4 Litigating CA Wage & Hour and Labor Code Class Actions (22nd Edition) Seyfarth Shaw LLP | www.seyfarth.com (3) “primarily” be engaged in managerial duties; and (4) “customarily and regularly“ exercise discretion and independent judgment.16 Most litigation in California arises out of element (3) above, because the California Supreme Court in Ramirez v. Yosemite Water Co.17 held that an employee meets element (3) only when the employee spends more than onehalf of the work time on exempt duties. By contrast, under the FLSA’s executive exemption, the employer need only establish that management is the employee’s “primary duty,” an element that focuses on the relative importance of the duty rather than just the amount of time devoted to the duty.18 Beyond emphasizing the percentage of work time that must be devoted to exempt duties, California case law has not extensively explained just which duties qualify as exempt “managerial work.” Since July 2000, however, the Wage Orders have expressly incorporated by reference the then-existing FLSA regulations defining “managerial” duties.19 Accordingly, federal authority construing those specific regulations is highly relevant in interpreting the California executive exemption.20 Examples of exempt work set forth in the federal regulation include interviewing, selecting and training employees, setting and adjusting pay rates and work hours, directing work, keeping production records for subordinates, evaluating employees’ efficiency and productivity, handling employee complaints, disciplining employees, planning work, determining techniques to be used, distributing work, deciding on types of materials, supplies, machinery and tools to be used or merchandise to be bought, stocked, and sold, controlling the flow and distribution of merchandise and supplies, and providing for employee safety.21 16 See IWC Wage Order 1-2001(1) (A) (1); Nordquist v. McGraw-Hill Broad. Co., 32 Cal. App. 4th 555, 573 (1995) (“‘Discretion and independent judgment’ within the meaning of IWC Order No. 11-80 involves the comparison of possible courses of conduct, and acting after considering various possibilities. It implies that the employee has the power to make an independent choice free from immediate supervision and with respect to matters of significance ... [meaning matters] of substantial significance to the policies or general operations of the business of the employer.”). 17 20 Cal. 4th 785 (1999). 18 Id. at 797; see also Baldwin v. Trailer Inns, Inc., 266 F.3d 1104, 1113-16 (9th Cir. 2001) (although store managers spent less than one-half of their time on duties that met the federal executive exemption, they still qualified as exempt because management was found to be their “primary” or most important duty). 19 29 C.F.R. § 541.102; Safeway Wage & Hour Cases, 43 Cal. App. 5th 665, 676 (2019). 20 See, e.g., United Parcel Serv. Wage & Hour Cases, 190 Cal. App. 4th 1001, 1015 (2010) (“Federal law interpreting similar components of the FLSA exemptions is properly considered as persuasive authority, even if not binding on this court. … As such, we may properly consider federal decisions interpreting the FLSA and the federal Department of Labor's implementing regulations as set forth in the Code of Federal Regulations that were in effect as of January 1, 2001”); Bldg. Material & Constr. Teamsters Union v. Farrell, 41 Cal. 3d 651, 658 (1986) (“Federal decisions have frequently guided our interpretation of state labor provisions the language of which parallels that of federal statutes.”); Alcala v. Western Agric. Enters., 182 Cal. App. 3d 546, 550 (1986) (“It has been held that when California’s laws are patterned on federal statutes, federal cases construing those federal statutes may be looked to for persuasive guidance.”). 21 29 C.F.R. § 541.102. Although the FLSA regulations were updated in 2004, the definition of exempt “executive” work has remained substantially the same for decades.
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