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Death of the Precedent Decisions?

Eleven months ago I wrote about the Rise of the Precedent Decisions. In that article I discussed the Labor Commissioner’s newly adopted practice of issuing Precedent Decisions that were supposedly binding upon all other Labor Commissioner cases. According to the California Court of Appeals, the Precedent Decisions issues by the Labor Commissioner are not binding and are promulgated in violation of the Administrative Procedures Act.

The Administrative Procedures Act is the process through which authorized agents of the state promulgate new regulations. For example, the Industrial Welfare Commission is authorized to promulgate regulations regarding the overtime requirements and under that authority issued various Industrial Welfare Commission Orders that are enacted in our California Code of Regulations. Since the IWC is authorized to promulgate the regulations and because they followed the APA rules regarding adopting such regulations, the regulations are the law and are binding upon employers.

Some years ago, the Labor Commissioner was criticized for attempting to bypass the APA by claiming its Enforcement Manual was the law. The California Supreme Court disagreed. Since the Labor Commissioner did not follow the APA, the Enforcement Manual is not an authorized regulation and is not binding.

When the legislature passed a law providing a penalty in the form of one hour’s wage for any employer that fails to follow the IWC Orders with respect to meal and rest breaks, the Labor Commissioner tried to pass a regulation defining the penalty as a wage (See Meal and Rest Breaks are Penalties). After the California Assembly passed a resolution declaring the Labor Commissioner was not authorized to pass such a regulation, the Labor Commissioner decided to issue a Precedent Decision on the issue; claiming that the Precedent Decision was binding on all future rest or meal break claims. The Labor Commissioner subsequently issued a few more Precedent Decision.

On July 10th, the Third Appellate District in Corrales v. Bradstreet, C051407, concluded that the APA does not allow the Labor Commissioner to issue binding Precedent Decisions. While the Precedent Decisions may be persuasive, they are not binding.

What does this mean? I expect the Labor Commissioner will issue fewer Precedent Decisions because they are not binding authority. This does not mean employers can ignore the Precedent Decisions. While employers may not be required to follow the Precedent Decisions, smart employers will familiarize themselves with the Labor Commissioner’s position because hearing officers will likely follow the Precedent Decisions in similar cases. Additionally, Courts may still use Precedent Decisions as persuasive authority especially if the decisions do not contradict the Labor Commissioner’s previously espoused positions.

The Law Office of Phillip J. Griego
95 South Market Street, Suite 520
San Jose, CA 95113
Tel. 408-293-6341
Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.

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Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.