California School of Culinary Arts v. Lujan

BACKGROUND

DLSE is a division of the state Department of Industrial Relations authorized to enforce provisions of the Labor Code and orders, including wage orders, issued by the Industrial Welfare Commission (IWC). (Lab. Code, §§ 56, 95, & 1193.5, subd. (b).) Specific to the issue presented in this appeal is the application of IWC’s wage order 4-2001, exempting professional employees from entitlement to overtime wages. In relevant part subsection 1(A)(3) of the wage order provides:

“Professional Exemption. A person employed in a professional capacity means any employee who meets all of the following requirements:

“(a) Who is licensed or certified by the State of California and is primarily engaged in the practice of one of the following recognized professions: . . . teaching . . . ;

“HD • • • HD

“(c) Who customarily and regularly exercises discretion and independent judgment in the performance of duties set forth in subparagraph[] (a) . . . .

“(d) Who earns a monthly salary equivalent to no less than two (2) times the state minimum wage for full-time employment. . . .”

Section 2 of the wage order defines “teaching” as: “(R) ... the profession of teaching under a certificate from the Commission for Teacher Preparation and Licensing or teaching in an accredited college or university.”

CSCA is a private entity operating a culinary school and employs 66 instructors. It contends that its instructors are exempt from entitlement to overtime wages based on its interpretation of the terms of IWC wage order 4-2001. In essence, CSCA asserts its instructors are “teachers in an accredited college” and fall within the order’s provision for the professional exemption accorded to “teachers.”

DLSE disagreed and sent CSCA a letter informing it that CSCA’s instructors are not classified as exempt from the overtime provision of IWC wage orders. DLSE’s determination was based on the opinion of its counsel, Thomas Kerrigan. He opined that CSCA is a “cooking school . . . [that] claims

In response to DLSE’s contention, CSCA filed a complaint for a declaration and judgment that pursuant to IWC wage order 4-2001 sections 1(A)(3)(a) and 2(R), CSCA and its instructors are exempt from overtime wage laws. DLSE answered and CSCA filed a motion for summary judgment.

In support of its motion for summary judgment, CSCA filed the declaration of Christopher C. Becker as the evidentiary foundation for CSCA’s separate statement of undisputed material facts. Becker is the founder and president of CSCA, and in summary, describes the school’s organization and operation as follows:

CSCA was founded in 1994, offering instruction and postsecondary degrees in the field of culinary arts and management of commercial restaurants. Its campus is located in Pasadena, California, and operates in an 80,000 square foot facility. It has 35 classrooms and an extensive library. In addition to its senior administrative staff, it employs 66 instructors. Twelve are “Academic Instructors,” 47 are “Chef Instructors,” and seven are “Department Chairs (Hot Foods Production, Restaurant Practical, Garde Manger, Academics, Introduction to Culinary Arts I, Introduction to Culinary Arts H, and Baking & Pastries).”

“The workweek of each CSCA instructor varies from week to week and course to course. Most are in the classroom approximately five days a week conducting six and a half hour long classes (excluding breaks). When not teaching, CSCA’s instructors hold office hours at which time they counsel students with respect to their progress .... [ft] ... A class typically involves approximately an hour of lecture and demonstration by the CSCA instructor, several hours of meal preparation with guidance from the CSCA instructor . . . , [and] an hour of evaluation by the CSCA instructor of the students’ performance.” “There are no set hours or express direction on how a[n] instructor is to conduct his or her work.”

“CSCA’s curriculum consists of a rigorous 60 weeks of coursework. Included are 1800 contact hours, which are classroom hours and labs, and 96 quarter credits, which is the minimum number of credits to graduate.”

CSCA’s statement of undisputed material facts is uncontroverted. DLSE’s response consisted only of legal conclusions, unsupported assertions, and the opinion of its counsel. It purported to dispute some of CSCA’s 24 statements of material facts without reference to any evidence. This approach is totally deficient. “Without a separate statement of undisputed facts with references to supporting evidence in the form of affidavits or declarations, it is impossible for the [opposing party] to demonstrate the existence of disputed facts.” (Lewis v. County of Sacramento (2001) 93 Cal.App.4th 107 , 116 [ 113 Cal.Rptr.2d 90 ].)

CSCA’s statement of undisputed material facts include statements “(6)” that its “instructors are ‘academically and experientially appropriate,’ ” “(7)” it “devotes its full attention to ‘educational activities, student financial aid, financial operations, plant and equipment, and student services,’ ” and “(8)” it has “ ‘established and administered measures of satisfactory academic progress’ including the maintenance of a 2.0 grade point average.” DLSE disputes each statement with the contention: “Plaintiff’s faculty is not sufficiently educated or academically trained.” In support of such assertion it references the declaration of its counsel, Thomas S. Kerrigan. Kerrigan’s declaration has no evidentiary content because it simply incorporates as an exhibit CSCA’s responses to interrogatories. The declaration is deficient as an evidentiary predicate to a separate statement of material facts. (United Community Church v. Garcin (1991) 231 Cal.App.3d 327 , 336 [ 282 Cal.Rptr. 368 ].)

CSCA has obtained accreditation by ACICS, an independent national institution accrediting organization recognized by the United States Secretary of Education. It has also been approved by the CBPPVE pursuant to Education Code section 94915 and title 5 of the California Code of Regulations section 73410.

In order for an entity to be designated a “college,” it must apply to and be approved by the CBPPVE to fulfill the declared legislative intent. (Educ. Code, § 94050.) Section 94705 of the Education Code provides: “It is the intent of the Legislature to promote the effective integration of private postsecondary education into all aspects of California’s educational system and to foster and improve the educational programs and services of these institutions while protecting the citizens of the state from fraudulent or substandard operations.”

It is abundantly apparent that California encourages and validates institutions offering a variety of fields of study and, in compliance with the operative regulation, permits institutions to be designated and recognized as a “college.” CSCA has complied with the statutory requirements to be designated a “college” and, based on its accreditation by ACICS, it is an “accredited college.” The fact that it does not include the term “college” in its name is irrelevant since the issue here is not how it is identified, but what it is in substance. Because DLSE failed to dispute any of CSCA’s statement of undisputed material facts, we resolve this appeal as a question of law.

Preliminarily, we address DLSE’s contention that the trial court’s historical comparative analysis of wage order 4-2001 and the Federal Labor Standard Act is, in this case, flawed. We conclude DLSE is correct, but, as we shall explain, this error is not dispositive.

The federal and California laws providing for professional exemption from overtime wages, especially as applied to “teachers,” are significantly different. Accordingly, we do not agree that the issue is appropriately addressed by a comparative analysis of the federal and California law.

Title 29 of the United States Code section 213(a)(1) provides an overtime exemption for “any employee employed in a bona fide executive, administrative, or professional capacity (including any employee employed in the

California's provision for overtime exemption is much narrower than the federal law. IWC wage order 4-2001, section 1(A)(3) includes a person employed in a professional capacity, licensed or certified by the State of California, engaged in “teaching in an accredited college or university,” and who customarily and regularly exercises discretion and independent judgment in performing his or her duties.

The trial court held that the rationale and purpose behind exempting professional employees is “derived from the Fair Labor Standards Act, 29 U.S.C. §§ 201 , et seq.” It analyzed the issue by a comparison of federal authority with California law, noting that because there is a “dearth of California law which specifically addresses whether teachers at an institution like CSCA are exempt, it is appropriate to look to parallel federal law, here the FLSA.” The trial court relied on Nordquist v. McGraw-Hill Broadcasting Co. (1995) 32 Cal.App.4th 555 , 562 [ 38 Cal.Rptr.2d 221 ], for the proposition that “[b]ecause the California wage and hour laws are modeled to some extent on federal laws, federal cases may provide persuasive guidance.” But the trial court failed to consider the remainder of the paragraph in the appellate opinion: “However, California’s professional employee exemption is narrower than that in the FLSA, and the administrative employee exemption is somewhat different. . . . Exemptions are narrowly construed against the employer and their application is limited to those employees plainly and unmistakably within their terms.” (Id. at p. 562.)

While federal authority may be persuasive, it is not controlling and, here, it is not dispositive. The narrow scope of California’s IWC wage order is strikingly different from 29 United States Code section 213 extending the FLSA to teachers of music, trades, automobile driving, and aircraft flight instructors. We, therefore, depart from the trial court’s reliance on the FLSA to interpret the professional exemption provided within IWC wage order 4-2001.

The evidence produced by CSCA demonstrates beyond question that it possesses all the indicia of a “college.” Moreover, it is approved by CBPPVE

DLSE acknowledges its “Policies and Procedures Manual limiting the exemption to institutions that grant bachelor’s or higher degrees does not have the force of law, and is an ‘underground regulation.’ ” That concession is warranted based on the holding of Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557 [ 59 Cal.Rptr.2d 186 , 927 P.2d 296 ]. “DLSE’s primary function is enforcement, not rulemaking. [Citation.] Nevertheless, recognizing that enforcement requires some interpretation and that these interpretations should be uniform and available to the public, the Legislature empowered the DLSE to promulgate necessary ‘regulations and rules of practice and procedure.’ [Citation.] The Labor Code does not, however, include special rulemaking procedures for the DLSE similar to those that govern IWC rulemaking, nor does it expressly exempt the DLSE from the [Administrative Procedure Act (Gov. Code, § 11340 et seq.)] .... [f] . . . [][] The APA provides that ‘[n]o state agency shall issue, utilize, enforce, or attempt to enforce ... a regulation’ without complying with the APA’s notice and comment provisions. [Citation.] The exception that covers the IWC is expressly limited to the IWC and makes specific reference to the comprehensive rulemaking procedures that apply to the IWC. [Citation.] In the absence of textual support or some other persuasive indication of legislative intent, we will not assume the Legislature intended the DLSE to adopt regulations without any public participation or procedural safeguards.” (Id. at pp. 569-571.) Thus, the Supreme Court found no basis to exempt DLSE from the requirements of the Administrative Procedure Act.

In response to our request to provide the document referred to in its opening brief supporting its position that “DLSE . . . has ‘always contended that a college or university means a qualified institution of higher learning offering a four-year course of study leading to a bachelor’s degree,’ ” DLSE submitted several publications authored by DLSE represen- tatives in connection with symposiums from 1991 through 1996. These publications include the statement: “The division has historically defined college or university to mean a school ofhigher learning teaching academic subjects which grants at least the bachelor degree in arts and science or both. Therefore, teachers in a trade school, for instance, would not be exempt.”

To buttress its contention that its policy of limiting the “teaching exemption” for “teaching in an accredited college or university” to “a school of

CSCA objected to any consideration of this issue as it pertains to a new theory not raised in the trial court. However, that general proposition is inapplicable where the issue before the appellate court is a question of law. (Curcio v. Svanevik (1984) 155 Cal.App.3d 955 , 960 [ 202 Cal.Rptr. 499 ] [“The general rule is that a party to an action may not for the first time on appeal change the theory upon which the case was tried. [Citations.] The exception to this rule exists where a question of law only is presented on the facts appearing in the record.”].) Because the issue before us is essentially a question of law, the facts not being in dispute as a result of DLSE failing to overcome CSCA’s statement of undisputed material facts, we judicially notice the 13 IWC documents as requested. (Rodas v. Spiegel (2001) 87 Cal.App.4th 513 , 518 [ 104 Cal.Rptr.2d 439 ].) We discuss them to the extent they are relevant to DLSE’s contention that they show IWC intended the definition of “teacher in an accredited college or university” to be restricted to “institutions that grant bachelor’s or higher degrees” in accordance with DLSE’s “underground regulation.”

The 1947 wage order adopted by IWC to exempt professional employees defined an employee as one who “is licensed or certified by the State of California and is engaged in the practice of one of the following professions: law, medicine, dentistry, architecture, engineering, teaching, or accounting.” This order did not include a definition of “teaching.” In 1957, the wage order included a definition of “teaching”: “ ‘Teaching’ means, for the purpose of this Order, the profession of teaching under a certificate from the California State Board of Education or teaching in an accredited college or university.”

The “Industrial Welfare Commission Meeting of May 28, 29, and 30, 1957” includes the following excerpt: “The Commission agreed with the Order 2 Wage Board that only teachers having a recognized professional standing should be excluded from the Order. Teachers in various institutions, such as trade schools, should be covered.” (Italics added.) Without explanation, this oblique reference is not found in any IWC wage order. In fact, the IWC minutes for the 1963 meeting recite that a motion was made, seconded, and passed “That Section 2(i) . . . ‘Teaching means, for the purpose of Section 1 of this Order, the profession of teaching under a certificate from the California State Board of Education or teaching in an accredited college or university.’ ” Another submission is entitled “Findings,” apparently prepared

Collectively, the submission of IWC documents does nothing to validate DLSE’s application of its policy to limit the “teaching exemption” beyond the plain language of the current IWC wage order 4-2001 (“Effective January 1, 2001 as amended”). There is no evidence that the current form of wage order 4-2001 includes the limited definition adopted by DLSE. Therefore, DLSE’s reliance on excerpts from a collection of outdated IWC records does not legitimize DLSE’s policy as an enforceable regulation.

In its reply brief, DLSE argues Labor Code section 1198.4 “provide[s] the regulated public with a means by which they may inquire as to the interpretation given to the provisions of IWC Orders by the enforcement agency so that those regulated may be aware of the obligations the Orders impose. [Sic.]” Specifically section 1198.4 states in part: “Upon request, the Chief of the Division of Labor Standards Enforcement shall make available to the public any enforcement policy statements or interpretations of orders of the Industrial Welfare Commission.” This obligation refers to “policy statements,” which presumably must require compliance with the Administrative Procedure Act. (Tidewater Marine Western, Inc. v. Bradshaw, supra, 14 Cal.4th 557 , 576 [ 927 P.2d 296 ] (Tidewater).) DLSE’s interpretation is not simply a policy. It dramatically changes the qualifications to obtain a “teaching exemption.”

Considering DLSE’s reliance on its submission of earlier records of IWC, it is telling that no amendment has been made to the wage order excluding vocational schools or in any way adopting DLSE’s “underground regulation.” DLSE’s self-determined definition is not supported by the documents of the early records of IWC and its policy is not entitled to any deference. This interpretation is entitled to no deference because it is a void regulation under Tidewater, supra, 14 Cal.4th 557 , 576, even if it is of long-standing duration. (Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575 , 581-582 [ 94 Cal.Rptr.2d 3 , 995 P.2d 139 ].) It is our role to interpret the wage order to decide its enforcement in this case. As well intentioned as the representatives of DLSE may be, it is not entitled to invoke any internal policy definition to interpret IWC wage orders simply because it divines that was the intent of IWC many decades past. If IWC determines that any limitation should be imposed on the exemption for “teachers in accredited colleges,” it may do so according to the formalities that apply. At present the wage order may not be read to apply only to institutions awarding baccalaureate degrees or higher.

DISPOSITION

The judgment is affirmed.

Epstein, J., and Curry, J., concurred.