Wage and Hour Class Actions Are Alive and Well
August 26, 2004
Summary
In a long-awaited ruling, the California Supreme Court added fuel to the overtime class action fire by ruling today that employees who are misclassified as exempt may proceed against their employer for unpaid overtime as a class.
Details
In April 2002, employers celebrated a decision of the California Court
of Appeal, which held that wage and hour misclassification actions do not lend themselves
to class treatment because of the need to analyze each employee’s actual work activities,
the time spent doing exempt versus non-exempt tasks, and the amount of hours worked.
Employers around the state had hoped that the Supreme Court would uphold this decision
and quell the explosion of overtime class action claims. However, in a victory for
employees and their attorneys, the California Supreme Court today agreed to allow
somewhere between 600-1,400 operational managers and assistant managers to proceed
as a class with their claim against Sav-On Drug Stores for unpaid overtime.
The lower appellate court had concluded that class status was
inappropriate because a fact-specific inquiry would be required to determine the
exempt status of individual managers. While the Supreme Court recognized that
such an inquiry may be required to ultimately determine which employees could
recover unpaid overtime, it found that the facts of the case presented sufficiently
common issues for resolution, and that the trial court did not abuse its discretion
by granting the employees’ motion for class certification. Specifically, the Court
pointed to the company’s standardized operational policies that appeared to have
deprived these managers of their management discretion, and the company’s across-the-
board classification of these positions as exempt based on job descriptions alone.
What This Means
This ruling is a huge disappointment for employers. If the
Court had let the lower ruling stand, the recent wave of overtime misclassification
class actions would have withered. Instead, this decision makes it easier for employees
to have a class certified in overtime misclassification cases, even cases where the
employer can point to significant differences in the actual job duties of potential
class members. Rather than affording employers the relief that had been hoped for,
this case may prompt a new wave of filings.
Because of this ruling, it is more important than ever for employers
to ensure that they have properly classified employees based on the actual work performed.
In the event that your organization identifies a misclassification, promptly consult
counsel as to the best strategy for reclassifying your employees.
We will be presenting a comprehensive review
of SB 1809, and all of the
other important new laws, including a discussion of their practical
applications for employers, during our fall seminar "Workplace
Law 2005" on
October 28, 2004. Click on the link below for more information
and to register for the seminar.
This E-Update was authored by Lysha Weston. If you have any questions
about this E-Update, please contact the author or any PPS&C attorney
at (619) 237-5200.
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