Filed 5/20/11
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
LEENA ARESO,
B219981
Plaintiff and Appellant,
(Los Angeles County
Super. Ct. No. BC391477)
v.
CARMAX, INC. et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Los Angeles County,
William F. Highberger, Judge. Affirmed.
Kingsley & Kingsley, Eric B. Kingsley, Elana R. Levine; Pine & Pine, Norman
Pine and Janet R. Gusdorf for Plaintiff and Appellant.
Ogletree, Deakins, Nash, Smoak & Stewart, Jack S. Sholkoff, Christopher W.
Decker, Mara B. Brandes for Defendants and Respondents.
___________________________
Leena Areso appeals from the trial court‘s grant of summary adjudication in favor
of CarMax, Inc. (CarMax) in her class action lawsuit, which (among other causes of
action) alleged violations of the Labor Code, including a failure to pay compensation for
overtime. We affirm.
BACKGROUND
Areso began working for CarMax on June 23, 2004 as a sales consultant trainee,
and until July 18, 2004 she was classified as an hourly employee and was eligible for
overtime pay.1 On July 19, 2004, CarMax promoted Areso to sales consultant, with the
primary job of selling CarMax‘s used vehicles, warranty plans, used vehicle appraisals,
and vehicle accessories. CarMax classified Areso and other California sales consultants
as ―commissioned exempt salespersons.‖ Areso received payments based on the products
and services she sold, with a minimum guaranteed base pay, but Areso was not paid
overtime. Areso worked for CarMax until June 7, 2005.
Until February 1, 2005, CarMax paid Areso and other sales consultants under its
National Pay Plan, which included a uniform dollar payment for each sale of a vehicle,
lease, appraisal purchase (purchasing a used vehicle from a customer), and extended
service plan. The uniform payment for the sale of a vehicle was $150.2 Sales consultants
also were paid 10 percent of the purchase price for any accessories sold. CarMax
adopted the $150 payment to avoid an incentive for its sales staff to push higher-priced
items to maximize their own commissions.
In 2005, CarMax implemented a new pay plan for its sales consultants in
California.3 Under the California Pay Plan, CarMax paid Areso and other sales
The facts are taken from the parties‘ statements of undisputed material facts and
from the trial court‘s order granting summary adjudication.
1
2
Other uniform rates were $50 for each vehicle leased, $50 for each appraisal
purchase, and $100 for each extended service plan sold.
CarMax states that its California Pay Plan was adopted ―in response to concerns
about uncertainties in the state of California law regarding the definition of a sales
commission.‖ The parties dispute exactly when in 2005 the California Pay Plan went
3
2
consultants pursuant to a formula which took into account the number of vehicles sold by
a sales consultant (the ―level‖) and the average price of the vehicles or other products
sold, decreasing the percentage paid to the sales consultant as the average sale price
increased, and providing for an adjustment if the base payment totaled less than the
―target commissions.‖ After these calculations, a sales consultant would earn the same
uniform payment per vehicle, approximately $154, whether the average sale price of the
vehicle sold was $40,000, $20,000, or $9,999.99. The sales consultants continued to
receive the same percentage (10 percent) of the purchase price of any accessories sold.
Like the National Plan, the California Plan was designed to avoid an incentive for sales
consultants to push higher-priced items.
Areso was a named plaintiff in a class action lawsuit filed on July 10, 2008 against
CarMax, alleging that CarMax failed to pay overtime in violation of Labor Code section
1194, along with other allegations of violations of the Labor Code and the Business and
Professions Code. CarMax filed a motion for summary adjudication, arguing that
Areso‘s compensation under both the National Pay Plan and the California Pay Plan
included payments which qualified under the ―commissioned sales‖ exemption from the
overtime pay requirement. Areso had undisputably earned more than one-and-a-half
times the minimum wage, and had received at least one half of her wages in
―commissions,‖ making her ineligible for overtime pay.
The trial court granted the motion for summary adjudication.4 The court stated:
―There is no material issue of fact under either pay plan that the employer paid the sales
consultants either exactly $150 per vehicle sold (under the National Plan) or
approximately $150 per vehicle sold (under the California Plan).‖ The court concluded
into effect, but the month in which the new plan began is not material to the question on
this appeal.
The trial court‘s order granting summary adjudication, filed June 16, 2009,
certified to this court the question of the interpretation of Labor Code section 204.1.
After we summarily denied Areso‘s petition for writ of mandate under Code of Civil
Procedure section 166.1, the trial court entered judgment on September 18, 2009.
4
3
that CarMax‘s compensation arrangement ―is still a performance-based incentive system
and thus fairly understood to be a commission structure‖ under Labor Code section
204.1.5 The trial court also concluded that the $150 or $154 received by Areso for each
vehicle, regardless of the price, was a ―commission‖ under section 204.1 based on the
―amount‖ rather than the ―value‖ of vehicles sold, construing ―amount‖ to mean the
number of vehicles Areso sold.
The trial court entered judgment in favor of CarMax on Areso‘s first cause of
action, the overtime claim, ordered that the second cause of action be dismissed with
prejudice, and dismissed without prejudice Areso‘s third, fourth, fifth, and sixth causes of
action.
Areso filed a timely appeal.
DISCUSSION
I.
The grant of summary adjudication is appealable as a final judgment.
The judgment reflects that the trial court granted CarMax‘s motion for summary
adjudication of Areso‘s first cause of action and ordered dismissal without prejudice of
Areso‘s third, fourth, fifth, and sixth causes of action.6 ―A judgment that disposes of
fewer than all the causes of action framed by the complaint is not final in the fundamental
sense as to any parties between whom another cause of action remains pending.‖
(Sullivan v. Delta Air Lines, Inc. (1997) 15 Cal.4th 288, 307.) While ―an order granting
summary adjudication is an intermediate order which is ‗reviewable on appeal from the
final judgment in the action,‘‖ (Jacobs-Zorne v. Superior Court (1996) 46 Cal.App.4th
5
Unless otherwise indicated, all statutory references are to the Labor Code.
6
Areso states in her opening brief that following summary adjudication of her first
cause of action, she requested the dismissal without prejudice of the fourth, fifth, and
sixth causes of action. The parties had earlier filed a stipulation on July 31, 2008
dismissing without prejudice the third cause of action. The third, fourth, fifth, and sixth
causes of action were therefore voluntary dismissals without prejudice. The trial court
dismissed with prejudice Areso‘s second cause of action (failure to provide meal breaks)
on August 18, 2009.
4
1064, 1070), ―if further judicial action is required for a final determination of the rights of
the parties, the decree is interlocutory.‖ (Ibid.)
Generally, a voluntary dismissal without prejudice is not a final judgment
appealable on the merits. (Syufy Enterprises v. City of Oakland (2002) 104 Cal.App.4th
869, 879.) Nevertheless, if unresolved claims are ―purely ancillary‖ to the cause of
action disposed of on summary adjudication, there is ―‗nothing further in the nature of
judicial action on the part of the court essential to a final determination of the asserted
rights of the respective parties,‘‖ and the matter is appealable. (Belio v. Panorama
Optics, Inc. (1995) 33 Cal.App.4th 1096, 1102.) The fourth cause of action (waiting time
penalties under section 203), the fifth cause of action (unfair competition under Business
and Professions Code section 17200), and the sixth cause of action (penalties under
section 2699), all depend entirely upon Areso‘s overtime claim, and therefore all became
moot once the trial court granted summary adjudication on that claim. (Belio, at p. 1102.)
The third cause of action, which alleged a failure to reimburse Areso for the
purchase of required uniforms in violation of section 2802, is not dependent upon nor
ancillary to her overtime claim. Nevertheless, in Areso‘s brief on appeal, she indicates
that she no longer wishes to pursue that claim and asks us to amend the judgment to
dismiss the third cause of action with prejudice. ―When a party expressly waives on
appeal the right to litigate an unresolved cause of action that deprived the judgment as
entered of finality, the appellate court may give effect to the waiver by amending the
judgment to reflect a dismissal of that cause of action with prejudice.‖ (Sullivan v. Delta
Air Lines, Inc., supra, 15 Cal.4th 288, 308–309.) We therefore exercise our discretion to
preserve Areso‘s appeal by amending the judgment to reflect that the third cause of action
was dismissed with prejudice.
The judgment is appealable.
II.
The payments are commission wages exempting CarMax from paying
overtime.
―We review an appeal from a grant of summary adjudication de novo. [Citation.]
The moving party bears the burden of showing that there is no triable issue of material
5
fact and that he or she is entitled to judgment as a matter of law. [Citation.] We view the
evidence and reasonable inferences from the evidence in the light most favorable to the
opposing party. [Citation.]‖ (Harris v. Investor’s Business Daily, Inc. (2006) 138
Cal.App.4th 28, 36 (Harris).) ―[T]he assertion of an exemption from the overtime laws is
considered to be an affirmative defense, and therefore the employer bears the burden of
proving the employee‘s exemption.‖ (Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th
785, 794–795 (Ramirez).)
Section 510, subdivision (a) requires that eight hours of labor constitute a day‘s
work, and any work in excess of eight hours in one day, 40 hours in one workweek, and
the first eight hours worked on the seventh day of work in any workweek ―shall be
compensated at the rate of no less than one and one-half times the regular rate of pay for
an employee.‖ California Industrial Welfare Commission (IWC) Wage Order no. 77
exempts from the overtime compensation requirement ―any employee whose earnings
exceed one and one-half (1 1/2) times the minimum wage if more than half of that
employee‘s compensation represents commissions.‖ (Cal. Code Regs., tit. 8, § 11070,
subd. (3)(D).) Section 204.1, applicable to employees of vehicle dealers such as CarMax,
provides: ―Commission wages paid to any person employed by an employer licensed as
a vehicle dealer . . . are due and payable once during each calendar month . . . .
Commission wages are compensation paid to any person for services rendered in the sale
of such employer‘s property or services and based proportionately upon the amount or
value thereof.‖ (Italics added.)8 The issue squarely presented on this appeal is whether
CarMax‘s payments to Areso of $150 (under the National Plan) or $154 per vehicle
7
The legislature defunded the IWC in 2004, but its wage orders remain in effect.
(Kettenring v. Los Angeles Unified School Dist. (2008) 167 Cal.App.4th 507, 512, fn. 2.)
We granted Areso‘s request for judicial notice of the legislative history of Senate
Bill 972, which in 1967 amended section 204 and added section 204.1. The legislative
history indicates that section 204.1 was intended to give automobile dealers the right to
pay employees commission wages on a monthly, rather than a biweekly, basis. (Sen.
Lagomarsino, sponsor of Sen. Bill No. 972 (1967 Reg. Sess.), letter to Governor,
August 5, 1967, p. 2.) It does not illuminate the issue before us.
8
6
(under the California Plan), constitute commission wages ―based proportionately on the
amount or value‖ of CarMax‘s property or services sold, thus exempting CarMax from
the overtime compensation requirement of the Labor Code.
Areso bases her contention that the payments are not commissions on a series of
cases, beginning with Keyes Motors, Inc. v. Division of Labor Standards Enforcement
(1987) 197 Cal.App.3d 557 (Keyes Motors.) In Keyes Motors, an employer that sold and
serviced automobiles sought a declaration from the Department of Labor Standards
Enforcement (DLSE) that its mechanics‘ compensation, which was based on a percentage
of the hourly rate charged to the customer for repairs, constituted ―commission wages.‖
(Id. at p. 560.) DLSE responded that ―‗commission‘ applied only to sales of ‗big ticket‘
items,‖ but the trial court, ―[d]efining commission as ‗a percentage of the money received
in [the] transaction,‘‖ found that the mechanics‘ receipt of a percentage of the hourly rate
constituted commission wages. (Id. at p. 561.) Division 7 of this appellate district
disagreed: ―We conclude Labor Code section 204.1 sets up two requirements, both of
which must be met before a compensation scheme is deemed to constitute ‗commission
wages.‘ First, the employees must be involved principally in selling a product or service,
not making the product or rendering the service. Second, the amount of their
compensation must be a percent of the price of the product or service.‖ (Id. at p. 563.)
DLSE, as the body charged with administration of wage orders, had consistently treated
as commissions only wages received by employees in sales positions. The mechanics did
not engage in sales, so that they ―fail the first part of the test, even assuming they may
satisfy the second.‖ (Ibid.)
In Ramirez, our Supreme Court granted review to determine the meaning of
―outside salesperson,‖ to determine whether an employee who performed sales and
delivery functions for a bottled water company was exempt from the overtime laws.
(Ramirez, supra, 20 Cal.4th at pp. 794, 802.) After concluding that the IWC‘s definition
of ―outside salesperson‖ was not arbitrary or capricious, the Court remanded the case for
the trial court to make the factual determination whether Ramirez fit the definition. (Id.
at pp. 801, 803.) The Court also addressed the question of whether Ramirez was paid
7
commissions. Stating that ―[t]here would be no need to remand this case if we agreed
with the trial court that Ramirez was a commissioned employee‖ (which was an
independent basis to exempt him from the overtime statute), the Court noted that section
204.1‘s definition of ―commission,‖ although specifically applying to employees of
vehicle dealers, was ―more generally applicable.‖ (Id. at p. 803.) The Court then quoted
in full the Keyes Motors interpretation of section 204.1, and remanded the case for the
trial court to determine ―whether Ramirez‘s compensation could be characterized as ‗a
percentage of the price of the product or service,‘‖ if the first condition, ―whether
Ramirez was ‗involved principally in selling the product or service,‘‖ was met. (Id. at
p. 804; see Wayne v. Staples, Inc. (2006) 135 Cal.App.4th 466, 478 [applying Keyes
Motors definition of ―‗commission wages‘‖ to determine whether, under the Insurance
Code, markup on shipping insurance was ―a commission . . . or is simply ‗profit‘‖];
Takacs v. A.G. Edwards and Sons, Inc. (S.D. Cal. 2006) 444 F.Supp.2d 1100, 1119
[citing Ramirez and Keyes Motors as requiring that to be a commission ―[t]he amount of
compensation must make up a percentage of the product or service‘s price‖]; Romero v.
Producers Dairy Foods, Inc. (E.D. Cal. 2006) 235 F.R.D. 474, 488 (same).)
Most recently, in Harris, Division 4 of this appellate district considered whether
the commission exemption applied to exempt from the overtime requirement
telemarketers who sold magazine subscriptions. The court quoted section 204.1‘s
definition of commission as ―‗based proportionately upon the amount or value thereof,‘‖
and stated that in Ramirez ―the Supreme Court identified two essential requirements for
finding that a compensation scheme involves commissions: (1) that the employees are
involved in selling a product or service; and (2) that the amount of compensation is ‗a
percent of the price of the product or service.‘‖ (Harris, supra, 138 Cal.App.4th at
p. 37.) There was no doubt that the telemarketers sold a product, and ―[w]hether all or
part of their compensation may be characterized as a commission depends on whether
they were paid on the basis of a percentage of the price of subscriptions sold.‖ (Ibid.)
The court of appeal described the compensation system as follows: ―The
employees were paid on a point system based on the number of points earned.
8
Employees received a certain number of points for each type of subscription sold. For
example, an employee received 0.25 points for a 13-week subscription. Employees also
received points for winning sales contests, called ‗spiffs,‘ and were eligible for fixed
monetary bonuses if they sold a specified number of points at certain levels. As
employees earned more points, the value of the points increased. Employees were paid
$15.80 per point for the first 9.99 points earned, $22.30 for the next 20 to 16.99 points,
and so on. The point values were not tied to the price of the subscription sold.‖ (Harris,
supra, 138 Cal.App.4th at p. 37, italics added.)
The employees also presented an expert declaration ―to demonstrate that the point
system was not a commission compensation scheme.‖ (Harris, supra, 138 Cal.App.4th
at p. 37.) The declaration ―concluded that the employees were paid ‗on [a] combination
of sales points, incentive points (―SPIFF‖), adjustment points, an apparent qualitative
point adjustment (―(Less) points OV 25%‖), 40/80 commission, daily graphs, adjustment
amount, bonus, charge-backs, carried over deductions, and other factors.‘‖ (Ibid.) The
declaration further stated ―‗[a] true commission basis would characteristically feature a
commission amount that is directly related to the dollar amount of the product or services
sold.‘‖ (Ibid.)
The employer argued that compensation need not be ―a percent of the product
price to qualify as a commission payment,‖ and that ―commission compensation may be
based on ‗value,‘ a term that goes beyond price to include ‗worth, merit and importance.‖
(Harris, supra, 138 Cal.App.4th at p. 38.) The court of appeal rejected that argument:
―As has been discussed, our Supreme Court has interpreted the statute to mean that the
amount of compensation ‗must be a percent of the price of the product or service.‘
(Ramirez, supra, 20 Cal.4th at p. 804.) We decline respondents‘ invitation to expand the
meaning of the term.‖ (Harris, supra, 138 Cal.App.4th at p. 38.) On the undisputed
facts, the points were ―based on the type of subscriptions sold. There was no showing
that the points are tied to a particular price,‖ and the expert‘s ―declaration demonstrated
that points received from bonuses, subscriptions, and sales contests were not based on the
price of the subscription.‖ (Ibid.) The court concluded ―the payments received by the
9
employees did not constitute commissions‖ and the commission exemption did not apply.
(Ibid.) The court went on to say that even if the point system constituted commissions,
the employer had failed to demonstrate as a matter of law that more than half the
employees‘ compensation came from the point system, or that the employees‘ total
compensation was more than one and one-half times the minimum wage. (Id. at pp. 38–
39.)
CarMax characterizes as dicta the statements that a commission must be ―a
percentage of the price of the product or service.‖ (Keyes Motors, supra, 197 Cal.App.3d
at p. 563; Ramirez, supra, 20 Cal.4th at p. 804; Harris, supra, 138 Cal.App.4th at p. 37.)
―‗―It is axiomatic that language in a judicial opinion is to be understood in accordance
with the facts and issues before the court. An opinion is not authority for propositions
not considered.‖‘ [Citation.] ‗An appellate decision is not authority for everything said
in the court‘s opinion but only ―for the points actually involved and actually decided.‖‘
[Citation.]‖ (People v. Knoller (2007) 41 Cal.4th 139, 154–155.) Mere observations by
an appellate court are dicta and not precedent, unless a statement of law was ―necessary
to the decision, and therefore binding precedent[].‖ (Krupnick v. Hartford Accident &
Indemnity Co. (1994) 28 Cal.App.4th 185, 199.) ―‗The doctrine of precedent, or stare
decisis, extends only to the ratio decidendi of a decision, not to supplementary or
explanatory comments which might be included in an opinion. To determine the
precedential value of a statement in an opinion, the language of that statement must be
compared with the facts of the case and the issues raised.‘ [Citation.]‖ (Gogri v. Jack in
the Box Inc. (2008) 166 Cal.App.4th 255, 272.) ―[W]e generally consider California
Supreme Court dicta to be persuasive,‖ but may reject dicta that ―does not, in our
opinion, ‗reflect[] compelling logic.‘‖ (Ibid.)
In Ramirez, the Supreme Court adopted the Keyes Motor language interpreting
section 204.1, and remanded for the trial court to determine in the first instance whether
Ramirez was involved in selling and, if so, whether his compensation was a percentage of
the product price. (Ramirez, supra, 20 Cal.4th at p. 804.) This explicit endorsement of
Keyes Motor is not a mere comment, but an instruction to the trial court to apply the two10
part test. Further, in Harris the court of appeal applied the Keyes Motor test to employee
compensation (based upon a ―point system‖), where it was undisputed that the employees
sold a product. The court ―conclude[d] that the payments received by the employees did
not constitute commissions‖ and determined that the commission exemption did not
apply. (Harris, supra, 138 Cal.App.4th at p. 38.) These statements are not dicta.
The Keyes Motor definition of ―commission,‖ however, does not control our case,
as it does not exclude Areso‘s compensation from the ambit of section 204.1‘s definition
of commission wages as ―based proportionately upon the amount or value‖ (italics
added) of the property or services sold. The Keyes Motor line of cases relies on the
statute‘s plain language allowing commission wages to be based proportionately on the
value (price) of the property or services sold by the employee. That same plain language
provides an alternative determinative in this case: commission wages may be based
proportionately on the amount (number) of property or services sold by the employee.
The system CarMax used under both the National Plan and the California Plan
(regardless of the computation method employed) compensated sales consultants with a
uniform payment for each vehicle sold, which constitutes wages based proportionately on
the amount of vehicles sold.
Section 204.1 on its face allows wages based on the number of items sold to be
considered commission wages. None of the cases interpreting section 204.1 has involved
a compensation system which, like CarMax‘s, compensates salespeople with a uniform
payment for each item or service sold, and as a result no case has construed the word
―amount‖ in the statute.9 This is an issue of first impression, and new facts require new
law.
9
Harris involved a compensation system based on points, which varied depending
on the type of subscription sold, were also awarded for winning sales contests, and whose
value increased as employees earned more points. (Harris, supra, 138 Cal.App.4th at
p. 37.) The employer argued that the points constituted commissions based on ―‗value‘‖
in section 204.1, meaning not price, but ―‗worth, merit, or importance.‘‖ (Harris, at
p. 38.) This is far from a system such CarMax‘s, which awards a uniform $150 or $154
for each vehicle sold.
11
Areso argues that CarMax‘s uniform payment is piece-rate compensation rather
than commission compensation. Areso points out that the DLSE manual quotes Keyes
Motors and defines commissions as compensation based on a percentage of the sale,
while ―a compensation plan which pays employees for the number of pieces of goods
finished, the number of appointments made, or the number of procedures completed, is
based on a piece rate, not a commission rate; though such compensation plans often refer
to the payment as ‗commission.‘‖ (DLSE Enforcement Policies and Interpretation
Manual (2002) § 2.5.4, pp. 2-2–2-3.) First, we afford no deference to the statement in the
DLSE manual ―because regulators did not properly adopt [the DLSE manual], making it
nonbinding on courts.‖ (Arechiga v. Dolores Press, Inc. (2011) 192 Cal.App.4th 567,
573, fn. 5; Martinez v. Combs (2010) 49 Cal.4th 35, 50, fn. 15.) Second, although we
―may still independently determine whether a DLSE interpretation contains persuasive
logic,‖ (United Parcel Service Wage & Hour Cases (2010) 190 Cal.App.4th 1001, 1011),
the DLSE manual statement regarding piece work does not apply to this case. CarMax‘s
compensation plan does not pay sales consultants for each piece of goods finished, each
appointment made, or each procedure completed. All those activities would by definition
fall outside of section 204.1, because the statute‘s definition of ―[c]ommission wages‖
applies only to sales of property or services. (Keyes Motors, supra, 197 Cal.App.3d at
p. 563.) Here, we deal with the sale of property—automobiles—which would not
constitute piece work, even if the DLSE manual‘s definition had persuasive force.
Areso also points to a 1993 DLSE opinion letter citing the Keyes Motor definition
of commission. ―Agency advice or opinion letters are not characterized as underground
regulations violative of the [Administrative Procedure Act] and therefore may properly
be considered.‖ (United Parcel Service Wage & Hour Cases, supra, 190 Cal.App.4th at
p. 1011.) ―While the DLSE‘s construction of a statute is entitled to consideration and
respect, it is not binding and it is ultimately for the judiciary to interpret [the] statute.‖
(Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1105, fn. 7.) The
1993 letter does not affect our analysis, however, because it cited Keyes Motors only in
the process of determining that an employee was not engaged primarily in sales (as the
12
parties agree is required for the application of section 204.1), as the employee was
―engaged ‗primarily‘ in the teaching of golf, not in the sale of the service.‖ (DLSE,
Opinion Letter no. 1993.02.22-1 (February 22, 1993), p. 1, fn. 1.)
Areso urges us to consider the purpose of the overtime laws, which includes
spreading employment throughout the workforce by putting pressure on the employer and
fostering a stable job market, as well as ―the important public policy goal of protecting
employees in a relatively weak bargaining position against ‗―the evil of ‗overwork.‘‖‘
[Citation.]‖ (Gentry v. Superior Court (2007) 42 Cal.4th 443, 456; see § 90.5, subd. (a).)
Areso does not explain, however, how the purpose of the overtime laws would be better
served by limiting ―commission wages‖ to compensation based on a percentage of the
price of vehicles sold, rather than including in ―commission wages‖ a uniform payment
for every vehicle sold. Rather than providing an incentive to its sales consultants to sell a
higher priced vehicle, CarMax has chosen a compensation system that provides the same
reward for selling a vehicle, regardless of price. We do not see how that threatens public
policy, and Areso offers no reason why CarMax‘s system of a uniform payment for each
vehicle sold would lead to more ―overwork‖ than a compensation system in which a
commission is based on a percentage of price. Nor does our conclusion, which is based
on the plain language of the statute, conflict with the principle that ―exemptions from
statutory mandatory overtime provisions are narrowly construed.‖ (Ramirez, supra, 20
Cal.4th at p. 794.)
We disagree with Areso that calling a uniform payment per vehicle sold a
commission reads the word ―proportionately‖ out of the statutory definition of
commission wages as ―based proportionately upon the amount or value thereof.‖
(§ 204.1, italics added.) Paying salespeople a uniform fee for each vehicle is
proportionate—a one to one proportion. The compensation will rise and fall in direct
proportion to the number of vehicles sold.10
10
Although it is not necessary to our decision, we note that nothing in section
204.1 or in the case law requires a commission which is a percentage of the value or price
of a sold item to be calculated according to a percentage which remains fixed regardless
13
CarMax‘s uniform payment for each vehicle sold constitutes commission
compensation under section 204.1.
DISPOSITION
The judgment is amended to dismiss the third cause of action with prejudice. The
judgment is affirmed as amended. Costs are awarded to respondents.
CERTIFIED FOR PUBLICATION.
JOHNSON, J.
We concur:
MALLANO, P. J.
CHANEY, J.
of the price of the item. In that light, we point out that the uniform payment Areso
received for each vehicle sold was unarguably a ―percentage,‖ albeit variable, of the sales
price of each vehicle. We also note that part of Areso‘s compensation—the ten percent
of the purchase price of accessories—was undisputedly a fixed (rather than variable)
percentage of the value or price of the item sold. There is, however, no contention that
the percentage commission for the sale of accessories constituted a significant enough
portion of Areso‘s pay to trigger the exemption from overtime.
14
