Is an unlicensed law school graduate working as a law clerk required to be paid overtime under California law? On August 17, 2011, the California Court of Appeal held such an employee can be exempt from overtime requirements under the "learned professional" exemption.

Plaintiff's Complaint

After graduating from law school, but before passing the bar examination, Matthew Zelasko-Barrett worked as a law clerk for Brayton-Purcell, LLP, a law firm in Novato, California with approximately 180 attorneys. Barrett performed duties similar to those of junior attorneys at Brayton, including drafting pleadings, discovery demands and responses, legal research, interviewing witnesses, assisting in deposition preparation and interacting with opposing counsel on discovery matters. As a law clerk, Barrett was treated as an exempt employee, paid a salary, and was not paid any overtime.

Barrett ultimately passed the bar examination and became an associate attorney. After leaving Brayton, Barrett filed a complaint, alleging that as a law clerk he had been misclassified as an exempt employee, and should have been paid at hourly overtime rates for all overtime hours worked. Barrett did not challenge his status as an exempt employee during the time he was employed as an associate attorney.

Trial Court Finds Barrett Was Properly Classified As Exempt

The trial court granted summary judgment in favor of Brayton, finding that Barrett had been properly classified as an exempt employee under the professional exemption. Barrett appealed the trial court's ruling.

Court Of Appeal Holds That Unlicensed Law Clerks May Be Classified As Exempt Professionals

Under Industrial Welfare Commission Wage Order 4-2001, an employee may qualify as exempt from overtime under the professional exemption in one of two ways: (1) if the employee "is licensed or certified by the State of California and is primarily engaged in the practice of ? law" (the "enumerated professions exemption"); or (2) "is primarily engaged in an occupation commonly recognized as a learned or artistic profession" (the "learned professions exemption"). According to the Wage Order, the learned professions exemption applies to an employee who is primarily engaged in the performance of work requiring knowledge of an advanced type in a field or science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study, as distinguished from a general academic education.

Barrett argued that since he was employed in a law-related capacity, he could qualify as exempt only under the enumerated professions exemption, and, since he was not licensed during his employment as a law clerk, he did not qualify for that exemption. The Court of Appeal rejected this argument, relying on the Ninth Circuit's decision regarding unlicensed accountants in Cambell v. Pricewaterhouse Coopers, LLP 642 F.3d 820 (9th Cir. 2011), click here to read. The Court of Appeal concluded that there was no ambiguity in the language of the Wage Order, which allows employees working in a law-related capacity to qualify under either the enumerated professions exemption or the learned professions exemption. The court found that Barrett's law school educational background satisfied the learned professions exemption.

Barrett also argued that he did not customarily and regularly exercise discretion and independent judgment in the performance of his duties as a law clerk, and therefore was not exempt under either the enumerated professions exemption or the learned professions exemption. Barrett contended that his work always was supervised, corrected and approved by a supervising attorney, that the ultimate decision to craft an argument was made by the supervising attorney, and that he could not sign pleadings, make court appearances, or provide advice to clients.

The Court of Appeal also rejected this argument, concluding that such limitations and oversight did not negate the fact that Barrett's responsibilities required discretion and independent judgment. The court cited 29 Code of Federal Regulations section 541.207(e), which states:

The term 'discretion and independent judgment' ? does not necessarily imply that the decisions made by the employee must have a finality that goes with unlimited authority and a complete absence of review. The decisions made as a result of the exercise of discretion and independent judgment may consist of recommendations for action rather than the actual taking of action. The fact that an employee's decision may be subject to review and that upon occasion the decisions are revised or reversed after review does not mean that the employee is not exercising discretion and independent judgment within the meaning of the regulations ?

The court found that, even though Barrett lacked final decision-making authority, his duties in collecting and assimilating evidence, performing legal research, and drafting legal memoranda required him to exercise a significant level of discretion, and that his tasks were not "routine mental, manual, mechanical or physical work."

What Brayton Means for Employers

Brayton is the first California appellate court decision holding that an unlicensed professional may qualify for the professional exemption even though the profession also is enumerated in the licensed professional section of the exemption. However, as this court did, employers also need to make sure that all other requirements of the exemption in question are satisfied, including whether the employee exercises discretion and independent judgment. In this regard, the court in Brayton concluded that the discretion and independent judgment test can be satisfied even if the decisions made by the employee are subject to review by others.