Litigating California Wage & Hour and Labor Code Class Actions

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position. This makes it more difficult to apply Combs to other situations involving lower level IT jobs or other sorts of mid-level administrative positions. 47 3. The Administrative/Production Dichotomy Test Survives—Harris v. Superior Court On December 29, 2011, the California Supreme Court issued its decision in Harris v. Superior Court, 48 holding that the Court of Appeal mistakenly concluded that claims adjusters, as a matter of law, do not qualify for the administrative exemption. The Supreme Court did not provide definitive guidance on this topic in its opinion. Rather, the Court simply held that the Court of Appeal had improperly applied the “administrative/production worker dichotomy” as a dispositive test. Liberty Mutual claims adjusters had filed a class action alleging that Liberty Mutual misclassified them as exempt administrative employees. The trial court denied plaintiffs’ motion for summary adjudication on Liberty Mutual’s administrative exemption affirmative defense, but the Court of Appeal reversed the trial court and held that as a matter of law, the administrative exemption did not apply to the claims adjusters. The Court of Appeal strictly applied the “administrative/production worker dichotomy” test set forth in the Bell v. Farmers Insurance Exchange cases and held that adjusting claims was part of the “product” that their employer sold and therefore not an administrative duty. While the administrative exemption analysis depends on multiple factors, the Harris decision focused on only one—whether the employees’ work qualified as administrative. The California Supreme Court broke this analysis down into two components, one “qualitative” (i.e., whether the work is administrative in nature) and the other “quantitative” (i.e. whether it is of “substantial importance” to the employer’s management policies or general business operations). In reversing the Court of Appeal, the California Supreme Court distinguished Bell. First, the Court noted that the Bell opinions limited their holding to the specific facts of that case (including defendants’ stipulation that the work performed by all plaintiff was ‘routine and unimportant’). Second, the Court noted that the analysis in Bell relied on the applicable Wage Order at that time (Wage Order 4-1998). That order did not provide a sufficient definition of the administrative exemption, thereby requiring the 47 48 In Heffelfinger v. Electronic Data Systems, 580 F. Supp. 2d 933, 961-62 (C.D. Cal. 2008), the United States District Court for the Central District of California surveyed various cases that analyzed whether IT workers were exempt, and found there to be a “clear demarcation point,” with employees who “were tasked to install, maintain, and troubleshoot software” falling on the non-exempt side, and those “charged with writing code, programming, or ‘administering’ databases or networks” falling on the exempt side. 53 Cal. 4th 170 (2011). Seyfarth Shaw LLP | www.seyfarth.com Litigating California Wage & Hour Class Actions (12th Edition) 14
Bell court to look beyond the Wage Order’s language. In contrast, Wage Order 4- 2001 (the current and operative Wage Order in Harris) incorporates specific federal regulations and contains “detailed guidance” concerning the administrative exemption. The Court of Appeal in Harris erred by focusing too heavily on the administrative/production dichotomy rather than applying the language of the relevant wage order and regulations. The Supreme Court ultimately declined to adopt a rule precluding the use of the dichotomy as an analytical tool. Instead, the Court held that, in determining whether work is administrative, courts must consider the particular facts and apply the language of the statutes and wage orders at issue. If the statutes and wage orders fail to provide adequate guidance, the Court held, then it would be appropriate to consider other sources, including, presumably, the administrative/production dichotomy. The only concrete guidance from the California Supreme Court in Harris is that the administrative/production dichotomy is not a dispositive test for the administrative exemption. The Court left open the possibility that the dichotomy may still apply in future cases. Employers who were looking for more specific guidance from the Court on the administrative exemption will be disappointed, as, even after Harris, determining whether an employee satisfies the administrative exemption remains a highly fact-specific venture. D. The Outside Sales Exemption The outside sales exemption is the broadest of all in that it exempts the employees from all provisions in the Wage Orders, even minimum wage protections. 49 To qualify as an outside salesperson, an employee must “customarily and regularly work more than half the working time away from the employer’s place of business selling tangible or intangible items or obtaining orders or contracts for products, services or use of facilities.” 50 This definition is slightly different from the definition of an outside salesperson under the FLSA, which provides that to be an outside salesperson, an employee must (1) customarily and regularly be engaged away from the employer’s place of business making sales or obtaining orders or contracts; and (2) must spend no more than 20 percent of the work time on other nonexempt tasks unless the tasks are incidental or in conjunction with the employee’s outside sales or solicitations. 49 50 IWC Wage Order 1-2001(1)(c) (“the provisions of this wage order shall not apply to outside salespersons”). By contrast, the white collar exemptions exempt employees only from Section 3 through 12 of the Wage Orders and other exemptions exempt employees only from Section 3 (governing hours of work). IWC Wage Order 1-2001(2)(j) (defining “outside salesperson”). Seyfarth Shaw LLP | www.seyfarth.com Litigating California Wage & Hour Class Actions (12th Edition) 15
Page 1 and 2: Litigating California Wage & Hour a
Page 3 and 4: Table of Contents I. Introduction a
Page 5 and 6: A. Disclosure of Class Member Names
Page 7 and 8: associated statutory penalties. 1 T
Page 9 and 10: who does not meet the threshold com
Page 11 and 12: exempt work is of a kind which in e
Page 13 and 14: 3) The employee performs his or her
Page 15: decisions have concluded that under
Page 19 and 20: place of business, would that quali
Page 21 and 22: IWC had the authority to promulgate
Page 23 and 24: stores” by providing them a porti
Page 25 and 26: declare such a system illegal witho
Page 27 and 28: employers should be able to defend
Page 29 and 30: waive the right to reimbursement, s
Page 31 and 32: Due to the ambiguity in the meaning
Page 33 and 34: For each workday the employer fails
Page 35 and 36: Arguably, no additional $100-per-pa
Page 37 and 38: permitted” the employee to work t
Page 39 and 40: federal decisions also held that an
Page 41 and 42: for all overtime hours worked. The
Page 43 and 44: much broader, such as the court’s
Page 45 and 46: In the appeal of Chau, the appellat
Page 47 and 48: years before the lawsuit, or for an
Page 49 and 50: imposition of penalties, 194 routin
Page 51 and 52: In one such class action, Elliot v.
Page 53 and 54: First, there has been a substantial
Page 55 and 56: Recent court decisions have begun t
Page 57 and 58: of her hours was paid at a rate of
Page 59 and 60: the limitations period for a penalt
Page 61 and 62: passage, then the employee could st
Page 63 and 64: all, but rather simply to proceed w
Page 65 and 66: Shortly thereafter, another Divisio
Page 67 and 68:
and the ability to bring a collecti
Page 69 and 70:
XIII. Class Action Fairness Act of
Page 71 and 72:
the plaintiff is “master of her c
Page 73 and 74:
alleged conduct or any related cond
Page 75 and 76:
Initially, the decisions were split
Page 77 and 78:
XIV. Class Certification A. General
Page 79 and 80:
expectations and the realistic requ
Page 81 and 82:
In the immediate wake of Sav-On, th
Page 83 and 84:
Similarly, employers may argue that
Page 85 and 86:
A 5 to 4 ruling reversed the Ninth
Page 87 and 88:
facility to the next, or variations
Page 89 and 90:
employer’s defense arsenal, and t
Page 91 and 92:
In reaching this conclusion, the Co
Page 93 and 94:
party who seeks the same relief, pr
Page 95 and 96:
is to be so maintained.” This det
Page 97 and 98:
speech. 429 Therefore, the court he
Page 99 and 100:
Puerto, or Crab Addison cases would
Page 101 and 102:
epresentative. That question was an
Page 103 and 104:
CashCall to disclose the identities
Page 105 and 106:
nothing but still are bound by the
Page 107 and 108:
Initially, there appeared to be a v
Page 109 and 110:
the case. As any one of these class
Page 111 and 112:
have any great impact on class sett
Page 113 and 114:
plaintiff’s attorney and putative
Page 115 and 116:
the California Supreme Court issued
Page 117 and 118:
While California courts have essent
Page 119 and 120:
The plaintiffs attempted to justify
Page 121:
Breadth. Depth. Results. www.seyfar
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