California appellate court rejected an employer’s affirmative defense that account executives were exempt administrative employees because their work did not relate to the management policies or general business operations of the employer or its customers. In Pellegrino v. Robert Half International, Inc., Maria Pellegrino and other plaintiffs, former account executives and a staffing manager for Robert Half International, Inc. (“RHI”), sued RHI for Labor Code violations involving overtime, commissions, meal periods and wage statements, and for unfair competition. As to the overtime claim, RHI claimed Plaintiffs were exempt administrative employees.

At RHI, account executives were responsible for recruiting, interviewing and evaluating candidates as potential RHI temporary employees; filling job orders with RHI candidates and assisting customers with their staffing needs; and new business development. RHI provided a “recipe” by which account executives accomplished their duties on a three-week rotating basis: (1) a “sales week” in which they were expected to make 125 “connects” with customers, conduct about 15 customer visits and attend networking events; (2) a “desk week” in which they handled incoming telephone calls and took job orders from customers; and (3) a “recruiting week” in which they were expected to interview 15-25 potential candidates for potential inclusion in RHI’s inventory of temporary staffing. RHI also required account executives to conduct, at least twice daily, “white board meetings” to list daily goals and chart their progress.

After RHI presented its evidence at trial, Plaintiffs moved for judgment arguing they were not exempt administrators because they performed in a production or sales role and did not impact management policies or general business operations of RHI or RHI’s customers. The trial court granted the motion and, on appeal by RHI, the appellate court affirmed this ruling.

While there was no dispute that Plaintiffs performed office or non-manual work, the evidence showed that Plaintiffs’ “work as account executives did not directly relate to management policies or general business operations of RHI or of RHI’s customers.” Instead, the court found that their duties comprised “sales work” on the basis of the following evidence adduced at trial:

  • At RHI, direct sales occurred when an account executive placed a candidate with a customer;
  • Account executives were trained in sales, were primarily responsible for selling RHI’s temporary employee services and were evaluated based on sales production levels;
  • When not selling services or filling customer orders, account executives were recruiting candidates to fill RHI’s “inventory” of temporary employees;
  • Account representatives did not supervise the temporary employees after placement with a customer and had no hiring or firing authority over RHI staff; and
  • Account executives did not develop policy, but instead followed RHI’s “recipe” for a three-week rotation of duties noted above.

This decision serves as an important reminder that exemption classifications must be thoughtfully considered and consistently applied. Simply because an employee performs what may appear to be an administrative function as part of their job does not mean that the employees’ position meets the stringent test for the administrative exemption from overtime requirements.