Delta’s pay system doesn’t short flight attendants: court

The pay system that Delta Air Lines uses to compensate flight attendants satisfies California's minimum wage laws, even those workers argue they are not being compensated for every hour they are on duty, according to a state Supreme Court opinion.

The California high court filed the opinion Monday in tandem with a second opinion, which also considered how state labor laws applied to airline employees who work across multiple states because their duties involve traveling. The second case concerned United Airlines. Ward v. United Airlines, Inc., S248702 (Cal. May 10, 2018).

"In the industry, it's fairly common for flight attendants and other workers who are in the air to not be compensated for every hour they're on duty or in uniform," said Ira L. Gottlieb, a partner at Bush Gottlieb, which has represented airline workers. "I've had some questions about how the airlines got away with it but this was a fairly sophisticated argument ... that Delta put together."

The plaintiffs in the Delta case are its current and former flight attendants who alleged the airline failed to pay them at least the minimum wage for all the hours they worked. According to their argument, Delta used a compensation system that paid flight attendants on an hourly basis for certain hours worked, but f didn't pay for other hours worked. Oman v. Delta Air Lines, Inc., 2018 DJDAR 4260 (Cal. May 10, 2018).

Monday's opinion implied the plaintiffs misunderstood Delta's compensation system. "Oman's argument depends on a particular view of the role of the flight time formula under the parties' contract: that by offering flight attendants a fixed amount of compensation for a particular rotation, but also disclosing the formula on which it has arrived at that amount, Delta has in effect promised to compensate flight attendants at their full flight pay rate for hours in flight, and not to compensate them at all for their other hours worked," according to the opinion, which was written by Justice Leondra Kruger.

However, Kruger wrote, this formula is only one part of the compensation plan. "The scheme, taken as a whole, does not promise any particular compensation for any particular hour of work; instead, as discussed above, it offers a guaranteed level of compensation for each duty period and each rotation," she added.

The opinion concluded the pay system guarantees flight attendants are always paid above the minimum wage for the hours they work. Moreover, the court ruled Delta achieved this without violating state wage and hour laws, which ban employers from meeting minimum wage requirements by "borrowing" pay promised for certain types of work, and using it bolster the sub-minimum wage pay promised for other types of work.

The plaintiffs' argument largely rested on the notion the airline was "not crediting us at all for time on the ground, time in the lounge ... so it is wage borrowing," Gottlieb said.

Daniel H. Handman, who represents employers as a partner at Hirschfeld Kraemer, said the reason the court didn't qualify Delta's actions as wage borrowing was because the plaintiffs knew about the system before entering into it, since it was negotiated in their collective bargaining agreement. "I think it will apply broadly to any employer who uses some type of formula base compensation," Handman said of the precedent set in Monday's case, "even outside of the airline industry."

In a concurring opinion, Justice Goodwin Liu said the majority opinion affirms the state's anti-wage borrowing rule. "Correctly identifying an employer's contractual commitment is critical to ensuring that employers do not circumvent the no-borrowing rule simply by inserting into employment agreements a minimum wage floor -- i.e., an agreement to make up the difference if an employee's promised pay, averaged over all hours worked, falls below the applicable minimum wage," he wrote.

The opinion additionally held the state's laws concerning wage statements and the timing of wage payments only applies to California residents who work primarily in the state, or have their base of operations in the state.

In Ward v. United Airlines, Inc., S248702 (Cal. May 10, 2018), Kruger clarified that a designated home-base airport qualifies as a base of operations.