District Court Upholds Employer Policy Adjusting Wages to Account for Uniform Maintenance Costs

This District Court decision initially escaped my notice. Thanks to Sarah Beard and Sheena Wadhawan for including it in their update.

In Temple v. Guardsmark, 2010 WL 1461629 (N.D. Cal., April 7, 2010), the District Court granted an employer's motion for partial summary judgment in an action for failure to reimburse employees for required uniform maintenance. The Court described the underlying facts as follows:

Plaintiff ... was employed as a security guard by defendant .... Plaintiff was employed on an at-will basis, meaning that his position did not come with a “contract or guarantee of employment for any specified period of time” and could be terminated “at any time, with or without cause.”

Plaintiff and other security guards were required to wear a uniform consisting of a blazer, slacks, and a white shirt, and to keep this uniform “clean and presentable” at all times. According to defendant's Human Resources Service Manager, it was defendant's policy at the time plaintiff began his employment “to include (but not specifically itemize) the funds for uniform maintenance in the employee's hourly pay rate.” Defendant notified security guards of this fact in their employment agreements. As of February 2004, plaintiff was paid at an hourly rate of $11 per hour. It is undisputed that plaintiff's pay statements did not specify which portion of this amount comprised his uniform maintenance allowance.

In 2003, two Guardsmark security guards filed a class action lawsuit in California state court, alleging that defendant failed to provide its employees funds for the maintenance of their uniforms. Plaintiff was a member of [this] class, which ultimately settled with defendant in December 2004 for $2 million....

As a result of [the earlier] litigation, defendant implemented a new uniform reimbursement policy in November 2004. Defendant sent a notice to its California security guards which stated the following:

[Y]our hourly wage rate has always included a uniform maintenance allowance. For each hour paid, you receive an allowance for maintaining your uniform.... [E]ffective with the pay period beginning November 14, 2004, your uniform maintenance allowance will be listed separately on your pay statement rather than being in your hourly wage rate. The uniform maintenance allowance is $0.25 per hour, and the amount stated in your hourly wage rate will be reduced by $0.25 per hour-the total amount you receive per hour worked remains the same.

After the change in payment practice, plaintiff continued to receive $11 per hour, but his new pay statements itemized his earnings, showing that he was earning $10.75 per hour as a base wage and $0.25 per hour for uniform maintenance.

Plaintiff filed the present action on May 14, 2009, challenging, among other things, defendant's uniform reimbursement policy. Plaintiff's claim is asserted on behalf of a class of all California security guards employed by defendant from four years prior to
the filing of the complaint to the present who “received a 25 cent reduction in wages beginning on or about November 14, 2004.” Plaintiff asserts that defendant's reimbursement policy constituted a violation of California Labor Code § 2802, California Wage Order No. 4-2001, and California's Unfair Competition Law (“UCL”), Cal. Bus. & Prof.Code § 17200 et seq. Plaintiff seeks various remedies including statutory penalties under California Labor Code § 2698.

Slip op. at 1-2.

Defendant moved for partial summary judgment on the uniform reimbursement claim. The Court granted the motion.

Defendant argued that it lawfully lowered plaintiff's hourly rate and reimbursed him for cleaning expenses at the rate of $0.25 per hour. Plaintiff alleged that his hourly rate remained the same, and that defendant unlwfully deducted $0.25 per hour from his wages. The Court held that plaintiff presented no admissible evidence to support his argument:

However, plaintiff does not actually submit any evidence in support of his theory other than the following statement in his declaration: “My hourly rate of pay as compensation to me for my labor only, $11.00, did not change after November 14, 2004. It remained the same as before November 14, 2004, $11.00 per hour worked.” This statement, which consists of plaintiff's unsupported speculation as to the nature of his pay, is insufficient to defeat summary judgment.

Slip op. at 3.

The Court did not indicate, and it is not at all clear to me, what type of evidence it expected plaintiff to produce beyond the facts recited by the Court. In any case, the Court concluded "that plaintiff has failed to raise a triable issue of fact on his claim that defendant effected an impermissible after-the-fact 'deduction' of his wages."

The Court then held that plaintiff, being an at-will employee, accepted Defendant's change of his payment terms by continuing to work after Defendant gave him written notice of the changed terms. "Plaintiff does not contest that he received the November 14, 2004 notice informing employees of the prospective change in pay practice, and that he continued to work for defendant for more than three years thereafter." Slip op. at 3.

Plaintiff argued that his continued employment could not constitute an acceptance of the changed compensation terms, as he could not waive his statutory right to reimbursement for uniform maintenance. Cal. Labor Code 2804. The Court rejected this argument, holding:

The plain language of the November 14, 2004 notice does not support the interpretation that defendant was asking its employees to waive any right to compensation. Rather, the notice announced a method of specifying the apportionment of that compensation. Under California law, a court should not construe an employment contract as effecting an improper waiver of a nonwaivable right unless that waiver is stated in express terms. Edwards v. Arthur Andersen LLP, 44 Cal.4th 937, 81 Cal.Rptr.3d 282, 189 P.3d 285, 292-93 (Cal.2008) (finding no waiver of statutory right to indemnity for claims resulting from the employees' acts within the scope of employment, even though release employee was asked to sign referred to waiver of “any and all” claims against employer). The November 14, 2004 notice did not expressly state or even imply that employees were required to waive the right to uniform maintenance payments. Plaintiff's position is thus untenable.

Slip op. at 4.