80 Litigating CA Wage & Hour Class and PAGA Actions (23rd Edition) Seyfarth Shaw LLP | www.seyfarth.com explain, however, why the violation of these particular Labor Code statutes signaled an intent to treat those violations as minimum wage violations. In 2020, the California Supreme Court clarified the Armenta rule in Oman v. Delta Air Lines, Inc.386 Instead of paying flight attendants by the hour, Delta paid them per “rotation”—a given sequence of flights over a day or a period of work days. Pay for each rotation was calculated according to four different formulas, and flight attendants were paid according to whichever formula yielded the highest pay for the complete rotation.387 One of the formulas was the “duty period credit” formula, which always exceeded minimum wage for every hour worked. If one of the other formulas yielded higher overall pay than the “duty period credit” formula, then the higher-paying formula would apply. Delta argued that the pay for each rotation, when averaged out over the hours worked, always exceeded minimum wage, thereby complying with the statute. The plaintiffs contended that this pay scheme violated Armenta’s prohibition against “wage averaging” (which the court said was more accurately described as “wage borrowing”).388 The California Supreme Court in Oman noted that “compensation owed employees is a matter determined primarily by contract. Compensation may be calculated on a variety of bases: Although nonexempt employee pay is often by the hour, state law expressly authorizes employers to calculate compensation by the task or piece, by the sale, or by any other convenient standard.”389 Determining whether an employer has met its contractual obligations may be accomplished by “translat[ing] the contractual compensation into an hourly rate by averaging pay across those tasks or periods.”390 As an example, Oman noted that an employer that pays by the day can average daily pay across all hours worked in that day to determine whether the resulting hourly wage exceeds the minimum.391 Oman held that an employer must meet its minimum wage obligations while also paying for each task, day, or other unit at the contractually promised rate.392 As the Court of Appeal held in Armenta, an employer could not “borrow” wages paid for one period or type of work to satisfy the requirement that another period or type of work be compensated at minimum wage. Rather, every hour for which an employer requires an employee to work must be separately compensated at the minimum wage.393 For example, if an employee must perform two tasks in a day, one paid at $500 and requiring 7.5 hours of work, and the other requiring 15 minutes of work for no pay, then the minimum wage law is violated as to the 15 minutes of uncompensated work, even though the employee’s overall pay for the day is far in excess of the minimum wage. Ultimately, Oman found that Delta’s compensation scheme was lawful. Unlike the pay structure 386 Oman v. Delta Air Lines, Inc., 9 Cal. 5th 762 (2020). 387 Id. 388 Id. at 781-782. 389 Id. 390 Id. at 782-783. 391 Id. 392 Id. 393 Id.
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