Seyfarth Shaw LLP | www.seyfarth.com Litigating CA Wage & Hour and Labor Code Class Actions (22nd Edition) 3 they work more than twelve hours in a single day or more than eight hours on the seventh consecutive day of a single workweek.9 They can also apply in certain situations to non-resident employees who perform work in California for California employers.10 Individual employees have a private right of action for unpaid overtime. Typically, a plaintiff invokes a private right of action by alleging violation of Labor Code Section 510 or a provision of the governing IWC order. Such a claim does not depend on the Fair Labor Standards Act or other federal law. A prevailing plaintiff may recover attorney’s fees for an overtime claim,11 but California law, unlike the FLSA, does not provide a remedy of double damages for willful overtime violations.12 In a private action for unpaid overtime compensation under the Labor Code, the statute of limitations reaches back to three years before the date the lawsuit is filed in court.13 B. The Executive (Managerial) Exemption One claim frequently made in misclassification class actions is that a proposed class of exempt managers—most often “working managers” in a retail establishment—do not qualify for the “executive” (aka “managerial”) exemption. The FLSA and California law contain similar executive exemptions, but California’s is more restrictive in key respects. California requires that an “executive” employee be paid a higher level of compensation than required under the FLSA.14 The salary must be set at a level at least twice the California minimum wage, which, as of 2022, is $15 per hour.15 Accordingly, to satisfy the salary basis test in California, a manager must now be paid $62,400 per year. The other executive-exemption requirements are that the manager must: (1) have the power to hire and fire, or make recommendations on those topics that are given particular weight; (2) supervise at least two full-time equivalent positions; 9 Previously, employees and employers could agree in advance to a “specific mutual wage agreement” that provided a guaranteed salary covering both base hours and a specific number of overtime hours. Archiega v. Dolores Press, Inc., 192 Cal. App. 4th 567, 571 (2011) (quoting Ghory v. Al-Lanham, 209 Cal. App. 3d 1487, 1491 (1989)). But then the Legislature amended Labor Code section 515 to preclude the use of such agreements. Lab. Code § 515(d) (2). 10 The California Supreme Court in Sullivan v. Oracle Corp., 51 Cal. 4th 1191 (2011), held that California overtime laws apply to out-of-state employees who perform work “entirely in California” for extended periods of time–“entire days and weeks.” See Section XX. 11 Only the prevailing employee, not the prevailing employer, may recover attorney’s fees in an action for overtime pay or for unpaid minimum wages. Earley v. Superior Court, 79 Cal. App. 4th 1420 (2000). 12 But see Lab. Code § 1194.2 (providing double damages for minimum wage violations). 13 As explained in Section XIII and in Statutes of Limitations for Selected California Wage and Hour Claims, the limitations period can be extended to four years by pleading a companion claim under the state Unfair Competition Law, Bus. & Prof. Code § 17200, et seq. 14 FLSA regulations set the salary threshold at $684 per week ($35,568 annually). Employers can use commissions and nondiscretionary bonuses to satisfy up to 10% of the salary threshold. 15 The California minimum wage rose to $15.00 per hour on January 1, 2022, and will rise to $15.50 on January 1, 2023. The federal minimum wage has remained at $7.25 per hour since 2009.
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