Motion for Summary Judgment in John Boudreau vs. Primeritus Financial Services Inc| Trellis.Law

On December 27, 2018 a Party Discovery was filed involving a dispute between Boudreau, John, On Behalf Of All Others Similarly Situated, and Does 1-10, Mcginness, Chris, Primeritus Financial Services Inc, for (Other Employment Complaint Case) in the District Court of Sacramento County.

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1 KEITH A. JACOBY, Bar No. 150233
kiacobv(a)littler.com FILED/ENDORSED
2 BRADLEY E. SCHWAN, Bar No. 246457
bschwan(S),littler.com
3 LITTLER MENDELSON, P C. AUG 1 4 2020
2049 Century Park East
4 Sth Floor
Los Angeles, CA 90067.3107 By C. Chapo, Deputy Clerk
5 Telephone: 310.553.0308
Fax No.: 310.553.5583
6
NATHANIEL H. JENKINS, Bar No. 312067
7 nienkins(g).littler.com
LITTLER MENDELSON, P.C.
8 500 Capitol Mall
Suite 2000
9 Sacramento, CA 95814
Telephone: 916.830.7200
10 Fax No.: 916.561.0828
11
Attomeys for Defendant
12 PRIMERITUS FINANCIAL SERVICES, INC.
13
SUPERIOR COURT OF CALIFORNL\
14
COUNTY OF SACRAMENTO
15
JOHN BOUDREAU, an individual, on Case No. 34-2018-00247272
16 behalf of himself and all others similarly
situated. Assigned to Department 41, Hon. David De Alba
17
Plaintiff DEFENDANT PRIMERITUS FINANCIAL
18 SERVICES, INC.'S MEMORANDUM OF
V. POINTS AND AUTHORITIES IN
19 OPPOSITION TO PLAINTIFF'S MOTION
PRIMERITUS FINANCIAL SERVICES, FOR SUMMARY ADJUDICATION
20 INC., A Delaware corporation; CHRIS
McGINNESS, an individual; and DOES 1 Date: September 24, 2020
21 through 10, inclusive. Time: 9:00 a.m.
Dept.: 54
22 Defendants. Judge: Christopher E. Krueger
Reservation No. 2517993
23
Complaint filed: December 27, 2018
24 First Amended Complaint filed: April 12, 2019
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1 TABLE OF CONTENTS
2 PAGE
3 I. INTRODUCTION AND SUMMARY OF ARGUMENT 1
4 II. SUMMARY OF RELEVANT MATERIAL FACTS 3
5 A. The Parties' Stipulation to File Cross Motions for Summary Adjudication 3
6 B. Brief Background on the Primeritus Pay Plan 3
7 C. Plaintiff and the Skip Tracers Kept Track of the Piece-Rate Points That They
Earned for Each Successful Vehicle Recovery 4
8
D. Plaintiff Conceded That His Wage Statements Accurately Reflected What
9 Primeritus Paid Him 4
10 III. LEGAL ARGUMENT 4
11 A. Plaintiff s Minimum Wage Claim Fails Because Primeritus' Pay Plan
Complies with California Law (Labor Code Section 226.2) As It Separately
12 Compensated Skip Tracers for Rest Breaks and Non-Productive Activities.
(Defendant's Response to Plaintiff's Issue No. 1 - Part 1) 4
13
1. Primeritus Separately Compensated Skip Tracers for Rest Periods and
14 Non-Productive Time As Required By Section 226.2 : 6
15 2. Primeritus Separately Compensated Skip Tracers for Rest Breaks At or
Above Their Average Rate of Pay 6
16
3. Primeritus Compensated the Skip Tracers' Non-Productive Time At or
17 Above the Minimum Wage 7
18 4. Primeritus Reasonably Estimated The Amovuit of Non-Productive
Time and the Data Analysis Supports That Estimate 8
19
B. Primeritus Neither "Borrows" Pay From Separate Compensation Sources, Nor
20 "Averages" All Sources of Pay Over All Hours Worked In Order to Provide
At Least Minimum Wage for All Hours Worked (Defendant's Response to
21 Plaintiffs Issue No. 1 - Part 2) 9
22 C. Class Members Are Not Entitled To One Hour of Premium Pay Because
There Was No Failiu-e to Provide, or Properly Compensate for, a Rest Period.
23 (Defendant's Response to Plaintiffs Issue No. 3) 15
24 D. Primeritus' Wage Statement Violations Were Not Knowing or Intentional
And Plaintiff Has Not Suffered Any Injury. (Defendant's Response to
25 Plaintiffs Issue No. 2) 15
26 1. Plaintiff Has Not Suffered Any "Injury As a Result of a Knowing and
Intentional" Violation of Section 226 15
27
2. Primeritus' Wage Statements Substantially Complied with Section
28
226(a) 18
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TABLE OF CONTENTS
1 TABLE OF CONTENTS
(CONTINUED)
2 PAGE
3 IV. CONCLUSION. 19
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1 T A B L E OF AUTHORITIES

2 PAGE(S)

3 Cases
4 Amchem Prods., Inc. v. Windsor
(1997) 521 U.S. 591 18
5
6 Armenta v. Osmose, Inc.
(2005) 135 Cal.App.4th 314 11, 12, 13
7
Bluford V. Safeway Inc.
8 (2013) 216 Cal.App.4th 864 passim
9 Downtown Palo Alto Com. for Fair Assessment v. City Council
(1986) 180 Cal.App.3d 384 18
10
11 E. Tex. Motor Freight Sys. v. Rodriguez
(1977) 431 U.S. 395 ...18
12
Gonzalez v. Downtown LA Motors, LP
13 (2013) 215 Cal.App.4th 36 passim

14 Morgan v. United Retail, Inc.
(2010) 186 Cal.App.4th 1136 18
15
Oman v. Delta Air Lines, Inc.,
16
(2020) 9 Cal.5th 762, 466 P.3d 325 passim
17
Raines v. Coastal Pac. Food Distrihs., Inc.
18 (2018) 23 Cal.App.5th 667 16

19 Sheppard v. North Orange County Regional Occupational Program
(2010) 191 Cal.App.4th 289 11
20
Spokeo, Inc. v. Robins
21
(2016) 136 S.Ct. 1540 18
22
Vaquero v. Stoneledge Furniture, LLC
23
(2017) 9Cal.App.5th98 12
24
Statutes
25
Lab. Code §226 1, 15,16, 18
26
Lab. Code § 226.2 passim
27
Lab. Code §226.7 15
28
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1 I. INTRODUCTION AND SUMMARY OF ARGUMENT
2 The Califomia Supreme Court recently reviewed a unique pay plan that had different

3 formulas for how employees would be compensated for a work period, and concluded that so long as

4 the employer paid employees consistent with its contractual agreement, and the payment exceeded

5 the minimum wage, the plan is lawful. (Oman v. Delta Air Lines, Inc., No. S248726, (Jun. 20, 2020)

6 9 Cal.5th 762, 466 P.3d 325.)' In holding that, "Delta's arrangement may be relatively imusual, but

7 it is not xuilawful," the Supreme Court endorsed creative pay plans that reward employees for hard

8 work an efficiency so long as they otherwise comply with the law. {Id. at 341.) Defendant

9 Primeritus Financial Services, Inc. ("Defendant" or "Primeritus") had a legally compliant Pay Plan

10 widi its Skip Tracers that paid them piece rate pay and separately set aside pay to compensate them

11 for rest periods and nonproductive time as required under Califomia Labor Code section 226.2

12 ("Section 226.2"). Primeritus' Pay Plan was governed by statute, but the same Oman analysis

13 applies - Primeritus paid Skip Tracers consistent with Section 226.2 and paid at least the minimum

14 wage for all time worked. Further, Primeritus did not "average" or "borrow" compensation from

15 other sources in order ensure minimum wage.^ Accordingly, Primeritus' Pay Plan is lawful.

16 Plaintiff s Motion for Summary Judgment Poses three questions: (1) Was Primeritus' Pay
17 Plan Unlawful, (2) Does Primeritus owe rest period premiums for its alleged failure to pay minimum
18 wage for rest periods, and (3) Were Primeritus' Wages Statements legally compliant.
19 Plaintiff s oversimplified analysis in its affirmative motion leads again and again to the
20 incorrect legal result. Plaintiff argues the eight dollar per hour payment is below the minimum wage,
21 so the plan must be illegal. This is simplistic and utterly false. Labor Code 226.2 expressly permits
22 employers to pay a reasonable estimate of non-productive time, and nowhere in his Motion does
23 Plaintiff even attempt to contend that enough nonproductive time was ever worked by a class
24 member in an 8-hour day or 40 hour week to render the eight dollar per hour allocation to non-
25 productive time insufficient to cover the minimum wage.
26
' Note: as of August 14, 2020, only the citation to the Pacific Reporter appears to be available. For the Court's
27 convenience and referenced, a copy ofthe decision is attached hereto as Exhibit 1 to Defendant's Request for Judicial
Notice ("RJN") filed concurrently herewith.
28 - Unless otherwise noted, all statutory references herein are to the Califomia Labor Code.
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1 Plaintiff also tries to parlay an alleged lack of information on the paystub into an unpaid
2 wage claim. Those are factually and legally distinct claims, though neither holds water. With respect
3 to the pay itself, Primeritus has submitted a wealth of declaration evidence that shows there is no
4 triable issue that the minutes and hours spent on non-productive time each week were paid at or
5 above the minimum wage. There is no contrary evidence, no declaration, nothing at all to suggest
6 that non-productive time and rest periods were not adequately compensated at a rate above the
7 minimum wage by the $8/hour pay component. As such, no unpaid wage class claim exists.
8 The Primeritus Pay Plan, while somewhat non-traditional, strictly complied with the four
9 requirements in Section 226.2 because it: (1) compensates Skip Tracers for rest breaks and other
10 nonproductive time separately fi'om the piece-rate pay; (2) pays for rest breaks at no less than the
11 employee's "average hourly rate" each workweek;^ (3) pays at least minimum wage for all non-
12 productive time;'* and (4) pays for other nonproductive time using reasonable estirhates.
13 Consequently, because tlie Primeritus Pay Plan properly compensates Skip Tracers for rest breaks at
14 no less that the employee's "average hotorly rate," there has been no failure to provide a break, nor a
15 failure to properly compensate a break, and the Skip Tracers are not entitled to recover the one-hour
16 of pay premium penalty for such a failure to provide or compensate a rest break.
17 Primeritus' Pay Plan is lawfiil and therefore Plaintiff s claim for unpaid wages and derivative
18 claim for rest period premiiuns fails.
19 The dociunentation of this pay methodology on the pay stub is the only place fault could
20 conceivably lie, as the stub does not set out the number of $25 pieces earned, but as Plaintiff himself
21 admitted, he understood the pay system and that he was paid $25 per point and his total piece rate
22 pay was displayed on the pay stub. While the parties may disagree over whether this omission was
23 "knowing and intentional" or whether Skip Tracers suffered any injury as required luider Section
24
25 ^ Primeritus' expert reviewed the applicable time and payroll records and confirmed that, out of 14,160 workweeks, there
was only one single instance where the $64 per day was insufficient to pay for the employee's rest breaks at the Skip
26 Tracer's Average Rate of Pay. (Defendant's RJN, Docket 77, Compendium of Evidence ("COE"), Exhibit 2, Ward
Report, Table 3.)
27 •* Primeritus' expert concluded that, after payment of rest break time at the average hourly rate, the instances where the
$64 per day failed to compensate for both rest periods at the average rate of pay and nonproductive time at the minimum
28 wages were similarly rare. (Defendant's RJN, Docket 77, COE, Exiiibit 2, Ward Report, Table 3.)
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1 226 (e)(1), this dispute does not translate into a claim that Primeritus failed to pay its employees as
2 required under Section 226.2 as demonstrated by the undisputed facts. Plaintiffs attempt to exploit
3 the novelty of this compliant Pay Plan should be rejected. The Court should deny Plaintiffs motion
4 for summary adjudication and instead hold that Primeritus' Pay Plan is, as a matter of law, compliant
5 with Section 226.2, and that lacking any cognizable injury, Primeritus' neghgible omissions on the
6 wage statement do not warrant the imposition of statutory or civil penalties.
7 IL SUMMARY OF RELEVANT MATERIAL FACTS
8 A. The Parties' Stipulation to File Cross Motions for Summary Adjudication
9 Defendant reminds the Coiut that the Parties have stipulated to class certification and
10 the filing of cross-Motions for Summary Adjudication in this matter. The Parties believe that the
11 underlying facts as to how Plaintiff was paid are not in dispute; rather the primary dispute in this
12 case is the legality as to how Primeritus paid Plaintiff and the Class Members - mainly, whether
13 Primeritus properly paid for all nonproductive time, including rest periods, in compliance with
14 Califomia law. (This Court entered an Order approving the Parties' Stipulation to file Cross-Motions
15 for Summary Adjudication on January 31, 2020 at Docket No. 55.) Accordingly, Defendant refers
16 the Court to Defendant's "Factual Background" set fonh in Sections II(A)-(F) within Defendant's
17 memorandum of points and authorities in support of its Motion for Summary Adjudication at Docket
18 No. 76, and incorporates by reference those facts stated in its Motion. {See Defendant's Request for
19 Judicial Notice ("RJN"), filed concurrently herewith.)
20 B. Brief Background on the Primeritus Pay Plan
21 During the Class Period, Primeritus' Incentive Pay Plan ("Pay Plan") was comprised
22 of two distinct components of pay. First, the Pay Plan included a points system. (Defendant's
23 Response to Plaintiff s Separate Statement of Material Facts ("UMF") No. 3.) Each point was worth
24 $25 and each vehicle that was successfially located and recovered typically earned four points, or
25 $100. {Id.) In this system, the points were the "piece rate." (UMF Nos. 3,4.) In addition to the piece-
26 rate pay, Primeritus paid Skip Tracers $8.00 for each hour worked.^ (UMF Nos. 3, 4.) This separate
27
' Primeritus fiirther paid $12 for each hour worked over eight hours per day or 40 hours in a week. (Defendant's RJN,
28 Docket No. 77, Defendant's Compendium of Exhibits, Exhibit C, McGinness Decl., at f 8.)
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1 compensation - typically $64.00 per eight-hour work day - was intended to be enough to cover the
2 Skip Tracers for their two ten-minute rest breaks, plus any other non-productive time based on their
3 reasonable estimates. (Defendant's RJN, Docket No. 77, Defendant's Compendium of Exhibits
4 ("COE"), Exhibit 3, McGinness Decl., at H 8). As with any piece rate system, there is a possibility
5 that the employee's piece rate pay alone would be insufficient to pay the employee the minimum
6 wage. Here, because Primeritus separately set aside $8 per hour, and because that amount often
7 exceeded the amount required to compensate employees for rest periods at the average hourly rate
8 and for nonproductive time at the minimum wage, the balance of that separate payment could be
9 utilized to ensure Skip Tracers received at least the minimum wage for all hours worked.
10 C. Plaintiff and the Skip Tracers Kept Track of the Piece-Rate Points That They
Earned for Each Successful Vehicle Recovery
11
Plaintiff and the Skip Tracers would keep track of their successfiil vehicle recoveries
12
and denote the points they eamed for each recovery on a document labeled a "commission sheet."
13
(UMF No. 17.) The Skip Tracers would provide this commission sheet to Primeritus and sign off on
14
its accuracy before it was provided to Primeritus' payroll department to be calculated into the Skip
15
Tracers' paycheck. (UMF No. 18.) Primerims retained the commission sheets denoting the points for
16
each Skip Tracer. (UMF No. 19.)
17
D. Plaintiff Conceded That His Wage Statements Accurately Reflected What
18 Primeritus Paid Him
19 During his deposition. Plaintiff admitted that, with the exception of one time where
20 he and Primeritus had a dispute regarding a deduction of his piece-rate pay based on a client's
21 modified policy, he was not aware of a time when the points he eamed did not match the
22 commission amount on his wage statement. (UMF No. 15.) As well as the fact that his statements
23 accurately reflected what Primeritus paid him. (UMF No. 16.)
24 m. LEGAL ARGUMENT
25 A. Plaintiffs Minimum Wage Claim Fails Because Primeritus' Pay Plan Complies
with California Law (Labor Code Section 226.2) As It Separately Compensated
26 Skip Tracers for Rest Breaks and Non-Productive Activities. (Defendant's
Response to Plaintiffs Issue No. 1 - Part 1)
27
Primeritus explained the legislative history that led to Section 226.2 in more detail in its
28
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1 Motion, but Section 226.2 alone now dictates how an employer must pay employees under a piece
2 rate plan. Specifically, Section 226.2 requires that:
3 (1) Employees shall be compensated for rest and recovery periods and other
4 nonproductive time separate from any piece rate compensation. (Lab. Code §
5 226.2(a)(1).) "Other nonproductive time" is defined under the statute as "time under
6 the employer's control, exclusive of rest and recovery periods, that is not directly
7 related to the activity being compensated on a piece-rate basis." (Lab. Code § 226.2.)
8 (2) Employees shall be compensated for rest and recovery periods at a regular hourly
9 rate that in no less than the higher of
10 (i) An average hourly rate determined by dividing the total compensation by
11 the workweek, exclusive of compensation for rest and recovery periods and
12 any premium compensation for overtime, by the total hours worked during the
13 workweek, exclusive of rest and rest and recovery periods; [or]
14 (ii) The applicable minimum wage. (Lab. Code § 226.2(a)(3)(A).)
15 (3) Employees shall be compensated for other nonproductive time at an hourly rate
16 that is no less than the applicable minimum wage. (Lab. Code § 226.2(a)(4).)
17 (4) The amount of nonproductive time may be determined either tlirough actual
18 records or the employer's reasonable estimates, whether for a group of employees or
19 for a particular employee, of other nonproductive time worked during the pay period.
20 (Lab. Code § 226.2(a)(5).)
21 In short, under a piece rate pay plan, (1) the pay for rest breaks and other nonproductive time
22 must be paid separately from the pay related to the piece rate compensation, (2) the pay for rest
23 breaks should be paid no less than the employee's "average hourly rate," (3) the pay for other
24 nonproductive time must be at least the minimum wage, and (4) the employer may pay for other
25 nonproductive time using reasonable estimates.
26 By definition, the "average rate of pay" and the amount of nonproductive time in each week
27 is variable. Thus, Primeritus could not know what the average rate of pay would be each pay period,
28 nor could it know how much nonproductive time would be worked each pay period. The only way
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1 to comply with Section 226.2's requirement to separately compensate employees for rest breaks and
2 other nonproductive time was to set aside an amount of money sufficient to reasonably cover the rest
3 breaks and nonproductive time each day, the balance of which would be attributed to the employees'
4 overall pay. Then, in each pay period, so long as that amount was sufficient to cover the average
5 rate of pay for rest breaks and any nonproductive time for the pay period, Primeritus complied with
6 Section 226.2.
7 1. Primeritus Separately Compensated Skip Tracers for Rest Periods and
Non-Productive Time As Required By Section 226.2
8
Although the Califomia Legislature has recently enacted new regulations on incentive pay
9
plans, Primeritus is not aware of any legislation or case law that has made such incentive pay plans
10
illegal. In fact, Oman reaffu-med that "compensation may be 'measured by time, piece, conmiission,
11
or otherwise.'" (Defendant's RJN, Exhibit 1, Oman, supra, 466 P.3d at 336, citing Lab. Code, §
12
200(a); and Wage Order No. 9 §4(B).) Tellingly, statutes like Section 226.2 reinforce the legality of
13
such plans per se, so long as they comply with the requirements of the statute. In particular. Section
14
226.2 requires that, for piece-rate pay plans similar to Primeritus' Pay Plan, an employer must
15
separately compensate employees for rest periods and "nonproductive time" (which the statute
16
defines as time "that is not directly related to the activity being compensated on a piece rate basis").
17
Primeritus' Pay Plan does just that by separately paying employees a separate component of pay
18
intended to cover pay for rest breaks and nonproductive time. (UMF 3, 4.)
19
2. Primeritus Separately Compensated Skip Tracers for Rest Breaks At or
20 Above Their Average Rate of Pay
21 Plaintiff misconstmes the law and baldly contends that Primeritus failed to compensate rest
22 breaks in violation of Bluford v. Safeway. While Bluford holds that "a piece-rate compensation
23 fomiula that does not compensate separately for rest periods does not comply with Califomia
24 minimum wage law" ((2013) 216 Cal.App.4th 864, 872), as explained above, the California
25 Legislature codified Bluford in 2015 when it enacted Section 226.2, which provides a clarification
26 on how employers are supposed to separately compensate for such breaks. Under Section 226.2,
27 piece-rate employees must "be compensated for rest and recovery periods at a regularly hourly rate
28 that is no less than the higher of: (i) [a]n average hourly rate determined by dividing the total
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1 compensation for the workweek...by the total hours worked during the work week... [or] (ii) [t]he
2 applicable minimum wage." (Lab. Code § 226.2(a)(3)(A).) Although Plaintiff cites to this particular
3 section in bolded, block quotes on page 4 of his Motion, Plaintiff altogether ignores the actual
4 requirements set forth in Section 226.2 and simply concludes Primeritus must have "failed to remit
5 payment for rest periods" in accordance with Califomia law, with no explanation as to how it alleged
6 failed to do so. (Ptlf's Mtn. at 6:13-14.)
7 In reality, Primeritus complied with Section 226.2 by paying Skip Tracers $64 per day to
8 cover rest breaks and other non-productive time. For the sake of a simple argument here, many Skip
9 Tracers' average rate of pay was approximately five times the 2019 minimum wage of $12 per hour
10 ($60 per hour). So after taking into account the piece rate pay, the Skip Tracer would only be due
11 $20 for two daily 10-minute rest breaks. This would leave nearly $44 per day to cover other
12 nonproductive time (at the minimum wage). Thus, it is virtually impossible for the $64 per day to be
13 insufficient to cover 20 minutes of rest breaks (even including some nonproductive time). Regardless
14 of this simple argument, Primeritus' compliance with the law is borne out by the actual data.
15 Primeritus' expert. Dr. Ward, analyzed the Skip Tracers' time and payroll data to confirm that the
16 $64 per day (or equivalent) payments were sufficient to pay Skip Tracers their Average Hourly Rate
17 (all amounts paid divided by all hours worked) for all rest breaks. Dr. Ward's analysis confirms that
18 the Skip Tracers' base pay during the Class Period was sufficient to pay Class Members for all rest
19 breaks at their Average Hourly Rate in 99.99% of workweeks - 14,159 out of 14,160. (Defendant's
20 RJN, Docket No. 77, COE, Exhibit 2, Ward Report, Table 3.) Therefore, Primeritus did not fail to
21 properly compensate Skip Tracers for rest and recovery periods in accordance with Section 226.2.
22 3. Primeritus Compensated the Skip Tracers' Non-Productive Time At or
Above the Minimum Wage
23
Again, Plaintiffs misconceived contention that Primeritus failed to compensate for
24
nonproductive time in accordance with Califomia law is a sham. Section 226.2 requires that piece-
25
rate employees "be compensated for other nonproductive time at an hourly rate that is no less than
26
the applicable minimum wage." (Lab. Code § 226.2(a)(4).) Section 226.2 defines "other
27
nonproductive time" as "time under the employer's control, exclusive of rest and recovery periods,
28
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1 that is not directly related to the activity being compensated on a piece-rate basis.Thus, time the
2 Skip Tracers spend not working toward eaming their piece-rate, was nonproductive time. (UMF No.
3 7.) However, as the Skip Tracers themselves explained, they engage in very little non-productive
4 time. Plaintiff and the Skip Tracers explain that the only time they are not at their desks actively
5 locating collateral for repossession, they are attending: (1) a meeting, such as a monthly team
6 meeting, or one-on-one performance review; (2) completing annual compliance training, or training
7 on a new skip-tracing software; or (3) attending a company social event. (Defendant's RJN, Docket
8 No. 75, Defendant's SSUF Nos. 8-23.) Even assuming all of these nonproductive activities occurred
9 in the same workweek, the time spent in nonproductive activities would average one hour and 20
10 minutes (1.33 hours) for the week. (Defendant's RJN, Docket No. 75, Defendant's SSUF No. 23.)
11 Under the Primeritus Pay Plan, as the Ward Report demonstrates, after compensating Skip
12 Tracers at the average rate of pay for rest breaks, except in rare cases (typically during workweeks
13 with irregular hours), there is still more than sufficient compensation to cover other nonproductive
14 time at the minimum wage. (Defendant's RJN, Docket No. 75, Defendant's SSUF Nos. 29, 30, 31.)
15 Indeed, even assuming three hours of nonproductive time per week—an extremely high estimate
16 based on the undisputed evidence—the Ward Report shows that instances where the $64 per day was
17 insufficient to cover both rest periods at the average rate of pay and nonproductive time at the
18 minimum wage were highly unlikely. (Defendant's RJN, Docket No. 75, Defendant's SSUF Nos.
19 24-31.) Accordingly, Plaintiff cannot present any evidence that he did not receive at least minimum
20 wage for any and all nonproductive time worked.
21 4. Primeritus Reasonably Estimated The Amount of Non-Productive Time
and the Data Analysis Supports That Estimate
22
Given the uncertainty surrounding the amount of nonproductive time worked as set forth in
23
24
25 ' Notably, in his Separate Statement at UMF No. 6, Plaintiff attempts to include time spent searching for collateral that
does not lead to the actual location of collateral as "nonproductive time" with actual nonproductive time like meetings
26 and training, but Section 226.2 addresses this point when it defines nonproductive time as time spent on activities "not
directly reiiited to the activity being compensated on a piece-rate basis." By definition, time spent searching for
27 collateral is time spent directly on the activity being compensated on a piece rate basis. There is no limitation on tlie
definition for time spent on unsuccessful results. Like a baker paid by tlie piece for baking cakes, or a shirt-maker paid
28 by the piece for making shirts, a dropped cake or torn short shirt does not convert productive time to nonproductive time.
LiTTLER MENDELSON. P.C. 8.
304E Canlgiy Pafk Eaal
Sin FlMr
Lo* Angetaa. CA 00007.3101
DEFENDANT PRIMERITUS FINANCIAL SERVICES, INC.'S MEMORANDUM OF POINTS AND
310 i i i 0300
AUTHORITIES IN OPPOSITION TO PLAINTIFFS MOTION FOR SUMMARY ADJUDICATION
1 the facts of Gonzalez'' and Bluford and the like, the Califomia Legislatiu-e recognized that it would
2 be nearly impossible for employers to predict the amount of nonproductive time a piece-rate worker
3 may need to work in any given pay period. Accordingly, the Legislature specifically added
4 subsection (a)(5) to Section 226.2, which provides that "the amount of nonproductive time may be
5 determined either through actual records or the employer's reasonable estimates, whether for a
6 group of employees or for a particular employee, of other nonproductive time worked during the
7 pay period." (Lab. Code § 226.2(a)(5) (emphasis added).) This means that an employer may make
8 a reasonable estimate as to the amount of nonproductive time a piece-rate worker may work, and so
9 long as that time is compensated by at least at minimum wage, the employer has complied with
10 Section 226.2.
11 Here, taking into account the very little time that Skip Tracers are not actively locating
12 collateral, such as monthly meetings lasting up to one hour, Primeritus reasonably estimated that
13 Skip Tracers could work up to two to three non-productive hours in any given workday, but never
14 more barring unusual circumstances. (Defendant's RJN, Docket No. 75, Defendant's SSUF Nos. 32,
15 33; Docket No. 77, COE, Exhibit 3, McGinness Decl.^l 8.) As such, Primeritus believed that
16 compensating the Skip Tracers at a daily flat rate of $64 per eight hour work day would sufficiently
17 compensate the Skip Tracers for any non-productive meetings or trainings they may encounter in
18 any given day, plus still allow for sufficient compensation for rest breaks at or above the Average
19 Rate of Pay. Tellingly, the Ward Report confirms that these estimates were indeed reasonable. The
20 instances of the $64 being insufficient under 226.2 were a fraction of one percent. (Defendant's RJN,
21 Docket No. 75, Defendant's SSUF Nos. 24-33.) Under any definition, these estimates are
22 "reasonable." Accordingly, Primeritus has not failed to compensate Skip Tracers for rest breaks and
23 nonproductive time because the Pay Plan complies with ail requirements set forth in Section 226.2.
24 B. Primeritus Neither "Borrows" Pay From Separate Compensation Sources, Nor
"Averages" All Sources of Pay Over All Hours Worked In Order to Provide At
25 Least Minimum Wage for All Hours Worked (Defendant's Response to
PlaintifTs Issue No. 1 - Part 2)
26
The crux of Plaintiff s claim about the Primeritus Pay Plan is his incorrect perception that
27
28 ' {Gonzalez v. Downtown LA Motors, Z,F (2013) 215 Cal.App.4th 36.)
LITTLER MENDELSON. P.C.
1040 Canlgiy Ps*k Caar
Ota riooi
Loa Anoalaa. CA 90007 3107 DEFENDANT PRIMERITUS FINANCIAL SERVICES, INC.'S MEMORANDUM OF POINTS AND
3tO i i i 030B
AUTHORITIES IN OPPOSITION TO PLAINTIFF'S MOTION FOR SUMMARY ADJUDICATION
1 Primeritus "borrows" piece rate pay to make up for its "$8 for each hour worked base pay" to ensure
2 that the Skip Tracers receive minimum wage for all hours worked. Or, altematively, that Primeritus
3 adds the $8 rate and the piece rate together and averages them over all hours worked to meet
4 minimum wage obligations. Primeritus does neither of these things. Rather, Primeritus' paid Skip
5 Tracers on a piece-rate basis, but separately paid for rest breaks and non-productive time, through
6 the $8 for every hour worked base pay, in accordance with Califomia law (Section 226.2).
7 Plaintiff ignores pertinent, recent Califomia Supreme Court authority discussing the critical
8 diffe

Case Info

Judge

Kevin R. Culhane Track Judge’s New Case

Case No.

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Document Filed Date

August 14, 2020

Case Filing Date

December 27, 2018

County

Parties

Alejandro P Gutierrez Attorney for the Plaintiff
Boudreau, John Plaintiff
Brian D Hefelfinger Attorney for the Plaintiff
Daniel J Palay Attorney for the Plaintiff
Does 1-10 Defendant
Keith A Jacoby Attorney for the Defendant
McGinness, Chris Defendant
on behalf of all others similarly situated Plaintiff
Primeritus Financial Services Inc Defendant
Bradley Schwan Attorneys for Defendants
Nathaniel Jenkins Attorneys for Defendants
David Phillips Attorneys for Defendants
Alejandro Zaffaroni Attorneys for Plaintiffs

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Party Discovery: John Boudreau vs. Primeritus Financial Services Inc

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