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Court of Appeal Holds that Every Hour Worked Must be Compensated

Gonzalez v. Downtown LA Motors, LP - filed March 6, 2013, publication ordered April 2, 2013, Second District, Div. Two

"In a wage and hour class action between automotive service technicians and Downtown LA Motors, a Los Angeles Mercedes-Benz dealership, the California Court of Appeal held that the employer-dealership must pay its employees for each and every hour worked. The dealership had previously paid the technicians on a piece-rate bases for their repair work and supplemented the total amount of their wages to ensure they received at least minimum wage for the hours they were at the dealership. However, the Court disagreed with the employer-dealership and determined that this method of compensation violated California wage and hour law. The Court further stated that wage and hour laws should be liberally construed in favor of protecting workers.

The California Court of Appeal, Second Circuit concluded that under California's minimum wage law, an employer that compensates its automotive service technicians on a "piece-rate" basis for repair work must also 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. Defendant automobile dealership, Downtown LA Motors, argued it was not required to pay the technicians a separate hourly minimum wage for "down-time" because it ensured that a technician's total compensation for a pay period did not fall below what the employer refers to as the "minimum wage floor" - the total number of hours the technician was at work during the pay period multiplied by the applicable minimum wage rate.

However, the Court reasoned that California law does not allow an employer to avoid paying its employees for all hours worked by averaging total compensation over total hours worked in a given pay period. California law requires that every hour worked be compensated at least at the minimum wage rate, regardless of the fact that the average rate is above the required rate. The Court held that class members were entitled to separate hourly compensation for time spent waiting for repair work or performing other non-repair tasks directed by the employer during their work shifts as well as penalties under Labor Code section 203, subdivision (a).

The Court held that the failure to pay wages was "willful" because there were instances when Downtown LA Motors failed to cover shortfalls between piece-rate wages and the minimum wage floor. The Court affirmed the penalty award under Labor Code section 203 against the dealership and agreed with plaintiffs that each and every hour worked must be compensated."

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