In a favorable decision for employers, especially technology companies, a California appellate court in Combs v. Skyriver Communications held that a former Director of Network Operations for an internet service provider was properly classified as an exempt administrative employee under California law.

In reaching its conclusion, the court rejected the application of the "administrative/production worker" dichotomy test used in prior court decisions, finding that the bright line rule was not applicable because the employee performed "specialized functions" (not merely "routine and unimportant" tasks) that could not be easily categorized in terms of the dichotomy. The court noted that unlike a traditional organization, Skyriver was "much more of a flat organization," typical of some start-up companies where "everybody worked with everybody," and in this context, the use of the administrative/production worker dichotomy test was not appropriate.

Although the employee, whose core responsibility was maintaining the well-being of the employer's computer network, argued that he primarily performed non-exempt production work, the court determined that his duties fell within the administrative exemption.

This ruling provides support for an administratively exempt classification for certain California IT workers who perform specialized functions, and who do not otherwise qualify as exempt computer professionals or executives. However, employees are cautioned to conduct a task-specific intensive inquiry with each such IT position.