Administrators and Overtime Pay in California

Harris v. Superior Court Decision Confirms Administrative Exemption Requires Detailed Case-by-Case Analyses and Job Descriptions

The Supreme Court of California ruled today there are no easy assumptions when an employer seeks to qualify company “administrators” as exempt from overtime.  Francis Harris v. Superior Court of Los Angeles County, No. S156555, opinion filed December 29, 2011.

For well over a decade, California has been a battleground on just what managerial roles and duties an employee must play in order to meet the administrative exemption. The difficulty first stemmed from a lack of definition in the 1998 regulations of the term “administrative work.”  Today’s Harris decision observed that the Industrial Welfare Commission (IWC) sought to remedy the potential ambiguity by issuing in October, 2000 a set of “seven fairly extensive and interrelated subdivisions” to specifically define “administrative work,” now found for example in the IWC’s Wage Order 4 (covering most white collar workers), sections 1(A)(2)(a)-(g).  However, as the Harris decision also pointed out today, the legal battles have nevertheless continued in part because some lower courts have failed to closely apply that seven-part definition.

Perhaps the most important lesson from the Harris decision is that employers must limit the potential for challenges to their administrative worker classifications by carefully comparing the roles and duties each such employee carries against each element of the IWC’s expanded definition for such workers.  As Harris makes it clear that the analysis is a case-by-case proposition, companies should also take care to create or update to well-crafted written job descriptions that contain all the necessary elements from the regulations and that match the actual roles and duties of their administrators. The task is best embraced with the assistance of skilled, experienced labor counsel.

 

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