The California Chamber of Commerce has joined the U.S. Chamber of Commerce in urging the Fourth Appellate District Court to review a case involving wage statements.
The joint friend-of-the-court letter asks the appeals court to provide California employers with certainty and clarity about how advance commission payments must be listed on a wage statement.
Advance Commission Payments
Many employers in California utilize a commission advance and chargeback program like the one at issue in the case, Macy’s West Stores, Inc., dba Macy’s, and Macy’s, Inc. v. Superior Court of California for the County of San Bernardino.
Macy’s advances commission payments to its employees, subject to chargeback if the item on which the commission is paid is returned within a certain period. And like many employers in California, Macy’s agrees to charge back such advances only in the form of an offset against future advanced commission payments, the letter states.
The superior court held that Macy’s violated Section 226 of the California Labor Code by issuing wage statements that reported these advanced commission payments at the time they were paid, without making further note of them on subsequent wage statements after the relevant chargeback period expired (meaning after they were earned).
Wage Statement Questions
The California and U.S. chambers respectfully urged the Fourth Appellate District Court to grant the review and clarify two questions that will have significant impact on businesses throughout California:
- When an employer agrees to charge back advanced commissions only through an offset against future advanced commission payments, does the employer properly issue a wage statement reporting the commissions at the time of payment, without notation on future wage statements when the commissions are earned; and
- Does the Private Attorneys General Act (PAGA) still afford a private right of action for alleged violations of California Labor Code Section 226(a)(6)—which requires itemized wage statements to show “the inclusive dates of the period for which the employee is paid”—in light of legislative amendments in 2015 that effectively removed this statutory provision from PAGA’s scope?
In the letter, the chambers argue that with respect to the laws governing paying employees advance commissions, California courts have long recognized the permissibility of programs such as the one at issue in the Macy’s case. Employers’ use of such payment plans benefits employees, as it pays them sums above their hourly wages, the letter comments.
For more information, visit CalChamber’s Top Story.
Staff Contact: Heather Wallace