Determining whether employees are exempt from overtime requirements under California law is more difficult than determining their status under federal law. Under federal law, exempt status depends on an employee’s primary duty and the time spent performing that duty is not dispositive. But California uses a “primarily engaged” test where how the employees spend their time is entirely dispositive. So the question becomes whether the employees spend more than half their time performing duties that meet the test of the exemption like “customarily and regularly exercising discretion and independent judgment.”
Hundreds of millions of dollars have been spent litigating how to apply that standard to various categories of employees. A big chunk of that has been spent litigating just whether insurance adjusters are exempt. So by this point, there must be a well-developed body of law on that issue, right? Wrong.
As Daniel Siegal reported last week in Law360 (subscription required), LA Superior Court Judge John Shepard Wiley is trying to decide whether to certify a class of claims adjusters in a case that’s been going on for over seven years. Judge Wiley denied class certification, but in doing so bemoaned the fact that the law had been unsettled for so long.
As quoted in Law360, Judge Wiley said:
This is discreditable for the legal system to fail to resolve an issue going for such a duration, over such a span of time. So I am imploring whatever court reviews this to put a fork in it, and let’s get no more rulings that say, ‘Well whatever that court below did was error, but we’re not going to offer anything more.’
So pay attention appellate courts! Even if you won’t give guidance that enables employers to avoid potentially ruinous class action lawsuits, won’t you at least help out a fellow judge? In the meantime, employers need to be very careful in determining which employees to treat as exempt from California overtime requirements. Getting professional guidance in making these determinations is far cheaper than getting sued.