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Employees who act as managers half the time are exempt from overtime pay, appeals court rules

By Karen Kidd | May 1, 2017

LOS ANGELES (Legal Newsline) – Employees who spend more than half their work time carrying out management tasks aren't eligible for overtime pay, a California appeals court ruled earlier this month.

In its ruling handed down April 4, the California Court of Appeal, Second District, Division 4, ruled against a group of Safeway assistant managers who claimed they should be classified as nonexempt, making them eligible for overtime pay. The ruling also upheld a lower court's findings that more than half of the assistant managers' time had work was spent in management tasks, making them exempt from overtime pay.

"The evidence presented bore out the court's conclusions," the appeals court ruling said. "Each appellant relied on different facts and different scenarios, and there was little overlap in the evidence to support the respective claims. Moreover, numerous managers and AMs testified that the majority of their workdays was spent attending to managerial duties."

The assistant store managers also based their claims for non-exempt status on their job requirements that they carry out non-exempt work such as stocking shelves, checking customers' purchases and building product displays. The appeals court didn't look favorably on that claim.

"That managerial employees performed lengthy store walks once or twice a day for the purpose of talking to department heads and other employees, assessing the condition of the store and determining the problems that needed to be addressed throughout the store that day, was established by the testimony of numerous witnesses, and supported the court's categorization of store walks as exempt tasks," the ruling said.

The case has its roots in the putative class action filed in July of 2002 filed by Peter Knoch and Jason Ritchey on behalf of all Safeway store managers and assistant manager over unpaid overtime and alleged violations of California's unfair competition laws. Class certification was denied in July 2007 with the ordering denying that certification entered in September of the following year.

Before that denial, Safeway Assistant Manager Gary Batze filed his complaint for unpaid wages in February 2006. Two other assistant managers, Carlo Cesar and Justin Hayes, filed complaints in October 2008. Other managerial level employees also filed related complaints in 2005 and 2006, and all of the claims later were combined.

During their appeal, plaintiffs claimed that the trial court was wrong when it ruled that they spent most of their work time at Safeway in managerial tasks during the four-year period described in their complaints. The court rejected that argument, as well as other allegations that a strike period amounted to an emergency that allowed Safeway to assign management employees to do non-exempt tasks without losing their exempt status. The appellate court likewise upheld the trial court's finding that the class action did not toll the statute of limitations.

"The fact that nearly 200 plaintiffs had already brought individual claims before the class certification was denied adds further support to the trial court's ruling, as it demonstrates that denial of class certification was not unforeseen," the appeals court ruling said. "The court also found that Cesar and Hayes unreasonably delayed asserting their claims after certification was denied, adding to the prejudice to respondent of defending stale claims."

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