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    « Supreme Court to Hear Arguments in Prachasaisoradej | Main | AB 1505 Dies in Committee »


    Steve Kane

    This is a puzzling and troubling ruling.

    To support its finding that "Arminderez does not apply to this case because it is not based on the FEHA or a fundamental public policy that is tied to a constitutional or statutory provision," the Court says that: "In this case, Giuliano argues that his statutory wage claim is an unwaivable Tameny claim because '[t]he right to be paid wages earned is part of the public policy of the State of California and is not waivable.' But Giuliano's contract claim for a $5 million to $8 million bonus and a $500,000 severance payment is distinguishable from the statutory overtime or minimum wage claims that were at issue in the cases cited by Giuliano...We distinguish the above cases because they involved unwaivable statutory claims for federally mandated overtime and minimum wage payments, whereas this case a breach of contract claim for a multimilion dollar bonus and severance payment.

    Is the Court saying that the "multimillion dollar bonus and severance payment" is not wages? What is the authority for that? The court appears to make this ruling based on the size of the compensation, but I know of no statute or case authority that compensation for services ceases to be wages when it reaches and exceeds some unstated amount. Indeed, there is case authority that bonuses and commissions are wages although they may be very large in some cases. Certainly, the Legislature and Congress could have imposed such limits, but have not done so.

    The Court also seems to say that only "federally mandated overtime and minimum wage payments" are non-waivable, but, again, this contention is without authority. The Labor Code explicitly makes the right to payment of all wages non-waivable, not just overtime and minimum wages. It would seem that payment of the bonus and severance pay to Giuliani is mandated by strong public policy unless the payments are not wages, which the Court does not explicitly find.

    Also, characterization of the plaintiff's claim as "a breach of contract claim" which does not involve an important public interest protected by wage and hour laws is a very questionable formulation. Fundamentally, all wage and hour claims are "breach of contract" claims because they involve enforcement of contracts with conditions imposed by law. The Court seems to find that the claim is just too big to be characterized as wages so there is no public interest in protecting it.

    In my opinion, the Court is starting down a slippery slope in refusing to characterize Giuliani's bonus and severance payments as wages based on a finding that the payment is just too big. Where is the line to be drawn for this test? It is surprising to see the Court apply a "reverse means test" to wages for the purpose of applying statutory protections when the Legislature has not done so. Does this case create a "too much money" defense against wage and hour claims?

    Thoughts on this?

    Hopefully, the Supreme Court will grant review and clear this up because we will certainly start to see this as a defense to high value wage claims.

    michael walsh

    We're closing the comments on this post because spammers like it too much.

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