United States: Silver Lining In A California Wage And Hour Cloud

Seyfarth Synopsis: Employers adopting an Alternative Workweek Schedule (AWS) must follow the specific rules in the applicable wage order or face liability for unpaid overtime. But employees cannot recover penalties for accurate wage statements, even if the statements do not record unpaid wages that are due. Maldonado v. Epsilon Plastics, Inc.

Legal Background

California Labor Code section 511 provides that an employer may adopt an AWS only if two-thirds of the affected employees approve the AWS in a secret vote. Specific AWS requirements appear in the applicable wage orders.

Wage Order 1, for the manufacturing industry, permits adoption of an AWS only upon satisfying these requirements: (1) the employer proposes an AWS in writing, (2) two-thirds of the affected employees vote to adopt the proposed AWS, in a secret ballot conducted during regular working hours at the work site, (3) the employer has made a written disclosure regarding the effects of the proposed arrangement on wages, hours, and benefits, and has held at least one meeting at least 14 days before the vote, (4) the results of the election have been timely reported to the Division of Labor Statistics and Research, (5) employees have not been required to work the new hours for at least 30 days after election results were announced, and (6) the employer has not coerced any employee’s vote.

Labor Code section 226, meanwhile, requires that employers issue wage statements for each pay period that accurately record such things as the wages earned, the number of hours the employee has worked, and the pay rate assigned to each hour of work.

The Facts

Olvin Maldonado operated a production machine for Epsilon Plastics, Inc., manufacturing plastic bags. Maldonado worked under an AWS by which employees worked 12-hour shifts that paid them at their regular rate for their first 10 hours of work and at an overtime rate for the next two hours.

Maldonado sued Epsilon on behalf of a class of production employees, claiming unpaid daily overtime wages for the time worked after eight hours. The lawsuit involved four periods in which Epsilon’s plant operated on an AWS.

The first period began in April 2007. The AWS then in effect had been in place since Epsilon acquired the plant from Apple Plastics in 2002. The trial court found no evidence that Apple had met the AWS requirements of a written disclosure, a meeting, a vote, a 30-day waiting period, or a report to the state. In January 2008, Epsilon conducted a revote to confirm the employees’ agreement to the AWS. There was a secret ballot, preceded by a written memo, but there was no evidence of a pre-vote meeting. In addition, a supervisor voted even though he was salaried exempt, and thus was not an employee subject to the AWS.

The second period ran for about a month in 2009. As to this period, Epsilon’s HR administrator prepared a memo stating that the plant would be moving to a 12-hour shift and would be “conducting this election” to get “employee input.” The memo continued: “Below please indicate if you agree with the twelve hour shift schedule or if you disagree with it.” The memo explained the terms of the AWS, but failed to specify that without adoption of the AWS, overtime pay on the 12-hour shift would begin after the first eight hours. The HR administrator met with each shift of employees, but not until the same day they voted for the AWS. There was evidence that employees were coerced into voting yes, and the AWS went into effect six days after the vote.

The third period covered two weeks in 2010, but Epsilon did not conduct a vote for this period.

The plant returned to an AWS for a fourth, two-year period between 2011 and 2013. A vote was conducted eight days after this AWS took effect.

The trial court concluded that, as to all four periods, the AWS had not been adopted in accordance with the applicable wage order. The court awarded unpaid overtime, interest, penalties for untimely termination pay and inaccurate wage statement penalties, and attorney’s fees. As to the wage statements, the trial court awarded penalties. The court found that the statements were inaccurate because whenever the plant was on the AWS the wage statements did not properly indicate the ninth and tenth hours were overtime hours. The trial court further concluded the employees had suffered injury from this violation because they were not paid all of the overtime wages they were due.

Epsilon appealed.

The Court of Appeal’s Decision

The Court of Appeal rejected Epsilon’s argument that Maldonado had failed to prove that Epsilon’s predecessor, Apple, had failed to comply with AWS requirements. It was Epsilon—not Maldonado—who had the burden of proof as to whether Apple had complied. Epsilon failed to meet its burden as to the initial period of the AWS, as well as to the later periods.

The Court of Appeal agreed with Epsilon, however, about the wage statements. The wage statements did correctly recorded the hours actually worked and the pay actually received. That was good enough. There was no further requirement that the wage statement show what the employees should have been paid.

The Court of Appeal reasoned that if failure to pay overtime wages at the appropriate rate generates an injury that justifies penalties for an inadequate wage statement, then there would be an apparent unintentional double recovery. The Court of Appeal concluded that while the invalid AWS mandated that the employees receive unpaid overtime wages, interest, and attorney’s fees, that violation did not mandate an award of penalties for wage statements that accurately recorded the hours worked and the pay received.

What Maldonado Means for Employers

Wage order procedures for an AWS must be followed to a “T” to avoid liability for overtime wages. A company purchasing a company already using an AWS should look for evidence that the AWS was properly adopted; a successor company cannot assume that its predecessor correctly followed all the prescribed procedures.

The silver lining of this decision is the commonsense approach the Court of Appeal took as to the wage statements. Wage statements need only record what employees actually got paid, not what they should have been paid.

Among the implications of this ruling would be that employers should not be liable for wage statements that fail to record premium pay employees should have received during a pay period in which the employer failed to provide a meal or rest break. First, as Maldonado clearly implies, recording pay employees should have received is not the function of a wage statement. Second, of course (and this is an issue Maldonado does not reach), money paid to compensate for breaks is, properly understood, not wages earned. The harshness of the Maldonado ruling on AWS issues as to Labor Code section 511 is thus counterbalanced by a sensible reading of Section 226.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions