SCHAUER, J. I concur in the judgment and, in general, in much of the opinion authored by Mr. Justice White. As a [331]precaution, however, against the drawing of unwarranted inferences from the opinion I state more fully my reasons for concurrence.
The subject order of the Industrial Welfare Commission prohibits wage deductions for cash shortage “unless it can be shown that the shortage ... is caused by a dishonest or wilful act, or by the culpable negligence of the employee. ’ ’ It prohibits, in other words, deductions for shortages either (1) caused by negligence of the employe other than “culpable negligence” (whatever that may mean), or (2) occurring without any negligence whatever on the part of the employe.
On the record before us it is unnecessary to explore the meaning in this context of the criminal law term “culpable negligence” (see, e.g., Pen. Code, §26 (subd. Six) ; People v. Sidwell (1915) 29 Cal.App. 12, 18-19 [154 P. 290]), or to consider whether the commission has statutory authority to prohibit deductions caused by negligence of the employe other than “culpable negligence.” After three da;^ of hearings on plaintiff-employer’s appeal from the initial determination of violation of Order No. 5-57, the Division of Industrial Welfare made findings of fact concerning plaintiff’s method of operation which are here set out in the footnote.1 From these findings the Division of Industrial Welfare concluded “that employees working under such conditions cannot be held to be guilty of culpable negligence, or any negligence. Indeed, the [332]greatest diligence could still result in an overage or a shortage. Discrepancies are bound to occur due to the system, rather than the individual.”
These administrative findings “are, in the absence of fraud, conclusive” (Lab. Code, §1187), and are not challenged in the present proceeding. In the light of the history of past abuses reflected in the enactment of the various regulatory provisions of part 1, division II of the Labor Code (e.g., §§ 201, 209, 221, 222.5, and 401), the commission could properly conclude that deductions for shortages occurring without any fault on the part of the employes and hence unrelated to their performance are disruptive of good employer-employe relations and tend to impose a special hardship upon the individual employe, who normally relies on payment in full of his or her anticipated wages. To this extent the commission could properly determine that such deductions are detrimental to “The standard conditions of labor demanded by the health and welfare of the women” employed in plaintiff’s business (Lab. Code, § 1182, subd. (c)), and accordingly issue the subject order of compliance.
Our decision, however (as I understand the intention of its author), should not be construed by the commission as authorizing it to regulate any term of an employment contract on the theory that a “condition of labor” is thereby affected.
No such all-encompassing delegation of power was intended by the Legislature in enacting section 1182 of the Labor Code. The commission does not have authority to fix “conditions of labor” in general any more than it has authority to fix minimum wages or maximum hours without regard to the statutory criteria (Lab. Code, §1182, subds. (a) and (b)). By subdivision (c) of section 1182 the commission’s authority in this respect is expressly restricted to fixing those “standard” conditions of labor which are “demanded by the health and [333]welfare” of women and minors engaged in an occupation in this state.
There can be no doubt that the freedom of all employes to bargain collectively with respect to the terms and conditions of their employment is recognized as basic in our civilization, and that the preservation of that freedom against unjustifiable governmental encroachment is essential to the cause of industrial democracy and hence to the common welfare. By section 923 of the Labor Code “the public policy of this State is declared as follows:
“Negotiations of terms and conditions of labor should result from voluntary agreement between employer and employees. Governmental authority has permitted and encouraged employers to organize in the corporate and other forms of capital control. In dealing with such employers, the individual unorganized worker is helpless to exercise actual liberty of contract and to protect his freedom of labor, and thereby to obtain acceptable terms and conditions of employment. Therefore it is necessary that the individual workman have full freedom of association, self-organization, and designation of representatives of his own choosing, to negotiate the terms and conditions of his employment, and that he shall be free from the interference, restraint, or coercion of employers of labor, or their agents, in the designation of such representatives or in self-organization or in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” (Italics added.)2
Section 923 of the Labor Code is “a general independent declaration of state policy” (Chavez v. Sargent (1959) 52 Cal.2d 162, 191 [19] [339 P.2d 801]), and represents an application to the area of collective bargaining of the constitutional right of liberty of contract (see Chavez v. Sargent (1959), supra, 52 Cal.2d at pp. 217-221 [concurring opinion]). That constitutional right is the foundation upon which our free enterprise system has been erected; it must remain free [334]from arbitrary restraints, and may be limited only by reasonable regulations necessary to safeguard the public health and welfare. Absent such necessity, “The Legislature may not limit parties in their power to incorporate in their contracts, otherwise valid, such terms as may be mutually satisfactory to them.” (Ibid, at p. 217.)
Typical of the “terms and conditions of employment” which may properly be the subject of collective bargaining is the incentive bonus or commission, designed to promote diligence and a high standard of efficiency on the part of the employe. Such an arrangement between persons of mutual good will must inevitably tend to benefit both. The employer, of course, has the benefit of increased productivity or sales flowing from the employe’s efforts; the employe, with little risk and with much to gain, acquires the additional status of entrepreneur, making it possible for him to realize tangible rewards for his diligence and care. In incorporating such a provision in a collective bargaining agreement the parties exercise their constitutional freedom to contract, in a manner consonant with the declared public policy of the state. Our decision today should not be interpreted as encouraging-further governmental impairment of that essential freedom.
McComb, J., concurred.
Respondent’s petition for a rehearing was denied March 21, 1962.
In addition to the facts summarized in the opinion of Justice White {ante, p. 319) the following findings were made:
“2. Inventory is supposed to be taken at the conclusion of the day’s run and the additional items loaded in the morning added to this. Between the time of night inventory and morning additions, the driver is not in control of the truck. It is open, standing in the yard. Some of the items are buried in ice and not visible. Small items, such as candy, may be jumbled together.
“3. Each route driver is supposed to inventory her truck prior to starting on her route. Fifteen minutes is the time allotted to inventory, load and prepare the truck for the road.
Every truck driver on each route has a definite time that she is to be at each establishment on her route.
“5. An analysis of the beginning and ending times for each route showed that some routes have as little as five or ten minutes to prepare trucks.
“6. Starting time for drivers is staggered, but the major portion of the drivers report to work between 7:00 and 7:15 a. m.
“7. Route drivers have full charge of their trucks while on the route. However, two sides are open simultaneously at each stop allowing ample opportunity for pilferage. At the completion of the work day employees are required to lock their trucks and turn the key in to the office. Trucks are loaded by other personnel following the completion of the day’s run [332]and prior to the start of the next day’s run. During the loading period, employees’ trucks are open and accessible to others.
“8. Shortages may be caused by ‘paper errors,’ by failure to take inventory, or by pilferage on the part of the customers.
“9. Eoute drivers have no knowledge as to whether they are over or short at the time that their cash is turned in. A list of overages and shortages is normally posted the day following the cash turn in.
“10. An analysis of overages and shortages on each route indicates a pattern of error. On each day almost every driver has an over or a short.
“11. Overages and shortages are assigned to a route regardless of the number of drivers who handle that route,”
Similarly, on the national level Congress lias declared in the Labor Management Relations Act of 1947 (29 U.S.C. §151) that it is “the policy of the United States to eliminate the causes of certain substantial obstructions to the free flow of commerce and to mitigate and eliminate these obstructions when they have occurred by encouraging the practice and procedure of collective bargaining and by protecting the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid or protection.” (Italics added.)