Key Decisions

June 2012 – Employer’s Liability For Deduction Of Sums

(filed under: | June 16, 2012)

An Employer’s Liability For Deducting Sums It Had Previously Erroneously Paid To An Employee From That Employee’s Wages Was Not Preempted By Federal Law

Sciborski v. Pacific Bell Directory
(Cal. Ct. of App., 4th Dist.), filed May 8, 2012 

KEY FACTS

Anne Sciborski worked for Pacific Bell selling advertising in its phone directories. She was a member of the International Brotherhood of Electrical Workers, AFL-CIO Local Union 2139 (Union), and the terms and conditions of her employment were governed by the collective bargaining agreement (CBA) between Pacific Bell and the Union.

Pursuant to the CBA, Sciborski received a basic weekly salary and a commission on completed sales. The CBA sets forth detailed rules governing commissions, including that “commissions are earned by employees only when the final commission rate and contract price applicable to a sale are determined by the Company, and all of the conditions to earn commissions have been satisfied.” The CBA further provides that “[u]ntil the commissions are earned, any commission payments made to employees . . . are advances to be applied against employees’ future earned commissions.”

Sciborski was assigned to a business customer, Expert Home Services. Expert Home Services purchased substantial advertising. All of the conditions for Sciborski to receive a commission on the sale were satisfied and she received a commission of $36,000.

Sometime after Sciborski received the commission, the union complained on behalf of its other members that Sciborski should not have been given the Expert Home Services account in the first instance. As a result, Pacific Bell concluded that Sciborski was not entitled to the commission and it started reimbursing itself out of Sciborski’s wages.

To prevent Pacific Bell from continuing to deduct money from her wages, Sciborski quit. She then sued. Among other things, she alleged Pacific Bell violated Labor Code section 221, which generally prohibits an employer from deducting earned amounts from an employee’s wages.

Pacific Bell did not dispute that Sciborski had fully satisfied all conditions to earning a commission on the Expert Home Services sale. Pacific Bell also agreed that if Sciborski had been properly assigned to the account, she would have been entitled to the full $36,000 commission. However, Pacific Bell argued that Sciborski never “earned” the commission because there was a clerical computer error and the account should not have been assigned to her in the first place. Pacific Bell acknowledged that it was responsible for the improper assignment.

The jury found in favor of Sciborski and awarded her the amount that Pacific Bell had deducted from her salary. The trial court then awarded her attorney’s fees.

HOLDING & REASONING

The Court of Appeal affirmed.

The court first addressed Pacific Bell’s argument that Sciborski’s claims were not preempted by federal law. If Sciborski’s claims arose under the CBA, then they were preempted by federal law. If they arose under state law, they would still be preempted if application of state law required the court to interpret the CBA.

The court found that Sciborski’s claims arose under state law because state law prohibited an employer from deducting money from earned wages. It also found that there was no need to interpret the CBA as it was plain and clear about when a commission was earned and there was no question that the evidence established that the commission was earned and was not simply an advance against a potentially earned commission.

The fact that Pacific Bell made an error when it assigned the Expert Home Services account to Sciborski did not negate the fact that all of the conditions to her entitlement to the commission had been satisfied. Thus, Pacific Bell’s payment was not an advance and it did not have the right to deduct it from her earnings.

In addition to holding that Sciborski’s claims were not preempted, the court held that the trial court did not abuse its discretion in awarding attorney’s fees. As a prevailing plaintiff, Sciborski was entitled to reasonable fees. The trial court awarded fees based on Sciborski’s attorney’s hourly rate multiplied by the hours expended. Although the trial court could have increased the fees by a “loadstar” amount, it was not obligated to do so if it concluded that such an increase was not warranted. Likewise, although it could have found either the hourly rate was high or the number of hours worked was excessive, the trial court was not obligated to do so.

ANALYSIS

The court obviously did not accept Pacific Bell’s attempt to treat the commissions as a gift. If this was an hourly employee who had been assigned to “the wrong job,” no right thinking employer would try to take those wages back.