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Your Employee Matters


By July 1, 2013No Comments

In Gonzales v. Downtown LA Motors, a California appeals court ruled that the employer’s method of compensation violated minimum wage law because state law prohibits an employer from paying employees for all hours worked by averaging total compensation over total hours worked in any period. The court ordered the auto dealer to pay minimum wage for the waiting time of repair mechanics.

Most auto repair facilities pay mechanics a flat rate for a repair job based on its “book value.” This piecework approach satisfies minimum wage obligations if the total compensation paid over the pay period averages at least minimum wage both for repair and waiting time. However, the California statute differs from federal law because it requires paying minimum wage for “each and every separate hour worked.”

The court noted that this requirement is distinct from the federal statute, which “requires payment of minimum wage to employees who in any workweek are engaged in commerce.”

You can imagine the potential exposure to similar claims for auto repair facilities in California. For example, in this case, the trial court indicated that the plaintiffs lost $553,653 in uncompensated time – and that the value of the waiting time, including interest was $1,555,078. The ruling also awarded penalties of $237,840 for the willful failure to pay all wages owed at the time the employees were terminated.

The Gonzalez case included amici curie briefs filed by the California Employment Lawyers Association, the National Automobile Dealers Association, the California Automotive Business Coalition, the California New Car Dealers Association, and the Alliance of Automobile Manufacturers. This decision will remain the law unless the California Supreme Court overturns it (which is unlikely), or the state legislature changes the existing rule. Either way, it represents an enormous windfall for auto repair workers in the state and their attorneys.