Calif. Court Backs 'L.A. Times' On Subcription Chargebacks

By: Mark Fitzgerald Newspapers can make their circulation telemarketers pay back commissions if a customer cancels a subscription in fewer than 28 days, a California appeals court ruled yesteryda in a case involving the Los Angeles Times.

The Court of Appeals for Division Eight said the Times "chargeback" policy -- a common newspaper industry practice -- does not violate California's tough labor laws.

In its decision, the court said any commission paid out before the 28-day limit is an "advance," and not a wage that cannot be taken back or withheld by an employer under California law.

The Times was sued for $7 million in a class action brought by six of its telesales employees, who argued the chargeback practice violated California Labor Code. Telesales employees received a basic wage plus commissions on new sales. The commissions were paid out two weeks after the sale was made, but could be taken back if the customer dropped the subscription in fewer than 28 days.

The lawsuit was never certified as a class action and was dismissed on summary judgment in Los Angeles Superior Court.

Writing for the appeals court, Justice Madeleine Flier noted that the chargeback practice was part of the paper's employment agreement with the telesales staff.

Telesales employees, she wrote, "bear the reasonable risk that the customer may not retain the subscription for at least 28 days, in which case the minimum hourly wage serves as his or her compensation for the time spent." But the newspaper is taking a chance, too, she continued: "Respondent correspondingly bears the risks of the customer not paying the bill at all or canceling on or after the 29th day." The decision was quoted in an account in the Los Angeles legal daily Metropolitan News-Enterprise by staff writer Kenneth Ofgang.

Thomas Kaufman, an attorney who represented the Times in the case, referred questions to a Times spokesperson, who did not immediately respond to a message seeking comment. The lead attorney for the telesales employees, Mark R. Thierman, was not available, his office said.