Campbell v. PricewaterhouseCoopers LLP, 2011 WL 2342740 (9th Cir. June 15, 2011) (pdf)

The U.S. Court of Appeals for the Ninth Circuit reversed a lower court’s grant of partial summary judgment in favor of the plaintiff-junior accountants, noting that the district court’s holding would produce “significantly troubling results” and create “highly problematic precedent affecting several non-accounting professions.” The plaintiffs, a class of approximately 2,000 current or former junior accountants resident in six California offices of PricewaterhouseCoopers LLP (“PwC”), claimed that PwC improperly classified them as “exempt” employees and failed to provide them overtime pay in accordance with California’s rigid overtime pay requirements. As “junior accountants,” the plaintiffs occupied the bottom two tiers of their department’s seven-tier hierarchy and performed, among other accounting functions, audits of financial records. While Certified Public Accountant (“CPA”) licenses were required for the five levels above them, the plaintiffs were unlicensed.

Under California law, employees are generally entitled to overtime pay for work in excess of 8 hours per day and 40 hours per week. PwC argued in Campbell that the plaintiff class fell within the ambit of at least one of three overtime exemptions (only two of which were at issue before the Ninth Circuit). The district court ruled that, as unlicensed accountants, the plaintiffs were categorically ineligible for California’s professional overtime exemption, and that PwC had raised no triable issue of fact as to whether the administrative exemption applied. See Campbell v. PricewaterhouseCoopers, LLP, 602 F. Supp. 2d 1163, 1185 (E.D. Cal. 2009). The Ninth Circuit reversed, concluding that PwC should be allowed to test its defenses before a jury.   

At stake in the court’s analysis of the professional exemption were the thousands of overtime claims that would foreseeably come from unlicensed employees in a number of professional disciplines if the district court’s ruling were allowed to stand. As Circuit Judge Richard Tallman opined, “every lawyer, doctor, dentist, optometrist, architect, engineer, or teacher who is not ‘licensed or certified by the State of California’ would not qualify for the professional exemption” (and thus have a compelling argument for overtime pay). Campbell, 2011 WL 2342740, at *7. The court found that this was strictly a question of statutory (more accurately, regulatory) interpretation, and that just because licensed accountants were specifically enumerated in one subpart of the exemption did not mean that unlicensed accountants were categorically unable to satisfy the subpart exempting employees in “learned or artistic” professions. Thus, the case was appropriate for hearing by a trier of fact.

The court also found that the issue of whether PwC’s junior accountants met the administrative exemption was an “intensely factual” inquiry, and that it could not conclude as a matter of law that the plaintiffs did not work “under only general supervision” as required by the exemption. Citing the lack of regulatory guidance on the definition of “general supervision,” the court remanded the case for resolution of this “highly contested fact.”

This area of law is constantly changing, but Campbell is in many respects a “win” for employers – though the Court’s identification of “intensely factual” inquiries relating to the exemption analysis may make it more difficult for employers to obtain summary judgment in their favor in some cases. At the same time, it serves as a reminder of the need to have counsel regularly evaluate the exempt status of low- to mid-level employees and staff. As the Campbell court noted, the professional exemption is a “veritable hotbed” for factual disputes (and, by extension, expensive litigation).