Deleon v. Verizon Wireless, LLC, 2012 WL 2765812 (Cal. Ct. App. 2012)

Verizon’s sales representatives received commissions on the sale of cell phone service, which were not earned until the expiration of a chargeback period during which the customer could cancel the service. Although Verizon advanced commission payments to its employees, the plan stated: “Your commission is not earned and the sale does not ‘vest’ until your customer satisfies his or her contract during the applicable chargeback period.” If a customer disconnected service during the chargeback period, the employee’s future commission advances would be reduced by the amount previously advanced. In this class action lawsuit, Deleon alleged violations of the Private Attorneys General Act (“PAGA”) on various grounds including that the chargebacks constitute a “secret underpayment of wages.” The trial court granted summary judgment to Verizon, and the Court of Appeal affirmed, holding that the commission payments are advances and not wages until the specified conditions have been satisfied. See also Sotelo v. MediaNews Group, Inc., 2012 WL 1955054 (Cal. Ct. App. 2012) (trial court properly denied class certification to workers who fold, bag and deliver newspapers and their managers all of whom were allegedly misclassified as independent contractors); People ex rel. Harris v. Sunset Car Wash, LLC, 205 Cal. App. 4th 1433 (2012) (liability was properly determined against successor car wash employer).