Allegations of Misclassification Are Insufficient to Demonstrate Commonality and Typicality According to California Court of Appeal Decision

by Orrick - Global Employment Law Group
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The California Court of Appeal for the Fourth District held that misclassification alone does not establish liability for overtime violations, and, thus, the fact that members of a putative class were classified as exempt was not sufficient to demonstrate the required commonality and typicality for a misclassification class action to proceed. The court in Kizer v. Tristar Risk Management held that in addition to alleging misclassification, the plaintiffs needed to prove that the misclassification caused harm. The standard announced by the Kizer Court augments the burden on plaintiffs in misclassification wage and hour class actions to establish commonality and typicality. On July 26, the decision was certified for publication.

The Kizer plaintiffs brought state-law claims on behalf of a group of California claims examiners alleging misclassification as exempt from overtime. The plaintiffs alleged that Tristar had a uniform policy of misclassifying its claims examiners as exempt under California overtime laws. Consequently, the plaintiffs and purported class members were denied overtime. On that basis, the plaintiffs argued class certification was appropriate, because they could establish by common proof that exemptions did not apply to these employees. In support, Plaintiffs submitted descriptions of the claims examiners’ job duties and the level of supervision imposed on them. Plaintiffs’ merits theory was that the job duties and supervision did not satisfy the five elements of the administrative employee exemption. Because the claims examiners’ job duties applied on a class-wide basis, this was an issue of common proof.

The trial court, however, denied the motion for class certification, finding that the plaintiffs failed to present substantial evidence establishing their claims were typical of the class or that common issues predominated on the plaintiffs’ overtime claims. Specifically, the trial court held that the plaintiffs failed to submit evidence that there was a generally applicable policy or practice that required the claims examiners to work overtime.

The Court of Appeal affirmed the trial court’s decision. The Court rejected the plaintiffs’ argument that the amount of overtime worked was an issue of damages.  The Court reasoned that the plaintiffs had to submit substantial evidence to demonstrate whether the potential class members worked any overtime and thus were harmed by the alleged misclassification, and whether those facts could be stablished through common proof.

The Court provided some guidance on what would constitute substantial evidence that overtime claims are subject to common proof. The Court was looking for a “written or de facto policy requiring claims examiners to work overtime, or that the performance of overtime . . . otherwise was subject to common proof.” The plaintiffs submitted their own declarations but no testimony from other claims examiners. The plaintiffs stated they routinely worked overtime but did not even contend that this was typical of the class. The Court of Appeal accepted the trial court’s assessment that the plaintiff’s purely anecdotal evidence did not suffice, particularly in light of the fact that the employer presented declarations in which employees stated they did not work overtime.

The Kizer decision is helpful to defendants in misclassification cases and its holding is relevant to other types of wage and hour class actions that involve overtime claims. The decision arguably holds that for any purported class action of overtime claims, a plaintiff must show a policy or practice that employees were required to work overtime, and a couple of anecdotal declarations are insufficient to satisfy that burden. The decision also underlines the important role that declarations from employees who did not regularly work overtime can have on the decision of whether to certify a class action on a misclassification or other overtime claim.

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Orrick - Global Employment Law Group
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