Morillion v. Royal Packing Co.

94 Cal.Rptr.2d 3

22 Cal.4th 575

995 P.2d 139

Jose M. MORILLION et al., Plaintiffs and Appellants, v. ROYAL PACKING COMPANY, Defendant and Respondent.

No. S073725.

Supreme Court of California.

March 27, 2000.

As Modified May 10, 2000.

Van Bourg, Weinberg, Roger & Rosenfeld, David A. Rosenfeld and Amy D. Martin, Oakland, for Plaintiffs and Appellants.

Miles E. Locker, San Francisco, and William A. Reich, Ventura, for California Labor Commissioner as Amicus Curiae on behalf of Plaintiffs and Appellants.

Cynthia L. Rice, Santa Rosa, for Antonio Madrigal as Amicus Curiae on behalf of Plaintiffs and Appellants.

Saperstein, Goldstein, Demchak & Bailer, David Borgen, Aaron Kaufmann and Laura L. Ho, Oakland, for Asian Law Caucus, Inc., East San Jose Community Law Center, Employment Law Center — A Project of the Legal Aid Society of San Francisco, La Raza Centro Legal, Inc., and Women's Employment Rights Clinic — Golden Gate University School of Law as Amici Curiae on behalf of Plaintiffs and Appellants.

Marcos Camacho, Keene; Altshuler, Berzon, Nussbaum, Berzon & Rubin, Stephen P. Berzon and Scott A. Kronland, San Francisco, for the United Farm Workers of America, AFL-CIO as Amicus Curiae on behalf of Plaintiffs and Appellants.

Rynn & Janowsky, Lewis P. Janowsky, Newport Beach, and Bart M. Botta, for Defendant and Respondent.

Nancy N. McDonough, Sacramento, and Carl G. Borden, for California Farm Bureau Federation as Amicus Curiae on behalf of Defendant and Respondent. James W. Bogart, for Grower-Shipper Vegetable Association of Central California as Amicus Curiae on behalf of Defendant and Respondent.

Sheppard, Muffin, Richter & Hampton, Richard J. Simmons, Los Angeles, and Jason R. Gasper, for the Employers Group as Amicus Curiae on behalf of Defendant and Respondent.

CHIN, J.

The general question presented in this case is whether an employer that requires its employees to travel to a work site on its buses must compensate the employees for their time spent traveling on those buses. Specifically, we must decide whether the time agricultural employees spend traveling to and from the fields on employer-provided buses is compensable as "hours worked" under Industrial Welfare Commission wage order No. 14-80 (Wage Order No. 14-80; found at Cal.Code Regs., tit. 8, § 11140). Wage Order No. 14-80 defines "hours worked" as "the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so." (Cal.Code Regs., tit. 8, § 11140, subd. 2(G); hereafter, all undesignated subdivision references are to subdivisions of section 11140 of title 8.)

Contrary to the Court of Appeal, we conclude the time agricultural employees are required to spend traveling on their employer's buses is compensable under Wage Order No. 14-80 because they are "subject to the control of an employer" and do not also have to be "suffered or permitted to work" during this travel period. (Subd. 2(G).) Thus, we reverse the Court of Appeal's judgment and remand the matter to the Court of Appeal for further proceedings consistent with this opinion.

I. Factual and Procedural Background

This appeal is taken from a judgment of dismissal entered after the trial court sustained defendant's demurrer without leave to amend. Under well-settled law, therefore, we take as true all properly pleaded material allegations. (Preferred Risk Mutual Ins. Co. v. Reiswig (1999) 21 Cal.4th 208, 212, 87 Cal.Rptr.2d 187, 980 P.2d 895.)

Defendant Royal Packing Company (Royal) is a corporation doing business in Monterey County. Plaintiffs Jose M. Morillion and the class members he represents (collectively, plaintiffs) are present and past agricultural employees of Royal. Royal required plaintiffs to meet for work each day at specified parking lots or assembly areas. After plaintiffs met at these departure points, Royal transported them, in buses that Royal provided and paid for, to the fields where plaintiffs actually worked. At the end of each day, Royal transported plaintiffs back to the departure points on its buses. Royal's work rules prohibited employees from using their own transportation to get to and from the fields.¹

In their class action against Royal for, inter alia, California Labor Code violations, unfair business practices, and breach of contract, plaintiffs alleged that they were entitled to compensation (including overtime wages and penalties) for the time they spent traveling to and from the fields. Specifically, plaintiffs claimed Royal should have paid them for the time they spent (1) assembling at the departure points; (2) riding the bus to the fields; (3) waiting for the bus at the end of the day; and (4) riding the bus back to the departure points.²

Royal demurred to and moved to strike plaintiffs' first amended complaint. The trial court sustained Royal's demurrer without leave to amend, granted its motion to strike, and dismissed plaintiffs' first amended complaint with prejudice.

Plaintiffs appealed. After concluding that the time plaintiffs spent traveling on Royal's buses is not compensable under federal authority, the Court of Appeal turned its focus to interpreting Wage Order No. 14-80. Relying on Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 576, 59 Cal.Rptr.2d 186, 927 P.2d 296 (Tidewater), the Court of Appeal first ruled it could give no weight to the interpretation of "hours worked" contained in the Division of Labor Standards Enforcement's (DLSE) 1989 Operations and Procedures Manual.³ The Court of Appeal concluded the DLSE interpretive policy was a regulation and thus void because it was not adopted in accordance with the Administrative Procedure Act (APA; Gov. Code, § 11340 et seq.). However, the Court of Appeal recognized that although the DLSE interpretation of "hours worked" is void, the underlying wage order is not. Thus, the Court of Appeal proceeded to interpret Wage Order No. 14-80 itself.

Although plaintiffs were required to travel on Royal's buses and thus were arguably "subject to the control of an employer" (subd. 2(G)), the Court of Appeal did not find this determination dispositive. Instead, to determine whether the time plaintiffs spent traveling on Royal's buses should be considered "hours worked" under Wage Order No. 14-80, the Court of Appeal emphasized the second clause of the "hours worked" definition: "all the time the employee is suffered or permitted to work...." (Subd. 2(G).) This clause, the Court of Appeal concluded, limited whether the time was compensable. In affirming the trial court's judgment, the Court of Appeal held the time plaintiffs spent traveling was not compensable as "hours worked" under Wage Order No. 14-80 because plaintiffs did not work, as that term is "commonly understood," during the required transport.

We granted plaintiffs' petition for review to determine the correct interpretation of "hours worked" under Wage Order No. 14-80, and to determine whether the Court of Appeal correctly applied our decision in Tidewater, supra, 14 Cal.4th 557, 59 Cal. Rptr.2d 186, 927 P.2d 296.

II. Discussion

The Industrial Welfare Commission (IWC) "is the state agency empowered to formulate regulations (known as wage orders) governing employment in the State of California." (Tidewater, supra, 14 Cal.4th at p. 561,59 Cal.Rptr.2d 186,927 P.2d 296, citing Lab.Code, §§ 1173, 1178.5, 1182.) The DLSE "is the state agency empowered to enforce California's labor laws, including IWC wage orders." (Tidewater, supra, 14 Cal.4th at pp. 561-562,59 Cal.Rptr.2d 186,927 P.2d 296, citing Lab. Code, §§ 21, 61, 95, 98-98.7,1193.5.)

"IWC has promulgated 15 [industry and occupation wage] orders—12 orders cover specific industries and 3 orders cover occupations—and 1 general minimum wage order which applies to all California employers and employees (excluding public employees and outside salesmen). [Citations.]" (Monzon v. Schaefer Ambulance Service, Inc. (1990) 224 Cal.App.3d 16, 29, 273 Cal.Rptr. 615 (Monzon).) Wage Order No. 14-80 governs all persons "employed in an agricultural occupation," as defined in the wage order, subject to exceptions not applicable here. (Cal.Code Regs., tit. 8, § 11140, subd. 1; see id., subd. 1(A), (B), (D), (E).) All 15 wage orders contain the same definition of "hours worked" as does Wage Order No. 14-80, except for IWC wage order Nos. 4-89 and 5-89, which include additional language. (Cal.Code Regs., tit. 8, §§ 11040, subd. 2(H), 11050, subd. 2(H).)

A. Wage Order No. 14-80

Both sides argue the import and application of our decision in Tidewater with respect to the interpretation of "hours worked" in the DLSE's 1989 Operations and Procedures Manual. In Tidewater, we determined that the DLSE interpretative policies contained in its manual were regulations. As regulations, the interpretive policies were void because they were not promulgated in accordance with the APA. (Tidewater, supra, 14 Cal.4th at p. 572, 59 Cal.Rptr.2d 186, 927 P.2d 296.) However, we held that although the interpretative policy at issue was void, the underlying wage order, which is not subject to the APA, was not. (Id. at pp. 569, 577, 59 Cal.Rptr.2d 186, 927 P.2d 296.) "Courts must enforce those wage orders just as they would if the DLSE had never adopted its policy." (Id. at p. 577, 59 Cal.Rptr.2d 186, 927 P.2d 296.)

Royal contends that the Court of Appeal correctly gave no deference to the DLSE interpretation of "hours worked" because this interpretive policy was a void regulation under Tidewater, supra, 14 Cal.4th at page 576, 59 Cal.Rptr.2d 186, 927 P.2d 296. On the other hand, plaintiffs argue the Court of Appeal nonetheless should have given some deference to this interpretation because it is long-standing. We have repeatedly rejected plaintiffs' argument. (Tidewater, supra, 14 Cal.4th at p. 576, 59 Cal.Rptr.2d 186, 927 P.2d 296, citing Armistead v. State Personnel Board (1978)...