Why it matters

The Ninth Circuit Court of Appeals affirmed summary judgment in favor of Costco Wholesale Corporation in a suit brought by a former employee alleging the company’s wage statements violated California state law. Costco’s pay statements did not list her total hours worked and the separate hourly rates for vacation pay and vacation pay at the overtime rate, Loretta Apodaca claimed in her putative class action. Costco countered that the statements complied with the law because they listed the total hours worked with the corresponding hourly rates and that any violation of the statute was not “knowing and intentional.” A district court judge sided with the employer and the federal appellate panel affirmed. Costco listed the total hours worked, the court said, and the lack of vacation pay challenged by the plaintiff “does not reflect ‘total hours worked,’ but instead represents paid time off.” Because the employer complied with the “plain and commonsense meaning” of the statute, it was entitled to summary judgment, the court held.

Detailed discussion

Loretta Apodaca filed a putative class action against her former employer, Costco Wholesale Corporation, alleging that the company violated California Labor Code section 226 by providing inaccurate wage statements. Costco failed to list on the wage statement the total hours and the separate hourly rates for vacation pay and vacation pay at the overtime rate (or float overtime) on the line labeled “vacation pay/nonexempt salaried vacation or float overtime,” she told the court.

Costco moved for summary judgment on the claim, arguing that its wage statements complied with section 226 of the Labor Code because they stated the total hours worked by the employee along with corresponding hourly rates. In addition, Apodaca failed to prove she was injured pursuant to section 226(e) because any alleged violation of the law was not “knowing and intentional,” the national retailer added.

A district court judge agreed with Costco and granted summary judgment in the employer’s favor. Apodaca appealed and, in an unpublished memorandum, the Ninth Circuit Court of Appeals affirmed.

To establish a section 226 claim, a plaintiff must demonstrate both a violation of subsection 226(a) and an injury under subsection 226(e), the panel noted. While the trial court found Apodaca failed with regard to her 226(e) obligation, the Ninth Circuit said Costco’s wage statements satisfied 226(a) and never considered the injury prong.

“The Labor Code provisions at issue require that the employer provide an accurate itemized wage statement listing ‘total hours worked by the employee,’ and ‘all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee,’” the court wrote. “The district court correctly concluded that the line at issue, ‘vacation pay/nonexempt salaried vacation or float overtime,’ does not reflect ‘total hours worked,’ but instead represents paid [time off]. Here, in the line ‘vacation pay/nonexempt salaried vacation or float overtime,’ Costco included additional information not required by statute, i.e., information regarding paid vacation, and therefore did not violate section 226(a).”

Costco’s wage statements satisfy the Labor Code requirements because they list the total hours worked and the corresponding hourly rates, the panel said. “It is undisputed that the total hours worked can be calculated based on the wage statement [alone] by adding the ‘REGULAR PAY’ hours to the ‘OVERTIME’ hours,’” the court explained. “It is also undisputed that the applicable hourly rate for these worked hours can be calculated based on the wage statement [alone] by dividing the amount paid by the hours worked.”

“Because the hours worked and hourly rate can be ‘promptly and easily determine[d] from the wage statement alone,’” the Ninth Circuit affirmed summary judgment for the employer.

To read the memorandum in Apodaca v. Costco Wholesale Corp., click here.