Justices Hint That Day Workers Should Get Waiting Time Penalties

Our extensive network of spies in San Francisco include a few folks who sat in on the oral argument before the California Supreme Court this week in Smith v. Superior Court (L’Oreal USA, Inc.), S129476. This was the case where a model worked for L'Oreal for one day and didn't get her check until two months later, then sued to recover waiting time penalties. The issue was whether the conclusion of a fixed term of employment constituted a "discharge" within the meaning of Labor Code S 201, so as to trigger waiting time penalties under Labor Code S 203.

Kevin Ruf argued the case for Smith. William Carroll represented L'Oreal. While handicapping the vote is never a precise science, here, it appears likely that a majority of the Supreme Court disagree with L'Oreal's contentions. Specifically, we suspect that the majority opinion will point out the absurdity that a day worker who is fired, or who quits in the middle of the day would be entitled to immediate payment of wages (if fired) or payment within 72 hours (upon resignation), while the good workers who finish out their job can be forced to wait around to be paid at the employer's leisure.

Comments

[Tom]

I was there and I agree with your handicapping. I don't understand why that hypothetical gets any traction though. Section 203 has nothing to do with why the employment ended. If I punch my boss in the face, spit on him, and call him racially derogatory names and he justly fires me in response, he still has to pay me that day because he "discharged" me. If he is abusive and mean to me and I just can't take it anymore and walk off the job, he has three days to pay me because I "quit." Is that absurd? No, because the statutory scheme pays no attention to the reason why the employee was "discharged" or "quit." Absurdity requires a result that offends the purposes of the statute, and this "absurdity" has nothing to do with the statutory structure. Oh well, I am not wearing a robe, so my musings don't trump theirs.

[Primo]

I agree with your limited point about that particular "absurdity" but the lack of absurdity doesnt really help the defense argument. If the "job is done" and the employemnt relationship has ended, then LC 201/202 applies. I think Michael's point was that when a "bad" employee's job has ended (or a good one who was forced to quit) they get paid promptly, but when a "good" employee's job has ended, then they DONT get paid promptly. Your point is, of course, valid that the "job has ended" part of that is the core issue.

[BP]

Did L'Oreal argue the model was not an "employee" rather an "independent contractor?" If so, how was this received?

[Tom]

I think L'Oreal's counsel tried to explain that the reason Amanza Smith wasn't paid for six weeks was because they viewed her as an independent contractor rather than an employee (which is true). The IC issue couldn't be resolved on summary judgment so, for the purposes of the case before the Supremes, L'Oreal assumed Smith was an employee. L'Oreal's counsel could have put the issue to bed by just admitting that, if she was not an independent contractor, it violated California law (i.e., Labor Code Section 204) for them to have waited more than two weeks to pay her. The concession would have been meaningless because there was no claim in the case for violation of Labor Code 204. For some reason though, counsel hedged, hemmed, and hawed and the justices went on a frolic and detour about independent contractors. It really should not have been an issue at all and the fact that it was an issue was very much to L'Oreal's disadvantage.

As for the absurdity issue, my point above was that a statutory scheme is absurd only if it produces results that are obviously contrary to its statutory structure and purpose (e.g., if a law to prevent discrimination interpreted literally requires discrimination). The fact that an employee gets LC 203 protection when they are fired for cause, while an employee who works to the end of a 1-day assignment gets protection only of Labor Code 204 is not "absurd," in the relevant sense of the word, because the cause for the termination is irrelevant to the statutory structure.

Anyway, like I said, these points were not made well at the hearing and, in any event, the California Supreme Court appears ready to describe the interpretation of 203 adopted by the Court of Appeal as "absurd."

[michael walsh]

I think what strikes them as absurd is that, given the goal of the statutory scheme (the prompt payment of an employee's final wages), it is an unreasonable interpretation, with a result that does no justice to the goal of the legislation, to construe completion of the term as anything other than a discharge when an employee whose employment ends before expected would get the protection of the statute, while one whose employment terminated when and how the parties expected, would not.

[Chuck]

If my regular employment is as a administrative assistant and my regular rate of pay $15/hr, can my employer require me to attend a company event or marketing function on the evenings and weekends and pay me minimum wage and no overtime for attending these functions on behalf of the company?

The company policy is this:

Required weekday evening & weekend marketing and promotional events will be paid at the legal minimum wage or greater for the time spent in the event and the travel time to and from the event when it is held outside of the Company. It will be paid as a bonus and included in your W-2 by the company where your payroll originates from.

Can my employer make me - or even ask me - to attend these events on the company's behalf on my evenings and weekends for minimum wage without overtime? Is the policy legal?

[Skeets]

I assume that this ruling would not affect talent hired through a model/talent agency?

Also, absent the presence of a talent agent, if the client hiring the model has a booking contract with the model outlining the payment terms (i.e. - Net-30) of the short-term assignment, I assume that this agreement would supercede the court's ruling here regarding the "discharge" terminology? Many such contracts also outline the late fees (i.e - 2.5% per month), which I assume would also eliminate the standard waiting time penalties described in Section 203.

Models and actors are typically hired as independent contractors, not employees, so even though I've read the previous posts, I'm still unclear as to why this ruling was made. I suppose that there must not have been any sort of booking contract/confirmation form in place prior to the assignment which clearly defined the model's role. If L'Oreal could not show that the plaintiff was an independent contractor, then thousands of modeling and acting projects per year that involve unrepresented talent (perhaps even those with agents?) are REALLY placing the hiring clients at great financial risk. The entire entertainment industry relies on specific call times, description of duties to be performed, and invoicing for work performed. Although working through an agency is the logical solution and booking contracts are considered standard whether there is an agency or not, many producers, photographers, etc. simply don't bother, and the talent working on such projects don't worry about anything until their payment doesn't show up.

The labor code in general and those relating to talent agencies specifically necessarily go above and beyond in protecting the rights of employees and artists, but a growing part of me is beginning to feel that if a model or actor is personally representing themselves as a professional model or an actor to a client, then they should have some basic level of understanding regarding the laws that relate to them. Idealistic I know, but if Smith had known that she would be "exposed to economic vulnerability from delayed wage payment" beforehand, she might have had the forethought to get a contract (or an agent) before working and a signed invoice at the end of the work day, possibly avoiding the "economic vulnerability" that I'm sure she must have suffered during the time she was waiting for payment. But of course, the other side of it, and perhaps the more important side, is that the client should have understood the legal risks involved in hiring talent directly and either gone through an agency or had their legal team draw up a solid booking contract to be used when hiring hair show models.

I'm a licensed talent agent in Los Angeles, not a lawyer, so any legal opinions would be appreciated.