Class Certification Denied in Accountant’s Wage and Hour Claim

July 21, 2011  |  From HRCalifornia Extra

In another pro-employer ruling, a California court of appeal just upheld the denial of class certification in a lawsuit brought by a group of unlicensed accountants alleging unpaid overtime, meal and rest period violations and other wage and hour claims.

Current and former employees of a Southern California accounting firm sought certification of a class of approximately 150 unlicensed accountants who claimed they had been misclassified as exempt.

The employer argued that the accountants met the administrative exemption and that they were properly classified. Soderstedt v. CBIZ Southern California, LLC, (No. B224349 July 7, 2011).

For a group of plaintiffs to be certified as a class, the single plaintiff requesting certification to represent a larger group of plaintiffs must show that "common questions of law or fact" predominate over questions affecting the individuals in the group. Class certification is only justified if it will provide substantial benefits to the courts and the parties by resolving common questions that can be tried together.

The court found that common questions of law and fact did not predominate because the responsibilities, types of work and levels of supervision varied from accountant to accountant.

Job Duties Varied From Accountant to Accountant

The employer in the case kept offices in three different Southern California locations. The employer submitted evidence that each of the three offices:

  • Worked with different clients
  • Oversaw different client responsibilities
  • Gave out different tasks and assignments to the accountants who worked there

The employer also presented evidence that the responsibilities of each individual accountant varied based on any number of factors, including:

  • The accountant’s knowledge and ability
  • The accountant’s experience level
  • The assignment’s complexity
  • The specifics of the particular client engagement
  • The client’s industry
  • The accountant’s position within the structure of the particular office

The employer submitted 38 statements from current and former employees establishing that each assignment was different and required the accountants to utilize their knowledge and judgment to perform the required services for the client.

Exemption Turns on Individual Questions, Not Common Questions

The court held that class treatment was not warranted because an individual inquiry was necessary to resolve whether each accountant met the administrative exemption test. The court agreed with the trial court’s statement that class action is not appropriate when you "have multiple, perhaps as many as 146, mini-trials."

For employers, the Soderstedt decision is a good follow up to an earlier pro-employer decision in the Campbell case, discussed here. In Campbell, the Ninth Circuit ruled that unlicensed accountants are not categorically ineligible for either the learned professional exemption or the administrative exemption. The Campbell court noted, however, that there was a factual dispute as to whether the accountants actually met either test. The court emphasized that "[e]ach case will require a fact-specific inquiry into whether the unlicensed accountant meets the [exemptions’] various benchmarks … "

The California court in Soderstedt used a similar analysis to find that class certification was not appropriate.

Best Practices

  • Exercise caution when classifying employees as exempt to ensure they meet each element of the exemption.
  • HRCalifornia's Exempt/Nonexempt wizard can help
  • Avoid "one-size-fits-all" job descriptions. Tailor each individual job description to the actual duties you expect the employee to perform. Proper documentation will support an employer’s choice of classification if a lawsuit arises
  • Make certain the employee meets the required salary test for exempt status
  • When in doubt, classify employees as nonexempt and consult legal counsel