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Mark Negri v. Koning & Associates

May 16, 2013

MARK NEGRI, PLAINTIFF AND APPELLANT,
v.
KONING & ASSOCIATES, DEFENDANT AND RESPONDENT.



Super. Ct. No. CV092242) Trial Court: Santa Clara County Superior Court Superior Court No. 10-07-CV092242 Trial Judge: Hon. Socrates P. Manoukian

The opinion of the court was delivered by: Premo, J.

CERTIFIED FOR PUBLICATION

(Santa Clara County

California law provides that, absent an exemption, an employee must be paid time-and-a-half for work in excess of 40 hours per week. To be exempt from that requirement the employee must perform specified duties in a particular manner and be paid "a monthly salary equivalent to no less than two times the state minimum wage for full-time employment." (Lab. Code, § 515, subd. (a).)

The question presented in this case is whether a compensation scheme based solely upon the number of hours worked, with no guaranteed minimum, can be considered a "salary" within the meaning of the pertinent wage and hour laws. We conclude that such a payment schedule is not a salary and, therefore, does not qualify the employee as exempt. Since the trial court found the employee was exempt, we shall reverse.

A. Factual and Procedural Background

Plaintiff Mark Negri is an insurance claims adjuster who was employed by defendant Koning & Associates from May 2004 through October 2005. He was paid $29 per hour with no minimum guarantee. When he worked more than 40 hours in a week he still received only $29 per hour. Plaintiff sued defendant for overtime pay. Defendant denied that plaintiff was owed any overtime since he was classified as an exempt employee under the administrative exemption of Industrial Welfare Commission (IWC) Wage Order 4 (Cal. Code Regs., tit. 8, § 11040 (regs. § 11040)).*fn1

The matter was tried on undisputed facts submitted in the form of a written stipulation. The stipulation contained 30 separate facts, about half of which related to plaintiff's job duties. For example, the parties agreed that plaintiff "made his own schedule" and that he "was never supervised in the field" by defendant's managers. He spent most of his time "recording and tabulating data" and "transmitting that data to insurance carriers."

The stipulation also explained that plaintiff "was paid based on the total hours he submitted to Defendant for each client." "Each month, Plaintiff was provided with a billing ledger of all hours that he billed and for which he was compensated." Plaintiff received "all invoices extended to clients based upon Plaintiff's billed hours." Plaintiff's "hourly rate of pay was $29 per hour." "[Defendant] never paid [plaintiff] a guaranteed salary, rather he was paid on an hourly rate of $29.00 per hour per claim basis. That is to say if he worked less claims [sic] in a pay period he made less money than if he worked more claims." But no matter how much he worked, he did not receive overtime pay; "plaintiff was paid $29 per hour for work done on each claim." Plaintiff estimated that he worked an "average 20 hours a week of overtime" during all 66 weeks he worked for defendant.

Plaintiff's theory of the case was that since he was compensated based upon the hours he worked he did not receive a salary and, therefore, he could not be categorized as exempt. The trial court did not base its decision on the compensation issue, however. At the time the trial court issued its statement of decision, Harris v. Superior Court (2011) 53 Cal.4th 170 (Harris), which concerned the classification of insurance claims adjusters, was pending before the Supreme Court. The issue in Harris was whether insurance adjusters "are not exempt employees as a matter of law." (Id. at p. 175.) Since the issue had not been decided as a matter of state law, the trial court turned to federal law, noting that Department of Labor regulations state that "insurance claims adjusters generally meet the duties requirements for the administrative exemption . . . ." The court also cited several federal cases (In re Farmers Ins. Exchange, Claims Represent. (9th Cir. 2007) 481 F.3d 1119; Cheatham v. Allstate Ins. Co. (5th Cir. 2006) 465 F.3d 578; Roe-Midgett v. CC Services, Inc. (7th Cir. 2008) 512 F.3d. 865), which had held that insurance claims adjusters are exempt employees. Although the trial court found that plaintiff had worked "20 hours of overtime a week," the court nevertheless concluded that plaintiff was an exempt employee.

The trial court entered a judgment in defendant's favor. Plaintiff has timely appealed.

B. Discussion

1. Issue and Standard of Review

The only issue on appeal is whether the trial court erred in finding plaintiff to have been an exempt employee notwithstanding the manner in which he was paid. There are no disputed factual issues. Accordingly, the question is one of law subject to our ...


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