Friday, February 5, 2010

Fourth District Upholds Summary Judgment Against Employer on Administrative Exemption in Pellegrino v. Robert Half International

On January 28, 2010, the Fourth District issued an opinion in Pellegrino V. Robert Half International, Inc., __ Cal.App. 4th __ (2010), upholding a trial court order granting summary judgment in favor of plaintiffs on the administrative exemption. The Court’s opinion contains two noteworthy components.

First, the court held that the trial court did not abuse its discretion in finding that a “limitation on claims” provision contained in plaintiffs’ employment agreements – which shortened the statute of limitations for employment claims to six months – was unenforceable under California law. As reasoned by the Court, “the trial court did not err because plaintiffs’ claims were based on unwaivable and fundamental statutory rights, and the provision drastically shortening to six months the time in which an employee might vindicate such rights violates [Labor Code] section 219 and public policy, and is thus unenforceable.” See Slip Opinion, at 11-27. Such non-waivable rights, in the view of the Court, included the right to overtime compensation [id., at 13-15], Meal and Rest periods [id., at 15-16], itemized wage statements [id., at 16-18], and the right to be paid commissions as wages. Id., at 18-19.

With regard to plaintiffs’ substantive claim, the Court concluded that defendant failed to establish plaintiffs performed work “directly related to the management polices or general business operations” of RHI or its customers – the 3rd element of the administrative exemption:
Here, substantial evidence showed plaintiffs' duties as account executives for RHI were not directly related to management policies because they instead constituted sales work. The evidence presented at trial included the following: (1) at RHI, a direct sale occurred when a candidate was placed with a client; (2) account executives were trained in sales and evaluated on how well they met or exceeded minimum sales production numbers; (3) account executives were primarily responsible for selling the services of RHI's temporary employees to clients; (4) when the account executives were not either soliciting potential clients for sales or placing orders for clients, they were recruiting more candidates for RHI's “inventory,” an activity which consumed about 30 percent of their time; (5) account executives had no role in supervising the temporary employees after they were placed and no responsibility for the administrative support staff in the account executives' offices; (6) account executives did not form policy but followed the “recipe,” including the three-week rotation system in performing their duties as required by headquarters; and (7) corporate headquarters included a human resources department, marketing department, and legal department designed to support the account executives' function—to focus on making sales.
See Slip Opinion, at 42-43

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