Gonzalez v. Downtown LA Motors agrees with Armenta and rejects compensation averaging on minimum wage claims


In Armenta v. Osmose, Inc., 135 Cal. App. 4th 314 (2005), one Court of Appeal (2/6) concluded that the governing Wage Order required payment of the minimum wage during every hour worked (as opposed to dividing compensation by total hours worked to check whether the average hourly compensation exceeds minimum wage).  In Gonzalez v. Downtown LA Motors, LP, et al., (April 2, 2013), the Court of Appeal (Second Appellate District, Division Two) examined the same issue, and reached the same conclusion.

In Gonzalez, the defendant compensated its automotive service technicians on a what was characterized as a “piece rate” basis for repair work.  The question before the trial court was whether the defendant was also required to pay those technicians a separate hourly minimum wage for time spent during their work shifts waiting for vehicles to repair or performing other non-repair tasks directed by the employer.  The defendant argued that it was not required to pay the technicians a separate hourly minimum wage for such time because it ensured that a technician's total compensation for a pay period never fell below what the defendant called a “minimum wage floor,” calculated as the total number of hours the technician was at work during the pay period (including hours spent waiting for repair work or performing non-repair tasks), multiplied by the applicable minimum wage rate. The employer did so by supplementing a technician's pay, if necessary, to cover any shortfall between the technician's piece-rate wages and the minimum wage floor.  The trial court did not find this persuasive, concluding that each hour had to be separately compensated at above minimum wage, even if other hours were compensated well above the minimum wage.  The Court of Appeal agreed.

In its analysis of Armenta, the Court observed:

Finally, the court in Armenta considered "the policies underlying California's minimum wage law and regulations" which "reflect a strong public policy in favor of full payment of wages for all hours worked." (Armenta, supra, 135 Cal.App.4th at p. 324.) Given that public policy, the court concluded that a method of "averaging all hours worked 'in any work week' to compute an employer's minimum wage obligation under California law is inappropriate." (Ibid.) The court in Armenta held that use of such an averaging method to determine an employer's minimum wage obligation violates California law and that "[t]he minimum wage standard applies to each hour worked by [the employees] for which they were not paid." (Ibid.)

Slip op., at 11-12.  Gonzalez, when coupled with Armenta, solidifies the construction of California's minimum wage obligation.