On June 15, 2011, the Ninth Circuit held that a class of 2,000 unlicensed junior accountants was not categorically ineligible, as a matter of law, to fall under the professional or administrative exemptions from mandatory overtime, reversing the lower court’s holding. Campbell v. PricewaterhouseCoopers LLP, No. 09-16370, (9th Cir. June 15, 2011).

The plaintiffs brought the wage-hour class action on behalf of 2,000 unlicensed junior accountants against their employer, PricewaterhouseCoopers LLP (“PwC”) claiming, among other things, that PwC failed to pay them mandatory overtime under California law. PwC argued that plaintiffs were exempt from overtime under the professional and administrative exemptions within California’s Industrial Welfare Commission’s (“IWC”) 2001 Wage Order.

Both parties brought motions for summary judgment and the district court ruled for plaintiffs, finding as a matter of law the PwC could not exempt them under the 2001 Wage Order. Specifically, the district court concluded that: (1) unlicensed accountants are categorically ineligible for the professional exemption because they are unlicensed, and (2) PwC had not established a triable fact issue on whether Plaintiffs would have fallen under either exemption.

On appeal, the Ninth Circuit reversed, finding summary judgment to be inappropriate as to both exemptions. Beginning with its review of the professional exemption, the court held that the exemption’s language did not categorically prohibit unlicensed accountants from falling under the exemption. The exemption reads:

(3) Professional Exemption[:] A person employed in a professional capacity means any employee who meets all of the following requirements:

a) Who is licensed or certified by the State of California and is primarily engaged in the practice of one of the following recognized professions: law, medicine, dentistry, optometry, architecture, engineering, teaching, or accounting; or  

b) Who is primarily engaged in an occupation commonly recognized as a learned or artistic profession.

The court considered whether the IWC intended subsection (a) to be the only provision through which accountants could be exempt, or whether unlicensed accountants – who would not qualify for subsection (a) exemption – could still be exempt under subsection (b), even though subsection (a) enumerates accounting as a profession and expressly requires licensure in California. Plaintiffs argued that because subsection (a) enumerates “accountants” and requires that they be “licensed or certified” in order to qualify under the subsection, accountants could not also or alternatively qualify under subsection (b), even if their job duties would qualify them as engaging in a “learned” profession.

The court rejected this argument, finding the language of the statute to be unambiguous and to contain no intent to exclude all accountants from subsection (b). To interpret otherwise would lead to the troubling result of other unlicensed professionals – for example, unlicensed medical school graduates who are completing their residency or first-year associates in California law firms who are awaiting their bar exam results – to claim that they were entitled to mandatory overtime from their California employers. The court also found that PwC had established several material fact questions for whether plaintiffs met the professional and administrative exemptions and, therefore, summary judgment as to either exemption was inappropriate.

Notably, regarding the professional exemption, the court focused on the language of the exemption that states that the exemption applies to “any employee” who falls under subsection (a) or (b). Due to the potential for substantial variance from one employee to another, the court held that as it relates to subsection (b), the “any employee” language requires an individual inquiry into whether each employee’s job duties qualify as “learned” or “artistic” and therefore are exempt.

This case provides employers a strong argument for overtime claims by employees who may be exempt under subsection (b) of the professional exemption, that such cases will require factspecific and individualized inquiries and, therefore, such claims are summary-judgment- and class-certification-inappropriate.