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.
In Campbell, over two thousand unlicensed junior
accountants brought suit against their employer, arguing that they
were misclassified as exempt and owed additional compensation for
their overtime hours worked. The district court agreed, and held
that unlicensed accountants could categorically never qualify for
the Industrial Welfare Commission's ("IWC")
professional or administrative exemptions. Analyzing the
professional exemption first, the district court held that these
PwC employees were ineligible for the exemption as a matter of law,
because they were not licensed Certified Public Accountants. As to
the administrative exemption, the district court held that, because
the unlicensed accountants were required by law to work under the
supervision of a licensed accountant, they could never meet the
requirement that they work under only "general
supervision" to be classified as an exempt administrative
employee.
The Ninth Circuit disagreed. Warning of the potentially extreme
implications of categorically excluding entire classes of employees
from the exemption analyses, the Court instead held that each
employee's duties and responsibilities must be measured
against the exemptions' requirements to determine whether
each exemption applies.
Starting with the professional exemption, the Ninth Circuit
undercut the district court's reasoning as to why no
unlicensed accountant could ever be found exempt. While the
district court read subsection (a) of the professional exemption
– which requires that the individual have obtained a
license or certification from the State of California –
to render subsection (b) superfluous, the Ninth Circuit instead
read these two subsections as an either/or option, allowing for an
employee without a license under subsection (a) to still meet the
exemption if he or she meets the various requirements for a
"learned or artistic" professional under subsection (b).
Because unlicensed accountants still are able to perform duties
that could be considered those of a "learned or artistic"
professional, these PwC employees could not be categorically
excluded from the analysis altogether.
On the administrative exemption question, the Ninth Circuit again
disagreed with the district court's analysis. The Court
explained that it did not agree with the crux of the lower
court's analysis that unlicensed accountants could never
meet the administrative exemption because, as a matter of law, they
always had to work under the supervision of a licensed accountant.
In reversing, the Ninth Circuit explained that, "[w]hile we
recognize Plaintiffs are on the low end of PwC's hierarchy,
we see no authority that would bar their audit work from meeting
this test as a matter of law." Instead, the Ninth Circuit held
that the requisite analysis would need a factual inquiry into the
employees' daily work, and the decision could not be
reached on a job position-wide basis.
The Ninth Circuit cautioned courts to not issue such sweeping
exclusion rulings, in which they categorically bar certain job
titles from even undergoing the complete exemption analysis. It
explained that such a ruling could have a greater reach and could
impact many other industries, with potentially unintended results
as well. For example, if the district court decision were permitted
to stand as issued, it could affect the exempt status of recent
medical school graduates working as residents in hospitals and also
first-year associates working at a law firm before receiving their
bar results, as well as seasoned attorneys licensed in another
state but working in California on a corporate deal or an ongoing
lawsuit. Under the district court's ruling here, because
each of these types of employees are unlicensed in California, they
could run the risk of being barred from the professional and
administrative exemptions, thereby having the opportunity to sue
their employers for their unpaid overtime, as well as potentially
missed meal and rest breaks.
Campbell confirms that a court must not limit its review
to just the employee's job title alone when it is
determining an employee's exempt or non-exempt status.
Accordingly, it appears clear that these exemption analyses require
fact-intensive inquiries, and sweeping generalizations as to job
duties and responsibilities cannot alone support an
employee's entitlement to (or ineligibility from) overtime
pay.
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