Kao v. Joy Holiday, 2017 WL 2590653 (Cal. Ct. App. 2017)

Ming-Hsiang Kao was employed by Joy Holiday (a travel tour company) initially performing IT-related duties and then eventually as its office manager. While he was still in Taiwan, Kao worked with Jessy Lin (one of the owners of Joy Holiday) as a tour organizer. Kao later arrived in California on a tourist visa and moved into the home of Lin and her husband Harry Chen. (Kao was paid a salary of $1,700 per month, representing a gross amount of $2,500 less an $800 rent deduction.) After he received an H-1B visa, Kao was put on the company payroll and worked as the “office manager” of Joy Holiday where he booked hotels and coordinated bus tours. The trial court determined that Kao worked roughly 50 hours per week. Kao was later demoted to “non-manager status,” moved into his own apartment and eventually was terminated after working for Joy Holiday for approximately two years. Kao filed suit for breach of contract and violation of various wage/hour statutes. Defendants contended that Kao was not an employee while he was awaiting his H-1B visa and, thereafter, he was an administrative exempt employee. Although the trial court rejected Kao’s statutory wage claims, the Court of Appeal reversed, holding that Kao was an employee (not a non-employee trainee or intern) before he received the visa and, thereafter, he was not paid a sufficient salary to be classified as an exempt administrative employee – the offsets for rent were not part of Kao’s salary. Accordingly, the Court held that Kao is entitled to unpaid wages and overtime, penalties for Joy Holiday’s failure to provide itemized wage statements and waiting-time penalties.