Peabody v. Time Warner Cable: Ninth Circuit Certifies Commission Questions to California Supreme Court

The last time that the Ninth Circuit Court of Appeals asked the California Supreme Court to clarify an issue of California wage law was Sullivan v. Oracle Corp. (2011) 51 Cal.4th 1191 (discussed here) in which the Court held that the California Labor Code and Unfair Competition Law apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs.

In Peabody v. Time Warner Cable, the Ninth Circuit has asked the California Supreme Court to decide the following issue:

To satisfy California’s compensation requirements, whether an employer can average an employee’s commission payments over certain pay periods when it is equitable and reasonable for the employer to do so.  

The facts are as follows: Susan Peabody worked for Time Warner Cable (TWC) as  an account executive, working an average of 45 hours per week and earning salary plus commissions based on her monthly sales.  TWC paid Ms. Peabody her salary biweekly and paid commissions monthly.  In those pay periods that included a commission payment, TWC paid Ms. Peabody more than one and one-half times the minimum wage; in those pay periods that did not include a commission payment, TWC paid Ms. Peabody less than one and one-half times the minimum wage.  

Ms. Peabody filed a putative class action alleging that TWC failed to pay her  less than one and one-half times the minimum wage, such that she did not qualify for the commissioned sales exemption.  To qualify for the commissioned sales exemption, one must earn wages in excess of one and one-half times the minimum wage, one-half of which must be commissions.  

The central question is whether Ms. Peabody's commissions should be averaged over the month in which they were earned or applied only to the pay periods in which they were paid.  

The Ninth Circuit's certification order is available here.  I have added Peabody v. Time Warner Cable to our Watch List of pending cases.