Tony Skogen, one of our worthy adversaries, has been named Chair of the Executive Committee of the Labor and Employment Law Section for the California Bar Association. Since his area of specialty includes wage and hour law, we run into him from time to time. Maybe this new assignment will keep him too busy to put up his best fight in our cases, but we aren't counting on it. Anyhow, congratulations, Tony.
We normally don't publish a post in response to a comment, but today, we will make an exception, especially since we are too busy to write a good post about what we really want to talk about -- the recent appellate opinions and upcoming appellate arguments on wage and hour issues. Those remarks will come next week.
In response to our post on Tuesday, "IWC Commissioners as Defense "Experts," some anonymous person (maybe we should disallow anonymous comments from now on), probably a defense lawyer, made this remark:
What about former IWC commissioner Barry Broad? He has been appearing for years in wage-hour cases as a Plaintiff's expert. And he has been opining on what the IWC's intent.
Or is your indignation only aroused by things that threaten your income?
On its face, it seems a fair remark, but as this commentor undoubtedly knows, it's actually nothing close to being a fair comparison or a fair comment upon our motivation.
No, our indignation is not only aroused by things that threaten our income. For example, among three things that triggered our outrage this year: Harpreet Brar doesn't threaten our cases or our income; plaintiff's lawyers who claim their case is worth a hundred million dollars and then file fee applications that laud their difficult work and success when the case settles for five percent of that do not threaten our cases or our income; and Bill Dombrowski does not threaten our cases or our income.
In our cases, we have succeeded, every time, in excluding expert testimony about "what the law means," and we are not threatened by it when someone like Dombrowski offers such testimony. It's not the outcome, but the attempt, and what it signifies, that offends us. We are outraged because this tactic brings about the whoring of a purported government official who, for a handsome fee, will tell you what his agency thinks.
And for what it's worth, we know perfectly well about plaintiffs lawyers (though not us) using former member Barry Broad, just as we know about defense lawyers using former Labor Commissioner Lloyd Aubrey for the same purpose. While we still think such testimony should be disregarded by the courts, we haven't blogged our outrage over the tactic because it is not quite as filthy as what Dombrowski is doing. It does, however, further illustrate one of the public policy reasons underlying the rule that makes such testimony improper. And for that, we thank you, A Little Truth, whoever you are, for bringing more attention to the issue.
Now that the Orco Block tentative decision appears dead, the defense tactic de jour seems to be to file writ applications every time a court denies a motion to strike allegations concerning meal and rest period pay claims that reach back more than one year, on the theory that such pay is a penalty rather than a wage. The tactic almost worked in Orco Block, now it is being tried all over, and after four years of uncertainty, the law is about to become clearer. At least, it is about to become as clear as the retroactivity of Prop 64 to pending UCL claims.
We've previously reported the status of two pending penalty/wage driven appeals. There is no timetable for argument in the Banda case, but in the Kenneth Cole Productions case, the 1st District Court of Appeal has scheduled oral argument for November 2, 2005.
And a newer case, the Bed, Bath & Beyond case, Mills v. Superior Court, is set for oral argument even sooner: November 1, 2005. That case appears to result from an order by L.A. Superior Court Judge Victoria Chaney's granting a demurrer. I am told, but have not seen for myself, that the ruling included a determination that break pay is a penalty. Unfortunately, the employees' bar didn't hear about that case right away, and the Employer's Group, Calif. Retailers Assn. & California Hospital Assn., Employment Law Council, Restaurant Association, the Alliance of Motor Picture & Television Producers, Airline Labor Relations Council & California Lodging Industry Association all got their amicus briefs on file, with no one stepping in to speak for the employees except for the plaintiff's counsel of record, Allen Willis Graves. We don't know Mr. Graves other than having heard that he was a Paul Hastings associate as recently as last year, and that he recently represented a plaintiff in an overtime case against Vivendi Universal Games.
The Mills decision is expected January 26, 2006, but it could come much earlier if the Second District wants to weigh in first on the issue.
One of the amicus attorneys in the Bed, Bath & Beyond case, Richard J. Simmons of Sheppard Mullin, filed a writ petition on the same issue this week in the Norm's Restaurants case, Ayala v. Norm's Restaurants. No action has been taken yet on that case.
Wal-Mart CEO H. Lee Scott Jr. turned heads this week by saying that Wal-Mart would support an increase in the federal minimum wage from the $5.15 an hour currently on the books.
While it is unusual for us to take a public position on a public policy issue of this kind, we simply believe it is time for Congress to take a responsible look at the minimum wage and other legislation that may help working families.
Pardon our cynicism, but we can't help but wonder why Wal-Mart is so concerned for working families on this issue, but not on the many other issues facing its workers? After all, Wal-Mart workers don't always get paid for every hour they work, and many of them make too little money to shop even at Wal-Mart. In fact, an absurd percentage of them have to turn to public assistances for such necessities as health care and housing. Wal-Mart isn't doing much for those issues facing working families.
Two recent studies, financed by Wal-Mart, found that Wal-Mart's pay practices depressed wages both in and beyond the retail sector. Another found that states spent an average of nearly $900 per year for each Wal-Mart worker in Medicaid expenses. Far from benefitting local government, Wal-Mart tax revenues brought little net gain to local communities in property taxes, sales taxes and employment. They merely pulled sales out from existing businesses. The Public Policy Institute of California found that "residents of a local labor market do indeed earn less following the opening of Wal-Mart stores."
So the crocodile tears for low income earners do not persuade us. More likely, we believe, is that this new found support for the working poor comes because Wal-Mart already pays an average wage of $9.68 per hour. That rate is higher than the federal minimum, and higher than some mom-and-pop outfits, but much lower than competing grocery chains. Thus, a federal minimum wage hike would hurt a few of Wal-Mart's smaller competitors, but would have no adverse effect on Wal-Mart or other large grocery chains. To the contrary, it might put a few more pennies in Wal-Mart's cash registers by giving potential customers an extra $40 or more per week to spend on Wal-Mart goods.
Scott claims the motivation is purely philanthropic:
For us, there is virtually no distinction between being a responsible citizen and a successful business. They are one and the same for Wal-Mart.
We don't believe that, but whatever the reason, we'll take what we can get. Thank you, Wal-Mart.
The IWC may have been de-funded, but the "sitting" IWC Commissioners, or at least one of them, seem to be willing to provide defense expert testimony in wage and hour cases for the bargain rate of $450 per hour. We've been informed that Bill Dombrowski (also an executive with the California Retailers Association, making his bias readily apparent) is willing and ready, and has been retained by at least one defense firm, for a fee, to provide declarations stating that the legislative intent of the IWC favors an employer's contention.
We wonder how such testimony can be admissible, in that intent must be taken from the public record, not from some undisclosed mindframe that can only be determined years later by paying an hourly rate to the appointed government official. The law is well settled that expert testimony cannot be offered to prove the meaning of a law. The court, not the witnesses, must decide the law. "Expert opinions on legal questions are not admissible regardless of whether the opinion embraces an ultimate issue of fact." Summers v. A.L. Gilbert (1999) 69 Cal.App.4th 1155, 1179.
And that is a good thing, too. What an incentive for future corruption this could present. Imagine, if you will, legislators drafting vague statutes so that they could profit later by offering otherwise unknowable legislative intent as retained litigation experts. That is essentially Dombrowski's situation, although he probably didn't plan it that way and is merely an opportunist. Hopefully, the court in every case will exclude Dombrowski's testimony and the defense bar will stop wasting their money on such "evidence." (And people wonder why defense bills are so expensive.)
Someone inquired recently whether we were the Walsh & Walsh that was formerly run by Sean Walsh. We are not.
Sean Walsh, the director of the Governor's Office of Planning and Research, has no affiliation with our firm. The Walsh & Walsh he ran was a government relations and communications firm. And, if it wasn't already obvious enough, no one from our firm would ever take a position in the Schwarzenegger administration.
Off on a tangent, we knew the president was going to be in our general vicinity today, so, to check the when and where, we did a google search for the terms "bush friday california." To our surprise, Google took us straight to ourselves. Behold, the power of the blog.
On the meal/rest period pay debate over whether an hour of pay for a break violation is a wage or a penalty, we've been seeing more and more defense lawyers citing Superior Court and tentative rulings (Orco Block) in support of their argument that the hour of pay is a penalty.
Don't try that trick in the courtroom of Orange County Superior Court Judge Kim Dunning. A recent ruling Judge Dunning posted in the Sandoval/Kropke v. Mountain Center case addressed the impropriety of this tactic in a different sort of motion:
Ruling: CONTINUE
"At the hearing counsel should be prepared to address why it has submitted 2 volumes of unrelated trial court orders and unpublished appellate decisions. This appears to violate Ca. Rules of Court. Counsel should advise the court which appendix exhibits violate the rule and, consequently, should not be considered by the court."
Except as law of the case, an appellate opinion that was not certified for publication or ordered published "shall not be cited or relied on by a court or a party in any other action or proceeding." California Rules of Court Rule 977(a). It is likewise improper to cite to a trial court opinion in an unrelated case (unless part of a published compilation of authorities cited for "persuasive value" where there is no appellate authority). Santa Ana Hosp. Med. Ctr. v. Belshe (1997) 56 Cal.App.4th 819, 831. Violation of this rule may lead to sanctions (e.g., striking the brief as "defective" and/or monetary sanctions against counsel). Alicia T. v. County of Los Angeles (1990) 222 Cal.App.3d 869, 885 886 (appellate sanctions imposed for citing case ordered depublished).
We've cited this authority in every brief on the subject, and so far, we haven't lost yet.
The settlement in our class action against J. Jill the Store (Balogh v. The Birch Pond Group, Inc.) has been given final approval by Riverside County Superior Court Commissioner Joan F. Burgess. The case involved the wardrobing and employee break policies of The Birch Pond Group's J. Jill The Store retail clothing stores in California from July 1999 to July 2003. Several hundred current and former hourly workers at J. Jill the Store's retail stores in Calfornia will share in approximately $287,000 in cash and merchandise as part of a settlement involving claims that they were required to purchase J. Jill clothing as a condition of employment, and that some workers were denied meal and rest periods.
The lawsuit was filed by a former sales associate and former assistant manager at J. Jill's Palm Desert store. On April 15, 2005, the settlement was given preliminary approval by Riverside County Superior Court Roger Leubs. Final approval was given at the court's final fairness hearing by Commissioner Joan F. Burgess on October 12, 2005.
To settle the wardrobing claims, full-time employees were compensated with J. Jill gift cards worth $150, plus $35 per full month of employment, beginning with the third month of employment during the relevant period. Part-time employees received gift cards worth $150, plus $20 per full month of employment, beginning with the third month of employment during the relevant period. The gift cards are good for the purchase of any merchandise available to the general public, including sale or clearance items, but may not be used: in conjunction with employee discounts, at J. Jill outlet store or on Amazon.com. They also may not be used to pay any J. Jill credit card account. Employees were given the option of accepting cash equivalent to 50% of their gross gift card allowance. To settle the meal and rest period claims, employees were paid up to $21 per month of employment. Checks and gift cards will be mailed to class members no later than November 4, 2005.
Under California Labor Code § 226.7 and Industrial Welfare Commission Wage Order 7, retail store employees are entitled to a paid ten-minute break for every four hours of work, or major fraction thereof. Employees working at least 3½ hours are entitled to one paid break, and earn a second paid break after six hours. Furthermore, employees who work more than five hour shifts are entitled to a 30 minute break which need not be paid. Under California Labor Code § 450 and Industrial Welfare Commission Wage Order 7, employers are required to pay for the cost of purchasing and maintaining employee uniforms and may not require employees to purchase anything of value, including uniforms or clothing of a particular style or maker, from the company.
Here is our press release concerning the GMRI meal and rest period case:
Court Approves $9.5 Million Settlement For Red Lobster and Olive Garden Employees in Meal and Rest Break Class Actions (Irvine, California)
More than 40,000 current and former hourly workers at California Red Lobster and Olive Garden restaurants will share $9.5 million as part of a settlement involving claims that they were prevented from taking breaks, and that they were required to purchase and maintain their own employee uniforms. Red Lobster workers from more than 40 locations in California who worked there from February 21, 1998 to the present will share $5.5 million, while Olive Garden employees who worked from March 24, 1999 to the present will share another $4 million.
Two food servers at the Brea Red Lobster restaurant filed the first class action complaint in Orange County Superior Court in February 2002, alleging that Red Lobster refused to allow breaks to its non-exempt workers throughout the State of California. The complaint was subsequently amended to include damages and restitution for Red Lobster’s former policy of charging workers for uniforms, and for making the employees maintain their own uniforms. In March 2003, an Olive Garden employee filed a similar complaint, seeking certification of all GMRI workers, including both the Red Lobster and Olive Garden chains. In May 2004, while the first case was on appeal from an Orange County Superior Court ruling denying the defendant’s motions for summary judgment and to compel arbitration, a third lawsuit was filed in Sacramento, California.
Under California Labor Code § 226.7 and Industrial Welfare Commission Wage Order 5, employees are entitled to a paid ten-minute break for every four hours of work, or major fraction thereof. Employees working at least 3½ hours are entitled to one paid break, and earn a second paid break after six hours. Furthermore, employees who work more than five hour shifts are entitled to a 30 minute break which need not be paid. Under California Labor Code § 450 and Industrial Welfare Commission Wage Order 5, employers are required to pay for the cost of purchasing and maintaining employee uniforms and may not require employees to purchase anything of value, including uniforms, from the company.
This is one of the largest rest period class actions ever certified in California. This case was hard fought for three years, in two counties, the Court of Appeal and the California Supreme Court. The Red Lobster case was settled more than two years after the first mediation session. A second mediation session was scheduled after the California Supreme Court denied review of a 4th District Court of Appeal ruling preventing Red Lobster from compelling the employees to arbitrate the Red Lobster class claims. Several weeks after the second mediation, before respected mediator Mark S. Rudy of San Francisco, the parties reached a tentative settlement agreement. The Olive Garden case settled shortly thereafter, and an integrated and final settlement of the three lawsuits was signed on June 25, 2005.
The settlement was given preliminary approval by the Sacramento County Superior Court earlier this year. Sacramento Judge Loren E. McMaster granted final approval to the settlement yesterday, October 18, 2005. Checks to class members will be mailed no later than December 6, 2005.
GRMI, Inc., a subsidiary of Darden Restaurants, Inc. (stock symbol DRI), which operates the Red Lobster and Olive Garden restaurant chains in California, did not admit liability in the settlement. The settlement does not dictate any change in the restaurant chain’s practices. However, attorneys for the class do not foresee any ongoing problems with GMRI’s policies. Since 2002, the reports of employees missing their meal and rest breaks have been few, and we have seen instances in which restaurant managers who did not permit employees to take breaks have been subject to discipline by the company.
Information on the settlement was previously posted here and here.
A few readers have asked if we have an analysis on whether the Labor Commissioner’s recent Precedent Decision in the Hartwig matter is binding on trial courts. We do. It isn't. In the recent Supreme Court case of Reynolds v. Bement, the court discussed the issue, noting that it had determined that the DLSE’s administrative policies are not due general interpretive deference unless they are promulgated in accordance with the Administrative Procedure Act (APA), section 11340 et seq. of the Government Code. (Tidewater Marine Western, Inc. v. Bradshaw (1996), 14 Cal. 4th 557, 561). Because the Labor Commissioner’s use of the Hartwig decision did not go through the APA process, it should be given no weight at all.
California Assembly Speaker Fabian Nunez (D-Los Angeles) said in an interview today that the Democratic agenda in California will focus on four issues in 2006: universal healthcare for children; raising the state's minimum wage by a $1 to $7.75; investing in the state's roads, levees, and transportation networks; and universal preschool.
As we discussed earlier, the governor vetoed the bill passed earlier this year that would have raised the minimum wage. In addition to continued Democratic interest, there is a ballot initiative circulating which would put the minimum wage issue on the November 2006 ballot.
Canyon County, Idaho has taken to filing RICO lawsuits against businesses that hire illegal immigrant workers, alleging that such business practices violate federal law, including anti-racketeeting laws, and that the businesses are costing the county millions of dollars for education, health care, social services and law enforcement. The presence of these undocumented workers "lowers the labor wage for American citizens and removes employment opportunities," said county Commissioner Robert Vasquez.
RICO, the federal Racketeering Influenced and Corrupt Organizations Act that was enacted to help law enforcement combat organized crime, has recently been found useful to take on less traditional targets, such as mail fraud schemes and Internet spamming and phishing.
The RICO plan is the latest in a series of creative efforts by the county to recover the costs of illegal immigration. Previous unsuccessful efforts including billing the Mexican government for the cost of dealing with illegal immigrants, and seeking to have the county declared a disaster area due to the ravages of illegal immigration costs.
Though groups such as the Idaho Farm Bureau oppose the county's plans, the county has at least one supporter: G. Robert Blakey, a law professor at the University of Notre Dame who helped write the RICO Act. "If people are knowingly bringing in and exploiting undocumented immigrants, they are creating a federal crime," said Blakey.
We recently had an employer raise, as a defense to a claim for unpaid wages, that the employee was negligent in the performance of some of his job duties, and that the employer should be entitled to an offset for "unclean hands." This is a defense which says that "one who seeks equity must do equity." It can prevent plaintiffs from seeking equitable relief if they have engaged in unequitable conduct themselves. Essentially, when you strip away the labels and look at what the employer was really arguing, the claim was that an imperfect employee is not entitled to wage and hour law protections, including minimum wage, overtime pay or breaks for meal periods or rest periods.
Fortunately, the court saw right through this claim. An unlawful violation of a statute imposes “strict liability,” (State Farm v. Superior Court (1996) 45 Cal. App. 4th 1093, 1102), and, “principles of equity cannot be used to avoid a statutory mandate.” Ghory v. Al-Laham (1989) 209 Cal. App. 3d 1487, 1492. The defense was stricken from the pleadings.
On October 1, 2005, the United Kingdom increased its minimum wage to $8.89 per hour. In the U.S., the federal minimum wage is just $5.15. Interestingly, though chambers of commerce typically complain that increases in minimum wage lead inevitably to economic decline and job loss, data from the U.K. shows no such correlation. The United Kingdom had no minimum wage until six years ago, and the effect of the new minimum wages laws have been studied and found to have no identifiable effect upon overall economic conditions. To the contrary, since adding the minimum wage laws to the books in 1999, the U.K.'s job growth has outpaced job growth in the United States and its overall employment rates remain superior to those in the U.S.
U.S. District Judge Joseph Greenaway has denied a motion by Wal-Mart Stores to dismiss a lawsuit filed by undocumented workers who claim they were not paid fair wages and overtime, and that store managers locked the doors at night to keep cleaning crews detained inside.
Wal-Mart agreed to pay $11 million last March to resolve a criminal investigation into its employment practices, but that payment does not affect the pending class action suit filed on behalf of the affected janitors.
Even though Federal law prohibits employers from hiring illegal aliens, Wal-Mart argued that it should be excused from liability for wage violations because the employees were illegal. Judge Greenaway ruled that such workers have the right to seek relief "for work already performed under the Fair Labor Standards Act." Wal-Mart also unsuccessfully argued that it did not employ the workers, because it used a subcontractor as the employer of record, and that (this was our favorite) the wage claims should be dismissed because Wal-mart had paid "near" minimum wage to many of the workers. Though the court did dismiss racketeering charges, the plaintiffs were given 45 days to amend their complaint to plead the racketeering claims more fully.
It seems that Wal-Mart's employment practices are becoming daily news. The company has even become the subject of a new Jib-Jab animation. If it's true that no publicity is bad publicity, Wal-Mart's public relations department must be thrilled.
The Department of Labor's Wage and Hour Division has released an opinion letter providing some guidance on the FLSA learned professionals exemption. The opinion letter, no. 2005-28, is set forth below:
This is in response to your request for an opinion concerning the application of the learned professional exemption under section 13(a)(1) of the Fair Labor Standards Act (FLSA) to sales engineers employed by your client (Company), which is engaged in the production and distribution of DC motors for automotive components, audio and visual products, information and communication equipment, and home industrial products.
You request that the sales engineer position be evaluated in light of the final rule implementing minimum wage and overtime pay exemptions under section 13(a)(1) of the FLSA. This section provides a complete minimum wage and overtime pay exemption for any employee employed in a bona fide executive, administrative, or professional capacity as those terms are defined in the final rules at 29 CFR Part 541 that took effect on August 23, 2004. 69 FR 22122 (April 23, 2004). An employee may qualify for exemption as a bona fide professional employee if all the pertinent tests relating to duty, salary level and salary basis are met. We conclude that sales engineers meet the regulatory tests and thus qualify for the exemption.
According to the job description you provided, the sales engineer position requires a minimum four-year degree in mechanical or electrical engineering. The sales engineer position involves a combination of sales and applications engineering activities. The position is responsible for increasing new and existing business opportunities by adapting the Company’s motor designs into various applications. The sales engineer provides excellent sales and engineering service, and technical support to help customers develop new products and improve existing products.
As part of the sales engineer’s essential job functions, he or she maintains close contacts with customers’ purchasing and engineering staff through frequent visits, follow-up meetings and correspondence. The sales engineer pursues new applications and business opportunities to increase the use of the Company’s products. Also, the sales engineer provides quotations, obtains purchase orders and contracts, and conducts market research. The sales engineer exercises discretion and independent judgment regarding the engineering specifications required for a given product application, based on advanced engineering and product knowledge. He or she supplies engineering and technical support to existing and prospective customers, resolves engineering related problems with customers, and processes necessary engineering approvals. In addition, the sales engineer collects data and samples for the Company’s “next generation” motor development; verifies industry and market standards or developments; and makes recommendations for clarification or changes in the Company’s motor designs, quality or production processes.
Below is a discussion of the learned professional exemption and the primary duty requirement, which is then followed by an analysis of whether the sales engineer position qualifies for the exemption.
Learned Professional Exemption.
As discussed in section 541.301(a), “[t]o qualify for the learned professional exemption, an employee’s primary duty must be the performance of work requiring advanced knowledge in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction. This primary duty test includes three elements:
1. The employee must perform work requiring advanced knowledge;
2. The advanced knowledge must be in a field of science or learning; and
3. The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.”
Pursuant to § 541.300(a)(1), the learned professional exemption also requires that the employee is compensated on a salary or fee basis at a rate of not less than $455 per week. We assume for purposes of this letter that the sales engineers meet the salary level and salary basis requirements.
With regard to the duties requirement, section 541.301(b) states that “[t]he phrase ‘work requiring advanced knowledge’ means work which is predominantly intellectual in character, and which includes work requiring the consistent exercise of discretion and independent judgment, as distinguished from performance of routine mental, manual, mechanical or physical work. An employee who performs work requiring advanced knowledge generally uses the advanced knowledge to analyze, interpret or make deductions from varying facts or circumstances. Advanced knowledge cannot be attained at the high school level.”
Section 541.301(c) describes the phrase “field of science or learning” to include the traditional professions of law, medicine, theology, accounting, engineering, teaching, pharmacy and other similar occupations that have a recognized professional status as distinguished from the mechanical arts or skilled trades where in some instances the knowledge is of a fairly advanced type, but is not in a field of science or learning.
Section 541.301(d) in part states that “[t]he phrase ‘customarily acquired by a prolonged course of specialized intellectual instruction’ restricts the exemption to professions where specialized academic training is a standard prerequisite for entrance into the profession. The best prima facie evidence that an employee meets this requirement is possession of the appropriate academic degree.” This section further clarifies that “the learned professional exemption is not available for occupations that customarily may be performed with only the general knowledge acquired by an academic degree in any field, with knowledge acquired through an apprenticeship, or with training in the performance of routine mental, manual, mechanical or physical processes.”
Primary Duty Requirement:
As discussed in section 541.700(a), “[t]o qualify for exemption under this part, an employee’s ‘primary duty’ must be the performance of exempt work. The term ‘primary duty’ means the principal, main, major or most important duty that the employee performs. Determination of an employee’s primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee’s job as a whole.”
“The amount of time spent performing exempt work can be a useful guide in determining whether exempt work is the primary duty of an employee. Thus, employees who spend more than 50 percent of their time performing exempt work will generally satisfy the primary duty requirement.” Section 541.700(b).
With regard to the first element of the learned professional exemption’s duties test, that the employee must perform work requiring advanced knowledge, this test is met if the work performed is predominantly intellectual in character and includes the consistent exercise of discretion and judgment, as distinguished from performing routine mental, manual, mechanical or physical work. See 29 C.F.R. § 541.301(b). This test is not met simply because an employee has a bachelor’s degree in a specialized field, like engineering; the outcome depends upon whether the particular job requires the employee to apply that advanced knowledge. See Opinion Letters dated October 15, 2003 and July 7, 1993 (copies enclosed). The sales engineer’s work, among other things, includes: collecting data and samples for the Company’s “next generation” motor development; verifying industry and market standards or developments; developing files of engineering specifications/drawings and engineering changes; and making recommendations for clarification or changes in the Company’s motor designs, quality or production processes. Such work is predominantly intellectual in character. Furthermore, the sales engineer’s duties and responsibilities also meet this element as he or she exercises discretion and judgment in working with the customer independently at the customer’s location to determine engineering specifications required for a given product application, and resolving any engineering-related problems that may occur. The sales engineer supplies engineering and technical support to existing and prospective customers. In addition, the sales engineer is responsible for communicating sales and engineering-related matters with the relevant departments at Headquarters and the manufacturing plants.
The sales engineer position meets the second element discussed above, as the advanced knowledge required by the job is in a field of science or learning, in this case, engineering. See 29 C.F.R. § 541.301(c). The third element is also met as the position of sales engineer requires advanced knowledge in mechanical or electrical engineering obtained through specialized academic training that is a standard prerequisite for entrance into the engineering profession. These engineers must possess either a BSEE or BSME degree, which requires a prolonged course of specialized intellectual instruction, and you state that the job duties could not be performed without this specific engineering training. See section 541.301(d).
As indicated above, to qualify for the exemption, the sales engineer’s primary duty must include these three elements. The factors mentioned in section 541.700(a), which we consider here in determining whether the primary duty requirement is met, include (1) the relative importance of the exempt duties as compared with other types of duties; (2) the amount of time spent performing exempt work; (3) the employee’s relative freedom from direct supervision; and (4) the relationship between the employee’s salary and the wages paid to other employees for the kind of nonexempt work performed by the employee.
With respect to the relative importance of the exempt engineering duties as compared with the sales responsibilities of the sales engineer, you state that the sales activities are directly related to the performance of the engineering aspect of the job. In this regard, without the requisite engineering background and ability to determine engineering specifications and resolve engineering-related problems, the sales engineer’s efforts would not result in securing any purchase orders or contracts for the Company’s products. In fact, sales naturally result only from the sales engineer’s ability to work with a customer to provide engineering and technical support and to resolve engineering-related issues. Thus, as you state, the importance of the exempt engineering duties of the sales engineer far outweigh his/her sales activities.
As to the amount of time spent performing exempt work, you state that well in excess of 50 percent of the employee’s time is spent performing engineering versus sales activities. The vast majority of the sales engineer’s time is spent with a customer determining the customer’s needs and resolving any engineering-related problems, with sales activities following only upon successful completion of the engineering functions. You also indicate that a sales engineer generally performs such work without direct supervision as he or she normally travels to and deals with the customer personally. Furthermore, you state that the sales engineers are paid annual salaries ranging from $51,000 to $79,000, compared with sales assistants, who perform the more routine or manual work associated with the sales activities, such as ordering or shipping, and are paid annual salaries ranging from $33,000 to $49,000.
After considering the information provided, it appears that the sales engineer’s primary duty is the performance of exempt engineering duties, not non-exempt sales activities. Therefore, it is our opinion that the sales engineer described above qualifies for the learned professional exemption under section 13(a)(1) of the FLSA.
This opinion is based exclusively on the facts and circumstances described in your request and is given on the basis of your representation, express or implied, that you have provided a full and fair description of all the facts and circumstances that would be pertinent to our consideration of the question presented. Existence of any other factual or historical background not contained in your request might require a different conclusion than the one expressed herein. You have represented that this opinion is not sought by a party to a pending private litigation concerning the issue addressed herein. You have also represented that this opinion is not sought in connection with an investigation or litigation between a client or firm and the Wage and Hour Division or the Department of Labor. This opinion letter is issued as an official ruling of the Wage and Hour Division for purposes of the Portal-to Portal Act, 29 U.S.C. 259. See 29 C.F.R. 790.17(d), 790.19; Hultgren v. County of Lancaster, Nebraska, 913 F.2d 498, 507 (8th Cir. 1990).
Electronic Arts Inc., the world's largest independent video game producer, announced yesterday that it has agreed to pay $15.6 million to settle an overtime class action brought by its graphic artists. The company also agreed to reclassify its entry-level artists as non-exempt workers eligible for overtime pay. The case had been pending for just over one year in the San Mateo County Superior Court. The employees, who were represented by San Francisco law firm Schubert & Reed LLP, alleged that EA forced them to work long hours, including weekends, without any additional pay beyond their 40 hours per week.
Long hours without pay seems to be a common practice in the video game industry, and this settlement is likely to be the first of many against software firms that have refused to obey state and federal overtime laws. EA, of course, denies any wrongdoing.
Four farmworkers who filed a federal class-action suit in Fresno against Kovacevich Five Farms on behalf of themselves and about 500 co-workers have agreed to a $1.7 million settlement against the grape grower. Kovacevich Five Farms also expressly agreed not to retaliate in any way against the workers, including cutting staff or supplies. The claims arose from the requirement that workers arrive on the job half an hour before their starting time to unload wheelbarrows and other supplies, off the clock. The settlement includes $320,000 in back wages and more than one million dollars in penalties, attorney's fees and other damages. In approving the settlement, the U.S. District Court judge called the settlement "a significant victory" for the workers.
Wage and hour violations are widespread in the agricultural industry, with growers often failing to provide paid breaks, lunch breaks and overtime pay, or forcing employees to work off the clock, provide their own tools, or accept less than minimum wage, sometimes in cash with little or no documentation. However, it is always difficult to pursue claims in the agricultural industry because farmworkers are often unaware of their rights. Most are immigrants unfamiliar with the California legal system, and they usually perceive that they have no ability to challenge any injustices, or, worse, fear that they will be retaliated against and ruined by an angry employer. As a result, many times, plaintiffs sometimes struggle to rally support and assistance from their co-workers. Congratulations to Tom Lynch and his team of attorneys representing the plaintiffs.
Bank of America Corp. has agreed to pay up to $9 million to settle a class action lawsuit brought by its California loan workers who sued to recover back overtime pay. The eligible class members include account executives, trainees and other workers selling home mortgages and personal loans.
Bank of America, of course, denies any wrongdoing. If approved by the U.S. District Court in San Francisco, the bank will pay up to $6.68 million to the workers and $2.25 million to their lawyers, depending upon the number of claims made.
This is slightly off topic, but we wanted to share a Littler Mendelson trick with our readers. We know of certain employers who use Littler Mendelson to conduct interviews by a so-called "neutral investigator" named Tanja Darrow. We checked her profile on Littler Mendelson's website and saw that she indicated she only represented employers in litigation. We assume that one or more employees complained that they wanted their employers to conduct their investigations with a truly neutral investigator. Littler has since revised Ms. Darrow's profile to reflect that she conducts "neutral investigations."