Agreement Shortening Time Period to File Wage Claim Held Unenforceable
A recent opinion from the Fourth Appellate District Court of Appeal emphasized that employers cannot by agreement limit the time period in which an employee can file a lawsuit for wage and hour issues. The opinion also exemplifies the difficulty associated with satisfying the requirements of the administrative exemption.
In Pellegrino v. Robert Half International, Inc., six former employees of a temporary staffing company sued their employer under Business and Professions Code section 17200 as well as various Labor Code sections on the grounds that the employer failed to properly compensate them for overtime worked, pay proper commissions, provide meal periods, or provide itemized wage statements. The employer asserted two main defenses to the employees’ claims: (1) the employees were properly classified as exempt under the administrative exemption; and (2) the employees’ claims were barred by the “Limitation on Claims” provision in their employment agreement that shortened the statute of limitations for such claims to six months. The plaintiff filed a motion for summary judgment on the grounds that the shortened time frame to file these claims was unenforceable because it violated public policy, and that they were not properly classified as exempt under the administrative exemption. The court granted the motion with regard to the shortened time frame, but found there was a triable issue of fact as to whether the employees were properly classified as exempt.
At trial, the issue of the administrative exemption was tried first. After all evidence was presented, the Court granted the employees’ motion for judgment and ruled that the employees were not properly classified as exempt as a matter of law. The employer appealed the ruling on the motion for judgment at trial and the prior motion for summary judgment.
On appeal, the court affirmed both rulings. With regard to the ruling concerning the shortened time frame to file the claims, the Court agreed that statutory wage and hour rights cannot be waived. To support this conclusion, the Court cited to Labor Code section 219 that provides “Nothing in this article shall in any way limit or prohibit the payment of wages at more frequent intervals, or in greater amounts, or in full when or before due, but no provision of this article can in any way be contravened or set aside by a private agreement, whether written, oral, or implied.” The Court also relied on prior cases, such as Gentry v. Superior Court, 42 Cal.4th 443 (2007), Franco v. Athens Disposal Co,. Inc., 171 Cal.App.4th 1277 (2009), and Zavala v. Scott Brothers Dairy, Inc., 143 Cal.App.4th 585 (2006), that previously determined certain wage and hour issues under the Labor Code, including the right to minimum wage, overtime compensation, meal and rest breaks, and itemized wage statements, could not be waived. The Court additionally referenced Martinez v. Master Protection Corp., 118 Cal.App.4th 107 (2004), which determined an arbitration agreement that required an employee to file any employment related claims within six months of the date the claim arose was unenforceable. The Court agreed with Martinez’s holding that “the enforcement of a provision in an employment agreement, which serious truncates the time period in which an employee may assert any claim, unlawfully restricts the employee’s ability to vindicate his or her statutory rights.”
With regard to the issue of whether the employees were properly classified as exempt under the administrative exemption, the Court agreed they were not. The employees had presented evidence at trial that they did not perform work “directly related to the management policies or general business operations” of the company, as required to fall under the administrative exemption. Rather, the employees performed duties that constituted sales work such as placing a candidate with a client, selling the services of the company to clients, and soliciting potential clients for sales. The employees’ performance was evaluated on how well they met or exceeded their sales goals. They had no supervisory duties and did not form any company policy.
The Pellegrino decision is here.