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When "Shall" Means "Never Mind."

The Fourth District Court of Appeal, Division One has issued a perplexing ruling concerning the need to post a bond to appeals from an adverse Labor Commissioner's award. In Progressive Concrete, Inc. v. Parker, D045798, Feb. 7, 2005, the court addressed the issue of whether an employer's failure to post an undertaking pursuant to Labor Code § 98.2(b) deprives the trial court of jurisdiction to consider the employer's appeal of the State of California Labor Commissioner's award in favor of the employee.

Below, the trial court had implicitly denied the employee's motion to dismiss the employer's appeal and after a de novo bench trial, the court entered a judgment awarding a lower amount. the employee appealed, contending that section 98.2(b) provides that an employer filing an appeal "shall" post an undertaking in the amount of the Commissioner's award and because the employer did not do so, the trial court should have dismissed the employer's appeal of the award.

Labor Code § 98.2(b) provides:

"Whenever an employer files an appeal pursuant to this section, the employer shall post an undertaking with the reviewing court in the amount of the order, decision, or award.  The undertaking shall consist of an appeal bond issued by a licensed surety or a cash deposit with the court in the amount of the order, decision, or award.  The employer shall provide written notification to the other parties and the Labor Commissioner of the posting of the undertaking.  The undertaking shall be on the condition that, if any judgment is entered in favor of the employee, the employer shall pay the amount owed pursuant to the judgment, and if the appeal is withdrawn or dismissed without entry of judgment, the employer shall pay the amount owed pursuant to the order, decision, or award of the Labor Commissioner unless the parties have executed a settlement agreement for payment of some other amount, in which case the employer shall pay the amount that the employer is obligated to pay under the terms of the settlement agreement.  If the employer fails to pay the amount owed within 10 days of entry of the judgment, dismissal, or withdrawal of the appeal, or the execution of a settlement agreement, a portion of the undertaking equal to the amount owed, or the entire undertaking if the amount owed exceeds the undertaking, is forfeited to the employee."

The appeal centered upon the meaning of the word "shall" in section 98.2. The court of appeal essentially held that, because the legislature did not "expressly provide for dismissal of the section 98.2 appeal or a "deemed" final adoption of the Commissioner's order, decision or award for an appealing employer's failure to post the undertaking," the word "shall" was merely informational, and that the trial court was within its rights to hear the appeal even if the employer did not do what the legislature said it "shall" do.

"We conclude the undertaking under section 98.2, subdivision (b) is directory and not mandatory or jurisdictional.  There is no contrary intent clearly expressed in section 98.2, subdivision (b).  That statute does not provide any consequence or penalty for an appealing employer's failure to post the undertaking."

The opinion, which can be viewed here in pdf or Word format, also included a curious discussion about how a prevailing party can "enforce" a Commissioner's award by filing a motion to confirm the award while the aggrieved party's appeal of that award is pending.


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