Litigating California Wage & Hour and Labor Code Class Actions

3) The employee performs his or her job only under general supervision and
works along specialized or technical lines in work requiring special training,
experience, or knowledge; and
4) The employee is paid a salary equivalent to at least twice the state minimum
wage. 31
As with the executive exemption, the IWC Wage Order provision on the
administrative exemption has since 2001 incorporated several FLSA regulations by
reference. As a result, decisions interpreting the federal administrative exemption
often provide persuasive guidance to California courts interpreting the California
administrative exemption. 32
Nonetheless, as explained below, California’s
interpretation of the administrative exemption in some ways departs from the way the
administrative exemption has been interpreted in most other jurisdictions.
2. California Develops a Unique Interpretation of the
Administrative/Production Dichotomy
An issue of substantial dispute under the administrative exemption is whether the
employees at issue are working in an “administrative” capacity or in a “production”
capacity. Generally speaking, only employees in the former group are eligible for the
exemption. This distinction between production and administrative workers is
sometimes referred to as the “administrative/production dichotomy.”
One of the few class actions that actually went to trial in California, Bell v. Farmers
Insurance Exchange, 33 was a case challenging whether certain insurance adjusters
of the defendant qualified for the administrative exemption. The plaintiffs prevailed
on the basis that the insurance adjusters at issue were found, on a classwide basis,
not to qualify for the administrative exemption. Following the plaintiffs’ success in
Bell, numerous other cases have been filed to challenge the exempt status of
insurance adjusters.
In Bell, the California Court of Appeal addressed the requirement that an
administratively exempt employee work in an administrative job rather than a
31
32
33
(U.S. Fed. Cl. 1993) (doing exempt duties only one-third of the total work time, but on a regular recurring basis, qualified
as performing the task “customarily and regularly”).
Wage Order 7-2001 § 1(A)(2)(f).
Combs v. Skyriver Communications, LLC, 159 Cal. App. 4th 1242, 1254-55 (2007) (recognizing that the incorporation of
FLSA regulations was intended to make the California exemption “closely parallel the federal regulatory definition of the
same exemption”).
87 Cal. App. 4th 805 (2001).
Seyfarth Shaw LLP | www.seyfarth.com Litigating California Wage & Hour Class Actions (12th Edition) 11