California has been the focus of numerous class action wage and hour suits involving retail managers and assistant managers. One reason is that California law defines the executive exemption slightly, but significantly differently than, federal law.  Under both the FLSA and California law, courts will consider whether the employee’s “primary duty” is management.  While under federal law that question is qualitative (which duties are the most important?), California applies a quantitative test (does the employee spend at least 50 percent of their time managing?).  As a result, employees who would clearly be exempt under the FLSA may not be in California, a trap that has ensnared many national employers.

A recent case from the Central District of California demonstrates that even under this more difficult standard, class certification may not be appropriate. In Velazquez v. Costco, Case No. SACV-11-00508-JVS (C.D. Cal., Oct. 11, 2011), the plaintiff sought to represent a class of Costco “receiving managers” throughout the state of California.  She alleged that she and the other receiving managers were misclassified as exempt because they spent more than half of their time on non-exempt duties. She sought to recover overtime, as well as other California forms of relief, on behalf of the class.

The court expressed some concern over whether the claims could satisfy the Rule 23(a) requirement of commonality given the Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), but assumed they had been met for purposes of its analysis. Instead, it focused on the Rule 23(b) element of predominance. It found that the plaintiffs’ claims did present a common question of law (whether they properly classified as exempt), but that the fact issue of how the managers spent their time varied widely.  It noted that the day-to-day work duties of the receiving managers varied based on factors such as the specific store, the individual’s experience, and the preferences of local management. The need to examine these and other factors meant that class issues did not predominate and also that a class would not be a superior means of handling the action.  Accordingly, it denied certification.

The Bottom Line:  even in California, differences in how employees spend their time can defeat class certification in wage and hour cases.