Lea Liday v. Peter Sim

When determining a claim for unpaid minimum wages,

does the court presume that a fixed salary paid to a live-in

domestic worker—who is exempt from overtime but subject to

minimum wage laws—covers only the regular, nonovertime work

hours mandated for nonexempt workers? Or, does the court

determine the worker’s unpaid minimum wages by calculating

the difference between the total number of hours she worked at

the prevailing minimum wage rate and the amount she received

through her salary? That is the question this wage-and-hour

appeal poses.

Lea Liday sued her former employers, appellants, for

unpaid wages incurred from April 2010 to April 2014. Liday

worked for appellants as their children’s live-in caretaker for

a fixed salary of $3,000 per month. After a bench trial, the trial

court found Liday was a “personal attendant” under Wage Order

No. 15, 2001 (Cal. Code Regs., tit. 8, § 11150 (Wage Order 15)).

It also found Liday’s salary did not compensate her at the

statutory minimum wage for all the hours it found she had

worked. Appellants do not contest the trial court’s finding that

Liday worked more hours than they had argued at trial, but

they do challenge the propriety of the formula the court used to

determine Liday’s unpaid minimum wages due from April 2010

through December 2013.

Before 2014, live-in domestic workers classified as

“personal attendants” were exempt from California’s overtime

requirements but were entitled to be paid at least the minimum

wage for all hours worked. The Legislature passed the Domestic

Workers Bill of Rights (DWBR) to provide personal attendants

with overtime protection beginning January 1, 2014. Under that

law, personal attendants cannot work more than nine hours per

day or more than 45 hours per week unless paid one and one-half

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times their regular rate of pay for all hours worked in excess of

those limits. (Lab. Code, § 1454.)1

The DWBR applied only to the last three months of Liday’s

employment. The trial court acknowledged Liday was exempt

from overtime requirements for the period from 2010 through

2013. But, to calculate her unpaid minimum wages for that

period, the court presumed Liday’s salary compensated her for

a regular, nonovertime 45-hour workweek—the number of hours

above which overtime is due under the 2014 law. It calculated

Liday’s regular, hourly rate to be $15.38 by dividing her averaged

weekly salary by 45 hours and concluded appellants owed Liday

minimum wages at that rate for the hours she worked in excess

of 45 per week.

Appellants argue the trial court erred when it presumed a

45-hour workweek to make this calculation because Liday was

exempt from overtime. They assert the court should have divided

Liday’s salary by the $8 per hour statutory minimum wage to

determine how many hours Liday’s salary had covered and then

ordered appellants to pay Liday for any uncompensated hours

at $8 per hour. The difference is significant. Using the $15.38

per hour rate at a presumed 45 hours per week, the court found

appellants owed Liday $265,720.26 in unpaid wages earned

before 2014. Applying the minimum wage rate of $8 per hour to

each hour the court found Liday worked, the amount drops to

under $75,000.

Because personal attendants were exempt from overtime

requirements before 2014, we conclude California law in effect at

the time did not limit the number of hours a personal attendant’s

1 All statutory references are to the Labor Code unless

indicated otherwise.

4

salary could cover, except to require that it pay at least the

minimum wage of $8 per hour for each hour worked. As the

parties do not dispute the trial court’s finding that they did not

agree to an hourly rate, and nothing in the record demonstrates

they agreed Liday would work a set number of hours per week,

the court erred when it presumed Liday’s monthly salary

compensated her for only 45 hours of work per week. We thus

reverse the judgment and remand to the trial court to recalculate

the unpaid wages appellants owe Liday for work she performed

from April 2010 through December 2013 applying an $8 per hour

rate of pay for each hour she worked.

FACTS AND PROCEDURAL BACKGROUND

Liday was a live-in personal attendant for the two autistic

sons of appellants Peter Sim, M.D., and Loraine Diego, M.D.,

from December 2002 until April 2014. Liday quit in April 2014

and sued appellants for failure to pay overtime, failure to pay

wages for all hours worked in violation of the minimum wage

law, waiting time penalties, unfair competition, and civil

penalties under the Labor Code Private Attorney General Act

(PAGA). After a bench trial, the court found in Liday’s favor

on all causes of action except her PAGA claim and found the

relevant claims period to be April 2010 to April 2014.2

Appellants requested a statement of decision, and the court

heard argument on the proposed statement on February 6, 2017.

2 Liday’s claims for violating the Labor Code were subject

to a three-year statute of limitations, but her unfair competition

claim extended to the period four years before she filed her

action. (Code Civ. Proc., § 338, subd. (a); Bus. & Prof. Code,

§ 17208.) Accordingly, Liday could recover unpaid wages from

April 2010 as restitution under her unfair competition claim.

For simplicity, we do not differentiate between Liday’s recovery

of unpaid wages versus restitution.

5

On March 17, 2017, the court issued its statement of

decision and entered judgment in Liday’s favor awarding her

$403,256.33, including prejudgment interest. The judgment

included unpaid wages for the entire claims period, but the

only period relevant to this appeal is from April 2010 through

December 2013. As appellants do not contest the court’s

underlying factual findings, we primarily state the facts relevant

to the appeal as described in the court’s statement of decision.

1. Liday’s personal attendant status

Sim and Diego, a married couple, are both medical doctors.

The couple hired Liday as a live-in caretaker for their son who

was born in October 2002. Liday also cared for appellants’ second

son, born in December 2005. Their first child, who was between

eight and 12 years old during the claims period, is severely

autistic and nonverbal. Their younger son, between five and

nine years old at the time, is mildly autistic. Appellants paid

Liday $3,000 a month during the relevant period.3

The children went to school Monday through Friday,

leaving the house at about 8:00 a.m. and returning at about

2:00 p.m. While at home, appellants’ elder son required

continuous supervision and attention. He also had sleeping

issues. Liday slept in the boy’s room to be available to supervise

him when he woke up at night. The court found Liday supervised

or was available to supervise appellants’ children around the

clock, except during the time they were at school. It thus

concluded Liday worked 18 hours per day on weekdays and

24 hours per day on Saturdays and Sundays. She took about

3 Appellants sometimes paid Liday $2,500 per month when

she took a weekend off work.

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three to four weekends off per year, totaling 14 weekends for

the entire April 2010 to December 2013 period.

The court also found Liday did not perform significant

nonattendant work for the couple and classified her as a

“personal attendant” under Wage Order 15. As a personal

attendant, Liday was entitled to receive the minimum wage

for all hours that she worked but was exempt from overtime

requirements during the period from April 2010 through

December 31, 2013.4 For that period, therefore, Liday’s recovery

was limited to unpaid wages under the minimum wage law.

The parties stipulated that the minimum wage during that time

was $8 per hour.

2. Liday’s wages and hourly rate

Liday testified that when she first was hired in 2002, Sim

told her he would pay her $1,000 per month to work six days a

week. They did not discuss the number of work hours required.

Liday testified she began working seven days a week in 2004

after she borrowed money from Sim through pay advances; she

also received a raise at that time.5 She began making $3,000 per

month around 2005. The court found Liday credibly testified she

and appellants never discussed her hourly rate of pay.

Sim testified he and Liday never discussed salaries during

the 2010 to 2014 time frame, but he did when he hired her. Sim

also testified Liday began to work seven days a week when he

began to advance her pay. Sim said the $3,000 per month was

4 The DWBR governed only the last three months of Liday’s

employment—January 1, 2014 through April 4, 2014. Appellants

do not challenge the court’s calculation of overtime and unpaid

wages they owed Liday for that period.

5 Liday testified she paid off the 2004 loan from Sim by 2012.

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not a salary; he based Liday’s pay on an $8 hourly rate and

estimated how many hours she worked per day. Appellants kept

no record of the hours Liday worked. In preparation for his

deposition in this case, Sim created a chart estimating Liday’s

work at 9.5 hours per weekday at $8 per hour, $82 per week,

plus $196 per month to pay for additional hours. Sim “just came

up with” the $196 number. The court found Sim’s postfiling

estimates of Liday’s hours and his testimony that he discussed

paying her $8 per hour not credible. It found Sim’s calculations

did not support “his assertion” that he paid Liday $8 per hour.

The court concluded there was “no evidence to prove one

way or the other” Liday’s hourly rate. It found Liday was not

entitled to overtime before January 1, 2014, but was “entitled

to be paid wages for each hour” she worked. Because there was

no mutual wage agreement, the court presumed Liday’s $3,000

per month salary compensated her for nine hours of work per

day, 45 hours per week—the regular, nonovertime work hours

applicable to personal attendants beginning in January 2014.

It thus calculated an hourly rate for Liday at $15.38 by dividing

her average weekly salary of $692.31 by 45 hours.

That calculation, proffered by Liday’s counsel, was based

on the formula used to determine overtime wages for salaried,

nonexempt employees found in section 515. Addressing

appellants’ counsel’s argument there was no basis for calculating

Liday’s hourly rate based on a 45-hour workweek and that

section 515 did not apply, the court explained, “I’m not basing it

on the fact that someone cited . . . a definitive case or code section

about how to calculate this. I’m just persuaded by looking at the

whole banana here, that that is the correct way to do this. Even

though . . . this is an ex[em]pt employee, . . . and even though

she’s not entitled to overtime. We have to calculate it based on

something. And I understand you want me to calculate it on $8,

8

but I think that the logic of this is that, and that’s what I’m

persuaded by, that in the—the nonexempt employees, that—this

is the way that they calculate and you agree with that. I just

think this is the way we should calculate it in this case, also. . . .

It’s not because I’m persuaded by some code section or a case.”

3. Liday’s unpaid minimum wages

The court applied Liday’s “regular rate” of $15.38 per hour

to the hours Liday worked in excess of 45 per week to determine

her unpaid wages. For the period at issue on appeal, April 2010

to December 2013, the court found Liday worked (a) 138 hours

per week for 179 weeks, and (b) 90 hours per week for 14 weeks.

Assuming a 45-hour workweek and a $15.38 hourly rate, the

court concluded Liday was not paid for 93 hours per week for

179 weeks, $256,030.86, and was not paid for 45 hours per week

for 14 weeks, $9,689.40, for a total of $265,720.26 in unpaid

wages.6 The court also awarded Liday prejudgment interest.

Appellants timely moved for a new trial on the ground that

the trial court erred in calculating Liday’s pre-2014 hourly rate

based on the “regular rate” formula for calculating overtime

for nonexempt employees. They argued the court should have

calculated Liday’s pre-2014 unpaid wages based on the minimum

wage rate of $8 per hour for each hour she worked. The court

heard and denied the motion on May 19, 2017. It reiterated,

“I think that this [is] the analogous and appropriate way to

6 Specifically, the court first determined Liday’s averaged

weekly salary was $692.31 ($3,000 x 12 months/52 weeks), and

then divided it by 45 hours to reach an hourly “regular rate” of

$15.38. The court then multiplied the $15.38 hourly rate by the

number of hours Liday worked per week in excess of 45 hours to

determine Liday’s unpaid wages.

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determine what the regular hourly rate was and that’s why

I calculated it that way.”

This appeal followed.

DISCUSSION

Appellants challenge only that portion of the judgment

awarding Liday unpaid minimum wages from 2010 through 2013.

They contend, that because Liday was entitled to be paid the

minimum wage, but was exempt from overtime requirements

during this period, the court erred when it found Liday’s monthly

salary compensated her for only 45 hours per week, entitling her

to unpaid wages at a “regular rate” of $15.38 per hour for all

hours she worked in excess of 45 per week. They argue the court

instead should have applied the prevailing minimum wage rate

of $8 per hour to all hours Liday worked during the contested

period to determine the amount of wages appellants owed.

Appellants ask us to reduce Liday’s base award of pre-2014

unpaid wages from $265,720.26 to $74,080.17, and to remand the

matter to the trial court to reduce the corresponding prejudgment

interest due.

Liday acknowledges the court’s finding that she was an

overtime-exempt personal attendant, but contends its method

to calculate her unpaid wages was proper. She argues that as a

salaried employee subject to the minimum wage, and without an

agreed hourly rate, the 45-hour nonovertime workweek applied to

her so that her salary compensated her for 45 hours of work per

week and no more. We disagree with Liday’s interpretation and

application of the law to the unchallenged facts before us.

1. Governing law and standard of review

“[W]age and hour claims are today governed by two

complementary and occasionally overlapping sources of

authority: the provisions of the Labor Code, enacted by the

Legislature, and a series of 18 wage orders, adopted by the

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IWC.”7 (Brinker Restaurant Corp. v. Superior Court (2012)

53 Cal.4th 1004, 1026 (Brinker).) “The IWC, a state agency,

was empowered to issue wage orders, which are legislative

regulations specifying minimum requirements with respect

to wages, hours, and working conditions.” (Mendiola v. CPS

Security Solutions, Inc. (2015) 60 Cal.4th 833, 838 (Mendiola).)

Although the Legislature has since defunded the IWC, its wage

orders are still in effect. (Gonzalez v. Downtown LA Motors, LP

(2013) 215 Cal.App.4th 36, 43 (Gonzalez).)

Wage orders “have the force of law” (Dynamex v. Superior

Court (2018) 4 Cal.5th 903, 914, fn. 3), and “must be given

‘independent effect’ separate and apart from any statutory

enactments” (Brinker, supra, 53 Cal.4th at p. 1027). Thus, when

a wage order and statute overlap, “we will seek to harmonize

them, as we would with any two statutes.” (Ibid.)

Like statutes, the interpretation of a wage order is a

question of law that we consider de novo. (Smith v. Superior

Court (2006) 39 Cal.4th 77, 83; Gonzalez, supra, 215 Cal.App.4th

at p. 44.) We apply the ordinary principles of statutory

construction to both the Labor Code and the IWC’s wage orders,

“beginning with and focusing on the text as the best indicator

of legislative purpose.” (Brinker, supra, 53 Cal.4th at pp. 1026-

1027; Mendiola, supra, 60 Cal.4th at p. 840; Gonzalez, at p. 43.)

We give the words of the statute (or regulation) “their ordinary

and usual meaning” and construe them “in their statutory

context.” (Gonzalez, at p. 43; Ward v. Tilly's, Inc. (2019) 31

Cal.App.5th 1167, 1175.) “When the language is clear, ‘we apply

the language without further inquiry.’ ” (Ward, at p. 1175.)

If the language is susceptible to more than one reasonable

7 “IWC” stands for Industrial Welfare Commission. (§ 70.)

11

interpretation, we “may consider ‘ “a variety of extrinsic aids,

including the ostensible objects to be achieved, the evils to be

remedied, the legislative history, public policy, contemporaneous

administrative construction, and the statutory scheme of which

the statute is a part.” [Citation.]’ ” (Gonzalez, at p. 44.)

We liberally construe state wage and hour laws in favor of

the legislative policy to protect workers. (Gonzalez, supra, 215

Cal.App.4th at p. 44.) But we must avoid a judicial construction

“that renders any part of the wage order meaningless or

inoperative” (ibid.), or leads to “absurd consequences” (Singh

v. Superior Court (2006) 140 Cal.App.4th 387, 393).

We also independently review the application of law to

undisputed facts. (Boling v. Public Employment Relations Bd.

(2018) 5 Cal.5th 898, 912.)

2. Wage and hour laws applicable to Liday

The payment of a wage lower than the minimum “fixed” by

the IWC or applicable law is unlawful. (§ 1197.) Under section

1194, “any employee receiving less than the legal minimum wage

or the legal overtime compensation applicable to the employee is

entitled to recover in a civil action the unpaid balance of the full

amount of this minimum wage or overtime compensation.” When

an employee sues to recover unpaid minimum wages under

section 1194, she “actually sues to enforce the applicable wage

order.” (Martinez v. Combs (2010) 49 Cal.4th 35, 62, 64.) “This is

because the ‘legal minimum wage’ recoverable under section 1194

is ‘[t]he minimum wage . . . fixed by the commission’ (§ 1197)

in the applicable wage order . . . and because employers and

employees become subject to the minimum wage only through

the applicable wage order and according to its terms [citation].”

(Ibid.) The prevailing minimum wage “fixed” during the relevant

period—to which the parties stipulated—was $8 per hour.

(Former § 1182.12, added by Stats. 2006, ch. 230, § 1.)

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“The number and complexity of wage orders reflect the

reality that differing aspects of work in differing industries

may call for different kinds of regulation.” (Mendiola, supra,

60 Cal.4th at p. 839.) The wage order at issue in this case,

Wage Order 15, applies to all persons employed in household

occupations, including “personal attendants.” (Wage Order 15,

subd. 1.) As defined by the wage order, “personal attendants”

include babysitters and individuals employed “to supervise,

feed, or dress a child or person who by reason of advanced age,

physical disability, or mental deficiency needs supervision.”

(Wage Order 15, subd. 2(J).) The court determined Liday was

a personal attendant as defined by Wage Order 15. The parties

do not challenge that finding on appeal.

Before 2001, Wage Order 15 did not apply to personal

attendants at all. (IWC Order No. 15-2000, subd. 1(B)



[as of Sept. 24, 2019], archived at

[“The provisions of this Order shall not apply to personal

attendants.”].) Personal attendants thus were exempt from both

the minimum wage and overtime requirements found in Wage

Order 15. In 2001, however, the IWC amended Wage Order 15

to remove the personal attendant exemption from its minimum

wage requirement. (Compare IWC Order No. 15-2000,

subd. 1(B), supra, with Wage Order 15, subds. 1(B), 4.)

Subdivision 4 of Wage Order 15, entitled “Minimum Wages,”

provides: “Every employer shall pay to each employee, on the

established payday for the period involved, not less than the

applicable minimum wage for all hours worked in the payroll

period, whether the remuneration is measured by time, piece,

commission, or otherwise.” (Wage Order 15, subd. 4(B); subd.

(4)(A) [“[e]very employer shall pay to each employee wages not

13

less than [the prevailing minimum hourly wage] for all hours

worked”].)

The express language of Wage Order 15, however,

unambiguously exempts personal attendants from most of its

other provisions, including overtime. (Wage Order 15, subd. 1(B)

[“Except as provided in sections 1, 2, 4, 10, and 15, the provisions

of this Order shall not apply to personal attendants.”].) Thus,

the provisions restricting domestic workers’ number of hours

and days of work, providing meal and rest periods, and requiring

employers to keep certain records, among others, did not apply to

Liday. (See Wage Order 15, subds. 1(B), 3 [“Hours and Days of

Work”], 7 [“Records”], 11 [“Meal Periods”], 12 [“Rest Periods”].)

Unlike overtime-exempt personal attendants, nonexempt

employees in general must be paid one and one-half times their

“regular rate of pay” if they work more than eight hours per day

and 40 hours per week. (§ 510 [“Eight hours of labor constitutes

a day’s work.”].) Similarly, live-in, non-personal attendant

domestic workers are entitled to at least three duty-free hours

within any 12-hour span of work and may not be required to

work more than five days without a day off, unless paid overtime.

(Wage Order 15, subds. 3(A)(1), (B).)

The Legislature amended the personal attendant overtime

exemption when it enacted the DWBR. Beginning January 1,

2014, under section 1454, a personal attendant may not be

employed for “more than nine hours in any workday or more than

45 hours in any workweek unless the employee receives one and

one-half times the employee’s regular rate of pay for all hours

worked over nine hours in any workday and for all hours worked

more than 45 hours in the workweek.”

It is undisputed, however, that section 1454 did not apply

to Liday’s claim for unpaid wages incurred from April 2010

14

through December 31, 2013.8 Thus, Liday was an overtimeexempt

personal attendant under Wage Order 15 during the

entire period challenged on appeal. Accordingly, for the pre-2014

period, by the express, unambiguous terms of Wage Order 15,

appellants were required to pay Liday at least the minimum

wage of $8 per hour for all hours she worked, but were not

obligated to limit Liday’s required daily or weekly work hours

or to pay her premium overtime wages. (See Wage Order 15,

subds. 1(B), 3(A) & (B) [excluding personal attendants from

“Hours and Days of Work” provision that limits a live-in

employee’s daily and weekly work hours and requires employer

to compensate employee at one and one-half times or double her

regular rate of pay if those limits are exceeded].)

3. Pre-2014 California law does not support the

court’s presumption

Although Liday was an overtime-exempt employee under

Wage Order 15, the court nonetheless determined appellants’

pre-2014 minimum wage obligation by applying the formula for

calculating salaried, nonexempt employees’ “regular rate” of pay

of dividing their salary by their regular, nonovertime hours.

Liday argues this method was proper because “when an employer

chooses to pay an employee not exempt from the minimum-wage

laws a fixed monthly salary, such salary constitutes payment

only for said employee’s regular, non-overtime hours.”

While that statement may be true for Liday’s 2014 wage

claims, it is not for her pre-2014 claims when she was exempt

8 No one has argued section 1454 is retroactive and nothing

indicates the Legislature intended it to be so. (Californians for

Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223, 230

[“statutes operate prospectively absent a clear indication the

voters or the Legislature intended otherwise”].)

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from overtime requirements. The authorities on which Liday

relies—section 515, the DLSE Enforcement Polices and

Interpretations Manual9 and Hernandez v. Mendoza (1988) 199

Cal.App.3d 721 (Hernandez)—do not require otherwise. They all

relate to calculating unpaid overtime for nonexempt employees.

a. The express language of the Labor Code demonstrates

the “regular hourly rate” calculation was intended to

determine overtime wages for nonexempt employees

Liday argues the trial court’s calculation of her “regular

hourly rate” based on her weekly salary divided by a regular,

nonovertime workweek of 45 hours is “congruent with” section

515 and the DLSE Manual. We disagree.

Section 515, subdivision (d)(1) provides: “For the purpose of

computing the overtime rate of compensation required to be paid

to a nonexempt full-time salaried employee, the employee’s

regular hourly rate shall be 1/40th of the employee’s weekly

salary.” (Italics added.) Section 515, subdivision (d)(2) in turn

states that “[p]ayment of a fixed salary to a nonexempt employee

9 The DLSE—Division of Labor Standards Enforcement—

is the agency “charged with enforcing California’s labor laws,

including the IWC wage orders.” (Alvarado v. Dart Container

Corp. of California (2018) 4 Cal.5th 542, 551, 555.) Its most

recent policy manual interpreting California’s labor laws is

published online. (See DLSE, The 2002 Update of the DLSE

Enforcement Policies and Interpretations Manual (rev. Aug.

2019) [as of Sept. 24, 2019], archived at

(DLSE Manual); Alvarado, at

p. 555.) Although DLSE policies are not necessarily entitled

to deference, a reviewing court may adopt the DLSE’s

interpretation if independently persuaded it is correct.

(Alvarado, at p. 561.)

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shall be deemed to provide compensation only for the employee’s

regular, nonovertime hours, notwithstanding any private

agreement to the contrary.”10 (Italics added.) Thus, as we

discuss below, an employer may not calculate a nonexempt

salaried employee’s hourly rate by dividing her salary by the

combined total number of nonovertime and overtime hours she

worked. Including overtime hours in the calculus would reduce

the employee’s hourly rate, thereby reducing the base rate for

computing her overtime compensation to one lower than if she

had worked a regular, 40-hour workweek. (See Skyline Homes,

Inc. v. Department of Industrial Relations (1985) 165 Cal.App.3d

239, 250 (Skyline).)

Section 515 does not apply to Liday’s pre-2014 minimum

wage claim, however. The statute expressly relates to

determining the hourly rate for a salaried, nonexempt employee

for purposes of calculating overtime compensation. As we

have said, Liday was exempt from the hours and days of work

provision governing overtime under Wage Order 15. Therefore,

before section 1454 became effective no statute or regulation

imposed a maximum number of hours Liday could work per week

or day—nonovertime hours—or specified the number of hours

that constituted a regular workday or workweek for personal

attendants.

The DLSE Manual also makes clear the “regular rate

of pay” calculation was designed to determine overtime

compensation. First, section 49.1.1 of the Manual explains,

“overtime is computed based on the regular rate of pay.” (Italics

added.) And, section 48.1.2 explains, “ ‘Workday’ is defined in

10 This language was added to section 515 effective January 1,

2013. (Stats. 2012, ch. 820, § 2.)

17

the [IWC] Orders and Labor Code § 500 for the purpose of

determining when daily overtime is due.” (Italics added.)

Section 49.2.1.1 of the Manual, cited by Liday, in turn provides

the method for computing the “regular rate of pay” for salaried

workers: “Multiply the monthly remuneration by 12 (months)

and divide by 52 (weeks) = weekly remuneration. Divide the

weekly remuneration by the number of legal maximum regular

hours worked = regular hourly rate.” (Italics added.) That is

the formula the court used here, but before 2014, there was no

“legal maximum” number of regular hours that Liday could work,

rendering that formula inapplicable by the express terms of the

statute and DLSE’s interpretation of it.

In a colloquy with appellants’ counsel, the trial court agreed

section 515 did not apply to Liday’s pre-2014 wages.

“[Appellants’ counsel:] Labor Code [ ]515(d) doesn’t

apply because she was not entitled to overtime. And

the Code itself specifically says that that applies only

to nonexempt salaried employees. During that period

of time, she was an exempt employee because she

was a personal attendant.

“The Court: I agree.”

Despite this acknowledgement, the court nevertheless computed

Liday’s pre-2014 hourly rate based on a maximum 45-hour work

week, finding the calculation for nonexempt, salaried workers

“analogous.” But by doing so, the court effectively applied section

1454’s maximum hours requirement retroactively without legal

basis.

Based on the plain language of the statute and wage order,

before 2014 Liday’s $3,000 per month salary ($692.31 per week)

legally compensated her for whatever total number of hours she

worked, be it 20, 45, or 80 hours per week. The only limitation

the law placed on Liday’s salary was that it must compensate her

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at least at the minimum wage rate of $8 per hour for every hour

she worked. Appellants concede they failed to do so and owe

Liday unpaid wages. But, the law does not require them to pay

Liday $15.38 per hour because of that failure or retroactively to

limit Liday’s salary to cover only 45 hours per week.

b. Case law also does not require that Liday’s salary

cover only regular, nonovertime hours

In support of her argument that the court’s calculation

was proper, Liday focuses on the Court of Appeal’s holding in

Hernandez that, “[a]bsent an explicit, mutual wage agreement,

a fixed salary does not serve to compensate an employee for the

number of hours worked under statutory overtime requirements.”

(Hernandez, supra, 199 Cal.App.3d at p. 725, second italics

added.) This holding from Hernandez is inapplicable to Liday’s

pre-2014 wage claim.

There, defendant hired plaintiff to work as a butcher

for a fixed salary of $300 per week. (Hernandez, supra, 199

Cal.App.3d at p. 724.) The butcher, who was entitled to overtime,

testified he worked every day for 13 hours a day during the

disputed period. (Ibid.) Defendant testified the butcher’s salary

included overtime wages because the butcher had agreed to

work every day for nine hours a day—63 hours per week—for

the minimum hourly wage, and the combined nonovertime and

overtime wages due for 63 hours was less than $300 a week.

(Ibid.) The trial court found the butcher had worked some

overtime, but entered judgment in favor of defendant, finding the

butcher failed to meet his burden of proof to establish the number

of overtime hours he had worked. (Id. at p. 725.)

The Court of Appeal reversed, finding the butcher had

met his burden of proof. (Hernandez, supra, 199 Cal.App.3d at

p. 725.) The court first found there was no evidence the parties

had agreed to the butcher’s working hours or hourly rate. (Ibid.)

19

As a result, it concluded the butcher’s $300 per week

compensation “must be construed as the payment he received

for a regular workweek,” not including overtime. (Ibid.) Citing

section 510, which provides for an eight-hour workday and

overtime wages for hours worked in excess of eight per day or

40 per week, the court explained, “[a]bsent an explicit, mutual

wage agreement, a fixed salary does not serve to compensate

an employee for the number of hours worked under statutory

overtime requirements”—the passage relied on by Liday.

(Hernandez, at p. 725.)

In other words, the butcher’s $300 per week salary

could not compensate him for hours he worked in excess of the

statutorily mandated eight hours per day and 40 hours per week.

He thus was entitled to unpaid overtime wages in addition to his

salary. (Hernandez, supra, 199 Cal.App.3d at pp. 725-726.) The

Court of Appeal also directed the trial court to draw “whatever

reasonable inferences it [could] from the employee’s evidence”

to determine his overtime hours because the employer had failed

to keep accurate records of the butcher’s hours. (Id. at p. 728.)

As with section 515, and the corresponding provisions of

the DLSE Manual, the key difference here is that Liday was not

subject to any statutory or regulatory overtime requirements like

the butcher. Her $692.31 per week compensation logically could

not be presumed to cover only “nonovertime” hours when she

had no set or maximum hours to exceed.11 The butcher’s weekly

11 Liday asserts that the trial court “expressly found” Liday’s

salary “covered only her regular non-overtime hours.” The

statement of decision cites the quoted passage above from

Hernandez, but the trial court never found the parties agreed to

the number of hours Liday would work per day or per week. The

court made clear it presumed the 45-hour “regular” workweek

20

salary could compensate him only for working nonovertime

hours—40 hours per week and eight hours per day under section

510—because to allow otherwise would circumvent statutory

overtime requirements. Nothing in Hernandez suggests that

a salary paid to an employee exempt from overtime cannot

compensate the employee for hours worked in excess of

what otherwise would be considered nonovertime hours for

a nonexempt employee. Such an interpretation of Hernandez

is nonsensical. If an employee is exempt from overtime, there

can be no “nonovertime” or “overtime” hours. Based on the law

at the time, appellants could not have anticipated that Liday’s

$3,000 per month salary would compensate her for nonovertime

hours only when she was exempt from overtime.

c. Liday cites no authority to support her contention

she was exempt from overtime wages, but not

overtime hours

Liday also seems to contend that as a salaried personal

attendant, she was exempt from “the separate requirement

of a premium overtime rate for overtime work,” but was not

excluded from application of regular, nonovertime work hours.

We cannot agree with Liday’s interpretation of her

overtime-exempt status. Liday would have us read the Labor

Code and Wage Order 15 as precluding an overtime-exempt

personal attendant’s regular workweek from exceeding the

statutory maximum number of hours specified for nonexempt

employees. Nothing in the Labor Code or Wage Order 15

suggests such an interpretation.

applied to calculate Liday’s unpaid minimum wages and did not

base its decision on any statute or case.

21

First, the maximum hours requirement logically cannot

be separated from the premium overtime rate required for hours

worked beyond the legal maximum. The two requirements go

hand in hand. Premium overtime pay was instituted to enforce

statutory maximum working hours by obligating employers to

pay higher hourly rates to employees whose work exceeded those

daily or weekly limits. (Monzon v. Schaefer Ambulance Service,

Inc. (1990) 224 Cal.App.3d 16, 37 [premium pay accomplishes

“IWC’s goal of enforcing maximum hours”]; Skyline, supra, 165

Cal.App.3d at p. 250 [“Premium pay for overtime is the primary

device for enforcing limitations on the maximum hours of

work.”].) Requiring nonovertime hours without requiring

payment of overtime wages would not achieve this goal.

Liday contends, “Wage Order 15 clearly delineates

between, on the one hand, regular, non-overtime work hours, and

on the other hand, overtime hours. The regular, non-overtime

hours are those up to 9 hours in a workday and 45 hours in a

workweek, while the overtime hours are those beyond those

thresholds.” That distinction may be true, but Liday fails to note

that Wage Order 15 also “clearly” exempts personal attendants

like Liday from the very provision she cites. That section limits

both the maximum number of hours a domestic employee may

work and provides for premium overtime wages should those

hours be exceeded. (Wage Order 15, subd. 3.) That provision

expressly does not apply to personal attendants.

Had the IWC intended the wage order’s hours of work

limitations to apply to personal attendants without providing

them with premium wages, it would not have excepted

application of the entire “hours and days of work” provision

to personal attendants when it removed the minimum wage

exemption in 2001. (Compare IWC Order No. 15-2000, subd.

1(B), supra, with Wage Order 15, subd. 1(B).) But it did.

22

We cannot interpret Wage Order 15 as nonetheless

intending to apply its limitations on nonovertime hours—without

premium overtime rates—to salaried12 personal attendants.

To do so not only would lead to the “absurd consequence[ ]” of

applying part of the wage order’s overtime requirement to an

employee explicitly exempt from all of its overtime requirements,

but also would fail to give effect to Wage Order 15’s explicit

exemption of personal attendants from that entire requirement—

both premium wages and maximum hours. (Singh v. Superior

Court, supra, 140 Cal.App.4th at p. 393 [interpretation of wage

order must not lead to “absurd consequences”]; Gonzalez, supra,

215 Cal.App.4th at p. 44 [construction of wage order must not

render part of it “meaningless”]; Brinker, supra, 53 Cal.4th at

p. 1027 [wage orders “must be given ‘independent effect’ ”].) We

thus conclude Liday was not subject to any set number of regular,

nonovertime work hours under Wage Order 15 on the ground she

received a fixed salary.

Moreover, the wage order’s minimum wage requirement

protects a salaried, overtime-exempt employee from the lack of an

agreed-upon hourly rate: if the salary compensates the employee

at less than the prevailing minimum wage for each hour the

employee works—as occurred here—the employee may recover

the difference. (§ 1194.) With no express restriction on the

number of hours the employee may be required to work, however,

no regular rate of pay calculation is mandated by assuming the

12 Nothing in Wage Order 15 prohibits an employer from

paying a personal attendant by salary, as long as the employer

pays the employee the legal minimum wage. (Wage Order 15,

subd. 4(B) [employer must pay employee the minimum wage

“whether the remuneration is measured by time, piece,

commission, or otherwise” (italics added)].)

23

salary covered only the statutory regular, nonovertime hours

for nonexempt employees.

The Legislature’s enactment of the DWBR supports our

analysis. By setting a maximum 45-hour workweek and ninehour

workday for personal attendants (§ 1454), the Legislature

acknowledged, that before January 2014, employers were not

precluded from requiring personal attendants to work more than

45 hours per week or nine hours per day at only the minimum

wage rate. As one commentator noted, “Before the DWBR,

personal attendants were not entitled to any overtime

compensation, even if they provided 24-hour, live-in care, seven

days a week. Personal attendants did not have to receive any

duty-free meal or rest breaks. Furthermore, unlike many

other exemptions, such as the executive, administrative, and

professional exemptions, personal attendants did not have to be

paid a salary equal to two times the applicable minimum wage

for full-time work. In other words, an employer could lawfully

require a personal attendant to work 24 hours a day, six days

a week and only pay that employee the minimum wage.”

(Rehwald, Caregiver Care: Current Law Limiting the Amount of

Time Personal Attendants Spend on Tasks Other than Caregiving

May Represent Liability Issues for Employers (Nov. 2016) 39

Los Angeles Lawyer 20, 22.)

The Legislature understood personal attendants were

“completely exempt” from overtime. (Assem. Com. on Labor

& Employment, Analysis of Assem. Bill No. 241 (2013-2014

Reg. Sess.) as amended Mar. 19, 2013, p. 5 (DWBR Analysis)

[“ ‘Personal attendants’ are completely exempt from the general

overtime requirements of Wage Order 15. Therefore, under the

Wage Order, ‘personal attendants’ are only required to be paid

straight-time for all hours worked, regardless of whether they

work more than eight hours in a day or 40 hours in a week.”].)

24

Indeed, the DWBR was introduced specifically to correct the

inequity of the law’s exclusion of personal attendants from

overtime protections, while granting those protections to other

types of domestic workers. (See DWBR Analysis, p. 9.)

Only when Liday became entitled to overtime protections

in January 2014 did California law require the court to calculate

Liday’s overtime wages by determining Liday’s $15.38 per hour

regular rate of pay based on a 45-hour workweek and then

to apply that rate to the hours she worked in excess of 45 on

a weekly basis. But before that day, Liday was “completely

exempt” from overtime. No statutorily mandated “regular hours”

applied to her, nor, as we discuss, had the parties agreed on a

maximum number of daily or weekly hours to which her salary

applied.

4. Armenta does not apply because the parties did not

agree to an hourly rate higher than the minimum

wage or to a set number of work hours

Liday also contends appellants’ proposed wage calculation

—paying Liday the minimum wage of $8 per hour for each hour

she worked—would average her monthly salary over all the hours

she worked to effectively compensate her at a lower rate for some

of the hours she worked, a practice prohibited by California law

as expressed in Armenta v. Osmose, Inc. (2005) 135 Cal.App.4th

314 (Armenta). Liday and the employees in Armenta are not

similarly situated, however.

In Armenta, the Court of Appeal agreed a company violated

California’s minimum wage statute, section 1194, when it did not

pay its employees for “nonproductive” time, such as travel time

and time spent on paperwork.13 (Armenta, supra, 135

13 To avoid removal to federal court, the plaintiff employees

amended their complaint to seek only unpaid minimum wages

25

Cal.App.4th at pp. 317, 324.) Under the terms of a collective

bargaining agreement, the company paid its union employees,

who maintained utility poles, hourly wages higher than the

minimum wage for “productive time.” (Id. at pp. 316-317.) The

company argued it had complied with the minimum wage law

because its employees’ weekly pay resulted in an average hourly

rate (factoring both paid time and unpaid nonproductive time)

higher than the applicable minimum wage. (Id. at p. 319.) The

trial court rejected this averaging method, accepted by federal

courts, concluding it would permit the employer to “extract

lengthy work weeks from its employees without paying them

for all hours worked.” (Id. at pp. 320-321.)

The Court of Appeal agreed the federal “model of averaging

all hours worked ‘in any work week’ to compute an employer’s

minimum wage obligation under California law [was]

inappropriate” considering California’s “strong public policy in

favor of full payment of wages for all hours worked.” (Armenta,

supra, 135 Cal.App.4th at p. 324.) Rather, in California

“[t]he minimum wage standard applies to each hour worked

by [employees] for which they were not paid.” (Ibid.)

The court reached its holding after examining sections 221,

222, and 223. (Armenta, supra, 135 Cal.App.4th at pp. 323-324.)

Section 221 prohibits an employer from collecting from an

employee any part of the wages the employer has paid to the

employee. Section 222 prohibits employers, in the case of a

collective bargaining wage agreement, from withholding from

employees “any part of the wage agreed upon.” And, section 223

under section 1194, striking all references to unpaid overtime

wages. (Armenta, supra, 135 Cal.App.4th at p. 318.)

26

prohibits employers from “secretly pay[ing] a lower wage while

purporting to pay the wage designated by statute or by contract.”

The court concluded these sections “articulate the

princip[le] that all hours must be paid at the statutory or agreed

rate and no part of this rate may be used as a credit against a

minimum wage obligation.” (Armenta, supra, 135 Cal.App.4th at

p. 323.) Thus, the trial court had determined correctly that the

employer must pay its employees the minimum wage for each of

the hours they had not been paid despite having paid them a rate

“far in excess of the minimum wage” for their “productive” hours.

(Id. at pp. 319, 324.) Adopting the averaging method proposed

by the employer would “contravene[ ]” the Labor Code and

“effectively reduce[ ] [employees’] contractual hourly rate.”

(Id. at p. 323.)

Liday contends the same principle applies here—to

average her salary over all the hours she worked would result in

“stretch[ing]” her salary to cover hours appellants argued at trial

were noncompensable. We disagree.

Here, no collective bargaining agreement is at issue, and

the court found the parties did not agree to an hourly rate, much

less an hourly rate higher than the minimum wage as the parties

had in Armenta. Appellants thus are not trying to average an

agreed higher wage to cover compensated and noncompensated

hours. In Armenta, the averaging method would have resulted

in taking a portion of the employees’ agreed higher rate to cover

hours for which they had not been paid at all. They would not

have received the wages due them under their collective

bargaining agreement.

Appellants agreed to pay Liday $3,000 per month, but there

is no evidence—nor did the court explicitly find—the parties

agreed this salary would compensate Liday for a 45-hour

workweek or any other specific number of work hours that could

27

compute to an agreed hourly rate higher than $8 per hour.14

Liday argues appellants now are attempting to include work

hours they originally did not treat as covered by her $3,000 per

month salary—“ ‘downtime between 9:00 a.m. and 2:00 p.m. and

. . . sleep time between 10:00 p.m. and 5:45 a.m.’ ” But, the fact

remains that Liday was exempt from overtime laws and the

parties never agreed she would work a specific number of hours

per day or week.15

Paying Liday the $8 minimum hourly wage for each hour

the court found she worked, therefore, would not “effectively

reduce[ ]” her contractual hourly rate as in Armenta. Nor would

doing so violate section 223 by paying her a lower wage than

designated by statute or contract. The parties may not have

14 As we have described, there was testimony the parties

discussed Liday working six days per week when she was hired

in 2002 (and made less), but she then began to work seven days

per week with only a few weekends off per year. The parties

never discussed her working hours or hourly rate, however.

15 In any event, Liday’s argument does not support her

implied conclusion that excluding this “downtime” from her

salary would result in an agreed hourly rate higher than the

minimum wage. Excluding the 7.75 hours of sleep time each day

and the five hours of downtime during the weekdays (when the

children were at school), results in a total of 88.75 work hours for

a seven-day week (11.25 hours for five days and 16.25 hours for

two days). Based on her $692.31 weekly salary, 88.75 hours of

work results in an hourly rate of $7.80, which is less, not more,

than the minimum wage. Liday did take a weekend off some

months, but she also was paid less during those months. In any

event, even if the math resulted in an hourly wage higher than

$8 per hour for some weeks, the court concluded the parties

did not agree to an hourly rate and no one testified Liday was

expected to work only 45 hours per week.

28

agreed to the specific hourly rate of $8 per hour, as Liday notes,

but as an overtime-exempt employee, the law required only that

appellants pay her the statutory minimum wage of $8 per hour

for each hour she worked, not $15.38 per hour. Thus, calculating

appellants’ minimum wage obligation by multiplying the number

of hours the court found Liday worked by the $8 per hour legal

minimum wage and then deducting the amount she received16

will not result in paying Liday less than the statutory or

contractual rate, crediting part of that rate against appellants’

obligation, or extracting longer hours from Liday than the law

allowed at the time—the concerns expressed in Armenta.

5. Conclusion

No one contests the trial court’s categorization of Liday as a

personal attendant. The trial court and Liday acknowledged she

was exempt from overtime before January 1, 2014. But instead

of applying the $8 per hour minimum wage to each hour Liday

worked, the court calculated her rate of pay based on the formula

used to determine payment of overtime wages for nonexempt

employees. As a personal attendant, Liday was exempt from

overtime as a matter of law—no statute or wage order limited the

number of hours her salary could cover. Payment of at least the

minimum wage for each hour she worked was the only limitation.

16 The parties discuss the math in terms of dividing Liday’s

weekly salary by the total number of hours she worked

(appellants) or 45 hours (Liday) to determine the amount of

minimum wage she was underpaid. We find it less cumbersome

to describe appellants’ proposed calculation as multiplying the

total number of hours Liday worked by the $8 minimum wage

to determine what she should have been paid. The result is the

same.

29

Liday argues section 1194 does not require the court to

default to the lowest allowable amount of minimum wage fixed

by the IWC. But section 1194 does not entitle Liday to an hourly

wage higher than the minimum wage when the parties did

not agree to it. Nor does it allow the court to impose a 45-hour

workweek on an overtime-exempt employee when the parties

did not agree her salary would pay for a certain number of work

hours. While it was proper for the court to determine Liday’s

regular rate of pay based on a 45-hour workweek for the hours

she worked beginning January 1, 2014, the law in effect before

that time did not require appellants to limit the salary they paid

Liday to cover just 45 hours of work per week.

As there was no basis in law or contract for the court to

presume Liday’s salary covered a 45-hour workweek and require

appellants to pay her $15.38 for hours she worked in excess of

45 per week, we reverse the court’s judgment with respect to

Liday’s second and fourth causes of action17 for unpaid wages and

restitution due from April 2010 through December 2013. Based

on an $8 per hour rate and the court’s uncontested finding that

Liday worked a total of 25,962 hours from April 2010 through

December 2013, Liday was entitled to total compensation of

$207,696.00 for that period. Because appellants already paid

her $133,615.83, she is entitled to an award of $74,080.17 in

combined restitution and unpaid wages for that period.

The judgment is reversed and remanded as to Liday’s second and fourth causes of action with instructions to the trial court to recalculate the amount of unpaid wages due Liday from April 2010 through December 31, 2013 (as unpaid wages from

17 We refer to Liday’s causes of action as the court numbered them in its judgment. 2011 to 2013 and restitution from 2010 to 2013) by applying an $8 per hour wage rate to all hours the trial court found Liday worked during that period. The trial court also is to hold further proceedings to redetermine the prejudgment interest owed on the recalculated unpaid wages. Appellants are to recover their costs on appeal.