The NAM filed an amicus letter urging the California Supreme Court to review a lower court ruling that throws into question whether employers can classify many different kinds of employees as exempt from the minimum wage and overtime provisions of California law under the "administrative" exemption. Administrative personnel are exempt from the wage and hour laws, but defining who is administrative is the heart of this case.
Our letter points out that the lower court's ruling will affect many more jobs than just the insurance claims adjusters that are the plaintiffs, and that the California Supreme Court should try to help ensure that state and federal interpretations are consistent and predictable.
Also, the test used by the court of appeal ignores the fact that employees do not necessarily need to “participate in the formulation of management policies or in the operation of the business as a whole” to be doing work “directly related to management policies or general business operations” and thus be covered by the administrative exemption. Employees need only affect policy or have the responsibility to carry out policy to be doing work “directly related” to management policies or to general business operations.
On Dec. 29, 2011, the California Supreme Court reversed the lower court and sent the case back to them to apply a legal standard outlined in its decision. According to the court, "The essence of our holding is that, in resolving whether work qualifies as administrative, courts must consider the particular facts before them and apply the language of the statutes and wage orders at issue."