The Supreme Court has set a date to hear arguments in Prachasaisoradej v. Ralph’s Grocery Company, Inc. (2004) 122 Cal.App.4th 29, to determine whether it is a violation of California’s wage laws and the Unfair Competition Law for an employee bonus plan to be based on an amount of profits that can be reduced by a store’s expenses, such as workers compensation insurance, and cash or merchandise losses. The arguments will be heard on Wednesday, June 6, 2007, at 9:00 a.m. in the Supreme Court's Los Angeles venue. The issue on appeal in Prachasaisoradej reads as follows:
Does an employee bonus plan based on a profit figure that is reduced by a store's expenses, including the cost of workers compensation insurance and cash and inventory losses, violate (a) Business and Professions Code section 17200, (b) Labor Code sections 221, 400 through 410, or 3751, or (c) California Code of Regulations, title 8, section 11070?
The Court of Appeal held that deducting such expenses from revenue in calculating the profit on which a bonus is based amounts to an unlawful recovery of business expenses out of an employee’s wages.
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