Litigating California Wage & Hour and Labor Code Class Actions

position. This makes it more difficult to apply Combs to other situations involving
lower level IT jobs or other sorts of mid-level administrative positions. 47
3. The Administrative/Production Dichotomy Test Survives—Harris v.
Superior Court
On December 29, 2011, the California Supreme Court issued its decision in Harris v.
Superior Court, 48 holding that the Court of Appeal mistakenly concluded that claims
adjusters, as a matter of law, do not qualify for the administrative exemption. The
Supreme Court did not provide definitive guidance on this topic in its opinion. Rather,
the Court simply held that the Court of Appeal had improperly applied the
“administrative/production worker dichotomy” as a dispositive test.
Liberty Mutual claims adjusters had filed a class action alleging that Liberty Mutual
misclassified them as exempt administrative employees. The trial court denied
plaintiffs’ motion for summary adjudication on Liberty Mutual’s administrative
exemption affirmative defense, but the Court of Appeal reversed the trial court and
held that as a matter of law, the administrative exemption did not apply to the claims
adjusters. The Court of Appeal strictly applied the “administrative/production worker
dichotomy” test set forth in the Bell v. Farmers Insurance Exchange cases and held
that adjusting claims was part of the “product” that their employer sold and therefore
not an administrative duty.
While the administrative exemption analysis depends on multiple factors, the Harris
decision focused on only one—whether the employees’ work qualified as
administrative. The California Supreme Court broke this analysis down into two
components, one “qualitative” (i.e., whether the work is administrative in nature) and
the other “quantitative” (i.e. whether it is of “substantial importance” to the employer’s
management policies or general business operations).
In reversing the Court of Appeal, the California Supreme Court distinguished Bell.
First, the Court noted that the Bell opinions limited their holding to the specific facts of
that case (including defendants’ stipulation that the work performed by all plaintiff was
‘routine and unimportant’). Second, the Court noted that the analysis in Bell relied on
the applicable Wage Order at that time (Wage Order 4-1998). That order did not
provide a sufficient definition of the administrative exemption, thereby requiring the
47
48
In Heffelfinger v. Electronic Data Systems, 580 F. Supp. 2d 933, 961-62 (C.D. Cal. 2008), the United States District
Court for the Central District of California surveyed various cases that analyzed whether IT workers were exempt, and
found there to be a “clear demarcation point,” with employees who “were tasked to install, maintain, and troubleshoot
software” falling on the non-exempt side, and those “charged with writing code, programming, or ‘administering’
databases or networks” falling on the exempt side.
53 Cal. 4th 170 (2011).
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