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California’s Salaried Workers Score a Victory

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On Thursday, March 19, 2009, the Ninth Circuit Court of Appeals reversed a District Court’s order and reinstated a class action lawsuit against FedEx Kinko’s Office and Print (“FedEx”) seeking unpaid overtime and related penalties on behalf of a class of hundreds of the company’s Center Managers. This short three page decision carries monumental implications which extend far beyond the class members of this single action to reinforce the rights of all California employees who are paid on a “salaried” basis and denied compensation for their overtime work.

The case filed in May 2005 alleged that Center Managers at FedEx’s California Stores were improperly classified as “exempt” from overtime pay under California law on the basis that these employees met what is commonly referred to as the “managerial” exemption. Under California law, exemptions from overtime pay are narrowly construed and the employer has the burden to prove the exemption applies. For the managerial exemption to apply, the employer must prove, among other things, that the employees spend more than one-half of their work time on exempt duties and “customarily and regularly” exercise discretion and independent judgment under Cal. Labor Code § 515.

The case was certified as a class action in 2006. In May 2007, FedEx moved for summary judgment asking the District Court to conclude that the entire class was exempt from overtime under California’s “executive” exemption. The District Court agreed and granted Defendant’s motion. The Plaintiff appealed to the Ninth Circuit seeking to have that decision overturned.

The Ninth Circuit reversed the District Court’s decision holding that the class members testimony and expert witnesses raised triable issues regarding whether the Center Managers were primarily engaged in management duties. The decision is important as it reinforces the heavy burden employers must meet in order to show that their employees are spending at least half of their time on exempt tasks – merely referring to those employees as “managers” is not enough.

By reversing the District Court’s finding for FedEx, the Ninth Circuit sent a clear message of the Court’s intention to require employers who seek to circumvent overtime laws by paying their employees fixed salaries to provide substantial evidence to support these decisions – rather than merely referring to thoseemployees as “managers”. The fact that the decision was issued a mere eight days after the hearing is somewhat unusual and bodes well for the rights of all salaried employees throughout the state.

In light of the ruling, the parties will be proceeding toward trial. If successful there, hundreds of FedEx Center Managers could recover compensation for years of lost wages. Employees with similar claims would be well advised to strike while the iron is hot in seeking to recover owed wages pursuant to this ruling. If you are currently working in the state of California and are not receiving overtime pay (or if you are an attorney currently representing such an employee), please visit the Scott Cole & Associates, APC website to obtain further information regarding this lawsuit.

About the Author: Matthew R. Bainer, Esq. is an experienced and successful advocate of employees’ rights and has successfully represented tens of thousands of employees, both in California and throughout the nation. Mr. Bainer, a well-respected practitioner in his field, has written for both legal periodicals and academic law reviews. For more information about Mr. Bainer and his firm, please visit the Scott Cole & Associates, APC website at www.scalaw.com.


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