California Court Holds That Federal Labor Law Does Not Preempt Wage Deduction Claim

As a general rule, when a union employee asserts claims against an employer requiring interpretation of the collective bargaining agreement (CBA), those claims are preempted by section 301 of the federal Labor Management Relations Act (LMRA). In Sciborski v. Pacific Bell Directory, the California Court of Appeal held that a union employee's unlawful wage deduction claim under California Labor Code section 221 was not preempted by the LMRA because the claim arose from independent state law and did not require interpretation of the CBA. The Court further held that the employer violated Labor Code section 221 when it made deductions from wages in order to recover a sales commission previously paid to the employee through a clerical error, where there was no CBA provision authorizing the deductions.

The Facts

Plaintiff Annie Sciborski worked as an advertising sales representative for Pacific Bell. She was a member of the International Brotherhood of Electrical Workers, and the terms and conditions of her employment were governed by a CBA, under which Sciborski earned a basic salary and commissions on completed sales.
In September 2007, Sciborski sold an advertising campaign to a Pacific Bell customer. The sale entitled Sciborski to a commission of $36,000, which management approved and then paid. Shortly thereafter, the union protested that management's assignment of the customer account to Sciborski had breached the terms of the CBA. Pac Bell agreed with the union and notified Sciborski that it had assigned her the account through a clerical error. Pac Bell then attempted to recover the commission already paid to Sciborski by deducting regular amounts from her wages.
On April 2, 2008, after Pac Bell had already deducted approximately $19,000 from Sciborski's wages, she resigned in order to prevent additional wage deductions.

Case Background

Sciborski sued Pac Bell for improper wage deductions in violation of Labor Code section 221. A jury found that the deductions violated Labor Code section 221, and resulted in Sciborski's constructive discharge in violation of public policy. The jury awarded her $36,000 in lost earnings and the trial court awarded $291,155 in attorney's fees against Pac Bell.
Pac Bell appealed, arguing that, since Sciborski's claims required the court to interpret the CBA, the claims were preempted by federal labor law.

The Court of Appeal's Decision

The Court of Appeal concluded that Sciborski's Labor Code section 221 claim was not preempted by Section 301 of the LMRA, because it arose from independent state law and did not require interpretation of the CBA.
Section 301 preempts state law governing a claim if a court must interpret a disputed provision of the CBA to decide the claim. Courts analyzing whether preemption applies utilize a two-part test: (1) whether the claim arises from independent state law or from a CBA; and, if the claim arises from independent state law, (2) whether the claim nevertheless requires interpretation of a CBA.

Pac Bell argued that Sciborski's claim was preempted because (1) it was legally entitled to recoup the $36,000 sales commission if it had not yet been earned, and (2) the CBA had to be interpreted in order to determine whether the advance was in fact earned. The Court of Appeal rejected this argument because there was no express CBA provision establishing that a commission would not be earned if an account was improperly assigned due to a clerical error. The Court further held that Pac Bell, without such an express provision, "was not entitled to unilaterally declare that the commission was not earned and use self-help measures to deduct funds from Sciborski's wages," because doing so would violate Labor Code section 221.

What Sciborski Means for Employers

Sciborski illustrates the risk that California employers take in unilaterally making wage deductions as a means to recover amounts that the employee owes to the employer. California Labor Code section 221 prohibits such "self-help" in most circumstances. Because of the strong California public policy protecting wages, an employer's right to recover an advanced commission generally requires a showing that the employee expressly agreed to the employer's right to recover under stated conditions.

Employers should also recognize that just because a union has grieved an issue or demanded certain actions, acquiescence to the grievance or demand does not automatically create a safe harbor from any violations of statutory law.