Supreme Court of California Justia
Citation 49 Cal. 4th 35, 231 P.3d 259, 109 Cal. Rptr. 3d 514

Martinez v. Combs

Filed 5/20/10






IN THE SUPREME COURT OF CALIFORNIA



MIGUEL MARTINEZ et al.,

Plaintiffs and Appellants,

S121552

v.

Ct.App. 2/6 B161773

CORKY N. COMBS et al.,

San Luis Obispo County

Defendants and Respondents. )

Super. Ct. No. CV001029



Plaintiffs, seasonal agricultural workers, brought this action under Labor

Code section 11941 and other theories to recover unpaid minimum wages.

Plaintiffs contend the Industrial Welfare Commission‘s (IWC) wage order No. 14-

2001, entitled ―Order Regulating Wages, Hours, and Working Conditions in the

Agricultural Occupations‖ (Cal. Code Regs., tit. 8, § 11140), commonly known as

Wage Order No. 14, defines defendants as their employers for purposes of section

1194. The lower courts rejected the argument. We affirm.

I. BACKGROUND

This case arises out of the strawberry farming operations of Isidro Munoz,

Sr., who did business as Munoz & Sons (Munoz). Plaintiffs are seasonal

agricultural workers whom Munoz employed during the 2000 strawberry season:

Antonio Perez Cortes, Catarino Cortez, Otilio Cortez, Asuncion Cruz, Hilda


1

All further statutory citations are to the Labor Code, except as noted.


Martinez and Miguel Martinez. Munoz, originally named as a defendant, has been

granted a discharge in bankruptcy. The remaining defendants are two of the

produce merchants through whom Munoz sold strawberries: Apio, Inc. (Apio),

and Combs Distribution Co., together with its principals, Corky and Larry Combs,

and its field representative Juan Ruiz (collectively Combs). Plaintiffs‘ separate

action against a third merchant, Frozsun, Inc. (Frozsun), has been stayed pending

the outcome of this action. A fourth merchant, Ramirez Brothers, has petitioned

for bankruptcy.

During the 2000 season, Munoz grew and harvested strawberries in the Santa

Maria Valley, which lies on the Central Coast along the border of San Luis Obispo

and Santa Barbara Counties. Munoz farmed a total of 130 acres divided among

four sites. He leased two 30-acre sites (the ―Oceano‖ and ―Zenon‖ fields) from

defendant Apio and a 40-acre site (the ―El Campo‖ field) from an unidentified

third party.2 Munoz had leased the Oceano and El Campo fields in prior years.

He rented an additional 30-acre site (the ―Santa Maria‖ field) from Ramirez

Brothers. Munoz operated his business as a single, integrated concern, using his

employees and equipment in all four fields, as needed, and combining his revenues

and expenses. During the peak of the harvest, Munoz employed approximately

180 agricultural workers, three foremen (including his brother, Armando Munoz)

and two office workers (including his son, Isidro Munoz, Jr.). Munoz owned his

equipment, including trucks, tools and strawberry carts, and paid his own business

expenses, including plants, fertilizer, pesticide, irrigation, fuel, packaging, and rent

for additional trucks, a large tractor and field toilets. On the occasions when Apio


2

The parties sometimes refer to these fields by other names: the Oceano

field as the Phelan and Taylor Ranch, El Campo as Mesa One, and Zenon as Mesa
Two.

2

and Combs paid Munoz‘s expenses in the first instance, they billed him. Both

defendants, for example, charged Munoz for packaging that bore their companies‘

labels, and for refrigeration, and Apio charged Munoz for his portion of the cost of

a shared irrigation system.

Munoz grew and harvested strawberries for two distinct markets: fresh sale

to consumers in markets, and sale for processing (typically freezing). Fresh

market and freezer berries are harvested differently. Fresh market berries cannot

be too green or too ripe, and the calyx (sepals and stem) is left attached. Market

berries are packed in the field, as they are picked, into the containers in which they

will be sold to consumers, such as plastic baskets or clamshell boxes. Freezer

berries, in contrast, are selected for advanced ripeness and packed in bulk into

crates with the calyx removed. Munoz harvested strawberries for both markets

from the same fields. He decided which fields to harvest on any given day, and

whether to harvest for fresh market sale or the freezer, based largely on the need to

pick fields every three days, informing the merchants of his schedule and taking

into account their orders and the berries‘ condition.

The four produce merchants through which Munoz sold strawberries are not

related to one another. Munoz had dealt profitably with defendant Apio for three

years prior to 2000, and with defendant Combs for one. The principals of Ramirez

Brothers were Munoz‘s personal friends. Apio, Combs and Ramirez Brothers

dealt only in fresh market berries, and Frozsun dealt only in freezer berries. Apio,

Combs and Frozsun each accepted berries from many independent growers, not

just Munoz. Combs also sold beans for Munoz after the strawberry season ended.

Munoz had different contractual relationships with each merchant. Apio and

Combs acted as produce brokers, selling Munoz‘s strawberries for a commission

3

and remitting to him the net proceeds.3 Munoz retained title until sale. Both

defendants, following a common practice of produce merchants on the Central

Coast, advanced money to Munoz before the season began, in exchange for

exclusive rights to fresh produce from designated fields. These advances were

retired over the season from sales revenues. Apio and Combs handled payment

differently. Combs agreed to remit the actual net proceeds of sale to Munoz

within 21 days, in weekly payments, minus a deduction for loan repayment (30

percent), expenses such as packaging materials and cooling, and an 8 percent

commission. Apio operated similarly and charged the same commission but,

rather than making weekly payments to Munoz of actual net proceeds, paid him

estimated net proceeds in the form of a weekly ―Pick-Pack‖ payment that was

initially set at $2.00 per carton but actually varied with the price of strawberries.

Frozsun, which purchased strawberries exclusively for processing, paid Munoz on

delivery the official ―field price‖ posted by the Processing Strawberry Advisory

Board of California. Munoz and Ramirez Brothers, being personal friends,

conducted business without a written contract. Their understanding was that

Munoz would pay for plants and labor and Ramirez Brothers would pay all other

expenses, remitting net profits to Munoz after recovering their costs.

Munoz‘s financial resources for the 2000 season came from many sources.

Much of his cash during the season came from sales proceeds, including at least

$378,392 in Pick-Pack payments (estimated net proceeds) from Apio, $476,955 in

net proceeds from Frozsun, and an unspecified amount from Combs. Munoz also

invested at least $500,000 of his own funds and an unspecified amount of loan


3

Munoz, who speaks only Spanish, dealt with defendants Apio and Combs

through their field representatives, respectively Juan Toche and Juan Ruiz.

4

proceeds. The record does not identify all of Munoz‘s financing sources. Some

financing, as noted, came from the produce merchants. Apio advanced Munoz

$163,000, or $2,716 per acre for the Oceano and Zenon fields, and Combs

advanced $80,000, or $2,000 per acre for El Campo. These advances were not

intended to cover Munoz‘s actual costs for growing and harvesting strawberries,

which were far higher.4 The vice-president of Apio described that company‘s

advances as covering rent for the Oceano and Zenon fields. Frozsun agreed to

make or facilitate a loan of up to $225,000 in exchange for the exclusive right to

purchase freezer and cannery berries from all of Munoz‘s acreage. Munoz also

received loans from personal friends and financing for equipment from Ford

Motor Company and John Deere.

Munoz alone, with the assistance of his foremen, hired and fired his

employees, trained them when necessary, told them when and where to report to

work, when to start, stop and take breaks, provided their tools and equipment,5 set

their wages, paid them, handled their payroll and taxes, and purchased their

workers‘ compensation insurance.6

Munoz and his foremen also supervised his employees. Plaintiffs contend

defendants Apio and Combs participated in the supervision, characterizing as


4

The parties refer to a publication from the University of California

Cooperative Extension, which estimates average total operating costs in the 2001
season in the Santa Maria Valley as $21,390 per acre. (U. Cal. Cooperative
Extension, Sample Costs to Produce Strawberries: South Coast Region — Santa
Maria Valley (2001) p. 10.)

5

Some employees used their own gloves and strawberry carts. Munoz

provided these tools for those who did not.

6

At some point in the 2000 season, Munoz fell behind on workers‘

compensation insurance payments.

5

supervision the activities of defendants‘ field representatives in the areas of quality

control and contract compliance. We will return to this subject below. (See post,

at p. 51 et seq.) Summarizing for present purposes, picking and packing

strawberries for fresh market sale necessitated communication in the field, during

the harvest, between defendants and Munoz‘s personnel. Both Apio and Combs

regularly sent field representatives to ascertain the quality of available strawberries

and to explain the manner in which they were to be packed. Apio sent their

representatives Juan Toche and Manuel Cardenas. Combs sent defendant Juan

Ruiz, who performed similar services for many entities and whom Combs

eventually hired as an employee in June 2000. Munoz‘s contract with Apio

expressly provided for these quality control activities. The contract provided,

under the headings ―Performance Oversight and Coordination‖ and ―Quality of

Crops,‖ that Apio would ―set the standards for, and be the sole judge, of the

quality and maturity of the Crops and the pack,‖ and that Apio would ―have the

right to send its quality control personnel to the fields . . . at any time to confirm

that the Crops . . . are the quality required for purchase by [Apio] and/or marketing

and sale under [Apio‘s] labels . . . .‖ Munoz operated the same way with Combs,

apparently as a matter of standard practice, even though the parties‘ terse, single-

page contract did not address the subject.

Munoz began delivering fresh market strawberries to Apio and Combs

sometime in March 2000. He delivered the last fresh berries to Apio on May 16,

2000, and to Combs on May 18, 2000. The freezer berry harvest began at the end

of April and thus overlapped the last few weeks of the fresh berry harvest. When

the fresh berry harvest ended, the freezer berry harvest greatly increased. To

illustrate, as of May 20 Munoz had sold to Frozsun a total of 175,400 pounds of

freezer berries for $31,663. In the next week alone (ending May 27), Munoz sold

6

787,208 pounds for $149,340. Sales to Frozsun continued until August 12,

eventually totaling 2,608,781 pounds and $476,955 in payments to Munoz.

In the last few weeks of the fresh strawberry harvest, the market for fresh

berries deteriorated. According to Munoz, more berries were grown and harvested

in 2000 than the market could handle. Apio, Combs and Ramirez Brothers were

receiving poor prices for berries and, in some cases, no price at all when customers

took berries on consignment. Apio‘s Pick-Pack payments of estimated net

proceeds, initially set at $2.00 per carton, reached a high of $2.50 per carton from

mid-March to April 23 and then dropped gradually to $1.33 in May as the price of

strawberries fell. Apio paid Munoz $68,791 on May 12 for berries delivered the

week ending May 7, in advance of the 21-day contractual due date for payment.

The next Pick-Pack advance payments from Apio were due on June 2 for the week

ending May 14, and on June 9 for the week ending May 21. Apio actually

advanced Munoz $77,662 for both weeks sometime between June 8 and 10.

Combs advanced Munoz $30,000 in the last five days of May. Munoz received no

payments at all from Ramirez Brothers during the 2000 season. Munoz finished

the season owing Apio about $80,000, Combs about $8,000, and Ramirez Brothers

about $30,000.

Despite advances from Apio and Combs, and despite increasing payments

from Frozsun, Munoz at some point in May 2000 began to have problems paying

his workers. This led to a work stoppage on the afternoon of Saturday, May 27, in

the El Campo field, where over 100 of Munoz‘s employees were harvesting

freezer berries. Munoz‘s employees, who had apparently not been paid for several

weeks, had stopped work and were talking with Jose Popoca Serrano, who

identified himself as a member of the ―Organization for Human Rights.‖ Serrano

was compiling a list, which he later gave to the Department of Labor Standards

Enforcement (DLSE), of workers claiming unpaid wages. Munoz‘s supervisor

7

Arturo Leon, and Munoz himself by telephone, asked Serrano to help persuade the

workers to return to work, telling Serrano that Munoz could not pay because Apio

was withholding payment.7 Munoz promised Serrano he would pay his workers

on Tuesday. At some point, Combs‘s field representative Juan Ruiz arrived,

telling Serrano he had a check to Munoz from Combs for $25,000 and that Munoz

already had another $20,000. Ruiz then spoke directly to Munoz‘s workers.

According to plaintiff Asuncion Cruz, ―Juan [Ruiz] . . . told us to keep working

and help Munoz. Juan told us not to worry and said he guaranteed we would be

paid as his boss had checks he was delivering to Isidro Munoz.‖ Cruz ―heard

workers tell Juan they were concerned that the amount of the check he brought

with him would not be enough to pay everyone. Juan told us not to worry as he

would deliver even larger amounts of money from his boss to Isidro Munoz the

following week, and even more money the week after that, which would be

enough to pay us all.‖ Munoz‘s workers recognized Ruiz as the field

representative for the company (Combs) to whom Munoz delivered fresh market

berries from the El Campo field. According to Leon, Ruiz also spoke with

individual workers, explaining that ―if all of you stop right now, the strawberries

are going to go to waste. And they won‘t be able to pay you.‖ After Ruiz spoke,

several workers crossed their names off Serrano‘s list and returned to work, but 75

workers left for the day to return on Monday.

On June 5, 2000, the DLSE began to investigate wage claims against Munoz,

based on Serrano‘s information. The next day, DLSE investigator Paul Rodriguez


7

The record does not support Munoz‘s statement to Serrano. As noted, as of

May 27, 2000, Apio had already paid Munoz for the week ending May 7, ahead of
the contractual 21-day due date. Apio‘s next payment would not come due until
June 2.

8

met with Tim Murphy, Apio‘s vice-president, who said that a payment to Munoz

of approximately $75,000 was pending. Rodriguez asked Murphy not to pay

Munoz but, instead, to pay Munoz‘s employees directly. Murphy declined

because Apio owed the money to Munoz, not his employees, and did not want to

breach its agreement with Munoz. Subsequently, however, Apio and Munoz

agreed, at the DSLE‘s suggestion, that Apio would pay Munoz, and that cashier‘s

checks would immediately be issued in the names of the employees who had filed

wage claims. Implementing this agreement on June 8 or 9, Murphy and Munoz

visited Mid-State Bank & Trust in Guadalupe, where Murphy did business.

Munoz endorsed Apio‘s check to the bank, and the bank issued checks to the

workers named on a list Munoz provided. On June 10, Murphy delivered the

checks to DLSE investigator Rodriguez at the Betteravia Government Center in

Santa Maria. Rodriguez, a second DLSE investigator, and Munoz‘s foreman

Arturo Leon distributed the checks to Munoz‘s employees. Murphy observed the

distribution but did not participate.

On November 21, 2000, plaintiffs filed the present action against defendants

Apio, Combs and Ruiz, as well as the now-bankrupt Munoz. Plaintiffs asserted a

variety of claims. Specifically, plaintiffs alleged defendants were liable for unpaid

minimum wages (§ 1194), liquidated damages for unpaid minimum wages

(§ 1194.2),8 unpaid contract wages (§ 216), waiting time penalties (§ 203),

penalties for failure to provide wage statements (§ 226), and breach of contract.

On behalf of similarly situated employees, plaintiffs also alleged claims under the

unfair competition law (Bus. & Prof. Code, § 17200 et seq.) (UCL) for restitution


8

The ―liquidated damages‖ allowed in section 1194.2 are in effect a penalty

equal to the amount of unpaid minimum wages.

9

(id., § 17203) and liquidated damages (Lab. Code, § 1194.2). Plaintiffs did not

seek class certification.

Defendants Apio, Combs and Ruiz moved for summary judgment on all

claims. Plaintiffs‘ opposition to the motions focused on three theories of liability.

First, applying the definitions of ―employ‖ and ―employer‖ set out in Wage Order

No. 14,9 plaintiffs contended defendants Apio and Combs, together with Munoz,

jointly employed plaintiffs and were thus liable under sections 1194 and 1194.2

for their unpaid wages and liquidated damages. Second, plaintiffs argued they

were third-party beneficiaries of the contract between Munoz and Apio, in which,

among other things, Munoz agreed to comply with all applicable laws, including

the labor laws. Third, plaintiffs asserted they were parties to an oral employment

agreement with Combs.10 The superior court rejected plaintiffs‘ arguments and

granted judgment for defendants.

Plaintiffs appealed. The Court of Appeal affirmed in part and reversed in

part. Finding no California case law interpreting the IWC‘s definitions of

―employ‖ and ―employer‖ (e.g., Wage Order No. 14, Cal. Code Regs., tit. 8,


9

Under Wage Order No. 14, ― ‗Employ‘ means to engage, suffer, or permit

to work,‖ and ― ‗[e]mployer‘ means any person as defined in Section 18 of the
Labor Code, who directly or indirectly, or through an agent or any other person,
employs or exercises control over the wages, hours, or working conditions of any
person.‖ (Cal. Code Regs., tit. 8, § 11140, subd. 2(C), (F).) Under Labor Code
section 18, ― ‗[p]erson‘ means any person, association, organization, partnership,
business trust, limited liability company, or corporation.‖

10

Only these three claims remain pending. Plaintiffs have abandoned all

others except for their claims under the UCL, which, as plaintiffs acknowledge,
depend on the validity of the three claims mentioned above. The UCL claims are
also subject to our holding in Arias v. Superior Court (2009) 46 Cal.4th 969, 980,
that private plaintiffs must ordinarily obtain class certification to represent others
in UCL actions.

10

§ 11140, subd. 2(C), (F)), the court imported the ―economic reality‖ test for

employment developed in federal cases interpreting the Fair Labor Standards Act

of 1938. (29 U.S.C. § 201 et seq.; see Goldberg v. Whitaker House Coop. (1961)
366 U.S. 28, 33.) Applying that test, the court concluded defendants ―did not

exercise sufficient control over [plaintiffs,] and [over Munoz‘s] agricultural

operation[,] to be [plaintiffs‘] joint employers,‖ and thus affirmed the summary

judgment for defendants on plaintiffs‘ claims under Labor Code sections 1194 and

1194.2. The court also affirmed the summary judgment for Apio on plaintiffs‘

claim as purported third-party beneficiaries of Apio‘s contract with Munoz.

Finally, the court found triable issues of fact on plaintiffs‘ claim regarding the

alleged oral agreement with Combs. The Court of Appeal reversed the judgment

on this claim alone, and Combs did not seek review. In all other respects, the

Court of Appeal affirmed.

We granted plaintiffs‘ petition for review and deferred further action pending

consideration of a related issue in Reynolds v. Bement (2005) 36 Cal.4th 1075

(Reynolds).

II. DISCUSSION

A. Introduction

The central question before us is whether defendants are subject to suit by

plaintiffs under section 1194.11 The statute provides in relevant part as follows:

―Notwithstanding any agreement to work for a lesser wage, any employee

receiving less than the legal minimum wage or the legal overtime compensation

applicable to the employee is entitled to recover in a civil action the unpaid


11

Plaintiffs cannot recover liquidated damages under section 1194.2 unless

they have a valid claim under section 1194. (See § 1194.2, subd. (a).)
Accordingly, we will from this point on refer only to section 1194.

11

balance of the full amount of this minimum wage or overtime compensation,

including interest thereon, reasonable attorney‘s fees, and costs of suit.‖ (Id.,

subd. (a).) The Legislature has thus given an employee a cause of action for

unpaid minimum wages without specifying who is liable. That only an employer

can be liable, however, seems logically inevitable as no generally applicable rule

of law imposes on anyone other than an employer a duty to pay wages.

Plaintiffs‘ effort to recover unpaid wages from persons who contracted with

their ostensible employer raises issues that have long avoided the attention of

California‘s courts. The statute currently designated as section 1194, with its

specific operative language, was enacted in 1913 as part of the act that created the

IWC and delegated to it the power to fix minimum wages, maximum hours of

work, and standard conditions of labor. (Stats. 1913, ch. 324, § 13, p. 637.) In the

ensuing 97 years, however, we have touched only once upon the question of how

employment should be defined in actions brought under section 1194. (Reynolds,

supra, 36 Cal.4th 1075, 1085-1089.)12 Similarly, the phrases the IWC presently

uses to define the terms ―employ‖ and ―employer‖ in all 16 of its current industry

and occupation wage orders (IWC wage orders Nos. 1-2001 to 16-2001, Cal. Code

Regs., tit. 8, §§ 11010-11160) first appeared in orders dated 191613 and 1947,14

12

As we explain below, Reynolds, supra, 36 Cal.4th 1075, spoke too broadly

in concluding that the common law defines the employment relationship in actions
under section 1194. (See post, at p. 31 et seq.) The few lower court decisions
addressing the definition of employment under section 1194 (Bradstreet v. Wong
(2008) 161 Cal.App.4th 1440, 1449-1454, and Jones v. Gregory (2006) 137
Cal.App.4th 798, 803-805) add nothing to our understanding of the problem
because they postdate and thus necessarily follow Reynolds. (See Auto Equity
Sales, Inc. v. Superior Court
(1962) 57 Cal.2d 450, 455 [this court‘s decisions
bind all lower courts].)

13

IWC former wage order No. 1, ―Fruit and Vegetable Canning Industry‖

(Feb. 29, 1916) sections 1-5 (IWC, approved minutes for Feb. 14, 1916, meeting).

12

respectively, yet the courts of this state have never considered their meaning or

scope.15 Likewise has the concept of joint employment avoided judicial scrutiny

in the context of wage claims brought under state law. Although we have

recognized that a person, by exercising significant control over the employees of

another, may come to share the employer‘s legal obligations, our decisions on this

point have concerned statutory schemes other than the wage laws.16

How then do we define the employment relationship, and thus identify the

persons who may be liable as employers, in actions under section 1194? The

question is ultimately one of legislative intent, as ―[o]ur fundamental task in

construing a statute is to ascertain the intent of the lawmakers so as to effectuate

the purpose of the statute.‖ (Day v. City of Fontina (2001) 25 Cal.4th 268, 272.)



(footnote continued from previous page)

14

IWC former wage order No. 1R, ―Wages, Hours, and Working Conditions

for Women and Minors in the Manufacturing Industry‖ (June 1, 1947), § 2(f).

15

The DLSE has devoted some attention to the wage orders‘ definition of

employer in its published policies governing the enforcement of wage claims.
(DLSE, Enforcement Policies and Interpretations Manual (Mar. 2006) §§ 2.2.1,
55.2 to 55.2.1.2.1.) However, we give the DLSE‘s current enforcement policies
no deference because they were not adopted in compliance with the
Administrative Procedure Act (Gov. Code, § 11340 et seq.). (Morillion v. Royal
Packing Co.
(2000) 22 Cal.4th 575, 581-582; Tidewater Marine Western, Inc. v.
Bradshaw
(1996) 14 Cal.4th 557, 575-577.)

16

For example, the Public Employees‘ Retirement Law (Gov. Code, § 20000

et seq.; see Metropolitan Water Dist. v. Superior Court (2004) 32 Cal.4th 491,
499-509); the Alatorre-Zenovich-Dunlap-Berman Agricultural Labor Relations
Act of 1975 (§ 1140 et seq.; see Rivcom Corp. v. Agricultural Labor Relations Bd.
(1983) 34 Cal.3d 743, 767-769); the California Fair Employment and Housing Act
(Gov. Code, § 12900 et seq.; see Bradley v. Department of Corrections &
Rehabilitation
(2008) 158 Cal.App.4th 1612, 1625-1629); and the workers‘
compensation law (§ 3200 et seq.; see, e.g., Kowalski v. Shell Oil Co. (1979) 23
Cal.3d 168, 174-175).

13

In this search for what the Legislature meant, ―[t]he statutory language itself is the

most reliable indicator, so we start with the statute‘s words, assigning them their

usual and ordinary meanings, and construing them in context. If the words

themselves are not ambiguous, we presume the Legislature meant what it said, and

the statute‘s plain meaning governs. On the other hand, if the language allows

more than one reasonable construction, we may look to such aids as the legislative

history of the measure and maxims of statutory construction. In cases of uncertain

meaning, we may also consider the consequences of a particular interpretation,

including its impact on public policy.‖ (Wells v. One2One Learning Foundation

(2006) 39 Cal.4th 1164, 1190.)

B. The Parties’ Arguments.

The uncertainty surrounding the definition of the employment relationship in

actions under section 1194 has led the parties to offer several diverse arguments.

Those arguments, and our conclusions, may be summarized as follows:

Plaintiffs contend the language and history of section 1194 show the

Legislature intended generally to defer to the IWC‘s regulatory definitions of the

employment relationship in its wage orders. Plaintiffs would give those

definitions sweeping breadth. Specifically, plaintiffs argue defendants ―suffer[ed],

or permit[ted plaintiffs] to work‖ (Wage Order No. 14, Cal. Code Regs., tit. 8,

§ 11140, subd. 2(C)), because defendants knew Munoz would need to hire

workers to fulfill his contracts with defendants, and that defendants thus, in some

sense, suffered or permitted plaintiffs to work for their benefit. Plaintiffs further

argue defendants ―exercise[d] control over [plaintiffs‘] wages, hours, or working

conditions‖ (Wage Order No. 14, Cal. Code Regs., tit. 8, § 11140, subd. 2(F)),

because defendants, under the terms of their contracts with Munoz, controlled the

14

remittance to him of his share of the proceeds of sale, and thus a portion of the

income from which he paid his employees.

Defendants, in opposition, cite our decision in Reynolds, supra, 36 Cal.4th

1075, where we looked to the common law to define employment in a suit under

section 1194 seeking to hold the directors and officers of a corporation liable for

its employees‘ unpaid overtime compensation. (Reynolds, at pp. 1086-1087.)

Alternatively, in the event Reynolds is distinguishable and the wage order‘s

definitions do apply, defendants argue we should construe the wage order as if it

incorporated the federal ―economic reality‖ definition of employment developed

in cases arising under the Fair Labor Standards Act of 1938 (29 U.S.C. § 201 et

seq. (FLSA); see Goldberg v. Whitaker House Coop., supra, 366 U.S. 28, 33) and

articulated in federal regulations promulgated under the FLSA; see 29 C.F.R.

§ 791.2) and the Migrant and Seasonal Agricultural Worker Protection Act (29

U.S.C. § 1801 et seq.; 29 C.F.R. § 500.20(h)(5) (2009)).17

We hold as follows: In actions under section 1194 to recover unpaid

minimum wages, the IWC‘s wage orders do generally define the employment

relationship, and thus who may be liable. An examination of the wage orders‘

language, history and place in the context of California wage law, moreover,

makes clear that those orders do not incorporate the federal definition of

employment. Applying these conclusions to the facts of the case, we affirm the

Court of Appeal‘s judgment.


17

Plaintiffs disclaim any argument that defendants were their employers

under federal or common law.

15

C. Labor Code Section 1194.

As noted at the outset, the Legislature has not, within the four corners of

section 1194, either defined the employment relationship or identified the persons

who are liable under the statute for unpaid wages. We thus turn for guidance to

the statute‘s context and legislative history. Section 1194 is the direct successor

of, and its operative language comes immediately from, section 13 of the

uncodified 1913 act (Stats. 1913, ch. 324, § 13, p. 637) that created the IWC and

delegated to it the power to fix minimum wages, maximum hours and standard

conditions of labor for workers in California.18 An examination of section 1194 in

its statutory and historical context shows unmistakably that the Legislature

intended the IWC‘s wage orders to define the employment relationship in actions

under the statute.

The act creating the IWC (the 1913 act) joined a wave of minimum wage

legislation that swept the nation in the second decade of the 20th century. No

state‘s law provided for a minimum wage before 1912. By the end of 1913,

however, nine states had enacted such laws, motivated by widespread public

recognition of the low wages, long hours, and poor working conditions under


18

Section 13 of the 1913 act provided: ―Any employee receiving less than

the legal minimum wage applicable to such employee shall be entitled to recover
in a civil action the unpaid balance of the full amount of such minimum wage,
together with costs of suit, notwithstanding any agreement to work for such lesser
wage.‖ (Stats. 1913, ch. 324, § 13, p. 637.)

Today, Labor Code section 1194, subdivision (a) (set out in full at pp. 11-

12, ante), differs from the original section 13 only in its coverage of all employees
regardless of gender, thus repealing an implicit limitation of the 1913 act (Stats.
1973, ch. 1007, § 8, p. 2004; Stats. 1972, ch. 1122, § 13, p. 2156); in its provisions
for overtime compensation (Stats. 1961, ch. 408, § 3, p. 1479), attorney fees, and
interest (Stats. 1991, ch. 825, § 2, p. 3666); and in the relocation of the original
statute‘s final clause (―notwithstanding . . .‖) to the beginning (ibid.).

16

which women and children often labored. By 1919, another five states, the

District of Columbia and Puerto Rico had followed. (Brandeis, Labor Legislation:

Minimum Wage Legislation in (1935) 3 History of Labor in the United States

1896-1932 (Commons edit. 1935) pp. 501, 507 (Brandeis).) These states took a

variety of approaches to the problem. For example, two states (Massachusetts and

Nebraska) enacted voluntary minimum wage laws, and one state (Utah) set a

minimum wage by statute. Other states, including California, went much further

by directing commissions to study labor conditions and to set minimum wages

based on the cost of living, and by making the failure to pay the minimum wage a

crime. (Brandeis, supra, at p. 502; Note, Woman’s Work (1913) 3 Am. Lab.

Legis. Rev. 433, 434-473.) These states did not follow a federal model,19 as

Congress would not enact the FLSA (29 U.S.C. § 201 et seq.) until 1938.

In California specifically, calls to enact a minimum wage followed 1911

legislation prohibiting some child labor and regulating the hours women and

children could be required to work (Stats. 1911, chs. 116, 258 & 456), and a

comprehensive 1912 report by the State Bureau of Labor Statistics on wages,

hours and labor conditions throughout the state. The report showed, among other

things, that approximately 40 percent of working women earned less than $9 per

week. (State Bur. of Lab. Statistics, 15th Biennial Rep., 1911-1912 (1912)

pp. 100-101, 458.) ―Although interpretations of this evidence varied widely, most

experts thought that these wages were unreasonably low. The bureau itself


19

California‘s minimum wage law was based on a proposal originally drafted

by the National Consumers‘ League for use in Oregon. (Brandeis, in 3 History of
Labor in the United States, supra, at p. 514; Hundley, Katherine Philips Edson
and the Fight for the California Minimum Wage, 1912-1923
(1960) 29 Pac. Hist.
Rev. 271, 274 (Hundley).)

17

considered them below a decent standard of living — ‗many women were living

below any normal standard, and . . . such subnormal living was having a most

disastrous effect on the health and morals of the women workers.‘ ‖ (Hundley,

supra, 29 Pac. Hist. Rev. at pp. 272-273, fn. omitted, quoting IWC, What

California Has Done to Protect the Women Workers (May 1927) p. 5.) Although

the 1911 legislation had nearly eliminated unpermitted child labor, the bureau

reported that minors from 12 to 16 years old working with permits still constituted

just under 1 percent of the workforce. (State Bur. of Lab. Statistics, 15th Biennial

Rep., supra, at pp. 21, 24.) The bureau did not report working minors‘ wages.

The 1913 Legislature addressed these continuing problems by creating the

IWC and delegating to it broad authority to regulate the hours, wages and labor

conditions of women and minors (Stats. 1913, ch. 324), and by proposing to the

voters a successful constitutional amendment confirming the Legislature‘s

authority to proceed in that manner.20 The argument in favor of the proposed

constitutional amendment informed the voters that ―[i]n 1911 bills were passed


20

Former article XX, section 17 1/2, of the California Constitution provided:

―The legislature may, by appropriate legislation, provide for the establishment of a
minimum wage for women and minors and may provide for the comfort, health,
safety and general welfare of any and all employees. No provision of this
constitution shall be construed as a limitation upon the authority of the legislature
to confer upon any commission now or hereafter created, such power and
authority as the legislature may deem requisite to carry out the provisions of this
section.‖ (Added by Assem. Const. Amend. No. 90 (1913 Reg. Sess.), as
approved by voters (Prop. 44), Gen. Elec. (Nov. 3, 1914).)

Today, article XIV, section 1, of the California Constitution declares on the

same point that ―[t]he Legislature may provide for minimum wages and for the
general welfare of employees and for those purposes may confer on a commission
legislative, executive, and judicial powers.‖ (Added by Assembly Const. Amend.
No. 40 (1975-1976 Reg. Sess.), as approved by voters (Prop. 14), Prim. Elec.
(June 8, 1976).)

18

controlling the hours of women‘s and children‘s work, and it was obvious that the

work was less than half done unless the other two minimum rules of industrial life

were also made to protect this weakest and most helpless class: that is, that the

safety and the sanitary conditions in which women worked should be controlled,

and, what was more important, that they should be certain of a living wage — a

wage that insures for them the necessary shelter, wholesome food and sufficient

clothing.‖ (Ballot Pamp., Gen. Elec. (Nov. 3, 1914) argument in favor of Assem.

Const. Amend. 90, p. 29.) On this point, the ballot pamphlet cited the findings of

the State Bureau of Labor Statistics and expressed concern that substandard wages

frequently led to ill health and moral degeneracy. (Ibid.)

The IWC‘s initial statutory duty under the 1913 act was to ―ascertain the

wages paid, the hours and conditions of labor and employment in the various

occupations, trades, and industries in which women and minors are employed in

the State of California, and to make investigations into the comfort, health, safety

and welfare of such women and minors.‖ (Stats. 1913, ch. 324, § 3, subd. (a),

p. 633.) To assist the IWC in this work, the Legislature gave the commission

broad investigatory powers, including free access to places of business and

employment (id., § 3, subd. (b), par. 2, p. 633), as well as the authority to demand

reports and information under oath (id., § 3, subd. (b), par. 1, p. 633), to inspect

records (id., § 3, subd. (b), par. 2, p. 633), and to issue subpoenas requiring the

appearance and sworn testimony of witnesses (id., § 4, pp. 633-634). If, after

investigation, the IWC determined that the wages paid to women and minors in

any industry were ―inadequate to supply the cost of proper living, or the hours or

conditions of labor [were] prejudicial to the health, morals or welfare of the

workers,‖ the IWC was to convene a ― ‗wage board‘ ‖ of employers and

employees. (Id., § 5, p. 634.) Based on the wage board‘s report and

recommendations, and following a public hearing, the commission was to issue

19

wage orders fixing for each industry ―[a] minimum wage to be paid to women and

minors . . . adequate to supply . . . the necessary cost of proper living and to

maintain [their] health and welfare‖ (id., § 6, subd. (a), par. 1, p. 634), the

maximum hours of work, and the standard conditions of labor (id., subd. (a),

pars. 2-3, pp. 634-635).

Today, the laws defining the IWC‘s powers and duties remain essentially the

same as in 1913,21 with a few important exceptions: First, the voters have

amended the state Constitution to confirm the Legislature‘s authority to confer on

the IWC ―legislative, executive, and judicial powers.‖ (Cal. Const., art. XIV, § 1,

italics added [added by Assem. Const. Amend. No. 40 (1975-1976 Reg. Sess.), as

approved by voters (Prop. 14), Prim. Elec. (June 8, 1976)]; see Industrial Welfare

Com. v. Superior Court (1980) 27 Cal.3d 690, 701.) Second, the Legislature has

expanded the IWC‘s jurisdiction to include all employees, male and female, in

response to federal legislation barring employment discrimination because of sex

(tit. VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq.). (See Stats.

1973, ch. 1007, § 8, p. 2004; Stats. 1972, ch. 1122, § 13, p. 2156; see generally

Industrial Welfare Com. v. Superior Court, supra, at pp. 700-701.) Third, ―while

retaining the authorizing language of [the 1913 act],‖ the Legislature has ―restated

the commission‘s responsibility in even broader terms‖ (Industrial Welfare Com.

v. Superior Court, supra, at pp. 701-702), charging the IWC with the ―continuing

duty‖ to ascertain the wages, hours and labor conditions of ―all employees in this

state,‖ to ―investigate [their] health, safety, and welfare,‖ to ―conduct a full review

of the adequacy of the minimum wage at least once every two years‖ (Lab. Code,


21

See, e.g., sections 1173 (duties of IWC), 1174-1174.5 (records and

inspections), 1176 (witnesses and subpoenas), 1178-1180 (wage boards), 1181
(hearings), 1182 (wage orders).

20

§ 1173), and to convene wage boards and adopt new wage orders if the

commission finds ―that wages paid to employees may be inadequate to supply the

cost of proper living‖ (id., § 1178.5, subd. (a); see also id., § 1182). Finally, while

the amount of the minimum wage has in recent years been set by statute (e.g., id.,

§§ 1182.11, 1182.12), specific employers and employees still become subject to

the minimum wage only through, and under the terms of, the IWC‘s applicable

wage orders (id., § 1197).22

To ensure the IWC‘s wage orders would be obeyed, the Legislature included

criminal, administrative and civil enforcement provisions in the original 1913 act.

The criminal enforcement provision declared that employers who failed to pay the

minimum wage, as well as officers, agents and other persons acting for such

employers, would be guilty of misdemeanors. (Stats. 1913, ch. 324, § 11, p. 636.)

The administrative provision authorized the IWC to ―take all proceedings

necessary to enforce‖ payment of the minimum wage based on complaints filed by

underpaid employees. (Id., § 14, p. 637.) The civil provision — the immediate

predecessor of Labor Code section 1194 — gave employees a private right of

action to recover unpaid minimum wages and invalidated agreements to work for

less than the minimum wage. (Stats. 1913, ch. 324, § 13, p. 637, quoted ante,

p. 16, fn. 18.) More robust versions of these enforcement provisions appear in

today‘s Labor Code. (See §§ 1193.5 [administrative enforcement], 1193.6, 1194,

1194.2 [civil actions], 1199 [criminal liability].)


22

Section 1197 provides that ―[t]he minimum wage for employees fixed by

the commission is the minimum wage to be paid to employees, and the payment of
a less wage than the minimum so fixed is unlawful.‖ Consistently with section
1197, legislative acts setting the minimum wage have taken effect through a
general wage order modifying all others to incorporate the current amount. (E.g.,
IWC wage order No. MW-2007, Cal. Code Regs., tit. 8, § 11000.)

21

The 1913 act did not give any employee the immediate right to receive a

minimum wage. Instead, the Legislature provided that implementation and

enforcement of the minimum wage would depend upon, and await, the IWC‘s

issuance of wage orders governing specific industries and occupations. This was

the effect of section 11 of the 1913 act, which provided that ―[t]he minimum wage

for women and minors fixed by said commission as in this act provided, shall be

the minimum wage to be paid to such employees, and the payment to such

employees of a less wage than the minimum so fixed shall be unlawful . . . .‖

(Stats. 1913, ch. 324, § 11, p. 636.) Accordingly, the essential predicate of each

employer‘s obligation to pay a minimum wage was the IWC‘s issuance of an

applicable wage order fixing the minimum wage for a particular industry or

occupation. The applicable wage order also provided the necessary legal basis for

an action by an employee to recover unpaid minimum wages. Section 13 of the

1913 act, the original civil liability provision, permitted ―[a]ny employee receiving

less than the legal minimum wage applicable to such employee . . . to recover in a

civil action the unpaid balance of the full amount of such minimum wage . . . .‖

(Stats. 1913, ch. 324, § 13, p. 637, italics added.) The italicized phrase

unambiguously referred to the wage mandated by the terms of the applicable wage

order, because section 11 defined the wage ―fixed by said commission‖ as ―the

minimum wage to be paid‖ and its nonpayment as ―unlawful.‖ (Stats. 1913,

ch. 324, § 11, p. 636.)

Virtually the same statutory and regulatory structure remains in place today.

Under section 1197, ―[t]he minimum wage for employees fixed by the commission

is the minimum wage to be paid to employees, and the payment of a less wage

than the minimum so fixed is unlawful.‖ Under section 1194, ―any employee

receiving less than the legal minimum wage . . . applicable to the employee is

entitled to recover in a civil action the unpaid balance of the full amount of this

22

minimum wage‖ (id., subd. (a)). Accordingly, today, as under the 1913 act,

specific employers and employees become subject to the minimum wage only

under the terms of an applicable wage order, and an employee who sues to recover

unpaid minimum wages actually and necessarily sues to enforce the wage order.

The newly created IWC moved diligently to exercise its broad delegated

powers. After investigating labor conditions in the fruit and vegetable canning

industry, the commission convened the first wage board in 1916 and later that year

issued its first wage order (IWC former wage order No. 1; see p. 12, fn. 13, ante),

making women and minors working in that industry the first employees in

California to receive a legally established minimum wage. By the end of 1918, the

commission had issued additional orders establishing minimum wages in the

mercantile, laundry, fish canning, fruit and vegetable packing, and manufacturing

industries, and in general and professional office occupations. (IWC, Third

Biennial Rep. (1919) pp. 9-11.) Today 18 wage orders are in effect, 16 covering

specific industries and occupations,23 one covering all employees not covered by

an industry or occupation order,24 and a general minimum wage order amending

all others to conform to the amount of the minimum wage currently set by

statute.25


23

IWC wage orders Nos. 1-2001 to 16-2001 (Cal. Code Regs., §§ 11010-

11160).

24

IWC wage order No. 17-2001, ―Miscellaneous Employees‖ (Cal. Code

Regs., tit. 8, § 11170).

25

IWC wage order No. MW-2007 (Cal. Code Regs., tit. 8, § 11000; see ante,

at p. 21, fn. 22).

23

D. How the IWC Has Defined the Employment Relationship.

The IWC‘s first wage order, adopted in 1916, contained no separate

definition of the term ―employ,‖ but various substantive provisions imposing

duties on employers began with language like that the IWC still uses today in all

of its industry and occupation wage orders to define the term. For example: ―No

person, firm or corporation shall employ or suffer or permit any woman or minor

to work in the fruit and vegetable canning industry in any occupation at time rates

less than the following . . . .‖ (IWC former wage order No. 1, § 2, italics added;

see, e.g., Wage Order No. 14, Cal. Code Regs., tit. 8, § 11140, subd. 2(C)

[― ‗Employ‘ means to engage, suffer, or permit to work‖ (italics added).) The

chosen language was especially apt in an order intended to regulate the

employment of women and minors because it was already in use throughout the

country in statutes regulating and prohibiting child labor (and occasionally that of

women),26 having been recommended for that purpose in several model child

labor laws published between 1904 and 1912 (see Rutherford Food Corp. v.

McComb (1947) 331 U.S. 722, 728, fn. 7). The language had been interpreted to

impose criminal liability for employing children, or civil liability for their

industrial injuries, even when no common law employment relationship existed

between the minor and the defendant, based on the defendant‘s failure to exercise

reasonable care to prevent child labor from occurring.


26

Of the many decisions applying such statutes before 1916, some of the

most notable include Curtis & Gartside Co. v. Pigg (Okla. 1913) 134 P. 1125,
1128-1129; Pinoza v. Northern Chair Co. (Wis. 1913) 140 N.W. 84, 86; Purtell v.
Philadelphia & Reading Coal & Iron Co.
(Ill. 1912) 99 N.E. 899, 902; Casperson
v. Michaels
(Ky. 1911) 134 S.W. 200, 201; State v. Rose (La. 1910) 51 So. 496,
497; and Commonwealth v. Beatty (Pa.Super. 1900) 15 Pa.Super. 5 [1900 Pa.
Super. LEXIS 290, p. **1].

24

Not requiring a common law master and servant relationship, the widely used

―employ, suffer or permit‖ standard reached irregular working arrangements the

proprietor of a business might otherwise disavow with impunity. Courts applying

such statutes before 1916 had imposed liability, for example, on a manufacturer

for industrial injuries suffered by a boy hired by his father to oil machinery (Curtis

& Gartside Co. v. Pigg, supra, 134 P. 1125, 1127), and on a mining company for

injuries to a boy paid by coal miners to carry water (Purtell v. Philadelphia &

Reading Coal & Iron Co., supra, 99 N.E. 899, 900-901).

Results such as these, while foreign to the common law, were generally

understood as appropriate under child labor statutes that included the ―employ,

suffer or permit‖ standard. As one state supreme court explained, ―[i]f the statute

went no farther than to prohibit employment, then it could be easily evaded by the

claim that the child was not employed to do the work which caused the injury, but

that he did it of his own choice and at his own risk; and if it prohibited only the

employment and permitting a child to do such things, then it might still be evaded

by the claim that he was not employed to do such work, nor was permission given

him to do so. But the statute goes farther, and makes use of a term even stronger

than the term ‗permitted.‘ It says that he shall be neither employed, permitted, nor

suffered to engage in certain works.‘ ‖ (Curtis & Gartside Co. v. Pigg, supra, 134

P. 1125, 1129.) The standard thus meant that the employer ―shall not employ by

contract, nor shall he permit by acquiescence, nor suffer by a failure to hinder.‖

(Ibid.) Similarly, another state supreme court rejected the employer‘s argument

that the standard could ―only apply when the relation of master and servant

actually exists.‖ (Purtell v. Philadelphia & Reading Coal & Iron Co., supra, 99

N.E. 899, 902.) ―To put [such a] construction on this statute . . . would leave the

words ‗permitted or suffered to work‘ practically without meaning. It is the

child‘s working that is forbidden by the statute, and not his hiring, and, while the

25

statute does not require employers to police their premises in order to prevent

chance violations of the act, they owe the duty of using reasonable care to see that

boys under the forbidden age are not suffered or permitted to work there contrary

to the statute.‖ (Ibid.)

The IWC‘s separate definition of ―employer‖ (i.e., a person who ―employs or

exercises control over the wages, hours, or working conditions of any person‖)27 is

only relatively recent, having first appeared in a 1947 order regulating the

manufacturing industry.28 The same language appears today in all 16 of the

IWC‘s industry and occupation orders. Beginning with the word ―employs,‖ the

definition logically incorporates the separate definition of ―employ‖ (i.e., ―to

engage, suffer, or permit to work‖) as one alternative. The remainder of the

definition — ―exercises control over . . . wages, hours, or working conditions‖ —

has no clearly identified, precisely literal statutory or common law antecedent.

About this language, however, one may safely make three observations:

First, the scope of the IWC‘s delegated authority is, and has always been,

over wages, hours and working conditions. (§§ 1173, 1178.5; see Stats. 1913,

ch. 324, §§ 3, 5 & 6, pp. 633-635.) For the IWC to adopt a definition of

―employer‖ that brings within its regulatory jurisdiction an entity that controls any

one of these aspects of the employment relationship makes eminently good sense.

Second, phrased as it is in the alternative (i.e., ―wages, hours, or working

conditions‖),29 the language of the IWC‘s ―employer‖ definition has the obvious

27

E.g., Wage Order No. 14 (Cal. Code Regs., tit. 8, § 11140, subd. 2(F)).

28

IWC former wage order No. 1R, ―Wages, Hours, and Working Conditions

for Women and Minors in the Manufacturing Industry‖ (June 1, 1947), section
2(f).

29

E.g., Wage Order No. 14 (Cal. Code Regs., tit. 8, § 11140, subd. 2(F),

italics added).

26

utility of reaching situations in which multiple entities control different aspects of

the employment relationship, as when one entity, which hires and pays workers,

places them with other entities that supervise the work. Consistently with this

observation, the IWC has explained its decision to include the language in one

modern wage order as ―specifically intended to include both temporary

employment agencies and employers who contract with such agencies to obtain

employees within the definition of ‗employer‘.‖30

Third, and finally, the IWC‘s ―employer‖ definition belongs to a set of

revisions intended to distinguish state wage law from its federal analogue, the

FLSA. We touched upon this point in Morillion v. Royal Packing Co., supra, 22

Cal.4th 575. In 1947, Congress limited the FLSA by enacting the Portal-to-Portal

Act (29 U.S.C. § 252 et seq.), which relieved employers of the obligation to

compensate employees for time spent travelling to the work site, even in an

employer‘s vehicle, and for time spent in activities ―preliminary and postliminary‖

to work (id., § 254(a)(2)). In response, the IWC, exercising its authority to

provide employees with greater protection than federal law affords (Morillion v.

Royal Packing Co., supra, at p. 592; see also Ramirez v. Yosemite Water Co.

(1999) 20 Cal.4th 785, 795), revised its wage orders from 1947 forward to define

the term ―hours worked‖ as meaning ―the time during which an employee is

subject to the control of an employer, . . . includ[ing] all the time the employee is

suffered or permitted to work, whether or not required to do so.‖31 At the same


30

IWC, Statement as to the Basis for Wage Order No. 16 Regarding Certain

On-site Occupations in the Construction, Drilling, Mining, and Logging Industries
(Jan. 2001) page 5.

31

IWC former wage order No. 1R, section 2(h), italics added; see, e.g., Wage

Order No. 14 (Cal. Code Regs., tit. 8, § 11140, subd. 2(G)).

27

time, the IWC defined ―employer‖ as meaning ―any person . . . who directly or

indirectly, or through an agent or any other person, employs or exercises control

over the wages, hours, or working conditions of [an employee].‖32 Noting this

history, defendant Combs argues the IWC‘s 1947 changes were intended solely to

expand the definition of ―hours worked‖ and not also to affect the definition of

―employer.‖ This is plainly wrong, as the IWC could have redefined ―hours

worked‖ without also redefining ―employer.‖ One did not logically compel the

other.

E. Judicial Deference to the IWC’s Orders.

The Legislature and the voters have repeatedly demanded the courts‘

deference to the IWC‘s authority and orders. In the original 1913 act, the

Legislature narrowly confined the scope of judicial review of the commission‘s

orders, making its findings of fact conclusive in the absence of fraud and declaring

that the minimum wage fixed by the commission was ―presumed to be reasonable

and lawful.‖ (Stats. 1913, ch. 324, § 12, p. 636; see now Lab. Code, §§ 1185

[IWC‘s orders ―shall be valid and operative‖], 1187 [IWC‘s findings of fact are

conclusive in the absence of fraud].) At the same time, as noted, the Legislature

enacted and successfully proposed to the voters a constitutional amendment

approving the IWC‘s creation and providing that no part of the state Constitution

would be construed as limiting the Legislature‘s authority in the matter. (Cal.

Const., former article XX, section 17 1/2; see ante, p. 18, fn. 20.) The ballot

argument in favor of the measure explained the Assembly had proposed the

amendment ―to make sure that after the commission‘s work is done, its findings


32

IWC former wage order No. 1R, italics added; see, e.g., Wage Order No. 14

(Cal. Code Regs., tit. 8, § 11140, subd. 2(F)).

28

and rulings can not be assailed and made useless by the state courts declaring this

[the 1913] act unconstitutional.‖ (See Ballot Pamp., supra, argument in favor of

Assem. Const. Amend. No. 90, at p. 29.) In 1949, the Legislature provided that

the IWC‘s orders ―shall be valid and operative‖ and exempt from the

Administrative Procedure Act (Gov. Code, § 11340 et seq.). (Lab. Code, § 1185;

Stats. 1949, ch. 1454, § 12, p. 2538, as amended.) In 1976, as noted, the voters

again amended the Constitution to confirm in even stronger terms that ―[t]he

Legislature may provide for minimum wages and for the general welfare of

employees and for those purposes may confer on a commission legislative,

executive, and judicial powers.‖ (Cal. Const., art. XIV, § 1, italics added; see

ante, p. 18, fn. 20; see generally Industrial Welfare Com. v. Superior Court, supra,

27 Cal.3d 690, 701.)

Obeying these formal expressions of legislative and voter intent, the courts

have shown the IWC‘s wage orders extraordinary deference, both in upholding

their validity and in enforcing their specific terms. Concerning the wage orders‘

validity, ―[j]udicial authorities have repeatedly emphasized that in fulfilling its

broad statutory mandate, the IWC engages in a quasi-legislative endeavor, a task

which necessarily and properly requires the commission‘s exercise of a

considerable degree of policy-making judgment and discretion.‖ (Industrial

Welfare Com. v. Superior Court, supra, 27 Cal.3d 690, 702.) ―Because of the

quasi-legislative nature of the IWC‘s authority, the judiciary has recognized that

its review of the commission‘s wage orders is properly circumscribed. . . . ‗A

reviewing court does not superimpose its own policy judgment upon a quasi-

legislative agency in the absence of an arbitrary decision . . . .‘ ‖ (Ibid., quoting

Rivera v. Division of Industrial Welfare (1968) 265 Cal.App.2d 576, 594.)

―Moreover, past decisions . . . teach that in light of the remedial nature of the

legislative enactments authorizing the regulation of wages, hours and working

29

conditions for the protection and benefit of employees, the statutory provisions are

to be liberally construed with an eye to promoting such protection.‖ (Industrial

Welfare Com. v. Superior Court, supra, at p. 702.)

Concerning the specific terms of wage orders, we have explained that ―[t]he

power to fix [the minimum] wage does not confine the [IWC] to that single act. It

may adopt rules to make it effective.‖ (Cal. Drive-in Restaurant Assn. v. Clark

(1943) 22 Cal.2d 287, 303, italics added.) ―The power to provide safeguards to

insure the receipt of the minimum wage and prevent evasion and subterfuge, is

necessarily an implied power flowing from the power to fix a minimum wage

delegated to the commission. [¶] It is true that an administrative agency may not,

under the guise of its rule making power, abridge or enlarge its authority or exceed

the powers given to it by the statute, the source of its power. [Citations.]

However, ‗the authority of an administrative board or officer . . . to adopt

reasonable rules and regulations which are deemed necessary to the due and

efficient exercise of the powers expressly granted cannot be questioned. This

authority is implied from the power granted.‘ ‖ (Id., at pp. 302-303, quoting Bank

of Italy v. Johnson (1926) 200 Cal. 1, 20.)

Consistently with these deferential principles of review, we have repeatedly

enforced definitional provisions the IWC has deemed necessary, in the exercise of

its statutory and constitutional authority (§ 1173; Cal. Const., art. XIV, § 1), to

make its wage orders effective, to ensure that wages are actually received, and to

prevent evasion and subterfuge. (Cal. Drive-in Restaurant Assn. v. Clark, supra,

22 Cal.2d 287, 302-303.) Such provisions have, for example, excluded restaurant

servers‘ tips from the legal minimum wage (id., at p. 290); defined ― ‗[h]ours

worked‘ ‖ as including ―the time during which [an employee is] subject to the

control of an employer,‖ even if travelling on the employer‘s bus and not actually

working (e.g., Wage Order No. 14, Cal. Code Regs., tit. 8, § 11140, subd. 2(G);

30

see Morillion v. Royal Packing Co., supra, 22 Cal.4th 575, 581-595); and required

that an ― ‗[o]utside salesperson,‘ ‖ to be exempt from overtime compensation,33

must ―regularly work[] more than half the working time away from the employer‘s

place of business‖ in sales activities (IWC wage order No. 7-2001, Cal. Code

Regs., tit. 8, § 11070, subd. (2)(J); see Ramirez v. Yosemite Water Co., supra, 20

Cal.4th 785, 794-803). Such provisions constitute valid exercises of the IWC‘s

authority because, and to the extent, they have ―a direct relation to minimum

wages‖ (Cal. Drive-in Restaurant Assn. v. Clark, supra, at p. 302) and are

reasonably necessary to effectuate the purposes of the statute (see Ramirez v.

Yosemite Water Co., supra, 20 Cal.4th 785, 800; see also Cal. Drive-in Restaurant

Assn. v. Clark, supra, at p. 302). Courts must enforce such provisions in wage

actions because, as we have explained, an employee who sues to recover unpaid

minimum wages under section 1194 actually sues to enforce the applicable wage

order. Only by deferring to wage orders‘ definitional provisions do we truly apply

section 1194 according to its terms by enforcing the ―legal minimum wage‖ (id.,

subd. (a)).

F. The Significance of Reynolds, supra, 36 Cal.4th 1075.

Against this background we consider the significance of Reynolds, supra, 36

Cal.4th 1075, and whether that decision governs this case. In Reynolds we looked

to the common law rather than the applicable wage order to define employment in

an action under section 1194 seeking to hold a corporation‘s directors and officers

personally liable for its employees‘ unpaid overtime compensation. (Reynolds, at

pp. 1086-1088.) We conclude Reynolds does not govern this case. Wage Order


33

Since 1961, section 1194 has provided a civil remedy for unpaid overtime

compensation on the same terms as unpaid minimum wages. (Stats. 1961, ch. 408,
§ 3, p. 1479.)

31

No. 14, and not the common law, properly defines the employment relationship in

this action under section 1194.

The plaintiff in Reynolds, supra, 36 Cal.4th 1075, worked for a corporation

that owned and operated automobile painting shops. He sued under section 1194

to recover unpaid overtime compensation allegedly due him under the IWC‘s

applicable wage order. Plaintiff named as defendants, in addition to the

corporation, eight of its officers and directors in their individual capacities. The

question before us on demurrer was whether the plaintiff had stated a cause of

action against the individual defendants. We held he had not. (Reynolds, supra,

36 Cal.4th 1075, 1083, 1087-1088.)

We properly began our analysis in Reynolds, supra, 36 Cal.4th 1075, 1086,

by looking ―to the IWC‘s intent in promulgating the employer definition.‖ The

applicable wage order defined ―employer‖ in precisely the same language as all of

the commission‘s other industry and occupation orders. Thus, ―employer‖ meant

―any person . . . who directly or indirectly, or through an agent or any other

person, employs or exercises control over the wages, hours, or working conditions

of any person.‖ (IWC wage order No. 9-2001, Cal. Code Regs., tit. 8, § 11090,

subd. 2(G).) Reasoning that ―[t]he best indicator of [the commission‘s] intent is

the language of the provision itself‖ (Reynolds, at p. 1086), we accepted plaintiffs‘

concession that ―the plain language of Wage Order No. 9 defining employer does

not expressly impose liability under section 1194 on individual corporate agents‖

(Reynolds, at p. 1086).34 This reasoning sufficed to dispose of the Reynolds


34

While the DLSE had interpreted the IWC‘s wage orders as sometimes

imposing personal liability on corporate agents, we accorded that interpretation no
deference because it was embodied in enforcement policies the department had not
adopted in compliance with the Administrative Procedure Act (Gov. Code,


(footnote continued on next page)

32

plaintiff‘s claim because, as we have explained, a claim under section 1194 is in

reality a claim under the applicable wage order and thus subject to the order‘s

definitional provisions.

Nevertheless, we went on in Reynolds, supra, 36 Cal.4th 1075, 1086-1087, to

state that the common law rather than the applicable wage order defined the

employment relationship for purposes of the plaintiff‘s action under section 1194.

We reached this conclusion in two steps: First, we rejected the suggestion that the

Legislature had intended ―to incorporate‖ the IWC‘s definitions into section 1194.

(Reynolds, at p. 1086.) Second, we applied the maxim of interpretation that ―[a]

statute will be construed in light of the common law unless the Legislature

‗ ― ‗clearly and unequivocally‘ ‖ ‘ indicates otherwise.‖ (Ibid., quoting California

Assn. of Health Facilities v. Department of Health Services (1997) 16 Cal.4th 284,

297.) Elaborating on the latter point, we explained that when ― ‗a statute refer[s]

to employees without defining the term . . . courts have generally applied the

common law test of employment.‘ ‖ (Reynolds, at p. 1087, quoting Metropolitan

Water Dist. v. Superior Court, supra, 32 Cal.4th 491, 500.) In a footnote, we

added that the ―plaintiff . . . ha[d] not persuaded us that one may infer from the

history and purposes of section 1194 a clear legislative intent to depart, in the

application of that statute, from the common law understanding of who qualifies

as an employer.‖ (Reynolds, at p. 1087, fn. 8.)

As we have now shown, an examination of section 1194 in its full historical

and statutory context shows unmistakably that the Legislature intended to defer to



(footnote continued from previous page)

§ 11340 et seq.). (Reynolds, supra, 36 Cal.4th 1075, 1088; see Tidewater Marine
Western, Inc. v. Bradshaw
, supra, 14 Cal.4th 557, 576-577.)

33

the IWC‘s definition of the employment relationship in actions under the statute.

The Legislature has delegated to the IWC broad authority over wages, hours and

working conditions (§ 1173 et seq.), the voters have repeatedly ratified that

delegation (Cal. Const., art. XIV, § 1; see id., former art. XX, § 17 1/2), and we

have confirmed that ―[t]he power to fix [the minimum] wage does not confine the

[IWC] to that single act. It may adopt rules to make it effective‖ (Cal. Drive-in

Restaurant Assn. v. Clark, supra, 22 Cal.2d 298, 303). The power to adopt rules

to make the minimum wage effective includes the power to define the employment

relationship as necessary ―to insure the receipt of the minimum wage and to

prevent evasion and subterfuge . . . .‖ (Id., at p. 302.) Finally, as we have

explained, a worker who sues under section 1194 for unpaid minimum wages

actually sues to enforce the applicable wage order. This is because the ―legal

minimum wage‖ recoverable under section 1194 is ―[t]he minimum wage . . .

fixed by the commission‖ (§ 1197) in the applicable wage order, even if that order

merely incorporates the amount currently set by statute, and because employers

and employees become subject to the minimum wage only through the applicable

wage order and according to its terms (§ 1197; see ante, at pp. 21-23 & fn. 22).

This is not to say the common law plays no role in the IWC‘s definition of

the employment relationship. In fact, the IWC‘s definition of employment

incorporates the common law definition as one alternative. As defined in the

wage orders, ― ‗[e]mployer‘ means any person . . . who . . . employs or exercises

control over the wages, hours, or working conditions of any person,‖ and

― ‗[e]mploy’ means to engage, suffer, or permit to work.‖ (E.g., Wage Order

No. 14, Cal. Code Regs., tit. 8, § 11140, subd. 2(C), (F), italics added.) The verbs

―to suffer‖ and ―to permit,‖ as we have seen, are terms of art in employment law.

(See ante, at p. 24 et seq.) In contrast, the verb ―to engage‖ has no other apparent

meaning in the present context than its plain, ordinary sense of ―to employ,‖ that

34

is, to create a common law employment relationship.35 This conclusion makes

sense because the IWC, even while extending its regulatory protection to workers

whose employment status the common law did not recognize, could not have

intended to withhold protection from the regularly hired employees who

undoubtedly comprise the vast majority of the state‘s workforce. To employ, then,

under the IWC‘s definition, has three alternative definitions. It means: (a) to

exercise control over the wages, hours or working conditions, or (b) to suffer or

permit to work, or (c) to engage, thereby creating a common law employment

relationship.

While the common law definition of employment plays an important role in

the wage orders‘ definition, and thus also in actions under section 1194, to apply

only the common law definition while ignoring the rest of the IWC‘s broad

regulatory definition would substantially impair the commission‘s authority and

the effectiveness of its wage orders. The commission, as noted, has the power to

adopt rules to make the minimum wage ―effective‖ by ―prevent[ing] evasion and

subterfuge . . . .‖ (Cal. Drive-in Restaurant Assn. v. Clark, supra, 22 Cal.2d 298,

302, 303.) We have repeatedly upheld the commission‘s exercise of this authority.

(See ante, at p. 30 et seq.) Furthermore, language consistently used by the IWC to

define the employment relationship, beginning with its first wage order in 1916

(―suffer, or permit‖),36 was commonly understood to reach irregular working

arrangements that fell outside the common law, having been drawn from statutes

governing child labor and occasionally that of women. (See ante, at p. 24 et seq.)


35

(See, e.g., Black‘s Law Dict. (8th ed. 2004) p. 570, col. 1 [―engage, vb. To

employ . . .‖].)

36

IWC former wage order No. 1, section 2; see, e.g., Wage Order No. 14

(Cal. Code Regs., tit. 8, § 11140, subd. 2(C)).

35

For the IWC, created as it was to regulate the employment of women and minors,

to use this language to define the employment relationship was thus uniquely

appropriate. To adopt such a definitional provision also lay squarely within the

IWC‘s power, as the provision has ―a direct relation to minimum wages‖ (Cal.

Drive-in Restaurant Assn. v. Clark, supra, at p. 302) and is reasonably necessary

to effectuate the purposes of the statute (see Ramirez v. Yosemite Water Co.,

supra, 20 Cal.4th 785, 800; see also Cal. Drive-in Restaurant Assn. v. Clark,

supra, at p. 302). For a court to refuse to enforce such a provision in a

presumptively valid wage order (§ 1185) simply because it differs from the

common law would thus endanger the commission‘s ability to achieve its statutory

purposes.

One cannot overstate the impact of a such a holding on the IWC‘s powers.

Were we to define employment exclusively according to the common law in civil

actions for unpaid wages we would render the commission‘s definitions

effectively meaningless. Concerned about such a result, we suggested in

Reynolds, supra, 36 Cal.4th 1075, 1088-1089, that the IWC‘s definitions might

still play a role in administrative proceedings to recover unpaid minimum wages

(i.e., Berman hearings). (See § 98 et seq.; Cal. Code Regs., tit. 8, § 13501 et seq.)

Since Reynolds, however, the Court of Appeal has correctly observed that ―[t]he

distinction [between judicial and administrative proceedings] may be an empty

one, since Berman hearings are reviewed de novo in superior court at [the] request

of either party.‖ (Jones v. Gregory, supra, 137 Cal.App.4th 798, 806.) The

statutory trial de novo (see § 98.2) ―is neither a conventional appeal nor review of

the Labor Commissioner‘s decision, but is rather a de novo trial of the wage

dispute‖ (Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094,

1116), and the court ― ‗hears the matter, not as an appellate court, but as a court of

original jurisdiction, with full power to hear and determine it as if it had never

36

been before the labor commissioner‘ ‖ (id., at pp. 1116-1117, quoting Collier &

Wallis, Ltd. v. Astor (1937) 9 Cal.2d 202, 205, italics added). In such a trial, a rule

requiring courts in wage cases to define employment according to the common

law (i.e., Reynolds) would presumably apply, leaving the IWC‘s definitions

ultimately unenforceable even in proceedings that begin as Berman hearings.

In sum, we hold that the applicable wage order‘s definitions of the

employment relationship do apply in actions under section 1194. The opinion in

Reynolds, supra, 36 Cal.4th 1075, properly holds that the IWC‘s definition of

―employer‖ does not impose liability on individual corporate agents acting within

the scope of their agency. (Reynolds, at p. 1086.) The opinion should not be read

more broadly than that.

G. The IWC’s Definition of the Employment Relationship Does Not

Incorporate Federal Law.

With this background, we may easily dispose of defendants‘ argument that

the IWC‘s wage orders should be construed as if their provisions defining the

employment relationship incorporated federal law. They do not.

In no sense is the IWC‘s definition of the term ―employ‖ based on federal

law. As we have explained, the IWC has used the phrase ―suffer or permit‖ in

wage orders to define the employment relation since 1916,37 borrowing the phrase

from the common, well-understood wording of contemporary child labor laws.

(See ante, at p. 24 et seq.) Not until 1938 did Congress enact the FLSA, defining

the term ―employ‖ with similar language (29 U.S.C. § 203(g), added by 52 Stat.

1060, § 3),38 and not until 1961 did the United States Supreme Court engraft onto


37

IWC former wage order No. 1, sections 1-5; see, e.g., Wage Order No. 14

(Cal. Code Regs., tit. 8, § 11140, subd. 2(C)).

38

― ‗Employ‘ includes to suffer or permit to work.‖ (29 U.S.C. § 203(g).)

37

the language of the FLSA the nonstatutory ―economic reality‖ test for

employment. (Goldberg v. Whitaker House Coop., supra, 366 U.S. 28, 33.)

Moreover, the federal test has uniquely federal antecedents. While the high court

in 1961 was aware the phrase ―suffer or permit‖ (29 U.S.C. § 203(g)) had been

widely used in state child labor laws (see Rutherford Food Corp. v. McComb,

supra, 331 U.S. 722, 728 & fn. 7), the court derived the ―economic reality‖ test

not from that body of law but rather from the language of a judicial decision

defining employment for purposes of the federal tax and social security laws

(United States v. Silk (1947) 331 U.S. 704, 713), which in turn relied on a decision

interpreting the National Labor Relations Act (29 U.S.C. § 151 et seq.; Board v.

Hearst Publications (1944) 322 U.S. 111, 127-128). (See Goldberg v. Whitaker

House Coop., supra, at p. 33.) We see no reason to substitute this definition of

employment, which has no basis in California law, for definitions in wage orders

regularly adopted by the IWC.

Furthermore, the language used by the IWC in wage orders since 1947 to

define ―employer‖ — ―employs or exercises control over the wages, hours, or

working conditions of any person‖39 — does not appear anywhere in the FLSA

(29 U.S.C. § 201 et seq.) or its implementing regulations. One court has suggested

the wage orders‘ definition of ―employer‖ is ―almost identical‖ to the federal

definition (Bureerong v. Uvawas (C.D.Cal. 1996) 922 F.Supp. 1450, 1470), but a

comparison of the different state and federal definitions does not confirm the

observation.40 Instead, as noted (see ante, at p. 27 et seq.), the wage orders‘


39

IWC former wage order No. 1R, section 2(f); see, e.g., Wage Order No. 14

(Cal. Code Regs., tit. 8, § 11140, subd. 2(F)).

40

Under the FLSA, ― ‗[e]mployer‘ includes any person acting directly or

indirectly in the interest of an employer in relation to an employee and includes a


(footnote continued on next page)

38

language mirrors the scope of the IWC‘s regulatory authority over wages, hours

and working conditions (Lab. Code, § 1173) and by its terms imposes liability on

multiple entities who divide among themselves control over those different aspects

of the employment relationship.

The IWC has on occasion deliberately incorporated federal law into its wage

orders. However, ―where the IWC intended the FLSA to apply to wage orders, it

has specifically so stated.‖ (Morillion v. Royal Packing Co., supra, 22 Cal.4th

575, 592.) For example, IWC wage orders Nos. 1-2001 through 13-2001, 15-2001

and 16-2001 all expressly incorporate specific federal regulations issued under the

FLSA to define exempt executive, administrative and/or professional employees.41

In contrast, the wage order applicable to this case (Wage Order No. 14) and one

other (IWC wage order No. 17-2001) do not. The only reference to federal law in

Wage Order No. 14 appears in a provision exempting individuals participating in

national service programs.42 All wage orders contain a similar provision. No



(footnote continued from previous page)

public agency, but does not include any labor organization (other than when acting
as an employer) or anyone acting in the capacity of officer or agent of such labor
organization.‖ (29 U.S.C. § 203(d).)

41

For example: ―The activities constituting exempt work and non-exempt

work [for executive employees] shall be construed in the same manner as such
items are construed in the following regulations under the Fair Labor Standards
Act effective as of the date of this order: 29 C.F.R. Sections 541.102, 541.104-
111, and 541.115-116.‖ (IWC wage order No. 1-2001, Cal. Code Regs., tit. 8,
§ 11010, subd. 1(A)(1)(e) [manufacturing industry].)

42

―The provisions of this order shall not apply to any individual participating

in a national service program, such as AmeriCorps, carried out using assistance
provided under Section 12571 of Title 42 of the United States Code. (See Stats.
2000, ch. 365, amending Labor Code Section 1171.)‖ (Wage Order No. 14, Cal.
Code Regs., tit. 8, § 11140, subd. 1(E).)

39

wage order, however, incorporates federal law in defining the terms ―employ‖ or

―employer.‖

We have previously cautioned against ―confounding federal and state labor

law‖ (Ramirez v. Yosemite Water Co., supra, 20 Cal.4th 785, 798) and explained

―that where the language or intent of state and federal labor laws substantially

differ, reliance on federal regulations or interpretations to construe state

regulations is misplaced‖ (ibid.; see also Morillion v. Royal Packing Co., supra,

22 Cal.4th 575, 588). Courts must give the IWC‘s wage orders independent effect

in order to protect the commission‘s delegated authority to enforce the state‘s

wage laws and, as appropriate, to provide greater protection to workers than

federal law affords.43 (See Morillion v. Royal Packing Co., supra, 22 Cal.4th 575,

592; Ramirez v. Yosemite Water Co., supra, 20 Cal.4th 785, 798.) We therefore

apply the applicable wage order according to its terms, having in mind its distinct

language, history and function in the context of state wage law.

H. Summary Judgment.

This case comes to us on review of a summary judgment. Defendants are

entitled to summary judgment only if ―all the papers submitted show that there is

no triable issue as to any material fact and that the moving party is entitled to a

judgment as a matter of law.‖ (Code Civ. Proc., § 437c, subd. (c).) To determine

whether triable issues of fact do exist, we independently review the record that

was before the trial court when it ruled on defendants‘ motion. (Johnson v.


43

No party to this case argues that federal law defines the employment

relationship more favorably to plaintiffs than Wage Order No. 14 defines it.
Defendants, as noted, ask us to apply federal law because they believe the federal
definition to be potentially less favorable to plaintiffs, and plaintiffs expressly
disavow any argument that defendants were their employers under federal law.

40

American Standard, Inc. (2008) 43 Cal.4th 56, 64; State Dept. of Health Services

v. Superior Court (2003) 31 Cal.4th 1026, 1034-1035.) In so doing, we view the

evidence in the light most favorable to plaintiffs as the losing parties, resolving

evidentiary doubts and ambiguities in their favor. (Johnson v. American Standard,

Inc., supra, at p. 64.)

1. Plaintiffs’ claims under the wage laws.

We first consider plaintiffs‘ claim that defendants are liable as employers for

plaintiffs‘ unpaid minimum wages under section 1194 and Wage Order No. 14

because defendants allegedly ―suffer[ed], or permit[ted plaintiffs] to work‖ and/or

―exercise[d] control over [their] wages, hours, or working conditions . . . .‖ (Wage

Order No. 14, Cal. Code Regs., tit. 8, § 11140, subd. 2(C), (F).)

a. “[S]uffer, or permit to work.”

The IWC, as we have seen, borrowed its definition of ―employ‖ — ―to

engage, suffer, or permit to work‖44 — in 1916 from the language of early 20th-

century statutes prohibiting child labor. (See ante, at p. 24 et seq.) Statutes so

phrased were generally understood to impose liability on the proprietor of a

business who knew child labor was occurring in the enterprise but failed to

prevent it, despite the absence of a common law employment relationship. As

courts had explained, the language meant ―that [the proprietor] shall not employ by

contract, nor shall he permit by acquiescence, nor suffer by a failure to hinder.‖

(Curtis & Gartside Co. v. Pigg, supra, 134 P. 1125, 1129.) The language thus

―cast[] a duty upon the owner or proprietor to prevent the unlawful condition, and

the liability rest[ed] upon principles wholly distinct from those relating to master

and servant. The basis of liability is the owner’s failure to perform the duty of


44

Wage Order No. 14 (Cal. Code Regs., tit. 8, § 11140, subd. 2(C)).

41

seeing to it that the prohibited condition does not exist.‖ (People v. Sheffield

Farms-Slawson-Decker Co. (N.Y.App.Div. 1917) 167 N.Y.S. 958, 961, italics

added, affd. (N.Y. 1918) 121 N.E. 474, 477 [―the omission to discover and prevent

was a sufferance of the work‖].)

We see no reason to refrain from giving the IWC‘s definition of ―employ‖ its

historical meaning. That meaning was well established when the IWC first used

the phrase ―suffer, or permit‖ to define employment, and no reason exists to

believe the IWC intended another. Furthermore, the historical meaning continues

to be highly relevant today: A proprietor who knows that persons are working in

his or her business without having been formally hired, or while being paid less

than the minimum wage, clearly suffers or permits that work by failing to prevent

it, while having the power to do so.

Plaintiffs argue defendants Apio and Combs suffered or permitted plaintiffs

to work because defendants knew plaintiffs were working, and because plaintiffs‘

work benefited defendants. Concerning defendants‘ knowledge, plaintiffs note

defendants were aware Munoz would need to hire labor to supply strawberries to

defendants, and that defendants‘ field representatives had observed Munoz‘s

employees at work. Plaintiffs also point out that Munoz subleased the Oceano and

Zenon fields from Apio, which retained a right to enter the leased property.

What is in dispute is the significance, under the wage order, of the assertion

that defendants benefited from plaintiffs‘ labor. Certainly defendants benefited in

the sense that any purchaser of commodities benefits, however indirectly, from the

labor of the supplier‘s employees. However, the concept of a benefit is neither a

necessary nor a sufficient condition for liability under the ―suffer or permit‖

standard. Instead, as we have explained, the basis of liability is the defendant‘s

knowledge of and failure to prevent the work from occurring. (See, e.g., People v.

Sheffield Farms-Slawson-Decker Co., supra, 167 N.Y.S. 958, 961 [―The basis of

42

liability is the owner‘s failure to perform the duty of seeing to it that the prohibited

condition does not exist‖], affd. (1918) 121 N.E. 474, 477 [―the omission to

discover and prevent was a sufferance of the work‖]; Curtis & Gartside Co. v.

Pigg, supra, 134 P. 1125, 1129 [the employer ―shall not . . . permit by

acquiescence, nor suffer by a failure to hinder‖].) Here, neither Apio nor Combs

suffered or permitted plaintiffs to work because neither had the power to prevent

plaintiffs from working. Munoz and his foremen had the exclusive power to hire

and fire his workers, to set their wages and hours, and to tell them when and where

to report to work. Perhaps Apio or Combs, by ceasing to buy strawberries, might

as a practical matter have forced Munoz to lay off workers or to divert their labor

to other projects, such as harvesting berries for the other defendant, for Frozsun,45

or for Ramirez Brothers. But any substantial purchaser of commodities might

force similar choices on a supplier by withdrawing its business. Such a business

relationship, standing alone, does not transform the purchaser into the employer of

the supplier‘s workforce.

Plaintiffs‘ interpretation of the wage order is also unreasonably broad. For

the same reason that defendants benefited from plaintiffs‘ work, so too did the

grocery stores that purchased strawberries from defendants, and the consumers

who in turn purchased strawberries from the grocery stores. Had the IWC

intended to impose a rule capable of creating such potentially endless chains of

liability, one would expect the commission to have announced it in the plainest

terms after vigorous debate. Yet the concept of downstream benefit as a sufficient


45

Munoz‘s contracts with Apio and Combs permitted him to sell freezer

berries from the Oceano, Zenon and El Campo fields to a third party such as
Frozsun. Munoz‘s contract with Apio expressly covered only fresh berries, and
his contract with Combs was so interpreted by the parties, as plaintiffs concede.

43

basis for liability appears nowhere in the wage order‘s definition of ―employ‖ or in

the decisions interpreting the child labor statutes from which the IWC borrowed

the definition. We reject plaintiffs‘ broad interpretation of the IWC‘s definition of

―employ‖ for this reason.

We also note that plaintiffs‘ broad interpretation of the IWC‘s definition of

―employ‖ would be difficult to justify as an appropriate exercise of the

commission‘s power. The IWC‘s power to define employment is, as we have

explained, not expressly granted in the act creating the commission but merely

implied, and thus extends only so far as necessary to permit the commission

effectively to exercise its expressly granted powers to regulate wages, hours and

working conditions. (Cal. Drive-in Restaurant Assn. v. Clark, supra, 22 Cal.2d

287, 302.) ―[A]n administrative agency may not, under the guise of its rule

making power, abridge or enlarge its authority or exceed the powers given to it by

the statute, the source of its power.‖ (Id., at pp. 302-303.) Accordingly,

regulations issued by an administrative agency such as the IWC under a delegation

of legislative power must be reasonably necessary to effectuate the purposes of the

statute. (Ramirez v. Yosemite Water Co., supra, 20 Cal.4th 785, 800; Yamaha

Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 11.) That the

IWC has not, in nearly a century of administering the minimum wage, seen fit to

propose plaintiffs‘ downstream-benefit theory of liability strongly suggests the

theory is not reasonably necessary to permit the commission to discharge its

statutory responsibilities. We also find significant that the single rule of California

law that even approaches the breadth of plaintiffs‘ theory in imposing liability for

wages appears not in a wage order adopted by the IWC, but in a statute enacted by

44

the Legislature. (§ 2673.1, subd. (a).)46 These considerations suggest that rules of

liability as broad as those plaintiffs advocate are appropriately left to the

Legislature.

b. “[E]xercises control over . . . wages, hours, or working

conditions . . . .”

i. Defendant Apio.

Plaintiffs next argue that defendant Apio, through its contractual relationship

with Munoz, dominated his business financially and thus exercised indirect control

over his employees‘ wages and hours.47 In making this argument, plaintiffs seek

to portray Munoz as a straw man, engaged by Apio to shield itself from

agricultural workers‘ wage claims. Certainly Wage Order No. 14‘s definition of

―employer,‖ which encompasses ―any person . . . who directly or indirectly, or

through an agent or any other person, employs or exercises control over the

wages, hours, or working conditions of any person,‖48 is broad enough to reach

through straw men and other sham arrangements to impose liability for wages on

the actual employer. The undisputed facts, however, show that Munoz alone

controlled plaintiffs‘ wages, hours and working conditions.


46

―To ensure that employees are paid for all hours worked, a person engaged

in garment manufacturing, as defined in Section 2671, who contracts with another
person for the performance of garment manufacturing operations shall guarantee
payment of the applicable minimum wage and overtime compensation, as required
by law, that are due from that other person to its employees that perform those
operations.‖ (§ 2673.1, subd. (a).)

47

Plaintiffs do not make the same argument against Combs, whose

relationship with Munoz was very similar to Apio‘s.

48

Wage Order No. 14 (Cal. Code Regs., tit. 8, § 11140, subd. 2(F), italics

added).

45

Plaintiffs contend Apio indirectly controlled Munoz‘s ability to pay his

employees because Apio unilaterally decided the amount of estimated net

proceeds to advance to Munoz as ―Pick-Pack‖ payments, and because Apio

demanded that Munoz continue to harvest produce that would not produce a net

return. Apio‘s right to set off its expenses, however, was simply an aspect of its

contractual relationship with Munoz. Munoz had made a profit from the same

relationship in prior years. Plaintiffs note that Apio reduced its ―Pick-Pack‖

payments below the $2.00 level initially set by contract as the end of the season

neared and the market deteriorated, but the contract unequivocally permitted Apio

to set off its expenses before remitting net proceeds. Moreover, nothing in the

record shows that Apio ever compelled Munoz to harvest on any occasion.

Although Munoz had strong incentives to harvest fresh market berries for Apio in

order to repay Apio‘s preseason advance and also to make a profit for himself, he

testified without contradiction that he, alone, decided which fields to harvest on

any given day and whether to harvest strawberries for fresh market sale or for the

freezer. So far as the record discloses, negotiations between Apio and Munoz over

the amount of fresh market berries to be delivered took place in the field, after

Munoz had already informed Apio that he planned to harvest fresh market berries

from the Oceano or Zenon field on a given day. While Munoz stated on May 27,

2000, during the work stoppage in El Campo, that he could not pay his workers

because Apio was withholding payment, the undisputed facts show that Apio had

paid Munoz ahead of schedule and more than it was eventually determined to owe

him.

More importantly, plaintiffs‘ factual assertions do not establish that Apio‘s

business relationship with Munoz allowed the company to exercise control over

Munoz‘s employees‘ wages and hours. In making the argument, plaintiffs ignore

the following undisputed facts: First, Munoz operated a single, integrated

46

business operation, growing and harvesting strawberries for several unrelated

merchants and combining revenue from all sources with a personal investment, in

the hope of earning a profit at the end of the season. Munoz paid his employees

out of those combined revenues and assets. Second, Munoz had losses unrelated

to his business with Apio from his unsuccessful business with Ramirez Brothers,

who paid Munoz nothing during the 2000 season. Third, Munoz had substantial

revenue from other sources on May 27, 2000. On that same day, Frozsun paid

Munoz $149,340, bringing to $181,003 the amount it had paid him since April 29.

This source of revenue continued until August 12, by which date Frozsun had paid

Munoz a total of $476,955. Finally, Munoz alone, with the assistance of his

foremen, hired and fired plaintiffs, trained and supervised them, determined their

rate and manner of pay (hourly or piece-rate), and set their hours, telling them

when and where to report to work and when to take breaks. Plaintiffs‘ claim that

Apio dominated Munoz‘s financial affairs cannot be reconciled with these facts.

Taking a different approach not based on the applicable wage order, plaintiffs

attempt to compare this case with S.G. Borello & Sons, Inc. v. Department of

Industrial Relations (1989) 48 Cal.3d 341 (S.G. Borello), in which we held that

workers hired by a large agricultural landowner under ―sharefarmer‖ agreements

were employees rather than independent contractors for purposes of the workers‘

compensation law. (§ 3200 et seq.) The sharefarmers, we found, ―exhibit no

characteristics which might place them outside the Act‘s intended coverage of

employees. They engage in no distinct trade or calling. They do not hold

themselves out in business. They perform typical farm labor for hire where jobs

are available. They invest nothing but personal service and hand tools. They

incur no opportunity for ‗profit‘ or ‗loss‘; like employees hired on a piecework

basis, they are simply paid by the size and grade of cucumbers they pick. They

rely solely on work in the fields for their subsistence and livelihood.‖ (Id., at

47

pp. 357-358, fns. omitted.) Applying the common law test of employment in light

of the remedial purposes of the workers compensation law, we reasonably

concluded the sharefarmers were, ―[w]ithout doubt, . . . a class of workers to

whom the protection of the [workers‘ compensation law] is intended to extend.‖

(Id., at p. 358, fn. omitted.)

Assuming the decision in S.G. Borello, supra, 48 Cal.3d 341, has any

relevance to wage claims, a point we do not decide, the case does not advance

plaintiffs‘ argument. Plaintiffs are correct in that, if Munoz had been Apio‘s

employee rather than an independent contractor, Munoz‘s employees arguably

would also have been Apio‘s employees; the determination that a purported

independent contractor is in fact an employee raises the strong possibility,

generally speaking, that the contractor and its employer jointly employ the

contractor‘s employees. (Rinaldi v. Workers’ Comp. Appeals Bd. (1991) 227

Cal.App.3d 756, 759, and cases cited.) But Munoz was not Apio‘s employee. In

contrast to the sharefarmer-employees in S.G. Borello, Munoz held himself out in

business, invested substantial capital and equipment, employed over 180 workers,

sold produce through four unrelated merchants, enjoyed an opportunity for profit

or loss dependent on his business acumen and market conditions, and had indeed

made a profit in prior years operating in the same manner.

Next, plaintiffs argue Apio controlled their wages on June 8 or 9, 2000, when

Apio‘s vice-president Tim Murphy cooperated with the DLSE and Munoz to

ensure that Munoz used Apio‘s final advance of net proceeds to pay his workers.

(See ante, at p. 9.) The argument fails. At that time, as noted, Murphy gave

Munoz a check for $77,662, Munoz endorsed the check to the bank, and the bank

immediately issued cashier‘s checks payable to 71 employees whose names

Munoz had provided. In so doing, Apio participated with the government in what

amounts to a garnishment of money owed to Munoz for the benefit of his

48

employees. To hold on this basis that Apio controlled plaintiffs‘ wages would

punish Apio for cooperating with the DLSE‘s attempt to enforce the wage laws

and likely deter future cooperation by other employers.

Viewing the undisputed evidence in the light most favorable to plaintiffs, we

find no basis for concluding Apio exercised control over plaintiffs‘ wages and

hours.

ii. Defendant Combs.

Plaintiffs contend defendant Combs exercised control over their wages and

hours based on the events of May 27, 2000, at the El Campo field. On that date, as

noted (ante, at p. 7 et seq.), plaintiffs had been picking freezer berries and stopped

work to talk with Jose Serrano about unpaid wages. Juan Ruiz, Combs‘s agent,

convinced some of Munoz‘s employees to return to work. According to plaintiff

Asuncion Cruz, ―Juan [Ruiz] . . . told us to keep working and help Munoz. Juan

told us not to worry and said he guaranteed we would be paid as his boss had

checks he was delivering to Isidro Munoz.‖ Cruz ―heard workers tell Juan they

were concerned that the amount of the check he brought with him would not be

enough to pay everyone. Juan told us not to worry as he would deliver even larger

amounts of money from his boss to Isidro Munoz the following week, and even

more money the week after that, which would be enough to pay us all.‖ Cruz‘s

declaration is consistent with those of others who heard Ruiz speak; the record

contains no statements by Ruiz about what he said.

Based on this evidence, plaintiffs contend that ―Combs offered [plaintiffs]

employment through its agent Ruiz.‖ Assuming for the sake of argument Ruiz

49

was acting as Combs‘s agent in making the alleged statements,49 the evidence in

our view does not fairly support the inference that Ruiz offered plaintiffs

employment. Certainly a promise to pay a person for work would be an offer of

employment, as well as an exercise of control over wages and hours sufficient to

bring the promisor within the wage order‘s definition of ―employer.‖ (Wage

Order No. 14, Cal. Code Regs., tit. 8, § 11140, subd. 2(F).) But Ruiz did not offer

plaintiffs employment with Combs. Instead, he asked plaintiffs to continue

working to ―help Munoz‖ and pointed out that Munoz was not yet utterly without

funds to pay them, as he was still receiving payments from Combs. Plaintiffs‘

declarations show they understood the distinction, as they questioned Ruiz not

about the terms of any hypothetical work for Combs but about whether ―the

amount of the check [Ruiz] had brought with him would . . . be enough to pay

everyone.‖ That plaintiffs were not working for Combs on May 27 was also

reasonably apparent in that they were harvesting freezer berries in bulk rather than

picking and packing fresh berries for market sale. Again, plaintiffs understood the

distinction and recognized Ruiz as ― ‗Juan,‘ the person [they had seen] checking

the strawberries . . . for the company to whom Munoz delivered the market

strawberries we picked for sale.‖ (Italics added.)

For these reasons, we find plaintiffs‘ argument lacks merit.


49

The question of agency is disputed. Combs‘s principals declare that Ruiz

was not hired by the company as an employee until June 1, 2000, and that they
have never authorized Ruiz to make promises to growers‘ employees on Combs‘s
behalf. Several witnesses, however, including Munoz, his foreman Leon, and
some of his employees, state that Ruiz frequently visited the El Campo field on
Combs‘s behalf during the fresh berry harvest, which reached its peak in April and
May and ended before June, to check the quality of strawberries and explain how
they should be packed.

50

iii. Defendant Ruiz.

Relying on the same evidence, plaintiffs also contend that Ruiz personally

exercised control over their wages and hours and is thus personally liable as an

―employer‖ under section 1194 and Wage Order No. 14. The claim fails under our

holding in Reynolds, supra, 36 Cal.4th 1075, that the IWC‘s definition of

―employer‖ does not impose liability on individual corporate agents acting within

the scope of their agency. (Reynolds, at p. 1086.) Plaintiffs specifically allege in

the operative complaint that Ruiz, in making the alleged statements on May 27,

2000, was ―acting in his capacity as agent for [Combs] . . . .‖

iv. Defendants Apio and Combs.

Plaintiffs contend that defendants Apio and Combs, through their field

representatives‘ activities in the areas of quality control and contract compliance,

became joint employers of Munoz‘s workers by ―exercis[ing] control over [their]

. . . working conditions‖ within the meaning of Wage Order No. 14. (Cal. Code

Regs., tit. 8, § 11140, subd. 2(F).) Plaintiffs devote little attention to the argument,

but it deserves discussion.

As we have noted, picking and packing strawberries for fresh market sale

necessitated close communication during the harvest between defendants and

Munoz‘s personnel. This is because market berries are packed in the field, as they

are picked, into the containers in which they will be sold to consumers, often that

same day or the next. The contract between Apio and Munoz expressly provided

for such activities, and Munoz operated in the same manner with Combs,

apparently as a matter of standard practice. (See ante, at p. 6.) Viewing the facts

most favorably to plaintiffs, Apio sent its representatives Juan Toche and Manuel

Cardenas to the field on days when Munoz harvested fresh berries from the

Oceano and Zenon fields, and Combs sent defendant Juan Ruiz when Munoz

harvested berries from El Campo. Apio‘s and Combs‘s representatives followed

51

the same procedure: In the morning, the representatives would explain to Munoz

and his foremen how the merchant wanted strawberries packed, and Munoz and

his foremen would demonstrate the packing style to the workers. For about an

hour, the representatives, together with Munoz and his foreman, would check the

packed containers as workers brought them from the field to the truck where they

would be loaded for shipping. While the representatives would generally bring

problems to the attention of Munoz and his foremen, they would also sometimes

speak directly to the workers, pointing out mistakes in packing such as green or

rotten berries. In the afternoon, the representatives would return briefly to check

the quality and quantity of berries in the loaded truck.

The question is whether this evidence raises a triable issue of fact as to

whether Apio and Combs exercised control over the working conditions of

Munoz‘s employees. As we have explained, one of the reasons the IWC defined

―employer‖ in terms of exercising control was to reach situations in which

multiple entities control different aspects of the employment relationship. This

occurs, for example, when one entity (such as a temporary employment agency)

hires and pays a worker, and another entity supervises the work. (See ante, at

pp. 26-27.) Supervision of the work, in the specific sense of exercising control

over how services are performed, is properly viewed as one of the ―working

conditions‖ mentioned in the wage order. To read the wage order in this way

makes it consistent with other areas of the law, in which control over how services

are performed is an important, perhaps even the principal, test for the existence of

an employment relationship. (See, e.g., Metropolitan Water Dist. v. Superior

Court, supra, 32 Cal.4th 491, 512 [common law]; Tieberg v. Unemployment Ins.

App. Bd. (1970) 2 Cal.3d 943, 946 [unemployment insurance]; McFarland v.

Voorheis-Trindle Co. (1959) 52 Cal.2d 698, 704 [workers‘ compensation].)

52

While the evidence indicates that Apio‘s and Combs‘s field representatives

spoke with Munoz‘s employees about the manner in which strawberries were to be

packed, it does not indicate the field representatives ever supervised or exercised

control over his employees. No evidence suggests Munoz‘s employees viewed the

field representatives as their supervisors or believed they owed their obedience to

anyone but Munoz and his foremen. Plaintiffs, relying on cases interpreting other

bodies of law, argue the right to exercise control over the manner in which work is

performed is sufficient to prove the existence of an employment relationship,

whether or not the right is exercised. (E.g., S.G. Borello, supra, 48 Cal.3d 341,

350; Tieberg v. Unemployment Ins. App. Bd., supra, 2 Cal.3d 943, 946.) But even

assuming the same rule applies here, Munoz‘s contracts with Apio and Combs

gave the merchants no right to direct his employees‘ work. Neither does any

evidence in the record suggest that anyone — Munoz, Apio, Combs, the

merchants‘ field representatives, or plaintiffs — believed the merchants or their

representatives had such a right. Confusion on this point was not likely to arise,

since Munoz and his foremen were present when the field representatives

interacted with Munoz‘s employees. For all of these reasons, we conclude the

claim lacks merit.

2. Plaintiffs’ claims as purported third party beneficiaries.

Lastly, plaintiffs contend they are entitled to recover unpaid wages as third

party beneficiaries of the contract between Munoz and Apio. The claim has no

factual basis. Nowhere in its contract with Munoz did Apio undertake to pay his

employees under any set of conditions. There simply is no relevant obligation to

enforce.

In their contract, Apio and Munoz agreed that Munoz would be ―solely

responsible for the selection, hiring, firing, supervision, assignment, direction,

53

setting of wages, hours, and working conditions‖ of his employees, among other

things. In addition, Munoz warranted that he would ―comply with all provisions

of federal, state and local laws applicable to [his] farming operations, including,

without limitation , labor . . . .‖ (Italics added.) Finally, Munoz and Apio each

agreed to indemnify the other from claims ―concerning . . . the employment of

individuals . . . to perform such party‘s functions under this Agreement, including

. . . matters pertaining to . . . wages . . . .‖ (Italics added.) The plain import of

these contractual provisions is that Munoz agreed to pay his employees the wages

required by law, assuming sole responsibility in the

tter, and to indemnify Apio if his employees sued Apio for unpaid wages.

Apio contends plaintiffs cannot establish standing to enforce the contract

because no evidence shows the parties to the contract, Apio and Munoz, intended

to benefit plaintiffs. (See Hess v. Ford Motor Co. (2002) 27 Cal.4th 516, 524;

Civ. Code, § 1559.) We need not decide the point. Even if plaintiffs could

establish standing, they would gain thereby only the right to stand in Apio‘s shoes

and enforce the contract‘s terms by suing Munoz to compel him to pay their

wages. This, Munoz‘s bankruptcy precludes. Nothing in the rules of law

concerning third party beneficiaries permits us to rewrite the contract to impose on

Apio an obligation to pay wages that it never undertook.

III. DISPOSITION

The judgment of the Court of Appeal is affirmed.

WERDEGAR, J.

WE CONCUR:

GEORGE, C.J.
KENNARD, J.
BAXTER, J.
CHIN, J.
MORENO, J.
CORRIGAN, J.

54



See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Martinez v. Combs
__________________________________________________________________________________

Unpublished Opinion
XXX NP opn. filed 11/18/03 – 2d Dist., Div. 6
Original Appeal
Original Proceeding
Review Granted

Rehearing Granted

__________________________________________________________________________________

Opinion No.
S121552
Date Filed: May 20, 2010
__________________________________________________________________________________

Court:
Superior
County: San Luis Obispo
Judge: Earle Jeffrey Burke

__________________________________________________________________________________

Attorneys for Appellant:

Law Offices of Talamantes/Villegas/Carrera, Mark Talamantes, Jennifer Reisch; California Rural Legal
Assistance, Inc., William G. Hoerger, Michael C. Blank; California Rural Legal Assistance Foundation,
Inc., and Julia Montgomery for Plaintiffs and Appellants.

Virginia Ruiz for Farmworker Justice, National Employment Law Project and United Farm Workers as
Amici Curiae on behalf of Plaintiffs and Appellants.

Schneider & Wallace, Joshua Konecky and W.H. ―Hank‖ Wilson IV for Centro Legal de La Raza, Golden
Gate University Women‘s Employment Rights Clinic, The Katharine & George Alexander Community
Law Center, The Legal Aid Foundation of Los Angeles, The Legal Aid Society of San Franciso-
Employment Law Center and Neighborhood Services of Los Angeles County as Amici Curiae on behalf of
Plaintiffs and Appellants.

Law Offices of Carroll & Scully, Donald C. Carroll and Charles P. Scully II for California Labor
Federation, AFL-CIO as Amicus Curiae on behalf of Plaintiffs and Appellants.
__________________________________________________________________________________

Attorneys for Respondent:

Anastassiou & Associates, Jane E. Bednar and Effie F. Anastassiou for Defendant and Respondent Apio,
Inc.

Western Growers Law Group, Noland, Hamerly, Etienne & Hoss and Terrence R. O‘Connor for
Defendants and Respondents Corky N. Combs and Larry D. Combs dba Combs Distribution Co., and Juan
Ruiz.

Monte B. Lake for California Farm Bureau Federation, Agricultural Council of California, California
Citrus Mutual, California Grape and Tree Fruit League, Grower-Shipper Association of Central California,
Imperial Valley Vegetable Growers Association, Nisei Farmers League, Ventura County Agricultural
Association, Western Growers Association and Wine Institute as Amici Curiae on behalf of Defendants and
Respondents.







Counsel who argued in Supreme Court (not intended for publication with opinion):

William G. Hoerger
California Rural Legal Assistance, Inc.
631 Howard Street, Suite 300
San Francisco, CA 94105
(415) 777-2752

Effie F. Anastassiou
Anastassiou & Associates
242 Capitol Street
Salinas, CA 93902
(831) 754-2501

Terrence R. O‘Connor
Noland, Hamerly, Etienne & Hoss
333 Salinas Street
Salinas, CA 93902-2510
(831) 424-1414

Petition for review after the Court of Appeal affirmed in part and reversed in part the judgment in a civil action. The court ordered briefing deferred pending decision in Reynolds v. Bement, S115823, which includes the following issue: Can the officers and directors of a corporate employer personally be held civilly liable for causing the corporation to violate the statutory duty to pay minimum and overtime minimum wages, either on the ground such officers and directors fall within the definition of "employer" in Industrial Welfare Commission Wage Order 9 or on another basis?

Opinion Information
Date:Citation:Docket Number:Category:Status:Cross Referenced Cases:
Thu, 05/20/201049 Cal. 4th 35, 231 P.3d 259, 109 Cal. Rptr. 3d 514S121552Review - Civil Appealsubmitted/opinion due

REYNOLDS v. BEMENT (S115823)


Parties
1Martinez, Miguel (Plaintiff and Appellant)
Represented by Julia Louise Montgomery
California Rural Legal Assistance Foundation
2210 "K" Street, 2nd Floor
Sacramento, CA

2Martinez, Miguel (Plaintiff and Appellant)
Represented by Mark Andrew Talamantes
Talamantes Villegas & Carrera, LLP
170 Columbus Avenue, Suite 300
San Francisco, CA

3Cortes, Antonio Perez (Plaintiff and Appellant)
Represented by Julia Louise Montgomery
California Rural Legal Assistance Foundation
2210 "K" Street, 2nd Floor
Sacramento, CA

4Cortes, Antonio Perez (Plaintiff and Appellant)
Represented by Mark Andrew Talamantes
Talamantes Villegas & Carrera, LLP
170 Columbus Avenue, Suite 300
San Francisco, CA

5Cortes, Antonio Perez (Plaintiff and Appellant)
Represented by William G. Hoerger
California Rural Legal Assistance Foundation
631 Howard Street, Suite 300
San Francisco, CA

6Cortes, Otilio (Plaintiff and Appellant)
Represented by Mark Andrew Talamantes
Talamantes Villegas & Carrera, LLP
170 Columbus Avenue, Suite 300
San Francisco, CA

7Cortes, Otilio (Plaintiff and Appellant)
Represented by William G. Hoerger
California Rural Legal Assistance Foundation
631 Howard Street, Suite 300
San Francisco, CA

8Cruz, Asunsion (Plaintiff and Appellant)
Represented by Mark Andrew Talamantes
Talamantes Villegas & Carrera, LLP
170 Columbus Avenue, Suite 300
San Francisco, CA

9Cruz, Asunsion (Plaintiff and Appellant)
Represented by William G. Hoerger
California Rural Legal Assistance Foundation
631 Howard Street, Suite 300
San Francisco, CA

10Martinez, Hilda (Plaintiff and Appellant)
Represented by Mark Andrew Talamantes
Talamantes Villegas & Carrera, LLP
170 Columbus Avenue, Suite 300
San Francisco, CA

11Combs, Corky N. (Defendant and Respondent)
Represented by Terrence R. O'Connor
Noland Hamerly Etienne & Hoss, PC
333 Salinas Street, P.O. Box 2510
Salinas, CA

12Apio, Inc. (Defendant and Respondent)
Represented by Effie Florence Anastassiou
Anastassiou & Associates
242 Capitol Street, P.O. Box 2210
Salinas, CA

13Combs, Larry D. (Defendant and Respondent)
Represented by Terrence R. O'Connor
Noland Hamerly Etienne & Hoss, PC
333 Salinas Street, P.O. Box 2510
Salinas, CA

14Combs Distribution Company (Defendant and Respondent)
Represented by Terrence R. O'Connor
Noland Hamerly Etienne & Hoss, PC
333 Salinas Street, P.O. Box 2510
Salinas, CA

15Ruiz, Juan (Defendant and Respondent)
Represented by Terrence R. O'Connor
Noland Hamerly Etienne & Hoss, PC
333 Salinas Street, P.O. Box 2510
Salinas, CA

16Agricultural Council of California (Amicus curiae)
17California Citrus Mutual (Amicus curiae)
18California Farm Bureau Federation (Amicus curiae)
19California Grape & Tree Fruit League (Amicus curiae)
20California Labor Federation, AFL-CIO (Amicus curiae)
Represented by Donald C. Carroll
Carroll & Scully, Inc.
300 Montgomery Street, Suite 735
San Francisco, CA

21California Labor Federation, AFL-CIO (Amicus curiae)
Represented by Charles P. Scully
Carroll & Scully, Inc.
300 Montgomery Street, Suite 735
San Francisco, CA

22Centro Legal De La Raza (Amicus curiae)
Represented by William Harry Willson
Schneider & Wallace
180 Montgomery Street, Suite 2000
San Francisco, CA

23Centro Legal De La Raza (Amicus curiae)
Represented by Joshua Geoffrey Konecky
Schneider & Wallace
180 Montgomery Street, Suite 2000
San Francisco, CA

24Farmworker Justice (Amicus curiae)
Represented by Virginia Elizabeth Ruiz
Farmworker Justice
1126 16th St NW Ste 270
Washington, DC

25Golden Gate University Women's Employment Rights Clinic (Amicus curiae)
Represented by Joshua Geoffrey Konecky
Schneider & Wallace
180 Montgomery Street, Suite 2000
San Francisco, CA

26Grower-Shipper Association of Central California (Amicus curiae)
27Imperial Valley Vegetable Growers Association (Amicus curiae)
28Katharine & George Alexander Community Law Center (Amicus curiae)
Represented by Joshua Geoffrey Konecky
Schneider & Wallace
180 Montgomery Street, Suite 2000
San Francisco, CA

29Legal Aid Foundation of Los Angeles (Amicus curiae)
Represented by Joshua Geoffrey Konecky
Schneider & Wallace
180 Montgomery Street, Suite 2000
San Francisco, CA

30Legal Aid Society of San Francisco (Amicus curiae)
Represented by Joshua Geoffrey Konecky
Schneider & Wallace
180 Montgomery Street, Suite 2000
San Francisco, CA

31National Employment Law Project (Amicus curiae)
Represented by Virginia Elizabeth Ruiz
Farmworker Justice Fund
1010 Vermont Avenue N.W., Suite 915
Washington, DC

32Neighborhood Legal Services of Los Angeles County (Amicus curiae)
Represented by Joshua Geoffrey Konecky
Schneider & Wallace
180 Montgomery Street, Suite 2000
San Francisco, CA

33Nisei Farmers League (Amicus curiae)
34United Farm Workers (Amicus curiae)
Represented by Virginia Elizabeth Ruiz
Farmworker Justice Fund
1010 Vermont Avenue N.W., Suite 915
Washington, DC

35Ventura County Agricultural Association (Amicus curiae)
36Western Growers Association (Amicus curiae)
37Wine Institute (Amicus curiae)

Opinion Authors
OpinionJustice Kathryn M. Werdegar

Dockets
Dec 30 2003Petition for review filed
  by counsel for plaintiffs and appellants [Miguel Martinez,Hilda Martinez, Antonio Perez Cortes, Otilio Cortes and Asuncion Cruz] 40k
Dec 30 2003Record requested
 
Jan 5 2004Received Court of Appeal record
  two doghouses
Jan 20 2004Answer to petition for review filed
  by defendant and respondent (APIO, INC.) 40k/FedEx
Feb 10 2004Received:
 
Feb 19 2004Time extended to grant or deny review
  to and including March 29, 2i004
Feb 26 2004Received:
 
Mar 3 2004Review granted/briefing deferred (rule 29.1) - civil case
  Further action in this matter is deferred pending consideration and disposition of a related issue in Reynolds v. Bement, S115823 (see Cal. Rules of Court, rule 28.2 (c ), or pending further order of the court. Submission of additional briefing, pursuant to California Rules of Court, rule 29.1, is deferred pending further order of the court. Votes: George, C.J., Kennard, Baxter, Werdegar, Chin, Brown, and Moreno, JJ.
Mar 3 2004Note:
  Letters sent enclosing copies of the grant order and the certification of interested entities and persons form
Mar 17 2004Certification of interested entities or persons filed
  by Effie F Anastassiou, counsel for Apio, Inc. [defendant and respondent]
Oct 7 2005Filed:
  Letter from counsel for appellants dated October 6, 2005, requesting that the Court return the appeal to calendar and set a briefing schedule.
Oct 25 2005Received:
  Letter from counsel for respondents dated 10-24-2005, requesting that the appeal be dismissed.
Nov 3 2005Briefing ordered in previously Held case
  Review was granted in this matter on March 3, 2004, and briefing ordered deferred pending disposition of the appeal in Reynolds v. Bement, which was filed on August 11, 2005, and is now final (36 Cal.4th 1075). Appellants are now directed to file, within 30 days of the filing of this order, an opening brief on the merits. Within 30 days of the filing of that brief, respondents are to file an answer brief. Within 20 days of the filing of that brief, appellants may file a reply brief to respondent's answer brief.
Nov 23 2005Received:
  Joint application (one) for extensions of time by counsel for both parties. Counsel for appellant was advised that separate applications are needed. Respondents to submit a separate extension request.
Nov 29 2005Request for extension of time filed
  appellant asking to 12/23/2005 to file opening brief on the merits.
Nov 29 2005Request for extension of time filed
  respondents asking to January 22, 2006 to file answer brief on the merits.
Dec 2 2005Extension of time granted
  On application of appellants and good cause appearing, it is ordered that the time to serve and file appellants' opening brief on the merits is hereby extended to and including 12-23-2005.
Dec 2 2005Extension of time denied
  The applicationof respondent APIO, Inc., for extension of time to file respondent's answer brief on the merits is hereby denied without prejudice to respondent filing a request for extension of time at a later date.
Dec 20 2005Request for extension of time filed
  counsel for appellants' requesting a 24-day extension to and including January 17, 2006 to file appellants' opening brief on the merits.
Dec 22 2005Extension of time granted
  To January 17, 2006 to file appellants' opening brief on the merits.
Jan 18 2006Received:
  Application to file extra length opening brief on the merits [containing 29,700 words, over the 14,000 word limit CRC 29.1(c)
Jan 20 2006Order filed
  On application of appellants for permission to file opening brief on the merits containing 29,700 words, that exceeds the 14,000 word limit prescribed by California Rules of Court rule 29.1(c)(1) by 15,700 words is hereby GRANTED.
Jan 20 2006Opening brief on the merits filed
  by appellants (with permission)
Feb 1 2006Received:
  "Notice of Errata in Appellants' Opening Brief on the Merits"
Feb 8 2006Request for extension of time filed
  respondents asking to March 16, 2006, to file answer brief on the merits
Feb 9 2006Extension of time granted
  On application of respondents and good cause appearing, it is ordered that the time to serve and file the answer brief on the merits is extended to and including March 16, 2006.
Feb 14 2006Request for judicial notice filed (granted case)
  Antonio Perez Cortes, Otilio Cortes and Asucncion Cruz, Appellants by William G. Hoerger, counsel
Mar 6 2006Request for extension of time filed
  respondents' asking to April 17, 2006, to file answer brief on the merits.
Mar 8 2006Extension of time granted
  On application of respondent and good cause appearing, it is ordered that the time to serve and file the answer brief on the merits is extended to and includindg April 17, 2006.
Apr 17 2006Received:
  Respondent APIO, INC.'s oversized (19,016 words) Answer Brief on the Merits, exceeding the 14,000 word limit prescribed by CRC rule 29.1(c) by 5,016 words.
Apr 17 2006Answer brief on the merits filed
  for Corky N. Combs and Larry D. Combs d/b/a Combs Districution Co., and Juan Ruiz, respondents, by Terrence R. O'Connor of Noland, Hamerly Etienne & Hoss, retained counsel.
Apr 18 2006Order filed
  The application of Respondent APIO, INC., for permission to file their Answer Brief on the Merits containing 19,016 words that exceeds the 14,000 word limit prescribed by California Rules of Court rule 29.1(c)(1) by 5,016 words is hereby granted.
Apr 18 2006Answer brief on the merits filed
  for APIO, INC., respondent. by Effie F. Anastassiou of Anastassiou & Associates, retained counsel. [ PERM ]
Apr 21 2006Request for extension of time filed
  appellants asking to May 26, 2006, to file reply brief on the merits
Apr 26 2006Extension of time granted
  On application of appellants and good cause appearing, it is ordered that the time to serve and file appellants' reply brief on the merits is extended to and including May 26, 2006.
May 25 2006Request for extension of time filed
  Appellants requesting a 14-day extension to and including June 9, 2006 to file appellants' reply breif on the merits. Antonio P. Cortes et al., Appellants by William G. Hoerger, counsel
May 26 2006Extension of time granted
  On application of appellants and good cause appearing, it is ordered that the time to serve and file appellants' reply brief on the merits is hereby extended to and including June 9, 2006.
Jun 9 2006Application filed to:
  file appellants' extra-length reply brief on the merits containing 6,700 words [reply brief submitted separately with a request for judicial notice]
Jun 13 2006Order filed
  The application of appellants for permission to file Appellants' Reply Brief on the Merits containing 6,700 words that exceeds the 4,200 word limit prescribed by California Rules of Court, rule 29.1(c)(1) by 2,500 words is hereby granted.
Jun 13 2006Reply brief filed (case fully briefed)
  Miguel Martinez, et al., appellants by William G. Hoerger of California Rural Legal Assistance, Inc., [for Antonio Perez Cortes, Otilio Cortes and Asuncion Cruz], by Mark Talamantes of Talamantes et al. [for Miguel Martinez, Hilda Martinez, Antonio Perez Cortes, Otilio Cortes and Asuncion Cruz], and by Julia Montgomery of California Rural Legal Assistance Foundation, Inc. [for Miguel Martinez and Antonio Perez Cortes].
Jun 13 2006Request for judicial notice filed (granted case)
  Appelants' Miguel Martinez et al., [Second Request] by William G. Hoerger, Mark Talamantes and Julia Montgomery
Jun 23 2006Opposition filed
  by Respondents (Apio Inc., et al.) to Appellants' Second Request for Judicial Notice
Jul 10 2006Received application to file Amicus Curiae Brief
  Amici Curiae Farmworker Justice, the National Employment Law Project, and the United Farm Workers in support of appellants
Jul 10 2006Received application to file Amicus Curiae Brief
  California Farm Bureau Federation, Agricultural Council of California, California Citrus Mutual, California Grape and Tree Fruit League, Grower-Shipper Association of Central California, Imperial Valley Vegetable Growers Association, Nisei Farmers league, Ventura County Agricultural Association, Western Growers Association, and Wine Institute in support of reapondents.
Jul 12 2006Received application to file Amicus Curiae Brief
  and brief of California Labor Federation, AFL-CIO in support of appellant
Jul 12 2006Permission to file amicus curiae brief granted
  The application of Farmworker Justice, the National Employment Law Project, and; the United Farm Workers for permission to file an amici curiae brief in support of appellants is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Jul 12 2006Amicus curiae brief filed
  Farmworker Justice, te National Employment Law Project and the United Farm Workers in support of appellants.
Jul 12 2006Permission to file amicus curiae brief granted
  The application of California Farm Bureau Federation, Agricultural Council of California, California Citrus Mutual, California Grape and Tree Fruit League, Grower-Shipper Association of Central California, Imperial Valley Vegetable Growers Association, Nisei Farmers League, Ventura County Agricultural Association, Western Growers Association and Wine Institute for permission to file an amici curiae brief in support of respondents is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Jul 12 2006Amicus curiae brief filed
  California Farm Bureau Federation et al., in support of respondents.
Jul 13 2006Received application to file Amicus Curiae Brief
  and brief of California Labor Federation, AFL-CIO, in support of appellants.
Jul 13 2006Received application to file Amicus Curiae Brief
  and brief of Centro Legal de La Raza, Golden Gate University Women's Employment Rights Clinic, The Kathrine & George Alexander Community Law Center, The Legal Aid Foundation of Los Angeles, The Legal Aid Society of San Francisco - Employment Law Center, and Neighborhood Legal Services of Los Angeles County in support of appellants.
Jul 18 2006Permission to file amicus curiae brief granted
  The application of California Labor Federation, AFL-CIO for permission to file an amicus curiae brief in support of appellants is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Jul 18 2006Amicus curiae brief filed
  California Labor Federation, AFL-CIO in support of appellants.
Jul 18 2006Permission to file amicus curiae brief granted
  The application of Centro Legal de La Raza, Golden Gate University Women's Employment Rights Clinic, The Katharine & George Alexander Community Law Center, the Legal Aid Foundation of Los Angeles, The Legal Aid Society of San Francisco  Employment Law Center, and Neighborhood Legal Services of Los Angeles County for permission to file an amici curiae brief in support of appellants is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Jul 18 2006Amicus curiae brief filed
  Centro Legal de La Raza et al.
Aug 1 2006Response to amicus curiae brief filed
  Respondent's (Apio, Inc.) to (1) Brief of California Labor Federation, (2) Brief of Farmworker Justice, The National Employment Law Project and the United Far Workers, and (3) Brief of Centro Legal De La Raza, Golden Gate University Women's Employment Rights Clinic, The Katharine & George Alexander Community Law Center, The legal Aid Foundation of Los Angeles, The Legal Aid Society of San Francisco - Employment Law Center, and Neighborhood Legal Services of Los Angeles County.
Aug 1 2006Response to amicus curiae brief filed
  Respondents' [Corky N. Combs, Larry D. Combs dba Combs Districution Co. and Juan Ruiz] to separate amicus curiae briefs of Centro Legal De La Raza et al. and of California Labor Federation, AFL-CIO. by Terrence R. O'Connor, Noland Hamerly Etienne & Hoss.
Aug 2 2006Response to amicus curiae brief filed
  Appellants' Answer to Amici in Support of Responents (Calif Farm Bureau Federation et al.) (CRC 40.1(b))
Aug 7 2006Received:
  Erratum to Respondents' Answer to Amicus Curiae Briefs in support of Appellants by Terrence R. O'Connor of Noland, Hamerly et al.
Aug 7 2006Received:
  Respondents' (Corky Munos et al) Supplemental Proof of Service for Respondent's Answer to Amicus Curiae Briefs in Support of Appellants.
Jul 16 2008Received:
  Letter dated July 15, 2008 from William G. Hoerger, lead counsel for Appellants (Martinez et al.) requesting the court not to set oral argument during the period of September 25 through Nov. 7, 2008. He and wife have purchased non-refundable airline tickets for a trip departing 9/25/2008 and returning Nov. 7, 2008
May 21 2009Change of contact information filed for:
  Mark Talamantes of Talamantes Villegas Carrerra, LLP, counsel for appellants, effective immediately, and noted herein.
Feb 3 2010Case ordered on calendar
  to be argued Tuesday, March 2, 2010, at 9:00 a.m., in San Francisco
Feb 16 2010Received:
  Letter from William G. Hoerger, counsel for appellants, inquiring re party attendance at oral argument.
Feb 19 2010Filed:
  Letter from Terrence R. O'Connor, counsel for respondents Combs et al., requesting to share oral argument time equall with respondent Apio, Inc.
Feb 22 2010Supplemental brief filed
Defendant and Respondent: Apio, Inc.Attorney: Effie Florence Anastassiou   Respondent Apio Inc.'s LIST OF ADDITIONAL AUTHORITIES.
Feb 22 2010Supplemental brief filed
Defendant and Respondent: Combs, Corky N.Attorney: Terrence R. O'Connor Defendant and Respondent: Combs, Larry D.Attorney: Terrence R. O'Connor   LIST OF ADDITIONAL AUTHORITIES
Feb 23 2010Order filed
  The request of counsel for respondents in the above-referenced cause to allow two counsel to argue on behalf of respondents at oral argument is hereby granted. The request of respondents to allocate to respondents Combs et al. 15 minutes and respondent Apio, Inc. 15 minutes of respondents' 30-minute allotted time for oral argument is granted.
Feb 25 2010Note: Mail returned and re-sent
  to Virginia Elizabeth Ruiz at her address appearing on the State Bar's website, and noted herein.
Mar 1 2010Request for judicial notice granted
  Plaintiffs' and Appellants' "Request for Judicial Notice," filed on February 14, 2006, is granted as to exhibits 1, 6 and 8, and denied as to exhibits 2-5 and 7. Plaintiffs' and Appellants' "Second Request for Judicial Notice," filed on June 13, 2006, is granted as to exhibit 17, and denied as to exhibits 9-16.
Mar 2 2010Cause argued and submitted
 
May 18 2010Notice of forthcoming opinion posted
  To be filed Thursday, May 20, 2010 @ 10 a.m.

Briefs
Jan 20 2006Opening brief on the merits filed
 
Apr 17 2006Answer brief on the merits filed
 
Apr 18 2006Answer brief on the merits filed
 
Jun 13 2006Reply brief filed (case fully briefed)
 
Jul 12 2006Amicus curiae brief filed
 
Jul 12 2006Amicus curiae brief filed
 
Jul 18 2006Amicus curiae brief filed
 
Jul 18 2006Amicus curiae brief filed
 
Aug 1 2006Response to amicus curiae brief filed
 
Aug 1 2006Response to amicus curiae brief filed
 
Aug 2 2006Response to amicus curiae brief filed
 
Brief Downloads
application/pdf icon
appellants_petition_for_review.pdf (2595866 bytes) - Appellants' Petition for Review
application/pdf icon
respondent_apio_inc_answer_brief_on_the_merits.pdf (3422899 bytes) - Respondent, APIO, INC., Answer Brief on the Merits
application/pdf icon
appellants_opening_brief_on_the_merits.pdf (7918218 bytes) - Appellants' Opening Brief on the Merits
application/pdf icon
respondents_corky_n_combs_et_al_answer_brief_on_the_merits.pdf (2109551 bytes) - Respondents, Corky N. Combs et al., Answer Brief on the Merits
application/pdf icon
respondent_apio_inc_answer_to_petition_for_review.pdf (788796 bytes) - Respondent, APIO, INC., Answer to Petition for Review
application/pdf icon
appellants_reply_brief_on_the_merits.pdf (1470316 bytes) - Appellants' Reply Brief on the Merits
If you'd like to submit a brief document to be included for this opinion, please submit an e-mail to the SCOCAL website
May 28, 2010
Annotated by gosnell

FACTS:
The plaintiffs are seasonal agriculture workers who were employed during the 2000 strawberry farming season by Munoz & Sons (Munoz). According to his contract with one produce merchant, Munoz retained the sole responsibility for the “selection, hiring, firing, supervision, assignment, direction, setting of wages, hours, and working conditions” of his employees (as per his contract with produce merchant Apio). In the spring of 2000, Munoz began having problems paying his workers, which led to a work stoppage by the end of the May. Munoz filed for bankruptcy without paying the workers’ wages.

Plaintiffs filed suit against Munoz, as well as two produce merchants (Apio and Combs) through whom Munoz sold strawberries. Munoz was granted a discharge from these proceedings in bankruptcy. While the exert above demonstrates that Munoz retained direct control of employees, the produce merchants had representatives in the strawberry fields determining the quality of the produce as well as providing instructions for packing.

Thus, plaintiffs claim that Apio and Combs exercised control over the working conditions of Munoz’s employees. Specifically, they contend that defendants are their employers under the Industrial Welfare Commission’s (IWC) wage order No. 14-2001, “Order Regulating Wages, Hours, and Working Conditions in the Agricultural Operations.” Plaintiffs claims include unpaid minimum wages, liquidated damages for unpaid minimum wages, unpaid contract wages, waiting time penalties, penalties for failure to provide wage statement, and breach of contract. They also alleged claims under the Unfair Competition Law for restitution and damages.

PROCEDURAL POSTURE:

Plaintiffs filed the present action on November 21, 2000; defendants moved for summary judgment. The superior court granted judgment for the defendants, which the plaintiffs appealed. The Court of Appeal affirmed in part, and reversed in part. The Supreme Court of California granted plaintiffs’ petition for review, and deferred further action pending consideration of a related issue in Reynolds v. Bement, 36 Cal. 4th 1075.

ISSUE:

How should employment be defined for the purposes of determining employer liability in actions brought under §1194?

HOLDING:
The Court affirmed the holding of the lower courts, which rejected Plaintiffs’ claim that defendants were their employers for the purposes of §1194. The Court finds no basis for concluding that defendants exercised control over plaintiff’s wages and hours, and affirms the judgment of the Court of Appeals, granting defendants’ request for summary judgment.

REASONING:
The Court first established that an employee has a cause of action under §1194 for unpaid minimum wages, and clarified that only an employer can be liable. Once this foundation was established, the Court set about establishing how employment should be defined in actions brought under §1194. This section of the California Labor Code was enacted in 1913 as part of an act that created the Industrial Welfare Commission (IWC) and delegated it the power to fix minimum wages, maximum hours, and standard conditions of labor. Yet, the Court had never considered the meaning or scope of the IWC terms “employ” and “employer.”

The Court relied upon legislative intent to define the employment relationship, and thus identify persons liable as employers under §1194. The Court finds that an “examination of the wage orders’ language, history and place in the context of California wage law, moreover, makes clear that those orders do not incorporate the federal definition of employment.” The Court adopted the IWC's three alternative definitions for “to employ.” Specifically, it held that “[to employ] means: (a) to exercise control over the wages, hours or working conditions, or (b) to suffer or permit to work, or (c) to engage, thereby creating a common law employment relationship” (Emphasis original). The defendants met none of these alternative definitions.

TAGS: employer definition, wage and hour, suffer or permit, to employ, scope of liability, wage payment

Annotation By: Stephenie Gosnell