Katherine Schwinghammer vs County of Santa Barbara
Case No: 18CV01001
Hearing Date: Fri Apr 05, 2019 9:30

Nature of Proceedings: Demurrer

Tentative Ruling: The court overrules defendant County of Santa Barbara’s demurrer to the first cause of action and sustains the demurrer to the second and third causes of action in plaintiff Katherine Schwinghammer’s third amended complaint without leave to amend.

Background: In her third amended complaint (“3AC”) against defendant County of Santa Barbara, plaintiff Katherine Schwinghammer alleges: Plaintiff was employed by defendant in the Office of the Public Defender. [3AC ¶2] In 2006, she was hired as an “extra help attorney,” a non-regular, non-permanent position. Defendant informed her that she would be paid hourly for her time. [3AC ¶7]

Despite plaintiff working more than 40 hours per week during trials, defendant paid plaintiff for a maximum of 40 hours per week. [3AC ¶8] “The manner of Plaintiff’s employment, though potentially qualifying Plaintiff as professionally exempt had Defendant’s compensated Plaintiff properly, converted Plaintiff to an hourly employee with the same rights and benefits of an hourly employee rather than an exempt employee, despite the ‘professional’ nature of Plaintiff’s work, which often permits a classification of exemption.” [3AC ¶9] To qualify as “exempt” from hourly payment requirements, an employer must pay a predetermined amount that is not subject to deduction. Plaintiff as a lawyer, could never earn more than eight (8) hours per day but could earn less if she worked less. This disqualified her as an exempt employee. [3AC ¶10]

Plaintiff’s supervisor told her to record eight hours on her timecard unless she worked fewer than eight hours on any work day. Plaintiff regularly and routinely worked for no compensation on hours she worked in excess of eight in a day and 40 in a week, including a lack of payment for minimum wage and overtime compensation. [3AC ¶11] Plaintiff was expected to work the same schedules as the permanent salaried employees. She repeatedly notified her supervisor of her overtime hours and he responded by stating that plaintiff could only be paid for a maximum of eight hours a day, and she could not roll hours over from one day to another if she had to leave early or worked late. [3AC ¶13]

The extra help position was terminated in 2009. In 2016, plaintiff was re-hired as an extra-help attorney at an hourly rate of $37.65/hr, later increased to $38.40/hr. She continued to work as an hourly employee. [3AC ¶15] Her supervisor verbally assured her that she would be paid for all of her time worked. [3AC ¶16] The pay arrangement again worked as described in 3AC ¶11. [3AC ¶19]

At the end of 2016, plaintiff applied for and was twice interviewed for permanent attorney positions with defendant. [3AC ¶20] On March 13, 2017, plaintiff received correspondence from defendant advising her that, while she had not been selected for a permanent attorney position, she was being retained as an extra-help attorney. This time, however, her pay was identified as a weekly “salary” of $1,536.12 and advised that the position was overtime exempt. In a meeting with Public Defendant Tracy Macuga, plaintiff requested that she be compensated as an Attorney II and complained that she had been working for more than a year as an hourly employee and had not been paid for all hours worked or for overtime. Macuga told her that, if she was not happy with her pay, she should quit. Plaintiff made it clear that she was not quitting, but that she had been paid incorrectly and was entitled to pay for all of her hours worked. [3AC ¶21]

During the afternoon of March 13, 2017, plaintiff was asked to meet with Macuga. By the end of the meeting, all of plaintiff’s felony cases had been reassigned to other attorneys. [3AC ¶22] On March 17, 2017, plaintiff was told her position had been eliminated. Her termination was effective that day. [3AC ¶24]

Plaintiff was not allowed to record more than 200 hours of time worked during the period from March 2016 to her termination in March 2017 and was not paid at least the minimum wage for these approximately 200 hours. [3AC ¶34]

The causes of action in the 3AC are: 1) failure to pay minimum wage under state law, 8 CCR § 11010, et seq.; 2) denial of the federal minimum wage, 29 U.S.C. § 206; and 3) failure to pay overtime compensation, 29 U.S.C. § 207.

Demurrer: Defendant demurs to the 3AC on the ground that plaintiff was exempt from wage and overtime requirements. Plaintiff opposes the demurrer.

The court’s only task in ruling on a demurrer is to determine whether the complaint states a cause of action. Moore v. Regents of University of California, 51 Cal.3d 120, 125 (1990). The court treats “the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law”; considers “matters which may be judicially noticed”; and gives “the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” Evans v. City of Berkeley, 38 Cal.4th 1, 6 (2006) [internal quotation marks and citations omitted]. The court also considers the reasonable inferences that may be drawn from the properly pleaded material facts. Reynolds v. Bement, 36 Cal.4th 1075, 1083 (2005).

1. First Cause of Action for State Minimum Wage: Plaintiff’s first cause of action is for violation of Industrial Welfare Commission (“IWC”) orders at 8 CCR §§ 11010, et seq. (The Legislature defunded the IWC in 2004, however its wage orders remain in effect. Murphy v. Kenneth Cole Prods., Inc., 40 Cal.4th 1094, 1102 n4 (2007).) The particular wage order possibly applicable to plaintiff is at 8 CCR § 11040, applicable to professional, technical, clerical, mechanical, and similar occupations.

Defendant contends that plaintiff is making a claim to overtime compensation under 8 CCR § 11040-3. Plaintiff says she is making a minimum wage claim under 8 CCR § 11040-4.

If plaintiff is making an overtime claim, defendant County is exempt as set forth in 8 CCR § 11040-1(B). Under the same provision, defendant County is not exempt from minimum wage claims.

Defendant argues that plaintiff is making an overtime claim because she is seeking compensation for hours worked in excess of 8 in a day. Employees 18 years of age and older “shall not be employed more than eight (8) hours in any workday or more than 40 hours in any workweek unless the employee receives one and one-half (1 1/2) times such employee’s regular rate of pay for all hours worked over 40 hours in the workweek.” 8 CCR § 11040-3(A)(1). That provision does not apply to a county.

Plaintiff does not claim that defendant could not require her to work more than 8 hours in a day. Nor does she seek payment of 1 1/2 times her regular rate of pay. She claims she was not paid anything for time worked in excess of 8 hours. 8 CCR § 10040-4(A) and (B) requires that an employer pay each employee not less than the applicable minimum wage for all hours worked. She claims she was not paid the minimum wage for all the hours she worked. She identifies the hours for which she was not paid as those hours she worked in excess of 8 hours in a day. She says the total of unpaid hours is 200 over the course of one year. [3AC ¶34]

Defendant contends that any claim to payment for hours worked in excess of 8 is necessarily a claim to overtime. Defendant says overtime is “defined as ‘employment (beyond eight (8) hours in any workday or more than six (6) days in any workweek.’),” citing 8 CCR § 11040-3(A). [Reply 2:23-24] But that section does not define overtime. It is an “overtime provision” and makes certain requirements for compensation of employees working in excess of 8 hours in a day. Plaintiff does not make a claim to those requirements, i.e., 1 1/2 times her regular rate of pay.

Rather, plaintiff claims she is entitled to at least the minimum wage for those hours rather than the zero payment she alleges she received. [3AC ¶33] The county must pay her at least a minimum wage for those hours if she is not otherwise exempt. The minimum wage does not apply to persons employed in a professional capacity, if the employee’s duties meet certain requirements set forth in 8 CCR § 11040-1(A). As a lawyer, clearly she meets the professional capacity definition in 8 CCR § 11040-1(A)(3)(a). But she must also must earn “a monthly salary equivalent to no less than two (2) times the state minimum wage for full-time employment.” 8 CCR § 11040-1(A)(3)(d).

An employee is not paid a salary if she is not paid a “predetermined amount” that is “not subject to reduction based upon the quantity of work performed.” Negri v. Koning & Assocs., 216 Cal.App.4th 392, 400 (2013) (construing the identical salary requirement in 11040-1(A)(1)(f), (A)(2)(g), and (A)(3)(d)). Plaintiff alleges that her pay was not a predetermined amount and, even if it was, as promised at the end of her employment (see 3AC ¶21), it had been subject to reduction based on the quantity of work, i.e., if she worked less than 8 hours in a day.

The exemptions defendant argues do not apply to the claim in the first cause of action. The court overrules the demurrer to the first cause of action under the IWC wage order.

2. Second Cause of Action for Unpaid Wages under Federal Fair Labor Standards Act (“FLSA”): Similar to the first cause of action, plaintiff asserts a claim to be paid at least the Federal minimum wage for each hour worked. [3AC ¶39] The Federal minimum wage is set forth in Section 6 of the FLSA, codified at 29 U.S.C. § 206. Under Section 13(a)(1) of the FLSA, codified at 29 U.S.C. § 213(a)(1), the provisions of 29 U.S.C. § 206 do not apply to any employee employed in a bona fide professional capacity.

29 CFR § 541.304(a)(1) defines “[t]he term ‘employee employed in a bona fide professional capacity’ in section 13(a)(1) of the [FLSA]” as, inter alia, “Any employee who is the holder of a valid license or certificate permitting the practice of law or medicine or any of their branches and is actually engaged in the practice thereof.” Plaintiff is licensed to practice law.

The salary requirements of 29 CFR §§ 541.300 and 541.600, et seq., do not apply to employees described in 29 CFR § 541.304. In other words, unlike under state law discussed above, a lawyer need not be paid a salary to be exempt from the Federal minimum wage law. Plaintiff goes on to argue that she is not paid on a salary basis as defined in 29 CFR § 541.602. But it does not matter as the salary requirement does not apply to the exemption of attorneys from the Federal minimum wage. (The court came to the same conclusion when sustaining defendant’s demurrer to the second amended complaint.)

The court will sustain the demurrer to the second cause of action.

3. Third Cause of Action for Overtime Pay under FLSA: Plaintiff seeks overtime compensation under 29 U.S.C. § 207, which provides that no employer shall employ an employee for more than 40 hours in a workweek unless the employer pays for the excess hours at a rate not less than 1 1/2 times the regular rate. The professional capacity exemption in 29 U.S.C. § 213(a)(1) also applies to 29 U.S.C. § 207. The same analysis set forth above with respect to 29 U.S.C. § 206 applies here.

The court will sustain the demurrer to the third cause of action.

4. Leave to Amend: “If there is a reasonable possibility that the defect in a complaint can be cured by amendment, it is an abuse of discretion to sustain a demurrer without leave to amend. [Citation.] The burden is on the plaintiff, however, to demonstrate the manner in which the complaint might be amended. [Citation.]” Hendy v. Losse, 54 Cal.3d 723, 742 (1991). “It is not up to the judge to figure that out.” Lee v. Los Angeles County Metropolitan Transportation Authority, 107 Cal.App.4th 848, 854 (2003). The plaintiff has the burden “to show what facts he or she could plead to cure the existing defects in the complaint.” McClain v. Octagon Plaza, LLC, 159 Cal.App.4th 784, 792 (2008). “The assertion of an abstract right to amend does not satisfy this burden. The plaintiff must clearly and specifically set forth the ‘applicable substantive law’ and the legal basis for amendment, i.e., the elements of the cause of action and authority for it. Further, the plaintiff must set forth factual allegations that sufficiently state all required elements of that cause of action. Allegations must be factual and specific, not vague or conclusionary.” Rossberg v. Bank of Am., N.A., 219 Cal.App.4th 1481, 1491 (2013) [internal quotations and citations omitted].

“If the plaintiff has not had an opportunity to amend the complaint in response to the demurrer, leave to amend is liberally allowed as a matter of fairness, unless the complaint shows on its face that it is incapable of amendment.” City of Stockton v. Superior Court, 42 Cal.4th 730, 747 (2007).

This is plaintiff’s fourth complaint. She voluntarily filed a first amended complaint, filed a second amended complaint by stipulation, and filed this 3AC when the court sustained the demurrer to the second amended complaint. The reasons for sustaining the demurrer to the second and third causes of action in this ruling are the same reasons the court gave for sustaining the demurrer to the second amended complaint. Plaintiff does not suggest how she could amend those causes of action to state claims. From the analysis of the federal law above, it is clear that she cannot amend to state those claims. The court will sustain the demurrer to the second and third causes of action without leave to amend.

5. Order: The court overrules defendant County of Santa Barbara’s demurrer to the first cause of action and sustains the demurrer to the second and third causes of action in plaintiff Katherine Schwinghammer’s third amended complaint without leave to amend.