Court Supports Employee Claims for Overtime; Employer’s Contract Shortening Statute of Limitations is Invalid; Administrative Exception Does Not Apply

Employees who work more than 8 hours a day are entitled to overtime pay (one and one-half normal salary). The right to such compensation cannot be waived, and for that reason the California Court of Appeal has ruled that an employment contract that purports to shorten the statute of limitations for an overtime claim is invalid. The case is Pellegrino v. Robert Half International, Inc.

In addition, the court rejected the employer’s argument that the employees in question were not entitled to overtime because they were “administrative” employees. (Under the law, executive administrative and professional employees are exempt from overtime.) Exceptions to overtime pay, however, are narrowly construed. In order to claim the exemption, the employer must demonstrate that the employees are truly be engaged in management-type activities. There are five key factors. The employer must prove that the employees are (1) performing office or non-manual work directly related to management policies or general business operations of the employer; (2) customarily exercising independent discretion; (3) working under only general supervision; (4) engaged in these activities at least 50% of the time; and (5) earning twice the state’s minimum wage. A copy of the court’s opinion is attached.