Class Certification Properly Denied in Overtime Exemption Case
Trial courts are given significant discretion to determine whether class treatment is appropriate in wage and hour cases. Last week, one California appeals court upheld a trial court's determination that class treatment was not appropriate in a case alleging that a retail chain misclassified its store managers as exempt from overtime compensation requirements. In Mora v. Big Lots Stores, Inc., the plaintiffs worked as store managers in various Big Lots stores throughout California. They sued Big Lots alleging their employer misclassified them as exempt employees to avoid payment of overtime compensation (among other related claims).The plaintiffs sought to sue as a class on behalf of all store managers throughout California. Their primary argument in favor of class treatment was that Big Lots uniformly classified all of the managers as exempt and utilized the same job description and work rules for all managers, with no attention paid to how any individual manager actually spent his or her work time. Big Lots presented evidence that even though its managers were uniformly classified as exempt, the amount of time the managers spent on various job duties (exempt versus non-exempt) varied widely depending on a number of factors, including number of employees, store volume, season, etc.
The trial court denied class certification, finding that the evidence presented by Big Lots (declarations from store managers as well as an expert study based on observation of randomly selected managers in various storesperforming their job duties) showed that the actual time spent on exempt and non-exempt job duties materially varied from one manager to the next, such that common issues could not be said to predominate, making class treatment unmanageable and inappropriate. Notably, the court devalued the evidence (declarations) submitted by the plaintiffs in support of class certification, based on the fact that the declarations were largely boilerplate and there was significant evidence of discrepancies between the declarations and deposition testimony by the same individuals.
On appeal, the court upheld the trial court's ruling, largely based on the deferential standard of review allowing the trial court wide discretion in deciding whether to allow class treatment. The Big Lots case is a favorable decision for California employers fighting the continued cottage industry of wage and hour class actions in this state. The case provides further authority for the position that the lawfulness of exemptclassification requires an individualized analysis of how an employee spends his or her time, and the mere fact that a class of employees is classified as exempt and given the same job description does not end the inquiry.