Nov 05 2007
Gattuso v. Harte-Hanks Shoppers, Inc.
This is a pro-employer decision allowing for Labor Code section 2802 reimbursements to be made by base salary or compensation increases, provided there is a method to the apportionment.
More to come. . . (We’re busy today!)
You can read Walsh & Walsh’s extended take here, or Shaw Valenza’s here. If I have anything to add, it will be up this week.
UPDATE: Nice prediction on this by Walsh & Walsh, by the way. Good job!
[...] can read about this important case at WageLaw or at What’s New in Employment Law? Storm’s California Employment Law promises some coverage later this week. Posted in Labor & [...]
The only question I still have about the decision is how these plans are administered for withholding/income tax purposes.
I assume that the employer has to withhold from the amount of the “lump sum” in excess of actual expenses incurred each pay period, but if they’re not keeping track then how do they know what that amount is?
The other side of the coin is if there is withholding on the full amount of the “lump sum” component, in which case the employee is getting cheated, since the difference is not “income,” so how can there be withholding for income, SDI, social security, etc. taxes?
These are probably all rhetorical questions that will have to be worked out by the courts or DOR, but it is interesting how the Court glossed over this issue in Gattuso.
My take on Gattuso:
http://www.calemployeerightsblog.com/2007/11/06/california-supreme-court-decides-lump-sum-expense-reimbursement-is-ok/
Keep up the good work!
James Peters
California Employee Rights Blog
If the employer is allowed to reimburse its salespeople through increased commission to cover expenses related to the performance of the job as is the case here, what happens if there is no commission? What happens if no sale is made? The salesperson does not get paid yet expenses are still accrued? How do you account for a situation like that? I’m in sales myself - some weeks are good, some weeks are bad. Expenses will always be there regardless of my performance. Does anyone have an opinion on this?