In Castillo v. Toll Brothers, Inc. and Hernandez v. Toll Brother, Inc. employees of a construction subcontractor filed a class action lawsuit alleging multiple wage and hours violations, including minimum wage, meal and rest break, record keeping, and pay statement violations. In addition, the plaintiffs alleged a claim under Labor Code §2810 seeking to a hold a general contractor, Toll Brothers, liable for a subcontractor’s Labor Code violations. On July 27, 2011, the California First District Court of Appeals, rendered the first appellate review of this relatively new statute. See Castillo v. Toll Brothers, Inc. No. A128605
The primary issue before the Court was whether the standard to determine the sufficiency of a contract under section 2810 was (a) minimum wage or (b) the actual market price of labor. The Court determined that minimum wage was the proper standard. In its analysis the Court noted that not only was section 2810 unambiguous, but also that the legislative history clearly supported a finding of minimum wage as the proper standard. On a practical level the Court further added:
There are strong practical reasons for using the minimum wage costs to determine contract sufficiency. The minimum wage provides a bright line test for sufficiency, readily ascertained by a contracting party. As the evidence in this case demonstrates, the use of any other wage standard opens the contracting parties to significant uncertainty.Despite this holding on the proper legal standard for section 2810 claims, the Court concluded the trial court erred in granting summary judgment to Toll Brothers because the plaintiffs had provided triable issues of fact on the sufficiency of two contracts.
