2012-00120365-CU-WT

Sarah Orio vs. Smartrise Engineering Inc.

Nature of Proceeding: Motion for Summary Judgment and/or Adjudication

Filed By: Harmon, Jenni L.

Defendant Smartrise Engineering, Inc.’s (“Smartrise”) motion for summary judgment,
or in the alternative, summary adjudication is ruled upon as follows.

This is an employment dispute in which Plaintiff Sarah Orio alleges that she was
wrongfully terminated and denied proper compensation from Smartrise. Plaintiff
alleges that she brought to Smartrise’s attention that she and other employees were
improperly classified as salaried rather than hourly employees. Orio was thereafter
terminated purportedly for economic reasons. Three weeks later, Smartrise hired a
new employee who was classified as hourly, non-exempt.

Plaintiff alleges the following causes of action: (1) Wrongful Termination in Violation of
Public Policy, (2) Failure to Compensate for All Hours Worked, (3) Failure to Pay
Overtime, (4) Waiting Time Penalties pursuant to Labor Code §203, and (5) Violation
of B&P Code §17200.

Smartrise moves for summary judgment/adjudication on all of the above causes of
action as well Plaintiff’s claim for punitive damages and emotional distress damages.
Smartrise further moves for summary adjudication on its twenty-second and twenty-
third affirmative defenses.

Wrongful Termination in Violation of Public Policy

Smartrise moves for summary adjudication on this cause of action on the grounds that
Plaintiff cannot establish that her complaining to management about possible
wage/hour, employee misclassification and wage underpayment violations were a
motivating reason for her termination. Specifically, Smartrise argues that Plaintiff
cannot show that a nexus exists between her complaints about wage and hour
violations because she did not complain to management about the issue.

Smartrise’s separate statement includes the following. Plaintiff was an at-will
employee. (Smartrise’s separate statement (“UMF”) 1.) Plaintiff claims that on or
about March 14, 2010, she complained to Cheryl Walls (“Walls”) about possible wage
and hour, employee misclassification, and wage underpayment violation. (Id. 2.)
Walls is the only person at Smartrise to which Plaintiff complained. (Id. 3.) Walls was
an independent contractor at Smartrise while Plaintiff was employed. (Id. 4.) Walls did
not have any role in Plaintiff’s termination and was not present when Plaintiff was
terminated. (Id. 5.) Walls did not discuss Plaintiff’s complaint about possible wage and
hour, employee misclassifications, and wage underpayment violations with the
management of Smartrise prior to Plaintiff’s termination. (Id. 6.)

The Court finds that Smartrise’s showing set forth above is sufficient to shift to Plaintiff
the burden of demonstrating the existence of a triable issue of material fact. (Aguilar v.
Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849.)

In opposition, Plaintiff disputes that Walls did not discuss Plaintiff’s complaint with the
management of Smartrise prior to her termination. Plaintiff’s separate statement
provides that on “March 16, 2010 [after Plaintiff’s conversation with Wall], Plaintiff
asked Ms. Walls about how to proceed with the payroll for one employee who she
earlier told Walls was likely misclassified. Walls then told Plaintiff to keep him on an
exempt status because ‘he agreed to it, and does not know any better’.” (Plaintiff’s
Separate Statement (“PMF”), 18.)

Plaintiff has failed to proffer admissible evidence that Smartrise’s management was
aware of her concerns regarding exempt status. The Court has sustained Smartrise’s
objection to the portion of Plaintiff’s declaration supporting PMF 18 as Wall’s
statements are hearsay. (See Court’s ruling on Smartrise’s objections to evidence no.
6.) Moreover, the statement is ambiguous and does not support Plaintiff’s assertion
that Smartrise knew of her complaints. Plaintiff has not proffered evidence to dispute
Wall’s declaration that she did not discuss Plaintiff’s complaints about possible wage
and hour, employee misclassifications, and wage underpayment violations with the
management of Smartrise prior to Plaintiff’s termination. Thus, Plaintiff has failed to
demonstrate a triable issue of material fact.

Moreover, Plaintiff’s argument that there is an inference of retaliatory motive to her
termination because she was terminated on March 19, 2010, three days after bringing
the wage issues to Walls’ attention falls short. “The retaliatory motive is ‘proved by
showing that plaintiff engaged in protected activities, that his employer was aware of
the protected activities, and that the adverse action followed within a relatively short
time thereafter.’ ‘The causal link may be established by an inference derived from
circumstantial evidence, such as the employer’s knowledge that the [employee]
engaged in protected activities and the proximity in time between the protected action
and allegedly retaliatory employment decision.’” (Fisher v. San Pedro Peninsula
Hospital (1989) 214 Cal. App. 3d 590, 615 [internal citations omitted] [emphasis
added].) As noted above, however, Plaintiff has failed to demonstrate that Smartrise
was aware of her concerns.

Accordingly, the motion for summary adjudication on the wrongful termination cause of
action is GRANTED.

After-Acquired Evidence – Twenty Third Affirmative Defense

Having granted Smartrise’s motion for summary adjudication of Plaintiff’s wrongful
termination cause of action, the Court need not address Smartrise motion for summary
adjudication of its twenty-third affirmative defense that after acquired evidence
prevents Plaintiff from recovery on her wrongful termination cause of action.

Failure to Compensate for All Hours Worked, Failure to Pay Overtime, Waiting Time
Penalties pursuant to Labor Code §203

Smartrise moves for summary adjudication of each of the above causes of action
because the affirmative defense that she was an exempt employee and was therefore
exempt from overtime pay.

The Industrial Welfare Commission issued wage order No. 4-2001, applicable to
professional, technical, clerical, mechanical, and similar occupations. Included in title 8
of the California Code of Regulations, as section 11040, provides a five-part test to
determine whether the administrative employee exemption applies. The employee
must (1) perform “office or non-manual work directly related to management policies or
general business operations” of the employer or its customers, (2) “customarily and
regularly exercise[] discretion and independent judgment,” (3) “regularly and directly
assist[] a proprietor, or an employee employed in a bona fide executive or
administrative capacity” or “perform[] under only general supervision work along
specialized or technical lines requiring special training” or “execute[] under only
general supervision special assignments and tasks,” (4) be engaged in the activities
meeting the test for the exemption at least 50 percent of the time, and (5) earn twice
the state’s minimum wage. Stated in the conjunctive, each of the five elements must
be satisfied to find the employee exempt as an administrative employee.” (Eicher v.
Advanced Business Integrators, Inc. (2007) 151 Cal. App. 4th 1363, 1372.)

Smartrise’s Separate Statement includes the following. Plaintiff was the Finance
Manager and Human Resources Manager at Smartrise. (UMF, 22.) Her duties
involved the performance of office or non-manual work. (Id., 23.) She performed office
work relating to accounting, finances, human resources, employee benefits and the
general business operations of Smartrise and its customer. (Id., 24.) Her duties and
responsibilities involved accounts receivables, accounts payables, collections, payroll
and tax filings. (Id.) Plaintiff wrote, developed and implemented the employee
handbook and safety manuals, created the new hire packet, managed personnel files
for every employee, processed and ran payroll and managed paid time off and
employee health benefits. (Id., 25.) She implemented and maintained labor
regulations and safety standards per federal and local labor law and maintained the
human resources filed and created documents for human resources. (Id., 26.) She
created and managed an inventory tracking system. (Id., 27.) She made her own
decisions regarding her job tasks. (Id., 28.) She regularly and directly assisted the
owners of Smartrise. (Id., 29.) She spent 65% of her time on tasks related to
accounts receivables, accounts payable, and payroll. (Id., 30.) She was a full time
salaried employee. (Id., 31-32.)

The Court finds that Smartrise’s showing set forth above is sufficient to shift to Plaintiff
the burden of demonstrating the existence of a triable issue of material fact. (Aguilar v.
Atlantic Richfield Co . (2001) 25 Cal.4th 826, 849.)

Plaintiff contends that her job duties did not qualify her as an exempt employee under
the administrative exemption. Plaintiff could not hire or fire anyone without the
approval of Smartrise’s owners. (PMF 8.) She could not draw on any funds from
Smartrise’s bank and could not make any purchases without Smartrise’s owners’
approval. (Id., 9.) She did not have any authority to sign any service agreements or
purchase contracts with Smartrise’s vendors, nor could she enter into any agreement
with Smartrise’s customers. (Id., 10-11.) She did not have any authority to set the
price for the units of items that Smartrise was selling and did not have any authority to
set the budget for the company or sign any checks. (Id., 12.) Her role for
administering employee benefits was to deliver the paperwork to the employees and
returning it to the administrator. (Id., 13.) She did not have any authority to decide
how much vacation Smartrise’s employees received. (Id., 14.) With regards to
medical benefits, she did not have any authority to decide the extent of coverage for
Smartrise’s employees. (Id., 15.)

Plaintiff’s facts in response are not responsive and do not substantively dispute
Smartrise’s facts. For example, Plaintiff’s lack of authority to enter into contracts,
hire/fire, set prices or budgets are not material to whether Plaintiff was an exempt
employee. Plaintiff has failed to demonstrate at triable of material fact that she was
not an exempt employee. Accordingly, the motion for summary adjudication on
Plaintiff’s Failure to Compensate for All Hours Worked, Failure to Pay Overtime, and
Waiting Time Penalties pursuant to Labor Code §203 is GRANTED.

B&P Code §17200

Plaintiff alleges that Smartrise’s violation of the wage and hour laws constitutes an
unfair and unlawful business practice. Smartrise moves for summary adjudication on
this cause of action on the grounds that Plaintiff was an exempt employee and was not
entitled to overtime pay.

The motion for summary adjudication is GRANTED on the same grounds set forth
above in granting summary adjudication on Plaintiff’s wage and hour law cause of
action.

Punitive Damages and Emotional Distress Damages

As the Court has granted summary adjudication on all of Plaintiff’s causes of action,
the Smartrise’s the issue of damages now moot.

Smartrise’s motion for summary judgment is GRANTED.

Plaintiff’s objections to evidence are overruled.

Smartrise’s objections to evidence are ruled upon as follows:

Sustained: 6, 7, 9, 12, 13, 14

Overruled: 1, 2, 3, 4, 5, 8, 10, 11

Smartrise shall prepare a forma order and judgment of dismissal pursuant to CRC
3.1312 and CCP §437c(g).