Filed 10/20/16

                            CERTIFIED FOR PUBLICATION


                 COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                      DIVISION ONE

                                   STATE OF CALIFORNIA



LIDIA SOTO,                                     D069403

        Plaintiff and Appellant,

        v.                                      (Super. Ct. No. 37-2015-00017074-
                                                 CU-OE-CTL)
MOTEL 6 OPERATING, L.P.,

        Defendant and Respondent.


        APPEAL from a judgment of the Superior Court of San Diego County, Joel

Wohlfeil, Judge. Affirmed.

        Gaines & Gaines, Stephen H. Krumm and Daniel F. Gaines, for Plaintiff and

Appellant.

        Ogletree, Deakins, Nash, Smoak & Stewart, Spencer C. Skeen, Jennifer L. Santa

Maria, and Sarah A. Williams for Defendant and Respondent.
       Lidia Soto sued her former employer, Motel 6 Operating, L.P. (Motel), alleging

Motel violated Labor Code section 226, subdivision (a)1 by failing to include the

monetary amount of accrued vacation pay in its employees' wage statements. Soto filed

the action in her individual capacity and on behalf of all aggrieved workers under the

Private Attorney General Act of 2004 (PAGA). (§ 2698 et seq.)

       The court sustained Motel's demurrer without leave to amend. We affirm. Section

226(a) does not require employers to include the monetary value of accrued paid vacation

time in employee wage statements unless and until a payment is due at the termination of

the employment relationship.

                     FACTUAL AND PROCEDURAL SUMMARY

       Soto worked for Motel from June 2012 through January 2015. In May 2015, Soto

brought a representative PAGA action alleging a single cause of action under section

226(a).2 Soto alleged Motel violated section 226(a) by failing to provide its California



1       All statutory references are to the Labor Code; we omit the word subdivision when
referring to the statutory subparts.

2      Section 226(a) states: "Every employer shall, semimonthly or at the time of each
payment of wages, furnish each of his or her employees, either as a detachable part of the
check, draft, or voucher paying the employee's wages, or separately when wages are paid
by personal check or cash, an accurate itemized statement in writing showing (1) gross
wages earned, (2) total hours worked by the employee, except for any employee whose
compensation is solely based on a salary and who is exempt from payment of overtime
under subdivision (a) of Section 515 or any applicable order of the Industrial Welfare
Commission, (3) the number of piece-rate units earned and any applicable piece rate if
the employee is paid on a piece-rate basis, (4) all deductions, provided that all deductions
made on written orders of the employee may be aggregated and shown as one item, (5)
net wages earned, (6) the inclusive dates of the period for which the employee is paid, (7)
the name of the employee and only the last four digits of his or her social security number
                                             2
nonexempt employees with wage statements setting forth "all vacation and PTO (paid

time off) wages accrued during the applicable pay period." Soto sought statutory

penalties and attorney fees. (§ 2699(g)(1).)

       Motel demurred, asserting that section 226(a) does not require employers to

itemize the monetary value of vacation balances before the employment relationship is

terminated. Motel relied on the plain language of the statute, the language of related

statutes (§§ 227.3, 227.5), federal and state case law, and a sample itemized wage

statement contained on the Division of Labor Standards Enforcement (DLSE) website.

       In opposing the demurrer, Soto argued that section 226(a) requires itemization of

earned "wages" and California cases have recognized (in other contexts) that a "wage"

includes vacation pay. (See Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th

1094, 1103 (Murphy); Suastez v. Plastic Dress-Up. Co. (1982) 31 Cal.3d 774, 784

(Suastez).) Soto emphasized the legal principle that vacation benefits are earned and

become vested during the pay period when they accrue. (See Suastez, supra, 31 Cal.3d at

pp. 778-784.) Soto additionally argued a vacation wage reporting requirement is

supported by the strong public policy favoring timely pay for completed work.


or an employee identification number other than a social security number, (8) the name
and address of the legal entity that is the employer and, if the employer is a farm labor
contractor, as defined in subdivision (b) of Section 1682, the name and address of the
legal entity that secured the services of the employer, and (9) all applicable hourly rates
in effect during the pay period and the corresponding number of hours worked at each
hourly rate by the employee . . . . The deductions made from payment of wages shall be
recorded in ink or other indelible form, properly dated, showing the month, day, and year,
and a copy of the statement and the record of the deductions shall be kept on file by the
employer for at least three years at the place of employment or at a central location within
the State of California. . . ."
                                               3
       After considering the arguments and taking judicial notice of the DLSE sample

wage statement, the trial court sustained the demurrer without leave to amend. The court

concluded "section 226(a) does not require a wage statement to include the value of

vacation or PTO wages accrued and earned."

                                    I. Review Standards

       On appeal from a judgment dismissing an action after sustaining a demurrer

without leave to amend, the "reviewing court gives the complaint a reasonable

interpretation, and treats the demurrer as admitting all material facts properly pleaded."

(Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.) It "is error for a trial court

to sustain a demurrer [if] the plaintiff has stated a cause of action under any possible legal

theory." (Ibid.) We apply a de novo standard in reviewing the court's ruling sustaining

the demurrer. (Lazar v. Hertz Corp. (1999) 69 Cal.App.4th 1494, 1501.)

                           II. Statutory Interpretation Principles

       The issue before us requires that we ascertain the legislative intent underlying

section 226. (See Gattuso v. Harte-Hanks Shoppers, Inc. (2007) 42 Cal.4th 554, 567

(Gattuso).) In so doing, we first examine "the statute's words, giving them their ordinary

and usual meaning and viewing them in their statutory context, because the statutory

language is usually the most reliable indicator of legislative intent." (Ibid.)

       "When the statutory language is ambiguous, a court may consider the

consequences of each possible construction and will reasonably infer that the enacting

legislative body intended an interpretation producing practical and workable results rather

than one producing mischief or absurdity . . . . '[A] court's "overriding purpose" in

                                              4
construing a statute is "to give the statute a reasonable construction conforming to [the

Legislature's] intent. . . ." ' . . . . 'The court will apply common sense to the language at

hand and interpret the statute to make it workable and reasonable.' " (Gattuso, supra, 42

Cal.4th at p. 567; accord, Yohner v. California Dept. of Justice (2015) 237 Cal.App.4th 1,

8.)

       We independently determine the meaning of a statute. (Ramos v. Garcia (2016)

248 Cal.App.4th 778, 784.)

                                        III. Analysis

       Section 226 requires "employers [to] provide accurate itemized statements of

wages to their employees." (Morgan v. United Retail Inc. (2010) 186 Cal.App.4th 1136,

1143 (Morgan).) The employer must provide the wage statement to the employee

"semimonthly or at the time of each payment of wages" and furnish the statement "either

as a detachable part of the check . . . paying the employee's wages, or separately when

wages are paid by personal check or cash." (§ 226(a).) The wage statement must contain

the information specified in the statute. (Heritage Residential Care, Inc. v. Division of

Labor Standards Enforcement (2011) 192 Cal.App.4th 75, 80.)

       The Legislature enacted section 226 to ensure an employer "document[s] the basis

of the employee compensation payments" to assist the employee in determining whether

he or she has been compensated properly. (Gattuso, supra, 42 Cal.4th at p. 574; see

Morgan, supra, 186 Cal.App.4th at p. 1145.) Section 226 "play[s] an important role in

vindicating [the] fundamental public policy" favoring " ' "full and prompt payment of an



                                               5
employee's earned wages. . . ." ' " (Henry M. Lee Law Corp. v. Superior Court (2012)

204 Cal.App.4th 1375, 1388, italics added.)

       Soto contends section 226 requires the monetary amount of earned vacation pay to

be listed on each itemized wage statement. Five years ago, a federal district court

rejected the identical argument, finding that neither the statutory language nor the

statutory purpose supports this requirement. (Heinzman v. Home Depot U.S.A., Inc. (U.S.

Dist. Ct., C.D. Cal., Jan. 20, 2011, No. SACV 10-01827-CJC (RNBx)) 2011 WL

12817699.) We agree with the court's conclusion.

       First, section 226(a) is highly detailed, containing nine separate categories that

must be included on wage statements, and the code section does not identify accrued paid

vacation as one of these categories. (See fn. 2, ante.) When a statute omits a particular

category from a more generalized list, a court can reasonably infer a specific legislative

intent not to include that category within the statute's mandate. (See Blankenship v.

Allstate Ins. Co. (2010) 186 Cal.App.4th 87, 94.)

       Soto contends the accrued value of a paid vacation benefit need not have been

specifically identified because vacation pay falls within the definition of the "gross wages

earned" and "net wages earned" statutory categories. (§§ 226(a)(1), (5); see fn. 2, ante.)

Soto relies on language in California Supreme Court decisions recognizing that vacation

pay is a form of a "wage[]." (See Murphy, supra, 40 Cal.4th at p. 1103 [noting "wages"

are defined to "include those benefits to which an employee is entitled . . . including

money, room, board, clothing, vacation pay, and sick pay"]; Suastez, supra, 31 Cal.3d at



                                              6
p. 779 ["[V]acation pay is not a gratuity or a gift, but is, in effect, additional wages for

services performed."].)

       Soto's argument reflects a misunderstanding of the nature of an accrued vacation

benefit under California law. Under section 227.3, if an employer provides for paid

vacation, "all vested vacation shall be paid to [the employee] as wages at his final rate in

accordance with" the employment contract or policy. In interpreting section 227.3 and

applying "equity and fairness" principles, the California Supreme Court in Suastez held

paid vacation is a form of deferred wages for services rendered, similar to a pension or

retirement benefit. (Suastez, supra, 31 Cal.3d at pp. 780-781, 783-784.) Under this view,

a proportionate right to a paid vacation vests as the labor is provided. (Id. at p. 784.) On

termination, the employee must be paid for a pro rata share of his or her unused vacation

time. (Ibid.)

       Consistent with Suastez, the courts have recognized that although vacation time

vests as labor is provided, unused vacation time does not become a quantifiable vacation

wage until the employee separates from the employment. (Church v. Jamison (2006) 143

Cal.App.4th 1568, 1576-1577 (Church) ["termination of employment is the event that

converts the employer's obligation to allow an employee to take vacation from work into

the monetary obligation to pay that employee for unused vested vacation time," fn.

omitted].) This principle is supported by section 227.3's language that "upon

termination," vested vacation pay shall be paid to the employee "as wages," leading to the

reasonable inference that before this time accrued vacation pay is not a "wage." (Italics

added.)

                                               7
        Under these authorities, vacation pay cannot be fairly defined as "gross wages

earned" or "net wages earned" under section 226(a)(1) or (a)(5) until the termination of

the employment relationship. The employee has vested rights to paid vacation or

vacation wages during the time of his employment, but these rights do not ripen and

become an entitlement to receive the monetary value of the benefit as wages until the

separation date. (Church, supra, at pp. 1576-1577, 1583; see Suastez, supra, 31 Cal.3d at

p. 784.) Further, before separation, the amount of vacation pay to which the employee is

entitled is not ascertainable. An employee is entitled to obtain the value of unused paid

vacation at his or her "final rate." (§ 227.3, italics added.) Because the amount of

unused vacation and an employee's final rate may change, an employee's accrued

vacation balance depends on the particular circumstances at the employment termination

date.

        Additionally, even assuming the statutory term "wages" can be fairly defined to

include "vacation pay," in interpreting a statute's plain meaning, a court should not focus

solely on " ' "a single word or sentence; the words must be construed in context, and

provisions relating to the same subject matter must be harmonized to the extent

possible." ' " (Morgan v. Beaumont Police Department (2016) 246 Cal.App.4th 144, 151

(Morgan).) The reference to "gross wages earned" and "net wages earned" (§ 226(a)(1),

(5)) must be read in connection with section 226(a)'s directory language, which states that

"at the time of each payment of wages," the employer must "furnish . . . an accurate

itemized statement" of these earned wages. (Italics added.) This mandate requires the

employer to "itemize[ ]" the constituent parts of the total amount to be paid to the

                                             8
employee. (§ 226(a).) Because unused vacation pay is not owed to an employee and is

not paid to the employee until the termination of the relationship, and the monetary value

of the unused vacation pay cannot be determined until the termination date, the

requirement that an employer identify earned "wages" logically does not extend to

accrued vacation benefits.

       This interpretation is also supported by section 226(a)'s statutory purpose, which is

to document the paid wages to ensure the employee is fully informed regarding the

calculation of those wages. As Soto recognizes, " 'The purpose of requiring greater wage

stub information is to insure that employees are adequately informed of compensation

received and are not shortchanged by their employers' " (quoting Assem. Com. on Labor

and Employment, Analysis of Sen. Bill No. 1255 (2011-2012 Reg. Sess., italics added).

Consistent with this purpose, an employer is required to identify only those statutory

items that are part of the employee's current monetary compensation. The employer must

provide the employee with an itemized statement identifying the specific wages being

paid at the time of the payment (or at least semimonthly). (§ 226(a).) Until a vacation

benefit is required to be paid, it need not be included in a wage statement under section

226(a).

       In urging this court to adopt her interpretation of section 226(a), Soto argues the

trial court's conclusion will "keep employees in the dark as to whether their employer has

correctly computed and credited vacation pay and paid time off." However, there is

nothing in the statutory language or its legislative history suggesting that the Legislature

intended section 226 to set forth disclosure rules governing all parts of an

                                              9
employer/employee relationship. The statute is directed at the contents of a wage

statement pertaining to the specific component parts of the employee's current

compensation. If an employer is not required to compensate an employee for unused

vacation in a particular paycheck, there is no statutory duty to identify the monetary

amount of the accrued vacation balance.

       Soto contends we are required to construe wage statutes broadly in favor of

employees. (See Murphy, supra, 40 Cal.4th at p. 1103.) We agree, but this principle

does not provide us with the authority to rewrite applicable legislation to " 'conform to

[an] appellant's view of what [the law] should be.' " (Gatewood v. Board of Retirement

(1985) 175 Cal.App.3d 311, 317; see In re G.Y. (2015) 234 Cal.App.4th 1196, 1204.)

"The rules of statutory construction provide that ' "[u]nder the guise of construction, a

court should not rewrite the law, add to it what has been omitted, omit from it what has

been inserted, give it an effect beyond that gathered from the plain and direct import of

the terms used, or read into it an exception, qualification, or modification that will nullify

a clear provision or materially affect its operation so as to make it conform to a presumed

intention not expressed or otherwise apparent in the law." ' " (Kleitman v. Superior Court

(1999) 74 Cal.App.4th 324, 334.) Whether disclosure regarding unused paid vacation

information should be required on a regular basis is a policy matter for the Legislature

and/or the regulatory agencies, and not the courts.3




3     Section 227.5 (relied upon by Motel) requires an employer to provide annual
statements upon request regarding payments made "to a health or welfare fund, pension
                                              10
       In reaching our conclusions, we do not rely on the sample wage statement on the

DLSE website. As Soto notes, the sample statement does not address the issue of

vacation pay, and therefore it is not helpful on the issue before us. We additionally note

that Soto's complaint alleged a section 226(a) violation based also on Motel's failure to

specify "paid time off" on the wage statements. Soto does not suggest there is any

different analysis regarding this benefit, and therefore we do not separately discuss the

issue. Our conclusions apply equally to the "paid time off" allegations.

                                      DISPOSITION

       Judgment affirmed. Respondent to recover its costs on appeal.




                                                                               HALLER, J.

WE CONCUR:




HUFFMAN, Acting P. J.




NARES, J.




fund or vacation plan or such other plan, for the benefit of the employee." This provision
does not appear to be directly applicable to the issue here.
                                            11
