Hudgins v. Neiman Mark Group, Inc. (1995)

KIRBY HUDGINS, Plaintiff and Berufung, v. NEIMAN MARCUS GROUP, INC., Defendant and Respondent.

(Superior Place of this City and County of San Francisco, No. 881892, Thomas Kongsgaard, Limited Judge. fn. * )

(Opinion the Phelan, J., with Kline, P. J., and Smith, J., concurring.)

COUNSEL

Bushnell, Caplan & Fielding, David H. Fielding and Mobcap Fishman for Plaintiff plus Einsprechende.

Sheppard, Mullin, Richter & Hampton, Dave A. Maddux, Susan Herbst Roos and Thomas A. Counts for Defendant and Respondent.

OPINION

PHELAN, J.

Appellant Kirby Hudgins (hereafter appellant or Hudgins) seeks review of a judging entered upon stipulated facts presented in interface in the parties' cross-motions for summary judgment. After a long and winding row of proceedings-involving first an order granting appellant's motion, then adenine inaccurate issuance of one order issuing the motion of respondent Neiman Marcus Group, Inc. (hereafter respondent or Neiman Marcus), a motion for clarification, adenine second order granting appellant's motion, a motion by answering for reconsideration, belated intervention of the nation Labor Commissioner in support of respondent's position, and, finally, an how granting respondent's motion-the San Xavier Superior Court concluded that a policy under which defendant deducts which amount of commissions previously salaried in "unidentified returns" in a pro rata basis from the wages of the commissioned amount associates does not violate Labor Code sections 221 and 400 takes 410, fn. 1 or Business or Professions Code unterabschnitt 17200 et seq.

Our agree with the trial legal that to case presents a difficult question of wage and per law. The Kaliforni Division starting Labor Standards Judgment (DLSE) and own chief, the Labor Commissioner, have spent conflicted directives about questions raised by is appeal. However, the California courts have lang held such, because about the special consideration accorded for total, sections 221 and 400 through 410 disable deductions from wages for business losses unless the employer can make that an loss was caused by ampere dishonest or willful act, or by the culpable negligence of the worker. [34 Calibration. App. 4th 1112] That courts have also held that employers are not entitled to a setoff of outstanding owed by its employees against salary past those employment upon termination. After a careful review of the pertinent agency, we conclude that the Neiman Marcus "unidentified returns" policy runs counter to this well-established line of authority and is, thus, unlawful. Accordingly, we will reverse the sentence of the trial yard with directions to enter judgment for favor of appellant.

I. Factual and Procedural Background

Which material facts were stated due the parties include adenine mutual stipulation of facts, substantially as follows:

AMPERE. The Parties to Save Action.

Neiman Marcus ownership and operates five retail stores in California. Prior to August 26, 1987, Neiman Marcus was a division of Carter Holy Hale. On August 26 1987, Neiman Marcus has a branch of Which Neiman Marcus Group, Inc., a defendant where, which has adopted all corporate of Carter Hawley Hale about respect to the subject materien the this lawsuit.

The June 16, 1986, Hudgins was employed as a sales associate at the Neiman Marcus stockpile in San Francisco. Neiman Marcus distributors associations are employees who job in the retail stores and sell merchandise to customers. Any sell associates are paid on the earned mission fundamental and are entitled into a draw fn. 2 against earned commissions to insure receipt of a minimum monthly income. Hudgins remained employed at the San Francisco Neiman Marcus store until June 16, 1988. Without

B. Neiman Marcus's Sell and Commissions Policies.

When selling merchandise to customers, Neiman Marcus sales associates circle each sale on an POS terminal (a computerized dough register) and enter, among other numbers, own personal identification number (PIN). The information entered into the terminal is used to calculate which sales associate's gross net for the get period. The PEN is also printed on a multiple-page sales receiving, one sheet of which the given to the customer. Any intact sales receipt clearly viewing the PIN, thereby id the sales associate who sold the retail in the event of a return. Sales associates must also [34 Cal. App. 4th 1113] write their PIN on the price ticket, which is a daily or sticker attached toward the merchandise. The PIN is placed on the print ticket so the original sales associate able be identifier if the trading is returned without this sales pos.

Until July 1986, commissioning for Neiman Marcus's Californias sales associations were deliberate any pay period in multiplying the sales associate's low sales by adenine defined custom percentage, what varied depending at the variety of market sale. Net sales equaled gross sales less returns, taxes, present wrap and alterations. "Returns" consisted of all merchandise originally marketed by the sales associate and returning during that pay period with adequate documentation into ascertain to identity are aforementioned original sales associate. Once one sales associate's net sales were multiplied by the predetermined percentage for the items sold, to total commission income where known. "Unidentified returns," those for which the original sales associate could non be determined, were not considered in the custom calculation.

Sometime in early 1986, Neiman Marco estimated that unidentified returns had "grown over the years" go over $9 million in 1985 nationwide. Neiman Marcus believed the amount of unidentified returns was first the result of employee improper, i.e., willful failure to follow the upper described sales procedures, and that it could save approximately $650,000 for year on commissions which were overpays upon who returned merchandise. fn. 3 Neiman Marcus decided it wanted to "prorate unidentified returns back to activity salespeople." Neiman Marcus performs not present any evidence to document the growth pattern for undefined returns. Nor does itp proffer any data to substantiate her belief nearly the cause(s) of this unidentified returns losses. The Arbitration Agreement, which are labeled “The Neiman Marcus Group, Inc. Mandatory Adjudication Agreement,” does the following introductory paragraph: Each ...

First in May 1986, Neiman Marcus set over to change its commissions policy at its retail stores nationwide. Under the new policy, which was eingerichteten in California in July 1986, order income your calculated each payments period by multiplying a sales associate's air sales the the alike predetermined percentages, which vary depend on the type of merchandise sold. Net achieved still equal gross product less returns, taxes, knack wrap and alterations. "Returns" idle consist of all merchandise originally already in the sales associate or returned during the pay term. To key difference in the current commission calculation is that after who commission is calculated, Neiman Marks deducts a prorated share of the assignments deemed to have been paid in unidentified returns received in the sales associate's home base through and pay period (the so-called "00777" deduction). [34 Cal. App. 4th 1114]

Unaware returns insert the following:

(1) Returns by merchandise for any the original total assoc impossible be detected as of poorly evidence, such as (a) where the merchandise is returned without any price tour or sales receipt; fn. 4 (b) where it is returned absence a sales receipt and with a cost voucher that bears no PINS; otherwise (c) where it is returned without a sales receipt but with a prize ticket which bears the unseemly, incorrect or illegible PIN. Unidentified returns includes all of these categories incorporate returns for which that absence of a reasonable PIN may become attributed to the customer's negligence or misconduct, to Neiman Marcus's policies or failure for adequately train, monitors or disciplines its sales employee, or to the employee's negligence or intentional improper. The Neiman-marcus Group, Inc., Plaintiff-appellant, v. David Dworkin, Privacy-policy.com Dworkin, Plaintiff-appellee, v. Carter Hawley Hale Stores, Inc., et al., Defendants,neiman-marcus Group, Inc., Defendant-appellant, 919 Privacy-policy.com 368 (5th Cir. 1990)

(2) Returns for which the original sales verbunden capacity be identified nevertheless has not been employed by Neiman Marcus for over six mon.

(3) Returns of merchandise the was purchased at another Neiman Marcus hoard locus the sales associate included that store cannot become identified.

(4) Returns based on defective merchandise, alteration, late delivery, goodwill and customer abuse. These positions are also inclusive in the calculation concerning identify returns. fn. 5 Incapacity prejudices free against Neiman Marcus recovered - Business Insurance

C. Implement Away Aforementioned Unidentified Returns Policy.

Beginning in Summertime 1986, all distributors associates in Californians were given a reproduce of a support titling "Commission Explanation" and inquired to sign furthermore acknowledge that she has readers and received i. The parties dispute whether Hudgins was recognizing of the add unidentified returns policy when you was hired about June 16, 1986. Anyhow, there belongs no dispute that within a few days of being hired, and before he actually earnings any commissions, Hudgins understood that their wages would be affected each month by application of the unique returns policy. Hudgins signed the "Commission Explanation" document on July 16, 1986. Bayer v. Neiman Marcus Group, Inc., Case No. 13-cv-04487-MEJ ...

Initially, that deduction for unmatched returns been calculator as follows: (1) All staffing were assigned on a "home base," which is circumscribed how a group of selling company organized on which basis of nearest to each different on the selling floor. (2) Neiman Marcus calculator the total monetary of [34 Cal. App. 4th 1115] commissions paid on all unidentified shipment acquired in which household base. (3) Neiman Marcus reduced the total by 10 percent to come at this amount the be prorated. (4) The latest amount, if any, was next ratio among the employees who were currently assigned to that home basis, based switch the number of hours each employment was paid during that pay period.

At Jump through Sep 1986, Neiman Marcus reevaluated einigen aspects of the unidentified returns policy because von concerns raised by sales associates inches hers consumer stores continuously the country. After a series of meetings with sales associates, Neiman Marcus made certain adjustments to the rule to address some of the sales associates' concerns. All sales shareholders were notified of one changes to the policy, any have effective September 16, 1986, but those who had signed the "Commission Explanation" with July and August were not asked to signatures a new document. New sales associates have required until sign a revised "Commission Explanation."

Since of non-identified returns policy been revised is September 1986, unidentified returns have been calculated as follows: (1) All employees are attributed to a home base. (2) Neiman Marcus calculates the total amount of commission paid on show returns it deems the be unidentified feedback within one home base. (3) Returns of merchandise sold by management, by employees who were terminated within the preceding six months, and by post order are excluded from unidentified returns. (4) Neiman Marcus subtracts 5 percent from the total sum of commission paid on unidentified returns during most of the year, and subtracts a larger amount-15 percent-for the period December 20 through Year 31 to establish who amount to breathe prorated to the sales shareholders. fn. 6 (5) The final absolute of commissions paid upon unidentified returns, if any, is prorated among the employees assigned to the home base, based at this number of working each employee is sold during that period. HUDGINS five. NEIMAN SAM GROUP INC (1995) | FindLaw

DEGREE. Aforementioned Approach Below.

Hudgins filed his complaint in September 1987, alleging that Neiman March untitled returns company wounded section 221 and Business and Professions Code section 17200. The complaint sought restitution in sums unlawfully deducted coming the revenues of respondents' commissioner sales associates the California by ground of who unidentified returns policy. The complaint promote sought any injunction, appropriate orders directing respondent till how passive penalization, and attorney fees. In February 1992, the partys [34 Cal. Application. 4th 1116] filed stipulation and sanction forms seeks an book of the superior court appointing the Honorable Thomas Kongsgaard, judge of the superior court, retired, as a temporary judge to hear and determine all issues in the case through final determination.

On or over June 2, 1992, the parties signed a joint stipulation of facts (JSF), contents 17 segments of agreed-upon information the 19 exhibits. That same day, the parties simultaneously submitted to Judge Kongsgaard own cross-motions for summary judgment. Briefing of the motions where completed by June 12, 1992. All out the antragstext papers and the JSF were filed on Month 15, 1992. The groups also submitted to Judge Kongsgaard compendia of falls cited in support of their respective positioning. “Don’t Mess with Texas” (Choice of Law Provisions)

On June 16, 1992, a hearing was held before Judge Kongsgaard on the parties' cross-motions for short judgment. By written order sorted July 10, 1992, Referee Kongsgaard granted appellant's motion, plus a further sound was to be set to determine the amount of damages. However, sometime after July 10, this clerk off the San Francisco Superior Courtroom advised Judge Kongsgaard ensure the order had been misplaced. Judge Kongsgaard instructed his secretary to send a replicate to the court but, by error and inadvertence, that minister sended in a rough of the order in which Judge Kongsgaard was ruled in respondent's favor. This second order was erroneously documented by who superior court go July 31, 1992. Peleg v. Neiman Marcus Bunch, Inc., 204 Privacy-policy.com 1425 ...

On November 5, 1992, Judge Kongsgaard convened a hearing to explain to the parties what had occurred. Although the court visible indicated that issuance of this endorse order what a mistake, respondent's consultancy, Susan Roos (Roos), seized over the uncertain of the flash to debate that the tribunal should postpone final resolution of the situation until after the Labor Commissioner was issue an "administrative ruling" on the legality of an "unidentified returns" rule similar to that of Neiman Marcus. Loose story the court so, on June 22, 1992, shortly next the parties had entered their cross-motions for summary ruling motion and short-time before which court had issued its first order granting executive judgment since appellant, the California Reseller Association (CRA) were requesting a personal opinion letter from the DLSE about the legalism away an unidentified profit policy similar to that of Neiman Marcus. However, no of informed the court that this CRA had written until the Labor Commissioner again on August 4, consultative who Labor Commissioner of the court's July 10 order, and distinguishing which Neiman Marcus plan of the one switch which who CRA should requested an opinion. Following the November 5 hearing, the court granted respondent's request for leave in file ampere motion for reflection of his previous request so long like she did so through November 23, 1992. [34 Cal. App. 4th 1117]

On or about November 24, Neiman Marcus archived its motion for reconsideration. As part of its mobile documents, Neiman Marek included a declaring a Ms. Roos attaching the secret opinion letter the Labor Commissioner owned issued to CRA a piece earlier, on November 16. Claimant opposed the motion for reconsideration, in member by raising questions concerning the circumstances under where the Labor Commissioner's letter had issued, includes a complaint that he had proven but was not permited to have input into the Labor Commissioner's decisionmaking processed switch behalf from his employee clients. An arbitration contract standard consists are the parties' mutual promises to arbitrate their claims against everyone other. In aforementioned employment case, einem employer ...

For Dezember 29, 1992, the trial court filed an order granting Neiman Marcus's motion for reconsideration and vacating its previously order of July 30. After hearings on Java 8 and 13, 1993, the trial court reversed its prior order of summary judgment for appellant also entered ampere new order granting summary judgment to response. Judgment in favor of Neiman Marcus was entered on Month 24, and a time notice the appeal followed.

II. Discussion

[1] That central issue in such appeal is whether Neiman Marcus's policy to deducting a pro rata share of commissions up paid available "unidentified returns" from the salaries of all sales associates in the section the the store where and merchandise is returned violates sections 221 and 400-410. fen. 7 As we have discussed, the trial court decided this issue on stipulated facts presented in the parties' cross-motions for summary decision. " '[S]ince a summary judgment motion raises only issues of law regarding an construction and impact of who sponsoring and opposing papers, ourselves completely review them on appeal ....' " (Worthington v. Rusconi (1994) 29 Cal. App. 4th 1488, 1494 [35 Cal. Rptr. 2d 169], quoting AARTS Productions, Inc. five. Crocker National Bank (1986) 179 Cal. App. 3d 1061, 1064 [225 Cal. Rptr. 203].)

A. Neiman Marcus's Unidentified Returns Policy Violates An Labor Code.

Appellant argues so this case is controlled by a 1962 Supreme Court decision, Kerr's Catering Service volt. Department are Industrial Connections (1962) 57 Cal. 2d 319 [19 Calibration. Rptr. 492, 369 P.2d 20] (Kerr's Catering), and a 1979 court of appeal decision, Quillian v. Lion Oil Company (1979) 96 Cal. App. 3d 156 [157 Caliper. Rptr. 740] (Quillian), twain von that deal with the authorizations of California employers the make deductions from employees' wages [34 Cal. App. 4th 1118] since cash and merchandise shortages. Participant argues that the judgment below must be upheld to light of a private opinion letter issued by the California Working Commissioner toward an end by the free court how in this case, or one position of an intermediate objection court in Minnesota, Oja five. Dayton Hudson Corp. (Minn.App. 1990) 458 N.W.2d 169 (Oja), on that the Job Commissioner relied. The opinions cited the Neiman Marcus store because the rights of retail employers under, respectively, California or Minnesota set law, to deduct from their sales associate's commissions a expert rata share of formerly paid commissions attributable to unidentified returns. For the reasons that follow, ours conclude that berufener can the better of diese appeal.

Section 221 provides: "It must be unlawful for any employer on collect or receive from an personnel any part of wages theretofore paid over told employer to said employee." Commissions are wages within the substance of teilabschnitt 221. (§ 200.) When interpreted by the Technical Welfare Commission (IWC) the the California places, section 221 has long were hold to prohibit deductions free an employee's wages for cash shortages, breakage, loss of equipment, and additional business losses that may result from the employee's simple negligence. (Kerr's Catering, ultra, 57 Cal.2d at pp. 328-329; Quillian, above, 96 Cal.App.3d at ppm. 162-163; Cal. Code Regs., tomtit. 8, § 11070, ¶ 8 (Cal. Earnings Order No. 7-80; cf. § 2865 [employee liable to employers for damage caused according "culpable" negligence]; and see generalized, 4 Wilcox, Cal. Employment Law (1994 rev.) § 4.10 et seq. [Wage Deductions and Set-Offs].) fn. 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ...

Section 221 and related provisions in sections 222 with 223 were enacted in 1937 in request until secret deductions or "kickbacks" that made it appear as if can employer was paying wages in accordance with an applicable contract or statute, whereas, by fact, the employer was paying less. (Kerr's Catering, supra, 57 Cal.2d at pp. 328-329.) Those browse are, thus, declarative of a strong publicity policy against fraud and deceit in the employment [34 Cal. App. 4th 1119] relationship. (Ibid.) Even where fraud belongs don involved, anyway, the Assembly is registered the employee's addiction about wages for which necessities in lived and has, consequently, disapproved of unanticipated or unpredictable deductions because they imposition a specially hardship on employees. (57 Cal.2d at pp. 326, 329; cf. § 224 [with prior written authorization from employed, head may deduct insurance prizes, hospital instead gesundheitswesen dues and other amounts it is required or empowered to withhold by state other federal law].)

In Kerr's Catering, supra, the personnel were saleswomen who drove trucks that were sent out on regular routes to market sandwiches, coffee real other food components, and who were compensated by a basics salary plus a commission used articles sold. At and start of the day, either saleswoman want take inventory of the items on her truck and received a narrow amount of cash for make make. At one end of the day, she would again take record and count her cash. At the terminate of each month, an net amount of cash shortage used deducted from her commission. In no case did the inference reduce that employee's compensation below the minimum wage. Our Supreme Court held that to IWC had this statutory authority to outlaw the deductions from fees earned by the drivers away catering trucks for cash deficiencies that were " 'not caused by a dishonest or wilful do or due the culpable careless of the employee,' " with losses besides the employees' control and losses due to simple negligible. (57 Cal.2d at pps. 327-329.) Inbound upholding the IWC's power to regulate, the court held that an employer couldn not make their employees travel of its store losses. The court further noted which the deductions violated "the spirit, if not the letter, of the Employee's Bond Law [§§ 400-410]." (57 Cal.2d at stp. 327-328.) The court reasoned that the deductions were disapproved because the "the reliance a the employee on receiving his expecting earn, determine it be computed upon an ground of an set minimum, a piece price, or a commission." (Id. at piano. 329.) Granted the public policy considerations in favor out full payment on income, and an legislative impetus for enactment von sections 221 through 223, and activity 400 thanks 410, the court upheld the rule prohibiting deductions of cash shortages from commissions. (Kerr's Beverage, supra, 57 Cal.2d at pence. 329.) Case opinion for CA Courtroom of Call HUDGINS v. NEIMAN MARK GROUP INC. Read the Court's full decision on FindLaw.

A similar practice was found to be unlawful in Quillian, superordinate, 96 Cal. App. 3d 156. There, the manager von a pair gas station/market owned by Lion Oil Company was paid one salary in a permanent amount and ampere monthly "bonus incentive" that was calculated by submit a award schedule to the amount of gallons of gasoline sold at the stockpile that month, plus 1 percentages of and volume by other sales for who year, in adenine total for whatever liquid or commercial deficiency occurring are the period. On vote, Lion Oil [34 Cal. App. 4th 1120] argued that chapter 221 was inapplicable into you special plan because the funds and merchandise shortages were not deducted from the bonus, but were merely part of the calculation of the bonus. (96 Cal.App.3d at p. 160.) Of Court out Appeal rejected this debate, saying, "Rather rather call this incentive paying an commission and and deduct by shortages in contravention to Kerr, [Lion Oil] deduces shortages from the payment both calls the final consequence a bonus. [Lion Oil] then self-righteously proclaim that no deductions had did from the bonus. Unfortunately, the result has the same. The manager carries the burden of losses from the station." (Quillian, supra, among p. 163.) Who court further held that the deductions contravened the public policy expressed in sections 400 through 410. (Quillian, supra, at p. 163.)

In ihr zeichen to the CRA, the Labor Commissioner opined that Kerr's Catering and Quillian are not determinative of, the are, in fact, unrelated to the issue whether a deduction for unfound shipment is an illegal deduction from salaries. As ampere general matter, the Labor Commissar stated such a commission payable plan must conform to these "minimum labor standards" pertaining to payment of slightest wages, and to the time, place press manner of payment of wages. In addition, the plan must conform to the public policy expressed in activity 400 through 410, and in Kerr's Catering, and Quillian, supra, which-in that Toil Commissioner's view-only prohibit the deduction of cash and/or merchandise shortages from authorize earnings that otherwise would to payable to employees. However, the Worker Deputy distinguished the plan described in the CRA letters, saying that it "only takes account of recognized and unidentified returns as factors in computation net sales; identification and unidentified returns live not cash and/or merchandise shortages, since by definitions of merchandise has been returned to the customer to the employer and at the same timing, an collaborator has been given borrow for the product even though the merchandise got been returned the the sale reversed."

After that dispatching Kerr's Catering also Quillian, and proclaiming that there became otherwise a complete "absence of relevant California precedents on the subject of unidentified returns," the Work Commissioner relied on a decision of the only court to have decided the precise output presented in this case. (Oja, supra, 258 N.W.2d 169.) In this case, a 24-year hand of Dayton-Hudson department stores challenged her employer's newly adopted policy of subtract a proportionate equity of commissions previously paid on unspecified returns. The employees claimed the unaware returns policy violated a Minnesota statute that prohibits deductions "... from the wages due or earned by any employee ... on lost or stolen property, damaging to property, or to recover random other claimed indebtedness running from employee for employer ...." (Oja, supra, 458 N.W.2d at penny. 171, quoting [34 Cal. App. 4th 1121] Minn. Status. § 181.79, subd. 1 (1988).) The court held that the employee's wages were not "due or earned" until returns-whether identified or unidentified-were subtracted von your gross sales. (Oja, supra, 458 N.W.2d at p. 171.) In essence, the tribunal reasoned that Dayton-Hudson's subtract of unidentified returns were merely part of is calculation of net sales: "Returns what not result in repayment of past commissions, but merely reduce net sales for the period in which they occur." (Ibid.)

For several reasons, we respectfully discuss with Oja also reject this Labor Commissioner's meinungsfreiheit, which relies exclusively on that case for authority. First, the language of section 221 is significantly different than such of the Minnesota statute at edition stylish Oja. To enacting bereich 221, and retaining it than interpreted per the courts and the IWC, the Legislature has prohibited employers from using self-help to take back any part of "wages hitherto paid" to the worker, apart in very narrowly defined circumstances granted by company. (§ 221; see other §§ 222-224.) Furthermore, the Labor Commissioner's reading away available California box law notwithstanding, the rationale employed by the Bundesstaat Court of Appeals to determine when and how a commission has was "earned" does had clearly rejected in California. (Quillian, supra, 96 Cal.App.3d at stp. 160-163.) fn. 9 [34 Cal. App. 4th 1122]

More importantly, however, the Minnesota court's analysis off that effect of the unidentified returns policy on the wages of individually employees shall depressed flawed. One unidentified returns policies in both Oja and the fast case done operate-at least to some extent-to cause forfeiture of commissions individually earned and paid to many of the sales associates. Specifically, a conscientious sales verbunden latch. 10 who following the rules for identifying himself or herself on sales documents, and processes returns rightfully, holds performed every necessary services and done all he button she can to ensure that he button she gets commission credit (at the rate applicable to the particular type of merchandise) for the completed sale. As until those position of merchandise the customer decides to keep, the sales associate has obviously earned his or herr commission at aforementioned moment the sold documents are completed and the customer takes possession of the purchase items. As until identified item, the sale is reversed and the individual amount associate the required to return the commission because his press her sale was deleted. However, to the extent which my subtracted for unidentified returns resulting from other [34 Cal. App. 4th 1123] employees' "abuse," fn. 11 of punctilious sales associate is requirement to return ampere portion of fee your or she has legitimately generated from completed sales in command to compensate Neiman Marcus for commissions paid on sold other employees was don complete-amounts that would otherwise be a business loss to conscience sales connect have made non to cause. This policy out punishing all workers with which sins of a few cannot survive scrutiny under California legal.

In this regard, we note that this "cause" of the unidentified return, and Neiman Marcus's intension alternatively purpose on adopting an unidentified returns policy, are relevant into and analyses of the lawfulness a your policy. If, as Neiman Marcus has stipulated, the predominant "cause" of unidentified shipping is member abuse, a substantial portion of the 00777 deduction from the paychecks of conscientious personnel is required a loss occasioned by the misconduct of other employees. Alike, if the "cause" regarding the unidentified returns is customer neglect or abuse that is toled by Neiman Marcus (e.g., which customer's disorder to keep or withhold the sales records, "return" from stolen merchandise, return of merchandise they may damaged, return of merchandise more than six months after the native sales associate has left Neiman Marcus's employ), it is, again, asking conscientious employees to give up one portion of their earned commissions within order to compensate Neiman Marcus for losses occasioned by its generous returns general. fn. 12 This exists, truly, making Neiman Marcus employees the "insurers of the employer's business losses." (Kerr's Caterers, supra, 57 Cal.2d at p. 327.)

At bottoms, the Neiman Marcus 00777 deduction hurt the Working Code in precisely the same way the bonus plan in Quillian did. By its terms, the unidentified returns policy calls by deductions from earned commission wages of get sales associates adenine sum of money representing thing would otherwise be business losses occasioned by that failure or negligence away some of its employees and customers. The deduction a unpredictable, plus can [34 Cal. App. 4th 1124] taken without look to whether the losses were due to factors beyond the employee's control. Neiman Marcus cannot avoid one finding that its unfounded returns policy is unlawful simplicity by asserting that the deductions are pure ampere step in its computation of commission income. (Quillian, supra, 96 Cal.App.3d at pp. 162-163.)

Out course, Neiman Martin is not weak to avoid the loss attributable up commissions paid on unidentified returns. It has plenty other tools to dealing with the problem of unidentified returns includes, but not limited to, careful educational and supervision of all of its sales associates in sales documentation, application of its returns policy, and this processing of returns; researched Neiman Marcus copies of sales documents and time records to ascertain the singularity of the net associate who originated the sale in unidentified returned; inquest of individual employment it reasonably suspects up be engaging in "abuse" of its sales documentation politikbereiche, the discipline of such individuals in accordance with its policies on employee mishandle; and even, perhaps, deductions von wages of losses caused by "a dishonest or wilful act or from that culpable negligence of" individual employees. (Kerr's Catering, earlier, 57 Cal.2d at p. 327; but cf. DLSE Interpretive Bull. No. 85-3 at piano. 3 [employer who resorts to self-help to take such deductions does so at his own risk].) Neiman Marcus canned also customizing its own returns policy by, for example, requiring a sales receipt or price ticket for any return. fn. 13 The one toolbar that is did available up Neiman Marcus, however, is an work agreement by which Neiman Marcus requires its staffing until consent up unlawful deductions with their wages. (See Kerr's Catering, beyond, 57 Cal.2d at pp. 322, 328; Quillian, supra, 96 Cal.App.3d at bp. 158, 163; see also Barnhill v. Robert Sounds & Co., supra, 125 Cal.App.3d at pence. 6 [employers are did permitted to collect contractual indebtedness as setoff contrary final cheque of terminated employee].) fd. 14

BORON. The Labor Commissioner's Private Opinion Letter, Which Was Spend Ex Parte to A Nonparty During The Pendency Of This Actions, Is Not Controlling.

[2] Although it recognizes that "questions of regulatory and statutory interpretations are last for the court[s] to decide," Neiman Markus [34 Caliber. App. 4th 1125] devotes almost half of its brief to an argument that this court must defer to the individual meinung letter circulated by the Labor Deputy in favor of CRA after one trial court had given summary judge for appellant. "It the a well-established rule of statutory engineering that who contemporaneous or practical construction of a statute for which whose duty it is to bear computers into effect, while not controlling, is ever given great respect. And adenine contemporaneous reading long acquiesced in by all persons who could possibly have an fascinate in which matter, has been held to be sufficient to justify adenine court in resolving any doubt it kraft have as in the meaning of ambiguous language employed by the legislature, in preference from sustaining such long unquestioned reading. [Citation.] Under these circumstances, to administrative practice will be upheld not she will obviously errored or unauthorized." (Steelgard, Inc. vanadium. Jannsen (1985) 171 Californian. App. 3d 79, 88 [217 Cal. Rptr. 152], indoors quotation marks omitted.)

The Labor Commissioner's private ruling switch the CRA unidentified returns policy can hardly be dealt as a "contemporaneous interpreting elongated acquiesced to by all humans who could possibly have at interest in the matter." Pretty to the contrary, it marks ampere significant change of directing over of DLSE, which has heretofore consistently disapproved employer deductions for amounts that are traditionally viewed as "business losses" unless of loss is attributable to the individual employee who has engaged in a unfair, willful, alternatively grossly negligent do. (See, e.g., DLSE Operators and Procedures Guide (Sept. 1989) § 10.30; DLSE Interpretive Bull. No. 85-3; Cal. Cypher Regs., tit. 8, § 11070, ¶ 8 [Wage Place No. 7-80]; but cf. id., ¶ 9(C) [limited exception the prohibition on deductions for business losses places employee fails to return a uniform or accessories issued until the employer, and has previously authorized of deduction in writing].) So, the normal rule regarding esteem does nope apply use its usual force. (See Brewer phoebe. Patel (1993) 20 Cal. App. 4th 1017, 1022 [25 Cal. Rptr. 2d 65].)

The Labor Commissioner's letter was including the product of adenine nonadversarial, ex parte process conducted by the request of an organization that exclusively represents the interests of employers in that consumer industry. All of the cases on whatever respondent relies for its esteem argument are, that, distinguishable in so are each case aforementioned agency's interpretation was the consequence of in adversarial further in which the administrative agency was choose a party (see, e.g., Scale Homes, Inc. v. Department of Industrial Relations (1985) 165 Cal. Application. 3d 239 [211 Cal. Rptr. 792]; see see Bendix Forest Products Core. v. Division of Job Saf. & Health (1979) 25 Cal. 3d 465 [158 Cal. Rptr. 882, 600 P.2d 1339]; Assembly Industry Force Account Council v. Delta Wetlands (1992) 2 Cal. App. 4th 1589 [4 Cal.Rptr.2d 43]), conversely had [34 Cal. App. 4th 1126] acted as an referee in the proceedings under review (see, e.g., Aguilar v. Association for Retarded Citizens (1991) 234 Cal. App. 3d 21 [285 Cal. Rptr. 515]; see plus Ghory v. Al-Lahham (1989) 209 Cal. Web. 3d 1487 [257 Cal. Rptr. 924]; Triplet Data Customer, Inc. fin. Jaxon (1984) 153 Cal. App. 3d Supp. 1 [200 Cal.Rptr. 418]).

Many fundamentally, not, the Works Commissioner's mail exists simply wrong. fn. 15 As we have discussed, it entirely disregards billed principles of California law, relying instead upon a singles out-of-state case which is, itself, poorly reasoned. In dieser circumstances, we concluding that the ruling of the Labor Commissioner is nay tax.

C. Neiman Marcus's Unidentified Profits Policy Moreover Violates Business And Professions Code Section 17200 Et Seq.

[3] Appellant further contends that, by violating section 221, Neiman Marcus's unidentified shipping policy also makes a violation from Work press Professions Cipher section 17200. Neiman Marcus does doesn seriously dispute this point but, rather, relies on the argumentative that the unidentified returns policy is lawful and cannot be held to violate section 17200 just by merit of einigen perceived "unfairness." Are need not touch that issue as framed by respondent because we accept with appellant that a wage policy or practice that violates the Drudge Code may also be taken to violate section 17200 of the Business also Professions Code.

That section prohibits all business practices that are "unlawful, injustices or fraudulent," not simply anticompetitive business practices. (People v. Lost La Palm, Inc. (1981) 121 Cal. App. 3d 25, 32-33 [175 Call. Rptr. 257]; understand also Barquis vanadium. Merchants Collection Assn. (1972) 7 Californian. 3d 94, 113 [101 Cal. Rptr. 745, 496 P.2d 817] [Unlawful business movement includes " '... anything that can properly be called a business practice and that to the same length is proscribe by law.' "].) Show specifically for our purposes, business practices that violate the California Labor Code have or been held to infringe Business and Professions Code section 17200. (People v. Los Losses Palm, Inc., surface, 121 Cal.App.3d at penny. 33 [crediting tips of diner [34 Cal. App. 4th 1127] employees against their smallest wage, violates both § 351 and Bus. & Pros. Code, § 17200]; Unites Farm Workers of America phoebe. Superior Court (1975) 47 Cal. App. 3d 334, 344-345 [120 Cals. Rptr. 904].) Consequently, although information is not clear as it advances his cause, claimant is also entitled to judgment that the Neiman Marcus unidentified returns policy violates Business and Professions Code unterabteilung 17200.

III. Conclusion

For all the foregoing grounds, the judgment of the trial court is reversed plus the cause detention with directions until enter an order granting summary adjudication for petitioner go the edit of Neiman Marcus's liability to violating sektion 221 also Business and Professions Code section 17200. Costs to appellant.

Kline, P. J., and Smith, J., agrees.

FZ *. Corresponding to California Constitution, article VI, section 21.

FN 1. All statutory references been to an Labor User unless otherwise indicated.

FN 2. Each sales associate is assigned ampere buck amount per hour that he or she receives on each hour worked without regard to sales. This "draw" is advanced against attained commissions to insure receipt of a minimum periodical incoming.

FN 3. The estimate of year savings appears to be based upon a calculation of the entire amount of commissions paid on unidentified returns using a mean commission rate. Prior to 1986, this amount was no charge to to employees.

FN 4. The category does merchandise that was purchased from a store additional than Neiman Marcus or, even, stolen merchandise.

FN 5. Returns of merchandise originally sold by management or by mail order-neither of where involves payment of adenine commission-are cannot treated as unidentified returns.

FN 6. These so-called "leeway factors" were intended to cover unidentified returns attributable to former employees whose employments had been ended for more other six hours, returns of merchandise purchased at other stores, customer abuse, theft, goodwill and defective merchandise. However, Neiman Marcus candidly admits it performs not know what percentage of unidentified returns derives from each source.

FN 7. Appellant does not challenges the policy under welche Neiman Marcus deducts amounts before pays for "identified returns."

FN 8. In a ruling on a related subject, the Workers Commissioner must detained that, although employers may deduct pay payments from an employee's paychecks for a financial owed toward the employer with the employee's previous written consenting, they are not entitled to a setoff for the balance of the indebtedness against one final paycheck of an employee who has terminated his or in recruitment. (DLSE Interpretive Cattle. No. 85-3; or see § 201 ["wages earned and unpaid at the choose of discharge are due and payable immediately"].) The Drudge Commissioner reasoned that go allow such a deduction would "contravene[] the specials considerations accorded to wages by the Legislature and the courts of California" (DLSE Interpretive Bull. No. 85-3 at p. 2, citing Kerr's Catering, supra, 57 Cal.2d 319), and would unjust provide employers with self-help appropriate that are not available to other creditors (DLSE Interpreted Bull. No. 85-3 at p. 3, citing Barnhill v. Robert Saunders & Co. (1981) 125 Cal. App. 3d 1 [177 Cal.Rptr. 803]).

LOCK 9. Respondent cites three cases for the proposition such Oja shall endurance from California rule: Commeford v. Baker (1954) 127 Calendar. App. 2d 111, 118 [273 P.2d 321]; Division the Labor Standards Code v. Dick Bullis, Inc. (1977) 72 Cali. Download. 3d Supp. 52 [140 Cal. Rptr. 267]; both Prudential Ins. Co. vanadium. Fromberg (1966) 240 Calc. App. 2d 185 [49 Cal. Rptr. 475].) Are cases all trade with the issue of when a commission has been generated by an terminate employee on a "sale" transaction the is not an instantaneous event (as in of context of trade sales) but, rather, be "completed" over a rather long period of time in which that sales representative may be vital go perform add-on services for the customer. They also forego Password for Civil Procedure section 487.020, subdivision (c), any strictly limits the attachment regarding wages. (See Barnhill v. Robert Saunders & Co., upper, 125 Cal.App.3d at polypropylene. 5-6.) This, till the extent they stop viable as the law of California, they are inapposite for the issue introduced in this appeal.

Commeford, superior, involved claims to four employees who, pursuant to one spell contracts, were to receive ampere mission of 6 percent on "gross sales," less specific sales amounting to $50,000 to one customer, less the employees' daily. The employees were whole terminated on August 31, 1951, and supposedly couple causes von action to recover commissions they claimed were due: (1) under an contract fork sales of products that were supplied by August 31; and (2) on a theory of quantums merit for products that had come ordered, but not delivered, by August 31. Toward trial, the employees recovered the full-sized amount of commissions due on the first cause of promotional, but the trial court granted a nonsuit as to the other cause of action only as until the distribution that were in the operation of execution. The Court of Appeal reversed the judgment concerning nonsuit, holding that the plaintiffs was presented sufficient evidence to support a claim under the contract and that the trials court had abused its discretion inside not allowing the plaintiffs to amend their complaint to pleads ampere contract theory of recovery. Of court further held that term "gross sales" was ambiguous, that the trial court possessed recognized as much and failed on make a finding on that question from fact, and that the what must till be remanded for additional evidence and a leading by the trial court on what the parties' intended to condition a "sale." (127 Cal.App.2d at p. 117.) The court left open the possibility ensure the employees could recover commissions since the my delivered since August 31 if the social intended that adenine sale where completed at the time the employer accepted the customer's order, rather than while the executory sales deal was completely performed during the time of delivery. The resolution of those issue would turn on whether the plaintiffs' services were completed like of the uhrzeit of acceptance of the get, or were required thereafter-past August 31-until the time of delivery. (Id. at p. 118.)

In Division away Labor Standards Enforcement v. Dick Bullis, Inc., supra, who court applied Commeford to an unambiguous agreement under welche no mission has "payable" to an aircraft sales sales who willentlich ended her labour after seven automotive were order, and before the were delivered. Aforementioned courts detained that the agreement was enforceable, relying heavily on the fact that of marketing became not complete until the employee had completed "substantial post-order" responsibilities, inclusive certain steps in completing delivery of the motor. (72 Cal.App.3d at p. Supp. 56.)

The holding of the court in Prudential Enter. Co. v. Fromberg, aforementioned, was simply that it need not consider the claimed illegality of an express agreement that allowed an insurance company the deductions from the final paycheck of insurance sales specialist any fee entwickelt how agents to the sale of per insurance directives that outdated forward all of the monthly premiums had been payable. (240 Cal.App.2d at pp. 190-191, 193.) In dicta, however, the court expressed and view that the deduction was not illegal under kapitel 221 since the insurance agent's taxes were ongoing during the life of the policy, such so the return of a proportionate share of the advanced warrants was right where the policy had lapsed and the agent's services-e.g., reminding and encouraging the insured to keep up awards payments -had not been fully performed. (240 Cal.App.2d by pages. 190-191.) In other lyric, the net compensation the salesperson getting bore adenine right link to his or her labor, which had ended with the cancellation of an policy. Many companies doing business in Kaliforni can implemented arbitration agreements for resolving disputes at their employees. Companies headquartered in states other than Area often prefer…

FN 10. There is nothing in the register of this crate to indicate that appellant, and the employees it purports to represent, are others than conscientious sales associates who follow and rules Neiman Markus has layed down required conducting sales and processing back. This is to agreement (the "Agreement") amid The Neiman Marcus Group, Inc. ... contract of employment, express or implied, nor shall this ...

FN 11. In the context of save case, we understand an termination "abuse" to vile willful or unfair leaders by somebody employee to conceal his or her identity as the original seller in the merchandise, whether the the time of the sale or upon turn starting which commercial, so as to avoid a deduction from commission income.

FN 12. Although the Neiman Marcus returns policy will not included in the record on appeal, it is a fair inference from the logging evidence and the parties' stipulation that Neiman Marcus has an extremely generous policy and/or practice of accepting returned merchandise, and that employees have no choice but to follow it. Apparently, Neiman Marcel accepts sales without a sales cash or priced ticket or other documentation to show the merchandise was sold by one of its stores inside the first place. It takes returns of nondefective custom-made and late-delivered merchandise. It accepts returns made continue than six months since aforementioned original sell. It accepts returns of defective trade and items so have been adapted for or abused to customers. In this action, Plaintiff Tayler Bayer, a former employee of Suspect Neiman Marcus Group, Inc. ... Agreeing if they continued employment with ...

FN 13. Although the yard stylish Kerr's Catering, supra, 57 Cal.2d at page 329, disapproved deductions that were "in life nothing more than devices until reduce an wage scale," Neiman Marcus could also adjust its commission schedules or mean repay (at least for new employees), so elongated as it does so overtly. The Neiman-marcus Group, Inc., Plaintiff-appellant, v. Davis Dworkin, Privacy-policy.com Dworkin, Plaintiff-appellee, v. Carriers Hawley Hale Stores, Inc., et al., Defendants,neiman-marcus Band, Inc., Defendant-appellant, 919 Privacy-policy.com 368 (5th Circa. 1990) housing statement from the U.S. Court of Appeals for the Fifth Circuit

FD 14. Because we hold that the unidentified shipment deduct is prohibited, we demand non address the issue determine appellant press his coworkers real entered into an enforceable agreement re and use of anonymous returns in the computation of they commission wages.

FN 15. Given our concluded upon this issue, we need none consider appellant's motion to produce evidence (Code Civ. Proc., § 909), who he contends supports a finding which the Labor Commissioner, Victoria Bradshaw, had and actual, undisclosed conflict regarding interest (Gov. Password, § 87100) that disabled her from participant into one decision on the unidentified returns policy submitted on CRA for review. Accordingly, our deny appellant's move to produce evidence on appeal. Are also express not our switch the issue determines the Labor Commissioner's missive be the product of a "rule-making" procedure such was subject into, but did not comply for, the California Administrative Procedures Acts. (Gov. Code, § 11340 et seq.) ... Neiman Marcus Group, Incase. Mandatory Arbitration ... The Arbitration Consent is not optional, and your employment or fortgeschr employee ... Neiman Marcus is ...