March 26, 2013
By: Christopher P. Wesierski and Ashley A. Reagan
Plaintiff William Dailey (Plaintiff) brought a wage and hour class action lawsuit against Defendant Sears, Roebuck and Co. (Sears). The employees who sought to be part of the class were managers and assistant managers of the Sears Auto Centers in the San Diego area. The managers were classified in three separate levels- Auto Center Coach I, II and III. Level III managers were classified as exempt employees while level I and II managers were classified as nonexempt. Assistant managers were also classified as exempt employees who were not paid overtime. Plaintiff worked at one of the auto centers as an assistant manager and then a manager. The complaint alleged that all managers and assistant managers should be classified as nonexempt and should receive pay for overtime work and receive rest and meal breaks.
The Industrial Welfare Commission (IWC) wage order No. 4-2001 sets forth exemptions from overtime pay requirements for executive, administrative and professional employees. This exemption includes managerial and supervisorial positions. The general test for determining whether an employee is properly classified as exempt is if he primarily engages in the following duties: (1) Responsible for the management of the enterprise in which he is employed; (2) Regularly directs the work of 2 or more employees; (3) Has the authority to hire or fire; and (4) Regularly exercises discretion and independent judgment. Plaintiff utilized this test to argue that the managers should not be classified as exempt because they spent 50 percent of their time performing nonexempt work and did not regularly exercise independent judgment.
Plaintiff moved for class certification, arguing that certification was proper, despite the fact that some managers were exempt and others were not, because Sears had uniform policies requiring all of its managers to spend the majority of their time performing non-managerial, nonexempt work. Sears moved to preclude class certification arguing that determining how the class members actually spend their time necessitated individualized inquiry. The declarations submitted by the parties fundamentally disagreed on the percent of nonexempt work and the daily tasks that were performed by the employees.
The trial court denied class certification finding that commonality was lacking and that a class action was not the superior method for resolving Plaintiff’s claims. The court of appeal affirmed. The court determined that a uniform manner of misclassifying employees as exempt is not amenable to proof on a classwide basis. Class actions in California require proof of a sufficiently numerous, ascertainable class, of a well-defined community of interest, and that class certification provide a substantial benefit to litigants. The purported class could not meet the community of interest requirement. The issue of misclassification required individual inquiries as to how each employee spent his time. The random sampling methodology proposed by Plaintiff did not fix this issue. A mere proposal of statistical sampling is not an adequate evidentiary substitute for demonstrating the requisite commonality.
Facts and analysis based upon William Dailey v. Sears, Roebuck and Co., decided on March 20, 2013 by the California Court of Appeal, Fourth District.