Employment Alert: Exempt Managers May Maintain Wage and Hour Class Action Against Employer Relating to Work Performed on Non-Exempt Tasks

In Martinez v. Joe’s Crab Shack Holdings (filed 11/10/2014, No. B242807) the California Court of Appeal for the Second Appellate District held managers of “Joe’s Crab Shack” restaurants that were classified as “exempt” employees could maintain a class action wage and hour suit against the company arising out of work allegedly performed on non-exempt tasks.

Class Plaintiffs, Roberto Martinez, Lisa Saldana, Craig Eriksen and Chanel Rankin-Stephens (“Class Plaintiffs”) were employed as managers of various “Joe’s Crab Shack” restaurants and were classified as exempt employees. Class Plaintiffs filed suit against Crab Addison, Inc., Ignite Restaurant Group and Landry’s Restaurants, Inc. (“Defendants”) alleging they were not paid overtime as a result of being misclassified as exempt employees.

Class Plaintiffs filed a motion for class certification, accompanied by declarations from 22 current and former salaried employees. According to the declarations, Defendants advised the employees they would be working 50 to 55 hours per week. However, the employees actually worked more than 55 hours per week, oftentimes more than 70 hours per week. Exempt employees were required to fill in for non-exempt employees by performing utility functions including acting as cooks, servers, bussers, hosts, stockers, bartenders or kitchen staff. Defendants submitted 27 declarations from putative class members in opposition to the motion. These declarations reported significant variance among the duties associated with specific management positions, the amount of time the managers routinely spent on particular tasks, and the total amount of time worked each week. The declarations indicated that even when these employees were performing tasks ordinarily associated with hourly workers, they were monitoring the restaurant and supervising and directing subordinates.

The trial court denied the class certification motion holding Class Plaintiffs failed to: (1) establish their claims were typical of the class; (2) that Class Plaintiffs adequately represent the class; and (3) that common questions did not predominate. Class Plaintiffs appealed. The Court of Appeal reversed.

Noting Defendants maintained standard policies for their restaurants and the purportedly exempt employees were performing non-exempt tasks typically performed by hourly employees. The court concluded the class was adequately represented by the Class Plaintiffs, whose claims were typical of the class as a whole. Turning to the issue of whether common questions predominate, the court relied on Duran v. U.S. Bank National Assn. (2014) 59 Cal.4th 1, which held “individual issues will not necessarily overwhelm common issues when a case involves exemptions premised on how employees spend the workday.” The Court concluded the issue of whether the employees were properly categorized as “exempt” was common to every putative class plaintiff, and, therefore, the litigation was “eminently suited for class treatment.” The court noted the trial court’s analysis was too narrow, as it only considered the potential for variance among each manager’s time spent on non-exempt tasks. On remand, the Court instructed the trial court to refocus its analysis on the issue of Defendants’ policies and practices, and the effect those policies and practices had on the putative class as a whole.

Martinez is a significant decision because it indicates courts should evaluate employee classifications on a class basis, even where there is substantial evidence of individualized questions of fact. In doing so, Martinez tends to put a weighty evidentiary onus on employers who oppose class certification. Even more, it also suggests that employers, particularly in the retail and food service industries, are exposed to liability if non-exempt employees assume duties of hourly employees for even a short time out of necessity.

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November 12, 2014