Fresno, California – As an employer in California you’d like to use the Division of Labor Standards Enforcement or DLSE, as an agency that interprets and enforces the labor law for employers with certainty. As Datatech has found out, it seems that is not always the case in Calfornia with labor law standards up for different points of view in various authorities. A recent ruling by the California Supreme Court has the California Chamber of Commerce scratching its head.
Earlier this month on March 5, California’s highest court ruled in favor of the plaintiff in the case Alvarado v. Container Corporation of California. The case was mainly based on how the employer should calculate overtime compensation for an employee that earns both hourly and flat sum bonuses. The Court also discussed whether the DLSE’s interpretations of the law in their manual were a binding authority in the courts. The Court decided in their commentary that the DSLE’s manual is a “void underground regulation” and not entitled to any respect in this matter. What?
CalChamber’s Policy Advocate Laura E. Curtis, in a recent article on this topic, pointed out that this is not the first time the California Supreme Court has looked at the DLSE manual with deference. Says Curtis, “More than two decades ago, the California Supreme Court discussed the legitimacy of the DLSE manual in Tidewater Marine Western, Inc. v. Bradshaw (December 19, 1996). In Tidewater, the Court was tasked with deciding whether the DLSE manual constituted regulations within the meaning of the Administrative Procedure Act (APA). If a policy constitutes a regulation under the APA, it must follow specific protocols to be adopted.” Curtis went on to say, “If a regulation is not properly adopted per the APA requirements, it will be deemed unlawful. Notably, the DLSE manual has never been adopted through the APA process.”
So…California? We have a problem. In the Tidewater case as in the Alvarado case, the DLSE manual was not a binding authority to the court.
That leaves employers in California with uncertainty when the DLSE’s manual and it’s interpretations are challenged in court and can potentially be viewed as a “void underground regulation.”
Curtis says without change, employers in California are doomed to this nebulous approach to labor enforcement, “The DLSE will continue to interpret and enforce state labor laws and employers still will not know in advance whether the courts will uphold the DLSE’s interpretations—potentially subjecting an employer to a retroactive interpretation and penalties and/or damages, as seen in Alvarado v. Dart.”
Without an agency that’s enforcement regulations are binding, Curtis says employers are left to wonder about labor law. “Businesses need more certainty that they’re correctly applying the law and shouldn’t be left to guess. For now, employers should still rely on legal counsel when making difficult employment decisions and should assume that the courts will continue to utilize the DLSE manual as “one among several tools available to the court”(quoting the Tidewater court) when interpreting California law.”
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