Seyfarth Shaw LLP | www.seyfarth.com Litigating CA Wage & Hour and Labor Code Class Actions (22nd Edition) 15 Likewise, Duran v. U.S. Bank,73 a key wage and hour class certification decision, discussed in Section XV.G, infra, involved the outside sales exemption. In Duran, the California Supreme Court found that the evidence established wide variation from salesperson to salesperson in terms of the amount of time spent on outside sales activities. The trial court’s “decision to extrapolate classwide liability from a small sample, and its refusal to permit any inquiries or evidence about the work habits of [salespersons] outside the sample group, deprived USB of the ability to litigate its exemption defense, and therefore violated the employer’s due process rights to present a full defense.”74 E. The Commissioned Salesperson Exemption The Commissioned Salesperson Exemption applies to “Retail Industry” employees (IWC Wage Order 7) and employees in “Professional, Technical or Clerical Occupations” not covered by a different Wage Order (Wage Order 4). Under California law, a commissioned salesperson covered by either Wage Order 4 or Wage Order 7 is exempt from overtime compensation if: The employee’s total compensation exceeds 1.5 times the minimum wage for each hour worked during the pay period (as of Jan. 1, 2022, 1.5 x $15.00 = $22.50/hour) and At least 50% of the employee’s total compensation comes from commissions.75 Under this exemption, employees are exempt only from overtime pay requirements, and are still subject to California’s requirements to pay minimum wages, as well as to provide meal periods and rest breaks. In Peabody v. Time Warner Cable, Inc., the California Supreme Court provided clarification as to when commissioned salespersons must receive their commissions.76 In that case, the plaintiff worked for Time Warner as a commissioned salesperson. She was paid biweekly, but only the final paycheck of the month contained her commissions. Her first paycheck, meanwhile, generally paid an hourly rate of less than 1.5 times the minimum wage for the hours worked during the pay period corresponding to that paycheck.77 Wells Fargo home loan consultants); Maddock v. KB Homes, Inc., 248 F.R.D. 229 (C.D. Cal. 2007) (denying class certification as to putative class of commissioned home salespersons). 73 59 Cal. 4th 1 (2014). 74 Id. at 35. 75 Cal. Code Regs. tit. 8, § 11040(3) (D). 76 Peabody v. Time Warner Cable, Inc., 59 Cal. 4th 662 (2014). 77 Id. at 665-66.
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