Opinion
A131021
01-04-2012
PAUL JOSEPH IRELAND III, Plaintiff and Respondent, v. PORTOLA SYSTEMS, INC., Defendant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Sonoma County Super. Ct. No. SCV-245955)
Defendant Portola Systems, Inc., appeals from the judgment after a bench trial awarding plaintiff Paul Joseph Ireland III two years of overtime pay. The trial court held that Labor Code section 515.5, a provision pertaining to computer software professionals that creates an exemption from laws requiring employers to pay overtime, precludes consideration of whether any other exemptions apply to plaintiff's overtime wage claim. Defendant claims this ruling was erroneous. We agree and remand the matter back to the trial court for the determination of the application of the administrative exemption under section 515 to the facts of the case.
All subsequent code references are to the Labor Code unless otherwise specified.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
Defendant is an information technology consulting firm that troubleshoots, designs, and implements computer networks for businesses. The company is small, with three owner-partners, four support staff, and six to eight engineers.
Plaintiff was hired by defendant as a staff engineer on November 1, 2004, shortly after obtaining a four-year degree in information systems and his Cisco "certified network associate certification." In January 2007, his title was changed to senior engineer.
In the fall of 2007, plaintiff and some other employees became concerned because they were not being paid overtime wages. The owners told them they were exempt from overtime under the administrative exemption.
Under the administrative exemption, an employee is exempt from overtime pay if he or she has duties and responsibilities involving office or nonmanual work directly related to management policies, or general business operations of the employer or the employer's customers. (Cal. Code Regs., tit. 8, § 11040, subd. 1(A)(2)(a)(I).)
Defendant terminated plaintiff's employment on August 13, 2008, shortly after plaintiff submitted his letter of resignation. His annual salary at that time was $82,500 per year, which translates to an hourly rate of $39.66. Plaintiff never received overtime pay during his employment with defendant.
On December 16, 2008, plaintiff filed a complaint with the Office of the Labor Commissioner, seeking overtime wages, interest, and penalties under section 203 for overtime worked after December 16, 2005. Following an administrative hearing, the hearing officer decided in plaintiff's favor and awarded him $12,830.31 in overtime wages for the year 2006 only, plus $1,145.94 in interest.
Defendant challenged the decision and timely sought a trial de novo in the superior court. (§ 98.2, subd. (a).) The primary issue raised by the parties during the trial was whether plaintiff was exempt from overtime under section 515 as an administrative employee.
Section 98.2, subdivision (a), provides in part: "Within 10 days after service of notice of an order, decision, or award the parties may seek review by filing an appeal to the superior court, where the appeal shall be heard de novo."
On August 13, 2010, after closing briefs had been filed, the trial court sent a letter to the parties requesting further briefing concerning the applicability and impact of section 515.5 on the issues to be determined in the case.
On August 23, 2010, plaintiff filed his supplemental brief.
On September 1, 2010, defendant filed its supplemental closing brief and requested a statement of decision.
On December 13, 2010, the trial court filed its statement of decision and the judgment in favor of plaintiff. The court awarded plaintiff a total of $25,931.40 in overtime and interest for the years 2006 and 2007. The court determined section 515 was precluded by section 515.5, and found plaintiff was an exempt employee under section 515.5 during 2008 because his hourly wages exceeded the statutory threshold required to be found exempt during that year.
On February 4, 2011, the trial court filed its order awarding plaintiff $30,477.50 in attorney fees and costs. This appeal followed.
DISCUSSION
I. Standard of Review
Whether an employee is exempt from the Labor Code's overtime provisions is a factual issue that this court reviews under the substantial evidence rule. (Cardenas v. Mission Industries (1991) 226 Cal.App.3d 952, 958, disapproved on another ground in Smith v. Rae-Venter Law Group (2002) 29 Cal.4th 345, 370.) Where the evidence is in conflict, the appellate court will not disturb the findings of the trial court. The court must consider the evidence in the light most favorable to the prevailing party, giving that party the benefit of every reasonable inference and resolving conflicts in support of the judgment. (Aceves v. Regal Pale Brewing Co. (1979) 24 Cal.3d 502, 507, overruled on another ground in Privette v. Superior Court (1993) 5 Cal.4th 689, 696.) In contrast, the proper interpretation of a statute presents a question of law that this court must review de novo on appeal (see California Teachers Assn. v. San Diego Community College Dist. (1981) 28 Cal.3d 692, 699). Applying this standard, we conclude the trial court interpreted section 515.5 incorrectly.
II. Regulatory Framework
The Labor Code, which imposes overtime compensation and other requirements on employers (e.g., §§ 510, 512), authorizes California's Industrial Welfare Commission (IWC) to establish exemptions from the overtime requirements for executive, administrative, and professional employees, "provided that the employee is primarily engaged in the duties that meet the test of the exemption, customarily and regularly exercises discretion and independent judgment in performing those duties, and earns a monthly salary equivalent to no less than two times the state minimum wage for full-time employment." (§ 515, subd. (a).)
Section 510, subdivision (a), provides, in part: "Eight hours of labor constitutes a day's work. Any work in excess of eight hours in one workday and any work in excess of 40 hours in any one workweek and the first eight hours worked on the seventh day of work in any one workweek shall be compensated at the rate of no less than one and one-half times the regular rate of pay for an employee." Section 512 sets forth the requirements for employers to provide meal periods.
" 'The IWC, established by the Legislature in 1913, was the state agency authorized to formulate the regulations, or wage orders, that govern employment in California. [Citation.] In fulfilling its broad statutory mandate to regulate wages, hours, and working conditions of California employees, the IWC acted in a quasi-legislative capacity. [Citation.] Although the IWC was defunded effective July 1, 2004, its wage orders remain in effect. [Citation.]' [Citation.]" (California Correctional Peace Officers' Assn. v. State of California (2010) 188 Cal.App.4th 646, 651.)
The IWC promulgated Wage Order No. 4-2001, applicable to all persons employed in professional, technical, clerical, mechanical, and similar occupations. (See Cal. Code Regs., tit. 8, § 11040.) The wage order specifies that its provisions governing minimum wages, overtimes wages, and other employment conditions do not apply to employees falling within exemptions for persons employed in administrative, executive, or professional capacities, as defined in the wage order.
All references to section 11040 are to California Code of Regulations, title 8, section 11040.
Section 515.5 establishes an additional exemption that, upon meeting certain specified conditions, "an employee in the computer software field shall be exempt from the requirement that an overtime rate of compensation be paid pursuant to Section 510[.]" (§ 515.5, subd. (a).)
III. The Trial Court's Decision
In its letter dated August 13, 2010, the trial court stated that the parties' briefs contained "no reference or discussion of [section 515.5]." In fact, plaintiff had stated in his trial brief that the section did not apply because "section 515.5(b)(3) specifically provides that an employee is not an exempt computer professional if he is engaged primarily in the repair or maintenance of computer hardware and related equipment. In this case, [plaintiff] spent sixty to eighty percent of his time engaged in installing, troubleshooting, monitoring and maintaining computer hardware and related equipment. Accordingly, [the] computer professional exemption does not apply to [plaintiff.]"
In any event, in its letter, the trial court asked the parties to address (1) whether section 515.5 applies to the instant dispute, and (2) whether the enactment of section 515.5 precludes or preempts the application of the administrative exemption to computer software employees. In his supplemental brief, plaintiff reversed his position and argued that the exemption applied but that it did not prevent him from receiving overtime compensation for the years 2006 and 2007 because he did not receive the minimum salary requirement, as stated in section 515.5, subdivision (a)(4).
Section 515.5, subdivision (a)(4), provides an employee in the computer software field will not be deemed exempt unless the employee's hourly rate of pay "is not less than thirty-six dollars ($36.00) or, if the employee is paid on a salaried basis, the employee earns an annual salary of not less than seventy-five thousand dollars ($75,000) for full-time employment, which is paid at least once a month and in a monthly amount of not less than six thousand two hundred fifty dollars ($6,250)." These amounts are adjusted annually by the Division of Labor Statistics and Research.
The trial court concluded plaintiff was a computer software employee covered by Labor Code section 515.5. The court also found the more "specific" directives of Labor Code section 515.5 applied, rather than the more general categories, such as the administrative and professional exemptions established pursuant to Labor Code section 515. In so concluding, the court relied on Code of Civil Procedure section 1859 which states: "In the construction of a statute the intention of the Legislature, and in the construction of the instrument the intention of the parties, is to be pursued, if possible; and when a general and [a] particular provision are inconsistent, the latter is paramount to the former. So a particular intent will control a general one that is inconsistent with it." (Italics added.) The court's statement of decision fails to explain why the two statutes are inconsistent as opposed to complimentary. The court also made no finding as to plaintiff's status as an exempt employee under Labor Code section 515's administrative exemption.
The trial court found plaintiff's hourly wage was less than the minimum salary amount required to be found to be exempt during calendar years 2006 and 2007, but that his hourly wage in 2008 did exceed the threshold amount. The court concluded plaintiff was an exempt employee in 2008, and awarded a total of $25,931.40 in overtime and interest for the years 2006 and 2007. On appeal, plaintiff does not contest the finding that he was an exempt employee in 2008. IV. Defendant Has Not Waived the Issue on Appeal
Plaintiff first claims defendant waived this issue on appeal by not objecting to the statement of decision's finding that section 515.5 rather than 515 controls in resolving the dispute. He notes that when defendant filed its objections to the proposed statement of decision, it did not specifically target the court's refusal to apply the administrative exemption. Nor did defendant object to the court's failure to make factual findings regarding the administrative exemption. Plaintiff contends this failure bars defendant from raising the issue on appeal. Plaintiff is mistaken.
"Generally, failure to raise an issue or argument in the trial court waives the point on appeal." (Kolani v. Gluska (1998) 64 Cal.App.4th 402, 412.) Here, it is undisputed that defendant raised the argument that plaintiff was exempt from overtime under the administrative exemption. Plaintiff acknowledged as much in his letter to the trial court dated November 4, 2010: "[Defendant] alleged that [plaintiff] was an exempt employee under the administrative exemption. The court held that the administrative exemption did not apply because [plaintiff] was a computer software employee covered by Labor Code [section] 515.5." Defendant's position is explicitly acknowledged in the statement of decision itself: "Acknowledging the argument of [defendant] that the issue is whether [plaintiff] is an exempt employee under either the administrative exemption of Labor Code section 515 or Labor Code section 515.5, the court is guided by Code of Civil Procedure section 1859 . . . ." The trial court declined to rule on the administrative exemption, not because defendant failed to raise the issue, but because the court found the underlying statute did not apply.
Plaintiff's argument appears to be based on the doctrine of implied findings. "Under the doctrine of implied findings, the reviewing court must infer, following a bench trial, that the trial court impliedly made every factual finding necessary to support its decision. Securing a statement of decision is the first step in avoiding the doctrine of implied findings, but is not always enough: The appellant also must bring ambiguities and omissions in the factual findings of the statement of decision to the trial court's attention. If the appellant fails to do so, the reviewing court will infer the trial court made every implied factual finding necessary to uphold its decision, even on issues not addressed in the statement of decision. The question then becomes whether substantial evidence supports the implied factual findings." (Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 48.)
Here, there is no question or ambiguity with respect to what the trial court decided on the issue of the applicability of section 515. Further, while judgments and orders of the trial court are ordinarily presumed to be correct on appeal, we apply the de novo standard of review to issues of statutory interpretation and therefore we are not bound by the factual findings of the trial court. We conclude the issue of whether section 515.5 preempts section 515 has not been waived on appeal.
We also note "a new issue may be considered on appeal where the issue is one of law alone." (Chatterjee v. Kizer (1991) 231 Cal.App.3d 1348, 1359.)
V. The Trial Court Misapplied Code of Civil Procedure section 1859
Code of Civil Procedure section 1859 directs that "[i]n the construction of a statute the intention of the Legislature . . . is to be pursued, if possible; and when a general and [a] particular provision are inconsistent, the latter is paramount to the former." Consequently, "where the same subject matter is covered by inconsistent provisions, one of which is special and the other general, the special one, whether or not enacted first, is an exception to the general statute and controls unless an intent to the contrary clearly appears." (Warne v. Harkness (1963) 60 Cal.2d 579, 588.) Defendant argues that Code of Civil Procedure section 1859 does not support the trial court's conclusion that, under Labor Code section 515.5, a computer software professional employee may not be found exempt under alternative theories or statutes.
A. Canon of General Versus Specific Statutes
Generally, a reviewing court's "fundamental task in construing a statute is to ascertain the intent of the lawmakers so as to effectuate the purpose of the statute." (Day v. City of Fontana (2001) 25 Cal.4th 268, 272.) The analysis starts with an examination of the actual words of the statute, giving them their usual, ordinary meaning. (Garcia v. McCutchen (1997) 16 Cal.4th 469, 476.) If the words of the statute do not provide an unambiguous answer to the question presented, "then we may resort to extrinsic sources, including the ostensible objects to be achieved and the legislative history. [Citation.] In such circumstances, we ' "select the construction that comports most closely with the apparent intent of the Legislature, with a view to promoting rather than defeating the general purpose of the statute, and avoid an interpretation that would lead to absurd consequences." [Citation.]' [Citations.]" (Day, supra, at p. 272.)
"It is well settled [] that a general provision is controlled by one that is special, the latter being treated as an exception to the former. A specific provision relating to a particular subject will govern in respect to that subject, as against a general provision, although the latter, standing alone, would be broad enough to include the subject to which the more particular provision relates." (Rose v. State of California (1942) 19 Cal.2d 713, 723-724.) "Significantly, whether the canon invoked is that the specific statute prevails over the general or that the latest statutory expression prevails, such canons share the requirement that the enforcement of one duly enacted statute at the expense of another on the same subject only applies when the two statutes cannot be reconciled. Restraint of judicial trespass into the legislative province is no doubt the reason for the rule that a judicially determined repeal requires a repugnancy between the two statutes that prevents their concurrent operation—a restraint that has constitutional underpinnings premised on the separation of powers." (Medical Board v. Superior Court (2001) 88 Cal.App.4th 1001, 1014, fns. omitted.) Accordingly, if we can reasonably harmonize "[t]wo statutes dealing with the same subject," then we must give "concurrent effect" to both, "even though one is specific and the other general." (People v. Price (1991) 1 Cal.4th 324, 385.)
B. Labor Code Sections 515 and 515.5 Are Not Irreconcilable
As noted above, Labor Code section 515 codifies the notion of administrative exemption, along with the executive exemption and the professional exemption. However, the statute does not appear to be intended as a complete listing of exemptions. Labor Code section 515 states the IWC "may" establish exemptions and suggests this authority can be changed or supplemented. In subdivision (b)(1), the Legislature indicates "the commission may establish additional exemptions to hours of work . . . ." The IWC also has adopted certain regulations that specify the requirements of the exemptions, such as the administrative exemption, and their implementations. The regulations have the force of law and have been followed by appellate courts. (See, e.g., Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785, 794.) In Ramirez, for example, our Supreme Court assessed whether various exemptions within title 8, California Code of Regulations, section 11070 applied to the facts of that case, specifically the outside salesperson exemption and the commissioned employee exemption. (Ramirez, supra, at pp. 794, 803-804.) The opinion suggests that more than one exemption can be found to apply to a particular employee.
Wage Order No. 4-2001 provides that, for the administrative exemption to apply, "The employee must (1) perform 'office or non-manual work directly related to management policies or general business operations' of the employer or its customers, (2) 'customarily and regularly exercise[] discretion and independent judgment,' (3) 'perform[] under only general supervision work along specialized or technical lines requiring special training' or 'execute[] under only general supervision special assignments and tasks,' (4) be engaged in the activities meeting the test for the exemption at least 50 percent of the time, and (5) earn twice the state's minimum wage." (Eicher v. Advanced Business Integrators, Inc. (2007) 151 Cal.App.4th 1363, 1371 (Eicher).)
Title 8, California Code of Regulations, section 11040, subdivision 1(A)(2) provides, in relevant part: "A person employed in an administrative capacity means any employee: [¶] (a) Whose duties and responsibilities involve either: [¶] (I) The performance of office or non-manual work directly related to management policies or general business operations of his/her employer or his employer's customers; . . . [¶] [and] (b) Who customarily and regularly exercises discretion and independent judgment; and [¶] (c) Who regularly and directly assists a proprietor, or an employee employed in a bona fide executive or administrative capacity (as such terms are defined for purposes of this section); or [¶] (d) Who performs under only general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or [¶] (e) Who executes under only general supervision special assignments and tasks; and [¶] (f) Who is primarily engaged in duties that meet the test of the exemption. The activities constituting exempt work and non-exempt work shall be construed in the same manner as such terms are construed in the following regulations under the Fair Labor Standards Act effective as of the date of this order: 29 C.F.R. Sections 541.201-205, 541.207-208, 541.210, and 541.215."
The exemption contemplated in Labor Code section 515.5 applies to workers in the computer software field if they meet the following criteria: (1) they are primarily engaged in work that is intellectual or creative requiring the exercise of discretion and independent judgment; (2) they are primarily engaged in the application, design, analysis, testing, or creation of computer programs; (3) they are highly skilled and proficient in the theoretical and practical application of specialized information to computer systems; and (4) their hourly rate of pay is not less than a statutorily set minimum which is adjusted yearly to accommodate inflation. (Cal. Code Regs., tit. 8, § 11040(1)(A)(3)(h).)
We first note that nothing in section 515.5 explicitly states that no other exemptions may be applied to persons who otherwise qualify as employees in the computer software field. In fact, the legislative history of section 515.5 supports the conclusion that the provision merely seeks to address special circumstances pertaining to computer software professionals. The comments to the proposed bill reveal that the concern addressed by section 515.5 was to correct a legislative oversight and restore a previously existing exemption for temporarily assigned computer software employees: "This bill is intended to exempt from overtime pay, computer professionals who work for companies that assign them, on a temporary basis, to other companies to provide programming and related services as specified. These computer professionals are hourly employees and are therefore not eligible for a professional exemption from overtime requirements, because they lack an established monthly salary." (3d reading analysis of Sen. Bill No. 88 (1999-2000 Reg. Sess.) as amended Aug. 10, 2000, p. 4.) Other documents explain that highly skilled computer software employees "were inadvertently included within the scope of AB 60, thereby requiring that they receive overtime compensation after eight hours of work." Section 515.5 was intended to "correct this oversight." (Letter dated August 24, 2000 from Senator Sher regarding S.B. 88 (Stats. 2000, c. 492).) Nothing in section 515.5, so construed, is inconsistent with section 515's directive that all employees who spend more than half their time on administrative function are exempt from overtime.
On our own motion, we take judicial notice of the legislative history materials discussed in this section.
We note at least one court has considered whether multiple exemptions can be applied to employees in the computer software field. In Heffelfinger v. Electronic Data Systems Corp. (C.D.Cal. 2008) 580 F.Supp.2d 933, 952, the district court noted that California law allows exemptions for administrative employees as well as computer software professionals. The court's opinion addresses the application of multiple exemptions to a particular group of employees. The opinion considers the application of both section 515 and section 515.5 with respect to the workers in that case. (Heffelfinger, supra, at pp. 957-958, 969.) Thus, it appears the federal district court did not believe the case turned on whether a specific statute trumped a more general one.
This tolerance for multiple exemptions as being legally appropriate if factually justified is also seen in cases dealing with the Federal Labor Standards Act (FLSA). Importantly, the IWC Wage Orders detailed in California expressly reference FLSA standards in addressing the administrative, professional and executive exemptions of the regulations. We also note the FLSA has an analogous computer employee exemption under title 29 of the United States Code section 213(a)(17), to which federal courts have not given preclusive effect. (See Verkuilen v. MediaBank, LLC (N.D.Ill. May 19, 2010, No. 09 C 3527) 2010 WL 2011713 as an example of the separate review of facts to determine the application of the administrative and computer employee exemptions to a wage and hour claim.)
As defendant notes, a person could be both a computer software professional and the CEO of a computer software company, and thus be potentially exempt under both sections 515 and 515.5 simultaneously. Defendant also notes a computer software professional could be excluded from the exemption of section 515.5 by application of a section 515.5, subdivision (b) exception (as plaintiff initially conceded here), but still be considered exempt under another exemption. Our reading of sections 515 and 515.5 does not lead us to conclude one statute is repugnant or irreconcilable with the other. Instead, they are two statutes that each provides a potential basis for exempting an employee from overtime. There is no logical reason that an employee could not be covered by an exemption under alternative theories or statutes. A court should thus evaluate all potentially applicable statutory exemptions before deciding whether an employee is exempt from the right to receive overtime pay.
Here, the trial court did not determine the application of the administrative exemption to plaintiff. While plaintiff contends the administrative exemption cannot apply if section 515.5 also applies because the trial court necessarily must have found that more than half of his work time was spent implementing defendant's core day-to-day business operations, the trial court did not make an ultimate finding and did not consider the evidence presented in support of the administrative exemption.
VI. The Error Was Not Harmless
We next consider whether the error was harmless. Appellate courts "will not reverse a judgment unless 'after an examination of the entire cause, including the evidence,' it appears the error caused a 'miscarriage of justice.' (Cal. Const., art. VI, § 13.) In the case of civil state law error, this standard is met when 'there is a reasonable probability that in the absence of the error, a result more favorable to the appealing party would have been reached.' [Citation.]" (Elsner v. Uveges (2004) 34 Cal.4th 915, 939.)
Defendant claims the error is not harmless because if plaintiff is determined to be an exempt employee under section 515, then the damages for overtime pay adjudged by the trial court, including attorney fees to the prevailing party under section 98.2, subdivision (c), were ordered in error.
Whether plaintiff was an exempt administrative employee "presents a mixed question of law and fact because it involves the application of legal categories. [Citation.] 'In interpreting the scope of an exemption from the state's overtime laws, we begin by reviewing certain basic principles. First, "past decisions . . . teach that in light of the remedial nature of the legislative enactments authorizing the regulation of wages, hours and working conditions for the protection and benefit of employees, the statutory provisions are to be liberally construed with an eye to promoting such protection." [Citation.] Thus, under California law, exemptions from statutory mandatory overtime provisions are narrowly construed. [Citations.] Moreover, the assertion of an exemption from the overtime laws is considered to be an affirmative defense, and therefore the employer bears the burden of proving the employee's exemption. [Citations.]' [Citation.]" (Eicher, supra, 151 Cal.App.4th 1363, 1369-1370.) In a bench trial, this assessment is made by the trial judge in the first instance.
As the appellate court in Eicher stated, "Federal and California authorities 'draw a distinction between administrative employees, who are usually described as employees performing work "directly related to management policies or general business operations of his employer or his employer's customers," . . . and production employees, who have been described as "those whose primary duty is producing the commodity or commodities, whether goods or services, that the enterprise exists to produce." [Citation.]' [Citation.] Employees engaged in an activity that constitutes the company's primary purpose are likely production workers." (Eicher, supra, 151 Cal.App.4th 1363, 1372-1373, fns. omitted.)
See Bell v. Farmers Ins. Exchange (2001) 87 Cal.App.4th 805, describing the analytical tool known as the "administrative/production worker dichotomy." In simple terms, the administrative/production dichotomy defines administrative employees as those primarily engaged in servicing or " 'administering the business affairs of the enterprise' " as distinct from production-level employees whose " 'primary duty is producing the commodity or commodities, whether goods or services, that the enterprise exists to produce and market.' [Citation.]" (Id. at p. 821.)
Each side presented evidence regarding the application of the section 515 administrative exemption issue. The testimony by plaintiff and Stephen Fox was challenged by Grant Smoot, president of defendant. As a reviewing court, it is not our role to resolve the factual distinctions in that evidence at first blush. The case, in fact, was litigated with a focus on the application of the administrative exemption to plaintiff's responsibilities at defendant's operation. Only after the presentation of the evidence did the court's focus transfer to section 515.5.
Yet we find nothing in the record impelling us to order a new trial take place. It appears the issue was fully tried with each side presenting their evidence on the issue to be resolved. We do not see the need to take additional evidence. However, that determination is left to the trial court for final decision. Under the circumstances of this record and the factual issue to be resolved, we decide it is proper to remand the matter with the direction to the trial court to make necessary factual findings on the issue regarding the application of the administrative exemption.
VII. The Statute of Limitations
Plaintiff's recovery was calculated based on the date set by the Labor Commissioner during the administrative proceeding. The trial de novo commenced on September 25, 2009. Defendant claims the cause of action was not tolled for purposes of calculating unpaid overtime compensation until the action was filed in state court, and that damages were thus wrongly awarded for the period January 1, 2006, through September 25, 2006. It argues that the statute of limitations runs from the time the employer files its request for trial de novo after an unfavorable award in a section 98 hearing. It claims damages should have been cut off at three years prior to the filing of the notice of appeal under section 98.2.
The Supreme Court has held that, in cases such as this which were initially filed with the Labor Commissioner, the filing of the claim fixes the date on which the action is commenced for statute of limitations purposes. (Cuadra v. Millan (1998) 17 Cal.4th 855, 868-869 [overruled on unrelated grounds in Samuels v. Mix (1999) 22 Cal.4th 1, 16, fn. 4].) In Cuadra, the court stated that if the Labor Commissioner holds an administrative hearing under section 98 (commonly known as a Berman hearing), damages are to be calculated back three years from the date the claim was filed (instead of three years from the date of the administrative hearing). However, if the Labor Commissioner chooses to file a civil action under section 98.3, damages are to be calculated back three years from the date the complaint is filed in that civil action. (Cuadra, supra, at p. 869.)
Here plaintiff elected to proceed with a Berman hearing before the Labor Commissioner under section 98. Defendant then elected to appeal the Labor Commissioner's decision and proceed with a civil action under section 98.2. As plaintiff notes, a finding in favor of defendant on this issue would force employees to resort to immediate court action rather than risk forfeiting a portion of any recovery achieved during an administrative hearing procedure due to an unsuccessful trial de novo instigated by the employer, a result exactly opposite from that intended by the Legislature.
"[T]he purpose of the Berman hearing procedure is to avoid recourse to costly and time-consuming judicial proceedings in all but the most complex of wage claims." (Cuadra, supra, 17 Cal.4th 855, 869.)
DISPOSITION
The judgment is reversed and the cause remanded to the trial court to proceed with the disposition thereof under the directions and in conformity with the views herein expressed. Appellant shall recover costs on appeal.
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Dondero, J.
We concur: ____________
Marchiano, P. J.
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Banke, J.