2004-21

Plaintiff Hired for One Day at a Flat Fee is not "Discharged" within the Meaning of Labor Code Section 201

The California Court of Appeal, Second Appellate District held in Smith v. Superior Court (L'Oreal USA Inc.) that an individual hired for one day at a flat fee to model in a hair show was not "discharged" within the meaning of Labor Code section 201 when after the show was finished the model left. The court concluded that the hair show promoter was not required to pay the model immediately upon completion of the hair show and the model was not entitled to a waiting time penalty pursuant to Labor Code section 203.

Petitioner Amanza Smith was an aspiring actress and model. As such, she worked as a salesperson in a Beverly Hills boutique. While working at the boutique, Smith was approached by a representative of L'Oreal USA, Inc. and asked if she would like to be a hair model at an upcoming hair show featuring L'Oreal products and hair styles from the Beverly Hills salon, Christophe's. Smith accepted the opportunity and the parties agreed that Smith was to be paid $500 for one day's work.

Smith completed her one-day assignment at the hair show in April 2001. However, L'Oreal took more than two months to pay her the $500 previously agreed to. L'Oreal stated that the delay was due to the fact that Smith was treated as an independent contractor and as such, her payment came from L'Oreal's main accounting office in New York.

Smith, on behalf of herself and other similarly situated hair models, filed a class action complaint in Superior Court. The class action portion of her complaint contained seven causes of action: (1) conversion (2) fraud and deceit; (3) violation of Business and Profession Code section 17200; (4) violation of Labor Code sections 201 and 203; (5) breach of contract; and (6) negligent misrepresentation. The complaint also contained a separate cause of action on behalf of the public for violation of Business and Profession Code section 17200 and sought injunctive relief. In short, Smith and the other class members sought their "wages" ($500 a day) for 30 days ($15,000 per model) as the penalty for late payment provided for in Labor Code section 203.

L'Oreal subsequently field a motion for summary adjudication of all causes of action except conversion and breach of contract. In its motion L'Oreal argued that in order to be entitled to the benefits of Labor Code sections 201 and 203, one must have first been an employee who was discharged. L'Oreal argued, and the trial court agreed, that Smith was not discharged from her employment; rather Smith's employment ended by its own terms.

On appeal, the sole issue addressed was whether Smith was "discharged" within the meaning of Labor Code section 201. The court began by noting that the term discharge is not generally defined in the Labor Code or the regulations set forth by the Department of Industrial Relations and therefore has no special meaning attached to it. In order to determine the words meaning, the court first looked to other statutory language and definitions. The court reasoned that discharge does not include resignation or quitting by an employee because those actions are governed by other specific statutes. Given this context, the court inferred that "discharge" is an affirmative action of an employer that is generally involuntarily implemented against the employee.

The court next reviewed the dictionary definitions of the word "discharge." In this respect, the court noted that Webster's Tenth New Collegiate Dict. defined "discharge" as to "dismiss from employment and Black's Law Dictionary defined the word as "to terminate the employment of a person." The court also noted that the California Supreme Court defined "discharge" in the employment setting similarly as "to terminate employment." See Romano v. Rockwell Internat., Inc. 14 Cal.4th 479, 493 (1996). The court reasoned that the definitions again support the inference that for an employee to be "discharged," the employer need take affirmative action against the employee

After acknowledging the fact that California case authority is limited and "not particularly helpful on this issue," the court turned to other jurisdictions for guidance. Specifically, the court found that Appellate courts in Arkansas and Louisiana, states which have similar statutes to Labor Code section 201 and 203, had previously concluded that termination of employment by expiration of the time of employment does not constitute discharge. See Smith v. Dishman & Bennett Specialty Co., Inc. (La.App. 2d Cir. 2002) 805 So.2d 1220; see also Missouri P.R. Co. v. Clement (1944) 207 Ark. 389.

Thereafter, the court concluded based on the plain meaning of the word, the statutory context, and persuasive out-of-state authority that the definition of discharge means the "affirmative dismissal of an employee by an employer from ongoing employment and does not include the completion of a set period of employment or a specific task." Applying the definition of discharge to the facts of the instant case, the court concluded that Smith was not discharged within the meaning of Labor Code section 201 and 203 and was therefore not entitled to a waiting time penalty for L'Oreal's failure to immediately pay her upon completion of her work..

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Remark About Salesman's Age Allows Employee to Take Claim to a Jury

A unanimous Seventh Circuit panel has ruled that a longtime salesman who says he was replaced by a twenty-two-year-old and then fired presented sufficient evidence to take his Age Discrimination in Employment Act claim to a jury. Olson v. Northern FS Inc., 7th Cir., No. 04-1102 (10/22/04).

Employee Olson began selling seeds, fertilizer, and feed for Northern FS Inc. (hereinafter "FS") in 1960. Beginning in 1991 Olson transitioned to selling grain buildings and equipment before he returned to crop sales in 1994. Additionally, in 1996 and 1997 Olson won the company's annual sales award. From 1997 through 2000 Olson returned to building sales until FS ceased that aspect of its business.

Beginning in 2000, Olson was assigned to answering telephones and working in the warehouse of an FS plant. Later in that year, Olson's supervisor, Keelen, met with him about his future with FS. Olson claims that his supervisor told him that despite his experience, Olson was "undesirable in the business world because of his age."

One month after the alleged conversation between Olson and his supervisor, a sales position became available. At Keelen's request, Olson was awarded the position. With respect to the new job, Keelen maintained that he told Olson that the position was only for a temporary period of time. Olson, on the other hand, asserted that he was never informed that the position was not permanent.

In early 2001, FS hired Bloome, a twenty-two year old without any sales experience and assigned him Olson's former sales position. Eleven days after the hire, FS fired Olson. At the time of his termination, Olson was 59 years old and had spent 41 years with FS.

Subsequent to his termination, Olson filed an age discrimination charge with the EEOC, claiming FS had discriminated against him in violation of the Age Discrimination in Employment Act. After the EEOC found reasonable cause to believe FS had discriminated against him, Olson filed suit. However, the district court granted FS's motion for summary judgment finding that Olson "failed to provide sufficient evidence that his age was a motivating factor in his firing." The district court reasoned that because the statement concerning Olson's age occurred five months prior to his termination, it was merely a stray remark that was not linked to his termination.

The reviewing court found that the district court erred by ignoring Keelen's remark when it evaluated Olson's claim under the indirect method of proving discrimination as set forth in McDonnel Douglas Corp. v. Green, 411 U.S. 792 (1973). The court took exception to the fact that the lower court rigidly applied the McDOnnel Douglas prima facie in order to grant the summary judgment. To establish a prima facie case of employment discrimination under the indirect method, a plaintiff must show: (1) he was a member of a protected class; (2) he was meeting his employer's legitimate job expectations; (3) he suffered an adverse employment action; and (4) similarly situated employees not in the protected class were treated more favorably. Since both sides agreed that Olson met the first three requirements, the district court based its grant of summary judgment on its conclusion that Olson and Bloome were not similarly situated because they had different academic credentials. The court noted that to reach the ultimate question of when an employee within the protected class has been subject to age discrimination, the court has previously required that the employee show only that "he was performing his job to the employer's legitimate expectations" and that the employer "hired someone else who was substantially younger or other such evidence that indicates that it is more likely than not that his age . . . was the reason for the discharge."

The court concluded by noting that Olson presented evidence demonstrating that his job performance was satisfactory, that FS had hired someone substantially younger to replace him and that Olson's supervisor, whether in a stray remark or not, told him that he was undesirable because of his age. Therefore, the court found that based on those circumstances, Olson had presented sufficient facts to let a jury decide whether Olson's age actually played a role in FS's decision to terminate his employment.

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