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Class Action Defense Cases-Smith v. Superior Court: Employee Is “Discharged” Under California Labor Laws Not Only By Involuntary Termination But also By Completion Of Specific Assignment

California Supreme Court Rejects Class Action Defense Argument that Employees were not Discharged by Completion of Job Assignment for Which They were Hired

A class action was filed on behalf of models that worked specific projects but were not paid immediately after the projects ended. Defense attorneys argued that the employees were not “discharged” within the meaning of California Labor Code § 201 because they were not fired or otherwise involuntarily terminated. Smith v. Superior Court, 39 Cal.4th 77, 45 Cal.Rptr.3d 394 (Cal. July 10, 2006). Plaintiff was hired as a “hair model” – an audience watched a stylist color and style her hair, she walked the runway, and she remained until defendant told her that she could leave. Plaintiff was to be paid $500, but defendant waited more than two months to pay her the money owed. Plaintiff filed a class action complaint alleging various causes of action, including violations of California Labor Code §§ 201 and 203. Slip Opn., at 2.

Section 201 of the Labor Code provides that if an employer “discharges” an employee, wages earned and unpaid at the time of discharge are due and payable immediately. Under section 203, an employer’s willful failure to pay wages to a “discharged” employee in accordance with section 203 subjects the employer to penalties. Slip Opn., at 1.

Defense attorneys moved for summary adjudication on the labor law claims. The trial court agreed with the defense arguments, but the Supreme Court reversed.

Both § 201 and § 203 use the word “discharge” but the term is not defined in the Labor Code or by state labor law regulations. Slip Opn., at 5-6. The Supreme Court looked to the dictionary definition of “discharge” in the employment, to the statutory scheme, and to the legislative history. The Court concluded that the “discharge” of an employee should be interpreted to include not only affirmative dismissal from an ongoing employment relationship, but also employees who particular project by its terms. The Court explained:

[C]onstruing the immediate payment requirement as applying to both types of discharges appears to (1) be consistent with the statutory language and history; (2) better reflect the understanding of the agency originally charged with recommending enactment of such remedial legislation and with its enforcement; and (3) more broadly advance the purpose of the legislation to ensure that discharged employees do not suffer deprivation of the necessities of life or become charges upon the public. Accordingly, we conclude an employer effectuates a discharge within the contemplation of sections 201 and 203, not only when it fires an employee, but also when it releases an employee upon the employee’s completion of the particular job assignment or time duration for which he or she was hired. Slip Opn., at 14-15.

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