential Ins. Co. v. Fromberg (1966) 240 Cal.App.2d 185, 189-193 [49 Cal.Rptr. 475] [system of paying advances on commissions, then charging back excess when final commission was determined did not violate § 221]; see Hudgins, supra, 34 Cal.App.4th 1109, 1122 [implying that sales associate could be required, through chargebacks, to return commissions on his or her own sales that were later rescinded by reason of customer returns].)
Kerr’s Catering noted the potential for fraud and deceit in a system whereby unliquidated losses, as unilaterally determined by the employer, are charged to an individual employee through deductions from wages. But this concern, when stretched beyond reasonable limits, proves too much. All forms of employee compensation depend to some degree on the honesty and accuracy of the employer’s calculations. Certainly this is true of any fluctuating form of earnings, such as commission-, piece-, or task-based compensation, that relies primarily on the employer’s recordkeeping.
However, this concern alone does not mean those forms of incentive pay are forbidden. Similarly, it cannot bar the profit-based ICP at issue here. Indeed, the potential for deceit seems greater where the employer, claiming specific losses or shortages, charges them against an individual employee’s pay than where it distributes, among a group of employees, a share of its profits. We are not persuaded that Ralphs’s plan is illegal, per se, simply because of the theoretical possibility—concededly not presented here—that Ralphs might cheat in applying it.
Ralphs observes that plaintiff’s theories would eliminate all profit-based ICP’s. Plaintiff and amici curiae Asian Law Caucus, Inc., et al. disagree. They insist Ralphs could, and now does, offer a legal ICP by deleting from the profit formula workers’ compensation costs, cash and merchandise losses not attributable to employee fault, and other expenses plaintiff considers to be beyond employee control, such as third party tort claims. However, as Ralphs suggests, it is difficult to see how plaintiff’s basic premise would not entirely eliminate net earnings or profits as a legal basis for calculating supplementary incentive compensation.
It is true that plaintiff’s complaint and arguments focus on particular categories of employer expenses, such as workers’ compensation costs (citing [241]*241section 3751) and cash shortages and merchandise losses (citing Kerr’s Catering, Quillian, Hudgins, and Regulation 11070). But sections 221 through 224, in combination with other statutes, establish a public policy against any deductions, setoffs, or recoupments by an employer from employee wages or earnings, except those deductions specifically authorized by statute. (See Phillips v. Gemini Moving Specialists (1998) 63 Cal.App.4th 563, 574 [74 Cal.Rptr.2d 29].)
Thus if, as plaintiff insists, expenses used to calculate net earnings or profits for purposes of a supplementary profit-based ICP constitute “deductions” from wages, an employer presumably may not, for this purpose, subtract from its revenues such expenses as the utility bill, rent, cost of merchandise sold, or any other costs the employer actually absorbed before determining its net profit.
In any event, the concept of a supplementary profit-based ICP that may deduct only some actual expenses, but not others, to derive the figure upon which payments are calculated is not persuasive. No legal reason appears why, when an employer chooses or agrees to pay employees, in addition to their regular wages, a portion of its profits, it must artificially inflate the earnings figure by omitting expenses that actually reduced those profits.
Nor do plaintiff and his amici curiae demonstrate how such a requirement would serve the public policy of safeguarding employee wages. As plaintiff’s counsel conceded at oral argument, Ralphs could compensate for the elimination of certain expenses from the Plan formula simply by lowering the percentage of the resulting “profit” figure that was payable to employees. (See Kerr’s Catering, supra, 57 Cal.2d 319, 329.)12 We see nothing in the [242]*242wage-protection laws, or the policies they promote, that requires such meaningless figure juggling.13
Plaintiff, joined by amicus curiae Consumer Attorneys of California, contends at length that, insofar as Ralphs’s ICP subtracts a store’s workers’ compensation costs from its revenues to determine the profit on which supplementary incentive compensation amounts are based, the Plan violates the policy of the workers’ compensation law by encouraging store employees not to report valid injury claims for fear of reducing their pay. But one might equally argue that inclusion of workers’ compensation costs in the profit calculation promotes the goals of the workers’ compensation system by encouraging employees to maintain a safe workplace, and by discouraging claim abuse. (Ralphs Grocery, supra, 112 Cal.App.4th 1090, 1102.)
In any event, as the Ralphs Grocery court recognized, this policy debate is not for the courts to resolve. (Ralphs Grocery, supra, 112 Cal.App.4th 1090, 1102.) We conclude only that we find nothing in the statutes, regulation, and cases cited by plaintiff to prohibit Ralphs from offering its employees, over and above their guaranteed base wages, supplementary incentive compensation on the basis of store profits that remain after legitimate store expenses, including the costs of workers’ compensation, have been subtracted from store revenues.14
[243]*243Plaintiff argues that, at least with respect to workers’ compensation costs, the Legislature has resolved the issue by action subsequent to Ralphs Grocery. As plaintiff observes, soon after Ralphs Grocery was decided, two bills were introduced in the Senate to add a subdivision (c) to section 3751. The proposed amendment would have specified that use of workers’ compensation costs in the calculation of profits for purposes of an employee bonus program does not constitute a deduction from employees’ earnings in violation of the section. (Sen. Bill No. 6 (2003-2004 4th Ex. Sess.) as introduced Nov. 19, 2003 (Senate Bill No. 6); Sen. Bill No. 1141 (2003-2004 Reg. Sess.) as introduced Jan. 21, 2004 (Senate Bill No. 1141).)
In each case, plaintiff notes, committee analyses made clear that the purpose was to overturn Ralphs Grocery insofar as that decision held otherwise. (See, e.g., Sen. Com. on Lab. & Indus. Relat., analysis of Sen. Bill No. 6, Dec. 1, 2003, pp. 1-2 at <http://info.sen.ca.gov> [as of Aug. 23, 2007]; Sen. Com. on Lab. & Indus. Relat., analysis of Sen. Bill No. 1141, Apr. 26, 2004, pp. 1-2 at <http://info.sen.ca.gov> [as of Aug. 23, 2007].) However, both bills died in committee. (See Sen. Bill No. 6, Complete Bill History at <http://info.sen.ca.gov> [as of Aug. 23, 2007]; Sen. Bill No. 1141, Complete Bill History at <http://info.sen.ca.gov> [as of Aug. 23, 2007].)
Plaintiff urges these developments demonstrate that the Legislature acquiesced in Ralphs Grocery’s construction of section 3751, and that it rejected efforts to supersede that decision. We disagree. We have often said that mere legislative inaction is a “weak reed” upon which to rest any conclusion about the Legislature’s intent. (E.g., Harris v. Capital Growth Investors XIV (1991) 52 Cal.3d 1142, 1156 [278 Cal.Rptr. 614, 805 P.2d 873].)
We have sometimes found legislative acquiescence in the construction of a statute where, over a long period of uniform judicial or administrative treatment, the Legislature has addressed the law in question on multiple occasions, yet has not disturbed the settled interpretation. (See, e.g., People v. Salas (2006) 37 Cal.4th 967, 979 [38 Cal.Rptr.3d 624, 127 P.3d 40]; Sara M. v. Superior Court (2005) 36 Cal.4th 998, 1014-1015 [32 Cal.Rptr.3d 89, 116 P.3d 550]; In re Dannenberg (2005) 34 Cal.4th 1061, 1091 [23 Cal.Rptr.3d 417, 104 P.3d 783]; Olmstead v. Arthur J. Gallagher & Co. (2004) 32 Cal.4th 804, 816 [11 Cal.Rptr.3d 298, 86 P.3d 354].) On the other hand, we have declined to base such a conclusion on a bill’s mere failure, as here, to clear committee in the legislative chamber where it was introduced. (Moradi-Shalal v. Fireman’s Fund Ins. Companies (1988) 46 Cal.3d 287, 300 [250 Cal.Rptr. 116, 758 P.2d 58].) As we have noted, “failure of the bill to [244]*244reach the [chamber] floor is [not] determinative of the intent of the [chamber] as a whole that the proposed legislation should fail.” (Ibid.)
At the time Senate Bills Nos. 6 and 1141 were introduced, only a single recent Court of Appeal case had considered how section 3751 should apply to profit-sharing incentive compensation plans. We decline to infer, solely from the fact these bills died without a floor vote in the Senate, that the Legislature as a whole accepted the holding of this decision. Many reasons could explain the Legislature’s failure to consider the bills further, including the press of other business, political considerations, or a tendency, at least in the short run, to trust the courts to correct their own errors. (County of Los Angeles v. Workers’ Comp. Appeals Bd. (1981) 30 Cal.3d 391, 403-404 [179 Cal.Rptr. 214, 637 P.2d 681].) The Legislature’s mere inaction on two hastily presented bills cannot foreclose this court from examining, in the normal course, the Ralphs Grocery decision and the issues it addressed. Plaintiff’s claim of legislative acquiescence must be rejected.
Therefore, we hold that Ralphs’s 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.15 The derivative claim of liability under Business and Professions Code section 17200 thus also fails. Accordingly, we will reverse the decision of the Court of Appeal, which reversed the judgment of dismissal entered after the trial court sustained Ralphs’s demurrer to plaintiff’s complaint without leave to amend. We will also disapprove Ralphs Grocery, supra, 112 Cal.App.4th 1090, to the extent it reaches contrary conclusions.
[245]*245DISPOSITION
The judgment of the Court of Appeal is reversed. Ralphs Grocery Co. v. Superior Court, supra, 112 Cal.App.4th 1090, is disapproved to the extent it reaches conclusions contrary to the views expressed in this opinion.
George, C. J., Chin, J., and Corrigan, J., concurred.