California Labor Code Section 206.5 - Example Case
In Reynov v. ADP Claims Services Group, Inc. (N.D.Cal., Apr. 30, 2007, No. C 06-2056 CW) the trial court granted the employer's motion for summary judgment on the complaint by a former employee for unpaid overtime allegedly due to his misclassification as an exempt employee.
Shortly after the plaintiff quit his job, he signed an agreement releasing the employer "from 'all claims, actions, and causes of action, of every kind, nature, and description, which exist as of the date you sign this Letter Agreement, arising out of or related to your employment.'" (Id. at p. 1.)
In exchange, the plaintiff received "substantial compensation to which he was not otherwise entitled, including a severance payment in excess of $ 29,000." (Ibid.)
He also received his outstanding salary and other wages, which were not conditioned on the signing of the release.The plaintiff argued the release was unenforceable under section 206.5.
The Court found that section 206.5 prohibited a release of wages due unless paid in full. "Wages are not 'due' if there is a good faith dispute as to whether they are owed. Because the employer's defense that the plaintiff was an exempt employee under California law would, if successful, preclude any recovery for the plaintiff, a bona fide dispute exists and the overtime pay cannot be considered 'concededly due.'" (Reynov, supra, 2007 WL 5307977 at p. 3)