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California-Rescinding Employment Contract from EDD's perspective.

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  • California-Rescinding Employment Contract from EDD's perspective.

    A mortgage bank in CA offered me a job as a loan officer doing 100% commission only inside sales. They supplied an employment contract which provided for the compensation to be 100% commission based, with NO minimum wage payable.

    I worked for them for 2 weeks, then decided that the 100% commission structure wasn't for me. I quit the job citing this reason.

    I have received no compensation from the company, nor do I expect to receive any.

    Question #1:

    Can I unilaterally rescind the employment contract based on the contract containing terms which do not provide for the CA minimum wage? I believe that any contract which has terms that are in violation of applicable state or federal laws are voidable by either party. The terms at issue in this case are that the company will not pay a minimum wage, therefore in violation of the state wage/hour laws of CA.

    Question #2

    Presuming that I can prevail in rescinding the contract, would doing so make my employment status revert back to what it was prior to the contract? (Which was unemployed and receiving UI benefits.)

    Question #3

    If the answer to #2 is yes, then in the eyes of the EDD would that effectively negate or unwind any employment with said company, and in so doing re-establish my "most recent work/employer" as the employer prior to the the rescinded one?

    The reason for this exercise is that the EDD is determining that I left the employment at the mortgage bank "without good cause" because I was dissatisfied with the wages.

    Even with that, my understanding of one of the elements for "good cause" is failure to pay a minimum wage.


    1. General

    Title 22, Section 1256-22(b), provides:

    An individual who leaves work due to dissatisfaction with some aspect of wages has left work with good cause if the leaving of work is for . . . the following reasons:

    (1) The wages paid by the employer are less than the minimum wages required by federal or state law and the employer refuses to pay such minimum wages.

    Quitting work because wages were less than the minimum standards set by law will, without exception, constitute good cause for quitting, if the employer refuses to rectify the situation.

    Both the State of California and the Federal Government have minimum wage statutes. The State laws apply to most employees working in California and the Federal laws apply to all persons engaged in interstate commerce.


    I know this is a long post, thank you in advance for your opinions.

  • #2
    Originally posted by SteveinEG View Post
    A, if the employer refuses to rectify the situation.

    .
    This may be your problem... what actions did you take to allow the employer to rectify the issue?

    Comment


    • #3
      It is not legally possible for Inside Sales to be paid on a 100% commission basis that ignores hours worked. Any "contract" that specifies that would not be valid. File a wage claim with CA-DLSE for any unpaid MW or OT.

      Past that:
      - I have no opinion on your UI issues, other then to say that I would be very surprised if anything you just said has any traction with CA-EDD. You quit. CA-EDD does not care about your "contract", and your solution to being underpaid was to file a wage claim, not quit. But I understand that this is not the answer that you are looking for.
      - I in your position would have no interest in the contract or using words like "rescind" or "unwind" or "revert" in regards to the contract. If you really think that you have a contract law issue, then your sole recourse is to have a local attorney read your contract in it's entirety. And to have a general court action to resolve the contract law issue. But the whole mortgage industry, 100% commission and Inside Sales thing has been beat to death in courts over the past few years, with the mortgage industry losing 100% of its cases. This is black letter law. MW/OT is owed. File a wage claim and let the employer trying to breath life into their worthless contract. Based on what you have said, I see no reason why you want to even hint that the contract is in any way valid.
      "Reality is that which, when you stop believing in it, doesn't go away".
      Philip K. **** (1928-1982)

      Comment


      • #4
        DAW-

        If the employer agrees to void the contract, or accepts the rescission, then you think that EDD would still view it as employment?

        Filing a claim for wages, really doesn't help me any, it would be for $650-$700 for those 2 weeks. I know that I would prevail. But it also satisfies the employer's obligation to pay and therefore creates a voluntary quit without good cause.

        On the other hand, if the employer accepts the rescission, then we both would revert back to the status we were before the contract. That would relieve them of "most recent employer" status, for both of us actually.

        By doing this, the most recent employer I have is the one that laid me and the department off for lack of work. Theoretically, at least, my UI benefits would continue.

        Your thoughts?

        Comment


        • #5
          My thoughts are:
          - You quit. That does not certainly mean that you will not get UI, but it always greatly reduces the chances.
          - EDD does not care about your contract. Or anyone's contract. Ever. For any reason.
          - EDD does not care about any future agreement or meeting of the minds that you and former employer might make. You quit. They (EDD) will listen to your story, and your former employer's story, but at the end of the day, EDD will make their decision based on their rules.

          I understand that this is not the answer that you are looking for.
          "Reality is that which, when you stop believing in it, doesn't go away".
          Philip K. **** (1928-1982)

          Comment


          • #6
            The Claimant CAN prevail!

            ALJ ruled my quit was for good cause.

            First, which was the most time consuming and technical, There had to be a finding of fact that my occupation was covered under Wage Order 4 which required the employer to pay at least minimum wage. This took some doing because this finding is not "technically" within the jurisdiction of the the ALJ proceeding. after some wrangling, this finding was established in my favor, I was good to go.

            The employer, (and the CA EDD, I might add) said that because I had agreed to the employment contract which specified commission only as compensation, that I shouldn't be dissatisfied with the wages because I knew going in that the job would be commission only.

            I argued that the mere existence of the contract didn't trump California Wage Order 4 because employment contracts which violate the law or go against public policy are void. Furthermore, California law prohibits employees from waiving certain rights granted under California Labor code or other federal labor laws. Therefore, not only was the contract void, but I couldn't have agreed to it anyway because it required me to waive guaranteed rights.

            ALJ decision has about 8 paragraphs explaining the justification that the contract would have no bearing on the case.

            Next, to support the good cause for the voluntary quit, I used:

            Title 22, Section 1256-22(b), provides:
            An individual who leaves work due to dissatisfaction with some aspect of wages has left work with good cause if the leaving of work is for the following reasons:
            (1) The wages paid by the employer are less than the minimum wages required by federal or state law and the employer refuses to pay such minimum wages.
            Quitting work because wages were less than the minimum standards set by law will, without exception, constitute good cause for quitting, if the employer refuses to rectify the situation.

            Done. Ruled Eligible, and the employer's account to be charged.

            As it turned out, I got new employment back in February, so the employer was only nicked for a few months of UI compensation.

            This whole ordeal took me 4 months of determinations, redeterminations, etc., then an ALJ hearing in April 10. The judge remanded back to the EDD for additional details and determinations. Then, another round of determinations & re-determinations with the EDD, and finally round 2 at the ALJ for the win. All told, 11 months and 22 days for a little over $4,500.00. I guarantee you that California spent that much and then some fighting me on this.

            The claimant CAN prevail, but this took me a tremendous amount of time at night and weekends reading and researching. It also helped that my 1st trip to the ALJ told me what to expect at the 2nd hearing, how to prepare, how to be firm, how to be succinct, and above all, one MUST use the UI code prior rulings & decisions in order to prevail.

            Comment


            • #7
              Thanks for the up-date & that you did prevail.
              Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around. Leo Buscaglia

              Live in peace with animals. Animals bring love to our hearts and warmth to our souls.

              Comment

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