Labor Employment Law Blog

By Thomas Kaufman and Jason Guyser

On January 28, 2013, Hon. George King of the United States District Court for the Central District of California issued an order in Pedroza v. PetSmart, Inc. denying class certification of exempt misclassification claims brought by a former PetSmart store manager. The opinion is interesting in that it contains a detailed examination of certification requirements pursuant to Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011). The analysis Judge King employed would lead to denial of certification in many exemption cases. However, Judge King separately ruled that the case could proceed as an uncertified PAGA collective action, leaving open the possibility that PAGA penalties could somehow be determined notwithstanding the Court’s finding that common issues predominated on the underlying exemption issue.

By Thomas Kaufman (follow me on Twitter)

On June 18, 2012, the U.S. Supreme Court issued a 5-4 decision Christopher v. SmithKline Beecham, holding that pharmaceutical sales representatives ("pharma reps") generally meet the FLSA's outside sales exemption. While there are differences between California and the FLSA concerning the elements of the outside sales exemption, this case dealt with the definition of "selling" under the exemption, which is an area where the two statutes have generally been interpreted as parallel. Accordingly, if Christopher is adopted in California, then pharma reps will qualify as outside salespersons under California law as well. The case is helpful to employers both with respect to the outside sales exemption and with efforts to combat the Obama Administration Department of Labor ("DOL") when it intervenes in wage and hour cases on behalf of the employees.

Last week, the Ninth Circuit issued a decision in Solis v. State of Washington, Department of Social and Health Services, wherein it attempted to clarify the learned professional exemption's "specialized intellectual instruction" requirement. In Solis, the U.S. Department of Labor filed a complaint against the State of Washington, Department of Social and Health Services ("DSHS") wherein it alleged that DSHS had failed to pay overtime to certain of its social workers in violation of the Fair Labor Standards Act ("FLSA"). DSHS argued that the social workers were exempt under the learned professional exemption.

On June 15, 2011, the Ninth Circuit issued its long-awaited decision in Campbell v. PricewaterhouseCoopers, LLP, No. 09-16370 (June 15, 2011). In its ruling, the Ninth Circuit reversed the district court’s holding that unlicensed junior accountants could never meet the professional or administrative exemptions under California law, concluding that there is a triable issue of fact as to both exemptions.

On September 30, 2008, Governor Schwarzenegger approved AB 10, which amends the computer software employee exemption from California’s overtime pay requirements.  The bill, which is codified in Section 515.5 of the California Labor Code, is urgency legislation that will take effect immediately.  As amended, Section 515.5 will permit California employers to pay certain computer software employees either $36.00 per hour or an annual salary of $75,000 to satisfy the compensation component of the exemption.  Significantly, the amendment eliminates the prior requirement that even salaried employees receive not less than $36.00 per hour for all hours worked during each week, which effectively required tracking of these salaried computer professionals’ hours.  Under the amended law, employers who choose to pay their computer professionals the requisite salary of $75,000 per year are not required to track those employees’ hours.

California Labor Code Section 515.5 provides that employees in the computer software field who perform specific computer-related duties are exempt from the overtime requirements in Labor Code Section 510. In addition to a duties test, computer professionals must earn a statutorily specified minimum pay rate to be considered exempt. When Labor Code Section 515.5 was initially enacted, an employee had to earn at least $41.00 per hour to meet the exemption. Since its enactment, the Division of Labor Statistics and Research ("DLSR") has adjusted the rate on October 1 of each year by an amount equal to the percentage increase in the California Consumer Price Index for Urban Wage Earners and Clerical Workers. This adjustment has resulted in an increase in the hourly rate every year.  As of January 1, 2007, the minimum rate for the exemption was $49.77 per hour.