August 26, 2011
On August 17, 2011, the California Court of Appeal held that an individual need not be licensed as an attorney in the State of California in order to fall within the “learned professions” exemption contained in the California Code of Regulations, title 8, section 11040, which sets forth various exemptions to overtime compensation and other requirements imposed on employers. In Zelasko-Barrett v. Brayton Purcell, LLP, the appellate court determined that the California professional overtime exemption applied to the plaintiff during the period of time he was employed as a law clerk at Brayton Purcell and had not yet passed the California Bar Examination. Significantly, the appellate court held that it was not necessary for the plaintiff to hold a license to practice law in order to fall within the auspices of the professional overtime exemption. Instead, the exemption’s application could also be based on the actual duties being performed provided that the other requirements set forth in the test for exemption were met.
The case was brought by Matthew Zelasko-Barrett, who was employed by Brayton Purcell as a Law Clerk II following his graduation from law school and before passing the bar examination. As a Law Clerk II, Zelasko-Barrett performed tasks customarily performed by junior attorneys, although he was supervised by a licensed attorney and did not sign his name to pleadings. Zelasko-Barrett remained in the Law Clerk II position for almost two years because it took him that long to successfully pass the bar.
Following his voluntary departure from the law firm, Zelasko-Barrett filed a lawsuit asserting numerous causes of action that were all based on the premise that, as a Law Clerk II, he had been misclassified as an exempt employee.
In granting summary judgment for the employer, the trial court held that the undisputed facts establish that as a Law Clerk II, Zelasko-Barrett was an exempt employee under section 11040, subdivision (1)(A)(3)(b), the so-called learned professions exemption.
The Labor Code authorizes the California Industrial Welfare Commission (“IWC”) to establish exemptions from the overtime requirements for executive, administrative, and professional employees under specified conditions. Under this authority, the IWC created wage order No. 4-2001, which applies to all individuals employed in professional, technical, clerical, mechanical and similar occupations. (Cal. Code Regs. tit. 8, § 11040.) The wage order specifies that its provisions do not apply to employees falling within the exemptions defined in the wage order, including the professional exemption.
As it relates to this case, the wage order defines the professional exemption as applying to an employee: 1) who has a license or certificate in law, medicine, dentistry, optometry, architecture, engineering, teaching, or accounting; or 2) who is primarily engaged in an occupation commonly recognized as a “learned or artistic profession.” The phrase “learned or artistic profession” means work that requires advanced knowledge in a field, science or learning usually acquired by a prolonged course of specialized intellectual instruction and study, and is predominantly intellectual and varied in character and is of such character that the final product cannot be standardized in relation to a given period of time.
In challenging the trial court’s ruling, Zelasko-Barrett argued that because law is one of the identified professions requiring a license, he cannot have been employed in a law-related professional capacity unless he was licensed to practice law. He contended that, to interpret the exemption in any other way, would make subsection (a) superfluous. As such, he could not have fallen within the “learned profession” exemption.
Following an analysis of the wage order’s language, as well as its history, the appellate court wrote:
“. . . the wage order states explicitly that a person employed in a professional capacity means any employee who meets all of the requirements of subsection (a) ‘or’ of subsection (b). Moreover, ‘the exemption frames its application in terms of individual employees, rather than whole professions [Citation.]”
Based on this interpretation, the appellate court concluded that the professional exemption applies to a law school graduate performing legal services but not yet licensed to practice law if all of the conditions of the learned professions exemption are satisfied, which require that the individual: 1) is primarily engaged in an occupation commonly recognized as a learned or artistic profession; 2) customarily and regularly exercises discretion and independent judgment in the performance of her duties; and 3) earns a monthly salary equivalent to no less than two times the minimum wage for full-time employment.
The appellate court provided further guidance by defining “discretion and independent judgment.” It determined that the phrase does not imply that the employee’s decisions “must have a finality that goes with unlimited authority and a complete absence of review.” Instead, the appellate court wrote:
“’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 [Citation.]”
This case is significant because it allows an employer to apply the learned professions exemption to individuals who may not be licensed. Employers can make individual determinations based on an individual’s actual education, training, and duties. This permits a more flexible application of the exemption that takes into consideration the realities of a given situation.