Martinez v. Combs
For claims under the wage orders, who is an “employer” is governed by the IWC’s own definitions — to “employ” means to exercise control over wages, hours, or working conditions; to suffer or permit to work; or to engage in a common-law employment relationship — not by the common-law test alone.
Martinez v. Combs (2010) 49 Cal.4th 35
Wage & Hour
Employer Definition
Joint Employment
IWC Wage Orders
Affirmed
Published
In brief. When seasonal strawberry workers could not collect their wages from their immediate employer, they sued the produce merchants who had bought the berries, contending the merchants were also their “employers” and jointly liable for unpaid minimum wages under Labor Code section 1194. Resolving who counts as an “employer” for such a claim, the Court held that the IWC wage orders’ own definitions of “employ” and “employer” — not merely the common-law control test — govern. To “employ,” the Court explained, has three alternative meanings: “(a) to exercise control over the wages, hours or working conditions, or (b) to suffer or permit to work, or (c) to engage, thereby creating a common law employment relationship.” Measured against all three, the merchants were not the workers’ employers, and the Court affirmed judgment in their favor. (Martinez v. Combs (2010) 49 Cal.4th 35, 64.)
Facts
The case arose from the 2000 strawberry-farming operation of Isidro Munoz, Sr., doing business as Munoz & Sons, in the Santa Maria Valley. (49 Cal.4th at pp. 42–43.) The plaintiffs were six seasonal agricultural workers — including Hilda and Miguel Martinez — whom Munoz employed to grow and harvest the crop. (Id. at p. 42.) Munoz ran his fields as “a single, integrated concern,” hiring, supervising, scheduling, and (when he could) paying his own workforce. (Id. at pp. 43–44.)
Munoz sold his strawberries through produce merchants, principally Apio, Inc. and Combs Distribution Co. (with its principals Corky and Larry Combs and its field representative Juan Ruiz, collectively “Combs”); a separate action against a third merchant, Frozsun, Inc., was stayed. (49 Cal.4th at pp. 42–43.) When the market turned and Munoz’s operation failed, he was left unable to pay his workers the minimum wages they had earned. (Id. at pp. 43–48.) The workers sued the merchants under Labor Code section 1194 — which authorizes an employee to recover unpaid minimum and overtime wages, plus liquidated damages under section 1194.2 — on the theory that the merchants, through their purchasing relationships and their field representatives’ presence in the fields, were the workers’ “employers” and therefore jointly liable. (Id. at pp. 42, 48.) The plaintiffs did not seek class certification, and they disclaimed any contention that the merchants were their employers under federal or common law, resting instead on the wage order’s definitions. (Id. at pp. 48, 53.)
Procedural history
The trial court granted summary judgment for the merchants, and the Court of Appeal affirmed, each applying a narrow, control-focused conception of “employer.” (49 Cal.4th at pp. 42, 48–49.) The Supreme Court granted review to decide the governing definition of “employer” for a section 1194 minimum-wage claim — a question its recent decision in Reynolds v. Bement (2005) 36 Cal.4th 1075 had addressed in dicta that the Court would now revisit — and ultimately affirmed the judgment for the merchants while correcting the legal standard the lower courts had used. (Id. at pp. 49–52, 62–64, 73.)
Issue
What standard determines whether an entity is an “employer” liable for unpaid minimum wages under a Labor Code section 1194 claim predicated on the IWC wage orders — the common-law control test alone, or the wage orders’ own definitions of “employ” and “employer”? And, under the correct standard, were the produce merchants the plaintiffs’ employers? (49 Cal.4th at pp. 49–52, 64.)
Holding
The wage orders’ definitions govern. To “employ” under the IWC’s definition “has three alternative definitions. It means: (a) to exercise control over the wages, hours or working conditions, or (b) to suffer or permit to work, or (c) to engage, thereby creating a common law employment relationship.” (49 Cal.4th at p. 64.) Insofar as Reynolds v. Bement, supra, 36 Cal.4th 1075, suggested that the common law alone defines the employment relationship for section 1194 claims, it “spoke too broadly.” (49 Cal.4th at pp. 62–64.) Measured against all three definitions, the produce merchants were not the workers’ employers, and judgment in their favor is affirmed. (Id. at pp. 64, 73.)
Reasoning
1. Section 1194 presupposes, but does not define, the “employer.” Section 1194 gives an employee a private right of action to recover the unpaid balance of the minimum or overtime wage, “[n]otwithstanding any agreement to work for a lesser wage.” (49 Cal.4th at pp. 49–50.) But the statute does not itself say who, besides the immediate hirer, may be liable as an “employer.” To answer that, the Court turned to the body of law section 1194 was enacted to enforce: the minimum-wage obligations the IWC fixes through its wage orders. (Id. at pp. 50–52.) Because the action is one to enforce the wage order, the Court reasoned, the wage order’s own definitions of the employment relationship — not a definition borrowed from some other field — must supply the answer. (Id. at pp. 52, 62.)
2. The wage orders, not the common law alone, define employment — and Reynolds is cabined. The Court confronted its own recent decision in Reynolds v. Bement, which had looked to the common law in deciding whether individual corporate agents could be personally liable under section 1194. (49 Cal.4th at pp. 62–63.) Reynolds, the Court now held, “spoke too broadly in concluding that the common law defines the employment relationship” for such claims; the common-law test is not the exclusive measure, and “Wage Order No. 14 . . . and not the common law, properly defines the employment relationship in this action under section 1194.” (Id. at pp. 62–64.) The Court invoked the settled rule that remedial wage legislation is to be “liberally construed with an eye to promoting such protection” of employees (id. at p. 61), and observed that the IWC, exercising authority to give employees “greater protection than federal” law, could not have meant to leave its protections to the narrow contours of common-law agency (id. at pp. 60–61, 64).
3. The historical pedigree of “suffer or permit to work.” The heart of the opinion is its excavation of the phrase “suffer or permit to work.” The Court traced the language to the model child-labor statutes of the early twentieth century, which used “employ, suffer or permit” precisely so that liability would not depend on a “common law master and servant relationship.” (49 Cal.4th at pp. 57–59.) That same standard passed into the federal Fair Labor Standards Act of 1938 (29 U.S.C. § 201 et seq.), whose definition of “employ” “includes to suffer or permit to work” (29 U.S.C. § 203(g)), and was construed in the seminal federal cases the Court discussed, including Rutherford Food Corp. v. McComb (1947) 331 U.S. 722 and Goldberg v. Whitaker House Cooperative (1961) 366 U.S. 28. (49 Cal.4th at pp. 52, 57–59.) The IWC, the Court explained, deliberately adopted this broad, protective formulation; its reach “foreign to the common law” was the entire point, designed to extend wage protection to workers “whose employment status the common law did not recognize.” (Id. at pp. 58, 64.) The Court was careful, however, to note that California’s wage law is not simply federal law: it has its own statutory and historical roots, a point it had earlier touched in Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575. (49 Cal.4th at pp. 59–60.)
4. The three alternative definitions of “employ.” Synthesizing this history with the wage order text, the Court announced the definition that now governs California wage-and-hour law: to “employ” “has three alternative definitions. It means: (a) to exercise control over the wages, hours or working conditions, or (b) to suffer or permit to work, or (c) to engage, thereby creating a common law employment relationship.” (49 Cal.4th at p. 64.) The three are disjunctive — any one suffices — and the first two are materially broader than common-law agency, reaching those who control the terms of work or who knowingly permit work to proceed for their benefit. (Id. at pp. 64.)
5. Application: the merchants were not employers under any definition. Applying each branch, the Court held the merchants were not the workers’ employers. (49 Cal.4th at pp. 64–73.) They did not exercise control over the workers’ wages, hours, or working conditions: Munoz alone hired the workers, set and (when able) paid their wages, and directed their labor, while the merchants’ dealings concerned the price, quantity, and quality of the strawberries they purchased. (Id. at pp. 64–71.) They did not “suffer or permit” the workers to work in the operative sense, because they lacked the authority, characteristic of an employer, to cause the work to continue or to prevent it. (Id. at pp. 71–72.) And no common-law employment relationship existed between the merchants and Munoz’s workforce. (Id. at p. 72.) That the lower courts had reached the right result on a narrower rationale did not change the outcome: under the correct, broader standard, the merchants still were not employers, and the judgment was affirmed. (Id. at pp. 64, 73.)
Significance
Martinez is the foundational modern decision on who is an “employer” for California wage-order claims, and the source of the wage orders’ broad, three-part definition of “employ.” Its most consequential legacy is doctrinal lineage: eight years later, in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903, the Court derived the worker-protective ABC test directly from the “suffer or permit to work” branch that Martinez had resurrected and explained — a test the Legislature then codified in Assembly Bill 5. The “control” and “suffer or permit” concepts also run through the compensable-time and hours-worked cases that begin with Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575. Equally important, Martinez recalibrated Reynolds v. Bement, confining the role of common-law agency in wage-order litigation and opening the door to joint-employer and integrated-enterprise theories that the common law alone would foreclose. For practitioners, it is the indispensable starting point for any joint-employer, staffing, franchise, or supply-chain wage claim. See the Review’s practice guide on independent-contractor misclassification and the ABC test.
Key quotes
“To employ, then, under the IWC’s definition, has three alternative definitions. It means: (a) to exercise control over the wages, hours or working conditions, or (b) to suffer or permit to work, or (c) to engage, thereby creating a common law employment relationship.” (Martinez, supra, 49 Cal.4th at p. 64.)
“Wage Order No. 14 . . . and not the common law, properly defines the employment relationship in this action under section 1194.” (Id. at p. 62.)
Practice pointer
In any wage-order claim — especially joint-employer, staffing, franchise, or supply-chain theories — frame “employer” around the wage orders’ three definitions, not the common-law control test alone, and be ready to neutralize the defense’s reflexive reliance on common-law agency by citing Martinez’s limitation of Reynolds. The “suffer or permit to work” and “control over wages, hours, or working conditions” branches are where joint-employer liability is won or lost; develop facts showing the putative employer’s control over pay practices, scheduling, hiring/firing, or working conditions, or its knowing acceptance of the benefit of the work and its practical power to stop it. Plead the wage-order definition expressly rather than relying on a generic “employer” allegation. And remember the strategic payoff: Martinez’s “suffer or permit” language is the textual root of the Dynamex ABC test, so the same source that defines joint employment also drives the independent-contractor analysis.
Open questions
Martinez resolved the governing definitions but left their application to vary widely by industry and arrangement. How the three branches reach modern staffing agencies, franchisors, general contractors, and digital intermediaries continues to be litigated; how much “control” over wages, hours, or working conditions is enough; and what it means, in a given setting, to have the practical power to “suffer or permit” work to continue. The decision also left the precise interaction between its “employer” analysis and the Dynamex/AB 5 worker-classification framework to later cases — questions that remain live wherever joint employment and misclassification theories overlap.